Document:

Exhibit 4.1

CREDIT AGREEMENT

dated as of June 14, 2006

among

OWENS-ILLINOIS GROUP, INC., as
Company

OWENS-BROCKWAY GLASS CONTAINER
INC.,

ACI OPERATIONS PTY LIMITED, OI EUROPEAN GROUP B.V.,

O-I EUROPE SARL and O-I CANADA
CORP.

as Borrowers

OWENS-ILLINOIS GENERAL INC.,

as Borrowers’ Agent

THE LENDERS LISTED HEREIN,

DEUTSCHE BANK SECURITIES INC. and BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arrangers

BANC OF AMERICA SECURITIES LLC,

as Syndication Agent

DEUTSCHE BANK SECURITIES INC., BANC OF AMERICA SECURITIES LLC,
CITIGROUP GLOBAL MARKETS INC.,

J.P. MORGAN SECURITIES INC. and THE BANK OF NOVA SCOTIA,

As Joint Bookrunners-Revolving Credit Facility

DEUTSCHE BANK SECURITIES INC.,
BANC OF AMERICA SECURITIES LLC and GOLDMAN SACHS CREDIT PARTNERS L.P.,

As Joint Bookrunners-Term Loan
Facility

CITIGROUP GLOBAL MARKETS INC.,
J.P. MORGAN SECURITIES INC. and BNP PARIBAS SECURITIES CORP.,

As Co-Documentation Agents-
Revolving Credit Facility

CITIGROUP GLOBAL MARKETS INC.,
THE BANK OF NOVA SCOTIA and BNP PARIBAS SECURITIES CORP.,

As Co-Documentation Agents- Term
Loan Facility

DEUTSCHE BANK AG, NEW YORK
BRANCH,

as Administrative Agent

and

DEUTSCHE BANK TRUST COMPANY
AMERICAS

as Collateral Agent

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1

  	
   

  	
  DEFINITIONS

  	
   

  	
  3

  
	
   

  	
  1.1 

  	
   

  	
  Certain Defined Terms

  	
   

  	
  3

  
	
   

  	
  1.2

  	
   

  	
  Accounting Terms; Utilization of GAAP for Purposes
  of Calculations Under Agreement; Change in Accounting Principles

  	
   

  	
  56

  
	
   

  	
  1.3

  	
   

  	
  Other Definitional Provisions; Anniversaries

  	
   

  	
  56

  
	
   

  	
  1.4

  	
   

  	
  Dollar Amounts

  	
   

  	
  57

  
	
  SECTION 2

  	
   

  	
  AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES

  	
   

  	
  57

  
	
   

  	
  2.1

  	
   

  	
  Commitments; Making of Loans; Domestic Overdraft
  Account; Offshore Overdraft Accounts

  	
   

  	
  57

  
	
   

  	
  2.2

  	
   

  	
  Interest on the Loans

  	
   

  	
  74

  
	
   

  	
  2.3

  	
   

  	
  Fees

  	
   

  	
  79

  
	
   

  	
  2.4

  	
   

  	
  Repayment and Prepayments; Reductions in Commitments

  	
   

  	
  79

  
	
   

  	
  2.5

  	
   

  	
  Use of Proceeds

  	
   

  	
  90

  
	
   

  	
  2.6

  	
   

  	
  Special Provisions Governing Eurocurrency Rate Loans
  and B/A Discount Rate Loans

  	
   

  	
  91

  
	
   

  	
  2.7

  	
   

  	
  Capital Adequacy Adjustment; Increased Costs; Taxes

  	
   

  	
  96

  
	
   

  	
  2.8

  	
   

  	
  Letters of Credit

  	
   

  	
  102

  
	
   

  	
  2.9

  	
   

  	
  O-I General as Borrowers’ Agent

  	
   

  	
  111

  
	
   

  	
  2.10

  	
   

  	
  Collection Allocation Mechanism

  	
   

  	
  112

  
	
  SECTION 3

  	
   

  	
  CONDITIONS TO CLOSING DATE; LOANS AND LETTERS OF
  CREDIT

  	
   

  	
  113

  
	
   

  	
  3.1

  	
   

  	
  Conditions to Closing Date

  	
   

  	
  113

  
	
   

  	
  3.2

  	
   

  	
  Conditions to All Loans.

  	
   

  	
  118

  
	
   

  	
  3.3

  	
   

  	
  Conditions to Letters of Credit

  	
   

  	
  119

  
	
  SECTION 4

  	
   

  	
  LOAN PARTIES’ REPRESENTATIONS AND WARRANTIES

  	
   

  	
  119

  
	
   

  	
  4.1

  	
   

  	
  Organization, Powers, Good Standing, Business and
  Subsidiaries

  	
   

  	
  119

  
	
   

  	
  4.2

  	
   

  	
  Authorization of Borrowing, Etc.

  	
   

  	
  120

  
	
   

  	
  4.3

  	
   

  	
  Financial Condition

  	
   

  	
  121

  
	
   

  	
  4.4

  	
   

  	
  No Adverse Material Change

  	
   

  	
  121

  
	
   

  	
  4.5

  	
   

  	
  Litigation; Adverse Facts

  	
   

  	
  121

  
	
   

  	
  4.6

  	
   

  	
  Payment of Taxes

  	
   

  	
  122

  

 

 i
 

 

 

	
  

  	
  4.7

  	
   

  	
  Governmental Regulation

  	
   

  	
  122

  
	
   

  	
  4.8

  	
   

  	
  Securities Activities

  	
   

  	
  122

  
	
   

  	
  4.9

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  122

  
	
   

  	
  4.10

  	
   

  	
  Disclosure

  	
   

  	
  123

  
	
   

  	
  4.11

  	
   

  	
  Environmental Protection

  	
   

  	
  123

  
	
   

  	
  4.12

  	
   

  	
  Title to Properties; Liens; Real Property;
  Intellectual Property

  	
   

  	
  123

  
	
   

  	
  4.13

  	
   

  	
  Solvency

  	
   

  	
  124

  
	
   

  	
  4.14

  	
   

  	
  Matters Relating to Collateral

  	
   

  	
  124

  
	
   

  	
  4.15

  	
   

  	
  Credit Agreement Under Indentures

  	
   

  	
  125

  
	
   

  	
  4.16

  	
   

  	
  Professional Market Party Representation

  	
   

  	
  125

  
	
  SECTION 5

  	
   

  	
  COMPANY’S AFFIRMATIVE COVENANTS

  	
   

  	
  125

  
	
   

  	
  5.1

  	
   

  	
  Financial Statements and Other Reports

  	
   

  	
  126

  
	
   

  	
  5.2

  	
   

  	
  Corporate Existence, Etc.

  	
   

  	
  129

  
	
   

  	
  5.3

  	
   

  	
  Payment of Taxes and Claims; Tax Consolidation

  	
   

  	
  129

  
	
   

  	
  5.4

  	
   

  	
  Maintenance of Properties; Insurance; Application of
  Net Insurance/Condemnation Proceeds

  	
   

  	
  130

  
	
   

  	
  5.5

  	
   

  	
  Inspection

  	
   

  	
  131

  
	
   

  	
  5.6

  	
   

  	
  Compliance with Laws, Etc.

  	
   

  	
  131

  
	
   

  	
  5.7

  	
   

  	
  Securities Activities

  	
   

  	
  131

  
	
   

  	
  5.8

  	
   

  	
  Environmental Matters

  	
   

  	
  132

  
	
   

  	
  5.9

  	
   

  	
  Execution of Subsidiary Guaranty and Security
  Agreement After the Closing Date

  	
   

  	
  134

  
	
   

  	
  5.10

  	
   

  	
  Real Estate Matters

  	
   

  	
  135

  
	
  SECTION 6

  	
   

  	
  COMPANY’S NEGATIVE COVENANTS

  	
   

  	
  136

  
	
   

  	
  6.1

  	
   

  	
  Indebtedness

  	
   

  	
  137

  
	
   

  	
  6.2

  	
   

  	
  Liens and Related Matters

  	
   

  	
  138

  
	
   

  	
  6.3

  	
   

  	
  Investments; Acquisitions

  	
   

  	
  140

  
	
   

  	
  6.4

  	
   

  	
  Contingent Obligations

  	
   

  	
  142

  
	
   

  	
  6.5

  	
   

  	
  Restricted Junior Payments

  	
   

  	
  143

  
	
   

  	
  6.6

  	
   

  	
  Financial Covenants

  	
   

  	
  144

  
	
  

  	
  6.7

  	
   

  	
  Restriction on Fundamental Changes; Asset Sales

  	
   

  	
  146

  

 

 ii
 

 

 

	
  

  	
  6.8

  	
   

  	
  Consolidated Capital Expenditures

  	
   

  	
  147

  
	
   

  	
  6.9

  	
   

  	
  Transactions with Shareholders and Affiliates

  	
   

  	
  147

  
	
   

  	
  6.10

  	
   

  	
  Sales and Lease Backs

  	
   

  	
  148

  
	
   

  	
  6.11

  	
   

  	
  Conduct of Business

  	
   

  	
  148

  
	
   

  	
  6.12

  	
   

  	
  Amendments of Documents Relating to Restricted Debt
  Obligations; No Prepayments of Restricted Debt Obligations

  	
   

  	
  149

  
	
  SECTION 7

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  150

  
	
   

  	
  7.1

  	
   

  	
  Failure to Make Payments When Due

  	
   

  	
  150

  
	
   

  	
  7.2

  	
   

  	
  Default in Other Agreements

  	
   

  	
  150

  
	
   

  	
  7.3

  	
   

  	
  Breach of Certain Covenants

  	
   

  	
  151

  
	
   

  	
  7.4

  	
   

  	
  Breach of Warranty

  	
   

  	
  151

  
	
   

  	
  7.5

  	
   

  	
  Other Defaults under Agreement or Loan Documents

  	
   

  	
  151

  
	
   

  	
  7.6

  	
   

  	
  Involuntary Bankruptcy; Appointment of Receiver,
  Etc.

  	
   

  	
  151

  
	
   

  	
  7.7

  	
   

  	
  Voluntary Bankruptcy; Appointment of Receiver, Etc.

  	
   

  	
  151

  
	
   

  	
  7.8

  	
   

  	
  Judgments and Attachments

  	
   

  	
  152

  
	
   

  	
  7.9

  	
   

  	
  Dissolution

  	
   

  	
  152

  
	
   

  	
  7.10

  	
   

  	
  Change of Control

  	
   

  	
  152

  
	
   

  	
  7.11

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  152

  
	
   

  	
  7.12

  	
   

  	
  Invalidity of Guaranties; Failure of Security

  	
   

  	
  153

  
	
   

  	
  7.13

  	
   

  	
  Activities of Holdings; OI General FTS; Harbor
  Capital Subsidiaries and their respective Subsidiaries

  	
   

  	
  153

  
	
  SECTION 8

  	
   

  	
  AGENTS

  	
   

  	
  155

  
	
   

  	
  8.1

  	
   

  	
  Appointments

  	
   

  	
  155

  
	
   

  	
  8.2

  	
   

  	
  Powers; General Immunity

  	
   

  	
  155

  
	
   

  	
  8.3

  	
   

  	
  Representations and Warranties; No Responsibility
  for Appraisal of Creditworthiness

  	
   

  	
  157

  
	
   

  	
  8.4

  	
   

  	
  Right to Indemnity

  	
   

  	
  157

  
	
   

  	
  8.5

  	
   

  	
  Registered Persons Treated as Owners

  	
   

  	
  158

  
	
   

  	
  8.6

  	
   

  	
  Successor Agents and Domestic Overdraft Account
  Provider

  	
   

  	
  158

  
	
   

  	
  8.7

  	
   

  	
  Intercreditor Agreements, Subsidiary Guaranty and
  Collateral Documents

  	
   

  	
  159

  
	
   

  	
  8.8

  	
   

  	
  Quebec Security

  	
   

  	
  160

  

 

 iii
 

 

 

	
  SECTION 9

  	
   

  	
  COMPANY GUARANTY

  	
   

  	
  161

  
	
   

  	
  9.1

  	
   

  	
  Guaranty

  	
   

  	
  161

  
	
   

  	
  9.2

  	
   

  	
  Waivers

  	
   

  	
  162

  
	
   

  	
  9.3

  	
   

  	
  Payment

  	
   

  	
  163

  
	
   

  	
  9.4

  	
   

  	
  Waiver of Subrogation, Etc.

  	
   

  	
  164

  
	
   

  	
  9.5

  	
   

  	
  Termination

  	
   

  	
  165

  
	
   

  	
  9.6

  	
   

  	
  Security

  	
   

  	
  165

  
	
  SECTION 10

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  165

  
	
   

  	
  10.1

  	
   

  	
  Representation of Lenders

  	
   

  	
  165

  
	
   

  	
  10.2

  	
   

  	
  Assignments and Participations in Loans, Notes and
  Letters of Credit

  	
   

  	
  166

  
	
   

  	
  10.3

  	
   

  	
  Expenses

  	
   

  	
  169

  
	
   

  	
  10.4

  	
   

  	
  Indemnity

  	
   

  	
  170

  
	
   

  	
  10.5

  	
   

  	
  Set Off

  	
   

  	
  170

  
	
   

  	
  10.6

  	
   

  	
  Ratable Sharing

  	
   

  	
  171

  
	
   

  	
  10.7

  	
   

  	
  Amendments and Waivers

  	
   

  	
  172

  
	
   

  	
  10.8

  	
   

  	
  Independence of Covenants

  	
   

  	
  174

  
	
   

  	
  10.9

  	
   

  	
  Change in Accounting Principles, Fiscal Year or Tax
  Laws

  	
   

  	
  174

  
	
   

  	
  10.10

  	
   

  	
  Notices

  	
   

  	
  175

  
	
   

  	
  10.11

  	
   

  	
  Survival of Warranties and Certain Agreements

  	
   

  	
  175

  
	
   

  	
  10.12

  	
   

  	
  Failure or Indulgence Not Waiver; Remedies
  Cumulative

  	
   

  	
  176

  
	
   

  	
  10.13

  	
   

  	
  Severability

  	
   

  	
  176

  
	
   

  	
  10.14

  	
   

  	
  Obligations Several; Independent Nature of Lenders’
  Rights

  	
   

  	
  176

  
	
   

  	
  10.15

  	
   

  	
  Headings

  	
   

  	
  176

  
	
   

  	
  10.16

  	
   

  	
  Applicable Law

  	
   

  	
  176

  
	
   

  	
  10.17

  	
   

  	
  Successors and Assigns

  	
   

  	
  177

  
	
   

  	
  10.18

  	
   

  	
  Consent to Jurisdiction and Service of Process

  	
   

  	
  177

  
	
   

  	
  10.19

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  178

  
	
   

  	
  10.20

  	
   

  	
  Confidentiality

  	
   

  	
  178

  
	
   

  	
  10.21

  	
   

  	
  Judgment Currency

  	
   

  	
  179

  
	
   

  	
  10.22

  	
   

  	
  Limitation on Offshore Borrower Obligations

  	
   

  	
  179

  

 

 iv
 

 

 

	
  

  	
  10.23

  	
   

  	
  Counterparts

  	
   

  	
  179

  
	
   

  	
  10.24

  	
   

  	
  USA Patriot Act

  	
   

  	
  179

  

 

 v
 

 

EXHIBITS

	
  Exhibit I:

  	
   

  	
  Form of Notice of Borrowing

  
	
  Exhibit II:

  	
   

  	
  Form of Notice of Request for Issuance of
  Letter of Credit

  
	
  Exhibit III:

  	
   

  	
  Form of Notice of Conversion/Continuation

  
	
  Exhibit IV-A:

  	
   

  	
  Form of Tranche A Term Loan Note

  
	
  Exhibit IV-B:

  	
   

  	
  Form of Tranche B Term Loan Note

  
	
  Exhibit IV-C:

  	
   

  	
  Form of Tranche C Term Loan Note

  
	
  Exhibit IV-D:

  	
   

  	
  Form of Tranche D Term Loan Note

  
	
  Exhibit V:

  	
   

  	
  Form of Domestic Borrower Revolving Note

  
	
  Exhibit VI:

  	
   

  	
  Form of Offshore Revolving Loan Note

  
	
  Exhibit VII:

  	
   

  	
  Form of Domestic Overdraft Agreement

  
	
  Exhibit VIII:

  	
   

  	
  Form of Offshore Overdraft Agreement

  
	
  Exhibit IX:

  	
   

  	
  Form of Compliance Certificate

  
	
  Exhibit X:

  	
   

  	
  Form of Assignment and Acceptance

  
	
  Exhibit XIII:

  	
   

  	
  Form of Subsidiary Guaranty

  
	
  Exhibit XIV:

  	
   

  	
  Form of Domestic Borrowers’ Guaranty

  
	
  Exhibit XV:

  	
   

  	
  Form of Pledge Agreement

  
	
  Exhibit XVI:

  	
   

  	
  Form of Security Agreement

  
	
  Exhibit XVII:

  	
   

  	
  Form of Intercreditor Agreement

  

 

 vi

 

SCHEDULES

	
  Schedule A:

  	
   

  	
  Commitments and Pro Rata Shares

  
	
  Schedule B:

  	
   

  	
  Existing Liens

  
	
  Schedule C:

  	
   

  	
  Existing Letters of Credit

  
	
  Schedule D:

  	
   

  	
  Foreign Subsidiaries

  
	
  Schedule 1.1A:

  	
   

  	
  Offshore Guarantors as of the Closing Date

  
	
  Schedule 1.1B:

  	
   

  	
  Subsidiary Guarantors

  
	
  Schedule 1.1C:

  	
   

  	
  Calculation of Mandatory Costs

  
	
  Schedule 3.1L:

  	
   

  	
  Real Property Assets

  
	
  Schedule 4.1:

  	
   

  	
  Subsidiaries

  
	
  Schedule 4.12B:

  	
   

  	
  Real Property Assets as of the Closing Date

  
	
  Schedule 6.1:

  	
   

  	
  Existing Indebtedness

  
	
  Schedule 6.3:

  	
   

  	
  Existing Investments

  
	
  Schedule 6.4:

  	
   

  	
  Contingent Obligations

  

 

Execution Version

OWENS-ILLINOIS GROUP, INC.

OWENS-BROCKWAY GLASS CONTAINER INC.

ACI OPERATIONS PTY LIMITED

OI EUROPEAN GROUP B.V.

O-I EUROPE SARL

O-I CANADA CORP.

CREDIT AGREEMENT

DATED AS OF June 14, 2006

This CREDIT AGREEMENT
is dated as of June 14, 2006, and entered into by and among OWENS-ILLINOIS GROUP, INC., a Delaware
corporation (“Company”), OWENS-BROCKWAY GLASS CONTAINER INC., a
Delaware corporation (“Owens-Brockway”),
ACI OPERATIONS PTY LIMITED, ABN 94 004 230 326, a limited liability
company organized under the laws of Australia (“ACI”), OI
EUROPEAN GROUP B.V., a private company with limited liability
organized under the laws of the Netherlands (“OIEG”),
O-I EUROPE SARL, a
Swiss Société à responsabilité limitée
(limited liability corporation) (“O-I Europe”), O-I CANADA CORP., a Nova Scotia company (“O-I Canada”), and OWENS-ILLINOIS
GENERAL INC., a Delaware corporation (“O-I General”), as Borrowers’ Agent (in such capacity “Borrowers’ Agent”), THE LENDERS
LISTED ON THE SIGNATURE PAGES HEREOF (each individually a “Lender” and collectively, “Lenders”),
DEUTSCHE BANK SECURITIES INC. (“DBSI”) and BANC OF AMERICA SECURITIES LLC (“BAS”), as Joint Lead Arrangers (collectively, the “Joint Lead Arrangers”), BAS, as Syndication
Agent (the “Syndication Agent”),
DBSI, BAS, Citigroup Global Markets
Inc. (“CGMI”), J.P. Morgan Securities Inc. (“JPM”) and The Bank of Nova Scotia (“Scotia
Capital”), as
joint bookrunners with respect to the Revolving Loan Commitments (collectively,
the “Joint Bookrunners-Revolving Credit Facility”),
DBSI, BAS and Goldman Sachs Credit Partners L.P. (“GS”),
as joint bookrunners with respect to the Term Loans (collectively, the “Joint Bookrunners-Term Loan Facility” and, together with the
Joint Bookrunners-Revolving Credit Facility, the “Joint
Bookrunners”), CGMI, JPM and BNP Paribas Securities Corp. (“BNPPSC”), as co-documentation agents with respect to the
Revolving Loan Commitments (collectively, the “Co-Documentation
Agents-Revolving Credit Facility”), CGMI, Scotia Capital and BNPPSC, as co-documentation agents with respect to the Term Loans
(collectively, the “Co-Documentation
Agents-Term Loan Facility” and, together
with the Co-Documentation Agents-Revolving Credit Facility, the “Co-Documentation Agents”), DEUTSCHE
BANK AG, NEW YORK BRANCH (“DB”),
as Administrative Agent for Lenders (“Administrative Agent”)
and DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”),
as Collateral Agent for the Lenders (“Collateral Agent”).

RECITALS

WHEREAS, Lenders, at the request
of Company, have agreed to extend certain credit facilities to Borrowers, the
proceeds of which will be used (i) to repay the loans under the Existing
Credit Agreement and pay related fees and expenses, and (ii) to provide
financing for working capital and other general corporate purposes of the
Borrowers and their Subsidiaries;

 

WHEREAS, Owens-Brockway will
secure all of its Obligations hereunder, and under the other Loan Documents and
in respect of Other Lender Guarantied Obligations pursuant to a First Priority
Lien granted to Collateral Agent, on behalf of the Lenders and the holders of
Other Lender Guarantied Obligations, on substantially all of its real, personal
and mixed property, including a pledge of all of the Capital Stock of
substantially all of its Domestic Subsidiaries;

WHEREAS, Company and substantially all of the wholly-owned Domestic
Subsidiaries of Company will guarantee the Obligations of Owens-Brockway
hereunder and under the other Loan Documents and the Other Lender Guarantied
Obligations and secure their guaranties pursuant to a First Priority Lien
granted to Collateral Agent, on behalf of the Lenders and the holders of Other
Lender Guarantied Obligations, on substantially all of their respective real,
personal and mixed property, including a pledge of all of the Capital Stock of
substantially all of their Domestic Subsidiaries (other than O-I General FTS
Inc.) and 65% of the Capital Stock of substantially all of the first-tier
Foreign Subsidiaries owned by Company or such Domestic Subsidiary;

WHEREAS, Company
and substantially all of the wholly-owned Domestic Subsidiaries of Company will
guarantee the Obligations of the Offshore Borrowers and secure their guaranties
pursuant to a First Priority Lien granted to Collateral Agent, on behalf of the
Lenders, on substantially all of their respective real, personal and mixed
property and 35% of the Capital Stock of substantially all of the first-tier
Foreign Subsidiaries owned by Company or any such Domestic Subsidiary not
pledged to secure the Obligations of Owens-Brockway;

WHEREAS, ACI will secure its
Obligations hereunder and under the other Loan Documents pursuant to a First
Priority Lien granted to Collateral Agent, on behalf of the Lenders, on
substantially all of its real, personal and mixed property;

WHEREAS, each Australian
Guarantor, each UK Guarantor, O-I Canada, each Canadian Guarantor, OIEG and
each Dutch Guarantor will guarantee the Obligations of ACI hereunder and under
the other Loan Documents and secure their guaranties pursuant to a First
Priority Lien granted to Collateral Agent, on behalf of the Lenders, on
substantially all of their respective real, personal and mixed property;

WHEREAS, O-I Canada will secure
all of its Obligations hereunder and under the other Loan Documents pursuant to
a First Priority Lien granted to Collateral Agent, on behalf of the Lenders, on
substantially all of its real, personal and mixed property;

WHEREAS, ACI, each Australian
Guarantor, each UK Guarantor, each Canadian Guarantor, OIEG and each Dutch
Guarantor will guarantee the Obligations of O-I Canada hereunder and under the
other Loan Documents and secure their guaranties pursuant to a First Priority
Lien granted to Collateral Agent, on behalf of the Lenders, on substantially
all of their respective real, personal and mixed property;

WHEREAS, OIEG will secure all of
its Obligations hereunder and under the other Loan Documents pursuant to a
First Priority Lien granted to Collateral Agent, on behalf of the Lenders, on
substantially all of its real, personal and mixed property;

 2
 

 

WHEREAS, ACI, each Australian
Guarantor, each UK Guarantor, O-I Canada, each Canadian Guarantor and each
Dutch Guarantor will guarantee the Obligations of OIEG hereunder and under the
other Loan Documents and secure their guaranties pursuant to a First Priority
Lien granted to Collateral Agent, on behalf of the Lenders, on substantially
all of their respective real, personal and mixed property;

WHEREAS, ACI, each Australian
Guarantor, each UK Guarantor, O-I Canada, each Canadian Guarantor, OIEG and
each Dutch Guarantor will guarantee the Obligations of O-I Europe hereunder and
under the other Loan Documents and secure their guaranties pursuant to a First
Priority Lien granted to Collateral Agent, on behalf of the Lenders, on
substantially all of their respective real, personal and mixed property;

NOW, THEREFORE, in consideration
of the premises and the agreements, provisions and covenants herein contained,
Company, Borrower’s Agent, Borrowers, Lenders, Arrangers and Agents hereby
agree as follows:

SECTION 1

DEFINITIONS

1.1          Certain
Defined Terms

The following terms used in this Agreement shall have
the following meanings:

“ACI” has
the meaning assigned to that term in the introduction to this Agreement.

“Acquired
Indebtedness” means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of Company
or at the time it merges or consolidates with Company or any of its
Subsidiaries or assumed by Company or any of its Subsidiaries in connection
with the acquisition of assets from such Person, and in each case not incurred
by such Person in connection with, or in anticipation or contemplation of, such
Person becoming a Subsidiary of Company or such acquisition, merger or
consolidation.

“Acquisition”
has the meaning assigned such term in subsection 6.3.

“Additional Mortgage”
has the meaning set forth in subsection 5.10(i).

“Additional Mortgaged
Property” has the meaning set forth in subsection 5.10.

“Additional Term
Loans” has the meaning assigned to that term in subsection 2.1A(vi).

“Administrative Agent”
has the meaning assigned to that term in the introduction to this Agreement and
also includes any successor Administrative Agent appointed pursuant to
subsection 8.6.

“ADollars” and
the sign “A$” mean the lawful currency of
Australia.

 3
 

 

“Affected Lender”
means any Lender affected by any of the events described in
subsection 2.6B or 2.6C.

“Affiliate”, as
applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the
purposes of this definition, “control” (including with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”), as
applied to any Person, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.

“Agents” means
the Administrative Agent and the Syndication Agent and, for purposes of  Section 8,
Section 9, the Collateral Documents and the Intercreditor Agreement only,
Collateral Agent.

“Agreement”
means this Credit Agreement dated as of June 14, 2006, as it may be
amended, supplemented or otherwise modified from time to time.

“Aggregate Amounts Due”
has the meaning assigned to that term in subsection 10.6.

“Applicable Base
Rate Margin” means, (i) for any Tranche B Term Loan or Tranche
D Term Loan, 0.750% per annum, provided, that, the Applicable
Base Rate Margin for the Tranche B Term Loans and Tranche D Term Loans shall be
0.500% per annum at any time when (a) Owens-Brockway’s senior secured debt
ratings are BB- or higher from S&P and Ba3 or higher from Moody’s or (b) the
Applicable Leverage Ratio is less than 3.50:1, and (ii) for any Tranche A
Term Loan, Tranche C Term Loan, Revolving Loan or Offshore Revolving Loan, as
at any date of determination, a rate per annum equal to the percentage set
forth below opposite the Applicable Leverage Ratio in effect as of such date of
determination, any change in the Applicable Base Rate Margin to be effective on
the date of any corresponding change in the Applicable Leverage Ratio:

	
  Applicable Leverage Ratio

  	
   

  	
  Applicable Base Rate Margin

  	
   

  
	
  Less than 2.50:1

  	
   

  	
  0.125

  	
  %

  
	
  2.50:1 or greater
  but less than 3.00:1

  	
   

  	
  0.250

  	
  %

  
	
  3.00:1 or
  greater but less than 3.50:1

  	
   

  	
  0.500

  	
  %

  
	
  3.50:1 or
  greater but less than 4.25:1

  	
   

  	
  0.750

  	
  %

  
	
  Greater than or equal
  to 4.25:1

  	
   

  	
  1.000

  	
  %

  

 

 4
 

 

provided,
that, the Applicable Base Rate Margin for Tranche A Term Loans, Tranche
C Term Loans, Revolving Loans and Offshore Revolving Loan that would otherwise
be applicable as set forth above shall be reduced by 0.250% per annum upon the
achievement by Owens-Brockway of senior secured debt ratings of BB- or higher
from S&P and Ba3 or higher from Moody’s.

