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EXHIBIT 2
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DISTRIBUTION AGREEMENT
BETWEEN
TENNECO INC.
(TO BE RENAMED TENNECO AUTOMOTIVE INC.)
AND
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(FORMERLY TENNECO PACKAGING INC.)
, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................................................................................-1-
SECTION 1.01. GENERAL........................................................................-1-
SECTION 1.02. REFERENCES....................................................................-15-
ARTICLE II
PRE-DISTRIBUTION TRANSACTIONS;
CERTAIN COVENANTS.....................................................................................-15-
SECTION 2.01. CORPORATE RESTRUCTURING TRANSACTIONS..........................................-15-
SECTION 2.02. PRE-DISTRIBUTION STOCK DIVIDEND TO TENNECO....................................-16-
SECTION 2.03. CERTIFICATE OF INCORPORATION AND BYLAWS OF PACKAGING..........................-16-
SECTION 2.04. ELECTION OF DIRECTORS OF PACKAGING............................................-16-
SECTION 2.05. TRANSFER AND ASSIGNMENT OF CERTAIN LICENSES AND
PERMITS......................................................................................-16-
SECTION 2.06. TRANSFER AND ASSIGNMENT OF CERTAIN AGREEMENTS.................................-17-
SECTION 2.07. OTHER TRANSACTIONS............................................................-18-
SECTION 2.08. ELECTION OF OFFICERS..........................................................-18-
SECTION 2.09. PACKAGING REGISTRATION STATEMENT..............................................-19-
SECTION 2.10. STATE SECURITIES LAWS.........................................................-19-
SECTION 2.11. LISTING APPLICATION...........................................................-19-
SECTION 2.12. CERTAIN FINANCIAL AND OTHER ARRANGEMENTS......................................-19-
SECTION 2.13. DIRECTOR, OFFICER AND EMPLOYEE RESIGNATIONS...................................-20-
SECTION 2.14. TRANSFERS NOT EFFECTED PRIOR TO THE DISTRIBUTION; TRANSFERS
DEEMED EFFECTIVE AS OF THE DISTRIBUTION DATE.................................................-20-
SECTION 2.15. ANCILLARY AGREEMENTS..........................................................-21-
SECTION 2.16. DEBT REALIGNMENT..............................................................-21-
ARTICLE III
THE DISTRIBUTION......................................................................................-21-
SECTION 3.01. TENNECO ACTION PRIOR TO THE DISTRIBUTION......................................-21-
SECTION 3.02. THE DISTRIBUTION..............................................................-22-
ARTICLE IV
CONDITIONS TO THE DISTRIBUTION........................................................................-22-
SECTION 4.01. CONDITIONS PRECEDENT TO THE DISTRIBUTION......................................-22-
SECTION 4.02. NO CONSTRAINT.................................................................-24-
SECTION 4.03. DEFERRAL OF DISTRIBUTION DATE.................................................-24-
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SECTION 4.04. PUBLIC NOTICE OF DEFERRED DISTRIBUTION DATE...................................-24-
ARTICLE V
COVENANTS.............................................................................................-25-
SECTION 5.01. FURTHER ASSURANCES............................................................-25-
SECTION 5.02. TENNECO NAME..................................................................-25-
SECTION 5.03. SUPPLIES AND DOCUMENTS........................................................-25-
SECTION 5.04. ASSUMPTION AND SATISFACTION OF LIABILITIES....................................-25-
SECTION 5.05. NO REPRESENTATIONS OR WARRANTIES; CONSENTS....................................-26-
SECTION 5.06. REMOVAL OF CERTAIN GUARANTEES.................................................-27-
SECTION 5.07. PUBLIC ANNOUNCEMENTS..........................................................-27-
SECTION 5.08. INTERCOMPANY AGREEMENTS.......................................................-28-
SECTION 5.09. TAX MATTERS...................................................................-28-
SECTION 5.10. 1996 AGREEMENTS...............................................................-28-
ARTICLE VI
ACCESS TO INFORMATION.................................................................................-29-
SECTION 6.01. PROVISION, TRANSFER AND DELIVERY OF APPLICABLE CORPORATE
RECORDS......................................................................................-29-
SECTION 6.02. ACCESS TO INFORMATION.........................................................-29-
SECTION 6.03. REIMBURSEMENTS, OTHER MATTERS.................................................-30-
SECTION 6.04. CONFIDENTIALITY...............................................................-30-
SECTION 6.05. WITNESS SERVICES..............................................................-31-
SECTION 6.06. RETENTION OF RECORDS..........................................................-31-
SECTION 6.07. PRIVILEGED MATTERS............................................................-32-
ARTICLE VII
INDEMNIFICATION.......................................................................................-33-
SECTION 7.01. INDEMNIFICATION BY TENNECO....................................................-33-
SECTION 7.02. INDEMNIFICATION BY PACKAGING..................................................-33-
SECTION 7.03. NO INDEMNIFICATION IN RESPECT OF INDEMNITEE'S
INVESTMENT...................................................................................-33-
SECTION 7.04. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS....................................-34-
SECTION 7.05. PROCEDURES FOR INDEMNIFICATION................................................-35-
SECTION 7.06. INDEMNIFICATION PAYMENTS......................................................-38-
SECTION 7.07. OTHER ADJUSTMENTS.............................................................-38-
SECTION 7.08. OBLIGATIONS ABSOLUTE..........................................................-39-
SECTION 7.09. SURVIVAL OF INDEMNITIES.......................................................-39-
SECTION 7.10. REMEDIES CUMULATIVE...........................................................-39-
SECTION 7.11. COOPERATION OF THE PARTIES WITH RESPECT TO ACTIONS AND THIRD
PARTY CLAIMS.................................................................................-39-
SECTION 7.12. CONTRIBUTION..................................................................-40-
SECTION 7.13. PROCEDURES WITH RESPECT TO TRANSACTION LIABILITIES............................-40-
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ARTICLE VIII
MISCELLANEOUS.........................................................................................-41-
SECTION 8.01. COMPLETE AGREEMENT, CONSTRUCTION..............................................-41-
SECTION 8.02. ANCILLARY AGREEMENTS..........................................................-41-
SECTION 8.03. COUNTERPARTS..................................................................-42-
SECTION 8.04. SURVIVAL OF AGREEMENTS........................................................-42-
SECTION 8.05. RESPONSIBILITY FOR EXPENSES...................................................-42-
SECTION 8.06. NOTICES.......................................................................-42-
SECTION 8.07. WAIVERS.......................................................................-42-
SECTION 8.08. AMENDMENTS....................................................................-42-
SECTION 8.09. ASSIGNMENT....................................................................-42-
SECTION 8.10. SUCCESSORS AND ASSIGNS........................................................-43-
SECTION 8.11. TERMINATION...................................................................-43-
SECTION 8.12. THIRD PARTY BENEFICIARIES.....................................................-43-
SECTION 8.13. ATTORNEY FEES.................................................................-43-
SECTION 8.14. TITLE AND HEADINGS............................................................-43-
SECTION 8.15. EXHIBITS AND SCHEDULES........................................................-43-
SECTION 8.16. SPECIFIC PERFORMANCE..........................................................-43-
SECTION 8.17. GOVERNING LAW.................................................................-43-
SECTION 8.18. SEVERABILITY..................................................................-44-
SECTION 8.19. SUBSIDIARIES..................................................................-44-
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LIST OF EXHIBITS
EXHIBIT DESCRIPTION
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A AUTOMOTIVE BUSINESS PRO FORMA BALANCE SHEET
B AUTOMOTIVE SUBSIDIARIES
C CORPORATE RESTRUCTURING TRANSACTIONS
D DEBT REALIGNMENT PLAN
E FORM OF HUMAN RESOURCES AGREEMENT
F PACKAGING BUSINESS PRO FORMA BALANCE SHEET
G PACKAGING SUBSIDIARIES
H FORM OF TAX SHARING AGREEMENT
I SHARED AGREEMENTS
J EXCEPTIONS TO RESIGNATIONS OF COMMON DIRECTORS, OFFICERS AND EMPLOYEES
K FORM OF TRANSITION TRADEMARK LICENSE
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J&B DRAFT
SEPTEMBER 16, 1999(P.M.)
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made and entered into as of
_____________, 1999 by and between Tenneco Inc., a Delaware corporation to be
renamed Tenneco Automotive Inc. ("TENNECO"), and _____________, a Delaware
corporation formerly known as Tenneco Packaging Inc. ("PACKAGING").
R E C I T A L S
WHEREAS, the Board of Directors of Tenneco has deemed it appropriate
and advisable to:
(a) separate and divide the existing businesses of Tenneco so
that (i) Packaging and its subsidiaries shall own, directly or
indirectly, the Packaging Business (as defined below), and (ii) Tenneco
and its remaining subsidiaries shall own, directly or indirectly, the
Automotive Business (as defined below);
(b) distribute, following consummation of such separation and
division as a dividend to the holders of shares of common stock, par
value $.01 per share, of Tenneco (the "TENNECO COMMON STOCK") all of
the outstanding shares of common stock, $.01 par value, of Packaging
(the "PACKAGING COMMON STOCK"); and
(c) change the name of Tenneco Inc. to Tenneco Automotive
Inc. upon consummation of the transaction; and
WHEREAS, each of Tenneco and Packaging has determined that it is
necessary and desirable to set forth the principal corporate transactions
required to effect such separation, division and distribution and to set forth
other agreements that will govern certain other matters prior to and following
such separation, division and distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL. Unless otherwise defined herein or unless the
context otherwise requires, the following terms will have the meanings set forth
or referenced below (such meanings to be equally applicable to both the singular
and plural forms of the terms defined).
"ACTION" means any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or
any arbitration tribunal.
TENNECO DISTRIBUTION AGREEMENT
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"AFFILIATE" means, when used with respect to a specified
Person, another Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with the Person specified. For the purpose of this definition,
"control" means (i) the ownership or control of more than 50% of the
equity interest in any Person, or (ii) the ability to direct or cause
the direction of the management or affairs of a Person, whether through
the direct or indirect ownership of voting interests, by contract or
otherwise.
"AGENT" means First Chicago Trust Company of New York, or such
other trust company or bank designated by Tenneco and Packaging, who
shall act as agent for the holders of Tenneco Common Stock in
connection with the Distribution.
"AGREEMENT" means this Distribution Agreement by and between
Tenneco and Packaging, including any amendments hereto and each
Schedule and Exhibit attached hereto.
"ANCILLARY AGREEMENTS" means all of the written agreements,
instruments, understandings, assignments or other arrangements (other
than this Agreement) entered into by either of the parties hereto or
any other member of its respective Group in connection with the
Corporate Restructuring Transactions, the Distribution and the other
transactions contemplated hereby or thereby, including, without
limitation, the following:
(i) the Conveyancing and Assumption Instruments;
(ii) the Human Resources Agreement;
(iii) the Tax Sharing Agreement;
(iv) the Insurance Agreement;
(v) the Transition Services Agreement; and
(vi) the Transition Trademark License.
"AUTOMOTIVE ASSETS" means, collectively, all of the rights and
assets owned by Tenneco or any of its Subsidiaries as of the close of
business on the Distribution Date, including:
(i) the capital stock of the Automotive
Subsidiaries;
(ii) all of the assets included on the Automotive
Business Pro Forma Balance Sheet which are owned by Tenneco or
any of its Subsidiaries as of the close of business on the
Distribution Date;
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(iii) all of the assets and rights expressly
allocated to Tenneco or any of the Automotive Subsidiaries
under this Agreement or any of the Ancillary Agreements;
(iv) any other asset acquired by Tenneco or any of
its Subsidiaries from the date of the Automotive Business Pro
Forma Balance Sheet to the close of business on the
Distribution Date that is owned by Tenneco or one of its
Subsidiaries as of the close of business on the Distribution
Date and that is of a type or nature that would have resulted
in such asset being included as an asset on the Automotive
Business Pro Forma Balance Sheet had it been acquired on or
prior to the date of the Automotive Business Pro Forma Balance
Sheet, determined on a basis consistent with the determination
of assets included on the Automotive Business Pro Forma
Balance Sheet; and
(v) Tenneco Trademarks and Trade Names;
provided, however, that notwithstanding the foregoing, the Automotive
Assets shall not include the Packaging Assets or the capital stock of
Packaging.
"AUTOMOTIVE BUSINESS" means the businesses (other than the
Packaging Business or Prior Packaging Business) that, after giving
effect to the Corporate Restructuring Transactions, are or were
conducted by:
(i) Tenneco, the Automotive Subsidiaries or any of
the other members of the Automotive Group;
(ii) any other division, Subsidiary or investment of
Tenneco, or any Automotive Subsidiary or any of the other
members of the Automotive Group managed or operated or in
existence as of the date of this Agreement or any prior time,
unless such other division, Subsidiary or investment is
expressly included in the Packaging Group immediately after
giving effect to the Corporate Restructuring Transactions; or
(iii) any business entity acquired or established by
or for Tenneco or any of the Automotive Subsidiaries between
the date of the Automotive Pro Forma Balance Sheet and the
close of business on the Distribution Date that is engaged in,
or intends to engage in, any business that is of a type or
nature that would have resulted in such business being
included either as a Subsidiary or an asset of Tenneco on the
Automotive Business Pro Forma Balance Sheet had it been
acquired or established on or prior to the date of the
Automotive Business Pro Forma Balance Sheet, determined on a
basis consistent with the determination of the Subsidiaries
and assets included on the Automotive Business Pro Forma
Balance Sheet.
"AUTOMOTIVE BUSINESS PRO FORMA BALANCE SHEET" means the
column entitled "Consolidated Tenneco Pro Forma" on the Tenneco
Unaudited Pro Forma Consolidated
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Balance Sheet (prepared in accordance with GAAP) as of June 30, 1999
attached hereto as Exhibit A, other than any amounts reflected in that
column for the line items titled "Short- term debt (including current
maturities on long-term debt)" and "Long-term debt." The parties agree
that the liabilities of each party and its respective Subsidiaries for
indebtedness for borrowed money shall be determined pursuant to the
Debt Realignment.
"AUTOMOTIVE GROUP" means Tenneco, the Automotive Subsidiaries
and, after giving effect to the Corporate Restructuring Transactions
and the Distribution, the corporations, partnerships, joint ventures,
investments and other entities that represent equity investments of
Tenneco or any of the Automotive Subsidiaries.
"AUTOMOTIVE INDEMNITEE" means:
(i) Tenneco, the Automotive Subsidiaries and each
Affiliate thereof after giving effect to the Corporate
Restructuring Transactions and the Distribution; and
(ii) each of the respective past, present and future
directors, officers, employees and agents of any of the
entities described in the immediately preceding clause (i) and
each of the heirs, executors, successors and assigns of such
directors, officers, employees and agents.
"AUTOMOTIVE LIABILITIES" means, collectively, all of the
following Liabilities other than Transaction Liabilities:
(i) all of the Liabilities included on the
Automotive Business Pro Forma Balance Sheet which remain
outstanding as of the close of business on the Distribution
Date;
(ii) all of the Liabilities which are incurred or
which otherwise accrue or are accrued at any time on, prior
to, or after the date of the Automotive Business Pro Forma
Balance Sheet and which arise or arose out of, or in
connection with, the Automotive Assets, Automotive Business or
Prior Automotive Business, determined on a basis consistent
with the determination of the Liabilities of Tenneco which are
included on the Automotive Business Pro Forma Balance Sheet;
(iii) all of the Liabilities of Tenneco, each
Automotive Subsidiary and each member of the Automotive Group
under, or to be retained or assumed by Tenneco, any Automotive
Subsidiary or any other member of the Automotive Group
pursuant to, the Corporate Restructuring Transactions, the
Debt Realignment, this Agreement (including, without
limitation, the liabilities arising from the matters allocated
to it in the Litigation Letter) or any of the Ancillary
Agreements;
(iv) all of the Liabilities of the parties hereto or
their respective Subsidiaries (whenever arising whether prior
to, on or following the Distribution Date) arising out of or
in connection with or otherwise relating to the management
TENNECO DISTRIBUTION AGREEMENT
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or conduct before or after the Distribution Date of the
Automotive Business or any Prior Automotive Business;
(v) all Automotive Securities Liabilities and
Tenneco Securities Liabilities; and
(vi) all other Liabilities of Tenneco, of each
Automotive Subsidiary and of each of member of the Automotive
Group which do not constitute Packaging Liabilities.
"AUTOMOTIVE RECORDS" has the meaning ascribed to such term in
Section 6.01(c) hereof.
"AUTOMOTIVE SECURITIES LIABILITIES" means any and all
Securities Liabilities, other than Transaction Securities Liabilities,
of Tenneco or any entity that was or is a Subsidiary of Tenneco on or
before the Distribution Date arising out of, or in connection with, or
relating to any information, data (financial or otherwise, and
including pro forma financial data) or disclosures (or any omissions of
information, data or disclosures) provided, made or omitted (or alleged
to have been provided, made or omitted) on or prior to the Distribution
Date to the extent relating to or concerning the business, operations,
financial or other results, prospects, plans, potential risks,
financing or management of the Prior Automotive Business, Automotive
Business, Automotive Assets or Automotive Group before or after the
Distribution irrespective of (A) who authored, prepared or provided
such information, data or disclosures (or, as the case may be, the
section or discussion in which certain information, data or disclosure
is alleged to have been omitted), or (B) the form in which, or medium
through which (e.g., in writing, orally, electronically, etc.), such
information, data, disclosure, section or discussion was provided.
"AUTOMOTIVE SUBSIDIARIES" means the Subsidiaries of Tenneco
set forth on Exhibit B hereto and all other Subsidiaries of Tenneco
other than Packaging and the Packaging Subsidiaries.
"BOOKS AND RECORDS" means all books, records, manuals,
agreements and other materials (in any form or medium), including
without limitation, all mortgages, licenses, indentures, contracts,
financial data, customer lists, marketing materials and studies,
advertising materials, price lists, correspondence, distribution lists,
supplier lists, production data, sales and promotional materials and
records, purchasing materials and records, personnel records,
manufacturing and quality control records and procedures, blue prints,
research and development files, records, data and laboratory books,
accounts records, sales order files, litigation files, computer files,
computer disks and tapes, microfiche, tape recordings and photographs.
"CODE" means the Internal Revenue Code of 1986, as amended,
or any successor law.
"COMMISSION" means the United States Securities and Exchange
Commission.
TENNECO DISTRIBUTION AGREEMENT
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"CONSENTS" has the meaning ascribed to such term in Section
5.05(d) hereof.
"CONVEYANCING AND ASSUMPTION INSTRUMENTS" means collectively,
the various written agreements, instruments and other documents to be
entered into to effect the Corporate Restructuring Transactions or to
otherwise effect the transfer of assets and the assumption of
Liabilities in the manner contemplated by this Agreement, the Ancillary
Agreements and the Corporate Restructuring Transactions.
"CORPORATE RESTRUCTURING TRANSACTIONS" means, collectively,
(i) each of the distributions, transfers, conveyances, contributions,
assignments and other transactions described and set forth on Exhibit C
hereto, and (ii) such other distributions, transfers, conveyances,
contributions, assignments and other transactions that may be required
to be accomplished, effected or consummated by any of Tenneco,
Packaging or any of their respective divisions, investments,
Subsidiaries or Affiliates in order to separate and divide, in a series
of transactions that, to the extent intended to qualify for tax-free
transactions under the Code, shall qualify for tax-free treatment under
the Code, the existing businesses of Tenneco so that, except as
otherwise expressly set forth on Exhibit C hereto:
(i) the Packaging Assets shall be owned, directly
and indirectly, by Packaging; and
(ii) the businesses and assets of Tenneco that remain
after the separations and divisions described in clause (i)
above, including, without limitation, the Automotive Assets
are, after giving effect to the Distribution, owned, directly
and indirectly, by Tenneco.
"DEBT REALIGNMENT" means the repayment, realignment,
refinancing, exchange and/or modification of the consolidated
indebtedness of Tenneco, as described in Exhibit D attached hereto.
"DGCL" means the General Corporation Law of the State of
Delaware.
"DISTRIBUTION" means the distribution on the Distribution Date
as a dividend to holders of record of shares of Tenneco Common Stock as
of the Distribution Record Date of all of the outstanding Packaging
Common Stock owned by Tenneco on the basis provided in Section 3.02
hereof.
"DISTRIBUTION DATE" means such date as may hereafter be
determined by Tenneco's Board of Directors as the date on which the
Distribution shall be effected.
"DISTRIBUTION RECORD DATE" means the close of business on the
date determined by the Board of Directors of Tenneco for the purpose of
determining the holders of record of Tenneco Common Stock entitled to
participate in the Distribution.
TENNECO DISTRIBUTION AGREEMENT
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"ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or other Governmental restrictions (including without
limitation the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601, et seq.), whether now or hereafter in
existence, relating to the environment, natural resources or human
health and safety or endangered or threatened species of fish, wildlife
and plants or to emissions, discharges or releases of pollutants,
contaminants, petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes into the environment including,
without limitation, ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, petroleum or petroleum products, chemicals, or
industrial, toxic or hazardous substances or wastes or the cleanup or
other remediation thereof
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means United States generally accepted accounting
principles and practices, as in effect on the date of this Agreement,
as promulgated by the Financial Accounting Standards Board and its
predecessors.
"GOVERNMENTAL AUTHORITY" means any government or any agency,
bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government,
whether federal, state or local, domestic or foreign.
"GROUP" means (i) with respect to Tenneco, the Automotive
Group, and (ii) with respect to Packaging, the Packaging Group.
"HUMAN RESOURCES AGREEMENT" means the Human Resources
Agreement by and between Tenneco and Packaging, which agreement shall
be entered into on or prior to the Distribution Date in substantially
the form attached hereto as Exhibit E.
"INDEMNIFIABLE LOSSES" means, with respect to any Person, any
and all losses, liabilities, penalties, claims, damages, demands, costs
and expenses (including, without limitation, reasonable attorneys'
fees, investigation expenses and any and all other out-of-pocket
expenses, but excluding any punitive or consequential damages) or other
Liabilities whatsoever that are assessed, imposed, awarded against,
incurred or accrued by such Person either (a) in investigating,
preparing for, defending against or otherwise arising out of or in
connection with any Actions, any potential or threatened Actions or any
Third Party Claims for which such Person would be entitled to
indemnification under Article VII hereof, or (b) in respect of any
other event, occurrence or matter for which such Person would be
entitled to indemnification under Article VII hereof, in each case
whether accrued or incurred on, before or after the date of this
Agreement.
"INDEMNIFYING PARTY" has the meaning ascribed to such term in
Section 7.04(a) hereof.
TENNECO DISTRIBUTION AGREEMENT
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"INDEMNITEE" has the meaning ascribed to such term in Section
7.04(a) hereof.
"INSURANCE AGREEMENT" means the Insurance Agreement by and
between Tenneco and Packaging, which agreement shall be entered into on
or prior to the Distribution Date and which shall provide for the
separation and administration of existing insurance programs and the
purchase of "run-off" policies for fiduciaries and directors and
officers.
"INSURANCE PROCEEDS" means, with respect to any insured party,
those monies, net of any applicable premium adjustment
retrospectively-rated premium, deductible, retention or cost of reserve
paid or held by or for the benefit of such insured, which are either:
(i) received by an insured from an insurance
carrier; or
(ii) paid by an insurance carrier on behalf of an
insured.
"LAW" means any constitutional provision, statute, law,
ordinance, rule, regulation, permit, decree, injunction, order,
ruling, determination, finding or writ of any Governmental Authority.
"LIABILITIES" means any and all debts, liabilities,
obligations, responsibilities, response actions, losses, damages
(whether compensatory, punitive or statutory), fines, penalties and
sanctions, absolute or contingent, matured or unmatured, liquidated or
unliquidated, foreseen or unforeseen, joint, several or individual,
asserted or unasserted, accrued or unaccrued, known or unknown,
whenever arising, including, without limitation, those arising under or
in connection with any Law (including any Environmental Law), Action,
threatened Action, order or consent decree of any Governmental
Authority or any award of any arbitration tribunal, and those arising
under any contract, guarantee, commitment or undertaking, whether
sought to be imposed by a Governmental Authority, private party or
party to this Agreement, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, or
otherwise, and including any costs, expenses, interest, attorneys'
fees, disbursements and expense of counsel, expert and consulting fees
and costs related thereto or to the investigation or defense thereof.
"LITIGATION LETTER" means the letter agreement between Tenneco
and Packaging relating to the notice and defense of existing Third
Party Claims.
"NYSE" means the New York Stock Exchange.
"PACKAGING ASSETS" means, collectively, all of the following
rights and assets that are owned by Tenneco or any of its Subsidiaries
as of the close of business on the Distribution Date:
(i) the capital stock of the Packaging
Subsidiaries;
TENNECO DISTRIBUTION AGREEMENT
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(ii) all of the assets included on the Packaging
Business Pro Forma Balance Sheet that are owned by Tenneco or
any of its Subsidiaries as of the close of business on the
Distribution Date;
(iii) all of the assets and rights expressly
allocated to Packaging or any Packaging Subsidiary under this
Agreement, the Contribution Agreement or any of the Ancillary
Agreements; and
(iv) any other asset acquired by Tenneco or any of
its Subsidiaries from the date of the Packaging Business Pro
Forma Balance Sheet or to the close of business on the
Distribution Date that is owned by Tenneco or any of its
Subsidiaries as of the close of business on the Distribution
Date and that is of a type or nature that would have resulted
in such asset being included as an asset on the Packaging
Business Pro Forma Balance Sheet had it been acquired on or
prior to the date thereof, determined on a basis consistent
with the determination of the assets included on the Packaging
Business Pro Forma Balance Sheet.
"PACKAGING BUSINESS" means the businesses that, after giving
effect to the Corporate Restructuring Transactions, are or were
conducted by:
(i) Packaging, the Packaging Subsidiaries or any
of the other members of the Packaging Group; or
(ii) any business entity acquired or established by
or for Tenneco, Packaging or any of the Packaging Subsidiaries
between the date of this Agreement and the close of business
on the Distribution Date that is engaged in, or intends to
engage in, any business that is of a type or nature that would
have resulted in such business being included either as a
Subsidiary or an asset on the Packaging Business Pro Forma
Balance Sheet, had it been acquired or established on or prior
to the date thereof, determined on a basis consistent with the
determination of the Subsidiaries and assets included on the
Packaging Business Pro Forma Balance Sheet.
"PACKAGING BUSINESS PRO FORMA BALANCE SHEET" means the column
entitled "Packaging Pro Forma Combined" on the Packaging Unaudited Pro
Forma Combined Balance Sheet (prepared in accordance with GAAP) as of
June 30, 1999 attached hereto as Exhibit F other than any amounts
reflected in that column for the line items titled "Short- term debt"
and "Long-term debt". The parties agree that the liabilities of each
party and its respective Subsidiaries for indebtedness for borrowed
money shall be determined pursuant to the Debt Realignment.
"PACKAGING COMMON STOCK" has the meaning ascribed to such term
in the Recitals to this Agreement.
"PACKAGING" has the meaning ascribed to such term in the
Recitals to this Agreement.
TENNECO DISTRIBUTION AGREEMENT
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"PACKAGING GROUP" means Packaging, the Packaging Subsidiaries
and, after giving effect to the Corporate Restructuring Transactions
and the Distribution, the corporations, partnerships, joint ventures,
investments and other entities that represent equity investments of any
of Packaging or any of the Packaging Subsidiaries.
"PACKAGING INDEMNITEES" means:
(i) Packaging, the Packaging Subsidiaries and each
Affiliate thereof after giving effect to the Corporate
Restructuring Transactions and the Distribution; and
(ii) each of the respective past, present and future
directors, officers, employees and agents of any of the
entities described in the immediately preceding clause (i) and
each of the heirs, executors, successors and assigns of any of
such directors, officers, employees and agents.
"PACKAGING INFORMATION STATEMENT" means the information
statement or registration statement relating to Packaging and the
transactions contemplated hereby to be distributed to holders of
Tenneco Common Stock pursuant to the terms of this Agreement.
"PACKAGING LIABILITIES" means, collectively, all of the
following Liabilities other than Transaction Liabilities:
(i) all of the Liabilities included on the Packaging
Business Pro Forma Balance Sheet which remain outstanding as
of the close of business on the Distribution Date;
(ii) all of the Liabilities which are incurred or
which otherwise accrue or are accrued at any time on, prior to
or after the date of the Packaging Business Pro Forma Balance
Sheet, and which arise or arose out of, or in connection with
the Packaging Assets, Packaging Business or Prior Packaging
Business, determined on a basis consistent with the
determination of Liabilities of Packaging on the Packaging
Business Pro Forma Balance Sheet;
(iii) all of the Liabilities of Packaging, each
Packaging Subsidiary or any other member of the Packaging
Group under, or to be retained or assumed by Packaging, any
Packaging Subsidiary or any of the other members of the
Packaging Group pursuant to the Corporate Restructuring
Transactions, the Debt Realignment, this Agreement (including,
without limitation, the liabilities arising from the matters
allocated to it in the Litigation Letter) or any of the
Ancillary Agreements;
(iv) all of the Liabilities of the parties hereto or
their respective Subsidiaries (whenever arising whether prior
to, at or following the Distribution Date) arising out of or
in connection with or otherwise relating to the management or
conduct before or after the Distribution Date of the Packaging
Business or Prior Packaging Business;
TENNECO DISTRIBUTION AGREEMENT
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(v) the Packaging Securities Liabilities; and
(vi) all other Liabilities of Packaging, of each
Packaging subsidiary and of each member of the Packaging Group
that are not expressly included in clauses (i) through (v) of
the definition of Automotive Liabilities.
"PACKAGING RECORDS" has the meaning ascribed to such term in
Section 6.01(a) hereof.
"PACKAGING REGISTRATION STATEMENT" means the Registration
Statement on Form 10 to be filed with the Commission pursuant to the
requirements of Section 12 of the Exchange Act and the rules and
regulations thereunder in order to register the Packaging Common Stock
under Section 12(b) of the Exchange Act.
"PACKAGING SECURITIES LIABILITIES" means any and all
Securities Liabilities, other than Transaction Securities Liabilities,
of Tenneco or any entity that was or is a Subsidiary of Tenneco on or
prior to the Distribution Date arising out of, or in connection with,
or relating to any information, data (financial or otherwise, and
including pro forma financial data) or disclosures (or any omissions of
information, data or disclosures) provided, made or omitted (or alleged
to have been provided, made or omitted) on or prior to the Distribution
Date to the extent relating to or concerning the business, operations,
financial or other results, prospects, plans, potential risks,
financing or management of the Prior Packaging Business, Packaging
Business, Packaging Assets or Packaging Group before or after the
Distribution irrespective of (A) who authored, prepared or provided
such information, data or disclosures (or, as the case may be, the
section or discussion in which certain information, data or disclosure
is alleged to have been omitted), or (B) the form in which, or medium
through which (e.g., in writing, orally, electronically, etc.), such
information, data, disclosure, section or discussion was provided.
"PACKAGING SUBSIDIARIES" means the Subsidiaries listed on
Exhibit G hereto.
"PERSON" means any natural person, corporation, business
trust, join venture, association, company, partnership, limited
liability company or other entity, or any government, or any agency or
political subdivision thereof.
"PRIOR AUTOMOTIVE BUSINESS" means, collectively, the
businesses that were conducted by any division, Subsidiary, other
business entity or investment of Tenneco (or one of its former
Subsidiaries or former Affiliates) that (i) at any time prior to the
Distribution Date, were included in the "automotive parts" segment for
purposes of segment reporting in any Annual Report on Form 10-K of
Tenneco or the entity that, from December 8, 1987 to December 12, 1996,
was known as "Tenneco Inc.", and (ii) were sold, transferred or
otherwise discontinued or disposed of prior to the Distribution Date.
"PRIOR PACKAGING BUSINESS" means, collectively, the businesses
that were conducted by any division, Subsidiary, other business entity
or investment of Tenneco (or one of its
TENNECO DISTRIBUTION AGREEMENT
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former Subsidiaries or former Affiliates) that (i) at any time prior to
the Distribution Date were included in the "packaging," "specialty
packaging," or "paperboard packaging" segments for purposes of segment
reporting in any Annual Report on Form 10-K of Tenneco or the entity
that, from December 8, 1987 to December 12, 1996, was known as "Tenneco
Inc.", and (ii) were sold, transferred or otherwise discontinued or
disposed of prior to the Distribution Date.
"PRIOR RULINGS" means, collectively, the private letter ruling
issued by the Internal Revenue Service on October 30, 1996 with control
number PLR-240198-96, and the three private letter rulings
supplementing that ruling, issued by the Internal Revenue Service on
December 4, 1996 (control number PLR-252639-96), December 5, 1996
(control number PLR-253203-96) and May 27, 1997 (control number
PLR-104206-97).
"PRIVILEGE" has the meaning ascribed to such term in Section
6.07(a) hereof.
"PRIVILEGED INFORMATION" has the meaning ascribed to such
term in Section 6.07(a) hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES LIABILITIES" means any and all losses,
liabilities, penalties, claims, damages, demands, costs or expenses or
other Liabilities whatsoever that are assessed, imposed, awarded
against, incurred or accrued by a Person arising out of or relating in
whole or in part to any Action, any potential or threatened Action or
any Third Party Claim (or potential or threatened Third Party Claim) by
any Governmental Authority or any other Person that is based on any
violations or alleged violations of the Securities Act, Exchange Act,
any of the rules or regulations of the Commission promulgated under the
Securities Act or Exchange Act, or any other securities or other
similar Law.
"SUBSIDIARY" means, with respect to any Person:
(i) any corporation of which at least a majority in
interest of the outstanding voting stock (having by the terms
thereof voting power under ordinary circumstances to elect a
majority of the directors of such corporation, irrespective of
whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by
reason of the happening of a contingency) is at the time,
directly or indirectly, owned or controlled by such Person or
by such Person and one or more of its Subsidiaries; or
(ii) any non-corporate entity in which such Person
or such Person and one or more Subsidiaries of such Person
either (a) directly or indirectly, at the date of
determination thereof, has at least majority ownership
interest, or (b) at the date of determination is a general
partner or an entity performing similar functions (e.g.,
manager of a limited liability company or a trustee of a
trust).
TENNECO DISTRIBUTION AGREEMENT
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"TAX" or "TAXES" means any income, gross income, gross
receipts, profits, capital stock, franchise, withholding, payroll,
social security, workers compensation, unemployment, disability,
property, ad valorem, stamp, excise, occupation, services, sales, use,
license, lease, transfer, import, export, value added, alternative
minimum, estimated or other similar tax (including any fee, assessment
or other charge in the nature of or in lieu of any tax) imposed by any
governmental entity or political subdivision thereof, and any interest,
penalties, additions to tax or additional amounts in respect of the
foregoing.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement by and
among Tenneco and Packaging, which agreement shall be entered into on
or prior to the Distribution Date in substantially the form attached
hereto as Exhibit I.
"TENNECO" means Tenneco Inc., a Delaware corporation.
"TENNECO COMMON STOCK" has the meaning ascribed to such term
in the Recitals to this Agreement.
"TENNECO CORPORATE RECORDS" has the meaning ascribed to such
term in Section 6.01(a) hereof.
"TENNECO HOLDERS" means the holders of record of Tenneco
Common Stock as of the Distribution Record Date.
"TENNECO SECURITIES LIABILITIES" means any and all Securities
Liabilities of Tenneco or any of its Subsidiaries including, without
limitation, Tenneco Automotive Inc., other than Packaging Securities
Liabilities or Transaction Securities Liabilities.
"TENNECO TRADEMARKS AND TRADE NAMES" means trademarks, service
marks, and trade names containing "TENNECO", "TEN", or "TENN" or
variations thereof, along with their respective applications and
registrations wherever used or registered.
"TERMINATION DATE" means the date on which this Agreement is
terminated pursuant to and in accordance with the provisions of Section
8.11 of this Agreement.
"THIRD PARTY CLAIM" has the meaning as defined in Section
7.05(a) hereof.
"TRADEMARK TRANSITION LICENSE" has the meaning ascribed to
such term in Section 5.02 hereof.
"TRANSACTION LIABILITIES" means any and all Transaction
Securities Liabilities and any and all Liabilities imposed on Tenneco,
Packaging, or any member of their respective Group, jointly or
severally, arising as a result of the actions taken in connection with
or pursuant to this Agreement, any Ancillary Agreement, the Debt
Realignment or any of the Corporate Restructuring Transactions that are
based on:
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(i) any violation or alleged violation of the
DGCL or any other corporate or other similar
Law, to the extent such violation occurred
or is alleged to have occurred on or prior
to the Distribution Date; or
(ii) any violation or alleged violation by any
officer or director of any member of the
Packaging Group or the Automotive Group of
such officer's or director's fiduciary duty
as an officer or director.
"TRANSACTION SECURITIES LIABILITIES" means any and all
Securities Liabilities imposed on Tenneco, Packaging, or any member of
their respective Group, jointly or severally, arising as a result of
the actions taken in connection with or pursuant to this Agreement, any
Ancillary Agreement, the Debt Realignment or any of the Corporate
Restructuring Transactions that are not Automotive Securities
Liabilities or Packaging Securities Liabilities.
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement by and between Tenneco and Packaging, which agreement shall
be entered into on or prior to the Distribution Date pursuant to which
Packaging shall provide certain administrative services to Tenneco
after the Distribution Date.
