Exhibit 10.1
TENNECO INC. CHANGE IN CONTROL
SEVERANCE BENEFIT PLAN FOR KEY EXECUTIVES
As Amended and Restated Effective December 12, 2007
(the "Plan")
The Plan as established by Tenneco Inc., a Delaware corporation, effective
on November 4, 1999, has been amended and restated and renamed effective
December 12, 2007 (the "Effective Date"). The purpose of the Plan is to induce
key employees to enter into, or continue their services or employment with, and
to steadfastly serve the Company if and when a Change in Control (as defined
below) is threatened, despite attendant career uncertainties, by committing the
Company to provide severance benefits in the event their employment terminates
as a result of a Change in Control.
1. Definitions
A. "Change in Control" means any of the following events (but no event
other than one of the following events):
(1) any person, alone or together with any of its affiliates or
associates, becomes the beneficial owner, directly or indirectly,
of securities of the Company representing twenty percent (20%) or
more of either the Company's then outstanding shares of common
stock or the combined voting power of the Company's then
outstanding securities having general voting rights; provided,
however, that, notwithstanding the foregoing, a Change in Control
shall not be deemed to occur pursuant to this clause (1) solely
because the requisite percentage of either the Company's then
outstanding shares of common stock or the combined voting power
of the Company's then outstanding securities having general
voting rights is acquired by one or more employee benefit plans
maintained by one or more Tenneco Companies; or
(2) members of the Incumbent Board cease to constitute a majority of
the Company Board; or
(3) the consummation of any plan of merger, consolidation, share
exchange or combination between the Company and any person,
including without limitation becoming a subsidiary of any other
person, or the consummation of any sale, exchange or other
disposition of all or substantially all of the Company's assets
(any such transaction, a "Business Combination") without all or
substantially all of the persons who are the beneficial owners of
the then outstanding shares of the common stock of the Company
("Outstanding Common Stock") or of the combined voting power of
the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding
Voting
Securities") immediately prior to such Business Combination
constituting the beneficial owners, directly or indirectly, of
fifty percent (50%) or more of, respectively, the outstanding
shares of common stock and the combined voting power of the
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns
the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the
Outstanding Common Stock and the Outstanding Voting Securities,
as the case may be; or
(4) the Company's stockholders approve a plan of complete liquidation
or dissolution of the Company.
B. "Committee" means the Compensation/Nominating/Governance Committee of
the Company Board or any successor thereto.
C. "Company" means Tenneco Inc., a Delaware corporation, and any
successors thereto as provided in Section 11.
D. "Company Board" means the Board of Directors of the Company.
E. "Competing Business" means any business or activity that (1) competes
with any Tenneco Company for which the Key Executive performed
services or the Key Executive was involved in for the purposes of
making strategic or other material business decisions and involves (2)
(a) the same or substantially similar types of products or services
(individually or collectively) manufactured, marketed or sold by any
Tenneco Company during the term of such Key Executive's employment
with the Tenneco Companies or (b) products or services so similar in
nature to that of any Tenneco Company during the term of such Key
Executive's employment with the Tenneco Companies (or that any Tenneco
Company will soon thereafter offer) that they would be reasonably
likely to displace substantial business opportunities or customers of
the Tenneco Companies.
F. "Confidential Information" means Trade Secrets as well as information
acquired by the Key Executive in the course and scope of his or her
activities during such Key Executive's employment with the Tenneco
Companies, including information acquired from third parties, that:
(1) is not generally known or disseminated outside the Tenneco
Companies (such as non-public information);
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(2) is designated or marked by any Tenneco Company as "confidential"
or reasonably should be considered confidential or proprietary;
or
(3) any Tenneco Company indicates through its policies, procedures,
or other instructions should not be disclosed to anyone outside
the Tenneco Companies.
Without limiting the foregoing definitions, some examples of
Confidential Information under the Plan include:
(1) matters of a technical nature, such as scientific, trade or
engineering secrets, "know-how", formulae, secret processes,
inventions, and research and development plans or projects
regarding existing and prospective customers and products or
services;
(2) information about costs, profits, markets, sales, customer lists,
customer needs, customer preferences and customer purchasing
histories, supplier lists, internal financial data, personnel
evaluations, non-public information about automotive devices or
products of any Tenneco Company (including future plans about
them), information and material provided by third parties in
confidence and/or with nondisclosure restrictions, computer
access passwords, and internal market studies or surveys; and
(3) any other information or matters of a similar nature.
