1
Exhibit 10.17
AGREEMENT ON EMPLOYEE MATTERS
This Agreement on Employee Matters ("Agreement") dated as of ____ __,
1999, is made and entered into by and between GENCORP INC., an Ohio corporation
("GenCorp"), and OMNOVA SOLUTIONS INC., an Ohio corporation ("Omnova") which, as
of the date hereof, is a wholly owned subsidiary of GenCorp.
WITNESSETH:
WHEREAS, the Board of Directors of GenCorp has determined that it is
advisable to distribute substantially all of the stock of Omnova to its
shareholders in a transaction intended to qualify under Section 355 of the
Internal Revenue Code (variously, the "Distribution" or the "Spin-Off");
WHEREAS, GenCorp and Omnova are entering into a Distribution Agreement
which, among other things, together with the Schedules thereto, sets forth the
principal corporate transactions required to effect the Distribution and sets
forth other agreements that will govern certain other matters following the
Distribution; and
WHEREAS, in connection with the distribution, GenCorp and Omnova desire
to provide for the allocation of certain assets and liabilities and for certain
other matters all relating to employment, employee benefit plans and
compensation arrangements.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
2
ARTICLE I
DEFINITIONS
1.1 Terms used but not defined herein shall have the meanings set forth
in the Distribution Agreement. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
(a) DISTRIBUTION DATE. The date on which the shares of Omnova are
distributed to the shareholders of GenCorp.
(b) ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
(c) GENCORP CONTROLLED GROUP. Collectively, GenCorp and any GenCorp
Group member whose employees are required by Section 414 of the Code to be
treated as if they were employed by a single employer.
(d) GENCORP MEDICAL PLAN. The GenCorp Medical and Dental and Plans.
(e) GENCORP HOURLY PENSION PLAN. The Non-Contributory Pension Plan
of GenCorp Inc., as in effect on the day before the Distribution Date.
(f) GENCORP PENSION PLAN TRUSTEE. The trustee or trustees appointed
pursuant to the GenCorp Salaried Pension Plan.
(g) GENCORP SALARIED PENSION PLAN. The Pension Plan for Salaried
Employees of GenCorp Inc., as in effect on the day before the Distribution Date.
(h) GENCORP STOCK FUND. The GenCorp Stock Fund under the Joint
Savings Plan.
2
3
(i) JOINT SAVINGS PLAN. The GenCorp Retirement Savings Plan and the
GenCorp Profit Sharing Retirement and Savings Plan, as amended to be a
multiple-employer plan or plans jointly sponsored by GenCorp and Omnova.
(j) OMNOVA CONTROLLED GROUP. Collectively, Omnova and any Omnova
Group member whose employees are required by Section 414 of the Code to be
treated as if they were employed by a single employer.
(k) OMNOVA EMPLOYEES. Any person who at the Closing Time is
employed primarily in the Omnova Business, including any such employee on an
approved leave of absence (including disability) as of the Closing Time. Omnova
Employees shall include Omnova Salaried Employees and Omnova Hourly Employees.
(l) OMNOVA HOURLY EMPLOYEES. Omnova Employees other than Omnova
Salaried Employees.
(m) OMNOVA HOURLY PENSION PLAN. The Non-Contributory Pension Plan
of Omnova Solutions Inc.
(n) OMNOVA MEDICAL PLAN. The medical and dental benefit plans
adopted by Omnova for the benefit of its employees after the Distribution Date
and the separate medical and dental benefit programs maintained by Omnova
pursuant to collective bargaining agreements.
(o) OMNOVA PENSION PLAN TRUSTEE. The trustee or trustees appointed
pursuant to the trust agreement under the Omnova Pension Plan.
(p) OMNOVA SALARIED EMPLOYEES. Omnova Employees who are compensated
on a salaried basis.
(q) OMNOVA SALARIED PENSION PLAN. The Pension Plan for Salaried
Employees of Omnova Solutions Inc.
3
4
(r) OMNOVA STOCK FUND. The Omnova Stock Fund under the Joint
Savings Plan.
(s) UNFUNDED DEFERRED COMPENSATION. Unfunded obligations of GenCorp
as of the Distribution Date to pay deferred compensation and retirement income
under its Benefits Restoration Plan, Deferred Bonus Plan, Non-Employee Directors
Retirement and Deferred Compensation Plans, 1996 Supplemental Retirement Plan
for Management Employees, individual employment agreements, and other
miscellaneous plans related to discontinued operations, including such
additional amounts as may be attributable to earnings growth after the
Distribution Date in accordance with the terms of the specific plan or
agreement.
(t) UNION EMPLOYEES. Any Omnova Employee who is included in a
collective bargaining unit.
