EXHIBIT 10.39
[GENCORP LOGO]
PO Box 537012
Sacramento CA 95853-7012
WILLIAM R. PHILLIPS Tel: 916-351-8510
Senior Vice President, Law Fax: 916-351-8665
General Counsel and Secretary William.Phillips@GenCorp.com
July 26, 2002
Mr. Robert A. Wolfe
Chairman of the Board of Directors
GenCorp Inc.
P. O. Box 537012
Sacramento, CA 95853-7012
Re: Modified Employment Retention Agreement
Dear Mr. Wolfe:
As you are aware, as of November 30, 2001 you entered an Employment Retention
Agreement (the "Prior Agreement") with the Board of Directors of GenCorp Inc.
("Board") as the result of the desire of the Board that you continue to serve as
Chairman, Chief Executive Officer & President of GenCorp through November 30,
2003. Effective July 1, 2002, in order to begin the transition of management of
GenCorp Inc. ("GenCorp") in anticipation of your retirement, the Board elected
you executive Chairman of GenCorp ("Chairman") and elected Mr. T. L. Hall to the
position of Chief Executive Officer and President of GenCorp. These actions
would have entitled you to immediate collection of all compensation and benefits
to which you were entitled under the Prior Agreement. However, you have agreed
to remain employed as Chairman through November 30, 2003, provided the Prior
Agreement is modified to reflect your changed circumstances. As a consequence, I
have been authorized by the Board to offer you this Modified Employment
Retention Agreement ("Agreement") upon the terms approved by the Board at its
meeting of July 12, 2002, and subject only to the approval of this Agreement by
the Chairman of the Organization and Compensation Committee (the "Committee")
(which approval shall be evidenced by his signature on this Agreement). Once
approved by the Chairman of the Committee, this Agreement shall supercede the
Prior Agreement, and the Prior Agreement will become null and void and of no
further effect whatsoever.
From the date hereof until November 30, 2003, you will continue to serve as a
Director and executive Chairman of GenCorp. You will continue full-time
performance of all duties that you heretofore have performed in this capacity.
Your employment shall be
Robert A. Wolfe
Modified Employment Retention Agreement
July 26, 2002
Page 2
subject to termination at will by notice from you or GenCorp, subject to the
severance provisions of this Agreement.
For performance of these services, GenCorp will continue to pay your annual
compensation consisting of a base salary of not less than your current
$540,000.00 per year and year-end Management Incentive Compensation pursuant to
the plan currently in place, or any new plan that may in the future be adopted
in the sole discretion of the Board. For so long as you remain employed by
GenCorp as Chairman: (i) both your base salary and your year-end Management
Incentive Compensation opportunity and target shall be adjustable (upwards but
not downwards), in the sole discretion of the Board, on an annual basis; and,
(ii) you will continue to be eligible for your present benefits under GenCorp's
employee benefit plans and executive perquisite programs (as those plans may, in
the sole discretion of GenCorp, be modified in the future), including without
limitation, the following: (a) GenCorp Consolidated Pension Plan, (b)
Aerojet-General Corporation Consolidated Pension Plan, (c) GenCorp Retirement
Savings Plan, (d) GenCorp Benefits Restoration Plan, (e) GenCorp Medical Plan,
(f) GenCorp Dental Plan, (g) GenCorp Flexible Benefits Plan, (h) Employee
Assistance Program, (i) Sick-Pay Program, (j) Short-Term Disability Plan, (k)
Long-Term Disability Plan, (l) accidental Death and Dismemberment Insurance, (m)
Life Insurance, (n) Group Universal Life Insurance, (o) Vacation Program, (p)
Holiday Pay, (q) Deferred Bonus Plan, (r) Country Club Membership, (s) Executive
Physical, and (t) Financial Planning Assistance (AYCO); and, (iii) you shall
continue to be eligible, in the good faith discretion of the Board, for new
grants of GenCorp stock options and GenCorp restricted stock in accordance with
the 1999 Equity and Performance Incentive Plan, and any subsequently adopted
GenCorp equity participation plan.
