exv10w1






Exhibit 10.1




EXECUTION
COPY




DEBT EXCHANGE AGREEMENT




          This DEBT EXCHANGE AGREEMENT (this “Agreement”), dated as of October 28, 2009, is
entered into by and among Libbey Glass Inc., a Delaware corporation (the “Company”), Libbey
Inc., a Delaware corporation (“Parent”) and Merrill Lynch PCG, Inc., a Delaware corporation
(the “Investor” and together with the Company and Parent, the “Parties” and each, a
“Party”).




W I T N E S S E T H:




          WHEREAS, the Investor holds an aggregate principal amount of $160,862,039 of 16% Senior
Subordinated Pay-In-Kind Notes due 2011 of the Company (the “Old PIK Notes”), which
constitutes the total principal amount of the Old PIK Notes outstanding;




          WHEREAS, the Investor holds a warrant to purchase 485,309 shares of the common stock, par
value $0.01 per share, of Parent (the “Common Stock”) (the foregoing warrant, the “2006
Warrant”); and




          WHEREAS, subject to the terms and conditions herein, (a) the Investor and the Company have
agreed to exchange (the “Notes Exchange”) the Notes Exchange Old PIK Notes (as defined
herein) for $80,431,000 aggregate principal amount of Senior Subordinated Secured Pay-In-Kind Notes
due 2021 (the “Exchange PIK Notes”) to be issued pursuant to the indenture dated June 16,
2006, as amended and restated in the form of Exhibit A hereto (the “Indenture”)
between the Company and the Investor and guaranteed on a subordinated basis (the
“Guarantees”) by the guarantors party thereto, including Parent (the “Guarantors”)
and secured by third-priority liens on substantially all of the tangible and intangible assets of
the Company and the Guarantors, (b) the Investor and Parent have agreed to exchange the remaining
Old PIK Notes held by the Investor for (the “Debt-for-Equity Exchange” and collectively
with the Notes Exchange, the “Exchange”) (i) 933,145 shares of Common Stock (the
“Exchange Shares”), (ii) the Series I Exchange Warrant (as defined herein), and (iii) if
applicable, the Series II Exchange Warrant (as defined herein) and one or more Series III Exchange
Warrants (as defined herein) (together with the Series I Exchange Warrant, the “Warrants”
and the Exchange PIK Notes, the Series I Exchange Warrant, the Warrant Shares (as defined below)
and Exchange Shares, the “Exchange Securities”).




          NOW, THEREFORE, in consideration of the premises, and of the representations, warranties,
covenants and agreements set forth herein, the Parties agree as follows:




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Section I




EXCHANGE



          1.1 Closing Transactions. Concurrently with the execution hereof, (a) the Investor is
delivering to the Company and Parent an aggregate principal amount of $160,862,039 million of the
Old PIK Notes, and the Company shall cancel such Old PIK Notes;




               (b) the Company and the Investor are each executing and delivering to the other Party the
amended and restated Indenture substantially in the form attached hereto as Exhibit A (the
“Amended and Restated Indenture”);



               (c) the Guarantors are executing and delivering the Amended and Restated Indenture to the
Investor;



               (d) the Company is executing and delivering to the Investor the Exchange PIK Notes;



               (e) Parent is executing and delivering to the Investor the Series I Exchange Warrant
substantially in the form attached hereto as Exhibit C;



               (f) Parent is delivering to the Investor a certificate registered in the Investor’s name
representing 933,145 shares of Common Stock;



               (g) Parent is delivering to the Investor a certificate of Parent’s transfer agent as to the
number of shares of Common Stock outstanding as of the date hereof;



               (h) Parent and the Investor are executing and delivering to the other Party the Amended and
Restated Registration Rights Agreement substantially in the form attached hereto as Exhibit
B (the “Amended and Restated Registration Rights Agreement” and together with this
Agreement, the Amended and Restated Indenture, the Series I Exchange Warrant, the Engagement Letter
and the Collateral Documents, including, without limitation, the Reaffirmation, the
“Transaction Documents”);



               (i) Latham & Watkins LLP, counsel for the Company and Parent and the General Counsel of Parent
are delivering to the Investor their respective written opinions, dated the date hereof and
addressed to the Investor, each in a form agreed upon by the parties (the consummation of the
transactions in clauses (a) through (h), collectively, the “Closing,” the date of which is
the “Closing Date”); and



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               (j) Parent will deliver to the Investor, within 30 days following the Closing Date, the
Mortgage Modifications, and for each real property that is subject to the existing Louisiana
Mortgage, New York Mortgage, Ohio Mortgage or Wisconsin Mortgage, as the case may be, title policy
endorsements acceptable to the Investor issued by the title insurance company recording the
Mortgage Modifications acceptable to the Investor.



Section II




REPRESENTATIONS AND WARRANTIES




          2.1 Representations and Warranties of the Company and Parent. The Company and Parent,
jointly and severally, represent and warrant to the Investor as follows:




               (a) Organization, Authority and Subsidiaries. The Company, Parent and each of the
Company’s Subsidiaries has been duly organized and is validly existing and in good standing under
the laws of its jurisdiction of organization and is qualified to do business in every jurisdiction
in which its ownership of property or conduct of business requires it to qualify. The Company,
Parent and each of the Company’s Subsidiaries possess all requisite power and authority and all
material licenses, permits and authorizations necessary to own and operate their respective
properties, except where the failure to be so qualified, in good standing or have such power or
authority would not, individually or in the aggregate, have a material adverse effect (as
hereinafter defined) (i) on the business, properties, management, financial position or results of
operations or prospects of the Parent, the Company and each of the Company’s Subsidiaries taken as
a whole or (ii) on the performance by the Company and the Guarantors of their obligations under the
Exchange Securities and the Guarantees (each an “Issuer Material Adverse Effect”), to carry
on their respective businesses as presently conducted and to carry out the Exchange and the
transactions contemplated by this Agreement and the other Transaction Documents. Schedule 2.1(a)
to this Agreement sets forth all of the direct and indirect Subsidiaries of the Parent and the
Company and any other entity in which any of them owns an Equity Interest and the percentage
ownership of such entity.



               (b) Due Issuance and Authorization. (i) Each of the Transaction Documents has been
duly authorized by the Company, Parent and each of the Guarantors to the extent each is a party
thereto and, when duly executed and delivered in accordance with its terms by each of the parties
thereto, will each constitute a valid and legally binding agreement of the Company, Parent and each
of the Guarantors, to the extent each is a party thereto, enforceable against the Company, Parent
and each of the Guarantors, to the extent each is a party thereto, in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally or by equitable principles relating to
enforceability (collectively, the “Enforceability Exceptions”).



                    (ii) The Exchange PIK Notes have been duly authorized by the Company and, when duly
executed, authenticated, issued and delivered as provided in the Amended and Restated
Indenture and paid for as provided herein, will be duly and validly issued and outstanding
and will constitute valid and legally binding obligations of



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the Company, enforceable against the Company in accordance with their terms, subject
to the Enforceability Exceptions, and will be entitled to the benefits of the Amended and
Restated Indenture; and the Guarantees of the Exchange PIK Notes have been duly authorized
by each of the Guarantors and, when the Exchange PIK Notes have been duly executed,
authenticated, issued and delivered as provided in the Amended and Restated Indenture and
paid for as provided herein, will be valid and legally binding obligations of each of the
Guarantors, enforceable against each of the Guarantors in accordance with their terms,
subject to the Enforceability Exceptions, and will be entitled to the benefits of the
Indenture. The obligations of the Company and the Guarantors under the Exchange PIK Notes
in favor of the Investor are secured by valid and enforceable perfected third priority
liens on the Collateral (as defined in the Collateral Documents) pursuant to the Collateral
Documents for the benefit of holders of the Investor, and the Collateral will be free and
clear of all liens, except for the liens on the Collateral created or permitted by the
Credit Agreement, Indenture and the Collateral Documents.




                    (iii) The Exchange Shares have been duly authorized by the Parent and, when paid for as
provided herein, will be validly issued, fully paid and non-assessable and free and clear
of any pre-emptive rights or rights of first offer or similar rights and will be free of
any liens or encumbrances, except inchoate liens arising by operation of law, of the
stockholders of Parent; provided, however, that the Exchange Shares may be subject to
restrictions on transfer under state and/or federal securities laws or otherwise required
by such laws at the time a transfer is proposed.



                    (iv) Each series of the Warrants have been duly authorized by the Parent and, when
duly executed, delivered and paid for as provided herein, will constitute valid and legally
binding obligations of the Parent enforceable against the Parent in accordance with their
terms, subject to the Enforceability Exceptions.



                    (v) Upon issuance pursuant to the terms of the respective Warrants, the Warrant
Shares will be duly authorized, validly issued, fully paid and nonassessable, shall be
issued free from any preemptive rights or rights of first offer or similar rights and free
from all taxes, liens and charges except inchoate liens arising by operation of law with
respect to the issue thereof and, based in part upon the representations and warranties of
the Investor, shall be issued in compliance with all federal and state securities laws;
provided, however, that the Warrant Shares may be subject to restrictions on transfer under
state and/or federal securities laws or otherwise required by such laws at the time a
transfer is proposed.



               (c) Consents. Except as has been obtained or as may be required under the Amended and
Restated Registration Rights Agreement, no consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority, regulatory authority, or court or other
third party on the part of the Company, Parent or the Guarantors is required in connection with the
execution and delivery of the Transaction Documents or the consummation



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of the Exchange and the transactions contemplated hereby or thereby (other than the filings of
Uniform Commercial Code financing statements).




               (d) No Conflicts. The execution, delivery and performance by Parent, the Company and
each of the Guarantors, as applicable, of the Transaction Documents, to the extent party thereto,
and the consummation of the transactions contemplated hereby and thereby, do not (i) conflict with
or result in a breach or violation of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of, any lien, charge or encumbrance upon any
property or assets of Parent, the Company or any of the other Guarantors pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument, each as
amended, to which Parent, the Company or any of the other Guarantors is a party or by which Parent,
the Company or any of the other Guarantors is bound or to which any of the property or assets of
Parent, the Company or any of the Company’s Subsidiaries is subject (other than any lien or
encumbrance created or imposed pursuant to the Amended and Restated Indenture, the Exchange PIK
Notes, and the Collateral Documents), (ii) result in any violation of the provisions of the charter
or by-laws or similar organizational documents of Parent, the Company or any of the Company’s
Subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority, except, in the case
of clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not,
individually or in the aggregate, have an Issuer Material Adverse Effect.



               (e) Capitalization. The authorized capital stock of Parent consists of (a) 5,000,000
shares of preferred stock, par value $.01 per share and (b) 50,000,000 shares of Common Stock. As
of the date hereof, no shares of Preferred Stock were issued and outstanding and 15,155,560 shares
of Common Stock were issued and outstanding. All the outstanding shares of capital stock or other
equity interests of the Parent, the Company and the Company’s Subsidiaries have been duly and
validly authorized and are issued, are fully paid and non-assessable (except, in the case of any
foreign Subsidiary, for directors’ qualifying shares) and are owned directly or indirectly by the
Parent, free and clear of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party except for (i) those created pursuant to the
Credit Agreement, the Indenture governing the Company’s Floating Rate Senior Secured Notes due
2011, dated June 16, 2006, any Credit Documentation, or any Collateral Documents and (ii) such
liens, charges or other claims that would not, individually or in the aggregate, have an Issuer
Material Adverse Effect. All the outstanding shares of capital stock or other equity interests of
the Parent have been duly and validly authorized and issued, are fully paid and non-assessable.



               (f) No Undisclosed Liabilities. Except for those liabilities and obligations (i)
reserved against or provided for in the audited consolidated balance sheet of Parent as of December
31, 2008 or in the notes thereto or in the unaudited consolidated balance sheet of Parent as of
June 30, 2009 or in the notes thereto, (ii) incurred in the ordinary course of business consistent
with past practice, (iii) incurred under this Agreement or in connection with the transactions
contemplated hereby, including the Exchange, or (iv) as would not have an Issuer



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Material Adverse Effect, none of Parent, the Company or any of the Company’s Subsidiaries is
subject to any liabilities or obligations of any nature, whether accrued, absolute, determined,
determinable, fixed or contingent, that would be required to be recorded or reflected on a balance
sheet in accordance with United States generally accepted accounting principles as of the date
hereof.




               (g) Brokers. Except for fees that are or may be payable to Barclays Capital Inc.
pursuant to the engagement letter, dated March 9, 2009 and fees that may be payable to the lenders
under the Credit Agreement, there are no claims for brokerage commissions, finders’ fees or similar
compensation in connection with the Exchange and the transactions contemplated by the Transaction
Documents based on any arrangement or agreement binding upon Parent, the Company or any of the
Company’s Subsidiaries.



               (h) Financial Statements. The financial statements and the related notes thereto
included in the SEC Documents (as hereinafter defined) present fairly the consolidated financial
position of the Parent, the Company and the Company’s Subsidiaries as of the dates indicated and
the results of their operations and the changes in their cash flows for the periods specified; such
financial statements have been prepared in conformity with GAAP applied on a consistent basis
throughout the periods covered thereby.



               (i) Disclosure Controls and Procedures. The Parent, the Company and the Company’s
Subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule
13a-l5(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been
designed by, or under the supervision of, their respective principal executive and principal
financial officers, or persons performing similar functions, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. Except as disclosed
in the SEC Documents, there are no material weaknesses in the Parent’s or the Company’s internal
controls.



               (j) Absence of Certain Developments. Since the date of the most recent consolidated
financial statements of the Parent, the Company and the Company’s Subsidiaries included in the SEC
Documents, except to the extent resulting from (i) general economic, regulatory or political
conditions or changes therein in the United States or other countries in which the Parent, the
Company and the Company’s Subsidiaries operate; (ii) financial or securities market fluctuations or
conditions or (iii) changes in applicable law or GAAP, (i) there has not been any dividend or
distribution of any kind declared, set aside for payment, paid or made by the Parent or the Company
on any class of capital stock, or any material adverse change, or, to the knowledge of Parent or
the Company, any development involving a prospective material adverse change, in or affecting the
business, properties, management, financial position or results of operations of the Parent, the
Company and the Company’s Subsidiaries taken as a whole; (ii) neither the Parent, nor the Company
nor any of the Company’s Subsidiaries has entered into any transaction or agreement not in the
ordinary course of business that would be



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likely to have an Issuer Material Adverse Effect; and (iii) neither the Parent, nor the
Company nor any of the Company’s Subsidiaries has sustained any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or
from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or
governmental or regulatory authority, except in each case as otherwise set forth on Schedule 2.1(j)
hereto.




               (k) Title to Property and Assets. Parent, the Company and the Company’s Subsidiaries
each have good and marketable title in fee simple to, or have valid rights to lease or otherwise
use, all items of real and personal property that are described or referred to in the Collateral
Documents and any other real or personal property material to the respective businesses of the
Parent, the Company and the Company’s Subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except for those expressly permitted in
the Collateral Documents, and those that (i) secure debt obligations of the Parent, the Company and
the Company’s Subsidiaries identified on Schedule 2.1(a) hereto, or (ii) do not materially
interfere with the use made and proposed to be made of such property by the Parent, the Company and
the Company’s Subsidiaries.



