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Exhibit 10.2
TENNECO AUTOMOTIVE INC.
STOCK OWNERSHIP PLAN
1. Purpose
The purpose of the Tenneco Automotive Stock Ownership Plan (the "Plan") is
to promote the long-term success of Tenneco Automotive Inc. (the "Company") for
the benefit of shareholders by encouraging its directors, officers and key
employees to have meaningful investments in the Company so that, as stockholders
themselves, those individuals will be more likely to represent the views and
interest of other stockholders and by providing incentives to such directors,
officers and key employees for continued service. The Company believes that the
possibility of participation under the Plan will provide this group of
directors, officers and employees an incentive to perform more effectively and
will assist the Company in attracting and retaining people of outstanding
training, experience and ability. This document amends and restates the 1996
Tenneco Inc. Stock Ownership Plan.
2. Definitions
"Automotive Company" means 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 and any other company designated as such by the Committee, but
only during the period of such ownership or designation.
"Award" means an award or grant made to a Participant under Section 8.
"Award Agreement" means the agreement provided in connection with an Award
under Section 12.
"Award Date" means the date that an Award is made, as specified in an Award
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"Committee" means the Compensation / Nominating / Governance Committee of
the Board of Directors of the Company, or any successor committee thereto.
"Common Stock" means the Company's common stock.
"Covered Employees" shall have the meaning specified in Section 162(m)(3)
of the Code.
"Dividend Equivalent" means an amount equal to the amount of the cash
dividends that are declared and become payable after the Award Date for the
Award to which it relates and on or before the Settlement Date for such Award.
"Fair Market Value" on any date means the average of the highest and the
lowest sales prices of a share of Common Stock on the Composite Tape for such
date, as reported by the National Quotation Bureau Incorporated, provided that
if (i) no sales of Common Stock are included on the Composite Tape for such
date, or (ii) in the opinion of the Committee, the sales of Common Stock on such
date are insufficient to constitute a representative market, then the
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Fair Market Value of a share of Common Stock on such date shall be deemed to be
the average of the highest and lowest prices of a share of Common Stock as
reported on said Composite Tape for the next preceding day on which (x) sales of
Common Stock are included and (y) the circumstances described in this clause
(ii) do not exist.
"ISO" means any Stock Option designated in an Award Agreement as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.
"Non-Qualified Stock Option" means any Stock Option that is not an ISO.
"Option Price" means the purchase price of one share of Common Stock under
a Stock Option.
"Participant" means a director, employee or officer of an Automotive
Company who has been selected by the Committee to receive an Award under the
Plan.
"Performance Unit" means an Award denominated in cash, the amount of which
may be based on the performance of the Participant, of an Automotive Company or
of any subsidiary or division thereof.
"Reload Stock Option" means a Stock Option (i) that is awarded, either
automatically in accordance with the terms of an Award Agreement in which one or
more other Awards are made or by separate Award, upon the exercise of a Stock
Option granted under this Plan or otherwise where the Option Price is paid by
the option holder by delivery of shares of Common Stock on the Settlement Date
for such exercise and (ii) that entitles such holder to purchase the number of
shares so delivered for an Option Price equal to the Fair Market Value of a
share of Common Stock on such Settlement Date.
"Restricted Stock" means shares of Common Stock subject to restrictions and
conditions pursuant to Section 8(c).
"Settlement Date" means, (i) with respect to any Stock Option that has been
exercised in whole or in part, the date or dates upon which shares of Common
Stock are to be delivered to the Participant and the Option Price therefor paid,
(ii) with respect to any SARs that have been exercised, the date or dates upon
which a cash payment is to be made to the Participant, or in the case of SARs
that are to be settled in shares of Common Stock, the date or dates upon which
such shares are to be delivered to the Participant, (iii) with respect to
Performance Units, the date or dates upon which cash or shares of Common Stock
are to be delivered to the Participant, (iv) with respect to Dividend
Equivalents, the date upon which payment thereof is to be made, and (v) with
respect to Stock Equivalent Units, the date upon which payment thereof is to be
made, in each case, determined in accordance with the terms of the Award
Agreement under which any Award was made.
