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Exhibit 10.18
SERVICES AND SUPPORT AGREEMENT
This Services and Support Agreement ("Agreement"), dated as of
September __, 1999, is made and entered into by and between GENCORP INC., an
Ohio corporation ("GenCorp"), and OMNOVA SOLUTIONS INC., an Ohio corporation
("OMNOVA") and 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
(the "Distribution Agreement") which, among other things, sets forth the
principal 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 have
agreed to enter into this Agreement in order for OMNOVA and GenCorp each to
assist the other by providing to the other certain services and support not
otherwise specified in any of the Ancillary Agreements (as defined in the
Distribution Agreement);
NOW THEREFORE, in consideration of these premises and the mutual
promises and conditions contained herein, GenCorp and OMNOVA hereby agree as
follows:
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ARTICLE I
TERM
1.1 TERM OF THE AGREEMENT. The term of this Agreement shall be from the
date hereof (the "Effective Date") to and including the later of (i) the second
anniversary of the Distribution, and (ii) October 31, 2001 (the "Term"),
although the actual duration of specific services may be for a shorter period as
provided herein. The Term may be extended by the mutual agreement of GenCorp and
OMNOVA.
ARTICLE II
SERVICES
2.1 SERVICES PROVIDED BY OMNOVA. OMNOVA shall provide to GenCorp during
the Term of this Agreement the services listed on Schedule A attached hereto.
The services listed on Schedule A are based on the understanding of the parties
hereto of the support and administrative services reasonably required by GenCorp
at the date of this Agreement. If, following the Distribution, GenCorp
reasonably determines that additional services consistent with the recent
historical practice of GenCorp should be provided by OMNOVA, the parties agree
to negotiate in good faith to modify this Agreement appropriately with respect
to such additional services. In the event the parties agree that OMNOVA shall
provide such additional
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services, the parties hereto further agree that such agreement to provide such
additional services shall also amend Schedule A hereto to reflect such agreement
of the parties. GenCorp may reduce or terminate any specific services at any
time upon 30 days written notice.
2.2 PAYMENT FOR SERVICES PROVIDED BY OMNOVA. (a) GenCorp shall pay
OMNOVA on a monthly basis, for services provided to GenCorp by OMNOVA hereunder,
(i) amounts specified as "Costs Allocated to GenCorp" on Schedule A, (ii)
reasonable direct expenses incurred by OMNOVA in connection with providing
services, and (iii) charges by third party service providers which are
attributable to services provided to or for GenCorp. To the extent that GenCorp
has provided notice to reduce services in accordance with Section 2.1, the
"Costs Allocated to GenCorp" shall be appropriately reduced.
(b) Charges for the services shall be invoiced on or about the
tenth (10th) day of the calendar month next following the calendar month in
which the services have been performed, and such invoice shall be paid within
thirty (30) days following receipt thereof.
2.3 SERVICES PROVIDED BY GENCORP. GenCorp shall provide to OMNOVA
during the Term of this Agreement the services listed on Schedule B attached
hereto. The services listed on Schedule B are based on the understanding of the
parties hereto of the support and administrative services reasonably required by
OMNOVA at the date of this Agreement. If, following the Distribution, OMNOVA
reasonably determines that additional services consistent with the recent
historical practice of OMNOVA should be provided by GenCorp, the parties agree
to negotiate in good faith to modify this Agreement appropriately with respect
to such additional services. In the event the parties agree that OMNOVA shall
provide such additional services, the parties hereto further agree that such
agreement to provide such additional services shall also amend Schedule B hereto
to reflect such agreement of the parties.
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OMNOVA may reduce or terminate any specific services at any time upon 30 days
written notice.
2.4 PAYMENT FOR SERVICES PROVIDED BY GENCORP.
(a) OMNOVA shall pay GenCorp on a monthly basis, for services
provided to OMNOVA by GenCorp hereunder, (i) amounts specified as "Costs
Allocated to OMNOVA" on Schedule B, (ii) reasonable direct expenses incurred by
GenCorp in connection with providing services, and (iii) charges by third party
service providers which are attributable to services provided to or for OMNOVA.