               (l) SEC Documents. Since October 1, 2008, the Parent has timely filed all reports,
schedules, forms and statements required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date hereof and after
January 1, 2009, and all exhibits included therein and financial statements and schedules thereto
and documents incorporated by reference therein, being hereinafter referred to herein as the
“SEC Documents”). As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and
none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made,
not misleading. Since the adoption of the Sarbanes-Oxley Act, the Parent has complied in all
material respects with the laws, rules and regulations thereunder. As of their respective dates,
the financial statements of the Parent included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published rules and regulations
of the SEC applicable with respect thereto.



               (m) Intellectual Property. The Parent, the Company and the Company’s Subsidiaries own
or possess adequate rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of their respective
businesses; and the conduct of their respective businesses will not conflict in any material
respect with any such rights of others, and the Parent, the Company and the Company’s Subsidiaries
have not received any notice of any claim of infringement of or conflict with any such rights of
others.



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               (n) Foreign Corrupt Practices Act. Neither the Parent, nor the Company nor any of the
Company’s Subsidiaries nor, to the best knowledge of Parent and the Company, any director, officer,
agent, employee or other Person associated with or acting on behalf of the Parent, the Company or
any of the Company’s Subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.



               (o) Right of First Refusal; Voting and Registration Rights. No Person has any right
of first refusal, preemptive right, right of first offer, right of co-sale or other similar right
regarding the Parent or the Company’s securities. There are no provisions of the certificate of
incorporation or the bylaws of the Parent, the Company or the constituent documents of any of the
Company’s Subsidiaries, no agreements to which the Parent, the Company or any of the Company’s
Subsidiaries is a party and no agreements by which the Parent, the Company, any of the Company’s
Subsidiaries or the Exchange Securities are bound, which (a) may affect or restrict the voting
rights of the Investor with respect to the Exchange Shares or the Warrant Shares in its capacity as
a stockholder of the Parent, (b) restrict the ability of the Investor, or any successor thereto or
assignee or transferee thereof, to transfer any of the Exchange Securities, (c) would adversely
affect the Parent’s, the Company’s, any Guarantors, or the Investor’s right or ability to
consummate the transactions contemplated by this Agreement or comply with the terms of the
Transaction Documents and the transactions contemplated hereby or thereby, (d) require the vote of
more than a majority of the Parent’s issued and outstanding Common Stock, voting together as a
single class, to take or prevent any corporate action, other than those matters requiring a class
vote under Delaware law, or (e) entitle any party to nominate or elect any director of the Parent
or require any of the Parent’s stockholders to vote for any such nominee or other Person as a
director of the Parent in each case, except as provided for in this Agreement. Other than pursuant
to the Amended and Restated Registration Rights Agreement, the Parent is not under any contractual
obligation to register for sale any of its securities under the Securities Act.



               (p) Issuances Exempt. Assuming the truth and accuracy of the representations and
warranties of the Investor contained in Section 2.2 hereof, the offer, sale, and issuance
of the Exchange Securities will be exempt from the registration requirements of the Securities Act,
and will have been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable state securities
laws. All shares of capital stock and other securities issued by the Parent prior to the date of
this Agreement have been issued in transactions either registered under the Securities Act or
exempt from the registration requirements under the Securities Act and all applicable state
securities or “blue sky” laws, and in compliance with all applicable corporate laws. The Parent
has not offered any of its capital stock, or any other securities, for sale to, or solicited any
offers to buy any of the foregoing from the Parent, or otherwise approached or negotiated with any
other Person in respect thereof, in such a manner as to require registration under the Securities
Act. No holder of any of the Parent’s capital stock has any rescission rights.



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               (q) No Integrated Offering. Neither Parent, the Company nor any of their respective
Affiliates or any other Person acting on the Parent’s or the Company’s behalf, has directly or
indirectly engaged in any form of general solicitation or general advertising with respect to the
Exchange Securities, nor have any of such Persons made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would require registration of any
of the Exchange Securities under the Securities Act or cause the Exchange or the other transactions
contemplated by this Agreement to be integrated with any prior offering of securities of the Parent
or the Company for purposes of the Securities Act or any applicable stockholder approval
provisions.



               (r) Litigation. Except as described in the SEC Documents, there are no legal,
governmental or regulatory investigations, actions, suits or proceedings pending to which the
Parent, the Company or any of the Company’s Subsidiaries is a party or to which any property of the
Parent, the Company or any of the Company’s Subsidiaries is the subject that, individually or in
the aggregate, if determined adversely to the Parent, the Company or any of the Company’s
Subsidiaries, could reasonably be expected to have an Issuer Material Adverse Effect; and to the
best knowledge of the Company and each of the Guarantors, no such investigations, actions, suits or
proceedings are threatened by any Governmental Entity or by others.



               (s) Compliance with Laws. Neither the Parent, the Company nor any of the Company’s
Subsidiaries is in violation of any law, ordinance or regulation of any Governmental Entity, except
for violations that, either singly or in the aggregate, would not have an Issuer Material Adverse
Effect.



               (t) Taxes. (i) The Parent, the Company and the Company’s Subsidiaries have paid all
federal, state, local and foreign taxes and filed all Tax Returns required to be paid or filed
through the date hereof; and (ii) except as otherwise disclosed in the SEC Documents, there is no
tax deficiency that has been asserted against the Parent, the Company or any of the Company’s
Subsidiaries or any of their respective properties or assets; except, in the case of each of
clauses (i) or (ii) above, for any such payment or filing failures or deficiencies as would not,
individually or in the aggregate, have an Issuer Material Adverse Effect.



               (u) Employee Relations.



                    (i) Except for any non-compliance with (i) — (v) below that would not, individually
or in the aggregate, have an Issuer Material Adverse Effect (i) each employee benefit
plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), for which the Parent, the Company or any member of the
Parent’s “Controlled Group” (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the Code) would have
any liability (each, a “Plan”) has been maintained in compliance with its terms
and the requirements of any applicable statutes,



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orders, rules and regulations, including but not limited to ERISA and the Code; (ii) no
prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred with respect to any Plan excluding transactions effected pursuant to a
statutory or administrative exemption; (iii) no Plan subject to Sections 412 and 430 of
the Code or Sections 302 and 303 of ERISA, has applied for, received or is reasonably
expected to apply for a funding waiver under Section 412(c) of the Code or Section 302(c)
of ERISA; (iv) no “reportable event” (within the meaning of Section 4043(c) of ERISA for
which the notice requirements have not been waived) has occurred or is reasonably expected
to occur; and (v) neither the Parent, nor the Company nor any member of the Controlled
Group has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA
(other than contributions to the Plan or premiums to the PBGC, in the ordinary course and
without default) in respect of a Plan (including a “multiemployer plan”, within the
meaning of Section 4001(a)(3) of ERISA).




                    (ii) No labor disturbance by or dispute with employees of the Parent, the Company or
any of the Company’s Subsidiaries exists or, to the best knowledge of the Company and each
of the Guarantors, is contemplated or threatened and neither the Company nor any Guarantor
is aware of any existing or imminent labor disturbance by, or dispute with, the employees
of any of the Parent’s, the Company’s or any of the Company’s Subsidiaries’ principal
suppliers, contractors or customers, except as (x) disclosed in the SEC Documents or (y)
would not have an Issuer Material Adverse Effect.



               (v) Acknowledgment Regarding Securities. The Parent acknowledges that its obligation
to issue Exchange Shares and Warrant Shares upon conversion of the respective Warrants in
accordance with the terms of this Agreement and the respective Warrants, is absolute and
unconditional, regardless of the dilution that such issuance may have on the ownership interests of
other stockholders of the Parent. Taking the foregoing into account, the Parent’s Board of
Directors has determined in its good faith business judgment that the issuance of the Exchange
Shares and the respective Warrants hereunder and the consummation of the other transactions
contemplated hereby are (a) in the best interests of the Parent and its stockholders and (b) do not
breach (with or without the passage of time or the giving of notice) any obligations of the Parent,
the Company or any of the Company’s Subsidiaries the result of which would have an Issuer Material
Adverse Effect.



               (w) Environmental Matters. (i) The Parent, the Company and the Company’s Subsidiaries
(x) are in compliance with any and all applicable federal, state, local and foreign laws, rules,
regulations, requirements, decisions and orders relating to the protection of human health or
safety, the environment, natural resources, hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”), (y) have received and are in compliance
with all permits, licenses, certificates or other authorizations or approvals required of them
under applicable Environmental Laws to conduct their respective businesses, and (z) have not
received notice of any actual or potential liability under or relating to any Environmental Laws,
including for the investigation or remediation of any disposal or release of hazardous or



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toxic substances or wastes, pollutants or contaminants, and have no knowledge of any event or
condition that would reasonably be expected to result in any such notice, and (ii) there are no
costs or liabilities associated with Environmental Laws of or relating to the Parent, the Company
or the Company’s Subsidiaries, except in the case of each of (i) and (ii) above, for any such
failure to comply, or failure to receive required permits, licenses or approvals, or cost or
liability, as would not, individually or in the aggregate, have an Issuer Material Adverse Effect;
and (iii) except as described in the SEC Documents, (x) there are no proceedings that are pending,
or that are known to be contemplated, against the Parent, the Company or any of the Company’s
Subsidiaries under any Environmental Laws in which a Governmental Entity is also a party, other
than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000
or more will be imposed, (y) the Parent, the Company and the Company’s Subsidiaries are not aware
of any issues regarding compliance with Environmental Laws, or liabilities or other obligations
under Environmental Laws or concerning hazardous or toxic substances or wastes, pollutants or
contaminants, that could reasonably be expected to have an Issuer Material Adverse Effect.




               (x) Related-Party Transactions. No relationship, direct or indirect, exists between
or among the Parent, the Company or any of the Company’s Subsidiaries, on the one hand, and the
directors, officers, stockholders or other Affiliates of the Parent, the Company or any of the
Company’s Subsidiaries, on the other, that would be required by the Securities Act to be described
in a registration statement to be filed with the SEC and that is not so described in the SEC
Documents.



               (y) Insurance. The Parent, the Company and the Company’s Subsidiaries have insurance
covering their respective properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such losses and risks as
are generally consistent with industry practice to protect the Parent, the Company and the
Company’s Subsidiaries and their respective businesses. Neither the Parent nor the Company nor any
of the Company’s Subsidiaries has received notice from any insurer or agent of such insurer that
capital improvements or other expenditures are required or necessary to be made in order to
continue such insurance.



          2.2 Representations and Warranties of the Investor. The Investor hereby represents and
warrants to the Company and Parent as follows:




               (a) Organization. The Investor is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and is qualified to do business in every jurisdiction
in which its ownership of property or conduct of business requires it to qualify, except where the
failure to be so qualified and in good standing would not, individually or in the aggregate,
reasonably be likely to have a material adverse effect on the ability of the Investor to perform
its obligations under the Transaction Documents, to the extent a party thereto (an “Investor
Material Adverse Effect”). The Investor possesses all requisite corporate power and authority
and all material licenses, permits and authorizations necessary to own and operate its properties,
to carry on its business as presently conducted and to carry out the Exchange and the



11









 




transactions contemplated by this Agreement, except as would not have an Investor Material
Adverse Effect.




               (b) Authorization. The execution, delivery and performance of the Transaction
Documents to which the Investor is a party have been duly and validly authorized by all necessary
corporate action of the Investor. The Transaction Documents to which the Investor is a party each
constitute a valid and binding obligation of the Investor, enforceable in accordance with its
terms, except as may be limited by the Enforceability Exceptions. No other corporate proceedings
are necessary for the execution and delivery by the Investor of this Agreement, the performance of
its obligations hereunder or the consummation by it of the Exchange and the transactions
contemplated hereby.



               (c) Consents. Except as has been obtained or will be obtained prior to the Closing,
no consent, approval or authorization of, or designation, declaration or filing with, any
governmental authority, regulatory authority, court or other third party on the part of the
Investor is required in connection with the execution and delivery of this Agreement or the
consummation of the Exchange and the transactions contemplated hereby, except where the failure to
obtain such consent, approval or authorization or make such declaration or filing would not be
reasonably likely to have an Investor Material Adverse Effect.



               (d) No Conflicts. The execution, delivery and performance by the Investor of the
Transaction Documents to which the Investor is a party and the consummation of the and the
transactions contemplated thereby will not (i) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Investor is a party or by which
the Investor is bound, (ii) result in any violation of the provisions of the charter or by-laws or
similar organizational documents of the Investor or (iii) result in the violation of any law or
statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or
regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict,
breach, violation or default that would not, individually or in the aggregate, have an Investor
Material Adverse Effect.



               (e) Title. The Investor has good and valid title to the Old PIK Notes held by it and
will deliver the Old PIK Notes free and clear of all commitments, mortgages, pledges, taxes, liens,
charges, encumbrances or other security interests or claims of right to title by any third party of
any kind whatsoever.



               (f) Investor Capacity. The Investor, by reason of the business and financial
experience of its management, has the capacity to protect its own interests in connection with the
Exchange and the transactions contemplated by this Agreement. The Investor is able to bear the
economic risk of an investment in the Exchange Securities and has sufficient net worth to sustain a
loss of all of its investment in the Exchange Securities if such a loss should occur. The



12









 




Investor is acquiring the Exchange Securities for its own account for investment only, not as
a nominee or agent, and not with a view towards the resale or distribution thereof in violation of
the Securities Act. The Investor represents that it is an “accredited investor” within the meaning
of Regulation D under the Securities Act.




               (g) Due Diligence. The Investor has received all such documents, records and
information which the Investor has requested, and has had adequate opportunity to ask questions of,
and receive answers from, Parent’s and the Company’s respective officers, employees, agents,
accountants, and representatives concerning the business, operations, financial condition, assets,
liabilities, and all other matters relating to Parent, the Company and its Subsidiaries relevant to
the Investor’s investment in the Exchange Securities.



               (h) No Registration. The Investor understands and hereby acknowledges that it is
aware that the Exchange Securities have not been registered under the Securities Act or any similar
state securities laws and that the Exchange Securities will be issued by the Company in reliance
upon exemptions from the registration requirements of such laws. The Investor further understands
and acknowledges that all representations, warranties and agreements made herein form, in part, the
basis for the foregoing exemptions under the Securities Act and the applicable state securities
laws, and that in issuing the Exchange Securities to the Investor, the Company and Parent have
relied on all representations, warranties and agreements of the Investor contained herein.



               (i) Certain Tax Matters. The Investor does hereby acknowledge that it (i) has
reviewed with its own tax advisors the federal, state, local and foreign tax consequences of an
investment in the Exchange Securities, (ii) is relying solely on such advisors and not on any
statements or representations of Parent, the Company, the Guarantors or any of their respective
agents and (iii) understands that it shall be responsible for its own tax liability that may arise
as a result of this investment in the Exchange Securities.



