<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-9864
TENNECO INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0233548
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
77002
TENNECO BUILDING, HOUSTON, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 757-2131
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<S> <C>
10% Notes due 1998; 8% Notes due 1999;
10 3/8% Notes due 2000; 9 7/8% Notes
due 2001;
7 7/8% Notes due 2002; 10% Debentures
due 2008;
9% Debentures due 2012 ................ New York Stock Exchange
Preferred Stock, without par value:
$7.40 cumulative series................ New York Stock Exchange
Common Stock, par value $5 per share.... New York, Chicago, Pacific, Toronto,
London, Paris, Frankfurt, Dusseldorf,
Basel, Geneva and Zurich Stock
Exchanges
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT. THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY REFERENCE TO
THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES OF
SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO THE DATE OF FILING.
<TABLE>
<CAPTION>
CLASS OF VOTING STOCK AND NUMBER OF SHARES MARKET VALUE HELD
HELD BY NON-AFFILIATES AT JANUARY 31, 1996 BY NON-AFFILIATES
------------------------------------------ -----------------
<S> <C>
$7.40 Cumulative Preferred Stock, 587,270 shares $ 59,901,540*
Common Stock, 173,776,137 shares 9,535,965,517**
</TABLE>
- --------
* Based upon the closing sale price on the Composite Tape for the $7.40
Cumulative Preferred Stock on February 5, 1996.
** Based upon the closing sale price on the Composite Tape for the Common Stock
on February 12, 1996.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. Common Stock, par value $5
per share, 174,327,148 shares outstanding as of January 31, 1996.
DOCUMENTS INCORPORATED BY REFERENCE:
<TABLE>
<CAPTION>
PART OF THE FORM 10-K
DOCUMENT INTO WHICH INCORPORATED
-------- -----------------------
<S> <C>
Tenneco Inc.'s Definitive Proxy Statement for the Part III
Annual
Meeting of Stockholders to be Held May 14, 1996
</TABLE>
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I
ITEM 1. BUSINESS...................................................... 1
Tenneco Inc............................................................ 1
Contributions of Major Businesses...................................... 1
Tenneco Automotive..................................................... 2
Tenneco Energy......................................................... 4
Tenneco Packaging...................................................... 9
Newport News Shipbuilding.............................................. 11
Other.................................................................. 12
Business Strategy...................................................... 12
Environmental Matters.................................................. 12
ITEM 2. PROPERTIES.................................................... 13
ITEM 3. LEGAL PROCEEDINGS............................................. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 15
ITEM 4.1. EXECUTIVE OFFICERS OF THE REGISTRANT.......................... 15
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK-
HOLDER MATTERS................................................ 17
ITEM 6. SELECTED FINANCIAL DATA....................................... 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................... 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................... 36
Index to Financial Statements of Tenneco Inc. and Consolidated
Subsidiaries.......................................................... 36
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE...................................... 73
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............ 73
ITEM 11. EXECUTIVE COMPENSATION........................................ 73
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGE-
MENT.................................................................... 73
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 73
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K...................................................... 73
Financial Statements Included in Item 8................................ 73
Index to Financial Statements and Schedules Included in Item 14........ 73
Schedules Omitted as Not Required or Inapplicable...................... 73
Reports on Form 8-K.................................................... 80
Exhibits............................................................... 80
</TABLE>
i
<PAGE>
PART I
TENNECO INC.
ITEM 1. BUSINESS.
Tenneco Inc., a Delaware corporation, is a diversified industrial company
conducting all of its operations through its subsidiaries. As used herein,
"Tenneco" refers to Tenneco Inc. and its consolidated subsidiaries.
The major businesses of Tenneco are the manufacture and sale of automotive
exhaust system parts and ride control products; natural gas transportation and
marketing; manufacture and sale of packaging materials, cartons, containers and
specialty packaging products for consumer and commercial markets; and
construction and repair of ships. At December 31, 1995, Tenneco also owned
approximately 21% of Case Corporation, a manufacturer of farm and construction
equipment.
In March 1995, Tenneco Inc. sold, in a public flotation primarily in the
United Kingdom, all of the capital stock of Albright & Wilson plc, which is
engaged in the chemical business. See Note 3 to the Financial Statements of
Tenneco Inc. and Consolidated Subsidiaries for additional information
concerning the sale of this subsidiary.
At December 31, 1995, Tenneco had approximately 60,000 employees.
CONTRIBUTIONS OF MAJOR BUSINESSES
Information concerning Tenneco's principal industry segments and geographic
areas is set forth in Note 14 to the Financial Statements of Tenneco Inc. and
Consolidated Subsidiaries. The following tables summarize (i) net sales and
operating revenues from continuing operations, (ii) income from continuing
operations before interest expense, income taxes and minority interest and
(iii) capital expenditures for continuing operations of the major business
groups of Tenneco for the periods indicated.
NET SALES AND OPERATING REVENUES FROM CONTINUING OPERATIONS
<TABLE>
<CAPTION>
1995 1994 1993
----------- ------------ ------------
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Automotive............................. $2,479 28% $ 1,989 16% $ 1,785 15%
Energy................................. 1,916 21 2,378 20 2,862 23
Packaging.............................. 2,752 31 2,184 18 2,042 17
Shipbuilding........................... 1,756 20 1,753 14 1,861 15
Farm and construction equipment*....... -- -- 3,881 32 3,748 30
Other.................................. 5 -- 3 -- 6 --
Intergroup sales....................... (9) -- (14) -- (17) --
------ --- ------- --- ------- ---
Total................................ $8,899 100% $12,174 100% $12,287 100%
====== === ======= === ======= ===
</TABLE>
INCOME FROM CONTINUING OPERATIONS BEFORE INTEREST EXPENSE, INCOME TAXES AND
MINORITY INTEREST
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(MILLIONS)
<S> <C> <C> <C>
Automotive................................................ $ 240 $ 223 $ 222
Energy.................................................... 333 415 411
Packaging................................................. 430 209 139
Shipbuilding.............................................. 160 200 225
Farm and construction equipment*.......................... 110 326 82
Other..................................................... 96 6 18
------ ------ ------
Total................................................... $1,369 $1,379 $1,097
====== ====== ======
</TABLE>
1
<PAGE>
CAPITAL EXPENDITURES FOR CONTINUING OPERATIONS
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(DOLLAR AMOUNTS IN
MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Automotive........................................ $208 21% $113 15% $ 93 18%
Energy............................................ 334 34 331 45 170 32
Packaging......................................... 316 33 166 23 124 24
Shipbuilding...................................... 77 8 29 4 36 7
Farm and construction equipment*.................. -- -- 83 11 101 19
Other............................................. 41 4 14 2 1 --
---- --- ---- --- ---- ---
Total........................................... $976 100% $736 100% $525 100%
==== === ==== === ==== ===
</TABLE>
- --------
* In December 1994, Tenneco changed to the equity method of accounting for its
farm and construction equipment segment due to a reduction in its ownership
percentage in Case Corporation to below 50%. For additional information, see
Notes 1 and 3 to the Financial Statements of Tenneco Inc. and Consolidated
Subsidiaries.
The interest expense, income taxes and minority interest from continuing
operations that are not allocated to the major businesses were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(MILLIONS)
<S> <C> <C> <C>
Interest Expense (net of interest capitalized)............... $339 $407 $427
Income Tax Expense........................................... 273 301 257
Minority Interest............................................ 22 30 --
</TABLE>
TENNECO AUTOMOTIVE
The principal business operations of Tenneco Automotive and its affiliates
are Walker Manufacturing Company and Monroe Auto Equipment Company.
Walker Manufacturing Company and its affiliates ("Walker") manufacture a
variety of automotive exhaust systems and emission control products. In the
United States, Walker operates nine manufacturing facilities and seven
distribution centers, three of which are located at manufacturing facilities,
and also has two research and development facilities. In addition, Walker
operates 25 manufacturing facilities located in Australia, Canada, the United
Kingdom, Mexico, Denmark, Germany, France, Spain, Portugal and Sweden, and also
has one engineering and technical center in Germany.
Walker's products are sold to automotive manufacturers for use as original
equipment and to wholesalers and retailers for sale as replacement equipment.
Sales to the original equipment market are directly dependent on new car sales,
and sales to the replacement market are related to the service life of original
equipment and to the level of maintenance by individual owners of their
automobiles. The service life of exhaust systems has increased in recent years,
resulting in a longer time period for the exhaust replacement rate.
2
<PAGE>
The following table sets forth information relating to Walker's sales:
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES
----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
United States Sales
Automotive replacement equipment (primarily exhaust
system parts).......................................... 46% 48% 52%
Automotive original equipment........................... 54 52 48
--- --- ---
100% 100% 100%
=== === ===
Foreign Sales
Automotive replacement equipment........................ 42% 68% 70%
Automotive original equipment........................... 58 32 30
--- --- ---
100% 100% 100%
=== === ===
Total Sales by Geographic Area
United States........................................... 42% 58% 60%
European Union.......................................... 45 24 23
Canada.................................................. 7 10 12
Other areas............................................. 6 8 5
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
In November 1994, Walker acquired ownership of Heinrich Gillet GmbH & Co. KG
and its affiliates ("Gillet"), a manufacturer of exhaust systems headquartered
at Edenkoben, Germany. The combination of Gillet, Europe's largest original
equipment exhaust supplier, and Walker's European division, which is Europe's
largest replacement market supplier, increased Walker's European sales in 1995
by approximately 150%.
Monroe Auto Equipment Company and its affiliates ("Monroe") are engaged
principally in the design, manufacture and distribution of ride control
products. Monroe ride control products consist of hydraulic shock absorbers,
air adjustable shock absorbers, spring assisted shock absorbers, gas charged
shock absorbers, struts, replacement cartridges and electronically adjustable
suspension systems. Monroe manufactures and markets replacement shock absorbers
for virtually all domestic and most foreign makes of automobiles. In addition,
Monroe manufactures and markets shock absorbers and struts for use as original
equipment on passenger cars and trucks, as well as for other uses. Monroe has
seven manufacturing facilities in the United States and ten foreign
manufacturing operations in Australia, Belgium, Brazil, Canada, Mexico, the
United Kingdom, Spain and New Zealand.
The following table sets forth information relating to Monroe's sales:
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES
----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
United States Sales
Automotive replacement equipment...................... 70% 72% 72%
Automotive original equipment......................... 30 28 28
--- --- ---
100% 100% 100%
=== === ===
Foreign Sales
Automotive replacement equipment...................... 66% 69% 63%
Automotive original equipment......................... 34 31 37
--- --- ---
100% 100% 100%
=== === ===
Total Sales by Geographic Area
United States......................................... 48% 49% 50%
European Union........................................ 36 32 29
Canada................................................ 3 5 7
Other areas........................................... 13 14 14
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
3
<PAGE>
In 1995, Tenneco Automotive acquired a 51% interest in a joint venture that
has two ride control manufacturing facilities in India and a 51% interest in a
joint venture that has one ride control manufacturing facility in China. It is
anticipated that the joint venture in India will also manufacture exhaust
systems.
Tenneco Automotive owns and licenses the rights under a number of domestic
and foreign patents and trademarks relating to its products and businesses. It
manufactures and distributes its products primarily under the names "Walker"
and "Monroe," which are well recognized in the marketplace.
Tenneco Automotive is actively pursuing opportunities to expand its business
by entering additional geographic areas, including countries in Eastern Europe,
Asia and South America. It is anticipated that this expansion will occur
through a variety of means, including joint ventures and acquisitions.
The operations of Tenneco Automotive face intense competition from other
manufacturers of automotive equipment.
TENNECO ENERGY
Tenneco is engaged in the interstate and intrastate transportation and
marketing of natural gas, with operations conducted by Tenneco Energy Inc. and
other related subsidiaries of Tenneco Inc. (collectively, "Tenneco Energy").
Tenneco Energy is also engaged in related businesses that are not generally
subject to regulation by the Federal Energy Regulatory Commission ("FERC")
which Tenneco Energy believes have the potential to generate higher returns
than its regulated businesses. The principal activities of these business units
include the development of and participation in international natural gas
pipelines, primarily in Australia, and in international and domestic gas-fired
power generation projects, and the development of natural gas production and
production financing programs for producers, primarily in the United States.
INTERSTATE PIPELINE OPERATIONS
Tenneco Energy's interstate pipeline operations include the pipeline systems
of Tennessee Gas Pipeline Company ("Tennessee"), Midwestern Gas Transmission
Company ("Midwestern") and East Tennessee Natural Gas Company ("East
Tennessee"), which are primarily engaged in the transportation and storage of
natural gas for producers, marketers, end-users, and other gas transmission and
distribution companies.
Tennessee's multiple-line system begins in gas-producing regions of Texas and
Louisiana, including the continental shelf of the Gulf of Mexico, and extends
into the northeastern section of the United States, including the New York City
and Boston metropolitan areas. Midwestern's pipeline system extends from
Portland, Tennessee, to Chicago, and principally serves the Chicago
metropolitan area. East Tennessee's pipeline system serves the states of
Tennessee, Virginia and Georgia.
At December 31, 1995, Tenneco Energy's interstate gas transmission systems
included approximately 16,300 miles of pipeline, gathering lines and sales
laterals, together with related facilities that include 90 compressor stations
with an aggregate of approximately 1.5 million horsepower. These systems also
include underground and above-ground gas storage facilities to permit increased
deliveries of gas during peak demand periods. The total design delivery
capacity of Tenneco Energy's interstate systems at December 31, 1995, was
approximately 4,800 million cubic feet ("MMCF") of gas per day, and
approximately 5,600 MMCF on peak demand days, which includes gas withdrawn from
storage.
Tenneco Energy also has a 13.2% interest in Iroquois Gas Transmission System,
L.P. ("Iroquois"). The 370-mile Iroquois pipeline extends from the Canadian
border at Waddington, New York, to Long Island, New York, and is designed to
deliver (directly or through interconnecting pipelines such as Tennessee)
818 MMCF of gas per day to local distribution companies and electric generation
facilities in six states. For more information on Iroquois, see Item 3, "Legal
Proceedings."
In December 1995, Tenneco Energy sold its 50% interest in Kern River Gas
Transmission Company ("Kern River"). This sale was a part of Tenneco's ongoing
plan to redeploy assets into its primary growth
4
<PAGE>
businesses, which include the nonregulated natural gas operations. Kern River
owns a 904-mile pipeline system extending from Wyoming to California.
Gas Sales and Transportation Volumes
The following table sets forth the volumes of gas, stated in billions of
British thermal units ("BBtu"), sold and transported by Tenneco Energy's
interstate pipeline systems for the periods shown.
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Sales*......................................... 95,397 131,097 213,210
Transportation*................................ 2,139,169 2,183,944 2,118,936
--------- --------- ---------
Total........................................ 2,234,566 2,315,041 2,332,146
========= ========= =========
</TABLE>
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* These sales and transportation volumes include all natural gas sold or
transported by Tenneco Energy's interstate pipeline companies. The table
includes Tenneco Energy's proportionate share of transportation volumes of
the joint ventures in which it had interests during 1995; of the total
transportation volumes shown, 183,281 BBtu was attributable to these joint
venture interests in 1995, 167,961 BBtu in 1994 and 169,871 BBtu in 1993.
Intercompany deliveries of natural gas have not been eliminated from the
table.
Federal Regulation
Tenneco Energy's interstate natural gas pipeline companies are "natural gas
companies" as defined in the Natural Gas Act of 1938, as amended (the "Natural
Gas Act"). As such, these companies are subject to the jurisdiction of the
FERC. Tenneco Energy's interstate pipeline operations are operated pursuant to
certificates of public convenience and necessity issued under the Natural Gas
Act and pursuant to the Natural Gas Policy Act of 1978. The FERC regulates the
interstate transportation and certain sales of natural gas, including, among
other things, rates and charges allowed natural gas companies, extensions and
abandonments of facilities and service, rates of depreciation and amortization
and the accounting system utilized by the companies.
Prior to the FERC's industry restructuring initiatives in the 1980's, Tenneco
Energy's interstate pipeline companies operated primarily as merchants,
purchasing natural gas under long-term contracts and reselling the gas to
customers, also under long-term contracts. Pursuant to Order 636 issued by the
FERC, Tennessee implemented revisions to its tariff, effective on September 1,
1993, which restructured its transportation, storage and sales services to
convert Tennessee from primarily a merchant to primarily a transporter of gas.
As a result of this restructuring, Tennessee's gas sales declined while certain
obligations to producers under long-term gas supply contracts continued,
causing Tennessee to incur significant restructuring transition costs. Pursuant
to the provisions of Order 636 allowing for the recovery of transition costs
related to the restructuring, Tennessee has made filings to recover gas supply
realignment ("GSR") costs resulting from remaining gas purchase obligations,
costs related to its Bastian Bay facilities, the remaining unrecovered balance
of purchased gas ("PGA") costs and the "stranded" cost of Tennessee's
continuing contractual obligation to pay for capacity on other pipeline systems
("TBO costs").
Tennessee's filings to recover costs related to its Bastian Bay facilities
have been rejected by the FERC based on the continued use of the gas production
from the field; however, the FERC recognized the ability of Tennessee to file
for the recovery of losses upon disposition of these assets. Tennessee has
filed for appellate review of the FERC actions and is confident that the
Bastian Bay costs will ultimately be recovered as transition costs under Order
636; the FERC has not contested the ultimate recoverability of these costs.
The filings implementing Tennessee's recovery mechanisms for the following
transition costs were accepted by the FERC effective September 1, 1993;
recovery is subject to refund pending FERC review and approval for eligibility:
1) direct-billing of unrecovered PGA costs to its former sales customers over a
twelve-month period; 2) recovery of TBO costs, which Tennessee is obligated to
pay under existing contracts,
5
<PAGE>
through a surcharge from firm transportation customers, adjusted annually; and
3) GSR cost recovery of 90% of such costs over a period of up to 36 months from
firm transportation customers and recovery of 10% of such costs from
interruptible transportation customers over a period of up to 60 months.
Following negotiations with its customers, Tennessee filed in July 1994 with
the FERC a Stipulation and Agreement (the "PGA Stipulation"), which provides
for the recovery of PGA costs of approximately $100 million and the recovery of
costs associated with the transfer of storage gas inventory to new storage
customers in Tennessee's restructuring proceeding. The PGA Stipulation
eliminates all challenges to the PGA costs, but establishes a cap on the
charges that may be imposed upon former sales customers. On November 15, 1994,
the FERC issued an order approving the PGA Stipulation and resolving all
outstanding issues. On April 5, 1995, the FERC issued its order on rehearing
affirming its initial approval of the PGA Stipulation. Tennessee implemented
the terms of the PGA Stipulation and made refunds in May 1995. The refunds had
no material effect on Tenneco's reported net income. The orders approving the
PGA Stipulation have been appealed to the D.C. Circuit Court of Appeals by
certain customers. Tennessee believes the FERC orders approving the PGA
Stipulation will be upheld on appeal.
Tennessee is recovering through a surcharge, subject to refund, TBO costs
formerly incurred to perform its sales function, pending FERC review of data
submitted by Tennessee. The FERC subsequently issued an order requiring
Tennessee to refund certain costs from this surcharge. Tennessee is appealing
this decision and believes such appeal will likely be successful.
With regard to Tennessee's GSR costs, Tennessee, along with three other
pipelines, executed four separate settlement agreements with Dakota
Gasification Company and the U.S. Department of Energy and initiated four
separate proceedings at the FERC seeking approval to implement the settlement
agreements. The settlement resolved litigation concerning purchases made by
Tennessee of synthetic gas produced from the Great Plains Coal Gasification
plant ("Great Plains"). The FERC previously ruled that the costs related to the
Great Plains project are eligible for recovery through GSR and other special
recovery mechanisms and that the costs are eligible for recovery for the
duration of the term of the original gas purchase agreements. On October 18,
1994, the FERC consolidated the four proceedings and set them for hearing
before an administrative law judge ("ALJ"). The hearing, which concluded in
July 1995, was limited to the issue of whether the settlement agreements are
prudent. The ALJ concluded, in his initial decision issued in December 1995,
that the settlement was imprudent. Tennessee has filed exceptions to this
initial decision and believes that this decision will not impair Tennessee's
recovery of the costs resulting from this contract. The FERC has committed to
issuing a final order by December 31, 1996.
Also related to Tennessee's GSR costs, on October 14, 1993, Tennessee was
sued in the State District Court of Ector County, Texas, by ICA Energy, Inc.
("ICA") and TransTexas Gas Corporation ("TransTexas"). In that suit, ICA and
TransTexas contended that Tennessee had an obligation to purchase gas
production which TransTexas thereafter attempted to add unilaterally to the
reserves originally dedicated to a 1979 gas contract. An amendment to the
pleading seeks $1.5 billion from Tennessee for alleged damages caused by
Tennessee's refusal to purchase gas produced from the TransTexas leases
covering the new production and lands. Neither ICA nor TransTexas were original
parties to that contract. However, they contend that any stranger acquiring a
fractional interest in the original committed reserves thereby obtains a right
to add to the contract unlimited volumes of gas production from locations in
South Texas. Tennessee filed a motion for summary judgment, asserting that the
Texas statutes of frauds precluded the plaintiffs from adding new production or
acreage to the contract. On May 4, 1995, the trial court granted Tennessee's
motion for summary judgment; the plaintiffs have filed a notice of appeal.
Thereafter, ICA and TransTexas filed a motion for summary judgment on a
separate issue involving the term "committed reserves" and whether Tennessee
has a contractual obligation to purchase gas produced from a lease not
described in the gas contract. On November 8, 1995, the trial court granted
ICA's and TransTexas' motion in part. That order, which would be finalized upon
conclusion of the trial, also held that ICA's and TransTexas' rights are
subject to certain limitations of the Texas Business and Commerce Code. In
addition to these defenses, which are to be resolved at trial, Tennessee has
other defenses which it has asserted and intends to pursue. Tennessee has
6
<PAGE>
filed a Motion to Clarify the November 8, 1995 order together with a new motion
for partial summary judgment concerning the committed reserve issue. The
November 8, 1995 ruling does not affect the trial court's previous May 4, 1995
order granting summary judgment to Tennessee.
Tennessee has been engaged in separate settlement and contract reformation
discussions with holders of certain gas purchase contracts who have sued
Tennessee. Although Tennessee believes that its defenses in the underlying gas
purchase contract actions are meritorious, Tennessee accrued amounts in the
first quarter of 1995 which it believes are adequate to cover the resolution of
these matters. On August 1, 1995, the Texas Supreme Court affirmed a ruling of
the Court of Appeals favorable to Tennessee in one of these matters and
indicated that it would remand the case to the trial court. Motions for
rehearing have been filed by the producers. As of the date hereof, the court
had not ruled on those motions and mandate had not been issued.
As of December 31, 1995, Tennessee has deferred GSR costs yet to be recovered
from its customers of approximately $462 million, net of $316 million
previously recovered from its customers, subject to refund. A proceeding before
a FERC ALJ is scheduled to commence in early 1996 to determine whether
Tennessee's GSR costs are eligible for cost recovery. The FERC has generally
encouraged pipelines to settle such issues through negotiations with customers.
Although Order 636 provides for complete recovery by pipelines of eligible and
prudently incurred transition costs, certain customers have challenged the
prudence and eligibility of Tennessee's GSR costs and Tennessee has engaged in
settlement discussions with its customers concerning the amount of such costs
in response to the FERC and customer statements acknowledging the desirability
of such settlements.
Given the uncertainty over the results of ongoing discussions between
Tennessee and its customers related to the recovery of GSR costs and the
uncertainty related to predicting the outcome of its gas purchase contract
reformation efforts and the associated litigation, Tenneco is unable to predict
the timing or the ultimate impact that the resolution of these issues will have
on its consolidated financial position or results of operations.
On December 30, 1994, Tennessee filed for a general rate increase (the "1995
Rate Case"). On January 25, 1995, the FERC accepted the filing, suspended its
effectiveness for the maximum period of five months pursuant to normal
regulatory process, and set the matter for hearing. On July 1, 1995, Tennessee
began collecting rates, subject to refund, reflecting an $87 million increase
in Tennessee's annual revenue requirement. Settlement discussions with the FERC
staff and customers regarding 1995 Rate Case issues, including structural rate
design and increased revenue requirements, are ongoing and Tennessee is
reserving revenues it believes adequate to cover any refunds that may be
required upon final settlement of this proceeding. A hearing is scheduled to
commence in March 1996.
Competition
The regulated natural gas pipeline industry is experiencing increasing
competition, which results from actions taken by the FERC to strengthen market
forces throughout the industry. In a number of key markets, Tenneco Energy's
interstate pipelines face competitive pressure from other major pipeline
systems, enabling local distribution companies and end users to choose a
supplier or switch suppliers based on the short term price of gas and the cost
of transportation. Competition between pipelines is particularly intense in
Midwestern's Chicago and Northern Indiana markets, in East Tennessee's Roanoke,
Chattanooga and Atlanta markets, and in Tennessee's supply area, Louisiana and
Texas. In some instances, Tenneco Energy's pipelines have been required to
discount their transportation rates in order to maintain their market share.
Additionally, transportation contracts representing approximately 70% of firm
transportation capacity will be expiring over the next five years, principally
in the year 2000. The renegotiation of these contracts may be impacted by these
competitive factors.
Gas Supply
With full implementation of Order 636, Tennessee's firm sales obligations
requiring maintenance of long-term gas purchase contracts have declined from
over a 1.4 billion dekatherm maximum daily delivery
7
<PAGE>
obligation to less than a 200 million dekatherm maximum daily delivery
obligation. As discussed above under the caption "Federal Regulation,"
Tennessee has substantially reduced its natural gas purchase portfolio in line
with these requirements through termination and assignment to third parties.
Although Tennessee's requirements for purchased gas are substantially less than
prior to its implementation of Order 636, Tenneco Energy is pursuing the
attachment of gas supplies to Tennessee's pipeline system for transportation by
others. Current gas supply activities include development of offshore and
onshore pipeline gathering projects and utilization of production financing
programs to spur exploration and development drilling in areas adjacent to
Tennessee's system. Major gathering systems in the Gulf of Mexico were
completed during the fourth quarter of 1994.
GAS MARKETING AND INTRASTATE PIPELINES
Tenneco Energy Resources Corporation, an 80% owned subsidiary of Tenneco, and
its subsidiaries (collectively, "Tenneco Resources") are engaged in the
businesses of marketing natural gas and owning and operating approximately
1,300 miles of pipelines that serve the Texas Gulf Coast and West Texas
markets. Its businesses include the buying, selling, storage and transportation
of natural gas and price risk management services, including the offering of
fixed, floating and other natural gas pricing for short or long terms using
natural gas futures contracts or other financial instruments. These businesses
serve third parties, including producers, marketers, end-users, distribution
companies and gas transmission companies. During 1995 Tenneco Resources
transported, processed or sold approximately 2.3 billion cubic feet of natural
gas for its customers. Tenneco Resources also owns and manages gas gathering
systems and natural gas liquids plants in Pennsylvania, Texas, Louisiana and
the outer continental shelf of the Gulf of Mexico.
The following table sets forth the volumes of gas, stated in BBtu, sold and
transported by subsidiaries of Tenneco Resources for the periods indicated:
<TABLE>
<CAPTION>
1995 1994 1993
------- --------- -------
<S> <C> <C> <C>
Sales.............................................. 642,096 739,432 741,800
Transportation..................................... 229,415 273,587 235,940
------- --------- -------
Total............................................ 871,511 1,013,019 977,740
======= ========= =======
</TABLE>
In February 1994, a 20% interest in Tenneco Resources was sold to Ruhrgas AG,
Germany's largest natural gas company.
INTERNATIONAL
Tenneco Gas International Inc. and other subsidiaries of Tenneco
(collectively, "TGI") was organized to extend Tennessee's traditional
activities in North American pipelines to international pipeline, power, and
energy-related projects, with a current focus on activities in South America,
Southeast Asia, Australia and Europe. TGI was selected to construct, own and
operate a 470 mile natural gas pipeline in Queensland, Australia; construction
of the pipeline commenced in late 1995 with completion expected in early 1997.
In June 1995, Tenneco acquired the natural gas pipeline assets of the Pipeline
Authority of South Australia, which includes a 488 mile pipeline, for
approximately $225 million. The purchase resulted from the privatization of
Australia's natural gas industry. TGI also has interests in two consortiums
pursuing the development of two natural gas pipeline projects in South America,
from Argentina to Chile and from Bolivia to Brazil, including related gas-fired
electric generation plants.
In December 1995, TGI was selected by the Beijing Natural Gas Transportation
Company ("BGTC") to serve as technical advisor for the construction of China's
first major onshore natural gas pipeline. BGTC, a joint venture between the
Chinese National Petroleum Corporation and the city of Beijing, will build a
600 mile line linking the Jingbian gas field in central China's Ordos Basin
with Beijing. Construction is scheduled to commence in March 1996, with an in-
service date scheduled for October 1997.
8
<PAGE>
POWER GENERATION
Tenneco Power Generation Company ("Tenneco Power") has a 17.5% interest in a
240 megawatt power plant in Springfield, Massachusetts and a 50% interest in
two additional cogeneration projects in Florida which have a combined capacity
of 200 megawatts.
In December 1995, Tenneco Power entered into an agreement with Energy Equity
Corp., Ltd., an Australian company, to purchase 50% of two of its subsidiaries
subject to satisfaction of certain conditions. The new joint venture will
construct a 135 megawatt gas fired power plant.
TENNECO VENTURES
Tenneco Gas Production Corporation ("Tenneco Production") and Tenneco
Ventures Corporation ("Tenneco Ventures"), subsidiaries of Tenneco, together
with institutional investors and partners, invest in oil and gas properties and
finance independent producers engaged in exploration and development projects.
Tenneco Ventures and Tenneco Production hold various ownership interests in oil
and gas fields located primarily in the Gulf of Mexico, Texas and Louisiana.
The reserves in those fields are estimated to be in excess of approximately 150
billion cubic feet of natural gas. Tenneco Ventures is also involved in TGI's
international projects through exploration and development of gas reserves in
Indonesia, Poland and Bolivia.
TENNECO PACKAGING
Tenneco Packaging Inc. and other related Tenneco subsidiaries (collectively,
"Tenneco Packaging") manufacture and sell containerboard, paperboard,
corrugated shipping containers, folding cartons, plastic food storage and trash
bags, stretch film, disposable plastic and aluminum containers, molded fiber
products and other related products. Its shipping container products are used
in the packaging of food, paper products, metal products, rubber and plastics,
automotive products and point of purchase displays. Its folding cartons are
used in the packaging of soap and detergent, food products and a wide range of
other consumer goods. Uses for its molded fiber products include produce and
egg packaging, food service items and institutional and consumer disposable
dinnerware, as well as a wide range of other consumer and industrial goods. Its
disposable plastic and aluminum containers are sold to the food service, food
processing and related industries. Plastic food storage and trash bags, foam
dinnerware and related products are sold through a variety of retail outlets.
In addition to products bearing the name "Tenneco Packaging", Tenneco Packaging
manufactures and distributes products under the names "EZ FOIL(R)," "Revere
Foil Containers," "Dahlonega Packaging," "Agri-Pak," "PRESSWARE(R)
International," "HEFTY(R)," "HEFTY ONE ZIP(R)," "BAGGIES(R)" and "KORDITE(R)".
The following table sets forth information with respect to Tenneco
Packaging's sales during the past three years:
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES
----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales by Product Type
Corrugated shipping containers and containerboard products. 58% 56% 53%
Disposable plastic and aluminum products................... 22 20 22
Molded fiber products...................................... 7 9 9
Folding cartons and recycled paperboard mill products...... 7 9 10
Paper stock and other...................................... 6 6 6
--- --- ---
100% 100% 100%
=== === ===
Total Sales by Geographic Area
United States.............................................. 90% 90% 88%
European Union............................................. 5 5 7
Canada..................................................... 1 2 2
Other areas................................................ 4 3 3
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
9
<PAGE>
At December 31, 1995, Tenneco Packaging operated 69 container plants, seven
folding carton plants and 12 corrugated containerboard and paperboard machines
at six mills. Two of the mills (located in Georgia and Wisconsin), including
substantially all of the equipment associated with both mills, are leased from
third parties. Tenneco Packaging also has eight molded fiber products plants,
one pressed paperboard plant, three lumber plants, one pole mill, three paper
stock plants, and 25 disposable plastic and aluminum container plants. Tenneco
Packaging's plants are located primarily in the United States. Its foreign
plants are located in Great Britain, Spain, Canada, Switzerland and Germany. In
the United States, Tenneco Packaging has a 50% ownership interest in a molded
fiber distribution company and in a hardwood chip mill. In addition, Tenneco
Packaging has a 50% interest in a folding carton plant in Dongguan, China, and
a 50% interest in a folding carton plant in Bucharest, Romania.
In November 1995, Tenneco Packaging acquired the assets of Mobil
Corporation's plastics division for $1.3 billion. The business manufactures
HEFTY(R) trash bags and BAGGIES(R) food storage bags for the consumer market.
It also manufactures polystyrene foam foodservice containers, plates and meat
trays; clear take-out containers from thermoformed polystyrene packaging; and
polyethylene film products including liners, produce and retail bags, and
medical and industrial disposable packaging. The division employs 4,100 people
at 11 manufacturing plants and 16 distribution centers in the United States and
Canada.
Additionally, during 1995 Tenneco Packaging made eight other domestic
acquisitions in the paperboard packaging segment in the United States and two
plastics acquisitions in the United Kingdom. The total purchase price for these
acquisitions was $196 million.
Tenneco Packaging owns and licenses the rights under a number of domestic and
foreign patents and trademarks relating to its products and businesses. The
patents, trademarks and other intellectual property owned by Tenneco Packaging
are important in the manufacturing and distribution of its products.
Generally, Tenneco Packaging faces intense competition from numerous
competitors and alternative products in each of its geographic and product
markets.
The principal raw materials used by Tenneco Packaging in its mill operations
are virgin pulp and reclaimed paper stock and, in its specialty products
operations, aluminum and plastics. Tenneco Packaging obtains virgin pulp and
reclaimed paper stock from independent logging contractors, from timberlands
owned or controlled by it, from operation of its reclaimed paper stock
collecting and processing plants and from other sources. Tenneco Packaging
obtains aluminum rolling stock and plastic feed stock from various suppliers.
At December 31, 1995, Tenneco Packaging owned 187,000 acres of timberland in
Alabama, Michigan, Mississippi and Tennessee and leased, managed or had cutting
rights on an additional 808,000 acres of timberland in those states (excluding
Michigan) and in Florida, Wisconsin and Georgia. During the years 1995, 1994
and 1993 approximately 31%, 20% and 22%, respectively, of the virgin fiber and
timber used by Tenneco Packaging in its operations was obtained from
timberlands controlled by it.
10
<PAGE>
NEWPORT NEWS SHIPBUILDING
Newport News Shipbuilding and Dry Dock Company ("Newport News"), a Tenneco
subsidiary located in Newport News, Virginia, is the largest privately owned
shipbuilding company in the United States. Its primary business is constructing
and overhauling nuclear-powered aircraft carriers for the United States Navy.
Newport News also overhauls and repairs U.S. Navy and commercial vessels and
refuels nuclear-powered ships. Newport News returned to the commercial
shipbuilding market with the October 1994 award of product tanker contracts
from a foreign owner for two ships. Options for two additional ships were
exercised in June 1995. Additionally, Newport News was awarded a contract to
construct five additional "Double Eagle" tankers which will be used in U.S.
domestic trade. In February 1996, the owners secured financing guarantees from
the Maritime Administration. Newport News is also pursuing international sales
of its fast frigate design and is currently being considered under
congressional budgets for additional submarine work. Newport News' shipbuilding
facilities are located on the James River on approximately 475 acres of
property which it owns.
At December 31, 1995, the aggregate amount of Newport News' backlog of work
was approximately $4.6 billion (substantially all of which is U.S. Navy-
related), a decrease from the previous backlog of $5.6 billion as of December
31, 1994. Although cuts in naval shipbuilding have continued to put pressure on
the Newport News backlog, Newport News was successful in adding $1 billion in
new work during 1995. Major additions to the backlog included the overhaul
contract for the nuclear-powered aircraft carrier USS Eisenhower, two Double
Eagle product tankers and engineering design work for aircraft carriers and
submarines. At December 31, 1995, Newport News anticipated that it would
complete approximately $1.5 billion of the current backlog by December 31,
1996, and an additional $1.0 billion in 1997. The December 31, 1995, backlog of
Newport News included contracts for the construction of two Nimitz-class
aircraft carriers, scheduled for delivery in 1998 and 2002, and two Los
Angeles-class attack submarines to be delivered in 1996. The backlog also
included contracts for the construction of the four product tankers, the
conversion of two Sealift ships, and the Eisenhower overhaul. The present
backlog extends into 2002. For information concerning the impact of the
conversion work on Newport News' margins, see Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Newport News has various other contracts for U.S. Navy design work and for
industrial products. As is typical for similar Government contracts, all of
Newport News' contracts with the U.S. Navy are unilaterally terminable by the
U.S. Navy at its convenience with compensation for work completed and costs
incurred.
To increase its competitiveness worldwide and in response to the anticipated
decline in U.S. Navy budgets, Newport News has reduced its workforce by
approximately 11,000 or 37% between December 31, 1990 and December 31, 1995.
Newport News is aggressively pursuing new business opportunities and
attempting to expand its business base in light of the declining U.S. Navy
backlog; however, Newport News faces intense worldwide competition in its
efforts to enter new markets. During 1995, Newport News entered into contracts
to construct two additional product tankers. In addition it has a 40% interest
in a venture that will design, construct, own and operate a shipyard in Abu
Dhabi, United Arab Emirates. Construction of the shipyard is expected to be
completed in 1998. While the percentage of Newport News' total business for
commercial work is expected to increase, the U.S. Navy will continue to be its
primary customer. Newport News is pursuing new submarine design and
construction work, major U.S. Navy overhaul and repair work, new commercial
construction contracts, and foreign military sales. For additional information,
see Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
11
<PAGE>
OTHER
Tenneco Credit Corporation purchases interest-bearing and noninterest-bearing
trade receivables from Tenneco's operating subsidiaries. Through June 1994, it
also purchased retail receivables generated primarily by retail sales of
products by Case Corporation ("Case"). At December 31, 1995, approximately $509
million of those Case retail receivables remained outstanding and are expected
to be substantially liquidated by 1999. Case services the retail receivables
purchased by Tenneco Credit Corporation, for which Case receives a monthly
servicing fee based on the amount of receivables outstanding at the beginning
of each month. Funding for Tenneco Credit Corporation is provided through the
private and public debt markets.
BUSINESS STRATEGY
Since September 1991, Tenneco Inc. has focused on various initiatives and
taken steps designed to strengthen its financial results and improve its
financial flexibility and create greater returns to its stockholders. Asset
evaluation and redeployment have been and will continue to be important parts
of this strategy. Tenneco Inc. continues to study opportunities for the
strategic repositioning and restructuring of its operations (including through
acquisitions, dispositions, divestitures, spin-offs and joint venture
participation, wholly and partially, of various businesses). Tenneco Inc. has
expressed an intention to act on a broad range of options--spin-offs, sales,
public offerings, mergers, joint ventures and acquisitions--until it is
satisfied that its strategic mix and corporate structure maximize stockholder
value. These actions may include one, two or all of its businesses.
ENVIRONMENTAL MATTERS
Tenneco Inc. estimates that its subsidiaries will make capital expenditures
for environmental matters of approximately $60 million in 1996 and that capital
expenditures for environmental matters will range from approximately $161
million to $201 million in the aggregate for the years 1997 through 2007.
For information regarding environmental matters see Item 3, "Legal
Proceedings--Environmental Proceedings" and "--Potential Superfund Liability,"
Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Environmental Matters," and Note 15, "Commitments and
Contingencies" in the "Notes to Financial Statements." See also Note 1,
"Summary of Accounting Policies--Environmental Liabilities," in the "Notes to
Financial Statements."
12
<PAGE>
ITEM 2. PROPERTIES.
Reference is made to Item 1 for a description of Tenneco's properties.
Tenneco believes that substantially all of its plants and equipment are, in
general, well maintained and in good operating condition. They are considered
adequate for present needs and as supplemented by planned construction are
expected to remain adequate for the near future.
Tenneco Inc. is of the opinion that its subsidiaries have generally
satisfactory title to the properties owned and used in their respective
businesses, subject to liens for current taxes and easements, restrictions and
other liens which do not materially detract from the value of such property or
the interests therein or the use of such properties in their businesses.
ITEM 3. LEGAL PROCEEDINGS.
(1) Environmental Proceedings.
Tennessee is a party in proceedings involving federal and state authorities
regarding the past use by Tennessee of a lubricant containing polychlorinated
biphenyls ("PCBs") in its starting air systems. Tennessee has executed a
consent order with the EPA governing the remediation of certain of its
compressor stations and is working with the Pennsylvania and New York
environmental agencies to specify the remediation requirements at the
Pennsylvania and the New York stations. Tenneco believes that the ultimate
resolution of this matter will not have a material adverse effect on the
financial condition or results of operations of Tenneco Inc. and its
consolidated subsidiaries.
In Commonwealth of Kentucky, Natural Resources and Environmental Protection
Cabinet v. Tennessee Gas Pipeline Company (Franklin County Circuit Court,
Docket No. 88-C1-1531, November 16, 1988), the Kentucky environmental agency
alleges that Tennessee discharged pollutants into the waters of the state
without a permit and seeks an injunction against future discharges and a civil
penalty. Counsel for Tenneco are unable to express an opinion as to its
ultimate outcome. Tenneco believes that the resolution of this issue will not
have a material adverse effect on its consolidated financial position or
results of operations.
A subsidiary of Tennessee owns a 13.2% general partnership interest in
Iroquois Gas Transmission System, L.P. ("Iroquois"), which owns an interstate
natural gas pipeline from the Canadian border through the states of New York
and Connecticut to Long Island. The operator of the pipeline is Iroquois
Pipeline Operating Company (the "Operator"), a subsidiary of TransCanada
Pipelines, Ltd., an affiliate of TransCanada Iroquois, Ltd., which is also a
partner in Iroquois. Tennessee has a contract to provide gas dispatching as
well as post-construction field operation and maintenance services for the
Operator of Iroquois, but Tennessee is not the Operator and is not an affiliate
of the Operator.
Iroquois has been informed of investigations and allegations regarding
alleged environmental violations which occurred during the construction of the
pipeline. Communications have been received from U.S. Attorneys' Offices, the
Enforcement Staff of the FERC's Office of the General Counsel, the Army Corps
of Engineers, the Public Service Commission of the State of New York, the EPA
and the Federal Bureau of Investigation. Proceedings have not been commenced
against Iroquois in connection with these inquiries. However, communications
have indicated possible allegation of civil and criminal violations. Iroquois
has held discussions with certain of the agencies to explore the possibility of
a negotiated resolution of the issues. In the absence of a negotiated
resolution, Iroquois believes that indictments will be sought and, in them,
substantial fines and other sanctions may be requested.
As a general partner, Tennessee's subsidiary may be jointly and severally
liable with the other partners for the liabilities of Iroquois. The foregoing
proceedings and investigations have not affected pipeline operations. Based
upon information available to Tennessee, Tennessee believes that neither it nor
any of its subsidiaries is a target of the criminal investigation described
above. Further, while a global resolution of these inquiries could have a
material adverse effect on the financial condition of Iroquois, Tenneco
believes that the ultimate resolution of these matters will not have a material
adverse effect on the financial condition or results of operations of Tenneco
Inc. and its consolidated subsidiaries.
13
<PAGE>
On August 2, 1993, the Department of Justice filed suit against Tenneco
Packaging Inc. ("Tenneco Packaging") in the Federal District Court for the
Northern District of Indiana, alleging that wastewater from Tenneco Packaging's
molded fiber products plant in Griffith, Indiana, interfered with or damaged
the Town of Griffith's municipal sewage pumping station on two occasions in
1991 and 1993, resulting in discharges by the Town of Griffith of untreated
wastewater into a river. Tenneco Packaging and the Department of Justice have
agreed in principle to settle the suit. A consent decree is being negotiated by
Tenneco Packaging and the Department of Justice. Tenneco believes that the
resolution of this matter will not have a material adverse effect on the
financial condition or results of operations of Tenneco Inc. and its
consolidated subsidiaries.
(2) Potential Superfund Liability.
At December 31, 1995, Tenneco has been designated as a potentially
responsible party in 55 "Superfund" sites. With respect to its pro rata share
of the remediation costs of certain sites, Tenneco is fully indemnified by
third parties. With respect to certain other sites, Tenneco has sought to
resolve its liability through payments to the other potentially responsible
parties. For the remaining sites, Tenneco has estimated its share of the
remediation costs to be between $11 million and $69 million or 0.5% to 2.5% of
the total remediation costs for those sites and has provided reserves that it
believes are adequate for such costs. Because the clean-up costs are estimates
and are subject to revision as more information becomes available about the
extent of remediation required, Tenneco's estimate of its share of remediation
costs could change. Moreover, liability under the Comprehensive Environmental
Response, Compensation and Liability Act is joint and several, meaning that
Tenneco could be required to pay in excess of its pro rata share of remediation
costs. Tenneco's understanding of the financial strength of other potentially
responsible parties has been considered, where appropriate, in Tenneco's
determination of its estimated liability. Tenneco believes that the costs
associated with its current status as a potentially responsible party in the
Superfund sites described above will not be material to its consolidated
financial position or results of operations.
For additional information concerning environmental matters, see the caption
"Environmental Matters" under Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the caption "Environmental
Matters" under Note 15, in the "Notes to Financial Statements."
(3) Other Proceedings.
On October 14, 1993, Tennessee was sued in the State District Court of Ector
County, Texas, by ICA Energy, Inc. ("ICA") and TransTexas Gas Corporation
("TransTexas"). In that suit, ICA and TransTexas contended that Tennessee had
an obligation to purchase gas production which TransTexas thereafter attempted
to add unilaterally to the reserves originally dedicated to a 1979 gas
contract. An amendment to the pleading seeks $1.5 billion from Tennessee for
alleged damages caused by Tennessee's refusal to purchase gas produced from the
TransTexas leases covering the new production and lands. Neither ICA nor
TransTexas were original parties to that contract. However, they contend that
any stranger acquiring a fractional interest in the original committed reserves
thereby obtains a right to add to the contract unlimited volumes of gas
production from locations in South Texas. Tennessee filed a motion for summary
judgment, asserting that the Texas statutes of frauds precluded the plaintiffs
from adding new production or acreage to the contract. On May 4, 1995, the
trial court granted Tennessee's motion for summary judgment; the plaintiffs
have filed a notice of appeal. Thereafter, ICA and TransTexas filed a motion
for summary judgment on a separate issue involving the term "committed
reserves" and whether Tennessee has a contractual obligation to purchase gas
produced from a lease not described in the gas contract. On November 8, 1995,
the trial court granted ICA's and TransTexas' motion in part. That order, which
would be finalized upon conclusion of the trial, also held that ICA's and
TransTexas' rights are subject to certain limitations of the Texas Business and
Commerce Code. In addition to these defenses, which are to be resolved at
trial, Tennessee has other defenses which it has asserted and intends to
pursue. Tennessee has filed a Motion to Clarify the November 8, 1995 order
together with a new motion for partial summary judgment concerning the
committed reserve issue. The November 8, 1995 ruling does not affect the trial
court's previous May 4, 1995 order granting summary judgment to Tennessee.
Tenneco Inc. and its subsidiaries are parties to numerous other legal
proceedings arising from their operations. Tenneco Inc. believes that the
outcome of these other proceedings, individually and in the aggregate, will
have no material effect on Tenneco's consolidated financial condition or
results of operations.
14
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of Tenneco Inc.
during the fourth quarter of the fiscal year ended December 31, 1995.
ITEM 4.1 EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below is a list of the executive officers of Tenneco Inc. at
February 1, 1996. Each of such officers has served in the capacities indicated
below with Tenneco Inc. (or prior to a corporate reorganization in 1987 with
the then publicly held affiliate of Tenneco Inc. which bore the same name)
since the dates indicated below:
<TABLE>
<CAPTION>
NAME (AND AGE AT DECEMBER 31, 1995) OFFICES HELD* EFFECTIVE DATE OF TERM
- ----------------------------------- ------------- ----------------------
<S> <C> <C>
Dana G. Mead (59).............. Chairman May 1994
Chief Executive Officer February 1994
Director April 1992
Chairman of the Executive Committee February 1994
Member of the Executive Committee May 1992
Theodore R. Tetzlaff (51)...... General Counsel July 1992
Stacy S. Dick (39)............. Executive Vice President January 1996
Robert T. Blakely (54)......... Senior Vice President and Chief July 1981
Financial Officer
John J. Castellani (44)........ Senior Vice President--Government March 1995
Relations
Arthur H. House (53)........... Senior Vice President--Corporate March 1995
Affairs
Peter Menikoff (54)............ Senior Vice President June 1994
Barry R. Schuman (54).......... Senior Vice President--Human March 1993
Resources
Kenneth D. Allen (56).......... Vice President March 1987
David T. Ellis (42)............ Vice President--Environment, Health July 1995
and Safety
Ilene S. Gordon (42)........... Vice President--Operations May 1994
Jack Lascar (41)............... Vice President--Investor Relations July 1994
Mark A. McCollum (36).......... Vice President and Controller May 1995
M. W. Meyer (56)............... Vice President and Deputy General August 1979
Counsel
E. J. Milan (61)............... Vice President October 1989
Karen R. Osar (46)............. Vice President and Treasurer January 1994
Robert G. Simpson (43)......... Vice President--Tax May 1990
Stephen J. Smith (50).......... Vice President--Human Resources July 1994
Karl A. Stewart (52)........... Vice President May 1991
Secretary May 1986
S. D. Chesebro (54)........... Chairman of the Board-- November 1995
Chief Executive Officer-- February 1994
Tenneco Energy Inc.
William P. Fricks (51)......... Chief Executive Officer-- November 1995
President-- September 1994
Newport News Shipbuilding and Dry
Dock Company
R. A. Snell (54)............... President and Chief Executive September 1993
Officer--Tenneco Automotive, a
Division of Tennessee Gas Pipeline
Company
Paul T. Stecko (51)............ President and Chief Executive December 1993
Officer--Tenneco Packaging Inc.
</TABLE>
- --------
* Unless otherwise indicated, all offices held are with Tenneco Inc.
15
<PAGE>
Each of the executive officers of Tenneco Inc. has been continuously engaged
in the business of Tenneco Inc., its subsidiaries, affiliates or predecessor
companies during the past five years except that: (i) from 1986 to 1992, Dana
G. Mead was employed by International Paper Co., last serving in the capacity
of Executive Vice President; (ii) Theodore R. Tetzlaff has been a partner in
the law firm of Jenner & Block, Chicago, for more than five years; (iii) from
1985 to 1992, Stacy S. Dick was employed by The First Boston Corporation, last
serving in the capacity of Managing Director and from August 1992 to January
1996 he served as Senior Vice President--Strategy of Tenneco Inc.; (iv) from
1980 to 1992, John J. Castellani was employed by TRW Inc., last serving in the
capacity of Vice President of Government Relations and from August 1992 to
March 1995 he served as Vice President--Government Relations of Tenneco Inc.;
(v) from 1988 until his employment by Tenneco in 1992, Barry R. Schuman was
employed by Union Pacific Railroad Company, last serving in the capacity of
Vice President of Human Resources; (vi) from 1990 until 1992, Arthur H. House
served as Vice President, Corporate Communications of Aetna Life & Casualty
Company; from June 1992 until March 1995, he served as Vice President--
Corporate Affairs of Tenneco Inc.; (vii) from 1975 to 1994, Karen R. Osar was
employed by J. P. Morgan & Co., Inc., last serving in the capacity of Managing
Director--Corporate Finance Group; (viii) from 1980 to 1994, Mark A. McCollum
was employed by Arthur Andersen LLP, last serving as an Audit Partner and from
January 1995 to May 1995 he served as Vice President--Financial Analysis and
Planning of Tenneco Inc.; and (ix) from 1977 to 1993, Paul T. Stecko was
employed by International Paper Co., last serving as Vice President and General
Manager of Publications Papers, Bristols and Converting Papers.
Tenneco Inc.'s Board of Directors is divided into three classes of directors
serving staggered three-year terms, with a minimum of eight directors and a
maximum of sixteen directors. At each annual meeting of stockholders,
successors to the directors whose terms expire at such meeting are elected.
Officers are elected at the annual meeting of directors held immediately
following the annual meeting of stockholders.
16
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The outstanding shares of Common Stock, par value $5 per share, of Tenneco
Inc. (the "Common Stock") are listed on the New York, Chicago, Pacific,
Toronto, London, Paris, Frankfurt, Dusseldorf, Basel, Geneva and Zurich Stock
Exchanges.
The following table sets forth the high and low sale prices of Common Stock
during the periods indicated on the New York Stock Exchange Composite
Transactions Tape and dividends paid per share of Common Stock during such
periods:
<TABLE>
<CAPTION>
SALE
PRICES
------------ DIVIDENDS
HIGH LOW PAID
---- ---- ---------
<S> <C> <C> <C>
1994
1st quarter..................................... $58 3/4 $51 1/2 $.40
2nd quarter..................................... 54 7/8 45 1/8 .40
3rd quarter..................................... 49 1/2 43 1/4 .40
4th quarter..................................... 45 3/4 37 .40
1995
1st quarter..................................... $47 3/8 $42 1/4 $.40
2nd quarter..................................... 48 5/8 45 1/8 .40
3rd quarter..................................... 50 1/4 44 7/8 .40
4th quarter..................................... 50 3/8 41 7/8 .40
</TABLE>
On December 6, 1995, Tenneco Inc.'s Board of Directors declared a dividend of
$.45 per share payable on March 12, 1996, to the holders of record on February
23, 1996.
The number of holders of Common Stock of record as of January 31, 1996, was
approximately 92,000.
The declaration of dividends on Tenneco Inc. capital stock is at the
discretion of its Board of Directors. The Board has not adopted a dividend
policy as such; subject to legal and contractual restrictions, its decisions
regarding dividends are based on all considerations that in its business
judgment are relevant at the time, including past and projected earnings, cash
flows, economic, business and securities market conditions and anticipated
developments concerning Tenneco's business and operations. For additional
information concerning the payment of dividends by Tenneco Inc., see "Years
1995 and 1994 --Liquidity and Capital Resources--Dividends on Common Stock" in
Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Tenneco's cash flow and the consequent ability of Tenneco Inc. to pay any
dividends on the Common Stock is substantially dependent upon Tenneco's
earnings and cash flow available after its debt service and the availability of
such earnings to Tenneco Inc. by way of dividends, distributions, loans and
other advances. The instruments setting forth the rights of the holders of the
Preferred Stock and Junior Preferred Stock contain provisions restricting
Tenneco Inc.'s right to pay dividends and make other distributions on the
Common Stock. Certain of Tenneco Inc.'s subsidiaries have provisions under
financing arrangements and an investment agreement which limit the amount of
dividends that may be paid by them to Tenneco Inc. At December 31, 1995, such
amount was calculated to be approximately $3.7 billion. Tenneco Inc. is a party
to credit agreements containing provisions that limit the amount of dividends
paid on its common stock. At December 31, 1995, under the most restrictive
provisions contained in these credit agreements, Tenneco Inc. would be
permitted to pay dividends in excess of $300 million.
Under applicable corporate law, dividends may be paid by Tenneco Inc. out of
"surplus" (as defined under the law) or, if there is not a surplus, out of net
profits for the year in which the dividends are declared or the preceding
fiscal year. At December 31, 1995, Tenneco Inc. had surplus of approximately
$2.4 billion for the payment of dividends, and Tenneco Inc. will also be able
to pay dividends out of any net profits for the current and prior fiscal year.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(MILLIONS EXCEPT SHARE AMOUNTS)
------------------------------------------------------------------------
1995(A) 1994(A) 1993(A) 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME
(LOSS) DATA(B):
Net sales and operating
revenues from
continuing
operations--
Automotive............ $ 2,479 $ 1,989 $ 1,785 $ 1,763 $ 1,668
Energy................ 1,916 2,378 2,862 2,183 2,183
Packaging............. 2,752 2,184 2,042 2,078 1,934
Shipbuilding.......... 1,756 1,753 1,861 2,265 2,216
Farm and construction
equipment(c)......... -- 3,881 3,748 3,829 4,449
Other................. 5 3 6 39 34
Intergroup sales...... (9) (14) (17) (14) (14)
----------- ----------- ----------- ----------- -----------
Total................ $ 8,899 $ 12,174 $ 12,287 $ 12,143 $ 12,470
=========== =========== =========== =========== ===========
Income (loss) from con-
tinuing
operations before in-
terest expense,
income taxes and mi-
nority interest--
Automotive............ $ 240 $ 223 $ 222 $ 237 $ 188
Energy................ 333 415 411 360 561 (d)
Packaging............. 430 209 139 221 139 (d)
Shipbuilding.......... 160 200 225 249 225
Farm and construction
equipment(c)......... 110 326 (e) 82 (e) (1,180)(e) (1,079)(e)
Other................. 96 6 18 (32) (98)(e)
----------- ----------- ----------- ----------- -----------
Total................ 1,369 1,379 1,097 (145) (64)
Interest expense (net
of interest
capitalized).......... 339 407 427 496 528
Income tax expense..... 273 301 257 73 25
Minority interest...... 22 30 -- -- --
----------- ----------- ----------- ----------- -----------
Income (loss) from
continuing
operations............ 735 641 413 (714) (617)
Income (loss) from dis-
continued
operations, net of in-
come tax(f)........... -- (189) 38 102 (115)
Extraordinary loss, net
of income tax......... -- (5) (25) (12) --
Cumulative effect of
changes in
accounting principles,
net of
income tax............ -- (39)(g) -- (699)(g) --
----------- ----------- ----------- ----------- -----------
Net income (loss)...... 735 408 426 (1,323) (732)
Preferred stock divi-
dends................. 12 12 14 16 16
----------- ----------- ----------- ----------- -----------
Net income (loss) to
common stock.......... $ 723 $ 396 $ 412 $ (1,339) $ (748)
=========== =========== =========== =========== ===========
Average number of
shares of common stock
outstanding........... 173,995,941 180,084,909 168,772,852 144,110,151 122,777,910
Earnings (loss) per
average share of
common stock--
Continuing operations. $ 4.16 $ 3.49 $ 2.36 $ (5.07) $ (5.15)
Discontinued opera-
tions................ -- (1.04) .23 .72 (.94)
Extraordinary loss.... -- (.03) (.15) (.08) --
Cumulative effect of
changes in
accounting princi-
ples................. -- (.22) -- (4.86) --
----------- ----------- ----------- ----------- -----------
Net earnings (loss)... $ 4.16 $ 2.20 (h) $ 2.44 (h) $ (9.29)(h) $ (6.09)
=========== =========== =========== =========== ===========
Cash dividends paid per
common share.......... $ 1.60 $ 1.60 $ 1.60 $ 1.60 $ 2.80
</TABLE>
(Table continued on next page)
18
<PAGE>
(Continued from previous page)
<TABLE>
<CAPTION>
(MILLIONS)
-----------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(B):
Total assets........... $ 13,451 $ 12,542 $ 15,373 $ 16,584 $ 18,696
Short-term debt........ 908 545 1,274 1,696 2,452
Long-term debt......... 3,751 3,570 4,799 6,400 6,837
Minority interest...... 320 320 153 165 182
Preferred stock with
mandatory
redemption provisions. 130 147 163 191 194
Shareowners' equity.... 3,148 2,900 2,601 1,330 2,774
STATEMENT OF CASH FLOWS
DATA(B):
Net cash provided by
operating activities.. $ 1,443 $ 450 $ 1,615 $ 929 $ 950
Capital expenditures
for continuing
operations............ 976 736 525 507 668
</TABLE>
- --------
Notes: (a) For a discussion of significant items affecting comparability of
the financial information for 1995, 1994 and 1993, see Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."
(b) During 1995 and 1994, Tenneco completed several acquisitions at its
various operating segments, the most significant of which was the
acquisition of the plastics division of Mobil Corporation for $1.3
billion by Tenneco Packaging in late 1995. See Note 2 to the Financial
Statements of Tenneco Inc. and Consolidated Subsidiaries for further
information on the Tenneco acquisitions.
(c) In December 1994, Tenneco changed to the equity method of accounting
for its farm and construction equipment segment due to a reduction in
its ownership percentage in Case Corporation to below 50%. For
additional information, see Notes 1 and 3 to the Financial Statements
of Tenneco Inc. and Consolidated Subsidiaries.
(d) For Tenneco Energy, includes a gain of $265 million related to the sale
of its natural gas liquids business including its interest in an MTBE
plant then under construction. Also, Tenneco Packaging recorded a gain
of $42 million related to the sale of three short-line railroads.
(e) Includes restructuring charge of $920 million related to farm and
construction equipment in 1992 reduced by $20 million in 1993 and $16
million in 1994. Additionally, a $473 million restructuring charge was
recorded in 1991, of which $461 million related to farm and
construction equipment and $12 million related to other.
(f) Discontinued operations reflected in the above periods includes
Tenneco's chemicals and brakes operations, which were discontinued
during 1994, and its minerals and pulp chemicals operations, which were
discontinued in 1992. In addition, certain additional costs related to
Tenneco's discontinued oil and gas operations were reflected in the
1991 results.
(g) In 1994, Tenneco adopted Statement of Financial Accounting Standards
("FAS") No. 112, "Employers' Accounting for Postemployment Benefits".
In 1992, Tenneco adopted FAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," and FAS No. 109,
"Accounting for Income Taxes."
(h) For purposes of computing earnings per share, Series A preferred stock
was included in average common shares outstanding until its conversion
into common stock in December 1994; therefore, the preferred dividends
paid were not deducted from net income (loss) to determine net income
(loss) to common stock. The inclusion of Series A preferred stock in
the computation of earnings per share was antidilutive for the years
and certain quarters in 1994, 1993 and 1992. Other convertible
securities and common stock equivalents outstanding during each of the
five years ended December 31, 1995, 1994, 1993, 1992 and 1991 were not
materially dilutive.
19
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following review of Tenneco's financial condition and results of
operations should be read in conjunction with the financial statements and
related notes of Tenneco Inc. and Consolidated Subsidiaries presented on pages
38 to 72.
YEARS 1995 AND 1994
1995 STRATEGIC ACTIONS
During 1995, Tenneco continued implementing its strategy to redeploy capital
from non-core assets into less cyclical, higher-growth businesses. The
following asset dispositions were completed or announced during 1995:
. In March 1995, Tenneco completed the initial public offering of its
Albright & Wilson chemicals segment, resulting in net proceeds of
approximately $700 million. The loss on the sale, which was recorded in
December 1994 as "discontinued operations", was $170 million, including
income tax expense of $115 million.
. Tenneco sold approximately 16.1 million shares of Case Corporation
("Case") common stock in a public offering in August 1995, reducing
Tenneco's ownership in Case from 44 percent to 21 percent. The net
proceeds from the offering were approximately $540 million, resulting in
a pre-tax gain of $101 million. Also, in December 1995, Tenneco sold a
subordinated note which had been received from Case in connection with
the initial public offering ("IPO") of Case in June 1994. Tenneco
realized a gain on the sale of the subordinated note of $32 million; net
proceeds from the sale of the subordinated note were $326 million. Since
Tenneco had capital loss carryforwards from the 1994 Case reorganization
and IPO available to offset the taxes on these 1995 sales, no taxes were
payable on these transactions.
. In December 1995, Tenneco Energy sold its 50 percent interest in Kern
River Gas Transmission Company ("Kern River"), a joint venture that owns
a 904-mile pipeline extending from Wyoming to California. The sales price
was $206 million, resulting in a pre-tax gain of $30 million.
Tenneco acquired or announced intentions to acquire several new businesses
during 1995, including:
. Tenneco Packaging acquired the plastics business of Mobil Corporation
("Mobil") which is the largest North American producer of polyethylene
and polystyrene packaging on November 17, 1995 for $1.3 billion. Its
consumer products are marketed under the HEFTY(R), KORDITE(R) and
BAGGIES(R) brand names. The acquired plastics business is also a leader
in polystyrene foam packaging, thermoformed polystyrene packaging and
polyethylene film products for food service and industrial consumers. In
addition to this acquisition, Tenneco Packaging acquired two plastics
packaging operations in the United Kingdom for $25 million during 1995.
. Tenneco Packaging also completed eight acquisitions in the paperboard
packaging business during 1995 for $171 million in cash, notes and
Tenneco Inc. common stock.
. Tenneco Energy acquired the natural gas pipeline assets of the Pipeline
Authority of South Australia ("PASA"), which includes a 488-mile
pipeline, in June 1995 for approximately $225 million and a 50 percent
interest in two gas-fired cogeneration plants from ARK Energy for
approximately $65 million in cash and Tenneco Inc. common stock.
. Tenneco Automotive acquired an exhaust company and a catalytic converter
company in 1995 for $40 million and entered into two ride control joint
ventures for $14 million. Tenneco Automotive also announced that it will
acquire two additional ride control companies for $36 million in 1996.
20
<PAGE>
During 1995, Tenneco completed the $500 million common stock repurchase
program announced in December 1994. Also, in 1995, Tenneco announced two
additional share buyback programs, one for up to 3 million shares and another
for 2.5 million shares. These programs are designed to offset the growth in
common shares resulting from shares issued pursuant to employee benefit plans.
The 3 million share repurchase program was completed in 1995. Since December
1994, Tenneco repurchased a total of 14.3 million common shares at a cost of
$646 million.
Tenneco has expressed an intention to act on a broad range of options--spin-
offs, sales, public offerings, mergers, joint ventures and acquisitions--until
it is satisfied that its strategic mix and corporate structure maximize
shareowner value. These actions may include one, two or all of its businesses.
RESULTS OF OPERATIONS
Tenneco's income from continuing operations in 1995 of $735 million improved
by 15 percent compared to $641 million in 1994. Improved results from Tenneco
Packaging and Tenneco Automotive and income from sales of assets and businesses
were partially offset by declines in results at Tenneco Energy and Newport News
Shipbuilding, all of which are discussed below.
Earnings per share from continuing operations improved by 19 percent to $4.16
per average common share in 1995 from $3.49 in 1994. Average common shares
outstanding during 1995 were 174 million, a 3 percent decrease from 1994
primarily resulting from Tenneco's share repurchase programs.
In 1994, Tenneco recorded a loss of $189 million or $1.04 per share on the
discontinued operations of its Albright & Wilson chemicals business and Tenneco
Automotive's brake operations. An extraordinary loss of $5 million or $.03 per
share was incurred in 1994 for early retirement of debt. Also, 1994 results
included a charge of $39 million or $.22 per share for the adoption of a new
accounting principle. No similar costs were incurred in 1995. Net income to
common stock in 1995 was $723 million or $4.16 per share compared to net income
to common stock of $396 million or $2.20 per share in 1994.
NET SALES AND OPERATING REVENUES
<TABLE>
<CAPTION>
1995 1994
------ -------
(MILLIONS)
<S> <C> <C>
Automotive............................................... $2,479 $1,989
Energy................................................... 1,916 2,378
Packaging................................................ 2,752 2,184
Shipbuilding............................................. 1,756 1,753
Farm and construction equipment.......................... -- 3,881
Other.................................................... (4) (11)
------ -------
$8,899 $12,174
====== =======
</TABLE>
Revenues for farm and construction equipment (Case) are not included in
Tenneco's consolidated results in 1995. Tenneco consolidated the results of
Case through November 1994, when Tenneco reduced its ownership in Case to 44%.
Since that time, Tenneco has recorded its share of Case's results using the
equity method of accounting. Excluding Case, Tenneco's 1995 revenues increased
$606 million and have benefited from strong market conditions in the packaging
industry along with revenues from acquisitions made in late 1994 and 1995.
These increases more than offset lower natural gas sales at Tenneco Energy. The
results of each segment are discussed in detail below.
21
<PAGE>
INCOME BEFORE INTEREST EXPENSE, INCOME TAXES AND MINORITY INTEREST (OPERATING
INCOME)
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Automotive................................................. $ 240 $ 223
Energy..................................................... 333 415
Packaging.................................................. 430 209
Shipbuilding............................................... 160 200
Farm and construction equipment............................ 110 326
Other...................................................... 96 6
------ ------
$1,369 $1,379
====== ======
</TABLE>
Tenneco's 1995 operating income decreased by $10 million compared with 1994.
Tenneco Packaging benefited from favorable market conditions in the packaging
industry and Tenneco Automotive improved as European original equipment and
aftermarkets performed well. Also, Tenneco realized gains on sales of assets
and businesses in 1995 that were in excess of amounts earned in 1994. These
increases were offset by lower operating income at Tenneco Energy in both its
regulated and nonregulated businesses and at Newport News Shipbuilding due to
lower margins on conversion work, costs incurred to enter the highly
competitive international commercial shipbuilding markets and a charge for
staff downsizing. In addition, Tenneco's share of Case's earnings declined from
$326 million in 1994 to $110 million in 1995 as Tenneco reduced its ownership
in Case. The results of each segment are discussed in detail below.
Significant transactions affecting the comparability of operating income
between 1995 and 1994 are:
. Pre-tax gains on sales of assets and businesses of $162 million in 1995
(primarily the sale of Case common stock, a subordinated note received
from Case in connection with the IPO, a mill in North Carolina and
Tenneco Energy's interest in Kern River) compared with gains of $50
million in 1994 (primarily from the Case initial and secondary public
offerings and the sale of a 20 percent interest in Tenneco Energy
Resources Corporation ("Tenneco Resources")).
. Reserves established in 1995 of $25 million for the liquidation of
surplus real estate holdings and notes, $30 million for estimated
regulatory and legal settlement costs at Tenneco Energy, $30 million for
restructuring at Tenneco Packaging's molded fiber and aluminum foil
packaging operations and $24 million in charges at Newport News
Shipbuilding related to staff downsizing and costs related to entering
the highly competitive international commercial markets.
. A gain from a 1994 contract settlement between Tenneco Energy and
Columbia Gas Transmission Corporation ("Columbia Gas") of $11 million.
. Charges in 1994 of $22 million at Tenneco Automotive for a plant closing
in Ohio and consolidations in Europe associated with the acquisition of
Heinrich Gillet GmbH & Co. KG ("Gillet"), the German exhaust
manufacturer.
TENNECO AUTOMOTIVE
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Revenues....................................................... $2,479 $1,989
Operating income............................................... $ 240 $ 223
</TABLE>
Revenues from Tenneco Automotive's original equipment business increased
during 1995 by $419 million to $1,155 million. Eighty-three percent, or $346
million, of this increase resulted from revenues of Gillet. European original
equipment volumes were up significantly in 1995 where Gillet is the leading
original equipment manufacturer of exhaust components. In North America, ride
control sales increased eleven percent and exhaust sales increased four percent
in 1995.
22
<PAGE>
Operating income in the original equipment business for 1995 decreased by $5
million to $53 million compared with 1994. The 1994 operating income included a
$5 million charge recorded for a plant closing. The addition of Gillet
contributed $16 million to operating income in 1995. The remainder of the
operating income change in 1995 is due primarily to a high level of costs
related to new product launches. Tenneco Automotive completed 68 product
launches for 1996 model year vehicles in 1995, more than twice the normal
levels, which strained plant capabilities and adversely affected 1995 earnings.
In connection with the new product launches, Tenneco Automotive incurred
additional costs of $10 million in 1995 including those related to a new
process, hydroforming. Hydroforming is a liquid, high-pressure process for
bending and shaping metal parts not available with traditional manufacturing
technology.
Aftermarket revenues increased $71 million to $1,324 million in 1995. This
increase was due primarily to higher aftermarket revenues in both the European
exhaust and ride control businesses, resulting from improved economic
conditions in many European countries. North American aftermarket revenues were
down 5% in 1995.
Operating income in the aftermarket business was $187 million for 1995
compared with $165 million for the prior year. Tenneco Automotive recorded a
charge of $17 million in 1994 related to plant consolidations associated with
the Gillet acquisition. Excluding this charge, aftermarket operating income
increased $5 million compared with 1994. The positive impact of higher sales
volumes in Europe was offset by the negative impact of lower North American
sales. Industry-wide, the North American aftermarket experienced its sharpest
decline in more than a decade. The unusually mild winter weather in 1995 in the
Northeast and Midwest slowed automotive parts replacement rates.
OUTLOOK
The consolidation of the exhaust operations of Walker Europe and Gillet which
was undertaken during 1995 is substantially complete and is expected to result
in improved earnings from the European original equipment business in 1996.
Also, Tenneco Automotive's international expansion, including joint ventures in
India and China, acquisitions in Spain and Australia and new international
plants such as the new ride control plant in Mexico, are expected to contribute
to future earnings. Tenneco Automotive anticipates higher original equipment
volumes as a result of the high level of new product launches undertaken in
1995 and interest by additional customers in hydroforming technology. Tenneco
also anticipates the North American aftermarket to improve to more normal
activity levels in 1996.
TENNECO ENERGY
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Revenues....................................................... $1,916 $2,378
Operating income............................................... $ 333 $ 415
</TABLE>
The regulated portion of Tenneco Energy's business experienced a decline in
revenues from $918 million in 1994 to $761 million in 1995. Lower regulated
merchant gas sales along with a small decrease in transportation revenues
caused the decline. Under Federal Energy Regulatory Commission ("FERC") Order
636, customers assume the responsibility for acquiring their gas supplies,
reducing sales by the pipeline. The contract settlement reached with Columbia
Gas in 1994 as part of its bankruptcy proceedings reduced its contract volume,
contributing to the transportation revenue decline in 1995.