ARTICLE II
EMPLOYMENT AND BENEFIT PLANS
2.1 EMPLOYMENT OF OMNOVA EMPLOYEES AND UNION EMPLOYEES.
(a) Omnova shall employ or continue to employ, effective as of
the Distribution Date, all Omnova employees. Subject to the terms and conditions
of, and except as otherwise provided in, this Agreement, effective as of the
Distribution Date, Omnova shall provide the Omnova employees with terms and
conditions of employment, including, without limitation, employee benefits and
other perquisites, that are substantially similar to those provided to the
Omnova Employees immediately prior to the Distribution Date. However, nothing
contained in this Agreement shall impair Omnova's ability to make such changes
in such terms and conditions of employment following the Distribution as Omnova
may deem to be necessary or appropriate for the operation of Omnova.
4
5
(b) Subject to entering into mutually acceptable novation
agreements with the applicable Unions, Omnova shall assume all collective
bargaining agreements in place at locations which it owns or operates which are
in effect as of the Distribution Date, and following the Distribution it will
continue to employ all Union Employees pursuant to the terms and conditions of
such collective bargaining agreements.
2.2 JOINT SAVINGS PLAN. (a) Effective on or prior to the Distribution
Date, the GenCorp Retirement Savings Plan and the GenCorp Profit Sharing
Retirement and Savings Plan will become a multiple employer plan or plans
("Joint Savings Plan") in which both GenCorp and Omnova will be unrelated
participating employers. The Joint Savings Plan will be administered pursuant to
the separate Services and Support Agreement between GenCorp and Omnova.
(b) On and after the Distribution Date, employer matching
contributions on behalf of GenCorp employees will be made solely by GenCorp and
solely to the GenCorp Stock Fund and employer matching contributions on behalf
of Omnova Employees will be made solely by Omnova and solely to the Omnova Stock
Fund. Not later than the later of October 31, 2001 or two years after the
Distribution Date, the accounts of Omnova Employees and former Omnova Employees
will be transferred to a new separate savings plan to be established by Omnova.
Thereafter, neither Omnova nor its employees will participate in the GenCorp
Retirement Savings Plan.
(c) Following the Distribution, Omnova common stock held in the
accounts of GenCorp employees that is attributable to contributions made before
the Distribution may be retained in the Omnova Stock Fund, transferred to the
GenCorp Stock Fund or transferred to any other investment funds in the Joint
Savings Plan at the participant's election in accordance with the terms of the
Joint Savings Plan. Except as provided in the preceding sentence, contributions
5
6
made to or held under the Joint Savings Plan on behalf of GenCorp employees may
not be invested in the Omnova Stock Fund. Omnova common stock held in the
accounts of GenCorp Employees that is attributable to employer matching
contributions that have been in the plan for at least two full plan years may be
withdrawn, in cash or in kind. Any dividends on Omnova common stock in accounts
of GenCorp employees will be reinvested in the Omnova Stock Fund.
(d) Following the Distribution, GenCorp common stock held in the
accounts of Omnova employees that is attributable to contributions made before
the Distribution may be retained in the GenCorp Stock Fund, transferred to the
Omnova Stock Fund or transferred to any other investment fund in the Joint
Savings Plan at the Participant's election in accordance with the terms of the
Joint Savings Plan. Except as provided in the preceding sentence, contributions
made to or held under the Joint Savings Plan on behalf of Omnova employees may
not be invested in the GenCorp Stock Fund. GenCorp common stock held in the
accounts of Omnova Employees that is attributable to employer matching
contributions that have been in the plan at least two full plan years may be
withdrawn, in cash or in kind. Any dividends after the Distribution Date on
GenCorp common stock in accounts of Omnova employees will be reinvested in the
GenCorp Stock Fund.
2.3 OMNOVA SALARIED PENSION PLAN. (a) Omnova shall implement, as of the
Closing Time, the Omnova Salaried Pension Plan, a qualified defined benefit plan
substantially similar to the GenCorp Salaried Pension Plan for the benefit of
Omnova Salaried Employees. Omnova Salaried Employees who participate in the
GenCorp Salaried Pension Plan immediately before the Closing Time shall be
eligible for immediate participation in the Omnova Salaried Pension Plan as of
the Closing Time. Omnova Salaried Employees shall be credited under the Omnova
Salaried Pension Plan, for eligibility and vesting purposes, with the service
credited to them
6
7
under the GenCorp Salaried Pension Plan. An Omnova Salaried Employee shall be
credited under the Omnova Salaried Pension Plan, for benefit accrual purposes,
with the service credited to him or her under the GenCorp Salaried Pension Plan
only if a transfer described in subsection (b) of this Section is made with
respect to such Omnova Salaried Employee. On and after the Distribution Date,
the GenCorp Salaried Pension Plan shall retain all liabilities and obligations
for benefits attributable to employees of Omnova who terminated employment with
Omnova prior to the Distribution Date.