"1996 AGREEMENTS" means the following agreements, and any
amendments thereto:
(i) Distribution Agreement, dated November 1,
1996, by and among El Paso Tennessee
Pipeline Co. (formerly Tenneco Inc.),
Tenneco Inc. (formerly New Tenneco Inc.) and
Newport News Shipbuilding Inc., as amended
(the "1996 DISTRIBUTION AGREEMENT");
(ii) Debt and Cash Allocation Agreement, dated
December 11, 1996, by and among El Paso
Tennessee Pipeline Co. (formerly Tenneco
Inc.), Tenneco Inc. (formerly New Tenneco
Inc.) and Newport News Shipbuilding Inc.
(the "1996 DEBT AND CASH ALLOCATION
AGREEMENT");
(iii) Benefits Agreement, dated December 11, 1996,
by and among El Paso Tennessee Pipeline Co.
(formerly Tenneco Inc.), Tenneco Inc.
(formerly New Tenneco Inc.) and Newport
News Shipbuilding Inc.;
(iv) Insurance Agreement, dated December 11,
1996, by and among El Paso Tennessee
Pipeline Co. (formerly Tenneco Inc.),
Tenneco Inc. (formerly New Tenneco Inc.)
and Newport News Shipbuilding Inc.;
(v) Tax Sharing Agreement, dated December 11,
1996, by and among El Paso Tennessee
Pipeline Co. (formerly Tenneco Inc.),
Newport
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News Shipbuilding Inc., Tenneco Inc.
(formerly New Tenneco Inc.) and El Paso
Natural Gas Company;
(vi) First Amendment to Tax Sharing Agreement,
dated as of December 11, 1996, among El
Paso Tennessee Pipeline Co. (formerly
Tenneco Inc.), Tenneco Inc. (formerly New
Tenneco Inc.) and Newport News Shipbuilding
Inc.;
(vii) Transition Services Agreement, dated June
19, 1996, by and among Tenneco Business
Services Inc., El Paso Tennessee Pipeline
Co. (formerly Tenneco Inc.) and El Paso
Natural Gas Company;
(viii) Trademark Transition License Agreement,
dated December 11, 1996, by and between
Newport News Shipbuilding Inc. and Tenneco
Inc. (formerly New Tenneco Inc.) (the
"Newport News License"); and
(ix) Trademark Transition License Agreement,
dated December 11, 1996, by and between
Tenneco Inc. (formerly New Tenneco Inc.) and
El Paso Tennessee Pipeline Co. (formerly
Tenneco Inc.) (the "El Paso License").
SECTION 1.02. REFERENCES. References to an "Exhibit" or to a
"Schedule" are, unless otherwise specified, to one of the Exhibits or Schedules
attached to this Agreement, and references to a "Section" are, unless otherwise
specified to one of the Sections of this Agreement. References to "including"
shall be deemed to mean "including, without limitation."
ARTICLE II
PRE-DISTRIBUTION TRANSACTIONS;
CERTAIN COVENANTS
SECTION 2.01. CORPORATE RESTRUCTURING TRANSACTIONS. On or prior to the
Distribution Date (but in all events prior to the Distribution) and subject to
Section 2.06 below, each of Tenneco and Packaging shall, and shall cause each of
their respective divisions, investments, Subsidiaries and Affiliates to, as
applicable, take such action or actions as is necessary to cause, effect and
consummate the Corporate Restructuring Transactions. Each of Tenneco and
Packaging hereby agrees that any one or more of the Corporate Restructuring
Transactions may be modified, supplemented or eliminated on or prior to the
Distribution Date; provided such modification, supplement or elimination is
determined to be necessary or appropriate (i) to divide the existing businesses
of Tenneco so that Tenneco's packaging businesses and administrative services
operations shall be owned, directly and indirectly, by Packaging, or so that
Tenneco's automotive businesses shall be owned, directly and indirectly by
Tenneco after giving effect to the Distribution, in each case so long as the
ruling referred to in the following clause (ii) will not be adversely affected
by such modification, supplement, or elimination, or (ii) to obtain a ruling
from the Internal Revenue Service as described in Section 4.01(d).
TENNECO DISTRIBUTION AGREEMENT
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SECTION 2.02. PRE-DISTRIBUTION STOCK DIVIDEND TO TENNECO. On or prior
to the Distribution Date (but in all events prior to the Distribution),
Packaging shall issue to Tenneco, as a stock dividend, the number of shares of
Packaging Common Stock as is required to effect the Distribution, as certified
by the Agent. In connection therewith, Tenneco shall deliver to Packaging for
cancellation the share certificate (or certificates) then held by it
representing all Packaging Common Stock, and Packaging shall issue a new
certificate (or certificates) to Tenneco representing the total number of shares
of Packaging Common Stock to be owned by Tenneco after giving effect to such
stock dividend.
SECTION 2.03. CERTIFICATE OF INCORPORATION AND BYLAWS OF PACKAGING. On
or prior to the Distribution Date (but in all events prior to the Distribution),
Tenneco and Packaging shall each take all necessary actions so that, as of the
Distribution Date, the certificate of incorporation and bylaws of Packaging are
amended and/or restated in such manner as is determined appropriate by Tenneco.
SECTION 2.04. ELECTION OF DIRECTORS OF PACKAGING. On or prior to the
Distribution Date, Tenneco, as the sole stockholder of Packaging, shall take all
necessary action so that as of the Distribution Date the directors of Packaging
will be as set forth in the Packaging Information Statement.
SECTION 2.05. TRANSFER AND ASSIGNMENT OF CERTAIN LICENSES AND PERMITS.
(a) LICENSES AND PERMITS RELATING TO THE PACKAGING BUSINESS.
On or prior to the Distribution Date, or as soon as reasonably
practicable thereafter, Tenneco shall (and, if applicable, shall cause
any other Person over which it has legal or effective direct or
indirect control to) duly and validly transfer or cause to be duly and
validly transferred to the appropriate member of the Packaging Group
(as directed by Packaging) all transferrable licenses, permits and
authorizations issued by any Governmental Authority that relate
exclusively to the Packaging Business but which are held in the name of
Tenneco, any member of the Automotive Group, or any of their respective
employees, officers, directors, stockholders or agents.
(b) LICENSES AND PERMITS RELATING TO THE AUTOMOTIVE BUSINESS.
On or prior to the Distribution Date, or as soon as reasonably
practicable thereafter, Packaging shall (and if applicable, shall cause
any other Person over which it has legal or effective direct or
indirect control to) duly and validly transfer or cause to be duly and
validly transferred to the appropriate member of the Automotive Group
(as directed by Tenneco) all transferrable licenses, permits and
authorizations issued by any Governmental Authority that relate
exclusively to the Automotive Business but which are held in the name
of any member of the Packaging Group or any of their respective
employees, officers, directors, stockholders or agents.
TENNECO DISTRIBUTION AGREEMENT
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SECTION 2.06. TRANSFER AND ASSIGNMENT OF CERTAIN AGREEMENTS.
(a) TRANSFER AND ASSIGNMENT OF AUTOMOTIVE BUSINESS AGREEMENTS.
On or prior to the Distribution Date, or as soon as reasonably
practicable thereafter, and subject to the limitations set forth in
this Section 2.06, Packaging shall (and, if applicable, shall cause any
of the other members of its Group over which it has legal or effective
direct or indirect control to) assign, transfer and convey to Tenneco
(or such other member of the Automotive Group as Tenneco shall direct)
all of its (or such other member of its Group's) right, title and
interest in and to any and all agreements that relate exclusively to
the Automotive Business or any member of the Automotive Group.
(b) TRANSFER AND ASSIGNMENT OF PACKAGING BUSINESS AGREEMENTS.
On or prior to the Distribution Date, or as soon as reasonably
practicable thereafter, and subject to the limitations set forth in
this Section 2.06, Tenneco shall (and, if applicable, shall cause any
other Person over which it has legal or effective direct or indirect
control to) assign, transfer and convey to Packaging (or such other
member of the Packaging Group as Packaging shall direct) all of its (or
such other Person's) right, title and interest in and to any and all
agreements that relate exclusively to the Packaging Business or any
member of the Packaging Group.
(c) SHARED AGREEMENTS.
(i) Exhibit I attached hereto contains a list of
certain third party agreements with Tenneco Business Services,
Inc. under or through which both the Automotive Group and
Packaging Group has obtained or does obtain goods or services.
As set forth in Section 1 of Exhibit I, certain of these
agreements have been modified to provide that Tenneco and
Packaging may each order, receive and pay for the goods and
services to which such agreements apply for its respective
Group as if each company had a separate contract. The
third-party agreements listed in Section 2 of on Exhibit I
will be administered by Packaging or one of its Subsidiaries
after the Distribution and the allocated costs for such goods
or services will be billed to and paid by Tenneco on a
recurring basis.
(ii) Except with respect to the 1996 Agreements and
the agreements listed on Exhibit I hereto, and subject to the
provisions of Section 5.08 below, any agreement to which any
party hereto (or any other member of such party's Group) is a
party that inures to the benefit of or relates to the
Automotive Business and the Packaging Business, but that is
not a Packaging Asset or otherwise the subject of this
Agreement or any Ancillary Agreement, shall be assigned in
part, at the expense and risk of the Assignee (as defined
herein), on or prior to the Distribution Date or as soon as
reasonably practicable thereafter, so that each party (or such
other member of such party's Group) shall be entitled to the
rights and benefits inuring to its business under such
agreement.
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(d) OBLIGATIONS OF ASSIGNEES. The assignee of any agreement
assigned, in whole or in part, hereunder (an "ASSIGNEE") shall, as a
condition to such assignment, assume and agree to pay, perform and
fully discharge all obligations of the assignor under such agreement
(whether such obligations arose or were incurred prior to, on or
subsequent to the Distribution Date and irrespective of whether such
obligations have been asserted as of the Distribution Date) or, in the
case of a partial assignment under Section 2.06(c)(ii) above, such
Assignee's related portion of such obligations as determined in
accordance with the terms of the relevant agreement, where determinable
on the face thereof, or otherwise as determined in accordance with the
practice of the parties prior to the Distribution. Furthermore, the
Assignee shall use its reasonable efforts to cause the assignor of such
agreement to be released from the Assignee's obligations under the
assigned agreements.
(e) NO ASSIGNMENT OF CERTAIN AGREEMENTS. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign any agreement, in whole or in part,
or any rights thereunder if the agreement to assign or attempt to
assign, without the consent of a third party, would constitute a breach
thereof or in any way adversely affect the rights of the Assignee
thereto until such consent is obtained. If an attempted assignment
thereof would be ineffective or would adversely affect the rights of
any party hereto (or a member of its Group) so that the Assignee would
not, in fact, receive all such rights, the parties hereof will make
efforts consistent with Section 5.05(d) hereof to effect any
arrangement designed reasonably to provide for the Assignee the
benefits of, and to permit the Assignee to assume liabilities under,
any such agreement subject to the remaining sentences of this Section
2.06(e). There are certain software license agreements held in the name
of a member of the Packaging Group that presently inure to the benefit
of the Automotive Business and the Packaging Business. Notwithstanding
any other provision of this Agreement and subject to the terms of the
Transition Service Agreement, each such license agreement shall
continue to be held by that member of the Packaging Group without any
obligation of any party to cause the assignment or inurement to the
benefit of such license agreement, or to effect any arrangement to
provide such benefit, to the Automotive Business, except where the
license agreement expressly permits the benefits and obligations to be
divided among the Businesses or as may be negotiated with the licensor
by that member of the Packaging Group and such other parties.
SECTION 2.07. OTHER TRANSACTIONS. On or prior to the Distribution Date
(but in all events prior to the Distribution), each of Tenneco and Packaging
shall have consummated those other transactions in connection with the Corporate
Restructuring Transactions and the Distribution that are contemplated by the
Packaging Information Statement and the ruling request submitted by Tenneco to
the Internal Revenue Service dated April 29, 1999 (as subsequently
supplemented), and not specifically referred to in Sections 2.01 through 2.06
above, as long as such other transactions will not adversely affect the ruling
from the Internal Revenue Service.
SECTION 2.08. ELECTION OF OFFICERS. On or prior to the Distribution
Date, each of Tenneco and Packaging shall, as applicable, take all actions
necessary and desirable so that as of the Distribution Date the officers of
Packaging will be as set forth in the Packaging Information Statement.
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SECTION 2.09. PACKAGING REGISTRATION STATEMENT. Tenneco and Packaging
shall prepare or cause to be prepared, and Packaging shall file or cause to be
filed with the Commission, the Packaging Registration Statement. The Packaging
Registration Statement shall include or incorporate by reference the Packaging
Information Statement setting forth appropriate disclosure concerning Tenneco,
Packaging, the Distribution and such other matters as may be required to be
disclosed therein by the provisions of the Exchange Act and the rules and
regulations promulgated thereunder. Tenneco and Packaging shall take all such
actions as may be reasonably necessary or appropriate in order to cause the
Packaging Registration Statement to become effective by order of the Commission
pursuant to the Exchange Act.
SECTION 2.10. STATE SECURITIES LAWS. Prior to the Distribution Date,
Tenneco and Packaging shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other political
subdivisions of the United States in order to effect the Distribution.
SECTION 2.11. LISTING APPLICATION. Prior to the Distribution Date,
Tenneco and Packaging shall prepare and file with the NYSE a listing application
and related documents and shall take all such other actions with respect thereto
as shall be necessary or desirable in order to cause the NYSE to list on or
prior to the Distribution Date, subject to official notice of issuance, the
Packaging Common Stock.
SECTION 2.12. CERTAIN FINANCIAL AND OTHER ARRANGEMENTS.
(a) SETTLEMENT OF INTERCOMPANY ACCOUNTS BETWEEN PACKAGING
GROUP AND AUTOMOTIVE GROUP. All intercompany receivables, payables and
loans (other than receivables, payables and loans otherwise
specifically provided for in any of the Ancillary Agreements or
hereunder), including, without limitation, in respect of any cash
balances, any cash balances representing deposited checks or drafts for
which only a provisional credit has been allowed or any cash held in
any centralized cash management system, between any member of the
Packaging Group, on the one hand, and any member of the Automotive
Group, on the other hand, shall, as of the close of business on the
Distribution Date, be settled, capitalized or converted into ordinary
trade accounts, in each case as may be agreed in writing prior to the
Distribution Date by duly authorized representatives of Tenneco and
Packaging.
(b) OPERATIONS IN ORDINARY COURSE. Except as otherwise
provided in this Agreement or any Ancillary Agreement during the period
from the date of this Agreement through the Distribution Date, each of
Tenneco and Packaging shall, and shall cause any entity that is a
Subsidiary of such party at any time during such period to, conduct its
business in a manner substantially consistent with current and past
operating practices and in the ordinary course.
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SECTION 2.13. DIRECTOR, OFFICER AND EMPLOYEE RESIGNATIONS. Subject to
the provisions of Section 2.04 and Section 2.08 above:
(a) RESIGNATIONS BY DIRECTORS AND EMPLOYEES OF THE AUTOMOTIVE
GROUP. Tenneco shall cause all of its directors and all employees of
the Automotive Group to resign, effective as of the close of business
on the Distribution Date, from all boards of directors or similar
governing bodies (including committees and trusts responsible for
benefit plans and compensation structures) of each member of the
Packaging Group on which they serve, and from all positions as officers
or employees of any member of the Packaging Group, except as otherwise
set forth on Exhibit J hereto or in the Packaging Information Statement
or as otherwise mutually agreed to in writing on or prior to the
Distribution Date by Tenneco and Packaging.
(b) RESIGNATIONS BY DIRECTORS AND EMPLOYEES OF THE PACKAGING
GROUP. Packaging shall cause all of its directors and all employees of
the Packaging Group to resign, effective as of the close of business on
the Distribution Date, from all boards of directors or similar
governing bodies (including committees and trusts responsible for
benefit plans and compensation structures) of each member of the
Automotive Group on which they serve, and from all positions as
officers or employees of any member of the Automotive Group, except as
otherwise set forth on Exhibit J hereto or in the Packaging Information
Statement or as otherwise mutually agreed to in writing on or prior to
the Distribution Date by Packaging and Tenneco.
SECTION 2.14. TRANSFERS NOT EFFECTED PRIOR TO THE DISTRIBUTION;
TRANSFERS DEEMED EFFECTIVE AS OF THE DISTRIBUTION DATE. To the extent that any
transfers or transactions contemplated by this Article II shall not have been
consummated on or prior to the Distribution Date, the parties hereto shall
cooperate and make efforts consistent with Section 5.05(d) hereof (and shall
cause each of their respective Affiliates and each member of their respective
Groups over which they have legal or effective direct or indirect control to
cooperate and make such efforts) to effect such transfers or transactions as
promptly following the Distribution Date as shall be practicable. Nothing herein
shall be deemed to require the transfer of any assets or the assumption of any
Liabilities which by their terms or operation of Law cannot be transferred or
assumed, provided, however, that the parties hereto shall cooperate (and shall
cause each of their respective Affiliates and each member of their respective
Groups over which they have legal or effective direct or indirect control to
cooperate) to seek to obtain any necessary consents or approvals for the
transfer of all assets and Liabilities contemplated to be transferred or assumed
pursuant to this Article II and Section 5.04, in a manner consistent with
Section 5.05(d) hereof. In the event that any such transfer of assets or
assumption of Liabilities has not been consummated, from and after the
Distribution Date the party retaining such asset or Liability (or, as
applicable, such other member or members of such party's Group) shall hold such
asset in trust for the use and benefit of the party entitled thereto (at the
expense of the party entitled thereto) or retain such Liability for the account
of the party by whom such Liability is to be assumed pursuant hereto, as the
case may be, and take such other action pursuant to Section 5.05(d) hereof as
may be reasonably requested by the party to whom such asset is to be
transferred, or by whom such Liability is to be assumed, as the case may be, in
order to place such party, insofar as is reasonably possible, in the same
position as would have existed had such asset or Liability been
TENNECO DISTRIBUTION AGREEMENT
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transferred or assumed as contemplated hereby. As and when any such asset or
Liability becomes transferable or assumable, such transfer shall be effected
forthwith. As of the Distribution Date, each party hereto (or, if applicable,
such other members of such party's Group) shall be deemed to have acquired (or,
as applicable, retained) complete and sole beneficial ownership over all of the
assets, together with all rights, powers and privileges incident thereto, and
shall be deemed to have assumed in accordance with the terms of this Agreement
all of the Liabilities, and all duties, obligations and responsibilities
incident thereto, which such party (or any other member of such party's Group)
is entitled to acquire or required to assume pursuant to the terms of this
Agreement.
SECTION 2.15. ANCILLARY AGREEMENTS. Prior to the Distribution Date,
each of Tenneco and Packaging shall enter into, or where applicable shall cause
such other members of their respective Group to enter into, (a) the Ancillary
Agreements and (b) any other agreements in respect of the Corporate
Restructuring Transactions and the Distribution as are reasonably necessary or
appropriate in connection with the transactions contemplated hereby and thereby.
SECTION 2.16. DEBT REALIGNMENT. Tenneco and Packaging shall each use
commercially reasonable efforts so that, immediately prior to the Distribution,
the Debt Realignment plan set forth on Exhibit D attached hereto has been
effected in accordance with the goal set forth in clause 1 of Exhibit D.
Notwithstanding the foregoing, neither Tenneco nor Packaging, nor any member of
its respective Group, shall have any recourse, claim, or cause of action to or
against any other member of either Group if the ultimate result of the Debt
Realignment, the manner of the Debt Realignment or any element or component
thereof varies from that set forth in Exhibit D.
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. TENNECO ACTION PRIOR TO THE DISTRIBUTION. Subject to the
terms and conditions set forth herein, Tenneco shall take, or cause to be taken,
the following acts or actions in connection with, and to otherwise effect in
accordance with the terms of this Agreement, the Distribution.
(a) DECLARATION OF DISTRIBUTION AND ESTABLISHMENT OF
DISTRIBUTION DATE. The Board of Directors of Tenneco shall, in its sole
discretion and subject to and in accordance with this Agreement, the
applicable rules of the NYSE and provisions of the DGCL, declare the
Distribution and establish the Distribution Record Date, the
Distribution Date, the date on which Packaging Common Stock shall be
mailed to the Tenneco Holders and all appropriate procedures in
connection with the Distribution to the extent not provided for herein;
provided, however, that no such action shall create any obligation on
the part of Tenneco to effect the Distribution or in any way limit
Tenneco's power of termination as set forth in Section 8.11 hereof or
alter the consequences of any such termination from those specified in
such Section.
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(b) NOTICE TO NYSE. Tenneco shall, to the extent possible,
give the NYSE not less than ten days advance notice of the Distribution
Record Date in compliance with Rule 10b-17 under the Exchange Act.
(c) MAILING OF PACKAGING INFORMATION STATEMENT. Tenneco shall,
as soon as practicable after the Packaging Registration Statement shall
have been declared effective under the Exchange Act, cause the
Packaging Information Statement to be mailed to the holders of Tenneco
Common Stock.
SECTION 3.02. THE DISTRIBUTION.
(a) DUTIES AND OBLIGATIONS OF TENNECO. Subject to the
conditions contained herein, on the Distribution Date but effective
immediately following the close of business on the Distribution Date
Tenneco shall:
(i) deliver to the Agent the share certificates
representing the Packaging Common Stock issued to Tenneco by
Packaging, pursuant to Section 2.02 hereof, endorsed by
Tenneco in blank, for the benefit of the Tenneco Holders; and
(ii) instruct the Agent to distribute, as soon as
practicable following consummation of the Distribution, to the
Tenneco Holders one share of Packaging Common Stock for every
one share of Tenneco Common Stock held by such Tenneco Holders
as of the Distribution Record Date.
(b) DUTIES AND RESPONSIBILITIES OF PACKAGING. Packaging shall
provide, or cause to be provided, to the Agent sufficient certificates
representing Packaging Common Stock, in such denominations as the Agent
may request in order to effect the Distribution. All shares of
Packaging Common Stock issued in connection with the Distribution will
be validly issued, fully paid and nonassessable and free of any
preemptive (or similar) rights.
ARTICLE IV
CONDITIONS TO THE DISTRIBUTION
SECTION 4.01. CONDITIONS PRECEDENT TO THE DISTRIBUTION. The obligation
of Tenneco to cause the Distribution to be consummated shall be subject, at the
option of Tenneco, to the fulfillment or waiver, on or prior to the Termination
Date, of each of the following conditions.
(a) ANCILLARY AGREEMENTS. Each of the parties to each
Ancillary Agreement shall have executed and delivered such Ancillary
Agreement and all Ancillary Agreements shall be in full force and
effect.
(b) REGISTRATION STATEMENT. The Packaging Registration
Statement shall have been declared effective by order of the Commission
and no stop order shall have been
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entered, and no proceeding for that purpose shall have been initiated
or threatened by the Commission with respect thereto.
(c) NYSE LISTING. The Packaging Common Stock shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
(d) TAX RULING. Tenneco shall have received rulings from the
Internal Revenue Service reasonably acceptable to Tenneco and
Packaging, which rulings shall be in full force and effect as of the
Distribution Date, to the effect that:
(i) the Distribution as contemplated hereunder will
be tax-free for federal income tax purposes to Tenneco under
Section 355(c)(1) of the Code and to the stockholders of
Tenneco under Section 355(a) of the Code;
(ii) the merger, pursuant to a plan of complete
liquidation, of Tenneco Packaging Specialty and Consumer
Products Inc. with and into Packaging will be tax-free for
federal income tax purposes to Packaging and Tenneco Packaging
Specialty and Consumer Products Inc. under Sections 332 and
337 of the Code, respectively;
(iii) the transfers of property by Tenneco to
Packaging and the entity now known as Tenneco Automotive Inc.
will be tax-free for federal income tax purposes under
Sections 361(a) and 351(a), respectively; and
(iv) the foregoing transactions will have no adverse
effect on the Prior Rulings.
(e) PRE-DISTRIBUTION TRANSACTIONS. Each of the transactions
and other matters contemplated by Article II and Section 3.01 hereof
(including, without limitation, each of the distributions, transfers,
conveyances, contributions, assignments or other transactions included
in, or otherwise necessary to consummate, the Corporate Restructuring
Transactions) and the Debt Realignment shall have been fully effected,
consummated and accomplished.
(f) COVENANTS. The covenants contained in Article V of this
Agreement that are required to be performed on or before the
Distribution Date shall have been fully performed.
(g) NO PROHIBITIONS. Consummation of the transactions
contemplated hereby shall not be prohibited by Law and no Governmental
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which materially
restricts, prevents or prohibits consummation of the Distribution, or
any transaction contemplated by this Agreement, it being understood
that the parties hereto hereby agree to use their reasonable best
efforts to
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cause any such decree, judgment, injunction or other order to be
vacated or lifted as promptly as possible.
(h) CONSENTS. Tenneco and Packaging and the other members of
their respective Groups shall have obtained all Consents the failure of
which to obtain would, in the determination of the Board of Directors
of Tenneco, have a material adverse effect on the Automotive Group or
the Packaging Group, each taken as a whole, and such Consents shall be
in full force and effect.
SECTION 4.02. NO CONSTRAINT. Notwithstanding the provisions of
Section 4.01 above, the fulfillment or waiver of any or all of the conditions
precedent to the Distribution set forth therein shall not:
(i) create any obligation on the part of Tenneco or
any other party hereto to effect the Distribution;
(ii) in any way limit Tenneco's right and power
under Section 8.11 to terminate this Agreement and the process
leading to the Distribution and to abandon the Distribution;
or
(iii) alter the consequences of any such termination
under Section 8.11 from those specified in such Section.
SECTION 4.03. DEFERRAL OF DISTRIBUTION DATE. If the Distribution Date
shall have been established by the Board of Directors of Tenneco but all the
conditions precedent to the Distribution set forth in this Agreement have not
theretofore been fulfilled or waived, or Tenneco does not reasonably anticipate
that they will be fulfilled or waived, on or prior to the date established as
the Distribution Date, Tenneco may, by resolution of its Board of Directors (or
a committee thereof, so authorized), defer the Distribution Date to a later date
or terminate this Agreement under Section 8.11.
SECTION 4.04. PUBLIC NOTICE OF DEFERRED DISTRIBUTION DATE. If the Board
of Directors (or a committee thereof, so authorized) of Tenneco shall defer the
Distribution Date in accordance with Section 4.03 above and public announcement
of the prior Distribution Date has theretofore been made, Tenneco shall promptly
thereafter issue, in accordance with the advice of legal counsel, a public
announcement with respect to such deferment and shall, with the advice of legal
counsel, take such other actions as may be deemed necessary or desirable with
respect to the dissemination of such information.
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ARTICLE V
COVENANTS
SECTION 5.01. FURTHER ASSURANCES. Each of Tenneco and Packaging shall
use all reasonable efforts to:
(a) take or cause to be taken all actions, and to do or cause
to be done all things reasonably necessary, proper or advisable under
applicable Law and agreements or otherwise to consummate and make
effective the transactions contemplated hereby, including without
limitation using commercially reasonable efforts to obtain any,
consents and approvals from, enter into any amendatory agreements with
and make any applications, registrations or filings with, any third
Person or any Governmental Authority necessary or desirable in order to
consummate the transactions contemplated hereby or to carry out the
purposes of this Agreement; and
(b) execute and deliver such further instruments and documents
and take such other actions as the other party may reasonably request
in order to consummate the transactions contemplated hereby and
effectuate the purposes of this Agreement.
SECTION 5.02. TENNECO NAME. As part of the Corporate Restructuring
Transactions the Tenneco Trademarks and Trade Names will be assigned to a member
of the Automotive Group designated by Tenneco. Tenneco shall grant to Packaging
and to each of the members of the Packaging Group a transition license,
substantially in the form of Exhibit K hereto (the "TRADEMARK TRANSITION
LICENSE"), to use certain Tenneco Trademarks and Trade Names.
SECTION 5.03. SUPPLIES AND DOCUMENTS. Tenneco shall, pursuant to the
terms of the Trademark Transition License, grant a license (on a nonexclusive
basis) to Packaging and to each of the members of the Packaging Group to use
existing supplies and documents which have imprinted thereon any of the Tenneco
Trademarks and Trade Names to the extent that such supplies and documents were
existing in the inventory of such member of the Packaging Group as of the
Distribution Date.
SECTION 5.04. ASSUMPTION AND SATISFACTION OF LIABILITIES. Except as
otherwise specifically set forth in any Ancillary Agreement, from and after the
Distribution Date:
(a) Tenneco shall, and shall cause each of the other members
of the Automotive Group over which it has legal or effective direct or
indirect control to, assume, pay, perform and discharge all Automotive
Liabilities in accordance with their terms, when determinable, and
otherwise as determined in accordance with the practice of the parties
prior to the Distribution;
(b) Packaging shall, and shall cause each of the other members
of the Packaging Group over which it has legal or effective direct or
indirect control to, assume, pay, perform
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and discharge all Packaging Liabilities in accordance with their terms,
when determinable, and otherwise as determined in accordance with the
practice of the parties prior to the Distribution; and
(c) Tenneco and Packaging each severally and not jointly
covenant and agree to assume, pay, and discharge one half of the amount
of any and all Transaction Liabilities.
SECTION 5.05. NO REPRESENTATIONS OR WARRANTIES; CONSENTS.
(a) GENERAL. Each of the parties hereto understands and agrees
that no party hereto is, in this Agreement or in any other agreement or
document contemplated by this Agreement (including the Ancillary
Agreements) or otherwise, making to any other party hereto any
representation or warranty whatsoever, including without limitation,
any representation or warranty:
(i) as to the value or freedom from encumbrance of,
or any other matter concerning, any assets of such party; or
(ii) as to the legal sufficiency to convey title to
any asset as of the execution, delivery and filing of this
Agreement or any Ancillary Agreement, including, without
limitation, any Conveyancing and Assumption Instrument.
(b) DISCLAIMER OF MERCHANTABILITY OR FITNESS OF ASSETS. Each
party hereto further understands and agrees that there are no
warranties, express or implied, as to the merchantability or fitness of
any of the assets either transferred to or retained by the Automotive
Group or the Packaging Group, as the case may be, pursuant to the
Corporate Restructuring Transactions and the other terms and provisions
of this Agreement, any Conveyancing and Assumption Agreement or any
Ancillary Agreement, and all such assets which are so transferred will
be transferred on an "AS IS, WHERE IS" basis, and the party to which
any such assets are transferred hereunder, or which retains assets
hereunder, shall bear the economic and legal risk that any conveyances
of such assets shall prove to be insufficient or that the title of such
party or any other member of its respective Group to any such assets
shall be other than good and marketable and free from encumbrances.
(c) NO REPRESENTATIONS OR WARRANTIES REGARDING CONSENTS. Each
of the parties hereto understands and agrees that no party hereto is,
in this Agreement or any Ancillary Agreement or in any other agreement
or document contemplated by this Agreement or any Ancillary Agreement
or otherwise, representing or warranting in any way to any other party
hereto that the obtaining of any consents or approvals, the execution
and delivery of any amendatory agreements and the making of any filings
or applications contemplated by this Agreement will satisfy the
provisions of any or all applicable agreements or the requirements of
any or all applicable Law. Each of the parties hereto further agrees
and understands that the party to which any assets to be or are
transferred as contemplated by the Corporate Restructuring Transactions
or the other provisions of this Agreement shall bear the economic and
legal risk that any necessary consents or approvals are not obtained,
that any necessary
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amendatory agreements are not executed and delivered or that any
requirements of Laws are not complied with.
(d) COVENANT TO USE REASONABLE EFFORTS TO OBTAIN CONSENTS.
Notwithstanding the provisions of Section 5.05(c) above, each of the
parties hereto shall (and shall cause each of their respective
Affiliates and each member of its respective Group over which it has
direct or indirect legal or effective control to) use commercially
reasonable efforts to obtain all consents and approvals (the
"CONSENTS"), to enter into all amendatory agreements and to make all
filings and applications which may be reasonably required for the
consummation of the Corporate Restructuring Transactions, the
Distribution and all other transactions contemplated by this Agreement
and shall take all such further reasonable actions as shall be
reasonably necessary to preserve for each of the Automotive Group and
the Packaging Group, to the greatest extent feasible, the economic and
operational benefits of the allocation of assets and Liabilities
contemplated by this Agreement. In case at any time after the
Distribution Date any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement, or their successors in interest, shall
take all such necessary or desirable action.
SECTION 5.06. REMOVAL OF CERTAIN GUARANTEES.
(a) REMOVAL OF TENNECO AS GUARANTOR OF PACKAGING LIABILITIES.
Except as otherwise contemplated in the Corporate Restructuring
Transactions or otherwise specified in any Ancillary Agreement, each of
Tenneco and Packaging shall use its commercially reasonable efforts to
have, on or prior to the Distribution Date, or as soon as practicable
thereafter, Tenneco and any other member of the Automotive Group
removed as a guarantor of, or obligor under or for, any Packaging
Liability.
(b) REMOVAL OF PACKAGING AS GUARANTOR OF AUTOMOTIVE
LIABILITIES. Except as otherwise contemplated in the Corporate
Restructuring Transactions or otherwise specified in any Ancillary
Agreement, each of Tenneco and Packaging shall use its commercially
reasonable efforts to have, on or prior to the Distribution Date, or as
soon as practicable thereafter, Packaging and any other member of the
Packaging Group removed as a guarantor of, or obligor under or for, any
Automotive Liability.
SECTION 5.07. PUBLIC ANNOUNCEMENTS. Each party hereto shall consult
with each other before issuing any press release or otherwise issuing any other
similar written public statement with respect to this Agreement or the
Distribution and shall not issue any such press release or make any such public
statement without the prior consent of each other party, which shall not be
unreasonably withheld or delayed; provided, however, that a party may, without
the prior consent of any other party, issue such press release or other similar
written public statement as may be required by law or any listing agreement with
a national securities exchange to which any party hereto (or any member of such
party's Group) is a party if it has used all reasonable efforts to consult with
such other party and to obtain such party's consent but has been unable to do so
in a timely manner.
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SECTION 5.08. INTERCOMPANY AGREEMENTS. Effective as of the consummation
of the Distribution, each of Packaging and Tenneco shall (and shall cause each
other member of its respective Group over which it has legal or effective direct
or indirect control to) terminate each and every agreement between it and any
member of the other Group other than this Agreement, any of the Ancillary
Agreements, and any agreements between third Persons who are not members of
either Group, on the one hand, and members of both Groups, on the other hand;
provided, however, that such termination shall not have any effect whatsoever on
any of its rights or obligations that accrued or were incurred prior to the
Distribution Date (subject to the terms of Section 2.12 above).
SECTION 5.09. TAX MATTERS. Each of Tenneco and Packaging intend the
Distribution to be treated as a tax-free distribution under Code Sections 355(a)
and 361(c)(1) and each such party shall use its reasonable best efforts to cause
the Distribution to so qualify. Neither Tenneco, on the one hand, nor Packaging,
on the other hand, shall take, or permit any member of its Group over which it
has legal or effective direct or indirect control to take, any action which
might cause:
(i) the Distribution to fail to qualify as a
tax-free distribution under Code Section 355(a) or Code
Section 361(c)(1);
(ii) the merger, pursuant to a plan of complete
liquidation, of Tenneco Packaging Specialty and Consumer
Products Inc. with and into Packaging to not be tax-free for
federal income tax purposes to Packaging and Tenneco Packaging
Specialty and Consumer Products Inc. under Sections 332 and
337 of the Code, respectively;
(iii) the transfers of property by Tenneco to
Packaging and the entity now known as Tenneco Automotive Inc.
to not be tax-free for federal income tax purposes under
Sections 361(a) and 351(a), respectively;
(iv) the foregoing transactions to have an adverse
effect on the Prior Rulings; or
(v) any other transfer described in the Corporate
Restructuring Transactions that is intended (as described in
Tenneco's request for rulings from the Internal Revenue
Service) to qualify as a tax-free transfer under Code Sections
332, 351, 355 or 368 to fail to so qualify.
SECTION 5.10. 1996 AGREEMENTS.
(a) ALLOCATION OF BENEFITS AND LIABILITIES. Except as
expressly provided otherwise in an Ancillary Agreement, Tenneco and
Packaging each shall use its commercially reasonable efforts to
allocate and provide to the other party to the greatest extent feasible
the economic and operational benefits and liabilities of the 1996
Distribution Agreement and the 1996 Debt and Cash Allocation Agreement,
which allocation shall be based on the nature of the underlying asset
or liability giving rise to the allocated benefit or liability. To the
extent such benefit or liability is derived from or relates to an
Automotive
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Asset, an Automotive Liability, the Automotive Business, or the Prior
Automotive Business, it shall be allocated to Tenneco. To the extent
such benefit or liability is derived or related to a Packaging Asset, a
Packaging Liability, the Packaging Business, or the Prior Packaging
Business, it shall be allocated to Packaging.
(b) ASSIGNMENT OF CERTAIN AGREEMENTS. Tenneco and Packaging
each shall use its commercially reasonable efforts to cause the Newport
News License and the El Paso License to be assigned to Tenneco.
ARTICLE VI
ACCESS TO INFORMATION
SECTION 6.01. PROVISION, TRANSFER AND DELIVERY OF APPLICABLE
CORPORATE RECORDS.
(a) PROVISION, TRANSFER AND DELIVERY OF PACKAGING RECORDS.
Tenneco shall (and shall cause each other member of its Group over
which it has legal or effective direct or indirect control to) arrange
as soon as practicable following the Distribution Date for the
transportation (at Packaging's cost) to Packaging of the Books and
Records in its possession, if any, that relate primarily to the
Packaging Business or are necessary to operate the Packaging Business
(collectively, the "Packaging Records"), except to the extent such
items are already in the possession of any member of the Packaging
Group. The Packaging Records shall be available to Tenneco for review
and duplication, at its cost, pursuant to the terms of this Agreement.
