Exhibit 10.1

 

AMENDED AND RESTATED

OWENS-ILLINOIS, INC.

2005 INCENTIVE AWARD PLAN

 

ARTICLE 1.

PURPOSE

 

The purpose of the Owens-Illinois, Inc. 2005 Incentive Award Plan (the “Plan”)
is to promote the success and enhance the value of, as well as aid
Owens-Illinois, Inc. (the “Company”) by linking the personal interests of
current and future Employees and Consultants to those of Company stockholders.
The Plan is intended to incentivise these individuals to continue providing the
Company with outstanding performance, to generate superior returns to Company
stockholders, and to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of Employees and Consultants upon
whose judgment, interest, and special effort the successful conduct of the
Company’s operation is largely dependent.

 

ARTICLE 2.

DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings
specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

 

2.1                                 “Applicable Accounting Standards” shall mean
Generally Accepted Accounting Principles in the United States, International
Financial Reporting Standard or such other accounting principles or standards as
may apply to the Company’s financial statements under United States federal
securities laws from time to time.

 

2.2                                 “Award” means an Option, a Restricted Stock
award, a Stock Appreciation Right award, a Performance Share award, a
Performance Stock Unit award, a Dividend Equivalents award, a Stock Payment
award, a Deferred Stock award, a Restricted Stock Unit award, an Other
Stock-Based Award, a Performance Bonus Award, or a Performance-Based Award
granted to a Participant pursuant to the Plan.

 

2.3                                 “Award Agreement” means any written
agreement, contract, or other instrument or document evidencing an Award,
including through any electronic medium.

 

2.4                                 “Board” means the Board of Directors of the
Company.

 

2.5                                 “Change in Control” means and includes each
of the following:

 

(a)                                  A transaction or series of transactions
(other than an offering of Stock to the general public through a registration
statement filed with the Securities and Exchange Commission) whereby any
“person” or related “group” of “persons” (as such terms are used in
Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of
its Subsidiaries, an employee benefit plan maintained by the Company or any of
its Subsidiaries or a “person” that, prior to such transaction, directly or
indirectly controls, is controlled by, or is under common control with, the
Company) directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
possessing more than 50% of the total combined voting power of the Company’s
securities outstanding immediately after such acquisition; or

 

(b)                                 During any period of two consecutive years,
individuals who, at the beginning of such period, constitute the Board together
with any new director(s) (other than a director designated by a person

 

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who shall have entered into an agreement with the Company to effect a
transaction described in Section 2.4(a) or Section 2.4(c)) whose election by the
Board or nomination for election by the Company’s stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of the two year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or

 

(c)                                  The consummation by the Company (whether
directly involving the Company or indirectly involving the Company through one
or more intermediaries) of (x) a merger, consolidation, reorganization, or
business combination or (y) a sale or other disposition of all or substantially
all of the Company’s assets in any single transaction or series of related
transactions or (z) the acquisition of assets or stock of another entity, in
each case other than a transaction:

 

(i)                                     Which results in the Company’s voting
securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly,
all or substantially all of the Company’s assets or otherwise succeeds to the
business of the Company (the Company or such person, the “Successor Entity”))
directly or indirectly, at least a majority of the combined voting power of the
Successor Entity’s outstanding voting securities immediately after the
transaction, and

 

(ii)                                  After which no person or group
beneficially owns voting securities representing 50% or more of the combined
voting power of the Successor Entity; provided, however, that no person or group
shall be treated for purposes of this Section 2.4(c)(ii) as beneficially owning
50% or more of combined voting power of the Successor Entity solely as a result
of the voting power held in the Company prior to the consummation of the
transaction; or

 

(d)                                 The Company’s stockholders approve a
liquidation or dissolution of the Company.

 

The Committee shall have full and final authority, which shall be exercised in
its discretion, to determine conclusively whether a Change in Control of the
Company has occurred pursuant to the above definition, and the date of the
occurrence of such Change in Control and any incidental matters relating
thereto.

 

2.6                                 “Code” means the Internal Revenue Code of
1986, as amended.

 

2.7                                 “Committee” means the committee of the Board
described in Article 12.

 

2.8                                 “Consultant” means any consultant or adviser
if:

 

(a)                                  The consultant or adviser renders bona fide
services to the Company;

 

(b)                                 The services rendered by the consultant or
adviser are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities; and

 

(c)                                  The consultant or adviser is a natural
person who has contracted directly with the Company to render such services.

 

2.9                                 “Covered Employee” means an Employee who is,
or could be, a “covered employee” within the meaning of Section 162(m) of the
Code.

 

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2.10                           “Deferred Stock” means a right to receive a
specified number of shares of Stock during specified time periods pursuant to
Article 8.

 

2.11                           “Disability” means that the Participant qualifies
to receive long-term disability payments under the Company’s long-term
disability insurance program, as it may be amended from time to time.

 

2.12                           “Dividend Equivalents” means a right granted to a
Participant pursuant to Article 8 to receive the equivalent value (in cash or
Stock) of dividends paid on Stock.

 

2.13                           “Effective Date” shall have the meaning set forth
in Section 13.1.

 

2.14                           “Eligible Individual” means any person who is an
Employee or a Consultant, as determined by the Committee.

 

2.15                           “Employee” means any officer or other employee
(as defined in accordance with Section 3401(c) of the Code) of the Company or
any Subsidiary.

 

2.16                           “Exchange Act” means the Securities Exchange Act
of 1934, as amended.

 

2.17                           “Fair Market Value” shall mean, as of any given
date, the value of a share of Stock determined as follows:

 

(a)                                  If the Stock is listed on any established
stock exchange (such as the New York Stock Exchange, the NASDAQ Global Market
and the NASDAQ Global Select Market) or national market system, its Fair Market
Value shall be the closing sales price for a share of Stock as quoted on such
exchange or system for such date or, if there is no closing sales price for a
share of Stock on the date in question, the closing sales price for a share of
Stock on the last preceding date for which such quotation exists, as reported in
The Wall Street Journal or such other source as the Committee deems reliable;

 

(b)                                 If the Common Stock is not listed on an
established stock exchange or national market system, but the Common Stock is
regularly quoted by a recognized securities dealer, its Fair Market Value shall
be the mean of the closing representative bid and asked prices for such date or,
if there are no bid and asked prices for a share of Stock on such date, the
closing bid and low asked prices for a share of Stock on the last preceding date
for which such information exists, as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or

 

(c)                                  If the Stock is neither listed on an
established stock exchange or a national market system nor regularly quoted by a
recognized securities dealer, its Fair Market Value shall be established by the
Committee in good faith.

