<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Tenneco Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date filed:
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<PAGE> 2
[TENNECO INC. LETTERHEAD]
September 21, 1999
To the Shareowners of Tenneco Inc.:
I invite you to attend a special meeting of Tenneco shareowners on Monday,
October 25, 1999 at the offices of Tenneco Automotive, located at 500 North
Field Drive, Lake Forest, Illinois at 10:30 a.m., local time. A notice of the
meeting, a proxy and a proxy statement containing information about the matters
to be acted upon are enclosed. At this special meeting, you will be asked to
approve two important amendments to the Company's Restated Certificate of
Incorporation. These amendments, if adopted, would take effect only after the
Company's planned spin-off of its packaging business, which is currently
scheduled for November 1999. As such, these amendments would apply solely to
your remaining interest in Tenneco Inc., which upon the spin-off will include
only the Company's automotive business and will be renamed "Tenneco Automotive
Inc."
The Board of Directors believes that these amendments could position
Tenneco more attractively with investors following the spin-off of the packaging
business. HOWEVER, THESE AMENDMENTS ARE NOT REQUIRED IN ORDER TO COMPLETE THE
SPIN-OFF. THEREFORE, TENNECO PLANS TO GO FORWARD WITH THE SPIN-OFF EVEN IF THE
AMENDMENTS ARE NOT APPROVED. If the amendments are approved but Tenneco does not
complete the spin-off by its next annual shareowners' meeting, the Board may
elect to abandon the amendments.
The amendments, if adopted, will:
- provide for the annual election of directors, eliminating the current
classification of the Company's Board of Directors, whereby there are
three classes of directors serving staggered three-year terms; and
- effect a one-for-five reverse stock split of the Company's common stock
(the reverse stock split will not change your proportionate equity
interest in the Company except as may result from the disposition of any
fractional shares to which you would otherwise be entitled).
Holders of common stock are entitled to vote at the special meeting on the
basis of one vote for each share held.
The Board of Directors expects that the share price of the Company's common
stock will decrease significantly to reflect the dividend of the packaging
business to shareowners. This lower share price could adversely impact the
marketability of Tenneco's common shares. The Board of Directors believes that
the reverse stock split could position the remaining automotive company more
attractively with institutional investors who generally have restrictions on
investing in low-priced stocks and retail brokers who are often not inclined to
invest in low-priced stocks. The Board of Directors also believes that providing
for the annual election of directors could position the Company more
attractively with the investment community, who may view classified boards as
reducing director accountability to shareowners.
THE TENNECO BOARD HAS DETERMINED THAT THE AMENDMENTS ARE IN THE BEST
INTEREST OF THE COMPANY'S SHAREOWNERS. THE BOARD HAS APPROVED AND DECLARED THE
ADVISABILITY OF THE AMENDMENTS AND RECOMMENDS THAT SHAREOWNERS APPROVE THE
AMENDMENTS.
Whether or not you plan to attend the special meeting, please assist us in
preparing for the meeting by completing, executing and returning your proxy card
promptly or using our telephone or internet proxy submission procedures. If you
attend the special meeting in person, you may, if you wish, vote personally,
even if you have previously returned your proxy card or submitted a proxy by
telephone or the internet.
Very truly yours,
/s/ DANA G. MEAD
DANA G. MEAD
Chairman and Chief Executive Officer
<PAGE> 3
<TABLE>
<S> <C>
Tenneco Inc. TENNECO
1275 King Street
Greenwich, Connecticut 06831-2946
(203) 863-1000
</TABLE>
NOTICE OF
SPECIAL MEETING OF SHAREOWNERS
OCTOBER 25, 1999
NOTICE IS HEREBY GIVEN that a special meeting of shareowners of Tenneco
Inc., a Delaware corporation (the "Company"), will be held at the offices of
Tenneco Automotive, located at 500 North Field Drive, Lake Forest, Illinois, on
Monday, October 25, 1999, at 10:30 a.m., local time, for the following purposes:
1. To consider and approve a proposal to amend the Company's Restated
Certificate of Incorporation, as amended, to provide for the annual election of
directors;
2. To consider and approve a proposal to amend the Company's Restated
Certificate of Incorporation, as amended, to effect a one-for-five reverse stock
split of the Company's common stock (the "Common Stock"), as a result of which
holders of Common Stock will receive one share of Common Stock for every five
shares of Common Stock owned at the effective time of the amendment (with cash
being paid in lieu of fractional shares); and
3. To transact such other business, including, without limitation, the
adjournment of the special meeting (including an adjournment of the special
meeting to obtain a quorum or solicit additional proxies), as may properly come
before the special meeting.
The Board of Directors has fixed the close of business on September 13,
1999 as the record date for the determination of stockholders entitled to notice
of and to vote at the special meeting and any adjournments or postponements
thereof. A list of these stockholders will be available for examination by any
stockholder for any purpose germane to the special meeting, during normal
business hours at the offices of Tenneco Automotive, for a period of at least
ten days prior to the special meeting.
Each shareowner is cordially invited to attend the special meeting in
person. Whether or not you plan to attend the special meeting in person, in
order to assure your representation at the meeting, you are urged to complete,
date and sign the enclosed proxy card and return it to the Company in the
enclosed envelope, which requires no postage if mailed in the United States, or
to utilize our telephone or internet proxy submission procedures. If you attend
the special meeting in person, you may, if you wish, vote personally, even if
you have previously returned your proxy card or submitted a proxy by telephone
or the internet.
By Order of the Board of Directors,
KARL A. STEWART
Secretary
Greenwich, Connecticut
September 21, 1999
<PAGE> 4
Tenneco Inc.
1275 King Street
Greenwich, Connecticut 06831-2946
(203) 863-1000 TENNECO
September 21, 1999
PROXY STATEMENT
This proxy statement is being furnished to shareowners of Tenneco Inc., a
Delaware corporation ("Tenneco" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
special meeting of shareowners, and any adjournments or postponements thereof.
The Company's special meeting of shareowners will be held on October 25,
1999, at the time and place set out in the accompanying notice. At the special
meeting, holders of record as of the close of business on September 13, 1999
(the "Record Date") of the outstanding shares of the Company's common stock
will, to the extent and as described herein, consider and vote upon two
amendments to the Company's Restated Certificate of Incorporation, as amended
(the "Certificate of Incorporation"). These amendments, if adopted, will take
effect only after the Company's planned spin-off of its packaging business,
which is currently scheduled for November 1999. As such, these amendments would
apply solely to a shareowner's remaining interest in Tenneco, which upon the
spin-off will include only the Company's automotive business and will be renamed
"Tenneco Automotive Inc." Please note that the Company plans to go forward with
the spin-off even if the amendments are not approved. If the amendments are
approved but Tenneco does not complete the spin-off by its next annual
shareowners' meeting, the Board may elect to abandon the amendments.
The amendments, if adopted, will:
- provide for the annual election of directors, eliminating the current
classification of the Company's Board of Directors, whereby there are
three classes of directors serving staggered three-year terms; and
- effect a one-for-five reverse stock split of the Company's common stock
(the reverse stock split will not change a shareowner's proportionate
equity interest in the Company except as may result from the disposition
of any fractional shares to which a shareowner would otherwise be
entitled).
