-----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, JhcYovG6onj0yJbbdRsUJ0ZUWWlQBzSI6EVq0HrzmAfHi5F7mXtDKfK3JBKPpwD4 9XISiA2XZJmWyVR8bWRgnQ== 0000950131-01-502306.txt : 20010717 0000950131-01-502306.hdr.sgml : 20010717 ACCESSION NUMBER: 0000950131-01-502306 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010531 FILED AS OF DATE: 20010716 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATERIAL SCIENCES CORP CENTRAL INDEX KEY: 0000755003 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 952673173 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08803 FILM NUMBER: 1681654 BUSINESS ADDRESS: STREET 1: 2300 E PRATT BLVD CITY: ELK GROVE VILLAGE STATE: IL ZIP: 60007 BUSINESS PHONE: 8474398270 10-Q 1 d10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2001 Commission File Number 1-8803 MATERIAL SCIENCES CORPORATION (Exact name of Registrant as specified in its charter) Delaware 95-2673173 (State or other jurisdiction (IRS employer identification of incorporation or organization) number) 2200 East Pratt Boulevard Elk Grove Village, Illinois 60007 (Address of principal (Zip code) executive offices) Registrant's telephone number, including area code: (847) 439-8270 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 --------------- ____________ As of July 12, 2001, the registrant had 14,687,656 outstanding shares of common stock, $.02 par value. MATERIAL SCIENCES CORPORATION FORM 10-Q For The Quarter Ended May 31, 2001 PART I. FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------- (a) Financial statements of Material Sciences Corporation and Subsidiaries 2 Consolidated Statements of Income (Loss) (Unaudited) Material Sciences Corporation and Subsidiaries
Three Months Ended May 31, (In thousands, except per share data) 2001 2000 - ------------------------------------- -------------- --------------- Net Sales (1) $ 98,374 $110,287 Cost of Sales (2) 87,453 93,991 -------------- --------------- Gross Profit $ 10,921 $ 16,296 Selling, General and Administrative Expenses 13,068 12,512 -------------- --------------- Income (Loss) from Operations $ (2,147) $ 3,784 -------------- --------------- Other (Income) and Expense: Interest Expense, Net $ 2,555 $ 2,272 Equity in Results of Joint Ventures 312 293 Other, Net 62 76 -------------- --------------- Total Other Expense, Net $ 2,929 $ 2,641 -------------- --------------- Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes $ (5,076) $ 1,143 Provision (Benefit) for Income Taxes (2,182) 307 -------------- --------------- Income (Loss) from Continuing Operations $ (2,894) $ 836 Discontinued Operation: (8) Income from Discontinued Operation (Net of Income Taxes of $855 and $1,248 for Fiscal 2002 and 2001, Respectively) 1,243 1,812 -------------- --------------- Net Income (Loss) $ (1,651) $ 2,648 ============== =============== Basic Net Income (Loss) Per Share: Income (Loss) from Continuing Operations $ (0.21) $ 0.06 Income from Discontinued Operation 0.09 0.12 -------------- --------------- Basic Net Income (Loss) Per Share $ (0.12) $ 0.18 ============== =============== Diluted Net Income (Loss) Per Share: Income (Loss) from Continuing Operations $ (0.21) $ 0.06 Income from Discontinued Operation 0.09 0.12 -------------- --------------- Diluted Net Income (Loss) Per Share $ (0.12) $ 0.18 ============== =============== Weighted Average Number of Common Shares Outstanding Used for Basic Net Income (Loss) Per Share 13,858 14,596 Dilutive Shares - 158 -------------- --------------- Weighted Average Number of Common Shares Outstanding Plus Dilutive Shares 13,858 14,754 ============== =============== Outstanding Common Stock Options Having No Dilutive Effect 1,487 1,261 ============== ===============
The accompanying notes are an integral part of these statements. 3 Consolidated Balance Sheets Material Sciences Corporation and Subsidiaries
May 31, February 28, 2001 2001 (In thousands) Unaudited Audited - -------------- --------- ------- Assets: Current Assets: Cash and Cash Equivalents $ 1,967 $ 2,355 Receivables, Less Reserves of $4,397 and $4,632, Respectively (3) 40,515 43,935 Income Taxes Receivable 1,057 1,637 Prepaid Expenses 3,454 2,701 Inventories 54,542 56,428 Prepaid Taxes 3,004 3,004 Current Assets of Discontinued Operation, Net (8) 50,289 41,887 ---------- ------------ Total Current Assets $ 154,828 $ 151,947 ---------- ------------ Property, Plant and Equipment $ 362,659 $ 361,572 Accumulated Depreciation and Amortization (168,327) (163,672) ---------- ------------ Net Property, Plant and Equipment $ 194,332 $ 197,900 ----------- ------------ Other Assets: Investment in Joint Ventures $ 11,398 $ 11,700 Intangible Assets, Net 13,520 13,617 Other 1,856 1,790 ---------- ------------ Total Other Assets $ 26,774 $ 27,107 ---------- ------------ Total Assets $ 375,934 $ 376,954 ========== ============ Liabilities: Current Liabilities: Current Portion of Long-Term Debt $ 13,996 $ 7,703 Accounts Payable 42,319 39,508 Accrued Payroll Related Expenses 7,745 12,133 Accrued Expenses 5,465 6,682 ---------- ------------ Total Current Liabilities $ 69,525 $ 66,026 ---------- ------------ Long-Term Liabilities: Deferred Income Taxes $ 16,545 $ 18,019 Long-Term Debt, Less Current Portion (4) 126,892 129,762 Other 13,572 13,411 ---------- ------------ Total Long-Term Liabilities $ 157,009 $ 161,192 ---------- ------------ Shareowners' Equity: Preferred Stock (5) $ - $ - Common Stock (6) 363 354 Additional Paid-In Capital 64,616 63,334 Treasury Stock at Cost (7) (34,813) (34,813) Retained Earnings 119,234 120,861 ---------- ------------ Total Shareowners' Equity $ 149,400 $ 149,736 ---------- ------------ Total Liabilities and Shareowners' Equity $ 375,934 $ 376,954 ========== ============
The accompanying notes are an integral part of these statements. 4 Consolidated Statements of Cash Flows (Unaudited) Material Sciences Corporation and Subsidiaries
Three Months Ended May 31, (In thousands) 2001 2000 - ---------------------------------------------------------------------------------- -------------- -------------- Cash Flows From: Operating Activities: Net Income (Loss) $ (1,651) $ 2,648 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Discontinued Operation, Net (8) (2,640) (2,182) Depreciation and Amortization (2) 5,393 6,712 Provision (Benefit) for Deferred Income Taxes (1,474) 468 Compensatory Effect of Stock Plans 799 691 Other, Net 336 281 ------------- ------------- Operating Cash Flow Prior to Changes in Assets and Liabilities $ 763 $ 8,618 ------------- ------------- Changes in Assets and Liabilities: Receivables $ 3,420 $ 2,130 Income Taxes Receivable 580 - Prepaid Expenses (753) (2,288) Inventories 1,886 (4,636) Accounts Payable 2,811 1,715 Accrued Expenses (5,605) (9,657) Other, Net 138 (483) ------------- ------------- Cash Flow from Changes in Assets and Liabilities $ 2,477 $ (13,219) ------------- ------------- Net Cash Provided by (Used in) Operating Activities $ 3,240 $ (4,601) ------------- ------------- Investing Activities: Discontinued Operation, Net (8) $ (5,746) $ (568) Capital Expenditures, Net (1,465) (4,261) Investment in Joint Ventures (10) (74) Other (328) 14 ------------- ------------- Net Cash Used in Investing Activities $ (7,549) $ (4,889) ------------- ------------- Financing Activities: Discontinued Operation, Net (8) $ 6 $ (6) Net Proceeds Under Lines of Credit 10,700 10,400 Payments of Debt (7,277) (120) Purchase of Treasury Stock - (5,286) Issuance of Common Stock 492 579 ------------- ------------- Net Cash Provided by Financing Activities $ 3,921 $ 5,567 ------------- ------------- Net Decrease in Cash $ (388) $ (3,923) Cash and Cash Equivalents at Beginning of Period 2,355 3,923 ------------- ------------- Cash and Cash Equivalents at End of Period $ 1,967 $ - ============= =============
The accompanying notes are an integral part of these statements. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MATERIAL SCIENCES CORPORATION The data for the three months ended May 31, 2001 and 2000 have not been audited by independent public accountants but, in the opinion of the Company, reflect all adjustments (consisting of only normal, recurring adjustments) necessary for a fair presentation of the information at those dates and for those periods. The financial information contained in this report should be read in conjunction with the Company's 2001 Annual Report to Shareowners and Annual Report on Form 10-K. (1) During the three-month periods ending May 31, 2001 and 2000, the Company derived approximately 15.2% and 11.8%, respectively, of its sales from fees billed to Walbridge Coatings ("Partnership") by a subsidiary of the Company for operating the Walbridge, Ohio facility. (2) During the first quarter of fiscal 2002, the Company reduced depreciation expense by $1,392 at Pinole Point Steel due to changes made to the estimated useful lives of the galvanizing and coil coating lines, which more accurately reflects the service lives of the assets. (3) Includes trade receivables due from the Partnership of $1,334 as of May 31, 2001 and no amount as of February 28, 2001. (4) The Company was not in compliance with one financial covenant as of May 31, 2001. The banks waived the default and amended the line of credit agreement effective May 31, 2001. (5) Preferred Stock, $1.00 Par Value; 10,000,000 Shares Authorized; 1,000,000 Designated Series B Junior Participating Preferred; None Issued. (6) Common Stock, $.02 Par Value; 40,000,000 Shares Authorized; 18,096,989 Shares Issued and 14,712,553 Shares Outstanding as of May 31, 2001 and 17,676,984 Shares Issued and 14,292,548 Shares Outstanding as of February 28, 2001. (7) Treasury Stock at Cost; 3,384,436 Shares as of May 31, 2001 and as of February 28, 2001. (8) On June 29, 2001, the Company completed the sale of substantially all of the assets of MSC Specialty Films, Inc. ("MSC/SFI"), including its interest in Innovative Specialty Films, LLC, pursuant to the terms of the Purchase Agreement by and among MSC, MSC/SFI, Bekaert and N.V. Bekaert S.A., dated June 10, 2001. The Company received cash at closing of $122,137 and expects to record an after-tax gain of approximately $37,000 to $43,000 in the second quarter of fiscal 2002. The gain is subject to certain post-closing adjustments to the purchase price and expenses incurred as a result of the transaction. Net proceeds after taxes and transaction costs will be approximately $89,000, which the Company intends to use to primarily reduce long-term debt. As a result of the sale, MSC/SFI has been reported as a discontinued operation for the 6 current and prior periods. Net sales of MSC/SFI in the first quarter of fiscal 2002 decreased 2.2% to $16,369 as compared with $16,735 in the same period last year. (9) Business Segments: The Company reports segment information based on how management disaggregates its businesses for evaluating performance and making operating decisions. The Company's three remaining segments are: Engineered Materials, Coated Products and Services and Pinole Point Steel. Pinole Point Steel's loss before income taxes included an allocation of consolidated interest expense totaling $2,468 in the first quarter of fiscal 2002 and $2,114 in the same period last year. Corporate represents unallocated general corporate expenses. Sales between segments are recorded at market rates, and the related intercompany profit is eliminated in consolidation. The net sales on a geographic basis are not material. Information concerning the Company's business segments in the first quarter of fiscal 2002 and 2001 was as follows: Three Months Ended May 31, -------------------------- 2001 2000 ---- ---- Net Sales --------- Coated Products and Services $ 45,684 $ 48,184 Engineered Materials 21,782 21,432 Eliminations (1,466) (826) -------- --------- Subtotal 66,000 68,790 Pinole Point Steel 32,374 41,497 -------- --------- Total $ 98,374 $ 110,287 ======== ========= Income (Loss) Before Income Taxes --------------------------------- Coated Products and Services $ 1,776 $ 3,639 Engineered Materials 1,954 2,905 Corporate and Eliminations (2,542) (3,281) -------- --------- Subtotal 1,188 3,263 Pinole Point Steel (6,264) (2,120) -------- --------- Total $ (5,076) $ 1,143 ======== ========= 7 MATERIAL SCIENCES CORPORATION FORM 10-Q For The Quarter Ended May 31, 2001 PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and - ------------------------------------------------------------------------ Results of Operations - --------------------- RESULTS OF CONTINUING OPERATIONS - -------------------------------- As a result of the sale of substantially all of the assets of the Company's Specialty Films segment, including MSC Specialty Films, Inc. ("MSC/SFI"), to Bekaert Corporation and its affiliates ("Bekaert") in the second quarter of fiscal 2002, MSC/SFI has been reported as a discontinued operation for the current and prior periods. Net sales from continuing operations in the first quarter of fiscal 2002 decreased 10.8% to $98,374 from $110,287 in the same period last year due to lower sales at Coated Products and Services and Pinole Point Steel, offset by slightly higher sales at Engineered Materials. MSC's gross profit margin for the first quarter of fiscal 2002 was 11.1% as compared with 14.8% in the first quarter of fiscal 2001. The decline in gross profit margin was partially due to deteriorating selling prices at Pinole Point Steel that more than offset the decrease in the cost of steel purchased. In addition, lower capacity utilization, higher utility costs of $1,428 and an unfavorable product mix contributed to the decrease. This decrease was slightly offset by a reduction in depreciation expense of $1,392 at Pinole Point Steel due to changes made to the estimated useful lives of the galvanizing and coil coating lines, which more accurately reflects the service lives of the assets. Selling, general and administrative ("SG&A") expenses were 13.3% of net sales in the first quarter of fiscal 2002 as compared with 11.3% in the same period last year. The increase in SG&A percentage was mainly due to the decrease in net sales and severance expense related to employee terminations totaling $688 for the first quarter of fiscal 2002. For the first quarter of fiscal 2002, income before income taxes from continuing operations decreased to a loss of $5,076 as compared with income of $1,143 for the same period last year. The Company's three remaining principal business segments are Engineered Materials, Coated Products and Services and Pinole Point Steel. The Engineered Materials segment includes the laminates and composites product group. This segment combines layers of metal and other materials designed to meet specific customer requirements for the automotive, electronics, lighting and appliance markets. The Coated Products and Services segment includes the coil coating and electrogalvanizing product groups. This segment provides galvanized and prepainted products and services primarily to the automotive, building and construction, appliance and lighting markets. The Pinole Point Steel segment includes the hot-dip 8 galvanizing product group. This segment provides galvanized and prepainted product primarily to the building and construction market. Engineered Materials During the first quarter of fiscal 2002, sales of Engineered Materials were $21,782, slightly higher than $21,432 in the first quarter of fiscal 2001 due to higher shipments of Quiet Steel(R) for automotive dash panels and computer disk drives, offset by lower sales of disc brake noise dampers and other automotive materials. Income before income taxes for the first quarter of fiscal 2002 was $1,954, 32.7% lower than the first quarter of fiscal 2001, mainly due to a less favorable product mix, a one-time reorganization expense of $360 and a decline in capacity utilization. Coated Products and Services Net sales of Coated Products and Services during the first quarter of fiscal 2002 decreased 5.2% to $45,684 from $48,184 in the same period last year. Income before income taxes for the first quarter of fiscal 2002 decreased to $1,776, a 51.2% reduction from $3,639 in the same period last year. Coil coating income before income taxes declined in the first quarter of fiscal 2002 as a result of: lower sales volume to the automotive and building and construction markets as compared with last year's