 

2.18                           “Full Value Award” means any Award other than an
Option, SAR or other Award for which the Participant pays the intrinsic value
(whether directly or by forgoing a right to receive a cash payment from the
Company).

 

2.19                           “Incentive Stock Option” means an Option that is
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto.

 

2.20                           “Non-Employee Director” means a member of the
Board who qualifies as a “Non-Employee Director” as defined in
Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the
Board.

 

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2.21                           “Non-Qualified Stock Option” means an Option that
is not intended to be an Incentive Stock Option.

 

2.22                           “Option” means a right granted to a Participant
pursuant to Article 5 of the Plan to purchase a specified number of shares of
Stock at a specified price during specified time periods. An Option may be
either an Incentive Stock Option or a Non-Qualified Stock Option.

 

2.23                           “Other Stock-Based Award” means an Award granted
or denominated in Stock or units of Stock pursuant to Section 8.7 of the Plan.

 

2.24                           “Participant” means any Eligible Individual who,
as a member of the Board, Consultant or Employee, has been granted an Award
pursuant to the Plan.

 

2.25                           “Performance-Based Award” means an Award granted
to selected Covered Employees pursuant to Articles 6 and 8, but which is subject
to the terms and conditions set forth in Article 9. All Performance-Based Awards
are intended to qualify as Qualified Performance-Based Compensation.

 

2.26                           “Performance Bonus Award” has the meaning set
forth in Section 8.8.

 

2.27                           “Performance Criteria” means the criteria that
the Committee selects for purposes of establishing the Performance Goal or
Performance Goals for an Award for a Performance Period. The Performance
Criteria that will be used to establish Performance Goals are limited to the
following: (i) earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income;
(iii) operating income; (iv) earnings per share of Stock; (v) book value per
share of Stock; (vi) return on equity; (vii) expense management; (viii) return
on investment before or after the cost of capital; (ix) improvements in capital
structure; (x) profitability of an identifiable business unit or product;
(xi) maintenance or improvement of profit margins; (xii) Stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital; (xviii) return on assets; (xix) cost reduction goals;
(xx) return on sales; (xxi) gross margin; (xxii) debt reduction; (xxiii) new
product launches; (xxiv) completion of joint ventures, divestitures,
acquisitions or other corporate transactions; (xxv) new business or expansion of
customers or clients; or (xxvi) productivity improvement. The foregoing criteria
may relate to the Company, one or more of its Subsidiaries or one or more of its
divisions or units or any combination of the foregoing, and may be applied on an
absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine.

 

2.28                           “Performance Goals” means, for a Performance
Period, the goals established in writing by the Committee for the Performance
Period based upon the Performance Criteria. Depending on the Performance
Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of a
division, business unit, or an individual. The achievement of each Performance
Goal shall be determined in accordance with Applicable Accounting Standards, to
the extent applicable. The Committee may, in its sole discretion, provide that
one or more objectively determinable adjustments shall be made to one or more of
the Performance Goals. Such adjustments may include one or more of the
following: (i) items related to a change in Applicable Accounting Standards;
(ii) items relating to financing activities; (iii) expenses for restructuring or
productivity initiatives; (iv) other non-operating items; (v) items related to
acquisitions; (vi) items attributable to the business operations of any entity
acquired by the Company during the Performance Period; (vii) items related to
the disposal of a business or segment of a business; (viii) items related to
discontinued operations that do not qualify as a segment of a business under
Applicable Accounting Standards; (ix) items attributable to any stock dividend,
stock split, combination or exchange of shares

 

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occurring during the Performance Period; or (x) any other items of significant
income or expense which are determined to be appropriate adjustments; (xi) items
relating to unusual or extraordinary corporate transactions, events or
developments, (xii) items related to amortization of acquired intangible assets;
(xiii) items that are outside the scope of the Company’s core, on-going business
activities; or (xiv) items relating to any other unusual or nonrecurring events
or changes in applicable laws, accounting principles or business conditions. For
all Awards intended to be Qualified Performance-Based Compensation, such
determinations shall be made within the time prescribed by, and otherwise in
compliance with, Section 162(m) of the Code.

 

2.29                           “Performance Period” means the one or more
periods of time, which may be of varying and overlapping durations, as the
Committee may select, over which the attainment of one or more Performance Goals
will be measured for the purpose of determining a Participant’s right to, and
the payment of, a Performance-Based Award.

 

2.30                           “Performance Share” means a right granted to a
Participant pursuant to Article 8, to receive Stock, the payment of which is
contingent upon achieving certain Performance Goals or other performance-based
targets established by the Committee.

 

2.31                           “Performance Stock Unit” means a right granted to
a Participant pursuant to Article 8, to receive Stock, the payment of which is
contingent upon achieving certain Performance Goals or other performance-based
targets established by the Committee.

 

2.32                           “Plan” means this Amended and Restated
Owens-Illinois, Inc. 2005 Incentive Award Plan, as it may be amended from time
to time.

 

2.33                           “Qualified Performance-Based Compensation” means
any compensation that is intended to qualify as “qualified performance-based
compensation” as described in Section 162(m)(4)(C) of the Code.

 

2.34                           “Restricted Stock” means Stock awarded to a
Participant pursuant to Article 6 that is subject to certain restrictions and
may be subject to risk of forfeiture.

 

2.35                           “Restricted Stock Unit” means an Award granted
pursuant to Section 8.6.

 

2.36                           “Securities Act” shall mean the Securities Act of
1933, as amended.

 

2.37                           “Stock” means the common stock of the Company,
par value $0.01 per share, and such other securities of the Company that may be
substituted for Stock pursuant to Article 11.

 

2.38                           “Stock Appreciation Right” or “SAR” means a right
granted pursuant to Article 7 to receive a payment equal to the excess of the
Fair Market Value of a specified number of shares of Stock on the date the SAR
is exercised over the Fair Market Value on the date the SAR was granted as set
forth in the applicable Award Agreement.

 

2.39                           “Stock Payment” means (a) a payment in the form
of shares of Stock, or (b) an option or other right to purchase shares of Stock,
as part of any bonus, deferred compensation or other arrangement, made in lieu
of all or any portion of the compensation, granted pursuant to Article 8.

 

2.40                           “Subsidiary” means any “subsidiary corporation”
as defined in Section 424(f) of the Code and any applicable regulations
promulgated thereunder or any other entity of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.

 

2.41                           “Successor Entity” shall have the meaning set
forth in Section 2.4(c)(i).

