EXHIBIT 10.5

                                    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,  John Hughes ("Employee") is considered a key management employee,
currently serving as President and Chief Executive Officer 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 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 President and Chief Executive Officer. 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.



<PAGE>


     5. Termination of Employment  Prior to a Change of Control.  Employee shall
be entitled to terminate his employment prior to a Change in Control at any time
upon  sixty (60) days'  prior  written  notice.  The  Company,  shall be able to
terminate Employee's employment at any time prior to a Change in Control with or
without  cause upon sixty (60) days'  prior  written  notice (or the  payment of
salary in lieu  thereof).  This  Section  shall not be  construed  to reduce any
accrued  benefits  payable in  connection  with any  termination  of  Employee's
employment prior to a Change in Control.

     Nothing  expressed or implied in this  Agreement  shall create any right or
duty on the part of the  Company  or  Employee  to have  Employee  remain in the
employment of the Company prior to a Change in Control.

     6. Termination of Employment On or After Change in Control.

(a)  For  purposes of this  Agreement  the term  "Change in  Control"  means the
     change in the legal or beneficial  ownership of fifty-one  percent (51%) of
     the shares of the  Company's  common stock within a six-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.


<PAGE>


     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.
     
<PAGE>

(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              John Hughes
One North Arlington                          President and
1500 West Shure Drive                        Chief Executive Officer
Arlington Heights, IL 60004                  AMCOL International Corporation
ATTN:  Chairman of the Board                 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-(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). 
<PAGE>

(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 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).



<PAGE>

     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 instruments shall provide Employee with the ability to receive
the remaining  installments(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

<PAGE>


(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. 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 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 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 marketing
     throughout  the United  States and certain  foreign  countries.  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  competitive
     businesses and solicitation in the United States, Australia, Japan, Canada,
     the United Kingdom,  Thailand and those countries in which the Company, its
     affiliates and/or the subsidiaries thereof has (have) conducted $200,000 or
     more  of  business  during  the  twelve-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  three (3) 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

<PAGE>

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,  1997  and end on  March  31,  2000.  Provided,  however,  that in the  event
Employee's  employment  is  

<PAGE>

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: _____________________________


Employee                                    AMCOL International Corporation


____________________________________         By: _______________________________
John Hughes
                                            Its: _______________________________

(50023B7F)