To the extent that OMNOVA has provided notice to reduce services in accordance
with Section 2.3, the "Costs Allocated to OMNOVA" shall be appropriately
reduced.
(b) Charges for the services shall be invoiced on or about the
tenth (10th) day of the calendar month next following the calendar month in
which the services have been performed, and such invoice shall be paid within
thirty (30) days following receipt thereof.
ARTICLE III
TERMINATION
3.1 AUTOMATIC TERMINATION. This Agreement automatically shall terminate
at the conclusion of the Term unless such Term is extended in accordance with
Section 1.1 hereto.
3.2 TERMINATION WITH NOTICE. If either GenCorp or OMNOVA (the
"Defaulting Party") shall fail adequately to perform in any material respect any
of its material obligations under this Agreement, whether voluntarily or
involuntarily, the other may terminate this Agreement upon one hundred twenty
(120) days' written notice to the Defaulting Party that it
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has so failed to perform its obligations under this Agreement, unless during
such period the Defaulting Party shall have remedied such failure.
3.3 MUTUAL COOPERATION AND ADDITIONAL ASSUMPTIONS. Prior to the
termination of this Agreement, the parties shall reasonably cooperate in good
faith to facilitate an orderly transition of responsibility for the Services,
and each party shall deliver to the other party copies of such documents,
records and information as are reasonably necessary to achieve such transition.
Upon the termination of this Agreement, each party promptly shall deliver to the
other party copies of all remaining documents, records and information in such
party's possession and owned by the other party that may be reasonably necessary
for the other party to assume complete internal responsibility for all of the
Services.
ARTICLE IV
TERMS RELATED TO SPECIFIC SERVICES
4.1 EMPLOYEE BENEFITS ADMINISTRATION. (a) GenCorp will establish a
Benefits Transition Team ("Team") to be based at OMNOVA's corporate headquarters
in Fairlawn, Ohio. The responsibilities of the Team will include (i)
administration of GenCorp's employee benefit plans, (ii) transfer of
administrative responsibility for GenCorp's employee benefit plans to GenCorp's
new corporate headquarters in California and/or to GenCorp Vehicle Sealing
headquarters, and (iii) implementation and administration of new employee
benefit plans for OMNOVA as described on Schedule B. The Team will report to
OMNOVA's Director, Compensation and Benefits, regarding its responsibilities to
administer employee benefit plans for OMNOVA. GenCorp and OMNOVA hereby agree to
cooperate to
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establish and manage priorities for the Team in connection with fulfilling its
responsibilities for both companies.
(b) GenCorp shall, at its own cost and expense, (a) defend OMNOVA
from any and all claims, damages, actions or causes of action ("Claims") which
result from GenCorp's employment and/or termination of employment of any of the
employees included in its Benefits Transition Team on or after the Distribution
Date, and (b) indemnify and hold OMNOVA harmless from all damages, liabilities,
losses, costs, judgments, orders, assessments, interest, penalties, fines,
settlement payments, costs and expenses (including, without limitation,
attorneys fees and other investigation and defense costs and expenses) imposed
upon or incurred by OMNOVA as a result of any such Claim.
4.2 PAYROLL SERVICES. In connection with payroll services described on
Schedule A, OMNOVA will process and pay certain salaries and wages and related
payroll taxes with OMNOVA funds. Notwithstanding Section 2.2, GenCorp agrees to
reimburse OMNOVA for any and all such payments, by wire transfer, on the
business day next following each payment by OMNOVA.
4.3 LEASED EMPLOYEES. (a) GenCorp will continue to employ, at OMNOVA's
corporate headquarters in Fairlawn, Ohio, the individuals named as Leased
Employees on Schedule B, until their respective retirement dates determined
under GenCorp's 1999 Voluntary Enhanced Retirement Program. The Leased Employees
will provide services to OMNOVA as directed by OMNOVA. GenCorp shall be
exclusively responsible for all wages, benefits, withholdings and other
employment-related matters in respect of Leased Employees.