 

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ARTICLE 3.

SHARES SUBJECT TO THE PLAN

 

3.1                                 Number of Shares.

 

(a)                                  Subject to Article 11 and Section 3.1(b),
the aggregate number of shares of Stock which may be issued or transferred
pursuant to Awards under the Plan shall be 16,000,000 shares, provided, however,
that such aggregate number of shares of Stock available for issuance under the
Plan shall be reduced by 1.75 shares for each share of Stock delivered in
settlement of any Full Value Award.

 

(b)                                 To the extent that an Award terminates,
expires, or lapses for any reason, any shares of Stock subject to the Award
shall again be available for the grant of an Award pursuant to the Plan. Any
shares of Common Stock tendered or withheld to satisfy the grant or exercise
price or tax withholding obligation pursuant to any Award (other than an Option)
shall be counted against the number of shares available under Section 3.1(a). To
the extent permitted by applicable law or any exchange rule, shares of Stock
issued in assumption of, or in substitution for, any outstanding awards of any
entity acquired in any form of combination by the Company or any Subsidiary
shall not be counted against shares of Stock available for grant pursuant to
this Plan. The payment of Dividend Equivalents in conjunction with any
outstanding Awards shall not be counted against the shares available for
issuance under the Plan. For purposes of determining the number of shares
available under Section 3.1(a), shares of Common Stock subject to Stock
Appreciation Rights shall be counted as one share for each Stock Appreciation
Right awarded.

 

3.2                                 Stock Distributed.  Any Stock distributed
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Stock, treasury Stock or Stock purchased on the open market.

 

3.3                                 Limitation on Number of Shares Subject to
Awards.  Notwithstanding any provision in the Plan to the contrary, and subject
to Article 11, the maximum number of shares of Stock with respect to one or more
Awards that may be granted to any one Participant during a calendar year
(measured from the date of any grant) shall be 700,000 and the maximum aggregate
dollar value of any Award designated to be paid solely in cash to any Covered
Employee during any calendar year which is intended to be a Performance Based
Award shall not exceed $5,000,000.

 

ARTICLE 4.

ELIGIBILITY AND PARTICIPATION

 

4.1                                 Eligibility.  Each Eligible Individual shall
be eligible to be granted one or more Awards pursuant to the Plan.

 

4.2                                 Participation.  Subject to the provisions of
the Plan, the Committee may, from time to time, select from among all Eligible
Individuals, those to whom Awards shall be granted and shall determine the
nature and amount of each Award. No Eligible Individual shall have any right to
be granted an Award pursuant to this Plan.

 

4.3                                 Foreign Participants.  In order to assure
the viability of Awards granted to Participants employed in foreign countries,
the Committee may provide for such special terms as it may consider necessary or
appropriate to accommodate differences in local law, tax policy, or custom.
Moreover, the Committee may approve such supplements to, or amendments,
restatements, or alternative versions of, the Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of the Plan
as in

 

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effect for any other purpose; provided, however, that no such supplements,
amendments, restatements or alternative versions shall increase the share
limitations contained in Sections 3.1 and 3.3 of the Plan.

 

ARTICLE 5.

STOCK OPTIONS

 

5.1                                 General.  The Committee is authorized to
grant Options to Eligible Individuals on the following terms and conditions:

 

(a)                                  Exercise Price.  The exercise price per
share of Stock subject to an Option shall be determined by the Committee and set
forth in the Award Agreement; provided that the exercise price for any Option
shall not be less than 100% of the Fair Market Value of a share of Stock on the
date of grant.

 

(b)                                 Time and Conditions of Exercise.  The
Committee shall determine the time or times at which an Option may be exercised
in whole or in part; provided that the term of any Option granted under the Plan
shall not exceed ten years and one day. The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or
part of an Option may be exercised.

 

5.2                                 Incentive Stock Options.  The terms of any
Incentive Stock Options granted pursuant to the Plan must comply with the
conditions and limitations contained in Section 13.2 and this Section 5.2.

 

(a)                                  Eligibility.  Incentive Stock Options may
be granted only to employees of the Company or any “subsidiary corporation”
thereof (within the meaning of Section 424(f) of the Code and the applicable
regulations promulgated thereunder).

 

(b)                                 Exercise Price.  The exercise price per
share of Stock shall be set by the Committee; provided that subject to
Section 5.2(d) the exercise price for any Incentive Stock Option shall not be
less than 100% of the Fair Market Value on the date of grant.

 

(c)                                  Individual Dollar Limitation.  The
aggregate Fair Market Value (determined as of the time the Option is granted) of
all shares of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed $100,000 or
such other limitation as imposed by Section 422(d) of the Code, or any successor
provision. To the extent that Incentive Stock Options are first exercisable by a
Participant in excess of such limitation, the excess shall be considered
Non-Qualified Stock Options.

 

(d)                                 Ten Percent Owners.  An Incentive Stock
Option shall be granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of all
classes of Stock of the Company only if such Option is granted at a price that
is not less than 110% of Fair Market Value on the date of grant and the Option
is exercisable for no more than five years from the date of grant.

 

(e)                                  Notice of Disposition.  The Participant
shall give the Company prompt notice of any disposition of shares of Stock
acquired by exercise of an Incentive Stock Option within (i) two years from the
date of grant of such Incentive Stock Option or (ii) one year after the transfer
of such shares of Stock to the Participant.

 

(f)                                    Right to Exercise.  During a
Participant’s lifetime, an Incentive Stock Option may be exercised only by the
Participant.

 

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5.3                                 Substitution of Stock Appreciation Rights. 
The Committee may provide in the Award Agreement evidencing the grant of an
Option that the Committee, in its sole discretion, shall have the right to
substitute a Stock Appreciation Right for such Option at any time prior to or
upon exercise of such Option, subject to the provisions of Section 7.2 hereof;
provided that such Stock Appreciation Right shall be exercisable with respect to
the same number of shares of Stock for which such substituted Option would have
been exercisable.

 

ARTICLE 6.

RESTRICTED STOCK AWARDS

 

6.1                                 Grant of Restricted Stock.  The Committee is
authorized to make Awards of Restricted Stock to any Eligible Individual
selected by the Committee in such amounts and subject to such terms and
conditions as determined by the Committee. All Awards of Restricted Stock shall
be evidenced by a written Restricted Stock Award Agreement.

 

6.2                                 Issuance and Restrictions.  Subject to
Section 10.6, Restricted Stock shall be subject to such restrictions on
transferability and other restrictions as the Committee may impose (including,
without limitation, limitations on the right to vote Restricted Stock or the
right to receive dividends on the Restricted Stock). These restrictions may
lapse separately or in combination at such times, pursuant to such
circumstances, in such installments, or otherwise, as the Committee determines
at the time of the grant of the Award or thereafter.

