-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MyI01z/l5ik8BsH6wnAfxE3HR+y+/OsMokdPxRMC7zknT/ysRL3mUd1phcfKChDI yZ/t0eFLt5iVyzVT236DTA== 0000950137-05-000573.txt : 20050121 0000950137-05-000573.hdr.sgml : 20050121 20050121100927 ACCESSION NUMBER: 0000950137-05-000573 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050117 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050121 DATE AS OF CHANGE: 20050121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENNECO AUTOMOTIVE INC CENTRAL INDEX KEY: 0001024725 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 760515284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12387 FILM NUMBER: 05540120 BUSINESS ADDRESS: STREET 1: 500 NORTH FIELD DRIVE CITY: LAKE FOREST STATE: IL ZIP: 60045 BUSINESS PHONE: 847-482-50 MAIL ADDRESS: STREET 1: 500 N FIELD DR STREET 2: ROOM T 2560B CITY: LAKE FOREST STATE: IL ZIP: 60045 FORMER COMPANY: FORMER CONFORMED NAME: NEW TENNECO INC DATE OF NAME CHANGE: 19961011 8-K 1 c91290e8vk.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 8-K Current Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 ---------------------------------- Date of Report (Date of earliest event reported): January 17, 2005 TENNECO AUTOMOTIVE INC. (Exact Name of Registrant as Specified in Charter) Delaware 1-12387 76-0515284 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation or File Number) of Incorporation organization) Identification No.) 500 NORTH FIELD DRIVE, LAKE FOREST, ILLINOIS 60045 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (847) 482-5000 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: / / Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) / / Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) / / Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) / / Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry Into a Material Definitive Agreement Tenneco Automotive Inc. is filing this Current Report on Form 8-K to file the following form of agreement that the company has adopted and intends to use from time to time in making awards to its employees pursuant to the company's long-term compensation program: Form of Restricted Stock Award Agreement for employees under the 2002 Long-Term Incentive Plan, as amended (providing for 1/3 of the award to vest on each of the first, second and third anniversaries of grant). The form of Restricted Stock Award Agreement for employees previously filed by the company provides for vesting at the end of three years. A copy of this document is filed as Exhibit 99.1 to this Current Report on Form 8-K, and is incorporated herein by reference. On January 17, 2005, the company awarded shares of restricted common stock to the following executive officers in the following amounts pursuant to such form of agreement: Frissora, Mark P. - 75,000; Donovan, Timothy R. - 18,000; Nair, Hari N. -18,000; Trammell, Kenneth R. - 12,000; Bauer, Brent J. - 12,000; Jackson, Timothy E. - 12,000; Schneider, Richard P. - 12,000; Schultz, Paul - 12,000; Yanos, Neal A. - 12,000; and Perkins, James - 4,000. Tenneco Automotive Inc. is also filing this Current Report on Form 8-K to file the following forms of agreements that the company has adopted and intends to use from time to time in making awards to its directors and employees pursuant to the company's long-term compensation program: (a) Form of Stock Option Agreement for employees under the 2002 Long-Term Incentive Plan, as amended (providing for a seven year option term) and (b) Form of Stock Option Agreement for non-employee directors under the 2002 Long-Term Incentive Plan, as amended (providing for a seven year option term). The forms of Stock Option Agreements previously filed by the company provide for a ten-year option term. Copies of these documents are filed as Exhibits 99.2 and 99.3 to this Current Report on Form 8-K, and are incorporated herein by reference. On January 17, 2005, the company awarded options to purchase common stock to the following persons in the following amounts pursuant to such forms of agreements: Frissora, Mark P. - 75,000; Donovan, Timothy R. - 18,000; Nair, Hari N. - 18,000; Trammell, Kenneth R. - 12,000; Bauer, Brent J. - 12,000; Jackson, Timothy E. - 12,000; Schneider, Richard P. - 12,000; Schultz, Paul - 12,000; Yanos, Neal A. - 12,000; Perkins, James - 2,500; and each non-employee director - 5,000. Item 9.01 Financial Statements and Exhibits Exhibit No. Description - ----------- ----------- 99.1 Form of Restricted Stock Award Agreement for employees under the 2002 Long-Term Incentive Plan, as amended (vesting 1/3 annually). 99.2 Form of Stock Option Agreement for employees under the 2002 Long-Term Incentive Plan, as amended (providing for a seven year option term). 99.3 Form of Stock Option Agreement for non-employee directors under the 2002 Long-Term Incentive Plan, as amended (providing for a seven year option term). