Document:

exv10w2

 

Exhibit 10.2

SETTLEMENT AGREEMENT

     This SETTLEMENT AGREEMENT (this “Agreement”) is made and entered into as of March 19,
2008, by and among Capital Senior Living Corporation, a Delaware corporation (“Capital
Senior”); Boston Avenue Capital, LLC, an Oklahoma limited liability company (“Boston
Avenue”); Yorktown Avenue Capital, LLC, an Oklahoma limited liability company (“Yorktown
Avenue”); Stephen J. Heyman (“Heyman”); and James F. Adelson (“Adelson” and,
together with Heyman, Boston Avenue and Yorktown Avenue, the “Boston Avenue Parties”).

RECITALS

     WHEREAS, the Boston Avenue Parties beneficially own approximately 7.1% of the outstanding
common stock, par value $.01 per share (the “Common Stock”), of Capital Senior and have
filed a Schedule 13D with the Securities and Exchange Commission in which they have reserved the
right to seek representation on Capital Senior’s board of directors (the “Board”) at
Capital Senior’s 2008 annual meeting of stockholders (the “2008 Annual Meeting”); and

     WHEREAS, among other things, Capital Senior is entering into a Settlement Agreement (the
“West Creek Settlement Agreement”) as of the date hereof with West Creek Capital, LLC, a
Delaware limited liability company (“West Creek”); Harvey Hanerfeld (“Hanerfeld”);
and Roger Feldman (“Feldman” and, together with Hanerfeld and West Creek, the “West
Creek Parties”) pursuant to which West Creek, another significant holder of the Common Stock
will, among other things, be provided representation on the Board as a stockholder representative;
and

     WHEREAS, Capital Senior will only enter into the West Creek Settlement Agreement if the Boston
Avenue Parties agree to enter into this Agreement;

     NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

AGREEMENTS

     Section 1.1. Certain Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

     “2008 Nominees” shall have the meaning ascribed thereto in the West Creek Settlement
Agreement.

     “2009 Annual Meeting” shall mean the annual meeting of Capital Senior’s stockholders
to be held in 2009, or any special meeting of stockholders held in lieu thereof at which directors
are to be elected to the Board.

     “Affiliate” shall mean (a) with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, such first Person and (b) any officers, directors or members of Boston Avenue.

 

 

     “Boston Avenue Group” shall mean (a) the Boston Avenue Parties; (b) any and all
Affiliates of any Boston Avenue Party, (c) any Person as to which beneficial ownership of Common
Stock, directly or indirectly, is controlled or shared by a Boston Avenue Party; (d) any
then-current officers, directors or managing members (or Persons serving is equivalent capacities)
of any Person described in clauses (a) or (b) above; and (e) with respect to any Person described
in clauses (a) or (b) above who is an individual, (i) any and all immediate family members of such
Person, (ii) the heirs, executors, personal representatives and administrators of such Person,
(iii) any and all trusts established for the benefit of such Person and (iv) any and all charitable
foundations the investment decisions of which are controlled by such Person.

     “Governmental or Regulatory Authority” shall mean any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or other political subdivision, or any stock
exchange or market in which the Common Stock is listed for trading or traded.

     “Management Proposal” shall mean a proposal presented by the Board for consideration
at an annual meeting of Capital Senior’s stockholders that is anything other than the election of
directors or ratification of the appointment of Capital Senior’s independent auditors.
“Person” shall mean any individual, corporation, limited liability company, partnership,
trust, other entity or group (within the meaning of Section 13(d)(3) of the Exchange Act.

