SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15661
AMCOL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 36-0724340
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
1500 West Shure Drive, Suite 500, Arlington Heights, Illinois 60004-7803
(Address of principal executive offices) (Zip Code)
(847) 394-8730
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at April 14, 2000
(Common stock, $.01 par value) 26,949,038
<PAGE>
AMCOL INTERNATIONAL CORPORATION
INDEX
Part I - Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 2000 and December 31, 1999 1
Condensed Consolidated Statements of Operations -
three months ended March 31, 2000 and 1999 2
Condensed Consolidated Statements of Comprehensive Income -
three months ended March 31, 2000 and 1999 2
Condensed Consolidated Statements of Cash Flows -
three months ended March 31, 2000 and 1999 3
Notes to Condensed Consolidated Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information
Item 6 Exhibits and Reports on Form 8-K 10
<PAGE>
Part I - FINANCIAL INFORMATION
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
Current assets: *
<S> <C> <C>
Cash and cash equivalents $ 5,467 $ 3,815
Accounts receivable, net 98,696 106,816
Inventories 47,506 40,680
Prepaid expenses 7,239 6,571
Current deferred tax asset 6,924 6,888
Total current assets 165,832 164,770
Investment in and advances to joint ventures 10,064 9,111
Property, plant, equipment and mineral reserves 353,106 351,375
Less accumulated depreciation 184,225 178,967
168,881 172,408
Intangible assets, net 522 452
Other long-term assets, net 2,412 2,266
$ 347,711 $ 349,007
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current liabilities:
<S> <C> <C>
Notes payable and current maturities of debt $ 22 $ 509
Accounts payable 16,857 20,656
Accrued liabilities 39,208 38,550
Total current liabilities 56,087 59,715
Long-term debt 91,529 93,914
Deferred credits and other liabilities 9,549 8,938
Stockholders' equity:
Common stock 320 320
Additional paid-in capital 76,646 76,440
Foreign currency translation adjustment (3,099) (2,607)
Retained earnings 146,122 142,270
Treasury stock (29,443) (29,983)
190,546 186,440
$ 347,711 $ 349,007
</TABLE>
*Condensed from audited financial statements.
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except number of shares and per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Net sales $ 119,020 $ 128,959
Cost of sales 91,639 98,606
Gross profit 27,381 30,353
General, selling and administrative expenses 17,132 19,611
Operating profit 10,249 10,742
Other income (expense):
Interest expense, net (1,180) (1,869)
Other income, net (77) (9)
(1,257) (1,878)
Income before income taxes and equity in income of joint ventures 8,992 8,864
Income taxes 3,385 3,191
5,607 5,673
Equity in income of joint ventures 130 66
Net income $ 5,737 $ 5,739
Weighted average common shares 26,908,499 26,790,025
Weighted average common and common
equivalent shares 27,429,410 27,010,240
Earnings per share
Basic $ .21 $ .21
Diluted $ .21 $ .21
Dividends declared per share $ .07 $ .06
</TABLE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
<S> <C> <C>
Net income $ 5,737 $ 5,739
Other comprehensive income:
Foreign currency translation adjustment (492) (941)
Comprehensive income $ 5,245 $ 4,798
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
Cash flow from operating activities:
<S> <C> <C>
Net income $ 5,737 $ 5,739
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, and amortization 8,333 9,184
Other 1,105 1,422
Decrease in current assets 506 10,840
Decrease in current liabilities (3,141) (5,513)
Net cash provided by operating activities 12,540 21,672
Cash flow from investing activities:
Acquisition of land, mineral reserves,
depreciable and intangible assets (6,173) (8,668)
Other (704) 1,783
Net cash used in investing activities (6,877) (6,885)
Cash flow from financing activities:
Net change in outstanding debt (2,872) (8,113)
Dividends paid (1,885) (1,605)
Treasury stock transactions 746 (1,543)
Net cash used in financing activities (4,011) (11,261)
Net increase in cash and cash equivalents 1,652 3,526
Cash and cash equivalents at beginning of period 3,815 2,758
Cash and cash equivalents at end of period $ 5,467 $ 6,284
Supplemental disclosure of cash flow information
Cash paid for:
Interest $ 1,616 $ 936
Income taxes $ 3,226 $ 4,192
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
Note 1: BASIS OF PRESENTATION
The financial information included herein, other than the condensed
consolidated balance sheet as of December 31, 1999, has been prepared by
management without audit by independent certified public accountants who do not
express an opinion thereon. The condensed consolidated balance sheet as of
December 31, 1999, has been derived from and does not include all the
disclosures contained in the audited consolidated financial statements for the
year ended December 31, 1999. The information furnished herein includes all
adjustments which are, in the opinion of management, necessary for a fair
statement of the results of the interim period, and all such adjustments are of
a normal recurring nature. Management recommends the accompanying condensed
consolidated financial information be read in conjunction with the consolidated
financial statements and related notes included in the Company's 1999 Form 10-K
which accompanies the 1999 Corporate Report.