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TENNECO AUTOMOTIVE INC. Date: January 20, 2005 By: /s/ Kenneth R. Trammell -------------------------- Kenneth R. Trammell Senior Vice President and Chief Financial Officer EX-99.1 2 c91290exv99w1.txt FORM OF RESTRICTED STOCK AWARD AGREEMENT EXHIBIT 99.1 [_______], 20[__] TENNECO AUTOMOTIVE INC. 2002 LONG-TERM INCENTIVE PLAN RESTRICTED STOCK AWARD AGREEMENT (Vesting 1/3 per Year) _______________________________________ Participant Pursuant to the provisions of the Tenneco Automotive Inc. 2002 Long-Term Incentive Plan (as the same may be amended from time to time in accordance with its terms, the "Plan"), you were granted an Award of [_______] shares of Common Stock of Tenneco Automotive Inc. ("Shares") as of [________] ("Grant Date"). The "Restricted Period" applicable to this Award begins on the Grant Date and ends (i) as to the first one-third of the Shares, on the first anniversary of the Grant Date, (ii) as to the second one-third of the Shares, on the second anniversary of the Grant Date and (iii) as to the remaining one-third of the Shares, on the third anniversary of the Grant Date. As used herein the term "Restricted Shares" means any Shares subject to this Award and for which the Restricted Period remains in effect. During the applicable Restricted Period, and until all conditions imposed on the related Restricted Shares are satisfied, such Restricted Shares are restricted in that (i) they will be held by the Company and may not be sold, transferred, pledged or otherwise encumbered, tendered or exchanged, or disposed of, by you unless otherwise provided by the Plan and (ii) they are subject to forfeiture by you under certain circumstances as described herein and in the Plan. However, as long as the applicable Restricted Shares have not been forfeited, during the related Restricted Period (a) you will be entitled to receive, subject to withholding for taxes, dividends (which for tax purposes will generally be treated as ordinary compensation) payable on the Restricted Shares, which the Company may require to be reinvested in additional shares of Common Stock subject to the same restrictions as the shares on which such dividends are paid and (b) you may vote the Restricted Shares. If you remain employed by the Company and its Subsidiaries throughout the applicable Restricted Period and all the conditions are satisfied, or if your employment by the Company and its Subsidiaries terminates before the termination of the applicable Restricted Period as a result of your Retirement, death or Total Disability, the restrictions on the related Restricted Shares will lapse, and shares of Common Stock in an amount equal to the number of Restricted Shares as to which the restrictions have lapsed will be delivered to you (or your beneficiary), subject to withholding for taxes. Generally, if your employment terminates for any other reason before the expiration of the Restricted Period, you will forfeit the Restricted Shares unless the Committee determines otherwise. You agree that the term "Restricted Shares" shall include any shares or other securities which you may receive or be entitled to receive as a result of the ownership of the original Restricted Shares, whether they are issued as a result of a share split, share dividend, recapitalization, or other subdivision or consolidation of shares effected without receipt of consideration by the Company or the result of the merger or consolidation of the Company, or sale of assets of the Company. For purposes hereof, the term "Retirement" means termination of your employment after you have met the eligibility requirements for early or normal retirement as established in accordance with the retirement plan of the Company or its Subsidiaries covering you at the time such termination occurs and the term "Total Disability" means your permanent and total disability as determined under the rules and guidelines established by the Company in order to qualify for long-term disability coverage under the Company's long-term disability plan in effect at the time of such determination. You will generally be taxed on the value of the Restricted Shares on the date the restrictions lapse. However, as an alternative, you may elect under Internal Revenue Code Section 83(b) to be taxed on the value of the Restricted Shares on the Grant Date, identified above. Whether it is beneficial for you to make this election should be determined after consultation with your personal tax advisor. If you make this election, the value of the Restricted Shares will be taxable to you in the year of the Grant Date, rather than in the year that the restrictions lapse. If you choose to make this election, you must so notify the Company in writing, file the election with the Internal Revenue Service within thirty (30) days after the Grant Date, and promptly pay the Company the amount it determines is needed to satisfy tax withholding requirements. You hereby agree that the Restricted Shares shall be held by the Company during the Restricted Period. All distributions under the Plan, including any distribution in respect of this Award, are subject to withholding of all applicable taxes, and the delivery of any shares or other benefits under the Plan or this Award is conditioned on satisfaction of the applicable tax withholding obligations. Except as otherwise provided by the Committee, such withholding obligations