Exhibit 10(gg)

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT is made as of the 5th day of May 2004, between
MATERIAL SCIENCES CORPORATION, a Delaware corporation (the “Company”), and JAMES
J. WACLAWIK, SR. (“Waclawik”).

 

Preliminary Recitals

 

A. The Company is a Delaware corporation engaged in the business of applying
protective and decorative coatings to sheet steel coils, laminating films and
metals onto such coils to produce advance composite materials and other
businesses. The Company presently has domestic facilities located in Elk Grove
Village, Illinois (“Elk Grove Village”), Walbridge, Ohio, Middletown, Ohio,
Morrisville, Pennsylvania, Holland, Michigan and Wheaton, Illinois and also has
international facilities.

 

B. The Company desires to engage Waclawik as a consultant following the end of
his employment relationship with the Company pursuant to that certain Employment
Agreement, dated as of May 5, 2004, between Waclawik and the Company (the
“Employment Agreement”) and Waclawik desires to be so engaged on the terms and
conditions set forth below.

 

C. As a consultant, Waclawik will perform the consulting services described in
more detail below.

 

D. Due to the specialized nature of Waclawik’s services for the Company and the
confidential information to which he has had and will have access, Waclawik
recognizes not only a working relationship with the Company as a consultant but
also a fiduciary obligation to the Company.

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NOW, THEREFORE, the parties hereto agree as follows:

 

1. Preamble; Preliminary Recitals. The Preamble and Preliminary Recitals set
forth above are hereby incorporated in and made a part of this Agreement.

 

2. Engagement as Consultant. The Company hereby engages Waclawik to render
consulting services and Waclawik hereby accepts such engagement as a consultant
to the Company, in each case on the terms and conditions hereinafter set forth.

 

(a) Term. Subject to the provisions for earlier termination set forth in
Paragraph 5 below, the term of this Agreement shall commence on January 1, 2005
and end on December 31, 2005 (the “Consulting Term”).

 

(b) Consulting Services. Waclawik shall perform consulting services for the
Company on projects relating to financial reporting, SEC reporting and
compliance, internal audit and controls, systems, corporate finance, mergers and
acquisitions, joint ventures, litigation management and other areas identified
by the Chief Executive Officer (so long as those other areas are generally
consistent with Waclawik’s historical roles and experience at the Company).

 

(c) Work Schedule. Waclawik shall be available to perform consulting services
for the Company at the times and in the manner determined by the Company for up
to (i) forty (40) hours per week through May 31, 2005 and (ii) five (5) working
days per month during the remainder of the Consulting Term. If requested by the
Company, Waclawik shall provide consulting services in excess of the weekly or
monthly amounts referred to in the preceding sentence (“Additional Services”);
provided that (1) the Company shall pay Waclawik $5,600 for each working day of
Additional Services provided and (2) Waclawik’s consulting obligation and
consulting compensation in the period from June 1, 2005 through December 31,
2005 shall be reduced by one working day for each working day of Additional
Services provided. Any such reduction in Waclawik’s consulting schedule shall be
made in reverse

 

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chronological order, starting with December 2005 (for example, if Waclawik
provides a total of eight days of Additional Services, then his consulting
commitment for December 2005 would be deemed satisfied and his consulting
commitment for November 2005 would be reduced from 5 days to 2 days).

 

3. Consulting Fee; Bonus. During the Consulting Term and provided Waclawik is
available and able to perform the consulting services, the Company shall pay
Waclawik Forty Thousand Dollars and No Cents ($40,000.00) per month from January
1, 2005 through May 31, 2005 and Twenty-Eight Thousand Dollars and No Cents
($28,000.00) per month during the remainder of the Consulting Term
(collectively, the “Consulting Fee”). The Consulting Fee shall be payable
monthly on or before the third working day of the month following the month in
which the consulting services were performed. As a condition of payment,
Waclawik shall submit invoices to the Company, on a monthly basis, setting forth
a description of any services rendered hereunder and the dates on which such
services were rendered. In addition to the Consulting Fee, the Company shall pay
Waclawik a lump sum payment (the “Bonus”) of One Hundred Thousand Dollars and No
Cents ($100,000.00) on January 2, 2006 (or, at Waclawik’s option, within 5
business days following the date on which Waclawik completes all of his working
days of Consulting Services, as described in the last sentence of Section 2).
The foregoing notwithstanding, Waclawik shall not be entitled to receive the
Bonus if the Company has terminated his consulting services for Cause (as
defined below) or Waclawik has voluntarily resigned from his position as a
consultant with the Company without Good Reason (as defined below).