G. "Constructive Termination" will be deemed to have occurred if, upon or
following the Change in Control, a Key Executive separates from
service with all Tenneco Companies after the Tenneco Companies, by
action or inaction, and without the Key Executive's express prior
written consent:
(1) materially diminish in any manner the Key Executive's status,
position, duties or responsibilities with the Tenneco Companies
from those in effect immediately prior to the Change in Control
(without limiting the generality of the foregoing, for purposes
of this clause (1) a material diminution will be deemed to have
occurred if the Key Executive does not maintain the same or
greater status, position, duties and responsibilities with the
ultimate parent corporation of a controlled group of corporations
of which the Company is a member upon consummation of the
transaction or transactions constituting the Change in Control);
(2) materially reduce the Key Executive's then current annual cash
compensation from the Tenneco Companies below the sum of (a) the
Key Executive's annual base salary or annual base compensation
from the Tenneco Companies in effect immediately
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prior to the Change in Control and (b) the Key Executive's
targeted annual award under the Executive Incentive Compensation
Plan for the calendar year completed immediately prior to the
Change in Control; provided, however, a material reduction for
purposes of this clause (2) shall not be deemed to have occurred
if the Key Executive's then current annual cash compensation is
reduced as part of an overall cost reduction program that affects
all senior executives of the Tenneco Company and does not
disproportionately affect the Key Executive;
(3) cause a material reduction in (a) the level of aggregate Tenneco
Companies-paid medical benefit, life insurance and disability
plan coverages; or (b) the aggregate rate of Tenneco
Companies-paid thrift/savings plan contributions and of Tenneco
Companies-paid defined benefit retirement plan benefit accrual,
from those coverages and rates in effect immediately prior to the
Change in Control; provided, however, a material reduction for
purposes of this clause (3) shall not be deemed to have occurred
if a reduction as described in subclause (a) or (b) occurs as
part of an overall cost reduction program that affects all senior
executives of the Tenneco Company and does not disproportionately
affect the Key Executive;
(4) effectively require the Key Executive to relocate because of a
transfer of the Key Executive's place of employment with the
Tenneco Companies from the place where the Key Executive was
employed immediately prior to the Change in Control (for purposes
of the foregoing, a transfer of place of employment shall be
deemed to require a Key Executive to relocate if such transfer is
greater than 50 miles from the place where the Key Executive was
employed immediately prior to the Change in Control); or
(5) materially breach any provision of the Plan.
A Constructive Termination will be deemed to have occurred for all Key
Executives if any successor to the Company in a Business Combination
described in Section 1(A)(3) above constituting a Change in Control
fails to assume, in writing, all of the Company's obligations under
the Plan promptly upon consummation of such Change in Control.
Notwithstanding anything to the contrary in this Section 1(G), a
Constructive Termination will not be deemed to have occurred unless
the Key Executive delivers to the Company a written notice of the
existence of a condition described in this Section 1(G) within 90 days
after the Key Executive has actual knowledge of the existence of such
condition, and the Key Executive does not terminate his employment due
to Constructive Termination until the Key Executive has given the
Company at least 30
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days in which to cure the condition set forth in the written notice
and if such condition is not cured by the 30th day, the Key
Executive's employment shall terminate on such date.
In addition, a determination that a Key Executive has been
Constructively Terminated for purposes of eligibility for benefits
under this Plan shall be based solely on the criteria set forth in
this Section 1(G) and the Key Executive's eligibility or application
for, or receipt of, any retirement benefits from any Tenneco Company
following separation from service shall have no bearing on such
determination.
H. "Disability" shall mean the permanent and total disability as
determined under the rules and guidelines established by a Tenneco
Company in order to qualify for long-term disability coverage under
the Tenneco Company's long-term disability plan in effect at the time.
I. "Discharge for Cause" shall be deemed to have occurred only if,
following the Change in Control, a Key Executive is discharged by any
of the Tenneco Companies from employment because:
(1) the Key Executive has engaged in serious misconduct or willfully
or materially violated, or willfully or materially failed to
comply with, the Company's Corporate Compliance Policies or
Statement of Business Principles in his or her capacity as an
employee of any of the Tenneco Companies; or
(2) the Key Executive has willfully and continually failed (unless
due to incapacity resulting from physical or mental illness) to
substantially perform the duties of his or her employment by any
of the Tenneco Companies after written demand for substantial
performance is delivered to the Key Executive by any of the
Tenneco Companies specifically identifying the manner in which
the Key Executive has not substantially performed such duties.
Notwithstanding the foregoing, a Key Executive who, immediately prior
to the Change in Control, is a member of Executive Group I or II shall
not be deemed to have been Discharged for Cause unless a written
notice has been delivered to the Key Executive stating that the
Tenneco Companies have terminated the Key Executive's employment,
which notice shall include a resolution, adopted by at least a
three-quarter's vote of the Incumbent Board (after the Key Executive
has been provided with reasonable notice and an opportunity, together
with counsel, for a hearing before the entire Incumbent Board),
finding that the Key Executive has engaged in the conduct set forth in
clause (1) or (2) of the preceding sentence.
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J. "Executive Group I," from and after the Effective Date, shall consist
of the Chief Executive Officer of the Company.