Section III




ADDITIONAL AGREEMENTS




          3.1 Standstill.




               (a) So long as the Investor owns Registrable Common Stock or has the right to acquire
Registrable Common Stock or has a contingent or non-contingent right to receive a Series II
Exchange Warrant and/or Series III Exchange Warrant pursuant to this Agreement exercisable for
Registrable Common Stock (the “Standstill Period”), Investor shall not, and shall cause
each of its controlled Affiliates not to: (i) other than with respect to the Warrant Shares or
shares of Common Stock issuable upon exercise of the 2006 Warrant, as applicable, acquire, or
propose to acquire (whether publicly or otherwise) beneficial ownership of any equity securities or
assets, or rights or options to acquire any such securities or assets (through purchase,



13









 




exchange, conversion or otherwise), of Parent or any of its Subsidiaries, including derivative
securities representing the right to vote or economic benefits of any such securities; (ii) make,
effect or commence any tender or exchange offer, merger or other business combination involving
Parent or any of its Subsidiaries; (iii) consummate or commence any recapitalization,
restructuring, liquidation or, dissolution with respect to Parent or any of its Subsidiaries; (iv)
make, or in any way participate in, any “solicitation” of proxies to vote or consent, or seek to
advise or influence any Person with respect to the voting of, any voting securities of Parent or
any of its Subsidiaries (but without limiting stockholders’ rights to vote the securities); (v)
form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to, or otherwise act in concert with any Person in respect of, any
voting equity securities of Parent or any of its Subsidiaries; (vi) negotiate with any Person with
respect to, or make any statement or proposal to any Person with respect to, or make any public
announcement (except as required by law) or proposal or offer whatsoever with respect to, or act as
a financing source for or otherwise invest in any other Persons (other than in its or its
Affiliates’ investment management, banking, brokerage, securities or similar business and other
such insubstantial investments in the ordinary course of business) in connection with, or otherwise
solicit, seek or offer to effect any transactions or actions described in the foregoing clauses (i)
through (vii), or make any other proposal or statement inconsistent with the terms of this
Section 3.1 or that otherwise would reasonably be expected to result in a public
announcement regarding any such transactions or actions (except as required by law); or (viii)
knowingly advise, assist, or encourage any other Persons in connection with any of the foregoing
(other than in its or its Affiliates’ investment management, banking, brokerage, securities or
similar business); unless and until, in the case of each of the foregoing clauses (i) through
(vii), the Investor has received the prior written invitation or approval of Parent’s Board of
Directors to do so.




               (b) During the Standstill Period, Investor, together with its Affiliates (whose ownership of
Common Stock would be aggregated with the Investor for determinations of beneficial ownership
pursuant to this paragraph), shall not become a beneficial owner of more than 29.5% of the
outstanding Common Stock (the “Cap”) (beneficial ownership shall have the meaning set forth
in Rules 13d-3 and 13d-5 under the Exchange Act, except that it shall include shares of Common
Stock that Investor or such Affiliates have the right to acquire, whether such right is exercisable
immediately or only after the passage of time). The Cap shall not apply if bankruptcy or
liquidation proceedings have commenced by or on behalf of the Company. The Cap shall be
automatically increased to such higher percentage of Common Stock as may be permitted in the future
without triggering change in control covenants in any credit agreement, indenture or management
agreement of Parent and/or the Company. By way of example, if the change in control trigger in the
Credit Agreement and all of the Company’s management agreements were increased to 33%, the Cap
would be increased to 32.5%. In addition, the Cap shall not apply in the event that a change in
control or similar event, not caused by actions of the Investor or its Affiliates, occurs and
results in repurchase obligations, defaults or acceleration with respect to all credit agreements,
indentures or other indebtedness containing such a provision of Parent and/or the Company that
contain such change in control covenants that are not otherwise waived (and without regard to
consequences under management agreements) (a “Cap Termination”). For the avoidance of
doubt, the parties intend the Cap to prohibit Investor’s



14









 




purchases of Common Stock from triggering change in control covenants with respect to Parent
and the Company’s indebtedness and management agreements unless such covenants are already
triggered and not waived as a result of Common Stock purchases by other parties.




          3.2 Lock-Up. Subject to the exceptions contained in this Section 3.2, so long as
the Investor owns Registrable Common Stock or has the right to acquire Registrable Common Stock or
has a contingent right to receive a Series II Exchange Warrant and/or Series III Exchange Warrant
pursuant to this Agreement exercisable for Registrable Common Stock, the Investor shall not offer
for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into
any contract, option or other arrangement or understanding with respect to, or consent to the offer
for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of any or
all of the Common Stock, any rights to acquire Common Stock or any interest therein (any of the
foregoing, a “Disposition”) if the aggregate number of Common Stock sold by the Investor on
any given trading day would exceed 50% of the average daily volume for the prior ten trading days,
excluding shares of Common Stock sold by the Investor during the applicable period.



Notwithstanding the foregoing, a Disposition of Common Stock by the Investor shall not be subject
to the foregoing if the Disposition of Common Stock is:




               (a) pursuant to an offer or exchange subject to Regulation 14D of the Exchange Act;



               (b) pursuant to a negotiated transaction with a third party involving a block sale of Common
Stock;



               (c) arising as a result of a merger or similar transaction involving Parent;



               (d) to Parent or



               (e) pursuant to an underwritten offering of the Common Stock.


In the event that the outstanding shares of Common Stock shall be changed into a different number
of shares or a different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the limitations shall be
correspondingly adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.




15









 








          3.3 Contingent Warrants.




               (a) If any principal amount of the Exchange PIK Notes is outstanding on the earlier of (such
earlier date, the “Series II Date”) (i) December 1, 2010 or (ii) the date that the Company
has paid off, defeased, satisfied and discharged or redeemed its indebtedness obligations under its
Floating Rate Notes, Parent shall issue to the Investor on the Series II Date a warrant
substantially in the form attached hereto as Exhibit D, which, when exercised, will entitle
the Investor to acquire, subject to the Cap, a number of shares of fully paid and non-assessable
Common Stock representing ten percent (10%) (such percentage to be reduced on a pro rata basis with
any reduction in the principal amount of the Exchange PIK Notes as of the Series II Date) of the
Common Stock outstanding as determined on the Series II Date (on a fully diluted basis, excluding
the shares of Common Stock issuable upon exercise of the 2006 Warrant and the Series I Exchange
Warrant and any options to purchase shares of Common Stock outstanding on the date of this
Agreement, provided such options have not been repriced or otherwise modified) at a price of $0.01
per share of Common Stock (the “Series II Exchange Warrant”). By way of example, if a
principal amount of $40.2 million of the Exchange PIK Notes is outstanding as of the Series II
Date, Parent would issue a Series II Exchange Warrant entitling the Investor to acquire, subject to
the Cap, a number of shares of fully paid and non-assessable Common Stock representing five percent
(5%) of the Common Stock outstanding, as determined on the Series II Date (on a fully diluted
basis, excluding the shares of Common Stock issuable upon exercise of the 2006 Warrant and the
Series I Exchange Warrant and any options to purchase shares of Common Stock outstanding on the
date of this Agreement, provided such options have not been repriced or otherwise modified), at a
price of $0.01 per share of Common Stock.



               (b) If any principal amount of the Exchange PIK Notes is outstanding 180 days, 210 days or 240
days after the Series II Date (each, a “Series III Issuance Date”), Parent shall issue to
the Investor on such date, as applicable, a warrant in the form attached hereto as Exhibit
E, which, when exercised, will entitle the Investor to acquire, subject to the Cap then in
effect, a number of shares of fully paid and non-assessable Common Stock representing three and
one-thirds percent (3 1/3%) (such percentage to be reduced on a pro rata basis with any reduction
in the principal amount of the Exchange PIK Notes as of such Series III Issuance Date) of the
Common Stock outstanding as determined on the Series II Date (on a fully diluted basis, excluding
the shares of Common Stock issuable upon exercise of the 2006 Warrant and the Series I Exchange
Warrant and any options to purchase shares of Common Stock outstanding on the date of this
Agreement, provided such options have not been repriced or otherwise modified) at a price of $0.01
per share of Common Stock (each, a “Series III Exchange Warrant” and together with the
Series I Exchange Warrant and Series II Exchange Warrant, the “Exchange Warrants”). By way
of example, if a principal amount of $40.2 million of the Exchange PIK Notes is outstanding 210
days after the Series II Date, Parent would issue on that date a Series III Exchange Warrant
entitling the Investor to acquire, subject to the Cap, if applicable, a number of shares of fully
paid and non-assessable Common Stock representing one and two-thirds percent (1 2/3%) of the Common
Stock outstanding, as determined on the Series II Date (on a fully diluted basis, excluding the
shares of Common Stock issuable upon exercise of the 2006 Warrant and the Series I Exchange Warrant
and any options to purchase shares of Common Stock



16









 




outstanding on the date of this Agreement, provided such options have not been repriced or
otherwise modified), at a price of $0.01 per share of Common Stock.




               (c) Notwithstanding anything to the foregoing in Sections 3.3(a) and 3.3(b),
prior to and as a condition to the issuance of any Series II Exchange Warrant or Series III
Exchange Warrant, the Investor shall provide to Parent a certificate of an officer of the Investor
confirming the number of shares of Common Stock beneficially owned by the Investor, together with
its Affiliates whose ownership of Common Stock would be aggregated with the Investor for purposes
of Section 3.3(b) hereof (calculated to include the right to acquire Common Stock, whether
such right is exercisable immediately or only after the passage of time) (the
“Confirmation”) and certifying that such current ownership, together with the shares of
Common Stock issuable upon exercise of such Series II Exchange Warrant or Series III Exchange
Warrant and the right to acquire Common Stock by the Investor or such Affiliates, whether such
right is exercisable immediately or only after the passage of time, does not exceed the Cap then in
effect (the “Certification”). If the Investor is unable to provide the Certification to
Parent then, subject to the other provisions of this Agreement and upon receipt of the
Confirmation, Parent shall issue a portion of such Series II Exchange Warrant or Series III
Exchange Warrant, as applicable, entitling the Investor to acquire such number of shares of Common
Stock such that the Common Stock beneficially owned by the Investor, together with such Affiliates,
directors, officers and representatives (calculated to include the right to acquire Common Stock by
the Investor or such Affiliates, whether such right is exercisable immediately or only after the
passage of time) would not exceed the Cap, and Parent shall issue the remaining portion of such
Series II Exchange Warrant or Series III Exchange Warrant that would have been issuable as of the
Series II Date or the Series III Issuance Date (without regard to subsequent redemptions of
Exchange PIK Notes), as applicable, at such subsequent time as the Investor is able to provide the
Certification to Parent, or the Cap shall no longer be applicable.



               (d) For so long as (i) any portion of the Exchange PIK Notes remains outstanding and (ii) any
portion of the Series II Warrants or Series III Warrants has not yet been issued pursuant to this
Section 3.3, Parent shall not repurchase, extinguish or otherwise reduce outstanding shares
of its capital stock without the prior consent of the Investor if such reduction in outstanding
shares would result in the Investor beneficially owning more than 9.5% of the outstanding shares of
Common Stock.



          3.4 Further Assurances. From time to time after the Closing Date, each Party hereto shall
deliver or cause to be delivered such further documents and instruments and shall do and cause to
be done such further acts as a Party may reasonably request to carry out the provisions and
purposes of this Agreement.




          3.5 Public Announcements. Except as may be required by applicable law, no Party hereto
shall make any public announcements or otherwise communicate with any news media with respect to
this Agreement or any of the transactions contemplated hereby, without prior consultation with the
other parties as to the timing and contents of any such announcement or communications; provided,
however, that nothing contained herein shall prevent any Party from promptly making all filings
with any Governmental Entity or disclosures with the stock



17









 






exchange, if any, on which such Party’s capital stock is listed, as may, in its judgment, be
required in connection with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.




          3.6 Blue Sky Laws. The Parent shall exercise its commercially reasonable best efforts to
register or qualify (or obtain an exemption from registration) the Exchange Securities under the
blue sky laws of such states and districts of the United States and such other jurisdictions as the
Investor shall reasonably request; provided, however, that, in the case of non-U.S. jurisdictions,
the Parent will not be required to (a) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 3.6, (b) subject itself
to taxation in any such jurisdiction or (c) consent to general service of process in any such
jurisdiction). The Parent shall pay for all fees (including filing and application fees), costs
and expenses in connection therewith.




          3.7 Reservation of Common Stock. The Parent shall reserve and keep available out of its
authorized but unissued Common Stock the number of shares required for (i) the issuance of the
Exchange Shares and (ii) the exercise of any of the Warrants.




          3.8 Investor Agreements.




               (a) So long as the Investor owns Registrable Common Stock or has the right to acquire
Registrable Common Stock or has a contingent or non-contingent right to receive a Series II
Exchange Warrant and/or Series III Exchange Warrant pursuant to this Agreement exercisable for
Registrable Common Stock, as a condition to (x) the Transfer by the Investor of any Exchange
Warrant or shares of Common Stock (excluding shares of Common Stock sold pursuant to Rule 144 under
the Securities Act or shares sold in an underwritten offering, whether or not registered) to any
Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) that beneficially
owns more than five (5%) percent of the outstanding shares of Common Stock immediately prior to
such transfer or (y) the Transfer by the Investor of any such Exchange Warrant or shares of Common
Stock representing more than five (5%) of the outstanding shares of Common Stock immediately prior
to such transfer to any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange
Act), such Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have entered into an agreement with Parent agreeing to the obligations of the Investor under
Sections 3.1 and 3.8. It shall be deemed a sufficient evidence of compliance by
the Investor with this Section 3.8(a) for the Investor to obtain a letter from such transferee in
the form of Exhibit G hereto.



               (b) Notwithstanding anything to the foregoing, so long as the Investor owns Registrable Common
Stock or has the right to acquire Registrable Common Stock or has a contingent or non-contingent
right to receive a Series II Exchange Warrant and/or Series III Exchange Warrant pursuant to this
Agreement exercisable for Registrable Common Stock, the Investor agrees that it will not directly
or knowingly indirectly transfer any Exchange Warrants or shares of Common Stock to any Person
listed on Schedule 3.8 hereto without the prior written consent of Parent (which consent may be
given or withheld, or made subject to such conditions



18









 




as are determined by Parent, in its sole discretion), other than transfers in connection with a
change of control transaction resulting in a Cap Termination. It shall be deemed a sufficient
investigation by the Investor as to whether such transferee is an affiliate of any Person listed on
Schedule 3.8 hereof for purposes of compliance with this paragraph to obtain a letter from such
transferee in the form of Exhibit H hereto.




Section IV




CERTAIN DEFINITIONS




          Except as otherwise expressly provided, all accounting terms used in this Agreement, whether
or not defined in this Section IV, shall be construed in accordance with GAAP. The
following terms have the meanings set forth below:




               “Affiliate” of any Person means any other Person which directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common control with, such
Person. The term “control” (including the terms “controlling,” “controlled by” and “under common
control with”) as used with respect to any Person means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.



               “Agreement” means this Agreement.



               “Amended and Restated Indenture” has the meaning assigned to it in Section 1.1(b)
hereof.



               “Amended and Restated Registration Rights Agreement” has the meaning assigned to it in
Section 1.1(h) hereof.