first quarter; expenses associated with employee terminations resulting from the Company indefinitely suspending its oldest and least efficient coil coating line in Elk Grove Village, Illinois; higher utility costs; and a decline in capacity utilization from 81 percent for the first quarter of fiscal 2001 to 68 percent for the first quarter of fiscal 2002. Excess industry capacity, current economic conditions and escalating energy costs were all factors which led to the decision to suspend the coil coating line in Elk Grove Village. The Company has shifted its customer orders to other Company coil coating lines in Elk Grove Village. Electrogalvanizing income before income taxes grew in the first quarter of fiscal 2002 mainly due to higher sales volume to the automotive industry as compared with last year's first quarter. Electrogalvanizing capacity utilization also increased to 90 percent in the first quarter of fiscal 2002 as compared with 67 percent in the same period last year. MSC serves the electrogalvanizing market through its 50% ownership interest in Walbridge Coatings, a partnership ("Partnership") among subsidiaries of MSC, Bethlehem Steel Corporation ("BSC") and LTV Corporation ("LTV"). The Partnership term expires on December 31, 2004. The Partnership also has a long-term toll processing agreement with ISPAT Inland Inc. (a former partner) which expires on December 31, 2001. On December 29, 2000, LTV filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Sales to LTV through the Partnership were $2,004 in the first quarter of fiscal 2002. Although the Company believes that LTV's participation in the Partnership and the Partnership's processing services for LTV are valuable to the LTV estate, there currently can be no assurance that the LTV bankruptcy will not result in a disruption of such relationships. As of May 31, 2001, the Partnership is continuing to make shipments to LTV under special credit arrangements. On March 21, 2001, the bankruptcy court approved debtor in possession financing for LTV. The Partnership has no pre-petition receivables outstanding and $793 of 9 post-petition receivables outstanding as of May 31, 2001. MSC Pre Finish Metals Inc. has $274 of pre-petition receivables outstanding that are fully reserved and no post-petition receivables outstanding as of May 31, 2001. Pinole Point Steel Net sales for Pinole Point Steel declined 22.0% to $32,374 in the first quarter of fiscal 2002 compared with $41,497 for the same period last year. Pinole Point Steel's sales continue to be affected by the soft West Coast building and construction market. Loss before income taxes was $6,264 in the first quarter compared with $2,120 for the first quarter of fiscal 2001. The decline was due to deteriorating selling prices that more than offset the decrease in the cost of steel purchased, lower volume and higher utility costs, partially offset by lower depreciation charges. Loss before income taxes included an allocation of consolidated interest expense totaling $2,468 and $2,114 for the first quarter of fiscal 2002 and 2001, respectively. Total Other (Income) and Expense, Net and Income Taxes Total other (income) and expense, net was expense of $2,555 in the first quarter of fiscal 2002 as compared with $2,272 of expense for the first quarter of fiscal 2001. Interest expense increased $285 due to higher debt levels. In addition, Equity in Results of Joint Ventures was a loss of $312 for the first quarter of this fiscal year as compared with a loss of $293 for the same period last year. MSC's effective income tax rate for continuing operations was 43.0% (benefit) in the first quarter of fiscal 2002 as compared with 26.9% (provision) for the same period last year. RESULTS OF DISCONTINUED OPERATION - --------------------------------- On June 29, 2001, the Company completed the sale of substantially all of the assets its Specialty Films segment, including MSC/SFI and MSC/SFI's interest in Innovative Specialty Films, LLC ("ISF"), pursuant to the terms of the Purchase Agreement by and among MSC, MSC/SFI, Bekaert and N.V. Bekaert S.A., dated June 10, 2001. The Company received cash at closing of $122,137 and expects to record an after-tax gain of approximately $37,000 to $43,000 in the second quarter of fiscal 2002. The gain is subject to certain post-closing adjustments to the purchase price and expenses incurred as a result of the transaction. Net proceeds after taxes and transaction costs will be approximately $89,000, which the Company intends to use to primarily reduce long-term debt. Net sales of MSC/SFI in the first quarter of fiscal 2002 decreased 2.2% to $16,369 as compared with $16,735 in the same period last year. Higher sales of solar control window film were offset by lower shipments of coating and laminating materials. Income from discontinued operation for the first quarter of fiscal 2002 was $1,243, 31.4% lower than $1,812 in the comparable period of the prior year. The decrease was due to higher utility costs and lower sales of sputtered films to the electronics market, resulting in a first quarter loss of $130 from ISF, the joint venture with Bekaert, as compared with income of $292 in the first quarter of fiscal 2001. 10 LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- During the first quarter of fiscal 2002, MSC generated $3,240 of cash from operating activities as compared with utilizing $4,601 in the first quarter last year. The increase in cash generation was due mainly to decreases in working capital as a result of lower receivable and inventory levels and lower variable compensation payments in the first quarter of fiscal 2002 as compared with the same period last year, offset by lower net income. Earnings before interest, taxes, depreciation and amortization ("EBITDA") from continuing operations decreased to $2,872 for the first quarter of fiscal 2002 as compared with $10,127 for the same period last year. MSC's capital expenditures during the first quarter of fiscal 2002 were $1,465 as compared with $4,261 in the same period last year. As of May 31, 2001, MSC's total debt increased to $140,888 from $137,465 as of February 28, 2001. On April 20, 2001, the Company's line of credit agreement was amended to reduce the committed line of credit of $90,000 to $50,000 and eliminate the uncommitted $10,000 line of credit outstanding prior to the amendment. There was $35,200 outstanding under this line of credit as of May 31, 2001. The Company had executed letters of credit totaling $5,315 against these lines, leaving an available line of credit of $9,485 as of May 31, 2001. The Company was not in compliance with one financial covenant as of May 31, 2001. The banks waived the default and amended the line of credit agreement effective May 31, 2001. On June 21, 2001, the Company's line of credit agreement was further amended to provide the consent for the sale of MSC/SFI and a reduction in the committed line of credit from $50,000 to $20,000. On June 29, 2001, the Company utilized a portion of the proceeds from the MSC/SFI sale to pay the total amount outstanding under its line of credit of $42,600. The Company has invested the remaining proceeds from the sale in AAA securities. The Company is reviewing its alternative uses of the sale proceeds including further reductions in debt. The Company believes that its cash flow from operations, proceeds from the sale of MSC/SFI, available financing, other potential divestitures and cash on hand will be sufficient to fund its working capital needs, capital expenditures, acquisitions and debt payments. MSC continues to participate in the implementation of settlements with the government for the clean-up of various Superfund sites. For additional information, refer to MSC's Annual Report on Form 10-K for the fiscal year ended February 28, 2001. Certain statements contained in this report are forward-looking statements based on current expectations, forecasts and assumptions. MSC cautions the reader that the following factors could cause MSC's actual outcomes and results to differ materially from those stated in the forward-looking statements: successful development and introduction of new products and technologies; competitive factors; changes in the business environment, including the automotive, building and construction and durable goods industries; increases in the prices of raw and other material inputs used by the Company; adverse changes in government laws and regulations; environmental risks associated with the Company's manufacturing operations; and the other factors identified in Part II, Item 7 of the Company's 2001 Annual Report on Form 10-K, filed with the Securities and Exchange Commission. 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk - ------------------------------------------------------------------- There has been no material change in the Company's assessment of its sensitivity to market risk since its presentation set forth in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," in its Annual Report on Form 10-K for the year ended February 28, 2001. 12 MATERIAL SCIENCES CORPORATION FORM 10-Q For the Quarter Ended May 31, 2001 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) 4(m) Waiver and Fifth Amendment dated May 31, 2001, by and among Registrant, Bank of America, N.A., as Agent, and other financial institutions party thereto. 4(n) Sixth Amendment, Waiver and Consent dated June 21, 2001, by and among Registrant, Bank of America, N.A., as Agent, and other financial institutions party thereto. 10(dd) Form of Change in Control Agreement (MSC Executive Officers). 10(ee) Form of Change in Control Agreement (Subsidiary Executive Officers). (b) Reports on Form 8-K ------------------- On July 8, 2001, the Company filed a current report on Form 8-K, pursuant to Item 2, to indicate that it had completed the sale of substantially all of the assets of its Specialty Films segment to Bekaert Corporation and its affiliates. The Company filed, with the Form 8-K, the Purchase Agreement dated June 10, 2001, the press release related to the sale, the Company's Unaudited Pro Forma Condensed Consolidated Balance Sheet as of February 28, 2001 and the Company's Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss) for the years ended February 28, 2001, February 29, 2000 and February 28, 1999. 13 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, in Elk Grove Village, State of Illinois, on the 12th day of July, 2001. MATERIAL SCIENCES CORPORATION By: /s/ Gerald G. Nadig ------------------------------- Gerald G. Nadig Chairman, President and Chief Executive Officer By: /s/ James J. Waclawik, Sr. -------------------------------- James J. Waclawik, Sr. Vice President, Chief Financial Officer and Secretary 14 MATERIAL SCIENCES CORPORATION Quarterly Report on Form 10-Q Index to Exhibits Exhibit Number Description of Exhibit - -------------- ---------------------- 4(m) Waiver and Fifth Amendment dated May 31, 2001, by and among Registrant, Bank of America, N.A., as Agent, and other financial institutions party thereto. 4(n) Sixth Amendment, Waiver and Consent dated June 21, 2001, by and among Registrant, Bank of America, N.A., as Agent, and other financial institutions party thereto. 10(dd) Form of Change in Control Agreement (MSC Executive Officers). 10(ee) Form of Change in Control Agreement (Subsidiary Executive Officers). 15 EX-4.M 2 dex4m.txt WAIVER & FIFTH AMENDMENT DATED 5/31/2001 Exhibit 4(m) WAIVER AND FIFTH AMENDMENT DATED AS OF MAY 31, 2001 TO CREDIT AGREEMENT DATED AS OF DECEMBER 12, 1997 This Waiver and Fifth Amendment (this "Waiver"), dated as of May 31, 2001, is made by and among MATERIAL SCIENCES CORPORATION, a Delaware corporation (the "Company"), the financial institutions party hereto (the "Banks"), and Bank of America, N.A., as agent for the Banks (in such capacity, the "Agent"). Unless otherwise defined, terms defined in the Credit Agreement shall have the same respective meanings when used herein. W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company, the Banks and the Agent are parties to that certain Credit Agreement, dated as of December 12, 1997 (as amended or modified and in effect on the date hereof, the "Credit Agreement"); WHEREAS, the Company has requested that the Banks waive non- compliance as of May 31, 2001 with the Consolidated Debt to Adjusted EBITDA Ratio; and WHEREAS, the Banks are willing to grant such waiver, subject to the terms and conditions contained herein. NOW, THEREFORE, in consideration of the premises, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which is hereby acknowledged), the parties hereto, intending legally to be bound, hereby agree as follows: ARTICLE I WAIVER ------ 1.1. The Banks hereby waive any Default or Event of Default arising from noncompliance by the Company as of May 31, 2001 with the provisions of Section 9.2 (Consolidated Debt to Adjusted EBITDA Ratio) of the Credit Agreement (as in effect before giving effect to this Waiver). It is understood that the foregoing waiver does not apply to any computation date or period after May 31, 2001. 1.2. The foregoing waiver is specific in time and in intent and does not constitute, nor shall it be construed as, a waiver of any other right, power or privilege under the Credit Agreement, or under any agreement, contract, indenture, document or other instrument mentioned in the Credit Agreement; nor does the foregoing waiver preclude other or further exercise of any other right, power or privilege, nor shall the waiver of any right, power, privilege or default hereunder, or under any agreement, contract, indenture, document, or instrument mentioned in the Credit Agreement, constitute a waiver of any other default of any other term or provision. ARTICLE II AMENDMENT --------- 2.1. The Credit Agreement is amended so that Section 10.1(m) shall read in its entirety as follows: (m) MSC/SFI Sale. On or before July 31, 2001 (i) ------------ the Company or MSC/SFI shall fail to close the sale of the assets of MSC/SFI pursuant to a Purchase Agreement dated as of June 10, 2001 among the Company, MSC/SFI, Bekaert Corporation and N.V. Bekaert, SA, or (ii) the Company or MSC/SFI shall not have received $120 million or more of gross cash proceeds from such sale. ARTICLE III REPRESENTATION AND WARRANTIES ----------------------------- The Company hereby represents and warrants to the Banks and the Agent that: 3.1. Authorization, etc. The execution, delivery and performance of this ------------------ Waiver are within the Company's corporate authority, have been duly authorized by all necessary corporate action, have received all necessary consents and approvals (if any shall be required), and do not and will not contravene or conflict with any provision of law or of the Certificate of Incorporation or By- laws of the Company or its Subsidiaries, or of any other agreement binding upon the Company or its Subsidiaries or their respective property. 3.2. Validity. This Waiver constitutes the legal, valid, and binding -------- obligations of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. 3.3. No Default. Except for any Default or Event of Default which will be ---------- cured by this Waiver becoming effective, no Event of Default has occurred and is continuing or will result from this Waiver. ARTICLE IV CONDITIONS PRECEDENT -------------------- This Waiver shall become effective as of May 31, 2001 (the "Effective Date"), subject, however, to the receipt by the Agent of counterparts of this Waiver (or an executed facsimile copy hereof) executed by the Company and the Banks. ARTICLE V MISCELLANEOUS ------------- 5.1. Documents Remain in Effect. Except as amended or modified by this -------------------------- Waiver, the Credit Agreement remains in full force and effect and the Company confirms that its representations, warranties, agreements and covenants contained in, and obligations and liabilities under, the Credit Agreement and each of the other Loan Documents are true and correct in all material respects as if made on the date hereof, except where such representation, warranty, agreement or covenant speaks as of a specified date. References to the Credit Agreement in any other document shall be deemed to include a reference to the Credit Agreement as amended or modified hereby, whether or not reference is made to this Waiver. 