The results of operations for the three-month period ended March 31, 2000,
are not necessarily indicative of the results to be expected for the full year.
Certain items in the 1999 consolidated financial statements have been
reclassified to comply with the consolidated financial statement presentation
for 2000.
Note 2: INVENTORIES
Inventories at March 31, 2000 have been valued using the same methods as at
December 31, 1999. The composition of inventories at March 31, 2000 and December
31, 1999, was as follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
<S> <C> <C>
Crude stockpile and in-process inventories $ 33,106 $ 24,998
Other raw material, container and supplies inventories 14,400 15,682
</TABLE>
Note 3: EARNINGS PER SHARE
Basic earnings per share were computed by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per share
were computed by dividing the net income by the weighted average common shares
outstanding after consideration of the dilutive effect of stock options
outstanding at the end of each period.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4: DERIVATIVES
From time to time, the Company uses financial derivatives, principally
swaps, forward contracts and options, in its management of foreign currency and
interest rate exposures. These contracts hedge transactions and balances for
periods consistent with committed exposures. As of March 31, 2000, derivatives
outstanding were related to foreign currency hedging and an interest rate swap
with a notional principal amount of $15 million.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying condensed
consolidated financial statements.
Three Months Ended March 31, 2000 vs. 1999
Net sales decreased by $9.9 million, or 7.7%, and gross profit and
operating profit decreased by $3.0 million, or 9.8%, and $.5 million, or 4.6%,
respectively. Net sales decreased in both the absorbent polymers and
environmental segments. Lower volumes and currency rate changes accounted for
much of the change in the absorbent polymers segment, whereas the decrease in
sales for the environmental segment was largely accounted for by divestitures
made later in 1999. Gross profit was lower primarily because of higher acrylic
acid costs in the absorbent polymers segment, coupled with lower sales volume in
that unit. General, selling and administrative expenses decreased by $2.5
million, or 12.6%, from the prior-year quarter. The decrease was across all
business segments, but approximately $1.7 million, or 69.7%, of the change was
related to lower expenses from the environmental segment as a result of the
restructuring activities in 1999. Net interest expense decreased by $.7 million,
or 36.9%. Capitalized interest in the 2000 quarter related to the completion of
the Thailand polymer plant accounted for $.3 million of the change, with the
balance being accounted for by lower average debt levels. Net income was
approximately $5.7 million in both the 1999 and 2000 quarters. Diluted earnings
per share were $.21 for both the 2000 and 1999 quarters, though weighted average
common and common equivalent shares outstanding increased by approximately 1.6%
in the 2000 quarter. A brief discussion by business segment follows:
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Quarter Ended March 31,
2000 1999 2000 vs. 1999
Absorbent Polymers (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 50,442 100.0% $ 58,324 100.0% $ (7,882) (13.5)%
Cost of sales 39,967 79.2% 44,609 76.5%
Gross profit 10,475 20.8% 13,715 23.5% (3,240) (23.6)%
General, selling and
administrative expenses 4,135 8.2% 4,188 7.2% (53) (1.3)%
Operating profit 6,340 12.6% 9,527 16.3% (3,187) (33.5)%
</TABLE>
Net sales decreased by $7.9 million, or 13.5%, from the prior-year period.
Lower volume accounted for approximately 50% of the change and currency rates
accounted for much of the balance. The gross profit margin was approximately
11.5% lower in the 2000 quarter as a result of the lower sales volume and higher
acrylic acid costs.
<TABLE>
<CAPTION>
Quarter Ended March 31,
2000 1999 2000 vs. 1999
Minerals (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 42,208 100.0% $ 39,609 100.0% $ 2,599 6.6%
Cost of sales 32,840 77.8% 30,953 78.2%
Gross profit 9,368 22.2% 8,656 21.8% 712 8.2%
General, selling and
administrative expenses 3,844 9.1% 4,644 11.7% (800) (17.2)%
Operating profit 5,524 13.1% 4,012 10.1% 1,512 37.7%
</TABLE>
Sales increased by $2.6 million, or 6.6%, from the prior-year period,
primarily as a result of higher export sales in the first quarter of 2000. Gross
profit margins improved 1.8% over the prior year.