               “beneficial ownership” or “beneficially owns” or “beneficial owner”
has the meaning as set forth in Rules 13d-3 and 13d-5 of the Exchange Act.



               “Cap” has the meaning assigned to it in Section 3.1(b) hereof.



               “Certification” has the meaning assigned to it in Section 3.3(c) hereof.



               “Change of Control Transaction” means any transaction or series of related
transactions approved by the Board of Directors of Parent, that results in any Person who is not an
Affiliate of Parent on the date of this Agreement acquiring control of Parent and holding more than
35% of the outstanding shares of Common Stock.



19









 





               “Closing” has the meaning assigned to it in Section 1.1 hereof.



               “Closing Date” has the meaning assigned to it in Section 1.1 hereof.



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



               “Collateral Documents” means the mortgages, deeds of trust or deeds, the Pledge and
Security Agreement entered into and other instruments and documents executed and delivered pursuant
to which collateral is pledged, assigned or granted in connection with the Company’s sale of
100,000 units of Senior Subordinated Secured Pay-In-Kind Notes due 2011 and the Exchange PIK Notes,
including any amendments or supplements thereto.



               “Common Stock” has the meaning assigned to it in the Preamble hereof.



               “Confirmation” has the meaning assigned to it in Section 3.3(c) hereof.



               “Controlled Group” has the meaning assigned to it in Section 2.1(v)(i) hereof.



               “Credit Agreement” means the Credit Agreement, dated as of June 16, 2006, among the
Company and Libbey Europe B.V., Libbey Inc., the other loan parties thereto, the lenders party
thereto, JPMorgan Chase Bank, N.A. as administrative agent, LaSalle Bank Midwest National
Association, and Wells Fargo Foothill, LLC and Fifth Third Bank.



               “Credit Documentation” means all the documents entered into in connection with the
$150.0 million senior secured revolving credit facility entered into by the Company and Libbey
Europe B.V. in June 2006.



               “Enforceability Exception” has the meaning assigned to it in Section 2.1(b)(i)
hereof.



               “Engagement Letter” means the Engagement Letter by and between Parent and Bank of
America Securities LLC, in the form of Exhibit F hereto.



               “Environmental Laws” has the meaning assigned to it in Section 2.1(w) hereof.



20









 





               “Equity Interest” means any share, capital stock, partnership, membership or similar
interest in any Person, and any option, warrant, right or security (including debt securities)
convertible, exchangeable or exercisable therefore.



               “ERISA” has the meaning assigned to it in Section 2.1(u)(i) hereof.



               “Exchange” has the meaning assigned to it in the Preamble hereof.



               “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.



               “Exchange PIK Note” has the meaning assigned to it in the Preamble hereof.



               “Exchange Securities” has the meaning assigned to it in the Preamble hereof.



               “Exchange Shares” has the meaning assigned to it in the Preamble hereof.



               “Exchange Warrants” has the meaning assigned to it in Section 3.3(b) hereof.



               “Floating Rate Notes” has the meaning assigned to it in Section 3.1(b) hereof.



               “GAAP” means United States generally accepted accounting principles consistently
applied.



               “Governmental Entity” means any national, federal, state, municipal, local,
territorial, foreign or other government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral
body or public or private tribunal.



               “Guarantors” has the meaning assigned to it in the Preamble hereof.



               “Investor” has the meaning assigned to it in the Preamble hereof.



               “Investor Material Adverse Effect” has the meaning assigned to it in Section
2.2(a) hereof.



21









 





               “Issuer Material Adverse Effect” has the meaning assigned to it in Section
2.1(a) hereof.



               “Liquidation” means any voluntary or involuntary liquidation, dissolution, or winding
up of the affairs of the Parent or the Company.



               “Louisiana Mortgage” shall mean that certain Mortgage, Security Agreement and
Assignment of Rents and Leases, dated June 16, 2006 and recorded in the land mortgage records of
Caddo Parish, Louisiana, by Libbey Glass, Inc. in favor of Merrill Lynch PCG Inc. for the ratable
benefit of the Noteholders (as defined therein) and the other Secured Parties (as defined therein).



               “Mortgage Modifications” shall mean the modification agreements to the Louisiana
Mortgage, New York Mortgage, Ohio Mortgage and Wisconsin Mortgage, to be entered into not later
than 30 days following the Closing Date, by and between the Company’s Subsidiary party to such
Louisiana Mortgage, New York Mortgage, Ohio Mortgage or Wisconsin Mortgage, as the case may be, as
mortgagor, and the Investor, as mortgagee, in forms agreed upon by such parties.



               “New York Mortgage” shall mean that certain Mortgage, Security Agreement and
Assignment of Rents and Leases, dated June 16, 2006 and recorded in the land mortgage records of
Onondaga County, New York, by Syracuse China Company in favor of Merrill Lynch PCG Inc. for the
ratable benefit of the Noteholders (as defined therein) and the other Secured Parties (as defined
therein).



               “Notes Exchange” has the meaning assigned to it in the Preamble hereof.



               “Notes Exchange Old PIK Notes” means the Old PIK Notes to be exchanged with the
Company in the Notes Exchange. The Notes Exchange Old PIK Notes shall have, in the aggregate, an
adjusted issue price (as determined under Section 1.1275-1(b) of the Regulations) equal to the
aggregate issue price of the Exchange PIK Notes (as determined under Sections 1273 and 1274 of the
Code and the Regulations promulgated thereunder).



               “Ohio Mortgage” shall mean that certain Open-End Mortgage, Security Agreement and
Assignment of Rents and Leases, dated June 16, 2006 and recorded in the land mortgage records of
Lucas County, Ohio, by Libbey Glass, Inc. in favor of Merrill Lynch PCG Inc. for the ratable
benefit of the Noteholders (as defined therein) and the other Secured Parties (as defined therein).



               “Old PIK Notes” has the meaning assigned to it in the Preamble hereof.



22









 





               “Parent” has the meaning assigned to it in the Preamble hereof.



               “Person” means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, incorporated organization, association, corporation, institution,
public benefit corporation, Governmental Entity or other entity.



               “Plan” has the meaning assigned to it in Section 2.1(u)(i) hereof.



               “Reaffirmation” means the Reaffirmation Agreement substantially in the form attached
hereto as Exhibit F.



               “Registrable Common Stock” means (i) all shares of Common Stock issued or issuable
upon exercise of the 2006 Warrant, (ii) the Exchange Shares, (iii) the Warrant Shares, (iv) any
other security into or for which the Common Stock referred to in clauses (i) through (iv) has been
converted, substituted or exchanged, and any security issued or issuable with respect thereto upon
any stock dividend or stock split or in connection with a combination of shares, reclassification,
recapitalization, merger, consolidation or other reorganization or otherwise, until the date after
which such shares of Common Stock may be sold pursuant to Rule 144 under the Securities Act without
the limitations on volume, manner of sale or current information requirements set forth thereunder.



               “Regulations” means the Treasury regulations promulgated under the Code.



               “SEC” means the Securities and Exchange Commission.



               “SEC Documents” has the meaning assigned to it in Section 2.1(l) hereof.



               “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.



               “Series I Exchange Warrant” means a warrant, in the form attached hereto as
Exhibit C, to purchase 3,466,856 shares of Parent’s outstanding Common Stock as of the date
hereof at a price of $0.01 per share.



               “Series II Date” has the meaning assigned to it in Section 3.3(a) hereof.



               “Series II Exchange Warrant” has the meaning assigned to it in Section 3.3(a)
hereof.



23









 





               “Series III Exchange Warrant” has the meaning assigned to it in Section 3.3(b)
hereof.



               “Standstill Period” has the meaning assigned to it in Section 3.1(a) hereof.



               “Subsidiary” means, with respect to any Person, any corporation, association, trust,
limited liability company, partnership, joint venture or other business association or entity (i)
at least 50% of the outstanding voting securities of which are at the time owned or controlled
directly or indirectly by such Person or (ii) with respect to which such Person possesses, directly
or indirectly, the power to direct or cause the direction of the affairs or management.



               “Tax” or “Taxes” means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, severance, stamp, occupation, premium, windfall profits,
customs, duties, franchise, withholding, social security, unemployment, real property, personal
property, sales, use, transfer, value added, estimated or other tax of any kind whatsoever,
including any interest, penalties or additions thereto.



               “Tax Return” means any return, declaration, report, claim for refund or information
return or statement relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.



               “Transaction Documents” has the meaning assigned to it in Section 1.1(h)
hereof.



               “Transfer” means to sell, exchange, transfer, negotiate, gift, convey in trust,
pledge, assign, encumber or otherwise dispose of.



               “Warrant Shares” means the shares of Common Stock issuable upon exercise of any of the
Exchange Warrants.



               “Wisconsin Mortgage” shall mean that certain Mortgage, Security Agreement and
Assignment of Rents and Leases, dated April 1, 2007 and recorded
May 2, 2007 in the land mortgage records of
Dane County, Wisconsin, by Traex Company in favor of Merrill Lynch PCG Inc. for the ratable benefit
of the Noteholders (as defined therein) and the other Secured Parties (as defined therein).



24









 





Section V




MISCELLANEOUS




          5.1 Survival. Sections II, III, IV and V of this Agreement
shall survive until the earlier to occur of (i) the consummation of a Change of Control
Transaction, (ii) the termination of this Agreement, (iii) three years from the date of this
Agreement or (iv) the agreement in writing among the Company, Parent and the Investor to terminate
this Agreement.




          5.2 Amendment. No amendment of any provision of this Agreement will be effective unless
made in writing and signed by a duly authorized officer of each Party.




          5.3 Waiver. The conditions to each Party’s obligation to consummate the Closing are for
the sole benefit of such Party and may be waived by such Party in whole or in part to the extent
permitted by applicable law. No waiver will be effective unless it is in a writing signed by a
duly authorized officer of the waiving Party that makes express reference to the provision or
provisions subject to such waiver.




          5.4 Counterparts and Facsimile. For the convenience of the Parties hereto, this Agreement
may be executed in any number of separate counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts will together constitute the same agreement.
Executed signature pages to this Agreement may be delivered by .PDF or electronic facsimile
(including via electronic mail), and such .PDF or facsimiles will be deemed as sufficient as if
actual signature pages had been delivered.




          5.5 Governing Law. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to principles of
conflicts of law or choice of law that would compel the application of the substantive laws of any
other jurisdiction.




          5.6 WAIVER OF TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY COURT
(WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING TO OR IN CONNECTION WITH
(I) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF
OR (II) THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.




          5.7 Remedies. Each of the Parties to this Agreement will be entitled to enforce its rights
under this Agreement specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights existing in its favor. The Parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any breach of the provisions
of this Agreement and that any Party shall be entitled to immediate injunctive relief or specific
performance without bond or the necessity of showing actual





25












 




monetary damages in order to enforce or prevent any violations of the provisions of this Agreement.




          5.8 Notices. All notices, demands and other communications to be given or delivered under
or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have
been given (i) when personally delivered, sent by telecopy (with hard copy to follow); (ii) one day
after sent by reputable overnight express courier (charges prepaid); or (iii) five (5) days
following mailing by certified or registered mail, postage prepaid and return receipt requested.
Unless another address is specified in writing, notices, demands and communications to the Company,
Parent and the Investor shall be sent to the addresses indicated below.




          (A) If to the Investor:



Bank of America Merrill Lynch



Merrill Lynch PCG, Inc.



One Bryant Park

3rd Floor

New York, New York 10036

Attention: Robert Voreyer

Email: bob.voreyer@baml.com



with copies to (which shall not constitute notice):



2 World Financial Center

25th Floor

New York, NY 10281

Attn: Gerard Haugh

Facsimile No: (212) 236-2568

Email: Gerard_Haugh@ml.com



Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036-6522

Attention: Robert Copen

Facsimile: (212) 735-2000

Email: rcopen@skadden.com




          (B) If to the Company or Parent:




26









 







Libbey Glass Inc.

300 Madison Avenue

Toledo, Ohio 43604

Attention: Susan Kovach

Facsimile: (419) 325-2585

Email: susan.kovach@libbey.com



with a copy to (which shall not constitute notice):



Latham & Watkins LLP

Sears Tower, Suite 5800

233 South Wacker Drive

Chicago, Illinois 60606

Attention: Christopher D. Lueking

Facsimile: (312) 993 — 9767

Email: christopher.lueking@lw.com




          5.9 Entire Agreement. This Agreement (including the Exhibits hereto) and the other
Transaction Documents referenced herein set forth the entire agreement of the Parties hereto with
regard to the subject matter hereof and supersedes and replaces all prior agreements,
understandings and representations, oral or written, with regard to such matters.




          5.10 Assignment; Successors and Assigns. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be assignable by any Party
hereto without the prior written consent of the other Parties, and any attempt to assign any right,
remedy, obligation or liability hereunder without such consent shall be void, except that the
Investor may, without the prior consent of the Parent or the Company, assign its rights hereunder
to any of its Affiliates and assign any or all of its rights pursuant to Section 3.3
hereunder. Except as expressly set forth herein, this Agreement shall not inure to the benefit of
or be enforceable by any other Person. All covenants, promises and agreements by or on behalf of
the Parties contained in this Agreement shall be binding upon and shall inure to the benefit of the
Parties hereto and their respective heirs, legal representatives, successors and assigns.




          5.11 Severability. If any provision of this Agreement or the application thereof to any
Person or circumstance, is determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or unenforceable, will remain
in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any Party. Upon such determination, the Parties shall negotiate in
good faith in an effort to agree upon a suitable and equitable substitute provision to effect the
original intent of the Parties.




          5.12 No Third-Party Beneficiaries. Nothing contained in this Agreement, expressed or
implied, is intended to confer upon any Person other than the Company, Parent and the Investor, any
benefits, rights or remedies of any nature whatsoever.




27









 








          5.13 Restrictive Legends.




               (a) The Investor understands and agrees that Parent will cause the legends set forth below or
legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership
of the Exchange Shares and any Warrant Shares, together with any other legends that may be required
by state or federal securities laws:




THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
HEREOF, AGREES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, OR (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) TO REQUEST THE DELIVERY
OF AN OPINION OF COUNSEL AND/OR, CERTIFICATION AND/OR OTHER INFORMATION REASONABLY
SATISFACTORY TO THE ISSUER.



               (b) The Investor understands and agrees that Parent will cause the legends set forth below or
legends substantially equivalent thereto, to be placed upon any Exchange Warrant, together with any
other legends that may be required by state or federal securities laws:




THE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR INSTRUMENT) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. SUCH
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE SECURITIES ACT OR
PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT.



          5.14 Interpretation. The headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed followed by the words “without limitation.” No
rule of construction against the draftsperson shall be applied in connection with the
interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation
between sophisticated parties advised by counsel. Except as expressly stated in this



28









 







Agreement, all references to any statute, rule or regulation are to the statute, rule or regulation
as amended, modified, supplemented or replaced from time to time (and, in the case of statutes,
include any rules and regulations promulgated under the statute) and to any section of any statute,
rule or regulation include any successor to the section.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




29









 





          IN WITNESS WHEREOF, the Parties have executed this Debt Exchange Agreement as of the date
first written above.