 

6.3                                 Forfeiture.  Except as otherwise determined
by the Committee at the time of the grant of the Award or thereafter, upon
termination of employment or service during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited; provided, however, that, except as otherwise provided by
Section 10.6, the Committee may (a) provide in any Restricted Stock Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and (b) in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.

 

6.4                                 Certificates for Restricted Stock. 
Restricted Stock granted pursuant to the Plan may be evidenced in such manner as
the Committee shall determine. Certificates or book entries evidencing shares of
Restricted Stock must include an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, and the
Company may, in it sole discretion, retain physical possession of any stock
certificate until such time as all applicable restrictions lapse.

 

ARTICLE 7.

STOCK APPRECIATION RIGHTS

 

7.1                                 Grant of Stock Appreciation Rights.

 

(a)                                  The Committee is authorized to grant Stock
Appreciation Rights to Eligible Individuals from time to time, in its sole
discretion, on such terms and conditions as it may determine consistent with the
Plan; provided, however, that the term of any Stock Appreciation Right shall not
be more than ten (10) years from the date of grant.

 

(b)                                 A Stock Appreciation Right shall entitle the
Participant (or other person entitled to exercise the Stock Appreciation Right
pursuant to the Plan) to exercise all or a specified portion of the Stock
Appreciation Right (to the extent then exercisable pursuant to its terms) and to
receive from the

 

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Company an amount determined by multiplying the difference obtained by
subtracting the exercise price per share of the Stock Appreciation Right from
the Fair Market Value on the date of exercise of the Stock Appreciation Right by
the number of shares of Common Stock with respect to which the Stock
Appreciation Right shall have been exercised, subject to any limitations the
Committee may impose. The exercise price per share of Stock subject to each
Stock Appreciation Right shall be set by the Committee, but shall not be less
than 100% of the Fair Market Value on the date the Stock Appreciation Right is
granted.

 

7.2                                 Form of Payment.  Payment of the amounts
determined under Section 7.1(b) shall be in cash, shares of Common Stock (based
on its Fair Market Value as of the date the Stock Appreciation Right is
exercised), or a combination of both, as determined by the Committee.

 

ARTICLE 8.

OTHER TYPES OF AWARDS

 

8.1                                 Performance Share Awards.  Any Participant
selected by the Committee may be granted one or more Performance Share awards
which shall be denominated in a number of shares of Stock and which may be
linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular
Participant.

 

8.2                                 Performance Stock Units.  Any Participant
selected by the Committee may be granted one or more Performance Stock Unit
awards which shall be denominated in units of value including dollar value of
shares of Stock and which may be linked to any one or more of the Performance
Criteria or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. In making such determinations, the
Committee shall consider (among such other factors as it deems relevant in light
of the specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.

 

8.3                                 Dividend Equivalents.

 

(a)                                  Any Participant selected by the Committee
may be granted Dividend Equivalents based on the dividends declared on the
shares of Stock that are subject to any Award, to be credited as of dividend
payment dates, during the period between the date the Award is granted and the
date the Award is exercised, vests or expires, as determined by the Committee.
Such Dividend Equivalents shall be converted to cash or additional shares of
Stock by such formula and at such time and subject to such limitations as may be
determined by the Committee. No Dividend Equivalent will be paid to a
Participant unless and until the Award to which such Dividend Equivalent relates
vests.

 

(b)                                 Notwithstanding the foregoing, no Dividend
Equivalents shall be payable with respect to Options or Stock Appreciation
Rights.

 

8.4                                 Stock Payments.  Any Participant selected by
the Committee may receive Stock Payments in the manner determined from time to
time by the Committee; provided, that unless otherwise determined by the
Committee such Stock Payments shall be made in lieu of base salary, bonus, or
other cash compensation otherwise payable to such Participant. The number of
shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria

 

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determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.

 

8.5                                 Deferred Stock.  Any Participant selected by
the Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the Performance Criteria or
other specific performance criteria determined to be appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee subject to Section 10.6. Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a Participant awarded
Deferred Stock shall have no rights as a Company stockholder with respect to
such Deferred Stock until such time as the Deferred Stock Award has vested and
the Stock underlying the Deferred Stock Award has been issued.

 

8.6                                 Restricted Stock Units.  The Committee is
authorized to make Awards of Restricted Stock Units to any Participant selected
by the Committee in such amounts and subject to such terms and conditions as
determined by the Committee. At the time of grant, the Committee shall specify
the date or dates on which the Restricted Stock Units shall become fully vested
and nonforfeitable, and may specify such conditions to vesting as it deems
appropriate subject to Section 10.6. At the time of grant, the Committee shall
specify the maturity date applicable to each grant of Restricted Stock Units
which shall be no earlier than the vesting date or dates of the Award and may be
determined at the election of the grantee. On the maturity date, the Company
shall, subject to Section 10.5(b), transfer to the Participant one unrestricted,
fully transferable share of Stock for each Restricted Stock Unit scheduled to be
paid out on such date and not previously forfeited. The Committee shall specify
the purchase price, if any, to be paid by the grantee to the Company for such
shares of Stock.

 

8.7                                 Other Stock-Based Awards.  Any Participant
selected by the Committee may be granted one or more Awards that provide
Participants with shares of Stock or the right to purchase shares of Stock or
that have a value derived from the value of, or an exercise or conversion
privilege at a price related to, or that are otherwise payable in shares of
Stock and which may be linked to any one or more of the Performance Criteria or
other specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee subject to Section 10.6. In making such determinations, the
Committee shall consider (among such other factors as it deems relevant in light
of the specific type of Award) the contributions, responsibilities and other
compensation of the particular Participant.

 

8.8                                 Performance Bonus Awards.  Any Participant
selected by the Committee may be granted one or more Performance-Based Awards in
the form of a cash bonus (a “Performance Bonus Award”) payable upon the
attainment of Performance Goals that are established by the Committee and relate
to one or more of the Performance Criteria, in each case on a specified date or
dates or over any period or periods determined by the Committee subject to
Section 10.6. Any such Performance Bonus Award paid to a Covered Employee shall
be based upon objectively determinable bonus formulas established in accordance
with Article 9.

 

8.9                                 Term.  Except as otherwise provided herein,
the term of any Award of Performance Shares, Performance Stock Units, Dividend
Equivalents, Stock Payments, Deferred Stock, Restricted Stock Units or Other
Stock-Based Award shall be set by the Committee in its discretion.

