Document:

exv10w1

 

Exhibit 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER (the “Amendment”), dated as of
August 31, 2005, is to that certain Credit Agreement dated as of December 6, 2004 (as it may be
amended, modified, supplemented or restated from time to time, the “Credit Agreement”), by
and among GENCORP INC., an Ohio corporation (the “Borrower”), the subsidiaries of the
Borrower from time to time party thereto (the “Guarantors”), the lenders from time to time
party thereto (the “Lenders”), and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative
agent for the Lenders (the “Administrative Agent”). Capitalized terms used herein but not
otherwise defined shall have the meanings ascribed thereto in the Credit Agreement.

W I T N E S S E T H

     WHEREAS, the Lenders have established credit facilities for the benefit of the Borrower
pursuant to the terms of the Credit Agreement;

     WHEREAS, the Borrower has requested a certain amendment and a waiver to the Credit Agreement;

     WHEREAS, the Required Lenders are willing to amend the Credit Agreement and provide such
waiver, subject to the terms and conditions hereof.

     NOW, THEREFORE, IN CONSIDERATION of the agreements herein contained, the parties hereby agree
as follows:

SECTION 1

AMENDMENT

     1.1 The definition of “Permitted Investments” found in Section 1.1 of the Credit Agreement is
hereby amended by re-ordering clause (m) to (n) and adding a new clause (m) to read as follows and
by making the appropriate grammatical and punctuation changes thereto:

     (m) loans in connection with the AFC Sale in an amount not to exceed the lesser of (i)
$30,000,000 and (ii) 25% of the total consideration for the AFC Sale; provided that
such loans and advances shall be specifically subordinated in right of payment to the prior
payment of the Credit Party Obligations and contain subordination and other terms acceptable
to the Administrative Agent.

SECTION 2

WAIVER

     2.1 The Required Lenders hereby waive compliance with the Fixed Charge Coverage Ratio from
June 1, 2005 to (but not including) November 30, 2005 (the “Subject Period”);

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provided, that the Borrower shall demonstrate in the certificate of a Responsible
Officer delivered pursuant to Section 5.2(b) for the fiscal quarter ending August 31, 2005 that the
Fixed Charge Coverage Ratio for the four quarter period ending on such date, calculated on a pro
forma basis after giving effect to the AFC Sale, shall be greater than or equal to 1.10 to 1.0 and
failure to so demonstrate shall make this waiver null and void. Except for the specific, one-time
limited waiver set forth above, nothing set forth herein or contemplated hereby is intended to
constitute a waiver of (i) any rights or remedies available to the Lenders or the Administrative
Agent under the Credit Agreement or any other Credit Document or under applicable law (all of which
rights and remedies are hereby expressly reserved by the Lenders and the Administrative Agent) or
(ii) the Credit Parties’ obligation to comply fully with any duty, term, condition, obligation or
covenant contained in the Credit Agreement and the other Credit Documents.

SECTION 3

CONDITIONS TO EFFECTIVENESS

     3.1 This Amendment shall be and become effective as of the date first above written upon
receipt by the Administrative Agent of the following:

     (a) counterparts of this Amendment, which shall have been duly executed by the Borrower
and the Required Lenders; and

     (b) projected Fixed Charge Coverage Ratio calculations for the period ending August 31,
2005, in form and substance satisfactory to the Required Lenders.

SECTION 4

MISCELLANEOUS

     4.1 Representations and Warranties. Each of the Credit Parties represents and
warrants as follows as of the date hereof, after giving effect to this Amendment:

     (a) It has taken all necessary action to authorize the execution, delivery and
performance of this Amendment.

     (b) This Amendment has been duly executed and delivered by such Person and constitutes
such Person’s valid and legally binding obligations, enforceable in accordance with its
terms, except as such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting
creditors’ rights generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).

     (c) No consent, approval, authorization or order of, or filing, registration or
qualification with, any Governmental Authority or third party is required in connection with
the execution, delivery or performance by such Person of this Amendment.

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     (d) The representations and warranties set forth in Article III of the Credit Amendment
are true and correct as of the date hereof (except for those which expressly relate to an
earlier date).

     4.2 Instrument Pursuant to Credit Agreement. This Amendment is a Credit Document
executed pursuant to the Credit Agreement and shall be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.

     4.3 Acknowledgement of Guarantors; Ratification of Obligations. The Guarantors
acknowledge and consent to all of the terms and conditions of this Amendment and agree that this
Amendment and all documents executed in connection herewith do not operate to reduce or discharge
the Guarantors’ obligations under the Credit Documents. Except as modified hereby, the Credit
Agreement is ratified and affirmed by the Credit Parties, and shall continue to be in full force
and effect in accordance with its respective terms.

