Document:

exv10w5

 

Exhibit 10.5

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT is made and entered into by and between CHARTER PRIVATE EQUITY, L.P.
whose address is 1845 Woodall Rodgers Freeway, Suite 1700, Dallas, TX 75201 (“Secured Party”), and
MBI MORTGAGE, INC. a Texas corporation whose address is 1845 Woodall Rodgers, Suite 1225, Dallas,
Texas 75201 (“Debtor”).

     For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby grants to Secured Party a security interest in and to the Collateral,
as herein defined, and in connection therewith the parties hereby agree as follows:

     Collateral. To secure payment of the “Indebtedness”, as herein defined, Debtor
hereby assigns, transfers and sets over to Secured Party, and grants to Secured Party, a security
interest in and to the following assets ( “Collateral”): Any and all personal property assets of
Debtor now owned or hereinafter acquired, tangible and intangible, specifically including, but
necessarily limited to, all goods, equipment, inventory, general intangibles, furniture, fixtures,
receivables, contracts, accounts, claims, bank accounts, deposits, trade names, service marks,
licenses and any other items of personal property wherever located.

     Indebtedness. The term “Indebtedness” as used herein, shall mean: (a) the unpaid
principal sum, accrued and unpaid interest, and other sums payable under that certain promissory
note dated of even date herewith in the original principal amount of THREE HUNDRED TWENTY-FIVE
THOUSAND AND NO/100 DOLLARS ($325,000.00) executed by Debtor and payable to the order of Secured
Party ( “Note”), which Note is guaranteed by Debtor to the extent, and only to the extent, of the
Collateral described in this Security Agreement; and, (b) all rearrangements, increases, renewals
and extensions of the Note.

     Representations of Debtor. Debtor represents, warrants and agrees as follows:

     a. No financing statement or other instrument of hypothecation covering the Collateral or its
proceeds is on file in any public office except in favor of Secured Party; except for the security
interest granted by this Security Agreement, there is no lien, security interest or encumbrance in
or on the Collateral; and Debtor is the true and lawful owner of the Collateral.

     b. The Collateral will not be sold, transferred, pledged or made subject to a security
agreement without the prior written consent of Secured Party.

     c. Debtor will sign and execute alone or with Secured Party any financing statement or other
document or procure any document, and pay all costs in connection therewith necessary to protect
the security interest under this Security Agreement against the rights or interests of third
persons.

SECURITY AGREEMENT-

 

 

     d. Debtor will, at Debtor’s own expense, do, make, procure, execute and deliver all
acts, things, writings and assurances as Secured Party may at any time reasonably request to
protect, assure or enforce the interests, rights and remedies of Secured Party created by, provided
in or emanating from this Security Agreement.

     e. Debtor will pay to Secured Party all expenses (including expenses for legal services of
every kind) of, or incidental to, the enforcement of any of the provisions of this Security
Agreement, or incidental to the enforcement, repayment or collection of any of the Indebtedness, or
any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement of
any of the Collateral or receipt of the proceeds thereof, and for the care of the Collateral and
defending or asserting the rights and claims of the Secured Party in respect thereof, by litigation
or otherwise; and all such expenses shall be Indebtedness within the terms of this Security
Agreement.

     f. Until such time as the Note is paid in full, the Debtor will honor the terms and conditions
of any other written agreements entered into with the Secured Party.

     Uniform Commercial Code. This Security Agreement shall constitute a valid and
binding security agreement under the Uniform Commercial Code — Secured Transactions (herein called
the “Code”) creating in favor of Secured Party, until the Indebtedness is fully paid, a first and
prior security interest in and to the Collateral. Accordingly, Debtor hereby acknowledges unto
Secured Party that Secured Party shall have, in addition to any and all other rights, remedies and
recourses afforded to Secured Party under this Security Agreement or the Instruments, all rights,
remedies and recourses afforded to secured parties by the Code.

