EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (the
“Agreement”) is effective as of March 25, 2009 (the
“Effective Date”), by and between AMCOL International
Corporation, a Delaware corporation (the “Company”),
and Gary L. Castagna (“Executive”).
The Board of Directors of the Company (the
“Board”), has determined that it is in the best
interests of the Company and its stockholders to assure that the
Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined herein). The Board believes it is
imperative to diminish the inevitable distraction of the Executive
by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the Company in
the event of any threatened or pending Change of Control, and to
provide the Executive with compensation and benefits arrangements
upon a Change of Control that ensure that the compensation and
benefits expectations of the Executive will be satisfied and that
provide the Executive with compensation and benefits arrangements
that are competitive with those of other corporations. In addition,
the Board believes it is necessary to provide a severance package
that assures that the Company is able to attract and retain the
highest quality executive talent and to ensure that the
post-employment non-compete and non-solicitation restrictions are
enforceable. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS
FOLLOWS:
Article I —
DEFINITIONS
The terms set forth below have the following
meanings:
1.1 “Accrued
Annual Bonus” means the amount of any Annual Bonus earned but
not yet paid with respect to any fiscal year ended prior to the
Date of Termination.
1.2 “Accrued
Base Salary” means the amount of Executive’s Base
Salary which is accrued but not yet paid as of the Date of
Termination.
1.3 “Affiliate”
means any Person that directly or indirectly controls, is
controlled by, or is under common control with, the applicable
Person. For the purposes of this definition, the term
“control” when used with respect to any Person means
the power to direct or cause the direction of management or
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or
otherwise.
1.4 “Anniversary
Date” means any annual anniversary of the Effective
Date.
1.5 “Annual
Bonus” - see Section 4.2.
1.6 “Beneficial
Owner” means such term as defined in Rule 13d-3 (or any
successor rule) under the Exchange Act.
1.7 “Cause”
means any of the following:
(a) Executive’s
commission of a felony or misdemeanor that involves fraud,
dishonesty or moral turpitude,
(b) Executive’s
willful or intentional material breach of this Agreement, or any
material breach of this Agreement that is not corrected within
thirty (30) days of notice from the Company,
(c) willful
or intentional material misconduct by Executive in the performance
of his duties under this Agreement,
(d) Executive
performs his duties in a manner that is grossly negligent,
or
(e) Executive
fails to cooperate in any governmental investigations or
proceedings.
For purposes of
clauses (b), (c), (d) and (e) of the preceding sentence, Cause
shall not include bad judgment or negligence which results from the
Executive’s good faith efforts to perform his
duties.
1.8 “Change
of Control” means the occurrence of any one or more of the
following:
(a) any
person (as such term is used in Rule 13d-5 under the Exchange Act)
or group (as such term is defined in Section 3(a)(9) and 13(d)(3)
of the Exchange Act), other than a Subsidiary, any employee benefit
plan (or any related trust) of the Company or any of its
Subsidiaries or any Excluded Person, becomes the Beneficial Owner
of 50.1% or more of the outstanding common stock of the Company or
of Voting Securities representing 50.1% or more of the combined
voting power of the then outstanding voting securities of the
Company (such a person or group, a “Majority Owner”),
except that (i) no Change of Control shall be deemed to have
occurred solely by reason of such beneficial ownership by a
corporation with respect to which both more than 49.9% of the
common stock of such corporation and Voting Securities representing
more than 49.9% of the aggregate voting power of such corporation
are then owned, directly or indirectly, by the persons who were the
direct or indirect owners of the common stock and Voting Securities
of the Company immediately before such acquisition in substantially
the same proportions as their ownership, immediately before such
acquisition, of the common stock and Voting Securities of the
Company, as the case may be and (ii) such corporation shall not be
deemed a Majority Owner; or
(b) the
Incumbent Directors (determined using the Effective Date as the
baseline date) cease for any reason to constitute at least one-half
of the directors of the Company then serving; or
(c) the
consummation by the Company of a merger, reorganization,
consolidation, or similar transaction, or sale or other disposition
of 50.1% of the consolidated assets of the Company (any of the
foregoing transactions, a “Reorganization Transaction”)
which is not an Exempt Reorganization Transaction.
