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EXHIBIT 10.11
FORM OF
TENNECO RABBI TRUST AGREEMENT
This Tenneco Rabbi Trust Agreement (the "Trust Agreement") is made and
entered into as of this day of , 1999.
WHEREAS, the Tenneco Rabbi Trust (the "Trust") is being adopted as set
forth below by Tenneco Inc. ("Tenneco") and Tenneco Packaging Inc. ("Packaging")
and shall be maintained by and between Packaging and one or more individuals as
trustees (each a "Trustee" and collectively, the "Trustees") (and in the case of
Fund B described below, by and among Tenneco, Packaging and the Trustees) to
effect certain terms of the Human Resources Agreement between Tenneco and
Packaging (the "HR Agreement") and to provide for the payment of certain
transaction expenses as described below. Terms not defined herein shall have the
meaning set forth in or incorporated by reference into the HR Agreement;
WHEREAS, effective on the date (the "Effective Date") on which the common
stock of Packaging is distributed to the stockholders of Tenneco (the
"Spin-off"), Tenneco Management Company ("TMC") shall be obligated to make the
payments described on Appendix A related to certain benefit plans (collectively
the "Plans" and each a "Plan") to satisfy certain obligations allocated to the
Packaging Group under the HR Agreement;
WHEREAS, Packaging and Tenneco wish to maintain the Trust assets, until
paid as specified herein;
WHEREAS, it is the intention of the parties that this Trust shall not
affect the status of the Plan(s) as either a structure not subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or as an
unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of ERISA; and
WHEREAS, among the purposes for which the Trust is maintained is to assure
the payment of certain professional fees and expenses incurred in connection
with the Spin-off and attendant and resulting matters.
NOW, THEREFORE, the parties do hereby agree as follows:
1. ESTABLISHMENT OF TRUST.
(a) The Trust is hereby adopted and shall be comprised, held and disposed
of as set forth in this Trust Agreement. Tenneco has contributed certain assets
to the Trust. Subject to the terms and conditions explicitly set forth herein,
the Trust hereby established is irrevocable.
(b) The Trust is intended to be a grantor trust, within the meaning of
subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue
Code of 1986, as amended, (the "Code") and shall be construed accordingly.
(c) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Tenneco and Packaging. The assets of the
Trust shall be divided between two funds, Fund A and Fund B, and the earnings of
each Fund shall be allocated only to that Fund. Except as required by law, Fund
A shall be used exclusively for the uses and purposes of Plan participants.
Except as required by law, Fund B shall be used exclusively for making payments
to entities to whom amounts are owed as contemplated by Section 14 hereof (the
"Professionals"). (Plan participants and their beneficiaries and the
Professionals are referred to collectively herein as the "Beneficiaries.") The
Beneficiaries shall have no beneficial ownership interest in any assets of the
Trust. Any rights of the Beneficiaries created under the Plan(s) or this Trust
Agreement shall be unsecured contractual rights of the Beneficiaries against the
Trust, Packaging or Tenneco as the case may be. Notwithstanding any term or
provision of this Trust Agreement, this Trust Agreement shall not, and shall not
be deemed to, in any way amend, supercede or otherwise modify any term or
provision of any agreement between any Beneficiary and the Trust. Any
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rights or remedies of any Beneficiary with respect to Packaging or Tenneco shall
be cumulative and in addition to any rights or remedies under this Trust
Agreement.
(d) Any assets held by the Trust will be subject to the claims of the
general creditors of Packaging and any of Packaging's domestic subsidiaries. To
the extent Tenneco has any interest in the assets of Fund B pursuant to Section
12(b) below, such assets shall be held by the Trust subject to the claims of the
general creditors of Tenneco and any of Tenneco's domestic subsidiaries.
(e) Packaging and/or Tenneco, in its sole discretion, may at any time, or
from time to time, make additional deposits of cash in trust with the Trustees
to augment the principal to be held, administered and disposed of by the
Trustees as provided in this Trust Agreement. Deposits shall be credited to the
Fund designated by the party making the deposit.