With the exception of your Restricted Stock Agreements dated February 1, 2000
and January 16,2001 (the "Restricted Stock Agreements"), this Agreement shall
not modify your other employment related agreements presently in force, to-wit:
Severance Agreement, dated October 1, 1999 ("Severance Agreement");
Indemnification Agreement, dated October 1, 1999; and, Stock Option Agreements,
dated September 1, 1997, March 25, 1998, March 30, 1999, December 16, 1999, and
January 16, 2001 (in the aggregate, "Prior Contracts"). The Restricted Stock
Agreements are hereby modified as specified in the following paragraph.
Otherwise, should your employment by GenCorp as Chairman terminate prior to
November 30, 2003 for any reason other than death, disability, a Change of
Control (as defined in Paragraph 1.(d) of your Severance Agreement) or at the
will of GenCorp, all compensation and benefits (including without limitation,
pension and vesting of stock options) to which you are entitled on or after the
date your employment terminates shall be determined by the Prior Contracts and
by the Company's employee benefit plans described above, in accordance with
their terms. Any new shares of restricted stock granted to you by GenCorp after
the date of this Agreement shall be treated in accordance with the terms and
conditions of any such grant.
Robert A. Wolfe
Modified Employment Retention Agreement
July 26, 2002
Page 3
Your Restricted Stock Agreements covered 160,000 shares of restricted stock at
the time of the Prior Agreement. Since then, the 40,500 shares of restricted
stock allocated to FY2001 have lapsed and become null and void. There are
presently remaining under your Restricted Stock Agreements 49,500 shares and
70,000 shares of restricted stock allocated to FY2002 and FY2003, respectively.
In consideration of your entering this Agreement, the Board has determined that
on the date this Agreement is signed by the Chairman of the Committee all
119,500 remaining shares of restricted stock under your Restricted Stock
Agreements shall immediately vest and become non-forfeitable without the need
for any further action by you or GenCorp.
If you continue to serve in your present capacity to November 30, 2003, or if
GenCorp elects to terminate your employment prior to that date for any reason
other than Cause, you shall:
a. Be eligible to receive an annual pension payment (the "Pension
Benefit") equal to the greater of $248,860.26 and the amount calculated
as set forth below commencing upon your termination of employment. This
pension payment shall consist of pension payments made from the
appropriate combination of the Aerojet-General Corporation Consolidated
Pension Plan and the GenCorp Consolidated Pension Plan (collectively
"Pension Plan"); the GenCorp Benefit Restoration Plan (the "Restoration
Plan"); and, an Enhanced Pension Benefit paid to you as an unsecured
creditor from the cash assets of GenCorp. Your Pension Benefit will be
calculated based upon: (a) the formulas in the Pension Plan; (b) your
actual age; (c) your actual service credits plus ten whole years of
service credit; and, (d) your actual final five year average annual
plan compensation for you, but not less than $764,224.80. Pension
Benefits will be paid as provided under the applicable Pension Plan and
Restoration Plan (generally as an annuity over your lifetime) and the
Enhanced Pension Benefit will be paid in an actuarially equivalent five
equal annual installments commencing promptly following the date of
your retirement. The amount of the Enhanced Pension Benefit shall
consist of the difference between (i) your pension benefit calculated
as described above, and (ii) your normal pension benefit to be paid as
calculated under the normal terms of the Pension Plan and the
Restoration Plan. The actuarial equivalent value of this difference
shall be calculated using the same discount factors and mortality table
as utilized in connection with the 2001 GenCorp Voluntary Enhanced
Retirement Program under the 2001 Supplemental Retirement Plan for
GenCorp Executives, and the resulting value will be paid to you (and in
the event of your death, to your estate, except to the extent, if any,
legally required to be paid to your spouse) in five equal installments,
provided that you may designate another beneficiary at any time prior
to commencement of payment by written notice to GenCorp (with such
consent, if any, as shall be legally required of your spouse).