     Default by Debtor. There will be a default under this Security Agreement upon the
happening of any of the following events or conditions which is not cured within any applicable
cure periods contained in the Note or any instruments securing the Note (herein called an “Event of
Default”):

     a. If any Indebtedness secured by this Security Agreement, either principal or interest, is
not paid when due, subject to any notice and cure provisions provided for in the Note.

     b. If the Debtor shall fail to comply with any of the Debtor’s covenants or undertakings in
any agreement, instrument or other document between the Debtor and the Secured Party, subject to
any notice and cure provisions provided for therein.

     c. If Debtor shall fail to comply with any of Debtor’s covenants or agreements herein and such
failure remains uncured for thirty (30) days after receipt of written notice from the Secured
Party.

SECURITY AGREEMENT-

 

 

     d. If Debtor (i) applies for or consents to the appointment of a receiver, trustee, custodian
or liquidator of all or a substantial part of Debtor’s assets, or (ii) files a voluntary petition
in bankruptcy or fails generally to pay Debtor’s debts as such debts become due, or (iii) makes a
general assignment for the benefit of creditors, or (iv) files a petition or answers same wherein
Debtor seeks reorganization or rearrangement with creditors or to take advantage of any insolvency
law, or (v) files an answer admitting the material allegations of a petition filed against Debtor
in any bankruptcy, reorganization, insolvency or similar proceeding.

     e. If an order, non-appealable judgment or decree is entered by any court of competent
jurisdiction, upon the application of a creditor or otherwise, adjudicating Debtor as bankrupt or
insolvent or approving a petition seeking reorganization or appointing a receiver, trustee or
liquidator of all or any substantial part of Debtor’s assets and same remains in effect for more
than sixty (60) days.

     f. If any warranty, representation or statement contained in this Security Agreement, or any
agreement, instrument or other document made or furnished to Secured Party by or on behalf of
Debtor in connection with this Security Agreement proves to have been false in any material respect
when made or furnished.

     Remedies.

     a. When an Event of Default occurs, and at any time thereafter, Secured Party may declare all
or a part of the Indebtedness immediately due and payable and may proceed to enforce payment of
same and to exercise any and all of the rights and remedies provided by the Code, as well as all
other rights and remedies possessed by Secured Party under this Security Agreement or otherwise at
law or in equity. Secured Party may require Debtor to assemble the Collateral and make it
available to Secured Party at any place to be designated by Secured Party which is reasonably
convenient to both parties. For purposes of the notice requirements of the Code, Secured Party and
Debtor agree that notice given at least five (5) days prior to the related action hereunder is
reasonable. Secured Party shall be entitled to immediate possession of the Collateral and all
books and records evidencing same and shall have authority to enter upon any premises, upon which
said items may be situated, and remove same therefrom. Expenses of retaking, holding, preparing
for sale, selling, or the like (“Collection Costs”), shall include, without limitation, Secured
Party’s reasonable attorneys’ fees and all such expenses shall be recovered by Secured Party before
applying the proceeds from the disposition of the Collateral toward the Indebtedness. To the
extent allowed by the Code, Secured Party may use Secured Party’s discretion in applying the
proceeds of any disposition of the Collateral to the Collection Costs or to the Indebtedness and
Debtor will remain liable for any deficiency remaining after such disposition. All rights and
remedies of Secured Party hereunder are cumulative and may be exercised singly or concurrently.
The exercise of any right or remedy will not be a waiver of any other.

SECURITY AGREEMENT-

 

 

     b. Secured Party, in addition to the rights and remedies provided for in the preceding
subparagraph, shall have all the rights and remedies of a secured party under the Uniform
Commercial Code as adopted by the state where the Collateral is located at the date of any such
Event of Default, and Secured Party shall be entitled to all such other rights and remedies as may
now or hereafter exist at law or in equity for the collection of the Indebtedness and the
enforcement of the covenants herein and the foreclosure of the security interest created hereby and
to resort to any remedy provided hereunder or provided by the Uniform Commercial Code as adopted in
the state where the Collateral is located at the date of an Event of Default, or by any other law
of such state, shall not
prevent the concurrent or subsequent employment of any other appropriate remedy or remedies.

     c. Secured Party may remedy any default, without waiving same, or may waive any default
without waiving any prior or subsequent default.

