**Exhibit 10.1**

 

**AMENDED AND RESTATED**

**OWENS-ILLINOIS, INC.**

**2005 INCENTIVE AWARD PLAN**

 

**ARTICLE 1.**

**PURPOSE**

 

The purpose ofthe Owens-Illinois, Inc. 2005 Incentive Award Plan (the *“Plan”)* is to promote the success andenhance the value of, as well as aid Owens-Illinois, Inc. (the *“Company”)* by linking the personalinterests of current and future Employees and Consultants to those of Companystockholders. The Plan is intended to incentivise these individuals to continueproviding the Company with outstanding performance, to generate superiorreturns to Company stockholders, and to provide flexibility to the Company inits ability to motivate, attract, and retain the services of Employees andConsultants upon whose judgment, interest, and special effort the successfulconduct of the Company’s operation is largely dependent.

** **

**ARTICLE 2.**

**DEFINITIONS AND CONSTRUCTION**

 

Wherever thefollowing terms are used in the Plan they shall have the meanings specifiedbelow, unless the context clearly indicates otherwise. The singular pronounshall include the plural where the context so indicates.

 

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

 

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

 

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

 

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

 

2.5*                                 “Changein Control”* means and includes each of the following:

 

(a)                                  Atransaction or series of transactions (other than an offering of Stock to thegeneral public through a registration statement filed with the Securities andExchange Commission) whereby any “person” or related “group” of “persons” (assuch terms are used in Sections 13(d) and 14(d)(2) of theExchange Act) (other than the Company, any of its Subsidiaries, an employeebenefit plan maintained by the Company or any of its Subsidiaries or a “person”that, prior to such transaction, directly or indirectly controls, is controlledby, or is under common control with, the Company) directly or indirectlyacquires beneficial ownership (within the meaning of Rule 13d-3 under theExchange Act) of securities of the Company possessing more than 50% of thetotal combined voting power of the Company’s securities outstanding immediatelyafter such acquisition; or

 

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

 

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

 

(c)                                  Theconsummation by the Company (whether directly involving the Company orindirectly involving the Company through one or more intermediaries) of (x) amerger, consolidation, reorganization, or business combination or (y) asale or other disposition of all or substantially all of the Company’s assetsin any single transaction or series of related transactions or (z) theacquisition of assets or stock of another entity, in each case other than atransaction:

 

(i)                                     Whichresults in the Company’s voting securities outstanding immediately before thetransaction continuing to represent (either by remaining outstanding or bybeing converted into voting securities of the Company or the person that, as aresult of the transaction, controls, directly or indirectly, the Company orowns, directly or indirectly, all or substantially all of the Company’s assetsor otherwise succeeds to the business of the Company (the Company or suchperson, the *“Successor Entity”))*directly or indirectly, at least a majority of the combined voting power of theSuccessor Entity’s outstanding voting securities immediately after thetransaction, and

 

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

 

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

 

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

 

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

 

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

 

2.8*                                 “Consultant”*means any consultant or adviser if:

 

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

 

(b)                                 Theservices rendered by the consultant or adviser are not in connection with theoffer or sale of securities in a capital-raising transaction and do notdirectly or indirectly promote or maintain a market for the Company’ssecurities; and

 

(c)                                  Theconsultant or adviser is a natural person who has contracted directly with theCompany to render such services.

 

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

 

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2.10*                           “DeferredStock”* means a right to receive a specified number of shares of Stockduring specified time periods pursuant to Article 8.

 

2.11*                           “Disability”*means that the Participant qualifies to receive long-term disability paymentsunder the Company’s long-term disability insurance program, as it may beamended from time to time.

 

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

 

2.13*                           “EffectiveDate”* shall have the meaning set forth in Section 13.1.

 

2.14*                           “EligibleIndividual”* means any person who is an Employee or a Consultant, asdetermined by the Committee.

 

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

 

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

 

2.17*                           “FairMarket Value”* shall mean, as of any given date, the value of a share ofStock determined as follows:

 

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

 

(b)                                 Ifthe Common Stock is not listed on an established stock exchange or nationalmarket system, but the Common Stock is regularly quoted by a recognizedsecurities dealer, its Fair Market Value shall be the mean of the closingrepresentative bid and asked prices for such date or, if there are no bid andasked prices for a share of Stock on such date, the closing bid and low askedprices for a share of Stock on the last preceding date for which suchinformation exists, as reported in *The WallStreet Journal* or such other source as the Committee deems reliable;or

 

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

 

2.18*                           “FullValue Award”* means any Award other than an Option, SAR or other Award forwhich the Participant pays the intrinsic value (whether directly or by forgoinga right to receive a cash payment from the Company).

 

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

 

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

 

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2.21*                           “Non-QualifiedStock Option”* means an Option that is not intended to be an Incentive StockOption.

 

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

 

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

 

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

 

2.25*                           “Performance-BasedAward”* means an Award granted to selected Covered Employees pursuant toArticles 6 and 8, but which is subject to the terms and conditions setforth in Article 9. All Performance-Based Awards are intended to qualifyas Qualified Performance-Based Compensation.

 

2.26*                           “PerformanceBonus Award”* has the meaning set forth in Section 8.8.