     4.4 Survival. Except as expressly modified and amended in this Amendment, all of the
terms and provisions and conditions of each of the Credit Documents shall remain unchanged.

     4.5 Expenses. The Borrower agrees to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and delivery of this Amendment,
including without limitation the reasonable expenses of the Administrative Agent’s legal counsel.

     4.6 Entirety. This Amendment and the other Credit Documents embody the entire
agreement among the parties hereto and supersede all prior agreements and understandings, oral or
written, if any, relating to the subject matter hereof.

     4.7 Counterparts/Telecopy. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. Delivery of executed counterparts of this Amendment
by telecopy shall be effective as an original and shall constitute a representation that an
original shall be delivered.

     4.8 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     4.9 Successors and Assigns. This Amendment shall be binding upon and inure to the
benefit of the Credit Parties, the Administrative Agent, the Lenders and their respective
successors and assigns.

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     4.10 Waiver of Jurisdiction; Service of Process; Waiver of Jury Trial. The
jurisdiction, service of process and waiver of jury trial provisions set forth in Sections 9.13 and
9.16 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

[Signature Pages Follow]

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GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

     The parties hereto have duly executed this Amendment as of the date first above written.

	 	 	 	 	 	 	 	 	 
	BORROWER:	 	GENCORP INC.,	 	 	 	 
	 	 	an Ohio corporation	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Terry L. Hall	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Terry L. Hall	 	 	 	 
	 

	 	Title:
	 	Chairman	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	GUARANTORS:	 	AEROJET-GENERAL CORPORATION,	 	 
	 	 	an Ohio corporation	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Terry L. Hall	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Terry L. Hall	 	 	 	 
	 

	 	Title:
	 	Chairman	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	AEROJET ORDNANCE TENNESSEE, INC.,	 	 
	 	 	a Tennessee corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael F. Martin	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Michael F. Martin	 	 	 	 
	 

	 	Title:
	 	Chairman	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	AEROJET FINE CHEMICALS LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joseph Carleone	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Joseph Carleone	 	 	 	 
	 

	 	Title:
	 	President	 	 	 	 

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GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	LENDERS:	 	WACHOVIA BANK, NATIONAL ASSOCIATION,	 	 
	 	 	individually in its capacity as a	 	 
	 	 	Lender and in its capacity as Administrative Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Scott Santa Cruz	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Scott Santa Cruz	 	 	 	 
	 

	 	Title:
	 	Director	 	 	 	 

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GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	AVL CBNA Loan Funding LLC for itself or as	 	 
	 	 	Agent for AVL CFPI Loan Funding LLC	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jane Haack	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Jane Haack	 	 	 	 
	 

	 	Title:
	 	as Attorney-in-Fact	 	 	 	 

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GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	The Bank of New York	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Molnar	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	David Molnar	 	 	 	 
	 

	 	Title:
	 	Assistant Vice President	 	 	 	 

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GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	The Bank of Nova Scotia	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	Mark Sparrow	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Mark Sparrow	 	 	 	 
	 

	 	Title:
	 	Director	 	 	 	 

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GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	Bayerische Hypo- und Vereinsbank AG, New York Branch
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gavin Burke	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Gavin Burke	 	 	 	 
	 

	 	Title:
	 	Director	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Sven Schuessler	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Sven Schuessler	 	 	 	 
	 

	 	Title:
	 	Associate Director	 	 	 	 

10

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	CELERITY CLO LIMITED	 	 
	 	 	By: TCW Advisors, Inc.	 	 
	 	 	as Agent	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Wayne Hosang	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	G. Wayne Hosang	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Suo	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Suo	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

11

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	EMERALD ORCHARD LIMITED	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Denton Robinson	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Denton Robinson	 	 	 	 
	 

	 	Title:
	 	Loans Officer	 	 	 	 

12

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	FIRST 2004-I CLO, LTD	 	 
	 	 	By: TCW Advisors, Inc.	 	 
	 	 	its Collateral Manager	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Wayne Hosang	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	G. Wayne Hosang	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Suo	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Suo	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

13

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	FIRST 2004-II CLO, LTD.	 	 
	 	 	By: TCW Advisors, Inc.	 	 
	 	 	its Collateral Manager	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Wayne Hosang	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	G. Wayne Hosang	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Suo	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Suo	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

14

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	Highland Floating Rate Advantage Fund
	 	 	By: Highland Capital Management, L.P., as Collateral Manager
	 	 	By: Strand Advisors, Inc., Its Investment Advisor
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joe Dougherty	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Joe Dougherty	 	 	 	 
	 

	 	Title:
	 	Senior Vice President	 	 	 	 
	 

	 	 	 	Strand Advisors, Inc., General Partner of	 	 	 	 
	 

	 	 	 	Highland Capital Management, L.P.	 	 	 	 