(b) As soon as practicable after the Distribution Date, GenCorp
shall cause the GenCorp Pension Plan Trustee to segregate within the GenCorp
Pension Plan Trust the Segregated Salaried Pension Assets (as defined in the
following sentence) determined to be allocable with respect to accrued benefits
of Omnova Salaried Employees as of the Closing Time. For purposes of the
preceding sentence, the Segregated Salaried Pension Assets allocable as of the
Closing Time with respect to accrued benefits of Omnova Salaried Employees shall
mean assets with a value equal to the present value as of the Closing Time of
the benefits of the Omnova Salaried Employees under the GenCorp Salaried Pension
Plan, determined by the plan's actuary using interest assumptions prescribed by
the PBGC for valuing annuities in plan termination situations, and allocated in
proportion to the allocation of liabilities in accordance with ERISA section
4044.
(c) As soon as practicable after the Distribution Date, GenCorp and
Omnova shall make or cause to be made all required filings and submissions to
appropriate governmental and regulatory authorities and all necessary or
appropriate amendments to the GenCorp Salaried Pension Plan and the Omnova
Salaried Pension Plan, and shall take all other steps necessary and appropriate,
to permit the transfer of the Segregated Salaried Pension Assets from the
GenCorp
7
8
Pension Plan Trustee to the Omnova Pension Plan Trustee. As soon as practicable
after the filings, submissions, amendments and other steps described in this
subsection are completed, and after the expiration of any waiting periods
imposed under applicable law, GenCorp shall direct the GenCorp Pension Plan
Trustee to transfer to the Omnova Pension Plan Trustee, and Omnova shall direct
the Omnova Pension Plan Trustee to accept assets of the GenCorp Salaried Pension
Plan equal to the Segregated Salaried Pension Assets, as adjusted for
contributions, benefit payments, expenses and investment experience through the
date of such transfer. Such transfer shall be in cash, securities or other
property or a combination thereof, as mutually determined by GenCorp and Omnova
and acceptable to both the GenCorp Pension Plan Trustee and the Omnova Pension
Plan Trustee. After such transfer, each Omnova Salaried Employee for whom such
transfer was made shall be credited with benefits under the Omnova Salaried
Pension Plan attributable to service prior to the Closing Time at least equal to
his or her accrued benefit under the GenCorp Salaried Pension Plan, and the
GenCorp Salaried Pension Plan shall have no further obligations with respect to
such accrued benefit. GenCorp and Omnova shall prepare a list, certified by a
duly authorized officer of each, of all Omnova Salaried Employees with respect
to which a transfer pursuant to this subsection has been made.
(d) GenCorp shall have no obligation to direct the transfer
described in subsection (c) of this Section unless and until GenCorp receives
either a favorable determination letter issued by the IRS as to the qualified
status of the Omnova Salaried Pension Plan under Section 401(a) of the code or
an opinion of counsel to Omnova that the Omnova Salaried Pension Plan meets the
requirements of Section 401(a) of the Code as to form. The Omnova Pension Plan
Trustee shall have no obligation to accept any transfer from the GenCorp
Salaried Pension Plan unless and until Omnova and the Omnova Pension Plan
Trustee receives either a
8
9
favorable determination letter issued by the IRS as to the qualified status of
the GenCorp Salaried Pension Plan under Section 401(a) of the Code or an opinion
of counsel to GenCorp that the GenCorp Salaried Pension Plan meets the
requirements of Section 401(a) of the Code as to form. GenCorp and Omnova will
cooperate as necessary to facilitate obtaining such favorable determination
letters.
(e) The Omnova Salaried Pension Plan shall be a continuation of the
GenCorp Salaried Pension Plan as to the Omnova Employees for whom the transfer
described in subsection (c) of this Section was made and the transfer of assets
and liabilities from the GenCorp Salaried Pension Plan to the Omnova Pension
Plan Trustee pursuant to this Agreement shall not be deemed a termination or
partial termination of the GenCorp Salaried Pension Plan.
(f) In the event a former employee of GenCorp who participated in
the GenCorp Salaried Pension Plan prior to the Distribution Date becomes an
Omnova Employee eligible to participate in the Omnova Salaried Pension Plan
after the Distribution Date, GenCorp and Omnova may agree that the liabilities
of such individual and the assets attributable to such liabilities, in an amount
which (based on the certification of the actuary for the Plans) meets the
requirements of Section 414(1) of the Code and the regulations thereunder, will
be transferred by the GenCorp Pension Plan Trustee from the GenCorp Salaried
Pension Plan to the Omnova Salaried Pension Plan and the Omnova Pension Plan
Trustee in the manner described in, and in compliance with, Section 414(1) of
the Code and the regulations thereunder.
(g) The GenCorp Salaried Pension Plan shall provide that an
individual who is an employee of Omnova on the Distribution Date shall not be
eligible to commence receiving benefits from the GenCorp Salaried Pension Plan
until he terminates employment with Omnova after the Distribution Date. Until
the completion of the transfer of assets and liabilities from the
9
10
GenCorp Salaried Pension Plan to the Omnova Salaried Pension Plan and the Omnova
Pension Plan Trustee described in subsection (c) of this Section, benefits under
the Omnova Salaried Pension Plan payable to a Omnova Salaried Employee
thereunder shall be computed on the basis of his or her total service with
GenCorp and Omnova, but shall be reduced by any benefits accrued by such Omnova
Salaried Employee under the GenCorp Salaried Pension Plan.