     Secured Party’s Rights.

     a. This Security Agreement, Secured Party’s rights hereunder or said Indebtedness hereby
secured, may be assigned from time to time, and in any such case the assignee will be entitled to
all of the rights, privileges and remedies granted in this Security Agreement to Secured Party.

     b. Upon the occurrence of an Event of Default, Secured Party may execute, sign, endorse,
transfer or deliver, in the name of Debtor, notes, checks, drafts or other instrument for the
payment of money and receipts or any other documents necessary to evidence, perfect or realize upon
the security interest and obligations created by this Security Agreement.

     c. At Secured Party’s option, Secured Party may, after notice to Debtor and Debtor’s failure
to do so within thirty (30) days after receipt of said notice, discharge taxes, liens or security
interests or other encumbrances at any time levied or placed on the Collateral, and perform or
cause to be performed Debtor’s obligations under the Collateral to maintain the same in full force
and effect. Debtor agrees to reimburse Secured Party on demand for any payment made, or expense
incurred, by Secured Party pursuant to the foregoing authorization, plus interest thereon at the
rate of interest provided for in the Note.

     d. No remedy herein conferred upon or reserved to Secured Party is intended to be or shall be
exclusive of any other remedy, but every remedy herein provided is cumulative and is in addition to
every other remedy given hereunder or in any instrument executed in connection herewith, or now or
hereafter existing at law or in equity, or by statute; and every such right and remedy may be
exercised from time to time and as often as may be deemed expedient. No delay or omission by
Secured Party to exercise any right or remedy arising from any default will impair any such right
or remedy or will be construed to be a waiver thereof or of any such default or an acquiescence
therein.

 

 

     Release of Security Interest. Upon full and complete payment of all sums owing and to
be owing by Debtor to Secured Party and the termination of any obligations of Debtor under the
Security Agreement, together with all costs incurred in connection therewith, at the request and
expense of Debtor, Secured Party will make, execute and deliver a reassignment of the properties
assigned hereby and of the monies, revenues, proceeds, benefits and payments, if any, that may be
owing upon the aforesaid Collateral to Debtor but without covenant or warranty, however, of any
kind or character, express or implied, and with the provisions that Secured Party will not be
required or called upon to refund or account for any payments properly made to Secured Party which
have been or may be properly applied to any Indebtedness secured or to be secured hereby.

     Validity of Security Interest. No security taken hereafter as security for payment of
any part or all of the Indebtedness shall impair in any manner or effect this Security Agreement;
all such present and future additional security to be considered as cumulative security. Any of
the Collateral may be released from this Security Agreement without altering, varying or
diminishing in any way the force, effect, lien, security interest or charge of this Security
Agreement as to the Collateral not expressly released, and this Agreement shall continue as a first
lien, security interest and charge on all of the Collateral not expressly released until all sums
and indebtedness secured hereby have been paid in full.

     Notices. Any notice, request or other document shall be in writing and sent by
registered or certified mail, return receipt requested, postage prepaid and addressed to the party
to be notified at the following addresses, or such other address as such party may hereafter
designate by written notice to all parties, which notice shall be effective as of the date of
posting:

	 	(a)	 	If to Secured Party:
	 
	 	 	 	Charter Private Equity, L.P.

1845 Woodall Rodgers Freeway, Suite 1700

Dallas, TX 75201

	 	(b)	 	If to the Debtor:
	 
	 	 	 	MBI Mortgage, Inc.