At the close of business on September 13, 1999 there were 170,731,731
shares of common stock issued and outstanding and entitled to vote. At the
special meeting, the holders of these shares as of that time will be entitled to
one vote for each share held. This proxy statement is first being mailed to
shareowners on or about September 21, 1999.
If a shareowner properly executes and returns the enclosed form of proxy,
it will be voted according to his, her or its instructions. If no instructions
are given, then the proxy will be voted FOR approval of the two amendments to
the Certificate of Incorporation described in this proxy statement.
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<PAGE> 5
BACKGROUND
In July 1998, the Company's Board of Directors authorized the Company's
management to develop a broad range of strategic alternatives which could result
in the separation of the Company's automotive, paperboard packaging and
specialty packaging businesses. As part of that strategic alternatives analysis,
the Company has taken the following actions:
- In January 1999, the Company reached an agreement to contribute the
containerboard assets of its paperboard packaging segment to a new joint
venture with an affiliate of Madison Dearborn Partners, Inc. The
contribution of the containerboard assets to the joint venture was
completed in April 1999. The Company received consideration of cash and
debt assumption totaling approximately $2 billion and a 45 percent common
equity interest in the joint venture (now 43 percent due to subsequent
management equity issuances).
- In April 1999, the Company reached an agreement to sell the paperboard
packaging segment's other assets, its folding carton operations, to
Caraustar Industries. This transaction closed in June 1999.
- Also in April 1999, the Company announced that its Board of Directors had
approved the separation of its automotive and packaging businesses into
two separate, independent companies.
- In June 1999, the Company's Board of Directors approved a plan to sell
the Company's remaining interest in its containerboard joint venture. The
Company expects the sale to be completed before the spin-off of the new
packaging company discussed below.
The separation of the automotive and packaging businesses will be
accomplished by the spin-off of the Company's packaging business to the
Company's shareowners. In the spin-off, shareowners will receive one share of
common stock of the packaging company ("Packaging") for each share of Tenneco's
common stock held. At the time of the spin-off, Packaging will include the
Company's specialty packaging business, administrative services operations and,
if not previously sold, remaining interest in the containerboard joint venture.
When the spin-off is completed, the Company's remaining operations will
consist solely of its automotive businesses. The Company will be renamed
"Tenneco Automotive Inc." and will be a worldwide manufacturer and marketer of
automotive emissions control and ride control products and systems for vehicle
manufacturers and the repair and replacement market, or aftermarket.
Tenneco's Board of Directors has determined that the spin-off is in the
best interests of the Company's shareowners because divergent industry trends
increasingly require the Company's packaging and automotive businesses to pursue
different strategies. The spin-off is designed to separate the Company's
packaging business from its automotive business, which have distinct financial,
investment and operating characteristics, so that each can adopt strategies and
pursue objectives appropriate to its specific needs.
IF ADOPTED, THE PROPOSED AMENDMENTS TO THE COMPANY'S CERTIFICATE OF
INCORPORATION WILL NOT BECOME EFFECTIVE UNTIL AFTER THE SPIN-OFF IS COMPLETE.
CONSEQUENTLY, THE CHANGES TO THE COMPANY'S CERTIFICATE OF INCORPORATION IN THE
AMENDMENTS WILL NOT IN ANY WAY AFFECT THE NEWLY INDEPENDENT PACKAGING COMPANY.
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AMENDMENT OF THE CERTIFICATE OF
INCORPORATION TO PROVIDE
FOR ANNUAL ELECTION OF
DIRECTORS
(ITEM 1)
The Board of Directors has declared advisable, authorized and approved, and
recommends to shareowners that they consider and approve, an amendment to the
Company's Certificate of Incorporation to provide for the annual election of the
Company's directors (the "Board Amendment"). To approve the Board Amendment,
holders of a majority of the Company's common stock issued and outstanding as of
the Record Date must vote in favor of the Board Amendment. If the Board
Amendment is approved, a certificate of amendment to the Certificate of
Incorporation, in the form of Appendix A, will be filed with the Secretary of
State of the State of Delaware. If approved, the Board Amendment will be
effected only if, and then as quickly as possible after, the spin-off is
completed. THE APPROVAL OF THE BOARD AMENDMENT IS NOT A CONDITION TO THE
COMPLETION OF THE SPIN-OFF. If the Board Amendment is approved but the spin-off
is not completed by Tenneco's next annual shareowners' meeting, the Board of
Directors will have the right to abandon the Board Amendment before it becomes
effective.
BACKGROUND
Currently, the Company's Certificate of Incorporation provides for a
classified Board of Directors; that is, a system under which one-third of the
directors are elected annually, each for a three-year term. The Company and many
other large corporations adopted a classified board structure in response to
widespread concern over the use of abusive techniques by corporate "raiders" and
others who engaged in hostile and non-negotiated attempts to acquire
corporations to the disadvantage of stockholders. Because classified directors
serve extended terms, a classified board can operate to prevent the acquisition
of control of a company in a short period of time. This may have the effect of
discouraging interested parties from pursuing control of a company, whether
through a proxy contest for the election of directors or the acquisition of
large blocks of stock.
Recently, however, some members of the investment community have begun to
perceive classified boards as a mechanism to entrench directors improperly.
These investors have suggested that corporate acquisition techniques have
evolved and the ability of boards of directors to exercise their fiduciary
responsibilities to stockholders in the context of proposed acquisitions has
been substantially strengthened through the use of stockholder rights plans and
the continuing development of basic principles of corporate law and practice.
At the Company's annual meeting of shareowners held on May 11, 1999, a
shareowner proposal was adopted that requested the Board of Directors take steps
to declassify the Board. As a consequence of the action by the shareowners and
as part of its continuing efforts to be responsive to shareowners, the Board
believes the Company's directors should be elected annually.
BOARD AMENDMENT AND RECOMMENDATION
The Board Amendment would phase out the current division of the Board of
Directors into three classes, with one class elected each year for a three-year
term, and provide instead for the annual election of directors commencing with
the class of directors standing for election at the next annual meeting of
shareowners. In order to ensure the smooth transition to the new system, the
Board Amendment would not shorten the terms of directors elected or appointed
prior to it becoming effective. The new procedure would, however, apply to all
directors as their terms expire. This follows the shareowner recommendation at
the annual meeting, which called for the new policy to be applicable to the
re-election of any incumbent director whose term, under the current classified
system, subsequently expires.