(b) PROVISION, TRANSFER AND DELIVERY OF AUTOMOTIVE RECORDS.
Packaging shall (and shall cause each other member of its Group over
which it has legal or effective direct or indirect control to) arrange
as soon as practicable following the Distribution Date for the
transportation (at Tenneco's cost) to Tenneco of the Books and Records
in its possession, if any, (i) that relate primarily to the Automotive
Business or are necessary to operate the Automotive Business
(collectively, the "AUTOMOTIVE RECORDS"), (ii) that relate to any
Tenneco business other than the Packaging Business, or (iii) that
consist of the corporate minutes of the Board of Directors (or
committees thereof) of Tenneco or otherwise relate to the business,
administrative and management operations of Tenneco as the parent
holding company of the Automotive Business, Packaging Business and all
other Tenneco businesses or operations (collectively, the "TENNECO
CORPORATE RECORDS") except to the extent such items are already in the
possession of any member of the Automotive Group. The Automotive
Records and the Tenneco Corporate Records shall be the property of
Tenneco, but shall be available to Packaging for review and
duplication, at its cost, pursuant to the terms of this Agreement.
SECTION 6.02. ACCESS TO INFORMATION. Unless otherwise contemplated by
Section 6.06, from and after the Distribution Date, each of Tenneco and
Packaging shall (and shall cause each of the other members of its respective
Group over which it has legal or effective direct or indirect control to) afford
to each other party and its authorized accountants, counsel and other designated
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representatives reasonable access and duplicating rights (all such duplicating
costs to be borne by the requesting party) during normal business hours, subject
to appropriate restrictions for classified, privileged or confidential
information, to the personnel, properties, Books and Records and other data and
information of such party and each other member of such party's Group relating
to operations prior to the Distribution insofar as such access is reasonably
required by the other requesting party for the conduct of the requesting party's
business (but not for competitive purposes).
SECTION 6.03. REIMBURSEMENTS, OTHER MATTERS. Except to the extent
otherwise contemplated hereby or by any Ancillary Agreement, a party providing
Books and Records or access to information to any other party (or such party's
representatives) under this Article VI shall be entitled to receive from such
other party, upon the presentation of invoices therefor, payments for such
amounts, relating to supplies, disbursements and other out-of-pocket expenses,
as may be reasonably incurred in providing such Books and Records or access to
information.
SECTION 6.04. CONFIDENTIALITY.
(a) GENERAL RESTRICTION ON DISCLOSURE. Each of Tenneco and
Packaging shall not (and shall not permit any other member of its
respective Group over which it has legal or effective direct or
indirect control to) use or permit the use of (without the prior
written consent of the other) and shall hold, and shall cause its
consultants, advisors and other representatives and any other member of
its respective Group (over which it has legal or effective direct or
indirect control) to hold, in strict confidence, all information
concerning each other party hereto and the other members of such other
party's Group in its possession, custody or control to the extent such
information either
(i) relates to the period up to the Distribution
Date,
(ii) relates to any Ancillary Agreement, or
(iii) is obtained in the course of performing
services for the other party pursuant to any Ancillary
Agreement, and each party hereto shall not (and shall cause
each other member of its respective Group over which it has
legal or effective direct or indirect control not to)
otherwise release or disclose such information to any other
Person, except its auditors, attorneys, financial advisors,
bankers and other consultants and advisors, without the prior
written consent of the other affected party or parties, unless
compelled to disclose such information by judicial or
administrative process or unless such disclosure is required
by Law and such party has used commercially reasonable efforts
to consult with the other affected party or parties prior to
such disclosure.
(b) COMPELLED DISCLOSURE. To the extent that a party hereto or
a member of its Group over which it has legal or effective direct or
indirect control is compelled by judicial or administrative process to
disclose such information under circumstances in which any evidentiary
privilege would be available, such party agrees to assert or cause to
be asserted such privilege in good faith prior to making such
disclosure. Each of the parties shall consult
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with each relevant other party in connection with any such judicial or
administrative process, including without limitation, in determining
whether any privilege is available, and shall not object to each such
relevant party and its counsel participating in any hearing or other
proceeding (including, without limitation, any appeal of an initial
order to disclose) in respect of such disclosure and assertion of
privilege.
(c) EXCEPTIONS TO CONFIDENTIAL TREATMENT. Anything herein to
the contrary notwithstanding, no party hereto shall be prohibited from
using or permitting the use of, or required to hold in confidence, any
information to the extent that (i) such information has been or is in
the public domain through no fault of such party, (ii) such information
is, after the Distribution Date, lawfully acquired from other sources
by such party, or (iii) this Agreement, any Ancillary Agreement or any
other agreement entered into pursuant hereto permits the use or
disclosure of such information by such party.
SECTION 6.05. WITNESS SERVICES. At all times from and after the
Distribution Date, each of Tenneco and Packaging shall use its reasonable
efforts to make available to each other party hereto, upon reasonable written
request, the officers, directors, employees and agents of each member of its
respective Group for fact finding, consultation or interviews and as witnesses
to the extent that:
(a) such persons may reasonably be required in connection with
the prosecution or defense of any Action in which the requesting party
or any member of its respective Group may from time to time be
involved; and
(b) there is no conflict in the Action between the requesting
party or any member of its respective Group and the party to which a
request is made pursuant to this Section 6.05 or any member of such
party's Group.
Except as otherwise agreed by the parties, a party providing
witness services to any other party under this Section shall be
entitled to receive from the recipient of such services, upon the
presentation of invoices therefor, payments for such amounts relating
to supplies, disbursements and other out-of-pocket expenses (but not
salary expenses) of employees who participate in fact finding,
consultation or interviews or are witnesses, as are actually and
reasonably incurred in providing such fact finding, consulting,
interviews or witness services by the party providing such services.
SECTION 6.06. RETENTION OF RECORDS. Except when a longer period is
required by Law or is specifically provided for herein or in any Ancillary
Agreement, each party hereto shall cause the members of its Group over which it
has legal or effective direct or indirect control, to retain, for a period of at
least seven years following the Distribution Date, all material information
(including without limitation all material Books and Records) relating to such
Group and its operations prior to the Distribution Date. Notwithstanding the
foregoing, any party hereto may offer in writing to deliver to the other parties
all or a portion of such information as it relates to members of the offering
party's Group and, if such offer is accepted in writing within 90 days after
receipt thereof, the offering party shall promptly arrange for the delivery of
such information (or copies thereof) to each
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accepting party (at the expense of such accepting party). If such offer is not
so accepted, except as required by Law the offered information may be destroyed
or otherwise disposed of by the offering party at any time thereafter.
SECTION 6.07. PRIVILEGED MATTERS.
(a) PRIVILEGED INFORMATION. Each of the parties hereto shall,
and shall cause the members of its Group over which it has legal or
effective direct or indirect control to, use its reasonable efforts to
maintain, preserve, protect and assert all privileges including,
without limitation, all privileges arising under or relating to the
attorney-client relationship (including without limitation the
attorney-client and attorney work product privileges) that relate
directly or indirectly to any member of any other Group for any period
prior to the Distribution Date ("PRIVILEGE" or "PRIVILEGES"). Each of
the parties hereto shall use its reasonable efforts not to waive, or
permit any member of its Group over which it has legal or effective
direct or indirect control to waive, any such Privilege that could be
asserted under applicable Law without the prior written consent of the
other parties. With respect to each party, the rights and obligations
created by this Section 6.07 shall apply to all information as to which
a member of any Group did assert or, but for the Distribution, would
have been entitled to assert the protection of a Privilege ("PRIVILEGED
INFORMATION") including, but not limited to, any and all information
that either:
(i) was generated or received prior to the
Distribution Date but which, after the Distribution, is in
the possession of a member of another Group; or
(ii) is generated or received after the Distribution
Date but refers to or relates to Privileged Information that
was generated or received prior to the Distribution Date.
(b) PRODUCTION OF PRIVILEGED INFORMATION. Upon receipt by a
party or any member of its Group of any subpoena, discovery or other
request that arguably calls for the production or disclosure of
Privileged Information, or if a party or any member of its Group
obtains knowledge that any current or former employee of such party or
any member of its Group has received any subpoena, discovery or other
request which arguably calls for the production or disclosure of
Privileged Information, such party shall promptly notify the other
parties of the existence of the request and shall provide the other
parties a reasonable opportunity to review the information and to
assert any rights it may have under this Section 6.07 or otherwise to
prevent the production or disclosure of Privileged Information. No
party will, or will permit any member of its Group over which it has
direct or indirect legal or effective control to, produce or disclose
any information arguably covered by a Privilege under this Section 6.07
unless:
(i) each other party has provided its express
written consent to such production or disclosure; or
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(ii) a court of competent jurisdiction has entered
an order which is not then appealable or a final,
nonappealable order finding that the information is not
entitled to protection under any applicable privilege.
(c) NO WAIVER. The parties hereto understand and agree that
the transfer of any Books and Records or other information between any
members of the Automotive Group or the Packaging Group shall be made in
reliance on the agreements of Tenneco and Packaging, as set forth in
Section 6.04 and Section 6.07 hereof, to maintain the confidentiality
of Privileged Information and to assert and maintain all applicable
Privileges. The Books and Records being transferred pursuant to Section
6.01 hereof, the access to information being granted pursuant to
Section 6.02 hereof, the agreement to provide witnesses and individuals
pursuant to Section 6.05 hereof and the transfer of Privileged
Information to either party pursuant to this Agreement shall not be
deemed a waiver of any Privilege that has been or may be asserted under
this Section or otherwise.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. INDEMNIFICATION BY TENNECO. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Tenneco shall, to the fullest extent permitted by law, indemnify,
defend and hold harmless the Packaging Indemnitees from and against any and all
Indemnifiable Losses of the Packaging Indemnitees arising out of, by reason of
or otherwise in connection with (i) the Automotive Liabilities, (ii) to the
extent Tenneco has not discharged its obligations under Section 5.04(c) above,
Tenneco's share of any Transaction Liability, or (iii) the breach by Tenneco or
any Automotive Subsidiary of any provision of this Agreement or any Ancillary
Agreement.
SECTION 7.02. INDEMNIFICATION BY PACKAGING. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Packaging shall, to the fullest extent permitted by law, indemnify,
defend and hold harmless the Automotive Indemnitees from and against any and all
Indemnifiable Losses of the Automotive Indemnitees arising out of, by reason of
or otherwise in connection with either (i) the Packaging Liabilities, (ii) to
the extent Packaging has not discharged its obligations under Section 5.04(c)
above, Packaging's share of any Transaction Liability, or (iii) the breach by
Packaging or any Packaging Subsidiary of any provision of this Agreement or any
Ancillary Agreement.
SECTION 7.03. NO INDEMNIFICATION IN RESPECT OF INDEMNITEE'S INVESTMENT.
Notwithstanding anything to the contrary contained herein, Tenneco shall not be
obligated to indemnify, defend and hold harmless the Packaging Indemnitees from
and against, and Packaging shall not be obligated to indemnify, defend and hold
harmless the Automotive Indemnitees from and against, any Indemnifiable Losses
to the extent such Indemnifiable Losses arise out of, by reason of or otherwise
in connection with (i) the direct or indirect ownership, from and after the
Distribution Date, of any equity or other investment interest by such Indemnitee
in a member of the Indemnifying Party's Group or (ii) any direct or indirect
contractual or similar arrangement arising in the ordinary
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course of business between a member of the Automotive Group and a member of the
Packaging Group, except as otherwise contemplated by the terms of such
arrangement.
SECTION 7.04. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
(a) REDUCTIONS FOR INSURANCE PROCEEDS AND OTHER RECOVERIES.
The amount that any party (an "INDEMNIFYING PARTY") is or may be
required to pay to any other Person (an "INDEMNITEE") pursuant to
Section 7.01 or Section 7.02 above, as applicable, shall be reduced
(retroactively or prospectively) by any Insurance Proceeds or other
amounts actually recovered from third parties by or on behalf of such
Indemnitee in respect of the related Indemnifiable Losses. The
existence of a claim by an Indemnitee for insurance or against a third
party in respect of any Indemnifiable Loss shall not, however, delay
any payment pursuant to the indemnification provisions contained herein
and otherwise determined to be due and owing by an Indemnifying Party.
Rather, the Indemnifying Party shall make payment in full of such
amount so determined to be due and owing by it against an assignment by
the Indemnitee to the Indemnifying Party of the entire claim of the
Indemnitee for such insurance or against such third party.
Notwithstanding any other provisions of this Agreement, it is the
intention of the parties hereto that no insurer or any other third
party shall be (i) entitled to a benefit it would not be entitled to
receive in the absence of the foregoing indemnification provisions,
(ii) relieved of the responsibility to pay any claims for which it is
obligated or (iii) entitled to any subrogation rights with respect to
any obligation hereunder. If an Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in
respect of any Indemnifiable Losses and shall subsequently actually
receive Insurance Proceeds or other amounts in respect of such
Indemnifiable Losses, then such Indemnitee shall hold such Insurance
Proceeds in trust for the benefit of such Indemnifying Party and shall
pay to such Indemnifying Party a sum equal to the amount of such
Insurance Proceeds or other amounts actually received, up to the
aggregate amount of any payments received from such Indemnifying Party
pursuant to this Agreement in respect of such Indemnifiable Losses.
(b) FOREIGN CURRENCY ADJUSTMENTS. In the event that any
indemnification payment required to be made hereunder or under any
Ancillary Agreement shall be denominated in a currency other than U.S.
Dollars, the amount of such payment shall be translated into U.S.
Dollars using the foreign exchange rate for such currency determined in
accordance with the following rules:
(i) with respect to any Indemnifiable Losses
arising from the payment by a financial institution under a
guarantee, comfort letter, letter of credit, foreign exchange
contract or similar instrument, the foreign exchange rate for
such currency shall be determined as of the date on which such
financial institution shall have been reimbursed;
(ii) with respect to any Indemnifiable Losses
covered by insurance, the foreign exchange rate for such
currency shall be the foreign exchange rate employed
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by the insurance company providing such insurance in settling
such Indemnifiable Losses with the Indemnifying Party; and
(iii) with respect to any Indemnifiable Losses not
covered by either clause (i) or (ii) above, the foreign
exchange rate for such currency shall be determined as of the
date that notice of the claim with respect to such
Indemnifiable Losses shall be given to the Indemnitee.
SECTION 7.05. PROCEDURES FOR INDEMNIFICATION. Except as otherwise
specifically provided in any Ancillary Agreement, including, without limitation,
the Tax Sharing Agreement and the Human Resources Agreement:
(a) NOTICE OF THIRD PARTY CLAIMS. If a claim or demand is made
against an Indemnitee by any Person who is not a member of the
Automotive Group or the Packaging Group (a "THIRD PARTY CLAIM") as to
which such Indemnitee is entitled to indemnification pursuant to this
Agreement, such Indemnitee shall notify the Indemnifying Party in
writing, and in reasonable detail, of the Third Party Claim promptly
(and in any event within 30 business days) after receipt by such
Indemnitee of written notice of the Third Party Claim, provided,
however, that failure to give such notification shall not affect the
Indemnitee's right to indemnification hereunder except to the extent
the Indemnifying Party shall have been actually prejudiced as a result
of such failure (except that the Indemnifying Party shall not be liable
for any expenses incurred during the period in which the Indemnitee
failed to give such notice). The Indemnifying Party shall have 30 days
from personal delivery or mailing of such written notice to notify the
Indemnitee (i) whether or not the Indemnifying Party disputes the
liability of the Indemnifying Party to the Indemnitee with respect to
such claim or demand and (ii) whether or not it assumes the defense of
such claim or demand. Thereafter, the Indemnitee shall deliver to the
Indemnifying Party, promptly (and in any event within 15 business days)
after the Indemnitee's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnitee relating
to the Third Party Claim.
(b) LEGAL DEFENSE OF THIRD PARTY CLAIMS. If a Third Party
Claim is made against an Indemnitee, the Indemnifying Party shall be
entitled to participate in the defense thereof and, if it so chooses,
to assume the defense thereof with counsel selected by the Indemnifying
Party, which counsel shall be reasonably satisfactory to the
Indemnitee. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnitee for legal or other expenses subsequently
incurred by the Indemnitee in connection with the defense thereof. If
the Indemnifying Party assumes such defense the Indemnitee shall have
the right to participate in the defense thereof and to employ counsel,
at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party
shall control such defense. The Indemnifying Party shall be liable for
the reasonable fees and expenses of counsel employed by the Indemnitee
for any period during which the Indemnifying Party has failed to assume
the defense of the Third Party Claim (other than during the period
prior to the time the Indemnitee shall have given notice of the Third
Party
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Claim as provided above). If the Indemnifying Party so elects to assume
the defense of any Third Party Claim, all of the Indemnitees shall
cooperate with the Indemnifying Party in the defense or prosecution
thereof. Notwithstanding the foregoing:
(i) the Indemnifying Party shall not be entitled to
assume the defense of any Third Party Claim (and shall be
liable to the Indemnitee for the reasonable fees and expenses
of counsel incurred by the Indemnitee in defending such Third
Party Claim) if the Third Party Claim either seeks an order,
injunction or other equitable relief or relief for other than
money damages against the Indemnitee which the Indemnitee
reasonably determines, after conferring with its counsel,
cannot be separated from any related claim for money damages;
provided, however, that if such equitable relief or other
relief portion of the Third Party Claim can be so separated
from that for money damages, the Indemnifying Party shall be
entitled to assume the defense of the portion relating to
money damages;
(ii) an Indemnifying Party shall not be entitled to
assume the defense of any Third Party Claim (and shall be
liable for the reasonable fees and expenses of counsel
incurred by the Indemnitee in defending such Third Party
Claim) if, in the Indemnitee's reasonable judgment, a conflict
of interest between such Indemnitee and such Indemnifying
Party exists in respect of such Third Party Claim or if the
claim for indemnification relates to a matter that, if
determined adversely, could reasonably be expected to expose
the Indemnitee to criminal prosecution or penalties; and
(iii) if at any time after assuming the defense of a
Third Party Claim an Indemnifying Party shall fail to
prosecute or withdraw from the defense of such Third Party
Claim, the Indemnitee shall be entitled to resume the defense
thereof and the Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel incurred by the
Indemnitee in such defense.
(c) SETTLEMENT OF THIRD PARTY CLAIMS. Except as otherwise
provided below in this Section 7.05(c), or as otherwise specifically
provided in any Ancillary Agreement, if the Indemnifying Party has
assumed the defense of any Third Party Claim, then:
(i) in no event will the Indemnitee admit any
liability with respect to, or settle, compromise or discharge,
any Third Party Claim without the Indemnifying Party's prior
written consent (which consent shall not be unreasonably
withheld or delayed); provided, however, that the Indemnitee
shall have the right to settle, compromise or discharge such
Third Party Claim without the consent of the Indemnifying
Party if the Indemnitee releases the Indemnifying Party from
its indemnification obligation hereunder with respect to such
Third Party Claim and such settlement, compromise or discharge
would not otherwise adversely affect the Indemnifying Party,
and
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(ii) the Indemnitee will agree to any settlement,
compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms
obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and
releases the Indemnitee completely in connection with such
Third Party Claim and that would not otherwise adversely
affect the Indemnitee;
provided, however, that the Indemnitee may refuse to agree to any such
settlement, compromise or discharge if the Indemnitee agrees that the
Indemnifying Party's indemnification obligation with respect to such
Third Party Claim shall not exceed the amount that would be required to
be paid by or on behalf of the Indemnifying Party in connection with
such settlement, compromise or discharge. If the Indemnifying Party has
not assumed the defense of a Third Party Claim then in no event shall
the Indemnitee settle, compromise or discharge such Third Party Claim
without providing prior written notice to the Indemnifying Party, which
shall have the option within 15 business days following receipt of such
notice to
(i) approve and agree to pay the settlement,
(ii) approve the amount of the settlement, reserving
the right to contest the Indemnitee's right to indemnity
pursuant to this Agreement,
(iii) disapprove the settlement and assume in writing
all past and future responsibility for such Third Party Claim
(including all of Indemnitee's prior expenditures in
connection therewith), or
(iv) disapprove the settlement and continue to
refrain from participation in the defense of such Third Party
Claim, in which event the Indemnifying Party shall have no
further right to contest the amount or reasonableness of the
settlement if the Indemnitee elects to proceed therewith.
In the event the Indemnifying Party does not respond to such written
notice from the Indemnitee within such 15 business-day period, the
Indemnifying Party shall be deemed to have elected option (i) above.
(d) OTHER CLAIMS. Any claim on account of an Indemnifiable
Loss which does not result from a Third Party Claim shall be asserted
by written notice given by the Indemnitee to the applicable
Indemnifying Party. Such Indemnifying Party shall have a period of 30
business days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 30
business-day period, such Indemnifying Party shall be deemed to have
refused to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 30 business-day period or rejects
such claim in whole or in part, such Indemnitee shall be free to pursue
such remedies as may be available to such party under applicable Law or
under this Agreement.
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(e) EXISTING THIRD PARTY CLAIMS. Effective as of the
Distribution Date, Tenneco and Packaging shall each be deemed to have
(i) received notification of a claim for indemnification from the other
party with respect to the Third Party Claims allocated to it under the
Litigation Letter, and (ii) elected to assume the defense of the Third
Party Claims allocated to it under the Litigation Letter pursuant to
Section 7.05(b). Thereafter, the relationships of the parties with
respect to such Third Party Claims shall be governed by the provisions
of Section 7.05.
SECTION 7.06. INDEMNIFICATION PAYMENTS. Indemnification required by
this Article VII shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when invoices or bills are
received or loss, liability, claim, damage or expense is incurred.
SECTION 7.07. OTHER ADJUSTMENTS.
(a) ADJUSTMENTS FOR TAXES. The amount of any Indemnifiable
Loss shall be:
(i) increased to take into account any net Tax cost
actually incurred by the Indemnitee arising from any payments
received from the Indemnifying Party (grossed up for such
increase); and
(ii) reduced to take account of any net Tax benefit
actually realized by the Indemnitee arising from the
incurrence or payment of any such Indemnifiable Loss.
In computing the amount of such Tax cost or Tax benefit, the Indemnitee
shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the
receipt of any payment with respect to an Indemnifiable Loss or the
incurrence or payment of any Indemnifiable Loss, and such Tax cost or
Tax benefit shall be determined on a stand-alone basis (based upon the
operations of such Indemnitee) after eliminating any effect resulting
from the consolidation or inclusion for Tax purposes of the operations
of any affiliates, companies, partnerships, or any other Person with
the Indemnitee.
(b) REDUCTIONS FOR SUBSEQUENT RECOVERIES OR OTHER EVENTS. In
addition to any adjustments required pursuant to Section 7.04 hereof or
Section 7.07(a) above, if the amount of any Indemnifiable Losses shall,
at any time subsequent to any indemnification payment made by the
Indemnifying Party pursuant to this Article VII, be reduced by
recovery, settlement or otherwise, the amount of such reduction, less
any expenses incurred in connection therewith, shall promptly be repaid
by the Indemnitee to the Indemnifying Party, up to the aggregate amount
of any payments received from such Indemnifying Party pursuant to this
Agreement in respect of such Indemnifiable Losses.
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SECTION 7.08. OBLIGATIONS ABSOLUTE. The foregoing contractual
obligations of indemnification set forth in this Article VII shall:
(i) also apply to any and all Third Party Claims
that allege that any Indemnitee is independently, directly,
vicariously or jointly and severally liable to such third
party;
(ii) to the extent permitted by applicable law,
apply even if the Indemnitee is partially negligent or
otherwise partially culpable or at fault, whether or not such
liability arises under any doctrine of strict liability; and
(iii) be in addition to any liability or obligation
that an Indemnifying Party may have other than pursuant to
this Agreement.
SECTION 7.09. SURVIVAL OF INDEMNITIES. The obligations of Tenneco and
Packaging under this Article VII shall survive the sale or other transfer by any
of them of any assets or businesses or the assignment by any of them of any
Liabilities, with respect to any Indemnifiable Loss of any Indemnitee related to
such assets, businesses or Liabilities.
SECTION 7.10. REMEDIES CUMULATIVE. The remedies provided in this
Article VII shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
SECTION 7.11. COOPERATION OF THE PARTIES WITH RESPECT TO ACTIONS AND
THIRD PARTY CLAIMS.
(a) IDENTIFICATION OF PARTY IN INTEREST. Any party to this
Agreement that has responsibility for an Action or Third Party Claim
shall identify itself as the true party in interest with respect to
such Action or Third Party Claim and shall use its commercially
reasonable efforts to obtain the dismissal of any other party to this
Agreement from such Action or Third Party Claim.
(b) DISPUTES REGARDING RESPONSIBILITY FOR ACTIONS AND THIRD
PARTY CLAIMS. If there is uncertainty or disagreement concerning which
party to this Agreement has responsibility for any Action or Third
Party Claim (including any Action or Third Party Claim with respect to
any 1996 Agreement not otherwise provided for), the following procedure
shall be followed in an effort to reach agreement concerning
responsibility for such Action or Third Party Claim:
(i) In general, each party shall control the portion
of such dispute or controversy that directly and exclusively
relates to a liability or benefit borne by such party. To the
extent any issue involved in, or aspect of, such dispute or
controversy does not directly and exclusively relate to the
liability or benefit of one party, Tenneco and Packaging shall
jointly control and otherwise handle such issue or matter upon
such terms as they may agree. The parties in disagreement over
the
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responsibility for an Action or Third Party Claim shall
exchange brief written statements setting forth their position
concerning which party has responsibility for the Action or
Third Party Claim in accordance with the provisions of this
Article VII. These statements shall be exchanged within 10
days of a party putting another party on written notice that
the other party is or may be responsible for the Action or
Third Party Claim.
(ii) If within 10 days of the exchange of the
written statement of each party's position agreement is not
reached on responsibility for the Action or Third Party
Claim, the General Counsel for each of the parties in
disagreement over responsibility for the Action or Third
Party Claim shall speak either by telephone or in person to
attempt to reach agreement on responsibility for the Action
or Third Party Claim.
(c) EFFECT OF FAILURE TO FOLLOW PROCEDURE. Failure to follow
the procedure set forth in clause (b) above shall not affect the rights
and responsibilities of the parties as established by the other
provisions of this Article VII.
(d) EXCHANGE OF INFORMATION. In connection with the handling
of current or future Actions or Third Party Claims, the parties may
determine that it is in their mutual interest to exchange privileged or
confidential information. If so, the parties agree to discuss whether
it is in their mutual interest to enter into a joint defense agreement
or information exchange agreement to maintain the confidentiality of
their communications and to permit them to maintain the confidentiality
of proprietary information or information that is otherwise
confidential or subject to an applicable privilege, including but not
limited to the attorney-client, work product, executive, deliberative
process or self-evaluation privileges.
SECTION 7.12. CONTRIBUTION. To the extent that any indemnification
provided for under Section 7.01 or Section 7.02 is unavailable to an Indemnitee
or is insufficient in respect of any of the Indemnifiable Losses of such
Indemnitee then the Indemnifying Party under such Section, in lieu of
indemnifying such Indemnitee thereunder, shall contribute to the amount paid or
payable by such Indemnitee as a result of such Indemnifiable Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnitee on the other hand from the
transaction or other matter which resulted in the Indemnifiable Losses or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Indemnifying Party on the one hand and of the Indemnitee on the other hand in
connection with the action, inaction, statements or omissions that resulted in
such Indemnifiable Losses as well as any other relevant equitable
considerations.
SECTION 7.13. PROCEDURES WITH RESPECT TO TRANSACTION LIABILITIES.
(a) NOTICE. If a Third Party Claim is made against either
party or such party's Group which may give rise to a Transaction
Liability, such party shall notify the other party in writing, and in
reasonable detail, of the Third Party Claim promptly (and in any event
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within 15 business days) after receipt by such party of written notice
of the Third Party Claim, provided, however, that failure to give such
notification shall not affect either party's right to indemnification
hereunder except to the extent a party shall have been actually
prejudiced as a result of such failure. The parties shall deliver to
each other, promptly (and in any event within 15 business days) after
the receipt thereof, copies of all notices and documents (including
court papers) received by a party relating to such Third Party Claim.
(b) LEGAL DEFENSE. If the parties jointly determine that a
Third Party Claim may give rise to a Transaction Liability, the parties
shall jointly agree on the manner of the defense of such Third Party
Claim, including the selection of counsel and responsibility for
strategic decisions, and share equally all costs and expenses incurred
in connection with defending such Claim. If the parties disagree as to
whether any Third Party Claim may or may not give rise to a Transaction
Liability, the parties shall proceed in accordance with Section 7.11(b)
above with respect to such Third Party Claim.
(c) SETTLEMENT. In no event will either party admit any
liability with respect to, or settle, compromise or discharge, any
Third Party Claim that the parties have jointly determined may give
rise to a Transaction Liability without the other party's prior written
consent (which consent shall not be unreasonably withheld or delayed);
provided, however, that either party shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of
the other party if such party releases the other party from its
indemnification obligation hereunder with respect to such Third Party
Claim and such settlement, compromise or discharge contains a full and
unconditional release of the other party with no obligation to pay any
amounts on account of such Claim and would not otherwise adversely
affect the other party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. COMPLETE AGREEMENT, CONSTRUCTION. This Agreement,
including the Exhibits and Schedules hereto, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule or Exhibit hereto, the Schedule or
Exhibit, as the case may be, shall prevail. Notwithstanding any other provisions
in this Agreement to the contrary, in the event and to the extent that there
shall be a conflict between the provisions of this Agreement and the provisions
of any Ancillary Agreement, such Ancillary Agreement shall control.
SECTION 8.02. ANCILLARY AGREEMENTS. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements except as specifically and
expressly provided by the Ancillary Agreements.
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SECTION 8.03. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
SECTION 8.04. SURVIVAL OF AGREEMENTS. Except as otherwise expressly
provided herein, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
SECTION 8.05. RESPONSIBILITY FOR EXPENSES. Subject to the provisions of
the Debt Realignment, Tenneco and Packaging will each pay for all its fees,
costs and expenses incurred by it or a member of its respective Group on or
prior to the Distribution Date in connection with the Distribution. Except as
otherwise set forth in this Agreement or any Ancillary Agreement each party
shall bear its own costs and expenses incurred after the Distribution Date.
SECTION 8.06. NOTICES. All notices and other communications to a party
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to such
party (and will be deemed given on the date on which the notice is received by
such party) at the address for such party set forth below (or at such other
address for the party as the party shall, from time to time, specify by like
notice to the other parties):
If to Tenneco, at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier:
Attention: General Counsel
If to Packaging, at: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier:
Attention: General Counsel
SECTION 8.07. WAIVERS. The failure of any party hereto to require
strict performance by any other party of any provision in this Agreement will
not waive or diminish that party's right to demand strict performance thereafter
of that or any other provision hereof.
SECTION 8.08. AMENDMENTS. Subject to the terms of Section 8.11 hereof,
this Agreement may not be modified or amended except by an agreement in writing
signed by the parties hereto.
SECTION 8.09. ASSIGNMENT. This Agreement shall be assignable in whole
in connection with a merger or consolidation or the sale of all or substantially
all the assets of a party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant party hereto by
operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the parties to this Agreement. Otherwise this Agreement shall
not be assignable, in whole or in part, directly or indirectly, by any party
hereto without the prior written consent of the other, and any
TENNECO DISTRIBUTION AGREEMENT
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48
attempt to assign any rights or obligations arising under this Agreement without
such consent shall be void.
SECTION 8.10. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective permitted successors and permitted assigns.
SECTION 8.11. TERMINATION. This Agreement may be terminated and the
Distribution may be amended, modified or abandoned at any time prior to the
Distribution by and in the sole discretion of Tenneco without the approval of
Packaging or the stockholders of Tenneco. In the event of such termination, no
party shall have any liability of any kind to any other party or any other
person. After the Distribution, this Agreement may not be terminated except by
an agreement in writing signed by all of the parties hereto; provided, however,
that Article VII shall not be terminated or amended after the Distribution in
respect of the third party beneficiaries thereto without the consent of such
persons.
SECTION 8.12. THIRD PARTY BENEFICIARIES. Except as provided in Article
VII hereof (relating to Indemnitees), this Agreement is solely for the benefit
of the parties hereto and the members of their respective Groups and Affiliates,
and should not be deemed to confer upon third parties any remedy, claim,
liability, right of reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
SECTION 8.13. ATTORNEY FEES. A party in breach of this Agreement shall,
on demand, indemnify and hold harmless the other parties hereto for and against
all out-of-pocket expenses, including, without limitation, reasonable legal
fees, incurred by such other party by reason of the enforcement and protection
of its rights under this Agreement. The payment of such expenses is in addition
to any other relief to which such other party may be entitled hereunder or
otherwise.
SECTION 8.14. TITLE AND HEADINGS. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
SECTION 8.15. EXHIBITS AND SCHEDULES. The Exhibits and Schedules
attached hereto shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
SECTION 8.16. SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges that there is no adequate remedy at law for the failure by such
parties to comply with the provisions of this Agreement and that such failure
would cause immediate harm that would not be adequately compensable in damages.
Accordingly, each of the parties hereto agrees that their agreements contained
herein may be specifically enforced without the requirement of posting a bond or
other security, in addition to all other remedies available to the parties
hereto under this Agreement.
SECTION 8.17. GOVERNING LAW. ALL QUESTIONS OR DISPUTES CONCERNING
THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND
TENNECO DISTRIBUTION AGREEMENT
-43-
49
THE SCHEDULES AND EXHIBITS HERETO SHALL BE GOVERNED BY THE INTERNAL LAWS, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY (i) AGREES TO BE SUBJECT TO,
AND HEREBY CONSENTS AND SUBMITS TO, THE JURISDICTION OF THE COURTS OF THE STATE
OF DELAWARE AND OF THE FEDERAL COURTS SITTING IN THE STATE OF DELAWARE, (ii) TO
THE EXTENT SUCH PARTY IS NOT OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE
STATE OF DELAWARE, HEREBY APPOINTS THE CORPORATION TRUST COMPANY, AS SUCH
PARTY'S AGENT IN THE STATE OF DELAWARE FOR ACCEPTANCE OF LEGAL PROCESS AND (iii)
AGREES THAT SERVICE MADE ON ANY SUCH AGENT SET FORTH IN (ii) ABOVE SHALL HAVE
THE SAME LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN
THE STATE OF DELAWARE.
SECTION 8.18. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 8.19. SUBSIDIARIES. Each of the parties hereto shall cause to
be performed, and hereby guarantee the performance of, all actions, agreements
and obligations set forth herein to be performed by any Subsidiary of such party
which is contemplated to be a Subsidiary of such party on and after the
Distribution Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
TENNECO INC.
By
--------------------------------
Name:
Title:
TENNECO PACKAGING INC.
By
--------------------------------
Name:
Title:
TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT A
TENNECO
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(MILLIONS)
PRO FORMA ADJUSTMENTS
-----------------------------------------
SPIN-OFF CONSOLIDATED
TENNECO DEBT AND RELATED TENNECO
AS REPORTED REALIGNMENT TRANSACTIONS PRO FORMA
----------- ----------- ------------ ------------
ASSETS
Current assets:
Cash and temporary cash investments.............. $ 40 $ -- $ -- $ 40
Receivables...................................... 606 -- 100(c) 785
79 (b)
Inventories...................................... 401 -- -- 401
Other current assets............................. 129 31(a) -- 160
------ ----- ------- ------
Total current assets........................... 1,176 31 179 1,386
Plant, property, and equipment, net................ 1,049 -- -- 1,049
Goodwill and intangibles, net...................... 510 -- -- 510
Other assets and deferred charges.................. 260 41(a) (54)(f) 247
Net assets of discontinued operations.............. 1,421 -- (1,421)(d) --
------ ----- ------- ------
Total assets................................... $4,416 $ 72 $(1,296) $3,192
====== ===== ======= ======
LIABILITIES AND
SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt (including current maturities on
long-term debt)................................ $ 206 $(206)(a) $ -- $ --
Trade payables................................... 351 -- 20(c) 371
Other current liabilities........................ 287 -- -- 287
------ ----- ------- ------
Total current liabilities...................... 844 (206) 20 658
Long-term debt..................................... 832 841(a) -- 1,673
Deferred income taxes.............................. 39 -- (22)(f) 17(e)
Other liabilities and deferred credits............. 168 -- -- 168
Minority interest.................................. 411 (394)(a) -- 17
Shareowners' equity................................ 2,122 (169)(a) (1,421)(d) 659
80(c)
(32)(f)
79(b)
------ ----- ------- ------
Total liabilities and shareowners' equity...... $4,416 $ 72 $(1,296) $3,192
====== ===== ======= ======
See the accompanying Notes to Unaudited Pro Forma Combined Balance Sheet.
TENNECO DISTRIBUTION AGREEMENT
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TENNECO
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(a) To reflect adjustments to Tenneco's debt for the debt realignment and the
assumed payment of interest on Tenneco consolidated debt tendered or
exchanged as part of the pre-spin-off debt realignment. The adjustment to
equity reflects the net impact of the debt realignment, the recording of
debt issue costs and deferred income taxes related to the debt realignment.
Tenneco will acquire certain subsidiary preferred stock as part of the debt
realignment. At this time, Tenneco cannot determine the ultimate amount of
securities which will be purchased in the cash tender offers, or the
ultimate amount of the original securities which will be exchanged for new
securities in the exchange offers, and the amounts could vary significantly.