1845 Woodall Rodgers

Suite 1225

Dallas, Texas 75201

     Texas Law. This Security Agreement and the obligations of the parties hereunder are
to be interpreted, construed and enforced in accordance with the laws of the State of Texas.

     Severability. If any provision of this Security Agreement or the application thereof
to any person or circumstance is held to be invalid or unenforceable to any extent, the remainder
of this Security Agreement and the application of such provisions to other persons or

 

 

circumstances
is not to be affected thereby and is to be enforced to the full extent permitted by law.

     Successors and Assigns. This Security Agreement inures to the benefit of, and is
binding upon, Debtor and Secured Party and their respective heirs, legal representatives,
successors and assigns.

     Gender. The use of any gender herein shall include the other genders.

     Scope. Nothing herein contained will in any way limit or be construed as limiting the
right of Secured Party to collect any note, item, sum or amount secured or to be secured hereby
only out of the properties assigned hereby or out of the revenues, monies, proceeds, benefits and
payments accruing and to accrue unto Debtor, under and by virtue of said Collateral, but it is
expressly understood and provided that all such Indebtedness and amounts secured and to be secured
hereby are, and shall constitute, absolute and unconditional obligations of Debtor to pay to
Secured Party the amount provided for instruments executed in connection herewith and all
agreements with reference thereto at the time and in the manner therein specified or provided.
Debtor agrees that Debtor will, from time to time, and upon request of Secured Party, furnish
satisfactory proof that the properties assigned hereby and the revenues, monies, proceeds, benefits
and payments accruing and to accrue under said Collateral are free and clear of all lawful demands,
claims and liens of any and all persons whomsoever.

     IN WITNESS WHEREOF, this Security Agreement is dated the 22nd day of March, 2006.

	 	 	 	 	 	 	 	 	 
	 	 	DEBTOR:	 	 
	 	 	MBI Mortgage, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ John M. Farkas	 	 
	 	 	 	 	 	 	 
	 	 	Name:	John M. Farkas	 	 
	 	 	 	 	 	 	 	 
	 	 	Its:	 	President/Secretary	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SECURED PARTY:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Charter Private Equity, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Charter Private Equity GP, Inc.	 	 
	 	 	By:	 	/s/ Richard Neely	 	 
	 	 	 	 	 	 	 
	 	 	Name:	Richard Neely	 	 
	 	 	 	 	 	 	 	 
	 	 	Its:	 	Vice President	 	 
	 	 	 	 	 	 	 

 

 

	 	 	 
	THE STATE OF TEXAS
	 	§
	 
	 	§
	COUNTY OF DALLAS
	 	§

     This instrument was acknowledged before me, a Notary Public, on the 22nd day of March,
2006, by John Farkas, President of MBI Mortgage, Inc., a Texas
corporation, for the purposes therein set forth, on behalf of such corporation.

	 	 	 	 	 	 	 	 	 
	 	 	/s/ Denise Boyd	 	 
	 	 	 	 	 
	 	 	Notary Public, State of Texas

Printed Name: Denise Boyd

Commission Expires: June 20, 2009	 	 

	 	 	 
	THE STATE OF TEXAS
	 	§
	 
	 	§
	COUNTY OF DALLAS
	 	§

     This instrument was acknowledged before me, a Notary Public, on the 22nd day of
March, 2006, by Richard Neely, Vice-President of Charter Private Equity
GP, Inc., a Texas corporation, general partner of Charter Private Equity, L.P., a Texas limited
partnership, for the purposes therein set forth, on behalf of such corporation and limited
partnership.