As a result of the Board Amendment, the individuals who will be the
Company's Class I directors when the spin-off is completed, Mark Andrews and
David B. Price, Jr., would stand for election at the next annual meeting of
shareowners (scheduled for 2000) for a one-year term. At the following annual
meeting of shareowners (scheduled for 2001), those two directors, together with
the Class II directors when the spin-off is completed (Dana G. Mead, M. Kathryn
Eickhoff and Roger B. Porter), would stand for election for a one-
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<PAGE> 7
year term. Beginning with the third succeeding annual meeting of shareowners
(scheduled for 2002), the classification of the Board would terminate and all
directors (including the Class III directors when the spin-off is completed,
Mark P. Frissora (the new Chief Executive Officer of Tenneco Automotive), Paul
T. Stecko and Sir David Plastow) would be subject to annual election.
If the Board Amendment is approved, the fifth article of the Company's
current Certificate of Incorporation would be deleted and replaced by the
following:
"FIFTH: A. The business and affairs of the corporation shall be
managed by or under the direction of a Board of Directors consisting
of not less than eight nor more than sixteen directors to be
determined from time to time by resolution adopted by the affirmative
vote of a majority of the entire Board of Directors. For purposes of
this Restated Certificate of Incorporation, the "entire Board of
Directors" shall mean the number of directors that would be in office
if there were no vacancies nor any unfilled newly created
directorships. Until the third annual meeting of stockholders
following effectiveness of this Certificate of Amendment under the
General Corporation Law of the State of Delaware, the directors shall
be divided into three classes, consisting initially of two, three and
three directors and designated Class I, Class II and Class III,
respectively. Each director elected or appointed prior to the
effectiveness of this Certificate of Amendment under the General
Corporation Law of the State of Delaware, shall serve for their full
term, such that the term of each Class I director shall end at the
first succeeding annual meeting of stockholders, the term of each
Class II director shall end at the second succeeding annual meeting of
stockholders, and the term of each Class III director shall end at the
third succeeding annual meeting of stockholders. The term of each
director elected after the effectiveness of this Certificate of
Amendment under the General Corporation Law of the State of Delaware
whether at an annual meeting or to fill a vacancy in the Board of
Directors arising for any reason, including an increase in the size of
the Board of Directors, shall end at the first annual meeting
following his or her election. Commencing with the third annual
meeting of stockholders following effectiveness of this Certificate of
Amendment under the General Corporation Law of the State of Delaware,
the foregoing classification of the Board of Directors shall cease,
and all directors shall be of one class and serve for a term ending at
the annual meeting following the annual meeting at which the director
was elected. In no case shall a decrease in the number of directors
shorten the term of any incumbent director. Each director shall hold
office after the annual meeting at which his or her term is scheduled
to end until his or her successor shall be elected and shall qualify,
subject, however, to prior death, resignation, disqualification or
removal from office in accordance with the General Corporation Law of
the State of Delaware. Any newly created directorship resulting from
an increase in the number of directors may be filled by a majority of
the Board of Directors then in office, provided that a quorum is
present, and any other vacancy on the Board of Directors may be filled
by a majority of the directors then in office, even if less than a
quorum, or by a sole remaining director.
B. Notwithstanding the provisions of Section A of Article FIFTH,
whenever the holders of any one or more classes or series of Preferred
Stock issued by the corporation shall have the right, voting
separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling
of vacancies and other features of such directorships shall be
governed by the terms of this Restated Certificate of Incorporation
applicable thereto or the resolution or resolutions adopted by the
Board of Directors applicable thereto.
C. The Board of Directors shall be authorized to adopt, make,
amend, alter, change, add to or repeal the By-Laws of the corporation,
subject to the power of the stockholders to amend, alter, change, add
to or repeal the By-Laws made by the Board of Directors.
D. Unless and except to the extent that the By-Laws of the
corporation shall so require, the election of directors of the
corporation need not be by written ballot."
Shareowners have no appraisal rights under Delaware law or under the
Company's Certificate of Incorporation or By-laws in connection with the Board
Amendment.
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<PAGE> 8
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO PROVIDE FOR THE
ANNUAL ELECTION OF DIRECTORS.
IF ADOPTED, THE BOARD AMENDMENT WILL NOT BECOME EFFECTIVE UNTIL AFTER THE
COMPANY COMPLETES THE SPIN-OFF OF PACKAGING. THE ADOPTION OF THE BOARD AMENDMENT
IS NOT A CONDITION TO THE COMPLETION OF THE SPIN-OFF. IF THE BOARD AMENDMENT IS
APPROVED BUT THE SPIN-OFF IS NOT COMPLETED BY TENNECO'S NEXT ANNUAL SHAREOWNERS'
MEETING, THE BOARD OF DIRECTORS WILL HAVE THE RIGHT TO ABANDON THE BOARD
AMENDMENT BEFORE IT BECOMES EFFECTIVE.
AMENDMENT OF THE CERTIFICATE OF
INCORPORATION TO PROVIDE
FOR A REVERSE STOCK SPLIT
(ITEM 2)
The Board of Directors has declared advisable, authorized and approved, and
recommends to shareowners that they consider and approve, an amendment to the
Company's Certificate of Incorporation to effect a one-for-five reverse stock
split (the "Reverse Stock Split") of the Company's common stock (the
"Reclassification Amendment") as soon as practicable after the spin-off of
Packaging. To approve the Reclassification Amendment, holders of a majority of
the common stock issued and outstanding on the Record Date must vote in favor of
the Reclassification Amendment. The effectiveness of the Reclassification
Amendment is conditioned on (a) the Company's completion of the spin-off and (b)
the receipt from the Internal Revenue Service ("IRS") of a favorable
supplemental ruling, or receipt of an opinion of counsel satisfactory to
Tenneco, to the effect that the Reverse Stock Split will not adversely impact
the IRS ruling letter issued to the Company dated August 20, 1999 regarding,
among other things, the tax-free nature of the spin-off to the Company and its
shareowners.
The Reclassification Amendment will not be effected if the spin-off is not
completed or if a favorable supplemental IRS ruling or legal opinion is not
received. If each of these conditions is met and the Reclassification Amendment
is approved, a certificate of amendment to the Certificate of Incorporation, in
the form of Appendix B, will be filed with the Secretary of State of the State
of Delaware, and the Reclassification Amendment will be effected as quickly as
practicable after the completion of the spin-off. THE APPROVAL OF THE
RECLASSIFICATION AMENDMENT IS NOT A CONDITION TO THE COMPLETION OF THE SPIN-OFF.
If the Reclassification Amendment is approved but the spin-off is not completed
by Tenneco's next annual shareowners' meeting, the Board of Directors will have
the right to abandon the Reclassification Amendment before it becomes effective.
BACKGROUND AND REASONS FOR THE REVERSE STOCK SPLIT.
The current market price of the Company's common stock reflects the
combination of Tenneco's automotive and packaging businesses. Because the
spin-off of the packaging business will result in shareowners holding their
interests in these businesses through two separate companies -- the Company and
Packaging -- the Company expects the market price of the Company's common stock
to be reduced significantly following the spin-off. See "Background."
On September 13, 1999, the closing sale price of a share of the Company's
common stock on the New York Stock Exchange ("NYSE") was $19.75. The market will
ultimately determine the trading price for the Company's common stock following
the spin-off. However, based on the amount of assets and debt the Company
expects each of Packaging and the Company to have upon the spin-off, the Company
believes the price of its common stock without the Reverse Stock Split could
decrease substantially, to a level at which the common stock could be subject to
practices and policies regarding low-priced stocks. As described above, however,
the market will ultimately determine the trading price of the Company's stock.
Many investors look upon low-priced stock as unduly speculative in nature
and, as a matter of policy, avoid investment in such stocks. These investors may
believe that low stock prices reflect companies that are of low quality or poor
performers. Accordingly, the Board of Directors believes that the post spin-off
per share price of the Company's common stock could reduce the marketability of
the shares because of the reluctance
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of many brokerage firms to recommend low-priced stock to their clients. Further,
various brokerage house policies and practices tend to discourage individual
brokers from dealing in low-priced stocks. Some of those policies and practices
pertain to the payment of brokers' commissions and to time-consuming procedures
which function to make the handling of low-priced stocks unattractive to brokers
from an economic standpoint. Further, several institutional investors have
policies prohibiting them from holding low-priced stock in their own portfolios.