2.4 OMNOVA HOURLY PENSION PLAN. (a) Omnova shall implement, as of the
Closing Time, the Omnova Hourly Pension Plan, a qualified defined benefit plan
substantially similar to the GenCorp Hourly Pension Plan for the benefit of
Omnova Hourly Employees. Omnova Hourly Employees who participate in the GenCorp
Hourly Pension Plan immediately before the Closing Time shall be eligible for
immediate participation in the Omnova Hourly Pension Plan as of the Closing
Time. Omnova Hourly Employees shall be credited under the Omnova Hourly Pension
Plan, for eligibility and vesting purposes, with the service credited to them
under the GenCorp Hourly Pension Plan. An Omnova Hourly Employee shall be
credited under the Omnova Hourly Pension Plan, for benefit accrual purposes,
with the service credited to him or her under the GenCorp Hourly Pension Plan
only if a transfer described in subsection (b) of this Section is made with
respect to such Omnova Hourly Employee. On and after the Distribution Date, the
GenCorp Hourly Pension Plan shall retain all liabilities and obligations for
benefits attributable to employees of Omnova who terminated employment with
Omnova prior to the Distribution Date.
(b) As soon as practicable after the Distribution Date, GenCorp
shall cause the GenCorp Pension Plan Trustee to segregate within the GenCorp
Pension Plan Trust the Segregated Hourly Pension Assets (as defined in the
following sentence) determined to be allocable with respect to accrued benefits
of Omnova Hourly Employees as of the Closing Time.
10
11
For purposes of the preceding sentence, the Segregated Hourly Pension Assets
allocable as of the Closing Time with respect to accrued benefits of Omnova
Hourly Employees shall mean assets with a value equal to the present value as of
the Closing Time of the benefits of the Omnova Hourly Employees under the
GenCorp Hourly Pension Plan, determined by the plan's actuary using interest
assumptions prescribed by the PBGC for valuing annuities in plan termination
situations, and allocated in proportion to the allocation of liabilities in
accordance with ERISA section 4044.
(c) As soon as practicable after the Distribution Date, GenCorp and
Omnova shall make or cause to be made all required filings and submissions to
appropriate governmental and regulatory authorities and all necessary or
appropriate amendments to the GenCorp Hourly Pension Plan and the Omnova Hourly
Pension Plan, and shall take all other steps necessary and appropriate, to
permit the transfer of the Segregated Hourly Pension Assets from the GenCorp
Pension Plan Trustee to the Omnova Pension Plan Trustee. As soon as practicable
after the filings, submissions, amendments and other steps described in this
subsection are completed, and after the expiration of any waiting periods
imposed under applicable law, GenCorp shall direct the GenCorp Pension Plan
Trustee to transfer to the Omnova Pension Plan Trustee, and Omnova shall direct
the Omnova Pension Plan Trustee to accept assets of the GenCorp Hourly Pension
Plan equal to the Segregated Hourly Pension Assets, as adjusted for
contributions, benefit payments, expenses and investment experience through the
date of such transfer. Such transfer shall be in cash, securities or other
property or a combination thereof, as mutually determined by GenCorp and Omnova
and acceptable to both the GenCorp Pension Plan Trustee and the Omnova Pension
Plan Trustee. After such transfer, each Omnova Hourly Employee for whom such
transfer was made shall be credited with benefits under the Omnova Hourly
Pension Plan
11
12
attributable to service prior to the Closing Time at least equal to his or her
accrued benefit under the GenCorp Hourly Pension Plan, and the GenCorp Hourly
Pension Plan shall have no further obligations with respect to such accrued
benefit. GenCorp and Omnova shall prepare a list, certified by a duly authorized
officer of each, of all Omnova Hourly Employees with respect to which a transfer
pursuant to this Subsection has been made.
(d) GenCorp shall have no obligation to direct the transfer
described in subsection (c) of this Section unless and until GenCorp receives
either a favorable determination letter issued by the IRS as to the qualified
status of the Omnova Hourly Pension Plan under Section 401 (a) of the code or an
opinion of counsel to Omnova that the Omnova Hourly Pension Plan meets the
requirements of Section 401(a) of the Code as to form. The Omnova Pension Plan
Trustee shall have no obligation to accept any transfer from the GenCorp Hourly
Pension Plan unless and until Omnova and the Omnova Pension Plan Trustee
receives either a favorable determination letter issued by the IRS as to the
qualified status of the GenCorp Hourly Pension Plan under Section 401(a) of the
Code or an opinion of counsel to GenCorp that the GenCorp Hourly Pension Plan
meets the requirements of Section 401(a) of the Code as to form. GenCorp and
Omnova will cooperate as necessary to facilitate obtaining such favorable
determination letters.