“Applicable  Commitment Fee Percentage” means, as at any date of
determination, a rate per annum equal to the percentage set forth below
opposite the Applicable Leverage Ratio in effect as of such date of
determination, any change in the Applicable Commitment Fee Percentage to be
effective on the date of any corresponding change in the Applicable Leverage
Ratio:

	
  Applicable Leverage Ratio

  	
   

  	
  Applicable Commitment Fee Percentage

  	
   

  
	
  Less than 2.50:1

  	
   

  	
  0.20

  	
  %

  
	
  2.50:1 or
  greater but less than 3.00:1

  	
   

  	
  0.25

  	
  %

  
	
  3.00:1 or
  greater but less than 3.50:1

  	
   

  	
  0.30

  	
  %

  
	
  3.50:1 or
  greater but less than 4.25:1

  	
   

  	
  0.40

  	
  %

  
	
  Greater than 4.25:1

  	
   

  	
  0.50

  	
  %

  

 

“Applicable Eurocurrency
Margin” means, (i) for any Tranche B Term Loan or Tranche D Term
Loan, 1.750% per annum, provided, that, the Applicable
Eurocurrency Margin for the Tranche B Term Loans and Tranche D Term Loans shall
be 1.500% per annum at any time when (a) Owens-Brockway’s senior secured
debt ratings are BB- or higher from S&P and Ba3 or higher from Moody’s or (b) the
Applicable Leverage Ratio is less than 3.50:1,; and (ii) for any Tranche A
Term Loan, Tranche C Term Loan, Revolving Loan or Offshore Revolving Loan, as
at any date of determination, a rate per annum equal to the percentage set
forth below opposite the Applicable Leverage Ratio in effect as of such date of
determination, any change in the Applicable Eurocurrency Margin to be effective
on the date of any corresponding change in the Applicable Leverage Ratio:

 5
 

 

 

	
  Applicable Leverage Ratio

  	
   

  	
  Applicable Eurocurrency Margin

  	
   

  
	
  Less than 2.50:1

  	
   

  	
  1.125

  	
  %

  
	
  2.50:1 or
  greater but less than 3.00:1

  	
   

  	
  1.250

  	
  %

  
	
  3.00:1 or
  greater but less than 3.50:1

  	
   

  	
  1.500

  	
  %

  
	
  3.50:1 or
  greater but less than 4.25:1

  	
   

  	
  1.750

  	
  %

  
	
  Greater than 4.25:1

  	
   

  	
  2.000

  	
  %

  

 

provided,
that, the Applicable Base Rate Margin for Tranche A Term Loans, Tranche
C Term Loans, Revolving Loans and Offshore Revolving Loan that would otherwise
be applicable as set forth above shall be reduced by 0.250% per annum upon the
achievement by Owens-Brockway of senior secured debt ratings of BB- or higher
from S&P and Ba3 or higher from Moody’s.

“Applicable Leverage Ratio”
means, with respect to any date of determination, the Consolidated Leverage
Ratio set forth in the Effective Pricing Certificate (as defined below) in
respect of the Pricing Period (as defined below) in which such date of
determination occurs; provided that the Applicable Leverage Ratio for the
period from the Closing Date to but excluding the date of commencement of the
first Pricing Period beginning upon the delivery of an Effective Pricing
Certificate for the first full Fiscal Quarter ending after the Closing Date
shall be deemed to be greater than 3.50:1 but less than 4.25:1.  For purposes of this definition, (i) ”Pricing Certificate” means an Officers’ Certificate of
Borrowers’ Agent delivered (a) in the case of any of the first three
Fiscal Quarters (beginning with the Fiscal Quarter ending September 30,
2006) of any Fiscal Year, within 45 days after the end of such Fiscal Quarter, (b) in
the case of the fourth Fiscal Quarter of any Fiscal Year, within 90 days after
the end of such Fiscal Quarter, (c) following the date of consummation of
a sale of equity Securities of Holdings in an offering, or (d) following
any Pro Forma Event, in each case certifying as to the Consolidated Leverage
Ratio, calculated on a Pro Forma Basis, as of the last day of such Fiscal
Quarter or as of the date of consummation of such sale of equity Securities or
Pro Forma Event after giving effect to the application of the proceeds thereof,
as the case may be, and setting forth the calculation of such Consolidated
Leverage Ratio in reasonable detail, which Officers’ Certificate, in the case
of the immediately preceding clauses (a) and (b), may be delivered to
Administrative Agent at any time on or after the date of delivery by Borrowers’
Agent of the Compliance Certificate with respect to the period ending on the
last day of the applicable Fiscal Quarter pursuant to subsection 5.1(iii),
and (ii) ”Pricing Period”
means each period commencing on the second Business Day after the delivery (or
deemed delivery as provided below) to Administrative Agent of a Pricing
Certificate (the “Effective Pricing
Certificate” in respect of such Pricing Period) and ending on the
first Business Day after the next Pricing Certificate is delivered (or deemed
to be delivered as provided below) to Administrative Agent; provided
that, in the event Borrowers’ Agent fails to deliver to Administrative Agent a Pricing
Certificate on or before the 45th day after the end of any of the first three
Fiscal Quarters of any

 6
 

 

Fiscal Year or the 90th day after the end of the
fourth Fiscal Quarter of any Fiscal Year or the 10th Business Day after the occurrence of any Pro
Forma Event (the “Cutoff Date”
with respect to any such Fiscal Quarter), Borrowers’ Agent shall be deemed to
have delivered to Administrative Agent, on the Cutoff Date, a Pricing
Certificate which establishes that the Consolidated Leverage Ratio as of the
last day of such Fiscal Quarter or as of the occurrence of the Pro Forma Event,
as applicable, was greater than 4.25:1.

“Arranger” and “Arrangers” means the Joint Lead Arrangers and the Joint
Bookrunners (as those terms are defined in the introduction to this Agreement).

“Asbestos Reserve”
means the aggregate reserve of Holdings and its Subsidiaries for claims
(including anticipated claims) of persons against Holdings for exposure to
asbestos-containing products and expenses related thereto.

“Asset Sale” means
the sale, transfer or other disposition by Company or any of its Subsidiaries
(including Borrowers) to any Person (other than sales, transfers or other
dispositions (1) to any Loan Party (other than O-I Europe, except as
described in subsection 6.7(x)), (2) by any Loan Party to any
Subsidiary of Company that is not a Loan Party of assets the aggregate value of
which for all such sales, transfers or other dispositions after the Closing
Date less the aggregate value of all sales, transfers or other dispositions
from O-I Europe or any Subsidiary that is not a Loan Party to any Loan Party
after the Closing Date does not exceed $200,000,000, or (3) by a non-Loan
Party to Company or any of its Subsidiaries) in a single transaction or a
related series of transactions of (i) any of the stock of any of Company’s
Subsidiaries (including any Foreign Subsidiary), (ii) substantially all of
the assets of any geographic or other division or line of business of Company
or any of its Subsidiaries (including any Foreign Subsidiary), or (iii) any
other assets (including, without limitation, any assets which do not constitute
substantially all of the assets of any geographic or other division or line of
business but  excluding (a) any assets manufactured,
constructed or otherwise produced or purchased for sale to others in the
ordinary course of business consistent with the past practices of Company and
its Subsidiaries and (b) any accounts receivable sold by Company or any of
its Subsidiaries in connection with Receivables Sale Indebtedness); provided,
that, any sale, transfer or disposition shall not be deemed to be an
Asset Sale unless the value of the assets sold exceeds $10,000,000. Solely for
purposes of subsection 6.7(iv), the issuance of Capital Stock by Company
or any of its Domestic Subsidiaries (other than by Owens-Brockway or with
respect to employee and executive compensation plans and issuances to
qualifying directors and Company or any of its Subsidiaries) shall be deemed an
Asset Sale (except to the extent such issuance, if deemed a disposition or
transfer, would not constitute an Asset Sale under clause (1) above).

“Assignment and Acceptance”
means an Assignment and Acceptance, in substantially the form of Exhibit X
annexed hereto.

“Australian Guarantors”
means Owens-Illinois (Australia) Pty Ltd., ACI
Packaging Services Pty Ltd., Australian Consolidated Industries Pty Ltd., ACI
International Pty Ltd., ACI Finance Pty Ltd., ACI Glass Packaging Penrith Pty
Ltd. and each other Australian Subsidiary that becomes an Offshore
Guarantor pursuant to subsection 5.9B.

 7
 

 

“Australian Overdraft
Account” means an account established by ACI with Australian
Overdraft Account Provider and referenced in an Australian Overdraft Agreement.

“Australian Overdraft
Account Provider” means Westpac Banking Corporation or any successor
Australian Overdraft Account Provider pursuant to subsection 10.2E; provided,
however, that no such Lender shall be a successor Australian Overdraft
Account Provider until ACI and such Lender have executed and delivered an
Australian Overdraft Agreement to Administrative Agent.

“Australian Overdraft
Agreement” means that certain agreement between ACI and Westpac
Banking Corporation, dated on or about June 14, 2006, and any Offshore
Overdraft Agreement between ACI and any successor Australian Overdraft Account
Provider, in substantially the form of Exhibit VIII annexed hereto,
with such modifications thereto as may be approved by Administrative Agent and
any successor Offshore Overdraft Agreement executed and delivered by ACI and
such successor Australian Overdraft Account Provider pursuant to
subsection 10.2E, as any such Offshore Overdraft Agreement may hereafter
be amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof.

“Australian Overdraft
Amount” means, as at any date of determination, the aggregate
principal amount of outstanding overdrafts charged to the Australian Overdraft
Account.

“Australian
Revolving Loan Commitment”
means the commitment of a Lender to make Australian Revolving Loans to ACI pursuant to subsection 2.1C, and “Australian Revolving Loan Commitments” means such commitments of all Lenders in the aggregate.

“Australian
Revolving Loan Exposure” means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender’s Australian Revolving
Loan Commitment, and (ii) after the termination of the Revolving Loan
Commitments, the sum of (a) the aggregate outstanding principal amount of
the Australian Revolving Loans
of that Lender plus (b) in the event that Lender is an Issuing
Lender in respect of a Letter of Credit issued for the account of ACI, the
aggregate Letter of Credit Usage in respect of all Letters of Credit issued by
that Lender for the account of ACI (in each case net of any participation
purchased by other Lenders in such Letters of Credit or any unreimbursed
drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit
issued for the account of ACI or any unreimbursed drawings under any Letters of
Credit issued for the account of ACI plus (d) in the case of
Australian Overdraft Account Provider, the Dollar Equivalent of the Australian
Overdraft Amount (net of any participations therein purchased by other Lenders)
plus (e) the aggregate amount of all participations purchased by
that Lender in the Australian Overdraft Amount.

“Australian Revolving Loan Note”
means any promissory note of ACI, substantially in the form of Exhibit VI
annexed hereto, issued in favor of a Lender pursuant to subsection 2.1G(iv) to
evidence the Australian Revolving
Loans of such Lender, as such promissory note may be amended, supplemented or
otherwise modified from time to time.

 8

 

“Australian Revolving Loans”
means any Loans made by Lenders to ACI pursuant to subsection 2.1C.

“Australian Subsidiary”
means any Subsidiary of ACI organized under the laws of the Commonwealth of
Australia or any state or territory thereof.

“B/A Discount
Rate” means:

(a)           with respect to each Interest
Period applicable to B/A Discount Rate Loans advanced by a Lender that is a
Schedule I Bank, the CDOR Rate in effect on the first day of such Interest
Period;

(b)           with
respect to each Interest Period applicable to B/A Discount Rate Loans advanced
by a Lender that is a Schedule II Bank or a Schedule III Bank, the lesser of (i) the
percentage discount rate (expressed to two decimal places and rounded upward,
if necessary, to the nearest 1/100th of
1%) quoted to the Administrative Agent by such Lender as the percentage
discount rate at which such Lender would, in accordance with its normal
practices, at or about 11:00 a.m. (New York time) on such day, be prepared
to purchase bankers’ acceptances accepted by such Lender having a term and face
amount comparable to the Interest Period and amount of such B/A Discount Rate
Loans and (ii) the CDOR Rate plus 0.10% per annum, in either case as in
effect on the first day of such Interest Period; and

(c)           with
respect to each Interest Period applicable to B/A Discount Rate Loans advanced
by a Lender that is not a Schedule I Bank, Schedule II Bank or Schedule III
Bank, the CDOR Rate in effect on the first day of such Interest Period plus
0.10% per annum.

“B/A Discount Rate Loan”
means any Loan in Canadian Dollars bearing interest at a rate determined by
reference to the B/A Discount Rate.

“Bankruptcy Code”
means Title 11 of the United States Code entitled “Bankruptcy” as now and
hereafter in effect, or any successor statute.

“Base Rate”
means (a) with respect to any Obligation denominated in Dollars, at any
time, the higher of (x) the Prime Rate or (y) the rate which is 1/2
of 1% in excess of the Federal Funds Effective Rate, and (b) with respect
to any Obligation denominated in Canadian Dollars, the Canadian Prime Rate.

“Base Rate Loans”
means Loans bearing interest at rates determined by reference to the Base Rate
as provided in subsection 2.2A.

“Borrower” means
(i) with respect to the Tranche B Term Loans, Revolving Loans and Letters
of Credit issued for the account of Owens-Brockway
and the Domestic Overdraft Account, Owens-Brockway,
(ii) with respect to the Tranche A Term Loans, Australian Revolving Loans,
Letters of Credit issued for the account of ACI and the Australian Overdraft
Account, ACI, (iii) with respect to the Tranche C Term Loans, Canadian
Revolving Loans and the Canadian Overdraft Account, O-I Canada, (iv) with
respect to the Tranche D Term Loans, Dutch Revolving Loans, Letters of Credit
issued for the account of OIEG and the Dutch Overdraft Account, OIEG, and (v) with
respect to the Swiss Revolving Loans, Letters of Credit

 9
 

 

issued for the account of O-I Europe and the Swiss
Overdraft Account, O-I Europe and “Borrowers”
means any combination thereof, collectively.

“Borrowers’ Agent”
means Owens-Illinois General Inc. pursuant to the appointment made by Borrowers
in subsection 2.9.

“BSN”
shall mean O-I
Manufacturing France (formerly
named BSN Glasspack, S.A.), a French societe anonyme.

“BSN Acquisition”
means OI Europe SAS’s acquisition of the Capital Stock of BSN and certain other
assets on June 21, 2004.

“BSN Senior
Subordinated Notes” means
the 9 1⁄4% Senior Subordinated Notes Due 2009, issued by BSN Glasspack Obligation
S.A. pursuant to the Indenture dated as of August 5, 2003 between
BSN Glasspack Obligation S.A., as Issuer and The Bank of New York, as Trustee,
as such Indenture may have been and may hereafter be amended, supplemented or
otherwise modified from time to time.

“Business Day”
means (i) for all purposes other than as covered by clause (ii) or (iii) below,
any day excluding Saturday, Sunday and any day which is a legal holiday under
the laws of the States of New York or Ohio or is a day on which banking
institutions located in such states are authorized or required by law or other
governmental action to close, (ii) with respect to all notices,
determinations, fundings and payments in connection with a Loan denominated in
Dollars, any day which is a Business Day described in clause (i) and which
is also a day for trading by and between banks in Dollar deposits in the
European interbank market, (iii) as it relates to any payment,
determination, funding or notice to be made or given in connection with any
Offshore Currency Loan, any day (A) on which dealings in deposits in the
applicable currency are carried out in the London interbank market, (B) on
which commercial banks and foreign exchange markets are open for business in
London, New York City, and/or the principal financial center for such Offshore
Currency, and (C) with respect to any such payment, determination or
funding to be made in connection with any Offshore Currency Loan denominated in
Euros, on which the Trans-European Automated Real-time Gross Settlement Express
Transfer (TARGET) System or any successor settlement system is open; provided,
however that when used in connection with an Obligation in Canadian
Dollars, the term “Business Day” shall also exclude any day on which banks are
not open for business in Toronto and when used in connection with an Obligation
in Australian Dollars, the term “Business Day” shall also exclude any day on
which banks are not open for business in Sydney, and (iv) with respect to
any borrowings, disbursements, payments, calculations, interest rates and
Interest Periods pertaining to any Letter of Credit issued in a currency other
than Dollars or an Offshore Currency, a day on which the Issuing Lender is open
for business in the location in which such Letter of Credit is issued.

“Calculation Date”
means (i) the last day of each calendar month (or, if such day is not a
Business Day, the next preceding Business Day), (ii) at any time after and
so long as (a) the Total Utilization of Australian Revolving Loan
Commitments or the Total Utilization of Canadian Revolving Loan Commitments or
the Total Utilization of Dutch Revolving Loan Commitments or the Total
Utilization of Swiss Revolving Loan Commitments exceeds 90% of

 10
 

 

the Offshore Sublimit for the applicable Offshore
Borrower or (b) the Total Utilization of Revolving Loan Commitments
exceeds 90% of the aggregate Revolving Loan Commitment, the fifteenth and last
day of each calendar month (or, if such day is not a Business Day, the next
preceding Business Day), (iii) the CAM Exchange Date, and (iv) such
other dates as Administrative Agent or any Borrower may reasonably require from
time to time, including any date on which Offshore Revolving Loans are made to
repay, or participations are purchased in, any Offshore Overdraft Amount under Section 2.1D,
any date on which a Borrower reimburses an Issuing Lender or Revolving Loans
are made to reimburse an Issuing Lender in Dollars for a draw on a Letter of
Credit denominated in a currency other than an Offshore Currency under Section 2.8D
and any date on which participations are purchased in Dollars in an
unreimbursed draw on a Letter of Credit denominated in a currency other than an
Offshore Currency under Section 2.8E.

“CAM”
means the mechanism for the allocation and exchange of interests in the
Specified Obligations and collections thereunder established under
subsection 2.10.

“CAM Exchange”
means the exchange of the Lenders’ interests provided for in
subsection 2.10.

“CAM Exchange Date”
means the date on which (a) any Event of Default  referred to in subsection 7.6 or 7.7
shall occur in respect of Company, Owens-Brockway, ACI, O-I Canada, O-I Europe
or OIEG or (b) an acceleration of the maturity of any of the Loans
pursuant to Section 7 shall occur.

“CAM Percentage”
means, as to each Lender, a fraction, expressed as a decimal, of which (a) the
numerator shall be the aggregate Dollar Equivalent (determined on the basis of
Spot Rates prevailing on the CAM Exchange Date) of the Specified Obligations
owed to such Lender and such Lender’s participations in the Domestic Overdraft
Amount, the Offshore Overdraft Amounts and unreimbursed LC Disbursements
immediately prior to the CAM Exchange, as adjusted after the CAM Exchange Date
pursuant to subsection 2.10D and (b) the denominator shall be aggregate
Dollar Equivalent (as so determined) of the Specified Obligations owed to all
the Lenders, the Domestic Overdraft Amount, the Offshore Overdraft Amounts and
the aggregate amount of unreimbursed LC Disbursements immediately prior to such
CAM Exchange, as adjusted after the CAM Exchange Date pursuant to subsection
2.10D.

“Canadian
Dollars” means the
lawful currency of Canada.

“Canadian Guarantors”
means any Canadian Subsidiary that becomes an Offshore Guarantor pursuant to
subsection 5.9B.

“Canadian Overdraft Account”
means the account established by O-I Canada 
with Canadian Overdraft Account Provider and referenced in the Canadian
Overdraft Agreement.

“Canadian Overdraft Account
Provider” means The Bank of Nova Scotia or any successor Canadian
Overdraft Account Provider pursuant to subsection 10.2E; provided, however,
that no such Lender shall be a successor Canadian Overdraft Account Provider
until O-

 11
 

 

I Canada and such Lender have executed and delivered a
Canadian Overdraft Agreement to Administrative Agent.

“Canadian Overdraft
Agreement” means that certain agreement between O-I Canada and The
Bank of Nova Scotia dated on or about June 14, 2006, and/or any Offshore
Overdraft Agreement between O-I Canada and any successor Canadian Overdraft
Account Provider, in substantially the form of Exhibit VIII annexed
hereto, with such modifications thereto as may be approved by Administrative
Agent and any successor Offshore Overdraft Agreement executed and delivered by
O-I Canada and such successor Canadian Overdraft Account Provider pursuant to
subsection 10.2E, as any such Offshore Overdraft Agreement may hereafter
be amended, amended and restated, supplemented or otherwise modified from time
to time.

“Canadian Overdraft Amount”
means, as at any date of determination, the aggregate principal amount of
outstanding overdrafts charged to the Canadian Overdraft Account.

“Canadian Prime Rate”
means, for each day in any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall at all times
for such day be equal to the higher of (a) the annual rate of interest
announced publicly by the Administrative Agent and in effect as its prime rate
at its principal office in Toronto, Ontario on such day for determining
interest rates on Canadian Dollar-denominated commercial loans made in Canada
and (b) 0.75% per annum above the average of the rates per annum for
Canadian Dollar bankers’ acceptances having a term of 30 days that appears on
the display referred to as the “CDOR Page” (or any display substituted
therefor) of Reuter Monitor Money Rates Service as of 11:00 a.m. (New York
time) on the date of determination, as reported by the Administrative Agent
(and if such screen is not available, any successor or similar service as may
be selected by the Administrative Agent).

“Canadian
Revolving Loan Commitment” means the commitment of a Lender to make
Canadian Revolving Loans to O-I Canada pursuant to subsection 2.1C, and “Canadian Revolving Loan Commitments” means such commitments
of all Lenders in the aggregate.

“Canadian Revolving
Loan Exposure” means, with respect to any Lender as of any date of
determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender’s Canadian Revolving Loan Commitment, and (ii) after
the termination of the Revolving Loan Commitments, the sum of (a) the
aggregate outstanding principal amount of the Canadian Revolving Loans of that
Lender plus (b) in the case of Canadian Overdraft Account Provider,
the Dollar Equivalent of the Canadian Overdraft Amount (net of any participations
therein purchased by other Lenders) plus (c) the aggregate amount
of all participations purchased by that Lender in the Canadian Overdraft
Amount.

“Canadian Revolving Loan
Note” means any promissory note of O-I Canada, substantially in the
form of Exhibit VI annexed hereto, issued in favor of a Lender
pursuant to subsection 2.1G(iv) to evidence the Canadian Revolving
Loans of such Lender, as such promissory note may be amended, supplemented or
otherwise modified from time to time.

 12
 

 

“Canadian Revolving Loans”
means the Loans made by Lenders to O-I Canada pursuant to subsection 2.1C.

“Canadian Subsidiary”
means any Subsidiary of O-I Canada organized under the federal laws of Canada
or any province or territory thereof.

“Capital Lease”,
as applied to any Person, means any lease of any property (whether real,
personal or mixed) by that Person as lessee which, in conformity with GAAP
(subject to subsection 1.2 hereof), is accounted for as a capital lease on
the balance sheet of that Person.

“Capital Stock”
means the capital stock or other equity interests of a Person.

“Cash” means
money, currency or a credit balance in a Deposit Account.

“Cash Equivalents”
means (i) marketable direct obligations issued or unconditionally
guarantied by the United States Government or issued by any agency thereof and (a) backed
by the full faith and credit of the United States of America or (b) having
a rating of at least AAA from S&P or at least Aaa from Moody’s, in each
case maturing within one year from the date of acquisition thereof; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having the highest rating obtainable from either S&P or
Moody’s; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates
of deposit or bankers’ acceptances maturing within one year from the date of
acquisition thereof issued by any Lender or any commercial bank organized under
the laws of the United States of America or any state thereof or the District
of Columbia having combined capital and surplus of not less than $250,000,000; (v) Eurodollar
time deposits having a maturity of less than one year purchased directly from
any Lender or any Affiliate of any Lender (whether such deposit is with such
Lender or Affiliate or any other Lender); (vi) repurchase agreements and
reverse repurchase agreements with any Lender or any Affiliate of any Lender
relating to marketable direct obligations issued or unconditionally guarantied
by the United States Government or issued by any agency thereof and backed by
the full faith and credit of the United States of America, in each case
maturing within one year from the date of acquisition thereof; and (vii) shares
of any money market mutual fund that has a rating of at least AAAm from S&P
or at least Aaa from Moody’s.

“CDOR Rate” means, on any day, the per annum rate of interest which is
the rate determined as being the arithmetic average of the annual yield rates
applicable to Canadian Dollar bankers’ acceptances having a comparable term to
the Interest Period requested for the B/A Discount Rate Loans in question
displayed and identified as such on the display referred to as the “CDOR Page”
(or any display substituted therefor) of Reuters Monitor Money Rates Service as
at approximately 11:00 a.m. (New York time) on such day, or if such day is
not a Business Day, then on the immediately preceding Business Day (as adjusted
by Administrative Agent in good faith after 11:00 a.m. (New York time) to
reflect any error in a posted rate of interest or in the posted average annual
rate); provided, however, if such a rate does not appear

 13
 

 

on such CDOR Page, then the CDOR Rate, on any day,
shall be the discount rate quoted by Administrative Agent (determined as of
11:00 a.m. (New York time)) on such day at which Administrative Agent
would notionally purchase bankers’ acceptances accepted by it having a
comparable term to the Interest Period requested for the B/A Discount Rate
Loans in question on such day, or if such day is not a Business Day, then on
the immediately preceding Business Day.

“Change of Control”
means such time as a “person” or “group” (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) of more
than 40% of the total voting power of the then outstanding Voting Stock. For
purposes of this definition of “Change of Control”, the term “Voting Stock” means Capital Stock of any class or kind
ordinarily (without regard to the occurrence of any contingency) having the
power to vote for the election of directors of Holdings or Company.

“Class”, as
applied to the Lenders, means each of the following five classes of
Lenders:  (i) Revolving Lenders, (ii) Lenders
having Tranche A Term Loan Exposure, (iii) Lenders having Tranche B Term
Loan Exposure, (iv) Lenders having Tranche C Term Loan Exposure and (v) Lenders
having Tranche D Term Loan Exposure.

“Closing Date” means the date on or before June 16,
2006 on which all of the conditions set forth in subsections 3.1 and 3.2 are
satisfied or waived and the Term Loans are made hereunder.

“Closing Date
Mortgage” has the meaning set forth in subsection 3.1M(i).

“Closing Date
Mortgaged Property” has the meaning set forth in subsection 3.1M(i).

“Co-Documentation Agents”
has the meaning assigned to that term in the introduction to this Agreement.

“Collateral”
means, collectively, all of the real, personal and mixed property (including
Capital Stock) in which Liens are purported to be granted pursuant to the
Collateral Documents.

“Collateral
Agent” means Deutsche
Bank Trust Company Americas acting in the capacity of collateral agent on
behalf of the Lenders, the trustees in respect of any outstanding Existing
Holdings Senior Notes, the trustees in respect of the Existing Owens-Brockway
Senior Secured Notes and the holders of Other Lender Guarantied Obligations and
the other persons (other than Company or its Subsidiaries) who in each case
have executed acknowledgements to the Intercreditor Agreement acknowledged (to
the extent necessary) by Borrowers’ Agent or are otherwise entitled to the
benefit thereof. Collateral Agent has designated Deutsche Bank AG, Sydney
Branch as its sub-agent to act on its behalf in Australia, Deutsche Bank AG London
as its sub-agent to act on its behalf in the UK, Switzerland and the
Netherlands, and may from time to time designate other sub-agents to act on
behalf of Collateral Agent with respect to the Offshore Collateral. The term “Collateral
Agent” shall be deemed to include such sub-agents where appropriate.

 14
 

 

“Collateral
Documents” means the Domestic Collateral Documents and the Offshore
Collateral Documents, collectively.

“Collateral Release
Conditions” means, as of any applicable date of determination, (i) Owens-Brockway
has achieved (and as of such date maintains) Threshold Debt Ratings, (ii) the
indentures governing any secured New Senior Debt, Refinancing Senior Debt, New
Junior Debt, the Existing Owens-Brockway Senior Secured Notes, and the Existing
Holding Senior Notes provide for the release of all liens securing such notes
on the Collateral (other than any such Collateral consisting of Capital Stock)
upon the release of the liens on such Collateral securing the Obligations, and (iii) no
Event of Default is continuing.

“Commercial Letter of
Credit” means any letter of credit or similar instrument issued for
the purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by Borrowers or any of their
Subsidiaries in the ordinary course of business of such Borrower or such
Subsidiary.

“Commitments”
means the Term Loan Commitments, the Revolving Loan Commitments, the Australian
Revolving Loan Commitments, the Canadian Revolving Loan Commitments, the Dutch
Revolving Loan Commitments, and the Swiss Revolving Loan Commitments or any
combination thereof.

“Commodities Agreement”
means any forward commodities contract, commodities option contract,
commodities futures contract, commodities futures option, or similar agreement
or arrangement.

“Common Stock”
means the common stock of a Person.

“Company” has
the meaning assigned to that term in the introduction to this Agreement.

“Company Guaranty”
means the guaranty by Company contained in Section 9 hereof.

“Compliance Certificate”
means a certificate substantially in the form annexed hereto as Exhibit IX
delivered to Lenders by Company pursuant to subsection 5.1(iii).

“Consolidated Adjusted
EBITDA” means, for any period, the remainder of  Consolidated
Net Income adjusted to exclude (without duplication) the effects of (i) Consolidated
Interest Expense, (ii) provisions for taxes based on income, (iii) depreciation
expense, (iv) amortization expense, (v) extraordinary items, (vi) material
non-recurring gains and non-cash charges (excluding, for all purposes other
than the calculation of Consolidated Excess Cash Flow, any such charges related
to claims of persons against Holdings for exposure to asbestos-containing
products and expenses related thereto), (vii) material non-recurring cash
charges (other than any cash charge against any accrual or reserve established
in a prior period for which an adjustment was taken under clause (vi) of
this definition and other than any charges related to claims of persons against
Holdings for exposure to asbestos-containing products and expenses related
thereto) in an amount not to exceed $10,000,000 for any such charge
individually or $20,000,000 in the aggregate for all such charges in any four
Fiscal Quarter

 15
 

 

Period; and (viii) minority share owners’
interests in earnings of subsidiaries, all of the foregoing as determined on a
consolidated basis for Holdings and its Subsidiaries in conformity with GAAP; provided
that  Consolidated Net Income
shall also be adjusted to exclude (ix) for the Fiscal Year ending December 31,
2005, an increase in the Asbestos Reserve in an amount not to exceed
$135,000,000, (x) in each Fiscal Year thereafter, increase in the Asbestos
Reserve in an amount not to exceed 90% of the lesser of (A) the maximum amount
permitted to be excluded in the previous Fiscal Year or (B) the amount by
which the Asbestos Reserve was actually increased in such previous Fiscal Year
as confirmed by Holdings’ form 10-K filing for such Fiscal Year and (xi)
restructuring charges (other than any cash charge against any accrual or
reserve in a prior period for which adjustment was taken under this clause
(xii)) taken on or prior to December 31, 2006 with respect to the BSN
Acquisition in an aggregate amount for all periods not to exceed €42,200,000.