     “Restricted Activity” shall mean (i) soliciting proxies or consents for the voting of
any shares of Common Stock or otherwise becoming a “participant,” directly or indirectly, in any
“solicitation” of “proxies” or consents to vote, or becoming a “participant” in any “election
contest” involving Capital Senior (all terms used herein and defined in Regulation 14A under the
Exchange Act having the meanings assigned to them therein), (ii) seeking to advise or influence any
person with respect to the voting of any shares of Common Stock in a manner other than as
recommended by the Board, (iii) initiating, proposing or otherwise “soliciting” Capital Senior
stockholders for the approval of shareholder proposals, (iv) otherwise communicating with Capital
Senior’s stockholders or others pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act, (v)
otherwise engaging in any course of conduct with the purpose of causing any other stockholder of
Capital Senior to vote contrary to the recommendation of the Board on any matter presented to
Capital Senior’s stockholders for their vote or (vi) otherwise acting, directly or indirectly,
alone or in concert with others, to seek to control or influence the management, the Board,
policies or affairs of Capital Senior. Notwithstanding the foregoing, no activity specified in any
of the foregoing clauses (ii) through (vi) inclusive shall, with respect only to a Management
Proposal, be deemed to be a Restricted Activity during the Solicitation Period for the 2008 Annual
Meeting. For the avoidance of doubt, any of the activities specified in any of the foregoing
clauses (ii) through (vi) inclusive shall, during the Solicitation Period of 2008 Annual Meeting,
be deemed to be Restricted Activities to the extent they are taken with respect to any matter at
such annual meeting that is not a Management Proposal. “Solicitation Period” shall mean,
with respect to any annual meeting of Capital Senior’s stockholders, the time period from (A) the
earlier of (i) the time when notice of such annual meeting is given by Capital Senior or (ii) such
earlier time, if any, as Capital Senior shall publicly announce or disclose an intention

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to present a Management Proposal at such annual meeting to (B) the conclusion of such annual
meeting.

     “Special Committee” shall have the meaning ascribed thereto in the West Creek
Settlement Agreement.

     “Strategic Alternatives” shall have the meaning ascribed thereto in the West Creek
Settlement Agreement.

     “West Creek Replacement” shall have the meaning ascribed thereto in the West Creek
Settlement Agreement.

     Section 1.2. Restricted Activities; Voting Agreement. Subject to the condition that Capital
Senior performs all of its obligations in the West Creek Settlement, specifically including but not
limited to those obligations set forth in Sections 1.2 and 1.3 thereof:

     (a) from the date hereof through the completion of the 2008 Annual Meeting, no Boston Avenue
Party shall, and each of the Boston Avenue Parties shall use all commercially reasonable efforts to
cause each other member of the Boston Avenue Group not to, directly or indirectly, engage in any
Restricted Activity.

          (b) The Boston Avenue Parties shall, and shall cause each other member of the Boston Avenue
Group as to which the Boston Avenue Parties have voting control over such other members’ Common
Stock to, cause all shares of Common Stock beneficially owned by each of them to be present at the
2008 Annual Meeting for purposes of establishing a quorum and (x) to be voted for the nominees
recommended by the Board (provided such nominees include the 2008 Nominees), (y) to be voted or not
voted on all other proposals of the Board and any proposals by other stockholders of Capital Senior
not covered by clause (z) below, as each such Person determines is appropriate, and (z) to be voted
in accordance with the recommendation of the Board on any proposals with respect to an election of
directors of any other stockholder of Capital Senior that is proposing one or more nominees for
election as director in opposition to the nominees of the Board at any such meeting. No later than
five business days prior to the 2008 Annual Meeting, the Boston Avenue Parties shall, and shall
cause each other member of the Boston Avenue Group as to which the Boston Avenue Parties have
voting control over such other members’ Common Stock to, vote in accordance with this Section
1.2(b). The Boston Avenue Parties shall not, and shall cause each other member of the Boston Avenue
Group not to, revoke or change any vote in connection with the 2008 Annual Meeting unless such
revocation or change is required or permitted in accordance with the first sentence of this Section
1.2(b)(x) and (z).