	 	 	 	 	 
	 	LIBBEY INC.

 	 
	 	By:  	/s/ Gregory T. Geswein
 	 
	 	 	Name:  	Gregory T. Geswein 	 
	 	 	Its:  VP,  Chief Financial Officer 	 
	 
	 	LIBBEY GLASS INC.

 	 
	 	By:  	/s/ Susan A. Kovach
 	 
	 	 	Name:  	Susan A. Kovach 	 
	 	 	Its: VP, General Counsel & Secretary 	 
	 
	 	MERRILL LYNCH PCG, INC.

 	 
	 	By:  	/s/
Gerard M. Haugh	 
	 	 	Name:  	Gerard M. Haugh	 
	 	 	Its: Vice President	 
	 




 









 








Exhibit A




Form of Amended and Restated Indenture




See Exhibit 4.1 to this Form 8-K


31









 








Exhibit B




Form of Amended and Restated Registration Rights Agreement



See
Exhibit 4.4 to this Form 8-K



32









 








Exhibit C




Form of Series I Exchange Warrant



See
Exhibit 4.3 to this Form 8-K



33









 








Exhibit D




Form of Series II Exchange Warrant




34









 







FORM OF SERIES II WARRANT





 







THE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR INSTRUMENT) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR PURSUANT TO AN EXEMPTION UNDER SAID ACT.










 




Libbey Inc.




Warrant for the Purchase of Common Stock




	 	 	 	 	 
	 

	 	 	 	Warrant to Purchase • Shares of Common Stock
	 

	 	No. 1
	 	 







                    FOR VALUE RECEIVED, Libbey Inc. (the “Company”), a Delaware corporation, hereby
certifies that MERRILL LYNCH PCG, INC., or each of its registered assignees or transferees (any
such Person, a “Holder”) is entitled, subject to the provisions of this Warrant, to
purchase from the Company, at any time or from time to time during the Exercise Period (as
hereinafter defined), an aggregate of • fully paid and nonassessable Warrant Shares (as hereinafter
defined), at a purchase price per Warrant Share (as hereinafter defined) equal to the Exercise
Price (as hereinafter defined). The aggregate number of Warrant Shares to be received upon the
exercise of this Warrant is subject to adjustment from time to time as hereinafter set forth.



 









 






                    Section 1. Definitions. Terms defined in the Debt Exchange Agreement dated as of
October 28, 2009 between the Company, Libbey Glass Inc. and the Holder (the “Debt Exchange
Agreement”), unless otherwise defined herein are used herein as therein defined. The following
additional terms, as used herein, have the following respective meanings:




                    “Additional Shares” means Common Stock other than Warrant Shares.




                    “Affiliate” of any Person means any other Person which directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control with, such Person.
The term “control” (including the terms “controlling,” “controlled by” and “under common control
with”) as used with respect to any Person means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.




                    “Appraiser” has the meaning set forth in Section 7(d)(iii).




                    “Business Day” means any day, except a Saturday, Sunday or legal holiday on which banking
institutions in The City of New York are authorized or obligated by law or executive order to
close.




                    “Cap” has the meaning set forth in Section 2(b).




                    “Common Stock” means the common stock of the Company, par value $0.01 per share and any shares
into which such Common Stock may thereafter be converted or changed.




                    “Credit Agreement” means the Credit Agreement, dated as of June 16, 2006, among Libbey Glass
Inc. and Libbey Europe B.V., the Company, the other loan parties thereto, the lenders party
thereto, JPMorgan Chase Bank, N.A. as administrative agent, LaSalle Bank Midwest National
Association, Wells Fargo Foothill, LLC and Fifth Third Bank.




                    “Current Market Price” means for Common Stock the current market price of such Common Stock as
determined in accordance with Section 7(c).




                    “Debt Exchange Agreement” has the meaning set forth in the introductory paragraph of Section
1.




                    “Exercise Period” means the period from and including the date hereof to and including 5:00
p.m. (New York City time) on the date representing the ten-year anniversary of the Original Issue
Date (or if such day is not a Business Day, the next succeeding Business Day).




                    “Exercise Price” means, with respect to any Warrant Share, an amount equal to $0.01 per share
for such Warrant Share.



2









 






                    “Floating Rate Notes” has the meaning set forth in Section 2(b).




                    “Original Issue Date” means the date set forth on the signature page hereof.




                    “Person” means any individual, sole proprietorship, partnership, limited liability company,
joint venture, trust, incorporated organization, association, corporation, institution, public
benefit corporation, entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency, body or department
thereof).




                    “Volume Weighted Average Price” with respect to any share Common Stock on any Business Day
shall mean the volume weighted average price on the OTC Bulletin Board (or the principal securities
exchange upon which the Common Stock is then traded), from 9:30 a.m. to 4:00 p.m. (New York City
time) on that Business Day as displayed by Bloomberg.




                    “Warrant Shares” means the Common Stock of the Company deliverable upon exercise of this
Warrant, as adjusted from time to time.




                    Section 2. Exercise of Warrant. (a) Subject to the terms set forth in clause (b)
below, this Warrant may be exercised in whole or in part, at any time or from time to time, during
the Exercise Period, by presentation and surrender hereof to the Company at its principal office at
the address set forth on the signature page hereof (or at such other address as the Company may
hereafter notify the Holders in writing), with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of that portion of the Exercise Price represented by the number of
Warrant Shares specified in such form being exercised. Such payment may be made, at the option of
the Holders, either (i) by cash, check payable to the order of the Company or wire transfer in an
amount equal to the product of (x) the Exercise Price times (y) the number of Warrant Shares as to
which this Warrant is being exercised or (ii) by electing to receive from the Company the number of
Warrant Shares equal to (x) the number of Warrant Shares as to which this Warrant is being
exercised minus (y) the number of Warrant Shares having a value, based on the Current Market Price
on the trading day immediately prior to the date of such exercise, equal to the product of (aa) the
Exercise Price times (bb) the number of Warrant Shares as to which this Warrant is being exercised.
If this Warrant should be exercised in part only, the Company shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the
balance of the Warrant Shares purchasable hereunder plus, pursuant to Section 4 below, any cash in
lieu of fractional shares upon cashless exercise. Upon receipt by the Company of this Warrant and
such Purchase Form, together with the applicable portion of the Exercise Price, at such office, in
proper form for exercise, the Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the share register of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually delivered to the Holder.
If this Warrant and such Purchase Form are delivered, together with the applicable portion of the
Exercise Price, prior to 10:00 a.m., New York City time, the Company will take reasonable best
efforts to register such



3









 






corresponding Warrant Shares in the name of the Holder and deliver (in book-entry form) such
corresponding Warrant Shares not later than 9:00 a.m., New York City time, on the following
Business Day. The Company shall pay any and all documentary, stamp or similar issue taxes payable
in respect of the issue of the Warrant Shares provided that the Company shall not be required to
pay any taxes payable in respect of the issue or delivery of any Warrant Shares in a name other
than that of the registered Holder of the Warrant at the time of exercise.




                         (b) Notwithstanding anything to the contrary contained herein, this Warrant may not be
exercised to the extent such exercise would result in the Holder becoming a “beneficial owner” (as
such term is used in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 9.5% of the shares
of Common Stock outstanding after giving effect to such exercise, taking into account all other
securities beneficially owned by the Holder, on the date of such measurement (i) unless the Holder
delivers a notice to the Company electing to increase such percentage above 9.5% and more than 65
days have elapsed from the date of such notice, or (ii) unless and only for so long as the Common
Stock is not registered or required to be registered under Section 12 of the Exchange Act. The
Company shall not repurchase or redeem any shares of Common Stock, or take any similar action, if
the effect thereof would cause the Holder to beneficially own over 9.5% of the shares of Common
Stock outstanding after giving effect to such exercise. Notwithstanding anything above, in no
event shall the Holder, together with its Affiliates (whose ownership of Common Stock would be
aggregated with the Holder for determinations of beneficial ownership pursuant to this paragraph),
shall not become a beneficial owner of more than 29.5% of the outstanding Common Stock (the
“Cap”) (beneficial ownership shall have the meaning set forth in Rules 13d-3 and 13d-5
under the Exchange Act, except that it shall include shares of Common Stock that the Holder or such
Affiliates have the right to acquire, whether such right is exercisable immediately or only after
the passage of time). The Cap shall not apply if bankruptcy or liquidation proceedings have
commenced by or on behalf of the Company. The Cap shall be automatically increased to such higher
percentage of Common Stock as may be permitted in the future without triggering change in control
covenants in any credit agreement, indenture or management agreement of Parent and/or the Company.
By way of example, if the change in control trigger in the Credit Agreement and all of the
Company’s management agreements were increased to 33%, the Cap would be increased to 32.5%. In
addition, the Cap shall not apply in the event that a change in control or similar event, not
caused by actions of the Holder or its Affiliates, occurs and results in repurchase obligations,
defaults or acceleration with respect to all credit agreements, indentures or other indebtedness
containing such a provision of Parent and/or the Company that contain such change in control
covenants that are not otherwise waived (and without regard to consequences under management
agreements). For the avoidance of doubt, the parties intend the Cap to prohibit Holder’s purchases
of Common Stock from triggering change in control covenants with respect to Parent and the
Company’s indebtedness and management agreements unless such covenants are already triggered and
not waived as a result of Common Stock purchases by other parties.



4









 






                    Section 3. Due Authorization; Reservation of Shares. (a) The Company represents and
warrants that this Warrant has been duly authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company and entitles the Holder hereof or its assignees to
purchase Warrant Shares upon payment to the Company of the Exercise Price applicable to such
shares. The Company hereby agrees that at all times there shall be reserved for issuance and
delivery by the Company, upon exercise of this Warrant, shares of Common Stock of the Company from
time to time issuable or deliverable upon exercise of this Warrant. All such shares have been duly
authorized and, if newly-issued, when issued upon such exercise, shall be validly issued, fully
paid and nonassessable, free and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all preemptive rights.




                         (b) The Company represents and warrants that the execution and delivery by it of this Warrant
does not require any action by or in respect of, or filing with, any federal, New York or Delaware
governmental body, agency or official and does not contravene or constitute a default under or
violation of (i) any provision of federal, New York or Delaware law or regulation, (ii) the charter
or by-laws of the Company or any of its subsidiaries, (iii) any agreement to which the Company or
any of its subsidiaries is a party or (iv) any judgment, injunction, order, decree or other
instrument binding upon the Company or any of its subsidiaries, except in the case of clauses (i),
(iii) and (iv) any defaults or violations that individually or in the aggregate would not have a
material adverse effect on the business of the Company and its subsidiaries taken as a whole or the
consummation of the transactions contemplated hereby.




                    Section 4. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share
called for upon any exercise hereof (including a cashless exercise), the Company shall pay to the
Holder an amount in cash equal to such fraction multiplied by the Current Market Price of one share
of Common Stock.




                    Section 5. Exchange, Transfer and Assignment. This Warrant is exchangeable, at any
time and from time to time, without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company for other Warrants of different denominations, entitling the Holder
or Holders thereof to purchase in the aggregate the same number of Warrant Shares. Subject to
Section 10 hereof, the Holder of this Warrant shall be entitled to assign or transfer its interest
in this Warrant (including the associated registration rights) in whole or in part to any person or
persons. Upon surrender of this Warrant to the Company, with the Assignment Form annexed hereto
duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new Warrant or Warrants in the name in such instrument of assignment or
transfer and, if the Holder’s entire interest is not being assigned or transferred, in the name of
the Holder, and this Warrant shall promptly be cancelled. This Warrant may be divided or combined
with other Warrants that carry the same rights upon presentation hereof at the office of the
Company, together with a written notice



5









 






specifying the names and denominations in which new Warrants are to be issued and signed by
the Holder hereof. The term “Warrant” as used herein includes any Warrants into which this
Warrant may be divided or for which it may be exchanged.




                    Section 6. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled
to any rights of a shareholder of the Company prior to the exercise of the Warrant, or after the
exercise of the Warrant with respect to any unexercised Warrant Shares, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.




                    Section 7. Anti-Dilution Provisions. The number of Warrant Shares which may be
purchased upon the exercise hereof shall be subject to change or adjustment from time to time as
follows:




                         (a) Stock Dividends, Splits, Combinations, Subdivision, Consolidation Reclassifications,
etc. If the Company at any time (i) shall declare a dividend or make a distribution on its
Common Stock payable in shares in its share capital (whether shares of Common Stock or of shares of
any other class), (ii) shall subdivide shares of its Common Stock into a greater number of shares,
(iii) shall combine or have combined or effect a consolidation of its outstanding Common Stock into
a smaller number of shares or (iv) shall issue by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or merger in which the Company is the
continuing company), other securities of the Company, the number of shares the Holder shall be
entitled to purchase upon exercise of the Warrant shall be adjusted to include the aggregate number
and kind of shares of capital stock of the Company which, if the Warrant had been exercised
immediately prior to such event, such Holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, distribution, subdivision, combination, consolidation or
reclassification. Such adjustment shall be made successively whenever any event listed above shall
occur.




                         (b) Distribution of Evidences of Indebtedness or Assets. If the Company at any time
shall fix a record date for the making of a distribution or dividend to all holders of its Common
Stock (including any such distribution to be made in connection with a consolidation or merger in
which the Company is to be the continuing company) of evidences of its indebtedness or assets
(excluding dividends paid in or distributions of Company share capital for which the number of
Warrant Shares purchasable hereunder shall have been adjusted pursuant to subsection (a) of this
Section 7 or regular cash dividends or distributions payable out of earnings or surplus and made in
the ordinary course of business) the number of Warrant Shares purchasable hereunder after such
record date shall be determined by multiplying the number of Warrant Shares purchasable hereunder
immediately prior to such record date by a fraction, of which the denominator shall be the Current
Market Price per share of Common Stock on such record date, less the fair market value (as
determined in the good faith, reasonable judgment of the Board of Directors of the Company) of the
portion of the assets or



6









 






evidences of indebtedness to be distributed in respect of one share of Common Stock, and the
numerator shall be such Current Market Price per share of Common Stock. Such adjustment shall
become effective immediately after such record date. Such adjustment shall be made whenever such a
record date is fixed; and in the event that such distribution is not so made, the number of Warrant
Shares purchasable hereunder shall again be adjusted to be the number that was in effect
immediately prior to such record date.




                         (c) Determination of Market Price. For the purpose of any computation under Section 4
or subsection (b) of this Section 7, the Current Market Price per share of Common Stock on any
record date shall be the average of the current market value, determined as set forth below, of
Common Stock for the 20 consecutive Business Days prior to the date in question.