 

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

 

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

 

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

 

2.29*                           “PerformancePeriod”* means the one or more periods of time, which may be of varying andoverlapping durations, as the Committee may select, over which the attainmentof one or more Performance Goals will be measured for the purpose ofdetermining a Participant’s right to, and the payment of, a Performance-BasedAward.

 

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

 

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

 

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

 

2.33*                           “QualifiedPerformance-Based Compensation”* means any compensation that is intended toqualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) ofthe Code.

 

2.34*                           “RestrictedStock”* means Stock awarded to a Participant pursuant to Article 6 thatis subject to certain restrictions and may be subject to risk of forfeiture.

 

2.35*                           “RestrictedStock Unit”* means an Award granted pursuant to Section 8.6.

 

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

 

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

 

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

 

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

 

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

 

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

 

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**ARTICLE 3.**

**SHARES SUBJECT TO THE PLAN**

 

3.1*                                 Numberof Shares.*

 

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

 

(b)                                 Tothe extent that an Award terminates, expires, or lapses for any reason, anyshares of Stock subject to the Award shall again be available for the grant ofan Award pursuant to the Plan. Any shares of Common Stock tendered or withheldto satisfy the grant or exercise price or tax withholding obligation pursuantto any Award (other than an Option) shall be counted against the number ofshares available under Section 3.1(a). To the extent permitted byapplicable law or any exchange rule, shares of Stock issued in assumption of,or in substitution for, any outstanding awards of any entity acquired in anyform of combination by the Company or any Subsidiary shall not be countedagainst shares of Stock available for grant pursuant to this Plan. The paymentof Dividend Equivalents in conjunction with any outstanding Awards shall not becounted against the shares available for issuance under the Plan. For purposesof determining the number of shares available under Section 3.1(a), sharesof Common Stock subject to Stock Appreciation Rights shall be counted as oneshare for each Stock Appreciation Right awarded.

 

3.2*                                 StockDistributed.*  Any Stock distributedpursuant to an Award may consist, in whole or in part, of authorized andunissued Stock, treasury Stock or Stock purchased on the open market.

 

3.3*                                 Limitationon Number of Shares Subject to Awards.* Notwithstanding any provision in the Plan to the contrary, and subjectto Article 11, the maximum number of shares of Stock with respect to oneor more Awards that may be granted to any one Participant during a calendaryear (measured from the date of any grant) shall be 700,000 and the maximumaggregate dollar value of any Award designated to be paid solely in cash to anyCovered Employee during any calendar year which is intended to be a PerformanceBased Award shall not exceed $5,000,000.

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**ARTICLE 4.**

**ELIGIBILITY AND PARTICIPATION**

 

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

 

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

 

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

 

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

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**ARTICLE 5.**

**STOCK OPTIONS**

 

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

 

(a)*                                  ExercisePrice.*  The exercise price per shareof Stock subject to an Option shall be determined by the Committee and setforth in the Award Agreement; *provided*that the exercise price for any Option shall not be less than 100% of the FairMarket Value of a share of Stock on the date of grant.

 

(b)*                                 Timeand Conditions of Exercise.*  TheCommittee shall determine the time or times at which an Option may be exercisedin whole or in part; *provided*that the term of any Option granted under the Plan shall not exceed ten yearsand one day. The Committee shall also determine the performance or otherconditions, if any, that must be satisfied before all or part of an Option maybe exercised.

 

5.2*                                 IncentiveStock Options.*  The terms of anyIncentive Stock Options granted pursuant to the Plan must comply with theconditions and limitations contained in Section 13.2 and this Section 5.2.

 

(a)*                                  Eligibility.*  Incentive Stock Options may be granted only toemployees of the Company or any “subsidiary corporation” thereof (within themeaning of Section 424(f) of the Code and the applicable regulationspromulgated thereunder).

 

(b)*                                 ExercisePrice.*  The exercise price per shareof Stock shall be set by the Committee; *provided*that subject to Section 5.2(d) the exercise price for any IncentiveStock Option shall not be less than 100% of the Fair Market Value on the dateof grant.

 

(c)*                                  IndividualDollar Limitation.*  The aggregateFair Market Value (determined as of the time the Option is granted) of allshares of Stock with respect to which Incentive Stock Options are firstexercisable by a Participant in any calendar year may not exceed $100,000 orsuch other limitation as imposed by Section 422(d) of the Code, orany successor provision. To the extent that Incentive Stock Options are firstexercisable by a Participant in excess of such limitation, the excess shall beconsidered Non-Qualified Stock Options.

 

(d)*                                 TenPercent Owners.*  An Incentive StockOption shall be granted to any individual who, at the date of grant, owns stockpossessing more than ten percent of the total combined voting power of allclasses of Stock of the Company only if such Option is granted at a price thatis not less than 110% of Fair Market Value on the date of grant and the Optionis exercisable for no more than five years from the date of grant.

 

(e)*                                  Noticeof Disposition.*  The Participantshall give the Company prompt notice of any disposition of shares of Stockacquired by exercise of an Incentive Stock Option within (i) two yearsfrom the date of grant of such Incentive Stock Option or (ii) one yearafter the transfer of such shares of Stock to the Participant.

 

(f)*                                    Rightto Exercise.*  During a Participant’slifetime, an Incentive Stock Option may be exercised only by the Participant.