5.2. Expenses. The Company covenants to pay to or reimburse the Agent, -------- upon demand, for all reasonable costs and expenses (including legal expenses) in connection with the development, preparation, negotiation, execution and delivery of this Waiver and the Loan Documents. 5.3. Headings. Section headings used in this Waiver are for convenience of -------- reference only, and shall not affect the construction of this Waiver. 5.4. Governing Law. This Waiver shall be a contract made under and ------------- governed by the internal laws of the State of Illinois, without giving effect to principles of conflicts of laws. 5.5. Cumulative Rights. All obligations of the Company and rights of the ----------------- Banks and the Agent, that are expressed herein, shall be in addition to and not in limitation of those provided by applicable law. 5.6. Severability. Whenever possible, each provision of this Waiver shall ------------ be interpreted in such manner as to be effective and valid under applicable law; but if any provision of this Waiver shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Waiver. 5.7. No Forbearance. The Company acknowledges and agrees that the -------------- execution and delivery by the Agent and the Banks of this Waiver shall not be deemed (i) to create a course of dealing or otherwise obligate the Agent or the Banks to forbear or execute similar Waivers under the same or similar circumstances in the future, or (ii) to amend, relinquish or impair any right of the Agent or the Banks to receive any indemnity or similar payment from any Person or entity as a result of any matter arising from or relating to this Waiver. 5.8. Successors and Assigns. This Waiver shall be binding upon and inure ---------------------- to the benefit of the parties and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Waiver. 5.9. Counterparts. This Waiver may be executed in any number of ------------ counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Agent of a facsimile transmitted document purportedly bearing the signature of a Bank or the Company shall bind such Bank or the Company, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Agent. 5.10. Entire Agreement. This Waiver, together with the Credit Agreement, ---------------- contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein. This Waiver supercedes all prior drafts and communications with respect thereto. This Waiver may not be amended except in accordance with the provisions of Section 12.1 of the Credit Agreement. * * * IN WITNESS WHEREOF, the parties hereto have dated this Waiver as of May 31, 2001 but executed the same on or about June 20, 2001. MATERIAL SCIENCES CORPORATION By:/s/ James J. Waclawik, Sr. ------------------------------- Name: James J. Waclawik, Sr. ----------------------------- Title: Chief Financial Officer ---------------------------- BANK OF AMERICA, as Agent By:/s/ Kristine D. Hyde ------------------------------- Name: Kristine D. Hyde ----------------------------- Title: Vice President ---------------------------- BANK OF AMERICA, N.A., in its individual corporate capacity By:/s/ Chris D. Buckner ------------------------------- Name: Chris D. Buckner ----------------------------- Title: Vice President ---------------------------- THE NORTHERN TRUST COMPANY By:/s/ Fredric McClendon ------------------------------- Name: Fredric McClendon ----------------------------- Title: Vice President ---------------------------- GUARANTOR ACKNOWLEDGMENT ------------------------ The undersigned, each a guarantor or third party pledgor with respect to the Company's obligations to the Agent and the Banks under the Credit Agreement, each hereby (i) acknowledge and consent to the execution, delivery and performance by the Company of the foregoing Fifth Waiver to the Credit Agreement ("Waiver"), and (ii) reaffirm and agree that the respective guaranty, third ------ party pledge or security agreement to which the undersigned is party and all other documents and agreements executed and delivered by the undersigned to the Agent and the Banks in connection with the Credit Agreement are in full force and effect, without defense, offset or counterclaim. (Capitalized terms used herein have the meanings specified in the Waiver.) GUARANTORS ---------- MSC Pre Finish Metals Inc. MSC Pre Finish Metals (EGV) Inc. MSC Pre Finish Metals (MV) Inc. MSC Pre Finish Metals (MT) Inc. MSC Laminates and Composites Inc. MSC Laminates and Composites (EGV) Inc. MSC Walbridge Coatings Inc. MSC Specialty Films, Inc. MSC Pinole Point Steel Inc. Solar-Gard International, Inc. MSC Pre Finish Metals (PP) Inc. Dated as of May 31, 2001 By: /s/ James J. Waclawik, Sr. --------------------------------- Title: Chief Financial Officer ------------------------------ EX-4.N 3 dex4n.txt SIXTH AMENDMENT, WAIVER & CONSENT DATED 06/21/2001 Exhibit 4(n) SIXTH AMENDMENT, WAIVER AND CONSENT DATED AS OF JUNE 21, 2001 TO CREDIT AGREEMENT DATED AS OF DECEMBER 12, 1997 This Sixth Amendment, Waiver and Consent (this "Amendment"), dated as of June 21, 2001, is made by and among MATERIAL SCIENCES CORPORATION, a Delaware corporation (the "Company"), the financial institutions party hereto (the "Banks"), and Bank of America, N.A., as agent for the Banks (in such capacity, the "Agent"). Unless otherwise defined, terms defined in the Credit Agreement shall have the same respective meanings when used herein. W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company, the Banks and the Agent are parties to that certain Credit Agreement, dated as of December 12, 1997 (as amended or modified and in effect on the date hereof, the "Credit Agreement"); WHEREAS, the Company has requested that the Banks and the Agent agree to amend or modify the Credit Agreement as set forth herein; and WHEREAS, the Banks and the Agent are willing to amend or modify the Credit Agreement on the terms and conditions contained herein. NOW, THEREFORE, in consideration of the premises, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which is hereby acknowledged), the parties hereto, intending legally to be bound, hereby agree as follows: ARTICLE I AMENDMENTS ---------- The Credit Agreement is amended as follows: 1.1. Article I of the Credit Agreement is amended so that the last sentence of the definition of "Applicable Margin" shall read in its entirety as follows: "Applicable Margin" means, in the case of Base Rate ----------------- Loans, 1.75% per annum, in the case of Offshore Rate Loans, 3.25% per annum, and in the case of the Commitment Fee, 0.50% per annum. 1.2. Article I of the Credit Agreement is amended so that the definition of Bekaert shall read as follows: "Bekaert" means Bekaert corporation, a Delaware corporation. ------- 1.3. Article I of the Credit Agreement is further amended so as to add the following definitions. "MSC/SFI Agreements" means the MSC/SFI Contribution Agreement and ------------------ the MSC/SFI Purchase Agreement and the other agreements referred to therein. "MSC/SFI Closing" means the closing under the MSC/SFI Purchase --------------- Agreement. "MSC/SFI Contribution Agreement" means the Contribution Agreement ------------------------------ dated as of June 29, 2001, among the Company, MSC/SFI and New SFI. "MSC/SFI Gross Cash Proceeds" means cash proceeds received by the --------------------------- Company (or MSC/SFI) from the MSC/SFI Closing before taxes and expenses. "MSC/SFI Purchase Agreement" means the Purchase Agreement dated as -------------------------- of June 10, 2001 among the Company, MSC/SFI, Bekaert, and NVB. "MSC/SFI Transaction" means collectively the transactions provided ------------------- for in the MSC/SFI Agreements. "New SFI" means New SFI, LLC, a Delaware limited liability company. ------- "NVB" means N.V. Bekaert S.A., a Belgium corporation. --- 1.4. Section 10.1 of the Credit Agreement is amended by substituting "; or" for the period at the end of subsection (m) and by adding subsection (n) as follows: (n) New Financial Covenants. On or before August 31, 2001 the ----------------------- Company shall have failed to execute an amendment to this Agreement which shall revise, to the satisfaction of the Banks, the financial tests specified in Sections 9.1, 9.2 and 9.3 and shall otherwise be in all respects acceptable to the Banks. ARTICLE II WAIVER ------ 2.1. The Banks hereby waive for the period from June 1, 2001 through August 31, 2001 compliance by the Company with the provisions of Sections 9.1 (Minimum Net Worth), 9.2 (Consolidated Debt to Adjusted EBITDA Ratio) and 9.3 (Fixed Charge Coverage Ratio) of the Credit Agreement. It is understood that the foregoing waiver does not apply to any computation date or period after August 31, 2001. 2.2. The foregoing waiver is specific in time and in intent and does not constitute, nor shall it be construed as, a waiver of any other right, power or privilege under the Credit Agreement, or under any agreement, contract, indenture, document or other instrument mentioned in the Credit Agreement; nor does the foregoing waiver preclude other or further -2- exercise of any other right, power or privilege, nor shall the waiver of any right, power, privilege or default hereunder, or under any agreement, contract, indenture, document, or instrument mentioned in the Credit Agreement, constitute a waiver of any other default of any other term or provision. ARTICLE III CONSENT ------- 3.1. The MSC/SFI Transaction. The Company represents to the Agent and the ----------------------- Banks that: (a) MSC/SFI is a wholly-owned Subsidiary of the Company. (b) As of the date hereof, MSC/SFI owns 50% of ISF. (c) Two of MSC/SFI's wholly owned subsidiaries, Pro Marketing, Inc., a Nebraska corporation ("Pro Marketing"), and Solar-Gard International, Inc., a Florida corporation ("Solar-Gard"), have been merged with and into MSC/SFI. MSC/SFI is the surviving entity. As a result of the Solar-Gard merger, MSC/SFI will own all of the equity in MSC Specialty Films (UK) Ltd., a United Kingdom corporation, Solar Gard (SEA) Pte, Ltd., a Singapore corporation, and MSC Specialty Films (Canada) Inc., an Ontario corporation. (d) MSC/SFI has formed New SFI as a wholly owned subsidiary of MSC/SFI. Pursuant to the MSC/SFI Contribution Agreement, MSC/SFI will contribute the Business through the contribution of substantially all of its assets (including the assets that were formerly owned by Pro Marketing and Solar-Gard) to New SFI. (e) Pursuant to the MSC/SFI Contribution Agreement, MSC/SFI will transfer to New SFI the stock of the following wholly owned subsidiaries: MSC Specialty Films (Australasia) Pty. Limited, an Australian corporation, MSC Specialty Films (UK) Ltd., a United Kingdom company, Solar-Gard (SEA), Pte, Ltd., a Singapore company, MSC Specialty Films (Canada) Inc., an Ontario corporation, MSC Specialty Films de Mexico S.A. de C.V., a Mexican corporation, and Specialty Films de Services Company S.A. de C.V., a Mexican corporation, except that 1% of the stock of each of MSC Specialty Films de Mexico S.A. de C.V. and Specialty Films de Services Company S.A. de C.V. has been transferred to MSC Specialty Films (Canada), Inc., an Ontario corporation, prior to the merger of Solar-Gard into MSC/SFI. (f) Pursuant to the MSC/SFI Purchase Agreement, MSC/SFI will sell to Bekaert all of MSC/SFI's right, title and interest in and to its membership interest in ISF and Newco, all subject to the terms and conditions set forth therein. (g) Pursuant to the MSC/SFI Purchase Agreement, MSC/SFI will sell to NVB (or its designated Affiliate) all of MSC/SFI's right, title and interest in and to certain intellectual property and MSC will assign to NVB a certain agreement with Research Frontiers Incorporated, all subject to the terms and conditions set forth therein. (h) The Company has furnished to the Banks a true and correct copy of the MSC/SFI -3- Agreements substantially in the form as executed or to be executed. (i) The MSC/SFI Gross Cash Proceeds shall not be less than $120,000,000. 3.2. Consent. Notwithstanding the provisions of Article VIII of the Credit ------- Agreement, the Banks hereby consent to the MSC/SFI Transaction, provided, -------- however that: - ------- (a) the MSC/SFI Closing shall occur on or before July 31, 2001, (b) concurrent with the MSC/SFI Closing, the Company shall receive MSC/SFI Gross Cash Proceeds in immediately available funds of not less than $120,000,000, (c) the Company shall immediately apply all of such MSC/SFI Gross Cash Proceeds to the payment in full of the Revolving Loans, and (d) concurrent with the MSC/SFI Closing, the Combined Commitment shall automatically reduce to $20,000,000 (such reduction to be pro rata among the Banks according to their respective Commitments). 3.3. Release. The Banks further agree that concurrent with the MSC/SFI ------- Closing, the Guaranties executed by MSC/SFI, Solar-Gard and New SFI pursuant to the Credit Agreement and any amendments thereto shall automatically be deemed to have been released and terminated in all respects and any and all liabilities of MSC/SFI, Solar-Gard and New SFI arising under or otherwise related to the Credit Agreement are also hereby released. ARTICLE IV REPRESENTATIONS AND WARRANTIES ------------------------------ The Company hereby represents and warrants to the Banks and the Agent that: 4.1. Authorization, etc. The execution, delivery and performance of this ------------------ Amendment are within the Company's corporate authority, have been duly authorized by all necessary corporate action, have received all necessary consents and approvals (if any shall be required), and do not and will not contravene or conflict with any provision of law or of the Certificate of Incorporation or By-laws of the Company or its Subsidiaries, or of any other agreement binding upon the Company or its Subsidiaries or their respective property. 4.2. Validity. This Amendment constitutes the legal, valid, and binding -------- obligations of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. 4.3. No Default. Except for any Default or Event of Default which will be ---------- cured by this Amendment becoming effective, no Event of Default has occurred and is continuing or will result from this Amendment. -4- ARTICLE V CONDITIONS PRECEDENT -------------------- This Amendment shall become effective as of June 21, 2001 (the "Effective Date"), subject, however, to the receipt by the Agent of the following in form and substance satisfactory to the Agent: 5.1. Counterparts. Counterparts of this Amendment (or an executed facsimile ------------ copy hereof), executed by the Company and the Banks. 5.2. Fees and Expenses. Evidence of the payment to the Agent in immediately ----------------- available funds of all legal fees and expenses of the Agent to the extent theretofore invoiced. 5.3. Resolutions, etc. A certificate of the Secretary or the Assistant ---------------- Secretary of the Company as to resolutions, and the signatures and incumbency of officers authorized to sign this Amendment. 5.4. Opinion. An opinion of Kirkland & Ellis, counsel to the Company, as to ------- the due authorization execution and delivery by the Company of this Amendment. 5.5. MSC/SFI Agreements. A certified copy of the MSC/SFI Agreements ------------------ substantially in the form as executed or to be executed. ARTICLE VI MISCELLANEOUS ------------- 6.1. Documents Remain in Effect. Except as amended or modified by this -------------------------- Amendment, the Credit Agreement remains in full force and effect and the Company confirms that its representations, warranties, agreements and covenants contained in, and obligations and liabilities under, the Credit Agreement and each of the other Loan Documents are true and correct in all material respects as if made on the date hereof, except where such representation, warranty, agreement or covenant speaks as of a specified date. References to the Credit Agreement in any other document shall be deemed to include a reference to the Credit Agreement as amended or modified hereby, whether or not reference is made to this Amendment. 6.2. Expenses. The Company covenants to pay to or reimburse the Agent, upon -------- demand, for all reasonable costs and expenses (including legal expenses) in connection with the development, preparation, negotiation, execution and delivery of this Amendment and the Loan Documents. 