	 	 	 	 	 	 	 	 	 
	 	 	/s/ Denise Boyd	 	 
	 	 	 	 	 
	 	 	Notary Public, State of Texas

Printed Name: Denise Boyd

Commission Expires: June 20, 2009exv10w1

 

Exhibit 10.1

INDEPENDENT CONSULTING AGREEMENT

Dated as of February 28, 2006

by and between

	 	 	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	Joseph Carleone

	 	 	 	 	 	GenCorp Inc.	 
	 	2338 Teton Circle

	 	 	 	 	 	P.O. Box 537012	 
	 	Placentia, CA 92870

	 	 	 	 	 	Sacramento, CA 95853-7012	 
	 	 

	 	 	and
	 	 	(if by courier — Highway 50 & Aerojet Road	 
	 	 

	 	 	 	 	 	Rancho Cordova, CA 95742)	 
	 	 

	 	 	 	 	 	an Ohio corporation	 
	 	(“Consultant”)

	 	 	 	 	 	(“GenCorp”)	 
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

For good and valuable consideration and intending to be legally bound, the following constitutes an
Independent Consulting Agreement (“Agreement”) between Consultant and GenCorp.

1.     General Provisions

A.     Subject. The subject of this Agreement is Consultant’s performance of certain consulting
services for GenCorp.

B.     Annex A. The parties have attached to this Agreement an Annex (“Exhibit A”) that
contains material provisions which are an integral part of this Agreement and are fully
incorporated herein by reference.

C.     Definitions. For purposes of this Agreement,

	 	(1)	 	“Term” means the period starting on February 28, 2006 and ending on
August 28, 2007;
	 
	 	(2)	 	“Services” means the services described on Item No. 1 of Annex A; and
	 
	 	(3)	 	“Fees” means payment for Services performed set forth in Item No. 2 of
Annex A;

2.     Engagement

Pursuant to the provisions of this Agreement, GenCorp hereby engages Consultant to perform the
Services during the Term and Consultant hereby accepts GenCorp’s engagement.

3.     Performance of Services

A.     Performance. Consultant shall perform the Services subject to the final, written acceptance of
GenCorp, which shall not be unreasonably withheld or delayed. GenCorp shall not withhold payment
of any of the Fees for the Services without providing Consultant with thirty (30) days’ prior
written notice and an opportunity to cure.

 

 

B.     Status. Consultant shall perform Services as an independent contractor, and nothing in this
Agreement, as written or as implemented, is intended to create an employer-employee,
master-servant, or principal-agent relationship between GenCorp and Consultant. During the Term,
Consultant will not accrue any additional benefits under the Company’s defined benefit pension
plan(s) or participate in any other Company benefit plans. In addition, Consultant shall not be
entitled to any health or welfare or other benefits by virtue of this Agreement.

C.     Discretion. Consultant shall exercise reasonable discretion in determining how, when and where
Services are performed.

D.     Authority. Consultant shall have no authority to enter into any agreement with any person or
entity on behalf of GenCorp; nor shall Consultant represent to anyone that he or she possesses any
such authority.

In performing Services at any GenCorp facility, Consultant agrees to comply with all GenCorp
regulations, rules of business conduct, security, safety and fire prevention requirements.

4.     Compensation

A.     Fees. In exchange for performance of the Services, GenCorp shall pay Consultant the Fees as
agreed herein.

B.      Expenses. GenCorp shall reimburse Consultant for those reasonable business expenses incurred
by Consultant, such as travel, lodging and meals, which are necessary to the performance of
Services outside the Orange County, California area. Such reimbursement shall not exceed the
actual dollar amount of the expense, and shall be supported by documentation that complies with
GenCorp’s then-current expense reimbursement policies and procedures.

C.     Taxes. Consultant shall be solely responsible for the payment of all taxes and other
governmental charges that may result from any payment made to Consultant under this Agreement, and
Consultant hereby agrees to reimburse and indemnify GenCorp with respect to any expenses,
penalties, charges or liabilities incurred by GenCorp as a result of the nonpayment of any such
taxes or charges.

D.     Payment. During the Term, GenCorp will pay Consultant the Fees and reimburse Consultant’s
reasonable business Expenses incurred in connection with the provision of the Services.