Notwithstanding
the occurrence of any of the foregoing events, a Change of Control
shall not occur with respect to Executive if, in advance of such
event, the Executive agrees in writing that such event shall not
constitute a Change of Control.
1.9 “Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
1.10 “Compensation
Committee” means the Compensation Committee of the Board of
Directors of the Company.
1.11 “Conflicting
Organization” means any person or entity which is engaged in
or about to become engaged in, research, development, production,
manufacturing, importation, marketing, licensing, selling, or
servicing of a Conflicting Product.
1.12 “Conflicting
Product” means any product, process, system or service of any
person or organization other than the Company or an Affiliate, in
existence or under development, which is the same as or similar to
or competes with a product, process, system or service upon which
Executive works or has worked during the three year period ending
on his Date of Termination, or about which Executive acquired or
acquires Confidential Information.
1.13 “Date
of Termination” means the date of the receipt of the Notice
of Termination by Executive (if such Notice is given by the
Company) or by the Company (if such Notice is given by Executive),
or any later date, not more than 15 days after the giving of such
Notice, specified in such notice; provided, however,
that:
(a) if
Executive’s employment is terminated by reason of death, the
Date of Termination shall be the date of Executive’s death;
and
(b) if
Executive’s employment is terminated by reason of Disability,
the Date of Termination shall be the 30th day after
Executive’s receipt of the physician’s certification of
Disability, unless, before such date, Executive shall have resumed
the full-time performance of Executive’s duties;
and
(c) if
Executive terminates his employment without Good Reason, the Date
of Termination shall be determined by the Company, provided that it
will not be later than the 90th day after the giving of such
Notice; and
(d) if
no Notice of Termination is given, the Date of Termination shall be
the last date on which Executive is employed by the
Company.
1.14 “Disability”
means (i) the Executive has a physical or mental condition which
renders Executive unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, or (ii) by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12
months, the Executive is receiving income replacement benefits for
a period of not less than three months under an accident and health
plan covering the Executive that is sponsored by the
Company.
1.15 “Employment
Period” - see Section 3.1.
1.16 “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
1.17 “Excluded
Person” means any of the Paul Bechtner Trust, Everett P.
Weaver, any Named Executive, any Affiliates or Family Member of any
of the foregoing and any group (as such term is defined in Section
3(a)(9) and 13(d)(3) of the Exchange Act) of which any of the
foregoing is a member.
1.18 “Executive
Termination” means a Termination of Employment by Executive
for any reason including Good Reason or no reason during the 30-day
period commencing twelve months after a Change of
Control.
1.19 “Exempt
Reorganization Transaction” means a Reorganization
Transaction which results (i) in the Persons who were the direct or
indirect owners of the outstanding common stock and Voting
Securities of the Company immediately before such Reorganization
Transaction becoming, immediately after the consummation of such
Reorganization Transaction, the direct or indirect owners of both
more than 49.9% of the then-outstanding common stock of the
Surviving Corporation and Voting Securities representing more than
49.9% of the aggregate voting power of the Surviving Corporation,
in substantially the same respective proportions as such
Persons’ ownership of the common stock and Voting Securities
of the Company immediately before such Reorganization Transaction;
(ii) in the Excluded Person owning 50% or more of the common stock
of the Surviving Corporation or Voting Securities representing 50%
or more of the combined voting power of the Surviving Corporation;
or (iii) from a transaction of any kind (including, without
limitation, a merger, reorganization, consolidation or similar
transaction or a plan or agreement for sale or other disposition of
assets of the Company or a plan of liquidation of the Company)
pursuant to the Bankruptcy Code of Title 11 of the United States
Code, as amended from time to time, or any similar or successor
statute, domestic or foreign.
1.20 “Family
Member” means, with respect to the applicable Person, a
spouse, ancestor, lineal descendant, or spouse of a lineal
descendant, including without limitation descendants by
adoption.