Operating income in the regulated portion of Tenneco Energy's business was
down by $27 million in 1995 as compared to 1994. The 1995 results included the
$30 million pre-tax gain on the sale of Tenneco's interest in Kern River and a
$21 million reserve for estimated regulatory and legal settlement costs while
1994 included the $11 million benefit from the Columbia Gas contract
settlement. Excluding these transactions, Tenneco Energy's regulated business
operating income decrease was primarily due to the
23
<PAGE>
reduction of revenues related to the early termination of transportation
contracts and lower returns earned on regulated assets due to the operating
environment created by Order 636. This decrease was partially offset by the
benefit Tennessee realized through the implementation of a new rate structure
in July 1995.
Revenues in Tenneco Energy's nonregulated businesses were $1,155 million,
down $305 million compared with 1994. Average natural gas prices were lower in
1995 compared with 1994, contributing approximately $175 million to the revenue
decrease. Natural gas volumes declined also, contributing $148 million to the
revenue decrease. Warmer weather in early 1995 resulted in lower levels of
storage activity during the year, decreasing demand for natural gas and forcing
prices lower. These effects were offset somewhat by $18 million in revenues
earned by the PASA assets which were acquired by Tenneco Energy in June 1995.
The 1995 operating income for the nonregulated business decreased $55 million
compared with 1994. Operating income in 1994 included a $23 million gain from
the sale of a 20 percent interest in Tenneco Resources to Ruhrgas AG. The
remainder of the operating income decline was due to increased startup and
development costs on international programs, a $9 million reserve for estimated
legal settlement costs and lower margins and volumes due to lower demand in gas
marketing. Tenneco Energy operating results included $9 million in income from
operating the PASA assets during the last half of 1995.
OUTLOOK
During 1995, Tenneco Energy sold its interest in Kern River and purchased the
PASA assets in Australia. Tenneco Energy also began construction during 1995 of
a 470-mile pipeline in Queensland, Australia, has been chosen to participate in
constructing a pipeline from Bolivia to Brazil, is participating in feasibility
studies for the construction of a pipeline in Taiwan and was selected as a
technical advisor for the construction of China's first major onshore natural
gas pipeline. Tenneco Energy and its partners continue to pursue pre-
construction commitments from prospective natural gas shippers and obtaining
right-of-way concessions for the construction of the Argentina to Chile
pipeline. Also, Tenneco Energy has acquired a stake in GreyStar Corp., a
Houston-based offshore services company that serves production and pipeline
facilities in the Gulf of Mexico. These actions are intended to reduce Tenneco
Energy's reliance on regulated businesses, increasing the opportunity to earn
higher returns.
The regulated natural gas pipeline industry is experiencing increasing
competition, which results from actions taken by the FERC to strengthen market
forces throughout the industry. In a number of key markets, Tenneco Energy's
interstate pipelines face competitive pressure from other major pipeline
systems, enabling local distribution companies and end users to choose a
supplier or switch suppliers based on the short term price of gas and the cost
of transportation. Competition between pipelines is particularly intense in
Midwestern Gas Transmission's Chicago and Northern Indiana markets, in East
Tennessee Natural Gas' Roanoke, Chattanooga and Atlanta markets, and in
Tennessee Gas Pipeline Company's ("Tennessee") supply area, Louisiana and
Texas. In some instances, Tenneco Energy's pipelines have been required to
discount their transportation rates in order to maintain their market share.
Additionally, transportation contracts representing approximately 70 percent of
firm transportation capacity will be expiring over the next five years,
principally in the year 2000. The renegotiation of these contracts may be
impacted by these competitive factors.
TENNECO PACKAGING
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Revenues....................................................... $2,752 $2,184
Operating income............................................... $ 430 $ 209
</TABLE>
Tenneco Packaging's paperboard business experienced excellent results during
1995. Revenues were up $399 million to $1,928 million in 1995, primarily as a
result of strong pricing improvements. As a result of the move into higher
margin graphics and specialty corrugated segments, Tenneco Packaging realized
higher
24
<PAGE>
revenues on comparable volumes. In addition, strong industry demand for
linerboard and corrugated products served to substantially increase prices for
those products in 1995 and contributed to record revenues.
Operating income in the paperboard business improved by $260 million to $399
million in 1995. This improvement includes the 1995 pre-tax gain of $14
million on the sale of a mill in North Carolina. Effective mix management
allowed Tenneco Packaging to absorb rapidly rising raw material prices for
corrugated products while posting increased margins. Additionally, Tenneco
Packaging continued to post new productivity gains, especially in the
operation of its containerboard mills, resulting in record operating margins
in 1995.
Revenues in Tenneco Packaging's specialty packaging business increased by
$169 million to $824 million during 1995. Revenues of $106 million from the
recently acquired plastics business (November 1995) are included in the
results of the specialty packaging business. The remainder of the revenue
increase over 1994 results from price increases realized during the year.
The specialty packaging business earned $31 million in operating income in
1995, a $39 million decrease compared to 1994 results. Specialty packaging
recorded a restructuring charge of $30 million in 1995 for its molded fiber
and aluminum foil packaging operations and recognized income from the recently
acquired plastics business of $15 million. Excluding these two items, the
decline in operating income for specialty packaging resulted from raw material
cost increases that more than offset the positive effects of the pricing
increases initiated during the year. The major contributors to the raw
material cost increases were higher prices for polystyrene, aluminum and old
newspaper. However, these prices declined during the second half of the year
and are expected to remain at their current lower levels.
In its restructuring actions, specialty packaging expects to complete in
1996 a realignment of molded fiber assets, enter into joint venture agreements
to reduce egg packaging and fruit tray costs and close an aluminum rolling
mill, whose production will be outsourced.
OUTLOOK
The plastics business is expected to be a major contributor to earnings. Its
revenues, combined with specialty packaging's existing business, will comprise
approximately one-half of Tenneco Packaging's revenues in 1996. The plastics
business is expected to generate less cyclical earnings than the paperboard
segment has historically. Tenneco Packaging has also been working to reduce
the cyclicality of its paperboard business. Four of the paperboard
acquisitions completed in 1995 were in enhanced graphics and displays, a
business less sensitive to changes in linerboard pricing. These acquisitions,
along with the corrugated requirements of the recently acquired plastics
business, have increased Tenneco Packaging's level of integration, reducing
exposure to linerboard pricing volatility. Tenneco Packaging expects some
softening in the paperboard market in the first and second quarters of 1996
followed by an improvement in the second half of the year.
NEWPORT NEWS SHIPBUILDING
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Revenues....................................................... $1,756 $1,753
Operating income............................................... $ 160 $ 200
</TABLE>
Shipbuilding revenues for 1995 increased slightly compared with 1994 due to
greater levels of activity on the conversion program, offset by lower carrier
and submarine program revenues. Construction activity on the Los Angeles-class
submarines declined in 1995 as two of the remaining four vessels were
delivered during the year. Carrier activity declined for the year as 1994
activity included the overhaul of the Enterprise;
25
<PAGE>
the overhaul of the Eisenhower began in the third quarter of 1995 and
construction activity on the Ronald Reagan replaced construction of the John C.
Stennis which was delivered in the fourth quarter of 1995.
Operating income for the Shipbuilding segment was down for the year due to
lower margins for conversion work and costs of approximately $24 million
incurred related to staff downsizing and Newport News' reentry into the highly
competitive international commercial markets.
OUTLOOK
Shipbuilding will continue to rely on the U.S. Navy for a significant amount
of its revenue; however, Shipbuilding is actively pursuing the large, global
commercial and military markets. Newport News has contracts to build four
"Double Eagle" product tankers. Additionally, Newport News was awarded a
contract to construct five additional "Double Eagle" tankers which will be used
in U.S. domestic trade. In February 1996, the owners secured financing
guarantees from the Maritime Administration. Shipbuilding is also pursuing
sales of its fast frigate to Middle East and Pacific Rim countries. U.S. Navy
work accounted for 95 percent of Shipbuilding revenues in 1995.
The shipyard's backlog was $4.6 billion at December 31, 1995 substantially
all of which is U.S. Navy-related. This compares with $5.6 billion at the end
of 1994. During 1995, Shipbuilding delivered one aircraft carrier (John C.
Stennis) and two submarines.
The yearend backlog included two Los Angeles-class submarines, two Nimitz-
class aircraft carriers (Harry S. Truman and Ronald Reagan), the two ship
Sealift conversion contract and contracts to construct four "Double Eagle"
product tankers. In addition, Newport News has ongoing engineering contracts as
the lead design yard for the Los Angeles-class and Seawolf-class submarines.
Subject to new orders, this backlog will decline as the remaining submarines
are delivered in 1996 and the aircraft carriers are delivered in 1998 and 2002.
CASE AND OTHER
Tenneco recorded $110 million in income for 1995 related to its equity
ownership in Case which was approximately 44 percent through July and 21
percent for the remainder of the year. During 1994, when Tenneco owned 100
percent of Case through June, 71 percent through November and 44 percent in
December, Tenneco recorded $326 million in operating income related to its farm
and construction equipment segment.
Tenneco's other operations reported operating income of $96 million during
1995. This included the $101 million gain on the August 1995 sale of Case
common stock, the $32 million gain on the sale of the Case subordinated note
and a $25 million charge to establish a reserve for liquidation of surplus real
estate holdings and notes. During 1994, other operations reported $6 million in
operating income, which included pre-tax gains of $29 million from the Case
initial and secondary public offerings.
INTEREST EXPENSE (NET OF INTEREST CAPITALIZED)
Tenneco's interest expense in 1995 was $339 million compared with $407
million in 1994. Excluding the interest expense of $68 million related to Case
which was included in Tenneco's 1994 income prior to deconsolidation of Case in
November, interest expense was the same between periods. Interest capitalized
was $9 million in 1995 compared with $6 million in 1994 due to higher levels of
capital spending in 1995.
MINORITY INTEREST
Minority interest of $22 million in 1995 related to dividends on preferred
stock of a U.S. subsidiary which was issued in December 1994. The $30 million
of minority interest in 1994 resulted primarily from the minority shareholders'
interest in Case's net income for the July through November period when Tenneco
owned 71 percent of Case.
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INCOME TAXES
The 1995 effective tax rate was 26.5%, compared with 31.0% in 1994. This
decline resulted primarily from recognition of $154 million in capital loss
carryforwards which Tenneco was able to utilize in connection with several 1995
transactions, including the August 1995 sale of Case stock, the Case
subordinated note sale and the Kern River sale.
DISCONTINUED OPERATIONS AND EXTRAORDINARY LOSS
In 1994, Tenneco sold its brakes operations and announced its plan to dispose
of Albright & Wilson, its chemicals segment. These businesses were accounted
for as discontinued operations in 1994. Of the after-tax loss from discontinued
operations, $158 million was attributable to Albright & Wilson and $31 million
to the brakes operations.
In June 1994, Tenneco realized an extraordinary loss of $5 million, net of a
$2 million tax benefit, for the redemption premium resulting from the
prepayment of debt.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1994, Tenneco adopted FAS No. 112, "Employers'
Accounting for Postemployment Benefits," using the cumulative catch-up method.
It requires employers to account for postemployment benefits for former or
inactive employees after employment but before retirement on the accrual basis
rather than the "pay-as-you-go" basis. As a result of adopting this statement,
an after-tax charge of $39 million, or $.22 per average common share, was
recorded in 1994.
Tenneco will adopt FAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," in the first quarter of
1996. FAS No. 121 establishes new accounting standards for measuring the
impairment of long-lived assets. Adoption of the new standard will not have a
material effect on Tenneco's consolidated financial position or results of
operations.
In October 1995, the Financial Accounting Standards Board issued FAS No. 123,
"Accounting for Stock-Based Compensation." This statement defines a fair value
based method of accounting for stock issued to employees and others but also
allows companies to choose to continue to measure compensation cost for such
plans as it is measured currently. Tenneco has elected to continue to use the
current method of accounting for stock issued to employees. Consequently, FAS
No. 123 will have no impact on Tenneco's consolidated financial position or
results of operations.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
<TABLE>
<CAPTION>
CASH PROVIDED (USED) BY: 1995 1994
------------------------ ------ ----
(MILLIONS)
<S> <C> <C>
Operating activities...................................... $1,443 $450
Investing activities...................................... (1,146) (117)
Financing activities...................................... (356) (151)
</TABLE>
Tenneco's operating results, combined with proceeds from sales of assets and
businesses, and supplemented by short-term and long-term borrowings, have
provided funds for acquisitions and capital investments in existing businesses
and to repurchase its common stock. Operating cash flow for 1995 improved as
Tenneco generated $858 million from the collection and sale of customer
receivables compared with cash used in 1994 of $417 million. This increase was
due primarily to trade receivables sold to Asset Securitization Cooperative
Corporation, which were $783 million higher in 1995 compared with 1994. The
increase in collections of receivables was also due in part to the collection
of approximately $300 million of Case retail receivables in 1995. Operating
cash flow in 1995 also benefited from lower interest and tax
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payments compared with 1994. Interest payments were $154 million lower and tax
payments were $72 million lower compared with payments in 1994. Sales of
businesses and assets, primarily the Albright & Wilson chemicals operations,
16.1 million shares of Case common stock and the Case subordinated note,
provided an additional $1,623 million of cash during the year. Finally, Tenneco
accessed its credit facilities, the commercial paper market and the long-term
debt markets during 1995 for $1,016 million. Included in the $1,016 million of
debt funding obtained during the year was $600 million in long-term debt issued
in December 1995; $300 million issued at an interest rate of 7 1/4% due in 2025
and $300 million issued at an interest rate of 6 1/2% due in 2005.
Cash used for business acquisitions during 1995 totaled $1,702 million. The
largest single transaction was the acquisition of the plastics business from
Mobil by Tenneco Packaging for $1.3 billion. However, the Energy and Automotive
segments also made acquisitions during the year. Further, Tenneco invested $976
million in capital expenditures in its existing businesses during the year.
Capital expenditures during the year included $208 million for Automotive, $334
million for Energy, $316 million for Packaging, $77 million for Shipbuilding
and $41 million related to Tenneco's other operations. Capital expenditures
were higher at Automotive, Packaging and Shipbuilding during 1995 while Energy
capital expenditures were approximately the same as the prior year.
Besides business expansion, Tenneco used its cash flow during the year for
the scheduled retirement of $513 million in long-term debt, to reacquire
Tenneco Inc. common stock for $655 million and to pay $286 million in dividends
on its common and preferred stock.
During 1994, Tenneco's cash sources included operating cash flow of $450
million and $860 million in proceeds from sales of businesses and assets
(primarily the Case initial and secondary public offerings for $694 million).
During 1994, Tenneco acquired Gillet for $44 million in cash and other
businesses for $7 million. Capital expenditures were $736 million for
continuing operations. Tenneco had a net reduction of $111 million in debt
(primarily as a result of the Case offerings and deconsolidation of Case) and
paid dividends on its common and preferred stock of $318 million.
LIQUIDITY
Tenneco and its consolidated subsidiaries had, at December 31, 1995,
committed credit agreements providing for $2,522 million of borrowing capacity.
Of these facilities, $2.0 billion are committed through 1999. As of December
31, 1995, $393 million of borrowings were outstanding under these facilities.
The availability of borrowings under Tenneco's agreements and facilities is
subject to its ability at the time to meet certain specified conditions, which
Tenneco believes it currently meets. These conditions include compliance with
the financial covenants and ratios required by such agreements, absence of
default under such agreements, and continued accuracy of the representations
and warranties contained in such agreements (including the absence of any
material adverse changes since the specified dates).
Tenneco's current liabilities exceeded current assets at December 31, 1995.
The decrease in working capital resulted primarily from a tax audit settlement
payment made in January 1996 and the short-term debt borrowed to finance the
recently acquired plastics business. The financing for this acquisition is
discussed below under "Capitalization."
In connection with the implementation of FERC Order 636 and the resolution of
the GSR costs issues, Tenneco intends to put in place, as needed, financing
arrangements to fund needs arising from timing differences between recovery
from pipeline customers and payments for transition costs. The actual cash
required will depend upon negotiations between Tennessee, its customers and
suppliers.
Based upon Tenneco's estimates of anticipated funding needs and expected
results of its operations, together with anticipated market conditions and
including any payments associated with the settlement of
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<PAGE>
the GSR issues discussed below, Tenneco expects adequate sources of funds to be
available to finance its future requirements through internally generated
funds, the sale of assets, the use of credit facilities, and the issuance of
long-term securities.
CAPITALIZATION
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Short-term debt and current maturities..................... $ 908 $ 545
Long-term debt............................................. 3,751 3,570
Minority interest.......................................... 320 320
Preferred stock............................................ 130 147
Common shareowners' equity................................. 3,148 2,900
------ ------
Total capitalization....................................... $8,257 $7,482
====== ======
</TABLE>
The primary reason for the net increase in debt outstanding is the debt
issued for the acquisition of the plastics business from Mobil. Tenneco
initially funded this acquisition primarily with short-term debt. In December
1995, Tenneco issued $600 million of long-term debt to refinance a portion of
the purchase price.
Tenneco's ratio of debt to total capitalization at December 31, 1995 was 56.4
percent compared to 55.0 percent at December 31, 1994. Including the market
value of the SECT shares, the ratio of total debt to total capitalization at
December 31, 1995 was 55.0 percent compared to 52.9 percent at December 31,
1994.
DIVIDENDS ON COMMON STOCK
Tenneco Inc. declared dividends on its common shares of $.40 per share for
each quarter in 1995. In December 1995, the Board of Directors declared a
dividend of $.45 per share for the first quarter of 1996, an increase of 12.5
percent over the previous indicated quarterly rate. Declaration of dividends is
at the discretion of the Board of Directors. The Board has not adopted a
dividend policy as such. Subject to legal and contractual restrictions, its
decisions regarding dividends are based on all considerations that in its
business judgment are relevant at the time, including past and projected
earnings, cash flows, economic, business and securities market conditions and
anticipated developments concerning Tenneco's business and operations.
Tenneco Inc. is a party to credit agreements containing provisions that limit
the amount of dividends paid on its common stock. At December 31, 1995, under
the most restrictive provisions contained in these credit agreements, Tenneco
Inc. had in excess of $300 million available for the payment of dividends.
Tenneco does not believe that this limitation will prevent the payment of
dividends on Tenneco Inc. common stock at the present annual dividend rate.
As a holding company, Tenneco Inc.'s ability to pay dividends is
substantially dependent upon cash flow from its subsidiaries by way of
dividends, distributions, loans and other advances. Under the most restrictive
of their covenants, however, Tenneco Inc.'s subsidiaries would have been able
to pay approximately $3.7 billion of their retained earnings as dividends to
Tenneco Inc. at December 31, 1995.
FERC MATTERS
Tennessee has deferred certain costs it has incurred associated with
renegotiating gas supply contracts ("GSR" costs) as a result of FERC Order 636.
As of December 31, 1995, Tennessee has deferred GSR costs yet to be recovered
from its customers of approximately $462 million, net of $316 million
previously recovered from its customers, subject to refund. A proceeding before
a FERC administrative law judge is scheduled to commence in early 1996 to
determine whether Tennessee's GSR costs are eligible for cost recovery. The
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FERC has generally encouraged pipelines to settle such issues through
negotiations with customers. Although Order 636 provides for complete recovery
by pipelines of eligible and prudently incurred transition costs, certain
customers have challenged the prudence and eligibility of Tennessee's GSR costs
and Tennessee has engaged in settlement discussions with its customers
concerning the amount of such costs in response to the FERC and customer
statements acknowledging the desirability of such settlements.
Also related to Tennessee's GSR costs, on October 14, 1993, Tennessee was
sued in the State District Court of Ector County, Texas, by ICA Energy, Inc.
("ICA") and TransTexas Gas Corporation ("TransTexas"). In that suit, ICA and
TransTexas contended that Tennessee had an obligation to purchase gas
production which TransTexas thereafter attempted to add unilaterally to the
reserves originally dedicated to a 1979 gas contract. An amendment to the
pleading seeks $1.5 billion from Tennessee for alleged damages caused by
Tennessee's refusal to purchase gas produced from the TransTexas leases
covering the new production and lands. Neither ICA nor TransTexas were original
parties to that contract. However, they contend that any stranger acquiring a
fractional interest in the original committed reserves thereby obtains a right
to add to the contract unlimited volumes of gas production from locations in
South Texas. Tennessee filed a motion for summary judgment, asserting that the
Texas statutes of frauds precluded the plaintiffs from adding new production or
acreage to the contract. On May 4, 1995, the trial court granted Tennessee's
motion for summary judgment; the plaintiffs have filed a notice of appeal.
Thereafter, ICA and TransTexas filed a motion for summary judgment on a
separate issue involving the term "committed reserves" and whether Tennessee
has a contractual obligation to purchase gas produced from a lease not
described in the gas contract. On November 8, 1995, the trial court granted
ICA's and TransTexas' motion in part. That order, which would be finalized upon
conclusion of the trial, also held that ICA's and TransTexas' rights are
subject to certain limitations of the Texas Business and Commerce Code. In
addition to these defenses, which are to be resolved at trial, Tennessee has
other defenses which it has asserted and intends to pursue. Tennessee has filed
a Motion to Clarify the November 8, 1995 order together with a new motion for
partial summary judgment concerning the committed reserve issue. The November
8, 1995 ruling does not affect the trial court's previous May 4, 1995 order
granting summary judgment to Tennessee.
Tennessee has been engaged in separate settlement and contract reformation
discussions with holders of certain gas purchase contracts who have sued
Tennessee. Although Tennessee believes that its defenses in the underlying gas
purchase contract actions are meritorious, Tennessee accrued amounts in the
first quarter of 1995 which it believes are adequate to cover the resolution of
these matters. On August 1, 1995, the Texas Supreme Court affirmed a ruling of
the Court of Appeals favorable to Tennessee in one of these matters and
indicated that it would remand the case to the trial court. Motions for
rehearing have been filed by the producers. As of the date hereof, the court
had not ruled on those motions and mandate had not been issued.
Given the uncertainty over the results of ongoing discussions between
Tennessee and its customers related to the recovery of GSR costs and the
uncertainty related to predicting the outcome of its gas purchase contract
reformation efforts and the associated litigation, Tenneco is unable to predict
the timing or the ultimate impact that the resolution of these issues will have
on its consolidated financial position or results of operations.
ENVIRONMENTAL MATTERS
Tenneco and certain of its subsidiaries and affiliates are parties to
environmental proceedings. Expenditures for ongoing compliance with
environmental regulations that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations and that do not contribute to current or future
revenue generation are expensed. Liabilities are recorded when environmental
assessments indicate that remedial efforts are probable and the costs can be
reasonably estimated. Estimates of the liability are based upon currently
available facts, existing technology, and presently enacted laws and
regulations taking into consideration the likely effects of inflation and other
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<PAGE>
societal and economic factors. All available evidence is considered, including
prior experience in remediation of contaminated sites, other companies' cleanup
experience and data released by the United States Environmental Protection
Agency ("EPA") or other organizations. These estimated liabilities are subject
to revision in future periods based on actual costs or new circumstances. These
liabilities are included in the balance sheet at their undiscounted amounts.
Recoveries are evaluated separately from the liability and, when recovery is
assured, are recorded and reported separately from the associated liability in
the financial statements.
Tennessee is a party in proceedings involving federal and state authorities
regarding the past use by Tennessee of a lubricant containing polychlorinated
biphenyls ("PCBs") in its starting air systems. Tennessee has executed a
consent order with the EPA governing the remediation of certain of its
compressor stations and is working with the Pennsylvania and New York
environmental agencies to specify the remediation requirements at the
Pennsylvania and the New York stations. Tenneco believes that the ultimate
resolution of this matter will not have a material adverse effect on the
financial condition or results of operations of Tenneco Inc. and its
consolidated subsidiaries.
A subsidiary of Tennessee owns a 13.2% general partnership interest in
Iroquois Gas Transmission System, L.P. ("Iroquois"), which owns an interstate
natural gas pipeline from the Canadian border through the states of New York
and Connecticut to Long Island. The operator of the pipeline is Iroquois
Pipeline Operating Company (the "Operator"), a subsidiary of TransCanada
Pipelines, Ltd., an affiliate of TransCanada Iroquois, Ltd. which is also a
partner in Iroquois. Tennessee has a contract to provide gas dispatching as
well as post-construction field operation and maintenance services for the
Operator of Iroquois, but Tennessee is not the Operator and is not an affiliate
of the Operator.
Iroquois has been informed of investigations and allegations regarding
alleged environmental violations which occurred during the construction of the
pipeline. Communications have been received from U.S. Attorneys' Offices, the
Enforcement Staff of the FERC's Office of the General Counsel, the Army Corps
of Engineers, the Public Service Commission of the State of New York, the EPA
and the Federal Bureau of Investigation. Proceedings have not been commenced
against Iroquois in connection with these inquiries. However, communications
have indicated possible allegation of civil and criminal violations. Iroquois
has held discussions with certain of the agencies to explore the possibility of
a negotiated resolution of the issues. In the absence of a negotiated
resolution, Iroquois believes that indictments will be sought and, in them,
substantial fines and other sanctions may be requested.
As a general partner, Tennessee's subsidiary may be jointly and severally
liable with the other partners for the liabilities of Iroquois. The foregoing
proceedings and investigations have not affected pipeline operations. Based
upon information available to Tennessee, Tennessee believes that neither it nor
any of its subsidiaries is a target of the criminal investigation described
above. Further, while a global resolution of these inquiries could have a
material adverse effect on the financial condition of Iroquois, Tenneco
believes that the ultimate resolution of these matters will not have a material
adverse effect on the financial condition or results of operations of Tenneco
Inc. and its consolidated subsidiaries.
At December 31, 1995, Tenneco has been designated as a potentially
responsible party in 55 "Superfund" sites. With respect to its pro rata share
of the remediation costs of certain sites, Tenneco is fully indemnified by
third parties. With respect to certain other sites, Tenneco has sought to
resolve its liability through payments to the other potentially responsible
parties. For the remaining sites, Tenneco has estimated its share of
remediation costs to be between $11 million and $69 million or 0.5% to 2.5% of
the total remediation costs for those sites and has provided reserves that it
believes are adequate for such costs. Because the cleanup costs are estimates
and are subject to revision as more information becomes available about the
extent of remediation required, Tenneco's estimate of its share of remediation
costs could change. Moreover, liability under the Comprehensive Environmental
Response, Compensation and Liability Act is joint and several, meaning that
Tenneco could be required to pay in excess of its pro rata share of remediation
costs. Tenneco's understanding of the financial strength of other potentially
responsible parties has been considered, where
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<PAGE>
appropriate, in Tenneco's determination of its estimated liability. Tenneco
believes that the costs associated with its current status as a potentially
responsible party in the Superfund sites described above will not be material
to its consolidated financial position or results of operations.
YEARS 1994 AND 1993
RESULTS OF OPERATIONS
REVENUES
Revenues for 1994 were $12.17 billion, down slightly from $12.29 billion in
1993. Automotive revenues were $1,989 million, a $204 million, or 11 percent
increase, compared with 1993 primarily due to improved sales in both the
aftermarket and original equipment market. Tenneco Energy revenues were down
$484 million or 17 percent as customers shifted from sales to transportation
service in the regulated business and gas prices fell in the nonregulated gas
marketing business. Packaging revenues increased $142 million, or seven
percent, to $2.18 billion in 1994, as prices in the paperboard business
recovered from the seven-year low reached in the third quarter of 1993.
Revenues for Shipbuilding decreased to $1.75 billion, or six percent, due to a
drop in carrier and submarine construction work and the fourth quarter 1993
divestiture of Sperry Marine. Revenues for farm and construction equipment were
$3.88 billion, compared with $3.75 billion in 1993. Tenneco excluded Case's
revenues for December 1994 because of the change to the equity accounting
method for Case. Case revenues were up in 1994 over 1993 due to higher sales
volumes both in the European construction equipment business and the North
American agricultural equipment market.
INCOME BEFORE INTEREST EXPENSE, INCOME TAXES AND MINORITY INTEREST (OPERATING
INCOME)
Operating income was $1,379 million for 1994. This was an improvement of $282
million over 1993's operating income of $1,097 million. Excluding gains from
asset sales and other special items including plant consolidations, 1994
operating income increased $364 million, or 37 percent, compared with 1993
primarily due to improved pricing in Packaging's containerboard business and
higher volumes in the farm and construction equipment segment.
Tenneco Automotive operating income for 1994 was $223 million, compared with
$222 million in 1993. The 1994 operating income included a $17 million charge
for plant consolidations in Europe associated with acquiring Gillet and a $5
million charge taken in the second quarter for closing a plant in Ohio.
Excluding special items, operating income increased $23 million, or 10 percent,
compared with 1993. This increase is a result of higher volumes in North
America and Europe and was partially offset by higher costs for new product
development and new facility start-up.
In November 1994, Tenneco acquired Gillet for $44 million in cash and $69
million in assumed debt. Gillet is the leading manufacturer of original
equipment exhaust systems and components for European auto makers.
Tenneco Energy's operating income for 1994 was $415 million, compared with
$411 million in 1993. Special items, including gains on asset sales along with
regulatory and litigation settlements, amounted to $34 million in 1994 and $28
million in 1993. Special items in 1994 included a $23 million gain on the sale
of a 20 percent interest in Tenneco Resources to Ruhrgas AG. When non-recurring
items in both years are excluded, operating income in 1994 declined slightly,
compared with 1993. Significant growth in the nonregulated businesses,
including an increase in Tenneco Ventures' operating income, was offset by
declines in the regulated business caused by implementing Order 636.
Tenneco Packaging's operating income for 1994 was $209 million, compared with
$139 million in 1993. The 1993 operating income included $29 million from gains
related to asset realignment. Excluding these gains, operating income increased
$99 million, or 90 percent, compared with 1993 primarily because of improved
paperboard pricing.
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<PAGE>
The paperboard business earned $139 million, up $104 million compared with
1993, excluding the 1993 asset realignment gains. Prices rose from depressed
levels in 1993 and contributed $125 million, excluding the recycling business,
of increased operating income. This was partially offset by higher raw material
costs of $32 million, but improved productivity helped counter rising raw
material costs. Paperboard productivity rose 1.6 percent, with mill operating
rates exceeding rated capacity for the full year. The specialty business
operating income for 1994 declined $5 million to $70 million, excluding the
asset realignment gains in 1993. Both the aluminum and plastic packaging
businesses reported improved operating income. Plastic packaging volumes grew
seven percent in 1994 and demand continues to be strong. Operating income for
plastics rose 40 percent in 1994, reflecting increased volumes and higher
pricing. The increase in operating income provided by the aluminum and plastic
businesses was more than offset by weak performance in the molded fiber
business, where higher raw material costs had a negative effect on operating
income. Prices for recycled newspaper, a major raw material for molded fiber,
rose to over $100 per ton, compared with $26 per ton in 1993.
Newport News Shipbuilding's operating income for 1994 was $200 million
compared with $225 million in 1993. Special items in 1993 included a $15
million gain on the sale of Sperry Marine and a $12 million benefit from
recovering a portion of the postretirement benefit costs reserve that was
established when FAS No. 106 was adopted in 1992. If these special items were
excluded, operating income increased $2 million in 1994 on revenues that were
six percent lower due to aggressive efforts to improve productivity and control
costs.
Case reported operating income of $326 million in 1994, a $244 million
improvement, compared with the $82 million reported in 1993. Several factors
contributed to this improvement in 1994. Higher sales volumes and a 16 percent
increase in worldwide production along with lower discounts and better top-line
pricing contributed to the operating income improvement. Cost reductions were
partially offset by retooling and reconfiguration expenses at the construction
equipment plant in Burlington, Iowa. Case also had higher engineering expenses
to support new product growth.
Tenneco's other operations reported operating income of $6 million in 1994,
compared with $18 million for 1993. The 1993 operating income included a gain
of $39 million from contributing Tenneco's investment in Cummins Engine Company
to the Case Corporation Pension Plan for Hourly Paid Employees, while the
operating income for 1994 included gains of $29 million from the Case initial
and secondary public offerings.
INTEREST EXPENSE
Net interest incurred declined $20 million from $427 million in 1993 to $407
million in 1994. The decrease was a result of lower debt levels, continued
emphasis on managing for cash flow and working capital and changing Case
reporting to the equity method of accounting in December 1994. Due to the
change in the method of financing dealer receivables as a result of the Case
IPO in June 1994, financing costs for Case's wholesale receivables were
reported as interest expense. Before the change in financing method, the Case
wholesale financing costs were reported as "Finance Charges--Tenneco Finance."
If the Case wholesale receivable interest was excluded for the full year,
interest expense would have decreased by an additional $24 million from last
year's level. Interest capitalized increased to $6 million in 1994 from $4
million in 1993 due to higher levels of major capital projects.
Finance charges (interest expense related to finance subsidiaries classified
as an operating expense) were $155 million in 1994 versus $254 million in 1993.
Approximately $2.0 billion in debt of Tenneco's finance subsidiaries was
retired during the year resulting in lower finance charges. Interest expense
related to debt on wholesale receivables was included as interest expense
rather than finance charges from July through November 1994 as indicated above.
In December, the method of reporting Case changed to the equity method, and
Case's debt is no longer consolidated with Tenneco's debt on the balance sheet.
In addition, Tenneco's finance subsidiaries reduced debt with proceeds from
issuing lower-cost asset backed securities.
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<PAGE>
MINORITY INTEREST
Minority interest expense was $30 million for the 1994 year. This primarily
reflected the minority shareholders' interest in Case's net income for July
through November 1994.
INCOME TAXES
Income tax expense for 1994 was $301 million versus $257 million reported for
1993. The increased tax expense in 1994 was from higher pre-tax income. This
was partially offset by tax benefits from the realization of deferred tax
assets resulting from consolidation of Tenneco's German operations and the tax
benefit associated with sale of businesses.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1994, Tenneco adopted FAS No. 112, "Employers'
Accounting for Postemployment Benefits." As a result, an after-tax charge of
$39 million, or $.22 per average common share, was recorded in 1994.
DISCONTINUED OPERATIONS AND EXTRAORDINARY LOSS
Loss from discontinued operations in 1994 of $189 million, net of income tax
expense of $104 million, or $1.04 per average common share, resulted from the
sale of Tenneco's chemicals and brakes businesses.
Income from discontinued operations in 1993 of $38 million, net of income tax
expense of $1 million, or $.23 per average common share, was attributable to
the discontinuance of Tenneco's brakes business and chemical operations in
1994. Net loss for 1993 for the brakes business was $7 million, net of income
tax benefit of $4 million. Net income for the chemicals business was $45
million, net of income tax expense of $5 million.
Extraordinary loss for 1994 was $5 million, net of income tax benefit of $2
million, or $.03 per average common share. The 1993 amount was $25 million, net
of income tax benefit of $13 million, or $.15 per average common share. Both
were the result of redemption premiums from prepaying high interest-bearing
long-term debt.
EARNINGS (LOSS) PER AVERAGE COMMON SHARE
Income from continuing operations for 1994 was $641 million, or $3.49 per
average common share after preferred dividends. This compares with income from
continuing operations of $413 million, or $2.36 per average common share after
preferred dividends, in 1993. The average number of shares of common stock
outstanding used for calculating earnings per average common share for 1994 was
180.1 million, compared with 168.8 million in 1993. Most of the increase
resulted from issuing 23.5 million shares in an underwritten public offering in
April 1993 and issuing treasury shares and SECT shares to employee benefit
plans.
LIQUIDITY & CAPITAL RESOURCES
Net cash provided by operating activities was $450 million for the year 1994,
compared with $1,615 million for 1993, a decrease of $1,165 million. Excluding
discontinued operations, there was a decrease of $1,232 million. This decrease
was due in part to lower sales of Case retail receivables in the form of asset
backed securities. Proceeds from the sale of Case retail receivables in the
form of asset backed securities were $850 million in 1994 compared with $1.0
billion in 1993. Also, trade receivables sold to Asset Securitization
Cooperative Corporation were $313 million less in 1994 compared with 1993.
Higher dealer demand for farm and construction equipment in 1994 resulting in
higher receivables compared with 1993 also lowered cash from operating
activities. Finally, rate refund payments of approximately $250 million were
made to pipeline customers in 1994. The working capital increase of $587
million for 1994 resulted primarily from the
34
<PAGE>
reduction of the pipeline rate refund liability of approximately $250 million
and lower tax accruals of $255 million. The lower tax accruals resulted from
the utilization of capital losses related to the sale of assets.
Net cash used by investing activities in 1994 was $117 million, compared with
$338 million in 1993. Net proceeds from the sale of businesses and assets were
$860 million in 1994, primarily due to the initial and secondary public
offerings of Case for $694 million. Net proceeds from the sale of businesses in
1993 of $266 million resulted from the sales of Dean Pipeline Company, Viking
Gas Transmission Company, Sperry Marine, and various international aluminum
ventures.
Expenditures for plant, property and equipment from continuing operations for
1994 were $736 million, compared with $525 million for 1993. Increased
expenditures for Energy ($161 million), Automotive ($20 million), Packaging
($42 million) and Tenneco's other operations ($13 million) were partially
offset by declines for Case ($18 million) and Shipbuilding ($7 million).
Cash used for financing activities for 1994 was $151 million compared with
$1,166 million in 1993. In June 1994, as part of the Case reorganization and
IPO, Case borrowed $983 million of terms loans and $478 million of short-term
debt to acquire the net assets of Tenneco's farm and construction equipment
segment. Tenneco utilized these funds to repay long-term debt. As a result of
the November 1994 secondary public offering which reduced Tenneco's ownership
in Case to approximately 44%, Case's debt is no longer consolidated with
Tenneco's debt on the balance sheet at December 31, 1994, due to reporting Case
on the equity method of accounting.
In December 1994, Tenneco sold a 25 percent preferred stock interest in a
subsidiary which resulted in net cash proceeds of $296 million. This was
included in minority interest in the balance sheet at December 31, 1994.
Concurrently, $160 million was used to retire equity securities of another
subsidiary which had been included in the balance sheet as minority interest.
Capitalization totaled $7.48 billion at December 31, 1994, a decrease of
$1.51 billion from December 31, 1993. The ratio of total debt to capitalization
decreased from 67.6 percent at December 31, 1993, to 55.0 percent at December
31, 1994. The ratio of total debt to capitalization was 52.9 percent at
December 31, 1994, including the market value of the SECT shares, compared with
64.0 percent at December 31, 1993. Total debt declined by $1.96 billion from
December 31, 1993 to December 31, 1994, while shareowners' equity increased
$299 million. Minority interest increased $167 million and preferred stock
decreased $16 million.
35
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS OF TENNECO INC.
AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of independent public accountants.................................. 37
Statements of income for each of the three years in the period ended
December 31, 1995........................................................ 38
Balance sheets--December 31, 1995 and 1994................................ 40
Statements of cash flows for each of the three years in the period ended
December 31, 1995........................................................ 41
Statements of changes in shareowners' equity for each of the three years
in the period ended December 31, 1995.................................... 42
Notes to financial statements............................................. 43
</TABLE>
36
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tenneco Inc.:
We have audited the accompanying balance sheets of Tenneco Inc. (a Delaware
corporation) and consolidated subsidiaries as of December 31, 1995 and 1994,
and the related statements of income, cash flows and changes in shareowners'
equity for each of the three years in the period ended December 31, 1995. These
financial statements and the schedules referred to below are the responsibility
of Tenneco's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tenneco Inc. and consolidated
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations, cash flows and changes in shareowners' equity for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, effective January 1,
1994, Tenneco changed its method of accounting for postemployment benefits.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
index to Part IV, Item 14 relating to Tenneco Inc. and consolidated
subsidiaries are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
The supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements of Tenneco Inc. and
consolidated subsidiaries taken as a whole.
Arthur Andersen LLP
Houston, Texas
February 8, 1996
37
<PAGE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
TENNECO INC. AND CONSOLIDATED
SUBSIDIARIES
-------------------------------------
YEARS ENDED DECEMBER 31 (MILLIONS EXCEPT
SHARE AMOUNTS) 1995 1994 1993
- ---------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
REVENUES
Net sales and operating revenues--
Automotive............................ $ 2,479 $ 1,989 $ 1,785
Energy................................ 1,916 2,378 2,862
Packaging............................. 2,752 2,184 2,042
Shipbuilding.......................... 1,756 1,753 1,861
Farm and construction equipment....... -- 3,881 3,748
Other................................. (4) (11) (11)
----------- ----------- -----------
8,899 12,174 12,287
----------- ----------- -----------
Other income--
Interest income....................... 127 192 277
Equity in net income of affiliated
companies............................ 176 54 52
Gain (loss) on sale of businesses and
assets, net.......................... 162 27 112
Gain on the sale by a subsidiary of
its stock............................ -- 23 --
Other income, net..................... 33 (51) 14
----------- ----------- -----------
9,397 12,419 12,742
----------- ----------- -----------
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation
shown below)........................... 5,262 7,517 7,532
Operating expenses...................... 1,426 1,856 2,268
Selling, general and administrative..... 808 1,104 1,120
Finance charges--Tenneco Finance........ 83 155 254
Depreciation, depletion and
amortization........................... 449 408 471
----------- ----------- -----------
8,028 11,040 11,645
----------- ----------- -----------
Income before interest expense, income
taxes and minority interest............ 1,369 1,379 1,097
Interest expense (net of interest
capitalized)........................... 339 407 427
----------- ----------- -----------
Income before income taxes and minority
interest............................... 1,030 972 670
Income tax expense...................... 273 301 257
----------- ----------- -----------
Income before minority interest......... 757 671 413
Minority interest....................... 22 30 --
----------- ----------- -----------
Income from continuing operations....... 735 641 413
Income (loss) from discontinued
operations, net of income tax.......... -- (189) 38
----------- ----------- -----------
Income before extraordinary loss........ 735 452 451
Extraordinary loss, net of income tax... -- (5) (25)
----------- ----------- -----------
Income before cumulative effect of
change in accounting principle......... 735 447 426
Cumulative effect of change in
accounting principle, net of income
tax.................................... -- (39) --
----------- ----------- -----------
Net income.............................. 735 408 426
Preferred stock dividends............... 12 12 14
----------- ----------- -----------
Net income to common stock.............. $ 723 $ 396 $ 412
=========== =========== ===========
PER SHARE
Average number of shares of common stock
outstanding............................ 173,995,941 180,084,909 168,772,852
Earnings (loss) per average share of
common stock:
Continuing operations................. $ 4.16 $ 3.49 $ 2.36
Discontinued operations............... -- (1.04) .23
Extraordinary loss.................... -- (.03) (.15)
Cumulative effect of change in
accounting principle................. -- (.22) --
----------- ----------- -----------
$ 4.16 $ 2.20 $ 2.44
=========== =========== ===========
Cash dividends per share of common
stock.................................. $ 1.60 $ 1.60 $ 1.60
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements of income.
Reference is made to Note 1 for definitions of "Tenneco Industrial" and
"Tenneco Finance."
38
<PAGE>
<TABLE>
<CAPTION>
TENNECO INDUSTRIAL TENNECO FINANCE
YEARS ENDED DECEMBER 31 ------------------------------------- ------------------------------------------
(MILLIONS EXCEPT SHARE AMOUNTS) 1995 1994 1993 1995 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Net sales and operating revenues--
Automotive............................ $ 2,479 $ 1,989 $ 1,785 $ -- $ -- $ --
Energy................................ 1,916 2,378 2,862 -- -- --
Packaging............................. 2,752 2,184 2,042 -- -- --
Shipbuilding.......................... 1,756 1,753 1,861 -- -- --
Farm and construction equipment....... -- 3,881 3,748 -- -- --
Other................................. (4) (11) (11) -- -- --
------- ------- ------- ------- ------- -------
8,899 12,174 12,287 -- -- --
------- ------- ------- ------- ------- -------
Other income--
Interest income....................... 61 61 46 138 313 494
Equity in net income of affiliated
companies............................ 196 140 158 -- -- --
Gain (loss) on sale of businesses and
assets, net.......................... 174 27 112 (12) -- --
Gain on the sale by a subsidiary of
its stock............................ -- 23 -- -- -- --
Other income, net..................... 33 (45) 27 6 5 6
------- ------- ------- ------- ------- -------
9,363 12,380 12,630 132 318 500
------- ------- ------- ------- ------- -------
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation
shown below)........................... 5,268 7,523 7,538 -- -- --
Operating expenses...................... 1,414 1,882 2,265 12 (23) 10
Selling, general and administrative..... 818 1,209 1,268 2 13 10
Finance charges--Tenneco Finance........ -- -- -- 86 159 275
Depreciation, depletion and
amortization........................... 447 406 469 2 2 2
------- ------- ------- ------- ------- -------
7,947 11,020 11,540 102 151 297
------- ------- ------- ------- ------- -------
Income before interest expense, income
taxes and minority interest............ 1,416 1,360 1,090 30 167 203
Interest expense (net of interest
capitalized)........................... 396 447 493 -- 22 24
------- ------- ------- ------- ------- -------
Income before income taxes and minority
interest............................... 1,020 913 597 30 145 179
Income tax expense...................... 263 247 184 10 54 73
------- ------- ------- ------- ------- -------
Income before minority interest......... 757 666 413 20 91 106
Minority interest....................... 22 25 -- -- 5 --
------- ------- ------- ------- ------- -------
Income from continuing operations....... 735 641 413 20 86 106
Income (loss) from discontinued
operations, net of income tax.......... -- (189) 38 -- -- --
------- ------- ------- ------- ------- -------
Income before extraordinary loss........ 735 452 451 20 86 106
Extraordinary loss, net of income tax... -- (5) (25) -- (4) (1)
------- ------- ------- ------- ------- -------
Income before cumulative effect of
change in accounting principle......... 735 447 426 20 82 105
Cumulative effect of change in
accounting principle, net of income
tax.................................... -- (39) -- -- -- --
------- ------- ------- ------- ------- -------
Net income.............................. 735 408 426 20 82 105
Preferred stock dividends............... 12 12 14 -- -- --
------- ------- ------- ------- ------- -------
Net income to common stock.............. $ 723 $ 396 $ 412 $ 20 $ 82 $ 105
======= ======= ======= ======= ======= =======
</TABLE>
39
<PAGE>
BALANCE SHEETS
<TABLE>
<CAPTION>
TENNECO INC. AND
CONSOLIDATED TENNECO TENNECO
SUBSIDIARIES INDUSTRIAL FINANCE
------------------ ---------------- -----------
DECEMBER 31 (MILLIONS) 1995 1994 1995 1994 1995 1994
- ---------------------- -------- -------- ------- ------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and temporary cash
investments............... $ 354 $ 405 $ 142 $ 172 $212 $ 233
Receivables--
Customer notes and
accounts (net).......... 921 1,535 474 650 444 882
Affiliated companies..... 112 67 106 65 34 186
Gas transportation and
exchange................ 64 214 64 214 -- --
Income taxes............. 172 234 172 234 -- --
Other.................... 514 192 514 187 -- 5
Inventories................ 1,181 910 1,181 910 -- --
Deferred income taxes...... -- 23 -- 23 -- --
Prepayments and other...... 264 315 268 315 -- 2
-------- -------- ------- ------- ---- ------
3,582 3,895 2,921 2,770 690 1,308
-------- -------- ------- ------- ---- ------
Investments and other assets:
Investment in affiliated
companies................. 620 997 868 1,762 -- --
Long-term receivables--
Notes and other (net).... 435 805 165 214 257 566
Affiliated companies..... -- 264 -- 264 -- --
Investment in subsidiaries
in excess of fair value of
net assets
at date of acquisition,
less amortization......... 642 331 642 331 -- --
Deferred income taxes...... 52 49 52 49 -- --
Other...................... 1,801 974 1,813 993 1 8
-------- -------- ------- ------- ---- ------
3,550 3,420 3,540 3,613 258 574
-------- -------- ------- ------- ---- ------
Plant, property and
equipment, at cost.......... 11,962 11,108 11,892 11,038 70 70
Less--Reserves for
depreciation, depletion
and amortization.......... 5,643 5,881 5,623 5,863 20 18
-------- -------- ------- ------- ---- ------
6,319 5,227 6,269 5,175 50 52
-------- -------- ------- ------- ---- ------
$ 13,451 $ 12,542 $12,730 $11,558 $998 $1,934
======== ======== ======= ======= ==== ======
LIABILITIES AND SHAREOWNERS'
EQUITY
Current liabilities:
Short-term debt (including
current maturities on
long-term debt)........... $ 908 $ 545 $ 773 $ 310 $160 $ 410
Payables--
Trade.................... 1,102 1,053 1,097 1,053 5 --
Affiliated companies..... 2 35 4 36 1 7
Gas transportation and
exchange................ 28 159 28 159 -- --
Taxes accrued.............. 572 86 569 86 3 --
Deferred income taxes...... 13 -- 13 -- -- --
Interest accrued........... 103 127 86 102 17 25
Natural gas pipeline
revenue reservation....... 27 190 27 190 -- --
Other...................... 1,081 859 1,081 853 -- 7
-------- -------- ------- ------- ---- ------
3,836 3,054 3,678 2,789 186 449
-------- -------- ------- ------- ---- ------
Long-term debt............... 3,751 3,570 3,202 2,865 549 705
-------- -------- ------- ------- ---- ------
Deferred income taxes........ 962 1,459 948 1,446 14 13
-------- -------- ------- ------- ---- ------
Postretirement benefits...... 616 603 616 603 -- --
-------- -------- ------- ------- ---- ------
Deferred credits and other
liabilities................. 688 489 688 488 1 2
-------- -------- ------- ------- ---- ------
Commitments and contingencies
Minority interest............ 320 320 320 320 -- --
-------- -------- ------- ------- ---- ------
Preferred stock with
mandatory redemption
provisions.................. 130 147 130 147 -- --
-------- -------- ------- ------- ---- ------
Shareowners' equity:
Common stock............... 957 957 957 957 -- 71
Stock Employee Compensation
Trust (common stock held
in trust)................. (215) (298) (215) (298) -- --
Premium on common stock and
other capital surplus..... 3,602 3,553 3,602 3,553 188 264
Cumulative translation
adjustments............... 26 (237) 26 (237) -- 2
Retained earnings
(accumulated deficit)..... (469) (905) (469) (905) 60 428
-------- -------- ------- ------- ---- ------
3,901 3,070 3,901 3,070 248 765
Less--Shares held as
treasury stock, at cost... 753 170 753 170 -- --
-------- -------- ------- ------- ---- ------
3,148 2,900 3,148 2,900 248 765
-------- -------- ------- ------- ---- ------
$ 13,451 $12,542 $12,730 $11,558 $998 $1,934
======== ======== ======= ======= ==== ======
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
Reference is made to Note 1 for definitions of "Tenneco Industrial" and
"Tenneco Finance."
40
<PAGE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TENNECO INC. AND
CONSOLIDATED
SUBSIDIARIES TENNECO INDUSTRIAL TENNECO FINANCE
---------------------- ---------------------- ---------------------
YEARS ENDED DECEMBER 31
(MILLIONS) 1995 1994 1993 1995 1994 1993 1995 1994 1993
- ----------------------- ------ ------ ------ ------ ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing
operations............. $ 735 $ 641 $ 413 $ 735 $ 641 $ 413 $ 20 $ 86 $ 106
Adjustments to reconcile
income from continuing
operations to cash
provided (used) by con-
tinuing operations--
Depreciation, depletion
and amortization...... 449 408 471 447 406 469 2 2 2
Equity in net (income)
loss of affiliated
companies, net of div-
idends................ (116) (4) (7) 164 (67) (104) -- -- --
Deferred income taxes.. 161 179 121 161 167 127 -- 12 (6)
(Gain) loss on sale of
businesses and assets,
net................... (162) (50) (112) (174) (50) (112) 12 -- --
Changes in components
of working capital--
(Increase) decrease in
receivables........... 526 (244) 483 169 (1,368) 70 345 1,027 612
(Increase) decrease in
inventories........... (239) (160) 107 (239) (160) 107 -- -- --
(Increase) decrease in
prepayments and other
current assets........ (33) 34 23 (35) 37 15 -- 4 13
Increase (decrease) in
payables.............. 3 92 (124) (5) (110) (272) -- 89 (7)
Increase (decrease) in
taxes accrued......... 45 (122) (57) 44 (102) (46) 1 (20) (11)
Increase (decrease) in
interest accrued...... (49) (31) (46) (35) (3) (29) (14) (29) (17)
Increase (decrease) in
restructuring liabili-
ty.................... -- (72) (78) -- (72) (78) -- -- --
Increase (decrease) in
natural gas pipeline
revenue reservation... (156) (91) 136 (156) (91) 136 -- -- --
Increase (decrease) in
other current liabili-
ties.................. (98) 7 31 (97) 27 37 (1) (20) (6)
(Increase) decrease in
long-term notes and
receivables........... 332 (173) 440 8 (46) (1) 315 (134) 405
Take-or-pay (refunds to
customers) recoup-
ments, net............ 36 26 (34) 36 26 (34) -- -- --
Other.................. 44 (26) (121) 45 (2) (52) (1) 6 (30)
------ ------ ------ ------ ------ ------ ----- ------ ------
Cash provided (used) by
continuing operations. 1,478 414 1,646 1,068 (767) 646 679 1,023 1,061
Cash provided (used) by
discontinued opera-
tions................. (35) 36 (31) (35) (32) (31) -- -- --
------ ------ ------ ------ ------ ------ ----- ------ ------
Net cash provided (used)
by operating activi-
ties................... 1,443 450 1,615 1,033 (799) 615 679 1,023 1,061
------ ------ ------ ------ ------ ------ ----- ------ ------
INVESTING ACTIVITIES
Net proceeds
(expenditures) related
to the sale of
discontinued
operations............. 682 (17) (54) 682 (17) (54) -- -- --
Net proceeds from sale
of businesses and as-
sets................... 615 860 266 615 872 266 -- (12) --
Expenditures for plant,
property and equip-
ment--
Continuing operations.. (976) (736) (525) (976) (736) (525) -- -- --
Discontinued opera-
tions................. (4) (68) (62) (4) (68) (62) -- -- --
Acquisitions of busi-
nesses................. (1,702) (51) (14) (1,702) (51) (14) -- -- --
Investments and other... 239 (105) 51 434 (350) (7) (186) 78 59
------ ------ ------ ------ ------ ------ ----- ------ ------
Net cash provided (used)
by investing activi-
ties................... (1,146) (117) (338) (951) (350) (396) (186) 66 59
------ ------ ------ ------ ------ ------ ----- ------ ------
FINANCING ACTIVITIES
Issuance of common,
treasury and SECT
shares................. 102 188 1,215 102 188 1,215 -- 185 9
Purchase of common
stock.................. (655) (26) (7) (655) (26) (7) -- -- --
Issuance of equity secu-
rities by a subsidiary. -- 296 -- -- 296 -- -- -- --
Redemption of equity se-
curities by a subsidi-
ary.................... -- (160) -- -- (160) -- -- -- --
Redemption of preferred
stock.................. (20) (20) (30) (20) (20) (30) -- -- --
Issuance of long-term
debt................... 595 980 3 595 1,035 9 -- 12 11
Retirement of long-term
debt................... (513) (1,466) (2,019) (274) (302) (1,264) (239) (1,276) (785)
Net increase (decrease)
in short-term debt ex-
cluding current maturi-
ties on long-term debt. 421 375 (21) 418 411 277 25 235 (348)
Dividends (common and
preferred)............. (286) (318) (307) (286) (318) (307) (300) (18) (8)
------ ------ ------ ------ ------ ------ ----- ------ ------
Net cash provided (used)
by financing activi-
ties................... (356) (151) (1,166) (120) 1,104 (107) (514) (862) (1,121)
------ ------ ------ ------ ------ ------ ----- ------ ------
Effect of foreign
exchange rate changes
on cash and temporary
cash investments....... 8 5 (4) 8 4 (1) -- 1 (3)
------ ------ ------ ------ ------ ------ ----- ------ ------
Increase (decrease) in
cash and temporary cash
investments............ (51) 187 107 (30) (41) 111 (21) 228 (4)
Cash and temporary cash
investments, January 1. 405 218 111 172 213 102 233 5 9
------ ------ ------ ------ ------ ------ ----- ------ ------
Cash and temporary cash
investments, December
31 (Note).............. $ 354 $ 405 $ 218 $ 142 $ 172 $ 213 $ 212 $ 233 $ 5
====== ====== ====== ====== ====== ====== ===== ====== ======
Cash paid during the
year for interest...... $ 459 $ 613 $ 759 $ 387 $ 498 $ 596 $ 98 $ 212 $ 316
Cash paid during the
year for income taxes
(net of refunds)....... $ 168 $ 240 $ 349 $ 160 $ 179 $ 273 $ 8 $ 61 $ 76
</TABLE>
Note: Cash and temporary cash investments include highly liquid investments
with a maturity of three months or less at date of purchase.
The accompanying notes to financial statements are an integral part of these
statements of cash flows.
Reference is made to Note 1 for definitions of "Tenneco Industrial" and
"Tenneco Finance."
41
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------------------------------
1995 1994 1993
------------------- ------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------ ----------- ------ ----------- ------
(MILLIONS EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
SERIES A PREFERRED STOCK
Balance January 1....... -- $ -- 8,935,175 $ 9 8,935,175 $ 9
Shares converted....... -- -- (8,935,175) (9) -- --
----------- ------ ----------- ------ ----------- ------
Balance December 31..... -- -- -- -- 8,935,175 9
=========== ------ =========== ------ =========== ------
COMMON STOCK
Balance January 1....... 191,335,193 957 173,953,012 870 150,300,224 752
Issued to convert Se-
ries A preferred
stock................. -- -- 17,342,763 87 -- --
Issued to retire debt.. -- -- -- -- 23,500,000 117
Issued pursuant to
benefit plans......... 3,761 -- 37,996 -- 151,678 1
Other.................. 12,661 -- 1,422 -- 1,110 --
----------- ------ ----------- ------ ----------- ------
Balance December 31..... 191,351,615 957 191,335,193 957 173,953,012 870
=========== ------ =========== ------ =========== ------
STOCK EMPLOYEE COMPENSA-
TION TRUST (SECT)
Balance January 1....... (298) (499) (488)
Shares issued.......... 118 115 113
Adjustment to market
value................. (35) 86 (124)
------ ------ ------
Balance December 31..... (215) (298) (499)
------ ------ ------
PREMIUM ON COMMON STOCK
AND OTHER CAPITAL SUR-
PLUS
Balance January 1....... 3,553 3,714 2,637
Premium on common
stock issued to re-
tire debt............. -- -- 935
Premium on common
stock issued pursuant
to benefit plans...... -- 2 6
Conversion of Series A
preferred stock....... -- (78) --
Loss on issuance of
treasury stock........ (2) (9) (3)
Dividends on shares
held by SECT.......... 9 13 17
Adjustment of SECT to
market value.......... 35 (86) 124
Other.................. 7 (3) (2)
------ ------ ------
Balance December 31..... 3,602 3,553 3,714
------ ------ ------
CUMULATIVE TRANSLATION
ADJUSTMENTS
Balance January 1....... (237) (303) (230)
Translation of foreign
currency statements... 25 68 (78)
Sale of investment in
foreign subsidiaries.. 235 -- --
Hedges of net invest-
ment in foreign sub-
sidiaries
(net of income tax-
es)................... 3 (2) 5
------ ------ ------
Balance December 31..... 26 (237) (303)
------ ------ ------
RETAINED EARNINGS (ACCU-
MULATED DEFICIT)
Balance January 1....... (905) (980) (1,082)
Net income............. 735 408 426
Dividends--
Preferred stock...... (9) (8) (11)
Series A preferred
stock............... -- (48) (50)
Common stock......... (287) (273) (260)
Accretion of excess of
redemption value of
preferred stock over
fair value at date of
issue................. (3) (4) (3)
------ ------ ------
Balance December 31..... (469) (905) (980)
------ ------ ------
LESS--COMMON STOCK HELD
AS TREASURY STOCK, AT
COST
Balance January 1....... 3,617,510 170 4,166,835 210 5,323,912 268
Shares acquired........ 14,066,214 641 1,731,263 75 234,434 12
Shares issued to ac-
quire businesses...... (1,229,614) (56) -- -- -- --
Shares issued pursuant
to benefit and divi-
dend
reinvestment plans.... (31,491) (2) (2,280,588) (115) (1,391,511) (70)
----------- ------ ----------- ------ ----------- ------
Balance December 31..... 16,422,619 753 3,617,510 170 4,166,835 210
=========== ------ =========== ------ =========== ------
Total................ $3,148 $2,900 $2,601
====== ====== ======
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements of changes in shareowners' equity.
42
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES
Consolidation and Presentation
The financial statements of Tenneco Inc. and consolidated subsidiaries
("Tenneco") include all majority-owned subsidiaries including wholly-owned
finance subsidiaries. Investments in 20% to 50% owned companies where Tenneco
has the ability to exert significant influence over operating and financial
policies are carried at cost plus equity in undistributed earnings since date
of acquisition (except for Tenneco's farm and construction equipment segment as
noted below) and cumulative translation adjustments.
In June 1994, Tenneco completed an initial public offering ("IPO") of
approximately 29% of the common stock of Case Corporation ("Case"), the holder
of Tenneco's farm and construction equipment segment. In November 1994, a
secondary offering of Case's common stock reduced Tenneco's ownership to
approximately 44%. A third offering in August 1995 reduced Tenneco's ownership
to approximately 21%. For the periods prior to and through November 1994,
Case's financial statements were fully consolidated with Tenneco's. From July
through November 1994, the financial statements reflected the 29% minority
stockholders' interest in Case. Subsequent to November 1994, Case is reflected
in Tenneco's financial statements using the equity method of accounting. For
further information on this subject, reference is made to Note 3, "Discontinued
Operations, Disposition of Assets and Extraordinary Loss."
The accompanying financial statements also include, on a separate and
supplemental basis, the combination of Tenneco's industrial companies and
finance companies as follows:
Tenneco Industrial--The financial information captioned "Tenneco
Industrial" reflects the consolidation of all majority-owned subsidiaries
except for the finance subsidiaries. The finance operations have been
included using the equity method of accounting whereby the net income and
net assets of these companies are reflected, respectively, in the income
statement caption, "Equity in net income of affiliated companies," and in
the balance sheet caption, "Investment in affiliated companies."
Tenneco Finance--The financial information captioned "Tenneco Finance"
reflects the combination of Tenneco's wholly-owned finance subsidiaries.
Prior to the Case IPO, the wholesale (dealer) credit and retail credit
operations of Case were financed by wholly-owned finance subsidiaries.
Subsequent to the IPO, the wholesale (dealer) credit operations are being
financed by Case industrial subsidiaries. As a result of this change, interest
expense related to the wholesale (dealer) credit operations was reported as
"Interest expense" rather than "Finance charges--Tenneco Finance" as in prior
periods. If prior periods were reclassified to reflect this presentation of
interest expense related to wholesale (dealer) credit operations, consolidated
"Finance charges--Tenneco Finance" would have been reduced and "Interest
expense" would have increased by $22 million and $69 million for 1994 and 1993,
respectively, with no effect on consolidated net income.
Gains or losses on the sale by a subsidiary of its stock are included in the
Statements of Income.
All significant intercompany transactions, including activity within and
between "Tenneco Industrial" and "Tenneco Finance" business units, have been
eliminated.
Depreciation, Depletion and Amortization
Depreciation of Tenneco's properties is provided on a straight-line basis in
amounts which, in the opinion of management, are adequate to allocate the cost
of properties over their estimated useful lives.
The excess of investment in subsidiaries over fair value of net assets at
date of acquisition is being amortized over periods ranging from 15 years to 40
years. Such amortization relative to continuing operations
43
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
amounted to $12 million, $21 million and $15 million for 1995, 1994 and 1993,
respectively, and is included in the income statement caption, "Other income,
net."
Tenneco has capitalized certain other intangible assets, primarily trademarks
and patents, based on their estimated fair value at date of acquisition.
Amortization is provided on these intangible assets on a straight-line basis
over periods ranging from five to 40 years. The majority of other intangible
assets at December 31, 1995, resulted from the acquisition of the plastics
division of Mobil Corporation during 1995. See Note 2, "Acquisitions," for
further information on the acquisition.
Revenue Recognition
Newport News Shipbuilding and Dry Dock Company ("Newport News"), a wholly-
owned subsidiary, reports profits on its long-term shipbuilding contracts on
the percentage-of-completion method of accounting, determined on the basis of
total costs incurred to date to estimated final total costs. Losses on
contracts are reported when first estimated. The performance of contracts
usually extends over several years, requiring periodic reviews and revisions of
estimated final contract prices and costs during the term of the contracts. The
effect of these revisions to estimates is included in income in the period the
revisions are made.
Tenneco's other divisions recognize revenue on the accrual method when title
passes to the customer or when the service is performed.
Risk Management Activities
Tenneco has utilized financial instruments for many years to mitigate its
exposure to various risks. Tenneco is currently a party to financial
instruments to hedge its exposure to changes in interest rates, foreign
currency exchange rates and natural gas prices. These financial instruments are
accounted for on the accrual basis with gains and losses being recognized based
on the type of contract and exposure being hedged. The amounts paid or received
under interest rate swap agreements are recognized as an adjustment to interest
expense. After-tax net gains or losses on foreign currency contracts designated
as hedges of Tenneco's net investments in foreign subsidiaries are recognized
in the balance sheet caption, "Cumulative translation adjustments." Net gains
and losses of foreign currency contracts designated as hedges of firm
commitments or other specific transactions are deferred and recognized when the
offsetting gains or losses are recognized on the hedged items. Net gains and
losses on energy commodity contracts are deferred and recognized when the
hedged transaction is consummated.
In the statements of cash flows, cash receipts or payments related to the
financial instruments discussed above are classified consistent with the cash
flows from the transactions being hedged.
Income Taxes
Tenneco utilizes the liability method of accounting for income taxes whereby
it recognizes deferred tax assets and liabilities for the future tax
consequences of temporary differences between the tax basis of assets and
liabilities and their reported amounts in the financial statements. Deferred
tax assets are reduced by a valuation allowance when, based upon management's
estimates, it is more likely than not that a portion of the deferred tax assets
will not be realized in a future period. The estimates utilized in the
recognition of deferred tax assets are subject to revision in future periods
based on new facts or circumstances.
Tenneco does not provide for U.S. income taxes on unremitted earnings of
foreign subsidiaries as it is the present intention of management to reinvest
the unremitted earnings in its foreign operations. Unremitted
44
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
earnings of foreign subsidiaries is approximately $515 million at December 31,
1995. It is not practicable to determine the amount of U.S. income taxes that
would be payable upon remittance of the assets that represent those earnings.
Changes in Accounting Principles
Tenneco will adopt Statement of Financial Accounting Standards ("FAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," in the first quarter of 1996. FAS No. 121
establishes new accounting standards for measuring the impairment of long-lived
assets. The adoption of this new standard will not have a significant effect on
Tenneco's consolidated financial position or results of operations.
Effective January 1, 1994, Tenneco adopted FAS No. 112, "Employers'
Accounting for Postemployment Benefits." This new accounting rule requires
employers to account for postemployment benefits for former or inactive
employees after employment but before retirement on the accrual basis rather
than the "pay-as-you-go" basis. Tenneco recorded an after-tax charge of $39
million ($.22 per average common share) which was reported as a cumulative
effect of change in accounting principle.
Inventories
At December 31, 1995 and 1994, inventory by major classification was as
follows:
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Finished goods.............................................. $ 396 $ 355
Work in process............................................. 102 83
Long-term contracts in progress, less progress billings..... 264 138
Raw materials............................................... 253 178
Materials and supplies...................................... 166 156
------ ------
$1,181 $ 910
====== ======
</TABLE>
Inventories are stated at the lower of cost or market. A portion of
inventories are valued using the "last-in, first-out" method (38% and 27% at
December 31, 1995 and 1994, respectively). All other inventories are valued on
the "first-in, first-out" ("FIFO") or "average" methods. If the FIFO or average
method of inventory accounting had been used by Tenneco for all inventories,
inventories would have been $56 million, $54 million and $47 million higher at
December 31, 1995, 1994 and 1993, respectively.
Plant, Property and Equipment, at Cost
At December 31, 1995 and 1994, plant, property and equipment, at cost, by
major segment was as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
(MILLIONS)
<S> <C> <C>
Automotive............................................... $ 1,403 $ 1,331
Energy................................................... 6,262 5,654
Packaging................................................ 2,623 1,661
Shipbuilding............................................. 1,552 1,494
Discontinued chemicals operations........................ -- 780
Other.................................................... 122 188
------- -------
$11,962 $11,108
======= =======
</TABLE>
45
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Notes Receivable and Allowance for Doubtful Accounts and Notes
Short-term notes receivable of $373 million and $337 million were outstanding
at December 31, 1995 and 1994, respectively, of which $216 million and $289
million, respectively, related to Tenneco Finance. These notes receivable are
presented net of unearned finance charges of $26 million and $43 million at
December 31, 1995 and 1994, respectively, which related to Tenneco Finance. At
December 31, 1995 and 1994, unearned finance charges related to long-term notes
and other receivables were $23 million and $66 million, respectively, which
related to Tenneco Finance.
At December 31, 1995 and 1994, the allowance for doubtful accounts and notes
receivable was $73 million and $48 million, respectively, of which $9 million
related to Tenneco Finance at December 31, 1995.
Environmental Liabilities
Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations,
and which do not contribute to current or future revenue generation, are
expensed. Liabilities are recorded when environmental assessments indicate that
remedial efforts are probable and the costs can be reasonably estimated.
Estimates of the liability are based upon currently available facts, existing
technology and presently enacted laws and regulations taking into consideration
the likely effects of inflation and other societal and economic factors. All
available evidence is considered including prior experience in remediation of
contaminated sites, other companies' clean-up experience and data released by
the United States Environmental Protection Agency or other organizations. These
estimated liabilities are subject to revision in future periods based on actual
costs or new circumstances. These liabilities are included in the balance sheet
at their undiscounted amounts. Recoveries are evaluated separately from the
liability and, when recovery is assured, are recorded and reported separately
from the associated liability in the financial statements.
For further information on this subject, reference is made to Note 15,
"Commitments and Contingencies--Environmental Matters."
Earnings Per Share
Earnings per share of common stock are based on the average number of shares
of common stock outstanding during each period. For purposes of computing
earnings per share, Series A preferred stock was included in average common
shares outstanding until its conversion into common stock in December 1994;
therefore, the preferred dividends paid were not deducted from net income to
determine net income to common stock. The inclusion of Series A preferred stock
in the computation of earnings per share was antidilutive for the years and
certain quarters in 1994 and 1993. Other convertible securities and common
stock equivalents outstanding during each of the three years ended December 31,
1995, 1994 and 1993, were not materially dilutive.
In 1992, 12,000,000 shares of common stock were issued to the Stock Employee
Compensation Trust ("SECT"). Shares of common stock issued to a related trust
are not considered to be outstanding in the computation of average shares of
common stock outstanding until the shares are utilized to fund the obligations
for which the trust was established. During the years ended December 31, 1995,
1994 and 1993, the SECT issued 2,697,770, 2,464,721 and 2,479,425 shares,
respectively.
Under Tenneco's stock repurchase programs, a total of 14.3 million shares of
Tenneco Inc. common stock have been acquired since December 1994, and are
included in "Shares held as treasury stock, at cost" on the balance sheet. For
further information on this subject, reference is made to Note 9, "Common
Stock."
46
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Foreign Currency Translation
Financial statements of international subsidiaries are translated into U.S.
dollars using the exchange rate at each balance sheet date for assets and
liabilities and the weighted average exchange rate for each applicable period
for revenues, expenses and gains and losses. Translation adjustments are
reflected in the balance sheet caption "Cumulative translation adjustments."
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions in
determining the reported amounts of Tenneco's assets, liabilities, revenues and
expenses. Reference is made to the "Revenue Recognition" and "Income Taxes"
sections of this footnote and Notes 6, 12, 13 and 15 for additional information
on significant estimates included in Tenneco's financial statements.
Reclassifications
Prior years' financial statements have been reclassified where appropriate to
conform to 1995 presentations.
2. ACQUISITIONS
In November 1995, Tenneco acquired the plastics division of Mobil Corporation
for $1.3 billion. The plastics business is the largest North American producer
of polyethylene and polystyrene consumer and food service packaging and became
part of Tenneco Packaging.
Tenneco's acquisition of the plastics business was accounted for as a
purchase; accordingly, the purchase price has been allocated to the assets
purchased and the liabilities assumed based on preliminary estimates of their
fair values. Final purchase price allocations will be based on more complete
evaluations and may differ from the original allocation. The excess of the
purchase price over the fair value of the net assets acquired is included in
the balance sheet caption, "Investment in subsidiaries in excess of fair value
of net assets at date of acquisition, less amortization" and is being amortized
on a straight-line basis over 40 years. The purchase was initially financed by
a combination of short-term debt and cash. In December 1995, Tenneco refinanced
a portion of the purchase price through a $600 million long-term debt offering.
See Note 4, "Long-Term Debt, Short-Term Debt and Financing Arrangements."
The following unaudited pro forma information of Tenneco Inc. and
consolidated subsidiaries illustrates the effect of the plastics business
acquisition as if it had occurred at the beginning of 1994, after giving effect
to certain pro forma adjustments including amortization of the excess purchase
price, depreciation and other adjustments based on the preliminary purchase
price allocation and interest expense related to financing the acquisition,
together with estimates of the related income tax effects.
<TABLE>
<CAPTION>
(UNAUDITED)
YEARS ENDED DECEMBER 31
------------------------
1995 1994
----------- ------------
(MILLIONS)
<S> <C> <C>
Net sales and operating revenues................ $9,895 $13,211
Income from continuing operations
applicable to common stock..................... $ 733 $ 572
Earnings per average share of common stock from
continuing operations.......................... $ 4.21 $ 3.18
</TABLE>
47
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The summarized pro forma information has been prepared for comparative
purposes only. It is not intended to be indicative of the actual operating
results that would have occurred had the acquisition been consummated at the
beginning of 1994, or the results which may be attained in the future.