 

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5.3*                                 Substitutionof Stock Appreciation Rights.*  TheCommittee may provide in the Award Agreement evidencing the grant of an Optionthat the Committee, in its sole discretion, shall have the right to substitutea Stock Appreciation Right for such Option at any time prior to or uponexercise of such Option, subject to the provisions of Section 7.2 hereof;provided that such Stock Appreciation Right shall be exercisable with respectto the same number of shares of Stock for which such substituted Option wouldhave been exercisable.

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**ARTICLE 6.**

**RESTRICTED STOCK AWARDS**

 

6.1*                                 Grantof Restricted Stock.*  The Committeeis authorized to make Awards of Restricted Stock to any Eligible Individualselected by the Committee in such amounts and subject to such terms andconditions as determined by the Committee. All Awards of Restricted Stock shallbe evidenced by a written Restricted Stock Award Agreement.

 

6.2*                                 Issuanceand Restrictions.*  Subject to Section 10.6,Restricted Stock shall be subject to such restrictions on transferability andother restrictions as the Committee may impose (including, without limitation,limitations on the right to vote Restricted Stock or the right to receivedividends on the Restricted Stock). These restrictions may lapse separately orin combination at such times, pursuant to such circumstances, in suchinstallments, or otherwise, as the Committee determines at the time of thegrant of the Award or thereafter.

 

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

 

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

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**ARTICLE 7.**

**STOCK APPRECIATION RIGHTS**

 

7.1*                                 Grantof Stock Appreciation Rights.*

 

(a)                                  TheCommittee is authorized to grant Stock Appreciation Rights to EligibleIndividuals from time to time, in its sole discretion, on such terms andconditions as it may determine consistent with the Plan; *provided, however*, that the term of anyStock Appreciation Right shall not be more than ten (10) years from thedate of grant.

 

(b)                                 AStock Appreciation Right shall entitle the Participant (or other personentitled to exercise the Stock Appreciation Right pursuant to the Plan) toexercise all or a specified portion of the Stock Appreciation Right (to theextent then exercisable pursuant to its terms) and to receive from the

 

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Company anamount determined by multiplying the difference obtained by subtracting theexercise price per share of the Stock Appreciation Right from the Fair MarketValue on the date of exercise of the Stock Appreciation Right by the number ofshares of Common Stock with respect to which the Stock Appreciation Right shallhave been exercised, subject to any limitations the Committee may impose. Theexercise price per share of Stock subject to each Stock Appreciation Rightshall be set by the Committee, but shall not be less than 100% of the FairMarket Value on the date the Stock Appreciation Right is granted.

 

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

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**ARTICLE 8.**

**OTHER TYPES OF AWARDS**

 

8.1*                                 PerformanceShare Awards.*  Any Participantselected by the Committee may be granted one or more Performance Share awardswhich shall be denominated in a number of shares of Stock and which may belinked to any one or more of the Performance Criteria or other specificperformance criteria determined appropriate by the Committee, in each case on aspecified date or dates or over any period or periods determined by theCommittee. In making such determinations, the Committee shall consider (amongsuch other factors as it deems relevant in light of the specific type of award)the contributions, responsibilities and other compensation of the particularParticipant.

 

8.2*                                 PerformanceStock Units.*  Any Participantselected by the Committee may be granted one or more Performance Stock Unitawards which shall be denominated in units of value including dollar value ofshares of Stock and which may be linked to any one or more of the PerformanceCriteria or other specific performance criteria determined appropriate by theCommittee, in each case on a specified date or dates or over any period orperiods determined by the Committee. In making such determinations, the Committeeshall consider (among such other factors as it deems relevant in light of thespecific type of award) the contributions, responsibilities and othercompensation of the particular Participant.

 

8.3*                                 DividendEquivalents.*

 

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

 

(b)                                 Notwithstandingthe foregoing, no Dividend Equivalents shall be payable with respect to Optionsor Stock Appreciation Rights.

 

8.4*                                 StockPayments.*  Any Participant selectedby the Committee may receive Stock Payments in the manner determined from timeto time by the Committee; *provided,*that unless otherwise determined by the Committee such Stock Payments shall bemade in lieu of base salary, bonus, or other cash compensation otherwisepayable to such Participant. The number of shares shall be determined by theCommittee and may be based upon the Performance Criteria or other specificperformance criteria

 

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determined appropriate by theCommittee, determined on the date such Stock Payment is made or on any datethereafter.

 

8.5*                                 DeferredStock.*  Any Participant selected bythe Committee may be granted an award of Deferred Stock in the mannerdetermined from time to time by the Committee. The number of shares of DeferredStock shall be determined by the Committee and may be linked to the PerformanceCriteria or other specific performance criteria determined to be appropriate bythe Committee, in each case on a specified date or dates or over any period orperiods determined by the Committee subject to Section 10.6. Stockunderlying a Deferred Stock award will not be issued until the Deferred Stockaward has vested, pursuant to a vesting schedule or performance criteria set bythe Committee. Unless otherwise provided by the Committee, a Participantawarded Deferred Stock shall have no rights as a Company stockholder withrespect to such Deferred Stock until such time as the Deferred Stock Award hasvested and the Stock underlying the Deferred Stock Award has been issued.