1.21 “Good
Reason” means the occurrence of any one of the following
events unless Executive specifically agrees in writing that such
event shall not be Good Reason:
(a) any
material breach of the Agreement by the Company, including without
limitation, Section 2.1, provided, however, that no breach of this
Agreement shall constitute Good Reason unless Executive gives the
Company written notice of such breach and the Company fails to cure
such breach within 30 days;
(b) the
failure of either the Company to assign this Agreement to a
successor of the Company or failure of a successor of the Company
to expressly assume and agree to be bound by the Agreement;
or
(c) the
assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position, authority, duties or
responsibilities as contemplated by this Agreement, or any action
by the Company that results in a material reduction in the nature
or scope of Executive’s position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
that is remedied by the Company promptly after receipt of notice
thereof given by the Executive.
In the event of
an occurrence or omission constituting Good Reason as described in
subsections (a), (b) and (c) above, Executive shall provide notice
to the Board of any such reduction, change or breach upon which
Executive intends to rely as the basis for Good Reason within 30
days of the occurrence of such reduction, change or
breach. The Company shall have 30 days following the
receipt of such notice to remedy the condition constituting such
reduction, change or breach and, if so remedied, any termination of
Executive’s employment hereunder on the basis of the
circumstances described in such notice shall be considered a
voluntary termination of employment. If the Company does
not remedy the condition that has been the subject of a notice as
described in this Section within 30 days of the Company’s
receipt of such notice, Executive must terminate his employment
within 90 days following the occurrence of such condition in order
for such termination to be considered due to Good Reason for
purposes of this Agreement.
1.22
“Imminent Control Change Date” means any date on which
occurs (i) a presentation to the Company’s stockholders
generally or any of the Company’s directors or executive
officers of a proposal or offer for a Change of Control, (ii) the
public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal
or offer for a Change of Control, and (iii) such proposal or offer
remains effective and unrevoked.
1.23 “Incumbent
Directors” means, as of the date of this Agreement,
individuals then serving as members of the Board; provided that any
subsequently-appointed or elected member of the Board whose
election, or nomination for election by stockholders of the Company
or the Surviving Corporation, as applicable, was approved by a vote
or written consent of at least one-half of the directors then
comprising the Incumbent Directors shall also thereafter be
considered an Incumbent Director, unless the initial assumption of
office of such subsequently-elected or appointed director was in
connection with (i) an actual or threatened election contest,
including a consent solicitation, relating to the election or
removal of one or more members of the Board, (ii) a “tender
offer” (as such term is used in Section 14(d) of the Exchange
Act), (iii) a proposed Reorganization Transaction, or (iv) a
request, nomination or suggestion of any Beneficial Owner of Voting
Securities representing 35% or more of the aggregate voting power
of the Voting Securities of the Company or the Surviving
Corporation, as applicable.
1.24 “Named
Executive” means any individual listed on Exhibit A except to
the extent the individual had a termination of employment not less
than 120 days prior to the applicable event potentially
constituting a Change of Control and any other employee or officer
of the Company designated by the Board and who is a party to an
agreement substantially in the same form as this Agreement (with
variation in the amount of compensation and benefits payable under
the agreement) and entered into by the employee or officer not less
than 120 days prior to the applicable event potentially
constituting a Change of Control.
1.25 “Notice
of Termination” means a written notice given in accordance
with Section 9.11 which sets forth (a) the specific termination
provision in this Agreement relied upon by the party giving such
notice, (b) in reasonable detail the specific facts and
circumstances claimed to provide a basis for such Termination of
Employment, and (c) if the Date of Termination is other than the
date of receipt of such Notice of Termination, the Date of
Termination.
1.26 “Person”
means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated
organization, corporation, institution, public benefit corporation,
entity or government instrumentality, division, agency, body or
department.
1.27 “Prorata
Annual Bonus” means the portion of the Annual Bonus payable
to Executive as calculated on a pro rata basis, based on
performance to date and on the number of days which have elapsed in
such fiscal year through the Date of Termination.
1.28 “Subsidiary”
means, with respect to any Person, (a) any corporation of which
more than 50% of the Voting Securities are at the time, directly or
indirectly, owned by such Person, and (b) any partnership or
limited liability company in which such Person has a direct or
indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than 50%.
1.29 “Surviving
Corporation” means the corporation resulting from a
Reorganization Transaction or, if securities representing more than
50% of the aggregate Voting Power of such resulting corporation are
directly or indirectly owned by another corporation, such other
corporation.