     Section 1.3. 2009 Annual Meeting. If (i) the Board approves the Strategic Alternative
recommended to it by Hanerfeld or a West Creek Replacement (whether as part of the Special
Committee’s recommendation or as a separate recommendation) and has diligently pursued in good
faith such Strategic Alternative, and (ii) Capital Senior is in compliance in all material respects
with its public disclosure obligations under the Securities Exchange Act of 1934, then

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no Boston Avenue Party shall, and each of the Boston Avenue Parties shall use all commercially
reasonable efforts to cause each other member of the Boston Avenue Group not to, directly or
indirectly, engage in any Restricted Activity with respect to the election of directors at the 2009
Annual Meeting.

ARTICLE II

MISCELLANEOUS PROVISIONS

     Section 2.1. Representations and Warranties.

     (a) Each of the parties hereto represents and warrants to the other parties that:

     (i) such party has all requisite authority and power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby,

     (ii) the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all required
action on the part of such party and no other proceedings on the part of such party are
necessary to authorize the execution and delivery of this Agreement or to consummate the
transactions contemplated hereby,

     (iii) the Agreement has been duly and validly executed and delivered by such party and
constitutes the valid and binding obligation of such party enforceable against such party in
accordance with their respective terms, and

     (iv) this Agreement will not result in a violation of any terms or provisions of any
agreements to which such Person is a party or by which such party may otherwise be bound or
of any law, rule, license, regulation, judgment, order or decree governing or affecting such
party.

     (b) The parties hereto acknowledge, warrant and represent that they have carefully read this
Agreement, understand it, have consulted with and received the advice of counsel regarding this
Agreement, agree with its terms, are duly authorized to execute it and freely, voluntarily and
knowingly execute it.

     Section 2.2. General.

     (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and the respective successors, personal representatives and assigns of the parties
hereto.

     (b) This Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and thereof and supersedes all prior and contemplated arrangements and
understandings with respect thereto.

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     (c) This Agreement may be signed in counterparts, each of which shall constitute an original
and all of which together shall constitute one and the same Agreement.

     (d) All notices and other communications required or permitted hereunder shall be effective
upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail,
express delivery service or U.S. overnight mail, addressed to the party to be notified at the
respective addresses set forth below, or at such other addresses which may hereinafter be
designated in writing:

If to Capital Senior:

Capital Senior Living Corporation

14160 Dallas Parkway, Suite 300

Dallas, Texas 75254

Attention: James A. Stroud, Chairman

Fax No.: 972-770-5666

email: jastroud@capitalsenior.com

with copies to:

Capital Senior Living Corporation

14160 Dallas Parkway, Suite 300

Dallas, Texas 75254

Attention: Lawrence A. Cohen, Chief Executive Officer

Fax No.: 212-551-1774

email: lcohen@capitalsenior.com

and

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Attention: Michael A. Schwartz

Fax No.: (212) 728-9267

email: mschwartz@willkie.com

If to any of the Boston Avenue Parties:

Boston Avenue Capital, LLC

15 East 5th Street, Suite 2660

Tulsa, Oklahoma 74103

Attention: Chuck Gillman

Fax No.: 918-583-0888

email: cgillman@bostavcap.com

with a copy to:

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Olshan Grundman Frome Rosenzweig & Wolosky LLP

Park Avenue Tower

New York, New York 10022

Attention: Steven Wolosky

Fax No.: (212) 451-2300

email: swolosky@olshanlaw.com 

     (e) This Agreement and the legal relations hereunder between the parties hereto shall be
governed by and construed in accordance with the laws of the State of Delaware applicable to
contracts made and performed therein, without giving effect to the principles of conflicts of law
thereof.

     (f) Whenever possible, each provision of this Agreement shall be interpreted in such manner as
to be effective and valid, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.

     (g) It is hereby agreed and acknowledged that it will be impossible to measure in money the
damages that would be suffered if the parties fail to comply with any of the obligations herein
imposed on them and that in the event of any such failure, an aggrieved person will be irreparably
damaged and will not have an adequate remedy at law. Any such person, therefore, shall be entitled
to injunctive relief, including specific performance, to enforce such obligations, without the
posting of any bond, and, if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense that there is an
adequate remedy at law.