                    (i) If the Common Stock is listed on a U.S. national securities exchange or
admitted to unlisted trading privileges on such an exchange, including if the
Common Stock is traded on the OTC Bulletin Board, the current market value shall
be the Volume Weighted Average Price of Common Stock (appropriately adjusted to
take into account the occurrence during such period of stock splits and similar
events); or




                    (ii) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the current market value shall be the mean of the last bid and asked
prices reported on such Business Day (x) by the National Association of Securities
Dealers Automatic Quotation System or (y) if reports are unavailable under clause
(x) above by the National Quotation Bureau Incorporated; or




                    (iii) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current market value
shall be such value as agreed upon by the Company and the Holder or, if the
Company and the Holder cannot otherwise agree, the current market value shall be
determined by an independent nationally recognized investment banking firm
experienced in valuing businesses (an “Appraiser”) jointly chosen by the
Holder and the Company or, if the Holder and the Company cannot agree on the
selection of an Appraiser within 10 Business Days, then each of the Company and
the Holder shall choose an Appraiser within 10 Business Days of the end of such
first 10-day period, and the current market value shall be the value agreed upon
by such Appraisers or, if the two Appraisers cannot so agree, the value of a third
Appraiser, which third Appraiser shall be chosen by the two Appraisers. All
expenses of the Appraiser(s) shall be paid by the Company.



7









 






                         (d) Shares Other Than Common Stock. In the event that at any time, as a result of an
adjustment made pursuant to subsection (a) of this Section 7, the Holder shall become entitled to
receive any shares in the share capital of the Company other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 7, and the provisions of this
Warrant with respect to the Common Stock shall apply on like terms to any such other shares.




          (e) Notice of Certain Actions. In the event that at any time:




          (A) the Company shall authorize the distribution to all holders of its Common
Stock of evidences of its indebtedness or assets (other than dividends paid in or
distributions of the Company, share capital for which the number of Warrant Shares
purchasable hereunder shall have been adjusted pursuant to subsection (a) of this
Section 7 or regular cash dividends or distributions payable out of earnings or
surplus and made in the ordinary course of business); or




          (B) the Company shall authorize any capital reorganization or reclassification
of the Common Stock (other than a subdivision, consolidation or combination of the
outstanding Common Stock and other than a change in par value of the Common Stock)
or of any consolidation, amalgamation or merger to which the Company is a party, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety; or




          (C) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or




          (D) the Company or any subsidiary shall commence a tender offer for all or a
portion of the outstanding shares of Common Stock (or shall amend any such tender
offer to change the maximum number of shares being sought or the amount or type of
consideration being offered therefor); or




          (E) the Company shall propose to take any other action that would require an
adjustment of the number of Warrant Shares purchasable hereunder pursuant to this
Section 7;



8









 






then the Company shall or shall cause to be mailed by certified mail to the Holder, at least 15
days prior to the applicable record or effective date hereinafter specified, a notice describing
such issuance, distribution, reorganization, reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation, winding-up or other action and stating (i) the date as of which
it is expected that the holders of Common Stock of record entitled to receive any such issuances or
distributions are to be determined or (ii) the date on which any such consolidation, amalgamation,
merger, conveyance, transfer, dissolution, liquidation or winding-up is expected to become
effective and the date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange or convert their shares of Common Stock for securities or other property, if
any, deliverable upon such reorganization, reclassification, consolidation, merger, amalgamation,
conveyance, transfer, dissolution, liquidation or winding-up.




                         (f) Deferral in Certain Circumstances. In any case in which the provisions of this
Section 7 shall require that an adjustment shall become effective immediately after a record date
of an event, the Company may defer until the occurrence of such event (i) issuing to the holder of
any Warrant exercised after such record date and before the occurrence of such event the Warrant
Shares and other shares of capital stock issuable upon such exercise by reason of the adjustment
required by such event and issuing to such holder only the shares of capital stock issuable upon
such exercise before giving effect to such adjustments, and (ii) paying to such holder any amount
of cash in lieu of fractional shares of capital stock pursuant to Section 4 above;
provided, however, that the Company shall deliver to such holder an appropriate
instrument or due bills evidencing such holder’s right to receive such Additional Shares and such
cash or other property.




                         (g) Other Anti-Dilution Provisions. If the Company has issued or issues any
securities containing provisions protecting the holder or holders thereof against dilution in any
manner more favorable to such holder or holders thereof than those set forth in this Section 7,
such provisions (or any more favorable portion thereof) shall be deemed to be incorporated herein
as if fully set forth in this Warrant and, to the extent inconsistent with any provision of this
Warrant, shall be deemed to be substituted therefor.




                         (h) Common Stock Defined. Whenever reference is made in this Section 7 to the issue
of shares of Common Stock, the term “Common Stock” shall include any equity securities of
any class of the Company hereinafter authorized which shall not be limited to a fixed or
determinable amount in respect of the right of the holders thereof to participate in dividends or
distributions of assets upon the voluntary or involuntary liquidation, dissolution or winding up of
the Company. However, subject to the provisions of Section 9 hereof, shares issuable upon exercise
hereof shall include only Warrant Shares as of the date hereof or shares of any class or classes
resulting from any reclassification or reclassifications thereof or as a result of any corporate
reorganization as provided for in Section 9 hereof.



9









 






                         (i) No Exercise Price Below Par Value. Before taking any action which would cause an
adjustment pursuant this Section 7 that would result in the Exercise Price falling below the then
par value (if any) of the Warrant Shares, the Company will take any commercially reasonable
corporate action which may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted. Following any adjustment to the
Exercise Price pursuant to this Section 7, the amount payable, when adjusted and together with any
consideration allocated to the issuance of the Warrants, shall never be less than the par value
per Warrant Share at the time of such adjustment. Such adjustment shall be made successively
whenever any event listed above shall occur. In the event that the foregoing requires an
adjustment to the Exercise Price and an adjustment to the number of Warrant Shares is not required
hereby, the Company will make an adjustment to the number of Warrant Shares issuable upon exercise
of the Warrant so that the Holder is treated equitably and does not lose any of the economic
benefit of this Warrant.




                    Section 8. Officers’ Certificate. Whenever the number of Warrant Shares purchasable
hereunder shall be adjusted as required by the provisions of Section 7, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal office an officers’
certificate showing the adjusted number of Warrant Shares purchasable hereunder determined as
herein provided, setting forth in reasonable detail the facts requiring such adjustment and the
manner of computing such adjustment. Each such officers’ certificate shall be signed by the
chairman, president or chief financial officer of the Company and by the secretary or any assistant
secretary of the Company. Each such officers’ certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered
pursuant to Section 5 hereof and the Company shall, forthwith after each such adjustment, mail a
copy, by certified mail, of such certificate to the Holder or any such holder.




                    Section 9. Reclassification, Reorganization, Consolidation or Merger. In case of any
Reorganization Transaction (as hereinafter defined), this Warrant shall become immediately
exercisable for the kind and amount of shares and other securities and property receivable upon
such Reorganization Transaction which the Holder of this Warrant would have owned immediately after
the Reorganization Transaction if such Holder had exercised this Warrant immediately prior to such
Reorganization Transaction and the calculation of the aggregate amount of such shares and other
securities and property shall be made without giving effect to any limitation on exercise of the
Warrant set forth herein (including without limitation in Section 2(b)). The foregoing provisions
of this Section 9 shall similarly apply to successive Reorganization Transactions. For purposes of
this Section 9, “Reorganization Transaction” shall mean (excluding any transaction covered
by Section 7) any reclassification or capital reorganization of the Company (other than a
subdivision or combination of the outstanding Common Stock or a change in the par value of the
Common Stock) or any consolidation, amalgamation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which merger the Company is the continuing
company and that does not



10









 






result in any reclassification, capital reorganization or other change of outstanding shares
of Common Stock in connection with such merger, consolidation or amalgamation of the class issuable
upon exercise of this Warrant) or any sale, lease, transfer or conveyance to another corporation of
all or substantially all of the assets of the Company.




                    Section 10. Transfer Restrictions. The Holder by its acceptance hereof, represents
and warrants that it is acquiring the Warrants and any Warrant Shares for its own account and not
with a present intent to sell or distribute the Warrants or any Warrant Shares in violation of the
United States and state securities laws. Neither this Warrant nor any of the Warrant Shares, nor
any interest in either, may be sold, assigned, pledged, hypothecated, encumbered or in any other
manner transferred or disposed of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.




                    Section 11. No Impairment; Regulatory Compliance and Cooperation. The Company shall
not by any action, including, without limitation, amending its charter documents or through any
reorganization, reclassification, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder against impairment.




                    Section 12. Listing on Securities Exchanges. The Company shall use all reasonable
efforts to list on each national securities exchange or other trading venue (including the OTC
Bulletin Board) on which any Common Stock may at any time be listed or traded, subject to official
notice of issuance upon the exercise of this Warrant, and shall use its best efforts to maintain
such listing, so long as any other shares of its Common Stock shall be so listed or traded, all
shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall use its best efforts to so list on each national securities exchange or other trading
venue, and shall use best efforts to maintain such listing of, any other shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any shares of capital
stock of the same class shall be listed on such national securities exchange or other trading venue
by the Company. Any such listing shall be at the Company’s expense.




                    Section 13. Exclusive Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may only be brought in any federal or state court located in
the County and State of New York, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that



11









 






any such suit, action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party at its principal
office shall be deemed effective service of process on such party.




                    Section 14. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.




                    Section 15. Loss or Mutilation. Upon receipt by the Company from any Holder of
evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and an indemnity reasonably satisfactory to it (it being understood that
the written indemnification agreement of or affidavit of loss of Merrill Lynch PCG, Inc. or any of
its affiliates shall be a sufficient indemnity) and, in case of mutilation, upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like
tenor to such Holder; provided, however, that, in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for
cancellation.




                    Section 16. Designated Office. As long as any of the Warrants remain outstanding, the
Company shall maintain an office or agency, which shall initially be the principal executive
offices of the Company at 300 Madison Avenue, Toledo, Ohio 43604 (the “Designated Office”),
where the Warrants may be presented for exercise, registration of transfer, division or combination
as provided in this Warrant. The Company may from time to time change the Designated Office to
another office of the Company or its agent within the United States by notice given to all
registered Holders at least 10 Business Days prior to the effective date of such change.




                    Section 17. Availability of Information. (a) The Company shall comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act to the extent it is required to
do so under the Exchange Act. The Company shall also cooperate with each Holder of any Warrants
and holder of any Warrant Shares in supplying such information as may be reasonably necessary for
such holder to complete and file any information reporting forms currently or hereafter required by
the Securities and Exchange Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any Warrants or Warrant Shares. The provisions of this Section 15
shall survive termination of this Warrant, whether upon exercise of this Warrant in full or
otherwise.




12











 






                    (b) If at any time the Company is not subject to the requirements of Section 13 or 15(d) of
the Exchange Act, Company will promptly furnish at its expense, upon request, for the benefit of
Holders from time to time of Warrants and holders from time to time of Warrant Shares, to Holders
of Warrants, holders of Warrant Shares and prospective purchasers of Warrants and Warrant Shares
information satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Securities
Act.




               Section 18. Expenses. The Company shall prepare, issue and deliver at its own expense
any new Warrant or Warrants required to be issued hereunder.




               Section 19. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company and the permitted
successors and assigns of the Holder hereof. The provisions of this Warrant are intended to be for
the benefit of any Holder from time to time of this Warrant and to the extent applicable, any
Holder of shares of Warrant Stock issued upon the exercise hereof (including transferees), and
shall be enforceable by any such Holder. The term “Holder” as used in this Warrant shall,
where appropriate to assign such rights to such permitted successors and assigns, be deemed to
refer to the transferee holder of such Warrant.




               Section 20. Amendment. This Warrant and all other Warrants may be modified or amended
or the provisions hereof waived with the written consent of the Company and the Holder thereof.




               Section 21. Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.




               Section 22. Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.




               Section 23. Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and
no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.



13









 






               Section 24. Governing Law. This Warrant and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of the State of New York
without regard to principles of conflicts of laws.



14









 






               IN
WITNESS WHEREOF, the Company has duly caused this Warrant to be executed by and attested by
their duly authorized officers and to be dated as of ____________, 2009.



	 	 	 	 	 
	 	Libbey Inc.

 	 
	 	By  	 	 
	 	 	Name:  	Susan Kovach 	 
	 	 	Title:  	Vice President and General Counsel 	 
	 
	 	Address: 300 Madison Avenue

               Toledo, Ohio 43604

Attention: Susan Kovach, General Counsel

Facsimile No.: 419-325-2585

 	 



15









 






	 	 	 	 	 



PURCHASE FORM—CASH EXERCISE




Dated ___________________, ____






               The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of
purchasing ____________ shares of Common Stock and hereby makes payment of __________________ in payment of
the exercise price thereof.



INSTRUCTIONS FOR REGISTRATION OF STOCK




	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 
	 

	 	 	 	(please typewrite or print in block letters)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 
	 
	 	 	 	 
	Signature:

	 	 	 
	 

	 	 





16









 






PURCHASE FORM—CASHLESS EXERCISE 




To Be Executed by the Holder in Order to Exercise Warrants



The undersigned Holder irrevocably elects (i) to exercise _________ Warrants represented by this
warrant certificate, and (ii) to surrender _________ Warrants represented by this warrant
certificate (with a “Value” of $_______________ based on a “Current Market Price” of
$_______________) to purchase the shares of Common Stock issuable upon the exercise of the Warrants
exercised hereby, and requests that certificates for such shares shall be issued in the name of:




	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	Social Security or Tax Identification Number:	 	 	 	 
	 

	 	 	 	 





and be delivered to:




	 	 	 
	Name:
	 	 
	 

	 
	 
	Address:
	 	 
	 

	 	 




and, if such number of Warrants exercised and surrendered shall not be all the Warrants evidenced
by this warrant certificate, that a new warrant certificate for the balance of such Warrants be
registered in the name of, and delivered to, the Holder at the address stated below:




	 	 	 	 	 	 	 	 
	Signature:

	 	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	Address:
	 	 	 	 	 	 	 
	 	 	 
	 
	Social Security or Tax Identification Number: 	 	 	 
	 

	 	 	 





17









 






ASSIGNMENT FORM




               FOR
VALUE RECEIVED, ___  hereby sells, assigns and transfers unto:



	 	 	 
	Name:
	 	 
	 

	 
	(please typewrite or print in block letters)

	 
	 	 
	Address:
	 	 
	 

	 	 




its right
to purchase ______ shares of Common Stock represented by this Warrant and does
hereby irrevocably constitute and appoint
______ Attorney, to transfer the same on the books
of the Company, with full power of substitution in the premises.




	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature:	 	 
	 

	 	 	 	 	 	 	 	 





Dated                                         ,                     





18











 








Exhibit E




Form of Series III Exchange Warrant




35









 







FORM OF SERIES III WARRANT




 




THE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR INSTRUMENT) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR PURSUANT TO AN EXEMPTION UNDER SAID ACT.



      




Libbey Inc.




Warrant for the Purchase of Common Stock




	 	 	 	 	 
	 

	 	 	 	Warrant to Purchase • Shares of Common Stock
	 

	 	No. 1
	 	 







                    FOR VALUE RECEIVED, Libbey Inc. (the “Company”), a Delaware corporation, hereby
certifies that MERRILL LYNCH PCG, INC., or each of its registered assignees or transferees (any
such Person, a “Holder”) is entitled, subject to the provisions of this Warrant, to
purchase from the Company, at any time or from time to time during the Exercise Period (as
hereinafter defined), an aggregate of • fully paid and nonassessable Warrant Shares (as hereinafter
defined), at a purchase price per Warrant Share (as hereinafter defined) equal to the Exercise
Price (as hereinafter defined). The aggregate number of Warrant Shares to be received upon the
exercise of this Warrant is subject to adjustment from time to time as hereinafter set forth.