K. "Executive Group II," from and after the Effective Date, shall consist
of each individual,
(1) who is not a member of Executive Group I, and
(2) who, immediately prior to the Change in Control, is an employee
of a Tenneco Company who reports directly to the Chief Executive
Officer of the Company and is in an executive salary grade of 6
or higher.
L. "Executive Group III," from and after the Effective Date, shall
consist of each individual,
(1) who is not a member of Executive Group I or II, and
(2) who, immediately prior to the Change in Control, is an employee
of a Tenneco Company who is critical to the negotiation or
consummation of a corporate transaction and who has been
designated by the Chief Executive Officer of the Company, in
writing before the Change in Control, with the approval of the
Committee, as a member of Executive Group III. In no event shall
Executive Group III contain more than ten (10) members.
M. "Executive Incentive Compensation Plan" means the Tenneco Inc. Value
Added Incentive Compensation Plan and any successor thereto.
N. "Incumbent Board" means
(1) the members of the Company Board on the Effective Date, to the
extent that they continue to serve as members of the Company
Board; and
(2) any individual who becomes a member of the Company Board after
the Effective Date, (a) upon the death or disability or
retirement of, and as the successor to or replacement for, a
member of the Company Board or (b) if his or her election or
nomination for election as a director is approved by a vote of at
least a majority of the then Incumbent Board, except that a
director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of the Company shall not be considered a member of the
Incumbent Board for purposes of this subclause (b).
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O. "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
P. "Key Executive" means an individual who, immediately prior to the
Change in Control, is a member of Executive Group I, Executive Group
II, or Executive Group III.
Q. "Prohibited Area" means countries in North America and Europe, Brazil,
Mexico, China, Russia and India, all of which are the geographic areas
in which the Tenneco Companies conduct a preponderance of their
business and in which the Key Executive provides substantive services
to the benefit of the Tenneco Companies.
R. "Section 409A" means Section 409A of the Internal Revenue Code and
regulations promulgated thereunder (and any similar or successor
federal or state statute or regulations).
S. "Stock Plans" means the 1996 Tenneco Inc. Stock Ownership Plan, the
Tenneco Automotive Inc. Stock Ownership Plan, the Tenneco Automotive
Inc. 2002 Long-Term Incentive Plan, the Tenneco Inc. 2006 Long-Term
Incentive Plan and any other equity-based or stock-based plan, program
or arrangement of a Tenneco Company, and any successors thereto.
T. "Tenneco Company" and "Tenneco Companies" mean the Company and any
stock corporation of which a majority of the voting common or capital
stock is owned directly or indirectly by the Company.
U. "Threatened Change in Control" means (1) any publicly disclosed
proposal, offer, actual or proposed purchase of stock or other action
which, if consummated, would, in the opinion of the Incumbent Board,
constitute a Change in Control, including the Company entering into an
agreement, the consummation of which would result in a Change in
Control or (2) the adoption of a resolution by the Incumbent Board
that a Threatened Change in Control has occurred.
V. "Threatened Change in Control Period" means the period beginning on
the date a Threatened Change in Control occurs and ending on the
earlier of (1) the date the proposal, offer, actual or proposed
purchase of stock or other action is formally withdrawn or the
Incumbent Board has determined that the circumstances which
constituted the Threatened Change in Control no longer exist or (2)
the date a Change in Control occurs.
W. "Trade Secrets" mean information of special value, not generally known
to the public that any Tenneco Company has taken steps to maintain as
secret from persons other than those selected by any Tenneco Company.
For purposes of the definitions in Section 1 and the Plan, the terms
"associate," "affiliate," "person," and "beneficial owner" shall have the
respective meanings
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set forth in Sections 3(a) and 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the regulations promulgated
thereunder, and the regulations promulgated under Section 12 of the
Exchange Act. For purposes of the Plan, the terms "separation," "separation
from service," termination" and "termination of employment," and variations
thereof, as used in the Plan, are intended to mean a separation from
service or termination of employment that constitutes a "separation from
service" under Section 409A.
2. Eligibility for Benefits.
If (i) within two years after a Change in Control, a Key Executive is
separated from service as an employee with the Tenneco Companies (a)
because the Key Executive is discharged by the Tenneco Companies, provided
that such discharge is not a Discharge for Cause nor a discharge due to the
death or Disability of the Key Executive, or (b) because of Constructive
Termination, and (ii) throughout the period beginning with the Change in
Control and ending with such separation from service with the Tenneco
Companies, the Key Executive remains an employee of the Tenneco Companies,
such Key Executive shall be entitled to receive the benefits described in
Sections 3 and 5 below, payable in accordance with Section 4 below to the
extent applicable.
3. Severance Benefits.
A. If the Key Executive is a member of Executive Group I immediately
prior to the Change in Control - a cash amount equal to three times
the sum of (a) the Key Executive's annual base salary in effect
immediately prior to the Change in Control, plus (b) the Key
Executive's targeted annual award under the Executive Incentive
Compensation Plan as in effect immediately prior to the Change in
Control.
