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EXHIBIT 10.11
PACTIV CORPORATION RABBI TRUST
The Pactiv Corporation Rabbi Trust (the "Trust") is hereby
adopted by Pactiv, (the "Company") and shall be maintained by and between the
Company and certain individuals as trustee (collectively the "Trustee").
Effective on the date on which the stock of the Company is
distributed to the shareholders of Tenneco Inc. (the "Effective Date"), the
following rules shall govern:
WHEREAS, the Company has adopted the nonqualified compensation
plan(s) and supplemental pension arrangements as listed in Appendix A
(collectively the "Plans" and each a "Plan") covering the benefit obligations
allocated to it under the Human Resources Agreement between and among Tenneco
Inc. and the Company (the "HR Agreement"), and
WHEREAS, the Company wishes to maintain the Trust and to
contribute to the Trust assets that shall be held therein, subject to the claims
of the Company's creditors in the event of the Company's Insolvency, as herein
defined, until paid to Plan participants and their beneficiaries in such manner
and at such times as specified in the Plan(s); and
WHEREAS, it is the intention of the parties that this Trust
shall not affect the status of the Plan(s) as an unfunded plan maintained for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees for purposes of Title I of the Employee
Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of the Company to make
contributions to the Trust to provide itself with a source of funds to assist it
in the meeting of its liabilities under the Plan(s).
NOW, THEREFORE, the parties do hereby adopt the Trust and
agree that the Trust shall be comprised, held and disposed of as follows:
1. Establishment of Trust.
(a) Subject to the rules explicitly set forth
herein, the Trust hereby established is irrevocable.
(b) The Trust is intended to be a grantor
trust, of which the Company is the grantor, within the meaning of subpart E,
part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(c) The principal of the Trust, and any earnings
thereon shall be held separate and apart from other funds of the Company and
shall be used exclusively for the uses and purposes of Plan participants and
general creditors as herein set forth. Plan participants and their beneficiaries
shall have no preferred claim on, or any beneficial ownership interest in, any
assets of
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the Trust. Any rights created under the Plan(s) and this Trust Agreement shall
be mere unsecured contractual rights of Plan participants and their
beneficiaries against the Company. Any assets held by the Trust will be subject
to the claims of the general creditors of the Company and any of the Company's
domestic subsidiaries.
(d) The Company, in its sole discretion, may at
any time, or from time to time, make deposits of common stock of the Company or
other property in trust with the Trustee to augment the principal to be held,
administered and disposed of by the Trustee as provided in this Trust Agreement.
Except as provided herein, neither the Trustee nor any Plan participant or
beneficiary shall have any right to compel additional deposits.
2. Payments to Plan Participants and their
Beneficiaries.
(a) At least annually, the Company shall deliver
to the Trustee a schedule (the "Payment Schedule") that indicates the amounts
payable in respect of each Plan participant (and his or her beneficiaries), that
provides a formula or other instructions acceptable to the Trustee for
determining the amounts so payable, the form in which such amount is to be paid
(as provided for or available under the Plan(s)), and the time of commencement
for payment of such amounts. To the extent that any amounts are due to an
employee (or beneficiary of an employee) of a subsidiary of the Company, and the
subsidiary fails to make such payment, the Company shall do so. Except as
otherwise provided herein, if the Company has failed to make payments to the
Plan participants and their beneficiaries in accordance with such Payment
Schedule the Trustee shall do so. The Company shall make provision for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan(s) and shall pay amounts withheld to the appropriate taxing
authorities.
(b) The entitlement of a Plan participant or
his or her beneficiaries to benefits under the Plan(s) shall be determined by
the Company or such party as it shall designate under the Plan(s), and any
claim for such benefits shall be considered and reviewed under the
procedures set out in the Plan(s). Notwithstanding the foregoing, the Trustee
may, without direction from the Company, make payments to participants and
beneficiaries in such manner and in such amounts as the Trustee shall determine
they are entitled to be paid under the Plans (to the extent funded through the
Trust) based on the most recent information furnished to the Trustee by the
Company and any supplemental information furnished to the Trustee by a
participant or beneficiary upon which the Trustee may reasonably rely in making
such determination. Notwithstanding any other provision hereof, persons (other
than persons covered by the Tenneco Inc. Pilots' Supplemental Retirement Plan)
who were employees of Tenneco Management Company ("TMC") immediately prior to
the Effective Date or who are treated as such under the HR Agreement, except
such persons who are employed by the Company or a subsidiary of the Company
other than TMC immediately after the Effective Date though they may be
participants in the plans listed in Appendix A, shall not be entitled to
payments under the Trust, and payments shall be available for their benefit
obligations through a separate rabbi trust.