may be satisfied (a) through cash payment by the Participant, (b) through the surrender of shares of Common Stock which the Participant already owns, or (c) through the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Plan; provided, however, that such shares of Common Stock under this paragraph (c) may be used to satisfy not more than the Company's minimum statutory withholding obligation (based on minimum statutory withholding rates for Federal and state tax purposes, including without limitation payroll taxes, that are applicable to such supplemental taxable income). The Company shall have the right to deduct from this Award, shares sufficient to satisfy any tax withholdings required by law. As a condition of this Award, you are required to execute the acknowledgement at the bottom of the enclosed copy of this Award notice and return the acknowledged copy of this Award notice to the Human Resources Department of Tenneco Automotive Inc. in Lake Forest not later than thirty days from the date on which you receive it. Also enclosed is a form by which you may designate a beneficiary in the event of your death. This Award is subject to all of the definitions, terms and conditions of the Plan, a copy of which is enclosed. In the event of any discrepancy between the provisions of the Plan and this or any other communication regarding the Plan, the provisions of the Plan control. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Plan. ATTEST: TENNECO AUTOMOTIVE INC. _____________________________________ __________________________________ Corporate Secretary Sr. Vice President ACCEPTED: _____________________________________ Participant Date _____________________________________ Social Security Number or National ID _____________________________________ Street Address _____________________________________ City/State/Zip/Country 1 EX-99.2 3 c91290exv99w2.txt FORM OF STOCK OPTION AGREEMENT EXHIBIT 99.2 TENNECO AUTOMOTIVE INC. 2002 LONG-TERM INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (Employees -- 7 Year Term) THIS AWARD AGREEMENT (the "Agreement") is made and entered into as of the [___] day of [____], [____] by and between Tenneco Automotive Inc., a Delaware corporation (the "Company"), and [____] (the "Participant"). WITNESSETH: WHEREAS, the Board of Directors of the Company has adopted the Tenneco Automotive Inc. 2002 Long-Term Incentive Plan (as the same may be amended from time to time in accordance with its terms, the "Plan") (capitalized terms used and not otherwise defined herein shall have the meanings given thereto in the Plan, a copy of which is attached hereto and incorporated by reference herein); and WHEREAS, pursuant to the authority vested in it under the Plan, the Compensation/Nominating/Governance Committee of the Board of Directors of the Company (the "Committee") has approved the granting of the Award hereinafter described to the Participant. NOW, THEREFORE, the Company and the Participant hereby agree as follows: 1. Award of Option. The Company hereby grants the Participant an option (the "Option"), which shall be an NQO (a non-qualified stock option), to purchase [_______] shares (the "Option Shares") of Common Stock of the Company at the Exercise Price of [FAIR MARKET VALUE] per share, subject to adjustment in accordance with the Plan, on the terms and subject to the conditions set forth herein and in the Plan (the "Award Date" for the Option shall be the date of this Agreement). 2. Term of Option. Except in the event of the earlier lapse or termination of the Option in accordance with this Agreement or the Plan, as to all Option Shares for which the Option has not theretofore been exercised, the Option shall be in effect during the period commencing on the Award Date and until 3:00 p.m., Lake Forest, Illinois, time on the day that immediately precedes the seventh anniversary of the date of the Award Date; provided however, that the Participant's right to exercise the Option and purchase the Option Shares shall be subject to the conditions set forth in this Agreement. 3. Conditions of Exercise. (a) The Option shall vest, and the Options Shares shall become available for purchase as to all such Option Shares for which the Option has not theretofore been exercised, after the anniversary dates indicated below:
Anniversary Of Fraction of Total Option Shares Award Date Available for Purchase -------------- ------------------------------- 1st 1/3 2nd 2/3 3rd All
