Exhibit 10.19
AGREEMENT
WHEREAS, AMCOL International Corporation (the "Company") considers it
essential and in the best interests of the Company and its shareholders to
foster the continued employment of its key management personnel;
WHEREAS, Paul G. Shelton ("Employee") is considered a key management
employee, currently serving as Senior Vice President, Chief Financial Officer
and Treasurer of AMCOL International Corporation, and President of Ameri-Co
Carriers, Inc. and Nationwide Freight, Inc.
WHEREAS, the Company desires to assure the future continuity of Employee's
services in the event of any actual or threatened "Change in Control" (as
defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement. This Agreement shall be effective and binding
immediately upon its execution. However, except as specifically provided herein,
this Agreement shall not alter materially Employee's duties and obligations to
the Company and the remuneration and benefits which Employee may reasonably
expect to receive from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided that the employee is
an employee of the Company immediately prior to a Change in Control, the Company
shall employ Employee, and Employee shall accept such employment, effective upon
such Change in Control for a period of thirty-six (36) months after said Change
in Control subject to the terms and conditions stated herein. For purposes of
this paragraph only, employment by a current or former subsidiary of the
Company, is the same as employment by the Company on or after a Change in
Control.
3. Duties After Change in Control. Employee agrees that during the term of
his employment with the Company after a Change in Control, he shall perform the
duties described herein and such other duties for the Company and its
subsidiaries consistent with his experience and training as the Board of
Directors of the Company (the "Board") or the Board's representatives shall
determine from time to time, which duties shall be at least substantially equal
in status, dignity and character to his duties at the date hereof. He shall also
have the title of Senior Vice President, Chief Financial Officer and Treasurer
of AMCOL International Corporation, and President of Americo Carriers, Inc. and
Nationwide Freight, Inc. Employee further agrees to devote his entire working
time and attention to the business of the Company and/or its current or former
subsidiaries and use his best efforts to promote such business.
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4. Compensation Prior to a Change in Control. Prior to a Change in Control
the Company agrees to pay Employee compensation for his services in an amount,
and to provide him with life insurance, disability, health and other benefits,
as agreed between Employee and the Company from time to time. For the purpose of
this Section, compensation does not include any bonus or other incentive
compensation plan or stock purchase plan, which may vary from year to year at
the discretion of the Company.
5. Termination of Employment Prior to a Change in Control. Employee shall
be entitled to terminate his employment prior to a Change in Control at any time
upon sixty (60) days' prior written notice. The Company shall be entitled to
terminate Employee's employment at any time prior to a Change in Control with or
without cause upon sixty (60) days' prior written notice (or the payment of
salary in lieu thereof). This Section shall not be construed to reduce any
accrued benefits payable in connection with any termination of Employee's
employment prior to a Change in Control.
Nothing expressed or implied in this Agreement shall create any right or
duty on the part of the Company or Employee to have Employee remain in the
employment of the Company prior to a Change in Control.
6. Termination of Employment On or After a Change in Control.
(a) For purposes of this Agreement the term "Change in Control" means
the change in the legal or beneficial ownership of fifty-one percent (51%)
of the shares of the Company's common stock within a six-month period other
than by death or operation of law, or the sale of ninety percent (90%) or
more of the Company's aggregate assets within a six-month period. Sale of
the Company's stock in a subsidiary or a subsidiary's assets shall not be
considered a Change in Control.
(b) Employee's employment on and after a Change in Control may be
terminated with just cause by the Company at any time upon not less than
ten (10) days' prior written notice. Prior to termination for just cause on
and after a Change in Control, the Board of Directors shall by majority
vote have declared that Employee's termination is for just cause
specifically stating the basis for such determination. In the event such a
termination occurs, the provisions of Section 9(a) shall apply.
Employee's employment may be terminated on or after a Change in
Control without just cause pursuant to the constructive termination
procedures described in the next paragraph or by the Company giving
Employee not less than thirty (30) days' prior written notice. In the event
Employee's employment is terminated pursuant to the preceding sentence:
(i) the provisions of Section 9(b) below shall apply; and
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(ii) although Employee's employment term shall be deemed
terminated at the end of such notice period (or, in the case of a
constructive termination described in the next paragraph, as of the
date Employee notifies the Company of such termination), such
termination shall in no way affect the term of this Agreement or
Employee's duties or other obligations.