                    Section 1. Definitions. Terms defined in the Debt Exchange Agreement dated as of
October 28, 2009 between the Company, Libbey Glass Inc. and the Holder (the “Debt Exchange
Agreement”), unless otherwise defined herein are used herein as



 









 






therein defined. The following additional terms, as used herein, have the following
respective meanings:




                    “Additional Shares” means Common Stock other than Warrant Shares.




                    “Affiliate” of any Person means any other Person which directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control with, such Person.
The term “control” (including the terms “controlling,” “controlled by” and “under common control
with”) as used with respect to any Person means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.




                    “Appraiser” has the meaning set forth in Section 7(d)(iii).




                    “Business Day” means any day, except a Saturday, Sunday or legal holiday on which banking
institutions in The City of New York are authorized or obligated by law or executive order to
close.




                    “Cap” has the meaning set forth in Section 2(b).




                    “Common Stock” means the common stock of the Company, par value $0.01 per share and any shares
into which such Common Stock may thereafter be converted or changed.




                    “Credit Agreement” means the Credit Agreement, dated as of June 16, 2006, among Libbey Glass
Inc. and Libbey Europe B.V., the Company, the other loan parties thereto, the lenders party
thereto, JPMorgan Chase Bank, N.A. as administrative agent, LaSalle Bank Midwest National
Association, Wells Fargo Foothill, LLC and Fifth Third Bank.




                    “Current Market Price” means for Common Stock the current market price of such Common Stock as
determined in accordance with Section 7(c).




                    “Debt Exchange Agreement” has the meaning set forth in the introductory paragraph of Section
1.




                    “Exercise Period” means the period from and including the date hereof to and including 5:00
p.m. (New York City time) on the date representing the ten-year anniversary of the Original Issue
Date (or if such day is not a Business Day, the next succeeding Business Day).




                    “Exercise Price” means, with respect to any Warrant Share, an amount equal to $0.01 per share
for such Warrant Share.




                    “Floating Rate Notes” has the meaning set forth in Section 2(b).




                    “Original Issue Date” means the date set forth on the signature page hereof.



2









 






                    “Person” means any individual, sole proprietorship, partnership, limited liability company,
joint venture, trust, incorporated organization, association, corporation, institution, public
benefit corporation, entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency, body or department
thereof).




                    “Volume Weighted Average Price” with respect to any share Common Stock on any Business Day
shall mean the volume weighted average price on the OTC Bulletin Board (or the principal securities
exchange upon which the Common Stock is then traded), from 9:30 a.m. to 4:00 p.m. (New York City
time) on that Business Day as displayed by Bloomberg.




                    “Warrant Shares” means the Common Stock of the Company deliverable upon exercise of this
Warrant, as adjusted from time to time.




                    Section 2. Exercise of Warrant. (a) Subject to the terms set forth in clause (b)
below, this Warrant may be exercised in whole or in part, at any time or from time to time, during
the Exercise Period, by presentation and surrender hereof to the Company at its principal office at
the address set forth on the signature page hereof (or at such other address as the Company may
hereafter notify the Holders in writing), with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of that portion of the Exercise Price represented by the number of
Warrant Shares specified in such form being exercised. Such payment may be made, at the option of
the Holders, either (i) by cash, check payable to the order of the Company or wire transfer in an
amount equal to the product of (x) the Exercise Price times (y) the number of Warrant Shares as to
which this Warrant is being exercised or (ii) by electing to receive from the Company the number of
Warrant Shares equal to (x) the number of Warrant Shares as to which this Warrant is being
exercised minus (y) the number of Warrant Shares having a value, based on the Current Market Price
on the trading day immediately prior to the date of such exercise, equal to the product of (aa) the
Exercise Price times (bb) the number of Warrant Shares as to which this Warrant is being exercised.
If this Warrant should be exercised in part only, the Company shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the
balance of the Warrant Shares purchasable hereunder plus, pursuant to Section 4 below, any cash in
lieu of fractional shares upon cashless exercise. Upon receipt by the Company of this Warrant and
such Purchase Form, together with the applicable portion of the Exercise Price, at such office, in
proper form for exercise, the Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the share register of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually delivered to the Holder.
If this Warrant and such Purchase Form are delivered, together with the applicable portion of the
Exercise Price, prior to 10:00 a.m., New York City time, the Company will take reasonable best
efforts to register such corresponding Warrant Shares in the name of the Holder and deliver (in
book-entry form) such corresponding Warrant Shares not later than 9:00 a.m., New York City time, on
the following Business Day. The Company shall pay any and all documentary, stamp or similar issue
taxes payable in respect of the issue of the Warrant Shares provided that the



3









 






Company shall not be required to pay any taxes payable
in respect of the issue or delivery of any Warrant Shares in a name other than that of the
registered Holder of the Warrant at the time of exercise.




                         (b) Notwithstanding anything to the contrary contained herein, this Warrant may not be
exercised to the extent such exercise would result in the Holder becoming a “beneficial owner” (as
such term is used in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 9.5% of the shares
of Common Stock outstanding after giving effect to such exercise, taking into account all other
securities beneficially owned by the Holder, on the date of such measurement (i) unless the Holder
delivers a notice to the Company electing to increase such percentage above 9.5% and more than 65
days have elapsed from the date of such notice, or (ii) unless and only for so long as the Common
Stock is not registered or required to be registered under Section 12 of the Exchange Act. The
Company shall not repurchase or redeem any shares of Common Stock, or take any similar action, if
the effect thereof would cause the Holder to beneficially own over 9.5% of the shares of Common
Stock outstanding after giving effect to such exercise. Notwithstanding anything above, in no
event shall the Holder, together with its Affiliates (whose ownership of Common Stock would be
aggregated with the Holder for determinations of beneficial ownership pursuant to this paragraph),
shall not become a beneficial owner of more than 29.5% of the outstanding Common Stock (the
“Cap”) (beneficial ownership shall have the meaning set forth in Rules 13d-3 and 13d-5
under the Exchange Act, except that it shall include shares of Common Stock that the Holder or such
Affiliates have the right to acquire, whether such right is exercisable immediately or only after
the passage of time). The Cap shall not apply if bankruptcy or liquidation proceedings have
commenced by or on behalf of the Company. The Cap shall be automatically increased to such higher
percentage of Common Stock as may be permitted in the future without triggering change in control
covenants in any credit agreement, indenture or management agreement of Parent and/or the Company.
By way of example, if the change in control trigger in the Credit Agreement and all of the
Company’s management agreements were increased to 33%, the Cap would be increased to 32.5%. In
addition, the Cap shall not apply in the event that a change in control or similar event, not
caused by actions of the Holder or its Affiliates, occurs and results in repurchase obligations,
defaults or acceleration with respect to all credit agreements, indentures or other indebtedness
containing such a provision of Parent and/or the Company that contain such change in control
covenants that are not otherwise waived (and without regard to consequences under management
agreements). For the avoidance of doubt, the parties intend the Cap to prohibit Holder’s purchases
of Common Stock from triggering change in control covenants with respect to Parent and the
Company’s indebtedness and management agreements unless such covenants are already triggered and
not waived as a result of Common Stock purchases by other parties.




                    Section 3. Due Authorization; Reservation of Shares. (a) The Company represents and
warrants that this Warrant has been duly authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company and entitles the Holder hereof or its assignees to
purchase Warrant Shares upon payment to



4









 






the Company of the Exercise Price applicable to such shares. The Company hereby
agrees that at all times there shall be reserved for issuance and delivery by the Company, upon
exercise of this Warrant, shares of Common Stock of the Company from time to time issuable or
deliverable upon exercise of this Warrant. All such shares have been duly authorized and, if
newly-issued, when issued upon such exercise, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, security interests, charges and other encumbrances or
restrictions on sale and free and clear of all preemptive rights.




                         (b) The Company represents and warrants that the execution and delivery by it of this Warrant
does not require any action by or in respect of, or filing with, any federal, New York or Delaware
governmental body, agency or official and does not contravene or constitute a default under or
violation of (i) any provision of federal, New York or Delaware law or regulation, (ii) the charter
or by-laws of the Company or any of its subsidiaries, (iii) any agreement to which the Company or
any of its subsidiaries is a party or (iv) any judgment, injunction, order, decree or other
instrument binding upon the Company or any of its subsidiaries, except in the case of clauses (i),
(iii) and (iv) any defaults or violations that individually or in the aggregate would not have a
material adverse effect on the business of the Company and its subsidiaries taken as a whole or the
consummation of the transactions contemplated hereby.




                    Section 4. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share
called for upon any exercise hereof (including a cashless exercise), the Company shall pay to the
Holder an amount in cash equal to such fraction multiplied by the Current Market Price of one share
of Common Stock.




                    Section 5. Exchange, Transfer and Assignment. This Warrant is exchangeable, at any
time and from time to time, without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company for other Warrants of different denominations, entitling the Holder
or Holders thereof to purchase in the aggregate the same number of Warrant Shares. Subject to
Section 10 hereof, the Holder of this Warrant shall be entitled to assign or transfer its interest
in this Warrant (including the associated registration rights) in whole or in part to any person or
persons. Upon surrender of this Warrant to the Company, with the Assignment Form annexed hereto
duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new Warrant or Warrants in the name in such instrument of assignment or
transfer and, if the Holder’s entire interest is not being assigned or transferred, in the name of
the Holder, and this Warrant shall promptly be cancelled. This Warrant may be divided or combined
with other Warrants that carry the same rights upon presentation hereof at the office of the
Company, together with a written notice specifying the names and denominations in which new
Warrants are to be issued and signed by the Holder hereof. The term “Warrant” as used
herein includes any Warrants into which this Warrant may be divided or for which it may be
exchanged.



5









 






                    Section 6. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled
to any rights of a shareholder of the Company prior to the exercise of the Warrant, or after the
exercise of the Warrant with respect to any unexercised Warrant Shares, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.




                    Section 7. Anti-Dilution Provisions. The number of Warrant Shares which may be
purchased upon the exercise hereof shall be subject to change or adjustment from time to time as
follows:




                         (a) Stock Dividends, Splits, Combinations, Subdivision, Consolidation Reclassifications,
etc. If the Company at any time (i) shall declare a dividend or make a distribution on its
Common Stock payable in shares in its share capital (whether shares of Common Stock or of shares of
any other class), (ii) shall subdivide shares of its Common Stock into a greater number of shares,
(iii) shall combine or have combined or effect a consolidation of its outstanding Common Stock into
a smaller number of shares or (iv) shall issue by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or merger in which the Company is the
continuing company), other securities of the Company, the number of shares the Holder shall be
entitled to purchase upon exercise of the Warrant shall be adjusted to include the aggregate number
and kind of shares of capital stock of the Company which, if the Warrant had been exercised
immediately prior to such event, such Holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, distribution, subdivision, combination, consolidation or
reclassification. Such adjustment shall be made successively whenever any event listed above shall
occur.




                         (b) Distribution of Evidences of Indebtedness or Assets. If the Company at any time
shall fix a record date for the making of a distribution or dividend to all holders of its Common
Stock (including any such distribution to be made in connection with a consolidation or merger in
which the Company is to be the continuing company) of evidences of its indebtedness or assets
(excluding dividends paid in or distributions of Company share capital for which the number of
Warrant Shares purchasable hereunder shall have been adjusted pursuant to subsection (a) of this
Section 7 or regular cash dividends or distributions payable out of earnings or surplus and made in
the ordinary course of business) the number of Warrant Shares purchasable hereunder after such
record date shall be determined by multiplying the number of Warrant Shares purchasable hereunder
immediately prior to such record date by a fraction, of which the denominator shall be the Current
Market Price per share of Common Stock on such record date, less the fair market value (as
determined in the good faith, reasonable judgment of the Board of Directors of the Company) of the
portion of the assets or evidences of indebtedness to be distributed in respect of one share of
Common Stock, and the numerator shall be such Current Market Price per share of Common Stock. Such
adjustment shall become effective immediately after such record date. Such adjustment shall be
made whenever such a record date is fixed; and in the event that such distribution



6









 






is not so made, the number of Warrant Shares purchasable hereunder shall again be adjusted to
be the number that was in effect immediately prior to such record date.




                         (c) Determination of Market Price. For the purpose of any computation under Section 4
or subsection (b) of this Section 7, the Current Market Price per share of Common Stock on any
record date shall be the average of the current market value, determined as set forth below, of
Common Stock for the 20 consecutive Business Days prior to the date in question.




                    (i) If the Common Stock is listed on a U.S. national securities exchange or
admitted to unlisted trading privileges on such an exchange, including if the
Common Stock is traded on the OTC Bulletin Board, the current market value shall
be the Volume Weighted Average Price of Common Stock (appropriately adjusted to
take into account the occurrence during such period of stock splits and similar
events); or




                    (ii) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the current market value shall be the mean of the last bid and asked
prices reported on such Business Day (x) by the National Association of Securities
Dealers Automatic Quotation System or (y) if reports are unavailable under clause
(x) above by the National Quotation Bureau Incorporated; or




                    (iii) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current market value
shall be such value as agreed upon by the Company and the Holder or, if the
Company and the Holder cannot otherwise agree, the current market value shall be
determined by an independent nationally recognized investment banking firm
experienced in valuing businesses (an “Appraiser”) jointly chosen by the
Holder and the Company or, if the Holder and the Company cannot agree on the
selection of an Appraiser within 10 Business Days, then each of the Company and
the Holder shall choose an Appraiser within 10 Business Days of the end of such
first 10-day period, and the current market value shall be the value agreed upon
by such Appraisers or, if the two Appraisers cannot so agree, the value of a third
Appraiser, which third Appraiser shall be chosen by the two Appraisers. All
expenses of the Appraiser(s) shall be paid by the Company.




                         (d) Shares Other Than Common Stock. In the event that at any time, as a result of an
adjustment made pursuant to subsection (a) of this Section 7, the Holder shall become entitled to
receive any shares in the share capital of the Company other than Common Stock, thereafter the
number of such other shares so receivable upon



7









 






exercise of this Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the Common Stock
contained in this Section 7, and the provisions of this Warrant with respect to the Common Stock
shall apply on like terms to any such other shares.