During 1995, Tenneco made various other acquisitions of assets and
investments. Tenneco Energy acquired the natural gas pipeline assets of the
Pipeline Authority of South Australia, which includes a 488-mile pipeline, for
approximately $225 million. Tenneco Energy also acquired a 50% interest in two
gas-fired cogeneration plants from ARK Energy, a privately-owned power
generation company, for approximately $65 million in cash and Tenneco Inc.
common stock. Tenneco Packaging completed acquisitions of 10 packaging
businesses for total consideration of approximately $196 million in cash, notes
and Tenneco Inc. common stock. In addition, Tenneco Automotive completed four
acquisitions for approximately $54 million.
Each of the acquisitions was accounted for as a purchase. If these assets and
investments had been acquired January 1, 1995, net income would not have been
significantly different from the reported amount.
In 1994, Tenneco Automotive acquired Heinrich Gillet GmbH & Co. KG for $44
million in cash and $69 million in assumed debt.
3. DISCONTINUED OPERATIONS, DISPOSITION OF ASSETS AND EXTRAORDINARY LOSS
Discontinued Operations
In March 1995, Tenneco completed an initial public offering of 100% of its
Albright & Wilson chemicals segment. The offering was underwritten in the
United Kingdom and was offered primarily in the United Kingdom. Also in 1994,
Tenneco sold its brakes operation. Net proceeds from the sales of the chemicals
and the brakes operations were approximately $700 million and $18 million,
respectively.
Net assets and results from discontinued operations as of and for the years
ended December 31, 1994 and 1993, are as follows:
<TABLE>
<CAPTION>
1994 1993
---------------- ----------------
CHEMICALS BRAKES CHEMICALS BRAKES
--------- ------ --------- ------
(MILLIONS)
<S> <C> <C> <C> <C>
Net assets at December 31............. $ 639 $ -- $558 $61
===== ==== ==== ====
Net sales and operating revenues...... $ 986 $ 62 $914 $54
===== ==== ==== ====
Income (loss) before income taxes and
interest allocation.................. $ 40 $ (8) $ 69 $ (8)
Income tax (expense) benefit.......... (9) 5 (5) 4
----- ---- ---- ----
Income (loss) before interest
allocation........................... 31 (3) 64 (4)
Allocation of interest expense, net of
income tax (a)....................... (19) (2) (19) (3)
----- ---- ---- ----
Net income (loss)..................... 12 (5) 45 (7)
----- ---- ---- ----
Loss on disposition................... (55) (41) -- --
Income tax (expense) benefit from loss
on disposition....................... (115) 15 -- --
----- ---- ---- ----
Net loss on disposition............... (170) (26) -- --
----- ---- ---- ----
Net income (loss) from discontinued
operations......................... $(158) $(31) $ 45 $ (7)
===== ==== ==== ====
</TABLE>
- --------
(a) The allocation of interest expense to discontinued operations is based on
the ratio of net assets of discontinued operations to consolidated net
assets plus debt.
48
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Disposition of Assets
Case Common Stock
In June 1994, Tenneco completed an IPO of approximately 29% of the common
stock of Case. In November 1994, a secondary offering of Case common stock
reduced Tenneco's ownership interest in Case to approximately 44%. Combined
proceeds from the two transactions was $694 million, net of commissions and
offering expenses. The combined gain on the transactions was $36 million,
including a $7 million tax benefit.
In August 1995, Tenneco sold an additional 16.1 million shares of Case common
stock for net proceeds of approximately $540 million. The sale resulted in a
pre-tax gain of $101 million and reduced Tenneco's ownership in Case from 44%
to 21%.
Other
In December 1995, Tenneco Energy sold its 50% interest in Kern River Gas
Transmission Company ("Kern River") for a pre-tax gain of $30 million. Kern
River owns a 904-mile pipeline extending from Wyoming to California. Also in
1995, Tenneco sold certain other facilities and assets, principally at its
Tenneco Packaging and Tenneco Energy segments, and a subordinated note
receivable for a combined pre-tax net gain of $31 million.
During 1994, Tenneco disposed of several assets and investments including a
facility, machinery and equipment at Tenneco Packaging and facilities and
equipment at Case. Proceeds from these dispositions were $125 million resulting
in a pre-tax loss of $2 million. Also in 1994, Tenneco Energy Resources
Corporation, a subsidiary which operates nonregulated gas marketing and
intrastate pipeline businesses, issued 50 shares of its common stock, diluting
Tenneco's ownership in this subsidiary to 80%. Cash proceeds were $41 million
resulting in a gain of $23 million. No taxes were provided on the gain because
management expects that the recorded investment will be recovered in a tax-free
manner.
During 1993, Tenneco disposed of a number of assets and investments including
its Newport News' Sperry Marine business; several Tenneco Packaging operations;
two wholly-owned Tenneco Energy companies, Viking Gas Transmission Company and
Dean Pipeline Company; and facilities and land of two foreign Case operations.
The proceeds from dispositions were $266 million and the pre-tax gain was $112
million.
Extraordinary Loss
In June 1994, an extraordinary loss of $5 million was recorded, net of $2
million income tax benefit, for the redemption premium resulting from the
prepayment of debt.
In April 1993, Tenneco Inc. issued 23.5 million shares of common stock for
approximately $1.1 billion. The proceeds were used to retire $327 million of
short-term debt, $688 million of long-term debt and $14 million of variable-
rate preferred stock. In November 1993, Tenneco retired DM250 million bonds.
The redemption premium related to the retirement of long-term debt resulting
from these two transactions ($25 million, net of income tax benefits of $13
million) was recorded as an extraordinary loss.
49
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. LONG-TERM DEBT, SHORT-TERM DEBT AND FINANCING ARRANGEMENTS
Long-Term Debt
A summary of long-term debt outstanding at December 31, 1995 and 1994, is
set forth in the following table:
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
TENNECO INDUSTRIAL
Tenneco Inc.--
Debentures due 1998 through 2025, average effective interest
rate 8.7% in 1995 and 9.7% in 1994 (net of $2 million in 1995
and 1994 of unamortized discount)............................. $ 698 $ 398
Notes due 1996 through 2005, average effective interest rate
8.8% in 1995 and 9.2% in 1994 (net of $5 million in 1995 and
$4 million in 1994 of unamortized discount)................... 1,962 1,681
Tennessee Gas Pipeline Company--
Debentures due 2011, effective interest rate 15.1% in 1995 and
1994 (net of $216 million in 1995 and $219 million in 1994 of
unamortized discount)......................................... 184 181
Notes due 1996 through 1997, average effective interest rate
9.7% in 1995 and 10.1% in 1994 (net of $5 million in 1995 and
$8 million in 1994 of unamortized discount)................... 573 808
Other subsidiaries--
Notes due 1996 through 2014, average effective interest rate
8.5% in 1995 and 8.6% in 1994 (net of $19 million in 1995 and
$20 million in 1994 of unamortized discount).................. 47 51
------ ------
3,464 3,119
------ ------
Less--Current maturities......................................... 262 254
------ ------
3,202 2,865
------ ------
TENNECO FINANCE
Tenneco Credit Corporation--
Senior notes due 1996 through 2001, average effective interest
rate 9.7% in 1995 and 9.6% in 1994 (net of $1 million in 1995
and $2 million in 1994 of unamortized discount)............... 549 749
Medium-term notes due 1996 through 2002, average interest rate
9.0% in 1995 and 9.4% in 1994................................. 38 73
Subordinated notes due 1998 through 2001, average interest rate
9.9% in 1995 and 1994......................................... 92 92
Other subsidiaries--
Notes due 1996 through 2010, average effective interest rate
12.7% in 1995 and 1994 (net of $27 million in 1995 and $28
million in 1994 of unamortized discount)...................... 28 30
------ ------
707 944
Less--Current maturities......................................... 158 239
------ ------
549 705
------ ------
$3,751 $3,570
====== ======
</TABLE>
At December 31, 1995 and 1994, approximately $72 million and $154 million,
respectively, of gross plant, property and equipment was pledged as collateral
to secure $30 million and $31 million, respectively, principal amounts of
long-term debt.
50
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The aggregate maturities and sinking fund requirements applicable to the
issues outstanding at December 31, 1995, are $420 million, $521 million, $845
million, $255 million and $181 million for 1996, 1997, 1998, 1999 and 2000,
respectively.
Short-Term Debt
Tenneco uses commercial paper, lines of credit and overnight borrowings to
finance its short-term capital requirements. Information regarding short-term
debt for the years ended December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
COMMERCIAL CREDIT COMMERCIAL CREDIT
PAPER AGREEMENTS* PAPER AGREEMENTS*
---------- ----------- ---------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Outstanding borrowings at end of
year............................ $346 $101 $ -- $ 44
Weighted average interest rate on
outstanding borrowings at end of
year............................ 6.2% 7.2% -- 9.8%
Approximate maximum month-end
outstanding borrowings during
year............................ $615 $486 $362 $1,023
Approximate average month-end
outstanding borrowings during
year............................ $109 $103 $164 $ 375
Weighted average interest rate on
approximate average month-end
outstanding borrowings during
year............................ 6.2% 8.6% 4.6% 6.4%
</TABLE>
- --------
* Includes borrowings under both committed credit facilities and uncommitted
lines of credit and similar arrangements.
Tenneco had other short-term borrowings outstanding of $41 million at
December 31, 1995, and $8 million at December 31, 1994.
Financing Arrangements
As of December 31, 1995, Tenneco and its subsidiaries had arranged committed
credit facilities of $2.5 billion:
<TABLE>
<CAPTION>
COMMITTED CREDIT FACILITIES(A)
--------------------------------
TERM COMMITMENTS UTILIZED AVAILABLE
--------- ----------- -------- ---------
(MILLIONS)
<S> <C> <C> <C> <C>
Tenneco Inc. credit agreements........ 1996-1999 $2,400(b) $346(c) $2,054
Subsidiaries credit agreements........ Various 122 47 75
------ ---- ------
$2,522 $393 $2,129
====== ==== ======
</TABLE>
- --------
Notes:(a) Tenneco and its subsidiaries generally are required to pay commitment
fees on the unused portion of the total commitment and facility fees
on the total commitment.
(b) In 1996, $400 million of these agreements expire; the remainder are
committed through 1999. Of the total committed long-term credit
facilities, $400 million are available to both Tenneco Inc. and
Tenneco Finance.
(c) Tenneco's committed long-term credit facilities support its
commercial paper borrowings; consequently, the amount available
under the committed long-term credit facilities is reduced by
outstanding commercial paper borrowings.
51
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Restrictions on the Payment of Dividends
Tenneco Inc.'s credit agreements contain provisions that limit the amount of
dividends paid on its common stock. At December 31, 1995, under the most
restrictive provisions contained in these credit agreements, Tenneco Inc. had
in excess of $300 million available for the payment of dividends.
Tennessee Gas Pipeline Company ("Tennessee"), a wholly-owned consolidated
subsidiary, is restricted as to the payment of dividends under certain of its
notes and debentures. Under the provisions of such agreements, Tennessee had
approximately $3.7 billion of unrestricted retained earnings at December 31,
1995 for payment of dividends. The payment of unrestricted amounts by Tennessee
would not affect the amount of retained earnings of Tenneco Inc. available for
dividends on common stock.
5. FINANCIAL INSTRUMENTS
The carrying and estimated fair values of Tenneco's financial instruments by
class at December 31, 1995 and 1994, were as follows:
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------ -------- ------
(MILLIONS)
ASSETS (LIABILITIES)
<S> <C> <C> <C> <C>
Asset and Liability Instruments
Cash and temporary cash investments........ $ 354 $ 354 $ 405 $ 405
Receivables (customer and long-term)....... 1,356 1,356 2,604 2,604
Accounts payable (trade)................... (1,102) (1,102) (1,053) (1,053)
Short-term debt (excluding current
maturities)............................... (488) (488) (52) (52)
Long-term debt (including current
maturities)............................... (4,171) (4,759) (4,063) (4,286)
Instruments With Off-Balance-Sheet Risk
Derivative
Interest rate swaps:
In a net receivable position........... -- 10 -- --
In a net payable position.............. -- (22) -- (30)
Foreign currency contracts............... 5 4 15 20
Natural gas swaps, futures and options... -- 3 -- (5)
Non-derivative
Financial guarantees..................... -- (30) -- (50)
</TABLE>
Asset and Liability Instruments
The fair value of cash and temporary cash investments, receivables, accounts
payable, and short-term debt in the above table was considered to be the same
as or was not determined to be materially different from the carrying amount.
At December 31, 1995 and 1994, respectively, Tenneco's aggregate customer and
long-term receivable balance was concentrated by industry segment as follows:
Tenneco Automotive, 28% and 15%; Tenneco Energy, 14% and 11%; Tenneco
Packaging, 9% and 11%; Newport News Shipbuilding, 9% and 8%; United States
retail farm and construction equipment receivables held by Tenneco Credit
Corporation, 33% and 30%; all other amounts were not significant.
Long-term debt--The fair value of fixed-rate long-term debt was based on the
market value of debt with similar maturities and interest rates; the carrying
amount of floating-rate debt was assumed to approximate its fair value.
52
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Instruments With Off-Balance-Sheet Risk
Derivative
Interest Rate Swaps--The fair value of interest rate swaps was based on the
cost that would have been incurred to buy out those swaps in a loss position
and the consideration that would have been received to terminate those swaps in
a gain position. At December 31, 1995 and 1994, Tenneco was a party to swaps
with a notional value of $1.5 billion and $1.6 billion, respectively. At
December 31, 1995, $750 million were in a net receivable position and $795
million were in a net payable position. At December 31, 1994, the entire $1.6
billion was in a net payable position. Notional amounts associated with these
swaps do not represent future cash payment requirements. These contractual
amounts are only used as a base to measure amounts to be exchanged at specified
settlement dates.
Consistent with its overall policy, Tenneco uses these instruments from time
to time only to hedge known, quantifiable risks arising from fluctuations in
interest rates. The counterparties to these interest rate swaps are major
international financial institutions. The risk associated with counterparty
default on interest rate swaps is measured as the cost of replacing, at the
prevailing market rates, those contracts in a gain position. In the event of
non-performance by the counterparties, the cost to replace outstanding interest
rate swaps at December 31, 1995 and 1994, would not have been material.
Foreign Currency Contracts--Tenneco utilizes foreign exchange forward
contracts and foreign currency interest rate swaps to hedge certain translation
effects of Tenneco's investment in net assets in certain foreign subsidiaries.
Pursuant to these arrangements, Tenneco recognized aggregate after-tax
translation gains (losses) of $3 million, $(2) million and $5 million for 1995,
1994 and 1993, respectively, which have been included in the balance sheet
caption, "Cumulative translation adjustments."
In the normal course of business, Tenneco and its foreign subsidiaries also
routinely enter into various foreign currency forward purchase and sale
contracts to hedge the transaction effect of exchange rate movements on
receivables and payables denominated in foreign currencies. These foreign
currency contracts generally mature in one year or less.
In managing its foreign currency exposures, Tenneco identifies naturally
occurring offsetting positions and then hedges residual exposures. The
following table summarizes by major currency the contractual amounts of foreign
currency contracts utilized by Tenneco:
<TABLE>
<CAPTION>
NOTIONAL AMOUNT
-----------------------------------
DECEMBER 31,
DECEMBER 31, 1995 1994
------------------- ---------------
PURCHASE SELL PURCHASE SELL
---------- -------- -------- ------
(MILLIONS)
<S> <C> <C> <C> <C>
Foreign currency contracts (in US$):
Australian Dollars....................... $ 1 $202 $ 94 $ 26
British Pounds........................... 81 125 277 964
Canadian Dollars......................... 23 50 81 74
French Francs............................ 44 16 94 15
U.S. Dollars............................. 240 81 244 377
Other.................................... 127 83 274 123
-------- -------- ------ ------
$ 516 $ 557 $1,064 $1,579
======== ======== ====== ======
</TABLE>
Based on exchange rates at December 31, 1995 and 1994, the cost of replacing
these contracts in the event of non-performance by the counterparties would not
have been material.
53
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Price Risk Management--Tenneco uses exchange-traded futures and option
contracts and over-the-counter option and swap contracts to reduce its exposure
to fluctuations in the prices of natural gas. The fair value of these contracts
is based upon the estimated consideration that would be received to terminate
those contracts in a gain position and the estimated cost that would be
incurred to terminate those contracts in a loss position. As of December 31,
1995 and 1994, these contracts, maturing through 1997 and 1996, respectively,
had an absolute notional contract quantity of 321 Bcf and 187 Bcf,
respectively. Since the contracts described above are designated as hedges
whose fair values correlate to price movements of natural gas, any gains or
losses on the contracts resulting from market changes will be offset by losses
or gains on the hedged transactions. Tenneco has off-balance sheet risk of
credit loss in the event of non-performance by counterparties to all over-the-
counter contracts. However, Tenneco does not anticipate non-performance by the
counterparties.
Non-derivative
Guarantees--At December 31, 1995 and 1994, Tenneco had guaranteed payment and
performance of approximately $30 million and $50 million, respectively,
primarily with respect to letters of credit and other guarantees supporting
various financing and operating activities.
6. FEDERAL ENERGY REGULATORY COMMISSION ("FERC") REGULATORY MATTERS
Restructuring Proceedings
Pursuant to Order 636 issued by the FERC on April 8, 1992, Tennessee
implemented revisions to its tariff, effective on September 1, 1993, which
restructured its transportation, storage and sales services to convert
Tennessee from primarily a merchant to primarily a transporter of gas. As a
result of this restructuring, Tennessee's gas sales declined while certain
obligations to producers under long-term gas supply contracts continued,
causing Tennessee to incur significant restructuring transition costs. Pursuant
to the provisions of Order 636 allowing for the recovery of transition costs
related to the restructuring, Tennessee has made filings to recover gas supply
realignment ("GSR") costs resulting from remaining gas purchase obligations,
costs related to its Bastian Bay facilities, the remaining unrecovered balance
of purchased gas ("PGA") costs and the "stranded" cost of Tennessee's
continuing contractual obligation to pay for capacity on other pipeline systems
("TBO costs").
Tennessee's filings to recover costs related to its Bastian Bay facilities
have been rejected by the FERC based on the continued use of the gas production
from the field; however, the FERC recognized the ability of Tennessee to file
for the recovery of losses upon disposition of these assets. Tennessee has
filed for appellate review of the FERC actions and is confident that the
Bastian Bay costs will ultimately be recovered as transition costs under Order
636; the FERC has not contested the ultimate recoverability of these costs.
The filings implementing Tennessee's recovery mechanisms for the following
transition costs were accepted by the FERC effective September 1, 1993;
recovery is subject to refund pending FERC review and approval for eligibility:
1) direct-billing of unrecovered PGA costs to its former sales customers over a
twelve-month period; 2) recovery of TBO costs, which Tennessee is obligated to
pay under existing contracts, through a surcharge from firm transportation
customers, adjusted annually; and 3) GSR cost recovery of 90% of such costs
over a period of up to 36 months from firm transportation customers and
recovery of 10% of such costs from interruptible transportation customers over
a period of up to 60 months.
54
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Following negotiations with its customers, Tennessee filed in July 1994 with
the FERC a Stipulation and Agreement (the "PGA Stipulation"), which provides
for the recovery of PGA costs of approximately $100 million and the recovery of
costs associated with the transfer of storage gas inventory to new storage
customers in Tennessee's restructuring proceeding. The PGA Stipulation
eliminates all challenges to the PGA costs, but establishes a cap on the
charges that may be imposed upon former sales customers. On November 15, 1994,
the FERC issued an order approving the PGA Stipulation and resolving all
outstanding issues. On April 5, 1995, the FERC issued its order on rehearing
affirming its initial approval of the PGA Stipulation. Tennessee implemented
the terms of the PGA Stipulation and made refunds in May 1995. The refunds had
no material effect on Tenneco's reported net income. The orders approving the
PGA Stipulation have been appealed to the D.C. Circuit Court of Appeals by
certain customers. Tennessee believes the FERC orders approving the PGA
Stipulation will be upheld on appeal.
Tennessee is recovering through a surcharge, subject to refund, TBO costs
formerly incurred to perform its sales function, pending FERC review of data
submitted by Tennessee. The FERC subsequently issued an order requiring
Tennessee to refund certain costs from this surcharge. Tennessee is appealing
this decision and believes such appeal will likely be successful.
With regard to Tennessee's GSR costs, Tennessee, along with three other
pipelines, executed four separate settlement agreements with Dakota
Gasification Company and the U.S. Department of Energy and initiated four
separate proceedings at the FERC seeking approval to implement the settlement
agreements. The settlement resolved litigation concerning purchases made by
Tennessee of synthetic gas produced from the Great Plains Coal Gasification
plant ("Great Plains"). The FERC previously ruled that the costs related to the
Great Plains project are eligible for recovery through GSR and other special
recovery mechanisms and that the costs are eligible for recovery for the
duration of the term of the original gas purchase agreements. On October 18,
1994, the FERC consolidated the four proceedings and set them for hearing
before an administrative law judge ("ALJ"). The hearing, which concluded in
July 1995, was limited to the issue of whether the settlement agreements are
prudent. The ALJ concluded, in his initial decision issued in December 1995,
that the settlement was imprudent. Tennessee has filed exceptions to this
initial decision and believes that this decision will not impair Tennessee's
recovery of the costs resulting from this contract. The FERC has committed to
issuing a final order by December 31, 1996.
Also related to Tennessee's GSR costs, on October 14, 1993, Tennessee was
sued in the State District Court of Ector County, Texas, by ICA Energy, Inc.
("ICA") and TransTexas Gas Corporation ("TransTexas"). In that suit, ICA and
TransTexas contended that Tennessee had an obligation to purchase gas
production which TransTexas thereafter attempted to add unilaterally to the
reserves originally dedicated to a 1979 gas contract. An amendment to the
pleading seeks $1.5 billion from Tennessee for alleged damages caused by
Tennessee's refusal to purchase gas produced from the TransTexas leases
covering the new production and lands. Neither ICA nor TransTexas were original
parties to that contract. However, they contend that any stranger acquiring a
fractional interest in the original committed reserves thereby obtains a right
to add to the contract unlimited volumes of gas production from locations in
South Texas. Tennessee filed a motion for summary judgment, asserting that the
Texas statutes of frauds precluded the plaintiffs from adding new production or
acreage to the contract. On May 4, 1995, the trial court granted Tennessee's
motion for summary judgment; the plaintiffs have filed a notice of appeal.
Thereafter, ICA and TransTexas filed a motion for summary judgment on a
separate issue involving the term "committed reserves" and whether Tennessee
has a contractual obligation to purchase gas produced from a lease not
described in the gas contract. On November 8, 1995, the trial court granted
ICA's and TransTexas' motion in part. That order, which would be finalized upon
conclusion of the trial, also held that ICA's and TransTexas' rights are
subject to certain limitations of the Texas Business and Commerce Code. In
addition to these defenses, which are to be resolved at trial, Tennessee has
other defenses which it has asserted and intends to pursue. Tennessee has
55
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
filed a Motion to Clarify the November 8, 1995 order together with a new motion
for partial summary judgment concerning the committed reserve issue. The
November 8, 1995 ruling does not affect the trial court's previous May 4, 1995
order granting summary judgment to Tennessee.
Tennessee has been engaged in separate settlement and contract reformation
discussions with holders of certain gas purchase contracts who have sued
Tennessee. Although Tennessee believes that its defenses in the underlying gas
purchase contract actions are meritorious, Tennessee accrued amounts in the
first quarter of 1995 which it believes are adequate to cover the resolution of
these matters. On August 1, 1995, the Texas Supreme Court affirmed a ruling of
the Court of Appeals favorable to Tennessee in one of these matters and
indicated that it would remand the case to the trial court. Motions for
rehearing have been filed by the producers. As of the date hereof, the court
had not ruled on those motions and mandate had not been issued.
As of December 31, 1995, Tennessee has deferred GSR costs yet to be recovered
from its customers of approximately $462 million, net of $316 million
previously recovered from its customers, subject to refund. A proceeding before
a FERC ALJ is scheduled to commence in early 1996 to determine whether
Tennessee's GSR costs are eligible for cost recovery. The FERC has generally
encouraged pipelines to settle such issues through negotiations with customers.
Although Order 636 provides for complete recovery by pipelines of eligible and
prudently incurred transition costs, certain customers have challenged the
prudence and eligibility of Tennessee's GSR costs and Tennessee has engaged in
settlement discussions with its customers concerning the amount of such costs
in response to the FERC and customer statements acknowledging the desirability
of such settlements.
Given the uncertainty over the results of ongoing discussions between
Tennessee and its customers related to the recovery of GSR costs and the
uncertainty related to predicting the outcome of its gas purchase contract
reformation efforts and the associated litigation, Tenneco is unable to predict
the timing or the ultimate impact that the resolution of these issues will have
on its consolidated financial position or results of operations.
Rate Proceedings
On December 30, 1994, Tennessee filed for a general rate increase (the "1995
Rate Case"). On January 25, 1995, the FERC accepted the filing, suspended its
effectiveness for the maximum period of five months pursuant to normal
regulatory process, and set the matter for hearing. On July 1, 1995, Tennessee
began collecting rates, subject to refund, reflecting an $87 million increase
in Tennessee's annual revenue requirement. Settlement discussions with the FERC
staff and customers regarding 1995 Rate Case issues, including structural rate
design and increased revenue requirements, are ongoing and Tennessee is
reserving revenues it believes adequate to cover any refunds that may be
required upon final settlement of this proceeding. A hearing is scheduled to
commence in March 1996.
56
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. INCOME TAXES
The domestic and foreign components of income from continuing operations
before income taxes are as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
----------------
1995 1994 1993
------ ---- ----
(MILLIONS)
<S> <C> <C> <C>
U.S. income before income taxes......................... $ 907 $766 $530
Foreign income before income taxes...................... 123 206 140
------ ---- ----
Income before income taxes.............................. $1,030 $972 $670
====== ==== ====
</TABLE>
Following is a comparative analysis of the components of consolidated income
tax expense applicable to continuing operations:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
---------------
1995 1994 1993
---- ---- ----
(MILLIONS)
<S> <C> <C> <C>
Current--
U.S.................................................... $ 1 $(18) $ 50
State and local........................................ 45 42 56
Foreign................................................ 66 98 30
---- ---- ----
112 122 136
---- ---- ----
Deferred--
U.S.................................................... 150 211 121
State and local........................................ 10 14 11
Foreign................................................ 1 (46) (11)
---- ---- ----
161 179 121
---- ---- ----
Income tax expense....................................... $273 $301 $257
==== ==== ====
</TABLE>
Following is a reconciliation of income taxes computed at the U.S. federal
income tax rate (35% for all years presented) to the income tax expense from
continuing operations reflected in the Statements of Income:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
----------------
1995 1994 1993
---- ---- ----
(MILLIONS)
<S> <C> <C> <C>
Tax expense computed at the U.S. federal income tax rate..... $360 $340 $235
Increases (reductions) in income tax expense resulting from:
Foreign income taxed at different rates and foreign losses
with no tax benefit....................................... 14 30 26
Permanent differences on sale of businesses................ 18 (48) (6)
State and local taxes on income, net of U.S. federal income
tax benefit............................................... 36 36 43
U.S. federal income tax rate change........................ -- -- 8
Realization of unrecognized deferred tax assets............ (174) (42) (37)
Other...................................................... 19 (15) (12)
---- ---- ----
Income tax expense........................................... $273 $301 $257
==== ==== ====
</TABLE>
57
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The components of Tenneco's net deferred tax liability at December 31, 1995
and 1994, were as follows:
<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Deferred tax assets--
Tax loss carryforwards....................................... $ 246 $ 356
Postretirement benefits other than pensions.................. 181 181
GSR reserve.................................................. 141 --
Environmental reserve........................................ 76 83
Other........................................................ 135 183
Valuation allowance.......................................... (200) (374)
------ ------
Net deferred tax asset..................................... 579 429
------ ------
Deferred tax liabilities--
Tax over book depreciation................................... 801 798
Pension...................................................... 175 163
Asset related to GSR costs of operations regulated by the
FERC........................................................ 141 --
Long-term shipbuilding contracts............................. 62 54
Debt related items........................................... 43 44
Book versus tax gains and losses on asset disposals.......... 86 475
Other........................................................ 194 282
------ ------
Total deferred tax liability............................... 1,502 1,816
------ ------
Net deferred tax liability..................................... $ 923 $1,387
====== ======
</TABLE>
As reflected by the valuation allowance in the table above, Tenneco had
potential tax benefits of $200 million and $374 million at December 31, 1995
and 1994, respectively, which were not recognized in the Statements of Income
when generated. These benefits resulted primarily from tax loss carryforwards
which are available to reduce future tax liabilities. During 1995, Tenneco
reduced its deferred tax asset valuation allowance due to the recognition of
tax loss carryforwards utilized to offset income taxes payable on asset and
investment dispositions.
At December 31, 1995, Tenneco had tax benefits of $163 million related to
U.S. capital loss carryforwards which expire in 1999 and $83 million from
foreign net operating loss carryforwards which will carry forward indefinitely.
8. INVESTMENT IN AFFILIATED COMPANIES
Tenneco holds investments in various affiliates which are accounted for on
the equity method of accounting. The principal equity method investments during
1995 and 1994 were Tenneco's investment in Case common stock and its 50%
investment in Kern River. As previously discussed, during 1995, Tenneco reduced
its total ownership in Case from 44% to 21% and sold its investment in Kern
River. Additionally, Case was not accounted for by the equity method of
accounting until December 1994, when Tenneco's total ownership in Case was
reduced below 50%. At December 31, 1995, the quoted market value of Tenneco's
21% investment in Case was approximately $694 million.
At December 31, 1995, Tenneco's retained earnings included equity in
undistributed earnings and cumulative translation adjustments from equity
method investments of $113 million and $(4) million, respectively; at December
31, 1994, the corresponding amounts were $154 million and $(29) million,
respectively. Dividends and distributions received from affiliates accounted
for on the equity method were $60 million, $50 million and $45 million during
1995, 1994 and 1993, respectively.
58
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Summarized financial information of Tenneco's proportionate share of 50% or
less owned companies accounted for by the equity method of accounting as of
December 31, 1995, 1994 and 1993, and for the years then ended is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ----
(MILLIONS)
<S> <C> <C> <C>
Current assets.............................................. $ 683 $1,249 $161
Non-current assets.......................................... 1,103 2,133 970
Short-term debt............................................. 336 278 36
Other current liabilities................................... 338 676 100
Long-term debt.............................................. 341 1,147 510
Other non-current liabilities............................... 151 284 15
Equity in net assets........................................ 620 997 470
Revenues and other income................................... 1,975 738 581
Costs and expenses.......................................... 1,799 684 529
Net income.................................................. 176 54 52
</TABLE>
- --------
Note: The above table reflects Tenneco's 44% ownership in Case from December
1994 through July 1995, and the remaining 21% ownership in Case for
August 1995 and subsequent periods. In addition, balance sheet amounts
related to Kern River are not included in the table above as of December
31, 1995 due to the sale discussed above.
9. COMMON STOCK
Tenneco Inc. has authorized 350 million shares ($5.00 par value) of common
stock, and 191,351,615 and 191,335,193 shares were issued at December 31, 1995
and 1994, respectively. At December 31, 1995, the SECT held 4,358,084 shares
which are included in the issued shares quoted above. Treasury stock held by
Tenneco was 16,422,619 and 3,617,510 shares at the respective dates.
Stock Repurchase Plans
Tenneco completed the $500 million common stock repurchase program initiated
in December 1994. In 1995, Tenneco announced two additional repurchase
programs, one for up to 3 million shares and another for 2.5 million shares.
Purchases executed through the programs were made in the open market or in
negotiated purchases. Under these programs, approximately 14.3 million shares
have been acquired at a total cost of $646 million and are included in "Shares
held as treasury stock, at cost" on the balance sheet at December 31, 1995.
Reserved
At December 31, 1995, the shares of Tenneco Inc. common stock reserved for
issuance were as follows:
<TABLE>
<S> <C>
ORIGINAL ISSUE SHARES
Restricted Stock Plan........................................... 323,706
Stock Option Plan............................................... 3,241,573
Performance Unit Plan........................................... 1,654,494
Other........................................................... 35,820
---------
5,255,593
=========
TREASURY STOCK
Dividend Reinvestment Plan...................................... 640,456
=========
</TABLE>
59
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Stock Plans
1994 Tenneco Inc. Stock Ownership Plan--In May 1994, Tenneco adopted the
Stock Ownership Plan effective as of December 8, 1993. This plan provides
Tenneco the latitude to grant a variety of awards, such as common stock, stock
equivalent units, dividend equivalents, performance units, stock appreciation
rights ("SARs") and stock options, to officers and key employees of the Tenneco
companies. The plan requires that options and SARs be granted at not less than
the fair market value of a share of common stock on the grant date. The plan
also requires that no award granted shall vest in less than six months after
the grant date. The Company can issue 8,400,000 shares of common stock under
this plan, which will terminate December 31, 1998. At December 31, 1995,
620,030 restricted shares and 19,705 restricted units at an average price of
$48.18 per share and 110,500 stock equivalent units were outstanding under this
plan at an average price of $49.63 per share.
1988 Key Employee Restricted Stock Plan--At December 31, 1995, 524,688
restricted shares and 11,895 restricted units were outstanding under this plan
at an average price of $43.82 per share. These awards generally require, among
other things, that the employee remain an employee of Tenneco during the
restriction period. This plan was superseded by the 1994 Tenneco Inc. Stock
Ownership Plan.
Under another arrangement, 300 shares (250 shares for years prior to 1995) of
restricted stock or restricted units are issued annually to each member of the
Board of Directors who is not also an officer of Tenneco. At December 31, 1995,
13,000 restricted shares and no restricted units were outstanding under this
program at an average price of $45.51 per share.
Options and Stock Appreciation Rights--Tenneco Inc. has granted stock options
and stock appreciation rights to key employees under a prior plan. The options
and SARs became exercisable over four years and lapse after ten years from the
date of grant. The prior plan was superseded by the 1994 Tenneco Inc. Stock
Ownership Plan.
The following table reflects the status and activity for all stock options
issued by Tenneco Inc., including those outside the option plans discussed
above, for the periods indicated:
<TABLE>
<CAPTION>
1995 1994 1993
----------------------- ----------------------- ---------------------
SHARES SHARES SHARES
UNDER UNDER UNDER
STOCK OPTIONS OPTION OPTION PRICES OPTION OPTION PRICES OPTION OPTION PRICES
------------- --------- ------------- --------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning
of year................ 2,084,942 $36.44-$57.50 434,114 $36.44-$53.13 434,379 $34.94-$53.13
Granted--Options........ 1,493,505 $42.88-$49.13 1,718,320 $45.75-$57.50 75,000 $48.69
Exercised--Options...... 2,700 $39.06-$42.88 2,250 $39.06-$41.13 3,942 $34.94-$41.13
--SARs............... 45,215 $39.06-$42.13 28,832 $39.06-$48.38 68,347 $34.94-$48.38
Cancelled............... 511,416 -- 36,410 -- 2,976 --
--------- ------------- --------- ------------- ------- -------------
Outstanding, end of
year................... 3,019,116 $36.44-$53.94 2,084,942 $36.44-$57.50 434,114 $36.44-$53.13
========= ============= ========= ============= ======= =============
Exercisable at end of
year................... 846,889 $36.44-$53.94 471,732 $36.44-$53.13 275,780 $36.44-$53.13
========= ============= ========= ============= ======= =============
</TABLE>
For the years ended December 31, 1995, 1994 and 1993, compensation expense
for these stock plans was not material.
Employee Stock Purchase Plan--In June 1992, Tenneco initiated an Employee
Stock Purchase Plan. The Plan allows U.S. and Canadian Tenneco employees to
purchase Tenneco Inc. common stock at a 15% discount. Each year employees in
the plan may purchase shares with a discounted value not to exceed $21,250.
Tenneco reserved 5,000,000 shares of treasury stock to be issued through this
plan. At December 31, 1995, 1,844,461 shares had been issued to participants
and the remaining shares are held by the SECT for issuance to employees in this
plan.
60
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Stock Employee Compensation Trust
In November 1992, Tenneco established the SECT to fund a portion of its
obligations arising from its various employee compensation and benefit plans.
Tenneco issued 12,000,000 shares of treasury stock to the SECT in exchange for
a promissory note of $432 million that bears interest at the rate of 7.8% per
annum. The SECT has a five-year life during which it will utilize the common
stock to satisfy those obligations. At December 31, 1995, 7,641,916 shares had
been utilized.
Shareholder Rights Plan
In 1988, Tenneco Inc. adopted a Shareholder Rights Plan ("the Plan") to deter
coercive takeover tactics and to prevent a potential acquiror from gaining
control of Tenneco without offering a fair price to all Tenneco Inc.
shareholders. Under the Plan, each outstanding share of Tenneco Inc. common
stock received one Purchase Right, exercisable at $130, subject to adjustment.
In the event a person or group acquires 20% or more of the outstanding Tenneco
Inc. common stock other than pursuant to an offer for all shares of such common
stock which is fair and in the best interests of Tenneco Inc. and its
shareholders, or has in the judgment of the Tenneco Inc. Board of Directors
acquired a substantial amount of common stock under certain motives deemed
adverse to Tenneco's best interests, each Purchase Right entitles the holder to
purchase shares of common stock or other securities of Tenneco Inc. or, under
certain circumstances, of the acquiring person, having a value of twice the
exercise price. The Purchase Rights, under certain circumstances, are
redeemable by Tenneco Inc. at a price of $.02 per Purchase Right. The Plan is
scheduled to terminate in 1998.
Dividend Reinvestment and Stock Purchase Plan
Under the Tenneco Inc. Dividend Reinvestment and Stock Purchase Plan, holders
of Tenneco Inc. common stock and $7.40 preferred stock may apply their cash
dividends and optional cash investments to the purchase of shares of common
stock.
10. PREFERRED STOCK
At December 31, 1995, Tenneco Inc. had authorized 15,000,000 shares of
preferred stock. In addition, Tenneco Inc. has an authorized class of stock
consisting of 50,000,000 shares of junior preferred stock, without par value,
none of which has been issued. Tenneco has reserved 3,500,000 shares of junior
preferred stock for the Shareholder Rights Plan.
The preferred stock issues outstanding at December 31, 1995, are as follows:
<TABLE>
<CAPTION>
SHARES REDEMPTION PERIODS OPTIONAL
ISSUED AND ------------------- REDEMPTION
ISSUE OUTSTANDING OPTIONAL MANDATORY PRICE
----- ----------- -------- --------- ----------
<S> <C> <C> <C> <C>
$7.40 preferred (no par value)....... 587,270 1996-1998 1996-1998 $100
$4.50 preferred (no par value)....... 803,723 1996-1999 1999 $100
---------
1,390,993
=========
</TABLE>
In December 1991, Tenneco issued 17,870,350 Depositary Shares, each
representing one-half of a share of a new series of cumulative preferred stock
designated as Series A preferred stock. On December 16, 1994, Tenneco exercised
its option to call all of the outstanding shares, which were converted into
shares of Tenneco Inc. common stock. In addition, $11 million was paid for
dividends on the Series A preferred stock that were accrued but unpaid at the
conversion date.
61
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The $7.40 and $4.50 preferred stock issues have a mandatory redemption value
of $100 per share (an aggregate of $139 million and $159 million at December
31, 1995 and 1994, respectively). Tenneco recorded these preferred stocks at
their fair value at the date of original issue (an aggregate of $250 million)
and is making periodic accretions of the excess of the redemption value over
the fair value at the date of issue. Such accretions are included in the income
statement caption "Preferred stock dividends" as a reduction of net income to
arrive at net income to common stock.
During 1993, Tenneco retired the remainder of a variable rate preferred stock
issue at the redemption price of $100 per share, or $17 million.
The aggregate maturities applicable to preferred stock issues outstanding at
December 31, 1995, are $20 million for each of the years 1996 and 1997, $19
million for 1998 and $80 million for 1999.
Changes in Preferred Stock with Mandatory Redemption Provisions*
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------ --------- ------ --------- ------
(MILLIONS EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Balance January 1........ 1,586,764 $147 1,782,508 $163 2,084,796 $191
Shares redeemed........ (195,771) (20) (195,744) (20) (302,288) (31)
Accretion of excess of
redemption value over
fair value at date of
issue................. -- 3 -- 4 -- 3
--------- ---- --------- ---- --------- ----
Balance December 31...... 1,390,993 $130 1,586,764 $147 1,782,508 $163
========= ==== ========= ==== ========= ====
</TABLE>
- --------
* For additional information on Series A preferred stock see Statements of
Changes in Shareowners' Equity.
11. MINORITY INTEREST
At both December 31, 1995 and 1994, Tenneco reported minority interest in the
balance sheet of $320 million. At December 31, 1995, $293 million of minority
interest resulted from the December 1994 sale by Tenneco of a 25% preferred
stock interest in Tenneco International Holding Corp. ("TIHC") to a financial
investor. TIHC is a separate legal entity from Tenneco Inc. and holds certain
assets including the capital stock of Tenneco Canada Inc., Monroe Europe N.V.,
Monroe Australia Proprietary Limited, Walker France S.A. and other subsidiaries
included in the Tenneco Automotive segment. TIHC also holds financial
obligations of Tenneco or guaranteed by Tenneco. For financial reporting
purposes, the assets, liabilities and earnings of TIHC and its subsidiaries
have continued to be consolidated in Tenneco's financial statements, and the
investor's preferred stock interest has been recorded as "Minority interest" in
the balance sheet.
Dividends on the TIHC preferred stock are based on the issue price ($300
million) times a rate per annum equal to 1.12% over LIBOR and are payable
quarterly in arrears on the last business day of each quarter commencing on
March 31, 1995. For 1995, the weighted average rate paid on TIHC preferred
stock was 7.30%. Additionally, beginning in 1996, the holder of the 12,000,000
shares of preferred stock will be entitled to receive, when and if declared by
the Board of Directors of TIHC, participating dividends based on the operating
income growth rate of TIHC. For financial reporting purposes, dividends paid by
TIHC to its financial investors have been recorded in Tenneco's income
statement as "Minority interest."
62
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
12. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Postretirement Benefits
Tenneco has postretirement health care and life insurance plans which cover
substantially all of its domestic employees. For salaried employees, the plans
cover employees retiring from Tenneco on or after attaining age 55 who have had
at least 10 years service with Tenneco after attaining age 45. For hourly
employees, the postretirement benefit plans generally cover employees who
retire pursuant to one of Tenneco's hourly employee retirement plans. All of
these benefits may be subject to deductibles, copayment provisions and other
limitations, and Tenneco has reserved the right to change these benefits.
The majority of Tenneco's postretirement benefit plans are not funded. In
June 1994, two trusts were established to fund postretirement benefits for
certain plan participants of the Tenneco Energy segment. The contributions are
collected from customers in FERC approved rates. As of December 31, 1995,
cumulative contributions were $10 million. Plan assets consist principally of
fixed income securities.
The funded status of the postretirement benefit plans reconciles with amounts
recognized on the balance sheet at December 31, 1995 and 1994, as follows
(Note):
<TABLE>
<CAPTION>
1995 1994
----- -----
(MILLIONS)
<S> <C> <C>
Actuarial present value of accumulated postretirement benefit
obligation at September 30:
Retirees....................................................... $ 512 $ 510
Fully eligible active plan participants........................ 48 46
Other active plan participants................................. 64 61
----- -----
Total accumulated postretirement benefit obligation.............. 624 617
Plan assets at fair value at September 30........................ 3 2
----- -----
Accumulated postretirement benefit obligation in excess of plan
assets at September 30.......................................... (621) (615)
Claims paid during the fourth quarter............................ 20 16
Unrecognized reduction of prior service obligations resulting
from plan amendments............................................ (100) (107)
Unrecognized net loss resulting from plan experience and changes
in actuarial assumptions........................................ 164 142
----- -----
Accrued postretirement benefit cost at December 31............... $(537) $(564)
===== =====
</TABLE>
- --------
Note: The accrued postretirement benefit cost has been recorded based upon
certain actuarial estimates as described below. Those estimates are
subject to revision in future periods given new facts or circumstances.
In conjunction with the Case IPO in June 1994, active Case salaried employees
were transferred from the Tenneco Inc. plans to new Case salaried plans, and
Case hourly retirees were transferred from the Case hourly plans to the Tenneco
Inc. plans. Amendments to reduce the cost of providing future benefits for Case
hourly retirees were reflected at that time.
In November 1994, through a secondary offering of Case stock, Tenneco's
ownership in Case dropped below 50%. Therefore, all Case liabilities for the
new Case plans are excluded from the Tenneco disclosure information beginning
in 1994. Benefit costs for these plans have been included up to the date of the
secondary offering (for all of 1993 and 11 months of 1994).
63
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The net periodic postretirement benefit cost from continuing operations for
the years 1995, 1994 and 1993 consist of the following components:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(MILLIONS)
<S> <C> <C> <C>
Service cost for benefits earned during the year.......... $ 6 $11 $12
Interest cost on accumulated postretirement benefit
obligation............................................... 49 53 56
Net amortization of unrecognized amounts.................. (13) (12) (4)
--- --- ---
Net periodic postretirement benefit cost.................. $42 $52 $64
=== === ===
</TABLE>
Tenneco recorded a pre-tax loss resulting from curtailments, settlements and
special termination benefits under these plans of $3 million in 1994 related
primarily to restructuring at Case.
The initial weighted average assumed health care cost trend rate used in
determining the 1995, 1994 and 1993 accumulated postretirement benefit
obligation was 7%, 8% and 9%, respectively, declining to 5% in 1997 and
remaining at that level thereafter.
Increasing the assumed health care cost trend rate by one percentage-point in
each year would increase the 1995, 1994 and 1993 accumulated postretirement
benefit obligations by approximately $36 million, $34 million and $47 million,
respectively, and would increase the aggregate of the service cost and interest
cost components of the net postretirement benefit cost for 1995, 1994 and 1993
by approximately $4 million, $5 million and $10 million, respectively.
The discount rates (which are based on long-term market rates) used in
determining the 1995, 1994 and 1993 accumulated postretirement benefit
obligations were 7.75%, 8.25% and 7.50%, respectively.
Postemployment Benefits
Tenneco adopted FAS No. 112, "Employers' Accounting for Postemployment
Benefits," in the first quarter of 1994. This new accounting rule requires
employers to account for postemployment benefits for former or inactive
employees after employment but before retirement on the accrual basis rather
than the "pay-as-you-go" basis. Implementation of this new rule reduced 1994
net income by $39 million, or $.22 per share, net of income tax benefits of $26
million, which was reported as the cumulative effect of a change in accounting
principle.
13. PENSION PLANS
Tenneco has retirement plans which cover substantially all of its employees.
Benefits are based on years of service and, for most salaried employees, on
final average compensation. Tenneco's funding policies are to contribute to the
plans amounts necessary to satisfy the funding requirements of federal laws and
regulations. Plan assets consist principally of listed equity and fixed income
securities.
64
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The funded status of the plans reconciles with amounts recognized on the
balance sheet at December 31, 1995 and 1994, as follows:
<TABLE>
<CAPTION>
PLANS IN
PLANS IN WHICH
WHICH ASSETS ACCUMULATED
EXCEED BENEFITS
ACCUMULATED EXCEED ALL PLANS
BENEFITS ASSETS (NOTE)
-------------- ------------ --------------
1995 1994 1995 1994 1995 1994
------ ------ ----- ----- ------ ------
(MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of bene-
fits based on service to date
and present pay levels at Sep-
tember 30:
Vested benefit obligation....... $2,550 $2,733 $ 35 $ 27 $2,585 $2,760
Non-vested benefit obligation... 93 88 4 2 97 90
------ ------ ----- ----- ------ ------
Accumulated benefit obligation.. 2,643 2,821 39 29 2,682 2,850
Additional amounts related to
projected salary increases...... 217 231 3 4 220 235
------ ------ ----- ----- ------ ------
Total projected benefit obliga-
tion at September 30............ 2,860 3,052 42 33 2,902 3,085
Plan assets at fair value at Sep-
tember 30....................... 3,259 3,314 8 10 3,267 3,324
------ ------ ----- ----- ------ ------
Plan assets in excess of (less
than) total projected benefit
obligation at
September 30.................... 399 262 (34) (23) 365 239
Contributions during the fourth
quarter......................... 4 16 -- -- 4 16
Unrecognized net (gain) loss
resulting from plan experience
and changes in actuarial
assumptions..................... 160 255 2 3 162 258
Unrecognized prior service obli-
gations resulting from plan
amendments...................... 84 155 1 1 85 156
Remaining unrecognized net obli-
gation (asset) at initial appli-
cation.......................... (143) (203) 1 2 (142) (201)
Adjustment recorded to recognize
minimum liability............... -- -- (2) (3) (2) (3)
------ ------ ----- ----- ------ ------
Prepaid (accrued) pension cost at
December 31..................... $ 504 $ 485 $ (32) $ (20) $ 472 $ 465
====== ====== ===== ===== ====== ======
</TABLE>
- --------
Note: Assets of one plan may not be utilized to pay benefits of other plans.
Additionally, the prepaid (accrued) pension cost has been recorded based
upon certain actuarial estimates as described below. Those estimates are
subject to revision in future periods given new facts or circumstances.
In December 1993, all liabilities and assets were transferred from the Case
Corporation Pension Plan for Hourly-Paid Employees ("Case Plan") to the
Tenneco Inc. Retirement Plan. In June 1994, all future accruals for the
salaried and hourly active Case employees were transferred from the Tenneco
Inc. Retirement Plan to new Case plans. In November 1994, through a secondary
offering of Case stock, Tenneco's ownership in Case dropped below 50%.
Therefore, all domestic and foreign Case liabilities and assets in the new
Case plans are excluded from the Tenneco disclosure information beginning in
1994. Pension cost (income) for these plans has been included up to the date
of the secondary offering (for all of 1993 and 11 months of 1994).
Net periodic pension costs (income) from continuing operations for the years
1995, 1994 and 1993 consist of the following components:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ------------ -----------
(MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost--benefits earned
during the year................... $ 52 $ 75 $ 76
Interest accrued on prior year's
projected benefit obligation...... 214 225 216
Expected return on plan assets--
Actual (return) loss............. (565) 35 (442)
Unrecognized excess (deficiency)
of actual return over expected
return.......................... 275 (335) 165
---- ----- ----
(290) (300) (277)
Net amortization of unrecognized
amounts........................... (11) 3 (5)
----- ----- -----
Net periodic pension costs
(income).......................... $ (35) $ 3 $ 10
===== ===== =====
</TABLE>
65
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Pre-tax gains (losses) resulting from curtailments, settlements and special
termination benefits under these plans were $(19) million and $(37) million for
1994 and 1993, respectively, all of which related primarily to restructuring at
Case.
The weighted average discount rates (which are based on long-term market
rates) used in determining the 1995, 1994 and 1993 actuarial present value of
the benefit obligations were 7.8%, 8.4% and 7.6%, respectively. The rate of
increase in future compensation was 5.0%, in 1995 and 1994, and 5.1% in 1993.
The weighted average expected long-term rate of return on plan assets was 10.0%
in 1995 and 1994 and 9.9% in 1993.
14. SEGMENT AND GEOGRAPHIC AREA INFORMATION
Tenneco is a diversified industrial conglomerate with multinational
operations. Tenneco's principal business segments are as follows:
Tenneco Automotive-- International manufacturer of exhaust system
parts and ride control products for automobiles,
which are sold in both the original equipment and
replacement markets.
Tenneco Energy-- Transporter and marketer of natural gas,
operating in both the regulated and nonregulated
environments. Additionally, holds interests in
international natural gas pipelines and domestic
power generation projects.
Tenneco Packaging-- Manufacturer of packaging materials, cartons,
containers and specialty packaging products for
consumer and commercial markets.
Newport News Primary business includes the design,
Shipbuilding-- construction and repair of U.S. Naval ships and
submarines, and commercial vessels.
In addition to the principal business segments above, Tenneco also holds a
21% ownership interest in Case, a leading manufacturer of farm and construction
equipment with primary operations in the U.S. and European Union. During 1995,
Tenneco sold its Albright & Wilson chemicals segment, which was involved in the
production of phosphorous chemicals and surfactants, as well as a range of
specialty chemicals. For more discussion of Tenneco's farm and construction
equipment and chemicals segments, see Notes 1 and 3.
66
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The following tables summarize certain segment and geographic information of
Tenneco's businesses:
<TABLE>
<CAPTION>
SEGMENT
---------------------------------------------------------------
FARM AND RECLASS.
AUTO- SHIP- CONSTRUCTION AND CONSOL-
(MILLIONS) MOTIVE ENERGY PACKAGING BUILDING EQUIPMENT(C) CHEMICALS OTHER ELIMINATION IDATED
---------- ------ ------ --------- -------- ------------ --------- ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1995, AND FOR THE YEAR THEN ENDED
Net sales and operating
revenues(a)............ $2,479 $1,916 $2,752 $1,756 $ -- $-- $ 5 $ (9) $ 8,899
====== ====== ====== ====== ====== === ===== ==== =======
Operating profit........ 248 286 440 172 -- -- 136 -- 1,282
Equity in net income of
affiliated companies... 1 63 -- -- 110 -- 2 -- 176
General corporate
expenses............... (9) (16) (10) (12) -- -- (42) -- (89)
------ ------ ------ ------ ------ --- ----- ---- -------
Income before interest
expense, income taxes
and minority interest.. 240 333 430 160 110 -- 96 -- 1,369
====== ====== ====== ====== ====== === ===== ==== =======
Identifiable assets..... 1,890 4,122 3,359 1,439 -- -- 2,322 (301) 12,831
Investment in affiliated
companies.............. 3 280 4 9 323 -- 1 -- 620
------ ------ ------ ------ ------ --- ----- ---- -------
Total assets......... 1,893 4,402 3,363 1,448 323 -- 2,323 (301) 13,451
====== ====== ====== ====== ====== === ===== ==== =======
Depreciation, depletion
and amortization....... 80 195 104 67 -- -- 3 -- 449
====== ====== ====== ====== ====== === ===== ==== =======
Capital expenditures
for continuing
operations............. 208 334 316 77 -- -- 41 -- 976
====== ====== ====== ====== ====== === ===== ==== =======
AT DECEMBER 31, 1994, AND FOR THE YEAR THEN ENDED
Net sales and operating
revenues(a)............ $1,989 $2,378 $2,184 $1,753 $3,881 $-- $ 3 $(14) $12,174
====== ====== ====== ====== ====== === ===== ==== =======
Operating profit........ 231 379 217 213 339 -- 14 -- 1,393
Equity in net income
(loss) of affiliated
companies.............. -- 52 -- -- 3 -- (1) -- 54
General corporate
expenses............... (8) (16) (8) (13) (16) -- (7) -- (68)
------ ------ ------ ------ ------ --- ----- ---- -------
Income before interest
expense, income taxes
and minority interest.. 223 415 209 200 326 -- 6 -- 1,379
====== ====== ====== ====== ====== === ===== ==== =======
Identifiable assets..... 1,505 3,241 1,574 1,353 -- -- 3,383 (353) 10,703
Investment in affiliated
companies.............. 2 359 3 -- 530 -- -- -- 894
Identifiable assets
related to discontinued
operations............. -- -- -- -- -- 849 -- (7) 842
Investment in affiliated
companies related
to discontinued
operations............. -- -- -- -- -- 103 -- -- 103
------ ------ ------ ------ ------ --- ----- ---- -------
Total assets......... 1,507 3,600 1,577 1,353 530 952 3,383 (360) 12,542
====== ====== ====== ====== ====== === ===== ==== =======
Depreciation, depletion
and amortization....... 49 100 82 70 102 -- 5 -- 408
====== ====== ====== ====== ====== === ===== ==== =======
Capital expenditures
for continuing
operations............. 113 331 166 29 83 -- 14 -- 736
====== ====== ====== ====== ====== === ===== ==== =======
</TABLE>
See notes on page 69
67
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
SEGMENT
---------------------------------------------------------------
FARM AND RECLASS.
AUTO- SHIP- CONSTRUCTION AND CONSOL-
(MILLIONS) MOTIVE ENERGY PACKAGING BUILDING EQUIPMENT(C) CHEMICALS OTHER ELIMINATION IDATED
---------- ------ ------ --------- -------- ------------ --------- ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1993, AND FOR THE YEAR THEN ENDED
Net sales and operating
revenues(a)............ $1,785 $2,862 $2,042 $1,861 $3,748 $-- $ 6 $(17) $12,287
====== ====== ====== ====== ====== === ===== ==== =======
Operating profit ....... 230 376 146 238 98 -- 26 -- 1,114
Equity in net income
(loss) of affiliated
companies.............. -- 49 2 -- 2 -- (1) -- 52
General corporate
expenses............... (8) (14) (9) (13) (18) -- (7) -- (69)
------ ------ ------ ------ ------ --- ----- ---- -------
Income before interest
expense, income taxes
and minority interest.. 222 411 139 225 82 -- 18 -- 1,097
====== ====== ====== ====== ====== === ===== ==== =======
Identifiable assets..... 1,016 2,953 1,468 1,277 6,122 -- 1,673 (392) 14,117
Investment in affiliated
companies.............. 4 307 6 -- 90 -- 1 -- 408
Identifiable assets
related to discontinued
operations............. 70 -- -- -- -- 721 -- (5) 786
Investment in affiliated
companies related
to discontinued
operations............. -- -- -- -- -- 62 -- -- 62
------ ------ ------ ------ ------ --- ----- ---- -------
Total assets......... 1,090 3,260 1,474 1,277 6,212 783 1,674 (397) 15,373
====== ====== ====== ====== ====== === ===== ==== =======
Depreciation, depletion
and amortization....... 50 166 77 72 101 -- 5 -- 471
====== ====== ====== ====== ====== === ===== ==== =======
Capital expenditures for
continuing operations.. 93 170 124 36 101 -- 1 -- 525
====== ====== ====== ====== ====== === ===== ==== =======
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC AREA(C)(D)
--------------------------------
RECLASS.
UNITED EUROPEAN OTHER AND CONSOL-
(MILLIONS) STATES CANADA UNION FOREIGN ELIMINATION IDATED
---------- ------- ------ -------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1995, AND
FOR THE YEAR THEN ENDED
Net sales and operating
revenues:
Sales to unaffiliated
customers(a)........... $ 7,343 $ 149 $ 1,140 $ 267 $ -- $ 8,899
Transfers among geo-
graphic areas(b)....... 74 43 27 34 (178) --
------- ----- ------- ----- ---- -------
Total................. 7,417 192 1,167 301 (178) 8,899
======= ===== ======= ===== ==== =======
Operating profit......... 1,166 20 77 19 -- 1,282
Equity in net income of
affiliated companies.... 175 -- 1 -- -- 176
General corporate ex-
penses.................. (89) -- -- -- -- (89)
------- ----- ------- ----- ---- -------
Income before interest
expense, income taxes
and
minority interest....... 1,252 20 78 19 -- 1,369
======= ===== ======= ===== ==== =======
Identifiable assets...... 11,083 207 1,079 769 (307) 12,831
Investment in affiliated
companies............... 578 2 2 38 -- 620
------- ----- ------- ----- ---- -------
Total assets.......... 11,661 209 1,081 807 (307) 13,451
======= ===== ======= ===== ==== =======
</TABLE>
See notes on following page.
68
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
GEOGRAPHIC AREA(C)(D)
-------------------------------
RECLASS.
UNITED EUROPEAN OTHER AND CONSOL-
(MILLIONS) STATES CANADA UNION FOREIGN ELIMINATION IDATED
---------- ------ ------ -------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1994, AND
FOR THE YEAR THEN ENDED
Net sales and operating
revenues:
Sales to unaffiliated
customers(a)............ $9,492 $532 $1,656 $494 $ -- $12,174
Transfers among geo-
graphic areas(b)........ 454 61 303 39 (857) --
------ ---- ------ ---- ---- -------
Total.................. 9,946 593 1,959 533 (857) 12,174
====== ==== ====== ==== ==== =======
Operating profit.......... 1,165 82 74 72 -- 1,393
Equity in net income
(loss) of affiliated com-
panies................... 55 -- -- (1) -- 54
General corporate ex-
penses................... (68) -- -- -- -- (68)
------ ---- ------ ---- ---- -------
Income before interest ex-
pense, income taxes and
minority interest........ 1,152 82 74 71 -- 1,379
====== ==== ====== ==== ==== =======
Identifiable assets....... 9,361 154 1,135 256 (203) 10,703
Investment in affiliated
companies................ 891 -- -- 3 -- 894
Identifiable assets re-
lated to discontinued op-
erations................. 176 43 602 42 (21) 842
Investment in affiliated
companies related to
discontinued operations.. 26 -- 3 74 -- 103
------ ---- ------ ---- ---- -------
Total assets........... 10,454 197 1,740 375 (224) 12,542
====== ==== ====== ==== ==== =======
AT DECEMBER 31, 1993, AND
FOR THE YEAR THEN ENDED
Net sales and operating
revenues:
Sales to unaffiliated
customers(a)............ $9,684 $598 $1,582 $423 $ -- $12,287
Transfers among geo-
graphic areas(b)........ 484 36 293 28 (841) --
------ ---- ------ ---- ---- -------
Total.................. 10,168 634 1,875 451 (841) 12,287
====== ==== ====== ==== ==== =======
Operating profit ......... 949 87 13 65 -- 1,114
Equity in net income
(loss) of affiliated com-
panies................... 51 -- 4 (3) -- 52
General corporate ex-
penses................... (69) -- -- -- -- (69)
------ ---- ------ ---- ---- -------
Income before interest ex-
pense, income taxes and
minority interest........ 931 87 17 62 -- 1,097
====== ==== ====== ==== ==== =======
Identifiable assets....... 11,622 726 1,703 439 (373) 14,117
Investment in affiliated
companies................ 403 -- 2 3 -- 408
Identifiable assets re-
lated to discontinued op-
erations................. 217 66 471 43 (11) 786
Investment in affiliated
companies related to
discontinued operations.. 26 -- 5 31 -- 62
------ ---- ------ ---- ---- -------
Total assets........... 12,268 792 2,181 516 (384) 15,373
====== ==== ====== ==== ==== =======
</TABLE>
- --------
Notes: (a) Contracts with U.S. government agencies (primarily shipbuilding
contracts with the U.S. Navy) accounted for $1.7 billion, $1.8 billion
and $1.9 billion for 1995, 1994 and 1993, respectively.
(b) Products are transferred between geographic areas on a basis intended to
reflect as nearly as possible the "market value" of the products.
(c) Case was reflected in Tenneco's financial statements using the equity
method of accounting subsequent to November 1994. Reference is made to
Note 1, "Summary of Accounting Policies--Consolidation and
Presentation."
(d) As reflected above, Tenneco's segments principally market their products
and services in the United States, with significant sales in the
European Union and other foreign countries.
69
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Tenneco is engaged in the sale of products for export from the United
States. Such sales are reflected in the table below:
<TABLE>
<CAPTION>
(MILLIONS)
--------------
GEOGRAPHIC AREA PRINCIPAL PRODUCTS 1995 1994 1993
--------------- ------------------ ---- ---- ----
<S> <C> <C> <C> <C>
Canada.................. Paperboard products, molded and
pressed pulp goods, corrugated
boxes, aluminum and plastics,
natural gas, farm and construction
equipment
(1994 and prior year).............. $ 87 $318 $380
European Union.......... Molded and pressed pulp goods,
paperboard products, corrugated
boxes, aluminum and plastics,
navigation aids (1993 only), farm
and construction equipment (1994
and prior year), tanker
construction and repair work (1995
only).............................. 164 98 127
Other Foreign........... Ride control systems, molded and
pressed pulp goods, paperboard
products, corrugated boxes,
aluminum and plastics, farm and
construction equipment (1994 and
prior year) ....................... 113 204 208
---- ---- ----
Total Export Sales........................................... $364 $620 $715
==== ==== ====
</TABLE>
15. COMMITMENTS AND CONTINGENCIES
Capital Commitments
Tenneco estimates that expenditures aggregating approximately $1.3 billion
will be required after December 31, 1995, to complete facilities and projects
authorized at such date, and substantial commitments have been made in
connection therewith.
Purchase Obligations
In connection with the financing commitments of certain joint ventures,
Tenneco has entered into unconditional purchase obligations for products and
services of $145 million ($106 million on a present value basis) at December
31, 1995. Tenneco's annual obligations under these agreements are $22 million
for the years 1996 through 2000. Payments under such obligations, including
additional purchases in excess of contractual obligations, were $26 million,
$34 million and $31 million for the years 1995, 1994 and 1993, respectively.
In addition, in connection with the Great Plains coal gasification project
(Dakota Gasification Company), Tennessee has contracted to purchase 30% of the
output of the plant's original design capacity for a remaining period of 14
years. Tennessee has executed a settlement of this contract as a part of its
gas supply realignment negotiations discussed in Note 6.
Lease Commitments
Tenneco holds certain of its facilities and equipment under long-term
leases. The minimum rental commitments under non-cancelable operating leases
with lease terms in excess of one year are $139 million, $128 million, $126
million, $113 million and $117 million for the years 1996, 1997, 1998, 1999
and 2000, respectively, and $868 million for subsequent years. Of these
amounts, $81 million for 1996, $84 million for 1997, $93 million for 1998, $86
million for 1999, $92 million for 2000 and $689 million for subsequent years
are lease payment commitments to GECC, John Hancock and Metropolitan Life for
assets purchased from
70
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Georgia-Pacific in January 1991 and leased to Tenneco Packaging. Commitments
under capital leases were not significant to the accompanying financial
statements. Total rental expense for continuing operations for the years 1995,
1994 and 1993, was $176 million, $197 million and $200 million, respectively,
including minimum rentals under non-cancelable operating leases of $166
million, $189 million and $196 million for the corresponding periods.
Litigation
Reference is made to Note 6, "Federal Energy Regulatory Commission ("FERC")
Regulatory Matters," for information concerning gas supply litigation. Tenneco
Inc. and its subsidiaries are parties to numerous other legal proceedings
arising from their operations. Tenneco believes that the outcome of these
proceedings, individually and in the aggregate, will have no material effect on
the financial position or results of operations of Tenneco Inc. and its
consolidated subsidiaries.
Environmental Matters
Since 1988, Tennessee has been engaged in an internal project to identify and
deal with the presence of polychlorinated biphenyls ("PCBs") and other
substances of concern, including substances on the U.S. Environmental
Protection Agency ("EPA") List of Hazardous Substances ("HS List") at
compressor stations and other facilities operated by both its interstate and
intrastate natural gas pipeline systems. While conducting this project,
Tennessee has been in frequent contact with federal and state regulatory
agencies, both through informal negotiation and formal entry of consent orders,
in order to assure that its efforts meet regulatory requirements.
Tenneco has established a reserve for Tennessee's environmental expenses,
which includes: 1) expected remediation expense and associated onsite, offsite
and groundwater technical studies, 2) legal fees and 3) settlement of third
party and governmental litigation, including civil penalties. Through December
31, 1995, Tenneco has charged approximately $147 million against the
environmental reserve, excluding recoveries related to Tennessee's
environmental settlement as discussed below. Of the remaining reserve, $38
million has been recorded on the balance sheet under "Payables-trade" and $126
million under "Deferred credits and other liabilities."
Due to the current uncertainty regarding the further activity necessary for
Tennessee to address the presence of the PCBs, the substances on the HS List
and other substances of concern on its sites, including the requirements for
additional site characterization, the actual amount of such substances at the
sites, and the final, site-specific cleanup decisions to be made with respect
to cleanup levels and remediation technologies, Tennessee cannot at this time
accurately project what additional costs, if any, may arise from future
characterization and remediation activities. While there are still many
uncertainties relating to the ultimate costs which may be incurred, based upon
Tennessee's evaluation and experience to date, Tenneco continues to believe
that the recorded estimate for the reserve is adequate.
Following negotiations with its customers, Tennessee in May 1995 filed with
the FERC a separate Stipulation and Agreement (the "Environmental Stipulation")
that addresses the recovery of environmental costs currently being recovered in
its rates and also establishes a mechanism for recovering a substantial portion
of the environmental costs that will be expended in the future. In November
1995, the FERC issued an order approving the Environmental Stipulation.
Although one shipper on its system has filed for rehearing, Tennessee believes
the Environmental Stipulation will be upheld. The effects of the Environmental
Stipulation, which is effective as of July 1, 1995, have been recorded with no
material effect on Tenneco's financial position or results of operations. As of
December 31, 1995, the balance of the regulatory asset is $74 million.
71
<PAGE>
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Tenneco has completed settlements with and has received payments from the
majority of its liability insurance policy carriers for remediation costs and
related claims. Tenneco believes that the likelihood of recovery of a portion
of its remediation costs and claims against the remaining carriers in its
pending litigation is reasonably possible. In addition, Tennessee has settled
its pending litigation against and received payment from the manufacturer of
the PCB-containing lubricant. These recoveries have been considered in
Tennessee's recording of its environmental settlement with its customers.
Tenneco has identified other sites in its various operating divisions where
environmental remediation expense may be required should there be a change in
ownership, operations or applicable regulations. These possibilities cannot be
predicted or quantified at this time and accordingly, no provision has been
recorded. However, provisions have been made for all instances where it has
been determined that the incurrence of any material remedial expense is
reasonably possible. Tenneco believes that the provisions recorded for
environmental exposures are adequate based on current estimates.
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
INCOME INCOME
BEFORE INTEREST (LOSS) FROM CUMULATIVE
NET SALES EXPENSE, DISCONTINUED EFFECT OF CHANGE
AND INCOME TAXES INCOME FROM OPERATIONS, EXTRAORDINARY IN ACCOUNTING
QUARTER OPERATING AND MINORITY CONTINUING NET OF LOSS, NET OF PRINCIPLE, NET NET
(MILLIONS) REVENUES INTEREST OPERATIONS INCOME TAX INCOME TAX OF INCOME TAX INCOME
---------- --------- --------------- ----------- ------------ ------------- ---------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995.................... 1st $ 2,163 $ 324 $ 153 $ -- $ -- $ -- $153
2nd 2,198 369 185 -- -- -- 185
3rd 2,136 377 214 -- -- -- 214
4th 2,402 299 183 -- -- -- 183
------- ------ ----- ----- ----- ---- ----
$ 8,899 $1,369 $ 735 $ -- $ -- $ -- $735
======= ====== ===== ===== ===== ==== ====
1994.................... 1st $ 3,049 $ 294 $121 $ 1 $ -- $(39) $ 83
2nd 3,258 375 161 (14) (5) -- 142
3rd 3,049 347 150 1 -- -- 151
4th 2,818 363 209 (177) -- -- 32
------- ------ ----- ----- ----- ---- ----
$12,174 $1,379 $ 641 $(189) $ (5) $(39) $408
======= ====== ===== ===== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EARNINGS (LOSS) PER AVERAGE SHARE OF COMMON STOCK
-----------------------------------------------------------------
CUMULATIVE EFFECT OF
CONTINUING DISCONTINUED EXTRAORDINARY CHANGE IN ACCOUNTING NET
QUARTER OPERATIONS OPERATIONS LOSS PRINCIPLE INCOME
------- ---------- ------------ ------------- -------------------- ------
<S> <C> <C> <C> <C> <C> <C>
1995..... 1st $ .84 $ -- $ -- $ -- $ .84
2nd 1.05 -- -- -- 1.05
3rd 1.23 -- -- -- 1.23
4th 1.05 -- -- -- 1.05
------- ------- ------ ----- -----
$ 4.16 $ -- $ -- $ -- $4.16
======= ======= ====== ===== =====
1994..... 1st $ .66 $ .01 $ -- $(.22) $ .45
2nd .88 (.08) (.03) -- .77
3rd .81 .01 -- -- .82
4th 1.14 (.98) -- -- .16
------- ------- ------ ----- -----
$ 3.49 $ (1.04) $ (.03) $(.22) $2.20
======= ======= ====== ===== =====
</TABLE>
- -------
Notes: Reference is made to Notes 2, 3 and 9 for discussion of items affecting
quarterly results.
The sum of the quarters may not equal the total of the respective year's
earnings per share due to the issuance or repurchase of shares throughout
the year.
(The preceding notes are an integral part of the foregoing financial
statements.)
72
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There has been no change in accountants during 1995 or 1994, nor has there
been any disagreement on any matter of accounting principles or practices or
financial disclosure which in either case is required to be reported pursuant
to this Item 9.
PART III
Item 10, "Directors and Executive Officers of the Registrant," Item 11,
"Executive Compensation," Item 12, "Security Ownership of Certain Beneficial
Owners and Management," and Item 13, "Certain Relationships and Related
Transactions," have been omitted from this report inasmuch as Tenneco Inc. will
file with the Securities and Exchange Commission pursuant to Regulation 14A
within 120 days after the end of the fiscal year covered by this report a
definitive Proxy Statement for the Annual Meeting of Stockholders of Tenneco
Inc. to be held on May 14, 1996, at which meeting the stockholders will vote
upon the election of directors. The information under the caption "Election of
Directors" in such Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
FINANCIAL STATEMENTS INCLUDED IN ITEM 8
See "Index to Financial Statements of Tenneco Inc. and Consolidated
Subsidiaries" set forth in Item 8, "Financial Statements and Supplementary
Data."