In addition, the structure of trading commissions also tends to have an adverse
impact upon holders of low-priced stock because the brokerage commission on a
sale of low-priced stock generally represents a higher percentage of the sales
price than the commission on higher-priced issues.
The Board believes the Reverse Stock Split is desirable for several
reasons. It is intended to increase the acceptance of the Company's common stock
by the financial community and the investing public and, accordingly, could
enhance shareowner value.
The Reverse Stock Split will decrease the number of shares outstanding and
presumably increase the per-share market price for the New Common Stock (as
defined below). The Company is currently quoted on the NYSE, which has adopted
certain criteria that the Company is required to meet. Although the Company
currently meets all criteria applicable to it, if its price falls below a
certain level, the NYSE could consider delisting the Company.
Although there can be no assurance that the price of the Company's New
Common Stock after the Reverse Stock Split will actually increase in an amount
proportionate to the decrease in the number of outstanding shares, the proposal
is intended to result in a price level for the New Common Stock that will
broaden investor interest and provide a market that will reflect more closely
the Company's underlying value.
There can be no assurance that any or all of these results will occur,
including, without limitation, that the market price per share of New Common
Stock after the Reverse Stock Split will be five times the market price per
share of the Company's common stock before the Reverse Stock Split, or that the
new price will either exceed or remain in excess of the current market price.
Further, there is no assurance that the market for the New Common Stock will
reflect more closely the Company's underlying value. Shareowners should note
that the Board cannot predict how the Reverse Stock Split will affect the market
price of the New Common Stock. If shareowners do not approve this proposal to
amend the Certificate of Incorporation, there can be no assurance that the price
of the Company's common stock will remain high enough to prevent the effects
outlined above.
RECLASSIFICATION AMENDMENT AND RECOMMENDATION
As a result of the Reclassification Amendment, each five shares of the
Company's common stock, par value $.01 per share, issued immediately prior to
the effective time of the Reclassification Amendment (the "Old Common Stock"),
will be reclassified and converted into one share of the Company's common stock,
par value $.01 per share (the "New Common Stock"). Fractional shares will not be
issued to shareowners who hold their shares directly. Instead, shareowners who
hold the Company's share certificates will be entitled to receive a cash
distribution, without interest, in lieu thereof. See "-- Exchange of Stock
Certificates."
If the Reclassification Amendment is approved, the FOURTH Article of the
Company's current Certificate of Incorporation would be amended to include the
following text as Subsection G to the FOURTH Article:
"G. Upon this Certificate of Amendment to the Restated
Certificate of Incorporation of the corporation becoming effective in
accordance with the General Corporation Law of the State of Delaware
(the "Effective Time"), each five (5) shares of Common Stock, par
value $.01 per share, of the corporation ("Old Common Stock") issued
immediately prior to the Effective Time shall be automatically
reclassified as and converted into one (1) share of Common Stock, par
value $.01 per share, of the corporation ("New Common Stock").
Notwithstanding the immediately preceding sentence, no fractional
shares of New Common Stock shall be issued to the holders of record of
Old Common Stock in connection with the foregoing reclassification of
shares of Old Common Stock. In lieu thereof, the aggregate of all
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fractional shares otherwise issuable to the holders of record of Old Common
Stock shall be issued to First Chicago Trust Company of New York, the
transfer agent, as agent for the accounts of all holders of record of Old
Common Stock otherwise entitled to have a fraction of a share issued to
them. The sale of all of the fractional interests will be effected by the
transfer agent as soon as practicable after the Effective Time on the basis
of prevailing market prices of the New Common Stock on the New York Stock
Exchange at the time of sale. After such sale and upon the surrender of the
stockholders' stock certificates, the transfer agent will pay to such
holders of record their pro rata share of the net proceeds derived from the
sale of the fractional interests.
Each stock certificate that, immediately prior to the Effective
Time, represented shares of Old Common Stock shall, from and after the
Effective Time, automatically and without the necessity of presenting
the same for exchange, represent that number of whole shares of New
Common Stock into which the shares of Old Common Stock represented by
such certificate shall have been reclassified (as well as the right to
receive cash in lieu of any fractional shares of New Common Stock),
provided, however, that each holder of record of a certificate that
represented shares of Old Common Stock shall receive, upon surrender
of such certificate, a new certificate representing the number of
whole shares of New Common Stock into which the shares of Old Common
Stock represented by such certificate shall have been reclassified, as
well as any cash in lieu of fractional shares of New Common Stock to
which such holder may be entitled pursuant to the immediately
preceding paragraph."
Shareowners have no appraisal rights under Delaware law or under the
Company's Certificate of Incorporation or By-laws in connection with the Reverse
Stock Split.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A ONE-FOR-FIVE
REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK AS SOON AS PRACTICABLE AFTER
THE SPIN-OFF BECOMES EFFECTIVE.
IF ADOPTED, THE RECLASSIFICATION AMENDMENT WILL NOT BECOME EFFECTIVE UNTIL
AFTER THE COMPANY COMPLETES THE SPIN-OFF OF PACKAGING. THE EFFECTIVENESS OF THE
RECLASSIFICATION AMENDMENT IS ALSO CONDITIONED ON THE RECEIPT FROM THE IRS OF A
SUPPLEMENTAL RULING, OR AN OPINION OF COUNSEL SATISFACTORY TO TENNECO, TO THE
EFFECT THAT THE REVERSE STOCK SPLIT WILL NOT ADVERSELY AFFECT THE IRS RULING
LETTER DATED AUGUST 20, 1999 REGARDING THE TAX-FREE NATURE OF THE SPIN-OFF. IF
THE RECLASSIFICATION AMENDMENT IS APPROVED BUT THE SPIN-OFF IS NOT COMPLETED BY
TENNECO'S NEXT ANNUAL SHAREOWNERS' MEETING, THE BOARD OF DIRECTORS WILL HAVE THE
RIGHT TO ABANDON THE RECLASSIFICATION AMENDMENT BEFORE IT BECOMES EFFECTIVE.
EFFECTS OF THE REVERSE STOCK SPLIT
If the Reclassification Amendment is approved by the shareowners, the
principal effect of the Reverse Stock Split will be to decrease the number of
(1) outstanding shares from 170,731,731 shares of Old Common Stock to
approximately 34,146,346 shares of New Common Stock and (2) shares held in
treasury from 3,475,410 shares of Old Common Stock to approximately 695,082
shares of New Common Stock based on share information as of September 13, 1999.
The Reverse Stock Split would not affect the proportionate equity interest in
the Company of any holder of common stock, except as may result from the
provisions for the elimination of fractional shares. The Reverse Stock Split
will not affect the registration of the common stock under the Securities
Exchange Act of 1934 or the listing of the common stock on the New York Stock
Exchange. The Company expects to have in excess of 48,000 record holders after
giving effect to the Reverse Stock Split. The relative rights and preferences on
the New Common Stock will be identical to the relative rights and preferences of
the Old Common Stock.