 

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8.10                           Exercise or Purchase Price.  The Committee may
establish the exercise or purchase price, if any, of any Award of Performance
Shares, Performance Stock Units, Deferred Stock, Stock Payments, Restricted
Stock Units or Other Stock-Based Award; provided, however, that such price shall
not be less than the par value of a share of Stock on the date of grant, unless
otherwise permitted by applicable state law.

 

8.11                           Exercise Upon Termination of Employment or
Service.  An Award of Performance Shares, Performance Stock Units, Dividend
Equivalents, Deferred Stock, Stock Payments, Restricted Stock Units and Other
Stock-Based Award shall only be exercisable or payable while the Participant is
an Employee or Consultant, as applicable; provided, however, that the Committee
in its sole and absolute discretion may provide that an Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred
Stock, Restricted Stock Units or Other Stock-Based Award may be exercised or
paid subsequent to a termination of employment or service, as applicable, or
following a Change in Control of the Company, or because of the Participant’s
retirement, death or Disability, or otherwise; provided, however, that any such
provision with respect to Performance Shares or Performance Stock Units shall be
subject to the requirements of Section 162(m) of the Code that apply to
Qualified Performance-Based Compensation.

 

8.12                           Form of Payment.  Payments with respect to any
Awards granted under this Article 8 shall be made in cash, in Stock or a
combination of both, as determined by the Committee.

 

ARTICLE 9.

PERFORMANCE-BASED AWARDS

 

9.1                                 Purpose.  The purpose of this Article 9 is
to provide the Committee the ability to qualify Awards other than Options and
SARs and that are granted pursuant to Articles 6 and 8 as Qualified
Performance-Based Compensation. If the Committee, in its discretion, decides to
grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 9 shall control over any contrary provision contained in Articles 6 or
8; provided, however, that the Committee may in its discretion grant Awards to
Covered Employees that are based on Performance Criteria or Performance Goals
but that do not satisfy the requirements of this Article 9.

 

9.2                                 Applicability.  This Article 9 shall apply
only to those Covered Employees selected by the Committee to receive
Performance-Based Awards. The designation of a Covered Employee as a Participant
for a Performance Period shall not in any manner entitle the Participant to
receive an Award for the period. Moreover, designation of a Covered Employee as
a Participant for a particular Performance Period shall not require designation
of such Covered Employee as a Participant in any subsequent Performance Period
and designation of one Covered Employee as a Participant shall not require
designation of any other Covered Employees as a Participant in such period or in
any other period.

 

9.3                                 Procedures with Respect to Performance-Based
Awards.  To the extent necessary to comply with the Qualified Performance-Based
Compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
any Award granted under Articles 6 and 8 which may be granted to one or more
Covered Employees, no later than ninety (90) days following the commencement of
any fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (a) designate one or more Covered
Employees, (b) select the Performance Criteria applicable to the Performance
Period, (c) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such

 

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Performance Period, and (d) specify the relationship between Performance
Criteria and the Performance Goals and the amounts of such Awards, as
applicable, to be earned by each Covered Employee for such Performance Period.
Following the completion of each Performance Period, the Committee shall certify
in writing whether the applicable Performance Goals have been achieved for such
Performance Period. In determining the amount earned by a Covered Employee, the
Committee shall have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of individual or
corporate performance for the Performance Period.

 

9.4                                 Payment of Performance-Based Awards.  Unless
otherwise provided in the applicable Award Agreement, a Participant must be
employed by the Company or a Subsidiary on the day a Performance-Based Award for
such Performance Period is paid to the Participant. Furthermore, a Participant
shall be eligible to receive payment pursuant to a Performance-Based Award for a
Performance Period only if the Performance Goals for such period are achieved.

 

9.5                                 Additional Limitations.  Notwithstanding any
other provision of the Plan, any Award which is granted to a Covered Employee
and is intended to constitute Qualified Performance-Based Compensation shall be
subject to any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.

 

ARTICLE 10.

PROVISIONS APPLICABLE TO AWARDS

 

10.1                           Stand-Alone and Tandem Awards.  Awards granted
pursuant to the Plan may, in the discretion of the Committee, be granted either
alone, in addition to, or in tandem with, any other Award granted pursuant to
the Plan. Awards granted in addition to or in tandem with other Awards may be
granted either at the same time as or at a different time from the grant of such
other Awards.

 

10.2                           Award Agreement.  Awards under the Plan shall be
evidenced by Award Agreements that set forth the terms, conditions and
limitations for each Award which may include the term of an Award, the
provisions applicable in the event the Participant’s employment or service
terminates, and the Company’s authority to unilaterally or bilaterally amend,
modify, suspend, cancel or rescind an Award.

 

10.3                           Limits on Transfer.  No right or interest of a
Participant in any Award may be pledged, encumbered, or hypothecated to or in
favor of any party other than the Company or a Subsidiary, or shall be subject
to any lien, obligation, or liability of such Participant to any other party
other than the Company or a Subsidiary. Except as otherwise provided by the
Committee, no Award shall be assigned, transferred, or otherwise disposed of by
a Participant other than by will or the laws of descent and distribution. The
Committee by express provision in the Award or an amendment thereto may permit
an Award (other than an Incentive Stock Option) to be transferred to, exercised
by and paid to certain persons or entities related to the Participant, including
but not limited to members of the Participant’s family, charitable institutions,
or trusts or other entities whose beneficiaries or beneficial owners are members
of the Participant’s family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the

 

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transfer is being made for estate and/or tax planning purposes (or to a “blind
trust” in connection with the Participant’s termination of employment or service
with the Company or a Subsidiary to assume a position with a governmental,
charitable, educational or similar non-profit institution) and on a basis
consistent with the Company’s lawful issue of securities.

 

10.4                           Beneficiaries.  Notwithstanding Section 10.3, a
Participant may, in the manner determined by the Committee, designate a
beneficiary to exercise the rights of the Participant and to receive any
distribution with respect to any Award upon the Participant’s death. A
beneficiary, legal guardian, legal representative, or other person claiming any
rights pursuant to the Plan is subject to all terms and conditions of the Plan
and any Award Agreement applicable to the Participant, except to the extent the
Plan and Award Agreement otherwise provide, and to any additional restrictions
deemed necessary or appropriate by the Committee. If the Participant is married
and resides in a community property state, a designation of a person other than
the Participant’s spouse as his or her beneficiary with respect to more than 50%
of the Participant’s interest in the Award shall not be effective without the
prior written consent of the Participant’s spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant’s will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.