 

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4. Reimbursement of Expenses. The Company shall reimburse Waclawik in accordance
with normal Company procedures for the reasonable and necessary expenses which
he incurs while performing consulting services as described in Paragraph 2(b) of
this Agreement.

 

5. Early Termination.

 

(a) Death or Disability. If Waclawik’s consulting services are terminated as a
result of the occurrence of Waclawik’s death or Disability (as defined in his
Employment Agreement), then the Company shall continue to pay Waclawik or his
estate the Consulting Fee and Bonus on their scheduled payment dates (in each
case to the extent unpaid).

 

(b) Termination by the Company for Cause. The Company may terminate Waclawik’s
consulting services at any time for Cause. For purposes hereof, “Cause” shall
mean any of the following: (i) Waclawik’s commission of any act of fraud, theft
or embezzlement against, or willful breach of a fiduciary duty to, the Company
(including the unauthorized disclosure of Confidential Information); (ii)
Waclawik’s conviction of a felony in either a state or federal court proceeding;
(iii) Waclawik’s material breach of this Agreement, including the material
failure of Waclawik to diligently and faithfully perform the consulting services
in accordance with in this Agreement; or (iv) any willful or intentional act
having the effect of injuring the reputation or business relationships of the
Company. The termination shall be deemed effective on the date the Company
provides written notice to Waclawik that it is terminating the Agreement
pursuant to this Paragraph 5(b). In the event Waclawik’s consulting services are
terminated pursuant to this Paragraph 5(b), the Company shall pay Waclawik any
accrued but unpaid Consulting Fee through the effective date of termination.

 

(c) Termination by the Company without Cause. The Company may terminate
Waclawik’s consulting services at any time without Cause. The termination shall
be

 

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deemed effective on the date the Company provides written notice to Waclawik
that it is terminating his consulting services pursuant to this Paragraph 5(c).
In the event Waclawik’s consulting services are terminated pursuant to this
Paragraph 5(c), the Company shall continue to pay Waclawik the Consulting Fee
and Bonus on their scheduled payment dates (in each case to the extent unpaid).

 

(d) Termination by Waclawik for Good Reason. Waclawik may terminate his
consulting services at any time for Good Reason. For purposes hereof, “Good
Reason” shall mean any of the following: (i) the Company’s assignment to
Waclawik of duties materially inconsistent with this Agreement without
Waclawik’s consent or (ii) the Company’s failure to pay any amount owing to
Waclawik hereunder, in each case after written notice from Waclawik of the
alleged breach and a reasonable opportunity to cure. In the event Waclawik
terminates his consulting services pursuant to this Paragraph 5(d), the Company
shall continue to pay Waclawik the Consulting Fee and Bonus on their scheduled
payment dates (in each case to the extent unpaid).

 

(e) Change in Control. In the event of a Change in Control (as defined in the
Employment Agreement), the Company shall pay Waclawik a lump sum of cash in an
amount equal to the Consulting Fee and Bonus (in each case to the extent
unpaid).

 

6. Covenants.

 

(a) Upon termination of his consulting services with the Company (whether under
the terms of this Agreement or otherwise), Waclawik, except as otherwise
provided for in his Employment Agreement, shall surrender to the Company all
property of the Company in his possession which includes, but is not limited to,
all books, records, correspondence, notes, memoranda, files, documents, plans,
sketches, lists, computerized forms of information and other forms of
information whether or not reduced to writing, and any copies thereof relating
to or concerning the Company.