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(c) The Company may make payment of benefits
directly to Plan participants or their beneficiaries as they become due under
the terms of the Plan(s). The Company shall notify the Trustee of its decision
to make payment of benefits directly prior to the time amounts are payable to
participants or their beneficiaries. In addition, if the principal of the Trust,
and any earnings thereon, are not sufficient to make payment of benefits in
accordance with the terms of the Plan(s), the Company shall make the balance of
each such payment as it falls due. The Trustee shall notify the Company where
principal and earnings are not sufficient.
(d) The Company shall cause its actuary to
determine the projected benefit obligation ("PBO") under all of the Plans as of
each January 1, commencing with January 1, 2000. To the extent that the value of
the assets of the Trust as of the January 1 in question is less than the total
PBO under all of the Plans as so determined, the Company shall contribute
additional assets to the Trust with a value equal to the difference. To the
extent that the assets of the Trust exceed 110% of the PBO, the Company may
withdraw assets with a value equal to the excess of the value of the Trust's
assets over 110% of such PBO.
(e) Notwithstanding any other provision hereof,
the Trustee may sell Company common stock or other assets in order to provide
cash to pay benefits hereunder.
3. Trustee Responsibility Regarding Payments to Trust
Beneficiary when the Company is Insolvent.
(a) The Trustee shall cease payment of benefits
to Plan participants and their beneficiaries if the Company is Insolvent. The
Company shall be considered "Insolvent" for purposes of this Trust Agreement if
(i) the Company is unable to pay its debts as they become due, or (ii) the
Company is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.
(b) In the event of Insolvency of the Company
the following rules shall apply:
(1) The Company shall inform the Trustee
in writing of the Company's Insolvency. If a person claiming to be a creditor of
the Company alleges in writing to the Trustee that the Company has become
Insolvent, the Trustee shall determine whether the Company is Insolvent and,
pending such determination, the Trustee shall discontinue payment of benefits to
Plan participants or their beneficiaries.
(2) Unless the Trustee has actual
knowledge of the Company's Insolvency, or has received notice from the Company
or a person claiming to be a creditor alleging that the Company is Insolvent,
the Trustee shall have no duty to inquire whether the Company is Insolvent. The
Trustee may in all events rely on such evidence concerning the Company's
solvency as may be furnished to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning the Company's solvency.
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(3) If at any time the Trustee has
determined that the Company is Insolvent, the Trustee shall discontinue payments
to Plan participants or their beneficiaries and shall hold the assets of the
Trust for the benefit of the Company's general creditors. Nothing in this Trust
Agreement shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of the Company with
respect to benefits due under the Plan(s) or otherwise.
(4) The Trustee shall resume the payment
of benefits to Plan participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after the Trustee has determined that the
Company is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets,
if the Trustee discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the first payment
following such discontinuance shall include the aggregate amount of all payments
due to Plan participants or their beneficiaries under the terms of the Plan(s)
for the period of such discontinuance, less the aggregate amount of any payments
made to Plan participants or their beneficiaries by the Company in lieu of the
payments provided for hereunder during any such period of discontinuance.
4. Payments to the Company.
Except as provided in Section 2 or 3 hereof, the Company shall
have no right or power to direct the Trustee to return to the Company or to
divert to others any of the Trust assets before all payment of benefits have
been made to Plan participants and their beneficiaries pursuant to the terms of
the Plan(s).
5. The Trustee's Powers of Investment and Management.
The Trustee shall have the following powers with respect to
any and all assets at any time held by it and constituting part of the Trust
Fund:
(a) The Trust shall hold the assets of the Trust
exclusively in shares of the common stock of the Company, and any assets
distributed with respect thereto.
(b) All rights associated with any stock held in the
Trust, including voting rights, shall be exercised by the Trustee or the person
designated by the Trustee, and shall in no event be exercisable by or rest with
Plan participants. Voting rights are exercisable by the Trustee in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
6. Disposition of Income.
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During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and reinvested in Company
common stock.