 

8.6*                                 RestrictedStock Units.*  The Committee isauthorized to make Awards of Restricted Stock Units to any Participant selectedby the Committee in such amounts and subject to such terms and conditions asdetermined by the Committee. At the time of grant, the Committee shall specifythe date or dates on which the Restricted Stock Units shall become fully vestedand nonforfeitable, and may specify such conditions to vesting as it deemsappropriate subject to Section 10.6. At the time of grant, the Committeeshall specify the maturity date applicable to each grant of Restricted StockUnits which shall be no earlier than the vesting date or dates of the Award andmay be determined at the election of the grantee. On the maturity date, theCompany shall, subject to Section 10.5(b), transfer to the Participant oneunrestricted, fully transferable share of Stock for each Restricted Stock Unitscheduled to be paid out on such date and not previously forfeited. TheCommittee shall specify the purchase price, if any, to be paid by the granteeto the Company for such shares of Stock.

 

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

 

8.8*                                 PerformanceBonus Awards.*  Any Participantselected by the Committee may be granted one or more Performance-Based Awardsin the form of a cash bonus (a *“PerformanceBonus Award”)* payable upon the attainment of Performance Goals thatare established by the Committee and relate to one or more of the PerformanceCriteria, in each case on a specified date or dates or over any period orperiods determined by the Committee subject to Section 10.6. Any suchPerformance Bonus Award paid to a Covered Employee shall be based uponobjectively determinable bonus formulas established in accordance with Article 9.

 

8.9*                                 Term.*  Except as otherwise provided herein, the termof any Award of Performance Shares, Performance Stock Units, DividendEquivalents, Stock Payments, Deferred Stock, Restricted Stock Units or OtherStock-Based Award shall be set by the Committee in its discretion.

 

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8.10*                           Exerciseor Purchase Price.*  The Committee mayestablish the exercise or purchase price, if any, of any Award of PerformanceShares, Performance Stock Units, Deferred Stock, Stock Payments, RestrictedStock Units or Other Stock-Based Award; *provided,however,* that such price shall not be less than the par value of ashare of Stock on the date of grant, unless otherwise permitted by applicablestate law.

 

8.11*                           ExerciseUpon Termination of Employment or Service.* An Award of Performance Shares, Performance Stock Units, DividendEquivalents, Deferred Stock, Stock Payments, Restricted Stock Units and OtherStock-Based Award shall only be exercisable or payable while the Participant isan Employee or Consultant, as applicable; *provided,however,* that the Committee in its sole and absolute discretion mayprovide that an Award of Performance Shares, Performance Stock Units, DividendEquivalents, Stock Payments, Deferred Stock, Restricted Stock Units or OtherStock-Based Award may be exercised or paid subsequent to a termination ofemployment or service, as applicable, or following a Change in Control of theCompany, or because of the Participant’s retirement, death or Disability, orotherwise; *provided, however,*that any such provision with respect to Performance Shares or Performance StockUnits shall be subject to the requirements of Section 162(m) of theCode that apply to Qualified Performance-Based Compensation.

 

8.12*                           Form ofPayment.*  Payments with respect toany Awards granted under this Article 8 shall be made in cash, in Stock ora combination of both, as determined by the Committee.

** **

**ARTICLE 9.**

**PERFORMANCE-BASED AWARDS**

 

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

 

9.2*                                 Applicability.*  This Article 9 shall apply only to thoseCovered Employees selected by the Committee to receive Performance-BasedAwards. The designation of a Covered Employee as a Participant for aPerformance Period shall not in any manner entitle the Participant to receivean Award for the period. Moreover, designation of a Covered Employee as aParticipant for a particular Performance Period shall not require designationof such Covered Employee as a Participant in any subsequent Performance Periodand designation of one Covered Employee as a Participant shall not requiredesignation of any other Covered Employees as a Participant in such period orin any other period.

 

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

 

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Performance Period, and (d) specifythe relationship between Performance Criteria and the Performance Goals and theamounts of such Awards, as applicable, to be earned by each Covered Employeefor such Performance Period. Following the completion of each PerformancePeriod, the Committee shall certify in writing whether the applicablePerformance Goals have been achieved for such Performance Period. Indetermining the amount earned by a Covered Employee, the Committee shall havethe right to reduce or eliminate (but not to increase) the amount payable at agiven level of performance to take into account additional factors that theCommittee may deem relevant to the assessment of individual or corporateperformance for the Performance Period.

 

9.4*                                 Paymentof Performance-Based Awards.*  Unlessotherwise provided in the applicable Award Agreement, a Participant must beemployed by the Company or a Subsidiary on the day a Performance-Based Awardfor such Performance Period is paid to the Participant. Furthermore, aParticipant shall be eligible to receive payment pursuant to aPerformance-Based Award for a Performance Period only if the Performance Goalsfor such period are achieved.

 

9.5*                                 AdditionalLimitations.*  Notwithstanding anyother provision of the Plan, any Award which is granted to a Covered Employeeand is intended to constitute Qualified Performance-Based Compensation shall besubject to any additional limitations set forth in Section 162(m) ofthe Code (including any amendment to Section 162(m) of the Code) orany regulations or rulings issued thereunder that are requirements forqualification as qualified performance-based compensation as described in Section 162(m)(4)(C) ofthe Code, and the Plan shall be deemed amended to the extent necessary to conformto such requirements.

