Exhibit
10.32


 


 


OWENS-ILLINOIS


 


2004
EXECUTIVE LIFE INSURANCE PLAN


 


 


Effective December 1,
2004


 





















 


OWENS-ILLINOIS


2004
EXECUTIVE LIFE INSURANCE PLAN


 


Owens-Illinois, Inc., a corporation duly organized
and existing under the laws of the state of Delaware and having its corporate
headquarters in the state of Ohio (hereinafter, together with its successors
and assigns, called the “Company”), hereby establishes and will be the sponsor
of this Owens-Illinois 2004 Executive Life Insurance Plan (the “Plan”), effective
as of December 1, 2004. The Plan is established and will be maintained by
the Company on behalf of each corporation (or other business entity) 50 percent
or more of the voting stock (or other ownership interest) of which is owned,
directly or indirectly, by the Company and which employs or employed any person
who participates in the Plan. Each such corporation (or other business entity),
together with its successors and assigns, is hereinafter referred to as an “Employer”.


 


W I T N E S S E T H:


 


WHEREAS, the Company
established the Owens-Illinois Executive Life Insurance Plan effective April 1,
2000 (the “2000 ELIP”) whereunder the Company assumed an unsecured obligation
to provide the beneficiaries of certain employees with a death benefit
generally equal to three times annual base salary and whereunder in order to
fund that obligation certain policies of insurance were purchased on the life
of each participating employee under a collateral assignment split-dollar
arrangement as part of an agreement between the Company and each such
participating employee; and


 


WHEREAS, pursuant to the
provisions of the 2000 ELIP, the 2000 ELIP is hereby terminated by the Company
as a result of unanticipated changes in the law adversely affecting the
collateral assignment split-dollar arrangements established thereunder; and


 


WHEREAS, the Company
hereby establishes this Plan contemporaneously with the termination of the 2000
ELIP to provide for the continued funding of the aforementioned death benefit
obligations under non-equity endorsement split-dollar arrangements with respect
to employees and retirees covered by the 2000 ELIP and other employees who
satisfy the eligibility requirements of this Plan.


 


NOW, WHEREFORE, it is
hereby agreed as follows:


 


Article I
- Purpose


 


1.1                                 The
primary purpose of this Plan is to support the Employers in attracting and
retaining qualified executive personnel, by providing for pre-retirement and
post-retirement death benefits in an amount generally equal to three times
annual base salary, determined as hereinafter provided and subject to certain
limits hereinafter stated. The Company has determined that the foregoing can
best be provided under non-equity 


 





















 


endorsement split-dollar
life insurance arrangements, and an insurance policy has been or will be
applied for on the life of each of the Participants. By execution of this Plan,
the Company agrees to purchase such insurance policies under non-equity
endorsement split-dollar arrangements and to pay the premiums thereon subject
to the provisions of the Plan.


 


Article II
- Definitions


 


2.1                                 Administrator.  The
Plan administrator serving pursuant to Article XV of this Plan. The
Company shall be the Administrator unless and until the Company appoints an
officer or a committee consisting of two or more officers or employees of the
Company to serve as the Administrator.


 


2.2                                 Agreement.  A
Participation Agreement, in the form attached hereto as either Exhibit A or
Exhibit A-1, entered into between a Participant (or his or her Assignee) and
the Company pursuant to which the Participant (or his or her Assignee) agrees
to participate in the Plan and the Company agrees to purchase a Policy on such
Participant’s life and irrevocably endorse to the Participant (or his or her
Assignee) its right to designate a beneficiary with respect to the Death
Benefit payable with respect to such Policy.


 


2.3                                 Anniversary Date.  The
first day of each Plan Year.


 


2.4                                 Assignee.  The
person, or entity, including the trustee of any irrevocable trust, to whom a
Participant has irrevocably assigned his or her interest in the Company’s
Obligation and the Death Benefit payable under a Policy issued under the Plan
as permitted under Article XI hereunder or the death benefit payable under
the 2000 ELIP.


 


2.5                                 Beneficiary.  The beneficiary or beneficiaries of the
Company’s Obligation and the Death Benefit payable under each Policy that has
been endorsed to such Participant (or his or her Assignee) under the terms the
Agreement and this Plan, as designated in accordance with paragraph 8.1 and
such Policy.


 


2.6                                 Company’s Obligation.  Under the Plan the Company assumes an
unsecured obligation to pay a Participant’s (or his or her Assignee’s)
Beneficiary prior to the Participant’s Retirement a death benefit equal to
three times such Participant’s annual base salary as of the most recent
Anniversary Date if such Participant dies before his or her Retirement.  Under the Plan the Company assumes an
unsecured obligation to pay a Participant’s (or his or her Assignee’s)
Beneficiary on or after the Participant’s Retirement a death benefit equal to
three times such Participant’s annual base salary as of the Anniversary Date
immediately preceding such Participant’s Retirement if such Participant dies
after his or her Retirement.  In the case
of a Participant who is a Retiree on the Effective Date, under the Plan the
Company assumes an unsecured obligation to pay the Retiree’s (or his or her
Assignee’s) Beneficiary upon such Retiree’s death a death benefit equal to such
Retiree’s (or his or her Assignee’s) death 


 


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benefit under the 2000
ELIP.  Notwithstanding the foregoing, a
Participant’s (or his or her Assignee’s) Death Benefit shall not be reduced by
reason of any subsequent decrease in such Participant’s annual base
salary.  The Company’s Obligation shall
be extinguished or reduced with respect to a Participant (or his or her
Assignee) upon the payment of the Death Benefit to the Participant’s (or his or
her Assignee’s) Beneficiary in accordance with paragraph 8.3, upon the transfer
of the Policy insuring the Participant’s life in accordance with paragraph
10.1, or if the Participant’s Termination Date occurs for any reason other than
such Participant’s Retirement, Disability or death in accordance with paragraph
9.2.  To the extent that the Company’s
Obligation is not fully extinguished as provided in the preceding sentence, the
Company shall be liable for any such deficiency in accordance with paragraph
8.3.