In order to avoid the expense and inconvenience of issuing and transferring
fractional shares of New Common Stock to shareowners who hold Old Common Stock
certificates and would otherwise be entitled to receive fractional shares of New
Common Stock (the "Fractional Shareowners"), the Company will cause cash to be
paid to such Fractional Shareowners in lieu of fractional shares of New Common
Stock. See "-- Exchange of Stock Certificates."
7
<PAGE> 11
The Company is authorized under the Certificate of Incorporation to issue
up to 400,000,000 shares of common stock. The Company is not proposing to reduce
the amount of its authorized common stock. If the Reverse Stock Split takes
effect, the New Common Stock issued and outstanding will represent approximately
8.5% of the Company's authorized common stock whereas the Old Common Stock
currently issued and outstanding represents approximately 42.7% of the
authorized common stock. After giving effect to the Reverse Stock Split,
approximately 365,158,572 shares of New Common Stock will be available for
future initial issuance, and approximately 695,082 shares of New Common Stock
will be held in the treasury and available for future sale, by the Board of
Directors without further action by the shareowners, subject to applicable stock
exchange rules.
Unissued and unreserved New Common Stock will enable the Board to issue
shares to persons friendly to current management. This could render more
difficult or discourage an attempt to obtain control of the Company by means of
a merger, tender offer, proxy contest or otherwise, and thereby protect the
continuity of the Company's management and possibly deprive the shareowners of
opportunities to sell their shares of the Company at prices higher than
prevailing market prices. The Company has no present plans to issue shares of
common stock except in connection with employee benefit plans, however, any such
issuance likely will have the effect of diluting current shareowners'
proportionate interest in the Company.
If approved and implemented, the proposal is likely to leave some
shareowners with "odd lots" of New Common Stock (i.e., stock in amounts of less
than 100 shares). These odd lots may be more difficult to sell, or require
greater transaction costs per share to sell, than shares in even multiples of
100.
Before the spin-off, stock options held by directors and employees who will
be continuing with Packaging generally will be converted into Packaging stock
options. Stock options held by the continuing directors and employees of the
automotive business generally will be adjusted to reflect the price reduction of
the Company's common stock which results from the spin-off. In connection with
the Reverse Stock Split, these stock options would be further adjusted so that
each would thereafter evidence the right to purchase one-fifth of the number of
shares of Old Common Stock previously covered thereby and the exercise price per
share would be five times the previous exercise price.
The following table illustrates the principal effects of the Reverse Stock
Split, based on share information as of September 13, 1999, discussed in the
preceding paragraphs:
<TABLE>
<CAPTION>
PRIOR TO UPON
NUMBER OF SHARES OF COMMON STOCK REVERSE STOCK SPLIT REVERSE STOCK SPLIT
- -------------------------------- ------------------- -------------------
<S> <C> <C>
Authorized.................................................. 400,000,000 400,000,000
Issued and Outstanding...................................... 170,731,731 34,146,346
Treasury.................................................... 3,475,410 695,082
Available for future issuance or sale by action of the Board
of Directors.............................................. 229,268,269 365,853,654
</TABLE>
TAX CONSEQUENCES
The following summary of the material U.S. federal income tax consequences
of the Reverse Stock Split is based on current law, including the Internal
Revenue Code of 1986, as amended (the "Code") and applicable Treasury
Regulations promulgated thereunder. The tax treatment of a shareowner may vary
depending upon the particular facts and circumstances of the shareowner. Certain
shareowners, including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, non-resident aliens, foreign corporations and
persons who do not hold the common stock as a capital asset, may be subject to
special rules not discussed below. Further, no foreign, state or local tax
consequences are discussed below.
ACCORDINGLY, EACH SHAREOWNER SHOULD CONSULT HIS, HER OR ITS TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF THE REVERSE STOCK
SPLIT, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR FOREIGN
INCOME TAX AND OTHER LAWS.
8
<PAGE> 12
The receipt of shares of New Common Stock (except to the extent that cash
is received in lieu of fractional shares of New Common Stock) in the Reverse
Stock Split will be a nontaxable transaction under the Code for U.S. federal
income tax purposes. Consequently, except with respect to cash received in lieu
of fractional shares of New Common Stock, a shareowner receiving shares of New
Common Stock will not recognize either gain or loss with respect to shares of
New Common Stock received as a result of the Reverse Stock Split. In addition,
the aggregate tax basis (reduced by the portion of such basis allocable to
fractional shares of New Common Stock) of such shareowner's shares of Old Common
Stock immediately prior to the Reverse Stock Split will carry over as the tax
basis of the shareowner's shares of New Common Stock. In this regard, a
shareowner's aggregate tax basis in the Old Common Stock immediately prior to
the Reverse Stock Split (1) will be determined after giving effect to the
spin-off and (2) will be based on the ratio that the value of the Old Common
Stock bears to the total value of the Old Common Stock and Packaging common
stock following the spin-off. Each shareowner will be required to allocate such
shareowner's basis in such shareowner's shares of Old Common Stock ratably among
the total number of shares of New Common Stock owned following the Reverse Stock
Split. The holding period of the shares of New Common Stock will also include
the holding period during which the shareowner held the Old Common Stock,
provided that such Old Common Stock was held by the shareowner as a capital
asset at the Effective Time.
The receipt by a Fractional Shareowner of cash in lieu of a fractional
share of New Common Stock pursuant to the Reverse Stock Split will be a taxable
transaction for federal income tax purposes. The receipt of cash in lieu of
fractional shares of New Common Stock will generally result in gain or loss to
the Fractional Shareowners measured by the difference between the amount of cash
received and the adjusted basis of the fractional share. Assuming that the Old
Common Stock was held by the Fractional Shareowner as a capital asset at the
Effective Time, any such gain or loss will be capital gain or loss, and will be
long-term capital gain or loss if at the Effective Time the shares of Old Common
Stock have been held by the Fractional Shareowner for more than one year.
EXCHANGE OF STOCK CERTIFICATES
If the proposal to implement the Reverse Stock Split is adopted,
shareowners who hold physical stock certificates will be required to exchange
their stock certificates to receive new certificates representing shares of New
Common Stock. Shareowners of record at the Effective Time will be furnished the
necessary materials and instructions for the surrender and exchange of share
certificates at the appropriate time by the Company's transfer agent (the
"Transfer Agent"). Shareowners will not have to pay a transfer fee or other fee
in connection with the exchange of certificates. SHAREOWNERS SHOULD NOT SUBMIT
ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
As soon as practicable after the Effective Time, the Transfer Agent will
send a letter of transmittal to each shareowner that holds physical stock
certificates advising such holder of the procedure for surrendering stock
certificates in exchange for new certificates representing the ownership of New
Common Stock. No certificates representing fractional shares shall be issued. In
lieu thereof, the aggregate of all fractional shares otherwise issuable shall be
issued to the Transfer Agent or its nominee, as agent for the accounts of all
holders of record of Old Common Stock otherwise entitled to have a fraction of a
share issued to them in connection with the Reverse Stock Split. Sales of
fractional interests will be effected by the Transfer Agent as soon as
practicable on the basis of prevailing market prices of the New Common Stock on
the NYSE at the time of sale. After the Effective Time, the Transfer Agent will
pay to such shareowners their pro rata share of the net proceeds derived from
the sale of their fractional interests upon surrender of their stock
certificates. No service charges or brokerage commissions will be payable by
shareowners in connection with the sale of fractional interests, all of which
costs will be borne by the Company.