For purposes of this Section 6(b), Employee shall be considered as
having been terminated by the Company on or after a Change in Control for
other than just cause provided that he has notified the Company of any of
the following within thirty (30) days of the occurrence thereof:
(i) the assignment to Employee of any duties of lesser status,
dignity and character than his duties immediately prior to the
effective date of the Change in Control or a substantial reduction in
the nature or status of his responsibilities from those in effect
immediately prior to the effective date of the Change in Control;
(ii) a post-Change in Control reduction by the Company in
Employee's annual base salary or bonus or incentive plan (as in effect
immediately prior to the effective date of the Change in Control);
(iii) relocation of Employee's office to a location which is more
than 50 miles from the location in which Employee principally works
for the Company immediately prior to the effective date of the Change
in Control; the relocation of the appropriate principal executive
office of the Company or the Company's operating division or
subsidiary for which Employee performed the majority of his services
for the Company during the year prior to the effective date of the
Change in Control to a location which is more than 50 miles from the
location of such office immediately prior to such date; or his being
required by the Company, in order to perform duties of substantially
equal status, dignity and character to those duties he performed
immediately prior to the effective date of the Change in Control, to
travel on the Company's business to a substantially greater extent
than is consistent with his business travel obligations as of such
date; or
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(iv) the failure of the Company to continue to provide Employee
with benefits substantially equivalent to those enjoyed by him under
any of the Company's life insurance, medical, health and accident or
disability plans in which he was participating immediately prior to
the effective date of the Change in Control, the taking of any action
by the Company which would directly or indirectly materially reduce
any of such benefits or deprive him of any material fringe benefit
enjoyed by him immediately prior to effective date of the Change in
Control, or the failure of the Company to provide him with at least
the number of paid vacation days to which he is entitled on the basis
of years of service under the Company's normal vacation policy in
effect immediately prior to the effective date of the Change in
Control.
(v) the elimination of the title of Sr. Vice-President of the
Company alone does not constitute a termination for those individuals
that remain presidents of subsidiaries.
(c) In the event Employee's employment is terminated on or after a
Change in Control in any manner not described in Section 6(b) above:
(i) the provisions of Section 9(b) shall not apply and Employee
shall instead receive the sums and benefits described in Section 9(a);
and
(ii) such termination shall in no way affect the term of this
Agreement or Employee's duties or other obligations.
(d) Any termination of employment of Employee following the
commencement of any discussions by a shareholder or group of shareholders
owning legally or beneficially more than 20% of the common stock or an
officially designated representative of the Board of Directors with a third
party that results within 180 days in a Change in Control shall (unless
such termination is for just cause or wholly unrelated to such discussions)
be deemed to be a termination of Employee on and after a Change in Control
for purposes of this Agreement.
7. Notice of Termination. Any termination by the Company or assertion of
termination by Employee shall be communicated by written notice of termination
to the other party at the following address:
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AMCOL International Corporation
One North Arlington
1500 West Shure Drive
Arlington Heights, IL 60004
Attn: Chief Executive Officer
8. Disability. If as a result of Employee's incapacity due to physical or
mental illness, he shall have been absent from his duties with the Company for
one hundred eighty (180) days within any twelve-(l2)-consecutive-month period
and within thirty (30) days after written notice of the Company's intention to
terminate his employment is given, Employee shall not have returned to the
performance of his duties with the Company substantially on a full-time basis,
the Company may terminate his employment for disability. This shall not
constitute a termination for the purposes of obtaining benefits pursuant to
Section 9.
9. Benefits Upon Termination And Leave Of Employment On or After Change in
the Control.
(a) If Employee is terminated for just cause on or after a Change in
Control, he shall only receive the accrued sums and benefits payable to him
through the date he is terminated; the provisions of Section 9(b) below
shall not be applicable in such case and Employee shall not receive (or
shall cease receiving) the payments and benefits described in Section 9(b).
(b) Subject to Employee's compliance with the provisions of this
Agreement, if Employee is terminated during the thirty-six (36) month
period beginning on and continuing after a Change in Control other than for
just cause (either at the discretion of the Company's management or
constructively by the operation of Section 6), he shall receive the
following payments and benefits in lieu of any other sums or benefits
otherwise, including severance or severance benefit payments payable to him
by the Company. Any payments in accordance with any special retention or
non-competition agreements, if any, shall be made in accordance with their
terms.
(i) all then accrued pay, benefits, executive compensation and
fringe benefits, including (but not limited to) pro rata bonus and
incentive plan earnings;
(ii) medical, health and disability benefits which are
substantially similar to the benefits the Company is providing him as
of the date his employment is terminated for a period of thirty-six
(36) months thereafter; and
(iii) one dollar less than three (3) times his base period
compensation.
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The foregoing payments and benefits shall be deemed compensation
payable for the duties to be performed by Employee pursuant to this
Agreement. For purposes of this Agreement, (A) Employee's "base period
compensation" is the average annual "compensation" (as defined below) which
was includable in his gross income for his base period (i.e., his most
recent five taxable years ending before the date of the Change in Control);
and (B) if Employee's base period includes a short taxable year or less
than all of a taxable year, compensation for such short or incomplete
taxable year shall be annualized before determining his average annual
compensation for the base period. (In annualizing compensation, the
frequency with which payments are expected to be made over an annual period
shall be taken into account. Thus, any amount of compensation for such a
short or incomplete taxable year that represents a payment that would not
be made more than once per year shall not be annualized). For purposes of
Section 9(iii) and the definitions pertaining to said Section, Employee's
"compensation" is the compensation which was payable to him by the Company
or a related entity determined without regard to the following Sections of
the Internal Revenue Code of 1986, as amended (the "Code"): 125 (cafeteria
plans), 402(a)(8) (cash or deferred arrangements), and in the case of
employer contributions made pursuant to a salary reduction agreement,
403(b) (tax sheltered annuities).