“Consolidated
Capital Expenditures”
means, for any period, the sum of the aggregate of all expenditures (whether
paid in cash or other consideration or accrued as a liability and including
that portion of Capital Leases which is capitalized on the consolidated balance
sheet of Holdings and its Subsidiaries) by Holdings and its Subsidiaries during
that period that, in conformity with GAAP, are included in “additions to
property, plant or equipment” or comparable items reflected in the consolidated
statement of cash flows of Holdings and its Subsidiaries; provided, that,
Consolidated Capital Expenditures shall not include any such expenditures
constituting all or a portion of the purchase price in connection with any
Acquisition. For purposes of this definition, the purchase price of equipment
that is purchased simultaneously with the trade-in of existing equipment or
with insurance proceeds shall be included in Consolidated Capital Expenditures
only to the extent of the gross amount of such purchase price less the credit
granted by the seller of such equipment for the equipment being traded in at
such time or the amount of such proceeds, as the case may be.

“Consolidated Cash Interest
Expense” means, for any period, (i) Consolidated Interest Expense
for such period excluding, however, any interest expense not
payable in Cash (including amortization of discount and amortization of debt
issuance costs), minus (iv) interest income received by Company and
its Subsidiaries in Cash or Cash Equivalents in respect of Investments
permitted hereunder.

“Consolidated Excess Cash
Flow” means, for any period, an amount (if positive) equal to (i) the
sum, without duplication, of the amounts for such period of (a) Consolidated
Adjusted EBITDA and (b) the Consolidated Working Capital Adjustment minus
(ii) the sum, without duplication, of the amounts for such period of (a) all
repayments of Consolidated Total Debt permitted hereunder (excluding (i) repayments
of Revolving Loans except to the extent the Revolving Loan Commitments are
permanently reduced in connection with such repayments, (ii) repayments of
Indebtedness with proceeds of other Indebtedness, and (iii) any other
mandatory prepayment of Indebtedness, to the extent proceeds from the event
giving rise to such prepayment are not included in the calculation of
Consolidated Adjusted EBITDA), (b) Consolidated Capital Expenditures (net
of any proceeds of any related financings with respect to such expenditures), (c) Consolidated
Cash Interest Expense, (d) the provision for current taxes based on income
of Company and its Subsidiaries and payable in cash with respect to such
period, (e) the amount of cash charges for such period for which
adjustment was made under clause (vii) of the definition of Consolidated
Adjusted EBITDA, (f) the amount of

 16
 

 

Holdings Ordinary Course Payments made pursuant to
clause (w) of the definition thereof for such period and (g) the
amount of Holdings Ordinary Course Payments made pursuant to clause (x) of
the definition thereof for such period.

“Consolidated Interest
Expense” means, for any period, without duplication, the sum of (i) total
interest expense (including, without limitation, any such expense attributable
to Capital Leases in accordance with GAAP and all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers’
acceptance financing and accounting for net amounts paid or received under
Interest Rate Agreements (with cap payments amortized over the life of the
cap)) of Holdings and its Subsidiaries for such period determined on a
consolidated basis in conformity with GAAP, plus (ii) any discount,
yield and/or interest component in respect of Receivables Sale Indebtedness
(regardless of whether such amounts would constitute interest expense in
accordance with GAAP).

“Consolidated
Leverage Ratio” means, as at any date of determination, the ratio of
(a) Consolidated Total Debt minus Cash and Cash Equivalents of Holdings
and its Subsidiaries as of the last day of the Fiscal Quarter ended on such
date to (b) Consolidated Adjusted EBITDA for the four Fiscal Quarter
period ended on such date.

“Consolidated Net Income”
means, for any period, the net income (or loss) of Holdings and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP.

“Consolidated Senior
Secured Debt” means (A) Consolidated Total Debt plus the
aggregate amount that is or may become available for drawing under any Letters
of Credit minus (B) Existing Holdings Senior Notes, Subordinated
Indebtedness of Holdings and its Subsidiaries, Refinancing Senior Debt, New
Junior Debt, the Existing Owens-Brockway Senior Unsecured Notes, New European
Refinancing Debt and any other unsecured and/or subordinated Indebtedness of
Holdings and its Subsidiaries permitted by this Agreement, determined on a
consolidated basis in conformity with GAAP.

“Consolidated Senior
Secured Leverage Ratio” means, as of any date of determination, the
ratio, calculated on a Pro Forma Basis, of (a) Consolidated Senior Secured
Debt as of the date of determination to (b) Consolidated Adjusted EBITDA
for the four Fiscal Quarter period most recently ended on or prior to such
date.

“Consolidated Tangible Net
Assets” means the total assets of Holdings and its Subsidiaries, as
determined from the consolidated balance sheet of Holdings and its Subsidiaries
most recently delivered pursuant to subsection 6.1, but excluding therefrom all
items that are treated as goodwill and other intangible assets (net of applicable
amortization) under GAAP.

“Consolidated Total Debt”
means, as at any date of determination, the aggregate stated balance sheet
amount of all Indebtedness of Holdings and its Subsidiaries, all as determined
on a consolidated basis in conformity with GAAP and Receivables Sale
Indebtedness of Holdings and its Subsidiaries regardless of whether included on
the consolidated balance sheet of Holdings and its Subsidiaries.

 17
 

 

“Consolidated
Working Capital Adjustment”
means, for any period on a consolidated basis, the amount (which may be
negative) by which the sum of the components of working capital as of the
beginning of such period exceeds (or is less than) the sum of the components of
working capital as of the end of such period, as presented on the face of the
consolidated cash flow statement included in Holdings’ Form 10-K
filing for such period.

“Contingent
Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person (i) with respect to any
Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings, or (iii) under
Hedge Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation
to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (1) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (2) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses (1) or
(2) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the principal amount of the obligation so guaranteed or
otherwise supported or, if less, the amount to which such Contingent Obligation
is specifically limited, or, if not stated, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.

“Contractual Obligation”,
as applied to any Person, means any provision of any Security issued by that
Person or of any material indenture, mortgage, deed of trust, contract,
undertaking, agreement or other instrument to which that Person is a party or
by which it or any of its properties is bound or to which it or any of its
properties is subject.

“Covered Tax”
means any Tax that is not an Excluded Tax.

“Currency Agreement”
means any foreign exchange contract, currency swap agreement or other similar agreement
or arrangement.

“Defaulting
Participating Lender”
means, (A) with respect to any Letter of Credit, any Lender which (i) has
Revolving Loan Exposure at the time a notice is given to Lenders to fund the
purchase of participations in such Letter of Credit pursuant to
subsection 2.8E, and (ii) fails to fully fund such purchase pursuant
to subsection 2.8E; or (B) with respect to the Domestic Overdraft
Account or any Offshore Overdraft Account, any Lender which (i) has
Revolving Loan Exposure at the time a notice is given to Lenders to fund the

 18
 

 

purchase of participations in either the Domestic
Overdraft Account pursuant to subsection 2.1B or an Offshore Overdraft
Account pursuant to subsection 2.1D(ii), and (ii) fails to fully fund
such purchase pursuant to subsection 2.1B or 2.1D(ii).

“Delayed Draw Commitments” has the meaning assigned to
that term in subsection 2.3A(ii).

“Delayed Draw
Funding Date” has the meaning assigned to that term in
subsection 2.3A(ii).

“Deposit Account”
means a demand, time, savings, passbook or similar account maintained with a
Person engaged in the business of banking, including a savings bank, savings
and loan association, credit union or trust company.

“Dollar Equivalent”
means, at any time as to any amount denominated in an Offshore Currency or, in
the case of the amount of a Letter of Credit, other non-Dollar currency, the
equivalent amount in Dollars as determined by the Administrative Agent at such
time on the basis of the Spot Rate for the purchase of Dollars with such Offshore
Currency or other non-Dollar currency on the most recent Calculation Date or
other date on which such calculation is required pursuant to subsection 2.6L
with respect to such currency.

“Dollar”,
“Dollars” or the sign “$” means the lawful currency of the United States of
America.

“Domestic Borrowers’
Guaranty” means that certain Second Amended and Restated Domestic
Borrowers’ Guaranty dated as of June 14, 2006, in the form attached hereto
as Exhibit XIV, pursuant to which (i) Owens-Brockway shall
guarantee all Obligations of the Offshore Borrowers; and (ii) Owens-Brockway
shall guarantee the Other Lender Guarantied Obligations.

“Domestic Collateral
Documents” means the Pledge Agreement, the Security Agreement and
the Mortgages securing Mortgaged Property located in the United States of
America.

“Domestic Overdraft Account”
means the account established by Owens-Brockway with Administrative Agent and
referenced in the Domestic Overdraft Agreement.

“Domestic Overdraft
Agreement” means the Overdraft Agreement dated as of June 14,
2006, between Owens-Brockway and Administrative Agent, and any successor
Overdraft Agreement substantially in the form attached hereto as Exhibit VII
with such modifications as may be approved by Administrative Agent, executed
and delivered by Owens-Brockway and any successor Administrative Agent pursuant
to subsection 8.6, as any such Overdraft Agreement may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time.

“Domestic Overdraft Amount”
means, as at any date of determination, the aggregate principal amount of
outstanding overdrafts charged to the Domestic Overdraft Account.

 19
 

 

“Domestic Subsidiaries”
means all Subsidiaries of Company other than (A) the Foreign Subsidiaries
and (B) Subsidiaries organized under the laws of a state of the United
States of America but owned, directly or indirectly, in whole or in part as of
the date hereof by a Foreign Subsidiary other than ACI America Holdings, Inc.

“Downgrade”
means, at any time after the Threshold Debt Ratings are achieved,
Owens-Brockway’s senior secured debt rating is Ba2 or lower from Moody’s or BB
or lower from S&P.

“Dutch Banking Act”
means the Credit System Supervision Act 1992 (Wet toezicht
kredietwezen 1992).

“Dutch Borrower”
has the meaning assigned to that term in subsection 4.16.

“Dutch Exemption Regulation”
means the Exemption Regulation, dated June 26, 2002, of the minister of
Finance of the Netherlands as promulgated in connection with the Dutch Banking
Act.

“Dutch Guarantors”
means VG Holding B.V., OI Manufacturing Netherlands B.V. (formerly named BSN
Glasspack N.V. (United Glassworks)), OI Canada Holdings B.V. and each other
Dutch Subsidiary that becomes an Offshore Guarantor under subsection 5.9B.

“Dutch Overdraft Account”
means an account established by OIEG with Dutch Overdraft
Account Provider and referenced in a Dutch Overdraft
Agreement.

“Dutch Overdraft Account
Provider” means Calyon or any successor Dutch Overdraft
Account Provider pursuant to subsection 10.2E; provided, however,
that no such Lender shall be a successor Dutch Overdraft
Account Provider until OIEG and such Lender have executed and delivered a Dutch Overdraft Agreement to Administrative Agent.

“Dutch Overdraft Agreement”
means that certain agreement between OIEG and Calyon, dated on or about June 14,
2006, and any Offshore Overdraft Agreement between OIEG, O-I Europe and any
successor Dutch Overdraft Account Provider, in
substantially the form of Exhibit VIII annexed hereto, with such
modifications thereto as may be approved by Administrative Agent and any
successor Offshore Overdraft Agreement executed and delivered by OIEG and such
successor Dutch Overdraft Account Provider
pursuant to subsection 10.2E, as any such Offshore Overdraft Agreement may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof and hereof.

“Dutch Overdraft Amount”
means, as at any date of determination, the aggregate principal amount of
outstanding overdrafts charged to the Dutch Overdraft
Account.

“Dutch Revolving Loan
Commitment” means the commitment of a Lender to make Dutch Revolving Loans to OIEG pursuant to subsection 2.1C,
and “Dutch Revolving Loan Commitments” means
such commitments of all Lenders in the aggregate.

 20

 

“Dutch
Revolving Loan Exposure” means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender’s Dutch Revolving Loan Commitment, and (ii) after
the termination of the Revolving Loan Commitments, the sum of (a) the
aggregate outstanding principal amount of the Dutch Revolving Loans of that Lender plus
(b) in the event that Lender is an Issuing Lender in respect of a Letter
of Credit issued for the account of OIEG, the aggregate Letter of Credit Usage
in respect of all Letters of Credit issued by that Lender for the account of
OIEG (in each case net of any participation purchased by other Lenders in such
Letters of Credit or any unreimbursed drawings thereunder) plus (c) the
aggregate amount of all participations purchased by that Lender in any
outstanding Letters of Credit issued for the account of OIEG or any
unreimbursed drawings under any Letters of Credit issued for the account of
OIEG plus (d) in the case of Dutch Overdraft
Account Provider, the Dollar Equivalent of the Dutch Overdraft
Amount (net of any participations therein purchased by other Lenders) plus
(e) the aggregate amount of all participations purchased by that Lender in
the Dutch Overdraft Amount.

“Dutch Revolving Loan Note” means any promissory
note of OIEG, substantially in the form of Exhibit VI annexed
hereto, issued in favor of a Lender pursuant to subsection 2.1G(iv) to
evidence the Dutch Revolving Loans of such Lender, as
such promissory note may be amended, supplemented or otherwise modified from
time to time.

“Dutch Revolving Loans”
means any Loans made from and after the Closing Date by Lenders to OIEG
pursuant to subsection 2.1C.

“Dutch Subsidiary”
means any Subsidiary of OIEG organized under the laws of the Netherlands.

“Eligible Assignee”
means (A)(i) a commercial bank organized under the laws of the United
States of America or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States of
America or any state thereof; (iii) a commercial bank organized under the
laws of any other country or a political subdivision thereof; provided
that (x) such bank is acting through a branch or agency located in the
United States of America or (y) such bank is organized under the laws of a
country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (iv) any other
entity which is an “accredited investor” (as defined in Regulation D under the
Securities Act) which extends credit or buys or invests in loans as one of its
businesses including, but not limited to, insurance companies, mutual funds and
lease financing companies, in each case (under clauses (i) through (iv) above)
that is reasonably acceptable to Administrative Agent; and (B) any Lender,
any Affiliate of any Lender and Related Fund of any Lender; provided
that (1) no Affiliate of Company shall be an Eligible Assignee and (2) no
“associate” (as defined in Section 128F(9) of the Income Tax
Assessment Act 1936 of Australia) of ACI shall be an Eligible Assignee with
respect to an Australian Revolving Loan Commitment or Tranche A Term Loans.

“Employee
Benefit Plan” means
any “employee benefit plan” as defined in Section 3(3) of ERISA which
is or was maintained or contributed to by Holdings, any of its Subsidiaries or
any of their respective ERISA Affiliates.

 21
 

 

“Environmental
Claim” means any
investigation, notice, notice of violation, claim, action, suit, proceeding,
demand, abatement order or other order or directive (conditional or otherwise),
by any Governmental Authority or any other Person, arising (i) pursuant to
or in connection with any actual or alleged violation of any Environmental Law,
(ii) in connection with any Hazardous Materials or any actual or alleged
Hazardous Materials Activity, or (iii) in connection with any actual or
alleged damage, injury, threat or harm to health, safety, natural resources or
the environment.

“Environmental Laws”
means any and all present and future laws, statutes, ordinances, rules,
regulations, requirements, restrictions, permits, orders, codes of practice,
approvals, controls and determinations of any Governmental Authority that have
the force and effect of law, and that pertain to pollution (including hazardous
or toxic substances), natural resources or the environment, whether federal,
state, or local, domestic or foreign, including environmental response laws
such as the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 and as the same may be further amended (collectively, “CERCLA”).

“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time, and any regulations promulgated thereunder.

“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control
with Holdings or any of its Subsidiaries within the meaning of Section 414(b) or
(c) of the Internal Revenue Code or (for purposes of Section 412 of
the Internal Revenue Code and provisions of the Internal Revenue Code relating
to said Section 412) Section 414(m) or (o) of the Internal
Revenue Code.

“ERISA Event”
means any of the following events or occurrences if such event or occurrence
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect:  (i) the
failure by Holdings, any of its Subsidiaries or any ERISA Affiliate to make a
required contribution to a Pension Plan; (ii) a withdrawal by Holdings, any
of its Subsidiaries or any ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer (as defined
in Section 4001(a)(2) of ERISA), or a cessation of operation which is
treated as such a withdrawal under Section 4062(e) of ERISA; (iii) a
complete or partial withdrawal by Holdings, any of its Subsidiaries or any
ERISA Affiliate from a Multiemployer Plan or the receipt by Holdings, any of
its Subsidiaries or any ERISA Affiliate of notification that a Multiemployer
Plan is in reorganization or is insolvent pursuant to Section 4241 or 4245
of ERISA; (iv) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate, in each
case with respect to a Pension Plan or receipt by Holdings, any of its
Subsidiaries or any ERISA Affiliate of notice of any such event with respect to
a Multiemployer Plan; (v) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or, to the knowledge of Holdings, any Multiemployer Plan; (vi) the
imposition of any liability upon Company, any of its Subsidiaries or any ERISA
Affiliate under Title IV of ERISA (other than with respect to PBGC premiums due
but not delinquent under Section 4007 of ERISA) upon Company, any of its
Subsidiaries or any

 22
 

 

ERISA Affiliate; (vii) the imposition of a Lien
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code
or pursuant to ERISA with respect to any Pension Plan; (viii) receipt from
the Internal Revenue Service of notice of the failure of any Plan intended to
qualify under Section 401(a) of the Internal Revenue Code to qualify
under Section 401(a) of the Internal Revenue Code, or the failure of
any trust forming part of any such Plan to qualify for exemption from taxation
under Section 501(a) of the Internal Revenue Code; or (ix) the
violation of any applicable foreign law, or an event or occurrence that is
comparable to any of the foregoing events or occurrences, in either case with
respect to a Plan that is not subject to regulation under ERISA by reason of Section 4(b)(4) of
ERISA.

“Euro” and the
sign “€” mean the single currency unit of
Participating Member States.

“Eurocurrency Rate”
means, for any Interest Rate Determination Date with respect to a
Eurocurrency Rate Loan for a proposed Interest Period, the aggregate of (1) and
(2) below:

(1)           (a)           in the case of Dollar denominated
Loans, (i) the rate per annum equal to the rate determined by
Administrative Agent to be the offered rate that appears on the Telerate Screen
that displays an average British Bankers Association Interest Settlement Rate
for Deposits in Dollars (for delivery on the first day of such interest period)
with a term equivalent to such interest period, determined as of approximately
11:00 a.m. (London time) on the applicable Interest Rate Determination
Date and, in the event such rate is not available, (b) the rate equal
to the arithmetic average (rounded upward to the nearest 1/100 of one
percent) of the offered quotation, if any, to first class banks in the
interbank Eurodollar market by each of the Reference Lenders for Dollar deposits
of amounts in Same Day Funds comparable to the principal amount of the
Eurocurrency Rate Loan of that Reference Lender for which the Eurocurrency Rate
is then being determined with maturities comparable to the Interest Period for
which such Eurocurrency Rate will apply as of approximately 11:00 A.M.
(London time) on such Interest Rate Determination Date; provided that if
any Reference Lender fails to provide Administrative Agent with its
aforementioned quotation then the Eurocurrency Rate shall be determined based
on the quotation(s) provided to Administrative Agent by the other
Reference Lender;

(b)           in
the case of Euro denominated Loans, (i) the rate per annum for deposits in
Euros as determined by the Administrative Agent for a period corresponding to the
duration of the rele­vant Interest Period which appears on Reuters Page EURIBOR-01
(or any successor page) at approx­imately 11:00 A.M. (London time) on the
applicable Interest Rate Determination Date or (ii) if such rate is not
shown on Reuters Page EURIBOR-01 (or any successor page), the
average offered quotation to prime banks in the Euro-zone interbank market by
the Administrative Agent for Euro deposits of amounts compar­able to the
principal amount of the applicable Loans to be made by the Administrative Agent
as part of such borrowing with maturities comparable to the Interest Period to
be applicable to such Loan (rounded upward to the next whole multiple of 1/100
of 1%), determined as of 11:00 A.M. (London time) on such Interest Rate
Determination Date; and

 23
 

 

(c)           in
the case of Adollar denominated Loans, (i) the rate per annum equal to the
rate determined by Administrative Agent to be the offered rate that appears on
the Telerate Screen that displays an average British Bankers Association
Interest Settlement Rate for Deposits in ADollars (for delivery on the first
day of such interest period) with a term equivalent to such interest period,
determined as of approximately 11:00 a.m. (London time) on the applicable
Interest Rate Determination Date and, in the event such rate is not available, (b) the
rate equal to the arithmetic average (rounded upward to the nearest 1/100
of one percent) of the offered quotation, if any, to first class banks in the
interbank Eurodollar market by each of the Reference Lenders for ADollar
deposits of amounts in Same Day Funds comparable to the principal amount of the
Eurocurrency Rate Loan of that Reference Lender for which the Eurocurrency Rate
is then being determined with maturities comparable to the Interest Period for
which such Eurocurrency Rate will apply as of approximately 11:00 A.M.
(New York time) on such Interest Rate Determination Date; provided that
if any Reference Lender fails to provide Administrative Agent with its
aforementioned quotation then the Eurocurrency Rate shall be determined based
on the quotation(s) provided to Administrative Agent by the other
Reference Lender; and

(2)           the
then current cost to the Lenders of complying with Eurocurrency Reserve
Requirements.

“Eurocurrency Rate Loans”
means Loans bearing interest at rates determined by reference to the
Eurocurrency Rate as provided in subsection 2.2A.

“Eurocurrency
Reserve Requirements” means, for any day as applied to a
Eurocurrency Rate Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve liquid asset or similar
requirements in effect on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto), including without
limitation, under regulations issued from time to time by (a) the Board of
Governors of the Federal Reserve System, (b) any Governmental Authority of
the jurisdiction of the relevant currency or (c) any Governmental
Authority of any jurisdiction in which advances in such currency are made to
which banks in any jurisdiction are subject for any category of deposits or
liabilities customarily used to fund loans in such currency or by reference to
which interest rates applicable to loans in such currency are determined,
including Mandatory Costs.

“Event of Default”
means any of the events set forth in Section 7.

“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.

“Excluded Tax”
means any of the following Taxes and all liabilities (including without
limitation all penalties, interest and other additions to tax) with respect
thereto:  (i) Taxes imposed on the
net income or capital of a Lender, Arranger, Agent or Tax Transferee and
franchise taxes imposed in lieu thereof (including without limitation branch
profits taxes, minimum taxes and taxes computed under alternative methods, at
least one of which is based on net income, but excluding in all cases any Taxes
in respect of any payment pursuant to

 24
 

 

subsection 2.7C(ii)(c) (collectively referred to
as “net income taxes”)) by (A) the jurisdiction under the laws of which
such Lender, Arranger, Agent or Tax Transferee is organized or resident for tax
purposes or any political subdivision thereof or (B) the jurisdiction of
such Lender’s, Tax Transferee’s, Arranger’s or Agent’s applicable lending
office or any political subdivision thereof or (C) any jurisdiction with
which the Lender, Arranger, Agent or Tax Transferee has any present or former
connection (other than solely by virtue of being a Lender, Arranger, Agent or
Tax Transferee under this Agreement), (ii) any Taxes (other than Taxes
imposed, levied, collected, withheld or assessed by or within Australia,
Canada, the Netherlands, Switzerland or any political subdivision thereof) to
the extent that they are in effect and would apply to a payment to such Lender,
Arranger or Agent, as applicable, as of the Closing Date, or as of the date
such Person becomes a Lender, in the case of any assignee pursuant to
subsection 10.2 or as of the date of and as a result of a change in the
jurisdiction of the Lender’s applicable lending office, (iii) any Taxes
(other than taxes imposed, levied, collected, withheld or assessed by or within
Australia, Canada, the Netherlands, Switzerland or any political subdivision
thereof) that are in effect and would apply to a payment to a Tax Transferee as
of the date of acquisition of any Loans by such Tax Transferee or the date of
and as a result of the change of lending office of such Tax Transferee, as the
case may be (provided, however, that a Person shall not be
considered a Tax Transferee for purposes of this clause (iii) as a result
of a change of its lending office or the taking of any other steps pursuant to
subsection 2.6K or as a result of a CAM Exchange pursuant to subsection
2.10), or (iv) any Taxes that would not have been imposed but for (A) the
failure or unreasonable delay by such Agent, Arranger, Lender or Tax
Transferee, as applicable, to complete, provide, file, update or renew, in each
such case at the request of a Borrower or Borrower’s Agent (in the reasonable
exercise of its discretion) at such Borrower’s expense, any application forms,
certificates, documents or other evidence required from time to time, properly
completed and duly executed, to qualify for any applicable exemption from or
reduction of Taxes, including, without limitation, the certificates, documents
or other evidence required under subsection 2.7C(v) (unless such
failure or delay did not occur on or prior to the Closing Date or the date of
the applicable Assignment and Acceptance, as the case may be, and results from
a change in applicable law after the Closing Date or the date of the applicable
Assignment and Acceptance, as the case may be, which precludes such Agent,
Arranger, Lender or Tax Transferee, as applicable, from providing application
forms, certificates, documents or other evidence required to qualify for such
exemption or reduction), (B) the gross negligence or willful misconduct of
such Agent, Arranger, Lender or Tax Transferee, or (C) such Agent,
Arranger, Lender or Tax Transferee being treated as a “conduit entity” within
the meaning of Treasury Regulation Section 1.881-3 or any successor
provision thereto.

“Existing Credit
Agreement” means the Third Amended and Restated Secured Credit
Agreement dated as of October 7, 2004, by and among Company,
Owens-Brockway, OI Plastic Products FTS Inc., O-I UK, Owens Illinois
(Australia) Pty Limited, ACI, Aziende Vetrarie Industriali Ricciardi - Avir
S.P.A., O-I Canada, BSN, and O-I General, the Lenders listed on the signature pages thereof,
the financial institutions party thereto and Deutsche Bank Trust Company
Americas as Administrative Agent, as amended by the First Amendment thereto
dated as of June 13, 2005.

“Existing Holdings
Senior Note Collateral” means the pledges of the shares of Capital
Stock and intercompany notes of Owens-Brockway and the direct subsidiaries of
Company pursuant to the Pledge Agreement.

 25
 

 

“Existing Holdings
Senior Note Obligors” means Holdings, and, on a subordinated basis,
Company and Packaging.

“Existing Holdings
Senior Notes” means the following issues of Holdings public
Indebtedness:  8.10% Senior Notes Due
2007; 7.35% Senior Notes Due 2008; 7.50% Senior Debentures Due 2010; and 7.80%
Senior Debentures Due 2018.

“Existing IRBs”
means the Holmes County Ohio 5.85% Industrial Development Revenue Bonds with
final maturity in 2007 and an outstanding principal amount of approximately
$350,000, the Kansas City, Missouri Industrial Development Revenue Bonds with
final maturity in 2008 and an outstanding principal amount of approximately
$9,000,000, and any extensions, renewals or refinancings thereof to the extent
that such extensions, renewals and refinancings thereof do not result in an
increase in the aggregate principal amount of such Existing IRBs.

“Existing Letter of Credit”
has the meaning assigned to that term in subsection 2.8A.

“Existing Owens-Brockway
Senior Secured Notes” means Owens-Brockway’s 8-7/8% Senior
Secured Notes due 2009, Owens-Brockway’s 7-3/4% Senior Secured Notes due
2011 and Owens-Brockway’s 8-3/4% Senior Secured Notes due 2012 (and, for
avoidance of doubt, any notes issued in exchange or replacement thereof on
substantially identical terms).

“Existing Owens-Brockway
Senior Unsecured Notes” means Owens-Brockway’s 8-1/4% Senior
Notes due 2013 and Owens-Brockway’s 6-3/4% Senior Notes due 2014 (and,
for avoidance of doubt, any notes issued in exchange or replacement thereof on
substantially identical terms).

“Federal Funds Effective
Rate” means, for any period, a fluctuating interest rate equal for
each day during such period to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Administrative Agent from three Federal funds brokers of recognized
standing selected by Administrative Agent.

“Fee Payment Date”
means each March 15, June 15, September 15 and December 15
of each year, commencing with September 15, 2006.

“First
Priority” means, with
respect to any Lien purported to be created in any Collateral pursuant to any
Collateral Document, that (i) such Lien is perfected and such Lien (other
than floating charges with respect to certain Collateral (the use of which with
respect to such Collateral has been approved by Administrative Agent), which
for UK priority purposes ranks behind statutorily preferred creditors and fixed
charges) has priority over any other Lien on such Collateral (other than Liens
permitted pursuant to subsection 6.2A) and (ii) such Lien is the only Lien
(other than Liens permitted pursuant to subsection 6.2A) to which such
Collateral is subject.

 26
 

 

“Fiscal Quarter”
means a fiscal quarter of any Fiscal Year.

“Fiscal Year”
means the fiscal year of Company and its Domestic Subsidiaries ending on December 31
of each calendar year.

“Flood Hazard
Property” means a
Closing Date Mortgaged Property or an Additional Mortgaged Property located in
an area designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.

“Foreign Plan”
means any employee benefit plan maintained by Company or any of its
Subsidiaries that is mandated or governed by any law, rule or regulation
of any Governmental Authority other than the United States, any state thereof
or any other political subdivision thereof.

“Foreign Subsidiary”
means (i) any Subsidiary of Company identified as such on Schedule D
annexed hereto, (ii) any Subsidiary of any Subsidiary described in clause
(i), except for ACI America Holdings, Inc. and (iii) in addition, any
Subsidiary acquired, incorporated or otherwise established by Company on or
after the Closing Date which is organized under the laws of a jurisdiction
other than the United States of America or any State thereof.

“Fund”
means any Person (other than a natural Person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

“Funding and Payment Office”
means the office of Administrative Agent located at 90 Hudson Street, Jersey
City, New Jersey 07302.

“Funding Date”
means the date of the funding of a Loan.

“FX Trading Office”
means such office of Administrative Agent as it may designate as such from time
to time in a written notice delivered to Borrowers’ Agent.

“GAAP” means,
subject to the provisions of subsection 1.2, generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession, which are applicable to the circumstances
as of the date of determination.

“Governing
Body” means the board
of directors or other body having the power to direct or cause the direction of
the management and policies of a Person that is a corporation, partnership,
trust or limited liability company.

“Governmental
Authority” means any political subdivision or department thereof,
any other governmental or regulatory body, commission, central bank, board,
bureau, organ or instrumentality or any court, in each case whether federal,
state, local or foreign.

