Exhibit 10(ll)
RETENTION
AGREEMENT
RETENTION AGREEMENT (this “
Agreement ”) dated as of February 29, 2004 by and
between MATERIAL SCIENCES CORPORATION, a Delaware corporation, and
its subsidiaries (collectively, the “ Company
”), and Ronald L. Millar, Jr. (“ 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, Employee is employed by the
Company or one of its subsidiaries;
WHEREAS, the Board of Directors of
the Company has determined that appropriate steps should be taken
to reinforce and encourage the continued employment and dedication
of key personnel; and
WHEREAS, as an inducement for and in
consideration of Employee remaining in its employ and in partial
consideration of Employee’s agreement to terminate his
supplemental employee retirement benefits and certain long term
incentive awards and stock options, the Company agrees that
Employee shall receive the retention, severance and other benefits
set forth in this Agreement.
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. Effective Date; Term .
This Agreement, and all rights and obligations of the parties
hereunder, shall commence and become effective on the date hereof.
The rights and obligations of the parties under Section 3 of this
Agreement shall expire on June 30, 2005 unless Employee’s
employment with the Company has terminated before June 30, 2005 or
the Sale Process Completion Date occurs before June 30, 2005;
provided that the Board of Directors may elect to extend the
expiration date in its sole and absolute discretion. !
2. Retention of Employee
.
(a) Retention Period
Compensation . The Company hereby agrees to continue to employ
Employee, and Employee hereby agrees to remain employed by the
Company, as Senior Vice President, Operations until the Sale
Process Completion Date; provided that the Company shall have the
right to terminate Employee at any time with or without Cause and
Employee shall have the right to terminate his employment at any
time with or without Good Reason. During this period, Employee
shall be entitled to the following compensation and
benefits:
(i) Employee shall receive a base
salary of $202,000 per annum or as such amount is increased by the
Compensation Committee of the Board of Directors of the Company in
its sole and absolute discretion on or about March 1, 2004 (the
“ Base
Salary ”), payable by the Company in regular
installments in accordance with the Company’s general payroll
practices (in effect from time to time) until either (A) February
28, 2005, or (B) if the Sale Process Completion Date occurs prior
to February 28, 2005, the one year anniversary of the Sale Process
Completion Date, at which time Employee’s Base Salary may be
adjusted, in the sole discretion of the Compensation Committee of
the Board of Directors of the Company or Successor, to be
competitive with comparable positions at companies of similar size
in the Company’s or Successor’s industry.
(ii) If Employee is employed by the
Company or a Successor on November 30th of any given year during
this period, then Employee shall be eligible to receive a cash
bonus under the Company’s EVA Plan. If Employee’s
employment terminates after November 30th of a given year but prior
to February 28th of the immediately following year, then the bonus
shall be pro-rated based on the portion of the fiscal year in which
Employee was employed by the Company or a Successor.
(iii) Employee shall participate in
all Company-sponsored employee benefit programs and receive all
fringe benefits for which employees of his level are eligible,
including, without limitation, incentive, savings, welfare benefit,
reimbursement and retirement plans; provided that (A) Employee
shall not be entitled to a car allowance and (B) Employee will
forfeit the benefits described in Sections 2(b) (other than his
right to receive the payment described therein) and 4(e)(ii)
below.
(b) Termination of Supplemental
Employee Retirement Plan . The Company shall pay to Employee,
in full and complete satisfaction of the Company’s
obligations under that certain Supplemental Pension Plan Agreement
dated March 2, 1992, as amended on May 7, 1999, between the Company
and Employee, an amount equal to $645,000 (less any withholding
taxes) on May 31, 2004 or, if earlier, the date of termination of
employment for any reason.
(c) Retention Bonus . The
Company shall pay to Employee an amount equal to $661,194 on the
earlier of (i) May 31, 2005, if Employee is employed by the Company
or a Successor on such date, (ii) the second business day following
the Company’s (or a Successor’s) termination of
Employee without Cause or the death or Disability of Employee or
(iii) the second business day following the Employee’s
termination of his employment with a Successor for Good Reason (but
Employee shall not be entitled to such amount in the event he
terminates his employment with the Company for Good
Reason).
3. Compensation Upon Termination
of Employment .
(a) Death . If
Employee’s employment by the Company is terminated as a
result of the occurrence of Employee’s death, the Company
shall pay to Employee’s estate vacation pay (for earned but
unused vacation) and the compensation and other benefits expressly
provided under Section 2 through the Termination Date, as well as
any death benefits available under any Company plan or
policy.
(b) Disability and Termination
with or without Good Reason . If Employee’s employment by
the Company is terminated by the Company as a result of the
occurrence of
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Employee’s Disability or Employee
terminates his employment with the Company with or without Good
Reason, the Company shall pay to Employee vacation pay (for earned
but unused vacation) and the compensation and other benefits
expressly provided under Section 2 (other than under Section 2(c)
if Employee terminates his employment with the Company with or
without Good Reason) through the Termination Date, as well as any
disability benefits available under any Company plan or policy in
the case of Disability.
(c) Termination without Cause or
for Good Reason .
(i) If Employee’s employment
with the Company is terminated by the Company without Cause, the
Company shall pay to Employee, in lieu of the Company’s then
current severance policy, (x) on the Termination Date, any vacation
pay (for earned but unused vacation) and the compensation and other
benefits expressly provided under Section 2 through the Termination
Date and (y) a severance payment (the “ Severance
Payment ”) consisting of the following:
(A) a lump sum cash payment equal to
the (x) Employee’s Base Salary and (y) a bonus equal to
$100,000; and
(B) a payment equal to nine months
of Employee’s Base Salary, payable semi-monthly, commencing
on the Termination Date; provided however that if
Employee’s termination occurs within 18 months after the Sale
Process Completion Date, Employee shall receive the amounts
described in this Section 3(c)(i)(B) as a lump sum cash payment on
the Termination Date.