<TABLE>
<CAPTION>
Quarter Ended March 31,
2000 1999 2000 vs. 1999
Environmental (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 18,435 100.0% $ 23,182 100.0% $(4,747) (20.5)%
Cost of sales 11,735 63.7% 16,078 69.4%
Gross profit 6,700 36.3% 7,104 30.6% (404) (5.7)%
General, selling and
administrative expenses 4,654 25.2% 6,382 27.5% (1,728) (27.1)%
Operating profit 2,046 11.1% 722 3.1% 1,324 183.4%
</TABLE>
Sales decreased by $4.7 million, or 20.5%, from the prior-year period.
Divestitures made later in 1999 accounted for much of the decrease in sales.
General, selling and administrative expenses decreased by 27.1%, primarily as a
result of the restructuring activities of 1999.
Historically, business in this segment accelerates during the second
quarter and peaks in the third quarter.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Quarter Ended March 31,
2000 1999 2000 vs. 1999
Transportation (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 7,935 100.0% $ 7,844 100.0% $ 91 1.2%
Cost of sales 7,097 89.4% 6,966 88.8%
Gross profit 838 10.6% 878 11.2% (40) (4.6)%
General, selling and
administrative expenses 515 6.5% 530 6.8% (15) (2.8)%
Operating profit 323 4.1% 348 4.4% (25) (7.2)%
</TABLE>
Net sales increased by 1.2%. Higher fuel costs were the primary cause for
the lower gross profit margin.
<TABLE>
<CAPTION>
Quarter Ended March 31,
2000 1999 2000 vs. 1999
Corporate (Dollars in Thousands) $ Change % Change
General, selling and
<S> <C> <C> <C> <C>
administrative expenses $ 3,984 $ 3,867 $117 3.0%
Operating loss (3,984) (3,867) (117) 3.0%
</TABLE>
Corporate costs include management information systems, human resources,
investor relations and corporate communications, corporate finance and corporate
governance costs. The start-up of the nanocomposite business is also included in
the corporate costs. The increase in corporate costs in 2000 is related to
increased expenditures for developing the nanocomposite technology.
Liquidity and Capital Resources
At March 31, 2000, the Company had outstanding debt of $91.6 million
(including both long-term and short-term debt) and cash and cash equivalents of
$5.5 million compared with $94.4 million in debt and $3.8 million in cash and
cash equivalents at December 31, 1999. The long-term debt represented 32.4% of
total capitalization at March 31, 2000, compared with 33.5% at December 31,
1999.
The Company had a current ratio of 2.96-to-1 at March 31, 2000, with
approximately $109.7 million in working capital compared with 2.76-to-1 and
$105.1 million, respectively, at December 31, 1999. The change in working
capital included an increase in inventories of $6.8 million, primarily related
to the absorbent polymers segment, and a reduction in current liabilities of
$3.6 million, offset by a reduction in accounts receivable of $8.1 million. The
balance of the increase came from increased cash balances and higher prepaid
expenses.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
During the first quarter of 2000, the Company paid dividends of $1.9
million and acquired property, plant and equipment totaling $6.2 million.
The Company has entered into a definitive agreement to sell its
superabsorbent polymer business to BASF AG. Completion of the transaction is
subject to the mechanical completion of the polymer plant in Thailand, approval
by regulatory authorities in the United States, United Kingdom and Germany and
approval by the Company's shareholders. German regulatory approval has been
obtained. The Company and BASF are responding to questions raised by the U.S.
Federal Trade Commission in response to their respective Hart Scott Rodino
filings. The Company currently intends to seek shareholder approval of the
transaction in the second quarter. If all approvals are obtained, the Company
currently intends to distribute substantially all of the net proceeds to its
shareholders.
The Company had approximately $63.7 million in unused, committed credit
lines with its five bank lending consortium at March 31, 2000. The Company has
negotiated a continuation of the credit line at the same level with new
covenants to reflect the impact of the absorbent polymers transaction. The
revisions to the credit agreement will occur when the transaction is completed.
It is also anticipated that as a result of the absorbent polymers transaction,
the Company will be required to repay $25 million of long-term debt from a
private placement. Management anticipates that this loan will be repaid from the
transaction proceeds. Management believes that the credit facilities with the
banks, in conjunction with funds generated from operations, are adequate to fund
the capital expenditure program approved by the board of directors at this time.