(e) The Omnova Hourly Pension Plan shall be a continuation of the
GenCorp Hourly Pension Plan as to the Omnova Employees for whom the transfer
described in subsection (c) of this Section was made and the transfer of assets
and liabilities from the GenCorp Hourly Pension Plan to the Omnova Pension Plan
Trustee pursuant to this Agreement shall not be deemed a termination or partial
termination of the GenCorp Hourly Pension Plan.
12
13
(f) The GenCorp Hourly Pension Plan shall provide that an
individual who is an employee of Omnova on the Distribution Date shall not be
eligible to commence receiving benefits from the GenCorp Hourly Pension Plan
until he terminates employment with Omnova after the Distribution Date. Until
the completion of the transfer of assets and liabilities from the GenCorp Hourly
Pension Plan to the Omnova Hourly Pension Plan and the Omnova Pension Plan
Trustee described in subsection (c) of this Section, benefits under the Omnova
Hourly Pension Plan payable to an Omnova Hourly Employee thereunder shall be
computed on the basis of his or her total service with GenCorp and Omnova, but
shall be reduced by any benefits accrued by such Omnova Hourly Employee under
the GenCorp Hourly Pension Plan.
2.5 OMNOVA WELFARE BENEFIT PLANS. (a) OMNOVA MEDICAL PLAN. As of the
Closing Time, Omnova Employees (and their eligible dependent(s)) shall be
covered by the Omnova Medical Plan, which shall be substantially identical to
the medical plan coverage provided to Omnova Employees immediately prior to the
Closing Time. The Omnova Medical Plan made available to Omnova Employees and
their dependent(s) as of the Closing Time shall waive any applicable waiting
periods for coverage of Omnova Employees and their dependent(s) which did not
exist with respect to such Omnova Employee or dependent(s) immediately prior to
the Closing Time. The Omnova Medical Plan shall not contain any exclusion or
limitation with respect to any pre-existing condition of any Omnova Employee or
dependent(s) which did not apply with respect to such Omnova Employee or
dependent immediately prior to the Closing Time. For purposes of the two
preceding sentences, service with GenCorp and Omnova prior to the Closing Time
shall be taken into account for purposes of meeting any such waiting period or
pre-existing condition, exclusion or limitation.
13
14
(b) OMNOVA EMPLOYEE MEDICAL CLAIMS. As of the Closing Time, the
Omnova Medical Plan shall have sole responsibility for all obligations,
financial and otherwise, with respect to medical claims for expenses incurred by
Omnova Employees and their dependent(s) from and after the Closing Time. Medical
claims for expenses incurred by Omnova Employees and their dependent(s) prior to
the Closing Time which remain unpaid as of the Closing Time shall be the
responsibility of the GenCorp Medical Plan and will be processed and paid by
GenCorp's third party administrator.
(c) CLAIM APPEALS. As of the Closing Time, Omnova shall have sole
responsibility for the determination of claim appeals filed by Omnova Employees
under the Omnova Medical Plan. Claim appeals filed by employees of Omnova under
the GenCorp Medical Plan will be determined by GenCorp under the GenCorp Medical
Plan.
(d) FLEXIBLE BENEFIT PLANS. (i) Omnova shall implement, as of the
Closing Time, a flexible spending account plan, a dependent care reimbursement
plan, a health care reimbursement plan and a pre-tax premium plan (collectively
referred to as the "Omnova Flexible Benefit Plan") with provisions substantially
similar to similar plans provided to Omnova Employees by GenCorp prior to the
Closing Time; and (ii) Plan Year 1999 deferrals and reimbursements by or to
Omnova Employees under the GenCorp Flexible Benefit Plan, shall be carried over
and applied to their accounts under the Omnova Flexible Benefit Plan.
2.6 POSTRETIREMENT BENEFITS. GenCorp currently provides certain health
care and life insurance benefits to most retired employees in the United States
with varied coverage by employee groups. The health care plans generally provide
for cost sharing in the form of retiree contributions, deductibles and
coinsurance between the company and its retirees. The unfunded benefit
obligation reported in GenCorp's financial statements for such postretirement
benefits
14
15
will be allocated between GenCorp and Omnova as follows: (1) $303 million for
active employees remaining GenCorp employees and former employees who do not
become employees of Omnova will be retained by GenCorp; and (2) $46 million for
active employees transferred to Omnova and former employees who terminated
employment from active business locations of Omnova will be assumed by Omnova.