 


2.7                                 Cost of Current Life Insurance Protection.  The annual cost, during each calendar year,
of the current life insurance protection provided with respect to a Participant
in an amount equal to the Participant’s current Death Benefit under the
applicable Policy, multiplied by the life insurance premium factor designated
or permitted in guidance published in the Internal Revenue Bulletin as
determined in accordance with Internal Revenue Code Regulation Section 1.61-22(d)(3)
and/or any other applicable regulations, rulings or interpretations of the
Internal Revenue Service.


 


2.8                                 Death Benefit.  The
portion of the face amount of the Policy payable upon a Participant’s death to
the Participant’s (or his or her Assignee’s) Beneficiary as specified
herein.  Prior to a Participant’s
Retirement, the Participant’s Death Benefit shall equal three times his or her
annual base salary as of the most recent Anniversary Date or, if less, the
Insurance Limit.  On or after a
Participant’s Retirement, the Participant’s Death Benefit shall equal three
times his or her annual base salary as of the Anniversary Date immediately
preceding such Participant’s Retirement or, if less, the Insurance Limit.  In the case of a Participant who is a Retiree
on the Effective Date, the Death Benefit shall equal the Retiree’s death
benefit under the 2000 ELIP. 
Notwithstanding the foregoing, a Participant’s (or his or her Assignee’s)
Death Benefit shall not be reduced by reason of any subsequent decrease in the
Participant’s annual base salary.


 


2.9                                 Disability.  A
Participant’s inability, solely because of disease or injury for which the
Participant is under the care of a qualified physician, to work within his or
her own occupation, as determined for purposes of the Owens-Illinois Long-Term
Disability Plan (a component of the Owens-Illinois, Inc. Salary Employees
Welfare Benefit Plan).


 


2.10                           Distribution Date. 
The Distribution Date of a Retiree on the Effective Date
shall be June 2, 2005 and the Distribution Date of any other Participant
shall be the first business day following the six-month anniversary of such
Participant’s Termination Date.


 


2.11                           Effective Date.  December 1,
2004.


 


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2.12                           Employee.  An
individual performing services for an Employer for which Form W-2 compensation is
paid.


 


2.13                           Endorsement.  The
irrevocable contractual endorsement by the Company as Owner of the Policy to a
Participant (or his or her Assignee) of the Death Benefit payable with respect
to such Policy as set forth in the Agreement between the Company and the
Participant (or his or her Assignee).


 


2.14                           Insurance Company. 
Jefferson-Pilot Life Insurance Company, or any other insurance company
or companies authorized to do business in the state of Ohio selected by the
Company for the issuance of a Policy pursuant to the Plan.


 


2.15                           Insurance Limit.  The
maximum amount of the Death Benefit for which a Policy may be issued at
standard rates and on a guaranteed-issue basis, as established by the Insurance
Company, unless the Insurance Company and the Company mutually consent to a
different amount as the Insurance Limit on coverage for a Participant. On the
Effective Date, the Insurance Limit on the original issuance of a Policy is
$3,000,000. The Insurance Limit is subject to modification by the Insurance Company
from time to time after the Effective Date.


 


2.16                           Owner.  The Company,
who is or will be defined in a Policy as Owner and, as such, possesses or will
possess all incidents of ownership in such Policy.


 


2.17                           Participant.  Any
Employee and any Retiree who is eligible to participate in the Plan and who (or
whose Assignee) enrolls in the Plan in accordance with Article III.


 


2.18                           Plan.  This
Owens-Illinois 2004 Executive Life Insurance Plan.


 


2.19                           Plan Documents.  This
document and all documents incorporated into the Plan under this document,
including the Agreements, the Policies and any other documents specifically
referenced herein or therein.


 


2.20                           Plan Year.  Each 12
consecutive month period beginning on December 1 and ending on the
following November 30.


 


2.21                           Policy.  The life
insurance policy on the life of a Participant, together with any supplemental
contracts issued by the Insurance Company in conjunction therewith, purchased
by the Company pursuant to the terms of the Plan and the Agreement to which the
Company is a party.


 


2.22                           Premium Payment Period. 
The period of time during which the Company will pay all premiums with
respect to the Policy. If the Agreement applicable to a Policy terminates
during the Premium Payment Period for such Policy, such Premium Payment Period
shall end concurrently.


 


2.23                           Retiree.  Any
former Employee who became a Participant before his or her 


 


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Termination Date and
whose Agreement remains in effect after his or her Termination Date, and any
former Employee on the Effective Date who was a participant under the 2000 ELIP
and whose agreement with the Company under the 2000 ELIP continues in effect on
the Effective Date.


 


2.24                           Retirement. 
Retirement from employment with an Employer at a time and under
circumstances whereby a Participant would be eligible for an immediately
payable early or normal retirement benefit under the Owens-Illinois Salary
Retirement Plan, as from time to time in effect.


 


2.25                           Termination Date.  The
date of termination of a Participant’s employment with the Employer(s) for any
reason, including voluntary and involuntary termination, and termination of
employment due to Disability or Retirement.


 


Article III
- Eligibility


 


3.1                                 Each Retiree (or his
or her Assignee) on the Effective Date, each Employee (or his or her Assignee)
who was a participant in the 2000 ELIP on the Effective Date, and each other
Employee (or his or her Assignee) whose position with an Employer is at or
above the level of divisional vice president (or equivalent, as determined by
the Company) and who is designated as eligible by the Chief Executive Officer
of the Company, shall be eligible to participate in the Plan.