These pro forma adjustments assume that 100% of the securities subject to
the cash tender offers are purchased and 100% of the original securities are
exchanged for new securities. These pro forma adjustments also assume that
the new securities will be recorded at the net carrying amount of the
original securities (in other words, the new securities are assumed not to
be "substantially different;" see "Accounting Treatment of the Exchange
Offers"). The results of the exchange offers could vary based on a number of
factors, including the level of acceptance of the exchange offers, the
ultimate interest rate of the exchanged securities and whether the exchanges
will be considered extinguishments for accounting purposes. Based on current
interest rate markets, it is expected that the exchange offers will not be
extinguishments for accounting purposes. Tenneco expects to incur an
extraordinary charge as a result of the debt realignment related to the cash
tender offers. Tenneco estimates that this cost will be approximately $20 to
$25 million after-tax based on current market rates of interest. Other
costs, including transaction costs related to the acquisition of certain
subsidiary preferred stock and costs associated with foreign tax
restructuring initiatives, will be incurred by Tenneco in connection with
the corporate restructuring transactions and the spin-off which Tenneco
estimates will be approximately $50 million after-tax. The effect on
Tenneco's debt of these costs has been reflected in this pro forma
adjustment. However, these charges have not been included in the unaudited
pro forma consolidated statements of income.
(b) To reflect the purchase of Automotive accounts receivable at fair value
which had previously been sold to a third party.
(c) To reflect affiliated receivables and payables with Packaging that were
eliminated in the Tenneco consolidated balance sheet.
(d) To reflect the spin-off of Packaging common stock to holders of Tenneco
common stock at an exchange ratio of one share of Packaging common stock for
each share of Tenneco common stock.
(e) Deferred income taxes at June 30, 1999 include $79 million of net operating
loss carryforwards which will be utilized by Packaging upon the planned sale
of Packaging's remaining interest in its containerboard joint venture.
(f) To reflect the increase in net periodic pension costs resulting from the
transfer to Packaging of prepaid pension costs attributable to Automotive
employees. Automotive employees will no longer participate in the Tenneco
Retirement Plan following the spin-off and Packaging will become the sponsor
of this plan. These prepaid pension costs will be transferred to Packaging
in connection with the corporate restructuring transactions.
TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT B
AUTOMOTIVE SUBSIDIARIES
TENNECO INC. (DELAWARE) (to be renamed Tenneco Automotive Inc.)
Tenneco Automotive Inc. (to be renamed)...........................................................100%
Beijing Monroe Automobile Shock Absorber Company Ltd. (Peoples
Republic of China)........................................................................51
(Tenneco Automotive Inc. owns 51%; and Beijing Automotive Industry
Corporation, an unaffiliated company, owns 49%)
Dalian ▇▇▇▇▇▇-▇▇▇▇▇▇ Muffler Co. Ltd. (Peoples Republic of China)..............................55
(Tenneco Automotive Inc. owns 55%; and non-affiliates own 45%)
▇▇▇▇▇▇▇▇▇ Strut Company Inc. (Delaware).......................................................100
Precision Modular Assembly Corp. (Delaware)...................................................100
Shanghai ▇▇▇▇▇▇ Exhaust Company, Ltd. (Peoples Republic of China)..............................55
(Tenneco Automotive Inc. owns 55%; and Shanghai Tractor and Internal
Combustion Engine Company, Ltd., an unaffiliated company, owns 45%)
Tenneco Asheville Inc. (Delaware).............................................................100
Tenneco Asia Inc. (Delaware)..................................................................100
Tenneco Automotive Foreign Sales Corporation Limited (Jamaica)................................100
Tenneco Automotive Japan Ltd. (Japan).........................................................100
Tenneco Automotive Nederlands B.V. (Netherlands)..............................................100
Tenneco Automotive RSA Company (Delaware).....................................................100
Tenneco Automotive Trading Company (Delaware).................................................100
Tenneco Brake, Inc. (Delaware)................................................................100
Tenneco Europe Limited (Delaware).............................................................100
Wimetal S. A. (France)....................................................................<1
(Tenneco Europe Limited owns 1 share; ▇▇▇▇▇▇ Limited owns 1 share;
▇▇▇▇▇▇ France S.A. owns 99%; and each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇, affiliated persons, owns 1 share)
Tenneco Inc. (Nevada).........................................................................100
Tenneco International Finance Limited (United Kingdom)(1).....................................100
Tenneco International Holding Corp. (Delaware)................................................100
Monroe Australia Pty. Limited (Australia)................................................100
Monroe Springs (Australia) Pty. Ltd. (Australia).....................................100
Monroe Superannuation Pty. Ltd. (Australia)..........................................100
▇▇▇▇▇▇ Australia Pty. Limited (Australia)............................................100
Tenneco Automotive Europe N.V. (Belgium).................................................100
Monroe Amortisor Imalat Ve Ticaret A.S. (Turkey)......................................99.85
(Tenneco Automotive Europe N.V. owns 99.85%; and various
unaffiliated individual stockholders own 0.15%)
Tenneco Automotive Italia S.r.l. (Italy)..................................................85
(Tenneco International Holding Corp. owns 85%; and Tenneco Automotive
France, S.A. owns 15%)
Tenneco Automotive Polska Sp. z.O.O........................................................1
(Tenneco International Holding Corp. owns 1%; and Tenneco Global Holdings
Inc. owns 99%)
TENNECO DISTRIBUTION AGREEMENT
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SUBSIDIARIES OF TENNECO INC.
SUBSIDIARIES OF TENNECO AUTOMOTIVE INC.
SUBSIDIARIES OF TENNECO INTERNATIONAL HOLDING CORP.
Tenneco Romania Sr(1)(Romania).............................................................0.14%
(Tenneco International Holding Corp. owns 0.14%; and Tenneco Global
Holdings Inc. owns 99.86%)
Tenneco Automotive Sverige A.B. (Sweden).................................................100
Tenneco Canada Inc. (Ontario)............................................................100
Tenneco Global Holdings Inc. (Delaware)..................................................100
Fric-Rot S.A.I.C. (Argentina).........................................................55
(Tenneco Global Holdings Inc. owns 55%; Maco Inversiones S.A.
owns 44.85%; and unaffiliated parties own .15%)
Maco Inversiones S.A. (Argentina)....................................................100
Fric-Rot S.A.I.C. (Argentina).....................................................44.85
(Maco Inversiones S.A. owns 44.85%; Tenneco Global Holdings
Inc. owns 55%; and unaffiliated parties own .15%)
Monroe Springs (New Zealand) Pty. Ltd. (New Zealand).................................100
Monroe Czechia s.r.o. (Czech Republic)...............................................100
Tenneco Automotive Iberica, S.A. (Spain).............................................100
Tenneco Automotive Polska Sp. z.O.O. (Poland).........................................99
(Tenneco Global Holdings Inc. owns 99%; and Tenneco International
Holding Corp. owns 1%)
Tenneco Romania Srl (Romania).........................................................99.86
(Tenneco Global Holdings Inc. owns 99.86%; and Tenneco International
Holding Corp. owns 0.14%)
Tenneco Mauritius Limited (Mauritius)................................................100
Hydraulics Limited (India)........................................................51
(Tenneco Mauritius Limited owns 51% and Bangalore Union
Services Limited, an unaffiliated company, owns 49%)
Renowned Automotive Products Manufacturers Ltd. (India)......................83
(Hydraulics Limited owns 83%; and non-affiliates own 17%)
Tenneco Automotive India Private Limited (India).................................100
▇▇▇▇▇▇ Exhaust India Private Limited (India)................................100
(Tenneco Automotive India Private Limited owns less than
100%; and an unaffiliated party owns the balance)
Tenneco Holdings Danmark A/S (Denmark)...................................................100
Gillet Exhaust Technologie (Proprietary) Limited (South Africa)......................100
Gillet Lazne Belohrad, s.r.o. (Czech Republic) ......................................100
Kinetic Ltd. (Australia)..............................................................99
(Tenneco Holdings Danmark A/S owns 99%+; and unaffiliated
entities own less than 1%)
Tenneco Automotive Holdings South Africa Pty. Ltd. (South Africa).....................51
(Tenneco Holdings Danmark A/S owns 51%; and an unaffiliated
party owns 49%)
▇▇▇▇▇▇▇▇▇ Hydraulics South Africa (Pty.) Ltd. (South Africa).....................100
▇▇▇▇▇▇▇▇▇ Properties (Pty.) Ltd. (South Africa)..................................100
(1) In dissolution.
TENNECO DISTRIBUTION AGREEMENT
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SUBSIDIARIES OF TENNECO INC.
SUBSIDIARIES OF TENNECO AUTOMOTIVE INC.
SUBSIDIARIES OF TENNECO GLOBAL HOLDINGS INC.
SUBSIDIARIES OF TENNECO AUTOMOTIVE HOLDINGS SOUTH AFRICA PTY. LTD.
Monroe Manufacturing (Pty.) Ltd. (South Africa)..................................100%
Smiths Industrial (SWA) (Pty.) Ltd. (South Africa)...............................100
Tenneco Automotive Port ▇▇▇▇▇▇▇▇▇ (Proprietary) Limited
(South Africa).......................................................................100
Tenneco Automotive Portugal - Componentes para Automovel, S.A.
(Portugal).......................................................................100
▇▇▇▇▇▇ Danmark A/S (Denmark).........................................................100
Tenneco Automotive France S.A. (France)..................................................100
(Tenneco International Holding Corp. owns 470,371 shares; ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ owns 16 shares; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ owns 8 shares; and
each of ▇▇▇▇▇▇ Europe, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ owns 1 share)
Gillet Tubes Technologies G.T.T. (France)............................................100
Monroe Packaging N.V. (Belgium).......................................................99.9
(Tenneco Automotive Europe N.V. owns 99.9%; and Tenneco
Automotive France S.A. owns 0.1%)
Tenneco Automotive Europe Coordination Center N.V. (Belgium)..........................99.9
(Tenneco Automotive Europe N.V. owns 99.9%; and Tenneco
Automotive France S.A. owns 0.1%)
Tenneco Automotive Italia S.r.l. (Italy)..............................................15
(Tenneco International Holding Corp. owns 85%; and Tenneco
Automotive France S.A. owns 15%)
▇▇▇▇▇▇ France Constructeurs S.A.R.L. (France)........................................100
Wimetal S.A. (France).................................................................99
(Tenneco Automotive France S.A. owns 99%; Tenneco Europe Limited
owns 1 share, ▇▇▇▇▇▇ Limited owns 1 share; and each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇, affiliated persons, owns 1 share)
The Pullman Company (Delaware)................................................................100
Autopartes ▇▇▇▇▇▇ ▇.▇. de C.V. (Mexico).................................................100
Consorcio ▇▇▇▇▇▇▇▇▇ ▇.▇. de C.V. (Mexico).............................................99.99
(Autopartes ▇▇▇▇▇▇ ▇.▇. de C.V. owns 99.99%; and Josan
Latinamericana S.A. de C.V., an unaffiliated company, owns 0.01%)
Monroe-Mexico S.A. de C.V. (Mexico)..................................................100
Tenneco Automotive Servicios de Mexico, S.A. de C.V. (Mexico)......................0.01
(Monroe-Mexico, S.A. de C.V. owns 1 share; and Proveedora
▇▇▇▇▇▇ S. de ▇.▇. de C.V. owns 49,999 shares)
Proveedora ▇▇▇▇▇▇ S. de ▇.▇. de C.V. (Mexico) ........................................99.99
(Autopartes ▇▇▇▇▇▇ ▇.▇. de C.V.owns 99.99%; and Pullmex S. de
▇.▇. de C.V. owns .01%)
TENNECO DISTRIBUTION AGREEMENT
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SUBSIDIARIES OF TENNECO INC.
SUBSIDIARIES OF TENNECO AUTOMOTIVE INC.
SUBSIDIARIES OF THE PULLMAN COMPANY
SUBSIDIARIES OF PROVEEDORA ▇▇▇▇▇▇ S. DE ▇.▇. DE CV
Pullmex S. de ▇.▇. de C.V. (Mexico)................................................0.01%
(Proveedora ▇▇▇▇▇▇ S. de ▇.▇. de C.V. owns 0.01% and
Autopartes ▇▇▇▇▇▇ ▇.▇. de C.V. owns 99.99%)
Tenneco Automotive Servicios de Mexico, S.A. de C.V. (Mexico).....................99.99
(Proveedora ▇▇▇▇▇▇ S. de ▇.▇. de C.V. owns 49,999 shares, and
Monroe-Mexico, S.A. de C.V. owns 1 share)
Pullmex S. de ▇.▇. de C.V.............................................................99.99
(Autopartes ▇▇▇▇▇▇ ▇.▇. de C.V. owns 99.9%; and Proveedora
▇▇▇▇▇▇ S. de ▇.▇. de C.V. owns 0.1%)
Proveedora ▇▇▇▇▇▇ S. de ▇.▇. de C.V. (Mexico) .....................................0.01
(Pullmex S. de ▇.▇. de C.V. owns 0.01%; and Autopartes
▇▇▇▇▇▇ ▇.▇. de C.V. owns 99.99%)
Clevite Industries Inc. (Delaware).......................................................100
Peabody International Corporation (Delaware).............................................100
Barasset Corporation (Ohio)..........................................................100
Peabody Galion Corporation (Delaware)................................................100
Peabody ▇▇▇▇▇▇-▇▇▇▇▇, Inc. (Delaware)................................................100
Peabody N.E., Inc. (Delaware)........................................................100
Peabody World Trade Corporation (Delaware)...........................................100
▇▇▇▇▇▇▇-▇▇▇▇▇ Corporation (Illinois).................................................100
Pullman Canada Ltd. (Canada)..........................................................61
(Peabody International Corporation owns 61%; and The Pullman
Company owns 39%)
Pullman Canada Ltd. (Canada)..............................................................39
(The Pullman Company owns 39%; and Peabody International
Corporation owns 61%)
Pullman Standard Inc. (Delaware).........................................................100
Tenneco Brazil Ltda. (Brazil)............................................................100
Tenneco Automotive Brasil Ltda. (Brazil).............................................100
▇▇▇▇▇▇▇▇ and Stammers Dunmow (Number 6) Limited (United Kingdom)..............................100
▇▇▇▇▇▇▇▇ and Stammers Dunmow (Number 7) Limited (United Kingdom)..............................100
TMC Texas Inc. (Delaware).....................................................................100
▇▇▇▇▇▇ Electronic Silencing Inc. (Delaware)...................................................100
▇▇▇▇▇▇ Europe, Inc. (Delaware)................................................................100
Tenneco Automotive France S.A. (France)....................................................1
(Tenneco International Holding Corp. owns 470,371 shares; ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ owns 16 shares; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ owns 8 shares; and
each of ▇▇▇▇▇▇ Europe, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ owns 1 share)
▇▇▇▇▇▇ Limited (United Kingdom)...............................................................100
TENNECO DISTRIBUTION AGREEMENT
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SUBSIDIARIES OF TENNECO INC.
SUBSIDIARIES OF TENNECO AUTOMOTIVE INC.
SUBSIDIARIES OF ▇▇▇▇▇▇ LIMITED (UNITED KINGDOM)
Gillet Torsmaskiner UK Limited (United Kingdom)...........................................50
(▇▇▇▇▇▇ Limited owns 100 A Ordinary Shares, 50% of total equity; and
AB Torsmaskiner, an unaffiliated company, owns 100 B Ordinary
Shares, 50% of total equity)
Exhaust Systems Technology Limited (United Kingdom)...................................99.99%
(Gillet Torsmaskiner UK Limited owns 99.99%; and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ GmbH & Co. owns .01%)
Tenneco Automotive UK Limited (United Kingdom)...........................................100
Gillet Exhaust Manufacturing Limited (United Kingdom)................................100
Gillet Pressings Cardiff Limited (United Kingdom)....................................100
▇▇▇▇▇▇ (UK) Limited (United Kingdom).................................................100
▇.▇. ▇▇▇▇▇▇▇ (Motor Trade) Limited (United Kingdom)..............................100
Tenneco - ▇▇▇▇▇▇ (U.K.) Ltd. (United Kingdom)....................................100
Tenneco Management (Europe) Limited (United Kingdom).....................................100
Wimetal S. A. (France).....................................................................1
(▇▇▇▇▇▇ Limited owns 1 share; Tenneco Europe Limited owns 1
share; Tenneco Automotive France S.A. owns 99%; and each of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, affiliated
persons, owns 1 share)
▇▇▇▇▇▇ Manufacturing Company (Delaware).......................................................100
Ced's Inc. (Illinois)....................................................................100
▇▇▇▇▇▇ Norge A/S (Norway).....................................................................100
Tenneco Deutschland Holdinggesellschaft mbH (Germany)..............................................99.97
(Tenneco Inc. owns 99.97%; and Atlas Vermoegensverwaltung, an
unaffiliated company, owns 0.03%)
GILLET Unternehmesverwaltungs GmbH (Germany)..................................................100
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GmbH & Co. KG (Germany)....................................................0.1
(GILLET Unternehmesverwaltungs GmbH owns 0.1%; and Tenneco
Deutschland Holdinggesellschaft mbH owns 99.9%. The
subsidiaries of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GmbH & Co. KG are listed
below.)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GmbH & Co. KG (Germany)........................................................99.9
(Tenneco Deutschland Holdinggesellschaft mbH owns 99.9%; and
GILLETUnternehmesverwaltungs GmbH owns 0.1%)
ELGIRA Montagebetrieb fur Abgasanlagen Rastatt GmbH (Germany).............................50
(▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GmbH & Co. KG owns 50%; and an unaffiliated
party owns 50%)
Exhaust Systems Technology Limited (United Kingdom)........................................0.01
(▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GmbH & Co. KG owns 0.01%; and Gillet Torsmaskiner
UK Limited owns 99.99%)
Gillet-Abgassysteme Zickau Gmbh (Germany)................................................100
Elagest AB (Sweden)...................................................................50
(Gillet-Abgassysteme Zickau GmbH owns 50%; and an
unaffiliated party owns 50%)
TENNECO DISTRIBUTION AGREEMENT
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SUBSIDIARIES OF TENNECO INC.
SUBSIDIARIES OF TENNECO AUTOMOTIVE INC.
SUBSIDIARIES OF TENNECO DEUTSCHLAND HOLDINGGESELLSCHAFT MBH
SUBSIDIARIES OF ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GMBH & CO. KG
Mastra-Gillet Industria e Comercio Ltda. (Brazil).........................................50
(▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GmbH & Co. KG owns 50%; and Mastra Industria e
Comercio Ltda., an unaffiliated company, owns 50%)
Montagewerk Abgastechnik Emden GmbH (Germany..............................................50%
(▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ GmbH & Co. KG owns 50%; and an unaffiliated
party owns 50%)
Tenneco Automotive Deutschland GmbH (Germany).................................................100
WALKER GILLET (Europe) GmbH (Germany).........................................................100
(1) In dissolution.
TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT C
CORPORATE RESTRUCTURING TRANSACTIONS
Set forth below are the transactions that, as applicable, the members of
each of the Packaging and Automotive Groups will consummate in connection with
the Distributions and Spin. A list of defined terms is included as Schedule 1 to
this Exhibit. Capitalized terms used but not otherwise defined in Schedule 1
have the meaning ascribed to them under the Distribution Agreement.
A. REALIGNMENT OF INTERCOMPANY OBLIGATIONS.
The following transactions will be effected to realign the intercompany
accounts of the Automotive and Packaging Groups. After the completion of these
transactions, TI will have a single net intercompany obligation from TPI and all
other intercompany obligations (other than trade accounts) will be exclusively
between entities which are members of the same Group. Following the completion
of these transactions, there will be no further transfers of funds between
members of different Groups other than pursuant to transactions occurring in the
ordinary course of business (trade accounts) and transfers required or otherwise
permitted pursuant to these Corporate Restructuring Transactions.
1. REALIGNMENT OF AG INTERCOMPANY OBLIGATIONS.
Realignment of AG Foreign Intercompany Accounts. Each foreign member of AG
having a net intercompany obligation owing from a member of PG (excluding trade
accounts receivable) will transfer such net intercompany obligation to TMEL in
exchange for an intercompany advance receivable from TMEL in an amount equal to
the aggregate amount of the net intercompany receivables and notes transferred.
TMEL will assume the net intercompany obligation owed by each foreign member of
AG having a net intercompany obligation to a member of PG (excluding trade
accounts payable) in exchange for the issuance by each such AG member of an
intercompany advance payable to TMEL in an amount equal to the aggregate amount
of the net intercompany obligations assumed
Realignment of AG Domestic Intercompany Obligations. Each domestic member
of AG having a net intercompany obligation owing from a member of PG (excluding
trade accounts receivable) will transfer such net intercompany obligation to TI
in exchange for an intercompany advance receivable from TI in an amount equal to
the aggregate amount of the net intercompany receivables and notes transferred.
TI will assume the net intercompany obligations owed by each domestic member of
AG having a net intercompany obligation to a member of PG (excluding trade
accounts payable) in exchange for the issuance by each such AG member of an
intercompany advance payable to TI in an amount equal to the aggregate amount of
the net intercompany obligations assumed.
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2. REALIGNMENT OF PG INTERCOMPANY OBLIGATIONS
Realignment of PG Foreign Intercompany Accounts. Each foreign member of PG
having a net intercompany obligation from a member of AG (excluding trade
accounts receivable) will transfer such net intercompany obligation to TPUKL in
exchange for an intercompany advance receivable from TPUKL in an amount equal to
the aggregate amount of the net intercompany receivables and notes transferred.
TPUKL will assume the net intercompany obligations owed by each foreign member
of PG having a net intercompany obligation to a member of the AG (excluding
trade accounts payable) in exchange for the issuance by each such PG member of
an intercompany advance payable to TPUKL in an amount equal to the aggregate
amount of the net intercompany obligations assumed.
Realignment of PG Domestic Intercompany Obligations. Each domestic member
of PG having a net intercompany obligation owing from a member of AG (excluding
trade accounts receivable) will transfer such net intercompany obligation to TPI
in exchange for an intercompany advance receivable from TPI in an amount equal
to the aggregate amount of the net intercompany receivables and notes
transferred. TPI will assume the net intercompany obligations owed by each
domestic member of PG having a net intercompany obligation to a member of AG
(excluding trade accounts payable) in exchange for the issuance by each such PG
member of an intercompany advance payable to TPI in an amount equal to the
aggregate amount of the net intercompany obligations assumed.
B. DEBT REALIGNMENT
1. Each of TI and TPI shall participate in the Debt Realignment.
TENNECO DISTRIBUTION AGREEMENT
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C. IMPLEMENTATION OF CORPORATE RESTRUCTURING TRANSACTIONS. The following
transactions will be effected pursuant to the requirement in Section 2.01 of the
Distribution Agreement that the parties and their affiliates "take such action
or actions as is necessary to cause, effect and consummate the Corporate
Restructuring Transactions." Transactions occurring on the same day shall be
deemed to have occurred in the order listed herein regardless of the order in
which the documentation is executed, filed, or accepted, and regardless of the
order in which the funds or other assets are transferred.
1. SEPARATION OF THE GERMAN AND U.K. PACKAGING AND AUTOMOTIVE PARTS
BUSINESSES
German Restructuring:
--------------------
a. TDH will form six new German corporate subsidiaries
(each, a"GP GmbH") and PDH:
(1) Omni-Pac GP GmbH;
(2) OPE GP GmbH;
(3) Sengewald V GP GmbH;
(4) ▇▇▇▇▇▇▇ ▇▇ GmbH;
(5) Sengewald K GP GmbH;
(6) Nord-West GP GmbH; and
(7) PDH
b. The TDH corporate subsidiaries will be converted to German
partnerships or GmbH & Co KGs ("operating target KGs").
c. TDH will transfer (in trust) a nominal interest (.1%) in each of OPE
GmbH, Kobusch GmbH, Nord-West GmbH, Sengewald V GmbH, and Sengewald K GmbH to
the corresponding GP GmbHs.
d. TI will sell its 1% interest in Omni-Pac to Omni-Pac GP GmbH.
An entity classification election will be made for US tax purposes so that
each of the operating target KGs, as well as all other direct and indirect
subsidiaries of the operating target KGs will be treated as divisions/branches
of TDH effective as of the conversion date.
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e. Packaging Deutschland will form six new German limited partnerships
("financing KGs" or "F KGs") corresponding to the six operating target KGs
created in b. above: Omni-Pac F KG; OPE F KG; Omni-Pac F KG; Nord-West F KG;
Sengewald V F KG; and ▇▇▇▇▇▇▇▇▇ ▇ ▇ KG.
An entity classification election will be made for US tax purposes so that
each of the financing KGs will be treated as divisions of Packaging Deutschland
GmbH effective as of the date of formation.
f. Each of the six general partner GmbHs formed in a. above will become
a general partner of one of the respective financing KGs formed in e. above.
Packaging Deutschland GmbH will receive 100% limited partnership interest in
each of the newly created financing KGs in exchange for nominal equity
contribution.
g. TDH will sell Halle real estate to Sengewald V F KG.
h. Each of the financing KGs will acquire respective operating target
KG limited partnership interests from TDH.
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i. TDH will sell the following entities to PDH:
(1) Omni-Pac GP GmbH;
(2) OPE GP GmbH;
(3) ▇▇▇▇▇▇▇ ▇▇ GmbH;
(4) Nord-West GP GmbH;
(5) Sengewald V GP GmbH; and
(6) Sengewald K GP GmbH.
j. TDH will sell its entire limited partnership interests in the
following entities:
(1) Omni-Pac KG to Omni-Pac F KG;
(2) OPE KG to OPE F KG;
(3) Kobusch KG to Kobusch F KG;
(4) Nord-West KG to Nord-West F KG; and
(5) Sengewald V KG to Sengewald V F KG.
k. Sengewald V KG will sell its entire limited
partnership interests in Sengewald K KG to ▇▇▇▇▇▇▇▇▇ ▇ ▇ KG.
l. TI will transfer 99.97% share in Sentinel GmbH Verpackungen to TPI
as equity contribution.
m. The following mergers will occur:
(1) Omni-Pac F KG (survivor) and Omni-Pac KG;
(2) OPE F KG (survivor) and OPE KG;
(3) Kobusch F KG (survivor) and Kobusch KG;
(4) Nord-West F KG (survivor) and Nord-West KG;
(5) Sengewald V F KG (survivor) and Sengewald V KG; and
(6) ▇▇▇▇▇▇▇▇▇ ▇ ▇ KG (survivor) and Sengewald K KG.
UK Restructuring.
-----------------
a. TI will make an entity classification election for US tax purposes
so that each of the following entities will be treated as a division of its
parent:
(1) OPUKL;
(2) Packaging Scotland;
(3) Alpha;
(4) Caerphilly;
(5) Films;
(6) Livingston;
(7) ▇▇▇▇▇▇▇;
(8) Brucefield; and
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(9) Polbeth.
▇. ▇▇▇▇▇▇▇ will purchase all of the stock of the following
subsidiaries from ▇▇▇▇▇▇: TPUKL; OPUKL; and Packaging Scotland.
c. TPUKL will become PG internal finance company.
▇. ▇▇▇▇▇▇ Ltd will transfer its shares in Omni-Pac UK and TPL to
▇▇▇▇▇▇▇.
2. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇ NOTE. TI will transfer the ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ note
to TMC.
3. TPI NAME CHANGE. TPI will change its name to _________ and will register
to do business in the following states (where Specialty is registered and TPI is
not): Arkansas, Louisiana, New Hampshire, and South Dakota
4. TI CONTRIBUTION OF CAPITAL TO TPI. TI will transfer all of its ownership
interests (100% unless otherwise indicated) in the following entities to TPI as
a contribution to capital:
▇. ▇▇▇▇▇▇▇
▇. ▇▇▇▇ Products Leasing Company (DE)
c. Tenneco Packaging Hungary Holdings Inc. (DE)
d. Tenneco Packaging International Holdings Inc. (DE)
e. Scriptoria N.V. (Belgium)(1)
f. Airpack Polska SP z.O.O. (Poland)
g. Airpack Japan K.K. (Japan)
h. Tenneco Packaging Europe B.V. (Netherlands)
i. Wellenfoam N.V. (Belgium)(2)
▇. ▇▇▇▇▇▇▇ Packaging Egypt Ltd. (Egypt)(3)
k. Tenneco Packaging - Chile Holdings Inc. (Delaware)
l. Airpack SPA (Italy)(4)
m. Aircal S.A. (France)(5)
-----------
(1) TI owns 99.56%; Tenneco Packaging International Holdings Inc. holds 18
shares; the balance of shares outstanding are held by unaffiliated persons.
(2) TI owns all of the shares except for one, which is owned by Tenneco
Packaging International Holdings Inc. (Delaware).
(3) TI owns 99% and Kobusch Folien GmbH (Germany) owns 1%.
(4) TI owns 98%; Tenneco Packaging International Holdings Inc. (Delaware)
owns 2%.
(5) TI owns all of the shares except seven which are held by the company's
four directors and TPI, Tenneco Protective Packaging Inc. (Delaware), and
Tenneco Packaging International Holdings Inc. (Delaware).
TENNECO DISTRIBUTION AGREEMENT
▇-▇
▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇)
o. Omni-Pac S.A.R.L. (France)(1)
p. Tenneco Packaging Hexacomb S.A. (Spain)
q. Tenneco Romania Holdings Inc. (DE)
r. Tenneco Packaging Leasing Company (DE)
s. TBSHI
t. Tenneco NV Inc.
u. Tenneco International Finance B.V. (Netherlands)
v. Tenneco International Business Development Limited (DE)
w. Tenneco Management Company (DE)
x. Tenneco Retail Receivables Co. (DE)
y. Sentinel GmbH Verpackungen (Germany)(2)
z. Alupak
aa. Tenneco Packaging RSA Company (DE)
5. TENNECO TRADEMARKS AND TRADE NAMES. The Tenneco Trademarks and
Trade Names will be assigned to a member of the AG.
------------
(1) TI owns 97% and Omni-Pac GmbH (Germany) owns 3%.
(2) A small percentage of shares is owned by Scriptoria N.V. (Belgium).
TENNECO DISTRIBUTION AGREEMENT
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6. TPI RECAPITALIZATION. Immediately before the Distribution, TPI will be
recapitalized as provided in Section 2.02 of the Distribution Agreement.
7. SPECIALTY MERGER. Pursuant to a plan of complete liquidation, Specialty
will be merged with and into TPI, with TPI as the surviving corporation.
8. TI CONTRIBUTION OF CAPITAL TO TAI. Following step C4, TI will transfer
all of its remaining assets (other than its ownership interests in TAI, TPI and
Tenneco Deutschland) to TAI as a contribution to capital.
9. TAI NAME CHANGE. Prior to the Distribution Date, TAI will change its
name to ________.
-----------
TENNECO DISTRIBUTION AGREEMENT
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D. DISTRIBUTIONS
1. DIVIDEND OF TPI STOCK. On the Distribution Date following the
consummation of steps C1 through C7, TI will distribute all of the stock of TPI
to Tenneco shareholders as a distribution with respect to stock (i.e., return of
contributed surplus) pro rata on the basis of one share of TPI stock for one
share of Tenneco common stock outstanding. Cash will be paid in lieu of issuing
fractional shares of TPI stock. Each share of stock of TPI will have attached to
it stock purchase rights (the "Rights") which will entitle the holder to
purchase certain stock of TPI, as the case may be, upon the occurrence of
certain triggering events.
2. TI STOCK SPLIT. One day after the Distribution Date, TI will effect a
reverse stock split. Cash will be paid in lieu of issuing fractional shares of
TI stock.
3. TI NAME CHANGE. Prior to the Distribution Date, but after C9, a merger
subsidiary will be incorporated in Delaware as Tenneco Automotive Inc. Effective
as of 8:00 a.m. EST on the day following the Distribution Date, TI will merge
into the Merger Subsidiary with TI as survivor under the name Tenneco Automotive
Inc.
TENNECO DISTRIBUTION AGREEMENT
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SCHEDULE 1
CORPORATE RESTRUCTURING TRANSACTIONS
LIST OF DEFINED TERMS
"AG" = Automotive Group
"Alpha" = Alpha Products (Bristol) Limited (UK)
"Alupak" = Alupak A.G. (Switzerland)
"ASCC" = Asset Securitization Cooperative Corporation
"▇▇▇▇▇▇▇" = The ▇▇▇▇▇▇▇ Group, Ltd. (UK)
"Brucefield" = Brucefield Plastics Limited (Scotland)
"Caerphilly" = Tenneco Packaging (Caerphilly) Limited (UK)
"CIBC" = Canadian Imperial Bank of Commerce
"Films" = Tenneco Packaging (Films) Limited (UK)
"Hexacomb" = Tenneco Packaging Hexacomb S.S. (Spain)
"Iberica" = Tenneco Automotive Iberica S.A. (Spain)
"KG" = German limited partnership
"Klinik" = Klinik GmbH (Germany)
"Kobusch" = Kobusch Folien GmbH (Germany
"Livingston" = Tenneco Packaging (Livingston) Limited (Scotland)
"Nord-West" = Nord-West Verpackung GmbH (Germany)
"Omni-Pac = Omni-Pac GmbH (Germany)
"OPE" = Omni-Pac Ekco GmbH (Germany)
"OPUKL" = Omni-Pac U.K. Limited (UK)
"Packaging Deutschland" = Packaging Deutschland GmbH (Germany)
"Packaging Scotland" = Tenneco Packaging Limited (Scotland)
"PCA" = Packaging Corporation of America
"PDH" = Tenneco Packaging Deutschland Holdinggesellschaft mbH (Germany)
"PG" = Packaging Group
"Polbeth" = Polbeth Packaging (Corby) Limited (Scotland)
"Sengewald V" = Sengewald Verpackungen GmbH (Germany)
"Sengewald K" = Sengewald Klinicprodukte GmbH (Germany)
"Specialty" = Tenneco Packaging Specialty and Consumer Products Inc. (DE)
"▇▇▇▇▇▇▇" = Tenneco Packaging (▇▇▇▇▇▇▇) Limited (UK)
"TA France" = Tenneco Automotive France S.A. (France)
"TAI" = Tenneco Automotive Inc. (DE)
"TARSAC" = Tenneco Automotive RSA Company Inc. (DE)
"TAVIAI" = Tenneco AVI Acquisition Inc, (DE)
"TBSHI" = Tenneco Business Services Holdings Inc. (DE)
"TBSI" = Tenneco Business Services Inc. (DE)
"TCI" = Tenneco Canada Inc.
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"TDH" = Tenneco Deutschland Holinggessellschaft mbH (Germany)
"TI" = Tenneco Inc. (DE)
"TIHC" = Tenneco International Holdings Corp. (DE)
"TMC" = Tenneco Management Company (DE)
"TMC Texas" = TMC Texas Inc. (DE)
"TMEL" = Tenneco Management (Europe) Limited (UK)
"TPI" = Tenneco Packaging Inc. (DE)
"TPRSAC" = Tenneco Packaging RSA Company Inc. (DE)
"TPUKL" = Tenneco Packaging (UK) Limited (UK)
"▇▇▇▇▇▇" = ▇▇▇▇▇▇ Limited (UK)
"WE" = W.E. Verwaltungsgesellschaft mbH
TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT D
DEBT REALIGNMENT
[TO BE PROVIDED BY AMENDMENT]
TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT E
FORM OF
HUMAN RESOURCES AGREEMENT
THIS HUMAN RESOURCES AGREEMENT is made and entered into as of this
day of , 19 , by, between and among TENNECO INC., a Delaware
corporation to be renamed Tenneco Automotive Inc. ("Tenneco" or "Automotive
Company"), and Tenneco Packaging Inc. (to be renamed), a Delaware corporation
("Packaging Company").
WHEREAS, pursuant to the terms of that certain Distribution Agreement by
and between Tenneco and Packaging Company and dated as of (the
"Distribution Agreement"), the parties have entered into this Agreement
regarding certain labor, employment, compensation and benefit matters occasioned
by the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement and the Distribution Agreement, each of
the parties hereto, on behalf of itself and each other entity over which it has
direct or indirect legal or effective control, hereby agrees as follows:
SECTION 1. DEFINITIONS. The following terms, when capitalized herein, shall
have the meanings set forth below in this Section 1. All other capitalized terms
which are used but are not otherwise defined herein shall have the meanings
ascribed to them in the Distribution Agreement.
"ACTIVE EMPLOYEES" means, with respect to each Group, all employees
regularly engaged in the performance of services to, for or on behalf of
any member of such Group as of the close of business on the Distribution
Date; provided, that all such employees of Tenneco Management Company
("TMC") who are employed by a member of the Automotive Group immediately
after the Distribution shall, for all purposes hereunder, be treated as
Active Employees of the Automotive Group.
"COMMON STOCK" means Tenneco Common Stock or Packaging Common Stock,
as applicable.
"FORMER EMPLOYEES" means, with respect to each Group, all former
employees of Tenneco and/or its Subsidiaries (including, but not limited
to, such employees who, as of the close of business on the Distribution
Date, are on leave of absence, long-term disability or layoff with recall
rights) who, if they were regularly engaged in the performance of services
to, for or on behalf of Tenneco or any of its Subsidiaries at the close of
business on the Distribution Date, would be an Active Employee of such
Group, determined on a basis consistent with the determination of the
Active Employees of such Group.
TENNECO DISTRIBUTION AGREEMENT
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"Tenneco Salaried Welfare Plans" means, collectively, the Tenneco Inc.
------------------------------
Health Care Plan, the Tenneco Inc. Group Life Insurance Plan, the Tenneco
Inc. Long Term Disability Plan, the Tenneco Inc. Travel Accident Insurance
Plan, the Tenneco Inc. Health Care Flexible Spending Account Program and
the Tenneco Inc. Dependent Day Care Flexible Spending Account Plan.
SECTION 2. General Employment Matters.