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"Stock Appreciation Right" or "SAR" means an Award that entitles the
Participant to receive on the Settlement Date an amount equal to the excess of
(i) the Fair Market Value of one share of Common Stock on the date of
exercise of the SAR over
(ii) the Fair Market Value of one share of Common Stock on the Award Date
or any other higher amount specified in the Award Agreement.
"Stock Equivalent Unit" means an Award that entitles the Participant to
receive on the Settlement Date an amount equal to the Fair Market Value of one
share of Common Stock on such date.
"Stock Option" or "Option" means any right to purchase shares of Common
Stock (including a Reload Stock Option) awarded pursuant to Section 8(a).
3. Term
The Plan shall be effective as of October 8, 1996 and shall remain in
effect through December 31, 2001. After termination of the Plan, no further
Awards may be granted other than Reload Stock Options granted in accordance with
Award Agreements existing as of the termination of the Plan, but outstanding
Awards shall remain effective in accordance with their terms and the terms of
the Plan.
4. Plan Administration
(a) The Committee shall be responsible for administering the Plan.
(i) Composition of the Committee. The Committee shall be comprised of
two or more members of the Board of Directors, all of whom shall be
"non-employee directors" as defined in Rule 16b-3 and "outside directors"
as that term is used in Section 162 of the Code and the regulations
promulgated thereunder.
(ii) Powers. The Committee shall have full and exclusive discretionary
power to interpret the Plan and to determine eligibility for benefits and
to adopt such rules, regulations and guidelines for administering the Plan
as the Committee may deem necessary or proper. Such power shall include,
but not be limited to, selecting Award recipients, establishing all Award
terms and conditions and, subject to Section 13, adopting modifications and
amendments to the Plan or any Award Agreement, including without
limitation, any that are necessary to comply with the laws of the countries
in which the Company or its affiliates operate.
(iii) Delegation. The Committee may delegate to one more of its
members or to one or more agents or advisors such non-discretionary
administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee
or such persons may have under the Plan.
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(b) The Committee may employee attorneys, consultants, accountants and
other persons, and the Committee, the Company and its officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon the Participants,
the Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination, or interpretation made in
good faith with respect to the Plan or Awards, and all members of the Committee
shall be fully protected by the Company, to the fullest extent permitted by
applicable law, in respect to any such action, determination and interpretation.
5. Eligibility
Awards will be limited to persons who are directors, officers, or key
employees of the Automotive Companies. In determining the persons to whom Awards
shall be made, the Committee shall, in its discretion, take into account the
nature of the person's duties, past and potential contributions to the success
of the Automotive Companies and such other factors as the Committee shall deem
relevant in connection with accomplishing the purposes of the Plan. A person who
has received an Award or Awards may receive an additional Award or Awards. For
purposes of this Section 5, the terms "director," "key employee" and "officer"
shall also include any former director, former key employee or former officer of
an Automotive Company or Tenneco Inc. eligible to receive a replacement Award as
contemplated in the third sentence of Section 8.
6. Authorized Awards; Limitations
(a) Except for adjustments pursuant to Section 7, the maximum number of
shares of Common Stock that shall be available for issuance under the Plan (the
"Authorized Plan Shares") shall be 3,400,000 after giving effect to the
one-for-five reverse stock split on November 5, 1999.
(b) If an Award expires unexercised or is forfeited, surrendered, canceled,
terminated or settled in cash in lieu of Common Stock, the shares of Common
Stock that were theretofore subject (or potentially subject) to such Award may
again be made subject to an Award Agreement.
(c) Common Stock that may be issued under the Plan may be either authorized
and unissued shares, or issued shares that have been reacquired by the Company
and that are being held as treasury shares. No fractional shares of Common Stock
shall be issued under the Plan; provided, however, that cash, in an amount equal
to the Fair Market Value of a fractional share of Common Stock as of the
Settlement Date of the Award, shall be paid in lieu of any fractional shares in
the settlement of Awards payable in shares of Common Stock.
(d) In no event shall the number of shares of Common Stock subject to Stock
Options plus the number of shares underlying SARs awarded to any one Participant
during the term set forth in Section 3 hereof, exceed 50% of the Authorized Plan
Shares. In all events, determinations under the preceding sentence shall be made
in a manner that is consistent with Code Section 162 and the regulations
promulgated thereunder.