 27
 

 

“Governmental Authorization”
means any permit, license, authorization, plan, directive, consent order or
consent decree of or from any foreign, federal, state or local Government
Authority, agency or court.

“Ground Leasehold
Interest” as applied to any Person, means any lease by which such
Person leases the fee interest in real property and owns the improvements
thereon (until the termination of the lease).

“Guarantied
Obligations” has the meaning assigned to that term in
subsection 9.1.

“Guarantied Party”
and “Guarantied Parties” have the meanings
assigned to those terms in subsection 9.1.

“Guaranties”
means, collectively, the Company Guaranty, the Domestic Borrowers’ Guaranty,
the Subsidiary Guaranty and the Offshore Guaranties.

“Harbor Capital
Subsidiaries” means, collectively, OI Advisors, Inc. (f/k/a/
Harbor Capital Advisors, Inc.), OI Securities, Inc. (f/k/a/ HCA
Securities, Inc.) and OI Transfer, Inc. (f/k/a Harbor Transfer, Inc.).

“Hazardous Materials”
means any substance that is defined or listed as a hazardous or toxic substance
under any present or future Environmental Law or that is otherwise regulated or
prohibited or subject to investigation or remediation under any present or
future Environmental Law because of its hazardous or toxic properties,
including (i) any substance that is a “hazardous substance” under CERCLA
(as defined in the definition of “Environmental Laws”) and (ii) petroleum
wastes or products.

“Hazardous
Materials Activity”
means any past, current, proposed or threatened activity, event or occurrence
involving any Hazardous Materials, including the use, manufacture, possession,
storage, holding, presence, existence, location, Release, threatened Release,
placement, generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposition or handling of any Hazardous Materials,
and any corrective action or response action with respect to any of the
foregoing.

“Hedge Agreement”
means an Interest Rate Agreement or a Currency Agreement designed to hedge
against fluctuations in interest rates or currency values, respectively.

“Holdings”
means Owens Illinois, Inc., a Delaware corporation.

“Holdings Ordinary
Course Payments” means dividends or other distributions by, or
payments of intercompany indebtedness from, Company to Holdings necessary to
permit Holdings to pay any of the following items which are then due and
payable:  (s) payments in respect of
Permitted Holdings Hedging Obligations, (t) cash interest on Permitted
Holdings Debt Obligations, (u) principal of Existing IRBs, (v) to
redeem, repay or otherwise repurchase the Existing Holdings Senior Notes to the
extent not prohibited by subsection 6.12B, (w) claims of persons for
exposure to asbestos-containing products and expenses related thereto, (x) so
long as

 28
 

 

no Potential Event of Default arising under
subsections 7.1, 7.6, 7.9 or 7.12 or Event of Default shall exist (or
shall be caused by such payment), (i) cash dividends on Holdings’ existing
preferred stock and Permitted Preferred Stock with an aggregate liquidation
preference or redemption price not exceeding $250,000,000 used (or the proceeds
of which are used directly or indirectly within 180 days of receipt) as
consideration for an Acquisition not prohibited hereunder and (ii) share
repurchases of, or common dividends on, Holdings’ Capital Stock in an aggregate
amount not exceeding $25,000,000, (y) consolidated tax liabilities of
Holdings and its Subsidiaries and (z) general administrative costs and
other on-going expenses of Holdings in the ordinary course of business
consistent with past practices.

“Indebtedness”,
as applied to any Person, means (i) all indebtedness for borrowed money, (ii) that
portion of obligations with respect to Capital Leases which is properly
classified as a liability on a balance sheet in conformity with GAAP (subject
to subsection 1.2 hereof), (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money, (iv) the amount of all honored but unreimbursed drawings
under letters of credit, (v) any obligation owed for all or any part of
the deferred purchase price of property or services, which purchase price is (a) due
more than six months from the date of incurrence of the obligation in respect
thereof or (b) evidenced by a note or similar written instrument, (vi) all
indebtedness secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person, and (vii) every
obligation of such Person under any Synthetic Lease treated as an operating
lease under generally accepted accounting principles and as a loan or financing
for U.S. income tax purposes; provided, however, that with
respect to any indebtedness of the type described in the foregoing clause (vi) which
has not been assumed by that Person or is otherwise nonrecourse to the credit
of that Person, the amount of such indebtedness shall be deemed to be the
lesser of the outstanding principal amount of such indebtedness and the fair
market value of the property or assets of such Person securing such
indebtedness.

“Inside Maturity Notes”
means the Existing Holdings Senior
Notes maturing in 2007, 2008 and 2010 and the Existing Owens-Brockway
Senior Secured Notes maturing in 2009 and 2011.

“Intellectual
Property” means all patents, trademarks, tradenames, copyrights,
technology and software, used in or necessary for the conduct of the business
of Company and its Subsidiaries as currently conducted that are material to the
condition (financial or otherwise), business or operations of Company and its
Subsidiaries, taken as a whole.

“Intercreditor Agreement”
means the Second Amended and Restated Intercreditor Agreement dated as of June 14,
2006, among Collateral Agent, DB, as Administrative Agent hereunder, the
trustees in respect of the Existing Owens-Brockway Senior Secured Notes, the
trustees in respect of the Existing Holdings Senior Notes, such Lenders or
Affiliates of Lenders which are holders of Other Permitted Credit Exposure,
which executed acknowledgments to the Original Intercreditor Agreement (as
defined therein) or to the Amended and Restated Intercreditor Agreement (as
defined therein), have executed acknowledgments to the Second Amended and
Restated Intercreditor Agreement or in the future execute acknowledgments to
such Second Amended and Restated Intercreditor Agreement, and, such

 29
 

 

other Persons who may become parties to the Second
Amended and Restated Intercreditor Agreement in accordance with the terms
thereof, which in the future execute acknowledgments to the Second Amended and
Restated Intercreditor Agreement, in the form attached hereto as Exhibit XVII,
and as such Intercreditor Agreement may hereafter be amended, supplemented or
modified from time to time.

“Interest Coverage Ratio”
means, as at any date of determination, the ratio of (i) Consolidated Adjusted EBITDA for the
four Fiscal Quarter period ended on such date to (ii) Consolidated Cash
Interest Expense for the four Fiscal Quarter period ended on such date.

“Interest Payment Date”
means, with respect to any Eurocurrency Rate Loan, the last day of each
Interest Period applicable to such Loan; provided that in the case of
each Interest Period of six months, “Interest Payment Date”
shall also include each three-month anniversary of the commencement of that
Interest Period.

“Interest Period”
means any interest period applicable to a Eurocurrency Rate Loan or a B/A
Discount Rate Loan as determined pursuant to subsection 2.2B.

“Interest Rate Agreement”
means any interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement or other similar agreement or arrangement.

“Interest Rate
Determination Date” means with respect to Eurocurrency Rate Loans,
the second Business Day prior to the first day of the related Interest Period.

“Internal Revenue Code”
means the Internal Revenue Code of 1986, as amended to the date hereof and from
time to time hereafter.

“Investment”, as
applied to any Person, means any direct or indirect purchase or other
acquisition by that Person of, or of a beneficial interest in, stock or other
Securities of any other Person, or any direct or indirect loan, advance (other
than advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital
contribution by that Person to any other Person, including all indebtedness and
accounts receivable from that other Person which are not current assets or did
not arise from sales to that other Person in the ordinary course of business. The
amount of any Investment shall be the original cost (which shall not include (i) the
amount of any Indebtedness of the Person that is the subject of such Investment
that is assumed by the Person making such Investment or (ii) the value of
any Common Stock issued as all or a portion of the consideration payable in
connection with such Investment) or, in the case of an Investment consisting of
non-cash consideration received in connection with an Asset Sale or other sale
of assets, the original value of such Investment plus the cost of all additions
thereto and less returns of capital to the Person making the Investment,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.

“IP Collateral”
means, collectively, the Intellectual Property of Borrower and its Domestic
Subsidiaries that constitutes Collateral under the Collateral Documents.

“IP Filing Office” means the
United States Patent and Trademark Office, the United States Copyright Office
or any successor or substitute office in which filings are

 30
 

 

necessary or, in the opinion of Collateral Agent,
desirable in order to create or perfect Liens on, or evidence the interest of
Collateral Agent and Lenders in, any IP Collateral.

“IRBs”
means industrial revenue bonds.

“Issuing Lender”
means, with respect to any Letter of Credit, the Lender which agrees or is
otherwise obligated to issue such Letter of Credit, determined as provided in
subsection 2.8C; provided that, in the event DB is to be an Issuing
Lender (and with respect to the Existing Letters of Credit issued by DBTCA), DB
may delegate the issuance of the applicable Letter of Credit to an Affiliate
(DB having done so with respect to Existing Letters of Credit, issued by
DBTCA), provided, further, that in the event of any such
delegation by DB, DB shall be deemed to be the Issuing Lender for purposes
relating to the utilization of the Revolving Loan Commitments under this
Agreement, although such Affiliate shall be entitled to all rights of
reimbursement relating to such Letter of Credit or DB and such Affiliate may
apportion all rights and obligations relating to such Letter of Credit as they
may agree and such apportionment shall be binding for all purposes hereunder.

“Joint Venture”
means a joint venture, partnership or other similar arrangement, whether in
corporate, partnership or other legal form; provided that, as to any
such arrangement in corporate form, such corporation shall not, as to any
Person of which such corporation is a Subsidiary, be considered to be a Joint
Venture to which such Person is a party.

“Landlord Consent
and Estoppel” means, with respect to any Ground Leasehold Interest
in the United States of America or any state thereof, a letter, certificate or
other instrument in writing from the lessor under the related lease pursuant to
which such lessor agrees for the benefit of Collateral Agent to such matters
relating to such leasehold and the Mortgage to be recorded thereon as
Collateral Agent may reasonably request including the existence or absence of
defaults, consent to the recordation and foreclosure of the Mortgage, the
transfer of the Ground Leasehold Interest following foreclosure, and a notice
and cure period for Collateral Agent with respect to any default under such
leasehold.

“L/C Collateral
Account” is defined in the Security Agreement.

“LC Disbursement”
means a payment made by an Issuing Lender pursuant to a Letter of Credit.

“Lender” and “Lenders” have the meanings assigned to those terms in the
introduction to this Agreement and shall include each Agent in its individual
capacity as a lender hereunder; provided that “Lender” and “Lenders”
shall also include the successors and permitted assigns of Lenders pursuant to
subsection 10.2B; and provided, further that the term “Lenders”
when used in the context of a particular Commitment or Loan, shall mean Lenders
having that Commitment or making that Loan.

“Letter of Credit”
or “Letters of Credit” means Commercial
Letters of Credit and Standby Letters of Credit issued or to be issued by
Issuing Lenders for the account of Borrowers (other than O-I Canada) pursuant
to subsection 2.8.

 31

 

“Letter of Credit Usage”
means, as at any date of determination, the sum of (i) the maximum
aggregate amount which is or at any time thereafter may become available for
drawing under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by Issuing
Lenders and not theretofore reimbursed by a Borrower. For purposes of this
definition, any amount described in clause (i) or (ii) of the
preceding sentence which is denominated in a currency other than Dollars shall
be valued based on its Dollar Equivalent as of the applicable date of
determination.

“Lien” means any
lien, mortgage, pledge, security interest, hypothec, assignment by way of
security, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any statutory
trust or deemed trust, and any agreement to give any security interest) and any
other agreement intended to create any of the foregoing.

“Loan” or “Loans” means one or more of the Tranche A Term Loans, the
Tranche B Term Loans, the Tranche C Term Loans, the Tranche D Term Loans, the
Revolving Loans, the Offshore Revolving Loans, the Additional Term Loans or the
Refinancing Term Loans or any combination thereof.

“Loan Documents”
means this Agreement, the Notes, the Domestic Overdraft Agreement, any Offshore
Overdraft Agreements, the Letters of Credit, the Guaranties and the Collateral
Documents.

“Loan Limitation Notice” has the meaning
assigned to that term in subsection 2.1E(iv).

“Loan Party”
means each of Borrowers, Company and, upon execution of a Loan Document
thereby, any of Company’s other Subsidiaries from time to time executing such
Loan Document, and “Loan Parties”
means all such Persons, collectively.

“Mandatory Costs”
means the cost imputed to the Lender(s) of compliance with the mandatory
liquid assets requirements of the Bank of England and/or the banking
supervision or other costs of the Financial Services Authority or European
Central Bank or any successor body exercising their functions in this respect
as determined in accordance with Schedule 1.1C.

“Margin Stock”
has the meaning assigned to that term in Regulation U of the Board of Governors
of the Federal Reserve System as in effect from time to time.

“Material Adverse Effect”
means (i) a material adverse effect upon the business, operations,
properties, assets or condition (financial or otherwise) of Company and its
Subsidiaries, taken as a whole, or (ii) a material adverse effect on the
ability of Company and its Subsidiaries, taken as a whole, to perform, or of
any Agent, Arranger or Lender to enforce, the Obligations.

“Material Subsidiary”
means each indirect or direct Subsidiary of Holdings now existing or hereafter
acquired or formed indirectly or directly by Holdings which (x) for the
most recent Fiscal Year of Holdings, accounted for more than 5% of the
consolidated revenues of

 32
 

 

Holdings or (y) as at the end of such Fiscal
Year, was the owner of more than 5% of the consolidated assets of Holdings.

“Maximum
Consolidated Capital Expenditures Amount” means, for any Fiscal Year
of Company and its Subsidiaries, an amount not to exceed the sum of (i) $550,000,000,
plus (ii) the excess, if any, of the Maximum Consolidated Capital
Expenditures Amount for the previous Fiscal Year over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year (up to a
maximum of $225,000,000), plus (iii) the amount of capital
expenditures made by any Person or attributable to any group of assets acquired
in an Acquisition permitted hereunder during the twelve-month period most
recently ended prior to the date of such Acquisition for which financial
statements are available to Company or any of its Subsidiaries (as demonstrated
by delivery of such financial statements of such Person for such period to
Administrative Agent), pro-rated in the Fiscal Year in which such Acquisition
is consummated.

“Moody’s” means
Moody’s Investors Service, Inc.

“Mortgage”
means (i) a security instrument (whether designated as a deed of trust,
debenture or a mortgage or by any similar title) executed and delivered by any
Loan Party, in a form approved by Collateral Agent, a form customarily used to
create Liens on real property interests in Australia, the UK, the Netherlands
and Canada, as appropriate, and approved by Collateral Agent or in such other
form as may be approved by Collateral Agent in its sole discretion, in each
case with such changes thereto as may be recommended by Collateral Agent’s
local counsel based on local laws or customary local mortgage or deed of trust
practices, or (ii) at Collateral Agent’s option, in the case of an
Additional Mortgaged Property, an amendment to an existing Mortgage, in form
satisfactory to Collateral Agent, adding such Additional Mortgaged Property to
the Real Property Assets encumbered by an existing Mortgage, in either case as
such security instrument or amendment may be amended, supplemented or otherwise
modified from time to time. “Mortgages”
means all such instruments, including the Closing Date Mortgages and any
Additional Mortgages, collectively.

“Mortgaged Property”
means either a Closing Date Mortgaged Property or an Additional Mortgaged
Property.

“Multiemployer Plan”
means a “multiemployer plan”, within the meaning of Section 4001(a)(3) of
ERISA, with respect to which Company, any of its Subsidiaries or any ERISA
Affiliate may have liability.

“Net Asset Sale
Proceeds”, with respect to any Asset Sale, means Cash payments
(including any Cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received, including when released from any escrow) received from such Asset
Sale, (A) net of any bona fide direct costs incurred in connection with
such Asset Sale, including (i) taxes reasonably estimated to be payable in
connection with such Asset Sale, (ii) reasonable commissions and other
fees and expenses incurred, and (iii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) that is paid (and is not prohibited from being paid under the
terms of this Agreement) with the gross proceeds of such Asset Sale, and

 33
 

 

(iv) a reasonable reserve for the after-tax costs
of any indemnification payments (fixed and contingent) attributable to seller’s
indemnities to the purchaser undertaken by Holdings and its Subsidiaries in
connection with such Asset Sale, (B) in the case of an Asset Sale by
Owens-Brockway or a Subsidiary Guarantor that is a Domestic Subsidiary, net of
any amount used within 355 days of the date of such Asset Sale to make
Investments in Domestic Subsidiaries or purchase assets or reinvest in the
business of Company and its Domestic Subsidiaries within the United States of
America (including, in the case of a sale of Capital Stock of a first-tier
Foreign Subsidiary, investment in the Capital Stock of another first-tier
Foreign Subsidiary), (C) in the case of an Asset Sale by an Offshore
Borrower or Offshore Guarantor, net of any amount used within 355 days of the
date of such Asset Sale to make Investments in a Loan Party or to purchase
assets or reinvest in the business of one or more of the Loan Parties or (D) in
the case of an Asset Sale by a Foreign Subsidiary other than an Offshore
Borrower or Offshore Guarantor, net of any amount used within 355 days of the
date of such Asset Sale to make Investments permitted hereunder or purchase
assets or to reinvest in the business of Company and its Subsidiaries; provided,
that in the case of each of (B), (C) and (D) above, such use
results in such amounts so utilized not constituting “Excess Proceeds” under
the indentures governing the Existing Owens-Brockway Senior Secured Notes, the
Existing Owens-Brockway Senior Unsecured Notes or any New Senior Debt issued
after the Closing Date.

“Net Debt Proceeds”
means the Cash proceeds (net of underwriting discounts and commissions,
premiums on any Indebtedness (other than Loans) to be redeemed with such
proceeds as permitted under this Agreement and other reasonable costs and
expenses associated therewith, including reasonable legal fees and expenses)
from the incurrence of Indebtedness by Holdings, Company or any of its
Subsidiaries (other than Indebtedness permitted by subsection 6.1 (except subsections
6.1(vii), 6.1(viii) 6.1(ix), 6.1(x) and 6.1(xiv)). In the case of the
issuance of Receivables Sale Indebtedness, Net Debt Proceeds shall also be net
of any amounts not constituting “Net Proceeds from Asset Sales” under, or which
are used within 355 days of the date of the applicable issuance in a manner
such that such proceeds do not constitute “Excess Proceeds” under, the
Indentures governing the Existing Owens-Brockway Senior Secured Notes, the
Existing Owens-Brockway Senior Unsecured Notes or any New Senior Debt issued
after the Closing Date.

“Net
Insurance/Condemnation Proceeds” means any Cash payments or proceeds
received by Company or any of its Subsidiaries (i) under any casualty
insurance policy in respect of a covered loss thereunder or (ii) as a
result of the taking of any assets of Company or any of its Subsidiaries by any
Person pursuant to the power of eminent domain, condemnation or otherwise, or
pursuant to a sale of any such assets to a purchaser with such power under
threat of such a taking, in each case net of any actual and reasonable
documented costs incurred by Company or any of its Subsidiaries in connection
with the adjustment or settlement of any claims of Company or such Subsidiary
in respect thereof and, in each case, only to the extent such cash payments or
proceeds, net of the foregoing documented costs, exceed $25,000,000; provided,
that, for the avoidance of doubt, any insurance proceeds received by Holdings
or any Subsidiary for asbestos claims shall not constitute Net Insurance/Condemnation
Proceeds hereunder.

“New European Refinancing
Debt” means Indebtedness (including guarantees thereof and
Indebtedness and guarantees issued in exchange or in replacement thereof
containing substantially identical terms) in an aggregate principal amount not
exceeding $500,000,000 (or

 34
 

 

the Offshore Currency Equivalent thereof) having the
following characteristics:  (u) the
sole issuer or borrower shall be OIEG or another Foreign Subsidiary reasonably
acceptable to the Administrative Agent, (w) any other obligors (whether
guarantors or other credit support parties) shall include only Company,
Owens-Brockway and/or the Subsidiary Guarantors and no other Persons, (v) such
Indebtedness (and any guaranties thereof) shall be unsecured or constitute Subordinated
Indebtedness or both, (w) such Indebtedness shall not have any scheduled
payment of principal, prepayment, mandatory redemption or sinking fund payment
prior to June 15, 2013, except for provisions requiring any permitted
obligor under clause (u) above to repurchase all or a portion of New
European Refinancing Debt from the holders thereof upon the occurrence of a “change
of control” or following an “asset sale” (such terms to be defined in the
indentures) governing such New European Refinancing Debt), (x) the Net
Debt Proceeds of such Indebtedness shall be applied as required by
subsection 2.4B(ii)(d), (y) the governing documentation for such
Indebtedness shall not contain any provision prohibiting the creation or
assumption of any Lien on any of the properties or assets of Company or its
Subsidiaries, whether then owned or thereafter acquired, to secure payment of
the Obligations or any agreement renewing, refinancing or extending the
Obligations or this Agreement, and (z) all other terms and conditions
shall be substantially comparable to those prevailing in the market place for
comparable debt issuances as confirmed by the Administrative Agent in its
reasonable judgment.

“New Junior Debt”
means Indebtedness (including guarantees thereof and Indebtedness and
guarantees issued in exchange or in replacement thereof containing
substantially identical terms) having the following characteristics:  (u) the obligors (whether borrowers,
issuers, guarantors, pledgors or other credit support parties) shall include
only the Existing Holdings Senior Note Obligors and no other Persons, (v) such
Indebtedness shall be unsecured or constitute Subordinated Indebtedness or
both, (w) such Indebtedness shall not have any scheduled payment of
principal, prepayment, mandatory redemption or sinking fund payment prior to June 15, 2013, except for provisions
requiring any permitted obligor under clause (u) above to repurchase all
or a portion of New Junior Debt from the holders thereof upon the occurrence of
a “change of control” or following an “asset sale” (such terms to be defined in
the indenture(s) governing such New Junior Debt), (x) the Net Debt
Proceeds of such Indebtedness shall be applied as required by
subsection 2.4B(ii)(d), (y) the governing documentation for such
Indebtedness shall not contain any provision prohibiting the creation or
assumption of any Lien on any of the properties or assets of Company or its
Subsidiaries, whether then owned or thereafter acquired, to secure payment of
the Obligations or any agreement renewing, refinancing or extending the
Obligations or this Agreement, and (z) all other terms and conditions
shall be substantially comparable to those prevailing in the market place for
comparable debt issuances as confirmed by the Administrative Agent in its
reasonable judgment.

“New Senior Debt”
means Indebtedness (including guarantees thereof and Indebtedness and
guarantees issued in exchange or in replacement thereof containing
substantially identical terms) having the following characteristics:  (u) the obligors (whether borrowers,
issuers, guarantors, pledgors or other credit support parties) shall include
one or more of the obligors of the Obligations (other than Foreign
Subsidiaries) and no other Persons, (v) no collateral (other than all or
any portion of the Collateral) shall secure such Indebtedness and the Liens on
the Collateral, if any, shall rank subordinate to or pari passu with the Liens
securing the

 35
 

 

Obligations, (w) such Indebtedness shall not have
any scheduled payment of principal, prepayment, mandatory redemption or sinking
fund payment in excess of 1% of the outstanding principal amount per year prior
to June 15, 2013 except for
provisions requiring any permitted obligor under clause (u) above to
repurchase all or a portion of New Senior Debt from the holders thereof upon
the occurrence of a “change of control” or following an “asset sale” (such
terms to be defined in the indenture(s) governing such New Senior Debt), (x) the
Net Debt Proceeds of such Indebtedness shall be applied as required by
subsection 2.4B(ii)(d), (y) the governing documentation for such
Indebtedness shall not contain any provision prohibiting the creation or
assumption of any Lien on any of the properties or assets of Company or its
Subsidiaries, whether then owned or thereafter acquired, to secure payment of
the Obligations or any agreement renewing, refinancing or extending the
Obligations or this Agreement, and (z) all other terms and conditions
shall be substantially comparable to those prevailing in the market place for
comparable debt issuances as confirmed by the Administrative Agent in its
reasonable judgment. For the avoidance of doubt, in any event, Existing
Owens-Brockway Senior Secured Notes and Existing Owens-Brockway Senior
Unsecured Notes and related guarantees constitute New Senior Debt.

“Nominal Restatement” means the
amendment and restatement of the Existing Credit Agreement dated as of June 14,
2006 by and between ACI and DBTCA, as trustee for the benefit of the Lenders
hereunder, under which DBTCA shall make a loan to ACI in the amount of $10,000.

“Non-Consenting Lender” has the meaning assigned to that term in
subsection 10.7B.

“Note  Redemption Conditions” means, with respect
to any Net Debt Proceeds, (i) after giving effect to the issuance of such
Net Debt Proceeds and any contemporaneous application of any portion thereof to
Revolving Loans or Offshore Revolving Loans outstanding, the Revolving Loan
Commitments shall exceed the Total Utilization of Revolving Loan Commitments by
at least $150,000,000; and (ii) in the case of Net Debt Proceeds arising
from the issuance of New Senior Debt (other than unsecured New Senior Debt
issued at a time when the aggregate outstanding principal amount of the
Existing Holdings Senior Notes due 2007, Existing Holdings Senior Notes due
2008 and Existing Owens-Brockway Senior Secured Notes due 2009 is $200,000,000
or less), after giving effect to the issuance of such New Senior Debt and the
proposed application of the Net Debt Proceeds arising therefrom, the Consolidated
Senior Secured Leverage Ratio is less than 3.00:1.00.

“Notes” means
one or more of the Tranche A Term Loan Notes, Tranche B Term Loan Notes, the
Tranche C Term Loan Notes, the Tranche D Term Loan Notes, the Revolving Notes
or the Offshore Revolving Loan Notes or any combination thereof.

“Notice of Borrowing”
means a notice substantially in the form of Exhibit I annexed
hereto with respect to a proposed borrowing.

“Notice of
Conversion/Continuation” means a notice substantially in the form of
Exhibit III annexed hereto with respect to a proposed conversion or
continuation.

 36
 

 

“Notice of Request for
Issuance of Letter of Credit” means a notice in the form of Exhibit II
annexed hereto with respect to the proposed issuance of a Letter of Credit.

“O-I Canada”
has the meaning assigned to that term in the introduction to this Agreement.

“O-I Europe”
has the meaning assigned to that term in the introduction to this Agreement.

“O-I General”
means Owens-Illinois General Inc.

“O-I UK” means
O-I Manufacturing UK Limited, a company incorporated in England and Wales with
registered number 00526983 (formerly known as United Glass Limited).

“Obligations”
means all obligations of every nature of any Loan Party from time to time owed
to Agents or Lenders or any of them under or in respect of this Agreement
whether for principal, interest, premium, fees, indemnification or otherwise,
the Notes, the Letters of Credit, the Offshore Overdraft Agreements, the
Domestic Overdraft Agreement or any of the other Loan Documents (excluding, for
the avoidance of doubt, all obligations under or in respect of Other Lender
Guarantied Obligations and Other Permitted Credit Exposure).

“Officers’ Certificate”
means, as applied to any corporation, limited liability company, partnership or
trust, a certificate executed on behalf of such entity by (i) its Chairman
of the Board (if an officer) or its President or one of its Vice Presidents or,
if applicable, its managing member, general partner or trustee or, in the case
of any Offshore Borrower or Offshore Guarantor, any director or any attorney
appointed by power of attorney, and (ii) by its Chief Financial Officer,
its Treasurer, any of its Assistant Treasurers, its Controller or any of its
Assistant Controllers or, in the case of any Offshore Borrower or Offshore
Guarantor, any other director or attorney appointed by power of attorney; provided,
that any Officers’ Certificate required to be delivered by Company on the
Closing Date may be executed on behalf of Company by any one of the foregoing
officers.

“Offshore Borrower”
means (i) with respect to Tranche A Term Loans, Australian Revolving
Loans, the Australian Overdraft Account and any Letter of Credit issued for the
account of ACI, ACI, (ii) with respect to Tranche C Term Loans, Canadian Revolving
Loans and the Canadian Overdraft Account, O-I Canada, (iii) with respect
to Tranche D Term Loans, Dutch Revolving Loans, the Dutch Overdraft Account and
any Letter of Credit issued for the account of OIEG, OIEG and (iv) with
respect to Swiss Revolving Loans, the Swiss Overdraft Account, and any Letter
of Credit issued for the account of O-I Europe, O-I Europe and “Offshore Borrowers” means ACI, O-I Canada, OIEG and O-I
Europe, collectively.

“Offshore Collateral
Documents” means the Offshore Security Agreements and the Mortgages
securing real property located outside of the United States of America.

“Offshore Currency”
means ADollars, Euros or Canadian Dollars.

 37
 

 

“Offshore Currency
Equivalent” means, at any time as to any amount denominated in
Dollars, the equivalent amount in the applicable Offshore Currency as
determined by the Administrative Agent at such time on the basis of the Spot
Rate for the purchase of such Offshore Currency with Dollars on the most recent
Calculation Date.

“Offshore Currency Loan”
means any Loan denominated in ADollars, Euros or Canadian Dollars.

“Offshore
Guarantors” means,
collectively, the Australian Guarantors, the UK Guarantors, the Canadian
Guarantors and the Dutch Guarantors. As of the Closing Date, the Offshore
Guarantors are set forth on Schedule 1.1A.

“Offshore
Guaranties” means the
guaranties entered into by each of the Offshore Borrowers (other than O-I
Europe) of the Obligations of the other Offshore Borrowers and by each of the
Offshore Guarantors of the Obligations of the Offshore Borrowers, in each case
in a form satisfactory to the Administrative Agent, as the same may be amended,
amended and restated or otherwise modified from time to time.

“Offshore Overdraft Account”
means the Australian Overdraft Account, the Canadian Overdraft Account, the
Dutch Overdraft Account or the Swiss Overdraft Account, and “Offshore Overdraft Accounts” means the Australian Overdraft
Account, the Canadian Overdraft Account, the Dutch Overdraft Account and the
Swiss Overdraft Account, collectively.

“Offshore Overdraft Account
Provider” means Australian Overdraft Account Provider, Canadian
Overdraft Account Provider, Dutch Overdraft Account Provider and Swiss
Overdraft Account Provider, and “Offshore Overdraft Account
Providers” means Australian Overdraft Account Provider, Canadian
Overdraft Account Provider, Dutch Overdraft Account Provider and Swiss
Overdraft Account Provider, collectively.