** **

**ARTICLE 10.**

**PROVISIONS APPLICABLE TO AWARDS**

 

10.1*                           Stand-Aloneand Tandem Awards.*  Awards grantedpursuant to the Plan may, in the discretion of the Committee, be granted eitheralone, in addition to, or in tandem with, any other Award granted pursuant tothe Plan. Awards granted in addition to or in tandem with other Awards may begranted either at the same time as or at a different time from the grant ofsuch other Awards.

 

10.2*                           AwardAgreement.*  Awards under the Planshall be evidenced by Award Agreements that set forth the terms, conditions andlimitations for each Award which may include the term of an Award, theprovisions applicable in the event the Participant’s employment or serviceterminates, and the Company’s authority to unilaterally or bilaterally amend,modify, suspend, cancel or rescind an Award.

 

10.3*                           Limitson Transfer.*  No right or interest ofa Participant in any Award may be pledged, encumbered, or hypothecated to or infavor of any party other than the Company or a Subsidiary, or shall be subjectto any lien, obligation, or liability of such Participant to any other partyother than the Company or a Subsidiary. Except as otherwise provided by theCommittee, no Award shall be assigned, transferred, or otherwise disposed of bya Participant other than by will or the laws of descent and distribution. TheCommittee by express provision in the Award or an amendment thereto may permitan Award (other than an Incentive Stock Option) to be transferred to, exercisedby and paid to certain persons or entities related to the Participant,including but not limited to members of the Participant’s family, charitableinstitutions, or trusts or other entities whose beneficiaries or beneficialowners are members of the Participant’s family and/or charitable institutions,or to such other persons or entities as may be expressly approved by theCommittee, pursuant to such conditions and procedures as the Committee mayestablish. Any permitted transfer shall be subject to the condition that theCommittee receive evidence satisfactory to it that the

 

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

 

10.4*                           Beneficiaries.*  Notwithstanding Section 10.3, aParticipant may, in the manner determined by the Committee, designate abeneficiary to exercise the rights of the Participant and to receive anydistribution with respect to any Award upon the Participant’s death. Abeneficiary, legal guardian, legal representative, or other person claiming anyrights pursuant to the Plan is subject to all terms and conditions of the Planand any Award Agreement applicable to the Participant, except to the extent thePlan and Award Agreement otherwise provide, and to any additional restrictionsdeemed necessary or appropriate by the Committee. If the Participant is marriedand resides in a community property state, a designation of a person other thanthe Participant’s spouse as his or her beneficiary with respect to more than50% of the Participant’s interest in the Award shall not be effective withoutthe prior written consent of the Participant’s spouse. If no beneficiary hasbeen designated or survives the Participant, payment shall be made to theperson entitled thereto pursuant to the Participant’s will or the laws ofdescent and distribution. Subject to the foregoing, a beneficiary designationmay be changed or revoked by a Participant at any time provided the change orrevocation is filed with the Committee.

 

10.5*                           StockCertificates; Book Entry Procedures.*

 

(a)                                  Notwithstandinganything herein to the contrary, the Company shall not be required to issue ordeliver any certificates evidencing shares of Stock pursuant to the exercise ofany Award, unless and until the Board has determined, with advice of counsel,that the issuance and delivery of such certificates is in compliance with allapplicable laws, regulations of governmental authorities and, if applicable,the requirements of any exchange on which the shares of Stock are listed ortraded. All Stock certificates delivered pursuant to the Plan are subject toany stop-transfer orders and other restrictions as the Committee deemsnecessary or advisable to comply with federal, state, or foreign jurisdiction,securities or other laws, rules and regulations and the rules of anynational securities exchange or automated quotation system on which the Stockis listed, quoted, or traded. The Committee may place legends on any Stockcertificate to reference restrictions applicable to the Stock. In addition tothe terms and conditions provided herein, the Board may require that aParticipant make such reasonable covenants, agreements, and representations asthe Board, in its discretion, deems advisable in order to comply with any suchlaws, regulations, or requirements. The Committee shall have the right torequire any Participant to comply with any timing or other restrictions withrespect to the settlement or exercise of any Award, including a window-periodlimitation, as may be imposed in the discretion of the Committee.

 

(b)                                 Notwithstandingany other provision of the Plan, unless otherwise determined by the Committeeor required by any applicable law, rule or regulation, the Company shallnot deliver to any Participant certificates evidencing shares of Stock issuedin connection with any Award and instead such shares of Stock shall be recordedin the books of the Company (or, as applicable, its transfer agent or stockplan administrator).

 

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

 

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made; *provided, however,* that, notwithstandingthe foregoing, Full Value Awards that result in the issuance of an aggregate ofup to 5% of the shares of Stock available pursuant to Section 3.1(a) maybe granted to any one or more Participants without respect to such minimumvesting provisions.

 

10.7*                           PaperlessAdministration.*  In the event thatthe Company establishes, for itself or using the services of a third party, anautomated system for the documentation, granting or exercise of Awards, such asa system using an internet website or interactive voice response, then thepaperless documentation, granting or exercise of Awards by a Participant may bepermitted through the use of such an automated system.