Upon the surrender of certificates representing Old Common Stock or as soon
as possible thereafter, any cash payment for a fractional share will be paid
(without interest).
Any shareowner whose certificate for Old Common Stock has been lost,
destroyed or stolen will be entitled to issuance of a certificate representing
the shares of New Common Stock into which such shares will
9
<PAGE> 13
have been converted upon compliance with such requirements as the Company and
the Transfer Agent customarily apply in connection with lost, stolen or
destroyed certificates.
VOTING
The Board of Directors has fixed the close of business on September 13,
1999 as the Record Date for determining shareowners entitled to notice of and to
vote at the special meeting. On the Record Date, there were outstanding
170,731,731 shares of the Company's common stock, par value $.01 per share. At
the special meeting, holders of issued and outstanding shares of common stock as
of the Record Date will be entitled to one vote for each share they held. The
presence in person or by proxy of holders of a majority of the votes entitled to
be cast will constitute a quorum for purposes of conducting business at the
special meeting.
A shareowner may cast votes in favor of or against the approval of the
Board Amendment, and in favor of or against approval of the Reclassification
Amendment, or a shareowner may elect to abstain from voting on these issues.
Abstentions and "broker non-votes" (which occur when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner) will be counted in
determining the presence or absence of a quorum for the transaction of business
at the special meeting.
Assuming the presence of a quorum, the affirmative vote of holders of a
majority of the Company's issued and outstanding common stock as of the Record
Date will be required to approve the Board Amendment and the Reclassification
Amendment. Because of this vote standard, abstentions and broker non-votes will
have the same effect as votes against such proposals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's common
stock beneficially owned as of June 30, 1999 by (i) each director of the
Company, (ii) each of the Company's five most-highly compensated current
executive officers, (iii) all directors and executive officers of the Company as
a group and (iv) owners of more than 5% of the outstanding shares of the
Company's common stock who are known to the Company.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK COMMON STOCK TOTAL SHARES AND
DIRECTORS OWNED(1)(2)(3) EQUIVALENTS(4) EQUIVALENTS
--------- ---------------------- -------------- ----------------
<S> <C> <C> <C>
Mark Andrews............................... 14,155 1,600 15,755
W. Michael Blumenthal...................... 12,852 1,600 14,452
Larry D. Brady............................. 2,000 3,381 5,381
M. Kathryn Eickhoff........................ 9,728 1,600 11,328
Belton K. Johnson.......................... 13,939 1,600 15,539
Dana G. Mead............................... 765,821 44,737 810,558(5)
Sir David Plastow.......................... 4,700 2,610 7,310
Roger B. Porter............................ 2,000 3,420 5,420
Paul T. Stecko............................. 314,362 -- 314,362
William L. Weiss........................... 6,505 1,600 8,105
EXECUTIVE OFFICERS
- -------------------------------------------
Theodore R. Tetzlaff....................... 148,376 -- 148,376
Robert T. Blakely.......................... 155,301 -- 155,301
John J. Castellani......................... 71,198 -- 71,198
All executive officers and directors as a
group (6)................................ 1,520,937 62,148 1,583,085
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME AND ADDRESS OF COMMON STOCK COMMON STOCK
BENEFICIAL OWNER OWNED(7) OUTSTANDING(7)
------------------- ------------ --------------
<S> <C> <C>
Barrow, Hanley, Mewhinney & Strauss, Inc.
One McKinney Plaza
3232 McKinney Avenue
15th Floor
Dallas, Texas 75204-2429.................................... 20,761,040(8) 12.18%(8)
Morgan Stanley Dean Witter & Co.
1585 Broadway
New York, NY 10036.......................................... 10,662,171(9) 6.26%(9)
</TABLE>
- -------------------------
(1) Each director and executive officer has sole voting and investment power
over the shares beneficially owned (or has the right to acquire shares as
set forth in note (2) below) as set forth in this column, except for: (i)
restricted shares that are held in trust for each director and executive
officer under the Company's Stock Ownership Plan; and (ii) shares that
executive officers of the Company have the right to acquire pursuant to the
Company's Stock Ownership Plan.
(2) Includes: (i) restricted shares held in trust under the Company's Stock
Ownership Plan; at June 30, 1999, Messrs. Mead, Tetzlaff, Blakely, and
Castellani held 66,025; 20,535; 19,425; and 10,000 restricted shares,
respectively, and Ms. Eickhoff and Messrs. Andrews, Blumenthal, and Weiss
held 3,963; 6,547; 7,183; and 340 restricted shares, respectively; and (ii)
shares that are subject to options, which were granted under the Stock
Ownership Plan and are exercisable at June 30, 1999, or within 60 days of
said date, for Messrs. Mead, Tetzlaff, Blakely and Castellani, to purchase
616,176; 89,871; 84,939; and 52,808 shares respectively, 2,000 shares for
each of Ms. Eickhoff and Messrs. Andrews, Blumenthal, Brady, Johnson,
Plastow, Porter and Weiss, and 288,814 shares for Mr. Stecko.
(3) Less than one percent of the outstanding shares of the Company's common
stock.
(4) Common stock equivalents are distributed in shares of common stock of the
Company after a director ceases to serve as a director of the Company or
upon retirement of the officer, as applicable, except that certain common
stock equivalents credited under the Outside Directors' Deferred
Compensation Plan may be distributed in cash.
(5) Since 1994, Mr. Mead has deferred a total of $1.1 million of cash incentive
compensation into common stock equivalent units under the Company's Deferred
Compensation Plan.
(6) Includes 1,170,518 shares that are subject to options that are exercisable
within 60 days of June 30, 1999, by all executive officers and directors of
the Company as a group, and includes 134,318 restricted shares that are held
in trust under the Company's Stock Ownership Plan, for all executive
officers and directors of the Company as a group.
(7) The foregoing information is based on information contained in filings made
with the Securities and Exchange Commission.
(8) Barrow, Hanley, Mewhinney & Strauss, Inc. has indicated that it has sole
voting power over 4,533,840 shares, shared voting power over 16,227,200
shares, and sole dispositive power over 20,761,040 shares. Barrow, Hanley,
Mewhinney & Strauss, Inc. has also advised the Company that it is a
registered investment advisor and these shares are held on behalf of various
clients.
(9) Morgan Stanley Dean Witter & Co. has indicated that it has sole voting power
over 10,504,928 shares.
OTHER MATTERS
The Board of Directors is not aware of any other matters that may properly
come before the special meeting. However, in the event that any other matters
properly come before the special meeting or any adjournment or postponement
thereof, the persons named as proxies in the enclosed form of proxy will vote in
accordance with their best judgment on such matters.
11
<PAGE> 15
SOLICITATION OF PROXIES AND VOTING
Shareowners may specify their choices by marking the appropriate boxes on
the proxy card. Shares will be voted in accordance with such instructions.
However, it is not necessary to mark any boxes to vote in accordance with the
Board of Directors' recommendations; merely sign, date and return the proxy card
in the envelope provided.
