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Exhibit 10.1
TENNECO AUTOMOTIVE INC. CHANGE IN CONTROL
SEVERANCE BENEFIT PLAN FOR KEY EXECUTIVES
(the "Plan")
This Plan is established by Tenneco Inc., a Delaware corporation to be
renamed Tenneco Automotive Inc., effective on the date and time at which the
Company completes the spin-off of its packaging business to the shareholders of
the Company (the "Effective Time"). 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" shall mean 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 (a)
fifteen percent (15%) 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, and a majority of the Incumbent Board does not
approve the acquisition before the acquisition occurs, or (b)
forty percent (40%) 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 paragraph (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, without members of the Incumbent Board, as constituted
immediately prior to the merger, consolidation, share exchange
or combination, constituting a majority of the board of
directors of (a) the surviving or successor corporation of such
transaction, or (b) if the surviving or successor corporation of
such transaction is a majority-owned subsidiary of another
corporation or corporations, the ultimate parent company of the
surviving or successor corporation; or
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(4) the consummation of any sale, exchange or other disposition of
all or substantially all of the Company's assets without members
of the Incumbent Board immediately prior to any sale, exchange
or disposition of all or substantially all of the Company's
assets constituting a majority of the board of directors of (a)
the corporation which holds such assets after such disposition,
or, (b) if such corporation is a majority-owned subsidiary of
another corporation or corporations, the ultimate parent company
of the corporation which holds such assets after such
disposition; provided, however, that the Company Board may
determine conclusively that any transaction does not constitute
a sale, exchange or other disposition of substantially all of
the Company's assets; or
(5) if any person, alone or together with any of its affiliates or
associates, shall elect or have elected, during any period not
exceeding 24 months, at least 25% of the members of the Company
Board, without the approval of the Incumbent Board, and such
members are comprised of persons not serving as members of the
Company Board immediately prior to the formation of such group
or the first solicitation of proxies by such persons; or
(6) the Company's stockholders approve a plan of complete
liquidation or dissolution of the Company.
B. "Company" means Tenneco Inc., a Delaware corporation to be renamed
Tenneco Automotive Inc., and any successors thereto as provided in
Section 7.
C. "Company Board" means the Board of Directors of the Company.
D. "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) diminish in any manner the Key Executive's status, position,
duties or responsibilities with Tenneco Companies from those in
effect immediately prior to the Change in Control (without
limiting the generality of foregoing, for purposes of this
clause (1) a 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) reduce the Key Executive's then current annual cash compensation
from 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 prior to the Change in Control
and (b) the Key Executive's average annual award under the
Company's Executive Incentive
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Compensation Plan (or any successor plan) for the three calendar
year periods (or for such shorter period as the Key Executive
has been employed by the Company) completed immediately prior to
the Change in Control;
(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; or
(4) effectively require the Key Executive to relocate because of
transfer of the Key Executive's place of employment with 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 (i) is
greater than 25 miles from the place where the Key Executive was
employed immediately prior to the Change in Control and (ii)
increases the normal commuting time of such Key Executive by
more than 50%).
A Constructive Termination will be deemed to have occurred for
all Key Executives if any successor to the Company in a merger,
consolidation, purchase or other combination 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.
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 paragraph D 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.
E. "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 dishonesty or other serious
misconduct in his or her capacity as an employee of any of the
Tenneco Companies having the effect of materially injuring the
reputation or business of any of the Tenneco Companies,
monetarily or otherwise; 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
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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 shall not
be deemed to have been Discharged for Cause under paragraph 1 or 2
above 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 paragraphs (1) or (2) of the preceding sentence.
F. "Executive Group I" shall consist of each individual who, immediately
prior to a Change in Control,
(1) is the Chief Executive Officer of Tenneco; or
(2) is designated by the Chief Executive Officer of Tenneco, in
writing on or before the Change in Control, as a member of
Executive Group I.
G. "Executive Group II" shall consist of each individual
(1) who is not a member of Executive Group I; and
(2) (a) who, immediately prior to the Change in Control, is an
active participant in the Company's Executive Incentive
Compensation Plan, or (b) who, immediately prior to the Change
in Control, is an employee of a Tenneco Company who has been
designated by the Chief Executive Officer of the Company, in
writing before the Change in Control, as a member of Executive
Group II.
H. "Incumbent Board" means
(1) the members of the Company Board on the Effective Time, 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 Time, if his or her election or nomination for
election as a director is approved by a vote of at least
three-quarters of then Incumbent Board, other than 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.
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I. "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
J. "Key Executive" means an individual who, immediately prior to the
Change in Control, is a member of Executive Group I or Executive Group
II.
K. "Tenneco Company" or "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.
L. "Threatened Change in Control" shall mean (i) 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 (ii) the adoption of a resolution by the Incumbent Board
that a Threatened Change in Control has occurred.
M. "Threatened Change in Control Period" shall mean 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.
For purposes of the foregoing definitions, the terms "associate",
"affiliate", "person", and "beneficial owner" shall have the
respective meanings 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.
2. Eligibility for Benefits. Any Key Executive who meets the criteria set
forth in paragraphs (A) or (B) below shall be entitled to receive the
benefits described in Sections 3 and 6 below.