 

10.8*                           Payment.*  The Committee shall determine the methods bywhich Participants may make payment with respect to any Awards granted underthe Plan, which shall include, without limitation: (i) cash, (ii) promissorynote bearing interest at no less than such rate as shall then preclude theimputation of interest under the Code, (iii) shares of Stock held for suchperiod of time as may be required by the Committee in order to avoid adverseaccounting consequences and having a Fair Market Value on the date of deliveryequal to the aggregate exercise price of the Option or exercised portionthereof, or (iv) other property acceptable to the Committee (includingthrough the delivery of a notice that the Participant has placed a market sellorder with a broker with respect to shares of Stock then issuable upon exerciseof the Option, and that the broker has been directed to pay a sufficientportion of the net proceeds of the sale to the Company in satisfaction of theOption exercise price; *provided*that payment of such proceeds is then made to the Company upon settlement ofsuch sale), and the methods by which shares of Stock shall be delivered ordeemed to be delivered to Participants. Notwithstanding any other provision ofthe Plan to the contrary, no Participant shall be permitted to make payment onany Award granted under the Plan with a loan or other extension of credit fromthe Company.

** **

**ARTICLE 11.**

**CHANGES IN CAPITAL STRUCTURE**

 

11.1*                           Adjustments.*

 

(a)                                  Inthe event of any stock dividend, stock split, combination or exchange ofshares, merger, consolidation, spin-off, recapitalization, distribution ofCompany assets to stockholders (other than normal cash dividends), or any othercorporate event affecting the Stock or the share price of the Stock, theCommittee shall make such proportionate and equitable adjustments, if any, asthe Committee in its discretion deems appropriate to reflect such changes withrespect to (i) the aggregate number and type of shares that may be issuedunder the Plan (including, but not limited to, adjustments of the limitationsin Sections 3.1 and 3.3); (ii) the terms and conditions of anyoutstanding Awards (including, without limitation, any applicable performancetargets or criteria with respect thereto); and/or (iii) the grant orexercise price per share for any outstanding Awards under the Plan. Anyadjustment affecting an Award intended as Qualified Performance-BasedCompensation shall be made consistent with the requirements of Section 162(m) ofthe Code.

 

(b)                                 Inthe event of any transaction or event described in Section 11.1(a) orany unusual or nonrecurring transactions or events affecting the Company, anyaffiliate of the Company, or the financial statements of the Company or anyaffiliate (including without limitation any Change in Control), or of changesin applicable laws, regulations or accounting principles, and whenever theCommittee determines that action is appropriate in order to prevent thedilution or enlargement of the benefits or potential benefits intended to bemade available under the Plan or with respect to any

 

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Award under thePlan, to facilitate such transactions or events or to give effect to suchchanges in laws, regulations or principles, the Committee, in its solediscretion and on such terms and conditions as it deems appropriate, either byamendment of the terms of any outstanding Awards or by action taken prior tothe occurrence of such transaction or event and either automatically or uponthe Participant’s request, is hereby authorized to take any one or more of thefollowing actions:

 

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

 

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

 

(iii)                               Tomake adjustments in the number and type of shares of Stock (or other securitiesor property) subject to outstanding Awards, and in the number and kind ofoutstanding Restricted Stock or Deferred Stock and/or in the terms andconditions of (including the grant or exercise price), and the criteriaincluded in, outstanding options, rights and awards and options, rights andawards which may be granted in the future;

 

(iv)                              Toprovide that such Award shall be exercisable or payable or fully vested withrespect to all shares covered thereby, notwithstanding anything to the contraryin the Plan or the applicable Award Agreement; and

 

(v)                                 Toprovide that the Award cannot vest, be exercised or become payable after suchevent.

 

11.2*                           Impactof a Change in Control.*  Subject toany applicable requirements of Section 409A of the Code, upon or inanticipation of, a Change in Control, the Committee, in its sole and absolutediscretion, may (a) cause any and all Awards outstanding hereunder tobecome fully exercisable, (b) cause all forfeiture conditions to lapse andto terminate at a specific time in the future, including but not limited to thedate of such Change in Control, (c) give each Participant the right toexercise such Awards during a period of time as the Committee, in its sole andabsolute discretion, shall determine, and/or (d) cause any and all Awardsoutstanding hereunder to terminate at a specific time in the future, includingbut not limited to the date of such Change in Control. In the event that theterms of any agreement between the Company or any Company Subsidiary oraffiliate and a Participant contains provisions that conflict with and are morerestrictive than the provisions of this Section 11.2, this Section 11.2shall prevail and control and the more restrictive terms of such agreement (andonly such terms) shall be of no force or effect.

 

11.3*                           OutstandingAwards—Certain Mergers.*  Subject toany required action by the stockholders of the Company, in the event that theCompany shall be the surviving corporation in any merger or consolidation(except a merger or consolidation as a result of which the holders of shares ofStock receive securities of another corporation), each Award outstanding on thedate of such merger or consolidation

 

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

 

11.4*                           OutstandingAwards—Other Changes.*  In the eventof any other change in the capitalization of the Company or corporate changeother than those specifically referred to in this Article 11, theCommittee may, in its sole and absolute discretion, make such adjustments inthe number and kind of shares or other securities subject to Awards outstandingon the date on which such change occurs and in the per share grant or exerciseprice of each Award as the Committee may consider appropriate to preventdilution or enlargement of rights hereunder.