15

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	Highland Legacy Limited	 	 
	 	 	By: Highland Capital Management, L.P., as Collateral Manager
	 	 	By: Strand Advisors, Inc., Its Investment Advisor
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Chad Schramek	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Chad Schramek	 	 	 	 
	 

	 	Title:
	 	Assistant Treasurer	 	 	 	 
	 

	 	 	 	Strand Advisors, Inc., General Partner of	 	 	 	 
	 

	 	 	 	Highland Capital Management, L.P.	 	 	 	 
	
 	 	 

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GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	Jefferson –
Pilot Life Insurance Company	 	 
	 	 	By: TCW Advisors, Inc.	 	 
	 	 	as its Investment Advisor	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Wayne Hosang	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	G. Wayne Hosang	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Suo	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Suo	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

17

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Clara Sohan	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Clara Sohan	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

18

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	NATIONAL CITY BANK	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kenneth M. Blackwell	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Kenneth M. Blackwell	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

19

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	Southfork CLO, Ltd.
	 	 	By: Highland Capital Management, L.P., as Collateral Manager
	 	 	By: Strand Advisors, Inc., Its General Partner
	 	 	as a Lender
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Chad Schramek	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Chad Schramek	 	 	 	 
	 

	 	Title:
	 	Assistant Treasurer	 	 	 	 
	 

	 	 	 	Strand Advisors, Inc., General Partner of	 	 	 	 
	 

	 	 	 	Highland Capital Management, L.P.	 	 	 	 

20

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	TCW SELECT LOAN FUND, LIMITED	 	 
	 	 	By: TCW Advisors, Inc. as its	 	 
	 	 	Collateral Manager	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Wayne Hosang	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	G. Wayne Hosang	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Suo	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Suo	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

21

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	TCW Senior Secured Loan Fund	 	 
	 	 	By: TCW Advisors, Inc.	 	 
	 	 	as its Investment Advisor	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Wayne Hosang	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	G. Wayne Hosang	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Suo	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Suo	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

22

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	VELOCITY CLO, LTD.	 	 
	 	 	By: TCW Advisors, Inc.	 	 
	 	 	its Collateral Manager	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Wayne Hosang	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	G. Wayne Hosang	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Suo	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Suo	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

23

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, N.N.	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gregory J. Mellor	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Gregory J. Mellor	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

24

 

GENCORP INC.

FIRST AMENDMENT AND WAIVER AGREEMENT

	 	 	 	 	 	 	 	 	 
	 	 	WIND River CLO I Ltd.	 	 
	 	 	By: McDonnell Investment Management, LLC, as Manager
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kathleen A. Zarn	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Kathleen A. Zarn	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 	 	 

25<PAGE>
                                                                    EXHIBIT 10.1

SEVERANCE COMPENSATION AGREEMENT BETWEEN COMM BANCORP, INC. AND ITS SUBSIDIARY,
COMMUNITY BANK & TRUST CO., AND MARK D. RENZINI

Comm Bancorp, Inc. (the "Company") and its subsidiary, Community Bank and Trust
Company (the "Bank"), consider the stability of its key management group to be
essential to the best interests of the Company, the Bank, and the Company's
shareholders. The Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control may arise and
that the attendant uncertainty may result in the departure or distraction of key
management personnel to the detriment of the Company, the Bank, and the
Company's shareholders.

Accordingly, the Board of Directors of the Company (the "Board") has determined
that appropriate steps should be taken to encourage members of the Bank's key
management group to continue as employees of the Bank notwithstanding the
possibility of a change in control of the Company.

The Board also believes it important that, in the event of a proposal for
transfer of control of the Company and Bank, you will be able to assess the
proposal and advise the Board without being influenced by the uncertainties of
your own situation.

In order to induce you to remain in the employ of the Bank, this Agreement,
which has been approved by the Board, sets forth the severance compensation
which the Company agrees will be provided to you in the event your employment
with the Bank is terminated subsequent to a "change in control" of the Company
and the Bank under the circumstances described below. The Company and the Bank
intends to be legally bound by this Agreement.