Notwithstanding the foregoing, if a
Successor (with the approval of the Company) offers Employee a
Comparable Position and Employee declines such offer, then Employee
shall not be entitled to a Severance Payment pursuant to this
Section 3(c).
(ii) If Employee’s employment
with a Successor is terminated by the Successor without Cause or
Employee terminates his employment with the Successor for Good
Reason, in each case at anytime during the eighteen month period
following the Sale Process Completion Date, the Successor shall pay
to Employee (x) on the Termination Date, any vacation pay (for
earned but unused vacation) and the compensation and other benefits
expressly provided under Section 2 through the Termination Date and
(y) the Severance Payment.
(iii) In addition to the
compensation paid pursuant to Sections 3(c)(i) or (ii) above, (x)
the Company (or Successor), at its expense, shall continue to
provide Employee with all employee benefits (including welfare
benefit programs) and fringe benefits specified in Section
2(a)(iii) for 21 months following the Termination Date (or
substantially comparable benefits); provided that the Company (or
Successor) shall not be required to make DC pension contributions
on behalf of Employee, and (y) except as set forth in Section 4(e),
all vested stock options, shares of restricted stock and other
stock or stock based awards granted by the Company to Employee
shall remain exercisable by Employee subject to the terms and
conditions of any plans which such grants or awards were made
under.
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(d) Notice of Termination .
Any purported termination of Employee’s employment by the
Company or by Employee shall be communicated 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.
(e) No Mitigation . Employee
shall not be required to mitigate the amount of any payment
provided for in this Section 3 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided
for in this Section 3 be reduced by any compensation earned by
Employee as the result of employment by another employer or
Successor, by retirement benefits, by offset against any amount
claimed to be owed by Employee to the Company or
otherwise.
4. Additional Understandings
.
(a) Employee’s Insurance
Policy . If applicable and immediately after the Termination
Date, Employee agrees to be solely responsible for the payment of
the premiums under his long-term care/life insurance
policy.
(b) Company Property .
Employee shall return and relinquish all rights to all Company
owned or leased property (including without limitation his
Company-issued cellular telephone) on the Termination
Date.
(c) Transition Services . In
the event Employee is terminated by the Company (other than for
Cause, Disability or death), or Employee terminates his employment
for Good Reason, the Company shall provide (i) outplacement
services at an executive level through one or more outside firms up
to an aggregate cost of $20,000 and in accordance with the
Company’s past practice, with such services to extend until
the earlier of (x) 21 months following the termination of
Employee’s employment or (y) the date Employee secures full
time employment and (ii) Employee access to the Company’s
voicemail and electronic mail systems, with such access continuing
for sixty (60) days following the Termination Date.
(d) Directors’ and
Officers’ Insurance . Prior to the Sale Process
Completion Date, the Company shall maintain a directors’ and
officers’ liability insurance policy (with coverage for the
Employee) consistent with past practice. Employee shall be entitled
to tail coverage under such policy (to apply following the Sale
Process Completion Date) on the same terms applicable to members of
the Board of Directors of the Company.
(e) Long-Term Incentives
.
(i) Upon the earlier of November 30,
2004 or the Sale Process Completion Date, the unvested portion of
the long-term incentive award and the related cash award granted to
Employee on December 18, 2001 shall automatically vest.
(ii) Employee expressly agrees and
acknowledges, effective as of the date hereof, that Employee
forfeits all right, title and interest to (i) the long-term
incentive award granted to Employee on March 1, 2003 pursuant to
the 2003 Long-Term Incentive Stock Award Program, and (ii) options
to purchase 23,707 shares of Common Stock at $10 per share which
were originally scheduled to vest on February 28, 2005.
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(f) Indemnification Agreement
. Employee expressly acknowledges and agrees that, notwithstanding
any provision or statement to the contrary contained in this
Agreement, the Indemnification Agreement between the Company and
Employee dated March 1, 2002 shall remain in full force and effect
and continue to be binding upon Employee and the Company in
accordance with its terms.
(g) Change in Control and
Technology Agreements . Employee and the Company expressly
acknowledge and agree that, effective as of the date hereof, the
Change of Control Agreement entered into between the Company and
Employee dated June 30, 2001, as amended on November 25, 2002, and
the Technology Agreement between the Company and the Employee dated
May 13, 1969 shall become null and void and have no further force
or effect.
(h) Retirement Accounts . The
Company shall take all necessary actions to cause the
Employee’s defined contribution plan account balance and
401(k) plan account balance to be distributed or transferred in
accordance with the Employee’s instructions as expeditiously
as possible following termination pursuant to the Company’s
then current practice and applicable law.
(i) 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 ”), and 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 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,
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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.
(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.
(j) Company Successors . The
Company will require either (1) any acquiror of the Company as a
whole or (2) any acquiror of the coated metal business unit and/or
the laminates and composites business unit which directly or
indirectly becomes the employer of Employee (in each case through
merger, consolidation, asset purchase, stock purchase or otherwise)
(a “ Successor ”) 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 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
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effective shall be deemed the Termination Date.
As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor which assumes and
agrees to perform this Agreement by operation of law, or
otherwise.
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; (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
Affili