2. PAYMENTS TO BENEFICIARIES.
(a) Each month, Tenneco Business Services Inc. or such other person or
entity as shall be designated by the Trustees in their sole discretion ("TBS")
shall deliver to the Trustees and Packaging (and Tenneco in the case of Fund B)
a schedule (the "Payment Schedule") that indicates the amounts payable in
respect of each Beneficiary, that provides a formula or other instructions
acceptable to the Trustees for determining the amounts so payable, the form in
which such amount is to be paid, and the time of commencement for payment of
such amounts. Except as otherwise provided herein, the Trustees shall cause the
Trust to make payments to the Beneficiaries in accordance with such Payment
Schedule, as approved or revised by the Trustees. TBS shall make provision for
the reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to payments made hereunder and shall advise
the Trustees of the amounts to be withheld and paid to the appropriate taxing
authorities.
(b) The entitlement of a Plan participant or his or her beneficiaries to
benefits under the Plan(s) shall be determined by TBS or such party as it shall
designate under the Plan(s). Any claim for such benefits shall be considered and
reviewed under the procedures set forth in the Plan(s). Notwithstanding the
foregoing, the Trustees may, without direction, make payments to Beneficiaries
in such manner and in such amounts as the Trustees shall determine they are
entitled to be paid (to the extent funded through Fund A) based on the most
recent information furnished to the Trustees upon which the Trustees may
reasonably rely in making such determination. Notwithstanding any other
provision hereof (i) payments shall be available from Fund A hereunder only to
persons with respect to whom liabilities are allocated to the Packaging Group
under the HR Agreement but who are excluded from coverage by the last sentence
of Section 2.b. of the Tenneco Packaging Inc. Rabbi Trust and to persons who
were directors of Tenneco Inc., but do not continue on the board of Tenneco or
Packaging after the Spin-off, and (ii) payments shall be available from Fund B
hereunder only to the Professionals.
(c) Packaging may make payment of benefits directly to Plan participants or
their beneficiaries as they become due under the terms of the Plan(s) and to the
Professionals. Packaging or Tenneco may make payments directly to the
Professionals. Packaging and/or Tenneco shall notify the Trustees of any
decision to make a payment directly to a Beneficiary prior to the time the
amount is due. In addition, if the principal of Fund A of the Trust, and any
earnings thereon, are not sufficient to make payment of benefits in accordance
with the terms of the Plan(s), Packaging shall make the balance of each such
payment as it falls due. If the principal of Fund B of the Trust, and any
earnings thereon, are not sufficient to pay the Professionals, Packaging and
Tenneco shall make the balance of each such payment as it falls due in
accordance with the Distribution Agreement. The Trustees shall notify Packaging
and Tenneco at any time the principal and earnings in either Fund are not
sufficient. Neither the existence of the Trust nor its termination shall relieve
Packaging or Tenneco of any obligation, including any obligation allocated to
Packaging Group under the HR Agreement, except to the extent that the obligation
has been discharged.
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3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN PACKAGING
IS INSOLVENT.
(a) Packaging shall be "insolvent" for purposes of this Trust Agreement if
(i) it is unable to pay its debts as they become due, or (ii) it is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code.
(b) If Packaging determines that it has become insolvent, it shall
immediately notify the Trustees in writing of the insolvency. If a person
claiming to be a creditor of Packaging alleges in writing to any Trustee that
Packaging has become insolvent, the Trustees shall determine whether Packaging
is insolvent and, pending such determination, the Trustees shall discontinue
payments to Beneficiaries from the Trust.
(c) Unless any Trustee has actual knowledge of Packaging's insolvency, or
has received notice from Packaging or a person claiming to be a creditor
alleging that it is insolvent, no Trustee shall have a duty to inquire whether
Packaging is insolvent. The Trustees may in all events rely on such evidence
concerning the company's solvency as may be furnished to the Trustees and that
provides the Trustees with a reasonable basis for making a determination
concerning the company's solvency.
(d) If at any time the Trustees have determined that Packaging is
insolvent, the Trustees shall discontinue payments to Beneficiaries from the
Trust and shall hold the assets of the Trust for the benefit of Packaging's
general creditors. Nothing in this Trust Agreement shall in any way diminish any
rights of Beneficiaries to pursue their rights as general creditors.
(e) The Trustees shall resume the payments to Beneficiaries in accordance
with Section 2 of this Trust Agreement only after the Trustees have determined
that Packaging is not insolvent (or is no longer insolvent).