2.7 GENCORP 1993 AND 1997 STOCK OPTION PLANS. (a) Prior to the
Distribution Date, exercisable options under the GenCorp 1993 and 1997 Stock
Option Plans for (1) active employees, (2) retirees, and (3) other former
employees whose options remain exercisable, will be split into options to
acquire GenCorp common stock and Omnova common stock. Except with respect to
options held by the chief executive officers of GenCorp and Omnova, the number
of exercisable options in each company will each equal the number of exercisable
options under the GenCorp Stock Option Plans. With respect to exercisable
options held by the chief executive officers, (1) Xx. Xxxxx'x options will be
converted into 66 2/3% GenCorp options and 33 1/3% Omnova options, and (2) Xx.
Xxxxxxxx'x options will be converted into 66 2/3% Omnova options and 33 1/3%
GenCorp options. The exercise price of each resulting option will bear the same
ratio to the market price, as of the Distribution Date, of the respective
company's stock, as the exercise price of the original GenCorp option bore to
the market price of GenCorp shares immediately before the Distribution Date.
GenCorp and Omnova agree that each will issue the appropriate
shares of their common stock to non-employees who exercise the options described
in this subsection (a).
(b) Unexercisable options under the GenCorp 1997 Stock Option Plan
for GenCorp employees will be replaced with a number of unexercisable GenCorp
options under that plan which will, based upon (1) the market price of GenCorp
shares immediately after the
15
16
Distribution Date and (2) the exercise prices for those options, have an
aggregate intrinsic value equal to that of the unexercisable GenCorp options
immediately before the Distribution Date.
(c) Unexercisable options under the GenCorp 1997 Stock Option Plan
for Omnova employees will be replaced with a number of unexercisable Omnova
options which will, based upon (1) the market price of Omnova shares immediately
after the Distribution Date and (2) the exercise price for such options, have an
aggregate intrinsic value equal to that of the unexercisable GenCorp options
immediately before the Distribution.
(d) In converting the stock option plans for the Distribution, the
exercisable and unexercisable aggregate intrinsic value of the options
immediately after the conversion will be equal to the aggregate intrinsic value
immediately before the conversion. The ratio of the exercise price per option to
the market value per share will not be reduced and the vesting provisions and
option period of the Omnova and GenCorp options will be the same as for the
original GenCorp options. Accordingly, no compensation expense will be
recognized by Omnova or GenCorp.
2.8 UNFUNDED DEFERRED COMPENSATION.
(a) Subject to legal requirements for employee acquiescence,
GenCorp's legal obligation to pay Unfunded Deferred Compensation for: (1) all
active employees transferred to Omnova, (2) all retired employees who terminated
employment from active business locations of Omnova, and (3) all GenCorp
directors resigning to become members of the Omnova Board will be assumed by
Omnova.
(b) The legal obligation to pay Unfunded Deferred Compensation for:
(1) all active employees remaining GenCorp employees, (2) all GenCorp directors
remaining on the
16
17
GenCorp Board, (3) all other retired employees, and (4) all retired directors,
will be retained by GenCorp.
(c) Former employees and directors of GenCorp or Omnova will be
able to elect a lump-sum payment of their Unfunded Deferred Compensation,
subject to (1) a 10% reduction in order to avoid adverse tax consequences, and
(2) all applicable tax withholding. Active employees and directors may receive
lump-sum payments of their Unfunded Deferred Compensation upon termination of
employment or board service with GenCorp or Omnova based upon appropriate
advance elections or discretionary approval by the company's benefit management
committee.
(d) GenCorp hereby indemnifies Omnova for the obligations to pay
Unfunded Deferred Compensation assumed by Omnova pursuant to subsection (a), and
will pay only those amounts of such Unfunded Deferred Compensation that Omnova
proves it is unable to pay.
(e) Omnova hereby indemnifies GenCorp for the obligation to pay
Unfunded Deferred Compensation retained by GenCorp pursuant to subsection (b),
and will pay only those amounts of Unfunded Deferred Compensation that GenCorp
proves it is unable to pay.
2.9 ANNUAL BONUSES. Bonus amounts under GenCorp's Executive Incentive
Compensation Plan for the period ending November 30, 1999 will be determined
based upon (1) actual performance up to the Distribution Date, and (2) budgeted
performance, for the remainder of the period, according to GenCorp's annual
operating plan. Subject to all legal requirements for employee acquiescence,
bonus obligations will be assumed by Omnova for all Omnova employees, and paid
in cash on January 3, 2000. Bonus obligations will be paid in cash on January 3,
2000 by GenCorp for all GenCorp employees and for terminated GenCorp employees
who are not employed by Omnova.