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(b) GenCorp shall, at its own cost and expense, (a) defend OMNOVA
from any and all claims, damages, actions or causes of action ("Claims") which
result from GenCorp's employment and/or termination of employment of any of the
Leased Employees prior to, on or after the Distribution Date, and (b) indemnify
and hold OMNOVA harmless from all damages, liabilities, losses, costs,
judgments, orders, assessments, interest, penalties, fines, settlement payments,
costs and expenses (including, without limitation, attorneys fees and other
investigation and defense costs and expenses) imposed upon or incurred by OMNOVA
as a result of any such Claim.
ARTICLE V
GENERAL
5.1 NON-WAIVER. The failure of either party to enforce at any time or
for any of the provisions hereof shall not be construed to be a waiver of such
provisions or of the right of such party thereafter to enforce each and every
such provision.
5.2 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (return receipt requested), or sent by
telecopy or by a recognized overnight courier service, to the parties at the
following addresses (or such other addresses for a party as shall be specified
by like notice) and shall be deemed given on the date on which such notice is
received:
To OMNOVA at: OMNOVA Solutions Inc.
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Attention: General Counsel
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
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To GenCorp at: GenCorp Inc.
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Attention: General Counsel
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5.3 GOVERNING LAW. This Agreement shall be governed by and enforced in
accordance with the internal laws of the State of Ohio, without regard to the
conflicts of law principles thereof.
5.4 LEVEL OF SERVICE. OMNOVA and GenCorp each severally undertake to
use the same degree of care in rendering services under this Agreement as it
respectively utilizes in rendering such services for its own operations and
shall not be liable for any failure to provide services.
5.5 SEVERABILITY. In the event any provision of this Agreement or
portion thereof is found to be wholly or partially invalid, illegal or
unenforceable in any judicial proceeding, then such provision shall be deemed to
be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
5.6 ENTIRE AGREEMENT. This Agreement supersedes and cancels any and all
previous agreements, written or oral, between the parties relating to the
subject matter hereof. This Agreement and the Other Agreements expresses the
complete and final understanding of
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the parties with respect to the subject matter thereto and may not be changed in
any way, except by an instrument in writing signed by both parties.
5.7 ASSIGNMENT. Neither of the parties shall assign any of its rights
or obligations under this Agreement without the prior written consent of the
other party, which consent shall not unreasonably be withheld.
IN WITNESS WHEREOF, the parties have hereunto signed this Agreement as
of the day and year first above written.
GENCORP INC.
By:
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Name:
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Title:
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OMNOVA SOLUTIONS INC.
By:
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Name:
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Title:
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SCHEDULE A
SERVICES TO BE PROVIDED
TO GENCORP BY OMNOVA
TBD = to be determined
SERVICES TARGET COST
DATE FOR ALLOCATED TO
COMPLETION GENCORP
EMPLOYEE BENEFITS ADMINISTRATION
1. Deferred Bonus Plan administration; and 11-30-00 $930/month
the transfer of records and
administration to Sacramento.
2. Administration of Non-employee Director 11-30-00 $130/month
deferred compensation plans, and the
transfer of records and administration
to Sacramento.
3. Health and welfare benefit plan accounting 8-31-00 $1852/month
including (i) analysis, reconciliation and
payments of life, AD&D, LTD and HMO
insurance premiums and plan administration
fees; (ii) daily funding of claims paid by
Aetna, Cigna and Caremark; and (iii) monthly
and special reporting to corporate accounting
and outside auditors of all group insurance
related costs.
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▇. Use of human resource and employee benefit 10-31-01 $5,760/mo.
plan-related computer systems and voice-
response systems, plus systems support by
Information Systems Department.
5. Use of office facilities and support for 10-31-01 TBD
GenCorp employee benefits and legal
personnel.
INVESTMENT MANAGEMENT
1. Liaison between Directors, management, 10-1-00 TBD
Benefits Management Committee, trustee and
investment managers for joint savings plan.
2. Liaison between Directors, management, 10-1-00 TBD
Committee, Benefits Management trustee and
investment managers for pension plan.