--------------------------
2.01 General Obligations. From and after the Distribution Date, each of
-------------------
Automotive Company and Packaging Company shall (and shall, as applicable, cause
each of the other members of its respective Group over which it has direct or
indirect legal or effective control to) (a) continue the employment of all of
the Active Employees of its respective Group, subject, however to the terms of
Section 2.03 below and (b) except as otherwise specifically provided herein,
pay, perform and discharge any and all labor, employment, compensation and
benefit liabilities, whether arising prior to, on or after the Distribution
Date, with respect to all such Active Employees and all Former Employees of its
respective Group. Notwithstanding the foregoing, all payments to be made to
Active Employees and Former Employees of TMC who are not employed by the
Automotive Group or the Packaging Group (excluding TMC) immediately after the
Distribution out of general corporate assets shall be made, processed and
administered by Tenneco Business Services Inc. ("TBS") (rather than by Packaging
Company or another member of the Packaging Group). Packaging Group shall
maintain one or more rabbi trusts to facilitate such payments.
2.02 Initial Compensation of Active Employees. The initial compensation
----------------------------------------
(base salary or wage level) of each Active Employee of each such Group as of the
Distribution Date shall be the same as the compensation (base salary or wage
level) of such Active Employee immediately prior to the Distribution Date.
2.03 No Additional Employment Rights Created. Nothing in this Agreement
---------------------------------------
shall give any Active Employee of any Group any right to continued employment by
any member of that Group or the other Group beyond the Distribution Date, which
is in addition to or supplemental to any such right he or she may have arising
under contract or otherwise.
SECTION 3. Collective Bargaining.
---------------------
3.01 Continuation of Existing Collective Bargaining Agreements. Each of
---------------------------------------------------------
Automotive Company and Packaging Company shall (and shall cause, as applicable,
each other member of its Group over which it has direct or indirect legal or
effective control to) continue to honor all collective bargaining agreements
covering the Active Employees of its respective Group which are in effect as of
the close of business on the Distribution Date, in accordance with and subject
to the terms of each such collective bargaining agreement.
3.02 Recognition of Incumbent Labor Organizations. Each of Automotive
--------------------------------------------
Company and Packaging Company shall (and shall cause, as applicable, each other
member of its Group over which it has direct or indirect legal or effective
control to) continue to recognize all
TENNECO DISTRIBUTION AGREEMENT
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incumbent labor organizations which, as of the close of business on the
Distribution Date, have established collective bargaining relationships in
respect of the Active Employees of its respective Group.
3.03 Continued Sponsorship of Hourly Employee Benefit Plans. Except as
------------------------------------------------------
otherwise specifically provided herein, each of Automotive Company and Packaging
Company shall continue (and shall, as applicable, cause each other member of its
respective Group over which it has direct or indirect legal or effective control
to continue) to sponsor all employee benefit plans for hourly employees which,
as of the close of business on the Distribution Date, are in existence and
relate to the Active Employees and/or Former Employees of its respective Group,
subject to its rights under such plans to amend or terminate such plans.
3.04 Provisions of Wages, Rights and Other Employment Benefits Required
------------------------------------------------------------------
Under Existing Collective Bargaining Agreements. Without limiting the generality
-----------------------------------------------
of the foregoing, each of Automotive Company and Packaging Company shall (and
shall cause each other member of its respective Group over which it has direct
or indirect legal or effective control to) provide those of its Active Employees
whose employment is subject to collective bargaining agreements and/or
established collective bargaining relationships as of the close of business on
the Distribution Date with the wages, benefits, and terms and conditions of
employment required by such agreements or relationships, except that (i)
participation in the Tenneco Inc. Employee Stock Purchase Plan will be suspended
as provided in Section 4.06 hereof, and (ii) the provisions of any defined
contribution plan calling for contributions or investment in the common stock of
Tenneco Inc. shall be amended in accordance with Section 4.05 hereof.
3.05 Limitation on Obligations. Each of the parties hereto hereby agrees
-------------------------
and acknowledges that nothing contained in this Agreement, including its
obligation to continue its applicable collective bargaining agreements or
relationships, shall be construed to restrict any right it, or any other member
of its respective Group, may have to terminate, renegotiate, reopen or otherwise
seek changes in any of its collective bargaining agreements or relationships.
SECTION 4. United States Salaried Pension and Thrift Benefits and Stock
------------------------------------------------------------
Purchase Plan.
-------------
4.01 Tenneco Retirement Plan. Effective as of the Impact Date (as defined
-----------------------
below), Automotive Company and all other members of that Group shall cease to be
sponsors of the Tenneco Retirement Plan (the "TRP"), and Packaging Company shall
become the sponsor of the TRP; provided that Packaging's sponsorship shall be
subject to the terms and conditions of the TRP. The TRP shall retain liability
for all pension benefits accrued by the Active Employees and Former Employees of
the Automotive Group who are or were formerly participants in the TRP through
the last day of the calendar month in which the Distribution Date occurs (the
"Impact Date"). Following the Distribution Date, Automotive Group will have no
liability, contingent or otherwise, with respect to the TRP, including without
limitation any liability for benefits accrued through the Impact Date (including
early retirement benefits and related subsidies, as to which all age, service
and participation requirements were satisfied on or before
TENNECO DISTRIBUTION AGREEMENT
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the Impact Date) for Active Employees or Former Employees of the Automotive
Group, and Packaging Company shall assume or retain, as the case may be, all
such liabilities.
Packaging Company shall succeed Tenneco Inc. under and with respect to
the Tenneco General Employee Benefit Trust (the "GEBT"). As soon as practicable
after the Distribution Date, Packaging Company shall cause the GEBT to transfer
to a trustee designated by Automotive Company the assets of the GEBT
attributable to the Automotive Group's hourly defined benefit pension plans.
Such transfer shall be in cash, except that Tenneco Common Stock may be
transferred, subject to the limitations of applicable law, and the assets
managed by one of more managers may be transferred.
Packaging Company shall create an investment committee (the "New
Committee") to manage the assets of the GEBT, equivalent to the committee which
performed those functions as of the Distribution Date (the "Old Committee"), and
the New Committee shall have as members, the members of the Old Committee as of
the Distribution Date until the earlier of March 31, 2000 or the date such
persons die, resign or are removed in accordance with rules equivalent to the
rules applicable to the Old Committee.
4.02 Amendment of TRP. The sponsor of the TRP shall amend the TRP to (a)
----------------
"freeze" the benefit accruals of the Active Employees of the Automotive Group as
of the Impact Date, and (b) provide that all benefits accrued as of the Impact
Date by the Active Employees of the Automotive Group shall be fully vested and
non-forfeitable (as will the benefits to Former Employees of the Automotive
Group to the extent required by applicable laws) and the sponsor shall inform,
in writing, as soon as practicable following the Impact Date, each such Employee
of his or her accrued benefits under the TRP as of the Impact Date.
4.03 No Credit for Post-Impact Date Service. Except as may be required by
--------------------------------------
law, the TRP shall not be required to count service with any entity other than a
member of the Packaging Group after the Impact Date for any purpose, nor shall
there be any requirement that Active Employees of the Automotive Group be
permitted to "grow into" normal or early retirement benefits under the TRP based
upon events occurring after the Impact Date.
4.04 Tenneco Thrift Plan. The active participation in the Tenneco Thrift
-------------------
Plan and the Tenneco Thrift Plan for Hourly Employees (collectively the "Tenneco
DC Plan") by persons other than the Active Employees of the Packaging Group
shall cease effective as of January 31, 2000 (the "Transition Date"). In
addition, Automotive Company and all other members of that Group shall cease to
be sponsors of the Tenneco DC Plan as of the Transition Date, and Packaging
Company shall become the sponsor of the Tenneco DC Plan from and after the
Transition Date. Automotive Group shall bear the costs of employer matching
contributions attributable to the participation of its employees in the Tenneco
DC Plan for the period commencing with the Distribution Date.
TENNECO DISTRIBUTION AGREEMENT
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4.05 Establishment of DC Plans.
-------------------------
(a) Automotive Thrift Plan. Automotive Company shall (and/or cause its
----------------------
respective Group members to) establish or make available on or with effect from
the Transition Date, one or more defined contribution plans for the benefit of
its Active Employees (collectively, the "Automotive Thrift Plan") which may,
subject to Section 4.05(d) hereof, be subject to amendment or termination by
Automotive Company or the applicable member of the Automotive Group.
(b) Transfer of Account Balances to Automotive Thrift Plan. As soon as
------------------------------------------------------
practicable following the Transition Date, Packaging Company shall cause the
Tenneco DC Plan to transfer to the Automotive Thrift Plan, the account balances
of each Active Employee of the Automotive Group and each Former Employee of the
Automotive Group with respect to whom the Tenneco DC Plan maintains an account
as of the close of business on the Transition Date. Such transfers shall be in
cash, except that the Automotive Thrift Plan will accept the following: (i)
Tenneco Common Stock, Packaging Common Stock received in the Distribution, stock
of Newport News Shipbuilding Inc. (if any remains in such account balances) and
stock of El Paso Energy Corporation (if any remains in such account balances)
for the Tenneco Common Stock fund portion of such account balances; (ii) amounts
credited to the Tenneco DC Plan which are held in mutual funds which are also
investment media in the Automotive Thrift Plan; and (iii) participant loans.
(c) Investment Options. Tenneco Common Stock shall not be offered as
------------------
an investment option with respect to contributions made after the Distribution
Date by the Packaging Group employees to the thrift plans of the Packaging
Group. The sponsor of each of the Tenneco DC Plan and the Automotive Thrift Plan
shall cause the plan to afford each participant therein, for a period of at
least 90 days following the Distribution Date, an election to sell the Common
Stock of the entities held in the plan's stock fund which does not directly or
indirectly employ him or her immediately following the Distribution Date. From
and after the Distribution Date employer stock contributions with respect to
Packaging Group employees shall be in Packaging Common Stock and employer stock
contributions with respect to the Automotive Group employees shall be in Tenneco
Common Stock.
TENNECO DISTRIBUTION AGREEMENT
▇-▇
▇▇
(▇) ▇▇▇▇▇▇▇ Automotive Obligations. The Automotive Company shall (and
------------------------------
shall cause each member of its Group over which it has legal or effective
direct or indirect control to) sponsor, establish, administer, maintain,
amend and otherwise deal with one or more defined contribution pension
plans (including the Automotive Thrift Plan) in a manner consistent with
any and all representations which Tenneco or its affiliates at the time
makes or has made to the Internal Revenue Service, including without
limitation, any actions that may be required to increase and/or maintain
the amount of Tenneco Common Stock held by such plans.
4.06 Tenneco Stock Purchase Plan. Participation in the Tenneco Inc.
---------------------------
Employee Stock Purchase Plan will be suspended effective June 30, 1999 and will
not resume prior to the Distribution Date.
SECTION 5. Pension Matters Outside the United States. With respect to the
-----------------------------------------
business and operations of each Group in jurisdictions outside the United
States, each of the parties hereto shall (and, as applicable, shall cause each
other member of its Group over which it has direct or indirect legal or
effective control to) assume and retain any and all pension liabilities and
attendant plans and their assets related to its Active Employees and Former
Employees.
SECTION 6. Executive and Directors' Compensation.
-------------------------------------
6.01 Tenneco Supplemental Executive Retirement Plan. Effective upon the
----------------------------------------------
Distribution Date, Tenneco and Packaging Company shall cause the Tenneco Inc.
Supplemental Executive Retirement Plan and the Tenneco Inc. Pilots' Supplemental
Retirement Plan (collectively, the "SERP") to be amended to cause the separation
of participation in, and liabilities under, the SERP as follows: (1) Packaging
Company shall (a) become the sponsor of the SERP with respect to all Active
Employees and Former Employees of its respective Group and, subject to the terms
of the 1996 Benefits Agreement (as defined below), all active and former
employees of the Shipbuilding Group and Energy Group (each as defined below),
and all other participants in the SERP not specifically allocated to Automotive
Company below and (b) assume and agree to pay, perform and discharge all
liabilities under the SERP with respect to such employees, whether accrued
before, on or after the Distribution Date; and (2) Automotive Company shall
continue sponsorship of the SERP with respect to all Active Employees and Former
Employees of its respective Group and shall assume and agree to pay, perform and
discharge all liabilities under the SERP with respect to such employees, whether
accrued before, on or after the Distribution Date. All accrued benefits under
the SERP as of the close of business on the Distribution Date shall be fully
vested and nonforfeitable; provided, that this rule shall not be applied to
grant an employee an amount equal to the benefit he or she has accrued under the
Tenneco Retirement Plan but only the amount provided by the SERP, nor shall it
be applied to alter or diminish any service requirement contained in any special
appendix or other document providing benefits in addition to those called for by
the SERP generally.
6.01A Pullman Supplemental Pension Benefits. Notwithstanding any other
-------------------------------------
provision hereof, the Automotive Company shall retain and succeed to any and all
liabilities for non-qualified defined benefit pension benefits for Active
Employees and Former Employees of its
TENNECO DISTRIBUTION AGREEMENT
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respective Group who were formerly employed by The Pullman Company, Peabody
International Corporation or any predecessor of either, including without
limitation, benefits under the Peabody Special Benefits Plan, the Peabody
Supplemental Plan and the Pullman Supplemental Plan (the "Pullman Plans").
Automotive Company shall retain sponsorship of the rabbi trust created in
connection with the Pullman Plans.
6.02 Tenneco Inc. Deferred Compensation Plan. The participation of the
Active Employees and Former Employees of the Automotive Group in the Tenneco
Inc. Deferred Compensation Plan (the "DC Plan") shall cease as of the
Distribution Date. As of the Distribution Date, (i) Automotive Company shall
assume the liability for the accounts of its Active Employees and Former
Employees in the DC Plan, (ii) Packaging Company shall assume the liability for
the accounts of the Active Employees and Former Employees of the Packaging Group
in the DC Plan, and (iii) Packaging Company shall succeed to sponsorship of the
DC Plan. The Automotive Group Active Employee's or Former Employee's account in
the DC Plan as of the Distribution Date shall become the opening balance of such
Active Employee's or Former Employee's account in a nonqualified deferred
compensation plan created, as of the Distribution Date by the Automotive Group.
Such opening balances shall become fully vested as of the close of business on
the Distribution Date.
6.03 Tenneco Benefits Protection Program and Rabbi Trust. The Tenneco Inc.
Benefits Protection Trust (the "BPT") and the Tenneco Inc. Rabbi Trust
(collectively the "Trusts") shall be terminated prior to the Distribution, and
neither Packaging Company nor Automotive Company shall have any liability with
respect to either of the Trusts or any of the terms of either.
6.04 [RESERVED]
6.05 Stock Options. Effective as of the Distribution Date, Tenneco shall
cause all outstanding options to purchase Tenneco Common Stock held by employees
and officers other than (i) Active Employees and Former Employees of Automotive
Group, (ii) employees of Packaging Corporation of America and (iii) employees of
the folding carton division (or persons who have succeeded to the rights of any
persons described in (i), (ii) or (iii) with respect to options to purchase
Tenneco Common Stock) to be replaced by options to purchase Packaging Common
Stock. Subject to the requirements of applicable law and generally accepted
accounting principles, the number, exercise price and other terms of such
replacement options shall be determined in a manner consistent with that
described in Exhibit A attached hereto. Options held by persons described in
clause (ii) or (iii) above, not exercised prior to the Distribution Date shall
be canceled effective as of the Distribution Date.
Options held by Active Employees and Former Employees of Automotive
Group (or persons who have succeeded to the rights of such persons) shall,
unless exercised prior to the Distribution Date, remain outstanding as adjusted
as provided herein after the Distribution Date, subject to the requirements of
applicable law and generally accepted accounting principles. The parties
recognize that in some jurisdictions, Automotive employees were granted rights
other than stock options in lieu of the Special Stock Option Award of 100
options per grantee, and in
TENNECO DISTRIBUTION AGREEMENT
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those jurisdictions, the outstanding rights will be adjusted comparably. The
Automotive Company options and rights shall have the same terms and conditions
as prior to the Distribution Date except that the number of options and the
option exercise price shall be adjusted as described in Exhibit A attached
hereto.
To the extent that the exercisability of options to purchase Tenneco
Common Stock currently is subject to the attainment of share price hurdles,
those hurdles will also be adjusted with respect to both options to purchase
Packaging Common Stock and Tenneco Common Stock.
Tenneco may grant special pre-Distribution Date exercisability with
respect to some or all options which are not otherwise exercisable.
6.06 Directors. Except for stock options which will expire at the
Distribution in accordance with their terms, stock options held by directors of
Tenneco and/or Packaging Company shall be treated as provided in
Section 6.05 hereof as if the director in question were an employee.
Notwithstanding the foregoing, stock options held by directors who do not
continue on the board of Packaging Company or Automotive Company will be
replaced by Packaging Company options in accordance with Section 6.05 hereof.
The 1997 Tenneco Inc. Board of Directors Deferred Compensation Plan shall be
treated as provided in Section 6.02 hereof, and the directors' accounts shall be
treated as if the directors were employees. If an individual becomes a director
of both Packaging Company and Automotive Company immediately after the
Distribution Date, his or her options, unless they expire at the Distribution,
shall be split and maintained one-half by Packaging Company and one-half by
Automotive Company; and with respect to individuals who were outside directors
prior to the Distribution Date, their deferred compensation accounts shall be
split similarly.
Any continuing liabilities under the terminated Outside Directors'
Retirement Plan including the obligation to grant restricted stock in lieu of
such plan shall be retained and performed by Automotive Company.
SECTION 7. Welfare Plans.
7.01 Tenneco Salaried Welfare Plans. Effective on December 31, 1999, each
member of the Automotive Group shall cease to be a sponsor of the Tenneco
Salaried Welfare Plans, Active Employees and Former Employees of Automotive
Group shall cease to participate in the Tenneco Salaried Welfare Plans as of
that date, and Packaging Company shall serve as the sponsor of the Tenneco
Salaried Welfare Plans from and after that date. Automotive Company shall
reimburse Packaging Company for all claims paid with respect to the
participation of its employees in such plans.
SECTION 8. General.
8.01 Post-Distribution Administration of Plans. The parties hereto agree to
administer all plans consistently herewith, and to the extent necessary to amend
plans accordingly.
TENNECO DISTRIBUTION AGREEMENT
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8.02 Cost and Expenses. Except as otherwise expressly provided herein, each
-----------------
party shall bear all costs and expenses, including but not limited to legal,
administrative and actuarial fees, incurred in the design, drafting,
administration and implementation of any and all plans and compensation
structures which it enables or creates and the amendment of its existing plans
or compensation structures.
8.03 RESERVED
--------
8.04 Human Resources Support Services. Subject to the rules set forth
--------------------------------
below, Packaging Company shall provide (or have provided by TBS or otherwise to)
Automotive Company or its Affiliates the following corporate-wide human resource
support services that are currently being provided to the Automotive Company
and/or members of the Automotive Group:
a. Benefits administration by ▇▇▇▇▇▇ & Associates LLC
and other outside administrators. Packaging Company
will provide management of the services that are
outsourced and continue benefits administration
services currently being provided by TBS.
b. Assistance in executive compensation plans, including
stock options, restricted stock, performance shares,
deferred compensation, director's stock options, and
director's restricted stock.
c. Generation of EEO reports.
d. Packaging Company will prepare, process and disburse
invoices and check requests for Prudential
relocations or cause such services to be provided.
Packaging Company shall provide the services described in this Section 8.04
for the period from the Distribution Date through the earlier of (i) December
31, 2000 and (ii) the date as of which Automotive Company no longer desires such
services, provided that Automotive Company shall have given Packaging Company at
least 60 days' advance written notice of such date.
In consideration for such services, other than third party fees as
described in the next sentence, Automotive Company shall pay Packaging Company
per . Any third party fees for such services for outsourced
providers utilized with respect to the Automotive Group as of the date hereof,
or for new outsourced providers selected with prior consent of Automotive
Company (which consent shall not be unreasonably withheld or delayed), will be
billed directly by the third party to Automotive Company; provided, that if the
third party refuses to ▇▇▇▇ Automotive Company directly, Automotive Company
shall reimburse Packaging Group for all amounts which it pays such third party
on behalf of Automotive Company. Reference is made to the Transition Services
Agreement between Tenneco and Packaging Company of even date herewith (the
"Transition Services Agreement"). The services described in this Section 8.04
shall be considered Packaging Services (as such term is defined in the
Transition Services Agreement) for purposes of Sections 2.3, 3, 4, 5 and 7 of
the Transition
TENNECO DISTRIBUTION AGREEMENT
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Services Agreement and shall be provided in accordance with and subject to the
terms and conditions thereof. The provisions of Sections 4.2, 4.3, 4.4 and 7 of
the Transition Services Agreement shall survive termination of the provision of
services hereunder.
SECTION 9. Miscellaneous.
-------------
9.01 1996 Benefits Agreement. Effective on the Distribution Date, Tenneco
-----------------------
shall assign to Packaging Company all of its rights under, and Packaging Company
shall assume and agree to pay, perform and discharge when due (and will
thereafter indemnify each member of the Automotive Group against) all
obligations, liabilities and responsibilities of Industrial Company under, the
certain Benefits Agreement (the "1996 Benefits Agreement"), dated as of December
11, 1996, by and among New Tenneco Inc., Newport News Shipbuilding Inc. and the
company then known as Tenneco Inc. The rights Tenneco shall assign to Packaging
Company under the 1996 Benefits Agreement shall include, without limitation, the
right to receive and retain all reimbursements for the payment of SERP benefits
to employees and former employees of the Shipbuilding Group and Energy Group
(capitalized terms used in this Section 9.01 and in Section 6.01 and not
otherwise defined in this Agreement shall have the meanings ascribed to such
terms in the 1996 Benefits Agreement).
9.02 Complete Agreement; Construction. This Agreement and the Distribution
--------------------------------
Agreement shall constitute the entire agreement between the parties with respect
to the subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter. Notwithstanding
any other provisions in this Agreement or the Distribution Agreement to the
contrary, in the event and to the extent that there shall be a conflict between
the provisions of this Agreement and the provisions of the Distribution
Agreement or any other Ancillary Agreement, this Agreement shall
control.
9.03 Other Ancillary Agreements. This Agreement is not intended to address,
--------------------------
and should not be interpreted to address, the matters specifically and expressly
covered by any of the other Ancillary Agreements.
9.04 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
9.05 Survival of Agreements. Except as otherwise expressly provided herein,
----------------------
all covenants and agreements of the parties contained in this Agreement shall
survive the Distribution Date.
9.06 Notices. All notices and other communications to a party hereunder
-------
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to such party (and
will be deemed given on the date on which the notice is received by such party)
at the address for such party set forth in the Distribution Agreement (or at
such other
TENNECO DISTRIBUTION AGREEMENT
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81
address for the party as the party shall, from time to time, specify by like
notice to the other parties).
9.07 Waivers. The failure of any party hereto to require strict performance
-------
by any other party of any provision in this Agreement will not waive or diminish
the party's right to demand strict performance thereafter of that or any other
provision hereof.
9.08 Amendments. This Agreement may not be modified or amended except by an
----------
agreement in writing signed by the parties hereto.
9.09 Assignment. This Agreement shall be assignable in whole in connection
----------
with a merger or consolidation or the sale of all or substantially all the
assets of a party hereto so long as the resulting, surviving or transferee
entity assumes all the obligations of the relevant party hereto by operation of
law or pursuant to an agreement in form and substance reasonably satisfactory to
the other parties to this Agreement. Otherwise this Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the other (which consent shall not be
unreasonably withheld or delayed), and any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be void.
9.10 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon, inure to the benefit of and be enforceable by the parties and
their respective permitted successors and permitted assigns.
9.11 No Third Party Beneficiaries. This Agreement is solely for the benefit
----------------------------
of the parties hereto and the members of their respective Groups, after giving
effect to the Distribution, and should not be deemed to confer upon other third
parties any remedy, claim, liability, right of reimbursement, claim of action or
other right in excess of those existing without reference to this
Agreement.
9.12 Attorney Fees. A party determined to be in breach of this Agreement
-------------
shall, on demand, indemnify and hold harmless the other party hereto for and
against all out-of-pocket expenses, including, without limitation, reasonable
legal fees, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement; provided, that such determination
shall be effective only when made by the court having final jurisdiction of the
matter and the period for appeal from that court, if any, shall have expired.
The payment of such expenses is in addition to any other relief to which such
other party may be entitled hereunder or otherwise.
9.13 Title and Headings. Titles and headings to sections herein are
------------------
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
TENNECO DISTRIBUTION AGREEMENT
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9.14 Governing Law. ALL QUESTIONS AND/OR DISPUTES CONCERNING THE
-------------
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS
HERETO SHALL BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF DELAWARE. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY (i) AGREES TO BE SUBJECT TO, AND HEREBY CONSENTS AND SUBMITS
TO, THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND THE FEDERAL
COURTS SITTING IN THE STATE OF DELAWARE, (ii) TO THE EXTENT SUCH PARTY IS NOT
OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE STATE OF DELAWARE, HEREBY
APPOINTS THE CORPORATION TRUST COMPANY, AS SUCH PARTY'S AGENT IN THE STATE OF
DELAWARE FOR ACCEPTANCE OF LEGAL PROCESS AND (iii) AGREES THAT SERVICE MADE ON
ANY SUCH AGENT SET FORTH IN (ii) ABOVE SHALL HAVE THE SAME LEGAL FORCE AND
EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN THE STATE OF DELAWARE.
9.15 Severability. In the event any one or more of the provisions contained
------------
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
9.16 Subsidiaries. Each of the parties hereto shall cause to be performed,
------------
and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party
which is contemplated to be a Subsidiary of such party on and after the
Distribution Date.
TENNECO DISTRIBUTION AGREEMENT
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TENNECO INC.
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
----------------------------------------
TENNECO PACKAGING INC. (to be renamed)
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT A
OPTION CONVERSION FORMULA*/
Formula
-------
Original option exercise price x New = New
------------------------------
Original market price of Tenneco market price of Tenneco option exercise price
Common Stock**/ Common Stock or Packaging ("New Option Price")
Common Stock, as applicable***/
No. of shares underlying original option x original option exercise price = Number of shares
-------------------------------------------------------------------------
New Option Price underlying new option
Assume
------
1,000 No. of shares Tenneco Common Stock underlying original option
$ 45.31 Original option exercise price
$ 25.00 Original market price of Tenneco Common Stock
$ 7.00 New market price for Tenneco Common Stock
$ 18.00 New market price for Packaging Common Stock
Adjusted Tenneco Options (for Automotive Group employees)
------------------------
$45.31 x $7.00 = $12.69 New Option Price
------
$25.00
1,000 x $45.31 = 3,571 shares Tenneco Common Stock
-------------- underlying new option
$12.69
----------------------------
*/ May be adjusted, as necessary, to reflect a reverse stock split by Tenneco
which becomes effective after the Distribution.
**/ Based on the closing sale price of the "full value" Tenneco Common Stock
(i.e. not giving effect to the declaration of any dividend) on the New York
Stock Exchange ("NYSE") on the day immediately prior to the Distribution Date.
***/ For the new market price of Tenneco Common Stock: Based on the closing sale
price of Tenneco Common Stock "without due bills" on the day immediately prior
to the Distribution Date, unless "when issued" trading for Tenneco Automotive
Inc. Common Stock exists on such date, in which case the new market price of the
Tenneco Common Stock would be based on the closing "when issued" market sale
price of Tenneco Automotive Inc. Common Stock on such date. For the new market
price of Packaging Common Stock: Based on the closing "when issued" market sale
price of Packaging Common Stock on the day immediately prior to the Distribution
Date, as applicable.
TENNECO DISTRIBUTION AGREEMENT
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New Packaging Company Options (for Packaging Group employees)
-----------------------------
$45.31 x $18.00 = $32.62 New Option Price
------
$25.00
1,000 x $45.31 = 1,389 shares Packaging Common Stock
-------------- underlying new option
$32.62
TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT F
PACKAGING
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1999
(IN MILLIONS)
PRO FORMA ADJUSTMENTS
-----------------------------
SPIN-OFF PACKAGING
PACKAGING DEBT AND RELATED PRO FORMA
HISTORICAL REALIGNMENT TRANSACTIONS COMBINED
ASSETS ---------- ----------- ------------ ---------
Current assets:
Cash and temporary cash
investments............................................. $ 18 $ -- $ -- $ 18
Receivables............................................... 375 -- 119(b) 494
Inventories............................................... 447 -- -- 447
Prepayments and other..................................... 72 -- -- 72
------ ------ ------- ------
Total current assets.................................. 912 -- 119 1,031
Plant, property, and equipment, net......................... 1,495 -- -- 1,495
Goodwill and intangibles, net............................... 1,028 -- -- 1,028
Other assets and deferred charges........................... 918 59(a) 85(c) 1,062
Net assets of discontinued
operations................................................ 133 -- -- 133
------ ------ ------- ------
Total assets.......................................... $4,486 $ 59 $ 204 $4,749
====== ====== ======= ======
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt........................................... $ 367 $ 829(a) $ -- $1,196(e)
Trade payables............................................ 357 -- -- 357
Other current liabilities................................. 336 -- -- 336
------ ------ ------- ------
Total current liabilities............................. 1,060 829 -- 1,889
Long-term debt.............................................. 1,494 (494)(a) -- 1,000(e)
Deferred income taxes....................................... 380 (52)(a) 34(c) 362
Other liabilities and deferred credits...................... 198 -- -- 198
Minority interest........................................... 14 -- -- 14
Equity:
Combined equity........................................... 1,340 (224)(a) 119(b) --
51(c)
(1,286)(d)
Common stock.............................................. -- -- 2(d) 2
Paid-in capital........................................... -- -- 1,284(d) 1,284
Retained earnings......................................... -- -- --(d) --
------ ------ ------- ------
Total liabilities and equity.......................... $4,486 $ 59 $ 204 $4,749
====== ====== ======= ======
See the accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
TENNECO DISTRIBUTION AGREEMENT
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87
PACKAGING
NOTES TO UNAUDITED PRO FORMA
COMBINED BALANCE SHEET
(a) To reflect debt allocated to Packaging in the debt realignment. The
adjustment to equity reflects the net impact of the debt realignment, the
recording of debt issue costs and deferred income taxes related to the
exchange offers and other transaction costs. Pro forma long-term debt
includes $980 million of new securities ($ million aggregate principal
amount) assumed to be exchanged in the exchange offers, and $20 million of
long-term debt of Packaging subsidiaries. Pro forma short-term debt includes
$1,187 million borrowed under Packaging's new credit facilities to be
entered into as part of this debt realignment and $9 million of short-term
debt of Packaging subsidiaries. At this time, Packaging and Tenneco cannot
determine the ultimate amount of the original securities which will be
exchanged into new securities, and this amount could vary significantly.
These pro forma adjustments assume that 100% of the original securities
subject to the exchange offers will be exchanged for new securities and the
new securities will be recorded at the net carrying amount of the original
securities (in other words, the new securities are assumed not to be
"substantially different;" see "Accounting Treatment of the Exchange
Offers"). The results of the exchange offers could vary based on a number of
factors, including the level of acceptance of the exchange offers, the
interest rate of the exchanged securities and whether the exchanges will be
considered extinguishments for accounting purposes. Based on current
interest rate markets, Packaging expects that the exchange offers will not
be extinguishments for accounting purposes. Therefore, Packaging does not
expect to recognize an extraordinary loss attributable to the debt exchange.
Other costs, including transaction costs related to the spin-off and
contractual employment obligations, are expected to be incurred by Packaging
in connection with the corporate restructuring transactions and the spin-off
which Packaging estimates will be approximately $70 million after-tax. The
effects on Packaging's debt of these costs has been reflected in this pro
forma adjustment. However, these charges have not been included in the
unaudited pro forma combined statement of income.
(b) To reflect the purchase of Packaging accounts receivable at fair value which
had previously been sold to a third party.
(c) To reflect the transfer to Packaging of prepaid pension costs attributable
to Automotive employees and the corresponding reduction in net periodic
pension costs and the increase in prepaid pension cost attributable to the
curtailment of the pension benefits related to Automotive employees.
Automotive employees will no longer participate in the Tenneco Retirement
Plan following the spin-off and Packaging will become the sponsor of this
plan. These prepaid pension costs will be transferred to Packaging in
connection with the corporate restructuring transactions. Packaging
estimates that a curtailment gain of approximately $30 million will be
recognized relating to the freezing of Automotive employees' pension
benefits in connection with the spin-off. This gain has not been included in
the unaudited pro forma combined statements of income.
(d) To reflect the spin-off of Packaging common stock to holders of Tenneco
common stock at an exchange ratio of one share of Packaging common stock for
each share of Tenneco common stock.
(e) The Packaging pro forma debt balances do not give effect to the application
of any proceeds from the planned sale of Packaging's remaining interest in
Packaging's containerboard joint venture. Packaging expects the sale to be
completed before the spin-off, with the proceeds used to repay the Tenneco
debt that would otherwise be allocated to Packaging in the debt realignment.
If the sale occurs after the spin-off, the net proceeds will be used to
retire Packaging debt. Estimated proceeds ranging from $ to
$ are anticipated to be received from the sale of Packaging's
remaining interest in its containerboard joint venture. For each $50 million
of after-tax proceeds received from the sale, pro forma interest expense
would be reduced by approximately $3 million on an annual basis and pro
forma income from continuing operations would be increased by approximately
$2 million on an annual basis, or $0.01 per diluted common share.
F-2
88
EXHIBIT G
PACKAGING SUBSIDIARIES
TENNECO PACKAGING INC. (DELAWARE)
A&E Plastics, Inc. (Delaware).......................................................................100 %
Aircal S.A. (France)................................................................................100
(Tenneco Packaging Inc. owns all shares except seven which are held by its
four directors and Tenneco Protective Packaging Inc. and Tenneco Packaging
International Holdings Inc.)
Airpack Japan K.K. (Japan)..........................................................................100
Airpack Polska Sp.Z.O.O. (Poland)...................................................................100
Airpack SPA (Italy)................................................................................. 98
(Tenneco Packaging Inc. owns 98%; Tenneco Packaging International
Holdings Inc. owns 2%)
Altapack SPA (Italy)............................................................................100
Alupak, A.G. (Switzerland)..........................................................................100
▇▇▇▇▇▇ Finance Corporation (Delaware)...............................................................100
Dongguan PCA Packaging Co., Ltd. (Peoples Republic of China).........................................50
(Tenneco Packaging Inc. owns 50%; and Dongguan Dong Ya Color Printing
& Packaging Factory, an unaffiliated company, owns 50%)
EKCO Products, Inc. (Illinois)......................................................................100
E-Z Por Corporation (Delaware)......................................................................100
Glacier-Cor US Corporation (Delaware)...............................................................100
Glacier-Cor US Holding Corporation (Delaware)...................................................100
E. H. Carton Products - Management Company Ltd. (Israel)....................................50
(Glacier-Cor US Holding Corporation owns 50%; and
non-affiliates owns 50%)
Glacier-Cor 1995 L.P. (Israel)...........................................................2
(E.H. Carton Products - Management Company Ltd. owns 2%;
Ha'Lakoach Ha'▇▇▇▇▇▇ ▇▇'Sheesheen Ou'▇▇▇▇▇'▇▇▇ Ltd.
owns 49%; and non-affiliates own 49%)
Ha'Lakoach Ha'▇▇▇▇▇▇ ▇▇'Sheesheem Ou'▇▇▇▇▇'▇▇▇ Ltd. (Israel)................................99
(Glacier-Cor US Holding Corporation owns 99%; and
Hexacomb Corporation owns 1%)
Glacier-Cor 1995 L.P. (Israel)..........................................................49
(Ha'Lakoach Ha'▇▇▇▇▇▇ ▇▇'Sheesheen Ou'▇▇▇▇▇'▇▇▇ Ltd.
owns 49%; non-affiliates own 49%; and E. H. Carton Products -
Management Company Ltd. owns 2%)
Kinarot Pallet Ltd. (Israel)............................................................50
(Ha'Lakoach Ha'▇▇▇▇▇▇ owns 50%; and I.M.A. Engineering,
an Israeli company and a non-affiliate, owns 50%
Yamaton Ltd. (Israel....................................................................33.3
(Ha'Lakoach Ha'▇▇▇▇▇▇ owns 33.3%; and non-affiliates,
Kibbutz Ein Hamifietz and Kibbutz Ga'aton own 66.7%
Hexacomb Corporation (Illinois).....................................................................100
Ha'Lakoach Ha' ▇▇▇▇▇▇ ▇▇' Sheesheem Ou' ▇▇▇▇▇'▇▇▇ Ltd. (Israel)...................................1
(Hexacomb Corporation owns 1%; and Glacier-Cor US Holding
Corporation owns 99%. Subsidiaries are listed above.)
TENNECO DISTRIBUTION AGREEMENT
G-1
89
SUBSIDIARIES OF TENNECO PACKAGING INC.
