Exhibit 10.46
TENNECO AUTOMOTIVE INC.
INCENTIVE DEFERRAL PLAN
TENNECO AUTOMOTIVE INC. INCENTIVE DEFERRAL PLAN
1. PURPOSE
Effective January 1, 2005, Tenneco Automotive Inc. (the "Company") hereby
establishes the Tenneco Automotive Inc. Incentive Deferral Plan (the "Plan").
The purpose of the Plan is to provide directors and a select group of management
or highly compensated employees of the Company and its subsidiaries and
affiliates (hereinafter collectively referred to as the "Company") an
opportunity to defer compensation received by them from the Company in
accordance with the terms and conditions set forth herein.
2. ADOPTION AND ADMINISTRATION
The Plan shall be administered by the Compensation/Nominating/Governance
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall have the 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
Directors and executive incentive level U.S. participants in the Company's Value
Added ("TAVA") Incentive Compensation Plan shall be eligible to participate in
the Plan. Further, any person who had an account balance in the Tenneco
Automotive Inc. Deferred Compensation Plan may participate in this Plan.
Persons eligible to participate in the Plan shall be referred to as
"Participant" or "Participants" as the case may be.
4. ELECTION TO DEFER
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 with
respect to a calendar year ("Deferral Election"); provided, however, that any
election by a Participant who is subject to the reporting and short swing
profits liability provisions of Section 16 of the Securities and Exchange Act of
1934, as amended, including an election relating to the form of distribution or
to defer income into an "Automotive stock index account" pursuant to Section 6
of the Plan, shall not be effective until such election and the transactions
contemplated thereby shall have been specifically approved by the Committee to
the extent such approval is required to avoid liability under Section 16 of the
Securities and Exchange Act of 1934 and the regulations thereunder. Once
received by the Committee, a Deferral Election cannot be revoked. A Deferral
Election (including Committee approval) must be made prior to June 30 of the
calendar year in which the bonus or incentive compensation will be awarded. A
Participant must make a separate Deferral 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 a Deferral Election with respect
to bonus or incentive
compensation to be awarded within that calendar year. Amounts deferred under the
Plan shall be referred to as the "Deferred Amounts."
5. OUTSIDE DIRECTORS
Directors who are not employees of the Company or its subsidiaries (hereinafter
referred to as "Outside Directors") will receive as part of their compensation
for service on the Company's Board of Directors sixty (60) percent of their
annual retainer fee in the form of credits deferred subject to the terms of this
Plan in the Automotive stock index account. Amounts credited to the Automotive
stock index account under this Section 5 will be settled either in cash or, if
the Company so elects, shares of the Company's common stock and will be offered
under the Company's principal equity incentive plan then in effect.
6. ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNT
At the time of a Participant's initial Deferral Election, the Company 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 below, shall be made to the Participant's Deferred
Compensation Account.
7. ADJUSTMENTS TO DEFERRED AMOUNTS
The Committee shall credit the balance of 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 JPMorgan Chase Bank at the
first day of each calendar month.
(b) Automotive stock index account - the amount of deferral will be
invested in Tenneco Automotive Inc. 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). Amounts credited to this account will be settled either
in cash or, if the Company so elects, shares of the Company's common
stock and will be offered under the Company's principal equity
incentive plan then in effect.
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(c) The return for the following investment funds:
(i) JPMorgan Chase Prime Rate Fund
(ii) Putnam Bond Index Fund
(iii) Putnam S&P 500 Index Fund
The Company is under no obligation to acquire or provide any of the
investments designated by a Participant, and any investments actually made
by the Company will be made solely in its name and will remain its
property.
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.
8. PAYMENT OF DEFERRED AMOUNTS
(a) Subject to the subsection (b) below, a Participant's Deferred Amount
shall be paid in a single lump sum payment to the Participant, or the
Participant's beneficiary, as soon as practicable after:
(i) the Participant's death,
(ii) the termination of the Participant's employment or service as a
director, or
(iii) the date specified in the applicable Deferral Election made by
the Participant.
(b) Notwithstanding Section 8(a), with respect to any Participant who is a
"key employee" as defined by Section 409A(a)(2)(B)(i) of the Code,
payment of such Participant's Deferred Amount shall be made no earlier
than six months from Participant's separation from service with the
Company.
9. TERMINATION OF PARTICIPATION IN 2005
If a Participant separates from service with the Company in 2005, such
Participant may elect, in a writing filed with the Committee, to terminate
participation in the Plan and revoke any Deferral Election for 2005. Any amounts
would be payable to the Participant and subject to immediate taxation.
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10. PARTICIPANT REPORTS
The Committee shall provide a statement to the Participant quarterly concerning
the status of his or her Deferred Compensation Account.
11. TRANSFERABILITY OF INTERESTS
During the period of deferral, all Deferred Amounts shall be considered as
general assets of the Company for use as it deems necessary and shall be subject
to the claims of its creditors. The rights and interests of a Participant during
the period of deferral shall be those of a general unsecured creditor except
that such Participant's rights and interests may not be reached by the creditors
of the Participant or the Participant's 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.
12. AMENDMENT, SUSPENSION AND TERMINATION
The Company, at any time, through action of the Committee, 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 its best interests. No amendment, suspension and
termination shall reduce the Deferred Amount then credited to a Participant's
Deferred Compensation Account.
13. 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 the Company. All amounts credited to
the memorandum accounts of the Participants will remain general assets of the
Company and shall be payable solely from the general assets of the Company.
14. 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 the Company. 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 the
Company except to the extent expressly provided therein.
15. DISPUTE RESOLUTION
By participating in the Plan, the Participant agrees that any dispute arising
under the Plan shall be resolved by binding arbitration in Lake Forest, Illinois
under the rules of the American Arbitration Association and that there will be
no remedy besides the disputed deferred compensation amount in issue.
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16. EFFECTIVE DATE
The effective date of this Plan is January 1, 2005 (the "Effective Date").
IN WITNESS WHEREOF, the Company has caused the Plan to be executed on
its behalf by its respective officers thereunder duly authorized, as of the
Effective Date.
TENNECO AUTOMOTIVE INC.
/s/ RICHARD P. SCHNEIDER
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By: Richard P. Schneider
Its: Senior Vice President,
Global Administration
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