5.     Work Product

A.     Work Product Assigned to GenCorp. All work product, including all inventions, ideas,
suggestions, works of authorship, and computer programs, conceived, developed, prepared for or
submitted to GenCorp by Consultant under this Agreement (“Work Product”) shall belong
exclusively to GenCorp, and Consultant hereby irrevocably assigns to GenCorp the ownership of any
and all of his rights, title and interest in and to the Work Product. GenCorp shall have the right
to obtain and hold in its own name patents, copyrights, registrations and other protection which
may be available for the Work Product. In connection with any such assignment, Consultant agrees
to communicate to GenCorp all facts known by Consultant concerning any Work Product, to sign all
rightful papers, make all rightful oaths and generally assist GenCorp in obtaining and enforcing
patent, copyright or other protection for all such Work Product.

B.     Original Work Product Warranty. Except as may be identified in writing by Consultant prior to
submission, Consultant represents, warrants and covenants that the items prepared for or submitted
to GenCorp under this Agreement shall be original work product of Consultant; no portion of such items shall be confidential and/or proprietary to Consultant and/or to any third

2

 

party or protected by any copyright, trade secret or similar right of Consultant or any third
party; provided, however, that to the extent that any preexisting materials are contained in the
Work Product and Consultant is entitled to license such pre-existing materials to GenCorp,
Consultant hereby grants to GenCorp an irrevocable, nonexclusive, worldwide, royalty-free license
to: (1) use, execute, reproduce, display, perform, distribute (internally or externally) copies
of, and prepare derivative works thereof, and (2) authorize others to do any, some or all of the
foregoing. GenCorp shall be responsible for procuring and paying for any additional licenses to
any pre-existing materials which Consultant is prohibited (by contractual, legal or fiduciary duty)
from disclosing to GenCorp.

C.     Work Product Use. No license or right is granted to Consultant either expressly or by
implication, estoppel or otherwise to publish, reproduce, prepare derivative works based upon,
distribute copies of, publicly display, or perform, any of the Work Product. Consultant shall
protect the Work Product from any disclosure not authorized by GenCorp and at GenCorp’s request and
upon the completion of the Services Contractor shall deliver to GenCorp all documents and other
media in his possession or under his control which contain or reflect any Work Product, subject
however to the following: Consultant may copy, reproduce, and retain any or all such copies of such
written documents which are necessary to perform the Services until expiration of the Term, at
which time Consultant shall deliver the same to GenCorp. Further, GenCorp shall have the right to
inspect and verify such retained documents which shall be segregated by Consultant at all times.
Notwithstanding the foregoing, Consultant may retain a complete set of copies of the Work Product
for the purpose of establishing his performance of his obligations under this Agreement.

6.     Confidentiality

A.     Nonuse and Nondisclosure. Consultant shall treat as confidential and protect from any
disclosure or use not authorized by this Agreement any information provided by GenCorp in
connection with this Agreement and any Work Product, including, but not limited to, information
relating to GenCorp’s technology, formulae, procedures, processes, methods, trade secrets, ideas,
and inventions (the “Confidential Information”). Consultant shall only use the Confidential
Information for the benefit of GenCorp and for no other purpose.

B.     Permitted Uses. Notwithstanding Section 6(A), Consultant shall not be liable for disclosing or
using Confidential Information if it is established that the Confidential Information disclosed or
used: (a) was actually known to the Consultant before being obtained from GenCorp; (b) was or
becomes generally available to the public without fault of Consultant; (c) was acquired in good
faith by Consultant from a third party who rightfully possessed such information and who was not
under any contractual, legal or fiduciary duty not to disclose such information; or (d) is required
to be disclosed by process of law, provided that Consultant shall promptly notify and cooperate
with GenCorp prior to any disclosure to allow GenCorp an opportunity to resist such process.