                    (e) Notice of Certain Actions. In the event that at any time:




     (A) the Company shall authorize the distribution to all holders of its Common
Stock of evidences of its indebtedness or assets (other than dividends paid in or
distributions of the Company, share capital for which the number of Warrant Shares
purchasable hereunder shall have been adjusted pursuant to subsection (a) of this
Section 7 or regular cash dividends or distributions payable out of earnings or
surplus and made in the ordinary course of business); or




     (B) the Company shall authorize any capital reorganization or reclassification
of the Common Stock (other than a subdivision, consolidation or combination of the
outstanding Common Stock and other than a change in par value of the Common Stock)
or of any consolidation, amalgamation or merger to which the Company is a party, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety; or




     (C) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or




     (D) the Company or any subsidiary shall commence a tender offer for all or a
portion of the outstanding shares of Common Stock (or shall amend any such tender
offer to change the maximum number of shares being sought or the amount or type of
consideration being offered therefor); or




     (E) the Company shall propose to take any other action that would require an
adjustment of the number of Warrant Shares purchasable hereunder pursuant to this
Section 7;




then the Company shall or shall cause to be mailed by certified mail to the Holder, at least 15
days prior to the applicable record or effective date hereinafter specified, a notice describing
such issuance, distribution, reorganization, reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation, winding-up or other action and stating (i) the date as of which
it is expected that the holders of Common Stock of record



8









 






entitled to receive any such issuances or distributions are to be determined or (ii) the date on
which any such consolidation, amalgamation, merger, conveyance, transfer, dissolution, liquidation
or winding-up is expected to become effective and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange or convert their shares of Common Stock for
securities or other property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, amalgamation, conveyance, transfer, dissolution, liquidation or winding-up.




                         (f) Deferral in Certain Circumstances. In any case in which the provisions of this
Section 7 shall require that an adjustment shall become effective immediately after a record date
of an event, the Company may defer until the occurrence of such event (i) issuing to the holder of
any Warrant exercised after such record date and before the occurrence of such event the Warrant
Shares and other shares of capital stock issuable upon such exercise by reason of the adjustment
required by such event and issuing to such holder only the shares of capital stock issuable upon
such exercise before giving effect to such adjustments, and (ii) paying to such holder any amount
of cash in lieu of fractional shares of capital stock pursuant to Section 4 above;
provided, however, that the Company shall deliver to such holder an appropriate
instrument or due bills evidencing such holder’s right to receive such Additional Shares and such
cash or other property.




                         (g) Other Anti-Dilution Provisions. If the Company has issued or issues any
securities containing provisions protecting the holder or holders thereof against dilution in any
manner more favorable to such holder or holders thereof than those set forth in this Section 7,
such provisions (or any more favorable portion thereof) shall be deemed to be incorporated herein
as if fully set forth in this Warrant and, to the extent inconsistent with any provision of this
Warrant, shall be deemed to be substituted therefor.




                         (h) Common Stock Defined. Whenever reference is made in this Section 7 to the issue
of shares of Common Stock, the term “Common Stock” shall include any equity securities of
any class of the Company hereinafter authorized which shall not be limited to a fixed or
determinable amount in respect of the right of the holders thereof to participate in dividends or
distributions of assets upon the voluntary or involuntary liquidation, dissolution or winding up of
the Company. However, subject to the provisions of Section 9 hereof, shares issuable upon exercise
hereof shall include only Warrant Shares as of the date hereof or shares of any class or classes
resulting from any reclassification or reclassifications thereof or as a result of any corporate
reorganization as provided for in Section 9 hereof.




                         (i) No Exercise Price Below Par Value. Before taking any action which would cause an
adjustment pursuant this Section 7 that would result in the Exercise Price falling below the then
par value (if any) of the Warrant Shares, the Company will take any commercially reasonable
corporate action which may, in the



9









 






opinion of its counsel (which may be counsel employed by the Company), be necessary in order
that the Company may validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted. Following any adjustment to the Exercise Price pursuant to this
Section 7, the amount payable, when adjusted and together with any consideration allocated to the
issuance of the Warrants, shall never be less than the par value per Warrant Share at the time of
such adjustment. Such adjustment shall be made successively whenever any event listed above shall
occur. In the event that the foregoing requires an adjustment to the Exercise Price and an
adjustment to the number of Warrant Shares is not required hereby, the Company will make an
adjustment to the number of Warrant Shares issuable upon exercise of the Warrant so that the Holder
is treated equitably and does not lose any of the economic benefit of this Warrant.




                    Section 8. Officers’ Certificate. Whenever the number of Warrant Shares purchasable
hereunder shall be adjusted as required by the provisions of Section 7, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal office an officers’
certificate showing the adjusted number of Warrant Shares purchasable hereunder determined as
herein provided, setting forth in reasonable detail the facts requiring such adjustment and the
manner of computing such adjustment. Each such officers’ certificate shall be signed by the
chairman, president or chief financial officer of the Company and by the secretary or any assistant
secretary of the Company. Each such officers’ certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered
pursuant to Section 5 hereof and the Company shall, forthwith after each such adjustment, mail a
copy, by certified mail, of such certificate to the Holder or any such holder.




                    Section 9. Reclassification, Reorganization, Consolidation or Merger. In case of any
Reorganization Transaction (as hereinafter defined), this Warrant shall become immediately
exercisable for the kind and amount of shares and other securities and property receivable upon
such Reorganization Transaction which the Holder of this Warrant would have owned immediately after
the Reorganization Transaction if such Holder had exercised this Warrant immediately prior to such
Reorganization Transaction and the calculation of the aggregate amount of such shares and other
securities and property shall be made without giving effect to any limitation on exercise of the
Warrant set forth herein (including without limitation in Section 2(b)). The foregoing provisions
of this Section 9 shall similarly apply to successive Reorganization Transactions. For purposes of
this Section 9, “Reorganization Transaction” shall mean (excluding any transaction covered
by Section 7) any reclassification or capital reorganization of the Company (other than a
subdivision or combination of the outstanding Common Stock or a change in the par value of the
Common Stock) or any consolidation, amalgamation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which merger the Company is the continuing
company and that does not result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock in connection with such merger, consolidation or amalgamation of
the class issuable upon exercise of this Warrant) or any sale, lease, transfer or conveyance to
another corporation of all or substantially all of the assets of the Company.



10









 






                    Section 10. Transfer Restrictions. The Holder by its acceptance hereof, represents
and warrants that it is acquiring the Warrants and any Warrant Shares for its own account and not
with a present intent to sell or distribute the Warrants or any Warrant Shares in violation of the
United States and state securities laws. Neither this Warrant nor any of the Warrant Shares, nor
any interest in either, may be sold, assigned, pledged, hypothecated, encumbered or in any other
manner transferred or disposed of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.




                    Section 11. No Impairment; Regulatory Compliance and Cooperation. The Company shall
not by any action, including, without limitation, amending its charter documents or through any
reorganization, reclassification, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder against impairment.




                    Section 12. Listing on Securities Exchanges. The Company shall use all reasonable
efforts to list on each national securities exchange or other trading venue (including the OTC
Bulletin Board) on which any Common Stock may at any time be listed or traded, subject to official
notice of issuance upon the exercise of this Warrant, and shall use its best efforts to maintain
such listing, so long as any other shares of its Common Stock shall be so listed or traded, all
shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall use its best efforts to so list on each national securities exchange or other trading
venue, and shall use best efforts to maintain such listing of, any other shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any shares of capital
stock of the same class shall be listed on such national securities exchange or other trading venue
by the Company. Any such listing shall be at the Company’s expense.




                    Section 13. Exclusive Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may only be brought in any federal or state court located in
the County and State of New York, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of
process on



11









 






such party at its principal office shall be deemed effective service of process on such party.




                    Section 14. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.




                    Section 15. Loss or Mutilation. Upon receipt by the Company from any Holder of
evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and an indemnity reasonably satisfactory to it (it being understood that
the written indemnification agreement of or affidavit of loss of Merrill Lynch PCG, Inc. or any of
its affiliates shall be a sufficient indemnity) and, in case of mutilation, upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like
tenor to such Holder; provided, however, that, in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for
cancellation.




                    Section 16. Designated Office. As long as any of the Warrants remain outstanding, the
Company shall maintain an office or agency, which shall initially be the principal executive
offices of the Company at 300 Madison Avenue, Toledo, Ohio 43604 (the “Designated Office”),
where the Warrants may be presented for exercise, registration of transfer, division or combination
as provided in this Warrant. The Company may from time to time change the Designated Office to
another office of the Company or its agent within the United States by notice given to all
registered Holders at least 10 Business Days prior to the effective date of such change.




                    Section 17. Availability of Information. (a) The Company shall comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act to the extent it is required to
do so under the Exchange Act. The Company shall also cooperate with each Holder of any Warrants
and holder of any Warrant Shares in supplying such information as may be reasonably necessary for
such holder to complete and file any information reporting forms currently or hereafter required by
the Securities and Exchange Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any Warrants or Warrant Shares. The provisions of this Section 15
shall survive termination of this Warrant, whether upon exercise of this Warrant in full or
otherwise.




                         (b) If at any time the Company is not subject to the requirements of Section 13 or 15(d) of
the Exchange Act, Company will promptly furnish at its expense, upon request, for the benefit of
Holders from time to time of Warrants and holders from time to time of Warrant Shares, to Holders
of Warrants, holders of Warrant



12









 






Shares and prospective purchasers of Warrants and Warrant Shares information satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the Securities Act.




                    Section 18. Expenses. The Company shall prepare, issue and deliver at its own expense
any new Warrant or Warrants required to be issued hereunder.




                    Section 19. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company and the permitted
successors and assigns of the Holder hereof. The provisions of this Warrant are intended to be for
the benefit of any Holder from time to time of this Warrant and to the extent applicable, any
Holder of shares of Warrant Stock issued upon the exercise hereof (including transferees), and
shall be enforceable by any such Holder. The term “Holder” as used in this Warrant shall,
where appropriate to assign such rights to such permitted successors and assigns, be deemed to
refer to the transferee holder of such Warrant.




                    Section 20. Amendment. This Warrant and all other Warrants may be modified or amended
or the provisions hereof waived with the written consent of the Company and the Holder thereof.




                    Section 21. Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.




                    Section 22. Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.




                    Section 23. Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and
no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.




                    Section 24. Governing Law. This Warrant and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of the State of New York
without regard to principles of conflicts of laws.




13












 





                    IN WITNESS WHEREOF, the Company has duly caused this Warrant to be executed by and attested by
their duly authorized officers and to be dated as of _________, 2009.



	 	 	 	 	 
	 	Libbey Inc.

 	 
	 	By 	 	 
	 	 	Name:  Susan Kovach 	 
	 	 	Title: Vice President and General Counsel 	 
	 
	 	
 Address: 300 Madison Avenue

               Toledo, Ohio 43604



	 
	 	
 Attention: Susan Kovach, General Counsel
	 
	 	

Facsimile No.: 419-325-2585
 	 



14









 







PURCHASE FORM—CASH EXERCISE




Dated ___________________, ____





                    The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of
purchasing _________ shares of Common Stock and hereby makes payment of _________ in payment of
the exercise price thereof.



INSTRUCTIONS FOR REGISTRATION OF STOCK





Name: 






(please typewrite or print in block letters)




Address: 





Signature: 





15









 








PURCHASE FORM—CASHLESS EXERCISE 




To Be Executed by the Holder in Order to Exercise Warrants



The undersigned Holder irrevocably elects (i) to exercise _________ Warrants represented by this
warrant certificate, and (ii) to surrender _________  Warrants represented by this warrant
certificate (with a “Value” of $____________ based on a “Current Market Price” of
$____________) to purchase the shares of Common Stock issuable upon the exercise of the Warrants
exercised hereby, and requests that certificates for such shares shall be issued in the name of:




Name: 






Address: 






Social Security or Tax Identification Number: 





and be delivered to:




Name: 






Address: 





and, if such number of Warrants exercised and surrendered shall not be all the Warrants evidenced
by this warrant certificate, that a new warrant certificate for the balance of such Warrants be
registered in the name of, and delivered to, the Holder at the address stated below:




	 	 	 	 	 	 
	Signature: 


	 	 
	 	Date: 

	 

	 	 	 	 






Address: 






Social Security or Tax Identification Number: 






16









 








ASSIGNMENT FORM




                    FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers unto:



Name: 





(please typewrite or print in block letters)




Address: 





its right to purchase _________ shares of Common Stock represented by this Warrant and does
hereby irrevocably constitute and appoint _________ Attorney, to transfer the same on the books
of the Company, with full power of substitution in the premises.




Signature: 






Dated ________________, _____





17











 








Exhibit F




Reaffirmation Agreement




See
Exhibit 4.2 to this Form 8-K


36












 





Exhibit G




CERTIFICATION AS TO BENEFICIAL OWNERSHIP OF

CERTAIN EQUITY SECURITIES OF LIBBEY INC.




          The undersigned,                     , as the transferee (“Transferee”) receiving Exchange
Warrants or Common Stock (each as defined in the Debt Exchange Agreement, dated October 28, 2009,
among Libbey Inc. (the “Company”), Libbey Glass Inc. and Merrill Lynch PCG, Inc., the “Debt
Exchange Agreement”), hereby certifies, pursuant to Section 3.8(a) of the Debt Exchange Agreement,
that, immediately prior to the transfer contemplated hereby (the “Transfer”), as calculated
pursuant to Rules 13d-3 and 13d-5 of the Securities Act of 1933, as amended, it:





	 	o	 	 Beneficially owns more than five (5%) of the outstanding shares of Common
Stock of the Company (in such case, Transferee is a “5% Holder”)
	 
	 	o	 	 Does not beneficially owns more than five (5%) of the outstanding shares
of Common Stock of the Company.





     Further, if Transferee is a 5% Holder, Transferee, as a condition to the Transfer, hereby:




	 	o 	 	 Agrees to be bound by all obligations set forth in Sections 3.1 and 3.8
of the Debt Exchange Agreement that the Investor (as defined in the Debt Exchange
Agreement) must comply with. For the avoidance of doubt, Transferee will not be
subject to any other obligations of the Investor set forth in the Debt Exchange
Agreement.





[Signature Page Follows]




37









 




Executed as of the date set forth below under the laws of the State of Delaware.




	 	 	 
	 

	 	 
 Name:
	 

	 	Address:






	 	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 
 





Accepted:




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
 
	 	 
	Date:
	 	 	 	 
	 

	 	 
 
	 	 





38









 






Exhibit H




CERTIFICATION AS TO AFFILIATION WITH

CERTAIN COMPETITORS OF LIBBEY INC.




          The undersigned,                     , as the transferee (“Transferee”) receiving Exchange
Warrants or Common Stock (each as defined in the Debt Exchange Agreement, dated October 28, 2009,
among Libbey Inc. (the “Company”), Libbey Glass Inc. and Merrill Lynch PCG, Inc., the “Debt
Exchange Agreement”), hereby certifies, pursuant to Section 3.8(b) of the Debt Exchange Agreement,
that, immediately prior to the transfer contemplated hereby, it is not an Affiliate (as defined in
the Debt Exchange Agreement) of any entity listed on Schedule 3.8 to the Debt Exchange Agreement.




[Signature Page Follows]




39









 








     Executed as of the date set forth below under the laws of the State of Delaware.



	 	 	 
	 

	 	 
 Name:
	 

	 	Address:






	 	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 
 





Accepted:




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 






40









 






Schedule 3.8




Paşabahçe
or
Şişecam Holding

Arc International or any of its Affiliates, including Arc North America

Anchor Hocking or any of its Affiliates





41