B. If the Key Executive is a member of Executive Group II immediately
prior to the Change in Control - a cash amount equal to two times the
sum of (a) the Key Executive's annual base salary in effect
immediately prior to the Change in Control, plus (b) the Key
Executive's targeted annual award under the Executive Incentive
Compensation Plan as in effect immediately prior to the Change in
Control.
C. If the Key Executive is a member of Executive Group III immediately
prior to the Change in Control -- a cash amount equal to one times the
sum of (a) the Key Executive's annual base salary in effect
immediately prior to the Change in Control, plus (b) the Key
Executive's targeted annual award under the Executive Incentive
Compensation Plan as in effect immediately prior to the Change in
Control.
D. All deferred compensation (and earnings accrued thereon) credited to
the account of a Key Executive under any deferred compensation plan,
program or arrangement of the Tenneco Companies shall be paid to such
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Key Executive pursuant to and in accordance with the terms of such
plan, program or arrangement.
E. A cash amount equal to the sum of (a) any incentive compensation which
has been allocated or awarded to such Key Executive under the
Executive Incentive Compensation Plan for a completed calendar year or
other measuring period preceding the Key Executive's separation from
service but has not yet been paid and (b) a pro rata portion to the
date of the Key Executive's separation from service with the Tenneco
Companies of the aggregate value of all incentive compensation awards
to such Key Executive under the Executive Incentive Compensation Plan
for the current calendar year or other measuring period, calculated as
if all conditions for receiving the targeted annual award amount with
respect to all such awards had been met, notwithstanding any provision
of the Executive Incentive Compensation Plan to the contrary.
F. Any outstanding awards under the Stock Plans held by the Key Executive
shall continue to be subject to the terms and conditions of the
applicable Stock Plan and award agreement.
G. The Key Executive and his or her eligible dependents, if any, shall
continue to be covered by the health, life and disability plans
applicable to comparably situated active employees as in effect from
time to time and subject to the rules thereof for the period described
below. For persons entitled to Executive Group I benefits, and their
eligible dependents, the period is three years from his or her
separation from service. For persons entitled to Executive Group II
benefits, and their eligible dependents, the period is two years from
his or her separation from service. For persons entitled to Executive
Group III benefits, and their eligible dependents, the period is one
year from his or her separation from service. This period of coverage
will not count against the minimum period of health coverage required
by the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), and persons covered by this provision will be afforded
their applicable COBRA rights at the end of the health coverage
provided herein.
H. The Company shall provide each Key Executive with reasonable
outplacement services at a cost not to exceed $25,000 during the 12
months following his or her separation from service.
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4. Method of Payment.
A. The Company shall pay, or cause to be paid, the cash severance
benefits under the Plan to the Key Executive in a single cash sum
within 30 days following the later of the Key Executive's separation
from service as an employee with the Tenneco Companies and submission
of a claim as required by Section 17 of the Plan, provided that the
payment at such time can be characterized as a "short-term deferral"
for purposes of Section 409A or as otherwise exempt from the
provisions of Section 409A, or if any portion of the payment cannot be
so characterized, and the Key Executive is a "specified employee"
under Section 409A, such portion of the payment shall be delayed until
the earlier to occur of the Key Executive's death or the date that is
six months and one day following the Key Executive's separation from
service. Except for withholdings required by law to satisfy local,
state, federal and foreign tax withholding requirements, no offset nor
any other reduction shall be taken in paying such benefit.
B. Reimbursement of expenses incurred by the Key Executive pursuant to
Section 3(G) shall be made promptly and in no event later than
December 31 of the year following the year in which such expenses were
incurred, and the amount of expenses eligible for reimbursement, or
in-kind benefits provided, in any year shall not affect the amount of
expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other year, except for any limit on the amount of
expenses that may be reimbursed under an arrangement described in
Section 105(b) of the Internal Revenue Code. If the Key Executive is a
"specified employee" under Section 409A, the full cost of the
continuation or provision of life and disability plan coverages (but
not health plan coverages) under Section 3(G) shall be paid by the Key
Executive until the earlier to occur of the Key Executive's death or
the date that is six months and one day following the Key Executive's
separation from service, and such cost shall be reimbursed by the
Company to, or on behalf of, the Key Executive in a lump sum cash
payment on the earlier to occur of the Key Executive's death or the
date that is six months and one day following the Key Executive's
separation from service.