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7. Adjustments and Reorganizations
The Committee may make such adjustments to Awards granted under the Plan
(including the terms, exercise price and otherwise) as it deems appropriate in
the event of changes that impact the Company, the Company's share price, or
share status, provided, that, notwithstanding any other provision hereof,
insofar as any Award is subject to performance goals established to qualify
payments thereunder as "performance-based compensation" as described in Section
162(m) of the Code, the Committee shall have no power to adjust such Awards
other than (i) negative discretion and (ii) the power to adjust Awards for
corporate transactions, in either case to the extent permissible under
regulations interpreting Code Section 162(m).
In the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, extraordinary
dividend, spin-off, split-off, rights offering, share combination, or other
change in the corporate structure of the Company affecting the Common Stock, the
number and kind of shares that may be delivered under the Plan shall be subject
to such adjustment as the Committee, in its sole discretion, may deem
appropriate, and the number and kind and price of shares subject to outstanding
Awards and any other terms of outstanding Awards shall be subject to such
adjustment as the Committee, in its sole discretion, may deem appropriate.
8. Awards
The Committee shall determine the type and amount of any Award to be made
to any Participant; provided however, that, except as provided in paragraph (g),
no Awards granted pursuant to this Plan shall vest in less than six months after
the date the Award is granted. Awards may be granted singly, in combination, or
in tandem. Awards may also be made in combination or in tandem with, in
replacement of, as alternatives to, or as the payment form for, grants or rights
under any other employee benefit or compensation plan of the Automotive
Companies or Tenneco Inc., including any such employee benefit or compensation
plan of any acquired entity.
(a) Stock Options
(i) Awards. Stock Options (including Reload Stock Options) granted
under this Plan may be either of the following:
(1) an ISO or
(2) a Non-Qualified Stock Option.
The Committee may grant any Participant one or more ISOs, Non-Qualified
Stock Options, or both types of Stock Options, in each case with or without
SARs or Reload Stock Options or any other form of Award. Stock Options
granted pursuant to this Plan shall be subject to such additional terms,
conditions, or restrictions as may be provided in the Award Agreement
relating to such Stock Option.
(ii) Option Price. The Option Price of a Stock Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the
Award Date.
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(iii) ISOs. Anything in this Plan to the contrary notwithstanding, no
term of this Plan relating to ISOs shall be interpreted, amended or
altered, nor shall any discretion or authority awarded under the Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code, or,
without the consent of the Participants affected, to disqualify any ISO
under Section 422 of the Code.
An ISO shall not be granted to an individual who, on the date of grant,
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the employing Company or of its parent or any
subsidiary corporation.
The aggregate Fair Market Value, determined on the Award Date, of the
shares of Common Stock with respect to which one or more ISOs that are
exercisable for the first time by the Participant during any calendar year
shall not exceed the $100,000 limitation imposed by Section 422(d) of the
Code.
(iv) Manner of Payment of Option Price. The Option Price shall be paid
in full at the time of the exercise of the Stock Option and may be paid in
any of the following methods or combinations thereof;
(A) In United States dollars in cash, check, bank draft or money
order payable to the order of the Company;
(B) By the delivery of shares of Common Stock having an
aggregate Fair Market Value on the date of such exercise to the Option
Price;
(C) Participants may simultaneously exercise the Stock Option
and sell their shares of Common Stock acquired thereby and apply the
proceeds to the payment of the Option Price pursuant to the procedures
established by the Committee; and
(D) In any other manner that the Committee shall approve.
Any shares of Common Stock required or permitted to be sold by an
executive officer of the Company in connection with the payment of the
Option Price shall be transferred to the Company.
(v) Reload Stock Options. The Committee may award Reload Stock Options
to any Participant either in combination with other Awards or in separate
Award Agreements that grant Reload Stock Options upon exercise of
outstanding stock options granted under this Plan or otherwise.
(b) Stock Appreciation Rights.
(i) Awards. The Committee may award any Participant SARs, which shall
be subject to such additional terms, conditions, or restrictions as may be
provided in the Award Agreement relating to such SAR Award, including any
limits on aggregate appreciation. SARs may be settled in Common Stock or
cash or both.