 

10.5                           Stock Certificates; Book Entry Procedures.

 

(a)                                  Notwithstanding anything herein to the
contrary, the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Board has determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed or traded. All Stock
certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to
comply with federal, state, or foreign jurisdiction, securities or other laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock. In addition to the terms and conditions provided
herein, the Board may require that a Participant make such reasonable covenants,
agreements, and representations as the Board, in its discretion, deems advisable
in order to comply with any such laws, regulations, or requirements. The
Committee shall have the right to require any Participant to comply with any
timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion
of the Committee.

 

(b)                                 Notwithstanding any other provision of the
Plan, unless otherwise determined by the Committee or required by any applicable
law, rule or regulation, the Company shall not deliver to any Participant
certificates evidencing shares of Stock issued in connection with any Award and
instead such shares of Stock shall be recorded in the books of the Company (or,
as applicable, its transfer agent or stock plan administrator).

 

10.6                           Full Value Award Vesting Limitations. 
Notwithstanding any other provision of this Plan to the contrary, Full Value
Awards made to Employees or Consultants shall become vested over a period of not
less than three years (or, in the case of vesting based upon the attainment of
Performance Goals or other performance based objectives, over a period of not
less than one year) following the date the Award is

 

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made; provided, however, that, notwithstanding the foregoing, Full Value Awards
that result in the issuance of an aggregate of up to 5% of the shares of Stock
available pursuant to Section 3.1(a) may be granted to any one or more
Participants without respect to such minimum vesting provisions.

 

10.7                           Paperless Administration.  In the event that the
Company establishes, for itself or using the services of a third party, an
automated system for the documentation, granting or exercise of Awards, such as
a system using an internet website or interactive voice response, then the
paperless documentation, granting or exercise of Awards by a Participant may be
permitted through the use of such an automated system.

 

10.8                           Payment.  The Committee shall determine the
methods by which Participants may make payment with respect to any Awards
granted under the Plan, which shall include, without limitation: (i) cash,
(ii) promissory note bearing interest at no less than such rate as shall then
preclude the imputation of interest under the Code, (iii) shares of Stock held
for such period of time as may be required by the Committee in order to avoid
adverse accounting consequences and having a Fair Market Value on the date of
delivery equal to the aggregate exercise price of the Option or exercised
portion thereof, or (iv) other property acceptable to the Committee (including
through the delivery of a notice that the Participant has placed a market sell
order with a broker with respect to shares of Stock then issuable upon exercise
of the Option, and that the broker has been directed to pay a sufficient portion
of the net proceeds of the sale to the Company in satisfaction of the Option
exercise price; provided that payment of such proceeds is then made to the
Company upon settlement of such sale), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants. Notwithstanding
any other provision of the Plan to the contrary, no Participant shall be
permitted to make payment on any Award granted under the Plan with a loan or
other extension of credit from the Company.

 

ARTICLE 11.

CHANGES IN CAPITAL STRUCTURE

 

11.1                           Adjustments.

 

(a)                                  In the event of any stock dividend, stock
split, combination or exchange of shares, merger, consolidation, spin-off,
recapitalization, distribution of Company assets to stockholders (other than
normal cash dividends), or any other corporate event affecting the Stock or the
share price of the Stock, the Committee shall make such proportionate and
equitable adjustments, if any, as the Committee in its discretion deems
appropriate to reflect such changes with respect to (i) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and
conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and/or
(iii) the grant or exercise price per share for any outstanding Awards under the
Plan. Any adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m) of
the Code.

 

(b)                                 In the event of any transaction or event
described in Section 11.1(a) or any unusual or nonrecurring transactions or
events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate (including without limitation any
Change in Control), or of changes in applicable laws, regulations or accounting
principles, and whenever the Committee determines that action is appropriate in
order to prevent the dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to any

 

14

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Award under the Plan, to facilitate such transactions or events or to give
effect to such changes in laws, regulations or principles, the Committee, in its
sole discretion and on such terms and conditions as it deems appropriate, either
by amendment of the terms of any outstanding Awards or by action taken prior to
the occurrence of such transaction or event and either automatically or upon the
Participant’s request, is hereby authorized to take any one or more of the
following actions:

 

(i)                                     To provide for either (A) termination of
any such Award in exchange for an amount of cash and/or other property, if any,
equal to the amount that would have been attained upon the exercise of such
Award or realization of the Participant’s rights (and, for the avoidance of
doubt, if as of the date of the occurrence of the transaction or event described
in this Section 11.1(b) the Committee determines in good faith that no amount
would have been attained upon the exercise of such Award or realization of the
Participant’s rights, then such Award may be terminated by the Company without
payment) or (B) the replacement of such Award with other rights or property
selected by the Committee in its sole discretion having an aggregate value not
exceeding the amount that could have been attained upon the exercise of such
Award or realization of the Participant’s rights had such Award been currently
exercisable or payable or fully vested;

 

(ii)                                  To provide that such Award be assumed by
the successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering the stock
of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices; and

 

(iii)                               To make adjustments in the number and type
of shares of Stock (or other securities or property) subject to outstanding
Awards, and in the number and kind of outstanding Restricted Stock or Deferred
Stock and/or in the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding options, rights and awards and
options, rights and awards which may be granted in the future;

 

(iv)                              To provide that such Award shall be
exercisable or payable or fully vested with respect to all shares covered
thereby, notwithstanding anything to the contrary in the Plan or the applicable
Award Agreement; and

 

(v)                                 To provide that the Award cannot vest, be
exercised or become payable after such event.

 

11.2                           Impact of a Change in Control.  Subject to any
applicable requirements of Section 409A of the Code, upon or in anticipation of,
a Change in Control, the Committee, in its sole and absolute discretion, may
(a) cause any and all Awards outstanding hereunder to become fully exercisable,
(b) cause all forfeiture conditions to lapse and to terminate at a specific time
in the future, including but not limited to the date of such Change in Control,
(c) give each Participant the right to exercise such Awards during a period of
time as the Committee, in its sole and absolute discretion, shall determine,
and/or (d) cause any and all Awards outstanding hereunder to terminate at a
specific time in the future, including but not limited to the date of such
Change in Control. In the event that the terms of any agreement between the
Company or any Company Subsidiary or affiliate and a Participant contains
provisions that conflict with and are more restrictive than the provisions of
this Section 11.2, this Section 11.2 shall prevail and control and the more
restrictive terms of such agreement (and only such terms) shall be of no force
or effect.