5. Gross-Up Payment.
A. If the Key Executive is a member of Executive Group I immediately
prior to the Change in Control and any portion of the payments
described herein, and/or any other payments no matter the source of
such payments, that are paid or payable or distributed or
distributable to such Key Executive shall be subject to the tax
imposed by Section 4999 of the Internal Revenue Code (the "Excise
Tax") (the portion of such payments which are subject to the Excise
Tax being referred to herein as the "Payments"), the Company shall pay
to the affected Key Executive, not
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later than 30th day following the date the Key Executive becomes
subject to the Excise Tax an additional amount (the "Gross-Up
Payment"), such that the net amount retained by the Key Executive
after deduction of the Excise Tax on such Payments, and all federal,
state, local and foreign income and employment tax (assuming the Key
Executive is in the highest marginal tax bracket), interest and
penalties and Excise Tax on the Gross-Up Payment, shall be equal to
the amount which would have been retained by the Key Executive had the
payments not been subject to the Excise Tax.
B. If the Key Executive is a member of Executive Group II or III
immediately prior to the Change in Control and if any portion of the
payments described herein, and/or any other payments no matter the
source of such payments, that are paid or payable or distributed or
distributable to such Key Executive shall be subject to the Excise
Tax, then the Payments shall be reduced by the Company to the extent
necessary so that no portion of the Payments to the Key Executive is
subject to the Excise Tax. Notwithstanding the preceding sentence, if
the Key Executive's aggregate "parachute payments," as such term is
defined under Internal Revenue Code Section 280G, exceed an amount
equal to 3.45 times the Key Executive's "base amount," as such term is
defined under Internal Revenue Code Section 280G, then the Company
shall pay to the affected Key Executive, not later than the 30th day
following the date the Key Executive becomes subject to the Excise Tax
an additional amount (also, a "Gross-Up Payment"), such that the net
amount retained by the Key Executive after deduction of the Excise Tax
on such Payments, and all federal, state, local and foreign income and
employment tax (assuming the Key Executive is in the highest marginal
tax bracket), interest and penalties and Excise Tax on the Gross-Up
Payment, shall be equal to the amount which would have been retained
by the Key Executive had the payments not been subject to the Excise
Tax.
C. The independent public accounting firm serving as the Company's
auditing firm, or such other accounting firm, law firm or professional
consulting services provider of national reputation and experience
reasonably acceptable to the Company and the Key Executive (the
"Accountants") shall make in writing in good faith all calculations
and determinations under this Section 5, including the assumptions to
be used in arriving at any calculations. For purposes of making the
calculations and determinations under this Section 5, the Accountants
and each other party may make reasonable assumptions and
approximations concerning the application of Internal Revenue Code
Sections 280G and 4999. The Company and the affected Key Executive
shall furnish to the Accountants and each other such information and
documents as the Accountants and each other may reasonably request to
make the calculations and determinations under this Section 5. The
Company shall bear all costs the Accountants incur in connection with
any calculations contemplated
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hereby. As a result of the uncertainty in the application of Section
4999 of the Internal Revenue Code at the time of the initial
determination by the Accountants hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts
its remedies pursuant to Section 5(D) and the Key Executive thereafter
is required to make a payment of any Excise Tax, the Accountants shall
determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the
benefit of the Key Executive.
D. The Key Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than 10 business
days after the Key Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Key Executive shall not
pay such claim prior to the expiration of the 30-day period following
the date on which the Key Executive gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Key
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Key Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by
the Company,
(3) cooperate with the Company in good faith in order effectively to
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Key Executive harmless, on an after-tax basis, for any Excise Tax
or federal, state, local or foreign income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of
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costs and expenses. Without limitation on the foregoing provisions of
this Section 5(D), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole discretion, either pay the tax claimed to the
appropriate taxing authority on behalf of the Key Executive and direct
the Key Executive to sue for a refund or contest the claim in any
permissible manner, and the Key Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, if the Company pays
such claim and directs the Key Executive to sue for a refund, the
Company shall indemnify and hold the Key Executive harmless, on an
after-tax basis, from any Excise Tax or federal, state, local or
foreign income tax (including interest or penalties) imposed with
respect to such payment or with respect to any imputed income in
connection with such payment; and provided, further, any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Key Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Key Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
E. If, after the receipt by the Key Executive of an amount advanced by
the Company pursuant to Section 5(D), the Key Executive becomes
entitled to receive any refund with respect to such claim, the Key
Executive shall (subject to the Company's complying with the
requirements of Section 5(D)) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Key
Executive of an amount advanced by the Company pursuant to Section
5(D), a determination is made that the Key Executive shall not be
entitled to any refund with respect to such claim and the Company does
not notify the Key Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
F. Notwithstanding anything to the contrary in the foregoing provisions
of this Section 5, (i) payment of any Gross-Up Payment shall not be
made later than December 31 of the year next following the year in
which the Excise Tax is remitted to the taxing authority, and (ii)
reimbursement of expenses incurred due to a tax audit or litigation
addressing the existence or amount of a tax liability, whether
federal, state, local or foreign, shall
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not be made later than the end of the year following the year in which
the taxes that are the subject of the audit or litigation are remitted
to the taxing authority, or where as a result of such audit or
litigation no taxes are remitted, the end of the year following the
year in which the audit is completed or there is a final nonapplicable
settlement or other resolution of the litigation.