1 (b) Other Limitations and Provisions. (i) Notwithstanding the foregoing, all Option Shares for which the Option has not theretofore been exercised shall become available for purchase if the participant's employment with the Company and its Subsidiaries terminates by (A) Retirement, (B) Total Disability of the Participant, or (C) death of the Participant while employed by the Company or one of its Subsidiaries; provided however, the Committee may allow the Participant to exercise the Option at any time, in the Committee's sole discretion. For purposes hereof, the term "Retirement" means termination of employment after the Participant has met the eligibility requirements for early or normal retirement as established in accordance with the retirement plan of the Company or its Subsidiaries covering such Participant at the time such termination occurs and the term "Total Disability" means permanent and total disability as determined under the rules and guidelines established by the Company in order to qualify for long-term disability coverage under the Company's long-term disability plan in effect at the time of such determination. (ii) At any time the Option is in effect and Option Shares are available for purchase thereunder, the Option may be exercised in whole or in part. 4. Manner of Exercise. Each Option shall be exercisable in whole or in part, and any such exercise shall be deemed to have occurred on the latest of (i) the date of exercise designated in the written notice referred to in subparagraph (a) below, (ii) if the date so designated is not a business day, the first business day following such date, or (iii) the earliest business day by which the Company has received all of the following: (a) Written notice, in such form as the Company may require, designating, among other things, the date of exercise and the number of Option Shares to be purchased. (b) Payment of the aggregate Exercise Price for the Option Shares to be purchased with respect to such exercise by delivery of: (i) cash, a personal check or bank draft; or (ii) at the option of the Participant, shares of Common Stock having a Fair Market Value on the date of exercise equal to such aggregate Exercise Price; provided however, that the shares that are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Exercise Price or must have been purchased on the open market; or (iii) a combination of the methods described in clauses (i) and (ii) above; or (iv) payment pursuant to any arrangement that the Company maintains to enable the Participant to elect to pay the Exercise Price upon the exercise of the Option by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion of the shares of Common Stock) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; or (v) such other form of payment as the Committee shall authorize on or before the exercise date. (c) Any other documentation that the Company may reasonably require. 2 5. Delivery by the Company. As promptly as practicable after receipt of all items described in Paragraph 4, the Company shall deliver to the Participant certificates issued in Participant's name for the number of shares of Common Stock purchased by the Participant (and not sold or withheld as contemplated by Paragraph 4) upon exercise of all or any applicable portion of the Option. 6. Lapse of Options. Unless otherwise determined by the Committee in its sole discretion, the Option shall lapse at (and shall not be exercisable after) the time specified below: (a) If the Participant's employment with the Company and its Subsidiaries terminates by (A) Retirement, (B) Total Disability of the Participant, or (C) death of the Participant while employed by the Company or one of its Subsidiaries, the Option shall lapse at 3:00 p.m. Lake Forest, Illinois, time on the third anniversary of the date of such termination of employment (subject to earlier termination pursuant to Paragraph 2 hereof or as otherwise provided in the Plan); and (b) If the Participant's employment with the Company and its Subsidiaries terminates for any reason not specified in Paragraph 6(a), or if the Participant's employing Tenneco Company ceases to be a Tenneco Company, the Option shall lapse immediately upon such termination or cessation unless the Committee determines otherwise. 7. Adjustments. The Option granted hereby, the number and kind of shares subject to the Option and the purchase price per share shall be subject to adjustments by the Committee in accordance with Section 5.2(f) of the Plan. 8. Taxes. All distributions under the Plan, including any distribution in respect of this Option, are subject to withholding of all applicable taxes, and the delivery of any shares or other benefits under the Plan or this Option is conditioned on satisfaction of the applicable tax withholding obligations. Except as otherwise provided by the Committee, such withholding obligations may be satisfied (a) through cash payment by the Participant, (b) through the surrender of shares of Common Stock which the Participant already owns, or (c) through the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Plan; provided, however, that such shares of Common Stock under this paragraph (c) may be used to satisfy not more than the Company's minimum statutory withholding obligation (based on minimum statutory withholding rates for Federal and state tax purposes, including without limitation payroll taxes, that are applicable to such supplemental taxable income). 9. Rights as Stockholder. The Participant shall have no rights as a stockholder with respect to any shares of Common Stock subject to the Option until and unless the Participant becomes the stockholder of record of such shares. Except as provided in Paragraph 7, no adjustment shall be made for dividends or other rights for which the record date is prior to the date on which the Participant becomes such shareholder of record. 