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES INCLUDED IN ITEM 14
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Schedules of Tenneco Inc. and Consolidated Subsidiaries--
Schedule I--Condensed financial information of registrant............... 74
Schedule II--Valuation and qualifying accounts--three years ended
December 31, 1995...................................................... 79
</TABLE>
SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE
Schedule III--Real estate and accumulated depreciation
Schedule IV--Mortgage loans on real estate
Schedule V--Supplemental Information Concerning Property--
Casualty Insurance Operations
73
<PAGE>
SCHEDULE I
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(MILLIONS)
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Interest Income from Affiliated Companies........ $ 101 $ 79 $ 41
Gain on Sale of Investment....................... 268 -- --
Other Income, Net................................ -- -- 39
-------- -------- --------
369 79 80
-------- -------- --------
Interest Expense and Other:
Affiliated companies........................... 421 229 83
Other.......................................... 199 206 211
-------- -------- --------
620 435 294
-------- -------- --------
Loss from Continuing Operations Before Income
Taxes and Equity in Net Income from Continuing
Operations of Affiliated Companies.............. (251) (356) (214)
-------- -------- --------
Income Tax Expense (Benefit):
Current........................................ (233) (171) (100)
Deferred....................................... 41 (16) 20
-------- -------- --------
(192) (187) (80)
-------- -------- --------
Equity in Net Income from Continuing Operations
of Affiliated Companies......................... 794 810 547
-------- -------- --------
Income from Continuing Operations................ 735 641 413
Income (Loss) from Discontinued Operations, Net
of Income Tax................................... -- (189) 38
-------- -------- --------
Income Before Extraordinary Loss................. 735 452 451
Extraordinary Loss, Net of Income Tax............ -- (5) (25)
-------- -------- --------
Income before Cumulative Effect of Change in
Accounting Principle............................ 735 447 426
Cumulative Effect of Change in Accounting
Principle, Net of Income Tax.................... -- (39) --
-------- -------- --------
Net Income....................................... 735 408 426
Preferred Stock Dividends........................ 12 12 14
-------- -------- --------
Net Income to Common Stock....................... $ 723 $ 396 $ 412
======== ======== ========
</TABLE>
(The accompanying notes to financial statements are an integral part of these
statements of income.)
74
<PAGE>
SCHEDULE I
(CONTINUED)
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(MILLIONS)
YEARS ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
Operating Activities:
Income from continuing operations............... $ 735 $ 641 $ 413
Adjustments to reconcile income from continuing
operations to
net cash provided (used) by operating
activities--
Deferred income taxes......................... 41 (16) 20
Gain on sale of investment.................... (268) -- --
Equity in net income of affiliates, net of
cash dividends............................... (489) (809) (547)
Changes in components of working capital--
(Increase) decrease in receivables........... 100 57 200
Increase (decrease) in payables.............. 536 50 (27)
Increase (decrease) in taxes accrued......... -- -- (19)
Increase (decrease) in interest accrued...... -- -- (7)
Other......................................... 5 19 (18)
-------- --------- -------
Net cash provided (used) by operating activities. 660 (58) 15
-------- --------- -------
Investing Activities:
Net proceeds from sale of investment............ 392 -- --
Investment in affiliated companies and other.... (1,572) (2,603) (224)
-------- --------- -------
Net cash used by investing activities............ (1,180) (2,603) (224)
-------- --------- -------
Financing Activities:
Issuance of common, treasury and SECT shares.... 102 188 1,234
Purchase of common stock........................ (655) (26) (7)
Redemption of preferred stock................... (20) (20) (30)
Issuance of long-term debt...................... 594 -- --
Retirement of long-term debt--
Note payable to Tenneco France Finance S.A. .. -- (160) --
Other......................................... (19) (150) (256)
Net increase in advances from affiliated
companies...................................... 170 195 --
Net increase (decrease) in short-term debt
excluding current
maturities on long-term debt--
Notes payable to affiliated companies......... (384) (64) (615)
Demand notes payable to affiliated companies.. 626 3,009 243
Commercial paper.............................. 341 10 (1)
Other......................................... 51 (3) (52)
Dividends (common and preferred)................ (286) (318) (307)
-------- --------- -------
Net cash provided by financing activities........ 520 2,661 209
-------- --------- -------
Increase (Decrease) in Cash and Temporary Cash
Investments..................................... -- -- --
Cash and Temporary Cash Investments, January 1... -- -- --
-------- --------- -------
Cash and Temporary Cash Investments, December 31
(Note).......................................... $ -- $ -- $ --
======== ========= =======
Cash paid during the year for interest........... $ 622 $ 433 $ 304
Cash paid during the year for income taxes (net
of refunds)...................................... $ (244) $ (123) $ 99
</TABLE>
- --------
Note: Cash and temporary cash investments include highly liquid investments
with a maturity of three months or less at date of purchase.
(The accompanying notes to financial statements are an integral part of these
statements of cash flows.)
75
<PAGE>
SCHEDULE I
(CONTINUED)
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
(MILLIONS)
DECEMBER 31,
----------------
1995 1994
------- -------
<S> <C> <C>
ASSETS
Current Assets:
Receivables--
Affiliated companies....................................... $ 149 $ 241
Income taxes............................................... 133 234
Interest-bearing notes receivable from affiliated
companies................................................. 361 --
Other...................................................... 17 16
Deferred income taxes....................................... -- 2
------- -------
660 493
------- -------
Investments and Other Assets:
Investment in affiliated companies.......................... 11,791 9,514
Deferred income taxes....................................... 24 --
Other....................................................... 48 25
------- -------
11,863 9,539
------- -------
$12,523 $10,032
======= =======
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Current maturities on long-term debt........................ $ 8 $ 8
Commercial paper--
Affiliated companies....................................... 56 62
Other...................................................... 346 --
Payables--
Affiliated companies....................................... 885 463
Other...................................................... 86 31
Interest-bearing notes payable to affiliated companies...... 240 240
Demand notes payable to affiliated companies................ 4,436 3,810
Interest accrued............................................ 60 60
Taxes accrued............................................... 70 --
Other....................................................... 7 5
------- -------
6,194 4,679
------- -------
Long-term Debt............................................... 2,652 2,072
------- -------
Advances from Affiliated Companies........................... 365 195
------- -------
Deferred Income Taxes........................................ -- 5
------- -------
Deferred Credits and Other Liabilities....................... 34 34
------- -------
Preferred Stock.............................................. 130 147
------- -------
Shareowners' Equity:
Common stock................................................ 957 957
Stock Employee Compensation Trust (common stock held in
trust)..................................................... (215) (298)
Premium on common stock and other capital surplus........... 3,602 3,553
Cumulative translation adjustments.......................... 26 (237)
Retained earnings (accumulated deficit)..................... (469) (905)
------- -------
3,901 3,070
Less--Shares held as treasury stock, at cost................ 753 170
------- -------
3,148 2,900
------- -------
$12,523 $10,032
======= =======
</TABLE>
(The accompanying notes to financial statements are an integral part of these
balance sheets.)
76
<PAGE>
SCHEDULE I
(CONTINUED)
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TENNECO INC.
NOTES TO FINANCIAL STATEMENTS
The financial statements of Tenneco Inc. should be read in conjunction with
the financial statements of Tenneco Inc. and Consolidated Subsidiaries
presented in this document.
Accounting Policies
Majority-owned subsidiaries and companies in which at least a 20% voting
interest is owned are carried at cost plus equity in undistributed earnings
since date of acquisition and cumulative translation adjustments. At December
31, 1995, equity in undistributed earnings and cumulative translation
adjustments amounted to $3,890 million and $18 million, respectively; at
December 31, 1994, the corresponding amounts were $3,241 million and $(199)
million, respectively.
Cash dividends received from companies accounted for on an equity basis
amounted to $305 million, $1 million and none for 1995, 1994 and 1993,
respectively. In addition, $250 million in non-cash dividends were received in
1995.
Income Taxes
Tenneco Inc., together with certain of its respective subsidiaries which are
owned 80% or more, have entered into an agreement to file a consolidated
federal income tax return. Such agreement provides, among other things, that
(1) each company in a taxable income position will be currently charged with an
amount equivalent to its federal income tax computed on a separate return basis
and (2) each company in a tax loss position will be currently reimbursed to the
extent its deductions, including general business credits, are utilized in the
consolidated return.
Tenneco Inc.'s pre-tax earnings (loss) from continuing operations (excluding
equity in net income from continuing operations of affiliated companies) for
the years 1995, 1994 and 1993 are principally domestic. The differences between
the U.S. income tax benefit, reflected in the Statements of Income, of $192
million, $187 million and $80 million for the years 1995, 1994 and 1993 and the
income tax expense (benefit), computed based on pre-tax income from continuing
operations at the U.S. federal income tax rates, of $190 million, $159 million
and $117 million, respectively, consisted principally of the tax effect of
equity in net income from continuing operations of affiliated companies in each
of the three years, realization of previously unrecognized deferred tax assets
to offset taxes payable on the sale of an investment in 1995 and permanent
differences on the sale of businesses in 1994.
Long-Term Debt and Current Maturities
The aggregate maturities and sinking fund requirements applicable to the
long-term debt issues outstanding at December 31, 1995, are $8 million, $15
million, $769 million, $250 million and $175 million for 1996, 1997, 1998, 1999
and 2000, respectively.
Financial Instruments
Tenneco Inc. has guaranteed the performance of certain subsidiaries pursuant
to arrangements under which receivables are factored on a nonrecourse basis
with Tenneco Credit Corporation. Also, Tenneco Inc. has agreed to pay to
Tenneco Credit Corporation a service charge to the extent necessary so that the
earnings
77
<PAGE>
SCHEDULE I
(CONTINUED)
of Tenneco Credit Corporation and its consolidated subsidiaries (before fixed
charges and income taxes) are not less than 125% of the fixed charges.
(The above notes are an integral part of the foregoing financial statements.)
78
<PAGE>
SCHEDULE II
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER DEDUCTIONS AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS (NOTE) OF YEAR
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful
Accounts Deducted from
Assets to Which it
Applies:
Year Ended December 31,
1995.................. $ 48 $46 $ 9 $ 30 $ 73
==== === === ==== ====
Year Ended December 31,
1994.................. $129 $66 $ 2 $149 $ 48
==== === === ==== ====
Year Ended December 31,
1993.................. $119 $48 $ 3 $ 41 $129
==== === === ==== ====
</TABLE>
- --------
Note: For 1994, primarily the result of the change to the equity method of
accounting for Case. For 1995, 1994 and 1993, includes uncollectible
accounts written off, net of recoveries on accounts previously written
off.
79
<PAGE>
REPORTS ON FORM 8-K
Tenneco Inc. filed three Current Reports on Form 8-K during the fourth
quarter of the fiscal year ended December 31, 1995: on October 2, 1995
regarding the issuance of a press release announcing that it had signed a
definitive agreement to acquire the plastics division of Mobil Corporation for
$1.27 billion; on November 17, 1995 regarding the issuance of a press release
announcing that it had completed the acquisition of the plastics division of
Mobil Corporation for $1.27 billion and filing financial statements of
businesses acquired and pro forma financial information of Tenneco Inc.; and on
December 13, 1995 regarding the issuance of $300,000,000 aggregate principal
amount of 6 1/2% Notes due 2005 of Tenneco Inc. and $300,000,000 aggregate
principal amount of 7 1/4% Debentures due 2025 of Tenneco Inc.
EXHIBITS
The following exhibits are filed with Tenneco Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1995, or incorporated therein by
reference (exhibits designated by an asterisk were filed with the Report; all
other exhibits were incorporated by reference):
<TABLE>
<C> <S>
*3(b) --Copy of By-Laws of Tenneco Inc. as amended on December 6, 1995.
*4(a)(1) --Indenture dated as of March 15, 1988 between Tenneco Inc. and
The Chase Manhattan Bank (National Association), as Trustee
*4(a)(2) --Second Supplemental Indenture dated as of March 30, 1988 to
Indenture dated as of
March 15, 1988 between Tenneco Inc. and The Chase Manhattan Bank
(National Association), as Trustee
*4(a)(3) --Fifth Supplemental Indenture dated as of November 15, 1990 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee
*4(a)(4) --Sixth Supplemental Indenture dated as of February 1, 1991 to
Indenture dated as of
March 15, 1988 between Tenneco Inc. and The Chase Manhattan Bank
(National Association), as Trustee
*4(a)(5) --Seventh Supplemental Indenture dated as of August 1, 1991 to
Indenture dated as of
March 15, 1988 between Tenneco Inc. and The Chase Manhattan Bank
(National Association), as Trustee
*4(a)(6) --Eighth Supplemental Indenture dated as of October 1, 1992 to
Indenture dated as of
March 15, 1988 between Tenneco Inc. and The Chase Manhattan Bank
(National Association), as Trustee
*4(a)(7) --Ninth Supplemental Indenture dated as of November 15, 1992 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee
*4(a)(8) --Tenth Supplemental Indenture dated as of November 15, 1992 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee
*4(a)(9) --Eleventh Supplemental Indenture dated as of December 15, 1995 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee
*4(a)(10) --Twelfth Supplemental Indenture dated as of December 15, 1995 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee
9 --None.
</TABLE>
80
<PAGE>
<TABLE>
<C> <S>
10(a)(1) --Copy of Tenneco Inc. Board of Directors Deferred Compensation
Plan, amended and restated January 1, 1988 (Exhibit 10(a)(1) to
Form 10-K for the fiscal year ended December 31, 1988, File No.
1-9864).
10(a)(2) --Copy of Tenneco Inc. Executive Incentive Compensation Plan,
amended and restated
July 31, 1986 (Exhibit 10(a)(2) to Registration No. 33-17815).
*10(a)(3) --Copy of Tenneco Inc. Deferred Compensation Plan, amended and
restated September 12, 1995, together with form of Deferred
Compensation Agreement.
*10(a)(4) --Copy of Tenneco Inc. 1993 Deferred Compensation Plan, amended
September, 1995.
10(a)(5) --Copy of 1981 Tenneco Inc. Key Employee Stock Option Plan,
amended and restated January 13, 1987 (Exhibit 10(a)(4) to
Registration No. 33-17815).
10(a)(6) --Copy of Tenneco Inc. Key Employee Restricted Stock and
Restricted Unit Plan effective May 10, 1988 (Exhibit 10(a)(8) to
Form 10-K for the fiscal year ended December 31, 1988, File No.
1-9864).
10(a)(7) --Copy of Tenneco Inc. Supplemental Executive Retirement Plan
effective January 1, 1989 (Exhibit 10(a)(9) to Form 10-K for the
fiscal year ended December 31, 1988, File No.
1-9864).
10(a)(8) --Copy of Amendment No. 1 to Tenneco Inc. Supplemental Executive
Retirement Plan (Exhibit 10(a)(9) to Form 10-K for the fiscal
year ended December 31, 1992, File No.
1-9864).
10(a)(9) --Copy of Tenneco Inc. Benefit Equalization Plan (Exhibit
10(a)(10) to Form 10-K for the fiscal year ended December 31,
1988, File No. 1-9864).
10(a)(10) --Copy of Amendment No. 1 to Tenneco Inc. Benefit Equalization
Plan (Exhibit 10(a)(11) to Form 10-K for the fiscal year ended
December 31, 1988, File No. 1-9864).
10(a)(11) --Copy of Tenneco Inc. Board of Directors Restricted Stock and
Restricted Unit Program (Exhibit 10(a)(12) to Form 10-K for the
fiscal year ended December 31, 1990, File No.
1-9864).
10(a)(12) --Copy of 1994 Tenneco Inc. Stock Ownership Plan (Exhibit
10(a)(13) to Form 10-K for the fiscal year ended December 31,
1993, File No. 1-9864).
10(a)(13) --Copy of Tenneco Inc. Outside Directors Retirement Plan (Exhibit
10(a)(12) to Form 10-K for the fiscal year ended December 31,
1994, File No. 1-9864).
10(a)(14) --Supplemental Pension Agreement, dated September 12, 1995,
between Dana G. Mead and Tenneco Inc. (Exhibit 10 to Form 10-Q
for the quarter ended September 30, 1995, File No. 1-9864).
10(b)(1) --Lease Agreement, Tomahawk, dated as of January 30, 1991,
between The Connecticut National Bank, as Owner Trustee, and
Packaging Corporation of America (Exhibit 10(b)(1) to Form 10-K
for the fiscal year ended December 31, 1990, File No. 1-9864).
10(b)(2) --Lease Agreement, Valdosta, dated as of January 30, 1991,
between The Connecticut National Bank, Philip G. Kane, Jr.,
Frank McDonald, Jr., and William R. Monroe, as Owner Trustee,
and Packaging Corporation of America (Exhibit 10(b)(2) to Form
10-K for the fiscal year ended December 31, 1990, File No. 1-
9864).
10(b)(3) --Timberland Lease dated January 31, 1991, by and between Four
States Timber Venture and Packaging Corporation of America
(Exhibit 10(b)(3) to Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-9864).
</TABLE>
81
<PAGE>
<TABLE>
<C> <S>
10(b)(4) --Asset Purchase Agreement, dated as of October 1, 1995, among
Mobil Oil Corporation, Mobil Chemical Canada Limited and Tenneco
Inc. (Exhibit 2 to Current Report on Form 8-K, dated November
17, 1995, of Tenneco Inc., File No. 1-9864).
10(c)(1) --Employment Agreement dated June 29, 1992, between Stacy S. Dick
and Tenneco Inc. (Exhibit 10(c)(3) to Form 10-K for the fiscal
year ended December 31, 1993, File No.
1-9864).
10(c)(2) --Employment Agreement dated March 12, 1992, between Dana G. Mead
and Tenneco Inc. (Exhibit 10(c)(2) to Form 10-K for the fiscal
year ended December 31, 1993, File
No. 1-9864).
10(c)(3) --Employment Agreement dated December 3, 1993, between Paul T.
Stecko and Tenneco Inc. (Exhibit 10(c)(5) to Form 10-K for the
year ended December 31, 1993, File
No. 1-9864).
10(c)(4) --Employment Agreement dated September 9, 1992, between Theodore
R. Tetzlaff and Tenneco Inc. (Exhibit 10(c)(6) to Form 10-K for
the fiscal year ended December 31, 1993, File No. 1-9864).
*11 --Computation of Earnings (Loss) Per Share of Common Stock.
*12 --Computation of Ratio of Earnings to Fixed Charges.
13 --None.
16 --None.
18 --None.
*21 --List of Subsidiaries and Affiliates of Tenneco Inc.
22 --None.
*23 --Consent of Arthur Andersen LLP, Independent Public Accountants
for Tenneco Inc.
*24 --Powers of Attorney of the following directors of Tenneco Inc.:
Mark Andrews
W. Michael Blumenthal
M. Kathryn Eickhoff
Peter T. Flawn
Henry U. Harris, Jr.
Belton K. Johnson
John B. McCoy
Joseph J. Sisco
William L. Weiss
Clifton R. Wharton, Jr.
*27 --Financial Data Schedule.
28 --None.
99 --None.
</TABLE>
UNDERTAKING.
The undersigned, Tenneco Inc., hereby undertakes, pursuant to Regulation S-K,
Item 601(b), paragraph (4)(iii), to furnish to the Securities and Exchange
Commission upon request all constituent instruments defining the rights of
holders of long-term debt of Tenneco Inc. and its consolidated subsidiaries not
filed herewith for the reason that the total amount of securities authorized
under any of such instruments does not exceed 10% of the total consolidated
assets of Tenneco Inc. and its consolidated subsidiaries.
82
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Tenneco Inc.
Dana G. Mead
By __________________________________
Chairman and Chief Executive Officer
Date: February 14, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Dana G. Mead Principal Executive Officer February 14, 1996
____________________________________ and Director
Dana G. Mead
Robert T. Blakely Principal Financial and February 14, 1996
____________________________________ Accounting Officer
Robert T. Blakely
Mark Andrews, W. Michael Blumenthal, Directors
M. Kathryn Eickhoff, Peter T.
Flawn, Henry U. Harris, Jr., Belton
K. Johnson, John B. McCoy, Joseph
J. Sisco, William L. Weiss, Clifton
R. Wharton, Jr.
</TABLE>
T. R. Tetzlaff February 14,
By ____________________________ 1996
Attorney-in-fact
83
<PAGE>
EXHIBIT 11
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
(MILLIONS EXCEPT SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
COMPUTATION FOR STATEMENTS OF INCOME
Primary Earnings Per Share (average
shares outstanding):
Income from continuing operations...... $ 735 $ 641 $ 413
Income (loss) from discontinued opera-
tions, net of income tax.............. -- (189) 38
----------- ----------- -----------
Income before extraordinary loss....... 735 452 451
Extraordinary loss, net of income tax.. -- (5) (25)
----------- ----------- -----------
Income before cumulative effect of
change in accounting principle........ 735 447 426
Cumulative effect of change in ac-
counting principle, net of income
tax................................... -- (39) --
----------- ----------- -----------
Net income ............................ 735 408 426
Preferred stock dividends.............. 12 12 14
----------- ----------- -----------
Net income to common stock............. $ 723 $ 396 $ 412
=========== =========== ===========
Average shares of common stock out-
standing (a)(b)....................... 173,995,941 180,084,909 168,772,852
=========== =========== ===========
Earnings (loss) per average share of
common stock:
Continuing operations................ $ 4.16 $ 3.49 $ 2.36
Discontinued operations.............. -- (1.04) .23
Extraordinary loss................... -- (.03) (.15)
Cumulative effect of change in ac-
counting principle.................. -- (.22) --
----------- ----------- -----------
$ 4.16 $ 2.20 $ 2.44
=========== =========== ===========
ADDITIONAL COMPUTATIONS(C)
Net income to common stock, per above... $ 723 $ 396 $ 412
=========== =========== ===========
Primary Earnings Per Share (including
common stock equivalents):
Average shares of common stock out-
standing (a)(b)....................... 173,995,941 180,084,909 168,772,852
Incremental common shares applicable
to common stock options based on the
common stock daily average market
price during the year................. 64,329 74,087 38,171
Incremental common shares applicable
to performance units based upon the
attainment of specified goals......... 27,625 -- --
----------- ----------- -----------
Average common shares, as adjusted..... 174,087,895 180,158,996 168,811,023
=========== =========== ===========
Earnings (loss) per average share of
common stock (including common
stock equivalents):
Continuing operations................ $ 4.16 $ 3.49 $ 2.36
Discontinued operations.............. -- (1.04) .23
Extraordinary loss................... -- (.03) (.15)
Cumulative effect of change in ac-
counting principle.................. -- (.22) --
----------- ----------- -----------
$ 4.16 $ 2.20 $ 2.44
=========== =========== ===========
Fully Diluted Earnings Per Share:
Average shares of common stock out-
standing (a)(b)....................... 173,995,941 180,084,909 168,772,852
Incremental common shares applicable
to common stock options based on the
more dilutive of the common stock
ending or average market price during
the year.............................. 94,418 75,223 106,901
Average common shares issuable assum-
ing conversion of Tenneco Inc. 10%
loan stock............................ -- 41,356 42,663
Incremental common shares applicable
to performance units based upon the
attainment of specified goals......... 27,625 -- --
----------- ----------- -----------
Average common shares assuming full
dilution.............................. 174,117,984 180,201,488 168,922,416
=========== =========== ===========
Fully diluted earnings (loss) per av-
erage share, assuming conversion of
all applicable securities:
Continuing operations................ $ 4.16 $ 3.49 $ 2.36
Discontinued operations.............. -- (1.04) .23
Extraordinary loss................... -- (.03) (.15)
Cumulative effect of change in ac-
counting principle.................. -- (.22) --
----------- ----------- -----------
$ 4.16 $ 2.20 $ 2.44
=========== =========== ===========
</TABLE>
- --------
Notes: (a) In 1992, 12,000,000 shares of common stock were issued to the
Tenneco Inc. Stock Employee Compensation Trust ("SECT"). Shares of
common stock issued to a related trust are not considered to be
outstanding in the computation of average shares of common stock
until the shares are utilized to fund the obligations for which the
trust was established. During each of the years ended December 31,
1995, 1994 and 1993, the SECT utilized 2,697,770, 2,464,721 and
2,479,425 shares, respectively.
(b) For purposes of computing earnings per share, Series A preferred
stock was converted into common stock under the Contingent Share
method. The above computation includes 8,935,175 shares of Series A
preferred stock which were converted into 17,342,763 shares of
common stock. In December 1994, all of the outstanding shares of
Series A preferred stock were converted into Tenneco Inc. common
stock. The inclusion of Series A preferred stock in the computation
of earnings per share was antidilutive for the years and certain
quarters in 1994 and 1993.
(c) These calculations are submitted in accordance with Securities and
Exchange Commission requirements although not required by Accounting
Principles Board Opinion No. 15 because they result in dilution of
less than 3%.
<PAGE>
EXHIBIT 12
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
COMBINED WITH 50% OWNED UNCONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations............................. $ 735 $ 641 $ 413 $(714) $ (617)
Add:
Interest............................... 458 597 717 898 977
Portion of rentals representative of
interest factor....................... 59 67 67 70 69
Preferred stock dividend requirements
of majority-owned subsidiaries........ 22 -- -- -- --
Income tax expense and other taxes on
income................................ 273 302 258 167 63
Amortization of interest capitalized
applicable to nonutility companies.... 5 6 6 5 5
Interest capitalized applicable to
utility companies..................... 2 1 1 2 4
Undistributed (earnings) losses of
affiliated companies in which less
than a 50% voting interest is owned... (112) (4) 4 (2) (4)
------ ------ ------ ----- ------
Earnings as defined................. $1,442 $1,610 $1,466 $ 426 $ 497
====== ====== ====== ===== ======
Interest................................ $ 458 $ 597 $ 717 $ 898 $ 977
Interest capitalized.................... 9 6 4 8 23
Portion of rentals representative of
interest factor........................ 59 67 67 70 69
Preferred stock dividend requirements of
majority-owned subsidiaries on a pretax
basis.................................. 30 -- -- -- --
------ ------ ------ ----- ------
Fixed charges as defined............ $ 556 $ 670 $ 788 $ 976 $1,069
====== ====== ====== ===== ======
Ratio of earnings to fixed charges...... 2.59 2.40 1.86 (a) (a)
====== ====== ======
</TABLE>
- --------
Note: (a) For the years ended December 31, 1992 and 1991, earnings were
inadequate to cover fixed charges by $550 million and $572 million,
respectively.
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed with Tenneco Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1995, or incorporated therein by
reference (exhibits designated by an asterisk were filed with the Report; all
other exhibits were incorporated by reference):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*3(b) --Copy of By-Laws of Tenneco Inc. as amended on December 6, 1995.
*4(a)(1) --Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(2) --Second Supplemental Indenture dated as of March 30, 1988 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(3) --Fifth Supplemental Indenture dated as of November 15, 1990 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(4) --Sixth Supplemental Indenture dated as of February 1, 1991 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(5) --Seventh Supplemental Indenture dated as of August 1, 1991 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(6) --Eighth Supplemental Indenture dated as of October 1, 1992 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(7) --Ninth Supplemental Indenture dated as of November 15, 1992 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(8) --Tenth Supplemental Indenture dated as of November 15, 1992 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(9) --Eleventh Supplemental Indenture dated as of December 15, 1995 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
*4(a)(10) --Twelfth Supplemental Indenture dated as of December 15, 1995 to
Indenture dated as of March 15, 1988 between Tenneco Inc. and The
Chase Manhattan Bank (National Association), as Trustee.
10(a)(1) --Copy of Tenneco Inc. Board of Directors Deferred Compensation
Plan, amended and restated January 1, 1988 (Exhibit 10(a)(1) to
Form 10-K for the fiscal year ended December 31, 1988, File No. 1-
9864).
10(a)(2) --Copy of Tenneco Inc. Executive Incentive Compensation Plan,
amended and restated July 31, 1986 (Exhibit 10(a)(2) to
Registration No. 33-17815).
*10(a)(3) --Copy of Tenneco Inc. Deferred Compensation Plan, amended and
restated September 12, 1995, together with form of Deferred
Compensation Agreement.
*10(a)(4) --Copy of Tenneco Inc. 1993 Deferred Compensation Plan, amended
September, 1995.
10(a)(5) --Copy of 1981 Tenneco Inc. Key Employee Stock Option Plan, amended
and restated January 13, 1987 (Exhibit 10(a)(4) to Registration
No. 33-17815).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10(a)(6) --Copy of Tenneco Inc. Key Employee Restricted Stock and Restricted
Unit Plan effective May 10, 1988 (Exhibit 10(a)(8) to Form 10-K
for the fiscal year ended December 31, 1988, File No. 1-9864).
10(a)(7) --Copy of Tenneco Inc. Supplemental Executive Retirement Plan
effective January 1, 1989 (Exhibit 10(a)(9) to Form 10-K for the
fiscal year ended December 31, 1988, File No. 1-9864).
10(a)(8) --Copy of Amendment No. 1 to Tenneco Inc. Supplemental Executive
Retirement Plan (Exhibit 10(a)(9) to Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-9864).
10(a)(9) --Copy of Tenneco Inc. Benefit Equalization Plan (Exhibit 10(a)(10)
to Form 10-K for the fiscal year ended December 31, 1988, File No.
1-9864).
10(a)(10) --Copy of Amendment No. 1 to Tenneco Inc. Benefit Equalization Plan
(Exhibit 10(a)(11) to Form 10-K for the fiscal year ended December
31, 1988, File No. 1-9864).
10(a)(11) --Copy of Tenneco Inc. Board of Directors Restricted Stock and
Restricted Unit Program (Exhibit 10(a)(12) to Form 10-K for the
fiscal year ended December 31, 1990, File No. 1-9864).
10(a)(12) --Copy of 1994 Tenneco Inc. Stock Ownership Plan (Exhibit 10(a)(13)
to Form 10-K for the fiscal year ended December 31, 1993, File No.
1-9864).
10(a)(13) --Copy of Tenneco Inc. Outside Directors Retirement Plan (Exhibit
10(a)(12) to Form 10-K for the fiscal year ended December 31,
1994, File No. 1-9864).
10(a)(14) --Supplemental Pension Agreement dated September 12, 1995, between
Dana G. Mead and Tenneco Inc. (Exhibit 10 to Form 10-Q for the
quarter ended September 30, 1995, File No. 1-9864).
10(b)(1) --Lease Agreement, Tomahawk, dated as of January 30, 1991, between
The Connecticut National Bank, as Owner Trustee, and Packaging
Corporation of America (Exhibit 10(b)(1) to Form 10-K for the
fiscal year ended December 31, 1990, File No. 1-9864).
10(b)(2) --Lease Agreement, Valdosta, dated as of January 30, 1991, between
The Connecticut National Bank, Philip G. Kane, Jr., Frank
McDonald, Jr., and William R. Monroe, as Owner Trustee, and
Packaging Corporation of America (Exhibit 10(b)(2) to Form 10-K
for the fiscal year ended December 31, 1990, File No. 1-9864).
10(b)(3) --Timberland Lease dated January 31, 1991, by and between Four
States Timber Venture and Packaging Corporation of America
(Exhibit 10(b)(3) to Form 10-K for the fiscal year ended December
31, 1990, File No. 1-9864).
10(b)(4) --Asset Purchase Agreement dated as of October 1, 1995, among Mobil
Oil Corporation, Mobil Chemical Canada Limited and Tenneco Inc.
(Exhibit 2 to Current Report on Form 8-K, dated November 17, 1995,
of Tenneco Inc., File No. 1-9864).
10(c)(1) --Employment Agreement dated June 29, 1992, between Stacy S. Dick
and Tenneco Inc. (Exhibit 10(c)(3) to Form 10-K for the fiscal
year ended December 31, 1993, File No. 1-9864).
10(c)(2) --Employment Agreement dated March 12, 1992, between Dana G. Mead
and Tenneco Inc. (Exhibit 10(c)(2) to Form 10-K for the fiscal
year ended December 31, 1993, File No. 1-9864).
10(c)(3) --Employment Agreement dated December 3, 1993, between Paul T.
Stecko and Tenneco Inc. (Exhibit 10(c)(5) to Form 10-K for the
fiscal year ended December 31, 1993, File No. 1-9864).
10(c)(4) --Employment Agreement dated September 9, 1992, between Theodore R.
Tetzlaff and Tenneco Inc. (Exhibit 10(c)(6) to Form 10-K for the
fiscal year ended December 31, 1993, File No. 1-9864).
*11 --Computation of Earnings (Loss) Per Share of Common Stock.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*12 --Computation of Ratio of Earnings to Fixed Charges.
*21 --List of Subsidiaries and Affiliates of Tenneco Inc.
*23 --Consent of Arthur Andersen LLP, Independent Public Accountants for
Tenneco Inc.
*24 --Powers of Attorney of the following directors of Tenneco Inc.:
Mark Andrews
W. Michael Blumenthal
M. Kathryn Eickhoff
Peter T. Flawn
Henry U. Harris, Jr.
Belton K. Johnson
John B. McCoy
Joseph J. Sisco
William L. Weiss
Clifton R. Wharton, Jr.
*27 --Financial Data Schedule.
</TABLE>
<PAGE>
Exhibit 3(b)
BY-LAWS
of
TENNECO INC.
AS AMENDED
December 6, 1995
<PAGE>
BY-LAWS
OF
TENNECO INC.
ARTICLE I
STOCKHOLDERS PLACE OF MEETING
Section 1. All meetings of the stockholders of the Company shall be held at
such place or places, within or without the State of Delaware, as may from time
to time be fixed by the Board of Directors (the "Board"), or as shall be
specified or fixed in the respective notices or waivers of notice thereof.
ANNUAL MEETING
Section 2. The Annual Meeting of Stockholders shall be held on such date and
at such time as may be fixed by the Board and stated in the notice thereof, for
the purpose of electing directors and for the transaction of only such other
business as is properly brought before the meeting in accordance with these By-
Laws.
To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board, (b) otherwise properly brought before the meeting by
or at the direction of the Board, or (c) otherwise properly brought before the
meeting by a stockholder. In addition to any other applicable requirements, for
business to be properly brought before the Annual Meeting by a stockholder, the
stockholder must have been given timely notice thereof in writing to the
Secretary of the Company. To be timely, a stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the Company, not
less than 50 days nor more than 75 days prior to the meeting; provided, however,
that in the event that less than 65 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the Annual Meeting was mailed or such public disclosure was made, whichever
first occurs. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the Annual Meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the Company which are beneficially owned by the
stockholder, and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in these By-Laws to the contrary, no business shall
be transacted at the Annual Meeting except in accordance with the procedures set
forth in this Section, provided, however, that nothing in this Section shall be
deemed to preclude discussion by any stockholder of any business properly
brought before the Annual Meeting.
The Chairman of the Annual Meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
<PAGE>
2
SPECIAL MEETING
Section 3. Special meetings of the stockholders shall be called by the
Board. The business transacted at a special meeting shall be confined to the
purposes specified in the notice thereof. Special meetings shall be held at such
date and at such time as the Board may designate.
NOTICE OF MEETING
Section 4. Written notice of each meeting of stockholders, stating the
place, date and hour of the meeting, and the purpose or purposes thereof, shall
be mailed not less than ten nor more than sixty days before the date of such
meeting to each stockholder entitled to vote thereat.
QUORUM
Section 5. Unless otherwise provided by statute, the holders of shares of
stock entitled to cast a majority of votes at a meeting, present either in
person or by proxy, shall constitute a quorum at such meeting. The Secretary of
the Company or in his absence an Assistant Secretary or an appointee of the
presiding officer of the meeting, shall act as the Secretary of the meeting.
VOTING
Section 6. Each stockholder entitled to vote at any meeting shall be
entitled to one vote, in person or by written proxy, for each share held of
record on the record date fixed as provided in Section 4 of Article V of these
By-Laws for determining the stockholders entitled to vote at such meeting.
Except as otherwise provided by statute or by the Certificate of Incorporation
or these By-Laws, the vote of a majority of any quorum shall be sufficient to
elect directors and to pass any resolution within the power of the holders of
all the outstanding shares.
Election of directors need not be by ballot; provided, however, that by
resolution duly adopted, a vote by ballot may be required.
PROXIES
Section 7. Any stockholder entitled to vote upon any matter at any meeting
of stockholders may so vote by proxy. Every proxy shall be in writing (which
shall include telegraphing or cabling) subscribed by the stockholder or his duly
authorized attorney, and shall be dated, but need not be sealed, witnessed or
acknowledged. Proxies shall be delivered to the Secretary of the Company before
such meeting.
INSPECTORS
Section 8. At each meeting of the stockholders the polls shall be opened and
closed; the proxies and ballots shall be received and be taken in charge, and
all questions touching the qualification of voters and the validity of proxies
and the acceptance or rejection of votes shall be decided by three Inspectors,
two of whom shall have power to make a decision. Such Inspectors
<PAGE>
3
shall be appointed by the Board before the meeting, or in default thereof by the
presiding officer at the meeting, and shall be sworn to the faithful performance
of their duties. If any of the Inspectors previously appointed shall fail to
attend or refuse or be unable to serve, substitutes shall be appointed by the
presiding officer.
ARTICLE II
BOARD OF DIRECTORS
NUMBER; METHOD OF ELECTION;
TERMS OF OFFICE AND QUALIFICATION
Section 1. The business and affairs of the Company shall be managed under
the direction of the Board. The number of directors which shall constitute the
whole Board shall be not less than eight nor more than sixteen and shall be
determined from time to time by resolution adopted by a majority of the whole
Board.
The directors shall be divided into three classes, designated Class I, Class
II and Class III. Each class shall consist, as nearly as may be possible, of
one-third of the total number of directors constituting the whole Board. The
initial term for Class I directors shall expire at the annual meeting of
stockholders held in 1988; for Class II directors at the annual meeting of
stockholders held in 1989; for Class III directors at the annual meeting of
stockholders held in 1990. At each annual meeting of stockholders, successors to
the class of directors whose term expires at such annual meeting shall be
elected for a three year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case shall a decrease in the number of
directors shorten the term of any incumbent director.
A director shall hold office until the annual meeting for the year in which
his term expires and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. Any vacancy on the Board that results from an increase in
the number of directors may be filled by a majority of the directors then in
office, provided that a quorum is present, and any other vacancy occurring in
the Board may be filled by a majority of the directors then in office, even if
less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of his predecessor.
Nominations of persons for election to the Board of the Company at the
Annual Meeting of Stockholders may be made at a meeting of stockholders by or at
the direction of the Board of Directors by any nominating committee or person
appointed by the Board or by any stockholder of the Company entitled to vote for
the election of directors at the meeting who complies with the notice procedures
set forth in this Article II. Such nominations, other than those made by or at
the direction of the Board, shall be made pursuant to timely notice in writing
to the Secretary of the Company. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Company not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that in the event that less than 65 days' notice or prior
<PAGE>
4
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 15th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made, whichever
first occurs. Such stockholder's notice to the Secretary shall set forth (a) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director, (i) the name, age, business address and residence of
the person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the Company which are
beneficially owned by the person and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Rule 14A under the Securities Exchange Act of
1934 as amended; and (b) as to the stockholder giving the notice (i) the name
and record address of the stockholder and (ii) the class and number of shares of
capital stock of the Company which are beneficially owned by the stockholder.
The Company may require any proposed nominee to furnish such other information
as may reasonably be required by the Company to determine the eligibility of
such proposed nominee to serve as director of the Company. No person shall be -
eligible for election as a director of the Company at the Annual Meeting of
Stockholders unless nominated in accordance with the procedures set forth
herein. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Any director may resign his office at any time by delivering his resignation
in writing to the Company, and the acceptance of such resignation unless
required by the terms thereof shall not be necessary to make such resignation
effective.
No director who shall have attained the age of 72 shall be eligible for
reelection as a director of the Company.
As used in these By-Laws, the term "Director Emeritus" shall include only
those persons who were serving in such capacity on January 1, 1988. A Director
Emeritus shall not have the right to vote as a director, but shall be entitled
to attend directors' meetings in a consultant capacity and to receive such fees
therefor as the Board may from time to time determine.
A Director Emeritus shall be eligible for appointment by the Chief Executive
Officer, subject to ratification by the Board, to act as a member of Committees
of the Board, with such authority as shall be provided for in his appointment to
any such Committee, provided that such appointment shall terminate on the
December 31 next following such appointment and shall be subject to termination
at any time by the Chief Executive Officer, subject also to approval by the
Board. A Director Emeritus so appointed to a Committee of the Board while so
acting shall be entitled to receive notices of all meetings of and to receive
such compensation therefor as the Board may determine.
MEETINGS
Section 2. The Board may hold its meetings and have an office in such place
or places within or without the State of Delaware as the Board by resolution
from time to time may determine.
<PAGE>
5
The Board may in its discretion provide for regular or stated meetings of
the Board. Notice of regular or stated meetings need not be given. Special
meetings of the Board shall be held whenever called by direction of the Chief
Executive Officer, the President or any two of the directors. The Secretary
shall give notice of any special meeting by mailing the same at least three
days, or by telegraphing or telephoning the same at least one day, before the
meeting to each director; but such notice may be waived by any director. Unless
otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
At any meeting at which every director shall be present, even though without
notice, any business may be transacted. No notice of any adjourned meeting need
be given.
The Board shall meet immediately after election, following the Annual
Meeting of Stockholders, for the purpose of organizing, for the election of
corporate officers as hereinafter specified, and for the transaction of any
other business which may come before it. No notice of such meeting shall be
necessary.
Prior to the date of the Annual Meeting of Stockholders an annual report of
the operations of the Company during the preceding fiscal year shall be
submitted to the Board, which reports shall include consolidated statements of
income and expenditures, and a balance sheet showing the consolidated financial
condition of the Company and its consolidated subsidiaries at the close of such
fiscal year.
QUORUM
Section 3. Except as otherwise expressly required by these By-Laws or by
statute, a majority of the directors then in office shall be present at any
meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting, and the vote of a majority of the directors present at
any such meeting at which a quorum is present shall be necessary for the passage
of any resolution or for an act to be the act of the Board. In the absence of a
quorum, a majority of the directors present may adjourn such meeting from time
to time until a quorum shall be present. Notice of any adjourned meeting need
not be given.
COMPENSATION OF BOARD OF DIRECTORS
Section 4. Each director (other than a director who is a salaried officer of
the Company or of any subsidiary company), in consideration of his serving as
such, shall be entitled to receive from the Company such amount per annum and
such fees for attendance at meetings of the Board or of any Committee, or both,
as the Board shall from time to time determine. The Board may likewise provide
that the Company shall reimburse each director or member of a Committee for any
expenses incurred by him on account of his attendance at any such meeting.
Nothing contained in this Section shall be construed to preclude any director
from serving the Company in any other capacity and receiving compensation
therefor. As used in this Section 4, the term "Committee" shall include the
Board of Managers of Tenneco Foundation.
Fees with respect to Directors Emeriti and ex officio members of any
Committee of the Board shall also be established by the Board.
<PAGE>
6
ARTICLE III
COMMITTEES OF THE BOARD
COMMITTEES
Section 1. The Board shall elect from the directors by the affirmative vote
of a majority of the whole Board an Executive Committee, an Audit Committee, a
Compensation Committee and any other Committee which the Board may by resolution
prescribe. Any such other Committee shall be comprised of such persons and shall
possess such authority as shall be set forth in such resolution.
PROCEDURE
Section 2. (1) Each Committee shall fix its own rules of procedure and shall
meet where and as provided by such rules. Unless otherwise stated in these By-
Laws, a majority of a Committee shall constitute a quorum.
(2) In the absence or disqualification of a member of any Committee, the
members of such Committee present at any meeting, and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
member of the Board to act at the meeting in the place of any such absent or
disqualified member. Fees in connection with such appointments shall be
established by the Board.
REPORTS TO THE BOARD
Section 3. All completed actions by the Executive, Audit and Compensation
Committees shall be reported to the Board at the next succeeding Board meeting
and shall be subject to revision or alteration by the Board, provided, that no
acts or rights of third parties shall be affected by any such revision or
alteration.
EXECUTIVE COMMITTEE
Section 4. The Board shall elect an Executive Committee comprised of the
Chief Executive Officer and not less than four additional members of the Board.
During the interval between the meetings of the Board, the Executive Committee
shall possess and may exercise all the powers of the Board in the management and
direction of all the business and affairs of the Company (except the matters
hereinafter assigned to the Compensation Committee) including, without
limitation, the power and authority to declare dividends and to authorize the
issuance of stock, in such manner as the Executive Committee shall deem best for
the interests of the Company in all cases in which specific directions shall not
have been given by the Board.
COMPENSATION COMMITTEE
Section 5. The Board shall elect a Compensation Committee consisting of at
least four members of the Board, none of whom shall be officers or employees of
the Company or of any subsidiary company. The Board shall appoint a Chairman of
such Committee who shall be one of its members. The Compensation Committee shall
have such authority and duties as the Board by resolution shall prescribe.
<PAGE>
7
AUDIT COMMITTEE
Section 6. The Board of Directors shall elect from among its members an
Audit Committee of at least three members. The Board shall appoint a Chairman of
said Committee who may be one of its members or such other person as the Board
may appoint. The Audit Committee shall have such authority and duties as the
Board by resolution shall prescribe. In no event shall a director who is also an
officer or employee of the Company or any of its subsidiary companies serve as a
member of such Committee. The Chief Executive Officer shall be an ex officio
member of such Committee.
ARTICLE IV
OFFICERS
GENERAL PROVISIONS
Section 1. The corporate officers of the Company shall consist of the
following: a Chairman and/or a President, one of whom shall be designated Chief
Executive Officer and each of whom shall be chosen from the Board; one or more
Vice Chairman, Executive Vice Presidents, Senior Vice Presidents, Vice
Presidents and Assistant Vice Presidents; a General Counsel, a Secretary, one or
more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a
Controller, and such other officers as the Board of Directors may from time to
time designate. Insofar as permitted by statute, the same person may hold two or
more offices.
The Chairman and/or President, each Vice Chairman, Executive Vice President,
Senior Vice President and Vice President, the Secretary and the Treasurer shall
be elected by the Board. Each such officer shall hold office until his successor
is elected or appointed and qualified or until his earlier death, resignation or
removal.
Any officer may be removed, with or without cause, at any time by the Board.
A vacancy in any office may be filled for the unexpired portion of the term
in the same manner as provided in these By-Laws for election or appointment to
such office.
POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER
Section 2. The Chief Executive Officer shall have general charge and
management of the affairs, property and business of the Company, subject to the
Board, the Executive Committee and the provisions of these By-Laws. The Chief
Executive Officer or in his absence such other individual as the Board may
select, shall preside at all meetings of the stockholders. He shall also preside
at meetings of the Board and the Executive Committee, and in his absence the
Board or the Executive Committee shall appoint one of their number to preside.
The Chief Executive Officer shall perform all duties assigned to him in
these By-Laws and such other duties as may from time to time be assigned to him
by the Board. He shall have the power to appoint and remove, with or without
cause, such officers, other than those whose election is provided for in these
By-Laws, as in his judgment may be necessary or proper for the transaction of
the business of the Company, and shall determine their duties, all subject to
ratification by the Board.
<PAGE>
8
POWERS AND DUTIES OF OTHER OFFICERS
Section 3. The Chairman shall perform such duties as may from time to time
be assigned to him by the Board, the Executive Committee or the Chief Executive
Officer.
Section 4. Each Vice Chairman shall perform such duties as may from time to
time be assigned to him by the Board, the Executive Committee or the Chief
Executive Officer.
Section 5. The President shall perform such duties as may from time to time
be assigned to him by the Board, the Executive Committee or the Chief Executive
Officer.
Section 6. Each Executive Vice President shall perform such duties as may
from time to time be assigned to him by the Board, the Executive Committee or
the Chief Executive Officer.
Section 7. Each Senior Vice President shall perform such duties as may from
time to time be assigned to him by the Board, the Executive Committee or the
Chief Executive Officer.
Section 8. Each Vice President and Assistant Vice President shall perform
such duties as may from time to time be assigned to him by the Board, the
Executive Committee, the Chief Executive Officer or an Executive Vice President.
Section 9. The General Counsel shall have general supervision and control of
all of the Company's legal business. He shall perform such other duties as may
be assigned to him by the Board, the Executive Committee or the Chief Executive
Officer.
Section 10. The Secretary or an Assistant Secretary shall record the
proceedings of all meetings of the Board and/or of the Executive Committee of
the Board, and of the stockholders, in books kept for that purpose. The
Secretary shall be the custodian of the corporate seal, and he or an Assistant
Secretary shall affix the same to and countersign papers requiring such acts;
and he and the Assistant Secretaries shall perform such other duties as may be
required by the Board, the Executive Committee or the Chief Executive Officer.
Section 11. The Treasurer and Assistant Treasurers shall have care and
custody of all funds of the Company and disburse and administer the same under
the direction of the Board, the Executive Committee or the Chief Executive
Officer and shall perform such other duties as the Board, the Executive
Committee or the Chief Executive Officer shall assign to them.
Section 12. The Controller shall maintain adequate records of all assets,
liabilities and transactions of the Company and see that audits thereof are
currently and regularly made; and he shall perform such other duties as may be
required by the Board, the Executive Committee or the Chief Executive Officer.
SALARIES AND APPOINTMENTS
Section 13. The salaries of corporate officers shall be fixed by the
Compensation Committee provided for in Section 5 of Article III hereof, except
that the fixing of salaries below certain levels, determinable from time to time
by the Compensation Committee of the Board, may in the discretion of the
Committee be delegated to the Chief Executive Officer, subject to the approval
of the Board.
<PAGE>
9
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 14. Each person who is or was a director or officer of the Company,
or who serves or may have served at the request of the Company as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise (including the heirs, executors, administrators or estate of such
person) and who was or is a party or is threatened to be made a party to any
threatened, pending or completed claim, action, suit or proceeding, whether
criminal, civil, administrative or investigative, including appeals, shall be
indemnified by the Company as a matter of right to the full extent permitted or
authorized by the General Corporation Law of Delaware, as it may from time to
time be amended, against any expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement, actually and reasonably incurred by him in
his capacity as a director or officer, or arising out of his status as a
director or officer. Each person who is or was an employee or agent of the
Company, or who serves or may have served at the request of the Company as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including the heirs, executors, administrators or estate of
such person) may, at the discretion of the Board, be indemnified by the Company
to the same extent as provided herein with respect to directors and officers of
the Company.
The Company may, but shall not be obligated to, maintain insurance at its
expense, to protect itself and any person who is or was a director, officer,
employee or agent of the Company, or is or was serving as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such. The Company may, but
shall not be obligated to, pay expenses incurred in defending a civil or
criminal action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding.
The indemnification provided by this Section 14 shall not be exclusive of
any other rights to which those seeking indemnification may be entitled as a
matter of law or under any agreement, vote of stockholders or disinterested
directors or otherwise.
ARTICLE V
CAPITAL STOCK
CERTIFICATES OF STOCK
Section 1. Certificates of stock certifying the number of shares owned shall
be issued to each stockholder in such form not inconsistent with the Certificate
of Incorporation as shall be approved by the Board. Such certificates of stock
shall be numbered and registered in the order in which they are issued and shall
be signed by the Chairman, the President or a Vice President, and by the
Secretary or an Assistant Secretary. Any and all the signatures on the
certificates may be a facsimile.
TRANSFER OF SHARES
Section 2. Transfers of shares shall be made only upon the books of the
Company by the holder, in person, or by power of attorney duly executed and
filed with the Secretary of the Company, and on the surrender of the certificate
or certificates of such shares, properly assigned. The Company may, if and
<PAGE>
10
whenever the Board shall so determine, maintain one or more offices or agencies,
each in charge of an agent designated by the Board, where the shares of the
capital stock of the Company shall be transferred and/or registered. The Board
may also make such additional rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Company.
LOST, STOLEN OR DESTROYED CERTIFICATES
Section 3. The Company may issue a new certificate of capital stock of the
Company in place of any certificate theretofore issued by the Company, alleged
to have been lost, stolen or destroyed, and the Company may, but shall not be
obligated to, require the owner of the alleged lost, stolen or destroyed
certificate, or his legal representatives, to give the Company a bond sufficient
to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate, as the officers of the Company may, in their discretion,
require.
FIXING OF RECORD DATE
Section 4. In order that the Company may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or for the purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than 60 nor less that 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. A determination of stockholders entitled to notice of or to vote at a
meeting of the stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
ARTICLE VI
CONSENTS TO CORPORATE ACTION
RECORD DATE
Section 1. The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting shall be as fixed by
the Board or as otherwise established under this Section. Any person seeking to
have the stockholders authorize or take corporate action by written consent
without a meeting shall by written notice addressed to the Secretary and
delivered to the Company, request that a record date be fixed for such purpose.
The Board may fix a record date for such purpose which shall be no more than 10
days after the date upon which the resolution fixing the record date is adopted
by the Board and shall not precede the date such resolution is adopted. If the
Board fails within 10 days after the Company receives such notice to fix a
record date for such purpose, the record date shall be the day on which the
first written consent is delivered to the Company in the manner described in
Section 2 below unless prior action by the Board is required under the General
Corporation Law of Delaware, in which event the record date shall be at the
close of business on the day on which the Board adopts the resolution taking
such prior action.
<PAGE>
11
PROCEDURES
Section 2. Every written consent purporting to take or authorizing the
taking of corporate action and/or related revocations (each such written consent
and related revocation is referred to in this Article VI as a "Consent") shall
bear the date of signature of each stockholder who signs the Consent, and no
Consent shall be effective to take the corporate action referred to therein
unless, within 60 days of the earliest dated Consent delivered in the manner
required by this Section 2, Consents signed by a sufficient number of
stockholders to take such action are delivered to the Company.
A Consent shall be delivered to the Company by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Company having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery to the Company's registered
office shall be made by hand or by certified or registered mail, return receipt
requested.
In the event of the delivery to the Company of a Consent, the Secretary of
the Company shall provide for the safekeeping of such Consent and shall promptly
conduct such ministerial review of the sufficiency of the Consents and of the
validity of the action to be taken by shareholder consent as he deems necessary
or appropriate, including, without limitation, whether the holders of a number
of shares having the requisite voting power to authorize or take the action
specified in the Consent have given consent; provided, however, that if the
corporate action to which the Consent relates is the removal or replacement of
one or more members of the Board, the Secretary of the Company shall promptly
designate two persons, who shall not be members of the Board, to serve as
Inspectors with respect to such Consent and such Inspectors shall discharge the
functions of the Secretary of the Company under this Section 2. If after such
investigation the Secretary or the Inspectors (as the case may be) shall
determine that the Consent is valid and that the action therein specified has
been validly authorized, that fact shall forthwith be certified on the records
of the Company kept for the purpose of recording the proceedings of meetings of
stockholders, and the Consent shall be filed in such records, at which time the
Consent shall become effective as stockholder action. In conducting the
investigation required by this Section 2, the Secretary or the Inspectors (as
the case may be) may, at the expense of the Company, retain special legal
counsel and any other necessary or appropriate professional advisors, and such
other personnel as they may deem necessary or appropriate, to assist them, and
shall be fully protected in relying in good faith upon the opinion of such
counsel or advisors.
ARTICLE VII
MISCELLANEOUS
DIVIDENDS AND RESERVES
Section 1. Dividends upon the capital stock of the Company may be declared
as permitted by law by the Board or the Executive Committee at any regular or
special meeting. Before payment of any dividend or making any distribution of
profits, there may be set aside out of the surplus or net profits of the Company
such sum or sums as the Board or the Executive Committee, from time to time, in
their absolute discretion think proper as a reserve fund to meet contingencies,
or for such other purposes as the Board or Executive Committee shall think
conducive to the interests of the Company, and any reserve so established may be
abolished and restored to the surplus account by like action of the Board or the
Executive Committee.
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12
SEAL
Section 2. The seal of the Company shall bear the corporate name of the
Company, the year of its incorporation and the words "Corporate Seal, Delaware".
WAIVER
Section 3. Whenever any notice whatever is required to be given by statute
or under the provisions of the Certificate of Incorporation or these By-Laws, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
FISCAL YEAR
Section 4. The fiscal year of the Company shall begin with January first and
end with December thirty-first.
RATIFICATION
Section 5. Any transaction questioned in any stockholders derivative suit on
the ground of lack of authority, defective or irregular execution, adverse
interest of director, officer or stockholder, nondisclosure, miscomputation, or
the application of improper principles or practices of accounting may be
ratified before or after judgment, by the Board or by the stockholders; and, if
so ratified, shall have the same force and effect as if the questioned
transaction had been originally duly authorized, and said ratification shall be
binding upon the Company and its stockholders and shall continue as a bar to any
claim or execution of any judgment in respect of such questioned transaction.
AMENDMENTS
Section 6. The Board from time to time shall have the power to make, alter,
amend or repeal any and all of these By-Laws, but any By-Laws so made, altered,
amended or repealed by the Board may be amended, altered or repealed by the
stockholders.
CERTIFICATION
The undersigned hereby certifies that he is the duly elected and acting
__________ Secretary of TENNECO INC., a Delaware corporation, and the keeper of
its corporate records and minutes. The undersigned further hereby certifies that
the above and foregoing is a true and correct copy of the By-Laws of said
Company, as in force at the date hereof.
WITNESS the hand of the undersigned and the seal of said Company, this
day of , .
________________________________________
______________________ Secretary
<PAGE>
EXHIBIT 4(a)(1)
[CONFORMED COPY]
================================================================================
TENNECO INC.
TO
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as Trustee
----------
Indenture
Dated as of March 15, 1988
----------
================================================================================
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TABLE OF CONTENTS
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Parties...................................................... 1
Authorization of Securities.................................. 1
Authorization of and consideration for the Indenture......... 1
ARTICLE 1.
Definitions.
Affiliate.................................................... 2
Bankruptcy Act............................................... 2
Board of Directors........................................... 2
Business Day................................................. 2
Certified resolution......................................... 2
Company...................................................... 3
Consolidated Assets.......................................... 3
Consolidated Debt............................................ 3
Consolidated Net Tangible Assets............................. 3
Consolidated Subsidiary...................................... 3
Counsel...................................................... 3
Debt......................................................... 4
Domestic Subsidiary.......................................... 4
Finance Subsidiary........................................... 4
Foreign Subsidiary........................................... 4
General Mortgage............................................. 4
Goodwill..................................................... 4
Indenture.................................................... 5
Interest..................................................... 5
Lien......................................................... 5
Liens upon rights-of-way for pipeline purposes............... 5
Mortgage Bonds............................................... 5
Officers' certificate........................................ 5
Oil, Gas, Mineral and Processing and Other Plant Properties.. 5
Opinion of counsel........................................... 7
Original issue date.......................................... 7
Original Issue Discount Security............................. 7
Outstanding.................................................. 7
Person....................................................... 8
Pipelines.................................................... 8
Principal office of the Trustee.............................. 8
Purchase money obligation.................................... 8
Registered holder............................................ 8
Responsible officers of the Trustee.......................... 9
Securities................................................... 9
Securityholders.............................................. 10
Subsidiary................................................... 10
Supplemental indenture....................................... 10
Tennessee.................................................... 10
Trustee...................................................... 11
Trust Indenture Act of 1939.................................. 11
U.S. Government Obligations.................................. 11
Yield to Maturity............................................ 11
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ARTICLE 2.
Form, Execution, Delivery, Registration
Exchange and Registration of Transfer of Securities.
SECTION 2.01 Form of Securities; legends; place and medium of payments ... 11
SECTION 2.02 Issuance of series of Securities............................. 12
SECTION 2.03 Authentication by Trustee.................................... 13
SECTION 2.04 Kinds and denominations of Securities; dates of Securities... 14
SECTION 2.05 Execution and authentication of Securities by the Company.... 15
SECTION 2.06 Registration and registration of transfer of Securities...... 16
SECTION 2.07 Exchange and registration of transfer of Securities.......... 16
SECTION 2.08 Temporary Securities......................................... 17
SECTION 2.09 Recognition of registered holder of Securities; acquisition
of Securities by Company.................................... 18
SECTION 2.10 Mutilated, destroyed, lost or stolen Securities.............. 18
SECTION 2.11 Upon consolidation, merger or transfer, new Securities of
successor corporation may be issued......................... 18
SECTION 2.12 Change of name of Company.................................... 19
ARTICLE 3.
Redemption.
SECTION 3.01 Provision for Securities subject to redemption............... 19
SECTION 3.02 Notice of redemption; selection in case of
partial redemption.......................................... 19
SECTION 3.03 Payment of Securities called for redemption.................. 21
ARTICLE 4.
Particular Covenants of the Company.
SECTION 4.01 To pay principal, premium, if any, and interest.............. 21
SECTION 4.02 To maintain office or agency for presentation of Securities;
appointment of agent........................................ 22
SECTION 4.03 To furnish paying agent moneys for payment of Securities
and interest thereon........................................ 23
SECTION 4.04 Negative pledge clause and exceptions thereto................ 23
SECTION 4.05 To maintain corporate existence.............................. 27
SECTION 4.06 Of further assurance......................................... 27
SECTION 4.07 Reports to Trustee........................................... 27
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ARTICLE 5
Remedies of Trustee and Securityholders.
SECTION 5.01 Defaults defined.................................... 28
SECTION 5.02 Declaration of maturity of principal on default..... 31
Waiver of declaration of maturity................... 32
SECTION 5.03 Company will pay to Trustee at its request whole
amount due upon occurrence of certain events....... 33
Upon failure to pay, Trustee may recover judgment... 33
Recovery of judgment to be for ratable benefit of
Securityholders.................................... 33
Trustee appointed attorney-in-fact for
Securityholders to file claims..................... 34
Trustee may prove indebtedness...................... 34
SECTION 5.04 Application of moneys collected
by Trustee......................................... 35
SECTION 5.05 Securities credited on purchase price in case
of sale............................................ 36
SECTION 5.06 A default subsisting, Trustee may enforce rights by
judicial proceeding; Trustee entitled to have
receiver appointed................................. 37
SECTION 5.07 Holders of majority of Securities may direct
proceedings........................................ 37
Waiver of defaults on request of Securityholders.... 37
SECTION 5.08 Right of Securityholders to institute proceeding.... 38
Assessment of costs and attorney's fees in legal
proceedings........................................ 39
SECTION 5.09 Remedies cumulative................................. 40
SECTION 5.10 Waiver of stay or extension laws.................... 40
ARTICLE 6.
Securityholders' Acts, Holdings and Apparent Authority.
Form of instruments executed by Securityholders................... 41
Proof of execution................................................ 41
Proof of holding of Securities.................................... 41
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ARTICLE 7.
REPORTS BY THE COMPANY AND THE TRUSTEE
AND SECURITYHOLDERS' LISTS.
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SECTION 7.01 Reports by Trustee
(a) annual report to Securityholders......................... 41
(b) special reports to Securityholders....................... 42
(c) manner and extent of transmitting reports................ 43
(d) copies to be filed with Securities and Exchange
Commission and with stock exchanges..................... 43
SECTION 7.02 Reports by Company
(a) reports and information to be filed with Trustee......... 43
(b) additional information and reports to be filed with
Trustee and the Securities and Exchange
Commission.............................................. 44
(c) reports to Securityholders............................... 44
SECTION 7.03 Securityholders' lists
(a) Company to furnish Trustee with names and addresses
of Securityholders...................................... 44
(b) Trustee to preserve information.......................... 45
(c) Securityholders' rights to access to names and
addresses of other Securityholders...................... 45
Authority of Securities and Exchange Commission
with respect to Securityholders lists................... 45
Trustee not liable for disclosure........................ 46
ARTICLE 8.
CONCERNING THE TRUSTEE
SECTION 8.01 Acceptance of trusts upon specified conditions
(a) Trustee entitled to compensation and expenses............ 46
(b) Trustee may act by agents and attorneys.................. 47
(c) Trustee not responsible for recitals of fact............. 47
--no representation with respect to validity of
Indenture.............................................. 47
--not accountable for application of proceeds of
Securities............................................. 47
(d) Trustee may consult with counsel......................... 47
(e) Trustee may rely upon certificate as to adoption of
resolutions............................................. 48
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(f) Trustee may become owner or pledgee of Securities...... 48
(g) action at request of or with consent of
Securityholders binding on future holders............. 48
(h) Trustee entitled to security against costs............. 48
(i) Trustee protected in relying on documents.............. 48
(j) Trustee may accept officers' certificate as proof of
facts................................................. 48
SECTION 8.02 Duties of Trustee in case of default......................... 48
--Trustee to use same degree of care as prudent man would
use........................................................ 48
--Trustee not to be relieved from liability for negligence
or willful misconduct...................................... 48
--except:
(1) when no default subsisting
(a) Trustee liable only for performance of duties
specifically set forth............................ 49
(b) Trustee may conclusively rely on opinions and
certificates furnished to it pursuant to
Indenture......................................... 49
(2) Trustee not liable for error of judgment made in
good faith by responsible officer..................... 49
(3) Trustee not liable for action or nonaction at
direction of holders of majority of Securities........ 49
--Trustee may examine books and records of the Company....... 49
SECTION 8.03 Notice to Securityholders of default......................... 50
SECTION 8.04 Resignation of Trustee and notice thereof.................... 51
Removal of Trustee........................................... 51
SECTION 8.05 Disqualification of Trustee by reason of
conflicting interest........................................ 51
(a) Trustee to resign as a result of
conflicting interest.................................. 51
(b) notice to Securityholders of failure to resign......... 51
(c) right of Securityholders to petition for removal of
Trustee............................................... 51
(d) meaning of the term "conflicting interest"............. 52
SECTION 8.06 Appointment of successor trustee
--by Securityholders......................................... 57
--by Company................................................. 57
--notice of appointment by Company........................... 57
--appointment by a court..................................... 57
</TABLE>
<PAGE>
vi
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Company covenants to appoint successor trustee having
specified qualifications.................................... 57
Trustee to resign if specified qualifications are
not met..................................................... 58
Execution of instruments by successor trustee,
predecessor trustee and Company............................. 58
SECTION 8.07 Consolidation and merger of Trustee.......................... 59
SECTION 8.08 Trustee required to account for amounts collected
as creditor of Company under certain conditions............. 60
(a) Trustee, if a creditor, to set apart and hold
certain moneys in a special account
during default......................................... 60
(b) situations not requiring Trustee to account............. 61
(c) apportionment of funds and property set apart........... 61
(d) in case of resignation of the Trustee................... 63
(e) meaning of certain terms................................ 63
(f) creditor relationships to which Section
not applicable......................................... 63
</TABLE>
ARTICLE 9.
DEFEASANCE.
<TABLE>
<C> <S> <C>
SECTION 9.01 Discharge of Indenture upon payment of Securities............ 65
SECTION 9.02 Defeasance and discharge of Securities of any series
upon deposit of moneys...................................... 65
SECTION 9.03 Covenant defeasance of Securities of any series
upon deposit of moneys...................................... 67
SECTION 9.04 Acknowledgment of discharge.................................. 68
SECTION 9.05 Payment of moneys............................................ 68
SECTION 9.06 Reinstatement of Indenture................................... 68
SECTION 9.07 No interest payable to Company; deposit in trust............. 69
</TABLE>
ARTICLE 10.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS.
<TABLE>
<S> <C>
Liability solely corporate................................................ 69
</TABLE>
ARTICLE 11.
CONSOLIDATION, MERGER AND SALE.
<TABLE>
<C> <S> <C>
SECTION 11.01 Consolidation, merger or sale permitted under certain
conditions................................................. 70
SECTION 11.02 Substitution of successor corporation for the Company....... 71
</TABLE>
<PAGE>
vii
ARTICLE 12.
SUPPLEMENTAL INDENTURES.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 12.01 Supplemental Indentures by Company and Trustee............... 71
(a) To add covenants and agreements......................... 72
(b) To add provisions in case of pledge or mortgage......... 72
(c) To evidence succession to Company....................... 72
(d) To establish the form or terms of any series of
Securities............................................. 72
(e) To correct or supplement existing provisions............ 72
Trustee's reliance on Company's request...................... 72
SECTION 12.02 Supplemental indentures with consent of Securityholders...... 72
SECTION 12.03 Authorization to Trustee for execution of supplemental
indentures.................................................. 73
SECTION 12.04 Supplemental indenture deemed a part of this Indenture, to
conform to provisions of Trust Indenture Act of 1939........ 74
</TABLE>
ARTICLE 13.
MISCELLANEOUS PROVISIONS.
<TABLE>
<S> <C>
SECTION 13.01 Benefits restricted to parties and holders of Securities..... 74
SECTION 13.02 Cancellation of Securities paid, redeemed or
otherwise retired........................................... 75
SECTION 13.03 Evidence of compliance with conditions precedent............. 75
Execution of notices, requests, certificates or statements... 75
Contents of certificates and opinions........................ 75
SECTION 13.04 Provisions required by Trust Indenture Act of 1939
to control.................................................. 76
SECTION 13.0S Accounting terms and determinations.......................... 76
SECTION 13.06 Service of notices and demands............................... 76
SECTION 13.07 Execution in counterparts.................................... 76
SECTION 13.08 Governing law................................................ 76
Testimonium................................................................ 77
Execution.................................................................. 77
Acknowledgments............................................................ 77
</TABLE>
<PAGE>
1
INDENTURE (hereinafter called "this Indenture"), dated as of the 15th day of
March, 1988, made by and between TENNECO INC., a corporation organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company"), party of the first part, and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a corporation existing under the national banking laws of the
United States of America, having its principal office in the Borough of
Manhattan, The City of New York, New York (hereinafter called the "Trustee"), as
Trustee, party of the second part;
WHEREAS, the Company deems it appropriate to borrow funds for its corporate
purposes, and to that end has duly authorized the issuance from time to time of
unsecured debentures, notes and/or other evidences of indebtedness to be issued
in one or more series (referred to hereinafter as the "Securities") up to such
principal amount or amounts as may be authorized in accordance with the terms of
this indenture; and
WHEREAS, all the requirements of law and the by-laws and certificate of
incorporation of the Company have been fully complied with and all other acts
and things necessary to make this Indenture a valid, binding and legal
instrument for the benefit of the holders of the Securities have been done and
performed;
NOW, THEREFORE, THIS INDENTURE WITNESSETH that for and in consideration of
the premises and of the acceptance or purchase of the Securities by the holders
thereof and of the sum of one hundred dollars lawful money of the United States
of America to it in hand paid by the Trustee at or before the ensealing and
delivery of this Indenture, the receipt whereof it hereby acknowledges, the
Company covenants and agrees with the Trustee, for the equal and proportionate
benefit of the present and future holders of the Securities, without preference,
priority or distinction of any of the Securities over any of the others by
reason of priority in time of issuance, negotiation or maturity thereof, or
otherwise, as follows:
ARTICLE 1.
DEFINITIONS.
The terms defined in this Article I shall, for all purposes of this Indenture
and of any indenture supplemental hereto, have the meanings
<PAGE>
2
herein specified, unless the context otherwise specifies or requires. Unless
herein otherwise defined, all terms used in this Indenture which are defined in
the Trust Indenture Act of 1939 (as in force on the date of this Indenture),
shall have the meanings assigned to them in said Act, unless the context
otherwise specifies or requires.
Affiliate:
The term "affiliate" when used with reference to the Company or another
person shall mean any person directly or indirectly controlling, controlled by,
or under direct or indirect common control with, the Company or such other
person.
Bankruptcy Act:
The term "Bankruptcy Act" shall mean any bankruptcy, insolvency,
reorganization or other similar law or statute of general applicability of the
United States of America or any State thereof.
Board of Directors:
The term "Board of Directors" shall mean either the Board of Directors of the
Company or the Executive Committee of the Board of Directors so long as the
Executive Committee may lawfully exercise the functions of the Board of
Directors in respect to the matters referred to in this Indenture.
Business Day:
The term "business day" shall mean any day other than a Saturday, Sunday or
legal holiday in The City of New York or a day on which banking institutions in
The City of New York are authorized by law or executive order to close and on
which the principal office of the Trustee is not open for business.
Certified resolution:
The term "certified resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the date
of such certification.
<PAGE>
3
Company:
The term "Company" shall mean the party of the first part hereto, Tenneco
Inc., and, subject to Article 11, shall also include its successors and assigns.
Consolidated Assets:
The term "Consolidated Assets" shall mean at any date the consolidated assets
of the Company and its consolidated Subsidiaries including all investments by
the Company or its consolidated Subsidiaries in other entities (less applicable
reserves and other properly deductible items), determined on a consolidated
basis as of such date.
Consolidated Debt:
The term "Consolidated Debt" shall mean at any date the Debt of the Company
and its consolidated Subsidiaries (other than Finance Subsidiaries), determined
on a consolidated basis as of such date.
Consolidated Net Tangible Assets:
The term "Consolidated Net Tangible Assets" shall mean at any date
Consolidated Assets after deducting therefrom (a) all current liabilities of the
Company and its consolidated Subsidiaries (excluding any which are by their
terms unconditionally extendible or renewable at the option of the obligor
thereon to a time more than 12 months after the time as of which the amount
thereof is being computed) and (b) Goodwill, all determined on a consolidated
basis as of such date.
Consolidated Subsidiary:
The term "consolidated Subsidiary" shall mean at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company in its consolidated financial statements as of such date.
Counsel:
The term "counsel" shall mean counsel, who may be counsel to the Company.
<PAGE>
4
Debt:
The term "Debt", as applied to any person, shall mean any obligation created
or assumed by such person for the repayment of money borrowed and any purchase
money obligation created or assumed by such person. All such Debt guaranteed in
any manner by such person or in effect guaranteed by such person through a
contingent agreement to purchase said Debt and all such Debt secured by mortgage
or other lien upon property owned by such person and upon which such person
customarily pays interest, although such person has not assumed or become liable
for the payment of such Debt, shall for all purposes hereof be deemed to be
"Debt" of such person.
Domestic Subsidiary:
The term "domestic Subsidiary" shall mean any Subsidiary which is not a
foreign Subsidiary.
Finance Subsidiary:
The term "Finance Subsidiary" shall mean any Subsidiary which is principally
engaged in the business of financing the sale or lease of the goods or services
of the Company and its consolidated Subsidiaries and third parties. At March 1,
1988, the Finance Subsidiaries were Tenneco Credit Corporation, J. I. Case
Credit Corporation, Tenneco Credit Canada Corp., Case Credit Limited, Compania
de Financiacion Case S.A., J. I. Case Credit Corporation of Australia Pty.
Limited and Tenneco International Finance Limited.