Forward-Looking Statements
Certain statements made from time-to-time by the Company, including
statements in the Management's Discussion and Analysis section above, constitute
"forward-looking statements" made in reliance upon the safe harbor contained in
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include statements relating to the Company or its
operations that are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions, and statements relating to
anticipated growth, levels of capital expenditures, future dividends, expansion
into global markets and the development of new products. Such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties. The Company's actual results, performance or achievements could
differ materially from the results, performance or achievements expressed in, or
implied by, these forward-looking statements as a result of various factors,
including, but not limited to the actual growth in AMCOL's various markets,
utilization of AMCOL's plants, customer concentration in the absorbent polymers
segment, competition in our business segments, operating costs, raw material
prices, weather, currency exchange rates, currency devaluations, delays in
development, production and marketing of new products, integration of acquired
businesses, and other factors detailed from time-to-time in AMCOL's annual
report and other reports filed with the Securities and Exchange Commission.
<PAGE>
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) See Index to Exhibits immediately following the signature page.
(b) No reports on Form 8-K have been filed during the quarter ended
March 31, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMCOL INTERNATIONAL CORPORATION
Date: April 24, 2000 /s/ Lawrence E. Washow
Lawrence E. Washow
President and Chief Operating Officer
Date: April 24, 2000 /s/ Paul G. Shelton
Paul G. Shelton
Senior Vice President and Chief Financial Officer
and Principal Accounting Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
3.1 Restated Certificate of Incorporation of the Company (5), as amended (10),
as amended (16)
3.2 Bylaws of the Company (10)
4 Article Four of the Company's Restated Certificate of Incorporation (5), as
amended (16)
10.1 AMCOL International Corporation 1983 Incentive Stock Option Plan (1); as
amended (3)
10.3 Lease Agreement for office space dated September 29, 1986, between the
Company and American National Bank and Trust Company of Chicago; (1) First
Amendment dated June 2, 1994 (8); Second Amendment dated June 2, 1997 (13)
10.4 AMCOL International Corporation 1987 Non-Qualified Stock Option Plan (2);
as amended (6)
10.7 Change in Control Agreement dated February 16, 1998, by and between
Registrant and Lawrence E. Washow (14)
10.8 Change in Control Agreement dated April 1, 1997, by and between Registrant
and Peter L. Maul (12)
10.9 AMCOL International Corporation Dividend Reinvestment and Stock Purchase
Plan (4); as amended (6)
10.10AMCOL International Corporation 1993 Stock Plan, as amended and restated
(10)
10.11Credit Agreement by and among AMCOL International Corporation and Harris
Trust and Savings Bank, individually and as agent, NBD Bank, LaSalle
National Bank and the Northern Trust Company dated October 4, 1994, (7); as
amended, First Amendment to Credit Agreement dated September 25, 1995 (9),
as amended, Second Amendment to Credit Agreement dated March 28, 1996,
Third Amendment to Credit Agreement dated September 12, 1996 (11) and
Fourth Amendment to Credit Agreement dated December 15, 1998 (18).
10.12Note Agreement dated October 1, 1994, between AMCOL International
Corporation and Principal Mutual Life Insurance Company, (7); as amended,
First Amendment of Note Agreement dated September 30, 1996 (11); Second
Amendment of Note Agreement dated December 15, 1998 (18).
10.13Change in Control Agreement dated August 21, 1996 by and between
Registrant and Frank B. Wright, Jr.
10.14Change in Control Agreement dated February 17, 1998 by and between
Registrant and Gary L. Castagna (14)
10.15 AMCOL International Corporation 1998 Long-Term Incentive Plan (15)
10.16Change in Control Agreement dated February 4, 1999 by and between
Registrant and Ryan F. McKendrick (17)
10.17Asset and Stock Purchase Agreement dated November 22, 1999 by and between
the Company and BASF Aktiengesellschaft (19)
10.18Change in Control Agreement dated March 31, 2000 by and between Registrant
and Frank B. Wright, Jr.
10.19Change in Control Agreement dated April 1, 2000, by and between Registrant
and Paul G. Shelton
27 Financial Data Schedule
(1) Exhibit is incorporated by reference to the Registrant's Form 10 filed with
the Securities and Exchange Commission on July 27, 1987.
(2) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1988.
(3) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1993.
(4) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1992.