1. Agreement to Provide Services; Right to Terminate.

(a) Termination Prior to Certain Offers. Except as otherwise provided in
paragraph (b) below, or in any written employment agreement between you and the
Bank, the Bank or you may terminate your employment at any time. If, and only
if, such termination occurs after a change in control of the Company (as defined
in section 5), the provisions of this Agreement regarding the payment of
severance compensation and benefits shall apply.

(b) Termination Subsequent to Certain Offers. In the event a tender offer or
exchange offer is made by a person (as defined in section 5) for more than 30
percent of the combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors ("Voting
Securities"), including the shares of common stock, par value $0.33 per share,
of the Company (the "Company Shares"), you agree that you will not leave the
employ of the Bank (other than as a result of Death or Disability as such term
is defined in section 6) and will render services to the Bank in the capacity in
which you then serve until such tender offer or exchange offer has been
abandoned or terminated or a change in control of the Company has occurred as a
result of such tender offer or exchange offer. If, during the period you are
obligated to continue in the employ of the Bank pursuant to this section 1(b),
and the Bank, reduces your compensation, your obligations under this section
1(b) shall thereupon terminate. You understand and agree that if you terminate
voluntarily your employment with the Bank during such period without Good
Reason, then you are not entitled to any of the payments or benefits under this
Agreement.

<PAGE>
2. Term of Agreement. This Agreement shall commence on the date hereof and shall
continue in effect until September 6, 2006; provided, however, that commencing
on the first anniversary of the date hereof, and each such anniversary
thereafter, the remaining term of this Agreement shall automatically be extended
for one additional year unless at least 180 days prior to such anniversary, the
Company and the Bank or you shall have given notice that this Agreement shall
not be extended; and provided, however, that if a change in control of the
Company shall occur while this Agreement is in effect, this Agreement shall
automatically be extended for 12 months from the date the change in control
occurs. This Agreement shall terminate if you or the Bank terminates your
employment prior to a change in control of the Company but without prejudice to
any remedy the Bank may have for breach of your obligations, if any, under
section 1(b).

3. Severance Payment and Benefits If Termination Occurs Following Change in
Control of the Company for Disability Without Cause, or With Good Reason. If,
within 12 months from the date of occurrence of any event constituting a change
in control of the Company (it being recognized that more than one such event may
occur in which case the 12-month period shall run from the date of occurrence of
each such event), your employment with the Bank is terminated: (i) by the Bank
for Disability; (ii) by the Bank without Cause; or (iii) by you with Good Reason
(as defined in section 5), you shall be entitled to a severance payment as
follows:

(a) Disability. If your employment with the Bank is terminated for Disability,
your benefits shall thereafter be determined in accordance with the Bank's
long-term disability income insurance plan. If the Bank's long-term disability
income insurance plan is modified or terminated following a change in control,
the Company shall cause the Bank to substitute a plan with benefits applicable
to you substantially similar to those provided by such plan prior to its
modification or termination. During any period that you fail to perform your
duties hereunder as a result of incapacity due to physical or mental illness,
you shall continue to receive your full base salary at the rate then in effect
until your employment is terminated by the Bank for Disability.

(b) Termination Without Cause or With Good Reason. If your employment with the
Bank is terminated without Cause by the Bank or with Good Reason by you, then
the Bank shall pay to you, upon demand, an amount equal to one times your full
base salary plus year-to-date accrued vacation leave through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs.

4. Payment If Termination Occurs Following Change In Control of the Company
Because of Death, For Cause, or Without Good Reason. If your employment shall be
terminated following any event constituting a change in control of the Company
because of your death, or by the Bank for Cause, or by you other than for Good
Reason, the Bank shall pay you your full base salary plus year-to-date accrued
vacation leave through the Date of Termination at the rate in effect on the date
when the change in control of the Company occurs. The Company and Bank shall
have no further obligations to you under this Agreement.

5. Definitions of Certain Terms. For the purpose of this Agreement, the terms
defined in this section 5 shall have the meanings assigned to them herein.

(a) Cause. Termination of your employment by the Bank for "Cause" shall mean
termination because, and only because, you committed an act of fraud,
embezzlement, or theft constituting a

<PAGE>
felony or an act intentionally against the interests of the Bank which causes
the Bank material injury. Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for the purpose (after reasonable notice to you and
an opportunity for you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board you were guilty of
conduct constituting Cause as defined above and specifying the particulars
thereof in detail.