A. If (i) within two years after a Change in Control, a Key Executive is
separated from service as an employee with the Tenneco Companies
because (a) the Key Executive is discharged by the Tenneco Companies,
provided, such discharge is not Discharge for Cause, 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 Tenneco Companies, the Key Executive remains an employee
of Tenneco Companies; or
B. If, during the first thirty days following the first anniversary of a
Change in Control, a member of Executive Group I on the date of the
Change in Control, voluntarily elects to separate from service.
3. Severance Benefits.
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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 or other annual
base compensation in effect immediately prior to the Change in
Control, plus (b) the greater of (i) the average of the Key
Executive's annual awards under the Company's Executive Incentive
Compensation Plan (or any successor plan), together with any special
awards from Tenneco Companies, for the last three years of the Key
Executive's employment with Tenneco Companies (or such shorter period
as the Key Executive has been employed by the Tenneco Companies) or
(ii) the Key Executive's targeted annual award under such plans 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 greater of
(i) the average of the Key Executive's annual awards under the
Company's Executive Incentive Compensation Plan (or any successor
plan), together with any special awards from the Tenneco Companies,
for the last three years of the Key Executive's employment with the
Tenneco Companies (or such shorter period as the Key Executive has
been employed by the Tenneco Companies) or (ii) the Key Executive's
targeted annual award under such plans in effect immediately prior to
the Change in Control.
C. 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
Key Executive immediately following termination of employment,
notwithstanding any provisions of such plan, program or arrangement to
the contrary.
D. An amount, paid in a single lump sum of cash, equal to the sum of (i)
any incentive compensation which has been allocated or awarded to such
Key Executive for a completed calendar year or other measuring period
preceding the Change in Control but has not yet been paid and (ii) a
pro rata portion to the date of the Change in Control of the aggregate
value of all contingent incentive compensation awards to such Key
Executive for the current calendar year or other measuring period
under any compensation or incentive plans of the Company, calculated
as if 100% of any performance target or goal was achieved or otherwise
on a basis on which such Key Executive will receive a pro rata portion
(based on elapsed time) of the amounts he or she would have been
entitled to receive if he or she had continued to be employed by the
Company throughout the period contemplated with respect to such award
and if all other conditions for receiving the maximum amount with
respect to all such awards had been met, notwithstanding any provision
of any such plan to the contrary.
E. The Key Executive shall be entitled to be paid in cash the total of
the fair market value, determined as of the date of his or her
separation from service, of any Restricted Stock, Stock Appreciation
Rights, Performance Units, Stock
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Equivalent Units and Dividend Equivalents which he or she held
immediately prior to such separation from service to the extent that
he or she would not otherwise receive the value thereof. The terms
"Restricted Stock", "Stock Appreciation Rights", "Performance Units",
"Stock Equivalent Units" and "Dividend Equivalents" shall have the
meaning ascribed to those terms in the Company's Stock Ownership Plan.
F. 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 (3) years from his or her
separation form service. For persons entitled to Executive Group II
benefits, and their eligible dependents, the period is two (2) years
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.
G. The Company shall provide each Key Executive with reasonable out
placement services consistent with past practices of the Company with
respect to officers at such level prior to the Change in Control.
H. If a Key Executive receives other cash severance benefits from Tenneco
Companies, the amount of severance benefit to which the Key Executive
is entitled under Section 3(A) or (B) above shall be considered to be
satisfied to the extent of such other cash severance payment.
4. Other Benefits. Upon a Change in Control, and without regard to the Key
Executive's employment status following such Change in Control, all Stock
Options granted under the Company's Stock Ownership Plan or any other
similar plan maintained by the Company shall become immediately vested and
exercisable for the lesser of 36 months or the remaining life of the
option. The term "Stock Options" shall have the meaning ascribed thereto
in the Company's Stock Ownership Plan.
5. Method of Payment. 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 Tenneco Companies and submission of a
claim as required by Section 12 of the Plan. Except for withholdings
required by law to satisfy local, state, and federal tax withholding
requirements, no offset nor any other reduction shall be taken in paying
such benefit.
6. Gross-Up Payment. If any portion of the payments described herein, and/or
any other payments no matter the source of such payments, shall be subject
to the tax imposed by Section 4999 of the Internal Revenue Code (the
portion of such payments which are
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subject to the Excise Tax being referred to herein as the "Payments") 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 (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 and local 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.
7. Assignment. No Key Executive may assign, transfer, convey, mortgage,
hypothecate, or in any way encumber any severance benefit payable under
the Plan, nor shall the Key Executive have any right to receive any
severance 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 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 assignments, 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.
8. 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 Executive 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.
9. Funding. The Company shall pay, or cause to be paid, any severance benefit
under the Plan out of 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 participants in the Plan. 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.
10. Controlling Law. The Plan shall be interpreted under the laws of the State
of Illinois, except to the extent that federal law preempts such laws.
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11. 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 interpret the Plan.
12. 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 Tenneco Companies has
terminated, 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 a 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 material necessary to
perfect the claim and an explanation of why such information or
material is necessary, and appropriate information concerning steps to
take if the Key Executive wishes to submit the claim for review.
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 to the Plan Administrator
requesting a review of that decision by the Company Board or the
Compensation / Nominating / Governance Committee thereof (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 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 after
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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 Company's decision regarding the review of the claim.
13. 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 a subject of the legal
action.
14. 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.
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. (to be renamed
TENNECO AUTOMOTIVE INC.)
By__________________
Its_________________
Date:____________________
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