“Offshore Overdraft
Agreement” means the Australian Overdraft Agreement, the Canadian
Overdraft Agreement, the Dutch Overdraft Agreement and the Swiss Overdraft
Agreement, and “Offshore Overdraft Agreements”
means the Australian Overdraft Agreement, the Canadian Overdraft Agreement, the
Dutch Overdraft Agreement and the Swiss Overdraft Agreement, collectively.

“Offshore Overdraft Amount”
means the Australian Overdraft Amount, the Canadian Overdraft Amount, the Dutch
Overdraft Amount and the Swiss Overdraft Amount and “Offshore
Overdraft Amounts” means the Australian Overdraft Amount, the
Canadian Overdraft Amount, the Dutch Overdraft Amount and the Swiss Overdraft
Amount, collectively.

“Offshore
Revolving Loan” means an Australian Revolving Loan, a Canadian
Revolving Loan, a Dutch Revolving Loan or a Swiss Revolving Loan, and “Offshore Revolving Loans” means such loans of all Lenders in
the aggregate.

“Offshore
Revolving Loan Commitment” means an Australian Revolving Loan
Commitment, a Canadian Revolving Loan Commitment, a Dutch Revolving Loan
Commitment or a Swiss Revolving Loan Commitment, and “Offshore
Revolving Loan Commitments” means all such commitments.

 38
 

 

“Offshore Revolving Loan
Note” means any of an Australian Revolving Loan Note, a Canadian
Revolving Loan Note, a Dutch Revolving Loan Note or a Swiss Revolving Loan
Note.

“Offshore Security
Agreements” means, collectively, (i) the security agreements by
ACI, each Australian Guarantor, O-I Canada, each Canadian Guarantor, OIEG, each
Dutch Guarantor, O-I Europe and each UK Guarantor, as executed and delivered on June 14, 2006, as the same may
be amended, amended and restated or otherwise modified in a form satisfactory
to Administrative Agent from time to time in accordance with the terms thereof
and hereof.

“Offshore Sublimit”
means, at any time, (i) as to ACI, the lesser of (a) $300,000,000 (or
the Offshore Currency Equivalent thereof) and (b) the Revolving Loan
Commitments then in effect, (ii) as to O-I Canada, the lesser of (a) $20,000,000
(or the Offshore Currency Equivalent thereof) and (b) the Revolving Loan
Commitments then in effect, (iii) as to OIEG, the lesser of (a) $425,000,000
(or the Offshore Currency Equivalent thereof) and (b) the Revolving Loan
Commitments then in effect and (iv) as to O-I Europe, the lesser of (a) $425,000,000
(or the Offshore Currency Equivalent thereof) and (b) the Revolving Loan
Commitments then in effect; provided that such Offshore Sublimits may be
from time to time decreased pursuant to subsection 2.4G and increased
pursuant to subsection 2.1A(vi).

“OIEG”
has the meaning assigned to that term in the introduction to this Agreement.

“Operating Lease”,
as applied to any Person, means any lease (including leases that may be
terminated by the lessee at any time) of any property (whether real, personal
or mixed) that is not a Capital Lease other than any such lease under which
that Person is the lessor.

“Organizational
Documents” means (i) with
respect to any corporation, its certificate or articles of incorporation or
organization, as amended, and its bylaws, as amended, (ii) with respect to
any limited partnership, its certificate of limited partnership, as amended,
and its partnership agreement, as amended, (iii) with respect to any
general partnership, its partnership agreement, as amended, (iv) with
respect to any limited liability company, its articles of organization, as
amended, and its operating agreement, as amended and (v) with respect to
any Foreign Subsidiary, to the extent not covered above, the equivalent thereof
in its jurisdiction of incorporation, formation or organization.

“Other Lender
Guarantied Obligations” means the obligations owed to Lenders and
their Affiliates pursuant to Other Permitted Credit Exposure which are
guaranteed pursuant to one or more of the Guaranties.

“Other Permitted
Credit Exposure” means the obligations of Subsidiaries or Joint Ventures
of Company owed to Lenders or Affiliates of Lenders arising out of loans,
advances, overdrafts, interest rate, currency or hedge products and other
derivative exposures (including under Interest Rate Agreements and Currency
Agreements) and other extensions of credit to such Subsidiaries or Joint
Ventures.

“Owens-Brockway”
means Owens-Brockway Glass Container Inc., a Delaware corporation.

 39
 

 

“Packaging”
means Owens-Brockway Packaging, Inc., a Delaware corporation and the
parent corporation of Owens-Brockway.

“Participating
Member State” means any member state of the European Community that
adopts or has adopted the Euro as its lawful currency in accordance with
legislation of the European Community relating to the European Monetary Union.

“PBGC” means the
Pension Benefit Guaranty Corporation (or any successor thereto).

“Pension Plan”
means a “pension plan”, as defined in Section 3(2) of ERISA (other
than a Multiemployer Plan), with respect to which Company, any of its
Subsidiaries or any ERISA Affiliate may have any liability.

“Permitted Canadian Liens”
means all Liens created by applicable statutory law in Canada that rank or are
capable of ranking prior to or pari passu with
the Liens granted pursuant to the applicable Collateral Documents, including for
amounts owing for vacation pay, employee deductions and contributions, goods
and services taxes, sales taxes, harmonized sales taxes, realty taxes, business
taxes, workers’ compensation, Quebec corporate taxes, pension plan or fund
obligations and overdue rents.

“Permitted Covenant”
means (i) any periodic reporting covenant, (ii) any covenant
restricting payments by Holdings with respect to any securities of Holdings
which are junior to the applicable Permitted Preferred Stock, (iii) any
covenant the default of which can only result in an increase in the amount of
any redemption price, repayment amount, dividend rate or interest rate, (iv) any
covenant providing board observance rights with respect to Holdings’ board of
directors and (v) any other covenant that does not adversely affect the
interests of the Lenders (as reasonably determined by Administrative Agent).

“Permitted Encumbrances”
means the following types of Liens:

(i)            Liens for taxes, assessments or
governmental charges or claims the payment of which is not at the time required
by subsection 5.3;

(ii)           Statutory Liens (including without
limitation Permitted Canadian Liens) and rights of set-off of banks, Liens of
landlords and Liens of carriers, warehousemen, suppliers, mechanics,
materialmen and other Liens imposed by law incurred in the ordinary course of
business (including title retention agreements arising in the ordinary course
of business) for sums not yet delinquent or being contested in good faith, if
such reserve or other appropriate provision, if any, as shall be required by
GAAP (subject to subsection 1.2) shall have been made therefor;

(iii)          Liens (other than any Lien imposed
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code
or by ERISA) incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,

 40
 

 

performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);

(iv)          Any attachment or judgment Lien not
resulting in an Event of Default under subsection 7.8;

(v)           Leases, subleases or licenses of
occupancy granted to others not interfering in any material respect with the
business of Company and its Subsidiaries, taken as a whole;

(vi)          Easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company and its Subsidiaries, taken as a whole;

(vii)         Any (a) interest or title of a
lessor under any lease not prohibited by this Agreement, (b) restriction
or encumbrance that the interest or title of such lessor or sublessor may be
subject to, or (c) subordination of the interest of the lessee or
sublessee under such lease to any restriction or encumbrance referred to in the
preceding clause (b), so long as the holder of such restriction or encumbrance
agrees to recognize the rights of such lessee or sublessee under such lease;

(viii)        Liens arising from UCC financing
statements regarding leases or charges not prohibited by this Agreement;

(ix)           Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;

(x)            Liens incurred in the ordinary
course of business encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of Company and its
Subsidiaries (excluding deposits securing the repayment of Indebtedness);

(xi)           Liens encumbering customary initial
deposits and margin deposits securing obligations under Interest Rate
Agreements, Currency Agreements and Commodities Agreements, and other Liens
incurred in the ordinary course of business and which are within the general
parameters customary in the industry securing obligations under Commodities
Agreements;

(xii)          Liens securing reimbursement
obligations under Commercial Letters of Credit or bankers’ acceptance
facilities, which Liens encumber documents and other property to be acquired by
drawings under such Commercial Letters of Credit or drafts accepted under such
bankers’ acceptance facilities;

(xiii)         exceptions to title disclosed by a
title policy, preliminary title report or certificate of title delivered
pursuant to subsection 5.10 and approved by Administrative Agent other
than Liens securing Indebtedness prohibited by subsection 6.1 or Contingent
Obligations prohibited by subsection 6.4;

 41
 

 

(xiv)        Liens in the form of title retention in
connection with the acquisition of goods in the ordinary course of business
provided that there has occurred and is continuing no default in the
obligations related thereto;

(xv)         Liens arising in countries other than
the United States of America substantially comparable to the foregoing; and

(xvi)        Liens created over credit balances in
Dutch or Canadian bank accounts of any Subsidiaries in the ordinary course of
their banking arrangements pursuant to the general conditions of such bank.

“Permitted Holdings
Debt Obligations” means the Existing Holdings Senior Notes and the
Existing IRBs and up to an additional $100,000,000 of IRB financing and, to the
extent Net Debt Proceeds are applied as required by subsection 2.4B(ii),
New Senior Debt, Refinancing Senior Debt and New Junior Debt issued by
Holdings.

“Permitted Holdings Hedging
Obligations” means obligations under Hedging Agreements entered into
by Holdings which could have been entered into by Owens-Brockway under Section 6.4(iii).

“Permitted Preferred
Stock” means any preferred stock of Holdings (or any equity security
of Holdings that is convertible or exchangeable into any preferred stock of
Holdings), so long as the terms of any such preferred stock or equity security
of Holdings (i) do not provide any collateral security, (ii) do not
provide any guaranty or other support by Company or any of its Subsidiaries, (iii) do
not contain any mandatory put, redemption, repayment, sinking fund or other
similar provision occurring before June 15,
2013, (iv) do not contain any covenants other than any Permitted Covenant,
(v) do not grant the holders thereof any voting rights except for (w) voting
rights required to be granted to such holders under applicable law, (x) customary
voting rights on fundamental matters such as mergers, consolidations, sales of
substantial assets, or liquidations involving Holdings and matters that could
adversely affect the rights, preferences, qualifications, limitations or
restrictions of such Permitted Preferred Stock and any other voting rights that
are customary in the market at the time of issuance of such Permitted Preferred
Stock, as determined by the Administrative Agent in its reasonable judgment, (y) other
voting rights to the extent not greater than or superior to those allocated to
Holdings Common Stock on a per share basis, and (z) voting rights with
respect to the election of directors arising from dividends in arrears, and (vi) are
otherwise reasonably satisfactory to Administrative Agent.

“Person” means
and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.

“Plan” means an
employee benefit plan (as defined in Section 3(3) of ERISA) which
Company or any of its Subsidiaries sponsors or maintains, or to which Company
or any of its Subsidiaries makes, is making or is obligated to make
contributions, or to which Company or any of its Subsidiaries may have any
liability, and includes any Pension Plan.

 42

 

 

“Pledge Agreement”
means the Second Amended and Restated Pledge Agreement dated as of June 14,
2006, by and between Company and Packaging, in the form attached hereto as Exhibit XV,
as such Pledge Agreement may hereafter be amended, supplemented or otherwise
modified from time to time.

“PMP” means a
professional market party (professionele marktpartij)
within the meaning of the Dutch Exemption Regulation.

“Potential Event of Default”
means a condition or event which, after notice or lapse of time or both, would
constitute an Event of Default if that condition or event were not cured or
removed within any applicable grace or cure period.

“Prime Rate”
means the rate which DB announces from time to time as its prime lending rate,
as in effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
DB may make commercial loans or other loans at rates of interest at, above or
below the Prime Rate.

“Pro Forma
Basis” means, as of any date of determination, the calculation of
the compliance of Borrowers with the financial covenants set forth in
subsections 6.6A and 6.6B or the calculation of the Consolidated Senior Secured
Leverage Ratio, after giving effect on a pro forma basis to any
Acquisition constituting a Pro Forma Event made during the four Fiscal Quarter
period most recently ended on or prior to such date of determination (the “Compliance Period”)(or made after the end of such Compliance
Period but on or before the date of determination), and any disposition
constituting a Pro Forma Event made during such Compliance Period (or made
after the end of such Compliance Period but on or before the date of
determination), on the following basis:

(i)            any
Indebtedness incurred or assumed by Holdings or any of its Subsidiaries in
connection with such Acquisitions and any Indebtedness repaid in connection
with such Acquisitions or dispositions shall be deemed to have been incurred or
repaid, respectively, as of the first day of the Compliance Period;

(ii)           if
such Indebtedness incurred or assumed by Holdings or any of its Subsidiaries in
connection with any such Acquisition has a floating or formula rate, then the
rate of interest for such Indebtedness for the applicable period shall be
computed as if the rate in effect for such Indebtedness on the relevant
measurement date had been the applicable rate for the entire applicable period;

(iii)          income
statement items (whether positive or negative) attributable to the property or
business acquired or disposed of in such Acquisitions or dispositions shall be
included as if such Acquisitions or dispositions took place on the first day of
such Compliance Period on a pro forma basis;

(iv)          for
purposes of calculating Consolidated Tangible Net Assets in subsections
6.1(iii), 6.3(xi) and 6.7(iv), assets acquired in such Acquisitions or disposed
of in such dispositions shall be included in Consolidated Tangible Net Assets
as if such Acquisitions or dispositions took place on the first day of such Compliance
Period on a pro forma basis; and

 43
 

 

 

(iv)          any
historical extraordinary non-recurring costs or expenses or other verifiable
costs or expenses that will not continue after the Acquisition or disposition
date may be eliminated and other expenses and cost reductions may be reflected
on a basis consistent with Regulation S-X promulgated by the Securities and
Exchange Commission.

With respect to any such Acquisitions, such pro forma
calculations shall be based on the consolidated balance sheet of such acquired
Person or business and its consolidated Subsidiaries as at the end of its most
recent Fiscal Year or the most recent fiscal period preceding such Acquisition
and the related consolidated statements of income and of cash flows for such
period, which shall have been previously provided to Administrative Agent and
shall either (1) have been reported on without a qualification arising out
of the scope of the audit by independent certified public accountants of
nationally recognized standing or (2) have been found reasonably
acceptable by Administrative Agent.

“Pro Forma Event”
means any disposition of assets to third parties the fair market value of which
equals or exceeds $100,000,000 and any Acquisition in which the aggregate
consideration paid or given (including, without limitation, cash paid, Acquired
Indebtedness or assumed Indebtedness and the value of any other consideration
paid or given) to third parties equals or exceeds $100,000,000.

“Pro Rata Share”
means, with respect to any Lender, (i) with respect to all payments,
computations and other matters relating to the Tranche A Term Loans of any
Lender, the percentage obtained by dividing (a) the Tranche A Term
Loan Exposure of that Lender by (b) the aggregate Tranche A Term
Loan Exposure of all Lenders, (ii) with respect to all payments,
computations and other matters relating to the Tranche B Term Loans of any
Lender, the percentage obtained by dividing (a) the Tranche B Term
Loan Exposure of that Lender by (b) the aggregate Tranche B Term
Loan Exposure of all Lenders, (iii) with respect to all payments,
computations and other matters relating to the Tranche C Term Loans of any
Lender, the percentage obtained by dividing (a) the Tranche C Term
Loan Exposure of that Lender by (b) the aggregate Tranche C Term
Loan Exposure of all Lenders, (iv) with respect to all payments,
computations and other matters relating to the Tranche D Term Loans of any
Lender, the percentage obtained by dividing (a) the Tranche D Term
Loan Exposure of that Lender by (b) the aggregate Tranche D Term
Loan Exposure of all Lenders, (v) with respect to all payments,
computations and other matters relating to the Revolving Loan Commitment or the
Revolving Loans of any Lender or any Letters of Credit issued or participations
therein purchased by any Lender or any participations in the Domestic Overdraft
Amount or any Offshore Overdraft Amount or any Offshore Revolving Loans
purchased by any Lender, the percentage obtained by dividing (a) the
Revolving Loan Exposure of that Lender by (b) the aggregate
Revolving Loan Exposure of all Lenders, (vi) with respect to all payments,
computations and other matters relating to the Australian Revolving Loan
Commitments or the Australian Revolving Loans of any Lender or any Letters of
Credit issued for the account of ACI or participations therein or any
participations in the Australian Overdraft Amount purchased by any Lender, the
percentage obtained by dividing (a) the Australian Revolving Loan
Exposure of that Lender by (b) the aggregate Australian Revolving
Loan Exposure of all Lenders, (vii) with respect to all payments,
computations and other matters relating to the Canadian Revolving Loan
Commitments or the Canadian Revolving Loans of any Lender or any participations
in the

 44
 

 

 

Canadian Overdraft Amount purchased by any Lender, the
percentage obtained by dividing (a) the Canadian Revolving Loan
Exposure of that Lender by (b) the aggregate Canadian Revolving
Loan Exposure of all Lenders, (viii) with respect to all payments,
computations and other matters relating to the Dutch Revolving Loan Commitments
or the Dutch Revolving Loans of any Lender or any Letters of Credit issued for
the account of OIEG or participations therein or any participations in the
Dutch Overdraft Amount purchased by any Lender, the percentage obtained by dividing
(a) the Dutch Revolving Loan Exposure of that Lender by (b) the
aggregate Dutch Revolving Loan Exposure of all Lenders, (ix) with respect
to all payments, computations and other matters relating to the Swiss Revolving
Loan Commitments or the Swiss Revolving Loans of any Lender or any Letters of
Credit issued for the account of O-I Europe or participations therein or any
participations in the Swiss Overdraft Amount, the percentage obtained by dividing
(a) the Swiss Revolving Loan Exposure of that Lender by (b) the
aggregate Swiss Revolving Loan Exposure of all Lenders, and (x) for all
other purposes with respect to each Lender, the percentage obtained by dividing
(a) the sum of the Tranche A Term Loan Exposure of that Lender plus
the Tranche B Term Loan Exposure of that Lender plus the Tranche C Term
Loan Exposure of that Lender plus the Tranche D Term Loan Exposure of
that Lender plus the Revolving Loan Exposure of that Lender by (b) the
sum of the aggregate Tranche A Term Loan Exposure of all Lenders plus
the aggregate Tranche B Term Loan Exposure of all Lenders plus the
aggregate Tranche C Term Loan Exposure of all Lenders plus the aggregate
Tranche D Term Loan Exposure of all Lenders plus the aggregate Revolving
Loan Exposure of all Lenders, in any such case as the applicable percentage may
be adjusted by assignments permitted pursuant to subsection 10.2. The
initial Pro Rata Share of each Lender for purposes of each of clauses (v),
(vi), (vii), (viii) and (ix) of the preceding sentence is set forth
opposite the name of that Lender in Schedule A annexed hereto. The
initial Pro Rata Share of each Lender for purposes of clauses (i), (ii), (iii),
(iv) and (x) are set forth in the Register as of the date hereof.

“PTO”
means the United States Patent and Trademark Office or any successor or
substitute office in which filings are necessary or, in the opinion of
Collateral Agent, desirable in order to create or perfect Liens on any IP
Collateral.

“Purchase Money
Indebtedness” means Indebtedness incurred simultaneously with or
within 180 days after the acquisition, construction or improvement of real
property or tangible personal property to finance such acquisition,
construction or improvement of such property.

“Real
Property Asset”
means, at any time of determination, any fee interest then owned or Ground
Leasehold Interest then held (or in the case of any UK Guarantor, any freehold
interest then owned or leasehold interest then held) by any Loan Party in any
real property.

“Receivables Sale
Indebtedness” means Indebtedness incurred or deemed incurred or cash
consideration received from the sale of accounts receivable by Company or any
of its Subsidiaries or a special purpose vehicle established by any of them to
purchase and sell such receivables.

 45
 

 

 

“Recorded Leasehold
Interest” means a lease or memorandum thereof evidencing a Ground
Leasehold Interest duly recorded in the applicable jurisdiction in which the
property underlying such Ground Leasehold Interest is located.

“Redemption Draw”
has the meaning assigned to that term in subsection 3.2B(i).

“Reference Lenders”
means Deutsche Bank AG, New York Branch and Bank of America, N.A.

“Refinancing Senior
Debt” means Indebtedness (including guarantees thereof and
Indebtedness and guarantees issued in exchange or in replacement thereof
containing substantially identical terms) having the following characteristics (u) the
obligors shall include only the Existing Holdings Senior Note Obligors and no
other Persons, (v) any collateral therefor shall include only the Existing
Holdings Senior Note Collateral and no other collateral and the Lien thereon,
if any, shall be subordinated to the Lien securing the Obligations, (w) such
Indebtedness shall not have any scheduled payment, prepayment, mandatory
redemption or sinking fund payment prior to June 15, 2013, except for provisions
requiring any permitted obligor under clause (u) above to repurchase all
or a portion of Refinancing Senior Debt from the holders thereof upon the
occurrence of a “change of control” or following an “asset sale” (such terms to
be defined in the indenture(s) governing such Refinancing Senior Debt), (x) the
Net Debt Proceeds of such Indebtedness shall be applied as required by
subsection 2.4B(ii)(d), (y) the governing documentation for such
Indebtedness shall not contain any provision prohibiting the creation or
assumption of any Lien on any of the properties or assets of Company or its
Subsidiaries, whether then owned or thereafter acquired, to secure payment of
the Obligations or any agreement renewing, refinancing or extending the
Obligations or this Agreement, and (z) all other terms and conditions
shall be substantially comparable to those prevailing in the market place for
comparable debt issuances as confirmed by the Administrative Agent in its
reasonable judgment.

“Refinancing Term Loans” has the meaning
assigned to that term in subsection 2.1A(vii).

“Register” has
the meaning assigned to that term in subsection 2.1G.

“Regulation D”
means Regulation D of the Board of Governors of the Federal Reserve System as
in effect from time to time.

“Related Fund”
means any fund that invests in bank loans and is managed by the same investment
advisor of a Lender or by an Affiliate of such investment advisor.

“Release” means any release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into the
indoor or outdoor environment (including the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the air,
soil, surface water or groundwater.

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“Requisite Class Lenders” means, at any time of
determination (i) for the Class of Revolving Lenders, Lenders having
or holding more than 50% of the aggregate Revolving Loan Exposure of all
Lenders, (ii) for the Class of Lenders having Tranche A Term Loan
Exposure, Lenders having or holding more than 50% of the aggregate Tranche A
Term Loan Exposure of all Lenders, (iii) for the Class of Lenders
having Tranche B Term Loan Exposure, Lenders having or holding more than 50% of
the aggregate Tranche B Term Loan Exposure of all Lenders, (iv) for the Class of
Lenders having Tranche C Term Loan Exposure, Lenders having or holding more
than 50% of the aggregate Tranche C Term Loan Exposure of all Lenders and (v) for
the Class of Lenders having Tranche D Term Loan Exposure, Lenders having
or holding more than 50% of the aggregate Tranche D Term Loan Exposure of all
Lenders.

“Requisite Lenders”
means Lenders having or holding more than 50% of the sum of (a) the
aggregate Tranche A Term Loan Exposure of all Lenders plus (b) the
aggregate Tranche B Term Loan Exposure of all Lenders plus (c) the
aggregate Tranche C Term Loan Exposure of all Lenders plus (d) the
aggregate Tranche D Term Loan Exposure of all Lenders plus (e) the
aggregate Revolving Loan Exposure of all Lenders.

“Responsible Officer”
means any of the chief executive officer, the president, any vice president,
the chief financial officer, the comptroller, the treasurer, any assistant
treasurer, the controller or any assistant controller of a Loan Party.

“Restricted Debt
Obligations” means, collectively, the Existing Holdings Senior
Notes, the Existing Owens-Brockway Senior Secured
Notes, the Existing Owens-Brockway Senior Unsecured Notes, New Senior Debt,
Refinancing Senior Debt and New Junior Debt.

“Restricted Junior Payment”
means (i) any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock of Company now or hereafter
outstanding, except a dividend payable solely in shares of that class of stock
to the holders of that class, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire shares of any
class of stock of Company now or hereafter outstanding, and (iv) any
payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness, including, without limitation, Company’s intercompany note to
Holdings.

“Revolving Lenders”
means the Lenders having Revolving Loan Exposure.

“Revolving Loan Commitment”
means the commitment of a Lender to make Revolving Loans from and after the
Closing Date to Owens-Brockway pursuant to subsection 2.1A(v), and “Revolving Loan Commitments” means such commitments of all
Lenders to Owens-Brockway in the aggregate.

“Revolving Loan Commitment
Termination Date” means June 15, 2012.

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“Revolving Loan Exposure”
means, with respect to any Lender as of any date of determination (i) prior
to the termination of the Revolving Loan Commitments, that Lender’s Revolving
Loan Commitment and (ii) after the termination of the Revolving Loan
Commitments, the sum (without duplication) of (a) aggregate outstanding
principal amount of the Revolving Loans of that Lender plus (b) in
the event that Lender is an Issuing Lender, the aggregate Letter of Credit
Usage in respect of all Letters of Credit issued by that Lender (in each case
net of any participations purchased by other Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) the aggregate
amount of all participations purchased by that Lender in any outstanding
Letters of Credit or any unreimbursed drawings under any Letters of Credit plus
(d) in the case of Administrative Agent (in its capacity as a Lender), the
Domestic Overdraft Amount (net of any participations therein purchased by other
Lenders) plus (e) the aggregate amount of all participations
purchased by that Lender in the Domestic Overdraft Amount plus (f) the
Dollar Equivalent of all participations purchased by that Lender in the
Offshore Overdraft Amount (net of any participations therein purchased by other
Lenders) plus (g) the aggregate outstanding principal amount of the
Dollar Equivalent of any Offshore Revolving Loans of such Lender (net of any
participations therein purchased by other Lenders) plus (h) in the
case of any Offshore Overdraft Account Provider with respect to a particular
Offshore Currency, the Dollar Equivalent of the relevant Offshore Overdraft
Amount (net of any participations therein purchased by other Lenders).

“Revolving Loans”
means the Loans made by Lenders to Owens-Brockway pursuant to
subsection 2.1A(v).

“Revolving Note”
means a promissory note of Owens-Brockway substantially in the form of Exhibit V
annexed hereto, issued in favor of Lenders pursuant to subsection 2.1G(iv) to
evidence the Revolving Loans made to Owens-Brockway, as they may be amended,
supplemented or otherwise modified from time to time. “Revolving Notes” means all such promissory
notes collectively, as they may be amended, supplemented or otherwise modified
from time to time.

“S&P” means
Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc.

“Same Day Funds”
means immediately available funds.

“Schedule I Bank”
means a bank that is a Canadian chartered bank listed on Schedule I to the Bank
Act (Canada).

“Schedule II Bank”
means a bank that is a Canadian chartered bank listed on Schedule II to the
Bank Act (Canada).

“Schedule III Bank” means an authorized foreign bank listed on Schedule III to
the Bank Act (Canada).

“Security Agreement”
means the Second Amended and Restated Security Agreement dated as of June 14,
2006, by and among Company, Owens-Brockway and the Subsidiary Guarantors, in
the form attached hereto as Exhibit XVI, as such Security Agreement
may hereafter be amended, supplemented or otherwise modified from time to time.

 48
 

 

 

“Securities”
means any stock, shares, voting trust certificates, bonds, debentures, options,
warrants, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as “securities” or any certificates of interest, shares or participations
in temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.

“Securities Act”
means the Securities Act of 1933, as amended from time to time, and any
successor statute.

“Solvent”,
(A) with respect to any Person organized under the laws of a state of the
United States of America, means that as of the date of determination both (i)(a) the
then fair saleable value of the property of such Person is (1) greater
than the total amount of liabilities (including contingent liabilities) of such
Person and (2) not less than the amount that will be required to pay the
probable liabilities on such Person’s then existing debts as they become
absolute and due considering all financing alternatives and potential asset
sales reasonably available to such Person; (b) such Person’s capital is
not unreasonably small in relation to its business or any contemplated or
undertaken transaction; and (c) such Person does not intend to incur, or
believe (nor should it reasonably believe) that it will incur, debts beyond its
ability to pay such debts as they become due; and (ii) such Person is “solvent”
within the meaning given that term and similar terms under applicable laws
relating to fraudulent transfers and conveyances; (B) with respect to any
Person incorporated in England, Wales or Scotland means that as of the date of
determination of solvency the value of such Person’s assets is not less than
the amount of its liabilities, taking into account its contingent and
prospective liabilities; (C) with respect to any Person organized under
the laws of Australia, the Netherlands or Canada means that such Person is able
to pay its debts as such debts become due and payable; and (D) with
respect to any Person organized under the laws of Switzerland means that as of
the date of determination, (i) the value of the assets of such Person is
higher than the sum of (a) the liabilities of such Person and (b) half
of the share capital of such Person, and (ii) such Person disposes of cash
or cash equivalents in an amount that is not less than the total of the
short-term liabilities. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.

“Specified
Obligations” means Obligations consisting of the principal of and
interest on the Loans, the Domestic Overdraft Amount (and participations
therein purchased by the Revolving Lenders pursuant to Section 2.1B), the
Offshore Overdraft Amount (and participations therein purchased by the
Revolving Lenders pursuant to Section 2.1D(ii)), reimbursement obligations
in respect of LC Disbursements and accrued commitment fees payable hereunder to
the Revolving Lenders.

“Spot Rate”
means, with respect to any foreign exchange computation in respect of any
Offshore Currency or otherwise or, with respect to a Letter of Credit, other
non-Dollar currency, the rate quoted by the Administrative Agent in accordance
with its customary procedures as the spot rate for the purchase by
Administrative Agent of Dollars with such currency or the purchase by
Administrative Agent of such Offshore Currency with Dollars, as the case may
be, through its FX Trading Office at 10:30 A.M. (New York time) on such
date as

 49
 

 

 

of which the applicable foreign exchange computation
is made for delivery two Business Days later.