 


3.2                                 Each Employee (or his
or her Assignee) and Retiree (or his or her Assignee) who is eligible to
participate in the Plan on the Effective Date, and who (or whose Assignee)
enrolls in the Plan by executing an Agreement, shall become a Participant on or
as of the Effective Date. Each Employee (or his or her Assignee) who becomes
eligible to participate in the Plan after the Effective Date, and who (or whose
Assignee) thereafter enrolls in the Plan by executing an Agreement, shall
become a Participant in the Plan on the first Anniversary Date thereafter.


 


3.3                                 An
Agreement shall go into effect on or as of the effective date specified in the
Agreement and shall remain in effect until the Participant’s death, unless
terminated earlier as provided in paragraph 9.2, paragraph 10.1 or Article XII;
provided, however, that to the extent the Company’s Obligation has not been
fully extinguished as provided in paragraph 9.2 or paragraph 10.1, it shall
remain in effect notwithstanding the termination of the Agreement upon the
termination of the Plan, the Company’s discontinuance of the payment of
premiums under the Plan, or the cancellation, lapse, or surrender of the Policy
for any reason as provided in Article XII, for so long as the Participant
is or becomes a Retiree or remains an Employee of any Employer.


 


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Article IV
- Application for Insurance


 


4.1                                 On
or before the Effective Date or Anniversary Date on which an eligible Employee
or Retiree becomes a Participant, the Company shall apply to the Insurance
Company for the issuance of a Policy insuring the Participant’s life in such
amount as is determined by the Company, which amount shall include the amount
of the Death Benefit endorsed to the Participant (or his or her Assignee) under
the terms of the Agreement and Article VI hereof.  The Participant (and his or her Assignee)
shall be subject to the provisions of the Plan, including the Agreement.
However, and notwithstanding anything herein to the contrary, neither an
Employee’s or Retiree’s eligibility to participate in the Plan, nor the Company’s
Obligation in paragraph 2.6 with respect to any Participant (or his or her
Assignee), are conditioned on the issuance of a Policy on the life of such
Participant, but the rights and interests of the Company, the Employers and the
Participant in and to any feature of a Policy are expressly conditioned upon
the issuance of such Policy on such underwriting classification and premium
amounts as are acceptable to the Company in the exercise of its sole and
absolute discretion.


 


4.2                                 It
is the intention of the Plan, as a matter of reasonable expectation based on
each Policy’s death benefit amount, investment options, schedule of
premiums, and other relevant Policy features, and on the age and other relevant
characteristics of the insured Participant, but not as a matter guaranteed by
the Company, any Employer, the Insurance Company, or otherwise, that at any
time after the end of the Policy’s Premium Payment Period such Policy can be
maintained in force for the remaining life expectancy of the insured
Participant without the payment of additional premiums into the Policy, by
utilizing the Policy’s cash surrender value; provided, however, that if
additional premiums are nevertheless required to be paid into the Policy after
the end of such Policy’s Premium Payment Period but while the Company is the
owner of the Policy and the Agreement remains in effect with respect to such
Policy, the Employer(s) shall pay such premiums.


 


Article V
- Payment of Premiums


 


5.1                                 On
or before the due date of each periodic Policy premium payable during the
Premium Payment Period, or within any grace period after such due date
permitted by the Policy, the Employer of the Participant insured by such Policy
shall pay the full amount of such premium to the Insurance Company. The amount
of the premium which the Employer shall pay each year, and the period of years
over which such premium is expected to be paid, shall be detailed with respect
to each Participant in a schedule of premiums furnished by the Insurance
Company to the Company at the time of issuance of the Policy on the life of
such Participant.


 


5.2                                 To
the extent that an Employer pays the premium amounts for life insurance
benefits under a Policy, the Participant insured by such Policy shall incur a
taxable economic benefit each year equal in amount to the Cost of Current Life
Insurance Protection, and the Employer will fully gross up the amount thereof
to cover all applicable federal, state, and local income taxes and FICA and
Medicare withholdings thereon. The gross 


 


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up shall be computed on the basis of the
highest then applicable income tax and withholding rates and shall take into
account and include the income taxes and withholdings paid by an Employer.  The amount to be reported as income each year
shall include the amount of such economic benefit plus the additional amount
attributable to the Employer’s grossing up such amount to cover such taxes and
withholdings. The Employer will furnish the Participant with an appropriate
statement of the amount of such income reportable by the Participant for
federal, state and local income tax purposes.


 


5.3                                 Notwithstanding the schedule of
premiums referred to in paragraph 5.1, if any additional premiums should be
required to be paid into a Policy while the Plan and the Agreement applicable
to such Policy remain in effect, the insured Participant’s Employer (or former
Employer) shall pay such premiums, but no additional premium payments shall be
required to be paid by an Employer on any Policy issued under the Plan after
the death of the insured Participant or the transfer of such Policy to the
insured Participant (or his or her Assignee) pursuant to paragraph 10.1.


 


5.4                                 Neither
the Company nor any Employer shall have any obligation or responsibility with
respect to any estate or gift tax liability or other adverse estate or gift tax
consequences resulting from the payment of premiums with respect to any Policy
on the life of any Participant, and the Participant (or his or her Assignee)
shall be solely responsible for any such estate or gift tax liability or other
adverse estate or gift tax consequence resulting from the payment of such
premiums.