SERVICES TARGET COST
DATE FOR ALLOCATED TO
COMPLETION GENCORP
SHAREHOLER SERVICES
1. Maintain GenCorp stock option program; TBD $2,760/mo.
2. Maintain balances on Treasury Share account
for GenCorp;
3. Reconciliation of outstanding GenCorp
shares and reserve accounts with Bank
of New York;
4. Form 3, 4, and 5 processing for GenCorp;
5. Historical reporting for GenCorp;
6. Tabulation of GenCorp proxy reporting; and
7. Liaison with Bank of New York for GenCorp.
RISK MANAGEMENT
1. Transfer of workers compensation claims (a) 2-1-00 (a) $60/hour
and claims handling;
2. Initial program design and marketing; (b) 10-1-00 (b) $75/hour
3. Risk management information system (c) 10-1-01
database management; and (d) 10-1-00 (c) $3,480/
4. Support of legacy issues (i.e. toxic month
tort, GenCorp, environmental, etc.). (d) $75/hour
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CUSTOMER FINANCIAL SERVICES FOR VEHICLE SEALING
1. Establishing new accounts and revising 2-1-00 $7,710/
existing accounts; month
2. Collecting current and past due receivables;
3. Applying cash to appropriate accounts within
NMC system; and
4. Processing order approvals.
TELECOMMUNICATIONS
1. On site project support for voice, AJ-6 mos. $1,908/
video, and wide-area networking VS-1 year month
installations;
2. Remote PBX technical support; and
3. Telephone calling card administration.
COMPENSATION
1. Merit Budget Planning Support for
Vehicle Sealing 2-1-00 $1,677/
month
2. Executive Compensation Planning for
GenCorp Headquarters and Aerojet 2-1-00 TBD
SERVICES TARGET COST
DATE FOR ALLOCATED TO
COMPLETION GENCORP
ACCOUNTING
Fixed Asset Accounting for Vehicle Sealing 2-28-00 $5,990/
month
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SCHEDULE B
SERVICES TO BE PROVIDED
TO OMNOVA BY GENCORP
SERVICES TARGET COST
DATE FOR ALLOCATED TO
COMPLETION OMNOVA
EMPLOYEE BENEFITS ADMINISTRATION $22,716/
month
1. All recordkeeping and administrative 10-31-01
responsibility for the 10-31-01
GenCorp Retirement Savings Plan and
the GenCorp Profit Sharing Retirement
and Savings Plan (collectively, the
"Joint Savings Plan"); and the split-up
of the Joint Savings Plan, effective
November 1, 2001, into separate GenCorp
and OMNOVA plans.
2. Recordkeeping and administrative services TBD
associated with TBD OMNOVA's defined
contribution plans; and the transfer of
records and administration to OMNOVA.
3. Recordkeeping and administrative services TBD
associated with TBD OMNOVA's defined
benefit plans; and the transfer of records
and administration to OMNOVA.
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SERVICES TARGET COST
DATE FOR ALLOCATED TO
COMPLETION OMNOVA
4. Health & Welfare plan administration TBD
including:
(a) Processing, accounting, and
reporting of vendor payments;
(b) Determination of benefit
eligibility and maintenance
of database;
(c) Communication to plan participants;
(d) COBRA administration;
(e) Flexible benefit program
administration;
(f) Short and Long Term disability
program administration; and
(g) Life Insurance program administration;
and the transfer of records and
administration to OMNOVA.
LEGAL SERVICES
1. In-house legal services associated with 12-31-00 $5,400/mo
employee benefits administration and the
implementation of new benefit plans
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SERVICES TARGET COST
DATE FOR ALLOCATED TO
COMPLETION OMNOVA
RECORD RETENTION
Use of GenCorp-leased storage facility
in Akron, OH. 8-31-00 Share of
monthly lease
cost, based
on % of
records
stored.
LEASED EMPLOYEES
Services of the following GenCorp employees Various Dates Actual Costs,
until their retirement dates determined under including
the 1999 Voluntary Enhanced Retirement Program: overhead to
cover
benefits,
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