1.30 “Target
Annual Bonus” - see Section 4.2.
1.31
“Target Annual
Goals” - see Section 4.2.
1.32 “Taxes”
means the incremental federal, state, local and foreign income,
employment, excise and other taxes payable by Executive with
respect to any applicable item of income.
1.33 “Termination
For Good Reason” means a Termination of Employment by
Executive for a Good Reason.
1.34 “Termination
of Employment” means a termination by the Company or
Executive of Executive’s employment.
1.35 “Termination
Without Cause” means a Termination of Employment by the
Company for any reason other than Cause or Executive’s death
or Disability.
1.36 “Voting
Securities” of a corporation means securities of such
corporation that are entitled to vote generally in the election of
directors of such corporation, but not including any other class of
securities of such corporation that may have voting power by reason
of the occurrence of a contingency.
Article II —
DUTIES
2.1
Duties . During the Employment Period, (A) the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the
most significant of those held, exercised and assigned at any time
during the 90-day period immediately preceding the Effective Date
and, (B) following any Change of Control, the Executive’s
services shall be performed at the office where the Executive was
employed immediately preceding the effective date of the Change of
Control, or at any other location less than 50 miles from such
office. Executive shall devote all of his business time,
attention and effort during normal business hours, excluding any
periods of disability, vacation, or sick leave to which Executive
is entitled, to the affairs of the Company and shall use his best
efforts to promote the interests of the Company.
2.2
Other Activities . Executive may serve on civic
or charitable boards or committees, deliver lectures, fulfill
speaking engagements or teach at educational institutions, and
manage personal investments; provided that such activities do not
significantly interfere with the performance of Executive’s
duties under this Agreement. Executive may serve on
corporate boards or committees with the prior written consent of
the Board.
Article III — EMPLOYMENT
PERIOD
Subject to the
termination provisions provided herein, the term of
Executive’s employment under this Agreement (the
“Employment Period”) shall begin on the Effective Date
and end on the second annual Anniversary Date or, such later date
to which the Employment Period is extended pursuant to the
following sentence. On the date which is twenty-one
months after the Effective Date and thereafter, the Employment
Period (assuming that an Expiration Notice to the effect that the
Agreement shall expire on the second annual Anniversary Date has
not been delivered by the Executive or Company to the other prior
to such date) shall be automatically extended each day by one day
to create a new three-month term until, at any time after the date
which is twenty-one months after the Effective Date the Company
delivers written notice (an “Expiration Notice”) to
Executive or Executive delivers an Expiration Notice to the
Company, in either case, to the effect that the Agreement shall
expire on a date specified in the Expiration Notice (the
“Expiration Date”) that is not less than three months
after the date the Expiration Notice is delivered to the Company or
the Executive, respectively. The employment of Executive
by the Company shall not be terminated other than in accordance
with Article VI.
Article IV —
COMPENSATION
4.1
Salary . Subject to Section 4.3 hereof, during
the Employment Period, the Company shall pay or cause to be paid to
Executive in accordance with its normal payroll practices (but not
less frequently than monthly) an annual salary at a rate of
$315,000 per year (“Base Salary”). During
the Employment Period, the Base Salary shall be reviewed at least
annually and may be increased from time to time as shall be
determined by the Compensation Committee. After any such
increase, the term “Base Salary” shall thereafter refer
to the increased amount. Any increase in Base Salary
shall not limit or reduce any other obligation of the Company to
Executive under this Agreement. Base Salary shall not be
reduced at any time without the express written consent of
Executive.
4.2
Annual Bonus .
(a) Subject
to Section 4.3 hereof, the Company shall pay or cause to be paid to
Executive an annual cash bonus (“Annual Bonus”) in
accordance with the terms of the AMCOL International Corporation
2006 Annual Cash Incentive Plan and the terms hereof for each
fiscal year which begins or ends during the Employment
Period. Executive shall be eligible for an Annual Bonus
based upon target performance goals (the “Target Annual
Goals”), as determined by the Compensation Committee for a
payment of at least 60% of Executive’s Base Salary
(“Target Annual Bonus”) upon the Executive’s
achievement of the Target Annual Goals. The Target
Annual Goals shall be set as described above no later than February
28 of each fiscal year.