Foreign Subsidiary:
The term "foreign Subsidiary" shall mean any Subsidiary which is organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia and (determined on a consolidated
basis) more than 66 2/3% of its sales or earnings are derived from operations
located in, or more than 66 2/3% of its assets are located in, territories of
the United States of America and jurisdictions outside the United States of
America.
General Mortgage:
The term "General Mortgage" shall mean the Mortgage and Deed of Trust of
Tennessee, dated May 1, 1945, to The First National Bank of Chicago and Robert
L. Grinnell (A.R. Bohm, Successor Individual Trustee), as Trustees, as
supplemented and amended at the date hereof.
Goodwill:
The term "Goodwill" shall mean at any date the amount of the Company's
investment in consolidated Subsidiaries in excess of the net assets of such
Subsidiaries at the time of acquisition of such assets, less amortization on
such excess amount from the time of acquisition thereof, all as reflected on the
consolidated balance sheet of the Company and its consolidated Subsidiaries as
of such date.
<PAGE>
5
Indenture:
The term "Indenture" shall mean this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular series
of Securities established as contemplated hereunder.
Interest:
The term "interest" shall mean, when used with respect to noninterest bearing
Securities, interest payable after maturity.
Lien:
The term "Lien" shall mean any mortgage, pledge, security interest, lien or
other encumbrance.
Liens upon rights-of-way for pipeline purposes:
The term "liens upon rights-of-way for pipeline purposes" shall mean any
mortgages, liens or other encumbrances created by persons other than the Company
or any of its Subsidiaries and any renewal or extension of any such lien,
mortgage or other encumbrance, which at the particular time in question are
liens upon the lands over which easements or rights-of-way for pipeline purposes
are held, securing bonds or other indebtedness which have not been assumed or
guaranteed by the Company or any of its Subsidiaries or on which the Company or
any of its Subsidiaries does not customarily pay interest charges.
Mortgage Bonds:
The term "Mortgage Bonds" shall mean bonds of Tennessee issued under its
General Mortgage.
Officers' certificate:
The term "officers' certificate" shall mean a certificate signed by the
President or a Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company and conforming to the
requirements of (S) 13.03.
Oil, Gas, Mineral and Processing and Other Plant Properties:
The term "oil, gas, mineral and processing and other plant properties" shall
mean the following properties and assets, now owned or hereafter acquired by the
Company or any of its Subsidiaries, namely: (a) all oil, gas
<PAGE>
6
and mineral leases, royalties, overriding royalties, production payments and fee
and other interests and rights in oil, gas and other minerals in place
wheresoever situated; (b) all oil, gas and other wells and mines for the
exploration, development and production of oil, gas and other minerals; (c)
all well, lease and mine equipment, personal property, fixtures and facilities
of every kind held or used in the exploration, development, operation or
maintenance of oil, gas and mineral leases, mines or other interests; (d) all
drilling rigs, workover rigs, drilling barges, drilling platforms, boats or
other marine equipment, and related equipment, parts, tools and accessories; (e)
all gas (including casinghead gas) gathering lines and systems connected to any
well or plant, up to the point at which the gas first enters a feeder, lateral
or main transmission line of oil, gas or other minerals, including a purchaser
or transporter; (f) all oil, distillate, condensate, gasoline and other
products gathering lines, pipelines, tanks, pumps, loading racks and other
property used in transporting, handling, storing, marketing or distributing oil,
distillate, condensate, gasoline or any other products or derivatives thereof,
and related equipment, machinery and facilities; (g) all meters, metering,
testing and measuring equipment installed and operated to measure oil, gas or
other minerals produced and delivered from producing properties or plants; (h)
all cycling plants, compressor plants, treating plants, processing plants,
refineries, petro-chemical plants and other plants of any kind owned and used in
the operation and maintenance of the aforementioned leases, interests and mines
or in the recovery, treating, refining or manufacture by any means or methods of
oil, gas, casinghead gas, condensate, distillate, gasoline or other hydrocarbons
or chemicals or any other minerals, or any products therefrom or derivatives
thereof, and all related machinery, equipment, personal property and accessories
held or used in connection therewith; (i) all oil, gas, casinghead gas,
distillate, condensate, and other hydrocarbons or chemicals or minerals of any
kind, gasoline and other products; (j) all lands held in fee, under lease or
otherwise which are used solely in connection with any of the aforementioned
operations, and the buildings, improvements, and fixtures thereon, and all
equipment, furnishings and supplies therein, including without limitation all
warehouses, and warehouse stock, casing and other materials, equipment and
supplies used or usable in such operations; (k) all contracts for the purchase
or sale of gas or casinghead gas produced or delivered from any of the
properties or plants included in this definition which are not connected to any
feeder, lateral or main transmission line of the Company or any of its
Subsidiaries, and all
<PAGE>
7
contracts for the processing of gas or casinghead gas or for the purchase or
sale or manufacture of oil, distillate, condensate, natural gasoline and other
hydrocarbons or chemicals or products or derivatives thereof, or for the
purchase or sale of or relating to any other minerals; and (1) without limiting
in any way the generality of the foregoing, all property and assets of every
kind and character, real, personal and/or mixed, wheresoever situated acquired
by Tennessee from Tennessee Production Company, a Delaware corporation, under
Agreement of Merger dated August 20, 1954.
Opinion of counsel:
The term "opinion of counsel" shall mean an opinion or opinions in writing
signed by counsel and conforming to the requirements of (S) 13.03.
Original issue date:
The term "original issue date" with regard to any Security (or portion
thereof) shall mean the earlier of (a) the date of such Security, (b) the date
of any Security (or portion thereof) for which such Security was issued
(directly or indirectly) on registration of transfer, exchange or substitution
or (c) the date specified with respect to such Security pursuant to (S) 2.02.
Original Issue Discount Security:
The term "Original issue Discount Security" shall mean any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
(S) 5.02.
Outstanding:
The term "outstanding", when used with respect to Securities, shall have the
meaning specified in the definition of Securities, and, when used with respect
to any other Debt of the Company, shall mean Debt then or theretofore created or
assumed by the Company, except
(a) All Debt theretofore paid or the evidences of which shall have been
reacquired by the Company; and
(b) Debt for the payment of which moneys or U.S. Government Obligations
in the necessary amount shall have been irrevocably
<PAGE>
8
deposited in trust with the Trustee hereunder or with some other bank or
trust company, provided that if any such Debt is to be paid prior to the
maturity thereof, necessary notice of such payment shall, according to an
opinion of counsel furnished to the Trustee, have been published or otherwise
given or provision satisfactory to the Trustee shall have been made therefor.
Person:
The term "person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
Pipelines:
The term "pipelines" shall mean pipelines for the gathering, transmission or
distribution of natural, manufactured or mixed gas.
Principal office of the Trustce:
The term "principal office of the Trustee" shall mean the principal office of
the Trustce in the Borough of Manhattan, The City of New York, New York, at
which at any particular time its corporate trust business shall be administered,
which office is, at the date of execution of this Indenture, located at One New
York Plaza, New York, New York 10081.
Purchase money obligation:
The term "purchase money obligation" shall mean any obligation incurred by a
purchaser of property to the seller for the payment of any part of the purchase
price of such property, which obligation by its terms matures one year or more
from the date of the creation thereof, and shall not include any obligation for
the repayment of money borrowed for the payment of any part of the purchase
price of property.
Registered holder:
The term "registered holder" shall mean thc person or persons in whose name
or names a particular Security shall be registered on the books of the Company
kept for that purpose in accordance with the terms of this Indenture.
<PAGE>
9
Responsible officers of the Trustee:
The term "responsible officers of the Trustee" shall mean the chairman of the
board of directors, the president, every vice president, the secretary, the
treasurer, the cashier, and every other officer and assistant officer of the
Trustee, other than those specifically above-mentioned, to whom any corporate
trust matter is referred because of his knowledge of, or familiarity with, a
particular subject.
Securities:
The term "Security" or "Securities" shall mean (except as otherwise provided
in (S) 8.05) any Security, or all the Securities, as the case may be,
authenticated and delivered under this Indenture.
The term "outstanding under this Indenture" or "outstanding hereunder" or
"outstanding", when used with reference to Securities, shall mean as of any
particular time all Securities authenticated and delivered under this Indenture,
except:
(a) Securities cancelled by the Trustee or delivered to the Trustee for
cancellation at or prior to the particular time;
(b) Securities, or portions thereof, for whose payment or redemption money
or U.S. Government Obligations in the necessary amount shall have theretofore
been irrevocably deposited with the Trustee in trust (whether upon or prior
to thc maturity of such Securities) for the holders of such Securities; and
(c) Securities in lieu of and in substitution for which other Securities
shall have been authenticated and delivered pursuant hereto.
In determining whether the holders of the requisite principal amount of
outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of an Original Issue Discount Security that shall be deemed to be
outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the maturity thereof pursuant to (S) 5.02.
The term "issued", when used with respect to Securities, shall mean sold or
otherwise disposed of for value by the Company except by way of pledge unless
the pledge shall have been foreclosed.
<PAGE>
10
Securityholders:
The term "Securityholders" or "holders of the Securities" or "holders" or
other similar terms shall mean the registered holders of Securities.
Any reference to a particular percentage or proportion of the Securityholders
shall mean the holders at the particular time of the specified percentage or
proportion in aggregate principal amount of all Securities or one or more series
thereof then outstanding under this Indenture, exclusive of Securities owned by
the Company or other obligor upon the Securities (whether or not theretofore
issued) or by any affiliate of the Company or such obligor and whether held in
the treasury of the Company or any such obligor or affiliate or pledged to
secure any indebtedness; provided, however, that where such reference is made in
connection with the protection of the Trustee, in acting upon the direction or
consent of a specified percentage or proportion of Securityholders, such
Securities shall be excluded only if known to the Trustee to be so owned; and
provided further, that Securities pledged in good faith may be regarded as
outstanding for the purposes of this paragraph if the pledgee shall establish to
the satisfaction of the Trustee the pledgee's right to vote such Securities and
that the pledgee is not an affiliate of the Company or such obligor.
Subsidiary:
The term "Subsidiary" shall mean any corporation or other person of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other individuals performing similar
functions are at the time owned by the Company or by one or more Subsidiaries or
by the Company and one or more Subsidiaries.
Supplemental indenture:
The term "supplemental indenture" or "indenture supplemental hereto" shall
mean any indenture hereafter duly authorized and entered into in accordance with
the provisions of this Indenture.
Tennessee:
The term "Tennessee" shall mean Tennessee Gas Pipeline Company, a Delaware
corporation which, at the date of this Indenture, is a wholly-owned subsidiary
of the Company.
<PAGE>
11
Trustee:
The term "Trustee" shall mean The Chase Manhattan Bank (National
Association), or the trustee under this Indenture for the time being, whether
original or successor.
Trust Indenture Act of 1939:
The term "Trust Indenture Act of 1939" shall mean the Trust Indenture Act of
1939 as it was in force on the date of this Indenture.
U.S. Government Obligations:
The term "U.S. Government Obligations" shall mean direct obligations of, or
obligations the principal and interest on which are fully guaranteed by, the
United States of America and which are not callable at the option of the issuer
thereof.
Yield to Maturity:
The term "Yield to Maturity" shall mean the yield to maturity on a series of
securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with accepted financial practice.
ARTICLE 2.
FORM, EXECUTION, DELIVERY, REGISTRATION, EXCHANGE
AND REGISTRATION OF TRANSFER OF SECURITIES.
(S) 2.01. The Securities of each series shall be substantially in the form
(not inconsistent with this Indenture) established pursuant to resolutions of
the Board of Directors or by an officer or officers of the Company pursuant to
resolutions of the Board of Directors or pursuant to one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture. Any of the Securities may be issued with appropriate insertions,
omissions, substitutions and variations, and may have such legends or
endorsements printed or otherwise endorsed thereon as may be required to comply
with any law or the rules of any securities exchange or
<PAGE>
12
of any governmental commission, or to conform to any usage with respect thereto;
and the Board of Directors, by resolution, may amend any legends or endorsements
on Securities then outstanding so as to comply with any such law or rules or so
as to conform to any such usage.
The principal of and the premium, if any, and the interest, if any, on each
series of the Securities shall be paid at the principal office of the Trustee;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder entitled thereto at his address
as it shall appear on the SecuritY register.
(S) 2.02. The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture shall be unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a resolution of the Board of Directors and set
forth in an officers' certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities of the series pursuant to
(S) 2.07, 2.08, 2.10, 2.11 or 3.02);
(3) the date or dates on which the principal and premium, if any, of the
Securities of the series is payable;
(4) the rate or rates, or method by which the rate or rates shall be
determined, at which the Securities of the series shall bear interest, if
any, the date or dates from which such interest shall accrue, the interest
payment dates on which such interest shall be payable and the record dates
for the determination of holders to whom interest is payable:
(5) the place or places where the principal of, and premium, if any, and
any interest on Securities of the series shall be payable;
(6) the price or prices at which, the period or periods within which and
the terms and conditions upon which Securities of the series may be
<PAGE>
13
redeemed, in whole or in part, at the option of the Company, pursuant to any
sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any sinking fund or analogous provisions
or at the option of a Securityholder thereof and the price or prices at which
and the period or periods within which and the terms and conditions upon
which Securities of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable:
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant tO (S) 5.02 or
provable in bankruptcy pursuant to (S) 5.03;
(10) any events which shall constitute defaults with respect to the
Securities of a particular series, if not set forth herein;
(11) any other terms of the series; and
(12) any trustees, authenticating or paying agents, transfer agents or
registrars with respect to the Securities of such series.
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
resolution of the Board of Directors and set forth in such officers' certificate
or as may otherwise be provided in any such indenture supplemental hereto.
(S) 2.03. At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Securities to or upon the written order of the
Company, signed by its Chairman of the Board, its President or any of its Vice
Presidents and by its Treasurer or any Assistant Treasurer or its Secretary or
any Assistant Secretary, without any further action by the Company hereunder. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to
<PAGE>
14
such Securities, the Trustee shall be entitled to receive, and (subject to (S)
8.02) shall be fully protected in relying upon:
(1) a copy of a certified resolution or resolutions relating thereto and,
if applicable, an appropriate record of any action taken pursuant to such
resolution:
(2) an executed supplemental indenture or an officers' certificate setting
forth the form and terms of the Securities as required by (S) 2.02; and
(3) an opinion of counsel which shall state
(a) that such Securities have been duly authorized and, when duly
executed and delivered by the Company and authenticated and delivered by
the Trustee in the manner and subject to any conditions specified in such
opinion of counsel, will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting the enforcement of creditors'
rights and to general equity principles; and
(b) that all laws and requirements (including the obtaining of all
necessary authorizations, approvals and consents, if any, of governmental
bodies) in respect of the execution and delivery by the Company of such
Securities have been complied with and that authentication and delivery of
such Securities by the Trustee will not violate the terms of the Indenture
The Trustee shall have the right to decline to authenticate and deliver any
Securities under this (S) 2.03 if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith by its board of directors or trustees, executive committee, or a trust
committee of directors or trustees and/or vice presidents shall determine that
such action would expose the Trustee to personal liability to existing
Securityholders.
(S) 2.04. The definitive Securities shall be issuable as registered
securities without coupons and in denominations as shall be specified as
contemplated by (S) 2.02. In the absence of any such specification with respect
to the
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15
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Each Security shall be dated the date of its authentication, shall bear
interest, if any, at such rate and from such date and shall be payable on such
dates, in each case, as shall be specified as contemplated by (S) 2.02.
The person in whose name any Security of any series is registered at the
close of business on any record date applicable to a particular series with
respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the extent
the Company shall default in the payment of the interest due on such interest
payment date for such series, in which case such defaulted interest shall be
paid to the persons in whose names outstanding Securities for such series are
registered at the close of business on a subsequent record date (which shall be
not less than five business days prior to the date of payment of such defaulted
interest ) established by notice given by mail by or on behalf of the Company to
the holders of Securities not less than 15 days preceding such subsequent record
date.
(S) 2.05. Each Security shall be signed in the name and on behalf of the
Company by its Chairman of the Board, its President or one of its Vice
Presidents, and its corporate seal shall be affixed thereto and attested by the
Secretary or one of the Assistant Secretaries of the Company; the signature of
the Chairman of the Board or President or any Vice President and the Secretary
or any Assistant Secretary and the corporate seal may be in facsimile. Such
Security shall then be delivered to the Trustee for authentication by it, and
thereupon, as provided in this Indenture and not otherwise, the Trustee shall
authenticate and deliver such Security. In case any officer of the Company who
shall have signed any of, or whose facsimile signature shall be borne by any of,
the Securities shall cease to be such officer of the Company before such
Securities shall annually be authenticated and delivered by the Trustee, such
Securities may nevertheless be authenticated and delivered as though such person
had not ceased to be such officer
<PAGE>
16
of the Company; and any of the Securities may be signed on behalf of the Company
by, or bear the facsimile signature of, any person who at the time of the
execution of such Security shall be the proper officer of the Company, although
at the date of such Security such person may not have been such officer of the
Company.
Only such of the Securities as shall bear thereon endorsed a certificate
substantially in the form of the Trustee's certificate of authentication
specified for such Securities, executed by the Trustee, shall be valid or
obligatory for any purpose or entitle the holder thereof to any right or benefit
under this Indenture, and the authentication by the Trustee upon any such
Security executed on behalf of the Company as aforesaid shall be conclusive
evidence that the Security so authenticated has been duly authenticated and
delivered hereunder.
(S) 2.06. The Company shall keep at the principal office of the Trustee books
for the registration of Securities and the registration of transfer of
Securities issued hereunder and upon presentation for such purpose at such
office the Company will register or cause to be registered therein, and permit
registration of transfer to be made thereon, under such reasonable regulations
as it and the Trustee may prescribe, Securities issued under this Indenture. The
Company hereby appoints The Chase Manhattan Bank (National Association) and its
successor from time to time as Trustee hereunder as agent of the Company with
the title of registrar for such registration and transfer.
(S) 2.07. Whenever any Security of any series shall be surrendered to the
Company at said office of the Trustee for registration of transfer, duly
endorsed or accompanied by a proper instrument or instruments of assignment and
transfer thereof, or for exchange, duly endorsed or accompanied by instruments
of assignment and transfer if so required by the Company or the Trustee, the
Company shall execute, and the Trustee shall authenticate and deliver, in
exchange therefor, a Security or Securities, as the case may require, of such
series for a like aggregate principal amount and of such authorized denomination
or denominations as may be requested. The registration of transfer of any
Security shall not be valid unless made at said office by the registered holder
in person, or by attorney thereunto duly authorized.
<PAGE>
17
No service charge shall be made to the Securityholders for any registration
of transfer or exchange of Securities or the issue of new Securities in the case
of partial payment of a Security, except that the Company may require payment of
a sum sufficient to cover any tax or other governmental charge which may be
imposed in relation thereto.
The Company shall not be required to register the transfer of or to exchange
Securities for a period of 15 days next preceding any selection by the Trustee
of Securities to be redeemed. The Company shall not be required to register the
transfer of or to exchange Securities or portions thereof theretofore so
selected for redemption.
(S) 2.08. Until definitive Securities of a series shall be prepared, the
Company may execute, and the Trustee shall authenticate and deliver, in lieu of
definitive Securities for such series and subject tO the same limitations and
conditions as are provided in this Indenture in respect of the execution,
authentication and delivery of definitive Securities for such series, one or
more temporary printed or lithographed Securities of such series of the
denomination of $1,000 (or such other minimum denomination as may be established
for any series of Securities pursuant to (S) 2.02) or any integral multiple
thereof, as shall be specified in the order or orders of the Company for the
authentication and delivery thereof, conforming generally to the form of
Security for such series, and with appropriate omissions, insertions,
substitutions and variations as may be approved by the officers of the Company
signing such Securities, their signatures thereto to be conclusive evidence of
such approval. Temporary Securities of a series shall be exchangeable at the
principal office of the Trustee for definitive Securities of such series, when
the latter shall be ready for delivery; and, upon the surrender of any temporary
Security for exchange, the Company, at its own expense, shall execute and the
Trustee shall authenticate and deliver in exchange therefor a definitive
Security or definitive Securities of the same series, as the case may require,
for a like aggregate principal amount. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits of this
Indenture as the definitive Securities to be authenticated and delivered
hereunder.
Definitive Securities shall be either printed, or lithographed on steel
engraved borders or shall be fully engraved, as the Company may elect.
<PAGE>
18
(S) 2.09. The Company, the Trustee, any paying agent and any registrar of the
Securities may deem and treat the registered holder of any Security as the
absolute owner of such Security for all purposes whatsoever, and neither the
Company nor the Trustee nor any paying agent nor any registrar of the Securities
shall be affected by any notice to the contrary.
If the Company shall acquire any of the Securities, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Securities unless and until the same are surrendered to the Trustee for
cancellation.
(S)2.10. In case any temporary or definitive Security shall become mutilated,
or be destroyed, lost or stolen, then upon the conditions hereinafter set forth
the Company in its discretion may execute, and thereupon the Trustee shall
authenticate and deliver, a new Security of the same series of like tenor, date,
maturity and principal amount in exchange and substitution for and upon
surrender and cancellation of the mutilated Security or in lieu of and
substitution for the Security so destroyed, lost or stolen; provided, however,
that if any such mutilated, destroyed, lost or stolen Security shall have
matured, the Company may, instead of issuing a substituted Security therefor,
pay such Security without requiring the surrender thereof. The applicant for
such substituted Security shall furnish to the Company and to the Trustee
evidence satisfactory to them, in their discretion, of the ownership of and the
destruction, loss or theft of such Security, and shall furnish to the Company
and to the Trustee indemnity satisfactory to them, in their discretion, and, if
required, shall reimburse the Company for all expenses (including counsel fees)
in connection with the preparation, authentication and delivery of such
substituted Security, and shall comply with such other reasonable regulations as
the Company and the Trustee, or either of them, may prescribe.
(S) 2.11. In case the Company pursuant to the provisions of Article 11 hereof
shall be consolidated with or merged into any other corporation or shall convey
or transfer its property and assets, as an entirety or substantially as an
entirety, and the successor corporation resulting from such consolidation or
into which the Company shall have been merged, or which shall have received a
conveyance or transfer as aforesaid, shall have executed with the Trustee an
indenture pursuant to the provisions of Article 11 hereof, the Securities of
each series issued under this Indenture prior to such
<PAGE>
19
consolidation, merger, conveyance or transfer may from time to time at the
request of the successor corporation and upon surrender by the holders thereof
be exchanged for other Securities of the same series executed in the name and
under the seal of the successor corporation, with such changes in phraseology
and form as may be appropriate, but in substance of like tenor as the Securities
of the series surrendered for exchange and of like principal amount; and the
Trustee upon the request of the successor corporation shall authenticate
Securities as specified in such request for the purpose of such exchange and
shall deliver them upon surrender of the Securities so to be exchanged. All
Securities so surrendered shall be accompanied by written instruments of
transfer duly executed by the registered holder or his duly authorized attorney
if deemed necessary by the Trustee. All Securities of each series so executed in
the name and under the seal of the successor corporation and authenticated and
delivered shall be of the same series and shall in all respects have the same
legal rank and rights as the Securities of such series executed in the name of
the Company and surrendered upon such exchange with like effect as if the
Securities of such series so delivered in the name of the successor corporation
had been made, authenticated and issued hereunder on the date hereof.
(S) 2.12. In case the name of the Company is changed, the Securities issued
under this Indenture subsequent to such change of name may be issued,
authenticated and delivered under such new name with such changes in phraseology
or form as may be appropriate.
ARTICLE 3.
REDEMPTION.
(S) 3.01. The Company may reserve the right to redeem and pay, prior to the
maturity of any Security of any series, all or any part of the Securities of
such series, either by optional redemption, sinking fund or otherwise, by
provision therefor in the Security for such series established pursuant to (S)
2.02. Redemption of Securities of any series shall be made in accordance with
the terms of such Securities and, to the extent that this Article does not
conflict with such terms, in accordance with this Article.
(S) 3.02. In case of redemption of any series of Securities or any part
thereof, the Company shall cause to be given notice of such redemption by
<PAGE>
20
mail, postage prepaid, at least 30 days but not more than 60 days prior to said
redemption date to all registered holders of Securities of such series which are
to be redeemed in whole or in part at their addresses as they shall then appear
on the register of the Company maintained pursuant to (S) 2.06. Such notice
shall state that such series of Securities, or portions thereof, specified
therein or all of such series of Securities, as the case may be, are to be
redeemed at the option of the Company, or that the Securities specified therein
are to be redeemed for an applicable sinking fund, the redemption date and place
of redemption, the redemption price or prices ( which shall be the redemption
price or prices payable on the redemption date, determined as provided in this
Indenture), and that interest on such series of Securities, or portions thereof,
in such notices specified for redemption shall cease to accrue on said date.
Failure to mail such notice to the holder of any Securities selected for
redemption as a whole or in part, or any defect therein, shall not affect the
validity of the proceedings for the redemption of any other Security or portion
thereof.
If the Company shall determine to redeem less than all of any series of
Securities then outstanding or shall be required to redeem Securities of such
series for any sinking fund, it shall give the Trustee 45 days' prior written
notice of the proposed redemption date and of the aggregate principal amount of
Securities of such series to be redeemed and thereupon the Trustee shall select,
in such manner as in its discretion it shall deem appropriate and fair, and
notify the Company of, the serial numbers of the Securities of such series to be
redeemed. In case a Security is of a denomination larger than $1,000 (or such
other minimum denomination as may be established for any series of Securities
pursuant to (S) 2.02), a portion of such Security ($1,000, or such other
minimum denomination, or an integral multiple thereof) may be redeemed and if
less than the whole Security be redeemed, upon surrender thereof to the Trustee,
the Company shall execute and the Trustee shall authenticate and shall deliver
to the order of the holder of such Security, without charge, a new Security or
Securities of the same series, equal in aggregate principal amount to the
unredeemed portion thereof, each such new Security to be in authorized form and
of such authorized denomination as such holder may elect. If less than all the
outstanding Securities of any series are called for redemption, the notice of
redemption shall state the aggregate principal amount of Securities of such
series to be redeemed and the serial numbers thereof; and in case there shall
<PAGE>
21
have been selected as aforesaid less than the entire principal amount of any
Security of a denomination in excess of $1,000 (or such other minimum
denomination), the notice shall specify the serial number of such Security and
the principal amount thereof called for redemption, and shall state that on the
redemption date, upon presentation of such Security, the holder will receive the
applicable redemption price in respect of the principal amount thereof called
for redemption, and upon surrender of such Security, a new Security or
Securities of the same series for the principal amount remaining unredeemed will
be delivered therefor.
Notice of redemption of Securities of any series to be redeemed shall be
given by the Trustee for and on behalf of and in the name of the Company.
(S) 3.03. Notice of redemption having been duly given as aforesaid, the
Securities of any series (or portions thereof) so designated for redemption
shall on the redemption date specified in such notice become due and payable at
their respective redemption prices; and on and after the redemption date so
specified (unless the Company shall default in the payment of the redemption
price or prices of Securities of such series) interest on such Securities (or in
the case of a partial redemption of a Security, on the portion thereof to be
redeemed) shall cease to accrue, and upon presentation and surrender of such
Securities on or after said redemption date at said place of redemption in
accordance with said notice, such Securities (or such specified portions) shall
be paid by the Company at the redemption price or prices aforesaid together with
accrued interest to the redemption date.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate of interest or
Yield to Maturity (in the case of an Original issue Discount Security) borne by
such Security.
ARTICLE 4.
PARTICULAR COVENANTS OF THE COMPANY.
The Company covenants with the Trustee as hereinafter in this Article 4 set
forth:
(S) 4.01. The Company will duly and punctually pay the principal of each of
the Securities, the premium, if any, payable upon the redemption
<PAGE>
22
thereof, and the interest, if any, which shall have accrued thereon, at the
respective times, dates and places and in the manner mentioned in such
Securities, according to the true intent and meaning thereof. The Company will
not directly or indirectly extend or assent to the extension of the time for
payment of any claim for interest upon any of the Securities and will not
directly or indirectly be a party to or approve of any arrangement for any such
extension by purchasing said claim or in any other manner. No claim for interest
on the Securities of any series, the time of payment of which shall have been so
extended or which shall have been so purchased, shall be entitled in case of a
default hereunder to the benefit of this Indenture except after the prior
payment in full of the principal of all the Securities of such series and claims
for interest not so extended or purchased; provided, however, that this Section
shall not apply in any case where an extension shall be made pursuant to a plan
proposed by the Company to the holders of all the Securities of such series then
outstanding. Interest on the Securities shall be payable only to the registered
holders thereof as shown on the books of the Company. When and as paid all
Securities shall be canceled and disposed of as provided in (S)13.02, and no
Securities shall be issued under this Indenture in lieu thereof.
If the date upon which any Security becomes payable, at maturity or by call
for redemption or otherwise, be a day other than a business day, then payment of
the amount due thereon may be made on the next succeeding business day with the
same force and effect as if made on the date upon which such Security became
payable and no interest shall accrue by reason of such delay in payment.
(S) 4.02. Until all the Securities shall have been paid or payment thereof
provided for, the Company will maintain an office or agency in the Borough of
Manhattan, The City of New York, New York, where notices and demands in respect
of the Securities may be served. The Company hereby appoints The Chase Manhattan
Bank ( National Association ) and its successor from time tO time as Trustee
hereunder as agent of the Company, in its behalf, to receive all such notices
and demands in respect of the Securities, and hereby designates the principal
office of the Trustee as the office where notices and demands in respect of the
Securities may be served.
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23
(S) 4.03. On or before the date on which the principal of, or the interest
on, any of the Securities by their terms or as a result of the calling thereof
for redemption shall become payable, the Company will pay to the Trustee a sum
of money or U.S. Government Obligations sufficient to pay such principal (and
the premium, if any, which shall be payable on any of the Securities which shall
have been called for redemption) and any interest which shall have so become
payable, to be held in trust for the benefit of the holders of such Securities.
The foregoing provisions of this (S) 4.03 are subject to the provisions of
Article Nine.
(S) 4.04. So long as any of the Securities are outstanding:
(a) The Company will not, and will not permit any Subsidiary to, create,
assume or suffer to exist any Lien which secures Debt and which is on any
capital stock of any Subsidiary owned by it; provided, however, that this (S)
4.04(a) shall not apply to or prevent the creation or existence of any Lien
upon:
(i) any capital stock if the Lien thereon is created at the time of the
acquisition of such capital stock by the Company or any Subsidiary or
within one year after such time to secure all or a portion of the purchase
price for such capital stock or Debt incurred to finance such purchase
price;
(ii) any capital stock held by a person if such Lien existed on such
capital stock at the time such person becomes a Subsidiary; or
(iii) any capital stock of a foreign Subsidiary held directly or
indirectly by another foreign Subsidiary if the Lien thereon is to secure
Debt of such other foreign Subsidiary.
(b) The Company will not, and will not permit any Subsidiary (other than a
Finance Subsidiary) to, create, assume or suffer to exist any Lien which
secures Debt and which is upon any property or assets (other than capital
stock of any Subsidiary, Liens on which shall be permitted only as set forth
in (S) 4.04(a)) owned by the Company or any Subsidiary (other than a Finance
Subsidiary) without making effective provision whereby the Securities shall
(so long as such other Debt shall be so secured) be equally and ratably
secured with any and all such Debt and with any other Debt similarly entitled
to be equally and ratably secured; provided, however, that this (S) 4.04(b)
shall not apply to nor prevent the creation or existence of:
<PAGE>
24
(i) any Lien upon any property or assets of the Company or any
Subsidiary in existence at the date of this Indenture or created pursuant
to an "after-acquired property" clause or similar term ( including Liens
created upon substitution of cash or collateral of similar value) in
existence at the date of this Indenture of any mortgage, pledge agreement,
security agreement or other similar instrument in existence on the date of
this Indenture;
(ii) any Lien upon any property or assets created at the time of the
acquisition of such property or assets by the Company or any Subsidiary or
within one year after such time to secure all or a portion of the purchase
price for such property or assets or Debt incurred to finance such
purchase price;
(iii) any Lien upon any property or assets existing thereon at the time
of the acquisition thereof by the Company or any Subsidiary (whether or
not the obligations secured thereby are assumed by the Company or any
Subsidiary):
(iv) any Lien upon any property or assets of a person existing thereon
at the time such person becomes a Subsidiary by acquisition or otherwise;
(v) the assumption by the Company or any Subsidiary of obligations
secured by any Lien existing at the time of the acquisition by the Company
or any Subsidiary of the property or assets subject to such Lien or at the
time of the acquisition of the person which owns such property or assets;
(vi) any extension, renewal or refunding of any Lien permitted by
(S) 4.04( a) or by subdivisions (i), (ii), (iii), (iv) or (v) of this
(S) 4.04(b) on substantially the same property or assets theretofore
subject thereto or any part thereof, securing Debt not in excess of the
amount outstanding on the date of such extension, renewal or refunding;
<PAGE>
25
(vii) any Lien on any oil, gas, mineral and processing and other plant
properties to secure the payment of Costs, expenses or liabilities
incurred under any lease or grant or operating or other similar agreement
in connection with or incident to the exploration, development,
maintenance or operation of such properties;
(viii) any Lien arising from or in connection with a conveyance by the
Company or any Subsidiary of any production payment with respect to oil,
gas, natural gas, carbon dioxide, sulphur, helium, coal, metals, minerals,
steam, timber or other natural resources;
(ix) any Lien in favor of the Company or any Subsidiary;
(x) any Lien created or assumed by the Company or any Subsidiary in
connection with the issuance of Debt the interest on which is excludable
from gross income of the holder of such Debt pursuant to the Internal
Revenue Code of 1986, as amended, or any successor statute, for the
purpose of financing, in whole or in part, the acquisition or construction
of property or assets to be used by the Company or any Subsidiary;
(xi) Liens upon rights-of-way for pipeline purposes;
(xii) any governmental Lien, mechanics', materialmen's, carriers' or
similar Lien incurred in the ordinary course of business which is not yet
due or which is being contested in good faith by appropriate proceedings
and any undetermined Lien which is incidental to construction;
(xiii) the right reserved to, or vested in, any municipality or public
authority by the terms of any right, power, franchise, grant, license,
permit or by any provision of law, to purchase or recapture or to
designate a purchaser of, any property;
(xiv) Liens of taxes and assessments which are (A) for the then current
year, or (B) not at the time delinquent or (C) delinquent but the
validity of which is being contested at the time by the Company or any
Subsidiary in good faith;
<PAGE>
26
(xv) Liens of, or to secure performance of, leases;
(xvi) any Lien upon, or deposits of, any assets in favor of any surety
company or clerk of court for the purpose of obtaining indemnity or stay
of judicial proceedings;
(xvii) any Lien upon property or assets acquired or sold by the Company
or any Subsidiary resulting from the exercise of any rights arising out of
defaults on receivables:
(xviii) any Lien incurred in the ordinary course of business in
connection with workmen's compensation or unemployment insurance, or to
secure obligations imposed by statute or governmental regulations;
(xix) any Lien upon property or assets of any foreign Subsidiary to
secure Debt of that foreign Subsidiary;
(xx) any Lien upon any property or assets in accordance with customary
banking practice to secure any Debt incurred by the Company or any
Subsidiary in connection with the exporting of goods to, or between, or
the marketing of goods in, or the importing of goods from, foreign
countries;
(xxi) any Lien upon any additions, improvements, replacements, repairs,
fixtures, appurtenances or component parts thereof attaching to or
required to be attached to property or assets pursuant to the terms of any
mortgage, pledge agreement, security agreement or other similar
instrument, creating a Lien upon such property or assets permitted by
subdivisions (i) through (xxii) inclusive of this (S) 4.04(b); or
(xxii) any Lien securing any Debt in an amount which, together with all
other Debt secured by a Lien that is not otherwise" permitted by (S)
4.04(a) or by the provisions of any other clause of this (S) 4.04(b), does
not at the time of the incurrence of the Debt so secured exceed 10% of
Consolidated Net Tangible Assets, as
<PAGE>
27
shown on a balance sheet as of the end of the most recent fiscal quarter
prior to the incurrence of such Debt for which a balance sheet is
available; and
provided further, in case the Company or any of its Subsidiaries (other than
any Finance Subsidiary) shall propose to create any Lien upon any assets or
property at any time owned by it to secure any Debt and the Securities are
required to be equally and ratably secured with such Debt pursuant to this
(S) 4.04(b), the Company will prior thereto give written notice thereof to
the Trustee, and the Company will prior to or simultaneously with the
creation of such Lien, by supplemental indenture executed to the Trustee (or
to the extent legally necessary to an additional or separate trustee ), in
form satisfactory to the Trustee, cause all the Securities effectively to be
secured equally and ratably with such Debt by a Lien on such assets or
property.
(c) the Company will not permit Tennessee, at any time it is a Subsidiary,
to issue additional Mortgage Bonds under the General Mortgage (except
Mortgage Bonds issued in replacement of mutilated, destroyed, lost or stolen
Mortgage Bonds or in respect of the unredeemed portion of outstanding
Mortgage Bonds as provided in the General Mortgage) or have outstanding
Mortgage Bonds in excess of the aggregate principal amount of the Mortgage
Bonds outstanding as of the date of this Indenture or extend the present
maturities of said outstanding Mortgage Bonds.
(S) 4.05. The Company will at all times (subject to its right to merge,
consolidate or convey all or substantially all its property and assets pursuant
to Article 11, and, if it so elects, thereafter dissolve) take or cause to be
taken all such action as may from time to time be necessary to maintain,
preserve and renew its corporate existence and its franchise to be a
corporation.
(S) 4.06. The Company will, upon reasonable request of the Trustee, execute
and deliver such further instruments and do such further acts as may be
necessary or proper to carry out more effectually the purposes of this
Indenture.
(S) 4.07. The Company will, on or before the first day of May in each
calendar year commencing with the May 1 next following the date on which
Securities are first issued hereunder, file with the Trustee an officers'
<PAGE>
28
certificate stating that a review of the activities of the Company during the
preceding calendar year has been made under the supervision of the signers of
such certificate with a view to determining whether the Company has kept,
observed, performed and fulfilled all the covenants, agreements and obligations
on its part in this Indenture contained and that to the best of their knowledge
the Company is not in default in the performance, observance or fulfillment of
any of the terms, provisions and conditions hereof, and that no default exists
or, if the Company shall be so in default or if any default exists, specifying
all such defaults, and the nature thereof, of which they may have knowledge.
ARTICLE 5.
REMEDIES OF TRUSTEE AND SECURITYHOLDERS.
(S) 5.01. Except where otherwise indicated by the context or where the term
is otherwise defined for a specific purpose, the term "default" wherever used in
this Indenture with respect to any Securities of any series shall mean one of
the following described events:
(a) the failure of the Company for a period of 30 days to pay any
installment of interest on any of the Securities of such series, when and as
the same shall become payable:
(b) the failure of the Company to pay the principal of or premium, if any,
on any of the Securities of such series, when and as the same shall become
due and payable, whether at maturity, upon redemption ( other than a sinking
fund redemption) or otherwise;
(c) the failure of the Company for a period of 30 days to make any sinking
fund redemption as and when the same shall become due and payable by the
terms of a Security of such series;
(d) the failure of the Company to observe and perform any other of the
covenants or agreements on the part of the Company contained in the
Securities of such series or in this Indenture for a period of 60 days after
written notice shall have been given to the Company by the Trustee or to the
Company and the Trustee by the holders of at least 25% in aggregate principal
amount of the Securities of all series outstanding ( or, if any such covenant
or agreement is not applicable to
<PAGE>
29
all series of the Securities, by the holders of at least 25% in aggregate
principal amount of the outstanding Securities of all series to which it is
applicable) (in each case treated as a single class), specifying such failure
and requiring the Company to remedy the same;
(e) a period of 60 days shall have elapsed after
(1) the adjudication of the Company or Tennessee, provided Tennessee is
at the time of such adjudication a Subsidiary, as a bankrupt or insolvent
by a court of competent jurisdiction;
(2) the entry by such a court of an order approving a petition seeking
reorganization or liquidation of the Company or Tennessee, provided
Tennessee is at the time of such entry a Subsidiary, under the Bankruptcy
Act; or
(3) the appointment by such a court of a trustee or custodian or
receiver or receivers of the Company or Tennessee, provided Tennessee is
at the time of such appointment a Subsidiary, or of all or any substantial
part of the property of the Company (or Tennessee, as the case may be)
upon the application of any creditor in any insolvency or bankruptcy
proceeding or other creditor's suit;
but such period of 60 days shall not include any period during which any such
decree or order shall be stayed upon appeal or otherwise;
(f) the filing by the Company or Tennessee, provided Tennessee is at the
time a Subsidiary, of a petition in involuntary bankruptcy or the making by
the Company or Tennessee, provided Tennessee is at the time a Subsidiary, of
an assignment for the benefit of creditors or the consenting by the Company
or Tennessee, provided Tennessee is at the time a Subsidiary, to the
appointment of a custodian or receiver or receivers of all or any substantial
part of the property of the Company (or Tennessee, as the case may be); or
the filing by the Company or Tennessee, provided Tennessee is at the time a
Subsidiary, of a petition or answer or consent seeking reorganization or
liquidation under the Bankruptcy Act; or the filing by the Company or
Tennessee, provided Tennessee is at the time a Subsidiary, of a petition to
take advantage of any debtor's act;
<PAGE>
30
(g) the default by the Company in the payment of principal of or interest
on any obligation for money borrowed (or any purchase money obligation or any
obligation under notes payable or drafts accepted representing extensions of
credit), beyond any period of grace provided with respect thereto, or default
in the performance of any other agreement, term or condition contained in any
agreement under which any such obligation is created (or if any other default
under any such agreement shall occur and be continuing) if the effect of any
such default described in this subdivision (g) is to cause such obligation to
become due prior to its stated maturity; provided, however, that if any such
default shall be cured by the Company, or be waived by the holders of such
obligations, or of a specified percentage thereof entitled so to waive, then the
default hereunder by reason of such default shall be deemed to have been cured;
(h) the default by any domestic Subsidiary (other than a Finance Subsidiary)
in the payment of principal of or interest on Debt, beyond any period of grace
provided with respect thereto, or default in the performance of any other
agreement, term or condition contained in any agreement under which any such
Debt is created (or if any other default under any such agreement shall occur
and be continuing) if the effect of any such default described in this
subdivision (h) is to cause Debt of such domestic Subsidiary in an amount in
excess of 1% of Consolidated Debt to become due prior to its stated maturity;
provided, however, that if any such default shall be cured, or be waived by the
holders of such Debt, or of a specified percentage thereof entitled so to waive,
then the default hereunder by reason of such default shall be deemed to have
been cured; or
(i) the default by two or more domestic Subsidiaries (other than Finance
Subsidiaries) in the payment of principal of or interest on any Debt beyond any
period of grace provided with respect thereto, or default in the performance of
any other agreement, term or condition contained in any agreement under which
any such Debt is created (or if any other default under any such agreement
shall occur and be continuing) if the effect of any such default described in
this subdivision (i) is to cause Debt of such domestic Subsidiaries in an
amount in excess of 5% of Consolidated Debt to become due prior to its stated
maturity; provided, however, that if any such default shall be cured, or be
waived
<PAGE>
31
by the holders of such Debt, or of a specified percentage thereof entitled so to
waive, then the default hereunder by reason of such default shall be deemed to
have been cured.
(S) 5.02. If any one or more of the defaults described in subdivision (a),
(b) or (c) of (S) 5.01 with respect to Securities of any series shall happen,
then, and in each and every such case, during the continuance of any such
default, either the Trustee, by notice in writing to the Company, or the holders
of at least 25% in principal amount of the Securities of such series then
outstanding, by notice in writing to the Company and to the Trustee, may declare
the principal amount (or, if the Securities of such series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all the Securities of such series then outstanding
(if not then due and payable) to be due and payable, and upon any such
declaration the same shall become and be immediately due and payable, anything
in this Indenture or in the Securities of such series contained to the contrary
notwithstanding. If any one or more of the defaults described in subdivision (d)
of (S) 5.01 shall happen, then, and in each and every such case, during the
continuance of any such default, either the Trustee, by notice in writing to the
Company, or the holders of at least 25% in principal amount of the Securities of
all series then outstanding (or, if such default is not applicable to all
series of the Securities, the holders of at least 25% in principal amount of
the outstanding Securities of all series to which it is applicable) (in each
case treated as a single class), by notice in writing to the Company and to the
Trustee, may declare the principal amount (or, if the Securities of any such
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all the Securities
(or all the Securities of such series, if such default is not applicable to all
series of the Securities) then outstanding (if not then due and payable) to be
due and payable, and upon any such declaration the same shall become and be
immediately due and payable, anything in this Indenture or in the Securities of
such series contained to the contrary notwithstanding. If any one or more of the
defaults described in subdivision (e), (f), (g), (h) or (i) of (S) 5.01 shall
happen, then, and in each and every such case, during the continuance of any
such default, either the Trustee, by notice in writing to the Company, or the
holders of at least 25% in principal amount of all the Securities then
outstanding (treated as a single class), by notice in writing to the Company
<PAGE>
32
and to the Trustee, may declare the principal amount (or, if the Securities of
any series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all the Securities
then outstanding (if not then due and payable), to be due and payable, and upon
any such declaration the same shall become and be immediately due and payable,
anything in this Indenture or in the Securities contained to the contrary
notwithstanding.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal (or, if the Securities of such series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of the Securities of any series (or all
of the Securities, as the case may be) shall have been so declared to be due
and payable and before any judgment or decree for the payment of the moneys
shall have been obtained or entered as hereinafter provided, the principal of
all the Securities of any series (or all of the Securities, as the case may be)
which shall have matured otherwise than by said declaration and all arrears of
interest, if any, upon all the Securities of any series (or all of the
Securities, as the case may be) with interest on any overdue principal and, so
far as permitted by law, installments of interest at the same rate as the rate
of interest or the Yield to Maturity (in the case of Original Issue Discount
Securities) applicable to the Securities of such series (or at the respective
rates of interest or Yields to Maturity of all Securities, as the case may be)
and the reasonable charges and expenses of the Trustee, its agents and
attorneys, shall be paid by the Company or deposited with the Trustee, and every
other default under this Indenture with respect to such series (or all of the
affected series, as the case may be) shall have been cured, waived or otherwise
remedied as provided herein, then and in every such case the holders of a
majority in principal amount of the outstanding Securities of such series (or
all of the Securities of the series affected as the case may be, in such case
treated as a single class) then outstanding, by written notice to the Company
and the Trustee, may waive all defaults with respect to such series (or with
respect to all of the Securities, as the case may be) which shall have been so
declared to be due and payable and may rescind and annul such declaration and
its consequences; but no such waiver or rescission and annulment shall extend to
or affect any subsequent default or impair any right consequent thereon.
<PAGE>
33
(S) 5.03. If the Company shall fail for a period of 30 days to pay any
installment of interest on or to make any sinking fund redemption in respect of
the Securities of any series or shall otherwise fail to pay the principal of any
of the Securities of any series when and as the same shall become due and
payable, whether at maturity or otherwise, then, upon demand of the Trustee, the
Company will pay to the Trustee for the benefit of the holders of the Securities
of that series then outstanding the whole amount which then shall have become
due and payable on all such Securities of that series, with interest to the date
of payment on the overdue principal and, so far as permitted by law,
installments of interest at the same rate as the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) applicable to the
Securities of such series, and reasonable compensation to the Trustee, its
agents and attorneys, and any other reasonable expenses and liabilities incurred
without negligence or bad faith by the Trustee under this Indenture.
In case the Company shall fail forthwith to pay such amounts, the Trustee, in
its own name and as trustee of an express trust, shall be entitled and empowered
to institute any action or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or proceedings to
judgment or final decree, and may enforce any such judgment or final decree
against the Company or any other obligor on such Securities, and collect the
moneys adjudged or decreed to be payable out of the property of the Company or
any other obligor on such Securities, wherever situated, in the manner provided
by law. Every recovery of judgment in any such action or other proceeding,
subject to the payment of the expenses, disbursements and compensation of the
Trustee, its agents and attorneys, shall be (subject to the provisions of (S)
5.04) for the ratable benefit of the holders of such Securities which shall be
the subject of such action or proceedings. All rights of action upon or under
any of such Securities or this Indenture may be enforced by the Trustee without
the possession of any of such Securities and without the production of any
thereof at any trial or any proceedings relative thereto.
The Trustee is hereby appointed, and each and every holder of the Securities,
by receiving and holding the same, shall be conclusively deemed to have
appointed the Trustee, the true and lawful attorney-in-fact of such holder, with
authority to make or file (whether or not the Company shall be in default in
respect of the payment of the principal of, or premium, if any,
<PAGE>
34
or interest on, any of the Securities, and whether or not the Trustee shall have
made any demand for payment pursuant to the provisions of this (S) 5.03), in
its own name as trustee of an express trust, in any receivership, insolvency,
liquidation, bankruptcy, reorganization or other judicial proceedings relative
to the Company, its creditors or its property, or any other obligor on the
Securities, its creditors or its property, any and all claims, proofs of debt,
petitions, consents, other documents and amendments of any thereof, and to
receive payment of any sums that shall be distributable in any such proceedings
on account of any of the Securities, and to execute and deliver any and all
other papers and documents and to do and perform any and all other acts and
things, as may be necessary or advisable in order to enforce in any such
proceedings any of the claims of any of such holders in respect of any of the
Securities; and any receiver, assignee, trustee or debtor in any such
proceedings is hereby authorized, and each and every holder of the Securities,
by receiving and holding the same, shall be deemed to have authorized any such
receiver, assignee, trustee or debtor, to make payment of any and all such sums
to or on the order of the Trustee, and to pay to the Trustee any amount due it
for compensation and expenses, including counsel fees, incurred by it down to
the date of such payment; provided, however, that nothing herein contained shall
be deemed to authorize or empower the Trustee to consent to or accept or adopt,
on behalf of any holder of Securities, any plan of reorganization or
readjustment of the Company affecting the Securities or the rights of any holder
thereof, or to authorize or empower the Trustee to vote in respect of the claim
of any holder of any Securities in any such proceedings.
In case there shall be pending proceedings relative to the Company or any
other obligor upon the Securities under the Bankruptcy Act, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for the Company or
its property or such other obligor, or in case of any other comparable judicial
proceedings relative to the Company or other obligor upon the Securities of any
series, the Trustee, irrespective of whether the principal of any Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
<PAGE>
35
(a) to file and prove a claim or claims for the whole amount of principal,
premium and interest, if any, (or, if the Securities of any series are
Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) owing in respect of the
Securities of any series, and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee, except as a result of
negligence or bad faith) and of the Securityholders allowed in any judicial
proceedings relative to the Company or other obligor upon the Securities of
any series, or to the creditors or property of the Company or such other
obligor, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their
behalf; and any trustee, receiver, or liquidator, custodian or other similar
official is hereby authorized by each of the Securityholders to make payments
to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to the Securityholders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith.
(S) 5.04. Any moneys collected by the Trustee under this Article 5 shall be
applied by the Trustee as follows:
First: To the payment of all costs and expenses in connection with the
collection of such moneys, including reasonable compensation to the Trustee,
its agents and attorneys, and all expenses, liabilities and advances incurred
or made without negligence or bad faith by the Trustee hereunder,
Second: In case the principal of the Securities in respect of which moneys
have been collected shall not have become and be then due and
<PAGE>
36
payable, to the payment of interest on the Securities of such series in
default in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) applicable to such Securities, such payments to be made ratably
to the persons entitled thereto, without discrimination or preference;
Third: In case the principal of the Securities in respect of which moneys
have been collected shall have become and shall be then due and payable, to
the payment of the whole amount then owing and unpaid upon all the Securities
of such series for principal and interest, with interest upon the overdue
principal and (to the extent that such interest has been collected by the
Trustee) upon overdue installments of interest at the same rate as the rate
of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) applicable to the Securities of such series; and in case such
moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Securities of such series, then to the payment of such
principal and interest, without preference or priority of principal over
interest, or of interest over principal, or of any installment of interest
over any other installment of interest, or of any Security of such series
over any other Security of such series, ratably to the aggregate of such
principal and accrued and unsaid interest; and
Fourth: To the payment of any surplus then remaining to the Company, its
successors or assigns, or to whomsoever may be lawfully entitled to receive
the same.
(S) 5.05. Upon any sale made under any writ of execution issued on any
judgment for the recovery of the indebtedness evidenced by the Securities of any
series or recovered under this Indenture, any purchaser shall be entitled in
making settlement or payment of the purchase price of the property purchased to
present and to turn in and use any of the Securities of that series then matured
and unpaid, such Securities being computed for that purpose at a sum equal to
that which shall be payable out of the net proceeds of such sale to such
purchaser as the holder thereof for his share of such net proceeds; and, if the
amounts so payable in respect of such
<PAGE>
37
Securities shall be less than the amount for which the Company may be liable
thereon, then the receipt endorsed thereon under the direction of any person
authorized to receive payment of the purchase price for the amount to be so
allowed or credited thereon shall constitute partial payment and settlement and
shall be conclusive proof of the amount thereof. At any such sale any holder or
holders of the Securities of that series may directly, or through one or more
agents, bid for and purchase the property sold for his or their own account and
make payment therefor as aforesaid or otherwise and may hold, retain and dispose
of such property without further accountability.
(S) 5.06. In case of a default hereunder with respect to any series of
Securities the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law. Upon the filing of a bill in
equity or other commencement of judicial proceedings to enforce the rights of
the Trustee and of such Securityholders, the Trustee shall be entitled, as a
matter of right, to the appointment of a custodian or receiver or receivers of
the property of the Company and of the tolls, rents, revenues, issues, earnings,
income and profits thereof, pending such proceedings, with such powers as the
court making such appointment shall confer.
(S) 5.07. The holders of a majority in principal amount of the Securities of
all series affected (treated as a single class) at the time outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee hereunder, or of exercising any trust or power hereby
conferred upon the Trustee.
Prior to the declaration of the maturity of the Securities of any series as
provided in (S) 5.02, the holders of a majority in principal amount of the
Securities of such series at the time outstanding may, on behalf of the holders
of all Securities of such series, waive any past default hereunder (or, in the
case of a default specified in subdivision (e), (f), (g), (h) or (i) of
(S) 5.01, or in the case of a default specified in subdivision (d) of (S) 5.01
which
<PAGE>
38
is applicable to all series of outstanding Securities, the holders of Securities
of a majority in principal amount of all the Securities then outstanding (or, in
the case of a default specified in subdivision (d) of (S) 5.01 which is
applicable to some but not all series of outstanding Securities, the holders of
a majority in principal amount of all the Securities then outstanding of the
affected series) (in each case treated as a single class) may waive such
default), except a default in the payment of the principal of Securities of any
series at the date of maturity stated therein; provided, however, that such
holders may not without the consent of the holder of each Security of any series
affected (1) waive a default in the payment of interest on the Securities of
such series unless all arrears of interest, with interest, so far as permitted
by law, on overdue installments of interest at the rate provided for such series
of the Securities or the Yield to Maturity (in the case of Original Issue
Discount Securities) shall have been paid by the Company or shall have been
provided for by the deposit with the Trustee in trust of a sum of money or U.S.
Government Obligations sufficient to pay the same, or (2) waive a default in
the payment of the redemption price of any of the Securities of such series that
shall theretofore have been called for redemption, unless such redemption price,
with interest thereon at the same rate as the rate of interest or the Yield to
Maturity (in the case of Original Issue Discount Securities) applicable to such
series, shall have been paid by the Company or shall have been provided for by
the deposit with the Trustee in trust of a sum of money or U.S. Government
Obligations sufficient to pay the same, or (3) waive a default in any
installment of the sinking fund on the Securities of such series unless such
default shall have been cured by the retirement, through redemption or
otherwise, of a principal amount of Securities of such series equal to the
amount of any such sinking fund installment so in default. In case of any such
waiver, the Company, the Trustee and the holders of such Securities shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
(S) 5.08. No holder of any Security shall have any right to institute any
action, suit or proceeding at law or in equity for the execution of any trust
hereunder or for the appointment of a receiver or for any other remedy hereunder
unless (1) such holder previously shall have given to the Trustee written
notice of the happening of one or more of the defaults herein specified, (2)
the holders of a majority in principal amount of the Securities
<PAGE>
39
then outstanding (or if the matter complained of does not relate to all series
of Securities, then the holders of a majority in principal amount of the
Securities then outstanding of the series to which the matter complained of
shall relate, treated as a single class) shall have requested the Trustee in
writing to take action in respect of the matter complained of, and shall have
afforded to it a reasonable opportunity either to proceed to exercise the powers
herein granted or to institute such action, suit or proceeding in its own name,
(3) there shall have been offered to the Trustee security and indemnity
satisfactory to it against the costs, expenses and liabilities to be incurred
therein or thereby, and (4) the Trustee, for 30 days after receipt of such
notification, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; and such notification, request
and offer of indemnity are hereby declared in every such case to be conditions
precedent to any such action, suit or proceeding by any holder of any
Securities; it being understood and intended that no one or more of the holders
of Securities shall have any right in any manner whatsoever by his or their
action to enforce any right hereunder, except in the manner herein provided, and
that every action, suit or proceeding at law or in equity shall be instituted,
had and maintained in the manner herein provided and for the equal benefit of
all holders of outstanding Securities (subject to the provisions of (S) 5.04)
which shall be the subject of such action, suit or proceeding; provided,
however, that notwithstanding any other provision of this Indenture, the right
of any holder of any Security to receive payment of the principal of, premium,
if any, and interest on such Security, on or after the respective due dates
expressed therein, or to institute suit for the enforcement of such payment on
or after such dates, shall not be impaired or affected without the consent of
such holder.
All parties to this Indenture and the holders of the Securities agree that
the court may in its discretion require, in any action, suit or proceeding for
the enforcement of any right or remedy under this Indenture, or in any action,
suit or proceeding against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such action, suit or proceeding of
an undertaking to pay the costs of such action, suit or proceeding, and that
such court may in its discretion assess reasonable costs, including reasonable
attorney's fees, against any party litigant in such action, suit or proceeding,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided, however, that the
<PAGE>
40
provisions of this paragraph shall not apply to any action, suit or proceeding
instituted by the Trustee, to any action, suit or proceeding instituted by any
one or more holders of Securities holding in the aggregate more than 10% in
principal amount of the Securities then outstanding (or if the matter
complained of does not relate to all series of Securities, then the holders of
10% in principal amount of the Securities then outstanding of the series to
which the matter complained of shall relate, treated as a single class), or to
any action, suit or proceeding instituted by any holder of Securities for the
enforcement of the payment of the principal of, or premium, if any, or interest
on, any of the Securities of that series, on or after the respective due dates
expressed in such Securities.
(S) 5.09. No remedy herein conferred upon or reserved to the Trustee or to
the holders of Securities is intended to be exclusive of any other remedy or
remedies, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute. No delay or omission of the Trustee or of any holder of
the Securities to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver of any such
default or an acquiescence therein; and every power and remedy given by this
Article 5 to the Trustee and to the holders of Securities, respectively, may be
exercised from time to time and as often as may be deemed expedient by the
Trustee or by the holders of Securities, as the case may be. In case the Trustee
or any holder of Securities shall have proceeded to enforce any right under this
Indenture and the proceedings for the enforcement thereof shall have been
discontinued or abandoned because of waiver or for any other reason or shall
have been determined adversely to the Trustee or to such holder of Securities,
then and in every such case the Company, the Trustee and the holders of the
Securities shall severally and respectively be restored to their former
positions and rights hereunder and thereafter all rights, remedies and powers of
the Trustee shall continue as though no such proceedings had been taken.
(S) 5.10. The Company will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the terms of performance of this Indenture; and the
Company hereby expressly waives all benefit or advantage of any such law or
laws, and covenants that it will not hinder, delay or
<PAGE>
41
impede the execution of any power herein granted and delegated to the Trustee,
but will suffer and permit the execution of every such power as though no such
law or laws had been made or enacted.
ARTICLE 6.
SECURITYHOLDERS' ACTS, HOLDINGS AND APPARENT AUTHORITY.
Any demand, request, notice, direction, consent, waiver, appointment, removal
or other instrument required or permitted by this Indenture to be signed and
executed by holders of Securities may be in any number of concurrent writings of
similar tenor and may be signed or executed by such holders in person or by
agent appointed in writing, and, subject to the provisions of (S) 8.02, proof of
the execution thereof or of the writing appointing any such agent or of the
holding by any person of Securities shall be sufficient for any purpose of this
Indenture and shall be conclusive in favor of the Trustee or of the Company with
regard to any action by them, respectively, taken under such instrument, if such
proof be made in the following manner:
(1) The fact and date of the execution by any person of any such
instrument may be proved (a) by the certificate under his official seal of
any notary public or other officer in any jurisdiction who, by the laws
thereof, has power to take acknowledgments or proof of deeds to be recorded
within such jurisdiction, that the person who signed such instrument did
acknowledge before such notary public or other officer the execution thereof,
or (b) by the affidavit of a witness of such execution. The appointment of an
officer of a corporation, or a member of a partnership, executing any
instrument on behalf of such corporation or partnership, need not be proved
as aforesaid, but shall be presumed.
(2) The fact of the holding of Securities shall be established by the
register of such Securities.
ARTICLE 7.
REPORTS BY THE COMPANY AND THE TRUSTEE AND
SECURITYHOLDERS' LISTS.
(S) 7.01. (a) The Trustee shall transmit to the holders of Securities, as
hereinafter provided, on or before the August 1 next following the date on
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42
which Securities are first issued hereunder, and on or before the first day of
August in each year thereafter, a brief report as of the last preceding first
day of June with respect to
(1) its eligibility under (S) 8.06 and its qualifications under (S) 8.05
to serve as Trustee hereunder, or in lieu thereof, if to the best of its
knowledge it has continued to be eligible and qualified under said Sections,
a written statement to that effect;
(2) the character and amount of any advances (and if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by it as
Trustee which remain unpaid on the date as of which such report is made and
for the reimbursement of which it claims or may claim a lien or charge, prior
to that of the Securities, on any property or funds held or collected by it
as Trustee, except that the Trustee shall not be required (but may elect)
to state such advances if such advances so remaining unpaid aggregate not
more than 1/2 of 1% of the principal amount of the Securities outstanding on
the date as of which such report is made;
(3) the amount, interest rate and maturity date of all other indebtedness
owing to it in its individual capacity, on the date as of which such report
is made, by the Company or any other obligor on the Securities, with a brief
description of any property held as collateral security therefor, except an
indebtedness based upon a creditor relationship arising in any manner
described in paragraph (2), paragraph (3), paragraph (4) or paragraph (6) of
subdivision (f) of (S) 8.08;
(4) the property and funds, if any, physically in its possession as
Trustee on the date as of which such report is made; and
(5) any action taken by it in the performance of its duties under this
Indenture which it has not previously reported and which in its opinion
materially affects the Securities, except action in respect of a default
notice of which has been or is to be withheld by the Trustee in accordance
with the provisions of (S) 8.03.
(b) If (i) since the date of the last report transmitted pursuant to the
provisions of subdivision (a) of this (S) 7.01 (or, if no such report has yet
been transmitted, since the date of the execution of this Indenture), the
Trustee shall have made any advances for the reimbursement of which it
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43
claims or may claim a lien or charge prior to that of the Securities on property
or funds held or collected by it as Trustee, (ii) the Trustee has not previously
reported such advances pursuant to this subdivision (b) and (iii) such advances
remaining unpaid shall at any time aggregate more than 10% of the principal
amount of the Securities then outstanding, the Trustee shall, within 90 days
after such time, transmit to the holders of Securities a brief report of the
character and amount of such advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof). The Trustee, if it so elects,
may transmit such a report with respect to advances remaining unpaid aggregating
10% or less of the principal amount of the Securities then outstanding.
(c) Each report pursuant to the provisions of this (S) 7.01 shall be
transmitted by mail to all registered holders of Securities, as the names and
addresses of such holders appear upon the registration books of the Company.
(d) The Trustee shall, at the time of the transmission to the holders of
Securities of any report pursuant to the provisions of this (S) 7.01, file a
copy of such report with each stock exchange upon which any of the Securities
are listed and also with the Securities and Exchange Commission. The Company
agrees to notify the Trustee when and as the Securities become listed on any
stock exchange.
The Company will reimburse the Trustee for all expenses incurred in the
transmission of any report pursuant to the provisions of this (S) 7.01.
(S) 7.02. (a) The Company will file with the Trustee, within 15 days after
the Company shall be required to file the same with the Securities and Exchange
Commission, copies of the annual reports and of the information, documents and
other reports which the Company may be required to file with the Securities and
Exchange Commission pursuant to the provisions of Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 (or copies of such portions of any of the
foregoing as the Securities and Exchange Commission may by rules and regulations
prescribe); or, if the Company is not required to file information, documents or
reports pursuant to the provisions of either of such Sections, then the Company
will file with the Trustee and the Securities and Exchange Commission, in
accordance with rules and regulations prescribed by the Securities and Exchange
Commission, such of the supplementary and periodic information, documents
<PAGE>
44
and reports which may be required pursuant to the provisions of Section 13
of the Securities Exchange Act of 1934, in respect of a security listed and
registered on a national securities exchange, as may be prescribed in such rules
and regulations.
(b) The Company will file with the Trustee and the Securities and Exchange
Commission, in accordance with rules and regulations prescribed by the
Securities and Exchange Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required by such rules and
regulations.
(c) The Company will transmit to the holders of Securities, within 30 days
after the filing thereof with the Trustee (unless some other time shall be
fixed by the Securities and Exchange Commission) and in the manner and to the
extent provided in subdivision (c) of (S) 7.01, such summaries of any
information, documents and reports required to be filed by the Company pursuant
to the provisions of subdivisions (a) and (b) of this (S) 7.02 as may be
required by rules and regulations prescribed by the Securities and Exchange
Commission.
(S) 7.03. (a) The Company will furnish or cause to be furnished to the
Trustee a list in such form as the Trustee may reasonably require containing all
information in the possession or control of the Company, or any of its paying
agents other than the Trustee, as to the names and addresses of the holders of
the Securities of each series obtained since the date as of which the next
previous list, if any, was furnished:
(1) not more than 15 days after each record date for the payment of
interest on such Securities as of such record date and on dates to be
determined pursuant to (S) 2.02 for non-interest bearing securities in each
year; and
(2) at such other times as the Trustee may request in writing, within 30
days after receipt by the Company of any such request as of a date not more
than 15 days prior to the time such information is furnished or caused to be
furnished, provided that such a list need not include information received
after such date;
provided that if and so long as the Trustee shall be the Registrar for such
series, such list shall not be required to be furnished.
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45
(b) The Trustee will preserve, in as current form as is reasonably
practicable, all information as to the names and addresses of holders of
Securities so furnished to it as provided in subdivision (a) of this (S) 7.03
or received by it in the capacity of paying agent or Security registrar. The
Trustee may destroy any list furnished to it as provided in subdivision (a) of
this (S) 7.03 upon receipt of a new list so furnished.
(c) Within five business days after the receipt by the Trustee of a written
application by any three or more holders of Securities stating that such holders
(hereinafter in this subdivision (c) called "such applicants") desire to
communicate with other holders of Securities with respect to their rights under
this Indenture or under the Securities and accompanied by a copy of the form of
proxy or other communication which such applicants propose to transmit, and by
reasonable proof that each such applicant has owned a Security for a period of
at least six months preceding the date of such application, the Trustee will, at
its election, either
(1) afford to such applicants access to all information furnished to, or
received by, and preserved by, the Trustee pursuant to the provisions of this
(S) 7.03; or
(2) inform such applicants as to the approximate number of holders of
Securities according to the most recent information so furnished to, or
received by, and preserved by, the Trustee, and as to the approximate cost of
mailing to such holders of Securities the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to such
information, the Trustee shall, upon written request of such applicants, mail to
all holders of Securities whose names and addresses are contained in the
information so furnished to, or received by, and preserved by, the Trustee
copies of the form of proxy or other communication which is specified in such
request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of such mailing, unless within five days after such tender,
the Trustee shall mail to such applicants, and file with the Securities and
Exchange Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interests of the holders of
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46
Securities or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Securities and Exchange
Commission, after opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to sustain any of the
objections specified in the written statements so filed, or if, after entry of
an order sustaining one or more of such objections, the Securities and Exchange
Commission shall find, after notice and opportunity for hearing, that all
objections so sustained have been met, and shall enter an order so declaring,
the Trustee shall mail copies of such material to all such holders of Securities
with reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any obligation or duty to
such applicants respecting their application.
Each and every holder of the Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the holders of Securities in accordance with the
provisions of this subdivision (c), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under this subdivision
(c).
ARTICLE 8.
CONCERNING THE TRUSTEE.
(S) 8.01. The Trustee accepts the trusts created by this Indenture upon the
terms and conditions hereof, including the following, to all of which the
parties hereto and the holders from time to time of the Securities agree:
(a) The Trustee shall be entitled to reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and such compensation, as well as the reasonable compensation of its
counsel, and all other reasonable expenses incurred by the Trustee hereunder in
good faith and without negligence, and all advances made by the Trustee in
accordance with any provision of this Indenture in good faith and without
negligence, the Company agrees to pay promptly on demand from time to time as
<PAGE>
47
such services shall be rendered and as such expenses shall be incurred or
advances made. If any property other than cash shall at any time be subject to
the lien of this Indenture, the Trustee, if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by the instrument
subjecting such property to such lien, shall be entitled to make advances for
the purpose of preserving such property or of discharging tax liens or other
prior liens or encumbrances thereon. In default of such payment by the Company,
the Trustee shall have a lien therefor on any moneys held by the Trustee
hereunder prior to any rights therein of the holders of the Securities. The
reasonable fees and expenses of the Trustee (including the reasonable charges
and expenses of its counsel) shall be preferred over the claims of the
Securityholders in any reorganization or other similar proceeding. The Company
also agrees to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on the part
of the Trustee, arising out of or in connection with the acceptance,
administration or satisfaction of this trust, as well as the costs and expenses
of defending against any claim of liability in the premises.
(b) The Trustee may execute any of the trusts or powers hereof and perform
any duty hereunder either directly or by its agents and attorneys.
(c) The Trustee shall not be responsible in any manner whatsoever for the
correctness of the recitals of fact herein or in the Securities (except its
certificate of authentication thereon), all of which are made by the Company
solely; and the Trustee shall not be responsible or accountable in any manner
whatsoever for or with respect to the validity or execution or sufficiency of
this Indenture, of any supplemental indenture, or of the Securities, and the
Trustee makes no representation with respect thereto. The Trustee shall not be
accountable for the use or application by the Company of any Securities, or the
proceeds of any Securities, authenticated and delivered by the Trustee in
conformity with the provisions of this Indenture.
(d) The Trustee may consult with counsel and, to the extent permitted by (S)
8.02, the advice or opinion of such counsel as to matters of law shall be full
and complete authorization and protection in respect of any action taken or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
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48
(e) The Trustee, to the extent permitted by (S) 8.02, may rely upon the
certificate of the Secretary or one of the Assistant Secretaries of the
Company, under its corporate seal, as to the adoption of any resolution by
its Board of Directors or stockholders.
(f) The Trustee, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to the provisions of (S)(S) 8.05
and 8.08, otherwise deal with the Company, with the rights it would have had
if it were not Trustee hereunder.
(g) Any action taken by the Trustee pursuant to any provision hereof at
the request or with the consent of any person who at the time of such request
or consent is the holder of any Security shall be conclusive and binding in
respect of such Security upon all future holders thereof, whether or not such
Security shall have noted thereon the fact that such request or consent had
been made or given.
(h) The Trustee, to the extent permitted by (S) 8.02, shall be under no
obligation to exercise any of the trusts or powers hereof at the request,
order or direction of any of the Securityholders, pursuant to the provisions
of this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
(i) The Trustee, to the extent permitted by (S) 8.02, may rely, and shall
be protected in relying upon any resolution, certificate, opinion, report,
statement, request, consent, security or other instrument or paper believed
by it to be genuine and to have been signed or presented by the proper
parties.
(j) Whenever in the administration of the trusts of this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, to the extent permitted by (S) 8.02, be deemed to be conclusively proved
and established by a certificate signed in the name of the Company by its
President or a Vice President and its Secretary or an Assistant Secretary or
its Treasurer or an Assistant Treasurer.
(S) 8.02. If a default specified in (S) 5.01 shall have happened, then, so
long as the same shall be subsisting, the Trustee shall exercise such of the
<PAGE>
49
rights and powers vested in it by this Indenture, and shall use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs; and none of the
provisions of this Indenture shall be construed as relieving the Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own wilful misconduct, except that, anything in this Indenture contained to the
contrary notwithstanding.
(1) unless and until a default specified in (S) S.O 1 shall have happened
which at the time is subsisting,
(a) the Trustee shall not be liable except for the performance of such
duties as are specifically set out in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee, whose duties and obligations shall be determined solely by the
express provisions of this Indenture; and
(b) the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, in the
absence of bad faith on the part of the Trustee, upon certificates or
opinions furnished to it pursuant to and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which, by the provisions of this Indenture, are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of
this Indenture;
(2) the Trustee shall not be liable to any holder of Securities or to any
other person for any error of judgment made in good faith by a responsible
officer or officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable to any holder of Securities or to any
other person with respect to any action taken or omitted to be taken by it in
good faith, in accordance with the direction of the holders of a majority in
principal amount of the Securities at the time outstanding, relating to the
time, method and place of conducting any proceeding for any remedy available
to it or exercising any trust or power conferred upon it by this Indenture.