10. Employment. Neither the granting of the Option or any term or provision of this Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of the Company or any of its Subsidiaries to employ the Participant for any period of time. 11. Nontransferability. During the Participant's lifetime, the Options shall not be transferable (voluntarily or involuntarily) and are exercisable only by the Participant or, during his disability, by his legal representative. The Options shall pass, upon death, to the beneficiary designated by the Participant on a form provided by, and filed prior to death with, the Company. If no designation is made or if the designated beneficiary does not survive the Participant's death, the Option shall pass by will or the laws of descent and distribution. Following the Participant's death, the Option, if exercisable in accordance with this Agreement, may be exercised by the person to whom such option or right passes according to the foregoing or by such person's estate, heirs or devisees. 3 12. Amendment. This Agreement may be amended, without the consent of the Participant, as follows: (a) The Agreement may be cancelled or amended by the Committee at any time if the Committee determines that cancellation or amendment is necessary or advisable because of any change or clarification after the Award Date of any applicable law or governmental regulation, including any applicable federal or state securities law; and (b) Subject to any required approval by Company stockholders, the Committee may amend or cancel this Agreement at any time for reasons other than those stated in subparagraph (a) above; provided, that no amendment or cancellation may, in the absence of written consent to the change by the Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of the Participant or any beneficiary under this Award prior to the date such amendment is adopted by the Board (it being understood that adjustments pursuant to Section 5.2(f) of the Plan shall not be subject to the foregoing limitations). 13. Miscellaneous. (a) Headings. The headings in this Agreement are inserted for convenience only and shall have no significance in the interpretation of this Agreement. (b) Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereunder and supersedes any prior arrangements or understandings with respect thereto, written or oral. No agreements or representations, oral or otherwise expressed or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement (including the Plan). (c) Successors. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representative and successors. (d) Governing Documents and Law. In the event of any inconsistency between the terms of this Agreement and the Plan, the terms of the Plan shall control. The validity, construction and effect of this Agreement, and any actions taken or relating to this Agreement, shall be determined in accordance with the laws of the State of Illinois and applicable federal law. (e) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. 4 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date and year first above written. ATTEST: ACCEPTED: TENNECO AUTOMOTIVE INC. - ------------------------------------- ---------------------------------- Type or Print Legal Name (Date) Sr. Vice President - ------------------------------------- ---------------------------------- Signature Corporate Secretary - ------------------------------------- Social Security Number or National ID - ------------------------------------- Street Address - ------------------------------------- City/State/Zip/Country 5 EX-99.3 4 c91290exv99w3.txt FORM OF STOCK OPTION AGREEMENT EXHIBIT 99.3 TENNECO AUTOMOTIVE INC. 2002 LONG-TERM INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (Non-Employee Directors) (7 Year Option Term) THIS AWARD AGREEMENT (the "Agreement") is made and entered into as of the [___] day of [________], [___] by and between Tenneco Automotive Inc., a Delaware corporation (the "Company"), and [____] (the "Participant"). WITNESSETH: WHEREAS, the Board of Directors of the Company has adopted the Tenneco Automotive Inc. 2002 Long-Term Incentive Plan (as the same may be amended from time to time in accordance with its terms, the "Plan") (capitalized terms used and not otherwise defined herein shall have the meanings given thereto in the Plan, a copy of which is attached hereto and incorporated by reference herein); and WHEREAS, pursuant to the authority vested in it under the Plan, the Compensation/Nominating/Governance Committee of the Board of Directors of the Company (the "Committee") has approved the granting of the Award hereinafter described to the Participant. NOW, THEREFORE, the Company and the Participant hereby agree as follows: 1. Award of Option. The Company hereby grants the Participant an option (the "Option"), which shall be an NQO (a non-qualified stock option), to purchase [_______] shares (the "Option Shares") of Common Stock of the Company at the Exercise Price of [$FAIR MARKET VALUE] per share, subject to adjustment in accordance with the Plan, on the terms and subject to the conditions set forth herein and in the Plan (the "Award Date" for the Option shall be the date of this Agreement). 