7. Accounting by the Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
the Company and the Trustee. Within 60 days following the close of each calendar
year and within 60 days after the removal or resignation of the Trustee, the
Trustee shall deliver to the Company a written account of its administration of
the Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash and securities held
in the Trust at the end of such year or as of the date of such removal or
resignation as the case may be.
8. Responsibility of the Trustee.
(a) The Trustee shall act with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims, provided,
however, that the Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by the Company which is
contemplated by, and in conformity with, the terms of this Trust and is given in
writing by the Company. In the event of a dispute between the Company and a
party, the Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If the Trustee undertakes or defends any
litigation arising in connection with this Trust, the Company agrees to
indemnify the Trustee against the Trustee's costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses) relating thereto
and to be primarily liable for such payments. If the Company does not pay such
costs, expenses and liabilities in a reasonably timely manner, the Trustee may
obtain payment from the Trust.
(c) The Trustee may consult with legal counsel
(who may also be counsel for the Company generally) with respect to any of its
duties or obligations hereunder.
(d) The Trustee may hire agents, accountants,
actuaries, investment advisors, financial consultants or other professionals to
assist it in performing any of its duties or obligations hereunder.
(e) The Trustee shall have, without exclusion,
all powers conferred on the
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Trustees by applicable law, unless expressly provided otherwise herein.
(f) Notwithstanding any powers granted to the
Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall
not have any power that could give this Trust the objective of carrying on a
business and dividing the gains therefrom, within the meaning of Section
301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant
to the Internal Revenue Code.
(g) Any action required to be taken by the
Company, or direction given by the Company, shall be by resolution of the
Compensation / Nominating / Governance Committee of its board of directors
or by written direction of one or more of its president, any vice president
or treasurer. The Trustee may rely upon a resolution or direction filed
with the Trustee and shall have no responsibility for any action taken by
the Trustee in accordance with any such resolution or direction.
9. Compensation and Expenses of the Trustee.
The Company shall pay all reasonable administrative expenses
and the Trustee's fees and expenses. If not so paid, the fees and expenses shall
be paid from the Trust. Notwithstanding the foregoing, individuals shall serve
without fee but shall be entitled to reimbursement of expenses.
10. Trustee Resignation or Removal.
(a) The Trustee or any individual who is one of
a group of individuals serving as Trustee may resign at any time by written
notice to the Company, which shall be effective 30 days after receipt of such
notice unless the Company and the Trustee (or individual as the case may be)
agree otherwise.
(b) The Trustee or any individual who is one of
a group of individuals serving as Trustee may be removed by the Company on 30
days notice or upon shorter notice acceptable by the Trustee (or individual as
the case may be).
(c) Upon a Change in Control, as defined herein,
the Trustee may not be removed by the Company for two years.
(d) If the Trustee or any individual who is one
of a group of individuals serving as Trustee resigns within two years of a
Change in Control, as defined herein, the Trustee shall select a successor
Trustee in accordance with the provisions of Section 11 hereof prior to the
effective date of the Trustee's resignation; provided that if an individual who
is one of a group of individuals serving as Trustee resigns in such
circumstances, the remaining individuals serving as Trustee may but are not
required to name a successor to replace him.
(e) Upon resignation or removal of the Trustee
and appointment of a
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successor Trustee, all assets shall subsequently be transferred to the successor
Trustee.
(f) For purposes hereof, death or incapacity
shall be deemed an immediately effective resignation.
11. Appointment of Successor.
(a) If the Trustee (or Individual) resigns or is
removed in accordance with Section 10 hereof, the Trustee may appoint any third
party as a successor to replace the Trustee (or individual) upon resignation or
removal. The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee
(or individual) shall execute any instrument necessary or reasonably requested
by the Company or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the
records and acts of any prior Trustee and may retain or dispose of existing
Trust assets, subject to the rules hereof. The successor Trustee shall not be
responsible for and the Company shall indemnify and defend the successor Trustee
from any claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event or any condition existing at the time it
becomes successor Trustee.
12. Amendment or Termination.
(a) This Trust Agreement may be amended by a
written instrument executed by the Trustee and the Company. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the Plan(s) or
shall make the Trust revocable.
(b) The Trust shall not terminate until the date
on which Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s). Upon termination of the Trust any
assets remaining in the Trust shall be returned to the Company.
