EXHIBIT 4(E)
FIRST AMENDMENT TO NOTE AGREEMENT
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Reference is hereby made to the Note Agreement dated as of February 15,
1997, as amended pursuant to a Waiver dated as of April 29, 1997 (together, the
"Original Agreement"), and as amended hereby (the "Agreement"), among Material
Sciences Corporation (the "Company"), Principal Mutual Life Insurance Company
("Principal"), Great-West Life & Annuity Insurance Company ("GWLA"), The Great-
West Life Assurance Company ("GWLAC"), Nationwide Life Insurance Company
("Nationwide"), Nationwide Life and Annuity Insurance Company ("NLAIC") and West
Coast Life Insurance Company (Principal, GWLA, GWLAC, Nationwide NLAIC and West
Coast Life together, the "Purchasers"). This First Amendment to the Original
Agreement is hereinafter referred to as the "First Amendment."
WHEREAS, the Company has requested that the Purchasers agree to certain
amendments to the Original Agreement; and
WHEREAS, the Purchasers have agreed to such amendments in consideration of
certain of the provisions set forth herein;
IT IS THEREFORE AGREED THAT:
1. Definitions.
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(a) All defined terms used herein shall have the meanings assigned to such
terms in the Original Agreement except as noted herein.
(b) Section 5.1 of the Original Agreement shall be amended by adding
thereto the following definitions:
Amendment Request - That Amendment Request of the Company dated
December, 1997 and provided to the Purchasers.
Colorstrip Acquisition - The acquisition by the Company or a
Subsidiary of substantially all of the assets of Colorstrip, Inc., as
described in the Amendment Request.
Consolidated Adjusted Net Income - Without duplication, consolidated
net income and net losses of the Company and its Restricted Subsidiaries,
as defined according to GAAP, after excluding the sum of (i) any net loss
or any undistributed net income of any Subsidiary in which the Company has
an ownership interest other than a Restricted Subsidiary; (ii) any net loss
or any undistributed net income of any Subsidiary prior to the date it
became a Restricted Subsidiary; (iii) any gain or net loss (net of any tax
effect) resulting from the sale of any capital assets other than in the
ordinary course of business;
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/1/ Nationwide is the owner of the Notes that were originally to be issued to
West Coast.
(iv) extraordinary gains or losses; (v) gains resulting from the
write-up of assets; (vi) any earnings of any Subsidiary unavailable
for payment to the Company; (vii) proceeds of any insurance policy
(other than business interruption and similar coverage); and (viii)
reversal of any contingency reserves (excluding reserves established
in the normal course of business, such as allowances for uncollectible
accounts receivable and warranty reserves) not created during any
applicable period.
Consolidated Adjusted Net Income Available for Fixed Charges -The
sum of (i) Consolidated Adjusted Net Income, (ii) income tax expense,
as defined according to GAAP, (iii) depreciation and amortization
expense, as defined according to GAAP and (iv) Fixed Charges.
Fixed Charges - The sum of (i) interest expense and (ii)
operating lease rental expense, both as defined according to GAAP.
Qualified Public Offering - An underwritten public offering (or
series of offerings) of capital stock of the Company in which the
Company shall receive (or in the aggregate receive) net cash proceeds
equaling not less than $20,000,000, and after giving effect thereto
(including the application of proceeds therefrom) (i) the ratio of
Consolidated Senior Debt to Consolidated Adjusted Total Capitalization
shall not exceed 55% and (ii) the ratio of Total Indebtedness to
Consolidated Adjusted Total Capitalization shall not exceed 60%.
2. Payment of Amendment Fee.
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Upon execution of this First Amendment, the Company shall pay to each
Noteholder an amendment fee equal to each Noteholder's pro rata share (based on
the unpaid principal amount of the Notes then outstanding) of an amount equal to
.25% multiplied by the aggregate principal amount of the Notes outstanding.
3. Amendments.
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(a) The Original Agreement is amended by deleting therefrom Section 7.1
and inserting in lieu thereof the following:
"SECTION 7.1 CONSOLIDATED ADJUSTED NET WORTH. The Company shall
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not permit at any time its Consolidated Adjusted Net Worth to be less than
the sum of (i) $105,000,000, (ii) the net cash proceeds of a Qualified
Public Offering, and (iii) until such time as the ratio of Total
Indebtedness to Consolidated Adjusted Total Capitalization is less than
45%, as measured on the last day of two consecutive fiscal quarters elapsed
since the closing date of the Colorstrip Acquisition, 40% of Consolidated
Adjusted Net Income for each semiannual period of the Company commencing
after August 31, 1997, as measured as of the last day of each such fiscal
semiannual period. If Consolidated
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Adjusted Net Income for any semiannual fiscal period is a deficit,
such deficit shall not reduce the amount of Consolidated Adjusted Net
Worth required to be maintained pursuant to this covenant."
(b) The Original Agreement is amended by deleting therefrom Section
7.2 and inserting in lieu thereof the following:
"SECTION 7.2 CONSOLIDATED SENIOR DEBT. The Company shall not at
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any time permit the ratio of Consolidated Senior Debt to Consolidated
Adjusted Total Capitalization ("Senior Leverage Ratio") to exceed, as
measured on the last day of each fiscal quarter, (x) 60.0% for the
period from the closing date of the Colorstrip Acquisition through
February 28, 1999, (y) 57.5% for the period from March 1, 1999 to
February 29, 2000, and (z) 55.0% thereafter, provided that, if at any
time the Company shall complete a Qualified Public Offering,
thereafter the Senior Leverage Ratio shall not exceed 55%, as measured
on the last day of each fiscal quarter."
