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PACTIV CORPORATION 2002 INCENTIVE COMPENSATION PLAN
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
<Table>
<Caption>
NUMBER OF
OPTIONS OPTION VESTING EXPIRATION
GRANTED TO AWARD DATE GRANTED PRICE PER SCHEDULE* DATE
SHARE
- -------------------------------------- --------------- ----------------- --------------- --------------- ---------------
- -------------------------------------- --------------- ----------------- --------------- --------------- ---------------
</Table>
* No award shall vest in less than six months after the Award Date.
PACTIV CORPORATION (the "Company") grants you (the "Participant") a
Non-Qualified Stock Option (the "Option"), under the Pactiv Corporation 2002
Incentive Compensation Plan (the "Plan").
The Plan is administered by the Compensation Committee of the Company's
Board of Directors (the "Committee").
This Option incorporates the terms of the Plan and, in the case of any
conflict between the Plan and this Option, the terms of the Plan control. Unless
otherwise defined in the grant, capitalized terms have the meaning ascribed to
them in the Plan. The terms of the Option are:
1. When the Option is exercisable, the Participant may purchase from
the Company the stated number of shares of Common Stock at the Option Price.
Except as provided in Section 3, the Option expires at 3:00 p.m. Lake Forest, IL
time on the tenth anniversary of the award date of this Option (the "Expiration
Date").
2. Except as provided in Section 3, the Option becomes exercisable in
installments according to the vesting schedule. The Participant must be employed
by a Pactiv Company at all times from the award date through the vesting date
for that part of the Option to become exercisable on the vesting date.
3. The Option may not be exercised after the expiration date. Except as
provided below, the Option may not be exercised after the Participant's
termination of employment with a Pactiv Company.
a) If the Participant's employment with a Pactiv Company
terminates by normal retirement (at least age 65) the Option becomes
fully vested and may be exercised until the earlier of three years from
the Participant's normal retirement date or the expiration date of the
Option. If the Participant terminates by early retirement and is at
least age 57 with ten or more years of Company service on his/her
retirement date the Option becomes fully vested and can be exercised
until the earlier of one year from the Participant's early retirement
date or the expiration of the Option. If the Participant terminates by
retirement and has not attained age 57 on his/her retirement date the
Option shall terminate as of the retirement date and shall no longer be
exercisable.
b) If the Participant incurs a Total Disability, the Option
becomes fully vested and exercisable and may be exercised until the
earlier of the third anniversary of the Participant's Total Disability
date or the expiration date of the Option. A Total Disability is the
permanent inability of the Participant, which is a result of accident
or sickness, to perform such Participant's occupation or employment for
which the Participant is suited by reason of the Participant's previous
training, education and experience and which results in the termination
of the Participant's employment with all Pactiv Companies.
c) If the Participant dies while employed, the Option becomes
fully vested and exercisable and the personal representative of
Participant's estate may exercise the Option until the earlier of the
third anniversary of the Participant's death or the expiration date of
the Option.
d) If the Participant's employment is involuntarily terminated
by the Company for reasons other than cause, the Participant may
exercise the portion of the Option that is exercisable at the date of
his termination of employment pursuant to Section 2. The Option may be
exercised until the earlier of 90 days after the Participant's
termination of employment or the expiration date of the Option.
e) If the Participant voluntarily terminates employment or the
Participant's employment is terminated by the Company for cause, this
Option shall terminate as of the date of notice of termination of
employment and shall no longer be exercisable. The Committee determines
whether a Participant has incurred an involuntary termination of
employment for reasons other than cause, and the Committee's
determination shall be binding for all purposes. Cause means fraud or
misappropriation with respect to any business of the Company or
intentional material damage to any property or business of the Company
or an affiliate of the Company, willful refusal by Participant to
perform his duties and responsibilities and to carry out his authority,
any disclosure of confidential or proprietary information pertaining to
the business of the Company, malfeasance or misfeasance or breach of a
material fiduciary duty to the Company, willful failure to act in
accordance with the policies of the Board of Directors of the Company,
conviction of Participant of a felony or any crime involving moral
turpitude, or the use of drugs and/or alcohol which interferes
materially with Participant's performance of his services.
f) If the Participant's employment with a Pactiv Company
terminates for any reason not specified above, or if the Participant's
employing Pactiv Company ceases to be a Pactiv Company, all options
shall lapse immediately upon such termination or cessation unless the
Committee determines otherwise.
4. At any time the Options are in effect and shares are available for
purchase, the Option may be exercised in whole or in part by giving written
notice to the Company stating the number of shares to be purchased. The Option
Price must be paid in full with the notice of exercise. The Option Price may be
paid in cash, check, bank draft or money order; by delivering shares (either by
actual delivery or attestation) of Common Stock that the Participant has owned
for at least six months or have been purchased on the open market; or by a
cashless exercise procedure whereby the Participant may simultaneously exercise
the Option and sell their shares of Common Stock acquired and apply the proceeds
to the payment of the Option Price. Shares of Common Stock used to make any
payment are valued at their Fair Market Value on the date of exercise.
5. The Company also grants to the Participant Reload Stock Options,
each such Stock Option to be deemed awarded on, and to become effective on, each
date, if any, (an "Award Date") that the Participant delivers shares of Common
Stock, as permitted by Paragraph 4, in payment of the Option Price for the
Option upon any whole or partial exercise of the Option; provided however, that
no such Reload Stock Option shall be granted unless the Participant is an active
employee of a Pactiv Company at the time of delivery of shares, and provided
further that not more than two Reload Stock Options shall be granted in any
twelve-month period, and the maximum number of Reload Stock Options so granted
shall be ten. In accordance with the Plan, the Option Price for shares of Common
Stock subject to each Reload Stock Option granted under this Paragraph 5 shall
be the Fair Market Value per share of Common Stock as of the Settlement Date or
Dates on which the Participant delivers shares of Common Stock in payment of the
Option Price pursuant to Paragraph 4.
6. 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 Options shall pass by will or the laws of descent and distribution.
7. As a condition of receiving the Option, the Participant (or any
person exercising after the Participant's death) agrees to make arrangements for
the withholding of income taxes and employment taxes upon the exercise of the
Option by any manner permitted by the Plan.
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8. The fact that the Participant has been granted the Option shall not
affect the right of the Company to terminate the Participant's employment at any
time. The number of shares and the Option Price are subject to adjustment under
certain circumstances, as described in the Plan. In the event of certain
corporate transactions or other actions or events, the Committee may take such
actions with respect to the Option as it deems appropriate and consistent with
the Plan.
9. Any notice to be given under the terms of this Option shall be
addressed to Pactiv Corporation, Compensation Department, 1900 West Field Court,
Lake Forest, IL 60045.
PACTIV CORPORATION
/s/ Henry M. Wells III
-----------------------------------------------
Henry M. Wells III
Vice President & Chief Human Resources Officer
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