Alternatively, in lieu of returning signed proxy cards, shareowners can
submit a proxy in respect of their shares over the internet or by calling a
specially designated telephone number which appears on the proxy cards. These
internet and telephone proxy submission procedures are designed to authenticate
shareowners' identities, allow shareowners to provide their voting instructions
and confirm the proper recording of those instructions. Specific instructions
for shareowners who wish to use the internet or telephone proxy submission
procedures are set forth on the enclosed proxy card.
A proxy may be revoked at any time prior to the voting at the special
meeting by (1) submitting a later dated proxy (including a proxy via the
internet or telephone), (2) giving timely written notice of such revocation to
the Secretary of the Company or (3) voting in person at the special meeting.
The cost of solicitation of proxies will be borne by the Company.
Solicitation will be made by mail, and may be made by directors, officers and
employees, personally or by telephone, telecopy, or telegram. Proxy cards and
material also will be distributed to beneficial owners of stock through brokers,
custodians, nominees, and other like parties, and the Company expects to
reimburse such parties for their charges and expenses. Georgeson & Co. Inc., New
York, New York, has been retained to assist the Company in the solicitation of
proxies at a fee estimated not to exceed $25,000.
SUBMISSION OF SHAREOWNER'S PROPOSALS
Shareowner Proposals -- Inclusion in Company Proxy Statement
For a shareowner proposal to be considered by the Company for inclusion in
the Company's proxy statement and form of proxy relating to the 2000 annual
meeting of shareowners, the proposal must be received by the Company by December
3, 1999.
Other Shareowner Proposals -- Discretionary Voting Authority and By-Law
Requirements
With respect to shareowner proposals not included in the Company's proxy
statement and form of proxy for an annual meeting, the Company may utilize
discretionary authority conferred by proxy in voting on any such proposals if,
among other situations, the shareowner does not give timely notice of the matter
to the Company by the date determined under the Company's By-laws for submission
of business by shareowners. The Company's By-laws state that to be timely,
notice and certain related information must be received at the principal
executive offices not less than 50 and no more than 75 days prior to the date of
the annual meeting; provided, however, that if less than 65 days' notice or
prior public disclosure of the meeting date is given or made to shareowners,
notice of the matter must be received not later than the close of business on
the 15th day following the date of notice or public disclosure of the meeting
date, whichever occurs first. It is currently expected that the 2000 Annual
Meeting of Shareowners will be held on May 9, 2000. Therefore to be timely under
the Company's By-laws, a proposal not included by or at the direction of the
Board must be received not earlier than February 24, 2000 nor later than March
20, 2000. A press release announcing such date and other details relating to
such annual meeting will be issued in January 2000.
By Order of the Board of Directors,
KARL A. STEWART
Vice President and Secretary
12
<PAGE> 16
APPENDIX A
FORM OF PROPOSED CERTIFICATE OF AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION
OF TENNECO INC.
Tenneco Inc. (the "Corporation"), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"DGCL"), does hereby amend the Restated Certificate of Incorporation, as
amended, of the Corporation.
The undersigned hereby certifies that this amendment to the Restated
Certificate of Incorporation of the Corporation, as amended, has been duly
adopted in accordance with Section 242 of the DGCL.
Article FIFTH of the Corporation's current Restated Certificate of
Incorporation, as amended, is hereby amended to read in its entirety as follows:
FIFTH: A. The business and affairs of the corporation shall be managed
by or under the direction of a Board of Directors consisting of not less
than eight nor more than sixteen directors to be determined from time to
time by resolution adopted by the affirmative vote of a majority of the
entire Board of Directors. For purposes of this Restated Certificate of
Incorporation, the "entire Board of Directors" shall mean the number of
directors that would be in office if there were no vacancies nor any
unfilled newly created directorships. Until the third annual meeting of
stockholders following effectiveness of this Certificate of Amendment under
the General Corporation Law of the State of Delaware, the directors shall
be divided into three classes, consisting initially of two, three and three
directors and designated Class I, Class II and Class III, respectively.
Each director elected or appointed prior to the effectiveness of this
Certificate of Amendment under the General Corporation Law of the State of
Delaware, shall serve for their full term, such that the term of each Class
I director shall end at the first succeeding annual meeting of
stockholders, the term of each Class II director shall end at the second
succeeding annual meeting of stockholders, and the term of each Class III
director shall end at the third succeeding annual meeting of stockholders.
The term of each director elected after the effectiveness of this
Certificate of Amendment under the General Corporation Law of the State of
Delaware whether at an annual meeting or to fill a vacancy in the Board of
Directors arising for any reason, including an increase in the size of the
Board of Directors, shall end at the first annual meeting following his or
her election. Commencing with the third annual meeting of stockholders
following effectiveness of this Certificate of Amendment under the General
Corporation Law of the State of Delaware, the foregoing classification of
the Board of Directors shall cease, and all directors shall be of one class
and serve for a term ending at the annual meeting following the annual
meeting at which the director was elected. In no case shall a decrease in
the number of directors shorten the term of any incumbent director. Each
director shall hold office after the annual meeting at which his or her
term is scheduled to end until his or her successor shall be elected and
shall qualify, subject, however, to prior death, resignation,
disqualification or removal from office in accordance with the General
Corporation Law of the State of Delaware. Any newly created directorship
resulting from an increase in the number of directors may be filled by a
majority of the Board of Directors then in office, provided that a quorum
is present, and any other vacancy on the Board of Directors may be filled
by a majority of the directors then in office, even if less than a quorum,
or by a sole remaining director.
B. Notwithstanding the provisions of Section A of Article FIFTH,
whenever the holders of any one or more classes or series of Preferred
Stock issued by the corporation shall have the right, voting separately by
class or series, to elect directors at an annual or special meeting of
stockholders, the election, term of office, filling of vacancies and other
features of such directorships shall be governed by the terms of this
Restated Certificate of Incorporation applicable thereto or the resolution
or resolutions adopted by the Board of Directors applicable thereto.
C. The Board of Directors shall be authorized to adopt, make, amend,
alter, change, add to or repeal the By-Laws of the corporation, subject to
the power of the stockholders to amend, alter, change, add to or repeal the
By-Laws made by the Board of Directors.
A-1
<PAGE> 17
D. Unless and except to the extent that the By-Laws of the corporation
shall so require, the election of directors of the corporation need not be
by written ballot.
This Certificate of Amendment, and the amendment effected hereby, shall
become effective at .
THE UNDERSIGNED, being the of the Corporation, for the purpose of
amending the Restated Certificate of Incorporation, as amended, of the
Corporation pursuant to the DGCL, does make this amendment to the Restated
Certificate of Incorporation of the Corporation, as amended, hereby declaring
and certifying that this is my act and deed and the facts herein stated are true
and accordingly have hereunto set my hand as of this day of ,
.
TENNECO INC.
By:
- --------------------------------------------------------------------------------
Name:
Title:
A-2
<PAGE> 18
APPENDIX B
FORM OF PROPOSED CERTIFICATE OF AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION
OF TENNECO INC.
Tenneco Inc. (the "Corporation"), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"DGCL"), does hereby amend the Restated Certificate of Incorporation, as
amended, of the Corporation.
The undersigned hereby certifies that this amendment to the Restated
Certificate of Incorporation, as amended, of the Corporation has been duly
adopted in accordance with Section 242 of the DGCL.