 


Article VI
– Endorsement of Death Benefit


 


6.1                                 To
secure the payment of the Death Benefit owed to the Participant’s (or his or
her Assignee’s) Beneficiary, the Company shall, simultaneous with the issuance
of the Policy, execute an Agreement with the Participant (or his or her
Assignee) wherein the Company shall irrevocably endorse to the Participant (or
his or her Assignee) the right to designate the Beneficiary with respect to the
Death Benefit amount payable with respect to such Policy. All rights in and to
the Policy not endorsed or otherwise assigned to the Participant (or his or her
Assignee) by the Agreement shall be retained by the Company as Owner of the
Policy, subject to applicable provisions of this Plan. The provisions of the
Agreement setting forth the Company’s endorsement of the Policy’s Death Benefit
to the Participant (or his or her Assignee) shall not be canceled, altered, or
amended except as expressly provided by the provisions of the Agreement and
permitted by the Plan.


 


Article VII
- Policy Interests and Rights


 


7.1                                 At
any time while the Agreement applicable to a Policy remains in effect, the
Company shall be the exclusive Owner of the Policy and shall be entitled to
exercise all the rights of ownership of the Policy. The rights of ownership
which shall be exercisable by the Company shall include all of the rights of
the “owner” which are specified in the Policy, including but not limited to the
right to withdraw or borrow against any cash 


 


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surrender value of the Policy, direct the
allocation of amounts paid into each Policy, and the entire value of the
Policy, among any investment options available under the Policy, sell, assign,
pledge as collateral, or otherwise transfer, exchange or encumber the Policy,
and maintain its possession, subject only to a Participant’s (or his or her
Assignee’s) right under the terms of the Agreement and the Plan to designate or
change the Beneficiary or settlement option with respect to the Death Benefit
endorsed to the Participant (or his or her Assignee) with respect to such
Policy.


 


Article VIII –
Beneficiary’s Death Benefit and


Satisfaction of Company’s
Obligation


 


8.1                                 The
Participant (or his or her Assignee) shall have the sole right to designate the
Beneficiary of the Death Benefit payable with respect to the Policy issued on
the Participant’s life and endorsed to the Participant (or his or her Assignee)
in accordance with the terms of the Agreement and the Plan. The Beneficiary
shall be designated, and may be changed from time to time, in accordance with
procedures specified in the Policy or otherwise prescribed by the Insurance
Company.  In the event the Participant
has not designated a Beneficiary, or if the Participant’s Beneficiary shall
have predeceased the Participant, the Death Benefit shall be paid to the
Participant’s estate.


 


8.2                                 Upon
the death of a Participant, the Company and the Beneficiary shall take appropriate
action to promptly obtain the insurance proceeds payable under the Policy if
the Company is the owner of such Policy at such time. The proceeds thereof
representing the Death Benefit endorsed to the Participant (or his or her
Assignee), as set forth in Article VI, shall be paid to the Beneficiary in
accordance with the Participant’s (or his or her Assignee’s) designation, the
Beneficiary’s instructions and the terms of the Policy.  The balance of such proceeds, if any, shall
be paid to the Company in a single sum.


 


8.3                                 The
Company’s Obligation existing at the Participant’s death, if any, shall be
reduced to the extent the Death Benefit is paid to the Participant’s (or his or
her Assignee’s) Beneficiary.  In the
event the Company’s Obligation existing at the Participant’s death, if any, is
not fully extinguished as a result of the payment of the Death Benefit, the
Company shall pay the Participant’s (or his or her Assignee’s) Beneficiary from
its own assets the balance of the Company’s Obligation.  In addition, to the extent the Beneficiary
realizes taxable income by reason of the receipt from the Company of the
Company’s assets in satisfaction of the balance of the Company’s Obligation,
the Employer will fully gross up the amount thereof to cover all applicable
federal, state and local income taxes and any FICA and Medicare withholdings
thereon. The gross up shall be computed on the basis of the highest then
applicable income tax and withholding rates and shall take into account and
include the income taxes and withholdings paid by an Employer.  The Employer will furnish the Beneficiary
with an appropriate statement of the amount of such income reportable by the
Beneficiary for federal, state and local income tax purposes.


 


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8.4                                 Neither
the Company nor any Employer shall have any obligation or responsibility with
respect to any estate or gift tax liability or adverse estate or gift tax
consequences resulting from the payment of the Death Benefit or the Company’s
Obligation to the Participant’s (or his or her Assignee’s) Beneficiary and the
Participant (or his or her Assignee) shall be solely responsible for any such
estate or gift tax liability or other adverse estate or gift tax consequence
resulting from such payment.


 


Article IX
- Retirement or Other Termination of Employment


 


9.1                                 If
a Participant’s Termination Date occurs by reason of the Participant’s
Retirement or Disability, the occurrence of such Termination Date shall not
cause the Agreement to be terminated.


 


9.2                                 If
a Participant’s Termination Date occurs for any reason other than the
Participant’s Retirement, Disability, or death, the Company’s Obligation and
the obligations of the Company and the Employer under the terms of the Plan and
the Agreement with such Participant (or his or her Assignee) to provide the
Death Benefit shall terminate effective as of the Participant’s Termination
Date, and thereafter the Company and the Employer shall be under no further
obligation to make premium payments or to take any other action to maintain the
Policy in force or to preserve the Policy’s Death Benefit in any manner.


 


9.3                                 In
the circumstances described in paragraph 9.2, above, the Participant (or his or
her Assignee) may elect, by written notice to the Administrator given no later
than 30 days after such Termination Date, to acquire the Policy from the
Company at its fair market value, whereupon the Participant (or his or her Assignee)
will assume full responsibility for the payment of all future premiums.  The fair market value of the Policy will be
determined in accordance with applicable Internal Revenue Service rules, and
will generally be the cash value of the Policy, without reduction for any
surrender charges.