2. Term of Option. Except in the event of the earlier lapse or termination of the Option in accordance with this Agreement or the Plan, as to all Option Shares for which the Option has not theretofore been exercised, the Option shall be in effect during the period commencing on the Award Date and until 3:00 p.m., Lake Forest, Illinois, time on the day that immediately precedes the seventh anniversary of the date of the Award Date; provided however, that the Participant's right to exercise the Option and purchase the Option Shares shall be subject to the conditions set forth in this Agreement. 3. Conditions of Exercise. (a) The Option shall vest, and the Options Shares shall become available for purchase as to all such Option Shares for which the Option has not theretofore been exercised, on the date which is six months after the Award Date. (b) Other Limitations and Provisions. (i) Notwithstanding the foregoing, all Option Shares for which the Option has not theretofore been exercised shall become available for purchase if the participant's service as a director of the Company terminates by (A) Retirement, (B) Total Disability of the Participant, or (C) death of the Participant while a director of the Company; provided however, the Committee may allow the Participant to exercise the Option at any time, in the Committee's sole discretion. For purposes hereof, the term "Retirement" means termination of service as a director after the Participant has met the eligibility requirements for early or normal retirement as established in 1 accordance with the retirement plan of the Company at the time such termination occurs (determined as if the Participant were an employee of the Company at the time) and the term "Total Disability" means permanent and total disability as determined under the rules and guidelines established by the Company in order to qualify for long-term disability coverage under the Company's long-term disability plan in effect at the time of such determination. (ii) At any time the Option is in effect and Option Shares are available for purchase thereunder, the Option may be exercised in whole or in part. 4. Manner of Exercise. Each Option shall be exercisable in whole or in part, and any such exercise shall be deemed to have occurred on the latest of (i) the date of exercise designated in the written notice referred to in subparagraph (a) below, (ii) if the date so designated is not a business day, the first business day following such date, or (iii) the earliest business day by which the Company has received all of the following: (a) Written notice, in such form as the Company may require, designating, among other things, the date of exercise and the number of Option Shares to be purchased. (b) Payment of the aggregate Exercise Price for the Option Shares to be purchased with respect to such exercise by delivery of: (i) cash, a personal check or bank draft; or (ii) at the option of the Participant, shares of Common Stock having a Fair Market Value on the date of exercise equal to such aggregate Exercise Price; provided however, that the shares that are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Exercise Price or must have been purchased on the open market; or (iii) a combination of the methods described in clauses (i) and (ii) above; or (iv) payment pursuant to any arrangement that the Company maintains to enable the Participant to elect to pay the Exercise Price upon the exercise of the Option by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion of the shares of Common Stock) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; or (v) such other form of payment as the Committee shall authorize on or before the exercise date. (c) Any other documentation that the Company may reasonably require. 5. Delivery by the Company. As promptly as practicable after receipt of all items described in Paragraph 4, the Company shall deliver to the Participant certificates issued in Participant's name for the number of shares of Common Stock purchased by the Participant (and not sold or withheld as contemplated by Paragraph 4) upon exercise of all or any applicable portion of the Option. 6. Lapse of Options. Unless otherwise determined by the Committee in its sole discretion, the Option shall lapse at (and shall not be exercisable after) the time specified below: 2 (a) If the Participant's service as a director of the Company terminates by (A) Retirement, (B) Total Disability of the Participant, or (C) death of the Participant while a director of the Company, the Option shall lapse at 3:00 p.m. Lake Forest, Illinois, time on the third anniversary of the date of such termination of employment (subject to earlier termination pursuant to Paragraph 2 hereof or as otherwise provided in the Plan); and (b) If the Participant's service as a director of the Company terminates for any reason not specified in Paragraph 6(a), the Option shall lapse immediately upon such termination unless the Committee determines otherwise. 