(c) Upon written approval of Participants or
beneficiaries entitled to payment of benefits pursuant to the terms of the
Plan(s), the Company may terminate this Trust prior to the time all benefit
payments under the Plan(s)have been made. All assets in the Trust at termination
shall be returned to the Company.
(d) This Trust Agreement may not be amended by
the Company for two years following a Change in Control, as defined herein.
13. Miscellaneous.
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(a) Any provision of this Trust Agreement
prohibited by law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and
their beneficiaries under this Trust Agreement may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois.
(d) "Change in Control" shall mean the first to
occur of the following events (but no event other than the following events),
except as otherwise provided below:
(i) any person and any of their
affiliates or associates becomes the beneficial owner, directly or indirectly,
of securities of the Company representing twenty-five percent (25%) or more of
the combined voting power of the Company's then outstanding securities having
general voting rights, and a majority of the Incumbent Board (as hereinafter
defined) does not approve the acquisition before the acquisition occurs.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
under this section (i) solely because twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding securities having
general voting rights is acquired by one or more employee benefit plans
maintained by the Company; or
(ii) members of the Incumbent Board cease
to constitute a majority of the board of the Company; or
(iii) the consummation of any plan of
merger, consolidation or combination between the Company and any person
including becoming a subsidiary of any other person without members of the
Incumbent Board, as constituted immediately prior to the merger, consolidation
or combination constituting a majority of the board of directors of (A) the
successor corporation, or (B) if the surviving or successor corporation is a
majority-owned subsidiary of another corporation or corporations, the ultimate
parent company of the surviving or successor corporation; or
(iv) the consummation of any sale,
exchange or other disposition of all or substantially all of the Company's
assets without members of the Incumbent Board immediately prior to any sale,
exchange or disposition of all or substantially all of the Company's assets
constituting a majority of the board of directors of (A) the corporation which
holds such assets after such disposition, or, (B) if such corporation is a
majority-owned subsidiary of another corporation or corporations, the ultimate
parent company of the successor corporation provided, that
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the Company Board may determine conclusively that any transaction does not
constitute a sale, exchange or other disposition of substantially all of the
Company's assets; or
(v) if any person and any of their
affiliates and associates, shall elect or have elected, during any period not
exceeding 24 months, at least 25% of the members of the Company's board of
directors, without the approval of the Incumbent Board and such members are
comprised of persons not serving as members of the Company's board of directors
immediately prior to the formation of such group or the first solicitation of
proxies by such shareholder.
For purposes of this definition, the terms "person" and
"beneficial owner" shall have the meaning set forth in Sections 3(a) and 13(d)
of the Securities Exchange Act of 1934, as amended, in the regulations
promulgated thereunder. If the Trustee requests in writing that the Company
determine or furnish evidence to enable the Trustee to determine whether a
Change in Control has occurred, the Company shall do so in writing as soon as
practicable following receipt of such request.
(e) "Incumbent Board" shall mean (i) the members
of the Company's board of directors on the Effective Date, to the extent that
they continue to serve, and (ii) any individual who becomes a member of the
Company's board of directors after the Effective Date, if his election or
nomination for election as a director is approved by a vote of at least
three-quarters of the then Incumbent Board.
14. Corporate Restructuring.
In the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, extraordinary
dividend, spin-off, rights offering, share combination, or other change in the
corporate structure of the Company affecting its common stock, the Trustee may,
in its sole discretion, cause the transfer of all or a portion of the Trust's
assets to a comparable trust maintained by one or more of the resulting
corporate entities or otherwise cause such changes in the Trust or its assets as
it shall deem appropriate.
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IN WITNESS WHEREOF, the Company and the Trustee have caused
this Agreement to be executed on their behalf by their respective officers
thereunto duly authorized, on the day and year set forth below.
Date: November 2, 1999
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By: /S/ Richard L. Wambold
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Its: Chief Executive Officer
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By: /S/ Andrew A. Campbell
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Its: Vice President and
Chief Financial Officer
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By: /S/ Richard C. Mitchell
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Its: Vice President
Compensation and Benefits
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By: /S/ James V. Faulkner
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Its: Vice President and
Chief Legal Officer
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By: /S/ John Potempa
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Its: Vice President Employee
Relations and Administration
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APPENDIX A
Pactiv Corporation Deferred Compensation Plan
Tenneco Inc. Pilots' Supplemental Retirement Plan
Pactiv Corporation Supplemental Executive Retirement Plan
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