 


Article X
– Transfer of Policy


 


10.1                           Notwithstanding
paragraph 9.1 to the contrary, the Company shall transfer the ownership of the
Policy insuring a Retiree’s life to such Retiree (or his or her Assignee) on
such Retiree’s Distribution Date whereupon the Company and the Employer shall
be under no further obligation to make premium payments or to take any other
action to maintain the Policy in force or preserve the Policy’s Death Benefit
in any manner. Notwithstanding paragraph 8.3 to the contrary, the Company’s
Obligation shall be fully extinguished and the obligations of the Company and
the Employer under the terms of the Plan and the Agreement with such Retiree
(or his or her Assignee) to provide the Death Benefit shall terminate if the
current accumulation value of the transferred Policy at the Distribution Date
is sufficient at then current mortality charges and a guaranteed 4% crediting
rate to keep such Policy in force until the date such Retiree reaches age 100
(the maturity age of the Policy) in an amount at least equal to the Death
Benefit.  If the current accumulation
value of the transferred


 


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Policy at the Distribution Date is not
sufficient at then current mortality charges and a guaranteed 4% crediting rate
to keep such Policy in force until the date such Retiree reaches age 100 (the
maturity age of the Policy) in an amount at least equal to the Death Benefit,
then the Company’s Obligation shall be reduced to an amount equal to the
difference between the Company’s Obligation immediately prior to the transfer
of such Policy and the amount of Death Benefit supported by the transferred
Policy’s current accumulation value at the Distribution Date.


 


10.2                           In the event
the Company transfers the ownership of a Policy to a Retiree (or his or her
Assignee) pursuant to paragraph 10.1 above and the Retiree insured by such
Policy realizes taxable income by reason of the transferred Policy, the
Employer will fully gross up the amount thereof to cover all applicable
federal, state and local income taxes and FICA and Medicare withholdings
thereon.  The gross up shall be computed
on the basis of the highest then applicable income tax and withholding rates
and shall take into account and include the income taxes and withholdings paid
by the Employer. The Employer will furnish the Retiree with an appropriate
statement of the amount of such income reportable by the Retiree for federal,
state and local income tax purposes.


 


10.3                           Neither
the Company nor any Employer shall have any obligation or responsibility with
respect to any estate or gift tax liability or adverse estate or gift tax
consequences resulting from the transfer of a Policy to any Retiree (or his or
her Assignee) and the Retiree (or his or her Assignee) shall be solely
responsible for any such estate or gift tax liability or other adverse estate
or gift tax consequence resulting from such transfer.


 


Article XI – Assignment by
Participant


 


11.1                           Notwithstanding
any provision hereof to the contrary, coincident with his or her participation
in the Plan or on any date thereafter, a Participant shall have the right to
absolutely and irrevocably assign by gift to an Assignee all or any portion of
his or her right, title and interest in and to the Company’s Obligation and in
and to the Death Benefit payable with respect to a Policy on such Participant’s
life.  This right shall be exercisable by
having the Assignee execute the Agreement with the Company on behalf of the
Participant in the form attached hereto as Exhibit A-1.  Upon the execution of such Agreement by the
Assignee and the Company, the Company shall thereafter treat the Participant’s
Assignee as the sole owner of all of the Participant’s right, title and
interest in and to the Company’s Obligation and in and to the Death Benefit
provided under this Plan.  Thereupon and
thereafter, the Participant shall have no right, title or interest in and to
the Company’s Obligation or in and to the Death Benefit provided for in this
Plan, the Agreement or the Policy, all such rights being vested in and
exercisable only by such Assignee.


 


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Article XII - Plan
Termination


 


12.1                           The
Company reserves the right to unilaterally discontinue or suspend the Employers’
payment of premiums under the Plan at any time or to terminate the Plan at any
time. The Plan shall terminate upon the total cessation of the business of the
Company or upon the bankruptcy, receivership or dissolution of the Company.


 


12.2                           Upon
termination of the Plan or the complete discontinuance of the payment of
premiums under the Plan, the Company shall be entitled to take whatever actions
it desires, in its sole and absolute discretion, with respect to each Policy
under the Plan; provided, however, the Company’s Obligation with respect to
each Participant (or his or her Assignee) shall survive such Plan termination
or discontinuance of premium payments.


 


Article XIII - Plan
Amendments


 


13.1                           Except
as may be otherwise expressly limited in a Participant’s Agreement, the Company
reserves the right to amend the Plan in any respect and at any time and from
time to time. However, the Company shall not amend the Plan in any manner, or
take or omit any other action, that has the effect of reducing the amount of
the Company’s Obligation to a Participant (or his or her Assignee) without the
Participant’s (or his or her Assignee’s) express written consent.


 


Article XIV
- Insurance Company


 


14.1                           The
Insurance Company will be fully discharged from its obligations under the
Policy by its payment of the Policy death benefit to the beneficiary(ies)
designated in the Policy, subject to the terms of the Policy. The Insurance
Company will not, in any event, be considered a party to this Plan or to any
Agreement, or to any modification or amendment of the Plan or any Agreement.


 


Article XV
- Administration and Claims


 


15.1                           The
Plan is an employee welfare benefit plan under Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The
following provisions of this paragraph 15.1 are intended to meet applicable
ERISA requirements:


 


(a)                                  The
Plan shall be administered by the Administrator, and the Administrator shall
have full discretionary authority and responsibility for the operation and
management of the Plan, including the interpretation of the Plan and any
Agreement thereunder.


 


(b)                                 The
named fiduciary or fiduciaries are the Company and/or one or more officers or
employees of the Company duly appointed to exercise fiduciary authority and
responsibility with respect to the Plan.