6.3. Headings. Section headings used in this Amendment are for convenience -------- of reference only, and shall not affect the construction of this Amendment. 6.4. Governing Law. This Amendment shall be a contract made under and ------------- governed by the internal laws of the State of Illinois, without giving effect to principles of conflicts of -5- laws. 6.5. Cumulative Rights. All obligations of the Company and rights of the ----------------- Banks and the Agent, that are expressed herein, shall be in addition to and not in limitation of those provided by applicable law. 6.6. Severability. Whenever possible, each provision of this Amendment ------------ shall be interpreted in such manner as to be effective and valid under applicable law; but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment. 6.7. No Forbearance. The Company acknowledges and agrees that the -------------- execution and delivery by the Agent and the Banks of this Amendment shall not be deemed (i) to create a course of dealing or otherwise obligate the Agent or the Banks to forbear or execute similar amendments under the same or similar circumstances in the future, or (ii) to amend, relinquish or impair any right of the Agent or the Banks to receive any indemnity or similar payment from any Person or entity as a result of any matter arising from or relating to this Amendment. 6.8. Successors and Assigns. This Amendment shall be binding upon and ---------------------- inure to the benefit of the parties and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment. 6.9. Counterparts. This Amendment may be executed in any number of ------------ counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Agent of a facsimile transmitted document purportedly bearing the signature of a Bank or the Company shall bind such Bank or the Company, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Agent. 6.10. Entire Agreement. This Amendment, together with the Credit Agreement, ---------------- contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein. This Amendment supercedes all prior drafts and communications with respect thereto. This Amendment may not be amended except in accordance with the provisions of Section 12.1 of the Credit Agreement. 6.11. Officer's Certificate. In connection with the execution and delivery --------------------- by the parties hereto of this Amendment, the Agent shall deliver to the Company the Officer's Certificate substantially in the form attached hereto as Exhibit A. * * * -6- IN WITNESS WHEREOF, the parties hereto have caused the execution and delivery hereof by their respective representatives thereunto duly authorized as of the date first herein appearing. MATERIAL SCIENCES CORPORATION By: /s/ James J. Waclawik, Sr. --------------------------- Name: James J. Waclawik, Sr. -------------------------- Title: Chief Financial Officer ------------------------- BANK OF AMERICA, as Agent By: /s/ Kristine D. Hyde --------------------------- Name: Kristine D. Hyde -------------------------- Title: Vice President - Senior ------------------------- Agency Officer ------------------------- BANK OF AMERICA, N.A., in its individual corporate capacity By: /s/ Chris D. Buckner --------------------------- Name: Chris D. Buckner -------------------------- Title: Vice President ------------------------- THE NORTHERN TRUST COMPANY By: /s/ Laurie A. Kieta --------------------------- Name: Laurie A. Kieta -------------------------- Title: Vice President ------------------------- -7- GUARANTOR ACKNOWLEDGMENT ------------------------ The undersigned, each a guarantor or third party pledgor with respect to the Company's obligations to the Agent and the Banks under the Credit Agreement, each hereby (i) acknowledge and consent to the execution, delivery and performance by the Company of the foregoing Sixth Amendment to the Credit Agreement ("Amendment"), and (ii) reaffirm and agree that the respective --------- guaranty, third party pledge or security agreement to which the undersigned is party and all other documents and agreements executed and delivered by the undersigned to the Agent and the Banks in connection with the Credit Agreement are in full force and effect, without defense, offset or counterclaim. (Capitalized terms used herein have the meanings specified in the Amendment.) GUARANTORS ---------- MSC Pre Finish Metals Inc. MSC Pre Finish Metals (EGV) Inc. MSC Pre Finish Metals (MV) Inc. MSC Pre Finish Metals (MT) Inc. MSC Laminates and Composites Inc. MSC Laminates and Composites (EGV) Inc. MSC Walbridge Coatings Inc. MSC Specialty Films, Inc* MSC Pinole Point Steel Inc. Solar-Gard International, Inc.* MSC Pre Finish Metals (PP) Inc. New SFI, LLC* Dated as of June 21, 2001 By: /s/ James J. Waclawik, Sr. -------------------------- Title: Chief Financial Officer ----------------------- * To be released from any applicable guaranty pursuant to the Sixth Amendment concurrently with the MSC/SFI Closing. -8- EXHIBIT A --------- BANK OF AMERICA, N.A. OFFICER'S CERTIFICATE --------------------- In connection with that certain Sixth Amendment, Waiver and Consent (the "Amendment"), dated as of June 21, 2001, by and among Material Sciences --------- Corporation (the "Company"), Bank of America, N.A., as agent, and the other financial institutions party thereto, I, Chris Buckner, Vice President, of Bank of America, N.A. (the "Bank"), DO HEREBY CERTIFY that: 1. The Bank has received the MSC/SFI Gross Cash Proceeds (as defined in the Amendment) and applied such proceeds to the payment in full of the Revolving Loans (as defined in the Amendment). 2. The conditions specified in Article V of the Amendment have been fully satisfied. 3. After the date hereof, the only subsidiaries of the Company subject to a guaranty pursuant to the Credit Agreement (as defined in the Amendment) are: MSC Pre Finish Metals Inc. MSC Pre Finish Metals (EGV) Inc. MSC Pre Finish Metals (MV) Inc. MSC Pre Finish Metals (MT) Inc. MSC Laminates and Composites Inc. MSC Laminates and Composites (EGV) Inc. MSC Walbridge Coatings Inc. MSC Pinole Point Steel Inc. MSC Pre Finish Metals (PP) Inc. IN WITNESS WHEREOF, I have hereunto set my hand on behalf of the Bank this __ day of June, 2001. BANK OF AMERICA, N.A. /s/ Chris D. Buckner --------------------------- By: Chris D. Buckner ------------------------ Its: Vice President ----------------------- -9- EX-10.DD 4 dex10dd.txt FORM OF CHANGE IN CONTROL AGREEMENT (MSC EXECUTIVE) EXHIBIT 10.(dd) CHANGE IN CONTROL AGREEMENT --------------------------- (MSC - Officer) CHANGE IN CONTROL AGREEMENT (this "Agreement") dated as of DATE by and --------- between MATERIAL SCIENCES CORPORATION, a Delaware corporation (the "Company"), ------- and ________________ ("Employee") (capitalized terms used herein and not -------- otherwise defined shall have the meanings ascribed thereto in Section 9 hereof). W I T N E S S E T H: -------------------- WHEREAS, in order to induce Employee to continue employment with, and remain in the employment of the Company, the Company and Employee desire to enter into this Agreement to provide Employee with appropriate compensation in the event of a Change in Control. NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties, intending legally to be bound, hereby agree as follows: 1. Term of Agreement. The term of this Agreement shall commence on the ----------------- date hereof and shall terminate on the third anniversary of the date hereof; provided; however, that this Agreement shall automatically renew for successive - -------- ------- one year terms unless either party delivers written notice to the other party at least 90 days in advance of the expiration of the initial term or the applicable renewal term, as the case may be, to the effect that such party desires to terminate this Agreement as of the last day of the initial term or applicable renewal term, as the case may be. The Company shall not terminate Employee's employment by the Company in connection with or in anticipation of a Change in Control. 2. Post Change in Control Employment. --------------------------------- (a) Commencement of Employment Period. The Company hereby employs --------------------------------- Employee, and Employee hereby accepts such employment, effective upon the occurrence of a Change in Control (the "Effective Date"), upon the terms and -------------- conditions hereinafter set forth. (b) Termination of Employment Period. The term of employment under -------------------------------- this Agreement shall terminate upon the earliest to occur of the following events (the date of such event being referred to as the "Termination Date," ---------------- except as more particularly defined in Section 9 or 4(e)): (i) Employee's death; (ii) the Company's termination of Employee's employment by the Company as a result of Employee's Disability; (iii) the Company's termination of Employee's employment by the Company for Cause or without Cause; (iv) Employee's termination of Employee's employment by the Company for Good Reason or without Good Reason; and (v) the date specified in Section 2(b)(v) of attached Schedule -------- A (the period commencing on the Effective Date and ending on such date is - referred to as the "Subject Period"); provided, however, that such period -------------- -------- ------- of employment may be extended by written agreement of the parties (it being understood that if no such written agreement is entered into and Employee remains employed by the Company after the completion of the Subject Period, such employment shall be "at-will" unless different terms are established in writing). (c) Notice of Termination. Any purported termination of Employee's --------------------- employment by the Company or by Employee shall be communicated by to the other party hereto by a written notice which shall indicate the specific termination provision of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated. (d) Compensation During Employment Period. During the Employment ------------------------------------- Period, Employee shall be entitled to the following compensation: (i) The Company shall pay to Employee a monthly base salary in an amount which is at least equal to Employee's highest base monthly salary in effect during the 12-month period immediately preceding the Effective Date. (ii) The Company shall pay to Employee an annual cash bonus (the "Required Bonus"), payable within 45 days after each anniversary of -------------- the Effective Date, in an amount which is at least equal the greater of (A) to the highest annual bonus paid to Employee in respect of any of the three fiscal years of the Company ended immediately preceding the Effective Date and (B) the bonus which would otherwise be required to be paid to Employee under the EVA Plan for the applicable period. (iii) The Company shall continue to provide all employee benefit programs and fringe benefits, including ,without limitation, incentive, savings, bonus, welfare benefit, reimbursement and retirement plans and the provision of Company automobiles, and permit Employee to participate therein at rates of participation and on terms and conditions which are at least equal to the most favorable rates of participation and terms and conditions available to Employee at any time during the 120-day period immediately preceding the Effective Date. (iv) All cash compensation payable pursuant to this Section shall be subject to all withholding and deductions required by applicable law. -2- 3. Compensation Upon Termination of Employment Period. -------------------------------------------------- (a) Death. If Employee's employment by the Company is terminated as ----- a result of the occurrence of Employee's death pursuant to Section 2(b)(i), the Company shall pay to Employee's estate the compensation and other benefits, including the bonus described in Section 2(d)(ii) pro-rated for partial years of service, unpaid deferred compensation and vacation pay, expressly provided under this Agreement through the Termination Date, as well as any death benefits available under any Company plan or policy. (b) Disability. If Employee's employment by the Company is terminated ---------- by the Company as a result of the occurrence of Employee's Disability pursuant to Section 2(b)(ii), the Company shall pay to Employee the compensation and other benefits, including the bonus described in Section 2(d)(ii) pro-rated for partial years of service, unpaid deferred compensation and vacation pay, expressly provided under this Agreement through the Termination Date, as well as any disability benefits available under any Company plan or policy. (c) Termination for Cause. If Employee's employment by the Company is --------------------- terminated by the Company for Cause pursuant to Section 2(b)(iii), the Company shall pay to Employee the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date. (d) Termination without Cause. If Employee's employment by the ------------------------- Company is terminated by the Company without Cause pursuant to Section 2(b)(iii), the Company shall pay to Employee (i) the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date and (ii) a lump sum cash payment (the "Severance Payment") equal to the sum of: ----------------- (A) the product of (I) the number set forth in Section 3(d)(ii)(A) of attached Schedule A multiplied by (II) the sum (y) ---------- Employee's annual base salary in effect at the Termination Date and (z) the Highest Annual Bonus (as hereinafter defined) ; (B) an amount (the "Highest Annual Bonus") equal to the greater -------------------- of (I) the Required Bonus and (II) the annual bonus received by Employee during the most recent fiscal year of the Company, in each case prorated to reflect the partial year for which Employee was employed by the Company from and after the most recent anniversary of the Effective Date; (C) the amount the Company would have been required to contribute on behalf of Employee under its defined contribution plans had Employee remained employed by the Company in the same status after the Termination Date for the duration of the Subject Period; and (D) the full positive balance in Employee's "bonus bank" account maintained by the Company pursuant to the EVA Plan (it being agreed that Employee shall not be required to pay to the Company any negative balance in such "bonus bank" -3- account), in each case notwithstanding anything to the contrary contained in the EVA Plan. In addition, (i) the Company, at its expense, shall continue to provide Employee with all employee benefit programs (other than welfare benefit programs) and fringe benefits specified in Section 2(d)(iii) for the duration of the Subject Period, or until Employee's death, whichever is the shorter period; (ii) the Company, at its expense (not to exceed the amount set forth in Section 3(d) of attached Schedule A), shall provide Employee with outplacement services; ---------- and (iii) all stock options, shares of restricted stock and other stock or stock based awards granted by the Company to Employee shall become fully vested, notwithstanding the terms and conditions thereof or any plans pursuant to which such grants or awards were made (the provisions of this paragraph are referred to as the "Other Severance Benefits"). ------------------------ (e) Termination by Employee. ----------------------- (i) Except as set forth in Section 3(e)(ii), if Employee's employment by the Company is terminated by Employee without Good Reason pursuant to Section 2(b)(iv), the Company shall pay to Employee the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date. (ii) If Employee's employment by the Company is terminated by Employee (A) without Good Reason within 30 days after the first year anniversary of the Effective Date pursuant to Section 2(b)(iv) or (B) for Good Reason at any time from and after the Effective Date, the Company shall pay to Employee (I) the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date and (II) a lump sum cash payment equal to the Severance Payment. In addition, Employee shall be entitled to the Other Severance Benefits. 