“Standby Letter of Credit”
means any standby letter of credit or similar instrument issued for the purpose
of supporting (i) Indebtedness incurred by any Foreign Subsidiary or any
Joint Venture to which Holdings or any of its Subsidiaries is a party for
working capital and general business purposes, (ii) obligations of
Holdings or any of its Subsidiaries with respect to capital calls or similar
requirements in respect of Joint Ventures to which Holdings or such Subsidiary
is a party, (iii) workers compensation liabilities of Holdings or any of
its Subsidiaries, (iv) the obligations of third party insurers of Holdings
or any of its Subsidiaries arising by virtue of the laws of any jurisdiction
requiring third party insurers, (v) Indebtedness of Holdings or any of its
Subsidiaries in respect of industrial revenue or development bonds or
financings, (vi) obligations with respect to leases of Holdings or any of
its Subsidiaries, (vii) obligations of Holdings or any of its Subsidiaries
imposed by statute or by a court of competent jurisdiction to post appeal bonds
or other security in connection with litigation appeals, and other performance,
payment, deposit or surety obligations of Holdings or any of its Subsidiaries,
in any such other case if required by law or governmental rule or
regulation or in accordance with custom and practice in the industry, (viii) obligations
of Owens Insurance Limited with respect to certain self insurance and
reinsurance programs, including obligations under insurance treaties, or (ix) other
obligations of Holdings or any of its Subsidiaries for which letter of credit
support would be used in the ordinary course of Holdings’ or such Subsidiary’s
business consistent with its past practices or otherwise consistent with custom
and practice in the industry.

“Subject Lender” has
the meaning assigned to that term in subsection 10.7B.

“Subordinated
Indebtedness” means any Indebtedness of Holdings or its Subsidiaries
incurred from time to time which is subordinated in right of payment to the
Obligations in a manner, and otherwise has terms and conditions (including as
to amortization, covenants and defaults), reasonably acceptable to Agents.

“Subsidiary”
means any corporation, association or other business entity of which more than
50% of the total voting power of shares of stock or other ownership interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof. As used herein,
references to “Subsidiaries” of Company shall include the Borrowers, unless
expressly specified otherwise.

“Subsidiary Guarantor”
means any Domestic Subsidiary of Company that executes and delivers a
counterpart of the Subsidiary Guaranty. As of the Closing Date, the Subsidiary
Guarantors are set forth on Schedule 1.1B.

“Subsidiary Guaranty”
means the Second Amended and Restated Subsidiary Guaranty dated as of June 14,
2006, by and among all wholly-owned Domestic Subsidiaries (excluding
Owens-Brockway, the Harbor Capital Subsidiaries, OI Domestic Holdings Inc.,
Bolivian Investments, Inc., OI Thailand Inc., Sovereign Air, LLC and
Maumee Air Associates

 50
 

 

 

Inc.), in the form attached hereto as Exhibit XIII,
and as supplemented hereafter under certain circumstances by certain
Subsidiaries of Company in accordance with subsection 5.9, and as such
Subsidiary Guaranty may hereafter be amended, supplemented or otherwise
modified from time to time.

“Swiss Overdraft Account”
means an account established by O-I Europe with Swiss Overdraft Account
Provider and referenced in a Swiss Overdraft Agreement.

“Swiss Overdraft Account
Provider” means Calyon or any successor Swiss Overdraft Account
Provider pursuant to subsection 10.2E; provided, however,
that no such Lender shall be a successor Swiss Overdraft Account Provider until
O-I Europe and such Lender have executed and delivered a Swiss Overdraft
Agreement to Administrative Agent.

“Swiss Overdraft Agreement”
means that certain agreement between O-I Europe and Calyon, dated on or about June 14,
2006, and any Offshore Overdraft Agreement between O-I Europe, OIEG and any
successor Swiss Overdraft Account Provider, in substantially the form of Exhibit VIII
annexed hereto, with such modifications thereto as may be approved by
Administrative Agent and any successor Offshore Overdraft Agreement executed
and delivered by O-I Europe and such successor Swiss Overdraft Account Provider
pursuant to subsection 10.2E, as any such Offshore Overdraft Agreement may
hereafter be amended, amended and restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.

“Swiss Overdraft Amount”
means, as at any date of determination, the aggregate principal amount of
outstanding overdrafts charged to the Swiss Overdraft Account.

“Swiss
Revolving Loan Commitment”
means the commitment of a Lender to make Swiss Revolving Loans to O-I Europe pursuant to subsection 2.1C, and
“Swiss Revolving Loan Commitments” means such commitments of all Lenders in
the aggregate.

“Swiss  Revolving Loan Exposure”
means, with respect to any Lender as of any date of determination (i) prior
to the termination of the Revolving Loan Commitments, that Lender’s Swiss Revolving Loan Commitment, and (ii) after
the termination of the Revolving Loan Commitments, the sum of (a) the
aggregate outstanding principal amount of the Swiss Revolving Loans of that Lender plus (b) in the
event that Lender is an Issuing Lender in respect of a Letter of Credit issued
for the account of O-I Europe, the aggregate Letter of Credit Usage in respect
of all Letters of Credit issued by that Lender for the account of O-I Europe
(in each case net of any participation purchased by other Lenders in such
Letters of Credit or any unreimbursed drawings thereunder) plus (c) the
aggregate amount of all participations purchased by that Lender in any
outstanding Letters of Credit issued for the account of O-I Europe or any
unreimbursed drawings under any Letters of Credit issued for the account of O-I
Europe plus (d) in the case of Swiss Overdraft
Account Provider, the Dollar Equivalent of the Swiss Overdraft
Amount (net of any participations therein purchased by other Lenders) plus
(e) the aggregate amount of all participations purchased by that Lender in
the Swiss Overdraft Amount.

“Swiss Revolving Loan Note”
means any promissory note of O-I Europe, substantially in the form of Exhibit VI
annexed hereto, issued in favor of a Lender pursuant to

 51
 

 

 

subsection 2.1G(iv) to evidence the Swiss Revolving Loans of such Lender, as
such promissory note may be amended, supplemented or otherwise modified from
time to time.

“Swiss Revolving Loans”
means any Loans made by Lenders to O-I Europe pursuant to subsection 2.1C.

“Syndication
Agent” has the meaning assigned to that term in the introduction to
this Agreement.

“Synthetic Lease”
means any lease of goods or other property, whether real or personal, which is
treated as an operating lease under generally accepted accounting principles
and as a loan or financing for U.S. income tax purposes.

“Tax” or “Taxes” means any present or future tax, substitute tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature and
whatever called, on whomsoever and wherever imposed, levied, collected,
withheld or assessed by any foreign, federal, state or local authority.

“Tax
Transferee” means any Person who acquires any interest in the Loans
(whether or not by operation of law) or the office to which a Lender, Arranger
or Agent has transferred its Loans for purposes of determining where the Loans
are made, accounted for or booked.

“Term Loan”
means either a Tranche A Term Loan, a Tranche B Term Loan, a Tranche C Term
Loan, a Tranche D Term Loan and, if made, an Additional Term Loan or a
Refinancing Term Loan, and “Term Loans”
means all such Loans collectively.

“Term Loan Commitment”
means a Tranche A Term Loan Commitment, a Tranche B Term Loan Commitment, a
Tranche C Term Loan Commitment or a Tranche D Term Loan Commitment, and “Term Loan Commitments” means all such commitments.

“Threshold Debt Ratings”
means a rating for Owens-Brockway’s senior secured Indebtedness of BB+ or
higher by S&P and Ba1 or higher by Moody’s.

“Total
Utilization of Australian Revolving Loan Commitments” means, as at any date of
determination, the sum of (i) the aggregate principal amount of all
outstanding Australian Revolving Loans (other than Australian Revolving Loans
made for the purpose of (a) reimbursing the applicable Issuing Lender for
any drawing honored under any Letter of Credit issued for the account of ACI or
(b) repaying the Australian Overdraft Amount, in each case to the extent
not yet so applied) plus (ii) all Letter of Credit Usage by ACI,
plus (iii) the Dollar Equivalent of the Australian Overdraft Amount.

“Total
Utilization of Canadian Revolving Loan Commitments” means, as at any date of determination,
the sum of (i) the aggregate principal amount of all outstanding Canadian
Revolving Loans (other than Canadian Revolving Loans made for the purpose of
repaying the Canadian Overdraft Amount to the extent not yet so applied) plus
(ii) the Dollar Equivalent of the Canadian Overdraft Amount.

 

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“Total
Utilization of Dutch Revolving Loan Commitments” means, as at any date of
determination, the sum of (i) the aggregate principal amount of all
outstanding Dutch Revolving Loans (other than Dutch Revolving Loans made for
the purpose of (a) reimbursing the applicable Issuing Lender for any
drawing honored under any Letter of Credit issued for the account of OIEG or (b) repaying
the Dutch Overdraft Amount, in each case to the extent not yet so applied) plus
(ii) all Letter of Credit Usage by OIEG, plus (iii) the Dollar
Equivalent of the Dutch Overdraft Amount.

“Total Utilization of
Revolving Loan Commitments” means, as at any date of determination,
the sum of (i) the aggregate principal amount of all outstanding Revolving
Loans (other than Revolving Loans made for the purpose of (a) reimbursing
the applicable Issuing Lender for any drawing honored under any Letter of
Credit issued for the account of Owens-Brockway or (b) repaying the
Domestic Overdraft Amount, in each case to the extent not yet so applied), plus
(ii) the Letter of Credit Usage by Owens-Brockway plus (iii) the
Domestic Overdraft Amount plus (iv) the Dollar Equivalent of the
aggregate principal amount of all outstanding Offshore Revolving Loans (other
than Offshore Revolving Loans made for the purpose of (a) reimbursing the
applicable Issuing Lender for any drawing honored under any Letter of Credit
issued for the account of an Offshore Borrower or (b) repaying any
Offshore Overdraft Amount in each case to the extent not yet so applied) plus
(v) the Letter of Credit Usage by the Offshore Borrowers plus (vi) the
Dollar Equivalent of the Offshore Overdraft Amounts.

“Total
Utilization of Swiss Revolving Loan Commitments” means, as at any date of
determination, the sum of (i) the aggregate principal amount of all
outstanding Swiss Revolving Loans (other than Swiss Revolving Loans made for
the purpose of reimbursing (a) the applicable Issuing Lender for any
drawing honored under any Letter of Credit issued for the account of O-I Europe
or (b) repaying the Swiss Overdraft Amount, in each case to the extent not
yet so applied) plus (ii) all Letter of Credit Usage by O-I Europe,
plus (iii) the Dollar Equivalent of the Swiss Overdraft Amount.

“Tranche A
Lender” means a Lender that has Tranche A Term Loan Exposure.

“Tranche A
Term Loan Commitment” means the
commitment of a Lender to make a Tranche A Term Loan to ACI pursuant to
subsection 2.1A(i), and “Tranche A Term
Loan Commitments” means such commitments of all Lenders in the
aggregate.

“Tranche A
Term Loan Exposure” means, with respect to any Lender as of any date
of determination, (i) prior to the funding of the Tranche A Term Loans,
that Lender’s Tranche A Term Loan Commitment, and (ii) after the funding
of the Tranche A Term Loans, the outstanding principal amount of the
Tranche A Term Loan of that Lender.

“Tranche A
Term Loan Maturity Date” means June 15, 2012.

“Tranche A
Term Loan Notes” means the promissory notes of ACI issued pursuant
to subsection 2.1G to evidence the Tranche A Term Loans of any Lenders,
substantially in the form of Exhibit IV-A annexed hereto, as they
may be amended, supplemented or otherwise modified from time to time.

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“Tranche A
Term Loans” means the Tranche A Term Loans made by Lenders to ACI
pursuant to subsection 2.1A (i).

“Tranche B
Lender” means a Lender that has Tranche B Term Loan Exposure.

“Tranche B
Term Loan Commitment” means the
commitment of a Lender to make a Tranche B Term Loan to Owens-Brockway pursuant
to subsection 2.1A(ii), and “Tranche B
Term Loan Commitments” means such commitments of all Lenders in the
aggregate.

“Tranche B
Term Loan Exposure” means, with respect to any Lender as of any date
of determination, (i) prior to the funding of any Tranche B Term Loan,
that Lender’s Tranche B Term Loan Commitment and (ii) after the funding of
any Tranche B Term Loan, the sum of the outstanding principal amount of the
Tranche B Term Loan of that Lender, plus the amount of that Lender’s
Delayed Draw Commitment.

“Tranche B
Term Loan Maturity Date” means June 14, 2013.

“Tranche B
Term Loan Notes” means any promissory notes of Owens-Brockway issued
pursuant to subsection 2.1G to evidence the Tranche B Term Loans of any
Lenders, substantially in the form of Exhibit IV-B annexed hereto,
as they may be amended, supplemented or otherwise modified from time to time.

“Tranche B
Term Loans” means the Tranche B Term Loans made by Lenders to
Owens-Brockway pursuant to subsection 2.1A(ii).

“Tranche C Lender” means a Lender
that has Tranche C Term Loan Exposure.

“Tranche C
Term Loan Commitment” means the
commitment of a Lender to make a Tranche C Term Loan to
O - I Canada pursuant to
subsection 2.1A(iii), and “Tranche C
Term Loan Commitments” means such commitments of all Lenders in the
aggregate.

“Tranche C
Term Loan Exposure” means, with respect to any Lender as of any date
of determination, (i) prior to the funding of the Tranche C Term Loans,
that Lender’s Tranche C Term Loan Commitment, and (ii) after the funding
of the Tranche C Term Loans, the outstanding principal amount of the
Tranche C Term Loan of that Lender.

“Tranche C
Term Loan Maturity Date” means June 15, 2012.

“Tranche C
Term Loan Notes” means any promissory notes of O-I Canada issued
pursuant to subsection 2.1G to evidence the Tranche C Term Loans of any
Lenders, substantially in the form of Exhibit IV-C annexed hereto,
as they may be amended, supplemented or otherwise modified from time to time.

“Tranche C
Term Loans” means the Tranche C Term Loans made by Lenders to O-I
Canada pursuant to subsection 2.1A(iii).

“Tranche D
Lender” means a Lender that has Tranche D Term Loan Exposure.

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“Tranche D
Term Loan Commitment” means the
commitment of a Lender to make a Tranche D Term Loan to OIEG pursuant to
subsection 2.1A(iv), and “Tranche D Term
Loan Commitments” means such commitments of all Lenders in the
aggregate.

“Tranche D
Term Loan Exposure” means, with respect to any Lender as of any date
of determination, (i) prior to the funding of the Tranche D Term Loans,
that Lender’s Tranche D Term Loan Commitment, and (ii) after the funding
of the Tranche D Term Loans, the outstanding principal amount of the Tranche D
Term Loan of that Lender.

“Tranche D
Term Loan Maturity Date” means June 14, 2013.

“Tranche D
Term Loan Notes” means any promissory notes of OIEG issued pursuant
to subsection 2.1G to evidence the Tranche D Term Loans of any Lenders,
substantially in the form of Exhibit IV-D annexed hereto, as they
may be amended, supplemented or otherwise modified from time to time.

“Tranche D
Term Loans” means the Tranche D Term Loans made by Lenders to OIEG
pursuant to subsection 2.1A(iv).

“Triggering Asset
Sale” means an Asset Sale that generates Net Asset Sale Proceeds
equal to or in excess of $25,000,000.

“Type” means (i) with
respect to a Commitment other than a Term Loan Commitment or an Offshore
Revolving Loan Commitment, a Revolving Loan Commitment, (ii) with
respect to an Offshore Revolving Loan Commitment, (a) an Australian
Revolving Loan Commitment, (b) a Canadian Revolving Loan Commitment, (c) a
Dutch Revolving Loan Commitment or (d) a Swiss Revolving Loan Commitment, (iii) with
respect to a Term Loan Commitment, (a) a Tranche A Term Loan Commitment, (b) a
Tranche B Term Loan Commitment, (c) a Tranche C Term Loan Commitment or (d) a
Tranche D Term Loan Commitment, (iv) with respect to a Loan other than an
Offshore Revolving Loan, (a) a Tranche A Term Loan, (b) a Tranche B
Term Loan, (c) a Tranche C Term Loan, (d) a Tranche D Term Loan, or (e) a
Revolving Loan, and (v) with respect to an Offshore Revolving Loan, (a) an
Australian Revolving Loan, (b) a Canadian Revolving Loan, (c) a Dutch
Revolving Loan or (d) a Swiss Revolving Loan.

“UK” means the
United Kingdom of Great Britain and Northern Ireland.

“UK Guarantors”
means O-I UK and each other UK Subsidiary that becomes an Offshore Guarantor
pursuant to subsection 5.9B.

“UK Subsidiary”
means any Subsidiary of Company incorporated under the laws of the UK or any
state or territory thereof.

“Unfunded Pension Liability”
means, with respect to any Pension Plan, the amount of unfunded benefit
liabilities of such Pension Plan as defined in Section 4001(a)(18) of
ERISA.

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“Weighted Average Life to
Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing (a) the then outstanding principal amount
of such indebtedness into (b) the total of the products obtained by
multiplying (x) the number of each then remaining installment, sinking
fund, serial maturity or other required payment of principal, including payment
at final maturity, in respect thereof by (y) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment.

“Wholly-Owned Subsidiary”
with respect to any Person, means any corporation, partnership, trust, limited
liability company, association or other business entity of which 100% of the
total voting power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in the election
of the Governing Body is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Wholly-Owned
Subsidiaries of that Person (other than any directors’ qualifying shares or
nominee shares); provided that Avir shall be deemed a Wholly-Owned
Subsidiary of OI Italia S.R.L., VMC shall be deemed to be a Wholly-Owned
Subsidiary of BSN and BSN Glasspack GmbH & Co. KG shall be deemed to
be a Wholly-Owned Subsidiary of BSN Glasspack Beteiligungs Verwaltungs GmbH.

1.2          Accounting
Terms; Utilization of GAAP for Purposes of Calculations Under Agreement; Change
in Accounting Principles.

Except as otherwise expressly provided in this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP as in effect from time to
time, and all calculations in connection with the financial covenants,
standards or terms found in Section 1, Section 5 and Section 6
hereof (collectively, “Calculations”)
shall utilize accounting principles and policies in conformity with GAAP as in
effect from time to time; provided that, in the event there is a change
in accounting principles and policies that would result in a change in the
method of performing any Calculations as described in subsection 10.9,
such change shall not be given effect for purposes of any Calculations until
such time as Company and Lenders complete the negotiations provided for in
subsection 10.9. Financial statements and other information required to be
delivered by any Loan Party to Lenders pursuant to clauses (i), (ii)(a) and
(x) of subsection 5.1 shall be prepared in accordance with GAAP as in
effect at the time of such preparation (and, if necessary, delivered together
with the written statements provided for in subsection 5.1(iv)).

1.3          Other
Definitional Provisions; Anniversaries.

References to “Sections” and “subsections” shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference. For purposes of this Agreement, a monthly
anniversary of a specified date shall occur on the same day of the applicable
month as the day of the month on which such date occurred; provided that
if there is no numerically corresponding day in the applicable month to the day
of the month on which such date occurred, the monthly anniversary of such date
shall be the last day of the applicable month.

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1.4          Dollar
Amounts.

For the purposes of the Loan Documents, if a Dollar
Equivalent or an Offshore Currency Equivalent needs to be determined, any
amount which is denominated in one currency will be converted into the other
currency using the Spot Rate on that date.

SECTION 2

AMOUNT AND TERMS OF
COMMITMENTS AND LOANS; NOTES

2.1          Commitments;
Making of Loans; Domestic Overdraft Account; Offshore Overdraft Accounts.

A.            Term Loan and Revolving Loan
Commitments. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company and Borrowers
herein set forth, each Lender hereby severally agrees to make the Loans
described in subsections 2.1A(i), 2.1A(ii), 2.1A(iii), 2.1A(iv) and
2.1(A)(v).

(i)            Tranche A Term Loans. Each
Tranche A Lender severally agrees to lend to ACI on the Closing Date an amount
in ADollars not exceeding its Pro Rata Share of the aggregate amount of the
Tranche A Term Loan Commitments to be used for the purposes identified in
subsection 2.5A. The amount of each Tranche A Lender’s Tranche A Term Loan
Commitment is set forth in the Register and the aggregate amount of the Tranche
A Term Loan Commitments is A$300,000,000; provided that the Tranche A
Term Loan Commitments of each Tranche A Lender shall be adjusted to give effect
to any assignments of the Tranche A Term Loan Commitments pursuant to
subsection 10.2 and may be increased from time to time by the amount of any
increase thereto pursuant to subsection 2.1A(vi). The Tranche A Term Loans
mature on the Tranche A Term Loan Maturity Date, and all Tranche A Term Loans
and all other amounts owed hereunder with respect to the Tranche A Term Loans
shall be paid in full no later than that date. Tranche A Term Loans repaid or
prepaid may not be reborrowed.

(ii)           Tranche B Term Loans. Each
Tranche B Lender severally agrees to lend to Owens-Brockway an amount in
Dollars not exceeding its Pro Rata Share of the aggregate amount of the Tranche
B Term Loan Commitments to be used for the purposes identified in subsection
2.5A. The amount of each Tranche B Lender’s Tranche B Term Loan Commitment is
set forth in the Register and the aggregate amount of the Tranche B Term Loan
Commitments is $200,000,000; provided that the Tranche B Term Loan
Commitments of each Tranche B Lender shall be adjusted to give effect to any
assignments of the Tranche B Term Loan Commitments pursuant to subsection 10.2
and may be increased from time to time by the amount of any increase thereto
pursuant to subsection 2.1A(vi). The Tranche B Term Loan Commitments shall be
available in two draws, the first of up to $50,000,000 available on the Closing
Date with one additional draw of up to the remainder of the aggregate Tranche B
Term Loan Commitments to be made not later than August 14, 2006. The
Tranche B Term Loans mature on the Tranche B Term Loan Maturity Date, and all
Tranche B Term Loans and all other amounts owed hereunder with respect to the
Tranche B Term Loans shall be paid in full no later than

 57
 

 

that date. Tranche
B Term Loans repaid or prepaid may not be reborrowed. Any Tranche B Term Loan Commitments not utilized on or
before August 14, 2006 shall terminate on such date.

(iii)          Tranche C Term Loans. Each
Tranche C Lender severally agrees to lend to O-I Canada on the Closing Date an
amount in Canadian Dollars not exceeding its Pro Rata Share of the aggregate
amount of the Tranche C Term Loan Commitments to be used for the purposes
identified in subsection 2.5A. The amount of each Tranche C Lender’s Tranche C
Term Loan Commitment is set forth in the Register and the aggregate amount of
the Tranche C Term Loan Commitments is C$138,000,000; provided that the
Tranche C Term Loan Commitments of each Tranche C Lender shall be adjusted to
give effect to any assignments of the Tranche C Term Loan Commitments pursuant
to subsection 10.2 and may be increased from time to time by the amount of any
increase thereto pursuant to subsection 2.1A(vi). The Tranche C Term Loans
mature on the Tranche C Term Loan Maturity Date, and all Tranche C Term Loans
and all other amounts owed hereunder with respect to the Tranche C Term Loans
shall be paid in full no later than that date. Tranche C Term Loans repaid or
prepaid may not be reborrowed.

(iv)          Tranche D Term Loans. Each
Tranche D Lender severally agrees to lend to OIEG on the Closing Date an amount
in Euro not exceeding its Pro Rata Share of the aggregate amount of the Tranche
D Term Loan Commitments to be used for the purposes identified in subsection
2.5A. The amount of each Tranche D Lender’s Tranche D Term Loan Commitment is
set forth in the Register and the aggregate amount of the Tranche D Term Loan
Commitments is € 200,000,000; provided that the Tranche D Term Loan
Commitments of each Tranche D Lender shall be adjusted to give effect to any
assignments of the Tranche D Term Loan Commitments pursuant to subsection 10.2
and may be increased from time to time by the amount of any increase thereto
pursuant to subsection 2.1A(vi). The Tranche D Term Loans mature on the Tranche
D Term Loan Maturity Date, and all Tranche D Term Loans and all other amounts
owed hereunder with respect to the Tranche D Term Loans shall be paid in full
no later than that date. Tranche D Term Loans repaid or prepaid may not be
reborrowed.

(v)           Revolving Loans. From and
after the Closing Date, each Lender with a Revolving Loan Commitment hereby
severally agrees, subject to the limitations set forth below with respect to
the maximum amount of Revolving Loans permitted to be outstanding from time to
time, to make Revolving Loans in Dollars, ADollars and Euro to Owens-Brockway
from time to time during the period from and including the Closing Date to but
excluding the Revolving Loan Commitment Termination Date in an aggregate amount
at any one time outstanding not exceeding its Pro Rata Share of the aggregate
amount of the Revolving Loan Commitments to be used for the purposes and
subject to the limitations identified in subsection 2.5A. The amount of each
Revolving Lender’s Revolving Loan Commitment is set forth opposite its name on Schedule
A annexed hereto and the aggregate amount of the Revolving Loan Commitments
as of the Closing Date is $900,000,000 (or the Offshore Currency Equivalent
thereof);  provided, that the
Revolving Loan Commitments of Lenders shall be adjusted to give effect to any
assignments of the Revolving Loan Commitments pursuant to subsection 10.2,
shall be reduced from time to time by the amount of any reductions thereto made
pursuant to

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subsection 2.4
and shall be increased from time to time by the amount of any increase thereto
pursuant to subsection 2.1A(vi). In no event shall the aggregate principal
amount of the Revolving Loans to Owens-Brockway from any Lender outstanding at
any time exceed its Revolving Loan Commitment then in effect. Each Lender’s
Revolving Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Revolving Loans and all other amounts owed hereunder
with respect to the Revolving Loans and the Revolving Loan Commitments shall be
paid in full no later than that date. Amounts borrowed under this subsection 2.1A(v) may
be repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.

Anything contained
in this Agreement to the contrary notwithstanding, the Revolving Loans and
the Revolving Loan Commitments shall be subject to the limitation that in no
event shall the Total Utilization of Revolving Loan Commitments at any time
exceed the Revolving Loan Commitments then in effect.

Revolving Loans
(other than (y) Revolving Loans made for the purpose of reimbursing any
Issuing Lender for the amount of a drawing honored under a Letter of Credit
issued by it, which shall be in the amount of such drawing so honored, or (z) Revolving
Loans made for the purpose of repaying the Domestic Overdraft Amount, which
shall be in an amount equal to the Domestic Overdraft Amount) made on any
Funding Date shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000, in excess of that amount.

(vi)          Additional Loans. (a) With
the approval of the Administrative Agent (such approval not to be unreasonably
withheld or delayed), Owens-Brockway, ACI, OIEG and O-I Canada shall have the
right at any time (so long as (x) no Potential Event of Default or Event
of Default then exists, (y) Borrowers’ Agent shall have delivered to Administrative
Agent a Compliance Certificate for the period of four full Fiscal Quarters
immediately preceding the incurrence described below (prepared in good faith
and in a manner consistent with the requirements of clause (b) of
subsection 5.1(iii) giving pro forma effect to such incurrence
(including an assumption that any increase in the Revolving Loan Commitments
made pursuant to this subsection is fully drawn on the date of such increase)
and evidencing compliance with the covenants referred to in such Compliance
Certificate and a Consolidated Senior Secured Leverage Ratio on a pro forma
basis of not more than 3.00:1.00 as of the last day of such period), and (z) after
giving pro forma effect to such incurrence (including an assumption that any
increase in the Revolving Loan Commitments made pursuant to this subsection is
fully drawn on the date of such increase) the Revolving Loan Commitments then
in effect would exceed the Total Utilization of Revolving Loan Commitments by
at least $150,000,000), and from time to time after the Closing Date to incur
from one or more existing Lenders and/or other Persons that are Eligible
Assignees and which, in each case, agree to make such loans and commitments to
make loans, loans and commitments to make loans denominated in Dollars,
ADollars and/or Euro, in an aggregate principal amount not to exceed
$500,000,000 (or the Offshore Currency Equivalent thereof), which loans may be
incurred as one or more tranches of additional term loans or an increase to any
tranche of Term Loans (the “Additional Term Loans”)
or as an increase to the Revolving Loan Commitments (which increase shall
automatically result in a pro rata

 59
 

 

increase
in the aggregate principal amount of each of the Offshore Revolving Loan
Commitments (except the Canadian Revolving Loan Commitment) and each of the
Offshore Sublimits (except the Offshore Sublimit applicable to O-I Canada)), provided,
that, (i) each such additional tranche of term loans, increase to a
tranche of term loans, or increase in Revolving Loan Commitments shall be no
less than $150,000,000 (or the Offshore Currency Equivalent thereof), (ii) the
Revolving Loan Commitments shall not be increased by more than $150,000,000 in
the aggregate, (iii) Loans made by way of increase to an existing tranche
of Term Loans shall be on terms and conditions identical to those of the other
Loans in the tranche so increased, (iv) Loans and Commitments made by way
of an increase to the Revolving Loan Commitments shall be on terms and
conditions identical to those applicable to the then-existing Revolving Loan
Commitments, and (v) term loans made by way of a new tranche of Term Loans
shall be pari  passu in all respects with, shall have a Weighted
Average Life to Maturity no greater than, and shall have a final maturity no
earlier than, the Term Loans outstanding to the incurring Borrower.

(b)           If Owens-Brockway, ACI, OIEG or O-I
Canada desire to incur Additional Term Loans in accordance with subsection
2.1A(vi)(a), the Borrowers will enter into an amendment with the lenders (which
shall upon execution thereof become Lenders hereunder if not theretofore
Lenders) to provide for such Additional Term Loans, which amendment shall set
forth any terms and conditions of the Additional Term Loans not covered by this
Agreement as agreed by the applicable Borrowers and such Lenders, and shall
provide for the issuance of promissory notes to evidence the Additional Term
Loans if requested by the lenders advancing Additional Term Loans (which notes
shall constitute Notes for purposes of this Agreement), with such amendment to
be in form and substance reasonably acceptable to Administrative Agent and
consistent with the terms of this subsection 2.1A(vi) and of the
other provisions of this Agreement. Borrowers shall, and shall cause the other
Loan Parties to, execute and deliver such documents and instruments and take
such other actions as may be reasonably requested by the Administrative Agent
in connection with the Additional Term Loans. No consent of any Lender (other
than any Lender making Additional Term Loans) is required to permit the Loans
contemplated by this subsection 2.1A(vi) or the aforesaid amendment
to effectuate the Additional Term Loans. No Lender shall have any obligation,
whether express or implied, to commit to provide any Additional Term Loans. This
section shall supersede any provisions contained in this Agreement, including,
without limitation, subsection 10.7.