 

11.3                           Outstanding Awards—Certain Mergers.  Subject to
any required action by the stockholders of the Company, in the event that the
Company shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result of which the holders of shares of
Stock receive securities of another corporation), each Award outstanding on the
date of such merger or consolidation

 

15

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shall pertain to and apply to the securities that a holder of the number of
shares of Stock subject to such Award would have received in such merger or
consolidation.

 

11.4                           Outstanding Awards—Other Changes.  In the event
of any other change in the capitalization of the Company or corporate change
other than those specifically referred to in this Article 11, the Committee may,
in its sole and absolute discretion, make such adjustments in the number and
kind of shares or other securities subject to Awards outstanding on the date on
which such change occurs and in the per share grant or exercise price of each
Award as the Committee may consider appropriate to prevent dilution or
enlargement of rights hereunder.

 

11.5                           No Other Rights.  Except as expressly provided in
the Plan, no Participant shall have any rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend, any
increase or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger, or consolidation of the Company or any other
corporation. Except as expressly provided in the Plan or pursuant to action of
the Committee under the Plan, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to an Award or the grant or exercise price of
any Award.

 

ARTICLE 12.

ADMINISTRATION

 

12.1                           Committee.  The Compensation Committee (or
another committee or a subcommittee of the Board assuming the functions of the
Committee under the Plan) shall administer the Plan (except as otherwise
permitted herein) and shall consist solely of two or more Non-Employee Directors
appointed by and holding office at the pleasure of the Board, each of whom is
intended to qualify as both a “non-employee director” as defined by Rule 16b-3
of the Exchange Act or any successor rule, an “outside director” for purposes of
Section 162(m) of the Code and an “independent director” under the rules of the
New York Stock Exchange (or other principal securities market on which shares of
Common Stock are traded); provided, that any action taken by the Committee shall
be valid and effective, whether or not members of the Committee at the time of
such action are later determined not to have satisfied the requirements for
membership set forth in this Section 12.l or otherwise provided in any charter
of the Committee. Except as may otherwise be provided in any charter of the
Committee, appointment of Committee members shall be effective upon acceptance
of appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may only be filled by the Board.
Notwithstanding the foregoing, (a) the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Awards granted to Non-Employee Directors and (b) the Board or
Committee may delegate its authority hereunder to the extent permitted by
Section 12.5.

 

12.2                           Action by the Committee.  Unless otherwise
established by the Board or in any charter of the Committee, a majority of the
Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved in
writing by all members of the Committee in lieu of a meeting, shall be deemed
the acts of the Committee. Each member of the Committee is entitled to, in good
faith, rely or act upon any report or other information furnished to that member
by any officer or other employee of the Company or any Subsidiary, the Company’s
independent certified public accountants, or any executive compensation
consultant or other professional retained by the Company to assist in the
administration of the Plan

 

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12.3                           Authority of Committee.  Subject to any specific
designation in the Plan, the Committee has the exclusive power, authority and
discretion to:

 

(a)                                  Designate Participants to receive Awards;

 

(b)                                 Determine the type or types of Awards to be
granted to each Participant;

 

(c)                                  Determine the number of Awards to be
granted and the number of shares of Stock to which an Award will relate;

 

(d)                                 Determine the terms and conditions of any
Award granted pursuant to the Plan, including, but not limited to, the exercise
price, grant price, or purchase price, any reload provision, any restrictions or
limitations on the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers
thereof, any provisions related to noncompetition and recapture of gain on an
Award, based in each case on such considerations as the Committee in its sole
discretion determines; provided, however, that the Committee shall not have the
authority to accelerate the vesting or waive the forfeiture of any
Performance-Based Awards;

 

(e)                                  Determine whether, to what extent, and
pursuant to what circumstances an Award may be settled in, or the exercise price
of an Award may be paid in, cash, Stock, other Awards, or other property, or an
Award may be canceled, forfeited, or surrendered;

 

(f)                                    Prescribe the form of each Award
Agreement, which need not be identical for each Participant;

 

(g)                                 Decide all other matters that must be
determined in connection with an Award;

 

(h)                                 Establish, adopt, or revise any rules and
regulations as it may deem necessary or advisable to administer the Plan;

 

(i)                                     Interpret the terms of, and any matter
arising pursuant to, the Plan or any Award Agreement; and

 

(j)                                     Make all other decisions and
determinations that may be required pursuant to the Plan or as the Committee
deems necessary or advisable to administer the Plan.

 

12.4                           Decisions Binding.  The Committee’s
interpretation of the Plan, any Awards granted pursuant to the Plan, any Award
Agreement and all decisions and determinations by the Committee with respect to
the Plan are final, binding, and conclusive on all parties.

 

12.5                           Delegation of Authority.  To the extent permitted
by applicable law, the Committee may from time to time delegate to a committee
of one or more members of the Board or one or more officers of the Company the
authority to grant or amend Awards to Participants other than (a) senior
executives of the Company who are subject to Section 16 of the Exchange Act,
(b) Covered Employees, or (c) officers of the Company (or members of the Board)
to whom authority to grant or amend Awards has been delegated hereunder. Any
delegation hereunder shall be subject to the restrictions and limits that the
Committee specifies at the time of such delegation, and the Committee may at any
time rescind the authority so delegated or appoint a new delegatee. At all
times, the delegatee appointed under this Section 12.5 shall serve in such
capacity at the pleasure of the Committee.

 

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ARTICLE 13.

EFFECTIVE AND EXPIRATION DATE

 

13.1                           Effective Date.  The Plan was originally adopted
effective on May 11, 2005, the date it was originally approved by the Company’s
stockholders. This Amended and Restated Plan will be effective on the date it is
approved by the affirmative vote of the holders of a majority of the shares of
stock of the Company present or represented and entitled to vote at the 2009
annual meeting if such meeting is duly held in accordance with the applicable
provisions of the Company’s Bylaws (the “Restatement Effective Date”).

 

13.2                           Expiration Date.  The Plan will expire on, and no
Incentive Stock Option or other Award may be granted pursuant to the Plan after
the tenth anniversary of the Restatement Effective Date. Any Awards that are
outstanding on the tenth anniversary of the Restatement Effective Date shall
remain in force according to the terms of the Plan and the applicable Award
Agreement.

 

ARTICLE 14.