4. Additional Understandings. ------------------------- (a) Timing of Certain Payments. The payments provided for in Section -------------------------- 3 shall be made not later than the 30th day following the Termination Date. (b) Retirement Benefits. In addition to all other amounts payable to ------------------- Employee under Section 3, following the termination of Employee's employment by the Company, Employee shall be entitled to receive all benefits payable to Employee under any plan or agreement relating to retirement benefits. (c) No Mitigation. Employee shall not be required to mitigate the ------------- amount of any payment provided for in Section 3 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 3 be reduced by any compensation earned by Employee as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by Employee to the Company or otherwise. -4- (d) Excise Tax Gross-Up. ------------------- (i) In the event that Employee becomes entitled to the payments and benefits provided under Section 3 above and/or any other payments or benefits in connection with a change in control or termination of Employee's employment with the Company (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change in control or any person affiliated with the Company or such person) (collectively, the "Payments"), if any of the Payments will be subject to the tax (the "Excise -------- ------ Tax") imposed by Section 4999 of the Code, then (A) if the aggregate amount --- of the Payments is equal to or greater than 330% of the "base amount" as defined in Section 280G(b)(3) of the Code, then the Company shall pay to Employee, at least 30 days prior to the time payment of any such Excise Tax is due, an additional amount (the "Gross-Up Payment") such that the net ---------------- amount retained by Employee, after deduction of any Excise Tax and any federal and state and local income tax imposed on the Gross-Up Payment, shall be equal to the Excise Tax imposed on the Payments; and (B) if the aggregate amount of the Payments is less than 330% of the "base amount," then the aggregate present value of the payments made pursuant to the terms of this Agreement alone without taking into account payments made pursuant to any other agreements between the Company and Employee shall be reduced so that the Payment equals 299.99% of the "base amount" (it being understood that in no event shall the amount of the payment made pursuant to the terms of this Agreement be less than $0). (ii) For purposes of determining whether any of the Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) the Payments shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to Employee, the Payments (in whole or in part) do not constitute parachute payments or excess parachute payments or are otherwise not subject to the Excise Tax, (B) the amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (y) the total amount of the Payments or (z) the amount of excess parachute payments within the meaning of Section 280G(b)(l) (after applying clause (A) above), and (C) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. (iii) For purposes of determining the amount of the Gross-Up Payment, Employee shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Employee's residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. -5- (iv) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Employee's employment, Employee shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross- Up Payment being repaid by Employee if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of Employee's employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross- Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined. (e) Company Successors. 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. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from the Company in the same amount and on the same terms as Employee would be entitled to hereunder if Employee terminated Employee's employment by the Company for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Termination Date. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. (f) No Contract of Employment. This Agreement shall not be construed ------------------------- as creating an express or implied contract of employment and, subject to Section 1 and except as otherwise agreed in writing between the Company and Employee, Employee shall not have any right to be retained in the employ of the Company. 5. Confidential Information and Ownership of Property. -------------------------------------------------- (a) Confidential Information. Employee agrees to use all Confidential ------------------------ Information solely in connection with the performance of services for or on behalf of the Company. Employee shall not, during the term of this Agreement, or at any time after the termination of this Agreement, in any manner, either directly or indirectly, (i) disseminate, disclose, use or communicate any Confidential Information to any person or entity, regardless of whether such Confidential Information is considered to be confidential by third parties, or (ii) otherwise directly or indirectly misuse any Confidential Information; provided, however, that (y) none of the provisions of this Section shall apply - -------- ------- to disclosures made for valid business purposes of the Company or (z) that Employee shall not be obligated to treat as confidential any Confidential Information that (I) was publicly known at the time of disclosure to Employee; -6- (II) becomes publicly known or available thereafter other than by means in violation of this Agreement or any other duty owed to the Company or any of its Affiliates by any person or entity; or (III) is lawfully disclosed to Employee by a third party. Notwithstanding the foregoing, Employee shall be permitted to disclose Confidential Information to the extent required to enforce Employee's rights hereunder in any litigation arising under, or pertaining to, this Agreement provided that Employee shall give prior written notice to the Company of any such disclosure so that the Company may have an opportunity to protect the confidentiality of such Confidential Information in such litigation. (b) Ownership of Property. Employee agrees that all works of --------------------- authorship developed, authored, written, created or contributed to during the term of this Agreement for the benefit of the Company, whether solely or jointly with others, shall be considered works-made-for-hire. Employee agrees that such works shall be the sole and exclusive property of the Company (or its appropriate Affiliate) and that all right, title and interest therein or thereto, including all intellectual property rights existing or obtained in connection therewith, shall likewise be the sole and exclusive property of the Company (or its appropriate Affiliate). Employee agrees further that, in the event that any work is not considered to be work-made-for-hire by operation of law, Employee will immediately, and without further compensation, assign all of Employee's right, title and interest therein to the Company (or its designated Affiliate), its successors and assigns. At the request and expense of the Company, Employee agrees to perform in a timely manner such further acts as may be necessary or desirable to transfer, defend or perfect the Company's ownership of such work and all rights incident thereto. 6. Covenant Not to Compete. Employee covenants and agrees that Employee ----------------------- shall not, during the term of Employee's employment by the Company or any Affiliate thereof and for the Non-Compete Period, directly or indirectly own an interest in, operate, join, control, advise, work for, consult to, have a financial interest which provides any control of, or participate in any corporation, partnership, proprietorship, firm, association, person, or other entity producing, designing, providing, soliciting orders for, selling, distributing, consulting to, or marketing or re-marketing products, goods, equipment, or services competitive with or in substantially the same line of business as the Company or any Affiliate thereof, or any part thereof, as of the commencement of the Non-Compete Period. This prohibition applies in the territory specified in Section 6 of attached Schedule A. This covenant does not ---------- prohibit the mere ownership of less than three percent (3%) of the outstanding stock of any publicly-traded corporation as long as Employee is not otherwise in violation of this Agreement. 7. Covenant Against Solicitation of Employees. During the term of ------------------------------------------ Employee's employment by the Company and for the Non-Compete Period, Employee shall not employ employees or agents or former employees or agents of the Company or its Affiliates or, directly or indirectly, solicit or otherwise encourage the employment of employees or agents or former employees or agents of the Company or its Affiliates; provided, however, that this restriction shall -------- ------- not apply to former employees or agents (y) who, as of the date of termination of Employee's employment by the Company, have not worked for any of the Company or its Affiliates during the twelve preceding months or (z) whose employment by the Company or any Affiliate thereof was terminated by the Company. -7- 8. Remedies. -------- (a) Employee Acknowledgements. Employee acknowledges (i) that the ------------------------- covenants contained in Sections 5, 6 and 7, including, without limitation, the time and geographic limits (collectively, the "Restrictive Covenants"), are --------------------- reasonable and appropriate and that Employee will not any claim to the contrary in any action brought by the Company or its Affiliates to enforce any of such provisions and (ii) that should Employee violate any of the Restrictive Covenants, it will be difficult to determine the resulting damages to the Company and its Affiliates and, in addition to any other remedies the Company and its Affiliates may have, (A) the Company and its Affiliates shall be entitled to temporary injunctive relief without being required to post a bond and permanent injunctive relief without the necessity of proving actual damage; and (B) the Company shall have the right to offset against its obligation to make any payments to Employee under this Agreement or otherwise to the extent of any money damages incurred or suffered by the Company and its Affiliates. The Company may elect to seek one or more of these remedies at its sole discretion on a case by case basis. Failure to seek any or all remedies in one case shall not restrict the Company from seeking any remedies in another situation. Such action by the Company shall not constitute a waiver of any of its rights. (b) Intent. It is the parties' intent that each of the Restrictive ------ Covenants be read and interpreted with every reasonable inference given to its enforceability. However, it is also the parties' intent that if any term, provision or condition of the Restrictive Covenants is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Finally, it is also the parties' intent that if a court should determine any of the Restrictive Covenants are unenforceable because of over-breadth, then the court shall modify said covenant so as to make it reasonable and enforceable under the prevailing circumstances. (c) Tolling. In the event of any breach by Employee of any ------- Restrictive Covenant, the running of the period of restriction shall be automatically tolled and suspended for the duration of such breach, and shall automatically recommence when such breach is remedied in order that the Company shall receive the full benefit of Employee's compliance with each of the Restrictive Covenants. (d) Independent Enforcement. Employee agrees that the Restrictive ----------------------- Covenants shall be enforced independently of any other obligations between the Company, on the one hand, and Employee, on the other, and that the existence of any other claim or defense shall not affect the enforceability of the Restrictive Covenants or the remedies provided herein. The Restrictive Covenants shall be in addition to and shall not replace any other restrictive covenant agreement that Employee may currently have (or hereafter enter into) with the Company or any of its Affiliates. (e) Survival. The provisions of this Section 8 shall survive the -------- termination of this Agreement. 9. Certain Defined Terms. For purposes of this Agreement the following --------------------- terms and phrases shall have the following meanings: -8- "Affiliate" means any person or entity who or which, directly or --------- indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified person or entity (the term "control" for these purposes meaning the ability, whether by ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to act as or select the managing or general partner of a partnership, or otherwise to select, or have the power to remove and then select, a majority of those persons exercising governing authority over an entity). "Cause", with respect to the termination of Employee's employment by the ----- Company, means (i) the willful and continued refusal by Employee to perform a lawful and reasonable order, direction or instruction of the Board of Directors within a reasonable period of time after a written demand for substantial performance is delivered to Employee by the Board of Directors which demand specifically identifies the manner in which the Board believes that Employee has not substantially performed such an order, direction or instruction; or (ii) the willful misconduct by Employee in the performance of Employee's duties to the Company or the willful engaging by Employee in conduct which, in either case, is illegal or materially injurious to the Company. For purposes of this definition, no act, or failure to act, on Employee's part shall be deemed "willful" unless done, or omitted to be done, by Employee not in good faith and without reasonable belief that Employee's action or omission was in the best interest of the Company. In addition, notwithstanding the foregoing, Employee's employment by the Company shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for such purpose (after reasonable notice to Employee and an opportunity for Employee, together with counsel, to be heard before the Board of Directors), finding that in the good faith opinion of the Board of Directors, Employee was guilty of conduct set forth above in clauses (i) or (ii) of the first sentence of this definition and specifying the particulars thereof in detail. "Change in Control" means the occurrence of any one of the following ----------------- events: (i) there is an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraphs (i) or (iii) of this definition) whose election by the Board of Directors of the Company or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or -9- (iii) the stockholders of the Company approve (A) a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or through the surviving entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. "Code" means the Internal Revenue Code of 1986, as amended. ---- "Confidential Information" means all software, trade secrets, work products ------------------------ created by Employee for the Company or any of its Affiliates, know-how, ideas, techniques, theories, discoveries, formulas, plans, charts, designs, drawings, lists of current or prospective clients, business plans and proposals, current or prospective business opportunities, financial records, research and development, marketing strategies and programs and reports and other proprietary information created or obtained by Employee for the benefit of the Company or any of its Affiliates during the course of employment by the Company. "Disability" means the inability of Employee to perform substantially all ---------- Employee's duties and responsibilities to the Company by reason of a physical or mental illness or infirmity for either (i) a continuous period of six months or (ii) 180 days during any consecutive twelve-month period. "Employment Period" means the date commencing on the Effective Date and ----------------- terminating on the Termination Date. "EVA Plan" means the Economic Value Added Improvement Incentive Plan -------- adopted by the Company, as the same may be amended, modified, supplemented or restated from time to time (including any successor thereto or replacement therefor). "Exchange Act" means the