(5) Exhibit is incorporated by reference to the Registrant's Form S-3 filed
with the Securities and Exchange Commission on September 15, 1993.
(6) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1993.
(7) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission for the quarter ended September
30, 1994.
(8) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1994.
(9) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission for the quarter ended September
30, 1995.
(10) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1995.
(11) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1996.
<PAGE>
(12) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission for the quarter ended March 31,
1997.
(13) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission for the quarter ended June 30,
1997.
(14) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1997.
(15) Exhibit is incorporated by reference to the Registrant's Form S-8 (File
333-56017) filed with the Securities and Exchange Commission on June 4,
1998.
(16) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission for the quarter ended June 30,
1998.
(17) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1998.
(18) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed
with the Securities and Exchange Commission for the quarter ended September
30, 1999.
(19) Exhibit is incorporated by reference to the Registrant's Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1999.
AGREEMENT
This Agreement (the "Agreement") is entered into on March 31, 2000,
effective as of December 1, 1999 between AMCOL International Corporation (the
"Company") and Frank B. Wright, Jr. ("Employee").
WHEREAS, 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, Employee is considered a key management employee, currently
serving as Vice President of the Company and President of its Volclay
International Corporation subsidiary; and
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 as of
December 1, 1999. 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 twenty-four (24) months after said Change
in Control subject to the terms and conditions stated herein.
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 in Section 12 below 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 Vice President of the Company and such other titles as he may
have as of the Change in Control. Employee further agrees to devote his entire
working time and attention to the business of the Company and its subsidiaries
and use his best efforts to promote such business.
4. Compensation Prior to 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 set by 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.
<PAGE>
5. Termination of Employment Prior to a Change of 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 able 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 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 (6) month period other than by
death or operation of law, or the sale of ninety percent (90%) or more of the
Company's assets within a six (6) month period.
(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 Sections 9(a) and 12 below 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
(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 and
obligations under Section 12 below.
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 ten (10) days of the occurrence thereof:
(i) the assignment to Employee of any duties of substantially lesser
status, dignity and character than the duties as a Vice President of
the Company immediately prior to the effective date of the Change in
Control;
<PAGE>
(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 35
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 35 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
(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.
(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 obligations under Section 12 below.
(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 twenty percent (20%) of the common stock or an officially
designated representative of the Board of Directors with a third party that
results within one hundred eighty (180) days in a Change in Control shall
(unless such termination is for 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.
<PAGE>
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:
AMCOL International Corporation
One North Arlington
1500 West Shure Drive
Arlington Heights, Illinois 60004
Attention: Chief Executive Officer
Mr. Frank B. Wright, Jr.
AMCOL International Corporation
One North Arlington
1500 West Shure Drive
Arlington Heights, Illinois 60004
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 Section 12(a)
below, if Employee is terminated during the twenty-four (24) 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 payable to him by the Company:
(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 of his employment is terminated for a period of twenty-four
(24) months thereafter; and
<PAGE>
(iii) one dollar less than two times his base period compensation.
The foregoing payments and benefits shall be deemed compensation
payable for the duties to be performed by Employee pursuant to Section 12
below. 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 (5) 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). The sum payable
to Employee pursuant to Section 9(b)(iii) shall in any and all cases be
reduced by any compensation which Employee receives, excluding stock option
or other stock incentive bonus plan compensation from the date of the
Change in Control until the termination date. 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), 402(h)( 1 )(B) (elective
contributions to simplified employee pensions), 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 two (2) annual
installments commencing thirty (30) days after the sums become due. 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, however, the amount of any payment or benefit provided for in
this Section 9(b) shall be reduced by no more than 50% by any compensation
earned by Employee as a result of employment by another employer and 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 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.
<PAGE>
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; or
(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.
11. Dispute. Any dispute arising under this Agreement (except Section 12)
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. Non-Competition, Non-Solicitation, and Confidentiality.
(a) In consideration of this Agreement and other good and valuable
consideration, Employee agrees that for so long as he is employed by the Company
and for twelve (12) months thereafter he shall not own manage, operate, control,
be employed by or otherwise engage in any competitive business. Employee's
agreement pursuant to the preceding sentence shall be in addition to any other
agreement or legal obligation he may have with or to the Company. For purposes
of the preceding sentence, a "competitive business" is any business engaged in
the production, refinement or sale of Bentonite and/or any business conducted by
the Company, its affiliates or any subsidiaries thereof as of the date
Employee's employment is terminated. A business which is conducted by the
Company, its affiliates or any subsidiaries which is subsequently sold by the
Company is not a competitive business as of the date such business is sold. An
"affiliate" of the Company' is any company which either controls, is controlled
by or is under common control with the Company. The phrase "any business
conducted by the Company, its affiliates, joint ventures or any subsidiaries
thereof' includes not only current businesses but also any new products, product
lines or use of processes under development, consideration or investigation on
the date Employee's employment with the Company is terminated.