AMENDMENT, MODIFICATION, AND TERMINATION

 

14.1                           Amendment, Modification And Termination.  With
the approval of the Board, at any time and from time to time, the Committee may
terminate, amend or modify the Plan; provided, however, that (a) to the extent
necessary and desirable to comply with any applicable law, regulation, or stock
exchange rule, the Company shall obtain stockholder approval of any Plan
amendment in such a manner and to such a degree as required, and (b) except as
permitted under Article 11, stockholder approval is required for any amendment
to the Plan that (i) increases the number of shares available under the Plan
(other than any adjustment as provided by Article 11), (ii) permits the
Committee to grant Options or SARs with an exercise price that is below Fair
Market Value on the date of grant, (iii) permits the Committee to extend the
exercise period for an Option or Stock Appreciation Right beyond ten years from
the date of grant, (iv) reduce the exercise price per share of any outstanding
Option or Stock Appreciation Right granted under the Plan, (v) cancel any Option
or Stock Appreciation Right in exchange for cash or another Award when the
Option or Stock Appreciation Right’s price per share exceeds the Fair Market
Value of a share of Common Stock, or (vi) results in a material increase in
benefits or a change in eligibility requirements.

 

14.2                           Awards Previously Granted.  No termination,
amendment, or modification of the Plan shall adversely affect in any material
way any Award previously granted pursuant to the Plan without the prior written
consent of the Participant.

 

ARTICLE 15.

GENERAL PROVISIONS

 

15.1                           No Rights to Awards.  No Eligible Individual or
other person shall have any claim to be granted any Award pursuant to the Plan,
and neither the Company nor the Committee is obligated to treat Eligible
Individuals, Participants or any other persons uniformly.

 

15.2                           No Stockholders Rights.  Except as otherwise
provided herein, a Participant shall have none of the rights of a stockholder
with respect to shares of Stock covered by any Award until the Participant
becomes the record owner of such shares of Stock.

 

15.3                           Withholding.  The Company or any Subsidiary shall
have the authority and the right to deduct or withhold, or require a Participant
to remit to the Company, an amount sufficient to satisfy federal, state,

 

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local and foreign taxes (including the Participant’s FICA obligation) required
by law to be withheld with respect to any taxable event concerning a Participant
arising as a result of this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have
the Company withhold shares of Stock otherwise issuable under an Award (or allow
the return of shares of Stock) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the
number of shares of Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the
Participant of such Award within six months (or such other period as may be
determined by the Committee) after such shares of Stock were acquired by the
Participant from the Company) in order to satisfy the Participant’s federal,
state, local and foreign income and payroll tax liabilities with respect to the
issuance, vesting, exercise or payment of the Award shall be limited to the
number of shares which have a Fair Market Value on the date of withholding or
repurchase equal to the aggregate amount of such liabilities based on the
minimum statutory withholding rates for federal, state, local and foreign income
tax and payroll tax purposes that are applicable to such supplemental taxable
income.

 

15.4                           No Right to Employment or Services.  Nothing in
the Plan or any Award Agreement shall interfere with or limit in any way the
right of the Company or any Subsidiary to terminate any Participant’s employment
or services at any time, nor confer upon any Participant any right to continue
in the employ or service of the Company or any Subsidiary.

 

15.5                           Unfunded Status of Awards.  The Plan is intended
to be an “unfunded” plan for incentive compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Subsidiary.

 

15.6                           Indemnification.  To the extent allowable
pursuant to applicable law, each member of the Committee or of the Board shall
be indemnified and held harmless by the Company from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action or failure to act pursuant to the Plan and against and from any
and all amounts paid by him or her in satisfaction of judgment in such action,
suit, or proceeding against him or her; provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled pursuant to the Company’s Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.

 

15.7                           Relationship to other Benefits.  No payment
pursuant to the Plan shall be taken into account in determining any benefits
pursuant to any pension, retirement, savings, profit sharing, group insurance,
welfare or other benefit plan of the Company or any Subsidiary except to the
extent otherwise expressly provided in writing in such other plan or an
agreement thereunder.

 

15.8                           Expenses.  The expenses of administering the Plan
shall be borne by the Company and its Subsidiaries.

 

15.9                           Titles and Headings.  The titles and headings of
the Sections in the Plan are for convenience of reference only and, in the event
of any conflict, the text of the Plan, rather than such titles or headings,
shall control.

 

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15.10                     Fractional Shares.  No fractional shares of Stock
shall be issued and the Committee shall determine, in its discretion, whether
cash shall be given in lieu of fractional shares or whether such fractional
shares shall be eliminated by rounding up or down as appropriate.

 

15.11                     Limitations Applicable to Section 16 Persons. 
Notwithstanding any other provision of the Plan, the Plan, and any Award granted
or awarded to any Participant who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application of
such exemptive rule. To the extent permitted by applicable law, the Plan and
Awards granted or awarded hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule.

 

15.12                     Government and Other Regulations.  The obligation of
the Company to make payment of awards in Stock or otherwise shall be subject to
all applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register pursuant to the Securities Act of 1933, as amended, any of the shares
of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may
in certain circumstances be exempt from registration pursuant to the Securities
Act of 1933, as amended, the Company may restrict the transfer of such shares in
such manner as it deems advisable to ensure the availability of any such
exemption.

 

15.13                     Section 409A.  To the extent that the Committee
determines that any Award granted under the Plan is subject to Section 409A of
the Code, the Award Agreement evidencing such Award shall incorporate the terms
and conditions required by Section 409A of the Code. To the extent applicable,
the Plan and Award Agreements shall be interpreted in accordance with
Section 409A of the Code and Department of Treasury regulations and other
interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the Effective Date.
Notwithstanding any provision of the Plan to the contrary, in the event that
following the Effective Date the Committee determines that any Award may be
subject to Section 409A of the Code and related Department of Treasury guidance
(including such Department of Treasury guidance as may be issued after the
Effective Date), the Committee may adopt such amendments to the Plan and the
applicable Award Agreement or adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), or take any other
actions, that the Committee determines are necessary or appropriate to
(a) exempt the Award from Section 409A of the Code and/or preserve the intended
tax treatment of the benefits provided with respect to the Award, or (b) comply
with the requirements of Section 409A of the Code and related Department of
Treasury guidance.

 

15.14                     Governing Law.  The Plan and all Award Agreements
shall be construed in accordance with and governed by the laws of the State of
Delaware.

 

* * * * *

 

I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Owens-Illinois, Inc. on March 26, 2009.

 

* * * * *

 

I hereby certify that the foregoing Plan was approved by the stockholders of
Owens-Illinois, Inc. on April 23, 2009.

 

Executed on this 24th day of April, 2009.

 

 

 

 

/s/ James W. Baehren

 

 

Corporate Secretary

 

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