(f) Provided that there are sufficient assets, if the Trustees discontinue
payments pursuant to Section 3(d) hereof and subsequently resume such payments,
the first payment following such discontinuance shall include the aggregate
amount of all payments due to Beneficiaries for the period of such
discontinuance, less the aggregate amount of any payments made to Beneficiaries
by Packaging in lieu of the payments provided for hereunder during any such
period of discontinuance.
4. PAYMENTS TO PACKAGING AND TENNECO.
Except as specifically provided herein, neither Packaging nor Tenneco shall
have the right or power to direct the Trustees to return to such company or to
divert to any other company any of the Trust assets of Fund A or Fund B before
all payments of benefits have been made to the Beneficiaries with respect to
such Fund.
5. THE TRUSTEES' POWERS OF INVESTMENT AND MANAGEMENT.
The Trustees shall have the power to hold any and all assets constituting
part of the Trust exclusively in cash and cash equivalents.
6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and held in cash and cash equivalents.
7. ACCOUNTING BY THE TRUSTEES.
The Trustees shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made. Within
15 days following the end of each month and within 60 days after the resignation
of a majority of the Trustees, the Trustees shall deliver to Packaging and to
Tenneco a written account of the administration of the Trust during such month
or during the period from the close of the last month to the date of such
resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or
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receivable being shown separately), and showing all cash and securities held in
the Trust at the end of such month or as of the date of such resignation as the
case may be. Such accounting shall reflect all such matters separately for Fund
A and Fund B. The Trustees may cause TBS or Packaging to perform the duties
described in this Section 7 on behalf of the Trustees and at no charge to the
Trustees.
8. RESPONSIBILITY OF THE TRUSTEES.
(a) Except as provided herein, the Trustees shall act by action of the
majority of individuals then serving as Trustees. No Trustee shall be liable for
any action or inaction with respect to the Trust except for gross negligence or
willful misconduct.
(b) If the Trustees undertake or defend any litigation arising in
connection with this Trust, Packaging shall pay the cost thereof.
(c) The Trustees may consult with legal counsel (who may also be counsel
for Packaging or Tenneco generally) with respect to any of their duties or
obligations hereunder.
(d) The Trustees may hire agents, accountants, actuaries, investment
advisors, financial consultants, custodians or other professionals to assist it
in performing any of its duties or obligations hereunder. Such expense shall be
borne by Packaging.
(e) The Trustees shall have, without exclusion, all powers conferred on the
Trustees by applicable law, unless expressly provided otherwise herein.
(f) Notwithstanding any powers granted to the Trustees pursuant to this
Trust Agreement or to applicable law, the Trustees shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.
(g) Any action required to be taken by Packaging or Tenneco, or direction
given by Packaging or Tenneco, shall be by resolution of its board of directors
or by written direction of one or more of its president, any vice president or
treasurer. The Trustees may rely upon a resolution or direction filed with the
Trustees and shall have no responsibility for any action taken by the Trustees
in accordance with any such resolution or direction.
9. COMPENSATION AND EXPENSES OF THE TRUSTEES.
Packaging shall be responsible for all reasonable administrative expenses
including without limitation the costs incurred by Trustees with respect to any
matter included in Section 8 hereof and the Trustees' fees and expenses. If not
so paid, the fees and expenses shall be paid from the Trust. The Trustees shall
be entitled to reimbursement of expenses and fees of $ .
10. TRUSTEE RESIGNATION.
(a) Any individual who is serving as a Trustee may resign at any time by
written notice to Packaging, which shall be effective 30 days after receipt of
such notice unless Packaging, Tenneco and the individual agree otherwise.
(b) Any individual who is serving as a Trustee may not be removed by
Packaging or Tenneco.
(c) For purposes hereof, the death or incapacity of a Trustee shall be
deemed an immediately effective resignation.
11. APPOINTMENT OF SUCCESSOR.
(a) If an individual resigns in accordance with Section 10 hereof, that
individual may appoint any other individual as successor to replace him or her
provided, that in default of such appointment the remaining individuals acting
as Trustees may appoint any other individual as successor to replace him or her.
The appointment shall be effective when accepted in writing by the successor,
who shall have all of
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the rights and powers of the predecessor. The predecessor shall execute any
instrument necessary or reasonably requested by Packaging or the successor to
evidence the transfer.