6. Noncompetition. Without the prior written consent of the Company Board
(which may be withheld in the Company Board's sole discretion), so long as
the Key Executive is an employee of a Tenneco Company and for a one-year
period thereafter (or, in the case of a Key Executive who is a member of
Executive Group I immediately prior to his or her separation from service,
for a two-year period thereafter), by accepting participation in the Plan,
the Key Executive agrees that he or she shall not anywhere in the
Prohibited Area, for himself or herself or as an officer, employee,
manager, operator, principal, owner, partner, shareholder, advisor,
consultant of, or lender to, any individual or other person that is engaged
or participates in or carries out a Competing Business or is actively
planning or preparing to enter into a Competing Business, for his or her
own account or the benefit of any other, engage or participate in or assist
or otherwise be connected with a Competing Business. Such prohibition shall
not apply to the Key Executive's passive ownership of not more than five
percent (5%) of a publicly-traded company.
7. No Solicitation or Interference. So long as the Key Executive is an
employee of a Tenneco Company and for a one-year period thereafter (or, in
the case of a Key Executive who is a member of Executive Group I
immediately prior to his or her separation from service, for a two-year
period thereafter), the Key Executive agrees, by accepting participation in
the Plan, that he or she shall not, whether for his or her own account or
for the account or benefit of any other person, throughout the Prohibited
Area:
A. request, induce or attempt to influence (1) any customer of a Tenneco
Company to limit, curtail, cancel or terminate any business it
transacts with, or products or services it receives from or sells to,
or (2) any person employed by (or otherwise engaged in providing
services for or on behalf of) any Tenneco Company to limit, curtail,
cancel or terminate any employment, consulting or other service
arrangement with any Tenneco Company. Such prohibition shall expressly
extend to any hiring or enticing away (or any attempt to hire or
entice away) any employee or consultant of a Tenneco Company;
B. solicit from or sell to any customer any products or services that any
Tenneco Company provides or is capable of providing to such customer
and that are the same as or substantially similar to the products or
services that any Tenneco Company sold or provided while the Key
Executive was employed with, or providing services to, any Tenneco
Company;
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C. contact or solicit any customer for the purpose of discussing (1)
services or products that are competitive with and the same or closely
similar to those offered by any Tenneco Company or (2) any past or
present business of any Tenneco Company;
D. request, induce or attempt to influence any supplier, distributor or
other person with which any Tenneco Company has a business
relationship to limit, curtail, cancel or terminate any business it
transacts with any Tenneco Company; or
E. otherwise interfere with the relationship of any Tenneco Company with
any person which is, or within one year prior to the Key Executive's
date of termination was, doing business with, employed by or otherwise
engaged in performing services for, any Tenneco Company.
8. Confidential Information. During the period of the Key Executive's
employment with the Tenneco Companies and at all times thereafter, the Key
Executive shall hold in secrecy for the Company all Confidential
Information that may come to his or her knowledge, may have come to his or
her attention or may have come into his or her possession or control while
employed by a Tenneco Company (or otherwise performing services for any
Tenneco Company). Notwithstanding the preceding sentence, the Key Executive
shall not be required to maintain the confidentiality of any Confidential
Information which (a) is or becomes available to the public or others in
the industry generally (other than as a result of disclosure or
inappropriate use, or caused, by the Key Executive in violation of this
Section 8) or (b) the Key Executive is compelled to disclose under any
applicable laws, regulations or directives of any government agency,
tribunal or authority having jurisdiction in the matter or under subpoena.
Except as expressly required in the performance of his or her duties to the
Tenneco Companies, the Key Executive shall not use for his or her own
benefit or disclose (or permit or cause the disclosure of) to any person,
directly or indirectly, any Confidential Information unless such use or
disclosure has been specifically authorized in writing by the Company in
advance. During the Key Executive's employment and as necessary to perform
his or her duties, the Company will provide and grant the Key Executive
access to the Confidential Information. The Key Executive recognizes that
any Confidential Information is of a highly competitive value and that the
Confidential Information could be used to the competitive and financial
detriment of any Tenneco Company if misused or disclosed by the Key
Executive.
9. Reasonableness; Remedies. The Key Executive acknowledges, by accepting
participation in the Plan, that each of the restrictions set forth in
Sections 6, 7, and 8 is reasonable and necessary for the protection of the
Company's business and opportunities (and those of the Tenneco Companies)
and that a breach of any of the covenants contained in Section 6, 7 or 8
would result in material irreparable injury to the Tenneco Companies for
which there is no adequate remedy at law and that it will not be possible
to measure damages for such injuries precisely.
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Accordingly, each Tenneco Company shall be entitled to the remedies of
injunction and specific performance, or either of such remedies, as well as
all other remedies to which any Tenneco Company may be entitled, at law, in
equity or otherwise, without the need for the posting of a bond or by the
posting of the minimum bond that may otherwise be required by law or court
order.