 


11





















 


(c)                                  The
funding policy under this Plan anticipates that all premiums on each Policy
shall be remitted by the Employer(s) to the Insurance Company when due, and all
benefits under the Plan shall be provided pursuant to a contract or contracts
with any insurance company or companies authorized to do business in the state
of Ohio, as selected by the Company.


 


(d)                                 Direct
payment by the Insurance Company is the primary basis of payment of benefits
under this Plan, with those benefits in turn being based on the payment of
premiums as provided in the Plan.


 


(e)                                  The
claims procedure of the Plan shall be as follows:


 


(i)                                     The
Owner of a Policy, a Beneficiary, or a duly authorized representative thereof
may make a claim for benefits by filing a claim with the Administrator on a
form made available for that purpose. The Administrator shall make the initial
determination as to the treatment of the claim and give the claimant notice
thereof within 90 days after receipt of the claim. If for any reason a claim
for benefits under this Plan is denied by the Administrator, it shall deliver
to the claimant a written explanation setting forth the specific reason for the
denial, pertinent references to the Plan provision on which the denial is
based, such other data as may be pertinent and information on the procedures to
be followed by the claimant in obtaining a review of the claim, all written in
a manner calculated to be understood by the claimant. For this purpose:


 


(A)                              The
claimant’s claim shall be deemed filed when presented in writing to the
Administrator.


 


(B)                                The
Administrator’s determination and explanation shall be in writing delivered to
the claimant within 90 days of the date the claim is filed.


 


(ii)                                  The
claimant shall have 60 days following his or her receipt of the denial of the
claim to file with the Company a written request for review of the denial. For
such review, the claimant or a representative thereof may submit pertinent
documents and written issues and comments.


 


12





















 


(iii)                               The
Company shall decide the issue on review and furnish the claimant with a copy
of its determination within 60 days of receipt of the claimant’s request for
review of the claim. The decision shall be in writing and shall include
specific reasons for the decision written in a manner calculated to be
understood by the claimant, as well as specific reference to the pertinent Plan
provisions on which the decision is based. If a copy of the decision is not
furnished to the claimant within such 60-day period, the claim shall be deemed
denied on review.


 


Article XVI
- Miscellaneous


 


16.1                           The
Plan Documents shall constitute the entire documentation of the Plan. No
representations, warranties, covenants, understandings or agreements, oral or
otherwise, in relation to the subject matter hereof, other than those set forth
in the Plan Documents, shall be valid.


 


16.2                           The
Plan and the Plan Documents shall not constitute an inducement or consideration
for the employment of any Employee or Participant and shall not give any
Employee or Participant any right to be retained in the employ of any Employer,
and each Employer hereby retains the right to discharge any Employee or
Participant at any time, in accordance with the personnel policies of the
Employer, or as provided in any employment agreement between the Employer and
the Employee or Participant.


 


16.3                           This
Plan shall be binding upon and inure to the benefit of each Participant, and
his or her heirs, successors, assigns, and personal representatives, and the
Company and each Employer, and their respective successors and assigns.


 


16.4                           In
the event that any part of this Plan shall be deemed invalid for any reason,
such invalidity shall not affect the remainder of this Plan, which shall remain
valid and binding upon all interested parties and enforceable in accordance
with its terms.


 


16.5                           Except
where otherwise indicated by the context, any use of the masculine gender
herein shall also refer to the feminine and vice versa, and the use of any term
herein in the singular shall also, where appropriate, include the plural and
vice versa.


 


16.6                           Except
as otherwise required by the laws of the United States of America, the Plan
Documents shall be construed in accordance with and governed by the laws of the
state of Ohio.


 


 


IN
WITNESS WHEREOF, the Company has caused this Plan to be duly
executed by its duly authorized officer(s) on this                
day of                          ,
2004.


 


13





















 


	
   

  	
  OWENS-ILLINOIS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas L. Young

  
	
   

  	
   

  	
  Thomas L. Young

  
	
  Attest:

  	
   

  	
  Executive Vice
  President and 

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
  /s/ James W. Baehren

  	
   

  	
   

  	
   

  
	
  James W. Baehren

  	
   

  	
   

  	
   

  
	
  Senior Vice President,

  	
   

  	
   

  	
   

  
	
  Chief Administrative
  Officer and 

  	
   

  	
   

  	
   

  
	
  General Counsel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


14





















 


OWENS-ILLINOIS
2004 EXECUTIVE  LIFE INSURANCE PLAN


PARTICIPATION
AGREEMENT


 


(Exhibit
A to the Owens-Illinois 2004 Executive Life Insurance Plan)


 


This Participation
Agreement (the “Agreement”) is made by and between Owens-Illinois, Inc. (the “Company”)
and                                                                                          
(the “Participant”), pursuant to the Owens-Illinois 2004 Executive Life
Insurance Plan (the “Plan”).  The Company
has selected Jefferson-Pilot Life Insurance Company (the “Insurance Company” or
“Jefferson Pilot”) to provide life insurance protection (the “Policy”) in
accordance with the terms of the Plan. 
The Company requests that Jefferson Pilot retain a copy of this
Agreement with the Policy.


 


	
  Jefferson
  Pilot Policy Number

  	
   

  	
  Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


The Participant designates the
following as the Beneficiary of the Death Benefit:


 


	
  Beneficiary: 

  	
  Relationship: 

  
	
  Address:  

  	
   

  
	
   

  	
  Tax ID (Social Security) Number

  
	
   

  	
   

  



 


IT IS AGREED:


 


A.                                   Capitalized
terms defined in the Plan and not otherwise defined in this Agreement shall
have the meaning assigned in the Plan.