Securities Exchange Act of 1934, as amended. ------------ "Good Reason" means the occurrence, without the express written consent of ----------- Employee, of any one of the following events, unless such circumstances are fully corrected prior to the Termination Date specified in the applicable notice of termination delivered pursuant to Section 2(b): (i) the assignment to Employee of any duties inconsistent with Employee's position and status with the Company as set forth on attached Schedule A or a substantial adverse alteration in the nature or status of ---------- Employee's employment responsibilities from those in existence on the date hereof; (ii) the relocation of Employee's office or job location to a location not within seventy-five miles of Employee's present office or job location, except for required travel on the Company's business to an extent substantially consistent with Employee's present business travel obligations; -10- (iii) the failure by the Company to pay to Employee any portion of the compensation required hereunder or under any compensation plan or program of the Company, within ten business days of the date such compensation is due; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 4(e) hereof; or (v) any purported termination of Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 2. "Non-Compete Period" means the period commencing on the date upon which ------------------ Employee ceases to be employed by the Company or any Affiliate thereof and terminating as specified on Section 9 of attached Schedule A thereafter. ---------- "Termination Date" means ---------------- (i) if Employee's employment is terminated for Disability, 30 days after Notice of Termination is given (provided that Employee shall not have returned to the full-time performance of Employee's duties during such 30 day period); and (ii) if Employee's employment is terminated pursuant to Section 2(b) for any other reason (other than death or Disability), the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than 30 days, and in the case of a termination for Good Reason shall not be less than 15 nor more than 60 days, respectively, from the date such Notice of Termination is given); provided; however, that if prior to the Termination Date (as determined without - -------- ------- regard to this provision), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Termination Date shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided; -------- further, however, that the Termination Date shall be extended by a notice of - ------- ------- dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. During the pendency of any such dispute, the Company will continue to pay Employee's full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue Employee as a participant in all compensation, benefit and insurance plans in which Employee was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this definition. Amounts paid under this paragraph are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement. 10. Miscellaneous. ------------- (a) Amendment. This Agreement may be amended, modified or --------- supplemented but only in writing signed by each of the parties hereto. -11- (b) Waivers. The failure of a party hereto at any time or times to ------- require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. (c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ------------- IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. (d) Forum Selection and Consent to Jurisdiction. EACH OF THE COMPANY ------------------------------------------- AND EMPLOYEE AGREE THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT BETWEEN OR AMONG SUCH PARTIES, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS LOCATED IN COOK COUNTY, ILLINOIS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS. EACH OF THE COMPANY AND EMPLOYEE HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS LOCATED IN COOK COUNTY, ILLINOIS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS. EACH OF THE COMPANY AND EMPLOYEE HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. (e) Counterparts. This Agreement may be executed in counterparts, ------------ each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Interpretation. The headings preceding the text of Articles and -------------- Sections included in this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include, without limitation," respectively. (g) Assignment. This Agreement shall be binding upon and inure to ---------- the benefit of the parties hereto and their respective successors and assigns. No assignment of any rights or obligations shall be made by any party without the written consent of each other party. (h) No Third Party Beneficiaries. This Agreement is solely for the ---------------------------- benefit of the parties hereto and, to the extent provided herein, their respective affiliates, directors, officers, employees, agents, heirs and representatives, and no provision of this Agreement shall be -12- deemed to confer upon other third parties any remedy, claim, liability, reimbursement, cause of action or other right. (i) Severability. If any provision of this Agreement shall be held ------------ invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue. (j) Remedies Cumulative. The remedies provided in this Agreement ------------------- shall be cumulative and shall not preclude the assertion or exercise of any other rights or remedies available by law, in equity or otherwise. (k) Entire Understanding. This Agreement, together with attached -------------------- Schedule A, sets forth the entire agreement and understanding of the parties - ---------- hereto with respect to the matters set forth herein and supersedes any and all prior agreements, arrangements and understandings among the parties; provided, -------- however, that any agreements and understandings between the Company and Employee - ------- relating to employment and severance shall continue in full force and effect until the occurrence of a Change in Control. (l) Conflicts With Existing Agreements. Subject to Section 10(k), in ---------------------------------- the event that any term or provision of this Agreement conflicts with or differs from any term or provision of other existing agreement, understanding or plan (the "Existing Agreements") between the Company and Employee or to which ------------------- Employee is a participant, such term or provision of this Agreement shall govern for all purposes and respects. Except as expressly set forth herein, this Agreement does not constitute a waiver or modification of any provision of any Existing Agreement. Except as expressly modified hereby, the Existing Agreements shall continue in full force and effect in accordance with the provisions thereof on the date hereof. (m) Attorneys' Fees and Other Costs. In the event a dispute arises ------------------------------- between the parties hereto and suit is instituted, the prevailing party or parties in such litigation shall be entitled to recover reasonable attorneys' fees and other costs and expenses from the non-prevailing party or parties, whether incurred at the trial level or in any appellate proceeding. Unless Employee otherwise elects, expenses incurred by Employee in connection with any dispute described in this Section will be paid by the Company in advance of the final disposition of such dispute within 20 days after presentation by Employee of written documentation therefor reasonably satisfactory to the Company if Employee furnishes the Company a written undertaking to repay any amounts advanced if it is ultimately determined that Employee is not entitled to attorneys' fees and other costs pursuant to this Section (which written undertaking will provide that the Company shall be entitled to collect its attorneys' fees and other out-of-pocket costs incurred in connection with the enforcement of such undertaking). (n) Notices. For the purpose of this Agreement, notices and all ------- other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to (i) the Company at 2200 East Pratt Boulevard, Elk Grove Village, Illinois 60007- 5995 and (ii) Employee at the address set forth on attached Schedule A, provided ---------- that all notices to the Company shall be directed to the attention of the -13- Board of Directors, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change in address shall be effective only upon recei pt. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. THE COMPANY: ----------- MATERIAL SCIENCES CORPORATION, a Delaware corporation By:______________________________________ Name: Gerald G. Nadig Title: Chairman, President and Chief Executive Officer EMPLOYEE: __________________________________________ Name: -14- SCHEDULE A ---------- Change in Control Agreement Employee Name: Gerald G. Nadig Employee Position: Chairman, President and Chief Executive Officer Section 2(b)(v): [36 months] anniversary of Effective Date (duration of Employment Period) Section 3(d)(ii)(A): [3.0x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [3.0 years] (duration of Non-Compete Period) SCHEDULE A ---------- Change in Control Agreement Employee Name: Frank J. Lazowski, Jr. Employee Position: Senior Vice President Human Resources Section 2(b)(v): [30 months] anniversary of Effective Date (duration of Employment Period) Section 3(d)(ii)(A): [2.5x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.5 years] (duration of Non-Compete Period) -2- SCHEDULE A ---------- Change in Control Agreement Employee Name: James J. Waclawik, Sr. Employee Position: Vice President, Chief Financial Officer and Secretary Section 2(b)(v): [30 months] anniversary of Effective Date (duration of Employment Period) Section 3(d)(ii)(A): [2.5x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.5 years] (duration of Non-Compete Period) -3- SCHEDULE A ---------- Change in Control Agreement Employee Name: Robert J. Mataya Employee Position: Vice President, Business Planning and Development Section 2(b)(v): [30 months] anniversary of Effective Date (duration of Employment Period) Section 3(d)(ii)(A): [2.5x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.5 years] (duration of Non-Compete Period) -4- SCHEDULE A ---------- Change in Control Agreement Employee Name: Edward J. Vydra Employee Position: Vice President and Chief Technology Officer Section 2(b)(v): [30 months] anniversary of Effective Date (duration of Employment Period) Section 3(d)(ii)(A): [2.5x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.5 years] (duration of Non-Compete Period) -5- SCHEDULE A ---------- Change in Control Agreement Employee Name: David J. DeNeve Employee Position: Vice President, Controller Section 2(b)(v): [24 months] anniversary of Effective Date (duration of Employment Period) Section 3(d)(ii)(A): [2.0x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.0 years] (duration of Non-Compete Period) -4- EX-10.EE 5 dex10ee.txt FORM OF CHANGE IN CONTROL (SUBSID. EXECUTIVE) Exhibit 10.(ee) CHANGE IN CONTROL AGREEMENT --------------------------- (Strategic Business Unit Group Vice President and General Manager ) CHANGE IN CONTROL AGREEMENT (this "Agreement") dated as of (DATE) by and --------- between [NAME OF SUBSIDIARY], (INCORPORATED)_______ corporation (the "Company"), and ________________ ("Employee") (capitalized terms used herein and ------- -------- not otherwise defined shall have the meanings ascribed thereto in Section 9 hereof). W I T N E S S E T H: - - - - - - - - - - WHEREAS, in order to induce Employee to continue employment with, and remain in the employment of the Company, the Company and Employee desire to enter into this Agreement to provide Employee with appropriate compensation in the event of a Change in Control. NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties, intending legally to be bound, hereby agree as follows: 1. Term of Agreement. The term of this Agreement shall commence on the ----------------- date hereof and shall terminate on the third anniversary of the date hereof; provided; however, that this Agreement shall automatically renew for successive - -------- ------- one year terms unless either party delivers written notice to the other party at least 90 days in advance of the expiration of the initial term or the applicable renewal term, as the case may be, to the effect that such party desires to terminate this Agreement as of the last day of the initial term or applicable renewal term, as the case may be. The Company shall not terminate Employee's employment by the Company in connection with or in anticipation of a Change in Control. 2. Post Change in Control Employment. --------------------------------- (a) Commencement of Employment Period. The Company hereby employs --------------------------------- Employee, and Employee hereby accepts such employment, effective upon the occurrence of a Change in Control (the "Effective Date"), upon the terms and -------------- Conditions hereinafter set forth. (b) Termination of Employment Period. The term of employment under -------------------------------- this Agreement shall terminate upon the earliest to occur of the following events (the date of such event being referred to as the "Termination Date," ---------------- except as more particularly defined in Section 9 or 4(e)): (i) Employee's death; (ii) the Company's termination of Employee's employment by the Company as a result of Employee's Disability; (iii) the Company's termination of Employee's employment by the Company for Cause or without Cause; (iv) Employee's termination of Employee's employment by the Company for Good Reason or without Good Reason; and (v) the second anniversary of the Effective Date (the period commencing on the Effective Date and ending on such date is referred to as the "Subject Period"); provided, however, that such period of ------- ------ -------- ------- employment may be extended by written agreement of the parties (it being understood that if no such written agreement is entered into and Employee remains employed by the Company after the completion of the Subject Period, such employment shall be "at-will" unless different terms are established in writing). (c) Notice of Termination. Any purported termination of Employee's --------------------- employment by the Company or by Employee shall be communicated by to the other party hereto by a written notice which shall indicate the specific termination provision of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated. (d) Compensation During Employment Period. During the Employment ------------------------------------- Period, Employee shall be entitled to the following compensation: (i) The Company shall pay to Employee a monthly base salary in an amount which is at least equal to Employee's highest base monthly salary in effect during the 12-month period immediately preceding the Effective Date. (ii) The Company shall pay to Employee an annual cash bonus (the "Required Bonus"), payable within 45 days after each -------------- anniversary of the Effective Date, in an amount which is at least equal the greater of (A) to the highest annual bonus paid to Employee in respect of any of the three fiscal years of the Company ended immediately preceding the Effective Date and (B) the bonus which would otherwise be required to be paid to Employee under the EVA Plan for the applicable period. (iii) The Company shall continue to provide all employee benefit programs and fringe benefits, including ,without limitation, incentive, savings, bonus, welfare benefit, reimbursement and retirement plans and the provision of Company automobiles, and permit Employee to participate therein at rates of participation and on terms and conditions which are at least equal to the most favorable rates of participation and terms and conditions available to Employee at any time during the 120-day period immediately preceding the Effective Date. (iv) All cash compensation payable pursuant to this Section shall be subject to all withholding and deductions required by applicable law. -2- 3. Compensation Upon Termination of Employment Period. -------------------------------------------------- (a) Death. If Employee's employment by the Company is terminated as ----- a result of the occurrence of Employee's death pursuant to Section 2(b)(i), the Company shall pay to Employee's estate