     (h) Each party hereto shall do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements, certificates, instruments
and documents as any other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

     (i) Each of the parties hereto hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of Delaware and of the United States of
America, in each case located in the County of New Castle, for any action, proceeding or
investigation in any court or before any governmental authority arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence any action,
proceeding or investigation relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by registered mail to its respective address
set forth in this Agreement shall be effective service of process for any action, proceeding or
investigation brought against it in any such court. Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any action, proceeding or
investigation arising out of this Agreement or the transactions contemplated hereby in the courts
of the State of Delaware or the United States of America, in each case located in the County of New
Castle, and hereby further irrevocably and unconditionally waives and agrees not to plead

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or claim in any such court that any such action, proceeding or investigation brought in any
such court has been brought in an inconvenient forum.

[Remainder of page intentionally left blank.]

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     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
day and year first written above.

	 	 	 	 	 	 	 
	 	 	CAPITAL SENIOR LIVING CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James A. Stroud	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	James A. Stroud	 	 
	 

	 	Title:
	 	Chairman of the Company	 	 
	 
	 	 	 	 	 	 
	 	 	BOSTON AVENUE CAPITAL, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen J. Heyman	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen J. Heyman	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James F. Adelson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	James F. Adelson	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	YORKTOWN AVENUE CAPITAL, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen J. Heyman	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen J. Heyman	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James F. Adelson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	James F. Adelson	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Stephen J. Hayman	 	 
	 	 	 	 	 
	 	 	Stephen J. Heyman	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ James F. Adelson	 	 
	 	 	 	 	 
	 	 	James F. Adelson	 	 

8exv10w1

 

Exhibit 10.1

LETTER AGREEMENT

     THIS LETTER AGREEMENT (this “Agreement”), dated as of March 5, 2008 is made and entered into
by and between GenCorp Inc., an Ohio corporation (the “Company”), and Terry L. Hall (the
“Executive”).

Recitals:

     A. The Executive is currently the President and Chief Executive Officer of the Company.

     B. Executive and the Company entered into a Severance Agreement, dated on or about August 10,
2006 (the “Severance Agreement”), pursuant to which Executive is entitled to the payment and
provision of certain amounts and benefits following a termination of Executive’s employment with
the Company without “Cause” (as defined therein) following a “Change in Control” (as defined
therein).

     C. As set forth in Section 2.10 of the Second Amended and Restated Shareholder Agreement dated
March 5, 2008 by and between the Company and Steel Partners II, L.P. (the “Shareholder Agreement”),
a “Change in Control”, as defined in Severance Agreement, will occur on the Effective Date, as
defined in the Shareholder Agreement.

     D. The parties hereto have entered into this Letter Agreement in order to acknowledge certain
existing agreements by and between the Company and Executive, and Executive’s rights thereunder.

     E. As further set forth in Section 2.10 of the Shareholder Agreement, Executive has agreed to
resign, and does hereby resign, as President and Chief Executive Officer of the Company, as a
member of the Company’s Board of Directors and from each and every other position Executive has
with the Company or its direct or indirect subsidiaries and the Company has agreed that such
resignation shall be treated as termination by the Company of Executive’s employment without Cause
following a Change in Control, each as defined in the Severance Agreement, thus entitling Executive
to the severance compensation specified in Section 3 of the Severance Agreement.

     NOW, THEREFORE, the Company and Executive agree as follows:

	1.	 	Exhibit A attached hereto sets forth the estimated amount of the payments and/or
benefits that Executive is entitled to following his termination of employment on the date
hereof (the “Termination Date”) pursuant to Section 3 and Annex A of the Severance Agreement.