Additionally, you may elect payment of the pension offered in this
Agreement in the form of a life annuity or a 100% or 50% joint and
survivor annuity, with your wife as the joint annuitant. Any of these
optional annuity forms of payment shall be the actuarial
Robert A. Wolfe
Modified Employment Retention Agreement
July 26, 2002
Page 4
equivalent of the pension amount calculated in accordance with the
terms and procedures applicable under the Pension Plan, and this
Agreement. Any alternative form must be elected or revoked at least one
(1) year prior to your retirement date.
b. Receive immediate vesting of all unexercised GenCorp stock options
granted to you prior to November 30, 2003, which shall remain
exercisable for the periods specified in the original grants (i.e., the
remainder of the term of the grant);
c. Receive immediate vesting of any GenCorp restricted stock which may be
granted to you after the date this Agreement is signed by the Chairman
of the Committee, but prior to November 30, 2003;
d. Receive in a lump-sum an amount equal to the Base Salary, if any, that
would have been paid to you through November 30, 2003;
e. Receive any accrued amounts including any earned but unpaid Base
Salary, accrued but unused vacation, unreimbursed business expenses and
earned bonus for any completed fiscal year and any amount or benefit
due under any benefit plan (the "Accrued Amounts");
f. Receive a pro rata bonus for the fiscal year of termination based on
actual results and the period of the year during which you were
employed by GenCorp (the "Pro Rata Bonus").
As used herein, "Cause" shall have the same meaning as defined in Paragraph 1(c)
of your Severance Agreement except that subpart (c)(i) shall only be Cause if
such violation is a felony and you are convicted or plead guilty or nolo
contendre to it (and it is not as a result of your vicarious liability), (ii),
(iii) and (iv) shall only be Cause if the violation is injurious to GenCorp. A
material breach of this Agreement by GenCorp, including but not limited to the
first two sentences of the second paragraph of this Agreement, that remains
uncured for ten (10) days after written notice thereof is given by you, or the
relocation of your office by more than fifty (50) miles from its present
location at the Aerojet facility in Sacramento, California shall be deemed a
termination at the will of and by GenCorp without Cause.
If you die prior to November 30, 2003 while employed as Chairman by GenCorp, or
while you are totally disabled (with the onset of your disability having
occurred while you were employed by GenCorp), GenCorp will: (i) pay the Enhanced
Pension Benefit offered in this Agreement to your estate, unless otherwise
required by law, calculated as if you had retired on November 30, 2003, unless
prior to your death, with the concurrence of GenCorp, you have elected a
different one of the alternative payout options offered in this Agreement to
take effect in the case of your death, in which case the pension shall be paid
in accordance with your election and provided that you may designate another
beneficiary at any time prior to your death by written notice to
Robert A. Wolfe
Modified Employment Retention Agreement
July 26, 2002
Page 5
GenCorp (with such consent, if any, as shall be legally required of your
spouse); (ii) vest all unvested GenCorp stock options held by you upon your
death which shall remain exercisable by your beneficiary for the periods
specified in the original grants (i.e., the remainder of the term of the grant);
(iii) vest all unvested GenCorp restricted stock held by you upon your death and
transfer that stock to your estate; and (iv) pay to your estate, unless
otherwise required by law, any Accrued Amounts, and Pro Rata Bonus.
If you become totally disabled and unable to perform your duties as Chairman,
and such disability is expected to continue for at least 6 consecutive months,
GenCorp shall pay you a monthly disability benefit equal to one-twelfth of the
sum of your base salary rate and target bonus plus your benefits until the first
to occur of the following events: (i) you are able to resume performance of your
duties; or (ii) November 30, 2003, at which time you shall be eligible to retire
and receive the pension and vesting of GenCorp stock options and GenCorp
restricted stock described in this Agreement. However, such disability benefit
shall be reduced by the amount of any disability benefit payments which you are
entitled to receive under the GenCorp Long-Term Disability Plan or pursuant to
federal law until such time as you retire. You shall also receive Accrued
Amounts and a Pro Rata Bonus to the extent these amounts are not duplicative of
amounts previously paid to you.
In the event a Change in Control of GenCorp occurs prior to November 30, 2003,
while you are serving as Chairman or while you are totally disabled (with the
onset of your disability having occurred while you were employed by GenCorp),
you shall be entitled to the full benefit of your Severance Agreement and the
full benefit of this Agreement. In addition, this Employment Retention Agreement
shall take precedence over those provisions of the Pension Plan which address
Change in Control.
You will hold in confidence and will not disclose to any third person or use for
your personal benefit any confidential information or trade secret GenCorp has
disclosed to you except in compliance with legal process or, while you are an
executive of the Company, as you deem appropriate in your good faith judgment.