7. Adjustments. The Option granted hereby, the number and kind of shares subject to the Option and the purchase price per share shall be subject to adjustments by the Committee in accordance with Section 5.2(f) of the Plan. 8. Taxes. All distributions under the Plan, including any distribution in respect of this Option, are subject to withholding of all applicable taxes, and the delivery of any shares or other benefits under the Plan or this Option is conditioned on satisfaction of the applicable tax withholding obligations. Except as otherwise provided by the Committee, such withholding obligations may be satisfied (a) through cash payment by the Participant, (b) through the surrender of shares of Common Stock which the Participant already owns, or (c) through the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Plan; provided, however, that such shares of Common Stock under this paragraph (c) may be used to satisfy not more than the Company's minimum statutory withholding obligation (based on minimum statutory withholding rates for Federal and state tax purposes, including without limitation payroll taxes, that are applicable to such supplemental taxable income). 9. Rights as Stockholder. The Participant shall have no rights as a stockholder with respect to any shares of Common Stock subject to the Option until and unless the Participant becomes the stockholder of record of such shares. Except as provided in Paragraph 7, no adjustment shall be made for dividends or other rights for which the record date is prior to the date on which the Participant becomes such shareholder of record. 10. Employment or Service. Neither the granting of the Option or any term or provision of this Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of the Company or any of its Subsidiaries to employ the Participant or retain the Participant in service as a director for any period of time. 11. Nontransferability. During the Participant's lifetime, the Options shall not be transferable (voluntarily or involuntarily) and are exercisable only by the Participant or, during his disability, by his legal representative. The Options shall pass, upon death, to the beneficiary designated by the Participant on a form provided by, and filed prior to death with, the Company. If no designation is made or if the designated beneficiary does not survive the Participant's death, the Option shall pass by will or the laws of descent and distribution. Following the Participant's death, the Option, if exercisable in accordance with this Agreement, may be exercised by the person to whom such option or right passes according to the foregoing or by such person's estate, heirs or devisees. 12. Amendment. This Agreement may be amended, without the consent of the Participant, as follows: (a) The Agreement may be cancelled or amended by the Committee at any time if the Committee determines that cancellation or amendment is necessary or advisable because of any change or clarification after the Award Date of any applicable law or governmental regulation, including any applicable federal or state securities law; and 3 (b) Subject to any required approval by Company stockholders, the Committee may amend or cancel this Agreement at any time for reasons other than those stated in subparagraph (a) above; provided, that no amendment or cancellation may, in the absence of written consent to the change by the Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of the Participant or any beneficiary under this Award prior to the date such amendment is adopted by the Board (it being understood that adjustments pursuant to Section 5.2(f) of the Plan shall not be subject to the foregoing limitations). 13. Miscellaneous. (a) Headings. The headings in this Agreement are inserted for convenience only and shall have no significance in the interpretation of this Agreement. (b) Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereunder and supersedes any prior arrangements or understandings with respect thereto, written or oral. No agreements or representations, oral or otherwise expressed or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement (including the Plan). (c) Successors. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representative and successors. (d) Governing Documents and Law. In the event of any inconsistency between the terms of this Agreement and the Plan, the terms of the Plan shall control. The validity, construction and effect of this Agreement, and any actions taken or relating to this Agreement, shall be determined in accordance with the laws of the State of Illinois and applicable federal law. (e) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. 4 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date and year first above written. ATTEST: ACCEPTED: TENNECO AUTOMOTIVE INC. - ------------------------------------- ---------------------------------- Type or Print Legal Name (Date) Sr. Vice President - ------------------------------------- ---------------------------------- Signature Corporate Secretary - ------------------------------------- Social Security Number or National ID - ------------------------------------- Street Address - ------------------------------------- City/State/Zip/Country 5 -----END PRIVACY-ENHANCED MESSAGE-----