-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SwiRoH/15AxbMVFPuv6YhaAanKbubT4mqwAYl295R2r7g1EJ8n6djR2FTtS+iVeh YSCeRoB7skghYwp4mo9Upg== 0000813621-00-000005.txt : 20000425 0000813621-00-000005.hdr.sgml : 20000425 ACCESSION NUMBER: 0000813621-00-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMCOL INTERNATIONAL CORP CENTRAL INDEX KEY: 0000813621 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 360724340 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14447 FILM NUMBER: 607266 BUSINESS ADDRESS: STREET 1: 1500 W SHURE DR STREET 2: ONE N ARLINGTON CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 BUSINESS PHONE: 8473948730 MAIL ADDRESS: STREET 1: 1500 W SHURE DR STREET 2: 1500 W SHURE DR SUITE 500 CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN COLLOID CO DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q 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)
Delaware 36-0724340 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
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 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 Part I - FINANCIAL INFORMATION AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) ASSETS
March 31, December 31, 2000 1999 Current assets: * 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
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: 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
*Condensed from audited financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except number of shares and per share data)
Three Months Ended March 31, 2000 1999 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
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (In thousands)
Three Months Ended March 31, 2000 1999 Net income $ 5,737 $ 5,739 Other comprehensive income: Foreign currency translation adjustment (492) (941) Comprehensive income $ 5,245 $ 4,798
The accompanying notes are an integral part of these condensed consolidated financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended March 31, 2000 1999 Cash flow from operating activities: 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
The accompanying notes are an integral part of these condensed consolidated financial statements. 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:
March 31, 2000 December 31, 1999 Crude stockpile and in-process inventories $ 33,106 $ 24,998 Other raw material, container and supplies inventories 14,400 15,682
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. 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. 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: AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Quarter Ended March 31, 2000 1999 2000 vs. 1999 Absorbent Polymers (Dollars in Thousands) $ Change % Change 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)%
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.
Quarter Ended March 31, 2000 1999 2000 vs. 1999 Minerals (Dollars in Thousands) $ Change % Change 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%
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.
Quarter Ended March 31, 2000 1999 2000 vs. 1999 Environmental (Dollars in Thousands) $ Change % Change 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%
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. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Quarter Ended March 31, 2000 1999 2000 vs. 1999 Transportation (Dollars in Thousands) $ Change % Change 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)%
Net sales increased by 1.2%. Higher fuel costs were the primary cause for the lower gross profit margin.
Quarter Ended March 31, 2000 1999 2000 vs. 1999 Corporate (Dollars in Thousands) $ Change % Change General, selling and administrative expenses $ 3,984 $ 3,867 $117 3.0% Operating loss (3,984) (3,867) (117) 3.0%
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. 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. 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. 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 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. (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. EX-10.18 2 MATERIAL CONTRACTS 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. 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; (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. 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 (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. 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 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. 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. 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 EX-10 3 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 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. 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; (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 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; (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. 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 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. 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 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 EX-27 4 FDS
5 0000813621 AMCOL International Corporation 1,000 USD 3-MOS DEC-31-2000 JAN-1-2000 MAR-31-2000 1.00 5,467 0 103,195 4,499 47,506 165,832 353,106 184,225 347,771 56,087 0 0 0 320 0 347,711 119,020 119,020 91,639 108,771 77 0 1,180 8,992 3,385 5,737 0 0 0 5,737 .21 .21
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