the compensation and other benefits, including the bonus described in Section 2(d)(ii) pro-rated for partial years of service, unpaid deferred compensation and vacation pay, expressly provided under this Agreement through the Termination Date, as well as any death benefits available under any Company plan or policy. (b) Disability. If Employee's employment by the Company is ---------- terminated by the Company as a result of the occurrence of Employee's Disability pursuant to Section 2(b)(ii), the Company shall pay to Employee the compensation and other benefits, including the bonus described in Section 2(d)(ii) pro-rated for partial years of service, unpaid deferred compensation and vacation pay, expressly provided under this Agreement through the Termination Date, as well as any disability benefits available under any Company plan or policy. (c) Termination for Cause. If Employee's employment by the Company --------------------- is terminated by the Company for Cause pursuant to Section 2(b)(iii), the Company shall pay to Employee the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date. (d) Termination without Cause. If Employee's employment by the ------------------------- Company is terminated by the Company without Cause pursuant to Section 2(b)(iii), the Company shall pay to Employee (i) the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date and (ii) a lump sum cash payment (the "Severance Payment") equal to the sum of: ----------------- (A) the product of (I) the number set forth in Section 3(d)(ii)(A) of attached Schedule A multiplied by (II) the sum (y) ---------- Employee's annual base salary in effect at the Termination Date and (z) the Highest Annual Bonus (as hereinafter defined); (B) an amount (the "Highest Annual Bonus") equal to the -------------------- greater of (I) the Required Bonus and (II) the annual bonus received by Employee during the most recent fiscal year of the Company, in each case prorated to reflect the partial year for which Employee was employed by the Company from and after the most recent anniversary of the Effective Date; (C) the amount the Company would have been required to contribute on behalf of Employee under its defined contribution plans had Employee remained employed by the Company in the same status after the Termination Date for the duration of the Subject Period; and (D) the full positive balance in Employee's "bonus bank" account maintained by Parent pursuant to the EVA Plan (it being agreed that Employee shall not be required to pay to the Company or Parent any negative balance in such -3- "bonus bank" account), in each case notwithstanding anything to the contrary contained in the EVA Plan. In addition, (i) the Company, at its expense, shall continue to provide Employee with all employee benefit programs (other than welfare benefit programs) and fringe benefits specified in Section 2(d)(iii) for the duration of the Subject Period, or until Employee's death, whichever is the shorter period; (ii) the Company, at its expense (not to exceed the amount set forth in Section 3(d) of attached Schedule A), shall provide Employee with outplacement services; ---------- and (iii) all stock options, shares of restricted stock and other stock or stock based awards granted by the Company to Employee shall become fully vested, notwithstanding the terms and conditions thereof or any plans pursuant to which such grants or awards were made (the provisions of this paragraph are referred to as the "Other Severance Benefits"). ------------------------ (e) Termination by Employee. ----------------------- (i) Except as set forth in Section 3(e)(ii), if Employee's employment by the Company is terminated by Employee without Good Reason pursuant to Section 2(b)(iv), the Company shall pay to Employee the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date. (ii) If Employee's employment by the Company is terminated by Employee (A) without Good Reason pursuant to Section 2(b)(iv) within 30 days after the first year anniversary of an Effective Date arising by reason of a Parent Change in Control or (B) for Good Reason pursuant to Section 2(b)(iv) at any time from and after an Effective Date arising from a Parent Change in Control or a Company Change in Control, the Company shall pay to Employee (A) the compensation and other benefits, including unpaid deferred compensation and vacation pay (but excluding the bonus described in Section 2(d)(ii)), expressly provided under this Agreement through the Termination Date and (B) a lump sum cash payment equal to the Severance Payment. In addition, Employee shall be entitled to the Other Severance Benefits. 4. Additional Understandings. ------------------------- (a) Timing of Certain Payments. The payments provided for in -------------------------- Section 3 shall be made not later than the 30th day following the Termination Date. (b) Retirement Benefits. In addition to all other amounts payable ------------------- to Employee under Section 3, following the termination of Employee's employment by the Company, Employee shall be entitled to receive all benefits payable to Employee under any plan or agreement relating to retirement benefits. (c) No Mitigation. Employee shall not be required to mitigate the ------------- amount of any payment provided for in Section 3 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 3 be reduced by any compensation earned by Employee as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by Employee to the Company or otherwise. -4- (d) Excise Tax Gross-Up. ------------------- (i) In the event that Employee becomes entitled to the payments and benefits provided under Section 3 above and/or any other payments or benefits in connection with a change in control or termination of Employee's employment with the Company (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change in control or any person affiliated with the Company or such person) (collectively, the "Payments"), if any of the Payments will be subject to the tax (the "Excise -------- ------ Tax") imposed by Section 4999 of the Code, then (A) if the aggregate amount --- of the Payments is equal to or greater than 330% of the "base amount" as defined in Section 280G(b)(3) of the Code, then the Company shall pay to Employee, at least 30 days prior to the time payment of any such Excise Tax is due, an additional amount (the "Gross-Up Payment") such that the net ---------------- amount retained by Employee, after deduction of any Excise Tax and any federal and state and local income tax imposed on the Gross-Up Payment, shall be equal to the Excise Tax imposed on the Payments; and (B) if the aggregate amount of the Payments is less than 330% of the "base amount," then the aggregate present value of the payments made pursuant to the terms of this Agreement alone without taking into account payments made pursuant to any other agreements between the Company and Employee shall be reduced so that the Payment equals 299.99% of the "base amount" (it being understood that in no event shall the amount of the payment made pursuant to the terms of this Agreement be less than $0). (ii) For purposes of determining whether any of the Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) the Payments shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to Employee, the Payments (in whole or in part) do not constitute parachute payments or excess parachute payments or are otherwise not subject to the Excise Tax, (B) the amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (y) the total amount of the Payments or (z) the amount of excess parachute payments within the meaning of Section 280G(b)(l) (after applying clause (A) above), and (C) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code. (iii) For purposes of determining the amount of the Gross-Up Payment, Employee shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Employee's residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. -5- (iv) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Employee's employment, Employee shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross- Up Payment being repaid by Employee if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of Employee's employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross- Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined. (e) Company Successors. 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. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from the Company in the same amount and on the same terms as Employee would be entitled to hereunder if Employee terminated Employee's employment by the Company for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Termination Date. As used in this Agreement, "Company" shall mean the Company as herein before defined ------- and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. (f) No Contract of Employment. This Agreement shall not be construed ------------------------- as creating an express or implied contract of employment and, subject to Section 1 and except as otherwise agreed in writing between the Company and Employee, Employee shall not have any right to be retained in the employ of the Company. 5. Confidential Information and Ownership of Property. -------------------------------------------------- (a) Confidential Information. Employee agrees to use all ------------------------ Confidential Information solely in connection with the performance of services for or on behalf of the Company. Employee shall not, during the term of this Agreement, or at any time after the termination of this Agreement, in any manner, either directly or indirectly, (i) disseminate, disclose, use or communicate any Confidential Information to any person or entity, regardless of whether such Confidential Information is considered to be confidential by third parties, or (ii) otherwise directly or indirectly misuse any Confidential Information; provided, however, that (y) none of the provisions of this Section -------- ------- shall apply to disclosures made for valid business purposes of the Company or (z) that Employee shall not be obligated to treat as confidential any -6- Confidential Information that (I) was publicly known at the time of disclosure to Employee; (II) becomes publicly known or available thereafter other than by means in violation of this Agreement or any other duty owed to the Company or any of its Affiliates by any person or entity; or (III) is lawfully disclosed to Employee by a third party. Notwithstanding the foregoing, Employee shall be permitted to disclose Confidential Information to the extent required to enforce Employee's rights hereunder in any litigation arising under, or pertaining to, this Agreement provided that Employee shall give prior written notice to the Company of any such disclosure so that the Company may have an opportunity to protect the confidentiality of such Confidential Information in such litigation. (b) Ownership of Property. Employee agrees that all works of --------------------- authorship developed, authored, written, created or contributed to during the term of this Agreement for the benefit of the Company, whether solely or jointly with others, shall be considered works-made-for-hire. Employee agrees that such works shall be the sole and exclusive property of the Company (or its appropriate Affiliate) and that all right, title and interest therein or thereto, including all intellectual property rights existing or obtained in connection therewith, shall likewise be the sole and exclusive property of the Company (or its appropriate Affiliate). Employee agrees further that, in the event that any work is not considered to be work-made-for-hire by operation of law, Employee will immediately, and without further compensation, assign all of Employee's right, title and interest therein to the Company (or its designated Affiliate), its successors and assigns. At the request and expense of the Company, Employee agrees to perform in a timely manner such further acts as may be necessary or desirable to transfer, defend or perfect the Company's ownership of such work and all rights incident thereto. 6. Covenant Not to Compete. Employee covenants and agrees that ----------------------- Employee shall not, during the term of Employee's employment by the Company or any Affiliate thereof and for the Non-Compete Period, directly or indirectly own an interest in, operate, join, control, advise, work for, consult to, have a financial interest which provides any control of, or participate in any corporation, partnership, proprietorship, firm, association, person, or other entity producing, designing, providing, soliciting orders for, selling, distributing, consulting to, or marketing or re-marketing products, goods, equipment, or services competitive with or in substantially the same line of business as the Company or any Affiliate thereof, or any part thereof, as of the commencement of the Non-Compete Period. This prohibition applies in the territory specified in Section 6 of attached Schedule A. This covenant does not ---------- prohibit the mere ownership of less than three percent (3%) of the outstanding stock of any publicly-traded corporation as long as Employee is not otherwise in violation of this Agreement. 7. Covenant Against Solicitation of Employees. During the term of ------------------------------------------ Employee's employment by the Company and for the Non-Compete Period, Employee shall not employ employees or agents or former employees or agents of the Company or its Affiliates or, directly or indirectly, solicit or otherwise encourage the employment of employees or agents or former employees or agents of the Company or its Affiliates; provided, however, that this restriction shall -------- ------- not apply to former employees or agents (y) who, as of the date of termination of Employee's employment by the Company, have not worked for any of the Company or its Affiliates during the twelve preceding months or (z) whose employment by the Company or any Affiliate thereof was terminated by the Company. -7- 8. Remedies. -------- (a) Employee Acknowledgements. Employee acknowledges (i) that ------------------------- the covenants contained in Sections 5, 6 and 7, including, without limitation, the time and geographic limits (collectively, the "Restrictive Covenants"), are --------------------- reasonable and appropriate and that Employee will not any claim to the contrary in any action brought by the Company or its Affiliates to enforce any of such provisions and (ii) that should Employee violate any of the Restrictive Covenants, it will be difficult to determine the resulting damages to the Company and its Affiliates and, in addition to any other remedies the Company and its Affiliates may have, (A) the Company and its Affiliates shall be entitled to temporary injunctive relief without being required to post a bond and permanent injunctive relief without the necessity of proving actual damage; and (B) the Company shall have the right to offset against its obligation to make any payments to Employee under this Agreement or otherwise to the extent of any money damages incurred or suffered by the Company and its Affiliates. The Company may elect to seek one or more of these remedies at its sole discretion on a case by case basis. Failure to seek any or all remedies in one case shall not restrict the Company from seeking any remedies in another situation. Such action by the Company shall not constitute a waiver of any of its rights. (b) Intent. It is the parties' intent that each of the Restrictive ------ Covenants be read and interpreted with every reasonable inference given to its enforceability. However, it is also the parties' intent that if any term, provision or condition of the Restrictive Covenants is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Finally, it is also the parties' intent that if a court should determine any of the Restrictive Covenants are unenforceable because of over-breadth, then the court shall modify said covenant so as to make it reasonable and enforceable under the prevailing circumstances. (c) Tolling. In the event of any breach by Employee of any ------- Restrictive Covenant, the running of the period of restriction shall be automatically tolled and suspended for the duration of such breach, and shall automatically recommence when such breach is remedied in order that the Company shall receive the full benefit of Employee's compliance with each of the Restrictive Covenants. (d) Independent Enforcement. Employee agrees that the Restrictive ----------------------- Covenants shall be enforced independently of any other obligations between the Company, on the one hand, and Employee, on the other, and that the existence of any other claim or defense shall not affect the enforceability of the Restrictive Covenants or the remedies provided herein. The Restrictive Covenants shall be in addition to and shall not replace any other restrictive covenant agreement that Employee may currently have (or hereafter enter into) with the Company or any of its Affiliates. (e) Survival. The provisions of this Section 8 shall survive the -------- termination of this Agreement. 