SUBSIDIARIES OF HEXACOMB CORPORATION
Hexajapan Company, Ltd. (Japan)..................................................................60 %
(Hexacomb Corporation owns 60%; and non-affiliates own 40%)
Kobusch Packaging Egypt Ltd. (Egypt).................................................................99.75
(Tenneco Packaging Inc. owns 99.75%; and Tenneco Kobusch-Folien GmbH
owns .25%)
Omni-Pac S.A.R.L. (France)...........................................................................97
(Tenneco Packaging Inc. owns 97%; and Tenneco Omni-Pac GmbH & Co. KG
Verpackungsmittel owns 3%)
Packaging Corporation of America (Delaware)..........................................................43.5
(Tenneco Packaging Inc. owns 43.5%; PCA Holdings LLC, an
unaffiliated limited liability company, owns 53.2%; and
PCA's management owns 3.3%)
American Cellulose Corporation (Delaware)........................................................50
(Packaging Corporation of America owns 50%; and ▇▇▇▇▇ ▇. ▇▇▇▇▇, an
unaffiliated individual, owns 50%)
Dahlonega Packaging Corporation (Delaware)......................................................100
▇▇▇▇▇ Container Corporation (Virginia)..........................................................100
PCA Hydro, Inc. (Delaware)......................................................................100
PCA Tomahawk Corporation (Delaware).............................................................100
PCA Valdosta Corporation (Delaware).............................................................100
PCA Box Company (Delaware)(1).......................................................................100
PCA Romania Srl (Romania)............................................................................50
(Tenneco Packaging Inc. owns 50%; and Kraftcorr Inc., an unaffiliated company, owns
50%)
PCA West Inc. (Delaware)............................................................................100
Coast-Packaging Company (California General Partnership).........................................50
(PCA West Inc. owns 50%, as General Partner; and ▇. ▇. ▇▇▇▇▇ Sales
Company, an unaffiliated company, owns 50%, as General Partner)
Pressware International, Inc. (Delaware)............................................................100
Revere Foil Containers, Inc. (Delaware).............................................................100
Scriptoria N.V. (Belgium)............................................................................99.6
(Tenneco Packaging Inc. owns approximately 99.6%; Tenneco Packaging
International Holdings Inc. owns 18 shares; and the remainder of the shares
are held by unknown third parties)
Sentinel GmbH Verpackungen (Germany).............................................................<1
(Scriptoria N.V. owns <1%; and Tenneco Packaging Inc. owns >99%)
Sentinel GmbH Verpackungen (Germany).................................................................99
(Tenneco Packaging Inc. owns >99%; and Scriptoria N.V. owns <1%)
--------
(1) In dissolution.
TENNECO DISTRIBUTION AGREEMENT
G-2
90
SUBSIDIARIES OF TENNECO PACKAGING INC.
Sentinel Polyolefins, L.L.C..........................................................................50 %
(Tenneco Packaging Inc. owns 50%; and Sentinel Products Corp., an
unaffiliated company and its principals, own 50%)
Suncor, Inc. (South Carolina).......................................................................100
Tenneco AVI Acquisition Inc. (Delaware).............................................................100
Tenneco Business Services Holdings Inc. (Delaware)..................................................100
Tenneco Business Services Inc. (Delaware).......................................................100
Tenneco CAP Acquisition Inc. (Delaware)(1)..........................................................100
Tenneco CPI Holding Company (Delaware)..............................................................100
Tenneco Forest Products GmbH (Germany)..............................................................100
PCA Embalajes Espana S.L. (Spain)................................................................99
(Tenneco Forest Products GmbH owns 99%; and Tenneco Omni-Pac Ekco
Verpackungsmittel GmbH & Co. KG owns 1%)
Tenneco International Business Development Limited (Delaware).......................................100
Ambassador Packaging (Ireland) Limited (Ireland)................................................100
Tenneco International Finance B.V. (Netherlands)....................................................100
Tenneco Management Company (Delaware)...............................................................100
Tenneco Management (Europe) Limited (United Kingdom)................................................100
Tenneco NHC Inc. (Nevada)...........................................................................100
Tenneco Packaging - Chile Holdings Inc. (Delaware)..................................................100
Tenneco Packaging - Chile S.A. (Chile)..........................................................100
Tenneco Packaging de Mexico, S.A. de C.V. (Mexico)....................................................0.01
(Tenneco Packaging Inc. owns 1 share; and Tenneco Packaging
International Holdings Inc. owns 499,999 shares)
Tenneco Packaging Deutschland Holdinggesellschaft mbH (Germany).....................................100
Kobusch Folien Verwaltungsgesellschaft mbH (Germany)............................................100
Tenneco Kobusch-Folien GmbH & Co. KG (Germany).............................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Kobusch-Folien Verwaltungsgesellschaft mbH
is the General Partner)
Kobusch Packaging Egypt Ltd. (Egypt).....................................................0.25
(Tenneco Kobusch-Folien GmbH & Co. KG owns 0.25%; and
Tenneco Packaging Inc. owns 99.75%)
Nord-West Verpackung Verwaltungsgesellschaft mbH (Germany)......................................100
Tenneco Nord-West Verpackung GmbH & Co. KG (Germany).......................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Nord-West Verpackung Verwaltungs-
gesellschaft mbH is the General Partner)
Nord-West Wohnungsbau GmbH (Germany)...................................................100
Omni-Pac Ekco Verpackungsmittel Verwaltungsgesellschaft mbH (Germany)...........................100
--------
(1) In dissolution.
TENNECO DISTRIBUTION AGREEMENT
G-3
91
SUBSIDIARIES OF TENNECO PACKAGING INC.
SUBSIDIARIES OF TENNECO PACKAGING DEUTSCHLAND HOLDINGGESELLSCHAFT MBH
SUBSIDIARIES OF OMNI-PAC EKCO VERPACKUNGSMITTEL VERWALTUNGSGESELLSCHAFT MBH
Tenneco Omni-Pac Ekco Verpackungsmittel GmbH & Co. KG (Germany)............................100 %
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Omni-Pac Ekco Verpackungsmittel Verwaltungs-
gesellschaft mbH is the General Partner)
Omni-Pac Poland Sp. z o.o. (Poland)....................................................100
PCA Embalajes Espana S.L. (Spain)........................................................1
(Tenneco Omni-Pac Ekco Verpackungsmittel GmbH & Co. KG
owns 1%; and Tenneco Forest Products GmbH owns 99%)
Omni-Pac Verpackungsmittel Verwaltungsgesellschaft mbH..........................................100
Tenneco Omni-Pac GmbH & Co. KG Verpackungsmittel (Germany).................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Omni-Pac Verpackungsmittel Verwaltungs-
gesellschaft mbH is the General Partner)
Omni-Pac ApS (Denmark).................................................................100
Omni-Pac A.B. (Sweden).................................................................100
Omni-Pac S.A.R.L. (France)...............................................................3
(Tenneco Omni-Pac GmbH & Co. KG Verpackungsmittel owns 3%;
and Tenneco Packaging Inc. owns 97%)
Sengewald Verpackungen Verwaltungsgesellschaft mbH (Germany)....................................100
Tenneco Sengewald Verpackungen GmbH & Co. KG (Germany).....................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Sengewald Verpackung Verwaltungs-
gesellschaft mbH is the General Partner)
Sengewald Klinikprodukte Verpackungsmittel GmbH.................................................100
Tenneco Sengewald Klinikprodukte GmbH & Co. KG (Germany)...................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Sengewald Klinikprodukte Verwaltungs-
gesellschaft mbH is the General Partner)
Sengewald France S.A.R.L. (France)(1)..................................................100
Tenneco Omni-Pac GmbH & Co. KG Verpackungsmittel (Germany)......................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Omni-Pac Verpackungsmittel Verwaltungs-
gesellschaft mbH is the General Partner)
Tenneco Omni-Pac Ekco Verpackungsmittel GmbH & Co. KG (Germany).................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Omni-Pac Ekco Verpackungsmittel Verwaltungs-
gesellschaft mbH is the General Partner)
--------
(1) In dissolution.
TENNECO DISTRIBUTION AGREEMENT
G-4
92
SUBSIDIARIES OF TENNECO PACKAGING INC.
SUBSIDIARIES OF TENNECO PACKAGING DEUTSCHLAND HOLDINGGESELLSCHAFT MBH
Tenneco Sengewald Verpackungen GmbH & Co. KG (Germany)..........................................100 %
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Sengewald Verpackung Verwaltungs-
gesellschaft mbH is the General Partner)
Tenneco Kobusch-Folien GmbH & Co. KG (Germany)..................................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Kobusch-Folien Verwaltungsgesellschaft mbH
is the General Partner)
Tenneco Nord-West Verpackung GmbH & Co. KG (Germany)............................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Nord-West Verpackung Verwaltungs-
gesellschaft mbH is the General Partner)
Tenneco Sengewald Klinikprodukte GmbH & Co. KG (Germany)........................................100
(Tenneco Packaging Deutschland Holdinggesellschaft mbH is the
Limited Partner; and Sengewald Klinikprodukte Verwaltungs-
gesellschaft mbH is the General Partner)
Tenneco Packaging Europe B.V. (Netherlands).........................................................100
Nederlandse Pillo-Pak Maatschappij B.V. (Netherlands)...........................................100
Tenneco Packaging Hexacomb S.A. (Spain).............................................................100
Tenneco Packaging Hungary Holdings Inc. (Delaware)..................................................100
Tenneco Packaging Hungary Packaging Material Limited (Hungary)(1)...................................100
Budafok Recycling Waste Paper Recovery Ltd. (Hungary)................................................63.8
(Tenneco Packaging Hungary Packaging Material Limited owns 63.8%;
and Asco Hungaria Kft., an unaffiliated company, owns 36.2%)
Tenneco Packaging International Holdings Inc. (Delaware)............................................100
Airpack SPA (Italy)...............................................................................2
(Tenneco Packaging International Holdings Inc. owns 2%; and Tenneco
Packaging Inc. owns 98%)
Scriptoria N.V. (Belgium)........................................................................<1
(Tenneco Packaging International Holdings Inc. owns <1% or 18 shares;
Tenneco Packaging Inc. owns approximately 99.6%; and the remainder
of the shares are held by unknown third parties)
Tenneco Packaging de Mexico, S.A. de C.V.........................................................99.99
(Tenneco Packaging International Holdings Inc. owns 499,999 shares; and
Tenneco Packaging Inc. owns 1 share)
--------
(1) This company is commonly referred to as "Tenneco Packaging Hungary Kft."
TENNECO DISTRIBUTION AGREEMENT
G-5
93
SUBSIDIARIES OF TENNECO PACKAGING INC.
SUBSIDIARIES OF TENNECO PACKAGING INTERNATIONAL HOLDINGS INC.
SUBSIDIARIES OF TENNECO PACKAGING DE MEXICO, S.A. DE C.V.
Empaques Protectores Tenneco S.A. de C.V. (Mexico)..........................................40 %
(Tenneco Packaging de Mexico, S.A. de C.V. owns 40%; non-
affiliates own 60%)
Wellenfoam N.V. (Belgium)........................................................................<1
(Tenneco Packaging International Holdings Inc. owns <1% or 1 share;
and Tenneco Packaging Inc. owns 99+%)
Tenneco Packaging Leasing Company (Delaware)........................................................100
Tenneco Packaging RSA Company (Delaware)............................................................100
Tenneco PPI Company (Delaware)......................................................................100
Tenneco Protective Packaging Inc. (Delaware)........................................................100
AVI Technologies, Inc. (Delaware)...............................................................100
Tenneco Retail Receivables Company (Delaware).......................................................100
Tenneco Rochester Acquisition Inc. (Delaware)(1)....................................................100
Tenneco Romania Holdings Inc. (Delaware)............................................................100
Tenneco Forest Products S.A. (Romania)..........................................................100
(▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, all of
whom are affiliated, each hold share(s) of this company)
Tenneco Windsor Box & Display, Inc. (Delaware)(2)...................................................100
The ▇▇▇▇▇▇▇ Group, Ltd. (U.K.)......................................................................100
Ambassador Packaging Ltd. (U.K.)................................................................100
Coastal Packaging Ltd. (U.K.)..............................................................100
Prempack Limited (U.K.)....................................................................100
R & H ▇▇▇▇▇▇▇▇ (Sheffield) Ltd. (U.K.).....................................................100
▇▇▇▇▇▇▇ Packaging Limited (U.K.).................................................................<1
(The ▇▇▇▇▇▇▇ Group owns <1% or 1 share J&W ▇▇▇▇▇▇▇ (Holdings)
Ltd. owns 99.9%)
J&W ▇▇▇▇▇▇▇ (Holdings) Ltd. (U.K.)..............................................................100
▇▇▇▇▇▇▇ Packaging Limited (U.K.)............................................................99.9
(J&W ▇▇▇▇▇▇▇ (Holdings) Ltd. owns 99.9%; and The ▇▇▇▇▇▇▇ Group
owns <1% or 1 share)
Jiffy Rugated Products Limited (U.K.)...................................................99.9
(▇▇▇▇▇▇▇ Packaging Limited owns 99.9%; and The ▇▇▇▇▇▇▇ Group
owns <1% or 1 share)
J&W ▇▇▇▇▇▇▇ (Manchester) Limited (U.K.).................................................99.9
(▇▇▇▇▇▇▇ Packaging Limited owns 99.9%; and The ▇▇▇▇▇▇▇
Group owns <1% or 1 share)
--------
(1) In dissolution.
(2) In dissolution.
TENNECO DISTRIBUTION AGREEMENT
G-6
94
SUBSIDIARIES OF TENNECO PACKAGING INC.
SUBSIDIARIES OF THE ▇▇▇▇▇▇▇ GROUP, LTD.
SUBSIDIARIES OF J&W ▇▇▇▇▇▇▇ (HOLDINGS) LTD.
Jifcour (UK) Limited (U.K.).................................................................99.9%
(J&W ▇▇▇▇▇▇▇ (Holdings) Ltd. owns 99.9%; and The ▇▇▇▇▇▇▇
Group, Ltd. owns <1% or 1 share)
Jiffy Packaging Company Ltd. (U.K.).........................................................99.9
(J&W ▇▇▇▇▇▇▇ (Holdings) Ltd. owns 99.9%; and The ▇▇▇▇▇▇▇
Group, Ltd. owns <1% or 1 share)
Pentland Packaging Limited (Scotland).......................................................99.9
(J&W ▇▇▇▇▇▇▇ (Holdings) Ltd. owns 99.9%; and The ▇▇▇▇▇▇▇
Group, Ltd. owns <1% or 1 share)
J&W ▇▇▇▇▇▇▇ (Manchester) Limited (U.K.)..........................................................<1
(The ▇▇▇▇▇▇▇ Group, Ltd. owns <1% or 1 share; and ▇▇▇▇▇▇▇ Packaging
Limited owns 99.9%)
Jifcour (UK) Limited (U.K.)......................................................................<1
(The ▇▇▇▇▇▇▇ Group, Ltd. owns <1% or 1 share; and J&W ▇▇▇▇▇▇▇
(Holdings) Ltd. owns 99.9%)
Jiffy Packaging Company Ltd. (U.K.)..............................................................<1
(The ▇▇▇▇▇▇▇ Group, Ltd. owns <1% or 1 share; and J&W ▇▇▇▇▇▇▇
(Holdings) Ltd. owns 99.9%)
Jiffy Rugated Products Limited (U.K.)............................................................<1
(The ▇▇▇▇▇▇▇ Group, Ltd. owns <1% or 1 share; and ▇▇▇▇▇▇▇ Packaging
Limited owns 99.9%)
Omni-Pac U.K. Limited (United Kingdom)..........................................................100
Pentland Packaging Limited (Scotland)............................................................<1
(The ▇▇▇▇▇▇▇ Group, Ltd. owns <1% or 1 share; and J&W ▇▇▇▇▇▇▇
(Holdings) Ltd. owns 99.9%)
Tenneco Packaging Limited (Scotland)............................................................100
Alpha Products (Bristol) Limited (United Kingdom)..........................................100
Brucefield Plastics Limited (Scotland).....................................................100
Polbeth Packaging (Corby) Limited (Scotland)...............................................100
Tenneco Packaging (Caerphilly) Limited (United Kingdom)....................................100
Tenneco Packaging (Films) Limited (United Kingdom).........................................100
Tenneco Packaging (Livingston) Limited (Scotland)..........................................100
Tenneco Packaging (▇▇▇▇▇▇▇) Limited (United Kingdom).......................................100
Tenneco Packaging (UK) Limited (United Kingdom).................................................100
The Corinth and ▇▇▇▇▇▇ Railroad Company (Mississippi)...............................................100
Valdosta Southern Railroad Company (Florida)....................................................100
798795 Ontario Limited (Ontario)....................................................................100
Astro-Valcour, Ltd. (Ontario)...................................................................100
Tenneco Packaging Canada Inc. (Ontario).........................................................100
Tenneco Packaging - Hexacomb Limited (Ontario)..................................................100
Shearmat Structures Ltd. (Manitoba)........................................................100
TENNECO DISTRIBUTION AGREEMENT
G-7
95
SUBSIDIARIES OF TENNECO PACKAGING INC.
Wellenfoam N.V. (Belgium)............................................................................99.9%
(Tenneco Packaging Inc. owns 99.9%; and Tenneco Packaging International
Holdings Inc. owns <1% or 1 share)
Wood Products Leasing Company (Delaware)............................................................100
Zhejing Zhongbao Packaging (Peoples Republic of China)...............................................62.5
(Tenneco Packaging Inc. owns 62.5%; and non-affiliates own 37.5%)
TENNECO DISTRIBUTION AGREEMENT
G-8
96
EXHIBIT H
FORM OF
TAX SHARING AGREEMENT
This Tax Sharing Agreement is entered into as of _________ __, 1999 by
and between Tenneco Inc., a Delaware corporation, to be renamed Tenneco
Automotive Inc. ("Tenneco"), and _____________, a Delaware corporation, formerly
known as Tenneco Packaging Inc. ("Packaging Company"). Tenneco and Packaging
Company are sometimes collectively referred to herein as the "Companies."
Capitalized terms used in this Agreement are defined in Section 1 below. Unless
otherwise indicated, all "Section" references in this Agreement are to sections
of this Agreement.
RECITALS
WHEREAS, as of the date hereof, Tenneco is the common parent of an
affiliated group of corporations, including Packaging Company, which has elected
to file consolidated Federal income tax returns; and
WHEREAS, the Companies have entered into a Distribution Agreement setting
forth the corporate transactions pursuant to which Tenneco will distribute all
of the outstanding shares of common stock of Packaging Company to Tenneco
shareholders in a transaction intended to qualify as a tax-free distribution
under Section 355 of the Code; and
WHEREAS, as a result of the Distribution, Packaging Company and its
subsidiaries will cease to be members of the affiliated group of which Tenneco
is the common parent, effective as of the Distribution Date; and
WHEREAS, the Companies desire to provide for and agree upon the
allocation between the parties of liabilities for Taxes arising prior to, as a
result of, and subsequent to the transactions contemplated by the Distribution
Agreement, and to provide for and agree upon other matters relating to Taxes;
NOW THEREFORE, in consideration of the mutual agreements contained
herein, the Companies hereby agree as follows:
SECTION 1. DEFINITION OF TERMS. For purposes of this Agreement (including
the recitals hereof), the following terms have the following meanings:
"ACCOUNTING CUTOFF DATE" means, with respect to Packaging Company, any
date as of the end of which there is a closing of the financial accounting
records for such entity.
"ACCOUNTING FIRM" shall have the meaning provided in Section 15.
TENNECO DISTRIBUTION AGREEMENT
H-1
97
"ADJUSTMENT REQUEST" means any formal or informal claim or request filed
with any Tax Authority, or with any administrative agency or court, for the
adjustment, refund, or credit of Taxes, including (a) any amended Tax Return
claiming adjustment to the Taxes as reported on the Tax Return or, if
applicable, as previously adjusted, or (b) any claim for refund or credit of
Taxes previously paid.
"AFFILIATE" means any entity that directly or indirectly is "controlled"
by the person or entity in question. For purposes of this Agreement, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a person, whether through
ownership of voting securities, by contract or otherwise. Except as otherwise
provided herein, the term Affiliate shall refer to Affiliates of a person as
determined immediately after the Distribution.
"AGREEMENT" shall mean this Tax Sharing Agreement.
"AVAILABLE OTHER GROUP CARRYBACK" shall have the meaning provided in
Section 4.07(c)(ii).
"BENCHMARK INCOME (OR LOSS) ALLOCATION" shall have the meaning provided
in Section 2.02(a)(ii).
"BENCHMARK 1997 LOSS CARRYFORWARD ALLOCATION" shall have the meaning
provided in Section 2.02(a)(iii).
"BENCHMARK 1998 LOSS CARRYFORWARD ALLOCATION" shall have the meaning
provided in Section 2.02(a)(iii).
"BENCHMARK PERIOD" shall have the meaning provided in Section
2.02(a)(ii).
"CARRYBACK" means any net operating loss, net capital loss, excess tax
credit, or other similar Tax item which may or must be carried from one Tax
Period to another Tax Period under the Code or other applicable Tax Law.
"CARRYBACK GROUP" shall have the meaning provided in Section 4.07(c)(ii).
"CODE" means the U.S. Internal Revenue Code of 1986, as amended, or any
successor law.
"COMPANIES" means Tenneco and Packaging Company collectively, and
"COMPANY" means any one of Tenneco or Packaging Company.
"CONSOLIDATED OR COMBINED INCOME TAX" means any Income Tax computed by
reference to the assets and activities of members of more than one Group.
TENNECO DISTRIBUTION AGREEMENT
H-2
98
"CONSOLIDATED OR COMBINED STATE INCOME TAX" means any State Income Tax
computed by reference to the assets and activities of members of more than one
Group.
"CONSOLIDATED TAX LIABILITY" means, with respect to any Tenneco Federal
Consolidated Return, the "tax liability of the group" as that term is used in
Treasury Regulation Section 1.1552-1(a)(1) (including applicable interest,
additions to tax, additional amounts and penalties as provided in the Code),
provided, that such tax liability shall be treated as including any alternative
minimum tax liability under Code Section 55.
"CORPORATE RESTRUCTURING TRANSACTIONS" shall have the meaning provided in
the Distribution Agreement.
"DEBT REALIGNMENT" shall have the meaning provided in the Distribution
Agreement.
"DISTRIBUTION AGREEMENT" means the Distribution Agreement, dated as of
______, 1999, between Tenneco and Packaging Company, as amended from time to
time, setting forth the corporate transactions required to effect the
distribution to Tenneco shareholders of all of the outstanding stock of
Packaging Company owned by Tenneco, and to which this Tax Sharing Agreement is
attached as an exhibit.
"DISTRIBUTION DATE" means the Distribution Date as that term is defined
in the Distribution Agreement.
"DISTRIBUTION" shall have the meaning provided in the Distribution
Agreement.
"ESTIMATED TAX PAYMENTS" shall have the meaning provided in Section
2.03(a)(ii)(B).
"FEDERAL INCOME TAX" means any Tax imposed by Subtitle A (Income Taxes)
or F (Procedure and Administration) of the Code.
"FINAL INCOME OR LOSS ALLOCATION" shall have the meaning provided in
Section 2.02(a)(iv).
"FINAL 1997 LOSS CARRYFORWARD ALLOCATION" shall have the meaning provided
in Section 2.02(a)(v).
"FINAL 1998 LOSS CARRYFORWARD ALLOCATION" shall have the meaning provided
in Section 2.02(a)(v).
"FOREIGN INCOME TAX" means any Tax imposed by any foreign country or any
possession of the United States, or by any political subdivision of any foreign
country or United States possession, which is an income tax as defined in
Treasury Regulation Section 1.901-2.
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"GERMAN RESTRUCTURING TRANSACTIONS" shall have the meaning provided in
Section 2.04(b).
"GROUP" means the Tenneco Group and the Packaging Group, as the context
requires.
"HYPOTHETICAL STATE TAX LIABILITY" shall have the meaning provided in
Section 2.03(a)(ii)(A).
"INCOME TAX" means any Federal Income Tax, State Income Tax, or Foreign
Income Tax.
"IRS RULING LETTER" shall have the meaning provided in the Distribution
Agreement.
"JOINT ADJUSTMENT" means any proposed adjustment by a Tax Authority or
claim for refund asserted in a Tax Contest which is neither a Tenneco Adjustment
nor a Packaging Adjustment.
"OLD TENNECO" shall have the meaning provided in Section 2.06(a)
"OTHER GROUP" shall have the meaning provided in Section 4.07(c)(ii).
"PACKAGING ADJUSTMENT" means any proposed adjustment by a Tax Authority
or claim for refund asserted in a Tax Contest to the extent Packaging Company
would be exclusively liable for any resulting Tax under this Agreement and
exclusively entitled to receive any resulting Tax Benefit under this Agreement.
"PACKAGING COMPANY" means _____________________, a Delaware corporation,
formerly known as Tenneco Packaging Inc., and any successor.
"PACKAGING GROUP" means Packaging Company and its Affiliates as
determined immediately after the Distribution, modified as provided in Section
18.
"PACKAGING GROUP PRIOR STATE TAX LIABILITY" shall have the meaning
provided in Section 2.03(b)(i)(B).
"PACKAGING GROUP RECOMPUTED STATE TAX LIABILITY" shall have the meaning
provided in Section 2.03(b)(i)(A).
"PAYMENT DATE" means (i) with respect to any Tenneco Federal Consolidated
Return, the due date for any required installment of estimated taxes determined
under Code Section 6655, the due date (determined without regard to extensions)
for filing the return determined under Code Section 6072, and the date the
return is filed, and (ii) with respect to any Tax Return for any Consolidated or
Combined State Income Tax, the corresponding dates determined under the
applicable Tax Law.
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"POST-DISTRIBUTION PERIOD" means any Tax Period beginning after the
Distribution Date, and, in the case of any Straddle Period, the portion of such
Straddle Period beginning the day after the Distribution Date.
"POST-DISTRIBUTION STATE INCOME TAX RETURN" means any State Income Tax
Return for the Tax Period ended December 31, 1999.
"PRE-DISTRIBUTION PERIOD" means any Tax Period ending on or before the
Distribution Date, and, in the case of any Straddle Period, the portion of such
Straddle Period ending on the Distribution Date.
"PRIME RATE" means the base rate on corporate loans charged by Citibank,
N.A., New York, New York from time to time, compounded daily on the basis of a
year of 365 or 366 (as applicable) days and actual days elapsed.
"PRIOR INTERCOMPANY TAX ALLOCATION AGREEMENTS" means any written or oral
agreement or any other arrangements relating to allocation of Taxes existing
between or among the Tenneco Group and the Packaging Group as of the
Distribution Date (other than this Agreement and other than any such agreement
or arrangement between or among persons who are members of a single Group).
"PROHIBITED ACTION" shall have the meaning provided in Section 11.
"RESPONSIBLE COMPANY" means, with respect to any Tax Return, the Company
having responsibility for preparing and filing such Tax Return under this
Agreement.
"RESTRUCTURING TAX" means the Taxes described in Sections 2.05(a)(i) or
2.05(a)(ii) (relating to Tax resulting from any income or gain recognized as a
result of the Transactions but excluding any Transfer Taxes described in Section
2.05).
"RULING REQUEST" means the letter filed by Tenneco with the Internal
Revenue Service dated April 30, 1999 requesting a ruling from the Internal
Revenue Service regarding certain Federal Income Tax consequences of the
Transactions (including all attachments, exhibits, and other materials submitted
with such ruling request letter) and any amendment or supplement to such ruling
request letter.
"SEPARATE COMPANY TAX" means any Tax computed by reference to the assets
and activities of a member or members of a single Group.
"SEPARATE COMPANY STATE INCOME TAX" means any State Income Tax that is a
Separate Company Tax.
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"STRADDLE PERIOD" means any Tax Period that begins on or before and ends
after the Distribution Date.
"STATE INCOME TAX" means any Tax imposed by any State of the United
States or by any political subdivision of any such State which is imposed on or
measured by net income, including state and local franchise or similar Taxes
measured by net income (including, without limitation, any Tax which is measured
by the higher of capital or net income (e.g., Ohio Rev. Code ▇▇▇. Title 57,
Section 5733, Corporate Franchise Tax)).
"TAX" or "TAXES" means any income, gross income, gross receipts, profits,
capital stock, franchise, withholding, payroll, social security, workers
compensation, unemployment, disability, property, ad valorem, stamp, excise,
severance, occupation, service, sales, use, license, lease, transfer, import,
export, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment, or other charge in the nature of or in lieu of
any tax) imposed by any governmental entity or political subdivision thereof,
and any interest, penalties, additions to tax, or additional amounts in respect
of the foregoing.
"TAX AUTHORITY" means, with respect to any Tax, the governmental entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.
"TAX BENEFIT" means any refund, credit, or other reduction in otherwise
required Tax payments (including any reduction in estimated Tax payments).
"TAX CONTEST" means an audit, review, examination, or any other
administrative or judicial proceeding with the purpose or effect of
redetermining Taxes of any of the Companies or their Affiliates (including any
administrative or judicial review of any claim for refund) for any Tax Period
ending on or before the Distribution Date or for any Straddle Period.
"TAX CONTEST COMMITTEE" shall have the meaning provided in Section
9.02(b).
"TAX ITEM" means, with respect to any Income Tax, any item of income,
gain, loss, deduction, and credit.
"TAX LAW" means the law of any governmental entity or political
subdivision thereof relating to any Tax.
"TAX PERIOD" means, with respect to any Tax, the period for which the Tax
is reported as provided under the Code or other applicable Tax Law.
"TAX RECORDS" means Tax Returns, Tax Return work papers, documentation
relating to any Tax Contests, and any other books of account or records required
to be maintained under the
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Code or other applicable Tax Laws or under any record retention agreement with
any Tax Authority.
"TAX RETURN" means any report of Taxes due, any claims for refund of
Taxes paid, any information return with respect to Taxes, or any other similar
report, statement, declaration, or document required to be filed under the Code
or other Tax Law, including any attachments, exhibits, or other materials
submitted with any of the foregoing, and including any amendments or supplements
to any of the foregoing.
"TENNECO" means Tenneco Inc., a Delaware corporation, and any successor.
"TENNECO ADJUSTMENT" means any proposed adjustment by a Tax Authority or
claim for refund asserted in a Tax Contest to the extent Tenneco would be
exclusively liable for any resulting Tax under this Agreement and exclusively
entitled to receive any resulting Tax Benefit under this Agreement.
"TENNECO AFFILIATED GROUP" means the affiliated group (as that term is
defined in Code Section 1504) that includes Tenneco as the common parent and
includes any member of the Packaging Group.
"TENNECO FEDERAL CONSOLIDATED RETURN" means any United States federal Tax
Return for the Tenneco Affiliated Group.
"TENNECO GROUP" means Tenneco and its Affiliates excluding any entity
that is a member of the Packaging Group.
"TRANSACTIONS" means the transactions contemplated by the Distribution
Agreement (including the Corporate Restructuring Transactions, Debt Realignment
and Distribution, as defined in such agreement).
"TRANSFER TAXES" means all Taxes (other than Taxes imposed on income or
gains) incurred or imposed by reason of the sale, assignment or transfer of
title of the applicable property, regardless of upon whom such Taxes are levied
or imposed by the applicable Tax Law, including sales, use, value-added, excise,
stock transfer, real estate transfer, lease assignment, transfer gains tax,
stamp, documentary, filing, recording, permit, license, authorization,
intangible and similar Taxes.
"TRUE-UP AMOUNT" shall have the meaning provided in Section 2.02(a)(vi).
"TREASURY REGULATIONS" means the regulations promulgated from time to
time under the Code as in effect for the relevant Tax Period.
"UK RESTRUCTURING TRANSACTIONS" shall have the meaning provided in
Section 2.04(c).
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"1996 SPIN-OFF TAX SHARING AGREEMENT" shall have the meaning provided in
Section 2.06(a).
"1997 LOSS CARRYFORWARD" shall have the meaning provided in Section
2.02(a)(i).
"1998 LOSS CARRYFORWARD" shall have the meaning provided in Section
2.02(a)(i).
"1999 TAX PERIOD" shall have the meaning provided in Section 2.02(a).
For purposes of this Agreement, any reference to "including" shall
be deemed to mean "including, without limitation."
SECTION 2. ALLOCATION OF TAX LIABILITIES. The provisions of this Section
2 are intended to determine each Company's liability for Taxes with respect to
Pre-Distribution Periods. Once the liability has been determined under this
Section 2, Section 5 determines the time when payment of the liability is to be
made, and whether the payment is to be made to the Tax Authority directly or to
another Company.
2.01 General Rule.
(a) Tenneco Liability. Tenneco shall be liable for all Taxes not
specifically allocated to Packaging Company under this Section 2. Tenneco shall
indemnify and hold harmless the Packaging Group from and against any liability
for Taxes for which Tenneco is liable under this Section 2.01(a).
(b) Packaging Company Liability. Packaging Company shall be liable
for, and shall indemnify and hold harmless the Tenneco Group from and against
any liability for, Taxes which are allocated to Packaging Company under this
Section 2.
2.02 Allocation of United States Federal Income Tax. Except as
provided in Sections 2.05 and 2.06:
(a) Allocation of Tax and Tax Attributes Relating to the 1999 Tax Period.
With respect to the Tenneco Federal Consolidated Return for the tax period
ending December 31, 1999 (the "1999 Tax Period"), the allocation and use of net
operating loss carryforwards and current year losses, and the allocation of
Consolidated Tax Liability, if any, shall be made as follows:
(i) STEP ONE. The net operating losses attributable to the tax
period ended December 31, 1997 (the "1997 Loss Carryforward") and the net
operating losses attributable to the tax period ended December 31, 1998 (the
"1998 Loss Carryforward") shall be allocated between the Tenneco Group and
Packaging Group based upon the legal entities that incurred such losses
(treating the income of any member of the Tenneco Affiliated Group for the
relevant tax period
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as reducing the losses of each legal entity included in the Tenneco Affiliated
Group on a pro rata basis in accordance with Treasury Regulation Section
1.1502-21(b)(2).
(ii) STEP TWO. The taxable income (or loss) of each of the Tenneco
Group and Packaging Group for the portion of the 1999 Tax Period ending on
September 30, 1999 (the "Benchmark Period") shall be computed (the "Benchmark
Income (or Loss) Allocation ") subject to adjustment for material divestments,
the costs of the Debt Realignment, and similar items.
(iii) STEP THREE. The taxable losses, if any, incurred by any
member of the Tenneco Affiliated Group for the Benchmark Period shall be deemed
to be utilized first to offset the taxable income, if any, of each other member
of the Tenneco Affiliated Group for such tax period (which losses shall be
deemed to be utilized by such members on a pro rata basis). Next, the 1997 Loss
Carryforward shall be deemed to be utilized, on a pro rata basis, to offset the
taxable income of each member of the Tenneco Affiliated Group. Finally, to the
extent the taxable income for such period exceeds the losses for such period and
the 1997 Loss Carryforward, the 1998 Loss Carryforward shall be deemed to be
utilized, on a pro rata basis, to offset the remaining taxable income of each
member of the Tenneco Affiliated Group. Neither Tenneco nor Packaging Company
shall have any obligation to pay or reimburse the other party for utilization of
such party's net operating losses under this Step Three. Each Group's allocable
share of the 1997 Loss Carryforward and 1998 Loss Carryforward following the
utilization of losses described in this Step Three shall be referred to as such
Group's "Benchmark 1997 Loss Carryforward Allocation" and "Benchmark 1998 Loss
Carryforward Allocation," respectively. In the event the 1997 Loss Carryforward
and 1998 Loss Carryforward are fully utilized, the Benchmark 1997 Loss
Carryforward Allocation and the Benchmark 1998 Loss Carryforward Allocation
shall be deemed to equal zero.
In the event the Tax Return for the tax period ended December 31,
1998 has not been filed at the time the Benchmark 1997 and Benchmark 1998 Loss
Carryforward Allocations are made pursuant to Step Three, the parties shall use
an agreed upon estimate of the net operating losses for the tax period ended
December 31, 1998, and within 30 days of the filing the Tax Return for such tax
period, the Benchmark 1997 Loss Carryforward Allocation and Benchmark 1998 Loss
Carryforward Allocation shall be redetermined. In the case of such
redetermination if Packaging Company's Benchmark 1997 Loss Carryforward
Allocation or Benchmark 1998 Loss Carryforward Allocation, as redetermined,
exceeds the amount of such allocation as initially determined under Step Three,
Packaging Company shall pay to Tenneco an amount equal to such excess multiplied
by 35%, and if Packaging Company's Benchmark 1997 Loss Carryforward Allocation
or Benchmark 1998 Loss Carryforward Allocation, as redetermined, is less than
Packaging Company's Benchmark 1997 Loss Carryforward Allocation or Benchmark
1998 Loss Carryforward Allocation, Tenneco shall pay to Packaging Company an
amount equal to such difference multiplied by 35%.
(iv) STEP FOUR. The taxable income (or loss) of each of the
Tenneco Group and the Packaging Group for the 1999 Tax Period shall be computed
(in the same manner as described in
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Step Two) based on the Tax Return as filed for such tax period (the "Final
Income or Loss Allocation").
(v) STEP FIVE. Based on the Tax Return as filed for the 1999 Tax
Period, the taxable losses, if any incurred by any member of the Tenneco Group
or Packaging Group for such period shall be deemed to be utilized first to
offset the taxable income, if any, of each other member of the Tenneco
Affiliated Group for such period (which losses shall be deemed to be utilized by
such members on a pro rata basis). Next, the 1997 Loss Carryforward shall be
deemed to be utilized, on a pro rata basis, to offset the taxable income of each
member of the Tenneco Affiliated Group. Finally, to the extent the taxable
income for such period exceeds the losses for the current period and the 1997
Loss Carryforward, the 1998 Loss Carryforward shall be deemed to be utilized, on
a pro rata basis, to offset the remaining taxable income of each member of the
Tenneco Affiliated Group. Each Group's allocable share of the 1997 Loss
Carryforward and 1998 Loss Carryforward following the utilization of losses
described in this Step Five shall be referred to as the "Final 1997 Loss
Carryforward Allocation" and "Final 1998 Loss Carryforward Allocation,"
respectively.