Article FOURTH of the Corporation's current Restated Certificate of
Incorporation, as amended, is hereby amended to include the following text as
Subsection G to the FOURTH Article:
"G. Upon this Certificate of Amendment to the Restated Certificate of
Incorporation of the corporation becoming effective in accordance with the
General Corporation Law of the State of Delaware (the "Effective Time"),
each five (5) shares of Common Stock, par value $.01 per share, of the
corporation ("Old Common Stock") issued immediately prior to the Effective
Time shall be automatically reclassified as and converted into one (1)
share of Common Stock, par value $.01 per share, of the corporation ("New
Common Stock").
Notwithstanding the immediately preceding sentence, no fractional
shares of New Common Stock shall be issued to the holders of record of Old
Common Stock in connection with the foregoing reclassification of shares of
Old Common Stock. In lieu thereof, the aggregate of all fractional shares
otherwise issuable to the holders of record of Old Common Stock shall be
issued to First Chicago Trust Company of New York, the transfer agent, as
agent for the accounts of all holders of record of Old Common Stock
otherwise entitled to have a fraction of a share issued to them. The sale
of all of the fractional interests will be effected by the transfer agent
as soon as practicable after the Effective Time on the basis of prevailing
market prices of the New Common Stock on the New York Stock Exchange at the
time of sale. After such sale and upon the surrender of the stockholders'
stock certificates, the transfer agent will pay to such holders of record
their pro rata share of the net proceeds derived from the sale of the
fractional interests.
Each stock certificate that, immediately prior to the Effective Time,
represented shares of Old Common Stock shall, from and after the Effective
Time, automatically and without the necessity of presenting the same for
exchange, represent that number of whole shares of New Common Stock into
which the shares of Old Common Stock represented by such certificate shall
have been reclassified (as well as the right to receive cash in lieu of any
fractional shares of New Common Stock), provided, however, that each holder
of record of a certificate that represented shares of Old Common Stock
shall receive, upon surrender of such certificate, a new certificate
representing the number of whole shares of New Common Stock into which the
shares of Old Common Stock represented by such certificate shall have been
reclassified, as well as any cash in lieu of fractional shares of New
Common Stock to which such holder may be entitled pursuant to the
immediately preceding paragraph."
This Certificate of Amendment, and the amendment effected hereby, shall
become effective at .
THE UNDERSIGNED, being the of the Corporation, for the purpose
of amending the Restated Certificate of Incorporation, as amended, of the
Corporation pursuant to the DGCL, does make this amendment to the Restated
Certificate of Incorporation, as amended, of the Corporation, hereby declaring
and certifying that this is my act and deed and the facts herein stated are true
and accordingly have hereunto set my hand as of this day of
, .
TENNECO INC.
By:
------------------------------------
Name:
Title:
B-1
<PAGE> 19
<TABLE>
<S> <C>
Tenneco Inc. TENNECO
1275 King Street
Greenwich, Connecticut 06831-2946 September 21, 1999
(203) 863-1000
</TABLE>
Dear Benefit Plan Participant:
A Special Meeting of Shareowners of Tenneco Inc. is scheduled to be held at
the offices of Tenneco Automotive in Lake Forest, Illinois, at 10:30 a.m., local
time, on Monday, October 25, 1999. A copy of the Notice and Proxy Statement,
which is being sent to all registered Shareowners in connection with the Special
Meeting is enclosed for your information.
Also enclosed with this letter is a form of proxy card, which designates
the number of shares held in your benefit plan account. By executing this proxy
card you instruct the benefit plan trustee (the "Trustee") how to vote the
shares of Tenneco Inc. stock in your account which you are entitled to vote. The
Trustee will vote all shares eligible to be voted by benefit plan participants
in accordance with their instructions.
If you return your form of proxy executed but without furnishing voting
instructions, the eligible shares in your account will be voted by the Trustee,
as holder of record of the shares in your account, FOR the amendment to the
Company's Restated Certificate of Incorporation, as amended, to provide for the
annual election of directors, FOR the amendment to the Company's Restated
Certificate of Incorporation, as amended, to effect a one for five reverse stock
split, and as recommended by Management on all other matters to be considered at
the Special Meeting.
If you do not return your executed form of proxy to the Trustee, then your
shares can be voted by the Trustee only in accordance with the requirements of
your benefit plan, which may or may not reflect your views.
Your vote is important. Please send your executed form of proxy card with
your voting instructions at your earliest opportunity. For your convenience, a
return envelope is enclosed.
YOUR BENEFITS COMMITTEE
<PAGE> 20
[TENNECO LOGO]
TENNECO INC.
SPECIAL MEETING OF SHAREOWNERS OCTOBER 25, 1999
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R The undersigned does hereby appoint D.G. MEAD and K.A. STEWART, and
either of them, with full power of substitution, as Proxies to vote,
O as directed on the reverse side of this card, or, if not so directed,
in accordance with the Board of Directors' recommendations, all shares
X of Tenneco Inc. (the "Company") held of record by the undersigned at
the close of business on September 13, 1999, and entitled to vote at
Y the Special Meeting of Shareowners of Tenneco Inc. to be held at 10:30
a.m., October 25, 1999, at the offices of Tenneco Automotive, located
at 500 North Field Drive, Lake Forest, Illinois, or at any adjournment
or postponement thereof, and to vote, in their discretion, upon such
other matters as may properly come before the Special Meeting.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' recommendations. The
Proxies cannot vote your shares unless you sign and return this card
or use the Company's telephone or internet proxy submission procedures.
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL /\
[TENNECO LOGO]
TENNECO INC.
Special Meeting of Shareowners
October 25, 1999
10:30 a.m., local time
500 North Field Drive
Lake Forest, Illinois 60045
<PAGE> 21
<TABLE>
<CAPTION>
<S><C>
0410
[X] Please mark your votes as in this example.
This Proxy when properly executed will be voted in the manner directed herein. If no direction is made, this Proxy will be
voted FOR items 1 and 2.
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR items 1 and 2.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. In the discretion of the Proxies named
1.To approve an amendment to the Company's herein, the Proxies are authorized to
Restated Certificate of Incorporation, as amended, vote upon other matters as may properly
to provide for the annual election of directors. come before the meeting.
2.Amend the Company's Restated Certificate of Incorporation,
as amended, to effect a one for five reverse stock split.
- --------------------------------------------------------------------------------------------------------------------------------
The signer hereby revokes all proxies
heretofore given by the signer to vote at
said meeting or any adjournments or
postponements thereof.
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee, or guardian,
please give full title as such.
-------------------------------------
-------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL /\
</TABLE>
TENNECO INC.
Dear Shareowner:
Tenneco Inc. encourages you to take advantage of new and convenient ways by
which you can submit a proxy in respect of your shares. You can submit a proxy
in respect of your shares electronically through the internet or the telephone.
This eliminates the need to return the proxy card.
To submit a proxy in respect of your shares electronically you must use the
control number printed in the box above, just below the perforation. The series
of numbers that appear in the box above must be used to access the system.
1. To submit a proxy over the internet:
- Log on to the internet and go to the web site http://www.eproxyvote.com/ten
2. To submit a proxy over the telephone:
- On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683) 24 hours
a day, 7 days a week
Your electronic proxy authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to submit a proxy in respect of your shares electronically, there
is no need for you to mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