(b) Subject
to Section 4.3 hereof, the Company shall pay or cause to be paid
the entire Annual Bonus that is payable with respect to a fiscal
year in cash after the Compensation Committee has certified (i)
whether and the degree to which Target Annual Goals have been
achieved, and (ii) the amount of the Annual Bonus, which shall
occur as soon as practicable following the close of such fiscal
year. Any such Annual Bonus shall in any event be paid
no later than February 28 of each fiscal year.
4.3
Deferral . In the event that all or any portion
of a payment to be made to Executive pursuant to Section 4.1 or 4.2
hereof or any equity compensation award shall be ineligible for
treatment as “qualified performance - based
compensation” under Section 162(m) of the Code, the Company,
in its sole discretion, shall have the right to defer payment to
Executive of all or any portion of any such payment until such time
as such amounts are deductible by the Company under Section 162(m)
of the Code; provided that such deferral shall be limited to the
portion of the payment that is not deductible by the Company
pursuant to the Code.
Article V — OTHER
BENEFITS
5.1
Stock Option, Restricted Stock and Other Equity Incentive
Plans . In addition to Base Salary and an Annual
Bonus, Executive shall be eligible to participate during the
Employment Period in all stock option, restricted stock and other
equity incentive plans, practices, policies and programs of the
Company, in accordance with their terms as in effect from time to
time. If a Change of Control occurs during the Employment Period,
all outstanding stock options, restricted stock and other equity
compensation granted to Executive (whether before, on or after the
Effective Date) shall become fully vested and exercisable, except
as otherwise provided with respect to an award intended to qualify
as performance-based compensation under Section 162(m) of the
Code.
5.2
Incentive, Savings and Retirement Plans . In
addition to Base Salary, Annual Bonus, and equity awards, Executive
shall be entitled to participate during the Employment Period in
all incentives, savings and retirement plans, practices, policies
and programs that are from time to time applicable to other
comparable senior executives of the Company, including any
supplemental executive retirement plan, in accordance with their
terms as in effect from time to time.
5.3
Welfare Benefits . During the Employment Period,
Executive and his family shall be eligible to participate in, and
shall receive all benefits under, welfare benefit plans, practices,
policies and programs provided by the Company (including medical,
prescription, dental, disability, employee life, group life,
dependent life, accidental death and travel accident insurance
plans and programs) applicable to other comparable senior
executives of the Company, in accordance with their terms as in
effect from time to time.
5.4
Fringe Benefits . During the Employment Period,
Executive shall be entitled to fringe benefits applicable to other
comparable senior executive of the Company, in accordance with
their terms as in effect from time to time.
5.5
Vacation . During the Employment Period,
Executive shall be entitled to paid vacation time in accordance
with the plans, practices, policies, and programs applicable to
other comparable senior executives of the Company, in accordance
with their terms as in effect from time to time, but in no event
shall such vacation time be less than four weeks per calendar
year.
5.6
Expenses . During the Employment Period,
Executive shall be entitled to receive prompt reimbursement for all
reasonable employment-related expenses incurred by Executive upon
the receipt by the Company of an accounting in accordance with
practices, policies, and procedures applicable to comparable senior
executives of the Company, in accordance with their terms as in
effect from time to time.
Article VI — TERMINATION
BENEFITS
6.1
Termination for Cause or Other than for Good Reason, etc
. If the Company terminates Executive’s employment
for Cause (whether before or after a Change of Control) or
Executive terminates his employment other than for Good Reason,
death or Disability, or Executive Termination, the Company shall
pay to Executive immediately after the Date of Termination an
amount equal to the sum of Executive’s Accrued Base Salary
and Accrued Annual Bonus and Executive shall not be entitled to
receive any severance payment.
6.2
Termination for Death or Disability Prior to Change of Control
or More than Thirteen Months after a Change of Control
. If Executive’s employment terminates due to his
death or Disability prior to a Change of Control or more than
thirteen months after a Change of Control, the Company shall pay to
Executive or his bene