 

11.5*                           No OtherRights.*  Except as expressly providedin the Plan, no Participant shall have any rights by reason of any subdivisionor consolidation of shares of stock of any class, the payment of any dividend,any increase or decrease in the number of shares of stock of any class or anydissolution, liquidation, merger, or consolidation of the Company or any othercorporation. Except as expressly provided in the Plan or pursuant to action ofthe Committee under the Plan, no issuance by the Company of shares of stock ofany class, or securities convertible into shares of stock of any class, shallaffect, and no adjustment by reason thereof shall be made with respect to, thenumber of shares of Stock subject to an Award or the grant or exercise price ofany Award.

** **

**ARTICLE 12.**

**ADMINISTRATION**

 

12.1*                           Committee.*  The Compensation Committee (or anothercommittee or a subcommittee of the Board assuming the functions of theCommittee under the Plan) shall administer the Plan (except as otherwisepermitted herein) and shall consist solely of two or more Non-EmployeeDirectors appointed by and holding office at the pleasure of the Board, each ofwhom is intended to qualify as both a “non-employee director” as defined by Rule 16b-3of the Exchange Act or any successor rule, an “outside director” for purposesof Section 162(m) of the Code and an “independent director” under therules of the New York Stock Exchange (or other principal securities marketon which shares of Common Stock are traded); *provided,*that any action taken by the Committee shall be valid and effective, whether ornot members of the Committee at the time of such action are later determinednot to have satisfied the requirements for membership set forth in this Section 12.lor otherwise provided in any charter of the Committee. Except as may otherwisebe provided in any charter of the Committee, appointment of Committee membersshall be effective upon acceptance of appointment. Committee members may resignat any time by delivering written notice to the Board. Vacancies in theCommittee may only be filled by the Board. Notwithstanding the foregoing, (a) thefull Board, acting by a majority of its members in office, shall conduct thegeneral administration of the Plan with respect to Awards granted toNon-Employee Directors and (b) the Board or Committee may delegate itsauthority hereunder to the extent permitted by Section 12.5.

 

12.2*                           Actionby the Committee.*  Unless otherwiseestablished by the Board or in any charter of the Committee, a majority of theCommittee shall constitute a quorum and the acts of a majority of the memberspresent at any meeting at which a quorum is present, and acts approved inwriting by all members of the Committee in lieu of a meeting, shall be deemedthe acts of the Committee. Each member of the Committee is entitled to, in goodfaith, rely or act upon any report or other information furnished to thatmember by any officer or other employee of the Company or any Subsidiary, theCompany’s independent certified public accountants, or any executivecompensation consultant or other professional retained by the Company to assistin the administration of the Plan

 

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12.3*                           Authorityof Committee.*  Subject to anyspecific designation in the Plan, the Committee has the exclusive power,authority and discretion to:

 

(a)                                  DesignateParticipants to receive Awards;

 

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

 

(c)                                  Determinethe number of Awards to be granted and the number of shares of Stock to whichan Award will relate;

 

(d)                                 Determinethe terms and conditions of any Award granted pursuant to the Plan, including,but not limited to, the exercise price, grant price, or purchase price, anyreload provision, any restrictions or limitations on the Award, any schedulefor lapse of forfeiture restrictions or restrictions on the exercisability ofan Award, and accelerations or waivers thereof, any provisions related tononcompetition and recapture of gain on an Award, based in each case on suchconsiderations as the Committee in its sole discretion determines; *provided, however,* that the Committeeshall not have the authority to accelerate the vesting or waive the forfeitureof any Performance-Based Awards;

 

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

 

(f)                                    Prescribethe form of each Award Agreement, which need not be identical for eachParticipant;

 

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

 

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

 

(i)                                     Interpretthe terms of, and any matter arising pursuant to, the Plan or any AwardAgreement; and

 

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

 

12.4*                           DecisionsBinding.*  The Committee’sinterpretation of the Plan, any Awards granted pursuant to the Plan, any AwardAgreement and all decisions and determinations by the Committee with respect tothe Plan are final, binding, and conclusive on all parties.

 

12.5*                           Delegationof Authority.*  To the extentpermitted by applicable law, the Committee may from time to time delegate to acommittee of one or more members of the Board or one or more officers of theCompany the authority to grant or amend Awards to Participants other than (a) seniorexecutives of the Company who are subject to Section 16 of the ExchangeAct, (b) Covered Employees, or (c) officers of the Company (ormembers of the Board) to whom authority to grant or amend Awards has beendelegated hereunder. Any delegation hereunder shall be subject to therestrictions and limits that the Committee specifies at the time of suchdelegation, and the Committee may at any time rescind the authority sodelegated or appoint a new delegatee. At all times, the delegatee appointedunder this Section 12.5 shall serve in such capacity at the pleasure ofthe Committee.

 

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**ARTICLE13.**

**EFFECTIVE AND EXPIRATION DATE**

 

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

 

13.2*                           ExpirationDate.*  The Plan will expire on, andno Incentive Stock Option or other Award may be granted pursuant to the Planafter the tenth anniversary of the Restatement Effective Date. Any Awards thatare outstanding on the tenth anniversary of the Restatement Effective Dateshall remain in force according to the terms of the Plan and the applicableAward Agreement.