(c)           If Owens-Brockway desires to increase
the Revolving Loan Commitments in accordance with subsection 2.1A(vi)(a), the
Borrowers will enter into an amendment with the existing Revolving Lenders
and/or new lenders willing to provide the increase to the Revolving Loan
Commitments (which, in the case of new lenders, shall upon execution thereof
become Revolving Lenders hereunder), which amendment shall provide for such
increase to the Revolving Loan Commitments, and shall provide for the issuance
of Revolving Notes to evidence such Revolving Loans if requested by the
Revolving Lenders, with such amendment to be in form and substance reasonably
acceptable to Administrative Agent and consistent with the terms of this
subsection 2.1A(vi) and of the other provisions of this Agreement. Borrowers
shall, and

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shall cause the Loan
Parties to, execute and deliver such documents and instruments and take such
other actions as may be reasonably requested by Administrative Agent in
connection with such increase. No consent of any Lender (other than any
Revolving Lender providing the increase to the Revolving Loan Commitments) is
required to effectuate an increase in the aggregate principal amount of
Revolving Loan Commitments (and the ratable increase in the aggregate principal
amount of the Offshore Revolving Loan Commitments and the Offshore Sublimits)
pursuant to this subsection 2.1A(vi) or the aforesaid amendment. No
Revolving Lender shall have any obligation, express or implied, to offer to
increase the aggregate principal amount of its Revolving Loan Commitment.

Upon effectiveness
of any such increase to the Revolving Loan Commitment, the applicable Pro Rata
Share of each Revolving Lender will be adjusted to give effect to the increase
in Revolving Loan Commitments and the Offshore Revolving Loan Commitments and
the Administrative Agent shall provide notice to each Revolving Lender of its
adjusted Pro Rata Share after giving effect to such increase. Each new
Revolving Lender shall assume from the existing Revolving Lenders a portion of
the outstanding Revolving Loans and Offshore Revolving Loans equal to its Pro
Rata Share. To the extent that the adjustment of Pro Rata Shares results in (x) loss
or expenses to any Lender as a result of the prepayment of any Eurocurrency
Rate Loan on a date other than the scheduled last day of the applicable
Interest Period, Borrowers shall be responsible for such loss or expense
pursuant to subsection 2.6E.

(vii)         Refinancing Term Loans. (a) Owens-Brockway,
ACI, OIEG and O-I Canada shall have the right at any time (so long as (x) no
Potential Event of Default or Event of Default then exists and (y) Borrowers’
Agent shall have delivered to Administrative Agent a Compliance Certificate for
the period of four full Fiscal Quarters immediately preceding the incurrence
described below (prepared in good faith and in a manner consistent with the
requirements of clause (b) of subsection 5.1(iii) giving pro forma
effect to such incurrence and evidencing compliance with the covenants referred
to in such Compliance Certificate), to incur from one or more existing Lenders
and/or other Persons that are Eligible Assignees and which, in each case, agree
to make such loans and commitments to make loans to Owens-Brockway, ACI, OIEG
and/or O-I Canada, as applicable (the “Refinancing
Term Loans”) in an aggregate principal amount not to exceed the
aggregate amount of Tranche A Term Loans (in the case of ACI), Tranche B Term
Loans (in the case of Owens-Brockway), Tranche C Term Loans (in the case of O-I
Canada) and Tranche D Term Loans (in the case of OIEG) and theretofore made to
such Borrower and thereafter repaid (or to be repaid with the proceeds of such
Refinancing Term Loans). Refinancing Term Loans may be incurred as one or more
tranches (of at least $150,000,000 each) of Refinancing Term Loans as
determined by Agents that are pari  passu in all respects with,
have a Weighted Average Life to Maturity of not less than, have a final
maturity no earlier than and shall otherwise be (except as to pricing) on terms
and conditions substantially similar to, the Type of Term Loan such tranche of
Refinancing Term Loans is to replace or refinance.

(b)           If Owens-Brockway, ACI, OIEG and/or
O-I Canada desires to incur Refinancing Term Loans, Owens-Brockway, ACI, OIEG
and/or O-I Canada, as

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applicable, will enter
into an amendment with the lenders (which shall upon execution thereof become
Lenders hereunder if not theretofore Lenders) to provide for such Refinancing
Term Loans, which amendment shall set forth any terms and conditions of the
Refinancing Term Loans not covered by this Agreement as agreed by
Owens-Brockway, ACI, OIEG and/or O-I Canada, as applicable, and such Lenders,
and shall provide for the issuance of promissory notes to evidence the
Refinancing Term Loans if requested by the lenders advancing Refinancing Term
Loans (which notes shall constitute Notes for purposes of this Agreement), with
such amendment to be in form and substance reasonably acceptable to Agents and
consistent with the terms of this subsection 2.1A(vii) and of the
other provisions of this Agreement. Borrowers shall, and shall cause the other
Loan Parties to, execute and deliver such documents and instruments and take
such other actions as may be reasonably requested by the Administrative Agent
in connection with the Refinancing Term Loans. No consent of any Lender (other
than any Lender making Refinancing Term Loans) is required to permit the Loans
contemplated by this subsection 2.1A(vii) or the aforesaid amendment
to effectuate the Refinancing Term Loans. No Lender shall have any obligation,
whether express or implied, to commit to provide any Refinancing Term Loans. This
section shall supersede any provisions contained in this Agreement, including,
without limitation, subsection 10.7.

B.            Domestic Overdraft Account. Lenders agree that Owens-Brockway
and Administrative Agent may establish and maintain the Domestic Overdraft
Account to be established pursuant to the Domestic Overdraft Agreement; provided
that (i) the Domestic Overdraft Amount shall not exceed at any time
$100,000,000, and (ii) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Revolving Loan Commitments
then in effect. Notwithstanding anything contained in this Agreement to the
contrary (but subject, however, to the limitations set forth in
subsection 2.1A(v) with respect to the making of Revolving Loans),
Lenders and Owens-Brockway further agree that Administrative Agent at any time
in its sole and absolute discretion may, upon notice to Owens-Brockway and
Revolving Lenders, require each Revolving Lender (including Administrative
Agent) on one Business Day’s notice to make a Revolving Loan on behalf of
Owens-Brockway in an amount equal to that Lender’s Pro Rata Share, or, in the
sole and absolute discretion of Administrative Agent, require each other
Revolving Lender to purchase a participation in amounts due with respect to the
Domestic Overdraft Amount in an amount equal to that Lender’s Pro Rata Share of
the Domestic Overdraft Amount; provided, however, that the
obligation of each such Lender to make each such Revolving Loan on behalf of
Owens-Brockway or to purchase each such participation in the Domestic Overdraft
Amount is subject to the condition that at the time such extension of credit
under the Domestic Overdraft Agreement was made the duly authorized officer of
Administrative Agent responsible for the administration of Administrative Agent’s
credit relationship with Owens-Brockway believed in good faith that (x) no
Event of Default had occurred and was continuing or (y) any Event of
Default that had occurred and was continuing had been waived by Requisite
Lenders (or, if applicable under subsection 10.7, all Lenders or all
Lenders directly affected, as applicable) at the time such extension of credit
under the Domestic Overdraft Agreement was made. In the case of Revolving Loans
made by Lenders other than Administrative Agent under the immediately preceding
sentence, each such Lender shall make the amount of its Revolving Loan
available to Administrative Agent, in Same Day Funds, at the Funding and
Payment Office not later than

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1:00 P.M.
(New York time) on the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Loans shall be immediately delivered to
Administrative Agent (and not to Owens-Brockway or any other Loan Party) and
applied to repay the Domestic Overdraft Amount. On the day such Revolving Loans
are made, Administrative Agent’s Pro Rata Share of the Domestic Overdraft
Amount being refunded shall be deemed to be paid with the proceeds of a
Revolving Loan made by Administrative Agent and such portion of the Domestic
Overdraft Amount deemed to be so paid shall no longer be outstanding. Owens-Brockway
authorizes Administrative Agent to charge its account with Administrative Agent
(up to the amount available in such account) in order to immediately pay Administrative
Agent the amount of the Domestic Overdraft Amount to be refunded to the extent
amounts received from Lenders, including amounts deemed to be received from
Administrative Agent, are not sufficient to repay in full the Domestic
Overdraft Amount to be refunded and provided  further that
Administrative Agent shall give Owens-Brockway notice of such charges prior
thereto or as soon as reasonably practicable thereafter. Each Revolving Loan
made in accordance with the foregoing shall be made as a Base Rate Loan. If any
portion of any such amount paid to Administrative Agent should be recovered by
or on behalf of Owens-Brockway from Administrative Agent in bankruptcy, by
assignment for the benefit of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Revolving Lenders in the manner
contemplated by subsection 10.6. In the event that Administrative Agent
requires the other Revolving Lenders to purchase participations in the Domestic
Overdraft Amount, payment for such participations shall be made directly to
Administrative Agent at the Funding and Payment Office not later than 1:00 P.M.
(New York time) on the Business Day next succeeding the date notice to purchase
such participations is given. Except as provided above in this
subsection 2.1B (and, in the case of the obligation to make Revolving
Loans, except for the satisfaction of the conditions specified in subsection
3.1 and 3.2) each Lender’s obligation to make Revolving Loans pursuant to this
subsection 2.1B and to purchase participations in the Domestic Overdraft
Amount pursuant to this subsection 2.1B shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against Administrative Agent, any Loan Party
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of an Event of Default or a Potential Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of any Loan Party; (iv) any
breach of this Agreement by any Loan Party or any other Revolving Lender; or (v) any
other circumstance, happening, or event whatsoever, whether or not similar to
any of the foregoing; provided that in the event that the obligations of
Lenders to make Revolving Loans are terminated in accordance with Section 7,
Lenders having a Revolving Loan Commitment shall thereafter only be obligated
to purchase participations in the Domestic Overdraft Amount as provided in this
subsection 2.1B. In the event that any Lender fails to make available to
Administrative Agent the amount of any of such Lender’s Revolving Loans
required to be made pursuant to this subsection 2.1B or the amount of any
participations in the Domestic Overdraft Amount which are required to be
purchased from Administrative Agent by such Lender pursuant to this
subsection 2.1B, Administrative Agent shall be entitled to recover such
amount on demand from such Lender together with interest at the customary rate
set by Administrative Agent for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this
subsection 2.1B shall be deemed to prejudice the right of any Lender to
recover from Administrative Agent any amounts made available by such Lender to
Administrative Agent

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pursuant to this
subsection 2.1B in respect of any extension of credit by Administrative
Agent under the Domestic Overdraft Agreement in the event that it is determined
by a court of competent jurisdiction that such extension of credit by
Administrative Agent constituted gross negligence or willful misconduct on the
part of Administrative Agent.

Any notice given by Administrative Agent to Lenders
pursuant to the immediately preceding paragraph shall be concurrently given by
Administrative Agent to Owens-Brockway or Borrowers’ Agent.

C.            Offshore Revolving Loan Commitments. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and warranties
of Borrowers herein set forth, each Offshore Borrower may request, in
accordance with the provisions of this subsection 2.1C, that Lenders with
a Revolving Loan Commitment make Offshore Revolving Loans. The making of
Offshore Revolving Loans shall reduce the availability of Revolving Loans to
Owens-Brockway on a dollar-for-dollar basis to the extent of the Dollar
Equivalent of the Offshore Revolving Loans outstanding. Subject to the
limitations set forth below, (a) each Revolving Lender hereby severally
agrees to make Australian Revolving Loans to ACI in Dollars, ADollars and Euro
from time to time during the period from and including the Closing Date to but
excluding the Revolving Loan Commitment Termination Date, in an aggregate
amount at any time outstanding not exceeding its Pro Rata Share of the
aggregate amount of the Australian Revolving Loan Commitments; (b) each
Revolving Lender hereby severally agrees to make Dutch Revolving Loans to OIEG
in Dollars, ADollars and Euro from time to time during the period from and
including the Closing Date to but excluding the Revolving Loan Commitment
Termination Date in an aggregate amount at any time outstanding not exceeding
its Pro Rata Share of the aggregate amount of the Dutch Revolving Loan
Commitments; (c) each Revolving Lender hereby severally agrees to make
Swiss Revolving Loans to O-I Europe in Euro from time to time during the period
from and including the Closing Date to but excluding the Revolving Loan
Commitment Termination Date in an aggregate amount at any time outstanding not
exceeding its Pro Rata Share of the aggregate amount of the Swiss Revolving
Loan Commitments; and (d) each Revolving Lender hereby severally agrees to
make Canadian Revolving Loans to O-I Canada in Dollars from time to time during
the period from and including the Closing Date to but excluding the Revolving
Loan Commitment Termination Date in an aggregate amount at any time outstanding
not exceeding its Pro Rata Share of the aggregate amount of the Canadian
Revolving Loan Commitments; provided, however, Lenders shall not
be obligated to make Canadian Revolving Loans (and O-I Canada may not request
any such Loans) at any time a Canadian Overdraft Agreement is in effect, except
to repay the Canadian Overdraft Amount upon notice from the Canadian Overdraft
Account Provider pursuant to subsection 2.1D(ii). The proceeds of all such
Offshore Revolving Loans shall be used for the purposes identified in
subsection 2.5A. The amount of each Lender’s Australian Revolving Loan
Commitment, each Lender’s Canadian Revolving Loan Commitment, each Lender’s
Dutch Revolving Loan Commitment and each Lender’s Swiss Revolving Loan
Commitment in each case as of the Closing Date is set forth opposite its name
in Schedule A annexed hereto and the aggregate amounts of the (i) the
Australian Revolving Loan Commitments, (ii) the Canadian Revolving Loan
Commitments; (iii) the Dutch Revolving Loan Commitments and (iv) the
Swiss Revolving Loan Commitments (in each case set forth in Schedule A)
are, as of the Closing Date, (i) $300,000,000, (ii) $20,000,000, (iii) $425,000,000
and (iv) $425,000,000, respectively; provided that the Offshore
Revolving Loan Commitments

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of Lenders shall be
adjusted to give effect to any assignments thereof pursuant to
subsection 10.2, shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsection 2.4G and shall be increased
from time to time by the amount of any increase thereto made pursuant to
subsection 2.1A(vi)(c). In no event shall (i) the aggregate principal
amount of the Australian Revolving Loans of any Lender outstanding at any time
exceed its Australian Revolving Loan Commitment then in effect, (ii) the
aggregate principal amount of the Canadian Revolving Loans of any Lender
outstanding at any time exceed its Canadian Revolving Loan Commitment then in
effect, (iii) the aggregate principal amount of the Dutch Revolving Loans
of any Lender outstanding at any time exceed its Dutch Revolving Loan
Commitment then in effect or (iv) the aggregate principal amount of the
Swiss Revolving Loans of any Lender outstanding at any time exceed its Swiss
Revolving Loan Commitment then in effect. Each Lender’s Offshore Revolving Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date and
all Offshore Revolving Loans and all other amounts owed hereunder with respect
to the Offshore Revolving Loans and the Offshore Revolving Loan Commitments
shall be paid in full no later than that date. Amounts borrowed under this
subsection 2.1C may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.

Anything contained in this Agreement to the contrary
notwithstanding, no Offshore Borrower shall request Lenders to make any
Offshore Revolving Loans (and no Lender shall be obligated to make Offshore
Revolving Loans) if, immediately after giving effect to the making of such
Offshore Revolving Loans:

(1)           the Total Utilization of Revolving
Loan Commitments would exceed the Revolving Loan Commitments then in effect;

(2)           the Total Utilization of Australian
Revolving Loan Commitments would exceed the Australian Revolving Loan
Commitments then in effect;

(3)           the Total Utilization of Dutch
Revolving Loan Commitments would exceed the Dutch Revolving Loan Commitments
then in effect; or

(4)           the Total Utilization of Swiss
Revolving Loan Commitments would exceed the Swiss Revolving Loan Commitments
then in effect; or

(5)           the Total Utilization of Canadian
Revolving Loan Commitments would exceed the Canadian Revolving Loan Commitments
then in effect.

Offshore Revolving Loans made on any Funding Date
(other than (y) Offshore Revolving Loans made for the purpose of
reimbursing any Issuing Lender for the amount of a drawing honored under a
Letter of Credit issued by it for the account of any Offshore Borrower, which
shall be in the amount of such drawing so honored, or (z) Offshore
Revolving Loans made for the purpose of repaying any Offshore Overdraft Amount,
which shall be in an amount equal to the Offshore Overdraft Amount) shall be in
an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000
in excess of that amount.

Each Offshore Borrower hereby unconditionally promises
to pay to the Lenders the then unpaid principal amount of each Offshore
Revolving Loan of such Lender made to such

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Offshore Borrower on or before the Revolving Loan
Commitment Termination Date or such earlier date on which such Offshore
Revolving Loans become due and payable pursuant to Section 7. Each
Offshore Borrower hereby further agrees and promises to pay to the Lenders
interest on the unpaid principal amount of each Offshore Revolving Loan of such
Lender made to such Offshore Borrower from time to time outstanding from the
date hereof until paid in full, at the rates and at the times which shall be
determined in accordance with the provisions of this Agreement.

D.            Offshore
Overdraft Accounts.

(i)            Lenders agree that ACI, O-I Canada,
OIEG and O-I Europe may each establish and maintain an Offshore Overdraft
Account with an Offshore Overdraft Provider pursuant to an Offshore Overdraft
Agreement; provided that (a) (1) the Australian Overdraft
Amount shall not exceed at any time the Offshore Currency Equivalent of
$30,000,000, (2) the Canadian Overdraft Amount shall not exceed at any
time the Offshore Currency Equivalent of $20,000,000 and (3) the aggregate
of the Dutch Overdraft Amount and the Swiss Overdraft Amount shall not exceed
at any time the Offshore Currency Equivalent of $60,000,000, and (b) in no
event shall an Offshore Borrower request an extension of credit under an
Offshore Overdraft Agreement (and no Offshore Overdraft Account Provider shall
be obligated to extend credit under an Offshore Overdraft Agreement) if, after
giving effect to such extension of credit:

(1)           the Total Utilization of Revolving
Loan Commitments would exceed the Revolving Loan Commitments then in effect;

(2)           the Total Utilization of Australian
Revolving Loan Commitments would exceed the Australian Revolving Loan
Commitments then in effect;

(3)           the Total Utilization of Dutch
Revolving Loan Commitments would exceed the Dutch Revolving Loan Commitments
then in effect;

(4)           the Total Utilization of Swiss
Revolving Loan Commitments would exceed the Swiss Revolving Loan Commitments
then in effect; or

(5)           the Total Utilization of Canadian
Revolving Loan Commitments would exceed the Canadian Revolving Loan Commitments
then in effect.

(ii)           Notwithstanding anything contained in
this Agreement to the contrary (but subject, however, to the limitations set
forth in subsection 2.1C with respect to the making of Offshore Revolving
Loans), Lenders and each Offshore Borrower further agree that any Offshore
Overdraft Account Provider at any time in its sole and absolute discretion may,
upon notice to the relevant Offshore Borrower, the Administrative Agent and the
Lenders, require each Revolving Lender (including such Offshore Overdraft
Account Provider) on one Business Day’s notice to (a) make an Offshore
Revolving Loan in Dollars (in the case of such a Loan to O-I Canada), ADollars
(in the case of such a Loan to ACI) or Euro (in the case of such a Loan to OIEG
or O-I Europe) in an amount equal to that Lender’s Pro Rata Share (determined
with respect to such Type of Offshore Revolving Loan Commitments) of the
relevant Offshore Overdraft

 66
 

 

Amount (calculated
in the case of such a Loan to O-I Canada by reference to the applicable Spot
Rate on the date such Offshore Revolving Loan is to be made) or, (b) in
the event the relevant Type of Offshore Revolving Loan Commitment has
terminated or the conditions for the making of such Offshore Revolving Loans
under subsection 3.2 are not satisfied, require each Revolving Lender to
purchase a participation in Dollars (in the case of the Canadian Overdraft
Amount), ADollars (in the case of the Australian Overdraft Amount) or Euro (in
the case of the Dutch Overdraft Amount or Swiss Overdraft Amount) in amounts
due with respect to the relevant Offshore Overdraft Account in an amount equal
to that Lender’s Pro Rata Share of the relevant Offshore Overdraft Amount
(calculated in the case of a Participation in the Canadian Overdraft Amount by
reference to the applicable Spot Rate on the date such participation is to be
purchased); provided, however, that the obligation of each
Revolving Lender to make each such Offshore Revolving Loan or of each Revolving
Lender to purchase each such participation in any such Offshore Overdraft
Amount is subject to the condition that at the time such extension of credit
under the applicable Offshore Overdraft Agreement was made the duly authorized
officer of such Offshore Overdraft Account Provider responsible for the
administration of such Offshore Overdraft Account Provider’s credit
relationship with the relevant Offshore Borrower believed in good faith that (a) no
Event of Default had occurred and was continuing or (b) any Event of
Default that had occurred and was continuing had been waived by Requisite
Lenders (or, if applicable under subsection 10.7, all Lenders or all
Lenders with Obligations directly affected, as applicable) at the time such
extension of credit under such Offshore Overdraft Agreement was made. In the
case of Offshore Revolving Loans or participation purchases made by Lenders
other than Administrative Agent under the immediately preceding sentence, each
such Lender shall make the amount of its Offshore Revolving Loan or the amount
of its participation, as applicable, available to Administrative Agent in Same
Day Funds in the applicable currency, at the Funding and Payment Office not
later than 12:00 Noon (New York time) on the Business Day next succeeding the
date such notice is given and upon such transfer such Offshore Revolving Loans
shall be deemed made or such participations purchased, as the case may be. The
proceeds of such Offshore Revolving Loans or participation purchases shall be
delivered by Administrative Agent to such Offshore Overdraft Account Provider
(and not to any Borrower or other Loan Party) as soon as practicable and
applied to repay the relevant Offshore Overdraft Amount. On the day such Offshore
Revolving Loans are made or such participations are purchased, such Offshore
Overdraft Account Provider’s Pro Rata Share of the Offshore Overdraft Amount
being refunded shall be deemed to be paid with the proceeds of an Offshore
Revolving Loan made by such Offshore Overdraft Account Provider and such
portion of the Offshore Overdraft Amount deemed to be so paid shall no longer
be outstanding. Each Offshore Borrower authorizes the Offshore Overdraft
Account Provider to charge such Offshore Borrower’s accounts with such Offshore
Overdraft Account Provider (up to the amount available in each such account) in
order to immediately pay such Offshore Overdraft Account Provider the amount of
the Offshore Overdraft Amount to be refunded to the extent amounts received
from Lenders, including amounts deemed to be received from such Offshore
Overdraft Account Provider, are not sufficient to repay in full the Offshore
Overdraft Amount to be refunded; provided that such Offshore Overdraft
Account Provider shall give such Offshore Borrower notice of such charges prior
thereto

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or as soon as
reasonably practicable thereafter. Each Offshore Revolving Loan made in
accordance with the foregoing shall be made as a Base Rate Loan. If any portion
of any such amount paid to any Offshore Overdraft Account Provider should be
recovered by or on behalf of such Offshore Borrower from such Offshore
Overdraft Account Provider in bankruptcy, by assignment for the benefit of
creditors or otherwise, the loss of the amount so recovered shall be ratably
shared among all Lenders in the manner contemplated by subsection 10.6.

(iii)          Except as provided above in this
subsection 2.1D (and, in the case of the obligation to make Offshore
Revolving Loans, except for the satisfaction of the conditions specified in
subsections 3.1 and 3.2), each Lender’s obligation to make Offshore Revolving
Loans pursuant to this subsection 2.1D and the obligation of each
Revolving Lender to purchase participations in any Offshore Overdraft Amount
pursuant to this subsection 2.1D shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (a) any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against such Offshore Overdraft Account Provider, any Borrower or any
other Person for any reason whatsoever; (b) the occurrence or continuance
of an Event of Default or a Potential Event of Default; (c) any adverse
change in the condition (financial or otherwise) of any Loan Party; (d) any
breach of this Agreement by any Borrower or any other Lender; or (e) any
other circumstance, happening, or event whatsoever, whether or not similar to
any of the foregoing; provided that in the event that the obligations of
Lenders to make Offshore Revolving Loans are terminated in accordance with Section 7,
Revolving Lenders shall thereafter only be obligated to purchase participations
in the relevant Offshore Overdraft Amount as provided in this
subsection 2.1D. In the event that any Lender fails to make available to
the relevant Administrative Agent the amount of any of such Lender’s Offshore
Revolving Loans required to be made pursuant to this subsection 2.1D or to
the Administrative Agent the amount of any participations in the relevant
Offshore Overdraft Amount which are required to be purchased from such Offshore
Overdraft Account Provider by such Lender pursuant to this
subsection 2.1D, such Offshore Overdraft Account Provider shall be
entitled to recover such amount on demand from such Lender together with
interest at the customary rate set by such Offshore Overdraft Account Provider
for the correction of errors among banks in the relevant jurisdiction for three
Business Days and thereafter at the Base Rate. Nothing in this
subsection 2.1D shall be deemed to prejudice the right of any Lender to
recover from any Offshore Overdraft Account Provider any amounts made available
by such Lender to such Offshore Overdraft Account Provider pursuant to this
subsection 2.1D in respect of any extension of credit by such Offshore
Overdraft Account Provider under the relevant Offshore Overdraft Agreement in
the event that it is determined by a court of competent jurisdiction that such
extension of credit by such Offshore Overdraft Account Provider constituted gross
negligence or willful misconduct on the part of such Offshore Overdraft Account
Provider.

(iv)          Any notice given by any Offshore
Overdraft Account Provider to the relevant Lenders pursuant to
subsection 2.1D(iii) shall be concurrently given by such Offshore
Overdraft Account Provider to the Administrative Agent and the applicable
Offshore Borrower or Borrowers’ Agent.

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(v)           Not later than the end of the first
and third week of each month, and promptly upon request by Administrative
Agent, each Offshore Overdraft Account Provider shall deliver to Administrative
Agent a written report in form satisfactory to Administrative Agent setting
forth activity with respect to the applicable Offshore Overdraft Account since
the last such report and the applicable Offshore Overdraft Amount outstanding
as of the end of the period covered by such report.

(vi)          Anything contained in this Agreement
to the contrary notwithstanding, no amendment, modification, termination or
waiver of any provision of this Agreement or of the other Loan Documents, and
no consent to any departure by any Borrower therefrom, shall modify, terminate
or waive in any manner adverse to any Offshore Overdraft Account Provider any
provision of this subsection 2.1D or any other provision of this Agreement
directly relating to the Offshore Overdraft Accounts or the Offshore Overdraft
Amounts (including any provision directly relating to the repayment of the
Offshore Overdraft Amounts with the proceeds of Offshore Revolving Loans or
directly relating to the obligations of Lenders to purchase participations in
the Offshore Overdraft Amounts) without the written concurrence of the
applicable Offshore Overdraft Account Providers.

E.             Notice of Borrowing.

(i)            Whenever a Borrower desires that
Lenders make Term Loans, Revolving Loans or Offshore Revolving Loans, it shall
deliver to Administrative Agent a Notice of Borrowing no later than 12:00 Noon
(New York time) (w) at least one Business Day in advance of the proposed
Funding Date, in the case of any Base Rate Loan, (x) at least two Business
Days in advance of the proposed Funding Date, in the case of a B/A Discount
Rate Loan, (y) at least three Business Days in advance of the proposed
Funding Date, in the case of a Eurocurrency Rate Loan (other than a
Eurocurrency Rate Loan denominated in ADollars) or (z) at least four
Business Days in advance of the proposed Funding Date, in the case of a
Eurocurrency Rate Loan denominated in ADollars. The Notice of Borrowing shall
specify (1) the proposed Funding Date (which shall be a Business Day), (2) the
amount, currency and Type of the proposed Loans, (3) whether such Loans
are initially to consist of Base Rate Loans, Eurocurrency Rate Loans, B/A
Discount Rate Loans, or a combination thereof, and (4) if such Loans, or
any portion thereof, are initially to be Eurocurrency Rate Loans or B/A
Discount Rate Loans, the amounts thereof and the initial Interest Periods
therefor; and except as set forth in subsection 3.2B, such Notice of Borrowing
shall further certify that subsection 3.2B is satisfied on and as of that
Funding Date; provided that the minimum amount of Revolving Loans, if
any, to be made on any Funding Date as Eurocurrency Rate Loans with a
particular Interest Period shall be $10,000,000 and integral multiples of
$1,000,000 in excess of that amount and the minimum amount of Offshore
Revolving Loans to be made on any Funding Date shall be as set forth in
subsection 2.1C; and provided  further  that, O-I
Canada may not deliver a Notice of Borrowing requesting a Canadian Revolving
Loan at any time a Canadian Overdraft Agreement is in effect. Notwithstanding
anything in this Agreement to the contrary, no Lender shall make or be
obligated to make a Revolving Loan or an Offshore Revolving Loan if it shall
have received notification of a delivery of a Loan Limitation Notice to a
Borrower with respect 

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to such Revolving
Loan or Offshore Revolving Loan from Administrative Agent on or prior to the
first Business Day immediately preceding the proposed Funding Date for such
Revolving Loan or Offshore Revolving Loan. Term Loans, Revolving Loans and
Offshore Revolving Loans may be continued as or converted into Base Rate Loans,
Eurocurrency Rate Loans or B/A Discount Rate Loans in the manner provided in
subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, a Borrower may give Administrative Agent irrevocable telephonic
notice by the required time of any proposed borrowing under this subsection
2.1; provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Borrowing to Administrative Agent on or prior to the
Funding Date of the requested Loans.