17
18
2.10 LONG TERM INCENTIVE COMPENSATION. Performance awards under
GenCorp's Long-Term Incentive Program for the three-year performance period
ending November 30, 1999 will be determined based upon (1) actual performance up
to the Distribution Date, and (2) budgeted performance, for the remainder of the
period, according to GenCorp's annual operating plan. Pro rata performance
awards will be paid under the GenCorp plan for the performance periods ending
November 30, 2000 and November 30, 2001. Pro rata performance awards for each
partial performance period will be determined based upon (1) actual performance
up to the Distribution Date, and (2) budgeted performance, for the remainder of
the fiscal year ending November 30, 1999, according to GenCorp's annual
operating plan. Subject to legal requirements for employee acquiescence,
performance award obligations for the three-year performance period ending
November 30, 1999 will be assumed by Omnova for all Omnova employees and paid in
cash on January 3, 2000. Performance award obligations for the three-year
performance period ending November 30, 1999 will be paid in cash on January 3,
2000 by GenCorp for all GenCorp employees and for terminated GenCorp employees
who are not employed by Omnova. All pro rata performance awards will be paid in
cash to all eligible employees of GenCorp and Omnova by GenCorp on the day
preceding the Distribution Date.
2.11 DIRECTOR COMPENSATION. Subject to legal requirements for director
acquiescence, benefit obligations under the Retirement Plan for Nonemployee
Directors of GenCorp Inc. and the Deferred Compensation Plan for Nonemployee
Directors of GenCorp Inc. (hereafter the "GenCorp Director Plans") for GenCorp
directors resigning to become members of the Omnova Board will be assumed by
Omnova. Benefit obligations under the GenCorp Director Plans for GenCorp
directors remaining on the GenCorp Board and retired directors will be retained
by GenCorp.
18
19
2.12 ENHANCED RETIREMENT AND SEPARATION PAY PLANS. GenCorp adopted a
Voluntary Enhanced Retirement Program (VERP) and Enhanced Involuntary Separation
Pay Plan (EISP) which are associated with and contingent upon the Distribution.
Pension and Separation Pay obligations under the VERP and EISP for GenCorp
Employees who become Omnova employees in connection with the Spin-Off will be
assumed and paid by Omnova. Pension and Separation Pay obligations under the
VERP and EISP for GenCorp employees who do not become employed by Omnova in
connection with the Spin-Off will be retained and paid by GenCorp. The total
number and identity of participants and the timing of their departure are not
yet known.
2.13 TRANSITION ADMINISTRATIVE SERVICES. For a transition period
extending up to October 31, 2001, the Joint Savings Plan and other benefit
programs currently applicable to GenCorp active employees and retirees will be
administered under a Services and Support Agreement between GenCorp and Omnova.
The purpose of the transition services arrangement will be to allow for an
orderly transition of administrative responsibility for ongoing GenCorp benefit
programs to administrative staffs of GenCorp, and for the implementation and
administration of new employee benefit plans for Omnova. In accordance with the
Services and Support Agreement, (i) GenCorp will reimburse Omnova specified
allocated costs plus all direct expenses incurred by Omnova on behalf of
GenCorp, and (ii) Omnova will reimburse GenCorp specified allocated costs plus
all direct expenses incurred by GenCorp on behalf of Omnova.
2.14 LIABILITIES TO OMNOVA EMPLOYEES ARISING PRIOR TO DISTRIBUTION
DATE. GenCorp shall retain sole responsibility for (a) payments of any and all
wages, vacation pay, bereavement pay, jury duty pay, disability income,
supplemental unemployment benefits, fringe benefits or other perquisites of
employment, or similar benefits, payroll taxes and other payroll related
expenses, (b) workers' compensation claims or related litigation claims, (c)
claims filed with the
19
20
equal Employment Opportunity Commission or related litigation claims and (d)
other similar employment-related claims, in any such case arising out of or
relating to (i) the employment of the Omnova Employees by GenCorp prior to the
Closing Time or (ii) the employment of former employees whose employment with
Omnova or GenCorp or the Controlled Group of either terminated on or before the
Closing Time.
2.15 AT WILL EMPLOYMENT. Nothing in this Agreement shall limit the at
will nature of the employment of any of the Omnova Employees who do not have any
other contractual rights with respect to employment by Omnova or the right of
GenCorp or Omnova to alter or terminate any employee benefit plan.
2.16 SEPARATION PAY. GenCorp and Omnova agree that with respect to
individuals who, in connection with the Distribution, cease to be employees of
GenCorp and become employees of Omnova at any time prior to the day after the
Distribution, such cessation shall not be deemed a severance of employment from
GenCorp for purposes of the GenCorp Involuntary Separation Pay Plan. GenCorp
shall retain and be solely responsible for, and shall indemnify Omnova against,
all liabilities and obligations whatsoever in connection with claims made by or
on behalf of former employees of GenCorp in respect of separation pay and
similar obligations relating to the termination or alleged termination of any
such person's employment from GenCorp on or before the Distribution Date.