	2.	 	The parties hereto believe in good faith that the six-(6-) month delay required for
“specified employees” pursuant to Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) does not apply to the payments described in Section 3 and Annex A of the
Severance Agreement because such payments do not constitute “deferred compensation” within the
meaning of Section 409A of the Code. Executive acknowledges and agrees that he shall be
solely responsible for any additional taxes imposed by Code Section 409A on any such payments
and/or benefits if any such additional tax is imposed by the Internal Revenue Service.

	3.	 	The Company acknowledges that Executive is eligible to “retire”, and hereby agrees that
Executive has “retired”, from the Company for purposes of all equity-based awards previously
granted to Executive by the Company, including, without limitation, all options to purchase
the Company’s common stock (“Options”) or stock appreciation rights (“SARs”, and together with

 

 

	 	 	the Options, the “Awards”) held by Executive that are vested as of the Termination Date,
which are afforded full-term exercisability pursuant to the applicable plan(s) and award
agreements governing such Awards.

	4.	 	Executive acknowledges and agrees that pursuant to Section 9 of the Severance Agreement,
payment of the amounts set forth on Exhibit A is conditioned upon the Executive executing and
delivering a release (the “Release”) substantially in the form provided in Annex C of the
Severance Agreement.

	5.	 	The Company may withhold from any amounts payable under this Agreement and the Severance
Agreement all federal, state, city or other taxes as the Company is required to withhold
pursuant to any law or government regulation or ruling and the principal and accrued interest
outstanding under any loans by and between the Company and the Executive, including but not
limited to the loan described in the Company’s definitive proxy statement filed with the
Securities and Exchange Commission on or about February 29, 2008.

	6.	 	The parties hereto acknowledge and agree that the provisions of this Agreement do not modify,
limit or restrict the rights and/or obligations of the Company and Executive under the
Severance Agreement or any other plan program or arrangement, including but not limited to
Section 4 of the Severance Agreement.

	7.	 	The validity, interpretation, construction and performance of this Agreement will be governed
by and construed in accordance with the substantive laws of the State of Ohio, without giving
effect to the principles of conflict of laws of such State.

	8.	 	This Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same agreement.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
as of the date first above written.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Terry L. Hall
 	 
	 	Terry L. Hall 	 
	 	 	 
	 
	 	GENCORP INC.

 	 
	 	By:  	/s/ Yasmin R. Seyal
 	 
	 	 	Yasmin R. Seyal 	 
	 	 	Senior Vice President and

Chief Financial Officer 	 
	 

 

 

EXHIBIT A

	 	 	 
	Payment/Benefit	 	Estimated Payment Amount/Benefit Described
	Accrued But Unpaid Base Pay

	 	$19,385 
	 
	 	 
	Annual Bonus

	 	$0 
	 
	 	 
	Accrued Vacation Pay

	 	$96,923 
	 
	 	 
	Severance Pay

	 	$3,927,656 
	 
	 	 
	Life Insurance

	 	Twenty-four (24) months of
term life insurance benefits
	 
	 	 
	Health Benefits

	 	Eighteen (18) months of health
benefits and lump sum equal to
after-tax amount of additional
six (6) months of health
benefits
	 
	 	 
	Qualified Retirement Benefits

	 	$58,580.25 — Annual single
life annuity commencing at
normal retirement age.1
	 
	 	 
	Non-Qualified Retirement Benefits

(Benefits Restoration Plan)

	 	Pre 12/31/04 - $50,798.16 —
Annual single life annuity
commencing at normal
retirement age; Post 12/31/04 - $158,035.16 — Annual single
life annuity commencing at
normal retirement age.2
	 
	 	 
	Outplacement Services

	 	$126,000 
	 
	 	 
	Payment for Financial Counseling

	 	$15,000 

 

			
	1	 	Executive eligible for unreduced retirement benefit
at age 57. Time and form of payment subject to the terms of the plan.
	 
	2	 	Executive eligible for unreduced retirement benefit
at age 57. Time and form of payment subject to the terms of the plan.
Pre-2005 BRP amount can be paid in a lump sum (discounted).

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