C.     Return of Confidential Information. At the written request of GenCorp and upon the completion
of the Services, all Confidential Information in the possession or under the control of Consultant,
including, without limitation, all papers, documents, tapes, computer databases or other media
which contain or reflect Confidential Information, shall be immediately delivered to GenCorp and
Consultant shall not retain any copies thereof, except as provided in Section 5(C) above.

D.     Continuing Duties. Consultant’s duties under this Section 6 will continue indefinitely,
including beyond the Term hereof.

3

 

7.     Miscellaneous

A.     Amendments. This Agreement may be amended at any time, but only by a written agreement signed
by both parties.

B.     Personal Performance. This Agreement calls for the personal performance of Services by
Consultant. Accordingly, Consultant may not assign any rights or delegate any duties under this
Agreement to anyone without GenCorp’s prior written approval.

C.     No Third Parties. This Agreement does not create any rights in or confer any benefits to anyone
other than GenCorp and Consultant. This Agreement inures to the benefit of and shall be binding on
and enforceable by each of the Parties hereto or any of them, their respective representatives, and
successors.

D.     Governing Law and Venue. This Agreement shall be governed by the laws of the State of
California, and this Agreement shall only be enforced by the courts of California. Consultant
hereby agrees to comply with all laws, rules and regulations in performance of Services under this
Agreement, including, without limitation, all securities laws, rules and regulations.

E.     Complete Agreement. This Agreement contains the entire understanding of the parties regarding
the subject of this Agreement. Accordingly, this Agreement supersedes all prior representations,
warranties, covenants, commitments, guarantees or other agreements, whether oral or written,
relating to the subject of this Agreement.

F.     Notices. All notices required hereunder shall be deemed received no later than five (5) days
after depositing said notice in the U.S. Mail, via certified mail, to the party’s address stated on
page one of this Agreement.

G.     Release. In consideration of, among other things, the entering into this Agreement, Consultant
shall on the date hereof, execute the release in the form attached hereto as Annex B.

To evidence their agreement, Consultant and GenCorp Inc. have signed this Independent
Consulting Agreement below and delivered signed counterparts of this Independent
Consulting Agreement to each other.

	 	 	 	 	 
	 	Joseph Carleone

 	 
	 	/s/ Joseph Carleone
 	 
	 	 	 
	 	 	 
	 

	 	 	 	 	 
	 	GenCorp Inc.

 	 
	 	By:  	/s/ Mark Whitney
 	 
	 	 	Its:  Vice President, Law 	 
	 	 	 	 
	 

4

 

Annex A

to

Independent Consulting Agreement

dated as of February 28, 2006

by and between

joseph carleone and GenCorp Inc.

Item No. 1 — Services

Consultant will provide the following Services during the Term:

Joseph Carleone shall reasonably assist GenCorp on an as needed basis with
respect to matters arising out of the sale of the Aerojet Fine Chemical
business by GenCorp and its affiliates to American Pacific Corporation
(“AMPAC”). Joseph Carleone shall assist GenCorp for up to thirty-two (32)
hours per month.

Item No.2 — Fees

Consultant’s Fees will be as follows:

$8,333.33 per month during the Term paid in arrears, with a final payment of
$8,333.39 paid on the final day of the term, for an aggregate amount paid of
$150,000.00.

v 

			
	�For Consultant
	 	For GenCorp�

 

 

Annex B

Release

     Joseph Carleone (“Carleone”) agrees as follows:

     WHEREAS, Carleone and GenCorp Inc. (“GenCorp”) are parties to that certain consulting
agreement dated February 28, 2006 (the “Consulting Agreement”) pursuant to which Carleone
shall provide certain consulting services to GenCorp; and

     WHEREAS, Carleone is required to sign this Release as part of the Consulting Agreement.