2.17 INTERNAL REVENUE SERVICE FORMS. GenCorp and Omnova agree that,
pursuant to the "Alternative Procedure" provided in Section 5 of Revenue
Procedure 84-77, 1984-2 C.B. 753, with respect to filing and furnishing Internal
Revenue Service Forms W-2, W-3 and 941, respectively: (a) GenCorp and Omnova
shall report on a "predecessor-successor" basis as set forth therein; (b)
GenCorp shall be relieved from furnishing Forms W-2 to GenCorp's
20
21
employees whose employment is transferred to Omnova in connection with the
Spin-Off and to whom GenCorp would have been obligated to furnish such Forms;
and (c) Omnova shall assume GenCorp's obligation to furnish such Forms to all
such employees for the full 1997 calendar year. Upon Omnova's request, GenCorp
will promptly provide Omnova with the information relating to periods ending on
the Closing Time necessary for Omnova to prepare and distribute Forms W-2 to
such employees for the year ending December 31, 1997, which Forms W-2 will
include all remuneration earned by such employees from both GenCorp and Omnova
during the year ending December 31, 1997.
ARTICLE III
ACCESS AND SHARING OF INFORMATION
3.1 SHARING OF INFORMATION. GenCorp agrees to provide Omnova, as soon
as practicable after the Distribution Date (with the cooperation of Omnova to
the extent that relevant information is in the possession of Omnova), with a
list of the Omnova Employees who were, to the best knowledge of GenCorp,
participants in or otherwise entitled to benefits under GenCorp's employee
benefit plans prior to the Distribution Date, together with a listing of each
such Omnova Employee's term of service for eligibility, vesting and benefit
accrual purposes under such Plans and a listing of each such Omnova Employee's
accrued benefit under the GenCorp Salaried or Hourly Pension Plan. GenCorp
shall, as soon as practicable after the Distribution Date, provide Omnova with
such additional information (in the possession of GenCorp and not already in the
possession of Omnova) as may be reasonably requested by Omnova and necessary in
order for Omnova to establish and administer effectively the Omnova employee
benefit plans.
21
22
3.2 ACCESS TO INFORMATION. (a) From and after the Closing Time each
party hereto shall afford the other party and its accountants, counsel and other
designated representative reasonable access (including using reasonable efforts
to give duplicating rights during normal business hours) to all records, books,
contracts, instruments, computer data and other data and information in such
party's possession relating to the business and affairs of such other party
(other than data and information subject to an attorney/client or other
privilege), insofar as such access is reasonably required by such other party
including, without limitation, for audit, accounting and litigation purposes and
administration of employee benefit plans, as well as for purposes of fulfilling
disclosure and reporting obligations.
(b) For a period of up to 24 months from and after the Distribution
Date, (or longer as required in connection with the Joint Savings Plan) each
party shall make available to the other during normal business hours and in a
manner which will not unreasonably interfere with such party's business, its
financial, tax, accounting, legal, employee benefits and such other staff and
services to the extent that the same may be reasonably required in connection
with the preparation of tax returns, audits, claims, administration of employee
benefit plans and otherwise to assist in effecting an orderly transition
following the Distribution.
22
23
ARTICLE IV
MISCELLANEOUS
4.1 COMPLETE AGREEMENT. This Agreement, together with the Distribution
Agreement, and the exhibits thereto, shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter.
4.2 GOVERNING LAW. This Agreement and (unless otherwise provided) all
amendments hereof shall be governed by the internal laws of the State of Ohio,
without regard to the conflicts of law principles thereof.
4.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, mailed by
registered or certified mail (return receipt requested) or sent by telecopy or
by a recognized overnight courier service, addressed as follows:
To Omnova at: Omnova Solutions Inc.
000 Xxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: General Counsel
Fax Number: 000-000-0000
To GenCorp at: GenCorp Inc.
X.X. Xxx 00000
Xxxxxxxxx: General Counsel
Fax Number: 000-000-0000
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section.
4.4 AMENDMENT. This Agreement may be amended, modified or supplemented
only by a written agreement signed by all the parties hereto.
23
24
4.5 WAIVER. No waiver by any party of any of the provisions of this
Agreement will be deemed, or will constitute, a waiver of any other provision,
whether similar, nor will any waiver constitute a continuing waiver. No waiver
will be binding unless executed in writing by the party making the waiver.
4.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original instrument and all of
which together shall constitute one and the same instrument.
4.7 INTERPRETATION. The Section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or interpretation of
this Agreement.
4.8 TERMINATION. Notwithstanding any provision hereof, this Agreement
may be terminated at any time prior to the Distribution. Any termination of the
Distribution Agreement shall result in the termination of this Agreement. In the
event of such termination, no party hereto shall have any liability to any
person by reason of this Agreement.
4.9 NO THIRD PARTY BENEFICIARY. Nothing in this Agreement, express or
implied, shall confer on any person other than the parties any rights or
remedies under or by virtue of this Agreement.
24
25
4.10 DISPUTE RESOLUTION. Any dispute between the parties concerning the
performance of this Agreement which cannot be resolved by good faith negotiation
of the parties shall be determined in accordance with the provisions of the
Alternative Dispute Resolution Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GENCORP INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
OMNOVA SOLUTIONS INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
25