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(ii) Award Price. The award price per share of Common Stock of an SAR
shall be fixed in the Award Agreement and shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date of the Award.
(iii) Distribution of SARs. SARs shall be exercisable in accordance
with the conditions and procedures set out in the Award Agreement relating
to such SAR Award.
(c) Restricted Stock. The Committee may award Restricted Stock to any
Participant. Awards of Restricted Stock shall be subject to such conditions and
restrictions as are established by the Committee and set forth in the Award
Agreement, which may include, but are not limited to, continued service with the
Company, achievement of specific business objectives, and other measurements of
individual or business unit or Company performance.
(d) Stock Equivalent Units. The Committee may award Stock Equivalent Units
to any Participant. All or part of any Stock Equivalent Units Award may be
subject to conditions and restrictions established by the Committee, and set
forth in the Award Agreement, which may include some or all of the following:
continued service with the Company, achievement of specific business objectives,
and other measurements of individual or business unit or Company performance
that may include but shall not be limited to, earnings per share, net profits,
total shareholder return, cash flow, return on shareholders' equity, EVA, and
cumulative return on net assets employed. Without limiting the generality of the
foregoing, it is intended that the Committee shall establish performance goals
applicable to Stock Equivalent Units granted to Participants who, in the
judgment of the Committee, may be Covered Employees, in such manner as shall
permit payments with respect thereto to qualify as "performance-based
compensation" as described in Section 162(m)(4)(C) of the Code. The maximum
number of Stock Equivalent Units that may be awarded to any Participant in any
one calendar year shall not exceed 100,000.
(e) Dividend Equivalents. The Committee may provide in any Award Agreement
in which Stock Equivalent Units are awarded that such Stock Equivalent Units may
accrue Dividend Equivalents. In lieu of awarding Dividend Equivalents, the
Committee may provide for automatic Awards of additional Stock Equivalent Units
on each date that cash dividends are paid on the Common Stock in an amount equal
to (i) the product of the dividend per share on the Common Stock times the total
number of Stock Equivalent Units then held by the Participant, divided by (ii)
the Fair Market Value of the Common Stock on the dividend payment date.
(f) Performance Units. Performance Units shall be based on the attainment,
over a specified period, of individual performance targets or, on other
parameters that may include but shall not be limited to, earnings per share, net
profits, total shareholder return, cash flow, return on shareholders' equity,
EVA, and cumulative return on net assets employed. Performance Units may be
settled in Common Stock or cash or both. Without limiting the generality of the
foregoing, it is intended that the Committee shall establish performance goals
applicable to Performance Units granted to Participants who, in the judgment of
the Committee, may be Covered Employees, in such a manner as shall permit
payments with respect thereto to qualify as "performance-based compensation" as
described in Section 162(m)(4)(C) of the Code. The maximum amount of
compensation that may be paid to any one Participant by means of Performance
Units with respect to any one year shall be $2,000,000.
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(g) The Committee may also, in its sole discretion, shorten or terminate
the restricted period or waive any other conditions for the lapse of
restrictions with respect to all or any portion of any Award. Notwithstanding
the foregoing, all restricted periods shall terminate and the Awards shall be
fully vested with respect to any Participant upon the Participant's Retirement,
death or Total Disability, coincident with termination of employment with
Automotive Companies. For purposes of this Section 8:
"Retirement" means the Participant's termination of employment with all
Automotive Companies at a time that is determined by the Committee to be
retirement; and
"Total Disability" means the permanent inability of the Participant, which
is a result of accident or sickness, to perform such Participant's occupation or
employment for which the Participant is suited by reason of the Participant's
previous training, education and experience and which results in the termination
of the Participant's employment with all Automotive Companies.
9. Dividends
The Committee may provide in the appropriate Award Agreement that dividends
on Restricted Stock may be paid currently in cash or credited to a Participant's
account for subsequent distribution as determined by the Committee. The Award
Agreement may provide for the reinvestment of dividends paid on Restricted Stock
in shares of Common Stock.