** **

**ARTICLE 14.**

**AMENDMENT, MODIFICATION, AND TERMINATION**

 

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

 

14.2*                           AwardsPreviously Granted.*  No termination,amendment, or modification of the Plan shall adversely affect in any materialway any Award previously granted pursuant to the Plan without the prior writtenconsent of the Participant.

** **

**ARTICLE 15.**

**GENERAL PROVISIONS**

 

15.1*                           NoRights to Awards.*  No EligibleIndividual or other person shall have any claim to be granted any Awardpursuant to the Plan, and neither the Company nor the Committee is obligated totreat Eligible Individuals, Participants or any other persons uniformly.

 

15.2*                           No StockholdersRights.*  Except as otherwise providedherein, a Participant shall have none of the rights of a stockholder withrespect to shares of Stock covered by any Award until the Participant becomesthe record owner of such shares of Stock.

 

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

 

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

 

15.4*                           NoRight to Employment or Services.* Nothing in the Plan or any Award Agreement shall interfere with or limitin any way the right of the Company or any Subsidiary to terminate anyParticipant’s employment or services at any time, nor confer upon anyParticipant any right to continue in the employ or service of the Company orany Subsidiary.

 

15.5*                           UnfundedStatus of Awards.*  The Plan isintended to be an “unfunded” plan for incentive compensation. With respect toany payments not yet made to a Participant pursuant to an Award, nothingcontained in the Plan or any Award Agreement shall give the Participant anyrights that are greater than those of a general creditor of the Company or anySubsidiary.

 

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

 

15.7*                           Relationshipto other Benefits.*  No paymentpursuant to the Plan shall be taken into account in determining any benefitspursuant to any pension, retirement, savings, profit sharing, group insurance,welfare or other benefit plan of the Company or any Subsidiary except to theextent otherwise expressly provided in writing in such other plan or anagreement thereunder.

 

15.8*                           Expenses.*  The expenses of administering the Plan shallbe borne by the Company and its Subsidiaries.

 

15.9*                           Titlesand Headings.*  The titles andheadings of the Sections in the Plan are for convenience of reference only and,in the event of any conflict, the text of the Plan, rather than such titles orheadings, shall control.

 

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15.10*                     FractionalShares.*  No fractional shares ofStock shall be issued and the Committee shall determine, in its discretion,whether cash shall be given in lieu of fractional shares or whether suchfractional shares shall be eliminated by rounding up or down as appropriate.

 

15.11*                     LimitationsApplicable to Section 16 Persons.* Notwithstanding any other provision of the Plan, the Plan, and any Awardgranted or awarded to any Participant who is then subject to Section 16 ofthe Exchange Act, shall be subject to any additional limitations set forth inany applicable exemptive rule under Section 16 of the Exchange Act(including any amendment to Rule 16b-3 of the Exchange Act) that arerequirements for the application of such exemptive rule. To the extentpermitted by applicable law, the Plan and Awards granted or awarded hereundershall be deemed amended to the extent necessary to conform to such applicableexemptive rule.

 

15.12*                     Governmentand Other Regulations.*  Theobligation of the Company to make payment of awards in Stock or otherwise shallbe subject to all applicable laws, rules, and regulations, and to suchapprovals by government agencies as may be required. The Company shall be underno obligation to register pursuant to the Securities Act of 1933, as amended,any of the shares of Stock paid pursuant to the Plan. If the shares paidpursuant to the Plan may in certain circumstances be exempt from registrationpursuant to the Securities Act of 1933, as amended, the Company may restrictthe transfer of such shares in such manner as it deems advisable to ensure theavailability of any such exemption.

 

15.13*                     Section 409A.*  To the extent that the Committee determinesthat any Award granted under the Plan is subject to Section 409A of theCode, the Award Agreement evidencing such Award shall incorporate the terms andconditions required by Section 409A of the Code. To the extent applicable,the Plan and Award Agreements shall be interpreted in accordance with Section 409Aof the Code and Department of Treasury regulations and other interpretiveguidance issued thereunder, including without limitation any such regulationsor other guidance that may be issued after the Effective Date. Notwithstandingany provision of the Plan to the contrary, in the event that following theEffective Date the Committee determines that any Award may be subject to Section 409Aof the Code and related Department of Treasury guidance (including suchDepartment of Treasury guidance as may be issued after the Effective Date), theCommittee may adopt such amendments to the Plan and the applicable Award Agreementor adopt other policies and procedures (including amendments, policies andprocedures with retroactive effect), or take any other actions, that theCommittee determines are necessary or appropriate to (a) exempt the Awardfrom Section 409A of the Code and/or preserve the intended tax treatmentof the benefits provided with respect to the Award, or (b) comply with therequirements of Section 409A of the Code and related Department ofTreasury guidance.

 

15.14*                     GoverningLaw.*  The Plan and all Award Agreementsshall be construed in accordance with and governed by the laws of the State ofDelaware.

 

* * * * *

 

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

 

* * * * *

 

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

 

Executed onthis 24th day of April, 2009.

 

 
|   |   | /s/ James W. Baehren |
|--------|--------|----------------------|
|   |   | Corporate Secretary  |

 

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