Notwithstanding any provisions of this Indenture authorizing the Trustee
conclusively to rely upon any certificates or opinions. the Trustee
<PAGE>
50
may, before taking or refraining from taking any action in reliance upon any
certificate furnished by the Company, require any further evidence or make any
further investigation as to the facts or matters stated therein which it may, in
good faith, deem reasonable in the circumstances, and in connection therewith
the Trustee may examine or cause to be examined the pertinent books, records and
premises of the Company; and the Trustee shall, in any case, require such
further evidence or make such further investigation as may be requested by the
holders of a majority in principal amount of the Securities then outstanding,
provided that, if payment to the Trustee of the costs, expenses and liabilities
likely to be incurred by it in making such investigation is not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee before making such investigation may require reasonable
indemnity against such costs, expenses or liabilities. Any further evidence
which may be requested by the Trustee pursuant to any of the provisions of this
(S) 8.02 shall be furnished by the Company at its own expense; and any costs,
expenses and liabilities incurred by the Trustee in connection with any further
investigation made by it pursuant to any of the provisions of this (S) 8.02
shall be paid by the Company, or, if paid by the Trustee, shall be repaid by the
Company upon demand, with interest at the rate of 6% per annum, and until such
repayment, shall be secured by a lien on any moneys held by the Trustee
hereunder prior to any rights therein of the holders of Securities.
(S) 8.03. The Trustee shall, within 90 days after the happening thereof, give
to the holders of the Securities of any and all series with respect to which a
default has occurred notice of the happening of any default, known to it to be
then subsisting, unless such default shall have been cured before the giving of
such notice (the term "default" for the purposes of this (S) 8.03 being hereby
defined to be any of the events specified in (S) 5.01 not including any period
of grace therein provided for and irrespective of the giving of the written
notice specified in subdivision (d) of (S) 5.01); provided that, unless such
event be the failure to pay the principal of, or the premium, if any, or
interest on, any of the Securities when and as the same shall become payable, or
the failure to meet any Sinking Fund requirement the Trustee shall be protected
in withholding such notice, if and so long as the board of directors, the
executive committee or a trust committee of directors and/or responsible
officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the holders of the Securities
<PAGE>
51
of such series. Such notice shall be given to the holders of the Securities of
such series in the manner and to the extent provided in subdivision (c) of (S)
7.01.
(S) 8.04. The Trustee, or any successor to it hereafter appointed, may at any
time resign and be discharged of the trusts hereby created by giving to the
Company notice in writing of such resignation, and by mailing, postage prepaid,
a copy of such notice to the holders of the Securities at their addresses as the
same shall then appear on the register of the Company. Such resignation shall
take effect upon the appointment by the holders of the Securities or by the
Company as hereinafter provided of a successor trustee having the qualifications
prescribed in (S)(S) 8.05 and 8.06, and the acceptance of such appointment by
such successor trustee. Any trustee hereunder may be removed at any time by the
filing with such trustee and the delivery to the Company of an instrument in
writing signed by the holders of a majority in principal amount of the
Securities then outstanding, specifying such removal and the date when it shall
become effective.
Upon its resignation or removal, any trustee shall be entitled to the payment
of reasonable compensation for the services rendered hereunder by such trustee
and to the payment of all reasonable expenses incurred hereunder and all moneys
then due to it hereunder.
(S) 8.05. (a) If the Trustee has or shall acquire any conflicting interest,
as the term "conflicting interest" is defined in subdivision (d) of this (S)
8.05, the Trustee shall, within 90 days after ascertaining that it has such
conflicting interest, either eliminate such conflicting interest or resign, the
resignation to become effective upon the appointment of a successor trustee and
the acceptance by such successor trustee of such appointment. If the Trustee
shall resign, the Company shall take prompt steps to have a successor appointed
in the manner provided in (S) 8.06.
(b) In the event that the Trustee shall fail to comply with the provisions
of subdivision (a) of this (S) 8.05, the Trustee shall within ten days after
the expiration of such 90-day period, transmit notice of its failure in that
regard to the holders of Securities in the manner and to the extent provided in
subdivision (c) of (S) 7.01.
(c) Subject to the provisions of the last paragraph of (S) 5.08, any holder
of a Security who has been a bona fide holder of a Security for at least six
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52
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee, and the
appointment of a successor trustee, if the Trustee shall fail, after written
request therefor by such holder, to comply with the provisions of subdivision
(a) of this (S) 8.05.
(d) For the purposes of this (S) 8.05, the Trustee shall be deemed to
have a conflicting interest, if
(1) the Trustee is trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities of the Company are outstanding, unless such other indenture is a
collateral trust indenture under which the only collateral consists of
Securities; provided, however, that there shall be excluded from the
operation of this paragraph (1) this Indenture and any such other indenture
or indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if (i)
this Indenture and such other indenture or indentures are wholly unsecured,
and such other indenture or indentures are hereafter qualified under the
Trust Indenture Act of 1939, unless the Securities and Exchange Commission
shall have found and declared by order pursuant to subsection (b) of Section
305 or subsection (c) of Section 307 of the Trust Indenture Act of 1939 that
differences exist between the provisions of this Indenture and the provisions
of such other indenture which are so likely to involve a material conflict of
interest as to make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as trustee under one of
said indentures, or (ii) the Company shall have sustained the burden of
proving, on application to the Securities and Exchange Commission and after
opportunity for hearing thereon, that trusteeship under this Indenture and
such other indenture is not so likely to involve a material conflict of
interest as to make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as trustee under one of
said indentures;
(2) the Trustee or any of its directors or executive officers is an
obligor upon the Securities or an underwriter for the Company;
(3) the Trustee directly or indirectly controls, or is directly or
indirectly controlled by, or is under direct or indirect common control with,
the Company or an underwriter for the Company;
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53
(4) the Trustee or any of its directors or executive officers is a director,
officer, partner, employee, appointee or representative of the Company, or of an
underwriter (other than the Trustee itself) for the Company who is currently
engaged in the business of underwriting, except that (A) one individual may be a
director and/or executive officer of the Trustee and a director and/or an
executive officer of the Company, but may not be at the same time an executive
officer of both the Trustee and the Company, and (B) if and so long as the
number of directors of the Trustee in office is more than nine, one additional
individual may be a director and/or an executive officer of the Trustee and a
director of the Company, and (C) the Trustee may be designated by the Company
or by any underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent or depositary or
in any other similar capacity, or, subject to the provisions of paragraph (1)
of this subdivision (d), to act as trustee, whether under an indenture or
otherwise:
(5) 10% or more of the voting securities of the Trustee is beneficially owned
either by the Company or any other obligor on the Securities or by any director,
partner or executive officer thereof, or 20% or more of such voting securities
is beneficially owned, collectively, by any two or more of such persons; or 10%
or more of such voting securities is beneficially owned either by an underwriter
for the Company or by any director, partner or executive officer thereof, or is
beneficially owned, collectively, by any two or more of such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default as the term "default" is defined in clause
(B) of the second paragraph following paragraph (9) of this subdivision (d),
(A) 5% or more of the voting securities, or 10% or more of any other class
of security, of the Company, not including Securities and not including
securities issued under any other indenture under which the Trustee is also
trustee, or (B) 10% or more of any class of security of an underwriter for the
Company;
(7) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default as the term "default" is defined in clause
(B) of the second paragraph following paragraph (9) of this subdivision (d),
5% or more of the voting securities of any
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54
person who, to the knowledge of the Trustee, owns 10% or more of the voting
securities of, or controls directly or indirectly, or is under direct or
indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default as the term "default" is defined in clause
(B) of the second paragraph following paragraph (9) of this subdivision (d),
10% or more of any class of security of any person who, to the knowledge of the
Trustee, owns 50% or more of the voting securities of the Company; or
(9) the Trustee owns, on May 15 in any year, in the capacity of executor,
administrator, testamentary or inter vivos trustee, guardian, committee or
conservator, or in any other similar capacity, an aggregate of 25% or more of
the voting securities, or of any class of security, of any person, the
beneficial ownership of a specified percentage of which would have constituted a
conflicting interest under paragraph (6), paragraph (7) or paragraph (8) of
this subdivision (d). As to any of such securities of which the Trustee acquired
ownership through becoming executor, administrator or testamentary trustee of an
estate which included them, the provisions of the preceding sentence shall not
apply, for a period of two years from the date of such acquisition, to the
extent that such securities included in such estate do not exceed 25% of such
voting securities or 25% of any such class of security. Promptly after May 15,
in each year, the Trustee shall make a check of its holding of such securities
in any of the above-mentioned capacities as of such May 15. If the Company shall
fail to make payment in full of principal of or interest on any of the
Securities, when and as the same becomes due and payable, and such failure shall
continue for 30 days thereafter, the Trustee shall make a prompt check of its
holdings of such securities in any of the above-mentioned capacities as of the
date of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph (9), all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall, but only so long as such failures shall
continue, be considered as though beneficially owned by the Trustee, for the
purposes of paragraphs (6), (7) and (8) of this subdivision (d).
<PAGE>
55
The specification of percentages in paragraphs (5) to (9), inclusive, of this
subdivision (d) shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or paragraph (7) of this subdivision (d).
For the purposes of paragraphs (6), (7), (8) and (9) of this
subdivision (d), (A) the terms "security" and "securities" shall include
only such securities as are generally known as corporate securities, but shall
not include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (B) an obligation shall be deemed to
be in default when a default in payment of principal shall have continued for 30
days or more and shall not have been cured; and (C) the Trustee shall not be
deemed the owner or holder of (i) any security which it holds as collateral
security (as trustee or otherwise) for an obligation which is not in default
as the term "default" is defined in this paragraph, or (ii) any security which
it holds as collateral security under this Indenture, irrespective of any
default hereunder, or (iii) any security which it holds as agent for collection,
or as a custodian, escrow agent or depositary, or in any similar representative
capacity.
For the purposes of this subdivision (d) the term "underwriter" when used
with reference to the Company means every person who, within three years prior
to the time as of which the determination is made, has purchased from the
Company with a view to, or has offered or sold for the Company in connection
with, the distribution of any security of the Company which is outstanding at
the time the determination is made, or has participated or has had a direct or
indirect participation in any such undertaking, or has participated or has had a
participation in the direct or indirect underwriting of any such undertaking;
but such term shall not include a person whose interest was limited to a
commission from an underwriter or dealer not in excess of the usual and
customary distributors' or sellers' commission.
For the purposes of this subdivision (d) the term "voting security" shall
mean any security presently entitling the owner or holder thereof to vote in the
direction or management of the affairs of a person, or any security issued under
or pursuant to any trust, agreement or arrangement whereby a trustee
<PAGE>
56
or trustees or agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of the affairs of a
person.
The percentages of voting securities and other securities specified in this
subdivision (d) shall be calculated in accordance with the following provisions:
(A) A specified percentage of the voting securities of a person means such
amount of the outstanding voting securities of such person as entitles the
holder or holders thereof to cast such specified percentage of the aggregate
votes which the holders of all the outstanding voting securities of such
person are entitled to cast in the direction or management of the affairs of
such person.
(B) A specified percentage of a class of securities of a person means such
percentage of the aggregate amount of securities of the class outstanding.
(C) The term "amount", when used in regard to securities, means the
principal amount, if relating to evidences of indebtedness; the number of
shares, if relating to capital shares; and the number of units, if relating
to any other kind of security.
(D) The term "outstanding" means issued and not held by or for the account
of the issuer. The following securities shall not be deemed outstanding
within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to another
class of securities of the issuer, if the obligation evidenced by such
other class of securities is not in default as to principal or interest or
otherwise:
(iii) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise;
(iv) securities held in escrow, if placed in escrow by the issuer
thereof;
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57
provided, however, that any voting securities of an issuer shall be deemed
outstanding, if any person other than the issuer is entitled to exercise the
voting rights thereof.
(E) A security shall be deemed to be of the same class as another
security, if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, (1) that,
in the case of secured evidences of indebtedness all of which are issued
under a single indenture, differences in the interest rates or maturity dates
of various series thereof shall not be deemed sufficient to constitute such
series different classes, and (2) that, in the case of unsecured evidences
of indebtedness, differences in the interest rates or maturity dates thereof
shall not be deemed sufficient to constitute them securities of different
classes, whether or not they are issued under a single indenture.
The term "the Company", whenever used in this subdivision (d), shall
include every other person which, at the time in question, is an obligor on the
Securities.
(S) 8.06. In case at any time the Trustee shall resign, or shall be removed
(unless the Trustee shall be removed as provided in subdivision (c) of (S) 8.05,
in which event the vacancy shall be filled as provided in said subdivision), or
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or if a receiver of the Trustee or of its property shall be appointed, or if any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, a
successor trustee may be appointed by the holders of a majority in principal
amount of the Securities then outstanding, by an instrument or concurrent
instruments in writing signed in duplicate by such holders and filed, one
original thereof with the Company and the other with the successor trustee; but,
until a successor trustee shall have been so appointed by the holders of
Securities as herein authorized, the Company by a resolution of its Board of
Directors or, in case all or substantially all of the assets of the Company
shall be in the possession of a custodian or one or more receivers lawfully
appointed, or of trustees in bankruptcy or reorganization proceedings (including
a trustee or trustees appointed under the provisions of the Bankruptcy Act), or
of assignees for the benefit of creditors, such custodian, receivers, trustees
or assignees, as the case may be,
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by an instrument in writing shall appoint a successor trustee. Upon the
appointment and acceptance as aforesaid of a successor trustee the Trustee shall
cease to be trustee hereunder. After any such appointment other than by the
holders of Securities, the person making such appointment shall forthwith cause
notice thereof to be mailed, postage prepaid, to the holders of Securities at
their addresses as the same shall then appear on the register of the Company;
but any successor trustee so appointed shall, immediately and without further
act, be superseded by a successor trustee appointed by the holders of Securities
in the manner above prescribed, if such appointment be made prior to the
expiration of one year from the date of mailing of such notice by the Company,
or by such custodian, receivers, trustees or assignees.
If any trustee shall resign because of a conflict of interest as provided in
subdivision (a) of (S) 8.05 and a successor trustee shall not have been
appointed by the Company or by the holders of Securities, or, if any successor
trustee so appointed shall not have accepted its appointment within 30 days
after such appointment shall have been made, the resigning trustee may apply to
any court of competent jurisdiction for the appointment of a successor trustee.
If in any other proper case a successor trustee shall not be appointed pursuant
to the foregoing provisions of this (S) 8.06 within three months after such
appointment might have been made hereunder, the holder of any Security or any
retiring trustee may apply to any court of competent jurisdiction to appoint a
successor trustee. Such court may thereupon, in any such case, after such
notice, if any, as such court may deem proper and prescribe, appoint a successor
trustee.
The Company covenants that whenever necessary to avoid or fill a vacancy in
the office of trustee, the Company will, in the manner provided in this (S)
8.06, appoint a successor trustee and that there shall at all times be a trustee
under this Indenture, which shall at all times be a corporation organized and
doing business under the laws of the United States of America or of the State of
New York, in good standing and having its principal offices in the Borough of
Manhattan, in The City of New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal or State authority and which has a combined capital and surplus of not
less than $5,000,000. For the purposes of this (S) 8.06 the combined capital and
surplus of any such trustee shall be deemed to be the combined capital and
surplus as set forth
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in the most recent report of its condition published by such trustee, provided
that such reports are published at least annually, pursuant to law or to the
requirements of a Federal or State supervising or examining authority. If the
Trustee or any successor shall at any time cease to have the qualifications
prescribed in this paragraph, it shall promptly resign as trustee hereunder.
Any successor trustee appointed hereunder shall execute, acknowledge and
deliver to its predecessor trustee and to the Company, or to the receivers,
trustees, assignees or court appointing it, as the case may be, an instrument
accepting such appointment hereunder, and thereupon such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
authority, rights, powers, trusts, immunities, duties and obligations of such
predecessor trustee with like effect as if originally named as trustee
hereunder, and such predecessor trustee shall thereupon become obligated to pay
over and such successor trustee shall be entitled to receive, all moneys on
deposit, or other obligations described in (S) 9.02(b), with or held by such
predecessor trustee as trustee hereunder. Nevertheless, on the written request
of the Company or of the successor trustee or of the holders of 10% in principal
amount of the Securities then outstanding, such predecessor trustee, upon
payment of its charges and disbursements then unpaid, shall execute and deliver
an instrument transferring to such successor trustee upon the trusts herein
expressed all the rights, powers and trusts of such predecessor trustee, and
shall assign, transfer and deliver to the successor trustee all moneys and
properties held by such predecessor trustee; and upon request of any such
successor trustee, the Company shall make, execute, acknowledge and deliver any
and all instruments in writing for more fully and effectively vesting in and
conforming to such successor trustee all such rights, powers, trusts,
immunities, duties and obligations.
(S) 8.07. Any corporation into which the Trustee or any successor to it in
the trusts created by this Indenture may be merged, or any corporation with
which it or any successor to it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Trustee or any such
successor to it shall be a party, or any corporation to which the Trustee or any
successor to it shall sell or otherwise transfer all or substantially all the
assets and business of the Trustee, shall be the successor trustee under this
Indenture without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that such corporation shall have the
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60
qualifications prescribed in (S)(S) 8.05 and 8.06. In case at the time such
successor to the Trustee shall succeed to the trusts created by this Indenture
any of the Securities shall have been authenticated but not delivered, any such
successor to the Trustee may adopt the certificate of authentication of the
original Trustee or of any successor to it as trustee hereunder, and deliver
such Securities so authenticated; and in case at any time any of the Securities
shall not have been authenticated, any successor to the Trustee by merger or
consolidation may authenticate such Securities either in the name of its
predecessor hereunder or in the name of the successor trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Securities or in this Indenture provided that the certificate of the Trustee
shall have.
(S) 8.08. (a) If the Trustee in its individual capacity shall be, or shall
become, a creditor, directly or indirectly, secured or unsecured, of the Company
(other than in a relationship specified in subdivision (f) of this (S) 8.08),
within four months prior to a default, as the term "default" is defined in
subdivision (e) of this (S) 8.08, or subsequent to such a default, then, unless
and until such default shall be made good, the Trustee shall set apart and hold
in a special account for the benefit of the Trustee individually, the holders of
Securities and the holders of any other indenture securities, as the term "other
indenture securities" is defined in said subdivision (e).
(1) an amount equal to any and all reductions in the amount due and owing
upon any claim as such creditor in respect of principal or interest, effected
after the beginning of such four months' period and valid as against the Company
and its other creditors, except any such reduction resulting from the receipt or
disposition of any property described in paragraph (2) of this subdivision (a),
or from the exercise of any right of set-off which the Trustee could have
exercised, if a petition in bankruptcy had been filed by or against the Company
upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as such
creditor, either as security therefor, or in satisfaction or composition thereof
or otherwise, after the beginning of such four months' period, or an amount
equal to the proceeds of any such property, if disposed of, subject, however, to
the rights, if any, of the Company and its other creditors in such property or
such proceeds.
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(b) Nothing contained in this (S) 8.08 shall affect the right of the
Trustee:
(1) to retain for its own account (i) payments made on account of any such
claim by any person (other than the Company) who is liable thereon, and (ii)
the proceeds of the bona fide sale of any such claim by the Trustee to a
third person, and (iii) distributions made in cash, securities or other
property in respect of claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy
Act or applicable State law;
(2) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four months' period;
(3) to realize, for its own account, but only to the extent of the claim
hereinafter mentioned, upon any property held by it as security for any such
claim, if such claim was created after the beginning of such four months'
period and such property was received as security therefor simultaneously
with the creation thereof, and if the Trustee shall sustain the burden of
proving that at the time such property was so received the Trustee had no
reasonable cause to believe that a default, as defined in subdivision (e) of
this (S) 8.08, would happen within four months; or
(4) to receive payment on any claim referred to in paragraph (2) or
paragraph (3) of this subdivision (b) against the release of any property
held as security for such claim as provided in said paragraph (2) or said
paragraph (3), as the case may be, to the extent of the fair value of such
property.
For the purposes of paragraphs (2), (3) and (4) of this subdivision (b),
property substituted after the beginning of such four months' period for
property held as security at the time of such substitution shall, to the extent
of the fair value of the property released, have the same status as the property
released, and, to the extent that any claim referred to in any of such
paragraphs is created in renewal of, or in substitution for, or for the purpose
of repaying or refunding, any pre-existing claim of the Trustee as such
creditor, such claim shall have the same status as such pre-existing claim.
(c) If the Trustee shall be required to account, the funds and property held
in a special account pursuant to the provisions of this (S) 8.08 and the
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62
proceeds thereof shall be apportioned among the Trustee, the holders of
Securities and the holders of other indenture securities in such manner that the
Trustee, the holders of Securities and the holders of other indenture securities
realize, as a result of payments from such special account and payments of
dividends on claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to the Bankruptcy Act, the same
percentage of their respective claims, figured before crediting to the claim of
the Trustee anything on account of the receipt by it from the Company of the
funds and property in such special account and before crediting to the
respective claims of the Trustee, the holders of Securities and the holders of
other indenture securities dividends on claims filed against the Company in
bankruptcy or receivership or in proceedings for reorganization pursuant to the
Bankruptcy Act, but after crediting thereon receipts on account of the
indebtedness represented by their respective claims from all sources other than
from such dividends and from the funds and property so held in such special
account. As used in this subdivision (c) with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim in
bankruptcy or receivership or in proceedings for reorganization pursuant to the
Bankruptcy Act, whether such distribution is made in cash, securities, or other
property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership, or proceeding for reorganization shall be pending shall have
jurisdiction (i) to apportion among the Trustee, the holders of Securities and
the holders of other indenture securities, in accordance with the provisions of
this subdivision (c), the funds and property held in such special account and
the proceeds thereof, or (ii) in lieu of such apportionment thereof, in whole or
in part, to give to the provisions of this subdivision (c) due consideration in
determining the fairness of the distributions to be made to the Trustee, the
holders of Securities and the holders of other indenture securities with respect
to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this subdivision (c) as
a mathematical formula.
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63
(d) In case the Trustee shall have resigned or been removed after the
beginning of such four months' period, the Trustee shall be subject to the
provisions of this (S) 8.08 as though such resignation or removal had not
occurred. If the Trustee shall have resigned or been removed prior to the
beginning of such four months' period, it shall be subject to the provisions of
this (S) 8.08 if and only if the receipt of property or reduction of claim which
would have given rise to the obligation to account, if the Trustee had continued
as such trustee hereunder, had occurred after the beginning of such four months'
period and within four months after such resignation or removal.
(e) As used in this (S) 8.08, the term "default" means any failure to make
payment in full of principal of or interest on the Securities or any other
indenture securities, when and as such principal or interest becomes due and
payable; and the term "other indenture securities" means securities upon which
the Company is an obligor (as the term "obligor" is defined in the Trust
Indenture Act of 1939) outstanding under any other indenture under which the
Trustee is also trustee and which contains provisions substantially similar to
the provisions of this (S) 8.08 and under which a default exists at the time of
the apportionment of the funds and property held in said special account.
(f) None of the foregoing provisions of this (S) 8.08 shall be applicable in
respect of a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any indenture,
or any security or securities having a maturity of one year or more at the
time of acquisition by the Trustee;
(2) if any property other than cash shall at any time be subject to the
lien of this Indenture, advances authorized by a receivership or bankruptcy
court of competent jurisdiction or by the instrument subjecting such property
to such lien, made for the purpose of preserving such property or of
discharging tax liens or other prior liens or encumbrances thereon, if notice
of such advance and of the circumstances surrounding the making thereof is
given to the Securityholders as provided in subdivisions (a), (b) and (c) of
(S) 7.01 with respect to advances by the Trustee as such;
(3) disbursements made in the ordinary course of business in the capacity
of trustee under an indenture, transfer agent, registrar, custodian, paying
agent, fiscal agent or depositary, or other similar capacity;
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64
(4) an indebtedness created as a result of services rendered or premises
rented; or an indebtedness created as a result of goods or securities sold in
a cash transaction, as defined in this subdivision (f);
(5) the ownership of stock or other securities of a corporation organized
under the provisions of Section 25(a) of the Federal Reserve Act as amended
which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any drafts,
bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper, as the term "self-liquidating
paper" is defined in this subdivision (f).
The term "security" or "securities" as used in this subdivision (f) shall
have the same meaning as the definition, singular and plural, respectively, of
the term "security" as that term is defined in the Securities Act of 1933, as
amended prior to the date of this Indenture.
The term "cash transaction" as used in paragraph (4) of this subdivision (f)
means any transaction in which full payment for goods or securities sold is made
within seven days after the delivery of the goods or securities in currency or
in checks or other orders drawn upon banks or bankers and payable upon demand.
The term "self-liquidating paper" as used in paragraph (6) of this
subdivision (f) means any draft, bill of exchange, acceptance or obligation
which is made, drawn, negotiated or incurred by the Company for the purpose of
financing the purchase, processing, manufacture, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents evidencing title
to, possession of or a lien upon the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or merchandise
previously constituting the security, provided that the security is received by
the Trustee simultaneously with the creation of the creditor relationship with
the Company arising from the making, drawing, negotiating or incurring of the
draft, bill of exchange, acceptance or obligation.
The term "the Company", whenever used in this (S) 8.08, shall include every
other person which, at the time in question, is an obligor on the Securities.
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65
ARTICLE 9.
DEFEASANCE.
(S) 9.01. If and when the principal of, and the interest on, all the
Securities outstanding hereunder and all other sums due hereunder shall have
been well and truly paid at the times and in the manner therein and herein
expressed, or provision for payment shall have been made therefor pursuant to
(S) 9.02, this Indenture shall cease and determine, and, at the written request
of the Company, accompanied by the officers' certificate and opinion of counsel
required by (S) 13.03, and upon payment of the costs, charges and expenses
incurred or to be incurred by the Trustee in relation thereto or in carrying out
the provisions of this indenture, the Trustee shall cancel and satisfy this
Indenture.
(S) 9.02. The Company shall be released from its obligations under the
Securities of any series:
(a) if, at or prior to the maturity of the Securities of such series, the
Company shall deposit with the Trustee, in trust for the pro rata benefit of
the holders thereof, either:
(i) funds sufficient to pay or provide for payment of all sums, for
principal and interest and premium, if any, due or to become due on such
Securities at the time outstanding, and shall pay all costs, charges and
expenses incurred or to be incurred by the Trustee in relation thereto or
in carrying out the provisions of this Indenture, or
(ii) such amount of U.S. Government Obligations as will together with
the income to accrue thereon without consideration of any reinvestment
thereof, be sufficient to pay all sums, for principal and interest and
premium, if any, due or to become due on such Securities at the time
outstanding, and shall pay all costs, charges and expenses incurred or to
be incurred by the Trustee in relation thereto or in carrying out the
provisions of this Indenture, provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal and interest and
premium, if any, with respect to such Securities;
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66
(b) if any of the Securities of such series are to be redeemed prior to
maturity, the Company shall have delivered to the Trustee (1) an officers'
certificate to the effect that notice of redemption of all outstanding
Securities of such series on a specified redemption date has been given as
herein provided, unless the Trustee has given such notice on behalf of the
Company; or (2) an officers' certificate to the effect that arrangements have
been made insuring to the satisfaction of the Trustee that such notice will
be so given, unless the Trustee has given such notice on behalf of the
Company; or (3) a written instrument executed by the Company under its
corporate seal, and expressed to be irrevocable, authorizing the Trustee to
give such notice for and on behalf of the Company;
(c) unless otherwise provided for any series of Securities pursuant to (S)
2.02, if the Company shall have delivered to the Trustee either (A) a ruling
received from the Internal Revenue Service to the effect that the holders of
the Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of the Company's exercise of its
option under this (S) 9.02 and will be subject to Federal income tax on the
same amount and in the same manner and at the same time or times as would
have been the case if such option had not been exercised or (B) an opinion
of counsel to the same effect as the ruling described in clause (A) with no
material qualifications; and
(d) the Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the defeasance under this (S) 9.02 have
been satisfied.
Such release or defeasance pursuant to this (S) 9.02 means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Securities of such series and to have satisfied all its other obligations
under such Securities and this Indenture insofar as such Securities are
concerned, except for the following which shall survive until otherwise
terminated or discharged hereunder: (A) the rights of Holders of Securities of
such series to receive, solely from the trust fund described in this (S) 9.02,
payments in respect of the principal of and interest on such Securities when
such payments are due, (B) the Company's obligations with respect to such
Securities under (S)(S) 2.06, 2.07, 2.09, 2.10, 2.11, 2.12, 4.02, 7.03, 8.01 and
8.06 hereof and (C) this Article Nine. Subject to compliance with this Article
Nine, the Issuer may exercise its
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67
option under this (S) 9.02 notwithstanding the prior exercise of its option
under (S) 9.03 with respect to the Securities of such series.
(S) 9.03 The Company shall be released from its obligations under (S) 4.04
with respect to the Securities of any series:
(a) if, at or prior to the maturity of the Securities of such series, the
Company shall deposit with the Trustee, in trust for the pro rata benefit of
the holders thereof, either:
(i) funds sufficient to pay or provide for payment of all sums, for
principal and interest and premium, if any, due or to become due on such
Securities at the time outstanding, and shall pay all costs, charges and
expenses incurred or to be incurred by the Trustee in relation thereto or
in carrying out the provisions of this Indenture, or
(ii) such amount of U.S. Government Obligations as will together with
the income to accrue thereon without consideration of any reinvestment
thereof, be sufficient to pay all sums, for principal and interest and
premium, if any, due or to become due on such Securities at the time
outstanding, and shall pay all costs, charges and expenses incurred or to
be incurred by the Trustee in relation thereto or in carrying out the
provisions of this Indenture, provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal and interest with
respect to such Securities; and
(b) if any of the Securities of such series are to be redeemed prior to
maturity, the Company shall have delivered to the Trustee (1) an officers'
certificate to the effect that notice of redemption of all outstanding
Securities of such series on a specified redemption date has been given as
herein provided, unless the Trustee has given such notice on behalf of the
Company; or (2) an officers' certificate to the effect that arrangements
have been made insuring to the satisfaction of the Trustee that such
notice will be so given, unless the Trustee has given such notice on
behalf of the Company; or (3) a written instrument executed by the Company
under its corporate seal, and expressed to be irrevocable, authorizing
the Trustee to give such notice for and on behalf of the Company; and
(c) the Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
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precedent provided for relating to the covenant defeasance under this
(S) 9.03 have been satisfied.
For this purpose, such release or covenant defeasance means that, with respect
to the Securities of such series, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
(S) 4.04 whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any such Section to
any other provision herein or in any other document and such omission to comply
shall not constitute a default under (S) 5.01 (d), but the remainder of this
Indenture and such Securities shall be unaffected thereby.
(S) 9.04 After any irrevocable deposit pursuant to (S) 9.02 or (S) 9.03 and
satisfaction of all conditions set forth therein, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Securities of the relevant series and, if applicable, under this Indenture,
except for any surviving obligations specified in (S) 9.02 or (S) 9.03.
(S) 9.05 Subject to Section (S) 9.02 and (S) 9.03, the Trustee shall promptly
pay to the Company upon request any excess money held by them at any time. The
Trustee shall pay to the Company upon request any money held by them for the
payment of principal or interest that remains unclaimed for two years; provided,
however, that the Trustee before being required to make any payment may at the
expense of the Company cause to be published once in a newspaper of general
circulation in The City of New York or mail to each holder entitled to such
money notice that such money remains unclaimed and that, after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing, any unclaimed balance of such money then remaining will be repaid to
the Company. After payment to the Company, Securityholders of the relevant
series entitled to money must look solely to the Company for payment as general
creditors unless an applicable abandoned property law designates another person.
(S) 9.06 If the Trustee is unable to apply any money or U.S. Government
Obligations in accordance with (S) 9.02 or (S) 9.03 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the rele-
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vant series of Securities shall be revived and reinstated as though no deposit
had occurred pursuant to (S) 9.02 or (S) 9.03 until such time as the Trustee is
permitted to apply all such money or U.S. Government Obligations in accordance
with (S) 9.02 and (S) 9.03; provided, however, that if the Company has made any
payment of interest on or principal of any relevant series of Securities because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the holders of such series of Securities to receive such payment from
the money or U.S. Government Obligations held by the Trustee.
(S) 9.07 The Trustee shall not be required to pay interest on any moneys or
U.S. Government Obligations deposited pursuant to the provisions of this
Indenture, except such as it shall agree with the Company to pay thereon.
Any moneys or U.S. Government Obligations which at any time shall be
deposited by the Company or on its behalf with the Trustee, as paying agent or
otherwise under this Indenture, shall be and are hereby assigned, transferred
and set over to the Trustee in trust for the purpose for which such moneys or
obligations shall have been deposited; but such moneys or obligations need not
be segregated from other funds except to the extent required bY law.
ARTICLE 10.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS.
No recourse shall be had for the payment of the principal of, the premium, if
any, or the interest on, any Securities, or any part thereof, or of the
indebtedness represented thereby, or upon any obligation, covenant or agreement
of this Indenture, against any incorporator, or for any claim based thereon or
otherwise in respect thereof, or against any stockholder, officer or director,
as such, past, present or future, of the Company, or of any predecessor or
successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this Indenture and all
the Securities are solely corporate obligations, and that no personal liability
whatsoever shall attach to, or be incurred
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by, any such incorporator, stockholder, officer or director, past, present or
future, of the Company or of any predecessor or successor corporation, either
directly or indirectly through the Company or any such predecessor or successor
corporation, because of the indebtedness hereby authorized or under or by reason
of any of the obligations, covenants, promises or agreements contained in this
Indenture or in any of the Securities or to be implied herefrom or therefrom;
and that any such personal liability is hereby expressly waived and released as
a condition of, and as part of the consideration for, the execution of this
Indenture and the issue of the Securities; provided, however, that nothing
herein or in the Securities contained shall be taken to prevent recourse to and
the enforcement of the liability, if any, of any stockholder or subscriber to
capital stock upon or in respect of the shares of capital stock not fully paid
up.
ARTICLE 11.
CONSOLIDATION, MERGER AND SALE.
(S) 11.01. Nothing contained in this Indenture or in the Securities shall be
deemed to prevent the consolidation or merger of the Company with or into any
other corporation, or the merger into the Company of any other corporation, or
the sale, lease, transfer or other disposition by the Company of its property
and assets as, or substantially as, an entirety, or otherwise; provided however,
(1) that, in case of any such consolidation or merger, the corporation
resulting from such consolidation or any corporation other than the Company into
which such merger shall be made shall be a corporation organized under the laws
of the United States or a State thereof or the District of Columbia and shall
succeed to and be substituted for the Company with the same effect as if it had
been named herein as the party of the first part hereto and shall become liable
and be bound for, and shall expressly assume, by indenture in form satisfactory
to the Trustee executed and delivered to the Trustee, the due and punctual
payment of the principal of, and the premium, if any, and interest on, all the
Securities then outstanding and the performance and observance of each and every
covenant and condition of this Indenture on the part of the Company to be
performed or observed, (2) that, as a condition of any such sale, lease,
transfer or other disposition of the property and assets of the Company as, or
substantially as, an entirety, the corporation to which such property and
<PAGE>
71
assets shall be sold, leased, transferred or otherwise disposed of shall (a)
expressly assume, as a part of the purchase price thereof, the due and punctual
payment of the principal of, and the premium, if any, and interest on, all the
Securities and the performance and observance of all the covenants and
conditions of this Indenture on the part of the Company to be performed or
observed, and (b) simultaneously with the delivery to it of the conveyances or
instruments of transfer of such property and assets, execute and deliver to the
Trustee a proper indenture in form satisfactory to the Trustee, whereby such
purchasing corporation shall so assume the due and punctual payment of the
principal of, and the premium, if any, and interest on, all the Securities then
outstanding and the performance and observance of each and every covenant and
condition of this Indenture on the part of the Company to be performed or
observed, to the same extent that the Company be bound and liable.
(S) 11.02. The Company will not consolidate with any other corporation or
permit the Company to be merged into any other corporation, or sell its property
and assets as, or substantially as, an entirety except upon the terms and
conditions set forth in this Article 11. Upon any consolidation or merger, or
any sale, lease, transfer or other disposition of the property and assets of the
Company as, or substantially as, an entirety in accordance with the provisions
of this Article 11, the corporation formed by such consolidation or into which
the Company shall have been merged or to which such sale, lease, transfer or
other disposition shall have been made shall succeed to and be substituted for
the Company with the same effect as if it had been named herein as a party
hereto, and thereafter from time to time such corporation may exercise each and
every right and power of the Company under this Indenture, in the name of the
Company or in its own name; and any act or proceeding by and provision of this
Indenture required or permitted to be done by any board or officer of the
Company may be done with like force and effect by the like board or officer of
any corporation that shall at the time be the successor of the Company
hereunder.
ARTICLE 12.
SUPPLEMENTAL INDENTURES.
(S) 12.01. The Company and the Trustee may, from time to time and at any
time, enter into such indentures supplemental hereto as shall be deemed by them
necessary or desirable, for one or more of the following purposes:
<PAGE>
72
(a) To add to the covenants and agreements of the Company for the protection
or benefit of the holders of all or any series of Securities;
(b) To add appropriate provisions in the event of the pledge, mortgage or
hypothecation, of property or assets as security for the Securities, as provided
in (S) 4.04;
(c) To evidence the succession of another corporation to the Company, or to
any successor corporation, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company upon the Securities and
under this Indenture;
(d) To establish the form and terms of any series of Securities as permitted
by (S) 2.02; and
(e) For any other purpose not inconsistent with the terms of this Indenture,
or for the purpose of curing any ambiguity or of curing, correcting or
supplementing any defective or inconsistent provisions, contained herein or in
any supplemental indenture.
The Trustee, to the extent permitted by (S) 8.02, shall be fully protected in
relying upon the request of the Company as proof of the necessity or
desirability of any supplemental indenture provided for in this (S) 12.01 and
upon an officers' certificate and an opinion of counsel that such supplemental
indenture complies with the provisions of this (S) 12.01.
(S) 12.02. Subject to the terms and provisions contained in this Section, and
not otherwise, the Company and the Trustee may execute such indenture or
indentures supplemental hereto as shall be by the Company deemed necessary or
desirable for the purpose of modifying or amending in any particular not
provided for under (S) 12.01 any of the terms or provisions contained in this
Indenture or in any supplemental indenture or in any Security, with the consent
of holders of a majority in aggregate principal amount of the Securities at the
time outstanding of all series affected by such supplemental indenture (treated
as a single class); provided, that no such supplemental indenture shall (a)
extend the fixed maturity of any Security, or reduce the principal amount
thereof, or reduce the rate or method of computation of or extend the time of
payment of interest, if any, thereon, or reduce any amount payable on or change
the time for any redemption thereof or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon an
acceleration of the maturity
<PAGE>
73
thereof pursuant to (S) 5.02 or the amount thereof provable in bankruptcy
pursuant to (S) 5.03 or impair or affect the right of any Securityholder to
institute suit for the payment thereof or the right of repayment, if any, at the
option of the Securityholder or make the principal of any Security or any
interest thereon payable in any coin or currency other than that hereinabove
provided, without the consent of the holder of each Security so affected, or (b)
reduce the aforesaid percentage of Securities, the holders of which are required
to consent to any such supplemental indenture, without the consent of the
holders of all Securities outstanding affected by such supplemental indenture.
If at any time the Company shall request the Trustee to enter into any
supplemental indenture pursuant to the provisions of this Section, accompanied
by a resolution authorizing the execution thereof, the Trustee shall, at the
expense of the Company, cause notice of the proposed execution of such
supplemental indenture to be mailed to all holders of Securities in the manner
and to the extent provided in subdivision (c) of (S) 7.01. Such notice shall
briefly set forth the nature of the proposed supplemental indenture, and shall
state that a copy thereof is on file at the principal office of the Trustee, for
inspection by all holders of Securities.
(S) 12.03. Whenever the Company shall deliver to the Trustee an instrument or
instruments executed by the holders of at least a majority in aggregate
principal amount of the Securities then outstanding of all series affected by
such supplemental indenture (treated as a single class), which instruments shall
refer to the proposed supplemental indenture described in such notice and shall
specifically consent to and approve the execution thereof in substantially the
form of the copy thereof referred to in such notice as on file with the Trustee,
together with an officers' certificate and an opinion of counsel, thereupon, but
not otherwise, the Trustee shall execute, subject to (S) 8.02, such supplemental
indenture in substantially such form, without liability or responsibility to any
holder of any Security, whether or not such holder shall have consented thereto,
and no holder of any Security shall have any right or interest to object to the
execution of such supplemental indenture or to object to any of the terms or
provisions therein contained, or the operation thereof, or in any manner to
question the propriety of the execution thereof, or to enjoin or restrain the
Trustee or the Company from executing the same or from taking any action
pursuant to the provisions thereof.
<PAGE>
74
Any consent given by the holder of any Security under this Article 12 shall
be irrevocable for a period of six months after the date of execution thereof,
but may be revoked at any time thereafter by such holder or by his successor in
title by filing written notice of such revocation with the Trustee at its
principal office; provided, however, that such consent shall not be revocable
after the holders of a majority in aggregate principal amount of the Securities
then outstanding of all series affected by such supplemental indenture (treated
as a single class) shall have consented to such supplemental indenture. No
notation on any Securities of the fact of such consent shall be necessary, but
any such written consent by the holder of any Security shall be conclusive and
binding on all future holders and owners of the same Security and of all
Securities delivered in exchange therefor, unless revoked in the manner and
during the period hereinabove in this (S) 12.03 provided.
(S) 12.04. Any supplemental indenture executed in accordance with any of the
provisions of this Article 12 shall thereafter form a part of this Indenture;
and all the terms and conditions contained in any such supplemental indenture as
to any provisions authorized to be contained therein shall be and be deemed to
be part of the terms and conditions of this Indenture for any and all purposes,
and the respective rights, duties and obligations under this Indenture of the
Company, the Trustee and all holders of outstanding Securities shall thereafter
be determined, exercised and enforced hereunder subject, in all respects, to
such modifications and amendments; provided, however, that all modifications of
or additions to the terms of this Indenture shall conform to the provisions of
the Trust Indenture Act of 1939 as such Act shall be in effect at the time of
execution of such supplemental indenture and that no such supplemental indenture
shall modify the rights, duties and immunities of the Trustee without its
written consent.
ARTICLE 13.
MISCELLANEOUS PROVISIONS.
(S) 13.01. Nothing in this Indenture expressed or that may be implied from
any of the provisions hereof is intended, or shall be construed, to confer upon
or to give to any person other than the parties hereto and the
<PAGE>
75
holders of the Securities any right, remedy or claim under or by reason of this
Indenture or any covenant, condition or stipulation hereof; and all covenants,
stipulations, promises and agreements in this Indenture contained shall be for
the sole and exclusive benefit of the parties hereto and their successors and of
the holders of the Securities.
(S) 13.02. All Securities paid or redeemed, or delivered to the Trustee for
any sinking fund or otherwise retired or surrendered in exchange for new
Securities pursuant to any of the provisions of this Indenture, shall be
canceled by the Trustee, and no Securities shall be issued under this Indenture
in lieu thereof except as expressly required or permitted by any of the
provisions of this Indenture. The Trustee may deliver to the Company all such
canceled Securities held by it or make such other disposition thereof as the
Company may request in writing.
(S) 13.03. As evidence of compliance with the conditions precedent provided
for in this Indenture (including any covenants compliance with which constitutes
a condition precedent) which relate to the satisfaction and discharge of this
Indenture or to any other action to be taken by the Trustee at the request or
upon the application of the Company, the Company will furnish to the Trustee an
officers' certificate stating that such conditions precedent have been complied
with and an opinion of counsel stating that in his opinion such conditions
precedent have been complied with.
Unless herein otherwise expressly provided and to the extent permitted by
(S) 8.02, any order, notice, request, certificate or statement of the Company
required or permitted to be filed with the Trustee or to be made or given under
any provision hereof, shall be sufficient if it shall have been signed by the
President or one of the Vice-Presidents and by the Treasurer or one of the
Assistant Treasurers or the Secretary or one of the Assistant Secretaries of the
Company.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include (1) a statement that the
person making such certificate or opinion has read such condition or covenant;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not
<PAGE>
76
such condition or covenant has been complied with; and (4) a statement as to
whether or not, in the opinion of such person, such condition or covenant has
been complied with.
(S) 13.04. If any provision of this Indenture limits, qualifies or conflicts
with another provision included in this Indenture which is required to be
included in this Indenture by any of the provisions of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such required provision shall
control.
(S) 13.05. Except as otherwise specified herein, all accounting terms used
herein shall be interpreted, and all accounting determinations hereunder shall
be made, in accordance with generally accepted accounting principles as in
effect from time to time.
(S) 13.06. Any notice or demand authorized by this Indenture to be served on
or given to the Company shall be sufficiently served or given for all purposes,
if it shall be sent by registered mail to the Company addressed to it at Post
Office Box 2511, Houston, Texas 77252-2511, or at such other address as may have
been furnished in writing to the Trustee by the Company.
(S) 13.07. This Indenture may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
(S) 13.08. THIS INDENTURE AND EACH AND EVERY PROVISION THEREOF AND OF THE
SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
<PAGE>
77
IN WITNESS WHEREOF, said TENNECO INC. has caused this Indenture to be
executed in its corporate name by its President or one of its Vice Presidents,
and its corporate seal to be hereunto affixed and to be attested by its
Secretary or one of its Assistant Secretaries, and said THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION) has caused this Indenture to be executed in its corporate
name by one of its Vice Presidents and its corporate seal to be hereunto
affixed and to be attested by one of its Assistant Secretaries, all as of March
15, 1988.
TENNECO INC.,
By ROBERT T. BLAKELY
---------------------------
ROBERT T. BLAKELY
Senior Vice President an
Chief Financial Officer
Attest:
KARL A. STEWART
- ----------------------------
Secretary
[CORPORATE SEAL]
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By T. J. FITZSIMONS
---------------------------
T. J. FITZSIMONS
Vice President
Attest:
JAMES J. SCHIMMEL
- ----------------------------
Assistant Secretary
[CORPORATE SEAL]
<PAGE>
Exhibit 4(a)(2)
[Conformed Copy]
================================================================================
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(National Association),
as Trustee
------------
Second Supplemental Indenture
Dated as of March 30, 1988
TO
Indenture
Dated as of March 15,1988
------------
Providing for the issuance of
10% Debentures due 2008
================================================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE dated as of March 30, 1988 between TENNECO
INC., a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and THE CHASE MANHATTAN BANK
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in (S)
2.02 of the Original Indenture; and
WHEREAS, (S)12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an
aggregate principal amount of $250,000,000 to be designated the "10% Debentures
due 2008" (the "Debentures"), and all action on the part of the Company
necessary to authorize the issuance of the Debentures under the Original
Indenture and this Second Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Debentures, when executed
by the Company and authenticated and delivered by the Trustee as in the
Indenture provided, the valid and binding obligations of the Company, and to
constitute these presents a valid and binding supplemental indenture and
agreement according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of the
sum of one dollar to the Company duly paid by the Trustee at the execution and
delivery of these presents, and of other valuable consideration the receipt
whereof is hereby acknowledged and in order to authorize the authentication and
delivery of and to set forth the terms of the Debentures,
<PAGE>
2
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties
hereto, for the benefit of holders of the Debentures issued under the Indenture,
as follows:
ARTICLE 1.
TERMS AND ISSUANCE OF 10% DEBENTURES DUE 2008
(S)1.01. Issue of Debentures. A series of Securities which shall be
designated the "10% Debentures due 2008" shall be executed, authenticated and
delivered in accordance with the provisions of, and shall in all respects be
subject to, the terms, conditions and covenants of the Indenture, including
without limitation the terms set forth in this Second Supplemental Indenture
(including the form of Debentures set forth in (S)1.02 hereof). The aggregate
principal amount of Debentures which may be authenticated and delivered under
the Indenture shall not, except as permitted by the provisions of (S)(S)2.07,
2.08, 2.10, 2.11 or 3.02 of the Indenture, exceed $250,000,000. The entire
amount of Debentures may forthwith be executed by the Company and delivered to
the Trustee and shall be authenticated by the Trustee and delivered to or upon
the order of the Company pursuant to (S)2.03 of the Indenture.
(S)1.02. Forms of Debentures and Authentication Certificate. The forms of
the Debentures and the Trustee's certificate of authentication shall be
substantially as follows:
[FORM OF FACE OF DEBENTURE]
TENNECO INC.
10% DEBENTURE DUE 2008
No. $
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to
or registered assigns, the sum of Dollars on March 15, 2008,
in any coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts, and to
<PAGE>
3
pay to the registered holder hereof as hereinafter provided interest thereon at
the rate per annum specified in the title hereof in like coin or currency, from
the September 15 or the March 15 next preceding the date hereof to which
interest has been paid, unless the date hereof is a September 15 or March 15 to
which interest on the Debentures has been paid, in which case from the date
hereof, or unless no interest has been paid on the Debentures since the original
issue date (hereinafter referred to) of this Debenture, in which case from the
original issue date, semi-annually on September 15 and March 15 in each year,
until payment of said principal sum has been made or duly provided for, and to
pay interest on any overdue principal and (to the extent permitted by law) on
any overdue installment of interest at the rate of 10% per annum.
Notwithstanding the foregoing, when there is no existing default in the payment
of interest on the Debentures, if the date hereof is after August 31 or February
28 (or 29) and prior to the following September 15 or March 15, as the case may
be, this Debenture shall bear interest from such September 15 or March 15;
provided, however, that if the Company shall default in the payment of interest
due on such September 15 or March 15, then this Debenture shall bear interest
from the September 15 or March 15 to which interest has been paid or, if no
interest has been paid on the Debentures since the original issue date of this
Debenture, from the original issue date. The interest so payable on any
September 15 or March 15 will, subject to certain exceptions provided in the
Indenture hereinafter referred to, be paid to the person in whose name this
Debenture is registered at the close of business on the August 31 or February 28
(or 29), as the case may be, next preceding such September 15 or March 15, or if
such August 31 or February 28 (or 29) is not a business day, the business day
next preceding such August 31 or February 28 (or 29). Interest on this
Debenture shall be computed on the basis of a 360-day year of twelve 30-day
months. Both principal of and interest on this Debenture are payable at the
principal office of the Trustee in the Borough of Manhattan, The City of New
York, New York; provided, however, that payment of interest may be made, at the
option of the Company, by check mailed to the address of the person entitled
thereto as such address shall appear on the Debenture register. The original
issue date in respect of the Debentures is March 15, 1988.
ADDITIONAL PROVISIONS OF THIS DEBENTURE ARE CONTAINED ON THE REVERSE HEREOF
AND SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH AT THIS PLACE.
<PAGE>
4
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President, and
its corporate seal (or a facsimile thereof) to be hereto affixed and attested by
its Secretary or an Assistant Secretary.
Dated ..............................
Tenneco Inc.
By.........................
Chairman of the Board
Attest:
.....................................
Secretary.
[FORM OF REVERSE OF DEBENTURE]
TENNECO INC.
10% DEBENTURE DUE 2008
This Debenture is one of a duly authorized issue of Debentures of the Company
known as its 10% Debentures due 2008 (herein called the "Debentures"), limited
to the aggregate principal amount of $250,000,000, all issued under and equally
entitled to the benefits of an Indenture (herein, together with any amendments
and supplements thereto, including without limitation the form and terms of
Securities issued Pursuant thereto, called
<PAGE>
5
the "Indenture"), dated as of March 15, 1988, executed by the Company to The
Chase Manhattan Bank (National Association) (herein, together with any successor
thereto, called the "Trustee"), as Trustee, to which Indenture reference is
hereby made for a statement of the rights thereunder of the Trustee and of the
registered holders of the Debentures and of the duties thereunder of the Trustee
and the Company.
The Debentures are not subject to redemption by the Company prior to
maturity.
The Debentures are subject to repayment on March 15, 1998, in whole or in
part, in increments of $1,000 or integral multiples of $1,000 in excess of
$1,000, provided that the portion of the principal amount of any Debenture not
being repaid shall be at least $1,000, at the option of the holders thereof at
a repayment price equal to the principal amount thereof to be repaid, together
with interest payable thereon to the repayment date. For this Debenture to be
repaid at the option of the holder, the Company must receive at the corporate
trust office of the Trustee in the Borough of Manhattan, The City of New York,
during the period from and including January 15, 1998 to and including February
15, 1998 or, if February 15, 1998 is not a Business Day, the next succeeding
Business Day, (i) this Debenture with the form entitled "Option to Elect
Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company in the United States of America setting forth the name of the holder of
the Debenture, the principal amount of the Debenture, the amount of such
Debenture to be repaid, a statement that the option to elect repayment is being
made thereby and a guarantee that the Debenture to be repaid with the form
entitled "Option to Elect Repayment" on the reverse thereof duly completed will
be received by the Company no later than five Business Days after the date of
such telegram, telex, facsimile transmission or letter, and such Debenture and
form duly completed are received by the Company by such fifth Business Day.
Either form of notice duly received during the period from and including January
15, 1998 to and including February 15, 1998 shall be irrevocable. All questions
as to the validity, eligibility (including time of receipt) and acceptance of
any Debentures for repayment will be determined by the Company, whose
determination shall be final and binding.
<PAGE>
6
The Indenture permits the Company to issue unsecured debentures, notes and/or
other evidences of indebtedness in one or more series ("Securities") up to such
principal amount or amounts as may be authorized in accordance with the terms of
the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the Company
and of the holders of the Debentures may be made with the consent of the Company
and with the consent of the holders of not less than a majority in principal
amount of the Securities of all series then outstanding under the Indenture
(treated as a single class) which are affected by the modification or amendment
thereto; provided, however, that without the consent of the holder hereof no
such modification or alteration shall be made which will affect the terms of
payment of the principal of or interest on this Debenture.
In case a default, as defined in the Indenture, shall occur, the principal of
all the Debentures at any such time outstanding under the Indenture may be
declared or may become due and payable, upon the conditions and in the manner
and with the effect provided in the Indenture. The Indenture provides that such
declaration may in certain events be waived by the holders of a majority in
principal amount of the Debentures outstanding in the case of payment defaults
on the Debentures and in certain other events by the holders of a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Debenture may enforce any remedy
under the Indenture except in the case of refusal or neglect of the Trustee to
act after notice of default and after request by the holders of a majority in
principal amount of the outstanding Debentures in certain events (and in
certain other events by the holders of a majority in principal amount of the
Securities of all series then outstanding under the Indenture, treated as a
single class, which are affected thereby) and the offer to the Trustee of
security and indemnity satisfactory to it; provided, however, that such
provision shall not prevent the holder hereof from enforcing payment of the
principal of or interest on this Debenture.
The transfer of this Debenture is registrable by the registered holder
hereof, in person or by duly authorized attorney, at the agency of the
<PAGE>
7
Company in the Borough of Manhattan, The City of New York, New York, on books of
the Company to be kept for that purpose at said agency, upon surrender and
cancellation of this Debenture and on presentation of a duly executed written
instrument of transfer, and thereupon a new Debenture or Debentures, of the same
aggregate principal amount and in authorized denominations. will be issued to
the transferee or transferees in exchange herefor; and this Debenture, with or
without other Debentures, may in like manner be exchanged for one or more new
Debentures of other authorized denominations but of the same aggregate principal
amount; all subject to the terms and conditions set forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the
Debentures may deem and treat the person in whose name this Debenture is
registered as the absolute owner hereof for all purposes whatsoever, and neither
the Company nor the Trustee nor any paying agent nor any Registrar of the
Debentures shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the interest
on, this Debenture, or for any claim based hereon or on the Indenture, against
any incorporator, or against any stockholder, director or officer, as such,
past, present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability, whether at common law, in equity, by any constitution, statute or
otherwise, of incorporators, stockholders, directors or officers being released
by every owner hereof by the acceptance of this Debenture and as part of the
consideration for the issue hereof, and being likewise released by the terms of
the Indenture; provided, however, that nothing herein or in the Indenture
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid up.
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
<PAGE>
8
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay the within Debenture (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the repayment date, to the undersigned, at
- --------------------------------------------------------------------------------
Tax I.D. No.
- --------------------------------------------------------------------------------
(Please Print or Typewrite Name, Address and
Tax Identification Number of the Undersigned)
For this Debenture to be repaid the Company must receive at the corporate
trust office of the Trustee in the Borough of Manhattan, The City of New York or
at such additional place or places of which the Company shall from time to time
notify the holder of the within Debenture during the period from and including
January 15, 1998 to and including February 15, 1998 or, if February 15, 1998 is
not a Business Day, the next succeeding Business Day, (i) this Debenture with
this "Option to Elect Repayment" form duly completed or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States of America setting forth the name of the
holder of the Debenture, the principal amount of the Debenture, the amount of
the Debenture to be repaid, a statement that the option to elect repayment is
being made thereby and a guarantee that the Debenture to be repaid with the form
entitled "Option to Elect Repayment" on the reverse of the Debenture duly
completed will be received by the Company not later than five Business Days
after the date of such telegram, telex, facsimile transmission or letter, and
such Debenture and form duly completed are received by the Company by such fifth
Business Day.
If less than the entire principal amount of the within Debenture is to be
repaid, specify the portion thereof (which shall be $1,000 or an integral
multiple of $1,000 in excess of $1,000) which the holder elects to have
repaid: $........; and specify the denomination or denominations (which shall
be $1,000 or an integral multiple of $1,000 in excess of $1,000) of the
Debenture or Debentures to be issued to the holder for the amount of the
portion of the within Debenture not being repaid (in the absence of any
<PAGE>
9
such specification, one such Debenture will be issued for the portion not
being repaid: $.......).
Dated:
--------------------------------------
NOTICE: The signature on this Option to
Elect Repayment must correspond with
the name as written upon the face of
this instrument in every particular
without alteration or enlargement or
any other change whatsoever.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Debenture is one of the 10% Debentures due 2008 described in the within-
mentioned Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee.
By ..............................
Authorized Officer.
ARTICLE 2.
MISCELLANEOUS
(S)2.01. Execution as Supplemental Indenture. This Second Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this Second
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions. uses and constructions contained in the Original
Indenture.
(S)2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Debentures (except in the Trustee's certificate of authentication) shall be
<PAGE>
10
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no representations
as to the validity or sufficiency of this Second Supplemental Indenture or of
the Debentures. The Trustee shall not be accountable for the use or application
by the Company of the Debentures or of the proceeds thereof.
(S)2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Second Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S)2.04. New York Contract. THIS SECOND SUPPLEMENTAL INDENTURE AND EACH
DEBENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SAID STATE.
(S)2.05. Execution and Counterparts. This Second Supplemental Indenture may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, said TENNECO INC. has caused this Second Supplemental
Indenture to be executed in its corporate name by its President or one of its
Vice Presidents, and said THE CHASE MANHATTAN BANK (National Association) has
caused this Indenture to be executed in its corporate name by one of its Vice
Presidents as of March 30, 1988.
TENNECO INC.
By ROBERT T. BLAKELY
-----------------------------
ROBERT T. BLAKELY
Senior Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK
(National Association)
By T. J. FITZSIMONS
------------------------------
T. J. FITZSIMONS
Vice President
<PAGE>
EXHIBIT 4(a)(3)
[Conformed Copy]
================================================================================
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(National Association),
as Trustee
------------
Fifth Supplemental Indenture
Dated as of November 15, 1990
TO
Indenture
Dated as of March 15, 1988
-----------
Providing for the issuance of
10 3/8% Notes due 2000
================================================================================
<PAGE>
FIFTH SUPPLEMENTAL INDENTURE dated as of November 15, 1990, between TENNECO
INC., a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and THE CHASE MANHATTAN BANK
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in
(S)2.02 of the Original Indenture; and
WHEREAS, (S)12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an
aggregate principal amount of $175,000,000 to be designated the "10-3/8% Notes
due 2000" (the "Notes"), and all action on the part of the Company necessary to
authorize the issuance of the Notes under the Original Indenture and this Fifth
Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid and binding obligations of the Company, and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of the
sum of one dollar to the Company duly paid by the Trustee at the execution and
delivery of these presents, and of other valuable consideration the receipt
whereof is hereby acknowledged and in order to authorize the authentication and
delivery of and to set forth the terms of the Notes,
<PAGE>
2
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties
hereto, for the benefit of holders of the Notes issued under the Indenture, as
follows:
ARTICLE I.
TERMS AND ISSUANCE OF 10-3/8% NOTES DUE 2000
(S)1.01. Issue of Notes. A series of Securities which shall be designated
the "10-3/8% Notes due 2000" shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to, the
terms, conditions and covenants of the Indenture, including without limitation
the terms set forth in this Fifth Supplemental Indenture (including the form of
Notes set forth in (S)1.02 hereof). The aggregate principal amount of Notes
which may be authenticated and delivered under the Indenture shall not, except
as permitted by the provisions of (S)(S)2.07, 2.08, 2.10, 2.11 or 3.02 of the
Indenture, exceed $175,000,000. The entire amount of Notes may forthwith be
executed by the Company and delivered to the Trustee and shall be authenticated
by the Trustee and delivered to or upon the order of the Company pursuant to
(S)2.03 of the Indenture.
(S)1.02. Forms of Notes and Authentication Certificate. The forms of the
Notes and the Trustee's certificate of authentication shall be substantially as
follows:
[FORM OF FACE OF NOTE]
TENNECO INC.
10-3/8% NOTE DUE 2000
No. $
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to or registered assigns, the sum of
Dollars on November 15, 2000, in any coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts, and to pay
<PAGE>
3
to the registered holder hereof as hereinafter provided interest thereon at the
rate per annum specified in the title hereof in like coin or currency, from the
May 15 or the November 15 next preceding the date hereof to which interest has
been paid, unless the date hereof is a May 15 or November 15 to which interest
on the Notes has been paid. in which case from the date hereof, or unless no
interest has been paid on the Notes since the original issue date (hereinafter
referred to) of this Note, in which case from the original issue date, semi-
annually on May 15 and November 15 in each year, until payment of said principal
sum has been made or duly provided for, and to pay interest on any overdue
principal and (to the extent permitted by law) on any overdue installment of
interest at the rate of 10-3/8% per annum. Notwithstanding the foregoing, when
there is no existing default in the payment of interest on the Notes, if the
date hereof is after April 30 or October 31 and prior to the following May 15 or
November 15, as the case may be, this Note shall bear interest from such May 15
or November 15; provided, however, that if the Company shall default in the
payment of interest due on such May 15 or November 15, then this Note shall bear
interest from the May 15 or November 15 to which interest has been paid or, if
no interest has been paid on the Notes since the original issue date of this
Note, from the original issue date. The interest so payable on any May 15 or
November 15 will, subject to certain exceptions provided in the Indenture
hereinafter referred to, be paid to the person in whose name this Note is
registered at the close of business on the April 30 or October 31, as the case
may be, next preceding such May 15 or November 15, or if such April 30 or
October 31 is not a business day, the business day next preceding such April 30
or October 31. Interest on this Note shall be computed on the basis of a 360-day
year of twelve 30-day months. Both principal of and interest on this Note are
payable at the principal office of the Trustee in the Borough of Manhattan, The
City of New York, New York; provided, however, that payment of interest may be
made, at the option of the Company, by check mailed to the address of the person
entitled thereto as such address shall appear on the Note register. The original
issue date in respect of the Notes is November 15, 1990.
ADDITIONAL PROVISIONS OF THIS NOTE ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET
FORTH AT THIS PLACE.
<PAGE>
4
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President, and
its corporate seal (or a facsimile thereof) to be hereto affixed and attested by
its Secretary or an Assistant Secretary.
Dated ...........................
Tenneco Inc.
By ....................................
Chairman of the Board
Attest:
.................................
Secretary
[FORM OF REVERSE OF NOTE]
TENNECO INC.
10-3/8% NOTE DUE 2000
This Note is one of a duly authorized issue of Notes of the Company known as
its 10-3/8% Notes due 2000 (herein called the "Notes"), limited to the aggregate
principal amount of $175,000,000, all issued under and equally entitled to the
benefits of an Indenture (herein, together with any amendments and supplements
thereto, including without limitation the form and terms of
<PAGE>
5
Securities issued pursuant thereto, called the "Indenture"), dated as of March
15, 1988, executed by the Company to The Chase Manhattan Bank (National
Association) (herein, together with any successor thereto, called the
"Trustee"), as Trustee, to which Indenture reference is hereby made for a
statement of the rights thereunder of the Trustee and of the registered holders
of the Notes and of the duties thereunder of the Trustee and the Company.
The Notes are not subject to redemption prior to maturity.
The Indenture permits the Company to issue unsecured debentures, notes and/or
other evidences of indebtedness in one or more series ("Securities") up to such
principal amount or amounts as may be authorized in accordance with the terms of
the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the Company
and of the holders of the Notes may be made with the consent of the Company and
with the consent of the holders of not less than a majority in principal amount
of the Securities of all series then outstanding under the Indenture (treated as
a single class) which are affected by the modification or amendment thereto;
provided, however, that without the consent of the holder hereof no such
modification or alteration shall be made which will affect the terms of payment
of the principal of or interest on this Note.
In case a default, as defined in the Indenture, shall occur, the principal of
all the Notes at any such time outstanding under the Indenture may be declared
or may become due and payable, upon the conditions and in the manner and with
the effect provided in the Indenture. The Indenture provides that such
declaration may in certain events be waived by the holders of a majority in
principal amount of the Notes outstanding in the case of payment defaults on the
Notes and in certain other events by the holders of a majority in principal
amount of the Securities of all series then outstanding under the Indenture
(treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Note may enforce any remedy
under the Indenture except in the case of refusal or neglect of the Trustee to
act after notice of default and after request by the holders of a majority in
principal amount of the outstanding Notes in certain events (and in certain
other events by the holders of a majority in principal amount of the Securities
of all series then outstanding under the Indenture, treated as a single
<PAGE>
6
class, which are affected thereby) and the offer to the Trustee of security and
indemnity satisfactory to it; provided, however, that such provision shall not
prevent the holder hereof from enforcing payment of the principal of or interest
on this Note.
The transfer of this Note is registrable by the registered holder hereof, in
person or by duly authorized attorney, at the agency of the Company in the
Borough of Manhattan, The City of New York, New York, on books of the Company to
be kept for that purpose at said agency, upon surrender and cancellation of this
Note and on presentation of a duly executed written instrument of transfer, and
thereupon a new Note or Notes, of the same aggregate principal amount and in
authorized denominations, will be issued to the transferee or transferees in
exchange herefor; and this Note, with or without other Notes, may in like manner
be exchanged for one or more new Notes of other authorized denominations but of
the same aggregate principal amount; all subject to the terms and conditions set
forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the Notes may
deem and treat the person in whose name this Note is registered as the absolute
owner hereof for all purposes whatsoever, and neither the Company nor the
Trustee nor any paying agent nor any Registrar of the Notes shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of, or the interest
on, this Note, or for any claim based hereon or on the Indenture, against any
incorporator, or against any stockholder, director or officer, as such, past,
present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability, whether at common law, in equity, by any constitution, statute or
otherwise, of incorporators, stockholders, directors or officers being released
by every owner hereof by the acceptance of this Note and as part of the
consideration for the issue hereof, and being likewise released by the terms of
the Indenture; provided, however, that nothing herein or in the Indenture
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid up.
<PAGE>
7
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Note is one of the 10-3/8% Notes due 2000 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By ..................................
Authorized Officer.
<PAGE>
8
ARTICLE 2.
MISCELLANEOUS
(S)2.01. Execution as Supplemental Indenture. This Fifth Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this Fifth
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture.
(S)2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Notes (except in the Trustee's certificate of authentication) shall be taken as
the statements of the Company, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity or
sufficiency of this Fifth Supplemental Indenture or of the Notes. The Trustee
shall not be accountable for the use or application by the Company of the Notes
or of the proceeds thereof.
(S)2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Fifth Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S)2.04. New York Contract. This Fifth Supplemental Indenture and each Note
shall be deemed to be a contract made under the laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
state.
(S)2.05. Execution and Counterparts. This Fifth Supplemental Indenture may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
9
IN WITNESS WHEREOF, said TENNECO INC. has caused this Fifth Supplemental
Indenture to be executed in its corporate name by its President or one of its
Vice Presidents, and said THE CHASE MANHATTAN BANK (National Association) has
caused this Fifth Supplemental Indenture to be executed in its corporate name by
one of its Vice Presidents as of November 15, 199O.
TENNECO INC.
By ROBERT T. BLAKELY
----------------------------------
ROBERT T. BLAKELY
Senior Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK
(National Association)
By ANN L. EDMONDS
----------------------------------
ANN L. EDMONDS
Vice President
<PAGE>
EXHIBIT 4(a)(4)
[CONFORMED COPY]
================================================================================
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(National Association),
as Trustee
------------
Sixth Supplemental Indenture
Dated as of February 1, 1991
TO
Indenture
Dated as of March 15, 1988
------------
Providing for the issuance of
9-7/8% Notes due 2001
================================================================================
<PAGE>
SIXTH SUPPLEMENTAL INDENTURE dated as of February 1, 1991, between TENNECO
INC. a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and THE CHASE MANHATTAN BANK
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the "Trustee).
WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in
(S)2.02 of the Original Indenture; and
WHEREAS, (S)12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an
aggregate principal amount of $200,000,000 to be designated the "9-7/8% Notes
due 2001" (the "Notes"), and all action on the part of the Company necessary to
authorize the issuance of the Notes under the Original Indenture and this Sixth
Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid and binding obligations of the Company, and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of the
sum of one dollar to the Company duly paid by the Trustee at the execution and
delivery of these presents, and of other valuable consideration the receipt
whereof is hereby acknowledged and in order to authorize the authentication and
delivery of and to set forth the terms of the Notes,
<PAGE>
2
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties
hereto, for the benefit of holders of the Notes issued under the Indenture, as
follows:
ARTICLE I.
TERMS AND ISSUANCE OF 9-7/8% NOTES DUE 2001
(S)1.01. Issue of Notes. A series of Securities which shall be designated
the "9-7/8% Notes due 2001" shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to, the
terms, conditions and covenants of the Indenture, including without limitation
the terms set forth in this Sixth Supplemental Indenture (including the form of
Notes set forth in (S)1.02 hereof). The aggregate principal amount of Notes
which may be authenticated and delivered under the Indenture shall not, except
as permitted by the provisions of (S)(S)2.07, 2.08, 2.10, 2.11 or 3.02 of the
Indenture, exceed $200,000,000. The entire amount of Notes may forthwith be
executed by the Company and delivered to the Trustee and shall be authenticated
by the Trustee and delivered to or upon the order of the Company pursuant to
(S)2.03 of the Indenture.
(S)1.02. Forms of Notes and Authentication Certificate. The forms of the
Notes and the Trustee's certificate of authentication shall be substantially as
follows:
[FORM OF FACE OF NOTE]
TENNECO INC.
9-7/8% NOTE DUE 2001
No. $
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to or registered
assigns, the sum of Dollars on February 1, 2001, in any coin
or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts, and to pay
<PAGE>
3
to the registered holder hereof as hereinafter provided interest thereon at the
rate per annum specified in the title hereof in like coin or currency, from the
February 1 or August 1 next preceding the date hereof to which interest has been
paid, unless the date hereof is a February 1 or August 1 to which interest on
the Notes has been paid, in which case from the date hereof, or unless no
interest has been paid on the Notes since the original issue date (hereinafter
referred to) of this Note, in which case from the original issue date,
semi-annually on February 1 and August 1 in each year, until payment of said
principal sum has been made or duly provided for, and to pay interest on any
overdue principal and (to the extent permitted by law) on any overdue
installment of interest at the rate of 9-7/8% per annum. Notwithstanding the
foregoing, when there is no existing default in the payment of interest on the
Notes, if the date hereof is after January 16 or July 16 and prior to the
following February 1 or August 1, as the case may be, this Note shall bear
interest from such February 1 or August 1; provided, however, that if the
Company shall default in the payment of interest due on such February 1 or
August 1, then this Note shall bear interest from the February 1 or August 1 to
which interest has been paid or, if no interest has been paid on the Notes since
the original issue date of this Note, from the original issue date. The interest
so payable on any February 1 or August 1 will, subject to certain exceptions
provided in the Indenture hereinafter referred to, be paid to the person in
whose name this Note is registered at the close of business on the January 16 or
July 16, as the case may be, next preceding such February 1 or August 1, or if
such January 16 or July 16 is not a business day, the business day next
preceding such January 16 or July 16. Interest on this Note shall be computed on
the basis of a 360-day year of twelve 30-day months. Both principal of and
interest on this Note are payable at the principal office of the Trustee in the
Borough of Manhattan, The City of New York, New York; provided, however, that
payment of interest may be made, at the option of the Company, by check mailed
to the address of the person entitled thereto as such address shall appear on
the Note register. The original issue date in respect of the Notes is February
1, 1991.
ADDITIONAL PROVISIONS OF THIS NOTE ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET
FORTH AT THIS PLACE.
<PAGE>
4
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President, and
its corporate seal (or a facsimile thereof) to be hereto affixed and attested by
its Secretary or an Assistant Secretary.
Dated .....................
Tenneco Inc.
By ...................................
Chairman of the Board
Attest:
...........................
Secretary
[FORM OF REVERSE OF NOTE]
TENNECO INC.
9-7/8% NOTE DUE 2001
This Note is one of a duly authorized issue of Notes of the Company known as
its 9-7/8% Notes due 2001 (herein called the "Notes"), limited to the aggregate
principal amount of $200,000,000, all issued under and equally entitled to the
benefits of an Indenture (herein, together with any amendments and supplements
thereto, including without limitation the form and terms of
<PAGE>
5
Securities issued pursuant thereto, called the "Indenture"), dated as of March
15, 1988, executed by the Company to The Chase Manhattan Bank (National
Association) (herein, together with any successor thereto, called the
"Trustee"), as Trustee, to which Indenture reference is hereby made for a
statement of the rights thereunder of the Trustee and of the registered holders
of the Notes and of the duties thereunder of the Trustee and the Company.
The Notes are not subject to redemption prior to maturity.