Employee also agrees that during the twelve (12) month period described in
the first sentence of this Section 12(a) he will not directly or indirectly, on
behalf of himself or any other person or entity, make a solicitation or conduct
business, with any customer or potential customer of the Company with which he
had contact while employed by the Company, its affiliates and/or any
subsidiaries thereof, with respect to any products or services which are
competitive with any business conducted by the Company, its affiliates or any
subsidiaries thereof. For purposes of the preceding sentence, a "customer" is
any person or entity that has purchased goods or services from the Company, its
affiliates or any subsidiaries thereof within the twelve (12) month period
ending on the date Employee's employment is terminated. A "potential customer"
is any person or entity that the Company
<PAGE>
solicited for business within twelve (12) months prior to the date Employee's
employment with the Company is terminated.
The Company and Employee recognize that his responsibilities have included
product development, sales and marketing of bentonite clay, fuller's earth,
nanocomposites and related products to various markets including without
limitation the foundry, agricultural, plastic and well drilling industries and
establishing contacts and business relationships on behalf of the Company in the
domestic and international markets. Employee's contacts on behalf of the Company
represent substantial assets of the Company which are entitled to protection. In
recognition of this situation, the covenants set forth in this Section 12 shall
apply to competitive businesses and solicitation in the United States,
Australia, Japan, China, India, Thailand, Egypt, Canada, Mexico and those other
countries of Europe, North America, South America and Asia in which the Company,
its affiliates, joint ventures and subsidiaries are located or have conducted
$100,000 or more of business during the twelve (12) month period ending on the
date Employee's employment with the Company terminated.
Before and forever after his termination or resignation, Employee shall
keep confidential and refrain from utilizing or disseminating any confidential,
proprietary or trade secret information of the Company for any purpose other
than furthering the business interests of the Company.
(b) During Employee's employment hereunder and during one (1) year
following his resignation or the termination of his employment hereunder for any
reason, Employee will not induce or attempt to influence any present or future
employee of the Company, its affiliates or any subsidiaries thereof to leave its
employ.
(c) In consideration of the covenant not to compete the Company will pay
one/twelfth (1/12) of Employee's annual base salary each month for a total of
twelve (12) months. The Company may at its sole discretion for any reason
whatsoever not make these payments if it so elects and the covenant not to
compete will end at the end of the month in which the Company elects to cease
payment.
13. 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.
14. 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.
<PAGE>
15. Injunction. The remedy at law for any breach of Section 12 will be
inadequate and the Company, its affiliates and any subsidiaries thereof would
suffer continuing and irreparable injury to their business as a direct result of
any such breach. Accordingly, notwithstanding anything stated herein, if
Employee shall breach or fail to perform any term, condition or duty contained
in Section 12 hereof, then, in such event, the Company shall be entitled to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to obtain the specific performance thereof by
Employee or to seek a temporary restraining order or injunctive relief, without
any' requirement to show actual damages or post bond, to restrict Employee from
violating the provisions of Section 12; however, nothing herein shall be
construed to prevent the Company' seeking such other remedy in the courts, in
case of any breach of this Agreement by Employee, as the Company may elect or
invoke. If court proceedings are instituted by the Company to enforce Section 12
hereof, and the Company is the prevailing party, the Company shall receive, in
addition to any damages awarded, reasonable attorneys' fees, court costs and
ancillary expenses.
16. 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 ten (10) 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.
17. Severability. The parties hereto intend this Agreement to be enforced
to the maximum extent permitted by law. In the event any provision of this
Agreement is deemed to be invalid or unenforceable by any court of competent
jurisdiction, such provisions shall be deemed to be restricted in scope or
otherwise modified to the extent necessary to render the same valid and
enforceable. In the event the provisions of Section 12 cannot be modified or
restricted so as to be valid and enforceable, then the same as well as the
Company's obligation to make any payment or transfer any benefit to Employee in
connection with any termination of Employee's employment shall be deemed excised
from this Agreement, and this Agreement shall be construed and enforced as if
such provisions had originally been incorporated herein as so restricted or
modified or as if such provisions had not originally been contained herein, as
the case may be. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall remain in full force and effect.