Except for the benefits described in Section 9(b)(ii) above, the sums
due pursuant to this Section 9(b) shall be paid in up to three (3) annual
installments commencing thirty (30) days after the sums become due. If on
or after the date any payment becomes due hereunder the Company at any time
has a funded debt-to-total capitalization ratio which equals or exceeds
1.1, the Company shall secure its payment of the remaining annual
installments with a letter of credit or other security instrument as shall
be reasonably acceptable to Employee. Such letter of credit or other
security instruments shall provide Employee with the ability to receive the
remaining installment(s) only if his payment is delinquent. All sums due
shall be subject to appropriate withholding and statutory requirements.
Employee shall not be required to mitigate the amount of any payment
provided for in this Section 9(b) by seeking other employment or otherwise.
Notwithstanding anything stated in this Section 9(b) to the contrary, the
Company shall not be required to provide medical, health and/or disability
benefits to the extent such benefits would duplicate benefits received by
Employee in connection with his employment with any new employer.
Notwithstanding anything stated in this Agreement to the contrary, if
the amounts which are payable and the benefits which are provided to
Employee under this Agreement, either alone or together with other payments
which Employee has a right to receive from the Company or any of its
affiliates, would constitute a "parachute payment" (as defined in Code
Section 280G), such amounts and benefits shall be reduced, as necessary, to
the largest amount as will result in no portion of said amounts and
benefits being either not deductible as a result of Code Section 280G or
subject to the excise tax imposed by Code Section
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4999. The determination of any reduction in said amounts and benefits
pursuant to the foregoing proviso shall be made by the Company in good
faith, and such determination shall be conclusive and binding on Employee.
The amounts provided to Employee under this Agreement in connection with a
Change in Control, if any, shall be deemed allocated to such amounts and/or
benefits to be paid and/or provided as the Company's Board of Directors in
its sole discretion shall determine.
10. Special Situations. The parties recognize that under certain
circumstances a Change in Control may occur under conditions which make it
inappropriate for Employee to receive the termination benefits or protection set
forth in this Agreement. Therefore, in the event that a Change in Control occurs
for any one of the following reasons, the provisions of Sections 2, 6 and 9
shall not apply:
(a) the purchase of more than fifty percent (50%) of the stock of the
Company by an employee stock ownership plan or similar employee benefit
plan of which Employee is a participant;
(b) the purchase of more than fifty percent (50%) of the stock or
ninety percent (90%) of the assets of the Company by a group of individuals
or entities including Employee as a member or participant, including but
not limited to those transactions commonly known as a leveraged or other
forms of management buy-outs; or
(c) A transaction or series of transactions involving the Company,
whether by way of a merger, exchange, sale or other method, where the party
ultimately acquiring the Company's bentonite business offers to the
Company's shareholders the opportunity to buy shares of its capital stock
as part of the transaction.
11. Dispute. Any dispute arising under this Agreement shall be
promptly submitted to arbitration under the Rules of the American
Arbitration Association. An arbitrator is to be mutually agreed upon by the
parties or upon failure of agreement, designated by the American
Arbitration Association.
12. Other Agreements. Except to the extent expressly set forth herein,
this Agreement shall not modify or lessen any benefit or compensation to
which Employee is entitled under any agreement between Employee and the
Company or under any plan maintained by the Company in which he
participates or participated. Benefits or compensation shall be payable
thereunder, if at all, according to the terms of the applicable plan(s) or
agreement(s). The terms of this Agreement shall supersede any existing
agreement between Employee and the Company executed prior to the date
hereof to the extent any such Agreement is inconsistent with the terms
hereof. Payments pursuant to this Agreement are in lieu of any severance
payments.
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13. Successors; Binding Agreement. The Company will require any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise, to all or substantially all of the business and/or assets of the
Company) to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.
This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
14. Miscellaneous. This Agreement may not be modified or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by Employee and such officers of the Company as may be specifically
designated by its Board for that purpose. Except for any failure to give
the thirty (30) day notice described in Section 6(b) above, the failure of
either party to this Agreement to object to any breach by the other party
or the non-breaching party's conduct or conduct forbearance shall not
constitute a waiver of that party's rights to enforce this Agreement. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of any
subsequent breach by such other party or any similar or dissimilar
provisions or conditions at the same or any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Illinois.
15. Survival. The obligations of the parties under this Agreement
shall survive the term of this Agreement.
16. Term of Agreement. The term of this Agreement shall commence on
September 18, 2000 and end on September 17, 2003; provided, however, that
in the event Employee's employment is terminated while this Agreement is in
force, this Agreement shall terminate when the Company has made all
payments to Employee required by Section 9 hereof and Employee has complied
with the duties and obligations described herein.
Date: September 20, 2000
EMPLOYEE AMCOL INTERNATIONAL CORPORATION
/s/ Paul G. Shelton By _/s/ Larry Washow
Paul G. Shelton Its: President