9. Certain Defined Terms. For purposes of this Agreement the following --------------------- terms and phrases shall have the following meanings: -8- "Affiliate" means any person or entity who or which, directly or --------- indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified person or entity (the term "control" for these purposes meaning the ability, whether by ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to act as or select the managing or general partner of a partnership, or otherwise to select, or have the power to remove and then select, a majority of those persons exercising governing authority over an entity). "Cause", with respect to the termination of Employee's employment by the ----- Company, means (i) the willful and continued refusal by Employee to perform a lawful and reasonable order, direction or instruction of the Board of Directors or similar governing body within a reasonable period of time after a written demand for substantial performance is delivered to Employee by the Board of Directors or similar governing body which demand specifically identifies the manner in which the Board believes that Employee has not substantially performed such an order, direction or instruction; or (ii) the willful misconduct by Employee in the performance of Employee's duties to the Company or the willful engaging by Employee in conduct which, in either case, is illegal or materially injurious to the Company. For purposes of this definition, no act, or failure to act, on Employee's part shall be deemed "willful" unless done, or omitted to be done, by Employee not in good faith and without reasonable belief that Employee's action or omission was in the best interest of the Company. In addition, notwithstanding the foregoing, Employee's employment by the Company shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board of Directors or similar governing body at a meeting of the Board of Directors or similar governing body called and held for such purpose (after reasonable notice to Employee and an opportunity for Employee, together with counsel, to be heard before the Board of Directors or similar governing body), finding that in the good faith opinion of the Board of Directors or similar governing body, Employee was guilty of conduct set forth above in clauses (i) or (ii) of the first sentence of this definition and specifying the particulars thereof in detail. "Change in Control" means a Company Change in Control or a Parent Change in ----------------- Control. "Code" means the Internal Revenue Code of 1986, as amended. ---- "Company Change in Control" means the occurrence of any one of the ------------------------- following events: (i) (A) the ownership, as a result of acquisition, merger, consolidation, reorganization or otherwise, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)), other than Parent and its Affiliates, of securities of the Company entitled to aggregate voting power which exceeds the aggregate voting power represented by securities of the Company held by Parent and its Affiliates; and (B) Parent and its Affiliates cease to control the day-to-day operations of the Company through ownership of Company securities, by contract, operating agreement or otherwise; or -9- (ii) the consummation of an agreement for the sale or disposition by the Company of all or substantially all the Company's assets to a party other than Parent or any Affiliate thereof. "Confidential Information" means all software, trade secrets, work products ------------------------ created by Employee for the Company or any of its Affiliates, know-how, ideas, techniques, theories, discoveries, formulas, plans, charts, designs, drawings, lists of current or prospective clients, business plans and proposals, current or prospective business opportunities, financial records, research and development, marketing strategies and programs and reports and other proprietary information created or obtained by Employee for the benefit of the Company or any of its Affiliates during the course of employment by the Company. "Disability" means the inability of Employee to perform substantially all ---------- Employee's duties and responsibilities to the Company by reason of a physical or mental illness or infirmity for either (i) a continuous period of six months or (ii) 180 days during any consecutive twelve-month period. "Employment Period" means the date commencing on the Effective Date and ----------------- terminating on the Termination Date. "EVA Plan" means the Economic Value Added Improvement Incentive Plan -------- adopted by Parent, as the same may be amended, modified, supplemented or restated from time to time (including any successor thereto or replacement therefor). "Exchange Act" means the Securities Exchange Act of 1934, as amended. ------------ "Good Reason" means the occurrence, without the express written consent of ----------- Employee, of any one of the following events, unless such circumstances are fully corrected prior to the Termination Date specified in the applicable notice of termination delivered pursuant to Section 2(b): (i) the assignment to Employee of any duties inconsistent with Employee's position and status with the Company as set forth on attached Schedule A or a substantial adverse alteration in the nature or status of ---------- Employee's employment responsibilities from those in existence on the date hereof; (ii) the relocation of Employee's office or job location to a location not within seventy-five miles of Employee's present office or job location, except for required travel on the Company's business to an extent substantially consistent with Employee's present business travel obligations; (iii) the failure by the Company to pay to Employee any portion of the compensation required hereunder or under any compensation plan or program of the Company, within ten business days of the date such compensation is due; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 4(e) hereof; or -10- (v) any purported termination of Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 2. "Non-Compete Period" means the period commencing on the date upon which ------------------ Employee ceases to be employed by the Company or any Affiliate thereof and terminating as specified on Section 9 of attached Schedule A thereafter. ---------- "Parent" means Material Sciences Corporation, a Delaware corporation, ------ together with its successors and assigns. "Parent Change in Control" means the occurrence of any one of the following ------------------------ events: (i) there is an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of the then outstanding voting securities of Parent entitled to vote generally in the election of directors; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of Parent and any new director (other than a director designated by a person who has entered into an agreement with Parent to effect a transaction described in paragraphs (i) or (iii) of this definition) whose election by the Board of Directors of Parent or nomination for election by Parent stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (iii) the stockholders of Parent approve (A) a merger or consolidation of Parent with any other entity, other than a merger or consolidation which would result in the voting securities of Parent outstanding immediately prior thereto continuing to represent (either by remaining outstanding or through the surviving entity) at least 50% of the combined voting power of the voting securities of Parent or such surviving entity outstanding immediately after such merger or consolidation, or (B) a plan of complete liquidation of Parent or an agreement for the sale or disposition by Parent of all or substantially all Parent's assets. "Termination Date" means ---------------- (i) if Employee's employment is terminated for Disability, 30 days after Notice of Termination is given (provided that Employee shall not have returned to the full-time performance of Employee's duties during such 30 day period); and (ii) if Employee's employment is terminated pursuant to Section 2(b) for any other reason (other than death or Disability), the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less -11- than 30 days, and in the case of a termination for Good Reason shall not be less than 15 nor more than 60 days, respectively, from the date such Notice of Termination is given); provided; however, that if prior to the Termination Date (as determined without - -------- ------- regard to this provision), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Termination Date shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided; -------- further, however, that the Termination Date shall be extended by a notice of - ------- ------- dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. During the pendency of any such dispute, the Company will continue to pay Employee's full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue Employee as a participant in all compensation, benefit and insurance plans in which Employee was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this definition. Amounts paid under this paragraph are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement. 10. Miscellaneous. ------------- (a) Amendment. This Agreement may be amended, modified or --------- supplemented but only in writing signed by each of the parties hereto. (b) Waivers. The failure of a party hereto at any time or times to ------- require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. (c) Governing Law. SECTIONS 5, 6, 7 AND 8 OF THIS AGREEMENT SHALL BE ------------- GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ____, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. ALL OTHER SECTIONS OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. (d) INTENTIONALLY OMITTED. ---------------------- (e) Counterparts. This Agreement may be executed in counterparts, ------------ each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -12- (f) Interpretation. The headings preceding the text of Articles and -------------- Sections included in this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include, without limitation," respectively. (g) Assignment. This Agreement shall be binding upon and inure to the ---------- benefit of the parties hereto and their respective successors and assigns. No assignment of any rights or obligations shall be made by any party without the written consent of each other party. (h) No Third Party Beneficiaries. This Agreement is solely for the ---------------------------- benefit of the parties hereto and, to the extent provided herein, their respective affiliates, directors, officers, employees, agents, heirs and representatives, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, liability, reimbursement, cause of action or other right. (i) Severability. If any provision of this Agreement shall be held ------------ invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue. (j) Remedies Cumulative. The remedies provided in this Agreement ------------------- shall be cumulative and shall not preclude the assertion or exercise of any other rights or remedies available by law, in equity or otherwise. (k) Entire Understanding. This Agreement, together with attached -------------------- Schedule A, sets forth the entire agreement and understanding of the ---------- parties hereto with respect to the matters set forth herein and supersedes any and all prior agreements, arrangements and understandings among the parties; provided, however, that any agreements and understandings between -------- ------- the Company and Employee relating to employment and severance shall continue in full force and effect until the occurrence of a Change in Control. (l) Conflicts With Existing Agreements. Subject to Section 10(k), in ---------------------------------- the event that any term or provision of this Agreement conflicts with or differs from any term or provision of other existing agreement, understanding or plan (the "Existing Agreements") between the Company and ------------------- Employee or to which Employee is a participant, such term or provision of this Agreement shall govern for all purposes and respects. Except as expressly set forth herein, this Agreement does not constitute a waiver or modification of any provision of any Existing Agreement. Except as expressly modified hereby, the Existing Agreements shall continue in full force and effect in accordance with the provisions thereof on the date hereof. (m) Attorneys' Fees and Other Costs. In the event a dispute arises ------------------------------- between the parties hereto and suit is instituted, the prevailing party or parties in such litigation shall be entitled to recover reasonable attorneys' fees and other costs and expenses from the non-prevailing party or parties, whether incurred at the trial level or in any appellate proceeding. Unless Employee otherwise elects, expenses incurred by Employee in connection with any -13- dispute described in this Section will be paid by the Company in advance of the final disposition of such dispute within 20 days after presentation by Employee of written documentation therefor reasonably satisfactory to the Company if Employee furnishes the Company a written undertaking to repay any amounts advanced if it is ultimately determined that Employee is not entitled to attorneys' fees and other costs pursuant to this Section (which written undertaking will provide that the Company shall be entitled to collect its attorneys' fees and other out-of-pocket costs incurred in connection with the enforcement of such undertaking). (n) Notices. For the purpose of this Agreement, notices and all other ------- communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to (i) the Company c/o Material Sciences Corporation at 2200 East Pratt Boulevard, Elk Grove Village, Illinois 60007-5995 and (ii) Employee at the address set forth on attached Schedule A, provided that all notices to the ---------- Company shall be directed to the attention of the Board of Directors of Parent, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change in address shall be effective only upon receipt. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -14- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. THE COMPANY: ----------- [NAME OF SUBSIDIARY], (INCORPORATED) corporation By: __________________________________________ Name: Gerald G. Nadig Title: Chairman, President and Chief Executive Officer EMPLOYEE: -------- Name: __________________________________________ -15- SCHEDULE A Change in Control Agreement Employee Name: Edward A. Williams Employee Position: Group Vice President and General Manager Section 3(d)(ii)(A): [2.0x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.0 years] (duration of Non-Compete Period) S-1 SCHEDULE A Change in Control Agreement Employee Name: Ronald L. Millar Employee Position: Group Vice President and General Manager Section 3(d)(ii)(A): [2.0x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.0 years] (duration of Non-Compete Period) -2- SCHEDULE A Change in Control Agreement Employee Name: Douglas M. Rose Employee Position: President Section 3(d)(ii)(A): [2.0x] (applicable multiple) Section 3(d): [$20,000] (maximum outplacement expenses) Section 6: [North America, including, without limitation, Canada, the United States and Mexico] (territory) Section 9: [2.0 years] (duration of Non-Compete Period) -3- -----END PRIVACY-ENHANCED MESSAGE-----