18. Survival. The obligations of the parties under this Agreement shall
survive the term of this Agreement.
<PAGE>
19. Term of Agreement. The term of this Agreement shall commence on
December 1, 1999 and end on December 1, 2002; 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 in Section 12 hereof (all of which duties and obligations
shall specifically survive the termination of the Employee's employment). To the
extent necessary for the Company's enforcement of the provisions of Section 12
above (but only for such purpose), Employee's employment term shall be deemed to
continue through the end of the Agreement term.
EMPLOYEE AMCOL INTERNATIONAL CORPORATION
/s/ Frank B. Wright By: /s/ Larry Washow
Frank B. Wright Its: President
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 and Chief Financial Officer
of the Company.
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.
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 in Section 12 below 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 and Chief Financial Officer of the
Company. Employee further agrees to devote his entire working time and attention
to the business of the Company and its subsidiaries and use his best efforts to
promote such business.
4. Compensation Prior to 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 set by 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 of 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 able 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.
<PAGE>
6. Termination of Employment On or After 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 assets within a six-month period.
(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 Sections 9(a) and 12 below 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
(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 and obligations under Section 12 below.
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 ten (10) days of the occurrence thereof:
(i) the assignment to Employee of any duties of substantially lesser
status, dignity and character than the duties as a Senior Vice
President and Chief Financial Officer of the Company immediately
prior to the effective date of the Change in Control;
<PAGE>
(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
35 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 35 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
(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.
(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 obligations under Section 12
below.
(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 cause or wholly unrelated to
<PAGE>
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:
AMCOL International Corporation
One North Arlington
1500 West Shure Drive
Arlington Heights, IL 60004
Attn: Chief Executive Officer
Mr. Paul G. Shelton
AMCOL International Corporation
One North Arlington
1500 West Shure Drive
Arlington Heights, IL 60004
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 Section
12(a) below, 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 payable to him by the Company:
(i) all then accrued pay, benefits, executive compensation and fringe
benefits, including (but not limited to) pro rata bonus and
incentive plan earnings;
<PAGE>
(ii) medical, health and disability benefits which are substantially
similar to the benefits the Company is providing him as of the
date of his employment is terminated for a period of thirty-six
(36) months thereafter; and
(iii) one dollar less than three times his base period compensation.
The foregoing payments and benefits shall be deemed compensation
payable for the duties to be performed by Employee pursuant to Section 12
below. 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). The sum payable
to Employee pursuant to Section 9(b)(iii) shall in any and all cases be
reduced by any compensation which Employee receives, excluding stock option
or other stock incentive bonus plan compensation from the date of the
Change in Control until the termination date. 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), 402(h)(1 )(B) (elective
contributions to simplified employee pensions), 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 two (2) annual
installments commencing thirty (30) days after the sums become due. 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, however, the amount of any payment or benefit provided for in
this Section 9(b) shall be reduced by no more than 50% by any compensation
earned by Employee as a result of employment by another employer and 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.
<PAGE>
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 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; or
(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.
11. Dispute. Any dispute arising under this Agreement (except Section 12)
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. Non-Competition, Non-Solicitation, and Confidentiality
(a) In consideration of this Agreement and other good and valuable
consideration, Employee agrees that for so long as he is employed by the
Company and for thirty-six (36) months thereafter he shall not own manage,
operate, control, be employed by or otherwise engage in any competitive
business. Employee's agreement pursuant to the preceding sentence shall be
in addition to any other agreement or legal obligation he may have with or
to the Company. For purposes of the preceding sentence, a "competitive
business" is any business engaged in the production, refinement or sale of
Bentonite and/or any business conducted by the Company, its affiliates or
any subsidiaries thereof as of the date Employee's employment is
terminated. A business
<PAGE>
which is conducted by the Company, its affiliates or any subsidiaries which
is subsequently sold by the Company is not a competitive business as of the
date such business is sold. An "affiliate" of the Company' is any company
which either controls, is controlled by or is under common control with the
Company. The phrase "any business conducted by the Company, its affiliates,
joint ventures or any subsidiaries thereof' includes not only current
businesses but also any new products, product lines or use of processes
under development, consideration or investigation on the date Employee's
employment with the Company is terminated.