(vi) STEP SIX. Within sixty (60) days of filing the Tenneco
Federal Consolidated Tax Return for the 1999 Tax Period, the Packaging Group
shall compute the "True-Up Amount," which amount shall equal (I) the sum of (A)
the Packaging Group's' Final Income (or Loss) Allocation less the Packaging
Group's Benchmark Income or (Loss) Allocation (any loss allocation shall be
treated as a negative number for purposes of this computation) plus (B) the
Packaging Group's Final 1997 Loss Carryforward less the Packaging Group's
Benchmark 1997 Loss Carryforward (as redetermined under Step Three, if
applicable), plus (C) the Packaging Group's Final 1998 Loss Carryforward less
the Packaging Group's Benchmark 1998 Carryforward (as redetermined under Step
Three, if applicable), multiplied by (II) 35%.
(vii) STEP SEVEN. In the event the Packaging Group's True-Up
Amount is positive, Packaging Company shall pay such amount to Tenneco, and in
the event the Packaging Group's True-Up Amount is negative, Tenneco shall pay
such amount to Packaging Company.
Schedule A attached hereto sets forth the parties' agreement as to
the determinations required under Steps One, Two and Three of this Section
2.02(a). Schedule B attached hereto provides an example of the manner in which
Steps Four, Five and Six are to be computed. The actual determination required
to be made under Steps Four, Five and Six will be based on the information
contained on the Tax Return as filed for the 1999 Tax Period.
(b) Allocation of Tenneco Federal Consolidated Return Tax
Adjustments. If there is any adjustment to the reported Tax liability with
respect to any Tenneco Federal Consolidated Return, or to such Tax liability as
previously adjusted, Packaging Company shall be liable to Tenneco for the excess
(if any) of--
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(i) the Consolidated Tax Liability of the Packaging Group
computed as if all members of the Packaging Group included in the Tax
Return had filed a consolidated Tax Return for such members based on the
Tax Items of such members as so adjusted (the "Packaging Group Recomputed
Federal Tax Liability"); over
(ii) the Consolidated Tax Liability of the Packaging Group
computed as if such members of the Packaging Group had filed a
consolidated Tax Return for such members based on the Tax Items of such
members as reported (or, if applicable, as previously adjusted) (the
"Packaging Group Prior Federal Tax Liability"). Solely with respect to
the Tenneco Federal Consolidated Return for the 1999 Tax Period, the
Packaging Group Prior Federal Tax Liability with respect to such Tax
Return shall equal the Consolidated Tax Liability allocable to the
Packaging Group with respect to such Tax Return under Section 2.02(a)
hereof.
If the Packaging Group Prior Federal Tax Liability exceeds the Packaging Group
Recomputed Federal Tax Liability, Tenneco shall be liable to Packaging Company
for such excess. For purposes of this Section 2.02(b), if the Packaging Group
has a net operating loss after taking into account the adjustments allocable to
such Group, the Recomputed Federal Tax Liability of the Group shall be less than
zero to the extent such net operating loss produces a Tax Benefit in
consolidation for the applicable taxable year (which shall be determined
applying the principles of Section 4.07(c)(ii)). For example, if the Packaging
Group's Prior Federal Tax Liability for Year X was $50 and taking into account
all adjustments for Year X, Packaging Group has a net operating loss of $40
resulting in a Tax Benefit of $14 (determined by computing the Consolidated Tax
Liability for such Tax Period with and without the net operating loss), then the
Packaging Group's Recomputed Federal Tax Liability for Year X would be negative
$14, and Tenneco would be liable to Packaging Company in the amount of $64, i.e.
($50 - (-$14)).
2.03 Allocation of State Income Taxes. Except as provided in
Sections 2.04, 2.05 and 6.03, State Income Taxes shall be allocated as follows:
(a) Allocation of State Income Tax Liabilities for
Post-Distribution State Income Tax Returns.
(i) Separate Company Taxes. In the case of any
Separate Company State Income Tax with respect to a Post-Distribution State
Income Tax Return, Packaging Company shall be liable for such Tax imposed on any
members of the Packaging Group.
(ii) Consolidated or Combined State Income Taxes. In
the case of any Consolidated or Combined State Income Tax with respect to a
Post-Distribution State Income Tax Return, the Consolidated or Combined State
Income Tax liability shall be allocated between the Tenneco Group and the
Packaging Group as follows:
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(A) Each Group shall compute its "Hypothetical
State Tax Liability," which shall equal the State Income Tax liability of such
Group (which number shall be deemed to be zero if such Group has net operating
losses for such Tax Period), computed as if all members of such Group included
in the computation of such Tax had filed a consolidated or combined Tax Return
for such Group's members based on the income, apportionment factors, and other
items of such members.
(B) In the event the Estimated Tax Payments (as
defined below) exceed, or are less than, the actual State Income Tax liability
shown on the Consolidated and Combined State Income Tax Return such excess or
deficit, as the case may be, shall be shared by the Tenneco Group and the
Packaging Group. Each Group's share shall be determined by multiplying such
excess or deficit by a fraction, (a) the numerator of which is the Hypothetical
State Tax Liability of such Group, and (b) the denominator of which is the sum
of the Hypothetical State Tax Liability of the Tenneco Group and the Packaging
Group, with appropriate payments being made by Packaging Company to Tenneco, or
by Tenneco to Packaging Company, to achieve the appropriate sharing of such
excess or deficit. The term "Estimated Tax Payments" shall mean any and all
estimated payments made in connection with the Combined or Consolidated State
Income Tax Return filed for such Tax Period; provided, however, such amount
shall (i) exclude any estimated Tax payments made after the Distribution Date
and (ii) include any overpayments of Combined or Consolidated State Income Tax
for any prior Tax Periods which are carried forward and applied as payments on
the Combined or Consolidated State Income Tax Returns for the applicable Tax
Period.
(iii) Post-Distribution Estimated Payments. Notwithstanding
anything to the contrary in the foregoing, in the case of both Separate Company
Taxes and Consolidated or Combined Income Taxes, Packaging Company shall pay to
the appropriate State Tax Authority any estimated Taxes with respect to the Tax
Period ended December 31, 1999 due after the Distribution Date. Tenneco shall
reimburse Packaging Company for (i) any estimated Tax payments made by Packaging
Company after the Distribution Date with respect to Separate Company Taxes
imposed on members of the Tenneco Group and (ii) any and all estimated Tax
payments made by Packaging Company after the Distribution Date with respect to
any Consolidated or Combined State Income Tax.
(b) Allocation of State Income Tax Adjustments.
(i) Combined or Consolidated State Income Tax Adjustments. If there is
any adjustment to the amount of Consolidated or Combined State Income Tax
reported on any Tax Return (or as previously adjusted), the liability of
the Packaging Group shall be recomputed as provided in this subparagraph.
Packaging Company shall be liable to Tenneco for the excess (if any) of--
(A) the State Income Tax liability computed as if all
members of the Packaging Group included in the Tax Return had
filed a consolidated or combined
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Tax Return for such members based on the income, apportionment
factors, and other items of such members as so adjusted (the
"Packaging Group Recomputed State Tax Liability"); over
(B) the State Income Tax liability computed as if
such members of the Packaging Group had filed a consolidated or
combined Tax Return for such members based on the income,
apportionment factors, and other items of such members as reported
(or, if applicable, as previously adjusted) (the "Packaging Group
Prior State Tax Liability").
If the Packaging Group Prior State Tax Liability exceeds the Packaging
Group Recomputed State Tax Liability, Tenneco shall be liable to
Packaging Company for such excess. For purposes of this paragraph, (i) if
the Packaging Group has a net operating loss after taking into account
the adjustments allowable to such Group, the Packaging Group Recomputed
State Tax Liability shall be less than zero to the extent such net
operating loss produces a Tax Benefit for purposes of the applicable
Consolidated or Combined State Income Tax and (ii) the determination and
payment of estimated Taxes (including the determination and payment of
any Tax required to be paid with a request for an extension of time to
file a Tax Return) shall not be treated as an adjustment to the related
Consolidated or Combined State Income Tax.
(ii) Separate Company Taxes. In the case of any adjustment to the amount
of a Separate Company Tax Liability, Packaging Company shall be liable
for such Tax imposed on members of the Packaging Group, and Tenneco shall
be liable for such Tax imposed on members of the Tenneco Group.
2.04 Allocation of Other Taxes.
(a) General. Except as provided in Section 2.04 (b) and (c) and
Section 2.05, all Taxes other than those specifically allocated pursuant to
Sections 2.02 and 2.03 shall be allocated based on the legal entity on which the
legal incidence of the Tax is imposed (provided, however, that in the event the
legal entity on which the legal incidence of the tax is imposed is a member of a
group including members of both the Packaging Group and Tenneco Group, the tax
shall be allocated between the Tenneco Group and Packaging Group based on each
Group's respective share of the taxable income giving rise to such Tax. As
between the parties to this Agreement, Packaging Company shall be liable for all
Taxes imposed on any member of the Packaging Group. The Companies believe that
there is no Tax not specifically allocated pursuant to Sections 2.02 and 2.03
which is legally imposed on more than one legal entity (e.g., joint and several
liability); however, if there is any such Tax, it shall be allocated in
accordance with past practices as reasonably determined by the affected
Companies, or in the absence of such practices, in accordance with any
allocation method agreed upon by the affected Companies.
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(b) German Restructuring. Notwithstanding anything to the contrary
in this Agreement, with respect to the Corporate Restructuring Transactions
involving the restructuring of the German entities (i.e., the members of the
Tenneco Affiliated Group organized under the laws of Germany) (the "German
Restructuring Transactions"), the parties agree as follows:
(i) Packaging Company shall be liable for any and all
Transfer Taxes incurred as a result of the German
Restructuring Transactions.
(ii) Tenneco Deutschland Holdinggesellschaft mBH's ("Tenneco
Deutschland") German Tax losses shall be utilized to the
fullest extent permitted under German Tax Law to offset
income realized in connection with the German Restructuring
Transactions and Packaging Company shall have no obligation
to reimburse or otherwise compensate Tenneco for the use of
such Tax losses; provided, however, that (X) in the event
the German Tax Authority makes a final determination that
the income realized in connection with the German
Restructuring Transactions is greater than the amount
reported on the Tax Return as originally filed, Packaging
Company shall pay to Tenneco Deutschland an amount equal to
the additional German Tax loss used to offset Tenneco
Deutschland's in creased income multiplied by the applicable
German Tax rate, and (Y) in the event the German Tax
Authority makes a final determination that the income
realized in connection with the German Restructuring
Transactions is less than the amount reported on the Tax
Return as originally filed, Tenneco Deutschland shall pay to
Packaging Company an amount equal to the German Tax loss
restored as a result of such determination multiplied by the
applicable German Tax rate.
(iii) In the event any member of the Packaging Group is
required to make profit and absorption payments to Tenneco
Deutschland after the Distribution Date, such payments shall
be promptly repaid to Tenneco Packaging Deutschland Holding
Gesellschaft mBH as an adjustment to purchase price with
respect to Tenneco Deutschland's sale of such member to
Tenneco Packaging Deutschland Holding Gesellschaft mBH
pursuant to the German Restructuring Transactions.
(iv) In the event the German Tax Authority disallows Tenneco
Deutschland's Organschaft status for any reason whatsoever,
Tenneco Deutschland shall pay to Packaging Company the Tax
Benefit realized by Tenneco Deutschland by reason of
claiming input credits arising out of deemed dividend
payments made by members of the Packaging Group.
(c) United Kingdom Restructuring. Notwithstanding anything to the
contrary in this Agreement, with respect to the Corporate Restructuring
Transactions involving the restructuring of the United Kingdom entities (i.e.,
the members of the Tenneco Affiliated Group organized
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under the laws of United Kingdom) (the "UK Restructuring Transactions"), the
Companies agree as follows:
(i) Packaging Company shall be liable for any and all
Transfer Taxes (including, without limitation, any
stamp duty) incurred as a result of the UK
Restructuring Transactions.
(ii) Each Group shall be entitled to cause any of its
members to surrender such member's Tax losses for
group relief or consortium relief (or other amounts
eligible for group or consortium relief) to another
member of such Group; provided, however, that if the
Tax losses of a Group cannot be utilized by the
members of such Group, the Tax losses shall be
surrendered for group relief or consortium relief to
the members of the other Group, as designated in
writing by the parent company of such other Group
(and such other Group shall have no obligation to
reimburse or otherwise compensate the surrendering
Group for its losses).
2.05 Transaction and Other Taxes.
(a) General. Except as otherwise provided in this Section 2.05,
any and all liability for Taxes resulting from the Transactions shall be
allocated as follows:
(i) Any sales and use, gross receipts or other Transfer
Taxes imposed on the transfers occurring pursuant to the Transactions (together
with any Tax resulting from any income or gain recognized under Treasury
Regulation Sections 1.1502-13 or 1.1502-19 (or any other corresponding
provisions of other applicable Tax Laws) as a result of the Transactions) shall
be allocated to the legal entity on which the legal incidence of the Tax is
imposed. As between the parties to this Agreement, Packaging Company shall be
liable for all Taxes imposed on any member of the Packaging Group and Tenneco
shall be liable for all Taxes imposed on any member of the Tenneco Group.
(ii) Any Tax liability resulting from any income or gain
recognized as a result of any of the transactions contemplated by the
Distribution Agreement failing to qualify for tax-free treatment under Code
Sections 332, 351, 355, 361 or other provisions of the Code (as contemplated by
the Ruling Request) or corresponding provisions of other applicable Tax Laws,
shall be allocated fifty percent (50%) to Tenneco and fifty percent (50%) to
Packaging Company.
(b) Indemnity for Inconsistent Acts. Tenneco or Packaging Company,
as the case may be, shall be liable for, and shall indemnify and hold harmless
the members of the other Group from and against any liability for, any
Restructuring Tax to the extent arising from any breach by such party of its
representations or covenants under Section 11.
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(c) Indemnity for Liability Under Code Section 355(e).
Notwithstanding anything to the contrary in this Section 2.05, any Tax liability
incurred by Tenneco under Code Section 355(e) (or any corresponding provision of
other applicable Tax Laws) by reason of the acquisition by one or more persons
of a "50-percent or greater interest" (as such term is defined in Code Section
355(d)(4)) in Tenneco or Packaging Company (a "50% Ownership Shift") shall be
allocated to that entity (i.e., Tenneco or Packaging Company) with respect to
which such Ownership Shift has occurred.
2.06 Liability Under 1996 Spin-Off Tax Sharing Agreement.
(a) With respect to any Tax liability imposed on or incurred by
Tenneco (or any Tax Benefit owing to Tenneco) under the Tax Sharing Agreement
dated as of December 11, 1996, as amended, by and among Tenneco, Newport News
Shipbuilding Inc., El Paso Natural Gas Company, and El Paso Tennessee Pipeline
Co. ("Old Tenneco") (the "1996 Spin-Off Tax Sharing Agreement), Packaging
Company shall be liable for, and shall indemnify and hold the Tenneco Group
harmless from, any and all such Tax liabilities (and Packaging Company shall be
entitled to any and all such Tax Benefits) except to the extent such Tax
liability (or such Tax Benefit) would be treated as allocable to the Tenneco
Group under the terms of Sections 2.01 through 2.04 hereof, in which case the
Tenneco Group shall be liable for such Tax liability and shall be entitled to
such Tax Benefit. Any amount owed by Packaging Company under this Section 2.06
shall be paid by Packaging Company to Tenneco within 30 days from the date of
written notice and demand from Tenneco evidencing the payment of such amount by
Tenneco in accordance with the terms of the 1996 Spin-Off Tax Sharing
Agreement. Any amount due to Packaging Company under this Section 2.06 shall be
paid to Packaging Company by Tenneco within 30 days from the date of receipt of
such amount by Tenneco in accordance with the terms of the 1996 Spin-Off Tax
Sharing Agreement.
(b) The Companies agree that in the case of any dispute or
controversy under the 1996 Spin-Off Tax Sharing Agreement, (i) each Company
shall control the portion of such dispute or controversy that directly and
exclusively relates to a Tax liability or Tax Benefit borne by such Company
under the terms hereof, and (ii) to the extent any issue involved in, or aspect
of, such dispute or controversy does not directly and exclusively relate to the
Tax liability or Tax Benefits of one Company under the terms hereof, the
Companies shall jointly control and otherwise handle such issue or matter in
accordance with the rules for defense or prosecution of Joint Adjustments in
Section 9.02(b) hereof. In furtherance of the foregoing, Tenneco shall, upon
Packaging Company's request, execute such powers of attorney or other
documentation as reasonably determined by Packaging Company to be necessary or
appropriate to permit Packaging Company to fully exercise its rights under this
Section 2.06(b). Each of Tenneco and Packaging Company agree that, with respect
to any issue which involves or could involve the other Company's liability (or
entitlement to payment) under the 1996 Spin-Off Tax Sharing Agreement pursuant
to this Section 2.06, it shall not have the right to settle such issue without
the prior written consent of such other Company.
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SECTION 3. PRORATION OF TAXES FOR STRADDLE PERIODS.
3.01 General Method of Proration. In the case of any Straddle
Period, Tax Items shall be apportioned between Pre-Distribution Periods and
Post-Distribution Periods in accordance with the principles of Treasury
Regulation Section 1.1502-76(b) as reasonably interpreted and applied by the
Companies. No election shall be made under Treasury Regulation Section
1.1502-76(b)(2)(ii) (relating to ratable allocation of a year's items). If the
Distribution Date is not an Accounting Cutoff Date, the principles of Treasury
Regulation Section 1.1502-76 (b)(2)(iii) will be applied to ratably allocate the
items (other than extraordinary items described in Treasury Regulation Section
1.1502-76(b)(2)(ii)(C)) for the month which includes the Distribution Date.
3.02 Transaction Treated as Extraordinary Item. In determining the
apportionment of Tax Items between Pre-Distribution Periods and
Post-Distribution Periods, any Tax Items relating to the Transactions shall be
treated as an extraordinary item described in Treasury Regulation Section
1.1502-76(b)(2)(ii)(C) and shall be allocated to Pre-Distribution Periods, and
any Taxes related to such items shall be treated under Treasury Regulation
Section 1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall be
allocated to Pre-Distribution Periods.
SECTION 4. PREPARATION AND FILING OF TAX RETURNS.
4.01 General. Except as otherwise provided in this Section 4, Tax
Returns shall be prepared and filed when due (including extensions) by the
person obligated to file such Tax Returns under the Code or applicable Tax Law.
The Companies shall provide, and shall cause their Affiliates to provide,
assistance and cooperate with one another in accordance with Section 7 with
respect to the preparation and filing of Tax Returns, including providing
information required to be provided in Section 7.
4.02 Packaging Company's Responsibility. Packaging Company has the
exclusive obligation and right to prepare and file, or to cause to be prepared
and filed:
(a) Tenneco Federal Consolidated Returns for Tax Periods ending on
or before December 31, 1999.
(b) The U.S. federal Income Tax return for the affiliated group
(as that term is defined in Code Section 1504) of which Tenneco International
Holding Corp. is the common parent for Tax Periods ending on or before December
31, 1999.
(c) Tax Returns for Separate Company State Income Taxes or
Consolidated or Combined State Income Taxes which the Companies reasonably
determine, in accordance with Tenneco's past practices, are required to be filed
by the Companies or any of their Affiliates for
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Tax Periods ending on or before December 31, 1999 (including without limitation,
the filing of amended Tax Returns to take into account Federal Income Tax
adjustments or Carryback Items).
(d) Tax Returns that are required to be filed by the members of
the Packaging Group.
Nothing in this Section 4.02 shall impose on Packaging Company any liability for
any failure to file any Tax Return, or for failure to file any Tax Return when
due, with respect to any Pre-Distribution Period if the due date for such return
(including extensions) was prior to the Distribution Date.
4.03 Tenneco Responsibility. Tenneco shall prepare and file, or
shall cause to be prepared and filed, Tax Returns required to be filed by or
with respect to members of the Tenneco Group other than those Tax Returns which
Packaging Company is required to prepare and file under Section 4.02. The Tax
Returns required to be prepared and filed by Tenneco under this Section 4.03
shall include (a) the Tenneco Federal Consolidated Return for Tax Periods ending
after December 31, 1999, (b) the U.S. Federal Income Tax return for the
affiliated group (as that term is defined in Code Section 1504) of which Tenneco
International Holding Corp. is the common parent for Tax Periods ending after
December 31, 1999, and (c) Tax Returns for Consolidated or Combined State Income
Taxes which the Companies reasonably determine, in accordance with Tenneco's
past practices, are required to be filed by the Companies or any of their
Affiliates for Tax Periods ending after December 31, 1999.
4.04 Tax Accounting Practices.
(a) General Rule. Except as otherwise provided in this Section
4.04, any Tax Return for any Pre-Distribution Period or any Straddle Period, and
any Tax Return for any Post-Distribution Period to the extent items reported on
such Tax Return might reasonably affect items reported on any Tax Return for any
Pre-Distribution Period or any Straddle Period, shall be prepared in accordance
with past Tax accounting practices used with respect to the Tax Returns in
question (unless such past practices are no longer permissible under the Code or
other applicable Tax Law), and to the extent any items are not covered by past
practices (or in the event such past practices are no longer permissible under
the Code or other applicable Tax Law), in accordance with reasonable Tax
accounting practices selected by the Responsible Company.
(b) Reporting of Transaction Tax Items. The tax treatment reported
on any Tax Return of Tax Items relating to the Transactions shall be consistent
with the treatment of such item in the IRS Ruling Letter. To the extent there is
a Tax Item relating to the Transactions which is not covered by the IRS Ruling
Letter, the Companies shall agree on the tax treatment of any such Tax Item
reported on any Tax Return. For this purpose, the tax treatment of such Tax
Items on a Tax Return by the Responsible Company with respect to such Tax Return
shall be agreed to by the other Company unless either (i) there is no reasonable
basis for such tax treatment, or (ii) such tax treatment is inconsistent with
the tax treatment contemplated in the
TENNECO DISTRIBUTION AGREEMENT
▇-▇▇
▇▇▇
▇▇▇▇▇▇ Request. Such Tax Return shall be submitted for review pursuant to
Section 4.06(a), and any dispute regarding such proper tax treatment shall be
referred for resolution pursuant to Section 15, sufficiently in advance of the
filing date of such Tax Return (including extensions) to permit timely filing of
the return.
4.05 Consolidated or Combined Returns. The Companies will elect and join,
and will cause their respective Affiliates to elect and join, in filing
consolidated, unitary, combined, or other similar joint Tax Returns, to the
extent each entity is eligible to join in such Tax Returns, if the Companies
reasonably determine that the filing of such Tax Returns is consistent with past
reporting practices, or in the absence of applicable past practices, will result
in the minimization of the net present value of the aggregate Tax to the
entities eligible to join in such Tax Returns.
4.06 Right to Review Tax Returns.
(a) General. The Responsible Company with respect to any Tax
Return shall make such Tax Return and related workpapers available for review by
the other Company, if requested, to the extent (i) such Tax Return relates to
Taxes for which the requesting party may be liable, (ii) such Tax Return relates
to Taxes for which the requesting party may be liable in whole or in part for
any additional Taxes owing as a result of adjustments to the amount of Taxes
reported on such Tax Return, (iii) such Tax Return relates to Taxes for which
the requesting party may have a claim for Tax Benefits under this Agreement, or
(iv) the requesting party reasonably determines that it must inspect such Tax
Return to confirm compliance with the terms of this Agreement. The Responsible
Company shall use its reasonable best efforts to make such Tax Return available
for review as required under this paragraph sufficiently in advance of the due
date for filing such Tax Returns to provide the requesting party with a
meaningful opportunity to analyze and comment on such Tax Returns and have such
Tax Returns modified before filing, taking into account the party responsible
for payment of the tax (if any) reported on such Tax Return and the materiality
of the amount of Tax liability with respect to such Tax Return. The Companies
shall attempt in good faith to resolve any issues arising out of the review of
such Tax Returns.
(b) Execution of Returns Prepared by Other Party. In the case of
any Tax Return which is required to be prepared and filed by one Company under
this Agreement and which is required by law to be signed by the other Company
(or by its authorized representative), the Company which is legally required to
sign such Tax Return shall not be required to sign such Tax Return under this
Agreement if there is no reasonable basis for the tax treatment of any material
items reported on the Tax Return.
4.07 Claims for Refund, Carrybacks, and Self-Audit Adjustments
("Adjustment Requests").
(a) Consent Required for Adjustment Requests Related to
Consolidated or Combined Income Taxes. Neither Company shall be entitled to file
an Adjustment Request with respect to any Consolidated or Combined Income Tax
for a Pre-Distribution Period without the
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consent in writing of the other Company (which consent shall not be unreasonably
withheld or delayed). Any Adjustment Request which the Companies consent to make
under this Section 4.07 shall be prepared and filed by the Responsible Company
under Section 4.02 for the Tax Return to be adjusted. The Company requesting the
Adjustment Request (if not the Responsible Company) shall provide to the
Responsible Company all information required for the preparation and filing of
such Adjustment Request in such form and detail as reasonably requested by the
Responsible Filing Company.
(b) Other Adjustment Requests Permitted. Nothing in this Section
4.07 shall prevent any Company or its Affiliates from filing any Adjustment
Request with respect to Income Taxes which are not Consolidated or Combined
Income Taxes or with respect to any Taxes other than Income Taxes. Any refund or
credit obtained as a result of any such Adjustment Request (or otherwise) shall
be for the account of the person liable for the Tax under this Agreement.
(c) Ordering of and Payment for Carrybacks.
(i) In the event that a member of the Packaging Group, on
the one hand, and a member of the Tenneco Group, on the other hand, are each
entitled to carryback a Tax Item to a Pre-Distribution Period, the respective
Tax Items shall be utilized under the rules of applicable Tax Law (which shall
be, in the case of Carrybacks to such Tax Periods of the affiliated group of
which Tenneco is the common parent, the rules contained in Treasury Regulation
Section 1.1502-21T).
(ii) Any Tax refund or other Tax Benefit resulting from the
Carryback of any member of one Group (the "Carryback Group") of any Tax Item
arising after the Distribution Date to a Pre-Distribution Period shall be for
the account of the Carryback Group (and in the event the Packaging Group is the
Carryback Group, Tenneco shall promptly pay to Packaging Company the amount of
such Tax refund or other Tax Benefit); provided, however, that if at the time of
the utilization of the Carryback Items of a member of the Carryback Group, a
member of the other Group (the "Other Group") possesses Carryback Tax Items
which, but for the ordering rule set forth in Section 4.07(c)(i), would have
been available to be utilized (the "Available Other Group Carryback") in lieu of
the Carryback Group's Tax Items, then (but only to the extent of the Available
Other Group Carryback) the Carryback Group shall not be entitled to payment of
the amount of such Tax refund or Tax Benefit until the earlier of (X) the date
on which a member of the Other Group claims the Available Other Group Carryback
on a Tax Return or (Y) the date on which a member of the Carryback Group would
have been able to utilize the Carryback had it not been claimed with respect to
the Pre-Distribution Period Tax Return.
(iii) In the event the Carryback of Tax Items of a member of
the Packaging Group, or the Tenneco Group, as the case may be, does not result
in a Tax refund, due to an offsetting Tax adjustment to a member of the Other
Group, then the Other Group shall promptly pay the amount of any decrease in Tax
liability resulting from the Carryback claim, provided,
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however, that in the event the Other Group possesses Carryback Items which, but
for the ordering rules of Section 4.07(c)(i) would have been available to be
utilized in lieu of the Carryback Group's Tax Items, then (but only to the
extent of the Available Other Group Carryback), the Other Group shall not be
required to pay the amount of such decrease in Tax liability to the Carryback
Group until the earlier of (X) the date on which a member of the Other Group
claims the Available Other Group Carryback on a Tax Return or (Y) the date on
which a member of the Carryback Group would have been able to utilize the
Carryback had it not been claimed with respect to the Pre-Distribution Period
Tax Return.
(d) Payment of Refunds. Except as otherwise provided in Section
4.07(c), any refunds or other Tax Benefits received by any Company (or any of
its Affiliates) as a result of any Adjustment Request which are for the account
of another Company (or member of such other Company's Group) shall be paid by
the Company receiving (or whose Affiliate received) such refund or Tax Benefit
to such other Company in accordance with Section 6.
SECTION 5. TAX PAYMENTS AND INTERCOMPANY ▇▇▇▇▇▇▇▇.
5.01 Payment of Taxes With Respect to Post-Distribution Tenneco
Federal Consolidated Returns. In the case of the Tenneco Federal Consolidated
Tax Return for the 1999 Tax Period:
(a) Computation and Payment of Tax Due. At least three
business days prior to the Payment Date with respect to the Tenneco Federal
Consolidated Tax Return for the 1999 Tax Period, Packaging Company shall compute
the amount of Tax required to be paid to the Internal Revenue Service (taking
into account the requirements of Section 4.04 relating to consistent accounting
practices) with respect to such Tax Return, and Packaging Company shall notify
Tenneco in writing of the amount of Tax required to be paid on such Payment
Date. Tenneco will pay such amount to the Internal Revenue Service on or before
such Payment Date.
(b) Computation and Payment of Packaging Company Liability
With Respect to Tax Due.
(i) Within 30 days of the determination date under
Section 2.01(a)(vi) with respect to the Tenneco Federal Consolidated Tax Return
for the 1999 Tax Period, Packaging Company shall pay to Tenneco an amount equal
to the True-Up Amount, if positive, as determined under Section 2.02(a)(vii).
In the event the Packaging Group's True-Up Amount, as determined under Section
2.02(a)(vii) is negative, Tenneco shall pay such amount to Packaging Company
within 30 days of the Payment Date with respect to the Tenneco Federal
Consolidated Return for the 1999 Tax Period.
(ii) In the event of a redetermination of the
Benchmark 1997 Loss Allocation Carryforward or Benchmark 1998 Loss Allocation
Carryforward pursuant to Section 2.02(a)(iii), Packaging Company shall pay to
Tenneco, or Tenneco shall pay to Packaging
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Company, the amount, if any, required to be paid pursuant to the last sentence
of Section 2.02(a)(iii), which payment shall be due within 30 days of such
redetermination.
(b) Interest on Intergroup Tax Allocation Payments. In the case of
any payments to Tenneco required under paragraph (b) of this subsection 5.01,
Packaging Company shall also pay to Tenneco an amount of interest computed at
the Prime Rate on the amount of the payment required based on the number of days
from the applicable Payment Date to the date of payment. In the case of any
payments by Tenneco required under paragraph (b) of this subsection 5.01,
Tenneco shall also pay to Packaging Company an amount of interest computed at
the Prime Rate on the amount of the payment required based on the number of days
from the date of receipt of the Tax Benefit to the date of payment of such
amount to Packaging Company.
5.02 Payment of Federal Income Tax Related to Adjustments.
(a) Adjustments Resulting in Underpayments. Tenneco shall pay to
the Internal Revenue Service when due any additional Federal Income Tax required
to be paid as a result of any adjustment to the Tax liability with respect to
any Tenneco Federal Consolidated Return for any Pre-Distribution Period. The
Responsible Company shall compute the amount attributable to the Packaging Group
in accordance with Section 2.02(b) and Packaging Company shall pay to Tenneco
any amount due Tenneco under Section 2.02(b) within 30 days from the later of
(i) the date the additional Tax was paid by Tenneco or (ii) the date of receipt
by Packaging Company of a written notice and demand from Tenneco for payment of
the amount due, accompanied by evidence of payment and a statement detailing the
Taxes paid and describing in reasonable detail the particulars relating thereto.
Any amount due to Packaging Company under Section 2.02(b) shall be paid by
Tenneco to Packaging Company within 30 days from the date the additional Tax was
paid by Tenneco to the Internal Revenue Service. Any payments required under
this Section 5.02(a) shall include interest computed at the Prime Rate based on
the number of days from the date the additional Tax was paid by Tenneco to the
date of the payment under this Section 5.02(a).
(b) Adjustments Resulting in Overpayments. Within 30 days of
receipt by Tenneco of any Tax Benefit resulting from any adjustment to the
Consolidated Tax Liability with respect to any Tenneco Federal Consolidated
Return for any Pre-Distribution Period, Tenneco shall pay to Packaging Company
or Packaging Company shall pay to Tenneco (as the case may be), respective
amounts due from or to Tenneco as determined by the Responsible Company in
accordance with Section 2.02(b). Any payments required under this Section
5.02(b) shall include interest computed at the Prime Rate based on the number of
days from the date the Tax Benefit was received by Tenneco to the date of
payment to under this Section 5.02(b).
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5.03 Payment of State Income Tax With Respect to Post-Distribution
State Income Tax Returns.
(a) Computation and Payment of Tax Due. At least three business
days prior to any Payment Date for any Tax Return with respect to any State
Income Tax (except for post-Distribution estimated Tax payments which shall be
governed by Section 2.03(a)(iii)), the Responsible Company shall compute the
amount of Tax required to be paid to the applicable Tax Authority (taking into
account the requirements of Section 4.04 relating to consistent accounting
practices) with respect to such Tax Return on such Payment Date and--
(i) If such Tax Return is with respect to a Consolidated or
Combined State Income Tax, the Responsible Company shall, if Tenneco is
not the Responsible Company with respect to such Tax Return, notify
Tenneco in writing of the amount of Tax required to be paid on such
Payment Date. Tenneco will pay such amount to such Tax Authority on or
before such Payment Date.
(ii) If such Tax Return is with respect to a Separate Company Tax,
the Responsible Company shall, if it is not the Company liable for the
Tax reported on such Tax Return, notify the Company liable for such Tax
in writing of the amount of Tax required to be paid on such Payment Date.
The Company liable for such Tax will pay such amount to such Tax
Authority on or before such Payment Date.
(b) Computation and Payment of Packaging Company Liability. With
respect to the Consolidated or Combined State Income Tax Returns (excluding any
Tax Return with respect to payment of estimated Taxes or Taxes due with a
request for extension of time to file), within 120 days of the due date
(including extensions) for filing of the Consolidated or Combined Tax Return
with the latest due date for filing of all such Consolidated or Combined Tax
Returns, Packaging Company shall pay to Tenneco the Tax liability allocable to
the Packaging Group, or Tenneco shall pay to Packaging Company amounts owing to
Packaging Company, as the case may be, as determined by the Responsible Company
under the provisions of Section 2.03(a), plus interest computed at the Prime
Rate on the amount of the payment based on the number of days from such latest
due date (including extensions) to the date of payment.
5.04 Payment of State Income Taxes Related to Consolidated or
Combined State Income Tax Adjustments.
(a) Adjustments Resulting in Underpayments. Tenneco shall pay to
the applicable Tax Authority when due any additional State Income Tax required
to be paid as a result of any adjustment to the Tax liability with respect to
any Tax Return for any Consolidated or Combined State Income Tax for any
Pre-Distribution Period. Packaging Company shall pay to Tenneco its share of any
such additional Tax payment determined by the Responsible Company in accordance
with Section 2.03(b) within 120 days from the later of (i) the date the
additional Tax was paid by Tenneco or (ii) the date of receipt by Packaging
Company of a written notice and demand from Tenneco for payment of the amount
due, accompanied by evidence of payment and a statement detailing the Taxes paid
and describing in reasonable detail the particulars relating thereto. Packaging
Company shall also pay to Tenneco interest on its share of such additional
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Tax computed at the Prime Rate based on the number of days from the date the
additional Tax was paid by Tenneco to the date of payment to Tenneco under this
Section 5.04(a). Any amount due to Packaging Company under Section 2.03(b) shall
be paid within 30 days from the date the additional Tax was paid by Tenneco to
the applicable Tax Authority (including interest computed at the Prime Rate
based on the number of days from the date the additional Tax was paid by Tenneco
to the date of payment to Packaging Company).
(b) Adjustments Resulting in Overpayments. In the case of any Tax
Benefits resulting from any adjustment to any Tax Return for any Consolidated or
Combined State Income Tax for any Pre-Distribution Period, Tenneco shall pay to
Packaging Company or Packaging Company shall pay to Tenneco (as the case may be)
respective amounts due from or to Tenneco as determined in accordance with
Section 2.03(b). Any payments owing to Packag ing Company under this Section
5.04(b) shall be made within 60 days of the earlier of (i) the date of receipt
of the Tax Benefit by Tenneco or (ii) receipt by Tenneco of a written notice and
demand from Packaging Company evidencing the filing of the applicable
Consolidated or Combined Income Tax Return containing the relevant adjustments
and detailing the extent to which the resulting Tax Benefit is attributable to
Packaging Company. Any payments owing to Tenneco under this Section 5.04(b)
shall be made within 30 days of Tenneco's receipt of any Tax Benefit resulting
from the adjustment to the applicable Consolidated or Combined State Income Tax
Return. Any payments required under this Section 5.04(b) shall include interest
computed at the Prime Rate based on the number of days from the date the Tax
Benefit was received by Tenneco to the date of payment to Packaging Company
under this Section 5.04(b).
5.05 Payment of Separate Company Taxes. Each Company shall pay, or
shall cause to be paid, to the applicable Tax Authority when due all Separate
Company Taxes owed by such Company or a member of such Company's Group.
5.06 Indemnification Payments. If any Company (the "payor") is
required to pay to a Tax Authority a Tax that another Company (the "responsible
party") is liable for under this Agreement, the responsible party shall
reimburse the payor within 30 days of delivery by the payor to the responsible
party of an invoice for the amount due, accompanied by evidence of payment and a
statement detailing the Taxes paid and describing in reasonable detail the
particulars relating thereto. The reimbursement shall include interest on the
Tax payment computed at the Prime Rate based on the number of days from the date
of the payment to the Tax Authority to the date of reimbursement under this
Section 5.06.