(b) Change in Control. A "Change in Control" of the Company shall mean:

(i) A change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A as in effect on the date
hereof pursuant to the Securities Exchange Act of 1934 (the "Exchange Act");
provided that, without limitation, such a change in control shall be deemed to
have occurred at such time as any Person hereafter becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 30 percent or more of the combined voting power of the Company's
Voting Securities; or

(ii) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; or

(iii) There shall be consummated (x) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which Voting Securities would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of Voting
Securities immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange, or other transfer (in one transaction or a series
of related transactions) of all, or substantially all of the assets of the Bank,
provided that any such consolidation, merger, sale, lease, exchange or other
transfer consummated at the insistence of an appropriate banking regulatory
agency shall not constitute a change in control; or

(iv) Approval by the shareholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company.

(c) Date of Termination. "Date of Termination" shall mean (i) if your employment
is terminated by the Bank for Disability, 30 days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such 30-day period), and (ii) if your
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided that if within 30 days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties or by a final judgment, order, or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected). The term of this Agreement
shall be extended until the Date of Termination.

<PAGE>
(d) Disability. Termination of your employment by the Bank for "Disability"
shall mean termination because of your absence from your duties with the Bank on
a full-time basis for 180 consecutive days as a result of your incapacity due to
physical or mental illness and your failure to return to the performance of your
duties on a full-time basis during the 30-day period after Notice of Termination
is given.

(e) Good Reason. Termination by you of your employment for "Good Reason" shall
mean termination based on any of the following:

(i) A change in your status or position(s) with the Bank, which in your
reasonable judgment, does not represent a promotion from your status or
position(s) as in effect immediately prior to the change in control of the
Company, or a change in your duties or responsibilities which, in your
reasonable judgment, is inconsistent with such status or position(s), or any
removal of you from, or any failure to reappoint or reelect you to, such
position(s), except in connection with the termination of your employment for
Cause or Disability or as a result of your death or by you other than for Good
Reason.

(ii) A reduction by the Bank in your base salary as in effect immediately prior
to the change in control of the Company.

(iii) The failure by the Bank to provide and credit you with the number of paid
vacation days to which you are then entitled in accordance with the Bank's
normal vacation policy as in effect immediately prior to the change in control
of the Company.

(iv) The Bank requiring you to be based anywhere other than where your office is
located immediately prior to the change in control of the Company except for
required travel on the Bank's business to an extent substantially consistent
with the business travel obligations which you undertook on behalf of the Bank
prior to the change in control of the Company.

(v) The failure by the Company to obtain from any successor the assent to this
Agreement contemplated by section 8 hereof.

(vi) Any purported termination by the Bank of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of this
Agreement; and for purposes of this Agreement, no such purported termination
shall be effective.

(vii) Any refusal by the Bank to continue to allow you to attend to matters or
engage in activities not directly related to the business of the Bank which,
prior to the change in control of the Company, you were permitted by the Board
to attend to or engage in.

(f) Notice of Termination. A "Notice of Termination" of your employment given by
the Bank shall mean a written notice given to you of the termination of your
employment which shall indicate the specific termination provision in this
Agreement relied upon, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.

(g) Person. The term "Person" shall mean and include any individual,
corporation, partnership, group, association, or other "person," as such term is
used in section 14(d) of the Exchange Act, other than the Company, the Bank or
any employee benefit plan(s) sponsored by the Bank.

<PAGE>
6. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company and Bank shall be directed
to the attention of the President of the Company and the Bank or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.

7. Successors; Binding Agreement.

(a) This Agreement shall inure to the benefit of, and be binding upon, any
corporate or other successor or assignee of the Company and the Bank which shall
acquire, directly or indirectly, by merger, consolidation or purchase, or
otherwise, all or substantially all of the business or assets of the Company and
the Bank. The Company and the Bank shall require any such successor, by an
agreement in form and substance satisfactory to you, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent as the
Company and the Bank would be required to perform if no such succession had
taken place.

(b) This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee, or other designee or, if there
is no such designee, to your estate.

8. Miscellaneous. No provision of this Agreement may be modified, waived, or
discharged unless such modification, waiver, or discharge is agreed to in a
writing signed by you and the President of the Company and the Bank. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or of compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same, or at any prior or subsequent, time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction, and performance of this Agreement shall be governed by laws of the
Commonwealth of Pennsylvania without giving effect to the principles of conflict
of laws thereof. Any prior agreement concerning the subject matter hereof is
rendered null and void on the date hereof.

9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.

<PAGE>
COMM BANCORP, INC./COMMUNITY BANK
AND TRUST COMPANY

By:

/s/ William F. Farber, Sr.
---------------------------------
William F. Farber, Sr., President

AGREED TO:

/s/ Mark D. Renzini
---------------------------------
Mark D. Renzini

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