Employee also agrees that during the thirty-six (36) month period
described in the first sentence of this Section 12(a) he will not directly
or indirectly, on behalf of himself or any other person or entity, make a
solicitation or conduct business, with any customer or potential customer
of the Company with which he had contact while employed by the Company, its
affiliates and/or any subsidiaries thereof, with respect to any products or
services which are competitive with any business conducted by the Company,
its affiliates or any subsidiaries thereof. For purposes of the preceding
sentence, a "customer" is any person or entity that has purchased goods or
services from the Company, its affiliates or any subsidiaries thereof
within the twenty-four (24) month period ending on the date Employee's
employment is terminated. A "potential customer" is any person or entity
that the Company solicited for business within twelve (12) months prior to
the date Employee's employment with the Company is terminated.
The Company and Employee recognize that his responsibilities have
included product development, sales and marketing of bentonite clay,
fuller's earth, nanocomposites and related products to various markets
including without limitation the foundry, agricultural, plastic and well
drilling industries and establishing contacts and business relationships on
behalf of the Company in the domestic and international markets. Employee's
contacts on behalf of the Company represent substantial assets of the
Company which are entitled to protection. In recognition of this situation,
the covenants set forth in this Section 12 shall apply to competitive
businesses and solicitation in the United States, Australia, Japan, China,
India, Thailand, Egypt, Canada, Mexico and those other countries of Europe,
North America, South America and Asia in which the Company, its affiliates,
joint ventures and subsidiaries are located or have conducted $500,000 or
more of business during the twelve-month period ending on the date
Employee's employment with the Company terminated.
(i) the United States,
(ii) the United Kingdom,
(iii) Germany,
(iv) Japan, and
(v) Canada.
<PAGE>
Before and forever after his termination or resignation, Employee
shall keep confidential and refrain from utilizing or disseminating any
confidential, proprietary or trade secret information of the Company for
any purpose other than furthering the business interests of the Company.
(b) During Employee's employment hereunder and during three (3) year
following his resignation or the termination of his employment hereunder
for any reason, Employee will not induce or attempt to influence any
present or future employee of the Company, its affiliates or any
subsidiaries thereof to leave its employ.
13. 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.
14. 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.
15. Injunction. The remedy at law for any breach of Section 12 will be
inadequate and the Company, its affiliates and any subsidiaries thereof would
suffer continuing and irreparable injury to their business as a direct result of
any such breach. Accordingly, notwithstanding anything stated herein, if
Employee shall breach or fail to perform any term, condition or duty contained
in Section 12 hereof, then, in such event, the Company shall be entitled to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to obtain the specific performance thereof by
Employee or to seek a temporary restraining order or injunctive relief, without
any' requirement to show actual damages or post bond, to restrict Employee from
violating the provisions of Section 12; however, nothing herein shall be
construed to prevent the Company' seeking such other remedy in the courts, in
case of any breach of this Agreement by Employee, as the Company may elect or
invoke. If court proceedings are instituted by the Company to enforce Section 12
hereof, and the Company is the prevailing party, the Company shall receive, in
addition to any damages awarded, reasonable attorneys' fees, court costs and
ancillary expenses.
16. 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 ten (10) 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
<PAGE>
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.
17. Severability. The parties hereto intend this Agreement to be enforced
to the maximum extent permitted by law. In the event any provision of this
Agreement is deemed to be invalid or unenforceable by any court of competent
jurisdiction, such provisions shall be deemed to be restricted in scope or
otherwise modified to the extent necessary to render the same valid and
enforceable. In the event the provisions of Section 12 cannot be modified or
restricted so as to be valid and enforceable, then the same as well as the
Company's obligation to make any payment or transfer any benefit to Employee in
connection with any termination of Employee's employment shall be deemed excised
from this Agreement, and this Agreement shall be construed and enforced as if
such provisions had originally been incorporated herein as so restricted or
modified or as if such provisions had not originally been contained herein, as
the case may be. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall remain in full force and effect.
18. Survival. The obligations of the parties under this Agreement shall
survive the term of this Agreement.
19. Term of Agreement. The term of this Agreement shall commence on
April 1, 2000 and end on March 31, 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 in Section 12 hereof (all of which duties and obligations
shall specifically survive the termination of the Employee's employment). To the
extent necessary for the Company's enforcement of the provisions of Section 12
above (but only for such purpose), Employee's employment term shall be deemed to
continue through the end of the Agreement term.
Date: April 1, 2000
EMPLOYEE AMCOL INTERNATIONAL CORPORATION
/s/ Paul G. Shelton By /s/ Larry Washow
Paul G. Shelton Its: President
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