     NOW THEREFORE, in consideration of the promises and agreements contained herein and other good
and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and
intending to be legally bound, Carleone agrees as follows:

     1.     This Release is effective on the date hereof and shall continue in effect as provided
herein.

     2.     In consideration of the payments to be made and the benefits to be received by Carleone
pursuant to the Consulting Agreement, which Carleone acknowledges are in addition to payments and
benefits which Carleone would be entitled to receive absent the Consulting Agreement, Carleone, for
himself and his dependents, successors, assigns, heirs, executors and administrators (and his and
their legal representatives of every kind), hereby releases, dismisses, remises and forever
discharges GenCorp Inc., its predecessors, parents, subsidiaries, divisions, related or affiliated
companies, officers, directors, stockholders, members, employees, heirs, successors, assigns,
representatives, agents and counsel (collectively, the “Company”) from any and all
arbitrations, claims, including claims for attorney’s fees, demands, damages, suits, proceedings,
actions and/or causes of action of any kind and every description, whether known or unknown, which
Carleone now has or may have had for, upon, or by reason of any cause whatsoever (collectively,
“claims”), against the Company, including but not limited to:

     (a)     any and all claims arising out of or relating to Carleone’s employment by or service with
the Company and his termination from the Company but specifically excluding any claim to benefits
under any defined benefit plan of the Company, 401K plan and/or benefit restoration plan;

     (b)     any and all claims for severance payments, and any claims of discrimination, including but
not limited to claims of discrimination on the basis of sex, race, age, national origin, marital
status, religion or handicap, including, specifically, but without limiting the generality of the
foregoing, any claims under the Age Discrimination in Employment Act, as amended, Title VII of the
Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, Ohio Revised Code
Section 4101.17 and Ohio Revised Code Chapter 4112, including Sections 4112.02 and 4112.99 thereof
and any similar provision under California and other state laws; and

     (c)     any and all claims of wrongful or unjust discharge or breach of any contract or
promise, express or implied.

vi

			
	�For Consultant
	 	For GenCorp�

 

 

     3.     Carleone understands and acknowledges that the Company does not admit any violation of law,
liability or invasion of any of his rights and that any such violation, liability or invasion is
expressly denied. The consideration provided for this Release is made for the purpose of settling
and extinguishing all claims and rights (and every other similar or dissimilar matter) that
Carleone ever had or now may have against the Company to the extent provided in this Release.
Carleone further agrees and acknowledges that no representations, promises or inducements have been
made by the Company other than as appear in the Consulting Agreement.

     4.     Carleone further agrees and acknowledges that:

     (a)     The release provided for herein releases claims up to and including the date of this
Release other than any claim to receive benefits under any defined benefit plan of the Company;

     (b)     He has been advised by the Company to consult with legal counsel prior to executing this
Release, has had an opportunity to consult with and to be advised by legal counsel of his choice,
fully understands the terms of this Release, and enters into this Release freely, voluntarily and
intending to be bound; and

     (c)     He has been given a period of 21 days to review and consider the terms of this Release,
prior to its execution and that he may use as much of the 21 day period as he desires.

     5.     Carleone agrees that he will never file a lawsuit or other complaint asserting any claim
that is released in this Release.

     6.     Except in the event of a breach of the Consulting Agreement by Carleone, the release of
claims set forth in this Release is conditioned upon the full payment by GenCorp of the Fees as set
forth in the Consulting Agreement. To the extent GenCorp fails to pay such Fees, Carleone may
pursue such claims against the Company; provided, however, that, Carleone agrees that he shall not
seek, and he hereby waives, any damages for such claims in an amount greater than the difference
between (i) $150,000, and (ii) the amount of such Fees actually paid to Carleone.

     IN WITNESS WHEREOF, Carleone has executed and delivered this Release on the date set forth
below.

	 	 	 	 	 
	 	 	 
	Dated: 28 Feb 2006 	/s/ Joseph Carleone
 	 
	 	Joseph Carleone 	 
	 	 	 
	 

vii

			
	�For Consultant
	 	For GenCorp�

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