10. Extension; Survival. By acceptance of participation in the Plan, the Key
Executive agrees that the time periods identified in Section 6, 7 and 8
will be stayed, and the Company's obligation to make any payments or
provide any benefits under the Plan shall be suspended, during the period
of any breach or violation by the Key Executive of the covenants contained
in such Sections. Each of the provisions of Sections 6, 7 and 8 is
fundamental to the Company's willingness to enter into this Plan and for it
to provide for the severance and other benefits described in the Plan, none
of which the Company was required to do prior to the date hereof. Further,
it is the express intent and desire of the Company that each provision of
Sections 6, 7 and 8 be enforced to the fullest extent permitted by law. If
any part of Section 6, 7 or 8, or any provision hereof, is deemed illegal,
void, unenforceable or overly broad (including as to time, scope and
geography), such provision shall be reformed to the fullest extent possible
to ensure its enforceability or if such reformation is deemed impossible
then such provision shall be severed from the Plan, but the remainder of
the Plan (expressly including any other provision of Sections 6, 7 and 8)
shall remain in full force and effect.
11. Assignment. No Key Executive may assign, transfer, convey, mortgage,
hypothecate, or in any way encumber any benefit payable under the Plan, nor
shall the Key Executive have any right to receive any benefit under the
Plan except at the time, in the amount and in the manner provided in the
Plan, provided that the rights of a Key Executive under the Plan may be
enforced by the Key Executive's heirs, dependents, beneficiaries and legal
representatives.
This Plan may and shall be assigned or transferred to, and shall be binding
upon and shall inure to the benefit of, any successor of the Company, and
any such successor shall be deemed substituted for all purposes of "the
Company" under the provisions of the Plan. As used in the preceding
sentence, the term "successor" shall mean any person, firm, corporation, or
business entity which at any time, whether by merger, purchase or
otherwise, acquires all, or substantially all, of the assets or business of
the Company. Notwithstanding such assignment, the Company shall remain,
with such successor, jointly and severally liable for all obligations under
the Plan, which, except as herein provided, may not be assigned by the
Company.
12. No Mitigation. It will be difficult, and may be impossible, for the Key
Executive to find reasonably comparable employment following the
termination of the Key Executive's employment, and the protective
provisions under Sections 6, 7 and 8 will further limit the employment
opportunities for the Key Executive. The Key
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Executive shall not be required to seek other employment, or otherwise, to
mitigate any payment provided under the Plan.
13. Plan Amendment and Termination. The Plan may be terminated or amended at
any time by the Board of Directors provided that during a Threatened Change
in Control Period, the Plan may not be terminated or amended in any manner
that reduces the benefits to a Key Executives or adversely affects the
rights of a Key Executive under the Plan. In the event of a Change in
Control, no amendment, or termination, made on or after the date of the
Change in Control shall apply to any Key Executive until the expiration of
two years and thirty-one days from the date of the Change in Control.
14. Funding. The Company shall pay, or cause to be paid, any severance benefit
under the Plan out of the general assets of the Tenneco Companies. Nothing
contained herein shall preclude the Company from establishing a grantor
trust through which assets to satisfy obligations under the Plan may be set
aside to provide for benefit payments to Key Executives and their
dependents or beneficiaries. Any assets or property held by such trust
shall be subject to the claims of general creditors of the Company, but
only upon the insolvency or bankruptcy of the Company and only to the
extent that the assets or property held by such trust are attributable to
contributions made by the Company. No person other than the Company shall,
by virtue of the provisions of the Plan, have any interest in such funds.
15. Controlling Law. The Plan shall be interpreted under the laws of the State
of Illinois, without regard to its conflicts of laws provisions, except to
the extent that federal law preempts the laws of the State of Illinois.
16. Plan Administrator. The Company is the Plan Administrator, and it shall
have the authority to control and manage the operation of this Plan with
the authority to construe and interpret the Plan, and to determine all
questions of eligibility to participate in the Plan, in its sole
discretion.
17. Making a Claim.
A. Submission of a Claim. In order to claim a severance benefit under
this Plan, a Key Executive need only advise the Plan Administrator in
writing that the Key Executive's employment with the Tenneco Companies
has terminated and that the Key Executive claims a severance benefit
under the Plan and of the mailing address to which the severance
benefit or related correspondence is to be sent.
B. Denial of Claim. If a Key Executive has made a claim for benefits
under this Plan and any portion of the claim is denied, the Plan
Administrator will furnish the Key Executive with a written notice
stating the specific reasons for the denial, specific reference to
pertinent Plan provisions upon which the denial was based, a
description of any additional information or
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material necessary to perfect the claim, an explanation of why such
information or material is necessary, and a description of the Plan's
appeal procedures and time frames, including a statement of the Key
Executive's right to bring a civil action following an adverse
decision on appeal.