The Indenture permits the Company to issue unsecured debentures, notes and/or
other evidences of indebtedness in one or more series ("Securities") up to such
principal amount or amounts as may be authorized in accordance with the terms of
the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the
Company and of the holders of the Notes may be made with the consent of the
Company and with the consent of the holders of not less than a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected by the modification or
amendment thereto; provided, however, that without the consent of the holder
hereof no such modification or alteration shall be made which will affect the
terms of payment of the principal of or interest on this Note.
In case a default, as defined in the Indenture, shall occur, the principal of
all the Notes at any such time outstanding under the Indenture may be declared
or may become due and payable, upon the conditions and in the manner and with
the effect provided in the Indenture. The Indenture provides that such
declaration may in certain events be waived by the holders of a majority in
principal amount of the Notes outstanding in the case of payment defaults on the
Notes and in certain other events by the holders of a majority in principal
amount of the Securities of all series then outstanding under the Indenture
(treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Note may enforce any remedy
under the Indenture except in the case of refusal or neglect of the Trustee to
act after notice of default and after request by the holders of a majority in
principal amount of the outstanding Notes in certain events (and in certain
other events by the holders of a majority in principal amount of the Securities
of all series then outstanding under the Indenture, treated as a single
<PAGE>
6
class, which are affected thereby) and the offer to the Trustee of security and
indemnity satisfactory to it; provided, however, that such provision shall not
prevent the holder hereof from enforcing payment of the principal of or interest
on this Note.
The transfer of this Note is registrable by the registered holder hereof, in
person or by duly authorized attorney, at the agency of the Company in the
Borough of Manhattan, The City of New York, New York, on books of the Company to
be kept for that purpose at said agency, upon surrender and cancellation of this
Note and on presentation of a duly executed written instrument of transfer, and
thereupon a new Note or Notes, of the same aggregate principal amount and in
authorized denominations, will be issued to the transferee or transferees in
exchange herefor; and this Note, with or without other Notes, may in like manner
be exchanged for one or more new Notes of other authorized denominations but of
the same aggregate principal amount; all subject to the terms and conditions set
forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the Notes may
deem and treat the person in whose name this Note is registered as the absolute
owner hereof for all purposes whatsoever, and neither the Company nor the
Trustee nor any paying agent nor any Registrar of the Notes shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of, or the interest
on, this Note, or for any claim based hereon or on the Indenture, against any
incorporator, or against any stockholder, director or officer, as such, past,
present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability, whether at common law, in equity, by any constitution, statute or
otherwise, of incorporators, stockholders, directors or officers being released
by every owner hereof by the acceptance of this Note and as part of the
consideration for the issue hereof, and being likewise released by the terms of
the Indenture; provided, however, that nothing herein or in the Indenture
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid up.
<PAGE>
7
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Note is one of the 9-7/8% Notes due 2001 described in the within-
mentioned indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By
----------------------------------
Authorized Officer.
<PAGE>
8
ARTICLE 2.
MISCELLANEOUS
(S) 2.01. Execution as Supplemental Indenture. This Sixth Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this Sixth
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture.
(S) 2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Notes (except in the Trustee's certificate of authentication) shall be taken as
the statements of the Company, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity or
sufficiency of this Sixth Supplemental Indenture or of the Notes. The Trustee
shall not be accountable for the use or application by the Company of the Notes
or of the proceeds thereof.
(S) 2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Sixth Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S) 2.04. New York Contract. This Sixth Supplemental Indenture and each Note
shall be deemed to be a contract made under the laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
state.
(S) 2.05. Execution and Counterparts. This Sixth Supplemental Indenture may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
9
IN WITNESS WHEREOF, said TENNECO INC. has caused this Sixth Supplemental
Indenture to be executed in its corporate name by its President or one of its
Vice Presidents, and said THE CHASE MANHATTAN BANK (National Association) has
caused this Sixth Supplemental Indenture to be executed in its corporate name by
one of its Vice Presidents as of February 1, 1991.
TENNECO INC.
By PETER MENIKOFF
-----------------------------------
PETER MENIKOFF
Vice President
THE CHASE MANHATTAN BANK
(National Association)
By ANN L. EDMONDS
-----------------------------------
ANN L. EDMONDS
Vice President
<PAGE>
EXHIBIT 4(a)(5)
[CONFORMED COPY]
================================================================================
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(National Association),
As Trustee
----------
Seventh Supplemental Indenture
Dated as of August 1, 1991
TO
Indenture
Dated as of March 15, 1988
----------
Providing for the issuance of
10% Notes due 1998
================================================================================
<PAGE>
SEVENTH SUPPLEMENTAL INDENTURE dated as of August 1, 1991, between TENNECO INC.,
a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and THE CHASE MANHATTAN BANK
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in
(S)2.02 of the Original Indenture; and
WHEREAS, (S)12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an
aggregate principal amount of $500,000,000 to be designated the "10% Notes due
1998" (the "Notes"), and all action on the part of the Company necessary to
authorize the issuance of the Notes under the Original Indenture and this
Seventh Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid and binding obligations of the Company, and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of the
sum of one dollar to the Company duly paid by the Trustee at the execution and
delivery of these presents, and of other valuable consideration the receipt
whereof is hereby acknowledged and in order to authorize the authentication and
delivery of and to set forth the terms of the Notes,
<PAGE>
2
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties
hereto, for the benefit of holders of the Notes issued under the Indenture, as
follows:
ARTICLE I.
TERMS AND ISSUANCE OF 10% NOTES DUE 1998
(S)1.01. Issue of Notes. A series of Securities which shall be designated
the "10% Notes due 1998" shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to, the
terms, conditions and covenants of the Indenture, including without limitation
the terms set forth in this Seventh Supplemental Indenture (including the form
of Notes set forth in (S)1.02 hereof). The aggregate principal amount of Notes
which may be authenticated and delivered under the Indenture shall not, except
as permitted by the provisions of (S)(S)2.07, 2.08, 2.10, 2.11 or 3.02 of the
Indenture, exceed $500,000,000. The entire amount of Notes may forthwith be
executed by the Company and delivered to the Trustee and shall be authenticated
by the Trustee and delivered to or upon the order of the Company pursuant to
(S)2.03 of the Indenture.
(S)1.02. Forms of Notes and Authentication Certificate. The forms of the
Notes and the Trustee's certificate of authentication shall be substantially as
follows:
[FORM OF FACE OF NOTE]
TENNECO INC.
10% NOTE DUE 1998
No. $
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to or registered assigns,
the sum of Dollars on August 1, 1998, in any coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts, and to pay
<PAGE>
3
to the registered holder hereof as hereinafter provided interest thereon at the
rate per annum specified in the title hereof in like coin or currency, from the
February 1 or August 1 next preceding the date hereof to which interest has been
paid, unless the date hereof is a February 1 or August 1 to which interest on
the Notes has been paid, in which case from the date hereof, or unless no
interest has been paid on the Notes since the original issue date (hereinafter
referred to) of this Note, in which case from the original issue date,
semi-annually on February 1 and August 1 in each year, until payment of said
principal sum has been made or duly provided for, and to pay interest on any
overdue principal and (to the extent permitted by law) on any overdue
installment of interest at the rate of 10% per annum. Notwithstanding the
foregoing, when there is no existing default in the payment of interest on the
Notes, if the date hereof is after January 16 or July 16 and prior to the
following February 1 or August 1, as the case may be, this Note shall bear
interest from such February 1 or August 1; provided, however, that if the
Company shall default in the payment of interest due on such February 1 or
August 1, then this Note shall bear interest from the February 1 or August 1 to
which interest has been paid or, if no interest has been paid on the Notes since
the original issue date of this Note, from the original issue date. The interest
so payable on any February 1 or August 1 will, subject to certain exceptions
provided in the Indenture hereinafter referred to, be paid to the person in
whose name this Note is registered at the close of business on the January 16 or
July 16, as the case may be, next preceding such February 1 or August 1, or if
such January 16 or July 16 is not a business day, the business day next
preceding such January 16 or July 16. Interest on this Note shall be computed on
the basis of a 360-day year of twelve 30-day months. Both principal of and
interest on this Note are payable at the principal office of the Trustee in the
Borough of Manhattan, The City of New York, New York; provided, however, that
payment of interest may be made, at the option of the Company, by check mailed
to the address of the person entitled thereto as such address shall appear on
the Note register. The original issue date in respect of the Notes is August 1,
1991.
ADDITIONAL PROVISIONS OF THIS NOTE ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET
FORTH AT THIS PLACE.
<PAGE>
4
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President, and
its corporate seal (or a facsimile thereof) to be hereto affixed and attested by
its Secretary or an Assistant Secretary.
Dated
----------------------------
Tenneco Inc.
By
---------------------------------------
Chairman of the Board
Attest:
- ----------------------------------
Secretary
[FORM OF REVERSE OF NOTE]
TENNECO INC.
10% NOTE DUE 1998
This Note is one of a duly authorized issue of Notes of the Company known as
its 10% Notes due 1998 (herein called the "Notes"), limited to the aggregate
principal amount of $500,00O,000, all issued under and equally entitled to the
benefits of an Indenture (herein, together with any amendments and supplements
thereto, including without limitation the form and terms of
<PAGE>
5
Securities issued pursuant thereto, called the "Indenture"), dated as of March
15, 1988, executed by the Company to The Chase Manhattan Bank (National
Association) (herein, together with any successor thereto, called the
"Trustee"), as Trustee, to which Indenture reference is hereby made for a
statement of the rights thereunder of the Trustee and of the registered holders
of the Notes and of the duties thereunder of the Trustee and the Company.
The Notes are not subject to redemption prior to maturity.
The Indenture permits the Company to issue unsecured debentures, notes and/or
other evidences of indebtedness in one or more series ("Securities") up to such
principal amount or amounts as may be authorized in accordance with the terms of
the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the
Company and of the holders of the Notes may be made with the consent of the
Company and with the consent of the holders of not less than a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected by the modification or
amendment thereto; provided, however, that without the consent of the holder
hereof no such modification or alteration shall be made which will affect the
terms of payment of the principal of or interest on this Note.
In case a default, as defined in the Indenture, shall occur, the principal of
all the Notes at any such time outstanding under the Indenture may be declared
or may become due and payable, upon the conditions and in the manner and with
the effect provided in the Indenture. The Indenture provides that such
declaration may in certain events be waived by the holders of a majority in
principal amount of the Notes outstanding in the case of payment defaults on the
Notes and in certain other events by the holders of a majority in principal
amount of the Securities of all series then outstanding under the Indenture
(treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Note may enforce any remedy
under the Indenture except in the case of refusal or neglect of the Trustee to
act after notice of default and after request by the holders of a majority in
principal amount of the outstanding Notes in certain events (and in certain
other events by the holders of a majority in principal amount of the Securities
of all series then outstanding under the Indenture, treated as a single
<PAGE>
6
class, which are affected thereby) and the offer to the Trustee of security and
indemnity satisfactory to it; provided, however, that such provision shall not
prevent the holder hereof from enforcing payment of the principal of or interest
on this Note.
The transfer of this Note is registrable by the registered holder hereof, in
person or by duly authorized attorney, at the agency of the Company in the
Borough of Manhattan, The City of New York, New York, on books of the Company to
be kept for that purpose at said agency, upon surrender and cancellation of this
Note and on presentation of a duly executed written instrument of transfer, and
thereupon a new Note or Notes, of the same aggregate principal amount and in
authorized denominations, will be issued to the transferee or transferees in
exchange herefor; and this Note, with or without other Notes, may in like manner
be exchanged for one or more new Notes of other authorized denominations but of
the same aggregate principal amount; all subject to the terms and conditions set
forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the Notes may
deem and treat the person in whose name this Note is registered as the absolute
owner hereof for all purposes whatsoever, and neither the Company nor the
Trustee nor any paying agent nor any Registrar of the Notes shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of, or the interest
on, this Note, or for any claim based hereon or on the Indenture, against any
incorporator, or against any stockholder, director or officer, as such, past,
present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability, whether at common law, in equity, by any constitution, statute or
otherwise, of incorporators, stockholders, directors or officers being released
by every owner hereof by the acceptance of this Note and as part of the
consideration for the issue hereof, and being likewise released by the terms of
the Indenture; provided, however, that nothing herein or in the Indenture
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid up.
<PAGE>
7
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Note is one of the 10% Notes due 1998 described in the within-mentioned
Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By
------------------------------------
Authorized Officer.
<PAGE>
8
ARTICLE 2.
MISCELLANEOUS
(S)2.01. Execution as Supplemental Indenture. This Seventh Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this Seventh
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture.
(S)2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Notes (except in the Trustee's certificate of authentication) shall be taken as
the statements of the Company, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity or
sufficiency of this Seventh Supplemental Indenture or of the Notes. The Trustee
shall not be accountable for the use or application by the Company of the Notes
or of the proceeds thereof.
(S)2.03. Provisions Binding on Company 's Successors. All the covenants,
stipulations, promises and agreements in this Seventh Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S)2.04. New York Contract. This Seventh Supplemental Indenture and each
Note shall be deemed to be a contract made under the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said state.
(S)2.05. Execution and Counterparts. This Seventh Supplemental Indenture may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
9
IN WITNESS WHEREOF, said TENNECO INC. has caused this Seventh Supplemental
Indenture to be executed in its corporate name by its President or one of its
Vice Presidents, and said THE CHASE MANHATTAN BANK (National Association) has
caused this Seventh Supplemental Indenture to be executed in its corporate name
by one of its Vice Presidents as of August 1, 991.
TENNECO INC.
By PETER MENIKOFF
-------------------------------
PETER MENIKOFF
Vice President
THE CHASE MANHATTAN BANK
(National Association)
By ANN L. EDMONDS
--------------------------------
ANN L. EDMONDS
Vice President
<PAGE>
EXHIBIT 4(a)(6)
[CONFORMED COPY]
================================================================================
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(National Association),
As Trustee
----------
Eighth Supplemental Indenture
Dated as of October 1, 1992
TO
Indenture
Dated as of March 15, 1988
----------
Providing for the issuance of
7-7/8% Notes due 2002
================================================================================
<PAGE>
EIGHTH SUPPLEMENTAL INDENTURE dated as of October 1, 1992 between TENNECO INC.,
a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and THE CHASE MANHATTAN BANK
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in (S)
2.02 of the Original Indenture; and
WHEREAS, (S)12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an
aggregate principal amount of $500,000,000 to be designated the "7-7/8% Notes
due 2002" (the "Notes"), and all action on the part of the Company necessary to
authorize the issuance of the Notes under the Original Indenture and this Eighth
Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid and binding obligations of the Company, and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of the
sum of one dollar to the Company duly paid by the Trustee at the execution and
delivery of these presents, and of other valuable consideration the receipt
whereof is hereby acknowledged and in order to authorize the authentication and
delivery of and to set forth the terms of the Notes,
<PAGE>
2
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties
hereto, for the benefit of holders of the Notes issued under the Indenture, as
follows:
ARTICLE I.
TERMS AND ISSUANCE OF 7-7/8% NOTES DUE 2002
(S)1.01. Issue of Notes. A series of Securities which shall be designated the
"7-7/8% Notes due 2002" shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to, the
terms, conditions and covenants of the Indenture, including without limitation
the terms set forth in this Eighth Supplemental Indenture (including the form of
Notes set forth in (S)1.02 hereof). The aggregate principal amount of Notes
which may be authenticated and delivered under the Indenture shall not, except
as permitted by the provisions of (S)(S)2.07, 2.08, 2.10, 2.11 or 3.02 of the
Indenture, exceed $500,000,000. The entire amount of Notes may forthwith be
executed by the Company and delivered to the Trustee and shall be authenticated
by the Trustee and delivered to or upon the order of the Company pursuant to (S)
2.03 of the Indenture.
(S)1.02. Forms of Notes and Authentication Certificate. The forms of the
Notes and the Trustee's certificate of authentication shall be substantially as
follows:
[FORM OF FACE OF NOTE]
TENNECO INC.
7-7/8% NOTE DUE 2002
No. $
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to or registered assigns, the sum
of Dollars on October 1, 2002, in any coin or currency of the United States
of America which at the time of payment is legal tender for the payment of
public and private debts, and to pay
<PAGE>
3
to the registered holder hereof as hereinafter provided interest thereon at the
rate per annum specified in the title hereof in like coin or currency, from the
April 1 or October 1 next preceding the date hereof to which interest has been
paid, unless the date hereof is a April 1 or October 1 to which interest on the
Notes has been paid, in which case from the date hereof, or unless no interest
has been paid on the Notes since the original issue date (hereinafter referred
to) of this Note, in which case from the original issue date, semi-annually on
April 1 and October 1 in each year, until payment of said principal sum has been
made or duly provided for, and to pay interest on any overdue principal and (to
the extent permitted by law) on any overdue installment of interest at the rate
of 7-7/8% per annum. Notwithstanding the foregoing, when there is no existing
default in the payment of interest on the Notes, if the date hereof is after
March 16 or September 16 and prior to the following April 1 or October 1, as the
case may be, this Note shall bear interest from such April 1 or October 1;
provided, however, that if the Company shall default in the payment of interest
due on such April 1 or October 1, then this Note shall bear interest from the
April 1 or October 1 to which interest has been paid or, if no interest has been
paid on the Notes since the original issue date of this Note, from the original
issue date. The interest so payable on any April 1 or October 1 will, subject to
certain exceptions provided in the Indenture hereinafter referred to, be paid to
the person in whose name this Note is registered at the close of business on the
March 16 or September 16, as the case may be, next preceding such April 1 or
October 1, or if such March 16 or September 16 is not a business day, the
business day next preceding such March 16 or September 16. Interest on this Note
shall be computed on the basis of a 360-day year of twelve 30-day months. Both
principal of and interest on this Note are payable at the principal office of
the Trustee in the Borough of Manhattan, The City of New York, New York;
provided, however, that payment of interest may be made, at the option of the
Company, by check mailed to the address of the person entitled thereto as such
address shall appear on the Note register. The original issue date in respect of
the Notes is October 1, 1992.
ADDITIONAL PROVISIONS OF THIS NOTE ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET
FORTH AT THIS PLACE.
<PAGE>
4
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President, and
its corporate seal (or a facsimile thereof) to be hereto affixed and attested by
its Secretary or an Assistant Secretary.
Dated
-----------------------------
Tenneco Inc.
By
-----------------------------------
Chairman of the Board
Attest:
- ----------------------------------
Secretary
[FORM OF REVERSE OF NOTE]
TENNECO INC.
7-7/8% NOTE DUE 2002
This Note is one of a duly authorized issue of Notes of the Company known as
its 7-7/8% Notes due 2002 (herein called the "Notes"), limited to the aggregate
principal amount of $500,000,000, all issued under and equally entitled to the
benefits of an Indenture (herein, together with any amendments and supplements
thereto, including without limitation the form and terms of
<PAGE>
5
Securities issued pursuant thereto, called the "Indenture"), dated as of March
15, 1988, executed by the Company to The Chase Manhattan Bank (National
Association) (herein, together with any successor thereto, called the
"Trustee"), as Trustee, to which Indenture reference is hereby made for a
statement of the rights thereunder of the Trustee and of the registered holders
of the Notes and of the duties thereunder of the Trustee and the Company.
The Notes are not subject to redemption prior to maturity.
The Indenture permits the Company to issue unsecured debentures, notes and/or
other evidences of indebtedness in one or more series ("Securities") up to such
principal amount or amounts as may be authorized in accordance with the terms of
the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the Company
and of the holders of the Notes may be made with the consent of the Company and
with the consent of the holders of not less than a majority in principal amount
of the Securities of all series then outstanding under the Indenture (treated as
a single class) which are affected by the modification or amendment thereto;
provided, however, that without the consent of the holder hereof no such
modification or alteration shall be made which will affect the terms of payment
of the principal of or interest on this Note.
In case a default, as defined in the Indenture, shall occur, the principal of
all the Notes at any such time outstanding under the Indenture may be declared
or may become due and payable, upon the conditions and in the manner and with
the effect provided in the Indenture. The Indenture provides that such
declaration may in certain events be waived by the holders of a majority in
principal amount of the Notes outstanding in the case of payment defaults on the
Notes and in certain other events by the holders of a majority in principal
amount of the Securities of all series then outstanding under the Indenture
(treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Note may enforce any remedy
under the Indenture except in the case of refusal or neglect of the Trustee to
act after notice of default and after request by the holders of a majority in
principal amount of the outstanding Notes in certain events (and in certain
other events by the holders of a majority in principal amount of the Securities
of all series then outstanding under the Indenture, treated as a single
<PAGE>
6
class, which are affected thereby) and the offer to the Trustee of security and
indemnity satisfactory to it; provided, however, that such provision shall not
prevent the holder hereof from enforcing payment of the principal of or interest
on this Note.
The transfer of this Note is registrable by the registered holder hereof, in
person or by duly authorized attorney, at the agency of the Company in the
Borough of Manhattan, The City of New York, New York, on books of the Company to
be kept for that purpose at said agency, upon surrender and cancellation of this
Note and on presentation of a duly executed written instrument of transfer, and
thereupon a new Note or Notes, of the same aggregate principal amount and in
authorized denominations, will be issued to the transferee or transferees in
exchange herefor; and this Note, with or without other Notes, may in like manner
be exchanged for one or more new Notes of other authorized denominations but of
the same aggregate principal amount; all subject to the terms and conditions set
forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the Notes may
deem and treat the person in whose name this Note is registered as the absolute
owner hereof for all purposes whatsoever, and neither the Company nor the
Trustee nor any paying agent nor any Registrar of the Notes shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of, or the interest
on, this Note, or for any claim based hereon or on the Indenture, against any
incorporator, or against any stockholder, director or officer, as such, past,
present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability, whether at common law, in equity, by any constitution, statute or
otherwise, of incorporators, stockholders, directors or officers being released
by every owner hereof by the acceptance of this Note and as part of the
consideration for the issue hereof, and being likewise released by the terms of
the Indenture; provided, however, that nothing herein or in the Indenture
contained shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of shares of capital stock not fully paid up.
<PAGE>
7
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Note is one of the 7-7/8% Notes due 2002 described in the within-
mentioned Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By
--------------------------------------
Authorized Officer.
<PAGE>
8
ARTICLE 2.
MISCELLANEOUS
(S) 2.01. Execution as Supplemental Indenture. This Eighth Supplemental
Indenture is executed and shall be construed as an indenture supplemental to the
Original Indenture and, as provided in the Original Indenture, this Eighth
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture.
(S) 2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Notes (except in the Trustee's certificate of authentication) shall be taken as
the statements of the Company, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity or
sufficiency of this Eighth Supplemental Indenture or of the Notes. The Trustee
shall not be accountable for the use or application by the Company of the Notes
or of the proceeds thereof.
(S) 2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Eighth Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S) 2.04. New York Contract. This Eighth Supplemental Indenture and each Note
shall be deemed to be a contract made under the laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
state.
(S) 2.05. Execution and Counterparts. This Eighth Supplemental Indenture may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
9
IN WITNESS WHEREOF, said TENNECO INC. has caused this Eighth Supplemental
Indenture to be executed in its corporate name by its Chairman of the Board or
its President or one of its Vice Presidents, and said THE CHASE MANHATTAN BANK
(National Association) has caused this Eighth Supplemental Indenture to be
executed in its corporate name by one of its Vice Presidents as of October 1,
1992.
TENNECO INC.
By E. J. MILAN
-----------------------------------
Vice President
THE CHASE MANHATTAN BANK
(National Association)
By ANN L. EDMONDS
-----------------------------------
Vice President
<PAGE>
EXHIBIT 4(a)(7)
[CONFORMED COPY]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
AS TRUSTEE
------------------
NINTH SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 15, 1992
TO
INDENTURE
DATED AS OF MARCH 15, 1988
------------------
PROVIDING FOR THE ISSUANCE OF
8% NOTES DUE 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Ninth Supplemental Indenture dated as of November 15, 1992, between Tenneco
Inc., a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and The Chase Manhattan Bank
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the
"Trustee").
Whereas, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in
(S) 2.02 of the Original Indenture; and
Whereas, (S) 12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
Whereas, the Company desires to create a series of the Securities in an
aggregate principal amount of $250,000,000 to be designated the "8% Notes due
1999" (the "Notes"), and all action on the part of the Company necessary to
authorize the issuance of the Notes under the Original Indenture and this
Ninth Supplemental Indenture has been duly taken; and
Whereas, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid and binding obligations of the Company, and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
Now, therefore, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of
the sum of one dollar to the Company duly paid by the Trustee at the execution
and delivery of these presents, and of other valuable consideration the
receipt whereof is hereby acknowledged and in order to authorize the
authentication and delivery of and to set forth the terms of the Notes,
It is hereby covenanted, declared and agreed by and between the parties
hereto, for the benefit of holders of the Notes issued under the Indenture, as
follows:
<PAGE>
2
ARTICLE 1.
Terms and Issuance of 8% Notes Due 1999
(S) 1.01. Issue of Notes. A series of Securities which shall be designated
the "8% Notes due 1999" shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to,
the terms, conditions and covenants of the Indenture, including without
limitation the terms set forth in this Ninth Supplemental Indenture (including
the form of Notes set forth in (S) 1.02 hereof). The aggregate principal
amount of Notes which may be authenticated and delivered under the Indenture
shall not, except as permitted by the provisions of (S)(S) 2.07, 2.08, 2.10,
2.11 or 3.02 of the Indenture, exceed $250,000,000. The entire amount of Notes
may forthwith be executed by the Company and delivered to the Trustee and
shall be authenticated by the Trustee and delivered to or upon the order of
the Company pursuant to (S) 2.03 of the Indenture.
(S) 1.02. Forms of Notes and Authentication Certificate. The forms of the
Notes and the Trustee's certificate of authentication shall be substantially
as follows:
[form of face of note]
TENNECO INC.
8% NOTE DUE 1999
No. $
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred
to), for value received, hereby promises to pay to or registered
assigns, the sum of Dollars on November 15, 1999, in any coin or
currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts, and to pay to the
registered holder hereof as hereinafter provided interest thereon at the rate
per annum specified in the title hereof in like coin or currency, from the May
15 or November 15 next preceding the date hereof to which interest has been
paid, unless the date hereof is a May 15 or November 15 to which interest on
the Notes has been paid, in which case from the date hereof, or unless no
interest has been paid on the Notes since the original issue date (hereinafter
referred to) of this Note, in which case from the original issue date, semi-
annually on May 15 and November 15 in each year, until payment of said
<PAGE>
3
principal sum has been made or duly provided for, and to pay interest on any
overdue principal and (to the extent permitted by law) on any overdue
installment of interest at the rate of 8% per annum. Notwithstanding the
foregoing, when there is no existing default in the payment of interest on the
Notes, if the date hereof is after April 30 or October 31 and prior to the
following May 15 or November 15, as the case may be, this Note shall bear
interest from May 15 or November 15; provided, however, that if the Company
shall default in the payment of interest due on such May 15 or November 15,
then this Note shall bear interest from the May 15 or November 15 to which
interest has been paid or, if no interest has been paid on the Notes since the
original issue date of this Note, from the original issue date. The interest
so payable on any May 15 or November 15 will, subject to certain exceptions
provided in the Indenture hereinafter referred to, be paid to the person in
whose name this Note is registered at the close of business on the April 30 or
October 31, as the case may be, next preceding such May 15 or November 15, or
if such April 30 or October 31 is not a business day, the business day next
preceding such April 30 or October 31. Interest on this Note shall be computed
on the basis of a 360-day year of twelve 30-day months. Both principal of and
interest on this Note are payable at the principal office of the Trustee in
the Borough of Manhattan, The City of New York, New York; provided, however,
that payment of interest may be made, at the option of the Company, by check
mailed to the address of the person entitled thereto as such address shall
appear on the Note register. The original issue date in respect of the Notes
is November 24, 1992.
ADDITIONAL PROVISIONS OF THIS NOTE ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH AT THIS PLACE.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
<PAGE>
4
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President,
and its corporate seal (or facsimile thereof) to be hereto affixed and
attested by its Secretary or an Assistant Secretary.
Dated..............................
Tenneco Inc.
By..........................................
Chairman of the Board
Attest:
...................................
Secretary
[form of reverse of note]
TENNECO INC.
8% NOTE DUE 1999
This Note is one of a duly authorized issue of Notes of the Company known as
its 8% Notes due 1999 (herein called the "Notes"), limited to the aggregate
principal amount of $250,000,000, all issued under and equally entitled to the
benefits of an Indenture (herein, together with any amendments and supplements
thereto, including without limitation the form and terms of Securities issued
pursuant thereto, called the "Indenture"), dated as of March 15, 1988,
executed by the Company to The Chase Manhattan Bank (National Association)
(herein, together with any successor thereto, called the "Trustee"), as
Trustee, to which Indenture reference is hereby made for a statement of the
rights thereunder of the Trustee and of the registered holders of the Notes
and of the duties thereunder of the Trustee and the Company.
The Notes are not subject to redemption prior to maturity.
<PAGE>
5
The Indenture permits the Company to issue unsecured debentures, notes
and/or other evidences of indebtedness in one or more series ("Securities") up
to such principal amount or amounts as may be authorized in accordance with
the terms of the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the
Company and of the holders of the Notes may be made with the consent of the
Company and with the consent of the holders of not less than a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected by the modification
or amendment thereto; provided, however, that without the consent of the
holder hereof no such modification or alteration shall be made which will
affect the terms of payment of the principal of or interest on this Note.
In case a default, as defined in the Indenture, shall occur, the principal
of all the Notes at any such time outstanding under the Indenture may be
declared or may become due and payable, upon the conditions and in the manner
and with the effect provided in the Indenture. The Indenture provides that
such declaration may in certain events be waived by the holders of a majority
in principal amount of the Notes outstanding in the case of payment defaults
on the Notes and in certain other events by the holders of a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Note may enforce any remedy
under the Indenture except in the case of refusal or neglect of the Trustee to
act after notice of default and after request by the holders of a majority in
principal amount of the outstanding Notes in certain events (and in certain
other events by the holders of a majority in principal amount of the
Securities of all series then outstanding under the Indenture, treated as a
single class, which are affected thereby) and the offer to the Trustee of
security and indemnity satisfactory to it; provided, however, that such
provision shall not prevent the holder hereof from enforcing payment of the
principal of or interest on this Note.
The transfer of this Note is registrable by the registered holder hereof, in
person or by duly authorized attorney, at the agency of the Company in the
Borough of Manhattan, The City of New York, New York, on books of the Company
to be kept for that purpose at said agency, upon surrender and cancellation of
this Note and on presentation of a duly executed written instrument of
transfer, and thereupon a new Note or Notes, of the same aggregate principal
amount and in authorized denominations, will be issued to
<PAGE>
6
the transferee or transferees in exchange herefor; and this Note, with or
without other Notes, may in like manner be exchanged for one or more new Notes
of other authorized denominations but of the same aggregate principal amount;
all subject to the terms and conditions set forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the Notes
may deem and treat the person in whose name this Note is registered as the
absolute owner hereof for all purposes whatsoever, and neither the Company nor
the Trustee nor any paying agent nor any Registrar of the Notes shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, or the
interest on, this Note, or for any claim based hereon or on the Indenture,
against any incorporator, or against any stockholder, director or officer, as
such, past, present or future, of the Company, or of any predecessor or
successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability, whether at common law, in equity, by any
constitution, statute or otherwise, of incorporators, stockholders, directors
or officers being released by every owner hereof by the acceptance of this
Note and as part of the consideration for the issue hereof, and being likewise
released by the terms of the Indenture; provided, however, that nothing herein
or in the Indenture contained shall be taken to prevent recourse to and the
enforcement of the liability, if any, of any stockholder or subscriber to
capital stock of the Company upon or in respect of shares of capital stock not
fully paid up.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
[form of trustee's certificate of authentication]
This Note is one of the 8% Notes due 1999 described in the within-mentioned
Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By ....................................
Authorized Officer.
<PAGE>
7
ARTICLE 2.
Miscellaneous
(S) 2.01. Execution as Supplemental Indenture. This Ninth Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Original Indenture and, as provided in the Original Indenture, this Ninth
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in
accordance with the definitions, uses and constructions contained in the
Original Indenture.
(S) 2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Notes (except in the Trustee's certificate of authentication) shall be taken
as the statements of the Company, and the Trustee assumes no responsibility
for the correctness thereof. The Trustee makes no representations as to the
validity or sufficiency of this Ninth Supplemental Indenture or of the Notes.
The Trustee shall not be accountable for the use or application by the Company
of the Notes or of the proceeds thereof.
(S) 2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Ninth Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S) 2.04. New York Contract. This Ninth Supplemental Indenture and each Note
shall be deemed to be a contract made under the laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
State without regard to principles of conflicts of laws.
(S) 2.05. Execution and Counterparts. This Ninth Supplemental Indenture may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same
instrument.
<PAGE>
8
In Witness Whereof, said Tenneco Inc. has caused this Ninth Supplemental
Indenture to be executed in its corporate name by its Chairman of the Board or
its President or one of its Vice Presidents, and said The Chase Manhattan Bank
(National Association) has caused this Ninth Supplemental Indenture to be
executed in its corporate name by one of its Vice Presidents as of November
15, 1992.
Tenneco Inc.
Robert T. Blakely
By .........................................
Robert T. Blakely
Senior Vice President
The Chase Manhattan Bank
(National Association)
C. J. Heinzelmann
By .........................................
Charles J. Heinzelmann
Vice President
<PAGE>
EXHIBIT 4(a)(8)
[CONFORMED COPY]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
AS TRUSTEE
------------------
TENTH SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 15, 1992
TO
INDENTURE
DATED AS OF MARCH 15, 1988
------------------
PROVIDING FOR THE ISSUANCE OF
9% DEBENTURES DUE 2012
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Tenth Supplemental Indenture dated as of November 15, 1992 between Tenneco
Inc., a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and The Chase Manhattan Bank
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the
"Trustee").
Whereas, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in
(S) 2.02 of the Original Indenture; and
Whereas, (S) 12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
Whereas, the Company desires to create a series of the Securities in an
aggregate principal amount of $150,000,000 to be designated the "9 %
Debentures due 2012" (the "Debentures"), and all action on the part of the
Company necessary to authorize the issuance of the Debentures under the
Original Indenture and this Tenth Supplemental Indenture has been duly taken;
and
Whereas, all acts and things necessary to make the Debentures, when executed
by the Company and authenticated and delivered by the Trustee as in the
Indenture provided, the valid and binding obligations of the Company, and to
constitute these presents a valid and binding supplemental indenture and
agreement according to its terms, have been done and performed;
Now, therefore, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of
the sum of one dollar to the Company duly paid by the Trustee at the execution
and delivery of these presents, and of other valuable consideration the
receipt whereof is hereby acknowledged and in order to authorize the
authentication and delivery of and to set forth the terms of the Debentures,
<PAGE>
2
It is hereby covenanted, declared and agreed by and between the parties
hereto, for the benefit of holders of the Debentures issued under the
Indenture, as follows:
ARTICLE 1.
Terms and Issuance of 9% Debentures Due 2012
(S) 1.01. Issue of Debentures. A series of Securities which shall be
designated the "9% Debentures due 2012" shall be executed, authenticated and
delivered in accordance with the provisions of, and shall in all respects be
subject to, the terms, conditions and covenants of the Indenture, including
without limitation the terms set forth in this Tenth Supplemental Indenture
(including the form of Debentures set forth in (S) 1.02 hereof). The aggregate
principal amount of Debentures which may be authenticated and delivered under
the Indenture shall not, except as permitted by the provisions of (S)(S) 2.07,
2.08, 2.10, 2.11 or 3.02 of the Indenture, exceed $150,000,000. The entire
amount of Debentures may forthwith be executed by the Company and delivered to
the Trustee and shall be authenticated by the Trustee and delivered to or upon
the order of the Company pursuant to (S) 2.03 of the Indenture.
(S) 1.02. Forms of Debentures and Authentication Certificate. The forms of
the Debentures and the Trustee's certificate of authentication shall be
substantially as follows:
[form of face of debenture]
TENNECO INC.
9% DEBENTURE DUE 2012
No. $
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred
to), for value received, hereby promises to pay to or registered
assigns, the sum of Dollars on November 15, 2012, in any coin or currency
of the United States of America which at the time of payment is legal tender for
the payment of public and private debts, and to pay to the registered holder
hereof as hereinafter provided interest thereon at the rate per annum specified
in the title hereof in like coin or currency, from the May 15
<PAGE>
3
or November 15 next preceding the date hereof to which interest has been paid,
unless the date hereof is a May 15 or November 15 to which interest on the
Debentures has been paid, in which case from the date hereof, or unless no
interest has been paid on the Debentures since the original issue date
(hereinafter referred to) of this Debenture, in which case from the original
issue date, semi-annually on May 15 and November 15 in each year, until
payment of said principal sum has been made or duly provided for, and to pay
interest on any overdue principal and (to the extent permitted by law) on any
overdue installment of interest at the rate of 9% per annum. Notwithstanding
the foregoing, when there is no existing default in the payment of interest on
the Debentures, if the date hereof is after April 30 or October 31 and prior
to the following May 15 or November 15, as the case may be, this Debenture
shall bear interest from such May 15 or November 15; provided, however, that
if the Company shall default in the payment of interest due on such May 15 or
November 15, then this Debenture shall bear interest from the May 15 or
November 15 to which interest has been paid or, if no interest has been paid
on the Debentures since the original issue date of this Debenture, from the
original issue date. The interest so payable on any May 15 or November 15
will, subject to certain exceptions provided in the Indenture hereinafter
referred to, be paid to the person in whose name this Debenture is registered
at the close of business on the April 30 or October 31, as the case may be,
next preceding such May 15 or November 15, or if such April 30 or October 31
is not a business day, the business day next preceding such April 30 or
October 31. Interest on this Debenture shall be computed on the basis of a
360-day year or twelve 30-day months. Both principal of and interest on this
Debenture are payable at the principal office of the Trustee in the Borough of
Manhattan, The City of New York, New York; provided, however, that payment of
interest may be made, at the option of the Company, by check mailed to the
address of the person entitled thereto as such address shall appear on the
Debenture register. The original issue date in respect of the Debentures is
November 24, 1992.
ADDITIONAL PROVISIONS OF THIS DEBENTURE ARE CONTAINED ON THE REVERSE HEREOF
AND SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
<PAGE>
4
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested by its Secretary or an Assistant Secretary.
Dated ..........................
Tenneco Inc.
By .......................................
Chairman of the Board
Attest:
................................
Secretary.
[form of reverse of debenture]
TENNECO INC.
9% DEBENTURE DUE 2012
This Debenture is one of a duly authorized issue of Debentures of the
Company known as its 9% Debentures due 2012 (herein called the "Debentures"),
limited to the aggregate principal amount of $150,000,000, all issued under
and equally entitled to the benefits of an Indenture (herein, together with
any amendments and supplements thereto, including without limitation the form
and terms of Securities issued pursuant thereto, called the "Indenture"),
dated as of March 15, 1988, executed by the Company to The Chase Manhattan
Bank (National Association) (herein, together with any successor thereto,
called the "Trustee"), as Trustee, to which Indenture reference is hereby made
for a statement of the rights thereunder of the Trustee and of the registered
holders of the Debentures and of the duties thereunder of the Trustee and the
Company.
The Debentures are not subject to redemption by the Company prior to
maturity.
<PAGE>
5
The Indenture permits the Company to issue unsecured debentures, notes
and/or other evidences of indebtedness in one or more series ("Securities") up
to such principal amount or amounts as may be authorized in accordance with
the terms of the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the
Company and of the holders of the Debentures may be made with the consent of
the Company and with the consent of the holders of not less than a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected by the modification
or amendment thereto; provided, however, that without the consent of the
holder hereof no such modification or alteration shall be made which will
affect the terms of payment of the principal of or interest on this Debenture.
In case a default, as defined in the Indenture, shall occur, the principal
of all the Debentures at any such time outstanding under the Indenture may be
declared or may become due and payable, upon the conditions and in the manner
and with the effect provided in the Indenture. The Indenture provides that
such declaration may in certain events be waived by the holders of a majority
in principal amount of the Debentures outstanding in the case of payment
defaults on the Debentures and in certain other events by the holders of a
majority in principal amount of the Securities of all series then outstanding
under the Indenture (treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Debenture may enforce any
remedy under the Indenture except in the case of refusal or neglect of the
Trustee to act after notice of default and after request by the holders of a
majority in principal amount of the outstanding Debentures in certain events
(and in certain other events by the holders of a majority in principal amount
of the Securities of all series then outstanding under the Indenture, treated
as a single class, which are affected thereby) and the offer to the Trustee of
security and indemnity satisfactory to it; provided, however, that such
provision shall not prevent the holder hereof from enforcing payment of the
principal of or interest on this Debenture.
The transfer of this Debenture is registrable by the registered holder
hereof, in person or by duly authorized attorney, at the agency of the Company
in the Borough of Manhattan, The City of New York, New York, on books of the
Company to be kept for that purpose at said agency, upon surrender and
cancellation of this Debenture and on presentation of a duly executed written
<PAGE>
6
instrument of transfer, and thereupon a new Debenture or Debentures, of the
same aggregate principal amount and in authorized denominations, will be
issued to the transferee or transferees in exchange herefor; and this
Debenture, with or without other Debentures, may in like manner be exchanged
for one or more new Debentures of other authorized denominations but of the
same aggregate principal amount; all subject to the terms and conditions set
forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the
Debentures may deem and treat the person in whose name this Debenture is
registered as the absolute owner hereof for all purposes whatsoever, and
neither the Company nor the Trustee nor any paying agent nor any Registrar of
the Debentures shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the interest
on, this Debenture, or for any claim based hereon or on the Indenture, against
any incorporator, or against any stockholder, director or officer, as such,
past, present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability, whether at common law, in equity, by any constitution, statute
or otherwise, of incorporators, stockholders, directors or officers being
released by every owner hereof by the acceptance of this Debenture and as part
of the consideration for the issue hereof, and being likewise released by the
terms of the Indenture; provided, however, that nothing herein or in the
Indenture contained shall be taken to prevent recourse to and the enforcement
of the liability, if any, of any stockholder or subscriber to capital stock of
the Company upon or in respect of shares of capital stock not fully paid up.
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
<PAGE>
7
[form of trustee's certificate of authentication]
This Debenture is one of the 9% Debentures due 2012 described in the within-
mentioned Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By.....................................
Authorized Officer.
ARTICLE 2.
Miscellaneous
(S) 2.01. Execution as Supplemental Indenture. This Tenth Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Original Indenture and, as provided in the Original Indenture, this Tenth
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in
accordance with the definitions, uses and constructions contained in the
Original Indenture.
(S) 2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Debentures (except in the Trustee's certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this Tenth Supplemental
Indenture or of the Debentures. The Trustee shall not be accountable for the
use or application by the Company of the Debentures or of the proceeds
thereof.
(S) 2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Tenth Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S) 2.04. New York Contract. This Tenth Supplemental Indenture and each
Debenture shall be deemed to be a contract made under the laws of the State of
New York, and for all purposes shall be construed in accordance with the laws
of said State without regard to principles of conflicts of laws.
<PAGE>
8
(S) 2.05. Execution and Counterparts. This Tenth Supplemental Indenture may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same
instrument.
In Witness Whereof, said Tenneco Inc. has caused this Tenth Supplemental
Indenture to be executed in its corporate name by its Chairman of the Board or
its President or one of its Vice Presidents, and said The Chase Manhattan Bank
(National Association) has caused this Indenture to be executed in its
corporate name by one of its Vice Presidents as of November 15, 1992.
Tenneco Inc.
Robert T. Blakely
By _________________________________________
Robert T. Blakely
Senior Vice President
The Chase Manhattan Bank
(National Association)
C. J. Heinzelmann
By _________________________________________
Charles J. Heinzelmann
Vice President
<PAGE>
EXHIBIT 4(a)(9)
[CONFORMED COPY]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
AS TRUSTEE
------------------
ELEVENTH SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 15, 1995
TO
INDENTURE
DATED AS OF MARCH 15, 1988
------------------
PROVIDING FOR THE ISSUANCE OF
6 1/2% NOTES DUE 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Eleventh Supplemental Indenture dated as of December 15, 1995 between
Tenneco Inc., a corporation duly organized and existing under the laws of the
State of Delaware (hereinafter called the "Company"), and The Chase Manhattan
Bank (National Association), a national banking association existing under the
laws of the United States of America, as trustee (hereinafter called the
"Trustee").
Whereas, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in
(S) 2.02 of the Original Indenture; and
Whereas, (S) 12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
Whereas, the Company desires to create a series of the Securities in an
aggregate principal amount of $300,000,000 to be designated the "6 1/2% Notes
due 2005" (the "Notes"), and all action on the part of the Company necessary
to authorize the issuance of the Notes under the Original Indenture and this
Eleventh Supplemental Indenture has been duly taken; and
Whereas, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid and binding obligations of the Company, and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
Now, therefore, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of
the sum of one dollar to the Company duly paid by the Trustee at the execution
and delivery of these presents, and of other valuable consideration the
receipt whereof is hereby acknowledged and in order to authorize the
authentication and delivery of and to set forth the terms of the Notes,
<PAGE>
2
It is hereby covenanted, declared and agreed by and between the parties
hereto, for the benefit of holders of the Notes issued under the Indenture, as
follows:
ARTICLE 1.
Terms and Issuance of 6 1/2% Notes Due 2005
(S) 1.01. Issue of Notes. A series of Securities which shall be designated
the "6 1/2% Notes due 2005" shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to,
the terms, conditions and covenants of the Indenture, including without
limitation the terms set forth in this Eleventh Supplemental Indenture
(including the form of Notes set forth in (S) 1.02 hereof). The aggregate
principal amount of Notes which may be authenticated and delivered under the
Indenture shall not, except as permitted by the provisions of (S)(S) 2.07,
2.08, 2.10, 2.11 or 3.02 of the Indenture, exceed $300,000,000. The entire
amount of Notes may forthwith be executed by the Company and delivered to the
Trustee and shall be authenticated by the Trustee and delivered to or upon the
order of the Company pursuant to (S) 2.03 of the Indenture.
(S) 1.02. Forms of Notes and Authentication Certificate. The forms of the
Notes and the Trustee's certificate of authentication shall be substantially
as follows:
[form of face of note]
[To be inserted on face of Global Notes]
[Unless and until this Note is exchanged in whole or in part for Notes in
definitive registered form, this Note may not be transferred except as a whole
by the Depositary (as defined in the Indenture (as defined below)) to the
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Company (as
defined below) or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
<PAGE>
3
TENNECO INC.
6 1/2% NOTE DUE 2005
No. $
CUSIP
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred
to), for value received, hereby promises to pay to or registered
assigns, the sum of Dollars on December 15, 2005, in any coin or currency
of the United States of America which at the time of payment is legal tender for
the payment of public and private debts, and to pay to the registered holder
hereof as hereinafter provided interest thereon at the rate per annum specified
in the title hereof in like coin or currency, from the June 15 or December 15
next preceding the date hereof to which interest has been paid, unless the date
hereof is a June 15 or December 15 to which interest on the Notes has been paid,
in which case from the date hereof, or unless no interest has been paid on the
Notes since the original issue date (hereinafter referred to) of this Note, in
which case from the original issue date, semi-annually on June 15 and December
15 in each year, until payment of said principal sum has been made or duly
provided for, and to pay interest on any overdue principal and (to the extent
permitted by law) on any overdue installment of interest at the rate of 6 1/2%
per annum. Notwithstanding the foregoing, when there is no existing default in
the payment of interest on the Notes, if the date hereof is after May 31 or
November 30 and prior to the following June 15 or December 15, as the case may
be, this Note shall bear interest from such June 15 or December 15; provided,
however, that if the Company shall default in the payment of interest due on
such June 15 or December 15, then this Note shall bear interest from the June 15
or December 15 to which interest has been paid or, if no interest has been paid
on the Notes since the original issue date of this Note, from the original issue
date. The interest so payable on any June 15 or December 15 will, subject to
certain exceptions provided in the Indenture hereinafter referred to, be paid to
the person in whose name this Note is registered at the close of business on the
May 31 or November 30, as the case may be, next preceding such June 15 or
December 15, or if such May 31 or November 30 is not a business day, the
business day next preceding such May 31 or November 30. Interest on this Note
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months. Both principal of and interest on this Note are payable at the principal
office of the Trustee in
<PAGE>
4
the Borough of Manhattan, The City of New York, New York; provided, however,
that payment of interest may be made, at the option of the Company, by check
mailed to the address of the person entitled thereto as such address shall
appear on the Note register. The original issue date in respect of the Notes
is December 15, 1995.
ADDITIONAL PROVISIONS OF THIS NOTE ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH AT THIS PLACE.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested by its Secretary or an Assistant Secretary.
Dated ..........................
Tenneco Inc.
By .......................................
Vice President
Attest:
................................
Secretary.
<PAGE>
5
[form of reverse of note]
TENNECO INC.
6 1/2% NOTE DUE 2005
This Note is one of a duly authorized issue of Notes of the Company known as
its 6 1/2% Notes due 2005 (herein called the "Notes"), limited to the
aggregate principal amount of $300,000,000, all issued under and equally
entitled to the benefits of an Indenture (herein, together with any amendments
and supplements thereto, including without limitation the form and terms of
Securities issued pursuant thereto, called the "Indenture"), dated as of March
15, 1988, executed by the Company to The Chase Manhattan Bank (National
Association) (herein, together with any successor thereto, called the
"Trustee"), as Trustee, to which Indenture reference is hereby made for a
statement of the rights thereunder of the Trustee and of the registered
holders of the Notes and of the duties thereunder of the Trustee and the
Company.
The Notes will be redeemable as a whole or in part, at the option of the
Company at any time, at a redemption price equal to the greater of (i) 100% of
their principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield plus 10 basis points, plus in each case
accrued interest to the date of redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the Notes. "Independent Investment Banker" means Morgan Stanley & Co.
Incorporated or, if such firm is unwilling or unable to select the Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the Trustee.
<PAGE>
6
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co. Incorporated,
CS First Boston Corporation, Lehman Brothers Inc. and Salomon Brothers Inc and
their respective successors; provided however, that if any of the foregoing
cease to be a primary U.S. Government Securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
Holders of Notes to be redeemed will receive notice thereof by first-class
mail at least 30 and not more than 60 days prior to the date fixed for
redemption.
The Indenture permits the Company to issue unsecured debentures, notes
and/or other evidences of indebtedness in one or more series ("Securities") up
to such principal amount or amounts as may be authorized in accordance with
the terms of the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the
Company and of the holders of the Notes may be made with the consent of the
Company and with the consent of the holders of not less than a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected by the modification
or amendment thereto; provided, however, that without the consent of the
holder
<PAGE>
7
hereof no such modification or alteration shall be made which will affect the
terms of payment of the principal of or interest on this Note.
In case a default, as defined in the Indenture, shall occur, the principal
of all the Notes at any such time outstanding under the Indenture may be
declared or may become due and payable, upon the conditions and in the manner
and with the effect provided in the Indenture. The Indenture provides that
such declaration may in certain events be waived by the holders of a majority
in principal amount of the Notes outstanding in the case of payment defaults
on the Notes and in certain other events by the holders of a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected thereby.
The Indenture provides that no holder of any Note may enforce any remedy
under the Indenture except in the case of refusal or neglect of the Trustee to
act after notice of default and after request by the holders of a majority in
principal amount of the outstanding Notes in certain events (and in certain
other events by the holders of a majority in principal amount of the
Securities of all series then outstanding under the Indenture, treated as a
single class, which are affected thereby) and the offer to the Trustee of
security and indemnity satisfactory to it; provided, however, that such
provision shall not prevent the holder hereof from enforcing payment of the
principal of or interest on this Note.
The transfer of this Note is registrable by the registered holder hereof, in
person or by duly authorized attorney, at the agency of the Company in the
Borough of Manhattan, The City of New York, New York, on books of the Company
to be kept for that purpose at said agency, upon surrender and cancellation of
this Note and on presentation of a duly executed written instrument of
transfer, and thereupon a new Note or Notes, of the same aggregate principal
amount and in authorized denominations, will be issued to the transferee or
transferees in exchange herefor; and this Note, with or without other Notes,
may in like manner be exchanged for one or more new Notes of other authorized
denominations but of the same aggregate principal amount; all subject to the
terms and conditions set forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the Notes
may deem and treat the person in whose name this Note is registered as the
absolute owner hereof for all purposes whatsoever, and neither the Company nor
the Trustee nor any paying agent nor any Registrar of the Notes shall be
affected by any notice to the contrary.
<PAGE>
8
No recourse shall be had for the payment of the principal of or the interest
on, this Note, or for any claim based hereon or on the Indenture, against any
incorporator, or against any stockholder, director or officer, as such, past,
present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability, whether at common law, in equity, by any constitution, statute
or otherwise, of incorporators, stockholders, directors or officers being
released by every owner hereof by the acceptance of this Note and as part of
the consideration for the issue hereof, and being likewise released by the
terms of the Indenture; provided, however, that nothing herein or in the
Indenture contained shall be taken to prevent recourse to and the enforcement
of the liability, if any, of any stockholder or subscriber to capital stock of
the Company upon or in respect of shares of capital stock not fully paid up.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
<PAGE>
9
[form of trustee's certificate of authentication]
This Note is one of the 6 1/2% Notes due 2005 described in the within-
mentioned Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By.....................................
Authorized Officer.
(S) 1.03. Global Securities.
The Notes shall be issued in the form of one or more Global Securities that
(i) shall represent and shall be denominated in an amount equal to the
aggregate principal amount of all of the Notes not yet cancelled, (ii) shall
be registered in the name of the Depositary or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instruction, and (iv) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or in part for
Notes in definitive registered form, this Note may not be transferred except
as a whole by the Depositary to the nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary."
Each Depositary designated must, at the time of its designation and at all
times while it serves as Depositary, be a clearing agency registered under the
Securities Exchange Act of 1934 and any other applicable statute or
regulation.
Notwithstanding the Indenture, any Notes represented by a Global Security
may not, except as set forth below, be exchanged for a Note or Notes having
authorized denominations and an equal aggregate principal amount, upon
surrender of Notes to be exchanged at the office of the Registrar.
Notwithstanding any other provision of this Eleventh Supplemental Indenture,
unless and until it is exchanged in whole or in part for Notes in definitive
registered form, a Global Security representing all or a part of the Notes may
not be transferred except as a whole by the Depositary for such series to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor Depositary for such series or a nominee of such
successor Depositary.
<PAGE>
10
If at any time the Depositary for the Notes represented by one or more
Global Securities notifies the Company that it is unwilling or unable to
continue as Depositary for such Notes or if at any time the Depositary for
such Notes shall no longer be eligible under this Eleventh Supplemental
Indenture, the Company shall appoint a successor Depositary with respect to
such Notes. If a successor Depositary for such Notes is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility, the Company's election that such Notes be represented
by one or more Global Securities shall no longer be effective and the Company
shall execute, and the Trustee, upon receipt of instructions from the Company
for the authentication and delivery of definitive Notes, will authenticate and
deliver Notes in definitive registered form, in any authorized denominations,
in an aggregate principal amount equal to the principal amount of the Global
Security or Securities representing such Notes in exchange for such Global
Security or Securities.
The Company may at any time and in its sole discretion determine that the
Notes issued in the form of one or more Global Securities shall no longer be
represented by a Global Security or Securities. In such event the Company
shall execute, and the Trustee, upon receipt of an Officers' Certificate for
the authentication and delivery of definitive Notes, shall authenticate and
deliver, Notes in definitive registered form, in any authorized denominations,
in an aggregate principal amount equal to the principal amount of the Global
Security or Securities representing such Notes, in exchange for such Global
Security or Securities.
The Depositary for such Global Security may surrender such Global Security
in exchange in whole or in part for Notes in definitive registered form on
such terms as are acceptable to the Company and such Depositary. Thereupon,
the Company shall execute, and the Trustee shall authenticate and deliver,
without service charge,
(i) to the Person specified by such Depositary, a new Security or
Securities of the same series as the Notes, of any authorized denominations
as requested by such Person, in an aggregate principal amount equal to and
in exchange for such Person's beneficial interest in the Global Security;
and
(ii) to such Depositary a new Global Security in a denomination equal to
the difference, if any, between the principal amount of the surrendered
Global Security and the aggregate principal amount of the Notes
authenticated and delivered pursuant to clause (i) above.
<PAGE>
11
Upon the exchange of a Global Security for Notes in definitive registered
form in authorized denominations, such Global Security shall be cancelled by
the Trustee or an agent of the Company or the Trustee. Notes in definitive
registered form issued in exchange for a Global Security pursuant to this
Section 1.03 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Company or the Trustee. The Trustee or
such agent shall deliver at its office such Notes to or as directed by the
Persons in whose names such Securities are so registered.
"Depositary" means, with respect to the Notes, The Depository Trust Company
until a successor Depositary shall have become such pursuant to the applicable
provisions of this Eleventh Supplemental Indenture, and thereafter
"Depositary" shall mean or include each Person who is then a Depositary
hereunder, and, if at any time there is more than one such Person,
"Depositary" as used with respect to the Notes shall mean the Depositary with
respect to the Global Securities.
"Global Security" means a Security evidencing all or a part of the Notes
issued to the Depositary and bearing the legend prescribed in this Eleventh
Supplemental Indenture.
ARTICLE 2.
Miscellaneous
(S) 2.01. Execution as Supplemental Indenture. This Eleventh Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Original Indenture and, as provided in the Original Indenture, this
Eleventh Supplemental Indenture forms a part thereof. Except as herein
expressly otherwise defined, the use of the terms and expressions herein is in
accordance with the definitions, uses and constructions contained in the
Original Indenture.
(S) 2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Notes (except in the Trustee's certificate of authentication) shall be taken
as the statements of the Company, and the Trustee assumes no responsibility
for the correctness thereof. The Trustee makes no representations as to the
validity or sufficiency of this Eleventh Supplemental Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of the Notes or of the proceeds thereof.
<PAGE>
12
(S) 2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Eleventh Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S) 2.04. New York Contract. This Eleventh Supplemental Indenture and each
Note shall be deemed to be a contract made under the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said State without regard to principles of conflicts of laws.
(S) 2.05. Execution and Counterparts. This Eleventh Supplemental Indenture
may be executed in any number of counterparts, each of which shall be an
original but such counterparts shall together constitute but one and the same
instrument.
In Witness Whereof, said Tenneco Inc. has caused this Eleventh Supplemental
Indenture to be executed in its corporate name by its Chairman of the Board or
its President or one of its Vice Presidents, and said The Chase Manhattan Bank
(National Association) has caused this Indenture to be executed in its
corporate name by one of its Vice Presidents as of December 15, 1995.
Tenneco Inc.
Robert T. Blakely
By _________________________________________
Robert T. Blakely
Senior Vice President
The Chase Manhattan Bank
(National Association)
Valerie Dunbar
By _________________________________________
Valerie Dunbar
Vice President
<PAGE>
EXHIBIT 4(a)(10)
[CONFORMED COPY]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TENNECO INC.
AND
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
AS TRUSTEE
------------------
TWELFTH SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 15, 1995
TO
INDENTURE
DATED AS OF MARCH 15, 1988
------------------
PROVIDING FOR THE ISSUANCE OF
7 1/4% DEBENTURES DUE 2025
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Twelfth Supplemental Indenture dated as of December 15, 1995 between Tenneco
Inc., a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter called the "Company"), and The Chase Manhattan Bank
(National Association), a national banking association existing under the laws
of the United States of America, as trustee (hereinafter called the
"Trustee").
Whereas, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of March 15, 1988 (hereinafter called the "Original
Indenture"), to provide for the issue of an unlimited amount of debentures,
notes and/or other debt obligations of the Company (hereinafter referred to as
the "Securities"), the terms of which are to be determined as set forth in
(S) 2.02 of the Original Indenture; and
Whereas, (S) 12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of setting forth the
terms of Securities of any series; and
Whereas, the Company desires to create a series of the Securities in an
aggregate principal amount of $300,000,000 to be designated the "7 1/4%
Debentures due 2025" (the "Debentures"), and all action on the part of the
Company necessary to authorize the issuance of the Debentures under the
Original Indenture and this Twelfth Supplemental Indenture has been duly
taken; and
Whereas, all acts and things necessary to make the Debentures, when executed
by the Company and authenticated and delivered by the Trustee as in the
Indenture provided, the valid and binding obligations of the Company, and to
constitute these presents a valid and binding supplemental indenture and
agreement according to its terms, have been done and performed;
Now, therefore, in consideration of the premises and of the mutual covenants
herein contained, and of the acceptance of this trust by the Trustee, and of
the sum of one dollar to the Company duly paid by the Trustee at the execution
and delivery of these presents, and of other valuable consideration the
receipt whereof is hereby acknowledged and in order to authorize the
authentication and delivery of and to set forth the terms of the Debentures,
<PAGE>
2
It is hereby covenanted, declared and agreed by and between the parties
hereto, for the benefit of holders of the Debentures issued under the
Indenture, as follows:
ARTICLE 1.
Terms and Issuance of 7 1/4% Debentures Due 2025
(S) 1.01. Issue of Debentures. A series of Securities which shall be
designated the "7 1/4% Debentures due 2025" shall be executed, authenticated
and delivered in accordance with the provisions of, and shall in all respects
be subject to, the terms, conditions and covenants of the Indenture, including
without limitation the terms set forth in this Twelfth Supplemental Indenture
(including the form of Debentures set forth in (S) 1.02 hereof). The aggregate
principal amount of Debentures which may be authenticated and delivered under
the Indenture shall not, except as permitted by the provisions of (S)(S) 2.07,
2.08, 2.10, 2.11 or 3.02 of the Indenture, exceed $300,000,000. The entire
amount of Debentures may forthwith be executed by the Company and delivered to
the Trustee and shall be authenticated by the Trustee and delivered to or upon
the order of the Company pursuant to (S) 2.03 of the Indenture.
(S) 1.02. Forms of Debentures and Authentication Certificate. The forms of
the Debentures and the Trustee's certificate of authentication shall be
substantially as follows:
[form of face of debenture]
[To be inserted on face of Global Debentures]
[Unless and until this Debenture is exchanged in whole or in part for
Debentures in definitive registered form, this Debenture may not be
transferred except as a whole by the Depositary (as defined in the Indenture
(as defined below)) to the nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
Unless this Debenture is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Company (as
defined below) or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
<PAGE>
3
TENNECO INC.
7 1/4% DEBENTURE DUE 2025
No. $
CUSIP
Tenneco Inc., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Company," which term shall include
any successor corporation as defined in the Indenture hereinafter referred
to), for value received, hereby promises to pay to or registered
assigns, the sum of Dollars on December 15, 2025, in any coin or currency
of the United States of America which at the time of payment is legal tender for
the payment of public and private debts, and to pay to the registered holder
hereof as hereinafter provided interest thereon at the rate per annum specified
in the title hereof in like coin or currency, from the June 15 or December 15
next preceding the date hereof to which interest has been paid, unless the date
hereof is a June 15 or December 15 to which interest on the Debentures has been
paid, in which case from the date hereof, or unless no interest has been paid on
the Debentures since the original issue date (hereinafter referred to) of this
Debenture, in which case from the original issue date, semi-annually on June 15
and December 15 in each year, until payment of said principal sum has been made
or duly provided for, and to pay interest on any overdue principal and (to the
extent permitted by law) on any overdue installment of interest at the rate of 7
1/4% per annum. Notwithstanding the foregoing, when there is no existing default
in the payment of interest on the Debentures, if the date hereof is after May 31
or November 30 and prior to the following June 15 or December 15, as the case
may be, this Debenture shall bear interest from such June 15 or December 15;
provided, however, that if the Company shall default in the payment of interest
due on such June 15 or December 15, then this Debenture shall bear interest from
the June 15 or December 15 to which interest has been paid or, if no interest
has been paid on the Debentures since the original issue date of this Debenture,
from the original issue date. The interest so payable on any June 15 or December
15 will, subject to certain exceptions provided in the Indenture hereinafter
referred to, be paid to the person in whose name this Debenture is registered at
the close of business on the May 31 or November 30, as the case may be, next
preceding such June 15 or December 15, or if such May 31 or November 30 is not a
business day, the business day next preceding such May 31 or November 30.
Interest on this Debenture shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Both principal of and interest on this
Debenture are payable at the principal office of the Trustee in
<PAGE>
4
the Borough of Manhattan, The City of New York, New York; provided, however,
that payment of interest may be made, at the option of the Company, by check
mailed to the address of the person entitled thereto as such address shall
appear on the Debenture register. The original issue date in respect of the
Debentures is December 15, 1995.
ADDITIONAL PROVISIONS OF THIS DEBENTURE ARE CONTAINED ON THE REVERSE HEREOF
AND SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.
In Witness Whereof, Tenneco Inc. has caused this Instrument to be signed in
its name by its Chairman of the Board or its President or a Vice President,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested by its Secretary or an Assistant Secretary.
Dated ..........................
Tenneco Inc.
By .......................................
Vice President
Attest:
................................
Secretary.
<PAGE>
5
[form of reverse of debenture]
TENNECO INC.
7 1/4% DEBENTURE DUE 2025
This Debenture is one of a duly authorized issue of Debentures of the
Company known as its 7 1/4% Debentures due 2025 (herein called the
"Debentures"), limited to the aggregate principal amount of $300,000,000, all
issued under and equally entitled to the benefits of an Indenture (herein,
together with any amendments and supplements thereto, including without
limitation the form and terms of Securities issued pursuant thereto, called
the "Indenture"), dated as of March 15, 1988, executed by the Company to The
Chase Manhattan Bank (National Association) (herein, together with any
successor thereto, called the "Trustee"), as Trustee, to which Indenture
reference is hereby made for a statement of the rights thereunder of the
Trustee and of the registered holders of the Debentures and of the duties
thereunder of the Trustee and the Company.
The Debentures will not be redeemable prior to maturity.
The Indenture permits the Company to issue unsecured debentures, notes
and/or other evidences of indebtedness in one or more series ("Securities") up
to such principal amount or amounts as may be authorized in accordance with
the terms of the Indenture.
To the extent permitted by, and as provided in, the Indenture, modifications
or alterations of the Indenture and of the rights and obligations of the
Company and of the holders of the Debentures may be made with the consent of
the Company and with the consent of the holders of not less than a majority in
principal amount of the Securities of all series then outstanding under the
Indenture (treated as a single class) which are affected by the modification
or amendment thereto; provided, however, that without the consent of the
holder hereof no such modification or alteration shall be made which will
affect the terms of payment of the principal of or interest on this Debenture.
In case a default, as defined in the Indenture, shall occur, the principal
of all the Debentures at any such time outstanding under the Indenture may be
declared or may become due and payable, upon the conditions and in the manner
and with the effect provided in the Indenture. The Indenture provides that
such declaration may in certain events be waived by the holders of a majority
in principal amount of the Debentures outstanding in the case of
<PAGE>
6
payment defaults on the Debentures and in certain other events by the holders
of a majority in principal amount of the Securities of all series then
outstanding under the Indenture (treated as a single class) which are affected
thereby.
The Indenture provides that no holder of any Debenture may enforce any
remedy under the Indenture except in the case of refusal or neglect of the
Trustee to act after notice of default and after request by the holders of a
majority in principal amount of the outstanding Debentures in certain events
(and in certain other events by the holders of a majority in principal amount
of the Securities of all series then outstanding under the Indenture, treated
as a single class, which are affected thereby) and the offer to the Trustee of
security and indemnity satisfactory to it; provided, however, that such
provision shall not prevent the holder hereof from enforcing payment of the
principal of or interest on this Debenture.
The transfer of this Debenture is registrable by the registered holder
hereof, in person or by duly authorized attorney, at the agency of the Company
in the Borough of Manhattan, The City of New York, New York, on books of the
Company to be kept for that purpose at said agency, upon surrender and
cancellation of this Debenture and on presentation of a duly executed written
instrument of transfer, and thereupon a new Debenture or Debentures, of the
same aggregate principal amount and in authorized denominations, will be
issued to the transferee or transferees in exchange herefor; and this
Debenture, with or without other Debentures, may in like manner be exchanged
for one or more new Debentures of other authorized denominations but of the
same aggregate principal amount; all subject to the terms and conditions set
forth in the Indenture.
The Company, the Trustee, any paying agent and any Registrar of the
Debentures may deem and treat the person in whose name this Debenture is
registered as the absolute owner hereof for all purposes whatsoever, and
neither the Company nor the Trustee nor any paying agent nor any Registrar of
the Debentures shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the interest
on, this Debenture, or for any claim based hereon or on the Indenture, against
any incorporator, or against any stockholder, director or officer, as such,
past, present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability, whether at common law, in equity, by any constitution, statute
<PAGE>
7
or otherwise, of incorporators, stockholders, directors or officers being
released by every owner hereof by the acceptance of this Debenture and as part
of the consideration for the issue hereof, and being likewise released by the
terms of the Indenture; provided, however, that nothing herein or in the
Indenture contained shall be taken to prevent recourse to and the enforcement
of the liability, if any, of any stockholder or subscriber to capital stock of
the Company upon or in respect of shares of capital stock not fully paid up.
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[form of trustee's certificate of authentication]
This Debenture is one of the 7 1/4% Debentures due 2025 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK
(National Association),
Trustee,
By.....................................
Authorized Officer.
(S) 1.03. Global Securities.
The Debentures shall be issued in the form of one or more Global Securities
that (i) shall represent and shall be denominated in an amount equal to the
aggregate principal amount of all of the Debentures not yet cancelled, (ii)
shall be registered in the name of the Depositary or the nominee of such
Depositary, (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instruction, and (iv) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for Debentures in definitive registered form, this Debenture
may not be transferred except as a whole by the Depositary to the nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
Each Depositary designated must, at the time of its designation and at all
times while it serves as Depositary, be a clearing agency registered under the
Securities Exchange Act of 1934 and any other applicable statute or
regulation.
<PAGE>
8
Notwithstanding the Indenture, any Debentures represented by a Global
Security may not, except as set forth below, be exchanged for a Debenture or
Debentures having authorized denominations and an equal aggregate principal
amount, upon surrender of Debentures to be exchanged at the office of the
Registrar.
Notwithstanding any other provision of this Twelfth Supplemental Indenture,
unless and until it is exchanged in whole or in part for Debentures in
definitive registered form, a Global Security representing all or a part of
the Debentures may not be transferred except as a whole by the Depositary for
such series to a nominee of such Depositary or by a nominee of such Depositary
to such Depositary or another nominee of such Depositary or by such Depositary
or any such nominee to a successor Depositary for such series or a nominee of
such successor Depositary.
If at any time the Depositary for the Debentures represented by one or more
Global Securities notifies the Company that it is unwilling or unable to
continue as Depositary for such Debentures or if at any time the Depositary
for such Debentures shall no longer be eligible under this Twelfth
Supplemental Indenture, the Company shall appoint a successor Depositary with
respect to such Debentures. If a successor Depositary for such Debentures is
not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such ineligibility, the Company's election that
such Debentures be represented by one or more Global Securities shall no
longer be effective and the Company shall execute, and the Trustee, upon
receipt of instructions from the Company for the authentication and delivery
of definitive Debentures, will authenticate and deliver Debentures in
definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Debentures in exchange for such Global Security
or Securities.
The Company may at any time and in its sole discretion determine that the
Debentures issued in the form of one or more Global Securities shall no longer
be represented by a Global Security or Securities. In such event the Company
shall execute, and the Trustee, upon receipt of an Officers' Certificate for
the authentication and delivery of definitive Debentures, shall authenticate
and deliver, Debentures in definitive registered form, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Global Security or Securities representing such Debentures, in exchange
for such Global Security or Securities.
<PAGE>
9
The Depositary for such Global Security may surrender such Global Security
in exchange in whole or in part for Debentures in definitive registered form
on such terms as are acceptable to the Company and such Depositary. Thereupon,
the Company shall execute, and the Trustee shall authenticate and deliver,
without service charge,
(i) to the Person specified by such Depositary, a new Security or
Securities of the same series as the Debentures, of any authorized
denominations as requested by such Person, in an aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
Global Security; and
(ii) to such Depositary a new Global Security in a denomination equal to
the difference, if any, between the principal amount of the surrendered
Global Security and the aggregate principal amount of the Debentures
authenticated and delivered pursuant to clause (i) above.
Upon the exchange of a Global Security for Debentures in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Company or the Trustee. Debentures
in definitive registered form issued in exchange for a Global Security
pursuant to this Section 1.03 shall be registered in such names and in such
authorized denominations as the Depositary for such Global Security, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Company or the Trustee. The Trustee or
such agent shall deliver at its office such Debentures to or as directed by
the Persons in whose names such Securities are so registered.
"Depositary" means, with respect to the Debentures, The Depository Trust
Company until a successor Depositary shall have become such pursuant to the
applicable provisions of this Twelfth Supplemental Indenture, and thereafter
"Depositary" shall mean or include each Person who is then a Depositary
hereunder, and, if at any time there is more than one such Person,
"Depositary" as used with respect to the Debentures shall mean the Depositary
with respect to the Global Securities.
"Global Security" means a Security evidencing all or a part of the
Debentures issued to the Depositary and bearing the legend prescribed in this
Twelfth Supplemental Indenture.
<PAGE>
10
ARTICLE 2.
Miscellaneous
(S) 2.01. Execution as Supplemental Indenture. This Twelfth Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Original Indenture and, as provided in the Original Indenture, this
Twelfth Supplemental Indenture forms a part thereof. Except as herein
expressly otherwise defined, the use of the terms and expressions herein is in
accordance with the definitions, uses and constructions contained in the
Original Indenture.
(S) 2.02. Responsibility for Recitals, Etc. The recitals herein and in the
Debentures (except in the Trustee's certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this Twelfth Supplemental
Indenture or of the Debentures. The Trustee shall not be accountable for the
use or application by the Company of the Debentures or of the proceeds
thereof.