(c) The Original Agreement is amended by deleting therefrom Section
7.3 and inserting in lieu thereof the following:
"SECTION 7.3 TOTAL INDEBTEDNESS. The Company shall not permit at
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any time the ratio of Total Indebtedness to Consolidated Adjusted
Total Capitalization ("Total Leverage Ratio") to exceed, as measured
on the last day of each fiscal quarter, (x) 65.0% for the period from
the closing date of the Colorstrip Acquisition through February 28,
1999, (y) 62.5% for the period from March 1, 1999 to February 29,
2000, and (z) 60.0% thereafter; provided that, if at any time the
Company shall complete a Qualified Public Offering, thereafter, the
Total Leverage Ratio shall not exceed 60%, as measured on the last day
of each fiscal quarter."
(d) The Original Agreement is amended by adding thereto the following
new Section 7.12:
"SECTION 7.12 FIXED CHARGES COVERAGE. Until such time that ratio
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of Total Indebtedness to Consolidated Adjusted Total Capitalization is
less than 45%, as measured on the last day of two consecutive fiscal
quarters elapsed since the date of closing of the Colorstrip
Acquisition, the Company shall maintain the ratio of Consolidated
Adjusted Net Income Available For Fixed Charges to Fixed Charges as
measured on the last day of any fiscal year at not less than 2.00 to 1
for the period of the four consecutive fiscal quarters ending on such
date of determination."
4. Representations and Warranties.
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(a) In order to induce the Purchasers to enter into this First Amendment,
the Company confirms that (i) except as otherwise set forth in the Schedules
attached hereto, each of the
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representations and warranties set forth in the Original Agreement is true and
correct in all material respects as of the date hereof, except that to the
extent any such representation or warranty is stated to relate solely to an
earlier date, the Company confirms that such representation or warranty was true
and correct in all material respects as of such earlier date and (ii) no Default
or Event of Default (which has not been cured pursuant to amendments made
hereunder) has occurred and is continuing.
(b) The Company represents and warrants that it has the requisite
corporate power and authority to enter into this First Amendment and to
otherwise carry out the transactions contemplated by this First Amendment.
(c) The Company represents and warrants that this First Amendment has
been duly authorized by all necessary corporate action on the part of the
Company and that this First Amendment has been executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforcement hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles regardless of whether enforcement is sought in equity or at
law.
(d) Neither the Amendment Request nor any other written statement or
document furnished by or on behalf of the Company in connection with this First
Amendment, taken together, contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein, in
light of the circumstances under which made, not misleading. The financial
projections contained in the Amendment Request are forward-looking statements
based on estimates and assumptions that are inherently uncertain and, though
considered reasonable by the Company, are subject to significant business and
economic and competitive uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond the control of the Company.
Accordingly, there can be no assurances that the forecasted results will be
realized or that actual results will not be significantly higher or lower than
forecasted.
(e) The execution, delivery and performance by the Company of this
First Amendment will not violate any provision of any law, rule, regulation or
ordinance or any order, judgment, decree or ruling of any court, arbitrator,
governmental authority or agency applicable to the Company and will not result
in any breach of any of the provisions of, or constitute a default under, or
result in the creation of any Lien on any property of the Company under the
provisions
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of, any charter document, by-law, loan, agreement or any other material
agreement or material instrument to which it is a party or by which it or its
property may be bound or affected.
5. Counterparts.
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This First Amendment may be executed by the parties hereto
individually, or in any combination of the parties hereto in several
counterparts, all of which taken together shall constitute one and the same
First Amendment.
6. Conditions to Effectiveness.
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The effectiveness of the Purchasers' agreement to this First Amendment
is subject to the satisfaction on or prior to the date hereof of each of the
following conditions:
(a) Delivery to the Purchasers of each of the following documents:
(i) copies of this First Amendment executed by the Company;
and
(ii) payment to each Purchaser of the Amendment fee
described in Section 2 hereof.
(b) payment of fees and expenses of counsel to the Purchaser.
7. Ratification and Acknowledgment.
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All of the representations, warranties, provisions, covenants, terms
and conditions of the Original Agreement not amended herein shall remain
unaltered and in full force and effect. The Original Agreement, as amended
hereby, is in all respects agreed to, ratified and confirmed by the Company. The
Company acknowledges and agrees that the amendments granted herein shall not be
construed as establishing a course of conduct on the part of the Purchasers upon
which the Company may rely at any time in the future.
8. Reference to and Effect on the Agreement.
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Upon the effectiveness of this First Amendment, each reference in the
Original Agreement and in other documents describing or referencing the Original
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like
import referring to the Original Agreement, shall mean and be a reference to the
Original Agreement, as amended hereby.
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Dated as of this _______ day of January, 1998.
MATERIAL SCIENCES CORPORATION
By:________________________________________
Its:
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PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By: _____________________________
Title:
By: _____________________________
Title:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By: _____________________________
Title:
By: _____________________________
Title:
THE GREAT-WEST LIFE ASSURANCE COMPANY
By: _____________________________
Title:
By: _____________________________
Title:
NATIONWIDE LIFE INSURANCE COMPANY
By: ______________________________
Title:
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By: ______________________________
Title:
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