 

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(b) Waclawik acknowledges and agrees that during the Consulting Term and
following the termination of his consulting services with the Company, he will
be bound by, and subject to restrictions set forth in, Sections 5, 6, 7 and 8 of
his Employment Agreement.

 

7. Indemnification. Waclawik shall not be liable to the Company for any loss,
damages or expenses resulting from Waclawik’s services under this Agreement with
the Company other than: (1) those covered under Waclawik’s general liability
insurance policy, and/or (2) those resulting from Waclawik’s acts which were
either unlawful or which were not made in good faith and in a manner which
Waclawik reasonably believed to be in the best interest of the Company. The
Company will indemnify and hold harmless Waclawik against all liabilities,
damages and expenses, including reasonable attorney fees, resulting from any
civil third-party claim or lawsuit arising from Waclawik’s performance under
this Agreement of acts within his authority, if Waclawik acted in good faith and
in a lawful manner he reasonably believed to be in the best interest of the
Company. Waclawik shall notify the Company in writing of any matter with respect
to which Waclawik intends to seek indemnification as soon as reasonably
practicable. Expenses incurred in defending a civil or criminal claim or lawsuit
may be paid by the Company in advance of the final disposition of such matter
only upon receipt of a written undertaking by Waclawik to repay such amount if
it shall ultimately be determined that he was not entitled to be indemnified by
the Company as authorized under Illinois law.

 

8. Non-Exclusive Remedy. All rights and remedies of the Company shall be
cumulative and none shall exclude any other right or remedy allowed by law.

 

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9. Independent Contractor. Waclawik and the Company agree that Waclawik shall
perform services hereunder as an independent contractor, retaining control over
and responsibility for his own operations and personnel. Neither Waclawik nor
Waclawik’s affiliates, partners, agents or related parties shall be considered
employees or agents of the Company as a result of this Agreement, nor shall any
of them have authority to contract in the name of or bind the Company, except as
expressly agreed to in writing by the Company. It is agreed that Waclawik shall
be solely responsible for any taxes that become due, if any, in connection with
any payments Waclawik receives in connection with this Agreement.

 

10. No Waiver. No failure on the part of the Company to insist upon strict
compliance by Waclawik with any term, covenant or provision of this Agreement
shall constitute a waiver of the Company’s right thereafter to demand exact
compliance with all the terms, covenants and provisions herein contained.

 

11. Assignment. This Agreement is personal to Waclawik and Waclawik may not
assign or delegate any of his rights or obligations hereunder. The terms and
provisions of this Agreement shall inure to the benefit of and bind the Company,
its successors and assigns.

 

12. Amendments. No amendments to this Agreement shall be binding unless in
writing and signed by the Company and Waclawik.

 

13. Applicable Law. This Agreement is made in the State of Illinois and all
rights and obligations of the parties shall be governed by the laws of such
state.

 

14. Captions. The paragraph headings used in this Agreement are included solely
for convenience and shall not affect nor be used in connection with the
interpretation of this Agreement.

 

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15. Invalidity of Provisions. If any provision in this Agreement is invalid as
applied to any fact or circumstance, such invalidity shall not affect the
validity of any other provision or of the same provision as applied to any other
fact or circumstance.

 

16. Entire Agreement. This Agreement, together with the Employment Agreement and
the Phantom Unit Agreement, contains the entire agreement between the parties
regarding its subject matter and supersedes all negotiations, commitments and
previous writings. Notwithstanding the foregoing, nothing in this Agreement is
intended to or has the effect of releasing Waclawik from the Employment
Agreement, which shall remain in full force and effect and continue to bind
Waclawik and the Company.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written.

 

COMPANY:

MATERIAL SCIENCES CORPORATION, a

Delaware corporation

By:

   

/s/ Ronald Stewart

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President and Chief Executive Officer

 

/s/ James J. Waclawik

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James J. Waclawik, Jr.

Consultant

May 5, 2004

Date

 

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