The claim will be deemed accepted if the Plan Administrator does not
approve the claim and fails to notify the Key Executive within 90 days
after receipt of the claim, plus any extension of time for processing
the claim, not to exceed 90 additional days, as special circumstances
require. To obtain an extension, the Plan Administrator must advise
the Key Executive in writing during the initial 90 days if an
extension is necessary, stating the special circumstances requiring
the extension and the date by which the Key Executive can expect the
Plan Administrator's decision regarding the claim.
C. Review Procedure. Within 60 days after the date of written notice
denying any benefits, the Key Executive or the Key Executive's
authorized representative may write the Plan Administrator requesting
a review of that decision by the Company Board or the Committee.
The request for review may contain such issues and comments as the Key
Executive wishes to have considered in the review. The Key Executive
may also review pertinent documents in the Plan Administrator's
possession. The Company Board or the Committee will make a final
determination with respect to the claim as soon as practicable. The
Plan Administrator will advise the Key Executive of the determination
in writing and will set forth the specific reasons for the
determination and the specific references to any pertinent Plan
provisions upon which the determination is based. The written notice
will also contain a statement that the Key Executive is entitled to
receive, upon request and free of charge, reasonable access to and
copies of all documents, records, and other information relevant to
his or her claim. The Plan Administrator will also include in the
notice a statement describing any voluntary appeal procedures offered
by the Plan and the Key Executive's right to obtain information about
such procedures, and a statement of the Key Executive's right to bring
an action under the Employee Retirement Income Security Act of 1974,
as amended.
The claim will be deemed accepted on review if the Plan Administrator
fails to give the Key Executive written notice of final determination
within 60 days receipt of the request for review, plus any extension
of time for completing the review, not to exceed 60 additional days,
as special circumstances require. To obtain an extension, the Plan
Administrator must advise the Key Executive in writing during the
initial 60 days if any extension is necessary, stating the special
circumstances requiring the extension and the date by which the Key
Executive can expect the
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Company Board's or the Committee's decision regarding the review of
the claim.
18. Legal Fees and Costs. In the event a Key Executive initiates legal action
to enforce his or her right to any benefit under this Plan, the Company
shall pay all reasonable legal fees and costs incurred by the Key Executive
in connection with such legal action, provided that the Key Executive
prevails on any material issue that is the subject of the legal action.
Reimbursement of such fees and costs shall be made promptly and in no event
later than December 31 of the year following the year in which such
expenses were incurred, and the amount of such expenses eligible for
reimbursement in any year shall not affect the amount of such expenses
eligible for reimbursement in any other year.
19. Severability. If for any reason any provision or provisions of the Plan are
determined invalid or unenforceable, the validity and effect of the other
provisions of the Plan shall not be affected thereby.
20. Notices. Any notice required or permitted under the Plan shall be given in
writing and shall be deemed to have been effectively made or given if
personally delivered, or if sent via U.S. mail or recognized overnight
delivery service or sent via confirmed e-mail or facsimile to the other
party at its address set forth below in this Section 20, or at such other
address as such party may designate by written notice to the other party
hereto. Any effective notice hereunder shall be deemed given on the date
personally delivered, three business days after mailed via U.S. mail or one
business day after it is sent via overnight delivery service or via
confirmed e-mail or facsimile, as the case may be, to the following
address:
If to the Company, the Company Board, any Tenneco Company or the Committee:
Tenneco Inc.
500 North Field Drive
Lake Forest, IL 60045
Attn. General Counsel
Telephone No.: (847) 482-5053
Facsimile No.: (847) 482-5040
If to the Executive:
At the most recent address on file with the Company.
21. Prohibition on Acceleration of Payments.
The time or schedule of any payment or amount scheduled to be paid pursuant
to the terms of the Plan may not be accelerated except as otherwise
permitted under Section 409A and the guidance and Treasury Regulations
issued thereunder.
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22. Section 409A.
The Plan and the benefits provided hereunder are intended to comply with
Section 409A to the extent applicable thereto. Notwithstanding any
provision of the Plan to the contrary, the Plan shall be interpreted and
construed consistent with this intent. Notwithstanding the foregoing, the
Tenneco Companies shall not be required to assume any increased economic
burden in connection therewith.
23. Nonduplication.
The Key Executive shall be entitled to receive any greater, or otherwise
more favorable, cash severance benefit or Excise Tax gross-up payment under
any other plan, program or arrangement with a Tenneco Company. If the Key
Executive is entitled to receive a cash severance benefit or Excise Tax
gross-up payment under any other plan, program or arrangement with a
Tenneco Company, the amount of cash severance benefit to which the Key
Executive is entitled under Section 3 or Gross-Up Payment to which the
Executive is entitled under Section 5 of the Plan shall be considered to be
satisfied to the extent of such other similar benefit.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed on its behalf
by its officer duly authorized, on the day and year set forth below.
TENNECO INC.
By
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Its
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Date:
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