 


B.                                     All
of the terms, provisions, and conditions of the Plan are hereby incorporated
into this Agreement.


 


C.                                     Commencing
on                                        ,
the Participant agrees to participate in the Plan and become subject to its
terms, and the Company agrees that the Participant’s Employer(s) or former
Employer(s) will contribute premiums in accordance with the Plan for the period
of time and in the amounts determined thereunder. Both parties to this
Agreement understand that benefits under the Plan shall be provided by the
above identified Policy issued or to be issued by the Insurance Company.


 


D.                                    Notwithstanding
the foregoing provisions of this Agreement or any contrary provisions of the
Plan, the Company agrees that:


 


1.                                       At
any time while this Agreement remains in effect before the Participant’s
Termination Date in the case of an Employee, the Death Benefit payable to the
Beneficiary shall equal three times the Participant’s annual base salary as of
the most recent Anniversary Date or, if less, the Insurance Limit;


 





















 


2.                                       At
any time while this Agreement remains in effect on or after the Participant’s
Termination Date in the case of an Employee, if such Termination Date occurred
by reason of the Employee’s Retirement or Disability, the Death Benefit payable
to the Beneficiary shall equal three times the Participant’s annual base salary
as of the last Anniversary Date preceding his or her Termination Date or, if
less, the Insurance Limit;


 


3.                                       At
any time while this Agreement remains in effect in the case of a Participant
who is a Retiree on the Effective Date, the Death Benefit payable to the
Beneficiary shall be the Retiree’s death benefit under the 2000 ELIP on the
Effective Date;


 


4.                                       Notwithstanding
1 and 2, above, the amount of the Death Benefit payable to the Beneficiary on
any Anniversary Date shall not be reduced by reason of any subsequent decrease
in an Participant’s annual base salary; and


 


5.                                       The
Company will provide Jefferson Pilot with the Participant’s annual base salary
as of each Anniversary Date.


 


E.                                      The
Company shall be the sole owner of the Policy, but by executing this Agreement
the Company hereby irrevocably endorses to the Participant the Death Benefit
under the Policy as described in paragraph D above.  During such time as the Company is the owner
of the Policy, the Company will be entitled to receive the amount of any death
benefit paid under the Policy in excess of the Death Benefit payable to the
Beneficiary.  Under current Internal
Revenue Service split-dollar life insurance rules, the Participant must include
as taxable income the amount attributable to the economic benefits received
from the endorsed Death Benefit.  If the
Participant terminates his or her employment by reason of his or her Retirement
or Disability, or if the Participant is a Retiree on the Effective Date, the
Company will transfer the ownership of the Policy to the Participant on his or
her Distribution Date. Under current Internal Revenue Service split-dollar life
insurance rules, the Participant will be deemed to have received taxable income
on the transfer of the Policy in the amount of the Policy’s value, and the
Company will furnish the Participant with an appropriate statement of the
amount of such income reportable by the Participant for the year of the
transfer. If the Participant terminates his or her employment for reasons other
than Retirement or Disability, the Participant shall have the right to acquire
the Policy from the Company for its then current fair market value and to pay
all future premiums thereon.


 


F.                                      The
Participant’s Employer(s) or former Employer(s) will fully gross up any taxable
income realized by the Participant that is attributable to the economic
benefits received from the endorsed Death Benefit and the value of a Policy
transferred to the Participant pursuant to paragraph E above to cover all
applicable federal, state and local income taxes and FICA and Medicare
withholdings thereon.  The gross up shall
be computed on the basis of the highest then applicable income tax and withholding
rates and shall take into account and include the income taxes and withholdings
paid by an Employer.


 


2





















 


G.                                     This
Agreement may be amended only by the mutual written consent of the Company and
the Participant.


 


H.                                    This
Agreement shall remain in effect from its effective date until the death of the
Participant, unless terminated earlier in connection with the Participant’s
termination of employment for any reason other than Retirement or Disability,
as provided in the Plan, or until the transfer by the Company of the ownership
of the Policy to the Participant pursuant to paragraph E above.


 


I.                                         The
Company’s Obligation to the Participant shall continue notwithstanding the
termination of the Plan, the Company’s discontinuance of the payment of
premiums under the Plan, or the cancellation, lapse, or surrender of the Policy
for any reason, unless the Participant’s Termination Date occurs for any reason
other than Retirement, Disability or death, or until the Company transfers
ownership of the Policy to the Participant, in which case the Company’s Obligation
shall be reduced by the amount of Death Benefit supported by such Policy at the
time of the transfer.


 


 


Dated as of the           
day of
                                ,
20      .


 


	
  PARTICIPANT:

  	
  OWENS-ILLINOIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
  Name 

  	
   

  	
   

  
	
   

  	
   

  
	
  Social Security Number 

  	
   

  	
   

  	
  Tax ID Number

  	
   

  	
   

  
										



 


3





















 


OWENS-ILLINOIS
2004 EXECUTIVE  LIFE INSURANCE PLAN


PARTICIPATION
AGREEMENT


 


(Exhibit
A-1 to the Owens-Illinois 2004 Executive Life Insurance Plan)


 


This Participation
Agreement (the “Agreement”) is made by and between Owens-Illinois, Inc. (the “Company”)
and                                                      
(the “Assignee”) as the Assignee and designated Beneficiary of                            
(the “Participant”), pursuant to the Owens-Illinois 2004 Executive Life
Insurance Plan (the “Plan”).  The Company
has selected Jefferson-Pilot Life Insurance Company (the “Insurance Company” or
“Jefferson Pilot”) to provide life insurance protection (the “Policy”) in
accordance with the terms of the Plan. 
The Company requests that Jefferson Pilot retain a copy of this
Agreement with the Policy.