(S) 2.03. Provisions Binding on Company's Successors. All the covenants,
stipulations, promises and agreements in this Twelfth Supplemental Indenture
contained by the Company shall bind its successors and assigns whether so
expressed or not.
(S) 2.04. New York Contract. This Twelfth Supplemental Indenture and each
Debenture shall be deemed to be a contract made under the laws of the State of
New York, and for all purposes shall be construed in accordance with the laws
of said State without regard to principles of conflicts of laws.
(S) 2.05. Execution and Counterparts. This Twelfth Supplemental Indenture
may be executed in any number of counterparts, each of which shall be an
original but such counterparts shall together constitute but one and the same
instrument.
<PAGE>
11
In Witness Whereof, said Tenneco Inc. has caused this Twelfth Supplemental
Indenture to be executed in its corporate name by its Chairman of the Board or
its President or one of its Vice Presidents, and said The Chase Manhattan Bank
(National Association) has caused this Indenture to be executed in its
corporate name by one of its Vice Presidents as of December 15, 1995.
Tenneco Inc.
Robert T. Blakely
By _________________________________________
Robert T. Blakely
Senior Vice President
The Chase Manhattan Bank
(National Association)
Valerie Dunbar
By _________________________________________
Valerie Dunbar
Vice President
<PAGE>
EXHIBIT 10(a)(3)
TENNECO INC. DEFERRED COMPENSATION PLAN
DECEMBER 1967
AS AMENDED JANUARY 1, 1970,
AMENDED AND RESTATED JANUARY 1, 1980,
AMENDED AND RESTATED JANUARY 1, 1982,
AMENDED AND RESTATED AUGUST 1, 1984,
AMENDED AND RESTATED NOVEMBER 1, 1984,
AMENDED AND RESTATED JANUARY 1, 1986,
AMENDED AND RESTATED JANUARY 1, 1987,
AMENDED AND RESTATED NOVEMBER 1, 1988,
AND AMENDED AND RESTATED SEPTEMBER 12, 1995.
1. NAME AND PURPOSE. The name of this plan is the "Tenneco Inc. Deferred
Compensation Plan" (the Plan). The purpose of this Plan is to provide reward and
incentive to employees who contribute to the success of the Company's business
by their ability, industry, loyalty, inventiveness, or exceptional service,
through making such employees participants in that success.
2. DEFINITIONS. For purposes of this Plan, the following definitions shall be
applicable:
a. The term "Employee" shall mean any person who is regularly employed on a
salaried basis by the Company or by a Qualified Subsidiary, including, but not
limited to, any employee who is also an officer or director of the Company or of
a Qualified Subsidiary.
b. The term "Participant" shall mean an Employee who has been credited with
any portion of an award pursuant to Section 4 hereof for any year during which
this Plan is in effect and who (or whose beneficiary) has not received the total
vested portion of the balance of the Participant's account.
c. The term "Company" shall mean Tenneco Inc.
d. The term "Qualified Subsidiary" shall mean a company 50 percent or more of
whose voting stock is owned (directly or through another Qualified Subsidiary)
by the Company.
e. The term "Board of Directors" shall mean the Board of Directors of the
Company.
f. The term "Compensation and Benefits Committee" shall mean the Compensation
and Benefits Committee established by the Board of Directors.
g. The term "Normal Retirement Date" when applied to a Participant shall
mean the Participant's Normal Retirement Date under the Tenneco Inc. Retirement
Plan.
h. The term "Early Retirement Benefit" shall mean an Early Retirement
Benefit under the Tenneco Inc. Retirement Plan.
i. The term "Disability" shall have the same meaning as that provided in the
Tenneco Inc. Retirement Plan.
<PAGE>
j. The term "Accumulation Limit" shall mean $1.5 million or such other amount
as the Compensation and Benefits Committee may, from time to time, designate as
in effect.
3. ADMINISTRATION. The Board of Directors has designated the Compensation and
Benefits Committee to administer, construe and interpret this Plan. The
construction and interpretation by the Compensation and Benefits Committee of
any provision of this Plan shall be final, conclusive and binding upon all
parties, including the Company, its stockholders and its Employees. No member of
the Compensation and Benefits Committee shall be liable for any act done or
determination made in good faith.
4. ACCOUNTING. The Company shall create a Deferred Compensation Ledger under
which an account shall be maintained in the name of each Employee who is
selected by the Board of Directors to be a Participant. Each Participant's
account shall be maintained in accordance with the following rules:
a. CREDITING OF AWARD. The Participant's award for a particular calendar year,
if any, shall be declared by the Board of Directors as of the commencement of
the calendar year. As of the first day of each month of the calendar year, the
Participant's account will be credited for 1/12 of the award, provided, that on
such day the Participant is an Employee.
b. INTEREST. As of the last day of each month on which the participant is an
employee, interest for the month shall be credited on the closing balance of the
Participant's account as of the last day of the immediately preceding month at a
rate (or rates) that is equal to the Prime Interest Rate (or Rates) announced by
the Chase Manhattan Bank for such later month (or applicable portions thereof).
c. CPI ADJUSTMENT. If the Participant is an Employee on the last day of a
calendar year (the "current year"), then as soon as is administratively feasible
following the completion of the current year, the percentage change in the
Consumer Price Index For All Urban Households as prepared by the Bureau of Labor
Statistics (the "CPI") as of the last day of the current year from the CPI as of
the last day of the preceding calendar year shall be calculated. The award
credited to the Participant's account for the current year and the sum of each
award credited to the Participant's account for each preceding calendar year
plus the total allowable CPI adjustments that have previously been determined
with respect thereto shall be separately multiplied by the percentage to
determine the current year CPI adjustment to the award credited for the current
year and to the award credited for each preceding calendar year. The total of
the allowable current year CPI adjustments to the award credited for the current
year and to the award credited for each of the preceding calendar years shall be
credited to (or, if negative, debited from) the Participant's account as of the
last day of the current year.
In the event that a Participant ceases to be an Employee prior to the last day
of the current year, the percentage change in the CPI as of the last day of the
month coinciding with or immediately preceding the date upon which the
Participant ceased to be an Employee from the CPI as of the last day of the
preceding calendar year shall be calculated. Such percentage shall be utilized
to determine the total of the allowable current year CPI adjustments to the
award credited for the partial current year and to the award credited for each
of the preceding calendar years in the manner hereinbefore described and such
total shall be credited to (or, if negative, debited from) the Participant's
account as of the last day of the month coinciding
<PAGE>
with or immediately preceding the date upon which the Participant ceased to be
an Employee.
For purposes of the foregoing, no current year CPI adjustment to an award
credited for any calendar year shall be allowable to the extent that such
adjustment, when added to all previous CPI adjustments to such award, would
exceed the original amount of the award credited for the calendar year.
d. VESTING. A Participant will vest in any award credited to his or her account
for a particular calendar year beginning on or after January 1, 1980, and in any
CPI adjustments made to such award, based upon the consecutive calendar years,
commencing with the particular calendar year, throughout which the Participant
has been an Employee, in accordance with the following schedule:
<TABLE>
<CAPTION>
CALENDAR VESTING
YEARS OF EMPLOYMENT PERCENTAGE
<S> <C>
1 33 1/3%
2 66%
3 100%
</TABLE>
Notwithstanding the foregoing, a Participant will be fully vested in all awards
credited to his or her account and in all CPI adjustments made to such awards
(i) if the Participant continues to be an Employee until the earliest of
attainment of his or her Normal Retirement Date, attainment of eligibility to
elect to receive an Early Retirement Benefit or termination of employment on
account of disability or death; or (ii) if the Compensation and Benefits
Committee determines that it would be in the best interests of the Company to
fully vest the Participant upon termination of employment. A Participant will
always be fully vested in any interest that has been credited to his or her
account.
5. PAYMENT OF BENEFITS. Distributions under this Plan shall be made only in
accordance with the following rules:
a. RETIREMENT OR DISABILITY. In the case of a participant who ceases to be an
Employee after having attained his or her Normal Retirement Date or having
attained eligibility to elect to receive an Early Retirement Benefit or on
account of disability, the Participant shall be entitled to receive an amount
equal to the balance of the Participant's account in a lump sum as soon as
administratively feasible following the reporting of the CPI as of the last day
of the month during which he or she ceased to be an Employee or in a number of
post termination annual installments, not to exceed five, as the Participant
shall elect. Interest and CPI adjustment will continue to be credited to a
Participant's account when a post termination distribution is elected.
b. OTHER TERMINATION OF EMPLOYMENT. In the case of a Participant who ceases
to be an Employee, otherwise than on account of disability, after attainment of
his or her Normal Retirement Date or after attainment of eligibility to elect to
receive an Early Retirement Benefit, the Participant shall be entitled to
receive an amount equal to the vested portion of the balance of the
Participant's account in 60 equal monthly installments commencing as of the
first day of the month immediately following the reporting of the CPI as of the
last day of the month during which he or she ceased to be an Employee. However,
in the event a
<PAGE>
Participant ceases to be an Employee on or after November 1, 1988, the
Compensation and Benefits Committee, in its sole and absolute discretion, may
direct that, in lieu of said installments, the Participant shall be paid an
amount equal to the vested portion of the balance of the Participant's account
in a lump sum as soon as administratively feasible following the reporting of
the CPI as of the last day of the month during which he or she ceases to be an
Employee. No interest or CPI adjustments will be credited following termination
of employment for reasons other than disability, retirement, or death.
c. DEATH DURING EMPLOYMENT. In the case of a Participant who dies while an
the participant's beneficiary shall be entitled to receive an amount
equal to the balance of the participant's account in a lump sum as soon as
administratively feasible following the reporting of the CPI as of the last day
of the month during which the participant's death occurred or in a number of
post termination annual installments, not to exceed five, as elected by the
administrator of the Participant's estate. Interest and CPI adjustments will
continue to be credited to the account when a post termination distribution
election is made.
d. ACCUMULATION LIMIT. In the event the balance of a Participant's account as of
the last day of a calendar year equals or exceeds the Accumulation Limit then in
effect, an amount equal to the Distribution Amount shall be distributed to the
Participant in a lump sum as soon as administratively feasible following the
expiration of the calendar year and the crediting of CPI adjustments for the
calendar year to the Participant's account, provided, that if the Participant
ceases to be an Employee prior to such distribution, distribution shall be
suspended and, thereafter, shall be made in accordance with paragraphs a, b, or
c, whichever applicable.
For purposes of the foregoing, the Distribution Amount shall be equal to the sum
of:
(i) each award, credited to the Participant's account for a particular calendar
year, in which the Participant is 100% vested and with respect to which
net CPI adjustments have been credited to the Participant's account in an
amount equal to the original amount of the award credited, determined as of
the close of the calendar year; plus
(ii) the net CPI adjustments credited to the Participant's account with respect
to each award included in clause (i); plus
(iii) the portion of interest credited to the Participant's account that is
allocated to each award included in clause (i) and to the net CPI
adjustments included in clause (ii), determined in accordance with such
allocation method as may be approved for such purpose by the Compensation
Committee.
e. DEATH FOLLOWING TERMINATION OF EMPLOYMENT. In the case of a Participant who
dies after ceasing to be an Employee and before having received an amount equal
to the entire vested portion of the balance of his or her account, the
Participant's beneficiary shall be entitled to receive an amount equal to the
remainder of the vested portion of the balance of the Participant's account in a
continuation of such form of distribution as the Participant was receiving prior
to death, or if distribution to the Participant had not commenced, in such form
as to which the Participant was entitled under paragraphs a, b, or c.
In the event that, upon written application of the recipient Participant or
beneficiary, the
<PAGE>
Compensation and Benefits Committee determines that distribution in the form or
commencing at the time specified above would impose a significant hardship on
the recipient, the Compensation and Benefits Committee may authorize
distribution in a different form or commencing at a different time.
Notwithstanding anything to the contrary contained in the foregoing provisions
of this Section 5:
(i) if distribution of a Participant's account is to commence on or after
September 1, 1984 and at the time of such commencement the vested portion of
the balance of the account does not exceed fifteen thousand dollars
($15,000.00), said portion shall be distributed in a lump sum, and shall not
be distributed in installments.
(ii) if, after distribution of a Participant's account in installments has
commenced, the vested portion of the balance of the account at any time on
or after September 1, 1984 does not exceed fifteen thousand dollars
($15,000.00), said portion shall promptly be distributed in a lump sum, and
shall not continue to be distributed in installments.
(iii) if a Participant ceased to be an Employee under circumstances described in
paragraphs (a) or (c) and distribution of the Participant's account in
installment form commenced prior to January 1, 1986, the remaining balance
of the account shall continue to be distributed in such installment form.
The amount of any distribution to a Participant or his or her beneficiary during
a month shall be debited, as of the last day of the immediately preceding month,
against the vested portion of the balance of the Participant's account.
6. DESIGNATION OF BENEFICIARY. Each Participant may at any time designate the
beneficiary or beneficiaries to whom payments hereunder shall be made on
account of the Participant's death. Any such designation shall be in writing and
filed with the Compensation and Benefits Committee. If no such designation is on
file with the Compensation and Benefits Committee or if no person so designated
is living, or otherwise in existence, at the time of the Participant's death,
then the deceased Participant's estate shall be deemed to be his or her
designated beneficiary.
7. NATURE AND SOURCE OF BENEFIT PAYMENTS. Portions of awards credited
pursuant to Section 4 hereof are compensation for services, and the benefits
provided herein with respect to such amounts shall constitute a liability of the
Company to the Participants and/or the beneficiaries in accordance with the
terms hereof. The payment of such benefits shall be made from the general funds
of the Company. No special or separate fund shall be established or other
segregation of assets made to assure the payment of such benefits and no
Participant shall have any interest in any particular asset of the Company by
virtue of the existence of a credit balance in such Participant's account.
8. EXPENSES OF ADMINISTERING PLAN. All expenses of administering this plan
shall be borne by the Company and no part thereof shall be charged against any
Participant's account.
9. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may:
a. terminate this Plan at any time; and
b. amend or modify this Plan, from time to time, in any respect;
<PAGE>
provided, that any amendment or termination of this Plan shall in no way affect
the rights of any Participant or beneficiary to the receipt of benefits to the
extent of the balance of the Participant's account at the time of such amendment
or termination.
10. NON-ALIENATION OF BENEFITS. No benefit under this Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt at such shall be void, and any such
benefit shall not in any way be subject to the debts. contracts,
liabilities, engagements, or torts of the person who shall be entitled to
such benefit, nor shall it be subject to attachment or legal process for or
against such person.
11. CLAIMS PROCEDURE. The Compensation and Benefits Committee shall establish a
claims procedure which satisfies the requirements of the Employee Retirement
Income Security Act of 1974.
APPROVED ON BEHALF OF THE BOARD OF DIRECTORS
By [SIGNATURE APPEARS HERE]
Pursuant to Section 11 of the Tenneco Inc. Deferred Compensation Plan (the
"Plan"), the Compensation and Benefits Committee of the Board of Directors of
Tenneco Inc. (the "Compensation and Benefits Committee") adopts the following
procedure for use in the administration of the Plan:
TENNECO INC. DEFERRED COMPENSATION PLAN CLAIMS PROCEDURE
A. CLAIMS FOR BENEFITS
1. As a prerequisite to payment of any benefit under the Plan, the Participant
or the beneficiary of the deceased Participant shall make a claim in such
manner as the Compensation and Benefits Committee may reasonably require;
2. Promptly upon the receipt of such claim, the Compensation and Benefits
Committee shall determine whether the claimant is entitled to the benefit
and, if so, the amount thereof.
B. DENIAL OF BENEFITS
In the event that any claim for a benefit under this Plan is denied, in whole or
in part, the Compensation and Benefits Committee shall furnish the claimant with
a written notice setting forth in a manner calculated to be understood by the
claimant:
1. The specific reasons for the denial;
2. Specific reference to any pertinent provisions of this Plan upon which the
denial is based;
<PAGE>
3. A description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary; and
4. Appropriate information as to the steps to be taken if the claimant wishes
to submit the claim for review.
A claim shall be deemed denied if the Compensation and Benefits Committee does
not approve the claim and fails to furnish the aforesaid notice of denial before
the expiration of a period commencing with its receipt of the claim and
consisting of 90 days, plus such extension of time for processing the claim, not
to exceed 90 additional days, as special circumstances require, provided, that,
prior to the expiration of the initial 90 days of the period, the claimant has
been furnished with a written notice, which indicates the special circumstances
requiring the extension and the date by which a decision regarding the claim is
expected to be rendered.
C. PROCEDURE FOR REVIEW OF DENIED CLAIMS
A claimant whose claim for a benefit under the Plan is denied, either in whole
or in part, shall have the right, to be exercised by written application filed
with the Compensation and Benefits Committee not later than the 60th day after
receipt of notice of such denial, to request a review of the claim. Such request
for review may contain such issues and comments as the claimant may wish
considered in the review and the Compensation and Benefits Committee shall
permit the claimant to review pertinent documents in its possession, including
copies of the Plan. The Compensation and Benefits Committee shall make a final
determination with respect to the claim as soon as practicable. Notice of the
final determination shall be furnished to the claimant in writing, in a manner
reasonably calculated to be understood by the claimant, and shall set forth the
specific reasons for the determination and specific references to any pertinent
provisions of the Plan upon which the determination is based. A claim shall be
deemed denied on review if the Compensation and Benefits Committee fails to
furnish the aforesaid notice of final determination before the expiration of a
period commencing with its receipt of the request for review of the claim and
consisting of 60 days, plus such extension of time for completing the review,
not to exceed 60 additional days, as special circumstances require, provided,
that prior to the expiration of the initial 60 days of the period, the claimant
has been furnished with a written notice which indicates the special
circumstances requiring the extension and the date by which a decision regarding
the review of the claim is expected to be rendered.
APPROVED ON BEHALF OF THE COMPENSATION AND BENEFITS COMMITTEE
By: [SIGNATURE APPEARS HERE]
<PAGE>
TENNECO INC.
DEFERRED COMPENSATION AGREEMENT
AGREEMENT dated , 19 , between Tenneco Inc., a Delaware
Corporation, herein called "Tenneco", and
of , herein called
"Participant".
WITNESSETH:
In consideration of the mutual agreements herein contained, Tenneco and
Participant agree as follows:
1.
Participant covenants and agrees to remain in the service of Tenneco, or its
divisions or subsidiaries, until termination of employment due to retirement or
other reason, and in consideration therefore and subject to the terms and
conditions contained in the Tenneco Inc. Deferred Compensation Plan (the
"Plan"), Tenneco agrees to maintain in its Deferred Compensation Ledger an
account in the name of the Participant. Said account shall be credited with so
much of the award of $ that has been declared for the calendar year
and with such other amounts, as shall be determined in accordance with the
provisions of the Plan, a copy of which is attached hereto and made a part
hereof.
2.
It is agreed that this Agreement is entered into solely for the purpose of
evidencing the additional compensation granted to Participant pursuant to the
provisions of the Plan and is not intended and shall not operate to change in
any way any of the other terms and conditions of Participant's employment by
Tenneco.
3.
The Agreement shall inure to and bind the successors and assigns to Tenneco.
IN WITNESS WHEREOF, Tenneco has caused this Agreement to be executed by its
Chairman or one of its Vice Presidents and attested by its Secretary or an
Assistant Secretary, and Participant has signed same, in duplicate originals, on
the date and year first above written.
ATTEST: TENNECO INC.
/s/ Karl A. Stewart By: /s/ Dana G. Mead
- ---------------------------- ---------------------------
Secretary Chairman/CEO
---------------------------
Participant
<PAGE>
EXHIBIT 10(a)(4)
TENNECO INC. 1993 DEFERRED COMPENSATION PLAN
(Amended September 1995)
1. Purpose
The purpose of the Tenneco Inc. 1993 Deferred Compensation Plan (the "Plan"} is
to provide to a select group of management or highly compensated employees of
Tenneco Inc. and its subsidiaries and affiliates (hereinafter collectively
referred to as "Tenneco") an opportunity to defer compensation received by them
from Tenneco in accordance with the terms and conditions set forth herein.
2. Adoption and Administration
The Plan shall be adopted by the Board of Directors of Tenneco Inc. and
administered by the Compensation and Benefits Committee of the Tenneco Inc.
Board of Directors (the "Committee"). The Committee shall have sole and complete
authority and discretion to interpret the terms and provisions of the Plan and
to adopt, alter and repeal such administrative rules, regulations and practices
governing the operation of the Plan, and to determine facts under the Plan as it
shall from time to time deem advisable.
3. Eligibility
U.S. paid participants in the Tenneco Inc. Executive Incentive Compensation Plan
shall be eligible to participate in the Plan.
Such persons shall be collectively referred to as the "Participant" or
"Participants" as the case may be.
4. Election to Defer
(a) A Participant may elect in writing to defer receipt of all or a specified
portion of his or her bonuses or incentive compensation to be received during a
calendar year. Amounts deferred under this Section 4(a) shall be referred to as
the "Deferred Amounts". Once received by the Committee, an election cannot
be revoked.
(b) Except as provided in this Section 4(b) or in Section 14, the election
must be made prior to September 30 of the calendar year in which the bonus or
incentive compensation will be awarded. A Participant must make a separate
election with respect to each calendar year of participation in the Plan. A new
Participant in the Plan shall have 30 days following his or her notification by
the Committee of his or her eligibility to participate in the Plan to make an
election with respect to bonus or incentive compensation to be awarded within
the calendar year.
(c) As specified by the Participant in the election to defer, the period of
deferral shall be until the Participant dies, terminates employment with
Tenneco, or until a specific date selected by the Participant in the election to
defer.
1
<PAGE>
5. Establishment of Deferred Compensation Account
At the time of the Participant's initial election to defer pursuant to Section 4
or 13, the Tenneco company which employs the Participant shall establish a
memorandum account (a "Deferred Compensation Account") for such Participant on
its books. The Deferred Amount shall be credited to the Participant's Deferred
Compensation Account as of the day on which the Participant would otherwise be
entitled to receive the bonus or incentive compensation. Any required
withholding for taxes (e.g. Social Security taxes) on the Deferred Amount shall
be made from other compensation of the Participant. Adjustments as provided in
Section 6 below, shall be made to the Participant's Deferred Compensation
Account.
6. Adjustments to Deferred Amounts
The Committee shall credit the balance in the Participant's Deferred
Compensation Account with an earnings factor. The earnings factor will equal the
amount the Participant's Deferred Compensation Account would have earned if it
had been invested in the investment options listed below. The Participant is
permitted to select the investment option used to determine the earnings factor
and may change the selection at any time. The Participant may choose more than
one investment option in increments of at least one (1) percent. The company
reserves the right to change or amend any of the investment options at any time.
The investment options used to determine the earnings factor are:
(a) The prime rate of interest as reported by The Chase Manhattan Bank at the
first day of each calendar month.
(b) Tenneco stock index account -- amount of deferral will be invested in
Tenneco stock equivalent unit account. Any investment in this account will be
measured solely by the performance of the company's common stock (including
dividends that will be reinvested).
(c) The return for selected Mutual Funds currently offered in the Tenneco Inc.
Thrift Plan:
(1) Fidelity Growth Company Fund
(2) BZW Barklays U.S. Debt Index Fund (Bond)
(3) BZW Barklays Daily Equity Index Fund
Tenneco is under no obligation to acquire or provide any of the investments
designated by a Participant, and any investments actually made by Tenneco will
be made solely in the name of Tenneco and will remain the property of Tenneco.
The crediting of an earnings factor shall occur so long as there is a balance in
the Participant's Deferred Compensation Account regardless of whether the
Participant has terminated employment with Tenneco.
2
<PAGE>
7. PAYMENT OF DEFERRED AMOUNTS
(a) Except as otherwise provided in subsections (b), (c) or (d) below, a
Participant's Deferred Amount shall be paid, or commence to be paid, to the
Participant, or the Participant's beneficiary, as soon as practicable after:
(i) the Participant's death,
(ii) the termination of Participant's Tenneco employment, or
(iii) the date specified in the election made by the Participant.
In the event of the Participant's death, payment of the balance in the
Participant's Deferred Compensation Account shall be made, either (i) in a lump
sum or (ii) in a number of annual installments, not to exceed five, as soon as
administratively feasible to the Participant's designated beneficiary, or if
none, to the Participant's estate.
(b) The Participant may elect to receive payment of the balance in his or her
Deferred Compensation Account either (i) in a lump sum upon termination or (ii)
in a single payment at a specified date prior to termination or (iii) in a
number of post termination annual installments, not to exceed five, as the
Participant shall elect. The distribution election must be made at least one
year before the Deferred Amount is payable and must have approval of the
Committee. If no election is made, a lump sum payment will be made upon a
Participant's termination.
(c) A Participant will receive the balance in the Deferred Compensation Account,
in a lump sum, upon the occurrence of a Change in Control of his or her
employing Tenneco company, or of Tenneco Inc. The term "Change in Control" shall
mean a Change in Control as defined in the Tenneco Inc. Retirement Plan for
Tenneco Inc., or in the case of a change in control of the Participant's
employing company, as defined in the Tenneco Inc. Retirement Plan with the name
of the employing company substituted in the definition for Tenneco Inc.
(d) Anything contained in this Section to the contrary not withstanding, in
the event a Participant incurs a severe financial hardship, the Committee, in
its sole discretion and upon written application of such Participant, may direct
immediate payment of all or a portion of the then current value of such
Participant's Deferred Compensation Account; provided that such payment shall in
no event exceed the amount necessary to alleviate such financial hardship; and
provided further that in the case of such payment, the Participant's Deferred
Compensation Account shall be reduced by 110% of the amount of such payment.
8. PARTICIPANT REPORTS
The Committee shall provide a statement to the Participant quarterly concerning
the status of his or her Deferred Compensation Account.
3
<PAGE>
9. TRANSFERABILITY OF INTERESTS
During the period of deferral, all Deferred Amounts shall be considered as
general assets of the Tenneco companies which employ or have employed the
Participant for use as they deem necessary and shall be subject to the claims of
the companies' creditors.
The rights and interests of a Participant during the period of deferral shall be
those of a general creditor except that such Participant's rights and interests
may not be reached by the creditors of the Participant or the beneficiary, or
anticipated, assigned, pledged, transferred or otherwise encumbered except in
the event of the death of the Participant, and then only by will or the laws of
descent and distribution.
10. AMENDMENT, SUSPENSION AND TERMINATION
Tenneco Inc. at any time may amend, suspend or terminate the Plan or any portion
thereof in such manner and to such extent as it may deem advisable and in the
best interests of Tenneco. No amendment, suspension and termination shall reduce
the amount then credited to a Participant's Deferred Compensation Account.
11. UNFUNDED OBLIGATION
The Plan shall not be funded; no trust, escrow or other provisions shall be
established to secure payments due under the Plan; and the Plan shall be
regarded as unfunded for purposes of the Employee Retirement Income Security Act
of 1974, as amended, and the Internal Revenue Code. A Participant shall be
treated as a general, unsecured creditor at all times under the Plan, and shall
have no rights to any specific assets of any Tenneco company. All amounts
credited to the memorandum accounts of the Participants will remain general
assets of the respective companies.
12. NO RIGHT TO EMPLOYMENT OR OTHER BENEFITS
Nothing contained herein shall be construed as conferring upon any Participant
the right to continue in the employ of Tenneco. Any compensation deferred and
any payments made under this Plan shall not be included in creditable
compensation in computing benefits under any employee benefit plan of Tenneco
except to the extent expressly provided for therein.
13. DISPUTE RESOLUTION
By participating in this Plan, the Participant agrees that any dispute arising
under the Plan shall be resolved by binding arbitration in Houston, Texas under
the rules of the American Arbitration Association and that there will be no
remedy besides the disputed deferred compensation amount at issue.
4
<PAGE>
14. EFFECTIVE DATE
The Plan shall be effective on August 1, 1993 if previously approved by the
Board of Directors of Tenneco Inc.; otherwise it shall be effective immediately
after such approval. After such effective date, eligible Participants shall be
permitted to make within 30 days an initial election to defer under Section 4
with respect to the bonus or incentive compensation to be awarded within the
first calendar year of the Plan.
5
<PAGE>
EXHIBIT 11
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
(MILLIONS EXCEPT SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
COMPUTATION FOR STATEMENTS OF INCOME
Primary Earnings Per Share (average
shares outstanding):
Income from continuing operations...... $ 735 $ 641 $ 413
Income (loss) from discontinued opera-
tions, net of income tax.............. -- (189) 38
----------- ----------- -----------
Income before extraordinary loss....... 735 452 451
Extraordinary loss, net of income tax.. -- (5) (25)
----------- ----------- -----------
Income before cumulative effect of
change in accounting principle........ 735 447 426
Cumulative effect of change in ac-
counting principle, net of income
tax................................... -- (39) --
----------- ----------- -----------
Net income ............................ 735 408 426
Preferred stock dividends.............. 12 12 14
----------- ----------- -----------
Net income to common stock............. $ 723 $ 396 $ 412
=========== =========== ===========
Average shares of common stock out-
standing (a)(b)....................... 173,995,941 180,084,909 168,772,852
=========== =========== ===========
Earnings (loss) per average share of
common stock:
Continuing operations................ $ 4.16 $ 3.49 $ 2.36
Discontinued operations.............. -- (1.04) .23
Extraordinary loss................... -- (.03) (.15)
Cumulative effect of change in ac-
counting principle.................. -- (.22) --
----------- ----------- -----------
$ 4.16 $ 2.20 $ 2.44
=========== =========== ===========
ADDITIONAL COMPUTATIONS(C)
Net income to common stock, per above... $ 723 $ 396 $ 412
=========== =========== ===========
Primary Earnings Per Share (including
common stock equivalents):
Average shares of common stock out-
standing (a)(b)....................... 173,995,941 180,084,909 168,772,852
Incremental common shares applicable
to common stock options based on the
common stock daily average market
price during the year................. 64,329 74,087 38,171
Incremental common shares applicable
to performance units based upon the
attainment of specified goals......... 27,625 -- --
----------- ----------- -----------
Average common shares, as adjusted..... 174,087,895 180,158,996 168,811,023
=========== =========== ===========
Earnings (loss) per average share of
common stock (including common
stock equivalents):
Continuing operations................ $ 4.16 $ 3.49 $ 2.36
Discontinued operations.............. -- (1.04) .23
Extraordinary loss................... -- (.03) (.15)
Cumulative effect of change in ac-
counting principle.................. -- (.22) --
----------- ----------- -----------
$ 4.16 $ 2.20 $ 2.44
=========== =========== ===========
Fully Diluted Earnings Per Share:
Average shares of common stock out-
standing (a)(b)....................... 173,995,941 180,084,909 168,772,852
Incremental common shares applicable
to common stock options based on the
more dilutive of the common stock
ending or average market price during
the year.............................. 94,418 75,223 106,901
Average common shares issuable assum-
ing conversion of Tenneco Inc. 10%
loan stock............................ -- 41,356 42,663
Incremental common shares applicable
to performance units based upon the
attainment of specified goals......... 27,625 -- --
----------- ----------- -----------
Average common shares assuming full
dilution.............................. 174,117,984 180,201,488 168,922,416
=========== =========== ===========
Fully diluted earnings (loss) per av-
erage share, assuming conversion of
all applicable securities:
Continuing operations................ $ 4.16 $ 3.49 $ 2.36
Discontinued operations.............. -- (1.04) .23
Extraordinary loss................... -- (.03) (.15)
Cumulative effect of change in ac-
counting principle.................. -- (.22) --
----------- ----------- -----------
$ 4.16 $ 2.20 $ 2.44
=========== =========== ===========
</TABLE>
- --------
Notes: (a) In 1992, 12,000,000 shares of common stock were issued to the
Tenneco Inc. Stock Employee Compensation Trust ("SECT"). Shares of
common stock issued to a related trust are not considered to be
outstanding in the computation of average shares of common stock
until the shares are utilized to fund the obligations for which the
trust was established. During each of the years ended December 31,
1995, 1994 and 1993, the SECT utilized 2,697,770, 2,464,721 and
2,479,425 shares, respectively.
(b) For purposes of computing earnings per share, Series A preferred
stock was converted into common stock under the Contingent Share
method. The above computation includes 8,935,175 shares of Series A
preferred stock which were converted into 17,342,763 shares of
common stock. In December 1994, all of the outstanding shares of
Series A preferred stock were converted into Tenneco Inc. common
stock. The inclusion of Series A preferred stock in the computation
of earnings per share was antidilutive for the years and certain
quarters in 1994 and 1993.
(c) These calculations are submitted in accordance with Securities and
Exchange Commission requirements although not required by Accounting
Principles Board Opinion No. 15 because they result in dilution of
less than 3%.
<PAGE>
EXHIBIT 12
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
COMBINED WITH 50% OWNED UNCONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations............................. $ 735 $ 641 $ 413 $(714) $ (617)
Add:
Interest............................... 458 597 717 898 977
Portion of rentals representative of
interest factor....................... 59 67 67 70 69
Preferred stock dividend requirements
of majority-owned subsidiaries........ 22 -- -- -- --
Income tax expense and other taxes on
income................................ 273 302 258 167 63
Amortization of interest capitalized
applicable to nonutility companies.... 5 6 6 5 5
Interest capitalized applicable to
utility companies..................... 2 1 1 2 4
Undistributed (earnings) losses of
affiliated companies in which less
than a 50% voting interest is owned... (112) (4) 4 (2) (4)
------ ------ ------ ----- ------
Earnings as defined................. $1,442 $1,610 $1,466 $ 426 $ 497
====== ====== ====== ===== ======
Interest................................ $ 458 $ 597 $ 717 $ 898 $ 977
Interest capitalized.................... 9 6 4 8 23
Portion of rentals representative of
interest factor........................ 59 67 67 70 69
Preferred stock dividend requirements of
majority-owned subsidiaries on a pretax
basis.................................. 30 -- -- -- --
------ ------ ------ ----- ------
Fixed charges as defined............ $ 556 $ 670 $ 788 $ 976 $1,069
====== ====== ====== ===== ======
Ratio of earnings to fixed charges...... 2.59 2.40 1.86 (a) (a)
====== ====== ======
</TABLE>
- --------
Note: (a) For the years ended December 31, 1992 and 1991, earnings were
inadequate to cover fixed charges by $550 million and $572 million,
respectively.
<PAGE>
EXHIBIT 21
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
TENNECO INC. (Delaware)
Autopartes Walker, S.A. de C.V. (Mexico).................................................................. 0.02%
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc. owns 0.02%; Tenneco
Corporation owns 0.02%; Tenneco International Inc. owns 0.02%; and Monroe
Auto Equipment Company owns 0.02%.)
DeLine Box & Display, Inc. (Delaware)..................................................................... 100
Tenneco Brazil Ltda. (Brazil)............................................................................. 100
Monroe do Brazil Industria e Comercio Ltda. (Brazil).................................................. 100
Monroe Auto Pecas S.A. (Brazil)................................................................... 82.71
(Monroe do Brazil Industria e Comercio Ltda. owns 82.71%; Monroe Auto
Equipment Company owns 2.82%; and Monteiro Aranha S/A, an unaffiliated company
owns 14.47%.)
Kern County Land Company (Delaware)....................................................................... 100
Tenneco Equipment Corporation (Delaware).............................................................. 100
Marlin Drilling Co., Inc. (Delaware).............................................................. 100
Bluefin Supply Company (Delaware)............................................................. 100
Marlin do Brasil Perfuracoes Maritimas Ltda. (Brazil) (in dissolution)................... 0.16
(Bluefin Supply Company owns 0.16%; and Marlin Drilling Co., Inc. owns
99.84%.)
Marlin do Brasil Perfuracoes Maritimas Ltda. (Brazil) (in dissolution)........................ 99.84
(Marlin Drilling Co., Inc. owns 99.84% and Bluefin Supply Company owns
0.16%.)
Tenneco Equipment Holding I Company (Delaware).................................................... 100
Tenneco Equipment Holding II Company (Delaware)................................................... 100
Tenneco Equipment Holding III Company (Delaware).................................................. 100
Tenneco Equipment Holding V Company (North Dakota)............................................ 100
Tenneco Equipment Holding IV Company (Wisconsin).................................................. 100
Tenneco Equipment Holding IV Company (Illinois)................................................... 100
Tenneco International Holding Corp. (Delaware).................................................... 20.34
(Tenneco Equipment Corporation owns 20.34% of Common Stock and 50% of $8.00 Junior Preferred
Stock; Tenneco International Inc. owns 71.84% of Common Stock and 50% of $8.00 Preferred
Stock; Tenneco Corporation owns 7.82% of Common Stock; MW Investors L.L.C., an unaffiliated
company, owns 100% of Variable Rate Voting Participating Preferred Stock.)
Monroe Australia Pty. Limited (Australia)..................................................... 100
Monroe Springs, (Australia) Pty. Ltd. (Australia)......................................... 100
Monroe Superannuation Pty. Ltd. (Australia)............................................... 100
Walker Australia Pty. Limited (Australia)................................................. 100
S.A. Monroe Europe N.V. (Belgium)............................................................. 100
Borusan Amortisor Imalat Ve Ticaret A.S. (Turkey)......................................... 16.67
(S. A. Monroe Europe N.V. owns 16.67%; Borusan Holding AS, an unaffiliated
company, owns 83.03%; and various unaffiliated individual stockholders own 0.3%.)
Monroe Europe Coordination Center N.V. (Belgium).......................................... 99.9
(S. A. Monroe Europe N.V. owns 99.9%; and Monroe Auto Equipment France, S.A.
owns 0.1%.)
Monroe Europe (UK) Limited (United Kingdom)............................................... 18
(S.A. Monroe Europe N.V. owns 18%; and Tenneco United Kingdom Holdings
Limited owns 82%)
Monroe Packaging N.V. (Belgium)........................................................... 99.9
(S. A. Monroe Europe N.V. owns 99.9%; and Monroe Auto Equipment France, S.A.
owns 0.1%.)
Tenneco Canada Inc. (Ontario)................................................................. 51.28
(Tenneco International Holding Corp. owns 100% of the issued and outstanding
Common Stock, 51.28% of total equity; and Tenneco United Kingdon Holdings
Limited owns 100% of the Class A Stock, 48.72% of total equity.)
</TABLE>
1
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Kern County Land Company (Delaware) (continued)
Subsidiaries of Tenneco International Holding Corporation (Delaware)(continued)
Subsidiaries of Tenneco Canada Inc. (Ontario) (continued)
982174 Ontario Limited (Ontario).......................................................... 100%
Tenneco Canada Wholesale Finance Company (Alberta)........................................ 100
Tenneco Credit Canada Corporation (Alberta)............................................... 100
Tenneco Espana Holdings, Inc. (Delaware)...................................................... 100
Tenneco Espana S.A. (Spain)............................................................... 100
Gillet Iberica, S.A. (Spain).......................................................... 100
Manufacturas Fonos, S.L. (Spain)...................................................... 100
Monroe Springs (New Zealand) Pty. Ltd. (New Zealand).................................. 100
Omni-Pac Embalajes S.A. (Spain)....................................................... 100
Thibault Investments Limited (Mauritius).............................................. 100
Hydraulics Limited (India).......................................................... 51
(Thibault Investments Limited owns 51% and Bangalore Union Services Limited,
an unaffiliated Company owns 49%)
Tenneco Holdings Danmark A/S (Denmark)........................................................ 100
Gillet Exhaust Technologie (Proprietary) Limited (South Africa)........................... 100
Gillet Lazne Belohrad, s.r.o. (Republic of Czechoslovakia)................................ 100
Heinrich Gillet Portuguesa - Sistemas de Escape, Lda. (Portugal).......................... 100
Walker Danmark A/S (Denmark).............................................................. 100
Walker Inapal Escapes, S.A. (Portugal).................................................... 90
(Tenneco Holdings Danmark A/S owns 90%; Inapal, Industria Nacional de
Acessorios Para Automoveis, SA, an unaffiliated company, owns 9.99%; and Walker
Danmark A/S owns 0.01%.)
Walker France S.A. (France)................................................................... 100
Constructions Metallurgiques de Wissembourg - Wimetal (France)............................ 100
Societe Europeenne des Ensembles-Montes (France).................................... 100
Gillet Tubes Technologies G.T.T. (France)................................................. 100
Walker Sverige A.B. (Sweden).................................................................. 100
Tenneco West, Inc. (Delaware)......................................................................... 100
Kern County Land Company, Inc. (California)....................................................... 100
Tenneco Asia Inc. (Delaware).............................................................................. 100
Tenneco Business Services Inc. (Delaware)................................................................. 100
Tenneco Technology Services Inc. (Delaware)........................................................... 100
Tenneco Credit Corporation (Delaware)..................................................................... 100
Counce Limited Partnership (Texas Limited Partnership)................................................ 95
(Tenneco Credit Corporation owns 95%, as Limited Partner; and Tenneco
InterAmerica Inc. owns 5%, as General Partner.)
Counce Finance Corporation (Delaware)............................................................. 100
TenFac Corporation (Delaware)......................................................................... 100
Tenneco Hexacomb Acquisition Inv. (Delaware).............................................................. 100
Tenneco Management Company (Delaware)..................................................................... 100
Tenneco MLP Inc. (Delaware)............................................................................... 100
Tenneco Romania Holdings Inc. (Delaware).................................................................. 100
Tenneco Transition Company (Delaware)..................................................................... 100
Tennessee Gas Pipeline Company (Delaware)................................................................. 100
Altamont Service Corporation (Delaware)............................................................... 100
Altamont Gas Transmission Canada Limited (Canada)................................................. 100
(Altamont Service Corporation is the registered holder of all of the issued
and outstanding shares of Altamont Gas Transmission Canada Limited, as Trustee for
Altamont Gas Transmission Company, a Joint Venture.)
Autopartes Walker, S.A. de C.V. (Mexico).............................................................. 99.92
</TABLE>
2
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc. owns 0.02%;
Tenneco Corporation owns 0.02%; Tenneco International Inc. owns 0.02%; and
Monroe Auto Equipment Company owns 0.02%.)
Border Gas, Inc. (Delaware) (a close corp.)........................................................... 37.5%
(Tennessee Gas Pipeline Company owns 100% of the Class A Common Stock,
37-1/2% of the total equity, and 37-1/2% total voting stock; Texas Eastern
Transmission Corporation, an unaffiliated company, owns 100% of the Class B
Common Stock, 27-1/2% of the total equity, and 27-1/2% total voting stock; El
Paso Natural Gas Company, an unaffiliated company, owns 100% of the Class C
Common Stock, 15% of the total equity, and 15% total voting stock;
Transcontinental Gas Pipe Line Corporation, an unaffiliated company, owns 100%
of the Class D Common Stock, 10% of the total equity, and 10% total voting
stock; Southern Natural Gas Company, an unaffiliated company, owns 100% of the
Class E Common Stock, 6-2/3% of the total equity, and 6-2/3% total voting stock;
and Florida Gas Transmission Company, an unaffiliated company, owns 100% of the
Class F Common Stock, 3-1/3% of the total equity, and 3-1/3% total voting stock.)
East Tennessee Natural Gas Company (Tennessee)........................................................ 100
Tenneco East Natural Gas L.P. (Delaware Limited Partnership)...................................... 1
(East Tennessee Natural Gas Company, as General Partner, owns 1%; and
Tenneco East Corporation, as Limited Partner, owns 99%.)
Eastern Insurance Company Limited (Bermuda)........................................................... 100
Energy Tracs, Inc. (Delaware)......................................................................... 100
Kern River Corporation (Delaware)..................................................................... 100
Land Ventures, Inc. (Delaware)........................................................................ 100
Midwestern Gas Marketing Company (Delaware)........................................................... 100
Midwestern Gas Transmission Company (Delaware)........................................................ 100
Tenneco Midwest Natural Gas L.P. (Delaware Limited Partnership)................................... 1
(Midwestern Gas Transmission Company, as General Partner, owns 1%; and
Tenneco Midwest Corporation, as Limited Partner, owns 99%.)
Monroe Auto Equipment Company (Delaware).............................................................. 100
Autopartes Walker, S.A. de C.V. (Mexico).......................................................... 0.02
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc. owns 0.02%;
Tenneco Corporation owns 0.02%; Tenneco International Inc. owns 0.02%; and
Monroe Auto Equipment Company owns 0.02%.)
Beijing Monroe Automobile Shock Absorber Company Ltd (China)...................................... 51
(Monroe Auto Equipment Company owns 51%; and Beijing Automotive Industry
Corporation, an unaffiliated company, owns 49%.)
Consorcio Terranova S.A. de C.V. (Mexico)......................................................... 99.99
(Monroe Auto Equipment Company owns 99.99%; and Josan Latinamericana S.A. de
C.V. an unaffiliated company, owns 0.01%.)
McPherson Strut Company Inc. (Delaware)........................................................... 100
Monroe Auto Equipement France, S.A. (France)...................................................... 100
Monroe Europe Coordination Center N.V. (Belgium).............................................. 0.1
(S.A. Monroe Europe N.V. owns 99.9%; and Monroe Auto Equipement France,
S.A. owns 0.1%.)
Tenneco Automotive Italia S.r.l. (Italy)...................................................... 15
(Monroe Auto Equipment Company owns 85%; and Monroe Auto Equipement
France, S.A. owns 15%.)
Monroe Packaging N.V. (Belgium)............................................................... 0.1
(S.A. Monroe Europe N.V. owns 99.9%; and Monroe Auto Equipement France,
S.A. owns 0.1%.)
Monroe Auto Pecas S.A. (Brazil)................................................................... 2.82
(Monroe Auto Equipment Company owns 2.82%; Monroe do Brasil Industria e
</TABLE>
3
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Monroe Auto Equipment Company (Delaware) (continued)
Comercio Ltda. owns 82.71%; and Monteiro Aranha S/A, an unaffiliated
company, owns 14.47%.)
Tenneco Automotive Italia S.r.l. (Italy).......................................................... 85%
(Monroe Auto Equipment Company owns 85%; and Monroe Auto Equipement France,
S.A. owns 15%.)
Monroe-Mexico S.A. de C.V. (Mexico)............................................................... 99.99
(Monroe Auto Equipment Company owns 99.99% and Tennessee Gas Pipeline
Company owns 0.01%.)
Precision Modular Assembly Corp. (Delaware)....................................................... 100
Rancho Industries Europe B.V. (Netherlands)....................................................... 100
Tenneco Automotive Foreign Sales Corporation Limited (Jamaica).................................... 99
(Monroe Auto Equipment Company owns 99%; and Tenneco Automotive, a Division
of Tennessee Gas Pipeline Company, owns 1%.)
Tenneco Automotive International Sales Corporation (Delaware) (In Dissolution).................... 100
Tenneco Automotive Japan Ltd. (Japan)............................................................. 100
Monroe-Mexico S.A. de C.V. (Mexico)................................................................... 0.01
(Tennessee Gas Pipeline Company owns 0.01%; and Monroe Auto Equipment
Company owns 99.99%.)
Mont Belvieu Land Company (Delaware).................................................................. 100
New Tenn Company (Delaware)........................................................................... 100
New Tennessee Gas Pipeline Company (Delaware)......................................................... 100
S. K. Petroleum Company (Delaware).................................................................... 100
Sandbar Petroleum Company (Delaware).................................................................. 100
Tennchase, Inc. (Texas)............................................................................... 100
Tenneco Alaska, Inc. (Alaska)......................................................................... 100
Tenneco-Altamont Corporation (Delaware)............................................................... 100
Altamont Gas Transmission Company (Delaware Joint Venture)........................................ 53.34
(Tenneco-Altamont Corporation owns 53-1/3%; Amoco Altamont Company, an
unaffiliated company, owns 33-1/3%; and Entech Altamont, Inc., an unaffiliated
company, owns 13-1/3%.)
Tenneco Argentina Corporation (Delaware).............................................................. 100
Tenneco Automotive Foreign Sales Corporation Limited (Jamaica)........................................ 1
(Tenneco Automotive, a Division of Tennessee Gas Pipeline Company, owns 1%;
and Monroe Auto Equipment Company owns 99%.)
Tenneco Baja California Corporation (Delaware)........................................................ 100
Tenneco Communications Corporation (Delaware)......................................................... 100
Tenneco Brake, Inc. (Delaware)........................................................................ 100
Tenneco Corporation (Delaware)........................................................................ 94.3
(Tennessee Gas Pipeline Company owns 100% of the Common Stock, 94.3% of
total equity; and Tenneco International Inc. owns 100% of the Second Preferred
Stock, 5.7% of total equity.)
Autopartes Walker, S.A. DE C.V. (Mexico).......................................................... 0.02
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc. owns 0.02%;
Tenneco Corporation owns 0.02%; Tenneco International Inc. owns 0.02%; and
Monroe Auto Equipment Company owns 0.02%.)
Entrade Engine Company (Kentucky)................................................................. 100
H. T. Gathering Company (Texas)................................................................... 50
(Tenneco Corporation owns 50% of the issued and outstanding Class A Voting
Stock and 20% of the Class B Nonvoting Stock, 29% of total equity; and Houston
Pipe Line Company, an unaffiliated company, owns 50% of the issued and
outstanding Class A Voting Stock and 80% of the Class B Nonvoting Stock, 71% of
total equity. The voting stock is split 50% - 50%.)
</TABLE>
4
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco Corporation (Delaware) (continued)
Petro-Tex Chemical Corporation (Delaware) (In Dissolution)........................................ 100%
SWL Security Corp. (Texas)........................................................................ 100
TGP Corporation (Delaware)........................................................................ 100
Tenneco Deutschland Holdinggesellschaft mbH (Germany)............................................. 99.97
(Tenneco Corporation owns 99.97%; and Atlas Bermoegensverwaltung, an
unaffiliated company, owns 0.03%.)
GILLET Unternehmesverwaltungs GmbH (Germany).................................................. 100
Heinrich Gillet GmbH & Co. KG (Germany)................................................... 0.1
(GILLET Unternehmesverwaltungs GmbH owns 0.1%; and Tenneco Deutschland
Holdinggesellschaft mbH owns 99.9%.)
Heinrich Gillet GmbH & Co. KG (Germany)....................................................... 99.9
(Tenneco Deutschland Holdinggesellschaft mbH owns 99.9%; and GILLET
Unternehmesverwaltungs GmbH owns 0.1%.)
Gillet-Abgassysteme Zwickau GmbH (Germany)................................................ 100
Mastra-Gillet Industria e Comercio Ltda. (Brazil)......................................... 50
(Heinrich Gillet GmbH & Co. KG owns 50%; and Mastra Industria e Comercio
Ltda., an unaffiliated company, owns 50%.)
Monroe Auto Equipment GmbH (Germany).......................................................... 100
Omni-Pac Ekco GmbH Verpackungsmittel (Germany)................................................ 100
Omni-Pac Poland Sp. z o. o. (Poland)...................................................... 100
PCA Embalajes Espana, S.L. (Spain)........................................................ 1
(Omni-Pac Ekco GmbH Verpackungsmittel owns 1%; and PCA Verpackungsmittel
GmbH owns 99%.)
Omni-Pac GmbH (Germany)....................................................................... 99
(Tenneco Deutschland Holdinggesellschaft mbH owns 99%; and Tenneco
International Inc. owns 1%.)
Omni-Pac ApS (Denmark).................................................................... 100
Omni-Pac A.B. (Sweden).................................................................... 100
Omni-Pac S.A.R.L. (France)................................................................ 3
(Omni-Pac GmbH owns 3%; and Tenneco International Inc. owns 97%.)
Walker Deutschland GmbH (Germany)............................................................. 99
(Tenneco Deutschland Holdinggesellschaft mbH owns 99%; and Tenneco
Corporation owns 1%.)
Walker Gillet (Europe) GmbH (Germany)......................................................... 100
Tenneco Energy Resources Corporation (Delaware)................................................... 80
(Tenneco Corporation owns 100% of the Common Stock, 80% of total equity; and
Ruhrgas Aktiengesellschaft, an unaffiliated company, owns 100% of the issued
and outstanding Series A Common Stock, 20% of total equity.)
Channel Gas Marketing Company (Delaware)...................................................... 100
Oasis Pipe Line Company (Delaware)........................................................ 30
(Channel Gas Marketing Company owns 100% of the issued and outstanding Series B
Preference Stock and 30% of the Common Stock, 30% of total equity; Dow Chemical
Company, an unaffiliated company, owns 100% of the issued and outstanding
Series A Preference Stock and 70% of the Common Stock, 70% of total equity.)
Channel Industries Gas Company (Delaware)..................................................... 100
Tenneco Energy Marketing Company (Delaware)................................................... 100
Tenneco Offshore Gathering Company (Delaware)................................................. 100
</TABLE>
5
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco Corporation (Delaware) (continued)
Subsidiaries of Tenneco Energy Resources Corportation (Delaware) (continued)
Tenneco Gas Marketing Company (Kentucky)...................................................... 100%
Creole Gas Pipeline Corporation (Louisiana)............................................... 100
Entrade Pipeline Company (Kentucky)....................................................... 100
Tenneco Gas Processing Company (Delaware)..................................................... 100
Tenneco Gas Trading Company (Delaware)........................................................ 100
Tennessee Gas Marketing Company (Delaware).................................................... 100
Tenneco International Holding Corp. (Delaware).................................................... 7.82
(Tenneco Corporation owns 7.82% of Common Stock; Tenneco Equipment
Corporation owns 20.34% of Common Stock and 50% of $8.00 Junior Preferred
Stock; Tenneco International Inc. owns 71.84% of Common Stock and 50% of $8.00
Junior Preferred Stock; MW Investors L.L.C., an unaffiliated company, owns 100%
of Variable Rate Voting Participating Preferred Stock. The subsidiaries of
Tenneco International Holding Corp. are listed beginning on page 1 hereof.)
Tenneco Independent Power I Company (Delaware).................................................... 100
Tenneco Independent Power II Company (Delaware)................................................... 100
Tenneco Insurance Ventures Inc. (Delaware)........................................................ 100
Tenneco Inc. (Nevada)............................................................................. 100
Tenneco InterAmerica Inc. (Delaware).............................................................. 100
Counce Limited Partnership (Texas Limited Partnership)........................................ 5
(Tenneco InterAmerica Inc. owns 5%, as General Partner; and Tenneco Credit
Corporation owns 95%, as Limited Partner.)
Counce Finance Corporation (Delaware)..................................................... 100
Newport News Shipbuilding and Dry Dock Company (Virginia)..................................... 100
Asheville Industries Inc. (North Carolina)................................................ 100
Greeneville Industries Inc. (Virginia).................................................... 100
Newport News Global Corporation (U.S. Virgin Islands)..................................... 100
Newport News Industrial Corporation (Virginia)............................................ 100
Newport News Industrial Corporation of Ohio (Ohio).................................... 100
Newport News Reactor Services, Inc. (Virginia)............................................ 100
Tenneco Tanker Holding Corporation (Delaware)............................................. 100
The James River Oyster Corporation (Virginia)............................................. 100
PCA Leasing Company (Delaware)................................................................ 100
Tenneco Packaging Inc. (Delaware)............................................................. 100
A&E Plastics, Inc. (Delaware)............................................................. 100
Alupak A.G. (Switzerland)................................................................. 100
American Cellulose Corporation (Delaware)................................................. 50
(Tenneco Packaging Inc. owns 50%; and Larry E. Homan, an unaffiliated
individual, owns 50%.)
The Corinth and Counce Railroad Company (Mississippi)..................................... 100
Marinette, Tomahawk & Western Railroad Company (Wisconsin)............................ 100
Valdosta Southern Railroad Company (Florida).......................................... 100
Dahlonega Packaging Corporation (Delaware)................................................ 100
Dixie Container Corporation (Virginia).................................................... 100
Dixie Convoy Corporation (North Carolina)................................................. 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
</TABLE>
6
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco Corporation (Delaware) (continued)
Subsidiaries of Tenneco Packaging Inc. (Delaware) (continued)
Hexacomb Corporation (Illinois)........................................................... 100%
Hexacomb International Sales Corporation (U.S. Virgin Islands)........................ 100
Packaging Corporation of America (Nevada)................................................. 100
PCA Box Company (Delaware)................................................................ 100
PCA-Budafok (Kartongyar) Kft. (Hungary)................................................... 100
PCA Hydro, Inc. (Delaware)................................................................ 100
PCA Romania Srl (Romania)................................................................. 50
(Tenneco Packaging Inc. owns 50%; and Kraftcorr Inc., an unaffiliated
company, owns 50%.)
PCA Tomahawk Corporation (Delaware)....................................................... 100
PCA Valdosta Corporation (Delaware)....................................................... 100
PCA Verpackungsmittel GmbH (Germany)...................................................... 100
PCA Embalajes Espana S.L. (Spain)..................................................... 99
(PCA Verpackungsmittel GmbH owns 99%; and Omni-Pac Ekco GmbH
Verpackungsmittel owns 1%.)
PCA West Inc. (Delaware).................................................................. 100
Coast-Packaging Company (California General Partnership).............................. 50
(PCA West Inc. owns 50%, as General Partner; and J. G. Haddy Sales Company,
an unaffiliated company, owns 50%, as General Partner.)
Pressware International, Inc. (Delaware).................................................. 100
Revere Foil Containers, Inc. (Delaware)................................................... 100
Tenneco Packaging-Romania S.R.L........................................................... 100
Tenneco Plastics Company (Delaware)....................................................... 100
798795 Ontario Limited (Ontario).......................................................... 100
PCA Canada Inc. (Ontario)............................................................. 100
Tenneco Minerals Company - California (Delaware).................................................. 100
Tenneco Minerals Company - Nevada (Delaware)...................................................... 100
Tenneco OCS Company, Inc. (Delaware).............................................................. 100
Tenneco Oil Company (Delaware).................................................................... 100
Tenneco Polymers, Inc. (Delaware)................................................................. 100
Tenneco Eastern Realty, Inc. (New Jersey)..................................................... 100
Tenneco Power Generation Company (Delaware)....................................................... 100
Orange Acquisition, Inc. (Delaware)........................................................... 100
Tenneco Ethanol Company (Delaware)............................................................ 100
Tenn/Ark Development Joint Venture........................................................ 70
(Tenneco Ethanol Company owns 70%, and Arkenol Holdings, L.L.C., an
unaffiliated company, owns 30%.)
Tenneco Ethanol Services Company (Delaware)................................................... 100
West Campus Cogeneration Company (Delaware)................................................... 100
Tennessee Overthrust Gas Company (Delaware)....................................................... 100
Walker Deutschland GmbH (Germany)................................................................. 1
(Tenneco Corporation owns 1%; and Tenneco Deutschland Holdinggesellschaft
mbH owns 99%.)
Tenneco Deepwater Gathering Company (Delaware)........................................................ 100
Tenneco Delta XII Gas Co., Inc. (Delaware)............................................................ 100
Tenneco East Corporation (Delaware)................................................................... 100
Tenneco East Natural Gas L.P. (Delaware Limited Partnership)...................................... 99
(Tenneco East Corporation, as Limited Partner, owns 99%; and East Tennessee
Natural Gas Company, as General Partner, owns 1%.)
</TABLE>
7
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Tenneco Energy Europe Inc. (Delaware)................................................................. 100%
Tenneco Energy Hungary Inc. (Delaware)............................................................ 99
Tenneco Energy Ltd. (Canada).......................................................................... 100
Tenneco Energy Services Company (Delaware)............................................................ 100
GreyStar Corporation (Texas)...................................................................... 50
(Tenneco Energy Services Company owns 50%, and unaffiliated parties own 50%.
Tenneco Energy Services Company owns 1,135,294 shares of Series B Preferred
Stock, $0.01 par value per share.
Tenneco Energy AIRCO Inc. (Delaware).............................................................. 100
Tenneco Energy OGS Inc. (Delaware)................................................................ 100
Tenneco Energy TEPSCO Inc. (Delaware)............................................................. 100
Tenneco Energy Inc. (Delaware)........................................................................ 100
Tenneco EIS Company (Delaware).................................................................... 100
Tenneco EIS Canada Ltd. (Alberta)............................................................. 100
Tenneco Gas Transportation Company (Delaware)..................................................... 100
Tenneco Gas Canada, Ltd. (Ontario).................................................................... 100
Tenneco Gas International Inc. (Delaware)............................................................. 100
Tenneco Energy China Inc. (Delaware).............................................................. 100
Tenneco Gas Brazil Corporation (Delaware)......................................................... 100
Tenneco Gas International Servicos do Brasil Ltda. (Brazil)................................... 100
Tenneco Gas Chile Corporation (Delaware).......................................................... 100
Tenneco Gas International (East Asia/Pacific) Inc. (Delaware)..................................... 100
Tenneco Gas Services (Chile) Corporation (Delaware)............................................... 100
Tenneco Gas Transportes S.A. (Chile).......................................................... 100
Tenneco Gas Latin America Inc. (Delaware)......................................................... 100
Tenneco Gas Louisiana Inc. (Delaware)................................................................. 100
Martin Exploration Company (Delaware)............................................................. 100
Tenneco Gas Production Corporation (Delaware)......................................................... 100
Tenneco Gas Properties Inc. (Delaware)................................................................ 100
Tenneco Gas Services, Inc. (Delaware)................................................................. 100
Tenneco Gas Supply Corporation (Delaware)............................................................. 100
Tenneco Gas Australia Inc. (Delaware)................................................................. 100
Tenneco Holdings Pty. Ltd. (Australia)............................................................ 100
Tenneco Energy Australia Pty. Ltd. (Australia)................................................ 100
Tenneco Energy Queensland Pty. Limited (Australia)........................................ 100
Tenneco Gas South Australia Pty. Limited (Australia)...................................... 100
Tenneco Energy Operations and Maintenance Pty. Ltd. (Australia)............................... 100
Tenneco Sulawesi Gas Pty. Ltd. (Australia).................................................... 100
Tenneco International Inc. (Delaware)................................................................. 100
Autopartes Walker, S.A. DE C.V. (Mexico).......................................................... 0.02
(Tennessee Gas Pipeline Company owns 99.92%; Tenneco Inc. owns 0.02%;
Tenneco Corporation owns 0.02%; Tenneco International Inc. owns 0.02%; and
Monroe Auto Equipment Company owns 0.02%.)
Omni-Pac GmbH (Germany)........................................................................... 1
(Tenneco International Inc. owns 1%; and Tenneco Deutschland
Holdinggesellschaft mbH owns 99%. The subsidiaries of Omni-Pac GmbH are listed
on page 9 hereof.)
Omni-Pac S.A.R.L. (France)........................................................................ 97
(Tenneco International Inc. owns 97%; and Omni-Pac GmbH owns 3%.)
Tenneco Automotive Trading Company (Delaware)..................................................... 100
Tenneco Corporation (Delaware).................................................................... 5.7
</TABLE>
8
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco International Inc. (Delaware) (continued)
(Tenneco International Inc. owns 100% of the Second Preferred Stock, 5.7% of
total equity; and Tennessee Gas Pipeline Company owns 100% of the Common
Stock, 94.3% of total equity. The Subsidiaries of Tenneco Corporation are
listed beginning on page 4 hereof.)
Tenneco International Holding Corp. (Delaware).................................................... 71.84%
(Tenneco International Inc. owns 71.84% of Common Stock and 50% of $8.00
Junior Preferred Stock; Tenneco Corporation owns 7.82% of Common Stock; Tenneco
Equipment Corporation owns 20.34% of Common Stock and 50% of $8.00 Junior
Preferred Stock; MW Investors L.L.C., an unaffiliated company, owns 100% of
Variable Rate Voting Participating Preferred Stock. The subsidiaries of
Tenneco International Holding Corp. are listed beginning on page 1 hereof.)
Tenneco Nederland B.V. (Netherlands).............................................................. 100
Tenneco Offshore Netherlands Company (Delaware)................................................... 100
Tenneco United Kingdom Holdings Limited (Delaware)................................................ 100
Monroe Europe (UK) Limited (United Kingdom)................................................... 82
(Tenneco United Holdings Limited owns 82%; and S.A. Monroe Europe N.V. owns 18%.)
Omni-Pac U.K. Limited (United Kingdom)........................................................ 100
Packaging Corporation of America (UK) Limited (Scotland)...................................... 100
Alpha Products (Bristol) Limited (United Kingdom)......................................... 100
Calendered Plastics Limited (United Kingdom).............................................. 100
Delyn Packaging Limited (United Kingdom).................................................. 100
Penlea Plastics Limited (United Kingdom).................................................. 100
Polbeth Packaging Limited (Scotland)...................................................... 100
Brucefield Plastics Limited (Scotland)................................................ 100
Polbeth Packaging (Corby) Limited (Scotland).......................................... 100
Tenneco Canada Inc. (Ontario)................................................................. 48.72
(Tenneco United Kingdom Holdings Limited owns 100% of the Class A Stock,
42.78% of total equity; and Tenneco International Holding Corporation owns 100%
of the issued and outstanding common stock, 51.28% of total equity. The
subsidiaries of Tenneco Canada Inc. are listed beginning on page 1 hereof.)
Tenneco Europe Limited (Delaware)............................................................. 100
Tenneco Asia Limited (United Kingdom)..................................................... 100
Tenneco International Finance Limited (United Kingdom)........................................ 100
Tenneco International Finance B.V. (Netherlands).......................................... 100
Tenneco Management (Europe) Limited (United Kingdom).......................................... 100
Tenneco Packaging (UK) Limited (United Kingdom)............................................... 100
Tenneco West Limited (United Kingdom)......................................................... 100
Thompson and Stammers Dunmow (Number 6) Limited (United Kingdom).............................. 100
Thompson and Stammers Dunmow (Number 7) Limited (United Kingdom).............................. 100
Thompson and Stammers Dunmow (Number 8) Limited (United Kingdom).............................. 100
Walker Limited (United Kingdom)............................................................... 100
Gillet Pressings Cardiff Limited (United Kingdom)......................................... 100
Gillet Exhaust Manufacturing Limited (United Kingdom)..................................... 100
Gillet Torsmaskiner UK Limited (United Kingdom)........................................... 50
(Walker 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 Heinrich Gillet GmbH & Co.
KG & AB Torsmaskiner, an unaffiliated company, owns 0.01%.)
</TABLE>
9
<PAGE>
TENNECO INC. AND SUBSIDIARIES AND AFFILIATES
As of December 31, 1995
<TABLE>
<S> <C>
Subsidiaries of Tenneco Inc. (continued)
Subsidiaries of Tennessee Gas Pipeline Company (continued)
Subsidiaries of Tenneco United Kingdom Holdings Limited (Delaware) (continued)
Subsidiaries of Walker Limited (United Kingdom) (continued)
Walker UK Ltd. (United Kingdom)........................................................... 100%
J. W. Hartley (Motor Trade) Limited (United Kingdom).................................. 100
Tenneco - Walker (UK) Limited (United Kingdom)........................................ 100
Walker Europe, Inc. (Delaware).................................................................... 100
Walker Norge A/S (Norway)......................................................................... 100
Tenneco Liquids Corporation (Delaware)................................................................ 100
Tenneco Marketing Services Company (Delaware)......................................................... 100
Tenneco Mobile Bay Gathering Company (Delaware)....................................................... 100
Tenneco MTBE, Inc. (Delaware)......................................................................... 100
Tenneco Midwest Corporation (Delaware)................................................................ 100
Tenneco Midwest Natural Gas L.P. (Delaware Limited Partnership)................................... 99
(Tenneco Midwest Corporation, as Limited Partner, owns 99%; and Midwestern
Gas Transmission Company, as General Partner, owns 1%.)
Tenneco Pittsfield Corporation (Delaware)............................................................. 100
Tenneco Portland Corporation (Delaware)............................................................... 100
Tenneco Realty, Inc. (Delaware)....................................................................... 100
Tenneco SNG Inc. (Delaware)........................................................................... 100
Tenneco Trinidad LNG, Inc. (Delaware)................................................................. 100
Tenneco Ventures Corporation (Delaware)............................................................... 100
Tenneco Western Market Center Corporation (Delaware).................................................. 100
The Western Market Center Joint Venture (Joint Venture)........................................... 50
(Tenneco Western Market Center Corporation owns 50%; Entech Gas Ventures, Inc., an
unaffiliated company, owns 15%; Questar WMC Corporation, an unaffiliated company,
owns 25% and Fuels WMC Corporation, an unaffiliated company, owns 10%.)
Tenneco Western Market Center Service Corporation (Delaware).......................................... 100
TennEcon Services, Inc. (Delaware).................................................................... 100
Tennessee Gas Transmission Company (Delaware)......................................................... 100
Tennessee/New England Pipeline Company (Delaware)..................................................... 100
Tennessee Storage Company (Delaware).................................................................. 100
Tennessee Trailblazer Gas Company (Delaware).......................................................... 100
Ten Ten Parking Garage Inc. (Delaware)................................................................ 100
The Fontanelle Corporation (Louisiana)................................................................ 100
The F and E Oyster Partnership (Louisiana Partnership)............................................ 64
(The Fontanelle Corporation owns 64%, as General Partner; and Expedite
Oyster, Inc., an unaffiliated company, owns 36% as General Partner.)
The LaChute Corporation (Louisiana)................................................................... 100
Walker Electronic Mufflers, Inc. (Delaware)........................................................... 100
Walker Noise Cancellation Technologies (New York Partnership)..................................... 50
(Walker Electronic Mufflers, Inc. owns 50% as General Partner; and NCT
Muffler, Inc., an unaffiliated company, owns 50% as General Partner.)
Walker Manufacturing Company (Delaware)............................................................... 100
Ced's Inc. (Illinois)............................................................................. 100
</TABLE>
10
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated February 8, 1996, included in the
Annual Report of Tenneco Inc. on Form 10-K for the year ended December 31, 1995,
into the following Registration Statements previously filed with the Securities
and Exchange Commission:
<TABLE>
<CAPTION>
Registration No. Form Securities Registered
- ---------------- ---- ---------------------
<C> <C> <S>
2-78521 S-8 Common Stock, par value $5 per share, of Tenneco
Inc. (formerly Tenneco Holdings, Inc.) ("Common
Stock") issuable under the 1981 Tenneco Inc. Key
Employee Stock Option Plan.
33-46579 S-8 5,000,000 shares of Common Stock of Tenneco Inc.
offered in connection with the Tenneco Inc. 1992
Employee Stock Purchase Plan.
33-61135 S-8 8,400,000 shares of Common Stock of Tenneco Inc.
offered in connection with the 1994 Tenneco Inc.
Stock Ownership Plan.
33-52595 S-3 1,000,000 shares of Common Stock of Tenneco Inc.
offered in connection with the Dividend
Reinvestment and Stock Purchase Plan, as amended by
Post-Effective Amendment No. 1 dated February 10,
1995 in which the Plan was made available to
investors as a direct purchase plan.
33-61133 S-8 Packaging Corporation of America 401(k) Savings
Plan, contributions thereunder and Common Stock of
Tenneco Inc. offered thereunder.
33-61129 S-8 Newport News Shipbuilding Savings (401(k)) Plan for
Union Eligible Employees, contributions thereunder
and Common Stock of Tenneco Inc. offered
thereunder.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Registration No. Form Securities Registered
- ---------------- ---- ---------------------
<C> <C> <S>
33-61127 S-8 Tenneco Automotive Hourly Employees Savings Plan,
contributions thereunder and Common Stock of
Tenneco Inc. offered thereunder.
33-64797 S-3 $900,000,000 aggregate principal amount of Debt
Securities of Tenneco Inc. offered pursuant to Rule
415 of the General Rules and Regulations under the
Securities Act of 1933, as amended (of which
$500,000,000 has been issued).
33-55622 S-3 2,800,000 shares of Common Stock of Tenneco Inc.
offered to the trustee of the Tenneco Inc. General
Employee Benefit Trust.
33-61137 S-8 Tenneco Inc. Thrift Plan, contributions thereunder
and Common Stock of Tenneco Inc. offered
thereunder.
</TABLE>
ARTHUR ANDERSEN LLP
Houston, Texas
February 14, 1996
<PAGE>
EXHIBIT 24
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
MARK ANDREWS
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
W. MICHAEL BLUMENTHAL
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
M. KATHRYN EICKHOFF
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
PETER T. FLAWN
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
HENRY U. HARRIS, JR.
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
BELTON K. JOHNSON
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
JOHN B. McCOY
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
JOSEPH J. SISCO
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
WILLIAM L. WEISS
-------------------------------
<PAGE>
TENNECO INC.
POWER OF ATTORNEY
TENNECO INC. ANNUAL REPORT ON FORM 10-K
The undersigned, in his capacity as a Director of Tenneco Inc., does hereby
appoint T. R. Tetzlaff, M. W. Meyer and K. A. Stewart, and each of them,
severally, his true and lawful attorneys, or attorney, to execute in his name,
place and stead, in his capacity as a Director of said Company, an Annual Report
on Form 10-K for the fiscal year ended December 31, 1995, and any and all
amendments and post-effective amendments to said Annual Report, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission. Each of said attorneys shall
have the power to act hereunder with or without the other of said attorneys and
shall have full power and authority to do and perform, in the name and on behalf
of the undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned has executed this instrument this
14th day of February, A.D. 1996.
CLIFTON R. WHARTON, JR.
-------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TENNECO
INC. AND CONSOLIDATED SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 354
<SECURITIES> 0
<RECEIVABLES> 921
<ALLOWANCES> 0
<INVENTORY> 1,181
<CURRENT-ASSETS> 3,582
<PP&E> 11,962
<DEPRECIATION> 5,643
<TOTAL-ASSETS> 13,451
<CURRENT-LIABILITIES> 3,836
<BONDS> 3,751
130
0
<COMMON> 957
<OTHER-SE> 2,191
<TOTAL-LIABILITY-AND-EQUITY> 13,451
<SALES> 8,899
<TOTAL-REVENUES> 8,899
<CGS> 6,688
<TOTAL-COSTS> 6,688
<OTHER-EXPENSES> 1,340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 339
<INCOME-PRETAX> 1,030
<INCOME-TAX> 273
<INCOME-CONTINUING> 735
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 735
<EPS-PRIMARY> 4.16
<EPS-DILUTED> 4.16
</TABLE>
