TENNECO AUTOMOTIVE INC
LETTER AGREEMENT DATED 7/27/00
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<TYPE>EX-10.27
<SEQUENCE>10
<FILENAME>ex10-27.txt
<DESCRIPTION>LETTER AGREEMENT DATED 7/27/00
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                                                                   Exhibit 10.27

Tenneco Automotive                                  [TENNECO LOGO]
500 North Field Drive
Lake Forest, IL  60045
Tel 847-482-5000
Fax 847-482-5940





                                  July 27, 2000



PERSONAL AND CONFIDENTIAL

Mr. Timothy E. Jackson
13694 Shady Lane
Monroe, MI   48161


Dear Mr. Jackson:

          On behalf of Tenneco Automotive Inc. (the "Company"), I am pleased
to set forth and confirm the terms and conditions of your continued service as
Senior Vice President and General Manager - North American Original Equipment
and Worldwide Program Management of the Company:

1.        COMMENCEMENT. Except as specifically provided herein, the terms and
     conditions hereof will be effective immediately upon the signing hereof.
     You will report to and serve at the pleasure of the Board of Directors of
     the Company (the "Board").

2.        BASE SALARY. Effective on January 1, 2000, you will be paid a base
     salary of $260,000.00 per year, which will be subject to such increases as
     may from time to time be approved by the Board or such committee of the
     Board to which such power has been delegated (the "Committee"), payable
     according to the regular pay schedule for salaried employees.

3.        ANNUAL BONUS. You will be eligible for an annual performance bonus.
     Commencing with calendar year 2000, your annual target bonus will be, at
     least, $155,000.00 subject to fulfillment of performance goals as
     determined by the Board or Committee.



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Mr. Timothy E. Jackson
July 27, 2000
Page 2



4.        PERFORMANCE UNITS, STOCK OPTIONS, RESTRICTED STOCK AND STOCK
     EQUIVALENT UNITS. At the time of the spin-off of Pactiv Corporation
     (formerly Tenneco Packaging Inc.) by the Company (the "Spin-off"), you were
     granted 16,500 performance units under the Company s Stock Ownership Plan
     (the "Plan"), payable in shares of the Company s stock in January 2003,
     subject to fulfillment of performance goals as determined by the Committee
     and the other terms of the grant determined by the Committee. At the time
     of the Spin-off, you were granted under the Plan an option to purchase
     90,000 shares of Company stock, subject to terms and conditions set by the
     Committee under the Plan. You have received a restricted stock grant of
     29,308 shares and one-third of such restricted stock will vest on each of
     the first three anniversaries of the Spin-off if you continue to be
     employed by the Company on such anniversary. The number of shares set forth
     above with respect to the performance unit, restricted stock and stock
     option awards is after giving effect to the one-for-five reverse stock
     split completed in November 1999. In December, 1999 (effective November 5,
     1999), you were granted 87,567 stock equivalent units under the Plan for
     the three-year period ending December 31, 2002. This grant is payable in
     cash in three annual installments, subject to and in accordance with the
     terms and conditions of the grant determined by the Committee. The grants
     described herein are without prejudice to your receipt of additional grants
     as determined by the Board or the Committee under the Plan and/or any other
     similar benefit plan or compensation program or arrangement of the Company.
     The vesting terms and the other conditions, events and circumstances under
     which you will be entitled to receive the Performance Units, Stock Options,
     Restricted Stock and Stock Equivalent Units shall be the terms, conditions,
     events and circumstances set forth in your grant agreements for the
     Performance Units, Stock Options, Restricted Stock and Stock Equivalent
     Units as of the date of this letter.

5.        EXECUTIVE BENEFIT PLANS. You will be eligible to participate in all
     employee benefit plans applicable to salaried employees generally and all
     executive compensation structures applicable to senior executives
     generally.

6.        PERQUISITE ALLOWANCE. You will receive an annual perquisites
     allowance of $30,000.00 which you may receive in either cash, perquisites,
     or a combination at your election.

7.        VACATION. You will receive four weeks vacation (with pay) per year.

8.        KEY EXECUTIVE PENSION AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.
     You will be a participant in the Company's Key Executive Pension Plan and
     Supplemental Executive Retirement Plan.

9.        CHANGE IN CONTROL. You will participate in the Company's Change in
     Control Severance Benefit Plan for Key Executives (the "Change in Control
     Plan"); provided, that


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Mr. Timothy E. Jackson
July 27, 2000
Page 3


     your cash severance benefit under Section 3A or 3B, as applicable, of the
     Change in Control Plan will be 3 times the total of (i) your annual base
     salary in effect immediately prior to the Change in Control (as defined in
     the Change in Control Plan), plus (ii) the higher of (a) your highest
     target bonus over the last 3 years of your employment, and (b) the average
     of your annual awards under any bonus plan of the Company or its
     subsidiaries, including any special awards, for the last three years of
     your employment (or such shorter period as you have been employed by the
     Company or its subsidiaries); and provided further that all of your
     outstanding awards under the Plan or any other similar benefit plan or
     compensation arrangement or program of the Company or its subsidiaries will
     be treated as exercisable, earned at target and vested, as the case may be,
     immediately upon the Change in Control (as that term is currently defined
     in the Change in Control Plan) and shall be paid to you or otherwise
     treated in the manner currently specified in, and in accordance with the
     current terms of, the Change in Control Plan.

10.       SEVERANCE. Subject to the provisions of paragraph 9, if your
     employment is terminated other than by you voluntarily or for death,
     disability, or non-performance of your duties, subject to your execution of
     a general release and such other documents as the Company may reasonably
     request: (a) you will be paid a severance benefit in an amount equal to two
     times the total of your then current annual base salary plus your bonus for
     the immediately preceding year; (b) subject to Board and/or Committee
     approval, all your outstanding awards under the Plan (or any other similar
     benefit plan or compensation program or arrangement of the Company or its
     subsidiaries) may vest and/or become exercisable on the date of your
     termination; (c) vested stock options you hold will remain exercisable for
     a period of not less than 90 days from your termination; and (d) the
     Company will continue to provide to you, for one year following the date of
     the termination of your employment, health and welfare benefits amounting
     to no less than the amount of health and welfare benefits you receive at
     the time your employment commences. COBRA continuation coverage will begin
     following this one year period.

11.       TAX GROSS-UP PAYMENT. If any portion of the payments described
     herein, and/or any other payments, shall be subject to the tax imposed by
     Section 4999 of the Internal Revenue Code (the portion of such payments
     which are subject to the Excise Tax being referred to herein as the
     "Payments"), the Company shall pay you, not later than the 30th day
     following the date you become subject to the Excise Tax, an additional
     amount (the "Gross-Up Payment") such that the net amount retained by you
     after deduction of the Excise Tax on such Payments and all federal, state,
     and local income tax, interest and penalties, and Excise Tax on the
     Gross-Up Payment, shall be equal to the amount which would have been
     retained by you had the payments not been subject to the Excise Tax.




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Mr. Timothy E. Jackson
July 27, 2000
Page 4


12.       GOVERNING LAW. This letter agreement shall be governed by, and shall
     be construed in accordance with, the internal laws (and not the laws of
     conflicts) of the State of Illinois.

          Please acknowledge your agreement with these terms by executing a
copy of this letter in the space provided below and returning it to me.

                                   Sincerely,

                                   TENNECO AUTOMOTIVE INC.


                                   By:  /s/ Mark P. Frissora
                                      -----------------------------------------

                                   Its: Chairman, CEO and President
                                        ---------------------------------------

ACKNOWLEDGED AND ACCEPTED

/s/ Timothy E. Jackson             Date:
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