10. Deferrals and Settlements
Settlement of Awards may be in the form of cash, Common Stock, other
Awards, or in combinations thereof as the Committee shall determine, and which
such other restrictions as it may impose. The Committee may also require or
permit Participants to defer the issuance or vesting of shares or the settlement
of Awards under such rules and procedures as it may establish under the Plan.
The Committee may also provide that deferred settlements include the payment or
crediting of interest on, the deferral amounts or the payment or crediting of
Dividend Equivalents on deferred settlements denominated in shares.
11. Transferability and Beneficiaries
No Awards under the Plan shall be assignable, alienable, saleable or
otherwise transferable other than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order (as defined by
the Code) or Title I of the Employee Retirement Income Security Act, or the
rules thereunder unless otherwise determined by the Committee under the
following paragraph.
12. Award Agreements
Awards under the Plan shall be evidenced by Award Agreements that set forth
the details, conditions and limitations for each Award, which may include the
term of an Award (except that (i) except as provided in Section 8(g), no Award
shall vest in less than six months after the date the Award is granted and (ii)
in no event shall the term of any ISO exceed a period of ten years
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from the date of its grant), the provisions applicable in the event the
Participant's employment terminates, and the Company's authority to unilaterally
or bilaterally amend, modify, suspend, cancel or rescind any Award.
13. Amendments; Compliance with Applicable Laws
The Committee may suspend, terminate, or amend the Plan as it deems
necessary or appropriate to better achieve the purposes of the Plan, except
that, if shareholder approval is necessary in order for any such amendment to
comply with any applicable tax or regulatory requirements, including for these
purposes, any approval requirement which is a prerequisite for exemptive relief
under Section 16b of the Securities Exchange Act of 1934 (the "Exchange Act"),
no such amendment shall be made without the approval of the Company's
shareholders.
14. Tax Withholding
The Company shall have the right to (i) make deductions from any settlement
of an Award made under the Plan, including the delivery of vesting of shares, or
require shares or cash or both be withheld from any Award, in each case in an
amount sufficient to satisfy withholding of any federal, state or local taxes
required by law, or (ii) take such other action as may be necessary or
appropriate to satisfy any such withholding obligations. The Committee may
determine the manner in which such tax withholding may be satisfied, and may
permit shares of Common Stock (rounded up to the next whole number) to be used
to satisfy required tax withholding based on the Fair Market Value of any such
shares of Common Stock, as of the Settlement Date of the applicable Award.
15. Other Company Benefit and Compensation Programs
Unless otherwise specifically determined by the Committee, settlements of
Awards received by a Participant under the Plan shall not be deemed a part of
the Participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country. Further, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
necessary.
16. Unfunded Plan
Unless otherwise determined by the Committee, the Plan shall be unfunded
and shall not create (or be construed to create) a trust or separate fund or
funds. The Plan shall not establish any fiduciary relationship between the
Company and any Participant or other person. To the extent any person holds any
rights by virtue of an Award granted under the Plan, such right (unless
otherwise determined by the Committee) shall be no greater than the right of an
unsecured general creditor of the Company.
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17. Future Rights
No person shall have any claim or right to be granted an Award under the
Plan, and no Participant shall have any right under the Plan to be retained in
the employment of the Company or its affiliates.
18. Governing Law
The validity, construction and effect of the Plan, and any actions taken or
relating to the Plan, shall be determined in accordance with the laws of the
State of Illinois and applicable federal law.
19. Successors and Assigns
The Plan shall be binding on all successors and assigns of a Participant,
including, without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.
20. Rights as a Shareholder
Except as otherwise provided in any Award Agreement, a Participant shall
have no rights as a shareholder of the Company until he or she becomes the
holder of record of Common Stock.
21. Section 16b
No Award or other transaction shall be permitted under this Plan which
would have the effect of imposing liability on a Participant under Section 16 of
the Exchange Act. Irrespective of any other provision of this Plan or an Award
Agreement, any such Award or other transaction purportedly made under or
pursuant to this Plan shall be void, ab initio.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed on its
behalf by its respective officers thereunder duly authorized, on this day and
year set forth below.
TENNECO AUTOMOTIVE INC.
Date: ________________________ ________________________________
By: ____________________________
Its: ___________________________
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