As used herein, "confidential information" and "trade secrets" mean any and all
information of GenCorp and/or any of its subsidiaries, which is not generally
available to third persons and relates to the products, customers, pricing,
terms of sale, manufacturing processes, research and development, financial
performance or any other aspects of the business of GenCorp and/or any of its
subsidiaries.
For a period of three years following the termination of your employment as
Chairman, you will not perform, directly or indirectly, any consulting or other
services for or on behalf of any company or person in respect of any business
operations which are in material competition with GenCorp's material businesses,
provided that the foregoing shall not prevent you from providing consulting or
other services in respect of noncompetitive business operations of a person or
entity that also has competitive business operations.
Robert A. Wolfe
Modified Employment Retention Agreement
July 26, 2002
Page 6
This Agreement will be deemed to require you to perform personal services.
Accordingly, you may not assign any right, delegate any duty, or otherwise
transfer any interest hereunder, whether by operation of law or otherwise,
without GenCorp's prior written consent.
As a condition of receiving the benefits hereunder upon termination, you further
agree to provide GenCorp a release, generally in the form attached hereto as
Exhibit A, upon termination of your employment under circumstances that will
result in payment of the benefits offered in this Agreement.
On any termination, except a termination for Cause or a termination initiated by
you prior to November 30, 2003 (which is not deemed a termination without Cause
by GenCorp), you will also receive the items on Exhibit B hereto. This Agreement
constitutes the entire understanding between you and GenCorp regarding the
incentives the Board is offering you to continue your employment as Chairman
through November 30, 2003. Except as expressly provided in this Agreement, this
Agreement may not be changed, amended or terminated, in whole or in part, except
by a writing executed by you and an authorized representative of GenCorp. This
Agreement shall in all respects be construed in accordance with the laws of the
State of Ohio. This Agreement shall be binding upon and shall inure to the
benefit of successors and assigns of GenCorp, including any successor resulting
from a change in control, provided the Agreement may only be assigned by GenCorp
only to a successor to all or substantially all of its business and then only
upon such successor promptly delivering to you a written assumption of this
Agreement. Any dispute under this Agreement shall be resolved by arbitration in
Sacramento, California before one arbitrator under the jurisdiction of the
American Arbitration Association (the "AAA") pursuant to the applicable AAA
rules. The judgment of the arbitrator shall be final and binding on the parties
and judgment upon it may be entered in any court of competent jurisdiction. Each
party shall bear its own costs and legal fees and shall equally divide those of
the AAA and the arbitrator, provided that the arbitrator may award the
prevailing party (as determined by the arbitrator) his or its costs and his or
its reasonable legal fees and disbursements, provided that no award shall be
made against you unless the arbitrator shall determine that you took the
material portion of your position in bad faith or that your claim was frivolous.
GENCORP INC.
/s/ William R. Phillips
----------------------------------------
William R. Phillips
Senior Vice President, Law, General
Counsel And Secretary
DATE: July 26, 2002
Robert A. Wolfe
Modified Employment Retention Agreement
July 26, 2002
Page 7
ACCEPTED AND AGREED
/s/ Robert A. Wolfe
- ----------------------------------------
Robert A. Wolfe
Chairman of the Board of Directors
DATE: July 30 , 2002
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APPROVED:
/s/ William K. Hall
- ----------------------------------------
William K. Hall
Chairman Organization & Compensation Committee
GenCorp Board of Directors
DATE: July 31 , 2002
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EXHIBIT A
RELEASE OF CLAIMS
In consideration for the amounts to be paid to me under the Modified
Employment Retention Agreement with GenCorp Inc. dated __________, 2002,
("Agreement"), I hereby irrevocably and unconditionally release any and all
claims described in subsection (i) hereafter that I may now have against the
following persons or entities (the "Releasees"): GenCorp Inc., all related,
affiliated or subsidiary companies of GenCorp, and their predecessors,
successors and assigns; and, with respect to each such entity, all of its past
and present employees, officers, directors, stockholders, owners,
representatives, assigns, attorneys, agents, insurers, employee benefit programs
(and the trustees, administrators, fiduciaries and insurers of such programs)
and any other persons acting by, through, under or in concert with any of the
persons or entities listed in this subsection in such capacities.