(b) The successor need not examine records and acts of any predecessor and
may retain or dispose of existing Trust assets, subject to the rules hereof. The
successor shall not be responsible for and Packaging shall indemnify and defend
the successor from any claim or liability resulting from any action or inaction
of any predecessor from any other past event or any condition existing at the
time he or she becomes a successor.
12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument executed by
each individual then serving as a Trustee, and Packaging. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the Plan(s) or
shall make the Trust revocable.
(b) The Trust shall terminate on the date on which Beneficiaries are no
longer entitled to payments hereunder or on the date determined by a unanimous
vote of the Trustees then serving; provided, however, that in no event shall the
Trust terminate prior to December 31, 2001. Upon termination of the Trust any
assets remaining in Fund A shall be paid to Packaging and any assets remaining
in Fund B shall be paid in equal amounts to Packaging and Tenneco. From and
after the date of such termination, the Trustees shall forever be released from
any liability under or arising with respect to such Funds.
13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in accordance
with the internal laws of the State of Illinois, without reference to its choice
of law rules.
(d) The preamble and preliminary recitals set forth above are hereby
incorporated in and made part of this Trust Agreement.
14. TRANSACTIONAL FEES AND COSTS.
Notwithstanding any other provision hereof, the Trustees shall pay and
discharge any and all fees and expenses of attorneys and investment bankers for
services performed after the Spin-off for Tenneco, Packaging or any of their
subsidiaries, in connection with, attendant upon or resulting from the Spin-off
or any and all related transactions, including, without limitation, matters
related to the initial public offering of stock of Packaging Corporation of
America (excluding underwriting discounts and commissions), the exchange offer
of Tenneco's public debt following the Spin-off and other matters relating to
the debt realignment, corporate restructuring transactions and Spin-off provided
that such services are provided by entities that provided services in connection
with or attendant to the Spin-off that were retained by or whose retention was
approved by Tenneco Inc. headquarters personnel in Greenwich, Connecticut.
15. INDEMNIFICATION.
Packaging and Tenneco shall, to the fullest extent permitted by law,
indemnify, defend and save harmless the Trustees from and against any and all
liability (including any judgments, losses, damages, civil penalties, excise
taxes, interest and any other form of liability or expense of any kind) or claim
of liability (as defined above and including any investigatory action) to which
they may be subjected by reason of any act alleged to have been done or omitted
to be done in connection with their service as Trustees of the Trust, including
all expenses reasonably incurred in their defense if Packaging and Tenneco fail
to provide such defense after having been requested to do so in writing.
Regardless of whether
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Packaging or Tenneco assumes such defense, counsel for such defense shall be
selected by the indemnified Trustee. Defense costs shall be indemnified as
incurred in the course of the defense or investigation. The remedies provided by
this Section 15 shall be cumulative and without prejudice to the assertion of
any other rights. To the extent that a Trustee receives payment under any
liability insurance or other indemnification arrangement with respect to a
matter covered by this Section 15, that Trustee shall reimburse the party which
has made payments to him or her hereunder, but no reimbursement shall be
required except to the extent that the total which he or she has received from
all sources is greater than the aggregate amount of his or her liability and
expense with respect to that matter. The liability of Tenneco and Packaging with
respect to the indemnification provided in this Section 15 shall be joint and
several as to the Trustees. As between Tenneco and Packaging, such liability
shall be shared equally, and Tenneco and Packaging shall each reimburse the
other party for any amounts paid by the other party in excess of 50 percent of
such liability.
IN WITNESS WHEREOF, Tenneco and Packaging have caused this Trust Agreement
to be executed on their behalf by their respective officers thereunto duly
authorized and each of the Trustees has duly executed this Trust Agreement, on
the day and year first above written.
TENNECO INC. TRUSTEES:
By: ---------------------------------------------
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Title: ---------------------------------------------
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TENNECO PACKAGING INC. ---------------------------------------------
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By:
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Title:
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APPENDIX A
Tenneco Packaging Inc. Deferred Compensation Plan
Tenneco Packaging Inc. Supplemental Executive Retirement Plan
Obligations under severance packages.
Corporate charitable commitments
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