 


	
  Jefferson
  Pilot Policy Number

  	
   

  	
  Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


The Assignee hereby designates
himself/herself/itself as the Beneficiary of the Death Benefit.


 


IT IS AGREED:


 


A.                                   Capitalized
terms defined in the Plan and not otherwise defined in this Agreement shall
have the meaning assigned in the Plan.


 


B.                                     All
of the terms, provisions, and conditions of the Plan are hereby incorporated
into this Agreement.


 


C.                                     Commencing
on                                      ,
the Assignee agrees to participate in the Plan and become subject to its terms,
and the Company agrees that the Participant’s Employer(s) or former Employer(s)
will contribute premiums in accordance with the Plan for the period of time and
in the amounts determined thereunder. Both parties to this Agreement understand
that benefits under the Plan shall be provided by the above identified Policy
issued or to be issued by the Insurance Company.


 


D.                                    Notwithstanding
the foregoing provisions of this Agreement or any contrary provisions of the
Plan, the Company agrees that:


 


1.                                       At
any time while this Agreement remains in effect before the Participant’s
Termination Date in the case of an Employee, the Death Benefit payable to the
Beneficiary shall equal three times the Employee’s annual base salary as of the
most recent Anniversary Date or, if less, the Insurance Limit;


 


2.                                       At
any time while this Agreement remains in effect on or after the Participant’s
Termination Date in the case of an Employee, if such Termination Date occurred
by reason of the Employee’s Retirement or 


 





















 


Disability, the Death
Benefit payable to the Beneficiary shall equal three times the Participant’s
annual base salary as of the last Anniversary Date preceding his or her
Termination Date or, if less, the Insurance Limit;


 


3.                                       At
any time while this Agreement remains in effect in the case of a Retiree on the
Effective Date, the Death Benefit payable to the Beneficiary shall be the
Retiree’s death benefit under the 2000 ELIP on the Effective Date;


 


4.                                       Notwithstanding
1 and 2, above, the amount of the Death Benefit payable to the Beneficiary on
any Anniversary Date shall not be reduced by reason of any subsequent decrease
in an Participant’s annual base salary; and


 


5.                                       The
Company will provide Jefferson Pilot with the Participant’s annual base salary
as of each Anniversary Date.


 


E.                                      The
Company shall be the sole owner of the Policy, but by executing this Agreement
the Company hereby irrevocably endorses to the Assignee the Death Benefit under
the Policy as described in paragraph D above and acknowledges and accepts the
Participant’s irrevocable assignment of his or her interest in the Company’s
Obligation to the Assignee.  During such
time as the Company is the owner of the Policy, the Company will be entitled to
receive the amount of any death benefit paid under the Policy in excess of the
Death Benefit payable to the Beneficiary. 
Under current Internal Revenue Service split-dollar life insurance
rules, the Participant must include as taxable income the amount attributable
to the economic benefits received from the endorsed Death Benefit.  If the Participant terminates his or her
employment by reason of his or her Retirement or Disability, or if the
Participant is a Retiree on the Effective Date, the Company will transfer the
ownership of the Policy to the Assignee on the Participant’s Distribution
Date.  Under current Internal Revenue
Service split-dollar life insurance rules, the Participant will be deemed to
have received taxable income on the transfer of the Policy in the amount of the
Policy’s value, and the Company will furnish the Participant with an
appropriate statement of the amount of such income reportable by the
Participant for the year of the transfer. If the Participant terminates his or
her employment for reasons other than Retirement or Disability, the Assignee
shall have the right to acquire the Policy from the Company for its then
current fair market value and to pay all future premiums thereon.


 


F.                                      The
Participant’s Employer(s) or former Employer(s) will fully gross up any taxable
income realized by the Participant that is attributable to the economic
benefits received from the endorsed Death Benefit and the value of a Policy
transferred to the Assignee pursuant to paragraph E above to cover all
applicable federal, state and local income taxes and FICA and Medicare
withholdings thereon.  The gross up shall
be computed on the basis of the highest then applicable income tax and
withholding rates and shall take into account and include the income taxes and
withholdings paid by an Employer.  Neither
the Company nor the Participant’s Employer(s) or former Employer(s) shall have
any obligation or responsibility with respect to any estate or gift tax
liability or other adverse 


 


2





















 


estate or gift tax consequences with
respect to the payment of premiums on the Policy or the transfer of the Policy
to the Assignee pursuant to paragraph E above.


 


G.                                     This
Agreement may be amended only by the mutual written consent of the Company and
the Assignee.


 


H.                                    This
Agreement shall remain in effect from its effective date until the death of the
Participant, unless terminated earlier in connection with the Participant’s
termination of employment for any reason other than Retirement or Disability,
as provided in the Plan, or until the transfer by the Company of the ownership
of the Policy to the Assignee pursuant to paragraph E above.


 


I.                                         The
Company’s Obligation to the Assignee shall continue notwithstanding the termination
of the Plan, the Company’s discontinuance of the payment of premiums under the
Plan, or the cancellation, lapse, or surrender of the Policy for any reason,
unless the Participant’s Termination Date occurs for any reason other than
Retirement, Disability or death, or until the Company transfers ownership of
the Policy to the Assignee, in which case the Company’s Obligation shall be
reduced by the amount of Death Benefit supported by such Policy at the time of
the transfer.


 


 


Dated as of the          
day of                              ,
20         .


 


 


	
  ASSIGNEE:

  	
  OWENS-ILLINOIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ 

  	
   

  	
  By: 

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
   

  
	
   

  	
  Tax ID Number

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Tax ID Number: 

  	
   

  	
   

  	
   

  
									



 


3