SECTION 6. TAX BENEFITS.
6.01 General Rule.
(a) If a member of one Group receives a Tax refund with respect to
Taxes for which a member of the other Group is liable hereunder, the Company
receiving such Tax refund shall make a payment to the Company who is liable for
such Taxes hereunder within 30 days
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following receipt of the Tax refund in an amount equal to such Tax refund, plus
interest on such amount computed at the Prime Rate based on the number of days
from the date of receipt of the Tax refund to the date of payment under this
Section 6.01.
(b) In the event one Group is reimbursed for its payment of a Tax
liability of the other Group, the amount of such reimbursement shall be computed
net of any Tax Benefit realized by the reimbursed Group as the result of payment
of the other Group's Tax liability.
6.02 Adjustment of Tax Attributes. In the event that the Carryback
of Tax Items of one Group, or a Tax adjustment attributable to such Group under
the terms of this Agreement, results in the disallowance or limitation of Tax
attributes (including Tax credits, deductions and similar items) claimed on the
Tax Return as filed, the Carryback Group shall be responsible for any increase
in Tax liability resulting from the disallowance or limitation of such Tax
attributes; provided, however, that in the event the disallowance or limitation
of Tax attributes results in a Tax Benefit resulting from the use of such Tax
attributes in another Tax Period, such Tax Benefit shall be deemed to be for the
account of the Carryback Group for purposes of this Agreement.
6.03 Correlative Adjustments. If, upon examination by any Tax
Authority of any Tax Return including a member of the Tenneco Group or Packaging
Group for any Tax Period, an item of deduction, credit or expense is disallowed
for which Tenneco is or may be liable for Taxes hereunder (or an item of income
is required to be recognized on a Tax Return which was not reported on such Tax
Return), in either such case resulting in a tax detriment suffered by the
Tenneco Group, and such disallowance (or recognition) results in a Tax Benefit
to the Packaging Group (with respect to that Tax Period or another Tax Period),
then Packaging shall pay to Tenneco the amount of such Tax Benefit (but in no
case to exceed the corresponding tax detriment). Any payment required to be made
hereunder shall be made when such Tax Benefit is realized in the form of an
actual reduction in Tax (which shall be computed by comparing the Tax which
would have been owed by Packaging but for the item giving rise to the Tax
Benefit with the Tax owed by Packaging taking such item into account). The
provisions of this Section 6.03 shall apply mutatis mutandis where an item of
deduction, credit or expense is disallowed for which Packaging is or may be
liable for Taxes hereunder (or an item of income is required to be recognized on
a Tax Return which was not reported on such Tax Return), as they apply where the
Tenneco Group suffers such a tax detriment. For avoidance of doubt, any payment
required to be made by Tenneco to the Packaging Group under this Section 6.03
shall, to the extent applicable, be deemed as an offset to amounts owing by
Packaging to Tenneco under Section 2.02 hereof.
SECTION 7. ASSISTANCE AND COOPERATION.
7.01 General. After the Distribution Date, each of the Companies
shall cooperate (and cause their respective Affiliates to cooperate) with each
other and with each other's agents, including accounting firms and legal
counsel, in connection with Tax matters relating to the Companies and their
Affiliates including (i) preparation and filing of Tax Returns, (ii)
determining the liability for and amount of any Taxes due (including estimated
Taxes) or the right to and
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amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any
administrative or judicial proceeding in respect of Taxes assessed or proposed
to be assessed. Such cooperation shall include making all information and
documents in their possession relating to the other Companies and their
Affiliates available to such other Companies as provided in Section 8. Each of
the Companies shall also make available to each other, as reasonably requested
and available, personnel (including officers, directors, employees and agents of
the Companies or their respective Affiliates) responsible for preparing,
maintaining, and interpreting information and documents relevant to Taxes, and
personnel reasonably required as witnesses or for purposes of providing
information or documents in connection with any administrative or judicial
proceedings relating to Taxes. Any information or documents provided under this
Section 7 shall be kept confidential by the Company receiving the information or
documents, except as may otherwise be necessary in connection with the filing of
Tax Returns or in connection with any administrative or judicial proceedings
relating to Taxes.
7.02 Income Tax Return Information. Each Company will provide to
the other Company information and documents relating to their respective Groups
required by the other Company to prepare Tax Returns. The Responsible Company
shall determine a reasonable compliance schedule for such purpose in accordance
with Tenneco's past practices. Any additional information or documents the
Responsible Company requires to prepare such Tax Returns will be provided in
accordance with past practices, if any, or as the Responsible Company reasonably
requests and in sufficient time for the Responsible Company to file such Tax
Returns timely.
SECTION 8. TAX RECORDS.
8.01 Retention of Tax Records. Except as provided in Section 8.02,
each Company shall preserve and keep all Tax Records exclusively relating to the
assets and activities of its Group for Pre-Distribution Tax Periods, and Tenneco
shall preserve and keep all other Tax Records relating to Taxes of the Groups
for Pre-Distribution Tax Periods, for so long as the contents thereof may become
material in the administration of any matter under the Code or other applicable
Tax Law, but in any event until the later of (i) the expiration of any
applicable statutes of limitation, and (ii) seven years after the Distribution
Date. If, prior to the expiration of the applicable statute of limitation and
such seven-year period, a Company reasonably deter mines that any Tax Records
which it is required to preserve and keep under this Section 8 are no longer
material in the administration of any matter under the Code or other applicable
Tax Law, such Company may dispose of such records upon 90 days prior notice to
the other Company. Such notice shall include a list of the records to be
disposed of describing in reasonable detail each file, book, or other record
accumulation being disposed. The notified Company shall have the opportunity, at
its cost and expense, to copy or remove, within such 90-day period, all or any
part of such Tax Records.
8.02 State Income Tax Returns. Tax Returns with respect to State
Income Taxes and workpapers prepared in connection with preparing such Tax
Returns shall be preserved and kept,
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in accordance with the guidelines of Section 8.01, by the Company responsible
for preparing and filing the applicable Tax Return.
8.03 Access to Tax Records. The Companies and their respective
Affiliates shall make available to each other for inspection and copying during
normal business hours upon reasonable notice all Tax Records in their possession
to the extent reasonably required by the other Company in connection with the
preparation of Tax Returns, audits, litigation, or the resolution of items under
this Agreement.
SECTION 9. TAX CONTESTS.
9.01 Notice. Each of the parties shall provide prompt notice to
the other party of any pending or threatened Tax audit, assessment or proceeding
or other Tax Contest of which it becomes aware related to Taxes for Tax Periods
for which it is indemnified by the other party hereunder. Such notice shall
contain factual information (to the extent known) describing any asserted Tax
liability in reasonable detail and shall be accompanied by copies of any notice
and other documents received from any Tax Authority in respect of any such
matters. If an indemnified party has knowledge of an asserted Tax liability
with respect to a matter for which it is to be indemnified hereunder and such
party fails to give the indemnifying party prompt notice of such asserted Tax
liability, then (i) if the indemnifying party is precluded from contesting the
asserted Tax liability in any forum as a result of the failure to give prompt
notice, the indemnifying party shall have no obligation to indemnify the
indemnified party for any Taxes arising out of such asserted Tax liability, and
(ii) if the indemnifying party is not precluded from contesting the asserted Tax
liability in any forum, but such failure to give prompt notice results in a
monetary detriment to the indemnifying party, then any amount which the
indemnifying party is otherwise required to pay the indemnified party pursuant
to this Agreement shall be reduced by the amount of such detriment.
9.02 Control of Tax Contests.
(a) Separate Company Taxes. In the case of any Tax Contest with
respect to any Separate Company Tax, the Company having liability for the Tax
shall have exclusive control over the Tax Contest, including exclusive authority
with respect to any settlement of such Tax liability.
(b) Consolidated or Combined Income Taxes. In the case of any Tax
Contest with respect to any Consolidated or Combined Income Tax, (i) Tenneco
shall control the defense or prosecution of the portion of the Tax Contest
directly and exclusively related to any Tenneco Adjustment, including settlement
of any such Tenneco Adjustment, and (ii) Packaging Company shall control the
defense or prosecution of the portion of the Tax Contest directly and
exclusively related to any Packaging Adjustment, including any settlement of any
Packaging Adjustment, and (iii) the two-person committee (the "Tax Contest
Committee"), comprised of one person selected by Packaging Company (as
designated in writing to Tenneco) and one person selected by
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Tenneco (as designated in writing to Packaging Company) shall control the
defense or prosecution of Joint Adjustments and any and all administrative
matters not directly and exclusively related to any Tenneco Adjustment. Each
person serving on the Tax Contest Committee shall continue to serve unless and
until he or she is replaced by the party designating such person. Any and all
matters to be decided by the Tax Contest Committee shall require the unanimous
approval of both persons serving on the committee. In the event the Tax Contest
Committee shall be deadlocked on any matter, the provisions of Section 15 of
this Agreement shall apply. A Company shall not agree to any Tax liability for
which another Company may be liable under this Agreement, or compromise any
claim for any Tax Benefit which another Company may be entitled under this
Agreement, without such other Company's written consent (which consent may be
given or withheld at the sole discretion of the Company from which the consent
would be required).
SECTION 10. EFFECTIVE DATE; TERMINATION OF PRIOR INTERCOMPANY TAX
ALLOCATION AGREEMENTS. This Agreement shall be effective on the Distribution
Date. Immediately prior to the close of business on the Distribution Date
Tenneco shall cause all Prior Intercompany Tax Allocation Agreements to be
terminated with respect to Packaging Company and its Affiliates. Upon such
termination, no further payments by or to Tenneco or by or to Packaging Company,
with respect to such agreements shall be made, and all other rights and
obligations resulting from such agreements between the Companies and their
Affiliates shall cease at such time.
SECTION 11. NO INCONSISTENT ACTIONS. Each of the Companies covenants and
agrees that it will not take any action, and it will cause its Affiliates to
refrain from taking any action, which is inconsistent with the Tax treatment of
the Transactions as contemplated in the Ruling Request (any such action is
referred to in this Section 11 as a "Prohibited Action"), unless such Prohibited
Action is required by law, or the person acting has obtained the prior written
consent of each of the other parties (which consent shall not be unreasonably
withheld). With respect to any Prohibited Action proposed by a Company (the
"Requesting Party"), the other party (the "Requested Party") shall grant its
consent to such Prohibited Action if the Requesting Party obtains a ruling with
respect to the Prohibited Action from the Internal Revenue Service or other
applicable Tax Authority that is reasonably satisfactory to each of the
Requested Party (except that the Requesting Party shall not submit any such
ruling request if a Requested Party deter mines in good faith that filing such
request might have a materially adverse effect upon such Requested Party).
Without limiting the foregoing:
(a) No Inconsistent Plan or Intent. Packaging Company and Tenneco
each represent and warrant that neither it nor any of its Affiliates has any
plan or intent to take any action which is inconsistent with any factual
statements or representations in the Ruling Request. Regardless of any change in
circumstances, Packaging Company and Tenneco each covenant and agree that it
will not take, and it will cause its Affiliates to refrain from taking, any such
inconsistent action on or before the last day of the calendar year ending after
the second anniversary of the Distribution Date, other than as permitted in this
Section 11.
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(b) 355(e) Covenant. Without in any manner limiting paragraph (a)
above, each of Packaging Company and Tenneco covenants and agrees that it will
not enter into any negotiations, agreement or arrangements with respect to
transactions or events (including stock issuances, option grants, capital
contributions or acquisitions, but not including the Transactions), which may
cause the Distribution to be treated as part of a plan pursuant to which one or
more persons acquire directly or indirectly Packaging Company or Tenneco stock,
as the case may be, representing a "50-percent or greater interest" within the
meaning of Section 355(d)(4) of the Code.
(c) Amended or Supplemental Rulings. Each of the Companies
covenants and agrees that it will not file, and it will cause its Affiliates to
refrain from filing, any amendment or supplement to the Ruling Request
subsequent to the Distribution Date without the consent of the other Company,
which consent shall not be unreasonably withheld or delayed.
SECTION 12. SURVIVAL OF OBLIGATIONS. The representations, warranties,
covenants and agreements set forth in this Agreement shall be unconditional and
absolute and shall remain in effect without limitation as to time.
SECTION 13. EMPLOYEE MATTERS. Each of the Companies agrees to utilize, or
cause its Affiliates to utilize, the alternative procedure set forth in respect
to wage reporting set forth in Revenue Procedure 96-60, 1996-2 C.B. 399, with
respect to wage reporting.
SECTION 14. TREATMENT OF PAYMENTS; TAX GROSS UP.
14.01 Treatment of Tax Indemnity and Tax Benefit Payments. In the
absence of any change in tax treatment under the Code or other applicable Tax
Law,
(a) any Tax indemnity payments made by a Company under Section 5
shall be reported for Tax purposes by the payor and the recipient as
distributions or capital contributions, as appropriate, occurring immediately
before the distribution of all of the outstanding stock of Packaging Company to
Tenneco shareholders on the Distribution Date, and
(b) any Tax Benefit payments made by a Company under Section 6,
shall be reported for Tax purposes by the payor and the recipient as
distributions or capital contributions, as appropriate, occurring immediately
before the distribution of all of the outstanding stock of Packaging Company to
Tenneco shareholders on the Distribution Date.
14.02 Tax Gross Up. If notwithstanding the manner in which Tax
indemnity payments and Tax Benefit payments were reported, there is an
adjustment to the Tax liability of a Company as a result of its receipt of a
payment pursuant to this Agreement, such payment shall be appropriately adjusted
so that the amount of such payment, reduced by the amount of all Income Taxes
payable with respect to the receipt thereof (but taking into account all
correlative Tax Benefits resulting from the payment of such Income Taxes), shall
equal the amount of the
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payment which the Company receiving such payment would otherwise be entitled to
receive pursuant to this Agreement.
14.03 Interest Under This Agreement. Anything herein to the
contrary notwithstanding, to the extent one Company ("indemnitor") makes a
payment of interest to another Company ("indemnitee") under this Agreement with
respect to the period from the date that the indemnitee made a payment of Tax to
a Tax Authority to the date that the indemnitor reimbursed the indemnitee for
such Tax payment, or with respect to the period from the date that the
indemnitor received a Tax Benefit to the date indemnitor paid the Tax Benefit to
the indemnitee, the interest payment shall be treated as interest expense to the
indemnitor (deductible to the extent provided by law) and as interest income by
the indemnitee (includible in income to the extent provided by law). The amount
of the payment shall not be adjusted under Section 14.02 to take into account
any associated Tax Benefit to the indemnitor or increase in Tax to the
indemnitee.
SECTION 15. DISAGREEMENTS. If after good faith negotiations the parties
cannot agree on the application of this Agreement to any matter, then the matter
will be referred to a nationally recognized accounting firm acceptable to each
of the parties (the "Accounting Firm"). The Accounting Firm shall furnish
written notice to the parties of its resolution of any such disagreement as
soon as practical, but in any event no later than 45 days after its acceptance
of the matter for resolution. Any such resolution by the Accounting Firm will be
conclusive and binding on all parties to this Agreement. In accordance with
Section 17, each party shall pay its own fees and expenses (including the fees
and expenses of its representatives) incurred in connection with the referral of
the matter to the Accounting Firm. All fees and expenses of the Accounting Firm
in connection with such referral shall be shared equally by the parties affected
by the matter.
SECTION 16. LATE PAYMENTS. Any amount owed by one party to another party
under this Agreement which is not paid when due shall bear interest at the Prime
Rate plus two percent, compounded semiannually, from the due date of the payment
to the date paid. To the extent interest required to be paid under this Section
16 duplicates interest required to be paid under any other provision of this
Agreement, interest shall be computed at the higher of the interest rate
provided under this Section 16 or the interest rate provided under such other
provision.
SECTION 17. EXPENSES. Except as provided in Section 15, each party and
its Affiliates shall bear their own expenses incurred in connection with
preparation of Tax Returns, Tax Contests, and other matters related to Taxes
under the provisions of this Agreement.
SECTION 18. SPECIAL RULES FOR DETERMINING MEMBERS OF GROUPS. For purposes
of this Agreement, the following special rules shall apply for determining the
members of the Packaging Group:
(a) Former Affiliates of Packaging Group. The Packaging Group
shall be deemed to include any corporation which (1) was a member of the
affiliated group (as defined in Code Section 1504(a), but treating all
corporations as "includable corporations" for purposes of
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such Code Section) of which Tenneco is (or Old Tenneco was) the common parent,
(2) was included in the "packaging," "specialty packaging" or "paperboard
packaging" segments for purposes of segment reporting in Tenneco's (or Old
Tenneco's) Annual Reports on Form 10-K and (3) was sold, transferred, otherwise
disposed of, or discontinued prior to the date hereof. Any entity substantially
all of the assets and liabilities of which have been transferred to a member of
the Packaging Group (e.g., by a statutory merger) shall be treated as a member
of the Packaging Group. For example, Tenneco Packaging Specialty and Consumer
Products Inc., a Delaware corporation, shall, by virtue of its liquidation into
Tenneco Packaging Inc., be treated as a member of the Packaging Group.
Similarly, Tenneco United Kingdom Holdings Limited shall be treated as a member
of the Packaging Group.
SECTION 19. GENERAL PROVISIONS
19.01 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to any party under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class mail or by other commercially reasonable means of
written communication (including delivery by an internationally recognized
courier service or by facsimile transmission) to the party at the party's
address as follows:
If to Tenneco:
--------------
--------------
--------------
--------------
With a copy to:
--------------
--------------
--------------
--------------
If to Packaging Company
--------------
--------------
--------------
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With a copy to:
--------------
--------------
--------------
--------------
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A party may change the address for receiving notices under this Agreement
by providing written notice of the change of address to the other parties.
19.02 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
19.03 Waiver. No failure by any party to insist upon the strict
performance of any obligation under this Agreement or to exercise any right or
remedy under this Agreement shall constitute waiver of any such obligation,
right, or remedy or any other obligation, rights, or remedies under this
Agreement.
19.04 Invalidity of Provisions. If any provision of this Agreement
is or becomes invalid, illegal or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall
not be affected thereby.
19.05 Further Action. The parties shall execute and deliver all
documents, provide all information, and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement,
including the execution and delivery to the other parties and their Affiliates
and representatives of such powers of attorney or other authorizing
documentation as is reasonably necessary or appropriate in connection with Tax
Contests (or portions thereof) under the control of such other parties in
accordance with Section 9.
19.06 Integration. This Agreement constitutes the entire agreement
among the parties pertaining to the subject matter of this Agreement and
supersedes all prior agreements and understandings pertaining thereto. In the
event of any inconsistency between this Agreement and the Distribution Agreement
or any other agreements relating to the transactions contemplated by the
Distribution Agreement, the provisions of this Agreement shall control.
19.07 Construction. The language in all parts of this Agreement
shall in all cases be construed according to its fair meaning and shall not be
strictly construed for or against any party.
19.08 No Double Recovery; Subrogation. No provision of this
Agreement shall be construed to provide an indemnity or other recovery for any
Taxes costs, damages, or other amounts (including Tax Benefits) for which the
damaged party has been fully compensated under any other provision of this
Agreement or under any other agreement or action at law or equity. Unless
expressly required in this Agreement, a party shall not be required to exhaust
all remedies available under other agreements or at law or equity before
recovering under the remedies provided in this Agreement. Subject to any
limitations provided in this Agreement (for example, the limitation on filing
claims for refund in Section 4.07), the indemnifying party shall be subrogated
to all rights of the indemnified party for recovery from any third party.
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19.09 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
19.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by the respective officers as of the date set forth above.
TENNECO INC.
By:
-----------------------------------
Its:
----------------------------------
--------------------------------------
By:
-----------------------------------
Its:
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TENNECO DISTRIBUTION AGREEMENT
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EXHIBIT I
SHARED AGREEMENTS
Section 1.
1. Corporate Travel Agreement dated as of November 30, 1998 by and between
American Airlines, Inc. and Tenneco Business Services Inc. (travel
incentive).
2. Corporate Supply Agreement dated as of July 1, 1996 by and between Boise
Cascade Office Products Corporation and Tenneco Business Services Inc.
(office supplies).
3. Corporate Supply Agreement dated as of February 1, 1999 by and between
▇▇▇▇▇▇ Distribution Division of ▇▇▇▇▇▇ Group, Inc. and Tenneco Business
Services Inc. (fasteners).
4. Corporate Agreement dated as of October 30, 1998 by and between Delta Air
Lines, Inc. (on its own behalf and on behalf of Austrian Airlines, N.V.
Sabena S.A. and Swiss Air Transport Company) and Tenneco Business
Services Inc. (air travel incentive).
5. Global Pricing Agreement dated as of February 4, 1998 by and between
Federal Express Corporation and Tenneco Business Services Inc. (package
delivery).
6. Corporate Account Agreement dated as of October 17, 1998 by and between
The Hertz Corporation and Tenneco Business Services Inc. (vehicle rental).
7. Agreement for Services dated as of May 16, 1996 by and between ▇▇▇▇▇
Services, Inc. and Tenneco Business Services Inc. (services/temporary
workers).
8. Supply Agreement dated as of August 31, 1995 by and among Motion
Industries, Inc., ▇▇▇▇▇ Bearing Company, a division of Motion Industries,
Inc. and Tenneco Business Services Inc. (bearings, etc.).
9. Preferred Carrier Agreement dated as 1998 by and between Northwest
Airlines, Inc. and Tenneco Business Services Inc. (travel incentive).
10. Security Services Contract dated as of September 15, 1995 by and between
Per Mar Security and Research Corp. and Tenneco Business Services Inc.
(security services).
11. Travel Services Agreement dated as of September 3, 1996 by and between
▇▇▇▇▇▇▇▇▇▇ International, Inc. and Tenneco Business Services Inc.
(travel services).
12. Agreement by and between Equilon Enterprises LLC (formerly Texaco
Lubricants Company) and Tenneco Business Services Inc. (industrial
lubricants).
13. UPS Ground, Air and International Incentive Program dated as of April 28,
1997 by and between United Parcel Service, Inc. and Tenneco Business
Services Inc. (carrier/package delivery).
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14. Corporate Supply Agreement dated as of April 1996 by and between ▇▇▇▇▇▇▇
Computer Services, Inc. and Tenneco Business Services Inc. (business
forms).
15. Agreement by and between WESCO Distribution Inc. and Tenneco Business
Services Inc. (electrical supplies).
16. Copier Outsourcing Agreement and Various Configuration Changes and
Amendments dated as of May 8, 1996 by and between Xerox Business Services,
a division of Xerox Corporation, and Tenneco Business Services Inc.
(copiers).
Section 2.
1. Services Agreement dated as of November 30, 1998 by and between ▇▇▇▇▇
Security & Investigation, Inc. and Tenneco Business Services Inc.
(security services).
2. Purchasing Card Agreement dated as of March 18, 1996 by and between
Citibank (South Dakota) N.A. and Tenneco Business Services Inc., including
its parent Tenneco Inc. (purchasing card/credit card).
3. Consultancy Services Agreement dated as of April 1, 1997 by and between
Dames & ▇▇▇▇▇ and Tenneco Business Services Inc. (environmental
services/audits).
4. Central Travel System (CTS) Program Agreement dated as of July 11, 1996 by
and between First Bank of South Dakota (National Association) and Tenneco
Business Services Inc. (credit card/travel and entertainment card).
5. Agreement by and between ▇▇▇▇▇ Lubricants Company and Tenneco Business
Services Inc. (lubricants).
6. Agreement by and between G&K and Tenneco Business Services Inc.
(uniforms).
7. Amended and Restated Administrative Service Agreement dated as of April 9,
1999 by and between ▇▇▇▇▇▇ Associates LLC and Tenneco Business Services
Inc. (administrative services).
8. Supplier Management Agreement dated as of April 26, 1996 by and between
▇▇▇▇▇ Safety, Inc. and Tenneco Business Services Inc. (safety equipment).
9. Special Customer Arrangement dated as of March 5, 1999 by and between MCI
Telecommunications Corporation and Tenneco Business Services Inc.
(telecommunication services).
10. Relocation Services Agreement dated as of March 15, 1996 by and between
Prudential Residential Services Limited Partnership d/b/a Prudential
Resources Management, Tennessee Gas Pipeline Company and Tenneco Business
Services Inc. (relocation services).
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11. Corporate Visa Card Agreement undated by and between Royal Bank of Canada
and Tenneco Business Services Inc. (credit card/Canadian travel card).
12. Parts Washing and Waste Disposal Services Agreement dated as of 1997 by
and between Safety-Kleen Corp. and Tenneco Business Services Inc. (parts
washing/waste disposal services).
13. Corporate Volume Agreement dated as of September 22, 1998 by and between
United Air Lines, Inc. and Tenneco Business Services Inc. (travel
incentive).
14. Services Contract dated as of September 1, 1995 by and between The
Wackenhut Corporation and Tenneco Business Services Inc. (security
services).
15. Lease dated as of November 19, 1992 by and between Wheels, Inc. and
Tenneco Business Services Inc. (original agreement with Tennessee Gas &
Pipeline, assigned to TBS) (vehicle lease).
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EXHIBIT J
EXCEPTIONS TO RESIGNATIONS OF COMMON DIRECTORS, OFFICERS AND EMPLOYEES
1. Investment Committee of the Tenneco Inc. General Employee Benefit Trust
(existing members may remain as members of the Committee until March 31,
2000).
2. Tenneco Packaging (UK) Limited (▇▇▇▇▇▇▇ Kitchen to remain as director).
3. Tenneco Rabbi Trust created in 1999 in connection with the spin-off
(existing trustees may remain trustees after the Distribution).
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EXHIBIT K
FORM OF
TRADEMARK TRANSITION LICENSE AGREEMENT
THIS TRADEMARK TRANSITION LICENSE AGREEMENT (this "Trademark Transition
License Agreement") is made and entered into as of ______, 1999, (the "Effective
Date") by and between Tenneco Inc., a Delaware company to be renamed Tenneco
Automotive Inc., a corporation organized and existing under the laws of the
State of Delaware, whose principal place of business is located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Licensor"), and Tenneco Packaging Inc. (to
be renamed), a corporation organized under the laws of the State of Delaware,
whose principal place of business is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Licensee").
WHEREAS, Pursuant to the terms of that certain Distribution Agreement
dated _____, 1999, (the "DISTRIBUTION AGREEMENT"), Licensee and Licensor have
agreed to cause this Trademark Transition License Agreement to be entered into
regarding the use of certain trademarks by Licensee.
WHEREAS, Licensor has adopted and is using the name and ▇▇▇▇ "Tenneco",
alone and in combination with other terms and/or symbols and variations thereof,
in the United States and elsewhere throughout the world and is the owner of the
U.S. Trademark Applications and the U.S. Trademark Registrations, listed on
Exhibit A of this Agreement, from the United States Patent and Trademark Office,
as well as their foreign counterparts, and other foreign trademarks listed on
Exhibit A (hereinafter individually and collectively referred to as the
"Trademark"); and
WHEREAS, Licensee previously has used the Trademark and is desirous of
continuing to use said Trademark with respect to the goods and services listed
on Exhibit B, to assist Licensee during its transition to a new identity and for
the limited purposes more fully described below;
NOW, THEREFORE, in consideration of the foregoing Recitals which are
hereby incorporated into the operative terms hereof, the mutual promises
contained in this Agreement and good and valuable consideration from the
Licensee to the Licensor, the receipt and sufficiency of which is hereby
acknowledged by said Licensor, the parties hereby agree as follows:
1. LICENSE. Licensor grants to Licensee and its Subsidiaries (as such
term is defined in the Distribution Agreement), the limited, non-exclusive right
to use the Trademark under the common law and under the auspices and privileges
provided by any of the registrations covering the same during the term of this
Agreement, and Licensee hereby undertakes to use the Trademark as follows:
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a. For a period of sixty (60) days following the Effective
Date of this Agreement, Licensee and its Subsidiaries may continue to use the
Trademark in their corporate names. After sixty (60) days following the
Effective Date of this Agreement, or as soon thereafter as reasonably practical
in non-U.S. jurisdictions, Licensee shall change or cause to be changed, if
necessary, such corporate names to delete the Trademark or any other word that
is confusingly similar to the Trademark.
b. For a period of nine (9) months following the Effective
Date of this Agreement, Licensee and its Subsidiaries shall be entitled to use
their supplies and documents which have imprinted thereon the Trademark to the
extent that such supplies and documents were existing inventory prior to the
Effective Date of this Agreement. Licensee shall not print or permit to be
printed any new supplies or documents bearing the Trademark from and after the
Effective Date of this Agreement.
c. For a period of eighteen (18) months from the Effective
Date of this Agreement, Licensee and its Subsidiaries may use the Trademark on
signs, displays or other identifications or advertising material (other than
supplies or documents, which shall be governed by paragraph b above), in each
case to the extent existing as of the date hereof. Licensee shall not, and shall
not permit its Subsidiaries to, prepare or install any new signs, displays or
other identifications or advertising material bearing the Trademark. Licensee
shall remove or cause to be removed any and all references to the Trademark from
any and all signs, displays or other identifications or advertising material by
the end of the eighteen (18) month period.
2. QUALITY OF SERVICES. Licensee agrees to maintain and cause its
Subsidiaries to maintain such quality standards as shall be prescribed by
Licensor in the conduct of the business operations with which the Trademark is
used. Licensee shall, and shall cause its Subsidiaries to, use the Trademark
only with goods and services listed in Exhibit B rendered by Licensee and/or its
Subsidiaries in accordance with the terms of this Agreement and with the
guidance and directions furnished to the Licensee by the Licensor, or its
authorized representatives or agents, from time to time, if any; but always the
quality of the goods and services shall be satisfactory to the Licensor or as
specified by it.
3. INSPECTION. Licensee will permit duly authorized representatives of
the Licensor to inspect the premises of Licensee and/or its Subsidiaries using
the Trademarks at all reasonable times, for the purpose of ascertaining or
determining compliance with Paragraphs 1 and 2 hereof.
4. USE OF TRADEMARK. When using the Trademark under this Agreement,
Licensee undertakes to, and shall cause its Subsidiaries to, comply with all
laws pertaining to the Trademark. This provision includes compliance with
marking requirements. Licensee represents and warrants that all goods and
services to be sold under the Trademark and the marketing, sales, and
distribution of them shall meet or exceed all federal, state, local and foreign
laws, ordinances, standards, regulations, and guidelines pertaining to such
products or activities, including, but not limited to those pertaining to
product safety, quality, labeling and propriety. Licensee agrees that it will
not package, market, sell, or distribute any goods or services or cause or
permit any goods or services to be
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packaged, marketed, sold or distributed in violation of any such federal, state,
local or foreign law, ordinance, standard, regulation or guideline.
5. EXTENT OF LICENSE. The license granted herein is for the sole
purpose of assisting Licensee in its transition to a new identity and is not
assignable or transferable in any manner whatsoever. Licensee has no right to
grant any sublicenses or to use the Trademark for any other purpose.
6. INDEMNITY. Licensee acknowledges that neither it nor its
Subsidiaries will have any claims against Licensor hereunder for any damage to
property or injury to persons arising out of the operation of their business.
Licensee agrees to indemnify, hold harmless, and defend Licensor and its
Subsidiaries, affiliates and authorized representatives with legal counsel
acceptable to Licensor from and against any and all demands, claims, injuries,
losses, damages, actions, suits, causes of action, proceedings, judgments,
liabilities and expenses, including attorneys' fees, court costs and other legal
expenses, arising out of or connected with:
a. the use of the Trademark by Licensee or any of its Subsidiaries or
affiliates; or
b. any breach by Licensee or any of its Subsidiaries of any provision
of this Agreement or of any warranty made by Licensee in this Agreement.
No approval by Licensor of any action by Licensee or any of its Subsidiaries or
affiliates shall affect any right of Licensor to indemnification hereunder.
7. TERMINATION. Except as otherwise provided herein, this Agreement
shall remain in full force and effect for the periods stated in Paragraph 1
above. However, Licensor retains the right to immediately terminate this
Agreement in the event of a material breach of any term of this Agreement by
Licensee or any of its Subsidiaries, upon written notice to the Licensee.
8. OWNERSHIP OF TRADEMARK. The Licensee acknowledges Licensor's
exclusive right, title and interest in and to the Trademark and will not at any
time do or cause or permit to be done any act or thing contesting or in any way
impairing or tending to impair any part or all of such right, title and
interest. In connection with the use of the Trademark, Licensee and each of its
Subsidiaries shall not in any manner represent that it has any ownership in the
Trademark or registrations thereof, and acknowledges that use of the Trademark
shall inure to the benefit of the Licensor. On termination of this Agreement or
any portion hereof in any manner provided herein, the Licensee will destroy or
cause to be destroyed all signs, displays or other identifications or
advertising material, supplies and documents, and any other materials bearing
the Trademark and will certify to Licensor in writing that it has done so.
Furthermore, Licensee and each of its Subsidiaries will not at any time adopt or
use without the Licensor's prior written consent, any word or ▇▇▇▇ which is
likely to be similar to or confusing with the Trademark.
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9. INFRINGEMENT OF TRADEMARK. If Licensee or any of its Subsidiaries
learns of any actual or threatened infringement of the Trademark or of the
existence, use, or promotion of any ▇▇▇▇ or design similar to the Trademark,
Licensee shall promptly notify Licensor. Licensor has the right to decide at its
sole discretion what legal proceedings or other action, if any, shall be taken,
by who, how such proceedings or other action shall be conducted, and in whose
name such proceedings or other action shall be performed. Any legal proceedings
instituted pursuant to this Section shall be for the sole benefit of Licensor
and all sums recovered in such proceedings whether by judgment, settlement, or
otherwise, shall be retained solely and exclusively by Licensor.
10. INJUNCTIVE RELIEF. Licensee acknowledges that any breach or
threatened breach of any of Licensee's covenants in this Agreement relating to
the Trademark, including, without limitation, Licensee's and/or any of its
Subsidiaries' failure to cease the manufacture, sale, marketing, or distribution
of the goods bearing the Trademark at the termination or expiration of this
Agreement will result in immediate and irreparable damage to Licensor and to the
rights of any subsequent licensee of them. Licensee acknowledges and admits that
there is no adequate remedy at law for failure to cease such activities, and
Licensee agrees that in the event of such breach or threatened breach, Licensor
shall be entitled to temporary and permanent injunctive relief and such other
relief as any court with jurisdiction may deem just and proper.
11. SEVERABILITY. If any provision of this Agreement shall be
determined to be illegal and unenforceable by any court of law or any competent
government or other authority, the remaining provisions shall be severable and
enforceable in accordance with their terms so as this Agreement without such
terms or provisions does not fail of its essential purpose or purposes. The
parties will negotiate in good faith to replace any such illegal or
unenforceable provision or provisions with suitable substitute provisions which
maintain the economic purposes and intentions of this Agreement.
12. NOTICE. Any notices required or permitted to be given under this
Agreement shall be deemed sufficiently given if mailed by registered mail,
postage prepaid, addressed to the party to be notified at its address shown
above (followed by facsimile) or at such other address as may be furnished in
writing to the notifying party.
13. MISCELLANEOUS.
a. CAPTIONS. The captions for each Section have been inserted
for the sake of convenience and shall not be deemed to be binding upon the
parties for the purpose of interpretation of this Agreement.
b. INTERPRETATION. The parties agree that each party and its
counsel has reviewed this Agreement and the normal rule of construction that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.
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c. WAIVER. The failure of Licensor to insist in any one or
more instance upon the performance of any term, obligation, or condition of this
Agreement by Licensee or any of its Subsidiaries or to exercise any right or
privilege herein conferred upon Licensor shall not be construed as thereafter
waiving such term, obligation, or condition, or relinquishing such right or
privilege, and the acknowledged waiver or relinquishment by Licensor of any
default or right shall not constitute waiver of any other default or right. No
waiver shall be deemed to have been made unless expressed in writing.
d. TIME OF ESSENCE. Time is of the essence with respect to the
obligations to be performed under this Agreement, and Licensee shall use its
best efforts to cause the transition of all existing materials, including signs
and displays, bearing the Trademark to a new name and ▇▇▇▇.
e. RIGHTS CUMULATIVE. Except as expressly provided in this
Agreement, and to the extent permitted by law, any remedies described in this
Agreement are cumulative and not alternative to any other remedies available at
law or in equity.
f. GOVERNING LAW. ALL QUESTIONS OR DISPUTES CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE SCHEDULES
AND EXHIBITS HERETO SHALL BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF DELAWARE. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY AND UNCONDITIONALLY (i) AGREES TO BE SUBJECT TO, AND HEREBY
CONSENTS AND SUBMITS TO, THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE
AND OF THE FEDERAL COURTS SITTING IN THE STATE OF DELAWARE, (ii) TO THE EXTENT
SUCH PARTY IS NOT OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE STATE OF
DELAWARE, HEREBY APPOINTS THE CORPORATION TRUST COMPANY, AS SUCH PARTY'S AGENT
IN THE STATE OF DELAWARE FOR ACCEPTANCE OF LEGAL PROCESS AND (iii) AGREES THAT
SERVICE MADE ON ANY SUCH AGENT SET FORTH IN (ii) ABOVE SHALL HAVE THE SAME LEGAL
FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN THE STATE OF
DELAWARE.
Attest: LICENSOR
By:
------------------------------------- -------------------------------
Attest: LICENSEE
By:
------------------------------------- -------------------------------
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EXHIBIT "A"
REGISTRATION EXPIRATION
TRADEMARK NO. DATE
--------- ----------- -----------
APPLICATION APPLICATION
TRADEMARK NO. NO.
--------- ----------- ------------
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EXHIBIT "B"
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