EXHIBIT 10.17
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, Ryan F. McKendrick ("Employee") is considered a key management
employee, currently serving as Vice President of the Company; 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 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
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.
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 a Change in Control.
Prior to a Change in Control the Company agrees to pay Employee
compensation for his services in an amount, and to provide him with life
insurance, disability, health and other benefits, at least equal to that which
he presently receives, only with such changes as shall be agreed upon between
Employee and the Company. 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 lesser status, dignity and
character than his duties immediately prior to the effective date of
the Change in Control or a substantial reduction in the nature or
status of his responsibilities from those in effect immediately prior
to the effective date of the Change in Control;
(ii) a post-Change in Control reduction by the Company in Employee's annual
base salary or bonus or incentive plan (as in effect immediately prior
to the effective date of the Change in Control);
(iii)relocation of Employee's office to a location which is more than 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 Ryan F. McKendrick
One North Arlington Vice-President
1500 West Shure Drive AMCOL International Corporation
Arlington Heights, IL 60004 One North Arlington
ATTN: Chairman of the Board 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 (12) 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
there-after; 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 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 from the Company
from the date of the Change in Control until the termination date, excluding any
non-qualified deferred compensation, stock option compensation or other stock
incentive bonus
plan compensation so received. 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 three (3) annual
installments commencing thirty (30) days after the sums become due. If on or
after the date any payment becomes due hereunder the Company at any time has a
funded debt-to-total capitalization ratio which equals or exceeds 1:1, upon
Employee's written request, the Company shall secure its payment of the
remaining annual installments with a letter of credit or other security
instrument as shall be reasonably acceptable to Employee. Such letter of credit
or other security instrument shall provide Employee with the ability to receive
the remaining installment(s) only if his payment is delinquent. All sums due
hereunder 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
buyouts.
11. Disputes.
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 twenty-four (24) 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 or similar minerals,
absorbent polymers 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 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 twenty-four (24) 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
contacts with, and analysis of, customers and potential customers throughout the
United States and certain foreign countries, in addition to certain operational
matters. Employee's contacts on behalf of the Company represent a substantial
asset of the Company which are entitled to protection. In recognition of this
situation, the covenants set forth in this Section 12 shall apply to competition
and solicitation in the United States, United Kingdom, Germany, Japan, Canada,
Thailand, and those countries in which the Company, its affiliates and/or the
subsidiaries thereof has (have) conducted $200,000 or more of the business
during the 12-month period ending on the date Employee's employment with the
Company is 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 two (2) years
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, 1998 and end on March
31, 2001. 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: February 4, 1999
Employee AMCOL International Corporation
By: /s/ Ryan F. McKendrick By: /s/ John Hughes
Name: Ryan F. McKendrick Name: John Hughes
Title: Chairman and CEO