(i) Claims Released: Except as provided in subsection (iii),
the claims released include all claims, promises, debts, causes of
action or similar rights of any type or nature that I have or had which
in any way relate to: (a) my employment with GenCorp, or the
termination of that employment through voluntary retirement, such as
claims for compensation, bonuses, commissions, or lost wages, (b) the
design or administration of any employee benefit plan or program, other
than my rights as a participant in the employee benefit programs and
the Prior Agreements described in the Agreement, (c) any rights to
severance or similar benefits under any employment agreement, any
termination Agreement, or any related programs, policy or procedure of
GenCorp, except my Severance Agreement which shall remain in effect,
(d) any other claims or demands I may have against the Releasees. The
claims released, for example, may have arisen under any of the
following statutes or common law doctrines:
Anti-Discrimination statutes including, without
limitation, the Age Discrimination in Employment Act and
Executive Order 11141, which prohibit age discrimination in
employment, Title VII of the Civil Rights Act of 1964, Section
1981 of the Civil Rights Act of 1866 and Executive Order
11246, which prohibit discrimination based on race, color,
national origin, religion or sex, the Equal Pay Act, which
prohibits paying men and women unequal pay for equal work; the
Americans With Disabilities Act and Sections 503 and 504 of
the Rehabilitation Act of 1973, which prohibit discrimination
against the disabled; the California Fair Employment and
Housing Act, which prohibits discrimination in employment
based on race, color, national origin, ancestry, physical or
mental disability, medical condition, marital status, sex or
age; and any other federal, state or local laws or regulations
prohibiting employment discrimination.
Federal Employment Statutes including, without
limitation, the WARN Act, which requires that advance notice
be given of certain work force reductions; the Employee
Retirement Income Security Act of 1974, which among other
things, protects pension or welfare benefits; and the Fair
Labor Standards Act of 1938, which regulates wage and hour
matters.
Other Laws including, without limitation, any
federal, state or local laws providing workers compensation
benefits, restricting an employer's right to terminate
employees or otherwise regulating employment, any federal,
state or local law enforcing express or implied employment
contracts or requiring an employer to deal with employees
fairly or in good faith; California Labor Code Sections
200 et seq., relating to salary, commission, compensation,
benefits and other matters, the California Workers'
Compensation Act, the California Unemployment Insurance Code;
any applicable California Industrial Welfare Commission Order;
and any other federal, state or local laws, whether based on
statute, regulation or common law, providing recourse for
alleged retaliation or wrongful discharge, physical or
personal injury, emotional distress, fraud, negligent
misrepresentation, libel, slander, defamation, whistleblower
and similar or related claims.
(ii) Release Extends to Both Known and Unknown Claims: This
Release covers both claims that I know about and those that I may not
know about. I hereby expressly waive all rights afforded by any statute
(including Section 1542 of the Civil Code of the State of California)
which limits the effect of a release with respect to unknown claims.
Section 1542 of the Civil Code of the State of California states as
follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
I understand the significance of this Release of unknown claims and my waiver of
statutory protection against a release of unknown claims (such as under Section
1542).
(iii) Claims Not Released: This Release does not release: (a)
my right to enforce any provision of the Agreement; (b) my rights as a
participant, if any, to unpaid salary, pension, welfare and/or COBRA
benefits under any GenCorp employee benefit plan or program, except to
the extent that any claim was rejected or denied, either as to me or as
to other similarly situated employees, before the Agreement and this
Release of Claim become effective; or (d) any right to indemnity
relating to third-party claims against me arising out of the course or
scope of my employment, and granted under the Articles of
Incorporation, the Corporate Code of Regulations, my Indemnification
Agreement and/or by operation of law or (e) any rights to directors and
officers liability insurance.
(iv) Ownership of Claims: I hereby represent that I have not
assigned or transferred, or purported to assign or transfer, all or any
part of any claim released herein.
Date
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Robert A. Wolfe
EXHIBIT B
1. Office and secretarial support for 3 years.
2. Charitable matching contributions for 3 years.
3. Financial planning and tax preparation for 3 years.
4. Existing home security equipment, home computer, laptop and similar
equipment.
5. Transfer of current country club membership to Executive.