(ii)           Neither Administrative Agent nor any
Lender shall incur any liability to any Borrower in acting upon any telephonic
notice referred to above which Administrative Agent or Lender, as the case may
be, believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of the relevant Borrower, as the
case may be, or for otherwise acting in good faith under this
subsection 2.1E, and upon funding of Loans by any Lender in accordance
with this Agreement pursuant to any such telephonic notice such Borrower shall
have effected Loans hereunder.

(iii)          Except as provided in
subsection 2.6D, a Notice of Borrowing for a Eurocurrency Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and after the related
Interest Rate Determination Date, and the Borrower giving such notice shall be
bound to make a borrowing in accordance therewith, unless such Borrower pays to
Lenders such amounts as may be due under subsection 2.6D(iii) for
failure of a borrowing of a Eurocurrency Rate Loan to occur on the date
specified therefor in a Notice of Borrowing (or telephonic notice in lieu
thereof).

(iv)          Promptly after receipt of a Notice of
Borrowing pursuant to this subsection 2.1E (or telephonic notice in lieu
thereof) with respect to any Revolving Loans or Offshore Revolving Loans,
Administrative Agent may (but shall not be obligated to) calculate whether,
before and after giving effect to the making of the relevant Loans:

(1)           (A) the Total Utilization of
Revolving Loan Commitments shall exceed (B) the Revolving Loan Commitments
then in effect;

(2)           the Total Utilization of Australian
Revolving Loan Commitments shall exceed the Australian Revolving Loan
Commitments then in effect;

(3)           the Total Utilization of Dutch Revolving
Loan Commitments shall exceed the Dutch Revolving Loan Commitments then in
effect;

(4)           the Total Utilization of Swiss
Revolving Loan Commitments shall exceed the Swiss Revolving Loan Commitments
then in effect; and

(5)           the Total Utilization of Canadian
Revolving Loan Commitments shall exceed the Canadian Revolving Loan Commitments
then in effect.

 70
 

 

In the event that Administrative Agent determines that
any of the statements in clauses (1) through (5) is true or will be
true after giving effect to the making of the relevant Loans, Administrative
Agent shall deliver to each Borrower written notice (a “Loan
Limitation Notice”) thereof, and shall notify each Lender promptly
of its delivery of such notice.

F.             Disbursement of Funds.

(i)            All Term Loans, Revolving Loans and
Offshore Revolving Loans under this Agreement shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata Shares of the
Revolving Loan Commitments, Australian Revolving Loan Commitments, Canadian
Revolving Loan Commitments, Dutch Revolving Loan Commitments, Swiss Revolving
Loan Commitments, Tranche A Term Loan Commitments, Tranche B Term Loan
Commitments, Tranche C Term Loan Commitments or Tranche D Term Loan
Commitments, as the case may be, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender’s
obligation to make a Term Loan, a Revolving Loan or an Offshore Revolving Loan
requested hereunder nor shall the Commitment of any Lender to make the
particular type of Loan requested be increased or decreased as a result of a
default by any other Lender in that other Lender’s obligation to make a Loan
requested hereunder. Promptly after receipt of a Notice of Borrowing pursuant
to subsection 2.1E (or telephonic notice in lieu thereof) or the deemed
receipt of a Notice of Borrowing pursuant to subsection 2.8D,
Administrative Agent shall notify each applicable Lender of the proposed
borrowing. Each Lender shall make the amount of its Term Loan or Revolving Loan
or Offshore Revolving Loan available to Administrative Agent, in Same Day
Funds, at the Funding and Payment Office not later than 12:00 noon (New York
time) on the Funding Date. From and after the Closing Date, except as provided
in subsection 2.1B (with respect to the repayment of the Domestic
Overdraft Amount), subsection 2.1D(ii) (with respect to the repayment
of any Offshore Overdraft Amount) and subsection 2.8D (with respect to the
reimbursement of amounts drawn under Letters of Credit), upon the satisfaction
or waiver of the conditions precedent specified in subsection 3.2,
Administrative Agent shall make the proceeds of Term Loans, Revolving Loans and
Offshore Revolving Loans, in each case available to the Borrower requesting
such Loans on such Funding Date by causing an amount of Same Day Funds equal to
the proceeds of all such Revolving Loans or Offshore Revolving Loans received
by Administrative Agent to be credited to the account of such Borrower at such
office of Administrative Agent.

(ii)           Unless Administrative Agent shall
have been notified by any Lender prior to any Funding Date that such Lender
does not intend to make available to Administrative Agent such Lender’s Loan on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent in its sole discretion may, but shall not be obligated to,
make available to the applicable Borrower a corresponding amount on such
Funding Date. If such corresponding amount is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the date such
amount is paid to Administrative 

 71
 

 

Agent at the
customary rate set by Administrative Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent’s
demand therefor, Administrative Agent shall promptly notify the applicable
Borrower, and such Borrower shall immediately pay such corresponding amount to
Administrative Agent. If such Borrower does not pay such corresponding amount,
Administrative Agent may require each Revolving Lender to purchase a
participation in the amount unpaid by such Borrower in an amount equal to that
Lender’s Pro Rata Share of such unpaid amount. Nothing in this
subsection 2.1F shall be deemed to relieve any Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights which Borrower
may have against any Lender as a result of any default by such Lender
hereunder.

G.            The Register; Notes.

(i)            Administrative Agent, acting for
this purpose as an agent of the Borrowers, shall maintain, at its address
referred to in subsection 10.10, a register for the inscription of the
names and addresses of Lenders and the Commitments and Loans of each Lender
from time to time (the “Register”).
Borrowers, Borrowers’ Agent, Agents, and Lenders may treat each Person whose
name is inscribed in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by Company,
Borrowers, Borrowers’ Agent or the Agents at any reasonable time and from time
to time upon reasonable prior notice. In addition, Administrative Agent shall
make the Register available for inspection by the Lenders upon reasonable prior
notice at reasonable times, provided that a Lender shall only be entitled to
inspect its own entry in the Register and not that of any other Lender.

(ii)           Administrative Agent shall inscribe
in the Register the Commitments and the Loans from time to time of each Lender,
the amount of each Lender’s participation in outstanding Letters of Credit and
each repayment or prepayment in respect of the principal amount of the Loans of
each Lender and the principal amount owing from time to time by each Borrower
in respect of each Loan to each Lender of such Loan. Any such inscription shall
be conclusive and binding on each Borrower and each Lender, absent manifest or
demonstrable error; provided that failure to make any such inscription,
or any error in such inscription, shall not affect any Borrower’s Obligations
in respect of the applicable Loans. The inscription in the Register of the
principal amount owing from time to time by the Borrowers in respect of each
Tranche A Term Loan or Australian Revolving Loan shall constitute an
unconditional and irrevocable covenant by ACI in favor of the Person whose name
is so inscribed as the Lender in respect of such Loan that ACI will make all
payments of principal and interest in respect of the Loan in accordance with
this Agreement, make all other payments required by this Agreement to be made
by it in respect of such Loan and otherwise perform all of its obligations
under this Agreement in full and by the due date.

(iii)          Each Lender shall record on its
internal records (including, without limitation, any promissory note described
in subsection 2.1G(iv)) the amount of each Loan made by it and each
payment in respect thereof and, in the case of a Lender with respect to each
Loan made by it to an Offshore Borrower, the identity of the Offshore 

 72
 

 

Borrower in
respect thereof, the amount thereof and each Interest Period applicable
thereto; provided that in the event of any inconsistency between the
Register and any Lender’s records, the inscriptions in the Register shall
govern, absent manifest or demonstrable error.

(iv)          If so requested by any Lender having
Tranche B Term Loan Exposure or Revolving Loan Exposure by written notice to
Owens-Brockway (with a copy to Administrative Agent) at any time,
Owens-Brockway shall execute and deliver to such Lender (and/or, if so specified
in such notice, any Person who is an assignee of such Lender pursuant to
subsection 10.2 hereof), promptly after Owens-Brockway’s receipt of such
notice, a promissory note or promissory notes to evidence such Lender’s Tranche
B Term Loans or Revolving Loans, substantially in the form of Exhibit IV-B
and/or Exhibit V hereto. If so requested by any Lender having
Tranche D Term Loan Exposure or Dutch Revolving Loan Exposure by written notice
to OIEG (with a copy to Administrative Agent and Borrowers’ Agent) at any time,
OIEG shall execute and deliver to such Lender (and/or, if so specified in such
notice, any Person who is an assignee of such Lender pursuant to
subsection 10.2 hereof), promptly after OIEG’s and Borrowers’ Agent’s
receipt of such notice, a promissory note or promissory notes to evidence such
Lender’s Tranche D Term Loans or Dutch Revolving Loans, substantially in the
form of Exhibit IV-D and/or Exhibit VI hereto,
respectively. If so requested by any Lender having Tranche C Term Loan Exposure
or Canadian Revolving Loan Exposure by written notice to O-I Canada (with a
copy to Administrative Agent and Borrowers’ Agent), O-I Canada shall execute
and deliver to such Lender (and/or, if so specified in such notice, any Person
who is an assignee of such Lender pursuant to subsection 10.2 hereof),
promptly after O-I Canada’s and Borrowers’ Agent’s receipt of such notice, a
promissory note or promissory notes to evidence such Lender’s Canadian
Revolving Loans, substantially in the form of Exhibit IV-C and/or Exhibit VI
hereto, respectively. If so requested by any Lender having Swiss Revolving Loan
Exposure by written notice to O-I Europe (with a copy to Administrative Agent
and Borrowers’ Agent), O-I Europe shall execute and deliver to such Lender (and/or,
if so specified in such notice, any Person who is an assignee of such Lender
pursuant to subsection 10.2 hereof), promptly after O-I Europe’s and
Borrowers’ Agent’s receipt of such notice, a promissory note or promissory
notes to evidence such Lender’s Swiss Revolving Loans, substantially in the
form of Exhibit VI hereto.

Tranche A Term Loans and Australian Revolving Loans
will be issued by ACI to the Lenders as debentures in inscribed form. Such
issue will be effected by inscription of each Loan and the name of each Lender
as described in this subsection 2.1G. Such inscription shall be made on behalf
of ACI for the purposes of issuing the debentures. In addition, ACI shall
execute and deliver to each Lender having Tranche A Term Loans or Australian
Revolving Loan Exposure one or more Tranche A Term Loan Notes and/or Australian
Revolving Loan Notes, substantially in the form of Exhibit IV-A
and/or Exhibit VI hereto, respectively, immediately after the
making of such Tranche A Term Loans or Australian Revolving Loans.

From time to time, upon
receipt of notice from any Lender (with a copy to Administrative Agent and
Borrowers’ Agent) ACI shall execute and deliver additional Tranche A Term Loan
Notes and/or Australian Revolving Loan Notes substantially in the form of Exhibit

 73
 

 

IV-A and/or Exhibit VI
hereto to any Person who is an assignee of a Lender of such Type of Loan or
Commitment pursuant to subsection 10.2 hereof.

2.2          Interest
on the Loans.

A.            Rate of Interest.

(i)            All Loans shall bear interest on the
unpaid principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to (a) in the
case of Loans denominated in Dollars, the Base Rate or the Eurocurrency Rate; (b) in
the case of Loans denominated in ADollars, the Eurocurrency Rate; (c) in
the case of Loans denominated in Canadian Dollars, the Base Rate or the B/A
Discount Rate and (d) in the case of Loans denominated in Euro, the
Eurocurrency Rate. Except for Loans denominated in ADollars and Euro (which
must be made and continue as Eurocurrency Rate Loans) and except to the extent
that this Agreement specifically provides that certain Loans must be made as,
continued as, or converted into Base Rate Loans, the applicable basis for determining
the rate of interest with respect to Term Loans, Revolving Loans and Offshore
Revolving Loans shall be selected by a Borrower at the time such Borrower gives
a Notice of Borrowing pursuant to subsection 2.1E (or is deemed to have
given a Notice of Borrowing pursuant to subsection 2.8D) or at the time a
Notice of Conversion/Continuation is given pursuant to subsection 2.2D. Except
in the case of Loans denominated in ADollars or Euro, if on any day a Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the basis for determining the rate of interest, then for that day that Loan
shall bear interest determined by reference to the Base Rate. If on any day Loans
denominated in ADollars or Euro are outstanding with respect to which notice
has not been delivered to Administrative Agent in accordance with the terms of
this Agreement specifying the basis for determining the rate of interest, then
such Loan shall be automatically continued as a Eurocurrency Loan with a one
month Interest Period.

Term Loans, Revolving Loans and Offshore Revolving
Loans shall bear interest through maturity as follows:

(a)           if a Base Rate Loan, then at the sum
of the Base Rate plus the Applicable Base Rate Margin;

(b)           if a Eurocurrency Rate Loan, then at
the sum of the Eurocurrency Rate plus the Applicable Eurocurrency Margin; or

(c)           if
a B/A Discount Rate Loan, then at the sum of the B/A Discount Rate plus the
Applicable Eurocurrency Margin.

B.            Interest Periods.

In connection with each Eurocurrency Rate Loan or B/A
Discount Rate Loan, the Borrower requesting such Loan shall elect an interest
period (each an “Interest Period”) to be 

 74
 

 

applicable to such Loan, which Interest Period shall
be a one, two, three or six month period (or, with Administrative Agent’s
consent, a one, two or three week period); provided that:

(i)            the initial Interest Period for any
such Loan shall commence on the Funding Date in respect of such Loan, in the
case of a Loan initially made as a Eurocurrency Rate Loan or a B/A Discount
Rate Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurocurrency Rate
Loan or a B/A Discount Rate Loan;

(ii)           in the case of immediately successive
Interest Periods applicable to a Eurocurrency Rate Loan or a B/A Discount Rate
Loan continued as such pursuant to a Notice of Conversion/Continuation or
otherwise, each successive Interest Period shall commence on the day on which
the next preceding Interest Period expires;

(iii)          if an Interest Period with respect to
any Loan would otherwise expire on a day which is not a Business Day, such
Interest Period shall expire on the next succeeding Business Day; provided
that if any such Interest Period would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day;

(iv)          any Interest Period with respect to
any Loan which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of a calendar
month;

(v)           no Interest Period with respect to
any Tranche A Term Loan shall extend beyond the Tranche A Term Loan Maturity
Date;

(vi)          no Interest Period with respect to any
Tranche B Term Loan shall extend beyond the Tranche B Term Loan Maturity Date;

(vii)         no Interest Period with respect to any
Tranche C Term Loan shall extend beyond the Tranche C Term Loan Maturity Date;

(viii)        no Interest Period with respect to any
Tranche D Term Loan shall extend beyond the Tranche D Term Loan Maturity Date;

(ix)           no Interest Period with respect to
any Revolving Loan or Offshore Revolving Loan shall extend beyond the Revolving
Loan Commitment Termination Date.

(x)            there shall be no more than 20
Interest Periods outstanding at any time with respect to Eurocurrency Rate
Loans to Owens-Brockway and there shall be no more than (a) 15 Interest
Periods outstanding at any time with respect to Australian Revolving Loans and
Tranche A Term Loans, (b) 5 Interest Periods outstanding at any time with
respect to Canadian Revolving Loans and Tranche C Term Loans, (c) 10
Interest Periods outstanding at any time with respect to Dutch Revolving Loans
and 

 75
 

 

Tranche D Term
Loans, and (d) 10 Interest Periods outstanding at any time with respect to
Swiss Revolving Loans;

(xi)           in the event a Borrower fails to
specify an Interest Period in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, such Borrower shall be deemed to have selected an
Interest Period of one month; and

(xii)          no Interest Period shall more than
thirty days (and no Base Rate Loan may be converted into a Eurodollar Rate Loan
or B/A Discount Rate Loan with an Interest Period of more than thirty days)
until the earlier of the  thirtieth day
after the Closing Date and the date specified by Administrative Agent to
Company on which the primary syndication of the Term Loans and Revolving Loan
Commitments has been completed.

C.            Interest Payments. Subject to
subsection 2.2E, interest shall be payable on the Loans as follows:

(i)            interest on each Base Rate Loan
shall be payable in arrears on and to each March 15, June 15, September 15,
and December 15 of each year, commencing on September 15, 2006, and
at maturity; and

(ii)           interest on each Eurocurrency Rate
Loan and B/A Discount Rate Loan shall be payable in arrears on and to each
Interest Payment Date applicable to that Loan, upon any prepayment of that Loan
(to the extent accrued on the amount being prepaid) and at maturity.

D.            Conversion or Continuation. Subject
to the provisions of subsections 2.6 and 2.2B(xii), the applicable
Borrower shall have the option (i) to convert at any time all or any part
of its outstanding Term Loans (other than Loans denominated in Euro or ADollars
which shall always constitute Eurocurrency Rate Loans), Revolving Loans or
Offshore Revolving Loans equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis, and (ii) upon the
expiration of any Interest Period applicable to a Eurocurrency Rate Loan or B/A
Discount Rate Loan, to continue all or any portion of such Eurocurrency Rate
Loan or B/A Discount Rate Loan equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount as a Eurocurrency Rate Loan, and the
succeeding Interest Period(s) of such continued Loan shall commence on the
last day of the Interest Period of the Loan to be continued, provided, however,
that a Eurocurrency Rate Loan or B/A Discount Rate Loan may only be converted
into a Base Rate Loan on the expiration date of an Interest Period applicable
thereto; and provided, further, that, unless Requisite Lenders
otherwise agree, no outstanding Loan may be continued as, or be converted into,
a Eurocurrency Rate Loan or B/A Discount Rate Loan when any Event of Default
has occurred and is continuing.

The applicable Borrower shall deliver a Notice of
Conversion/Continuation to Administrative Agent no later than 12:00 Noon (New
York time) (i) at least one Business Day in advance of the proposed
conversion/continuation date in the case of a conversion to a Base Rate Loan, (ii) at
least two Business Days in advance of the proposed conversion/continuation date
in 

 76
 

 

the case of a conversion to, or a continuation of, a
B/A Discount Rate Loan, (iii) at least three Business Days in advance of
the proposed conversion/continuation date in the case of a conversion to, or a
continuation of, a Eurocurrency Rate Loan (other than a conversion to, or a continuation
of, a Eurocurrency Rate Loan denominated in ADollars) or (iv) at least
four Business Days in advance of the proposed conversion/continuation date in
the case of a conversion to, or a continuation of, a Eurocurrency Rate Loan
denominated in ADollars. A Notice of Conversion/Continuation shall specify (i) the
proposed conversion/continuation date (which shall be a Business Day), (ii) the
amount and Type of the Loan to be converted/continued, (iii) the nature of
the proposed conversion/continuation and (iv) in the case of a conversion
to, or a continuation of, a Eurocurrency Rate Loan or B/A Discount Rate Loan,
the requested Interest Period. In lieu of delivering the above described Notice
of Conversion/Continuation, the applicable Borrower may give Administrative
Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided, that,
such notice shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date. Administrative Agent shall promptly notify the
Lenders of any Loan becoming subject to a Notice of Conversion/Continuation.

Administrative Agent shall not incur any liability to
any Loan Party in acting upon any telephonic notice referred to above which
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of a Borrower in
connection with any telephonic notice referred to above or for otherwise acting
in good faith under this subsection 2.2D and upon conversion/continuation
by Administrative Agent in accordance with this Agreement pursuant to any
telephonic notice, such Borrower shall have effected a conversion or
continuation, as the case may be, hereunder.

Except as provided in subsection 2.6D, a Notice
of Conversion/Continuation for conversion to, or continuation of, a
Eurocurrency Rate Loan to a B/A Discount Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and upon delivering a Notice of Conversion/Continuation,
the relevant Borrower shall be bound to convert or continue in accordance
therewith, unless such Borrower pays to Lenders such amounts as may be due
under subsection 2.6D(iii) for failure of a conversion to or
continuation of any Eurocurrency Rate Loan to occur on the date specified
therefor in a Notice of Conversion/Continuation (or telephonic notice in lieu
thereof).

E.             Post-Maturity Interest. Any
principal payments on the Loans (other than Loans denominated in Euro or
ADollars) not paid when due and, to the extent permitted by applicable law, any
interest payments on the Loans not paid when due, in each case whether at stated
maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate equal to the sum of the
Base Rate plus the Applicable Base Rate Margin plus 2.00% per
annum. Any principal payments on the Loans denominated in Euro or ADollars not
paid when due and, to the extent permitted by applicable law, any interest
payments on such Loans not paid when due, in each case whether at stated
maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate equal to the sum of the
Eurocurrency Rate (for sequential interest periods of 30 days) plus the
Applicable Eurocurrency Margin plus 2.00% per annum.

 77
 

 

F.             Computation of Interest. Interest on all Loans
(except B/A Discount Rate Loans and Base Rate Loans denominated in Canadian
Dollars) and reimbursed obligations in respect of L/C Disbursements shall be
computed on the basis of the actual number of days elapsed over a year of 360
days, and interest on B/A Discount Rate Loans and Base Rate Loans denominated
in Canadian Dollars shall be computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be. In computing
interest on any Loan, the date of the making of the Loan or the first day of an
Interest Period, as the case may be, shall be included and the date of payment
or the expiration date of an Interest Period, as the case may be, shall be
excluded; provided that if a Loan is repaid on the same day on which it
is made, one day’s interest shall be paid on that Loan.

G.            Interest Act (Canada). For
purposes of disclosure pursuant to the Interest
Act (Canada), the annual rates of interest or fees to which the
rates of interest or fees provided in this Agreement and the other Loan
Documents (and stated herein or therein, as applicable, to be computed on the
basis of a 360 day year or any other period of time less than a calendar year)
are equivalent are the rates so determined multiplied by the actual number of
days in the applicable calendar year and divided by 360 or such other period of
time, respectively.

H.            Interest Limitations.
Notwithstanding the foregoing provisions of this subsection 2.2, in no event
shall the rate of interest payable by any Borrower in respect of any Loan
exceed the maximum rate permitted to be charged by applicable law. Without
limiting the generality of the foregoing, if any provision of this Agreement or
any other Loan Documents would obligate O-I Canada to make any payment of
interest with respect to the Obligations of O-I Canada or other amount payable
to any Lender in an amount or calculated at a rate which would be prohibited by
law or would result in a receipt by that Lender of interest with respect to the
Obligations of O-I Canada at a criminal rate (as such terms are construed under
the Criminal Code (Canada)) then,
notwithstanding such provision, such amount or rates shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by law or so result
in a receipt by that Lender of interest with respect to the Obligations of O-I
Canada at a criminal rate, such adjustment to be effected, to the extent
necessary, as follows:  (1) first,
by reducing the amount or rates of interest required to be paid to the affected
Lender under this subsection 2.2H; and (2) thereafter, by reducing any
fees, commissions, premiums and other amounts required to be paid to the
affected Lender which would constitute interest with respect to the Obligations
of O-I Canada for purposes of Section 347 of the Criminal
Code (Canada). Notwithstanding the foregoing, and after giving
effect to all adjustments contemplated thereby, if any Lender shall have
received an amount in respect of Obligations of O-I Canada in excess of the
maximum permitted by that section of the Criminal Code
(Canada), then O-I Canada shall be entitled, by notice in writing to the
affected Lender, to obtain reimbursement from that Lender in an amount equal to
such excess, and pending such reimbursement, such amount shall be deemed to be
an amount payable by that Lender to O-I Canada. Any amount or rate of interest
under the Obligations of O-I Canada referred to in this subsection 2.2H shall
be determined in accordance with generally accepted actuarial practices and
principals at an effective annual rate of interest over the term that any
Offshore Revolving Loan remains outstanding on the assumption that any charges,
fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if related to a specific
period of time, be pro-rated over that period of time and otherwise be
pro-rated over the period from the Closing Date to the termination of the
Offshore Revolving Loan Commitment 

 78
 

 

(with reference to the
Obligations of O-I Canada) and, in the event of a dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries appointed by the Administrative
Agent shall be conclusive for the purposes of such determination.

2.3          Fees

A.            Commitment Fees.

(i)           Owens-Brockway shall pay or cause to be
paid, to Administrative Agent (for distribution to each Revolving Lender in
accordance with such Lender’s Pro Rata Share) commitment fees with respect to
the Revolving Loan Commitments, for the period from and including the Closing
Date to and excluding the Revolving Loan Commitment Termination Date, equal to
the average of the daily excess of the aggregate Revolving Loan Commitments
over the Total Utilization of the Revolving Loan Commitments (excluding, for
purposes of such calculation, amounts described in clauses (iii) and (vi) of
the definition thereof) multiplied by the Applicable Commitment Fee
Percentage. Such commitment fees to be computed on the basis of a 360-day
year and to be payable in arrears on each Fee Payment Date for the three-month
period ending on the day prior to such Fee Payment Date, commencing on the
first such date to occur after the Closing Date, and on the Revolving Loan
Commitment Termination Date.

(ii)          Owens-Brockway
shall pay or cause to be paid, to Administrative Agent (for distribution to
each Tranche B Term Loan Lender in accordance with such Lender’s Pro Rata Share
of the Delayed Draw Commitments (defined below)) commitment fees with respect
to the aggregate Tranche B Term Loan Commitments minus the amount of Tranche B
Term Loans funded on the Closing Date (the “Delayed
Draw Commitments”), for the period from and including the Closing Date
to and excluding the earlier to occur of the Funding Date for the Tranche B
Term Loans under the Delayed Draw Commitments (the “Delayed
Draw Funding Date”) or the date of termination of the
Delayed Draw Commitments, equal to the total amount of the Delayed Draw
Commitments multiplied by 0.50% per annum, such commitment fees to be computed
on the basis of a 360-day year and to be payable in arrears on the
earlier of the Delayed Draw Funding Date and the date of termination of the
Delayed Draw Commitments.

B.            Other Fees. Owens-Brockway
agrees to pay or cause to be paid an annual administrative fee to
Administrative Agent and such other fees to Arrangers and Agents, in each case
in the amounts and at the times agreed upon between Owens-Brockway and the
applicable Arranger or Agent.

2.4          Repayment
and Prepayments; Reductions in Commitments

A.            Scheduled Payments of Term Loans.

(i)          Scheduled Payments of Tranche A
Term Loans. ACI shall make principal payments in ADollars on the Tranche A
Term Loans in installments on the dates and in the amounts set forth below:

 79

 

	
  Date

  	
   

  	
   

  	
   

  	
  Scheduled Repayment—

  Tranche A Term Loans

  	
   

  
	
  September 30,
  2008

  	
   

  	
  A$3,750,000

  	
   

  
	
  December 31,
  2008

  	
   

  	
  A$3,750,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  A$3,750,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  A$3,750,000

  	
   

  
	
  September 30,
  2009

  	
   

  	
  A$3,750,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  A$3,750,000

  	
   

  
	
  March 31,
  2010

  	
   

  	
  A$3,750,000

  	
   

  
	
  June 30,
  2010

  	
   

  	
  A$3,750,000

  	
   

  
	
  September 30,
  2010

  	
   

  	
  A$22,500,000

  	
   

  
	
  December 31,
  2010

  	
   

  	
  A$22,500,000

  	
   

  
	
  March 31,
  2011

  	
   

  	
  A$22,500,000

  	
   

  
	
  June 30,
  2011

  	
   

  	
  A$22,500,000

  	
   

  
	
  September 30,
  2011

  	
   

  	
  A$45,000,000

  	
   

  
	
  December 31,
  2011

  	
   

  	
  A$45,000,000

  	
   

  
	
  March 31,
  2011

  	
   

  	
  A$45,000,000

  	
   

  
	
  Tranche A Term
  Loan Maturity Date

  	
   

  	
  A$45,000,000

  	
   

  
	
  Total:

  	
   

  	
  A$300,000,000

  	
   

  

 

;  provided that the scheduled
installments of principal of the Tranche A Term Loans set forth above shall be
reduced in connection with any voluntary or mandatory prepayments of the
Tranche A Term Loans in accordance with subsection 2.4B(iii) and
increased ratably in connection with any increase of the Tranche A Term Loans
pursuant to subsection 2.1A(vi); and provided, further that the
Tranche A Term Loans and all other amounts owed hereunder with respect to the
Tranche A Term Loans shall be paid in full no later than June 15, 2012,
and the final installment payable by ACI in respect of the Tranche A Term Loans
on such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by ACI under this
Agreement with respect to the Tranche A Term Loans.

(ii)         Scheduled Payments of Tranche B Term
Loans. Owens-Brockway shall make principal payments on the Tranche B Term
Loans in Dollars on the dates set forth below in an amount equal to the
percentage set forth below for each such date of the principal amount of the
Tranche B Term Loans outstanding as of August 15, 2006:

 80
 

 

 

	
  Date

  	
   

  	
   

  	
   

  	
  Scheduled Repayment—

  Tranche B Term Loans

  	
   

  
	
  December 31,
  2006

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2012

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2012

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2012

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2012

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2013

  	
   

  	
  0.25

  	
  %

  
	
  Tranche B Term
  Loan Maturity Date

  	
   

  	
  93.5

  	
  %

  
	
  Total:

  	
   

  	
  100

  	
  %

  

 

; provided that the scheduled installments of
principal of the Tranche B Term Loans set forth above shall be reduced in
connection with any voluntary or mandatory prepayments of the Tranche B Term
Loans in accordance with subsection 2.4B(iii) and increased ratably
in connection with any increase of the Tranche B Term Loans pursuant to
subsection 2.1A(vi); and provided, further that the Tranche B Term Loans and
all other amounts owed hereunder with respect to the Tranche B Term Loans shall
be paid in full no later than June 14, 2013, and the final installment
payable by Owens-Brockway in respect of the Tranche B Term Loans on such date
shall be in an amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by Owens-Brockway under this Agreement
with respect to the Tranche B Term Loans.

 81
 

 

 

(iii)        Scheduled Payments of Tranche C Term
Loans. O-I Canada shall make principal payments on the Tranche C Term Loans
in Canadian Dollars on the dates and in the amounts set forth below:

	
  Date

  	
   

  	
   

  	
   

  	
  Scheduled Repayment-

  Tranche C Term Loans

  (Canadian Dollars)

  	
   

  
	
  September 30,
  2008

  	
   

  	
  C$1,725,000

  	
   

  
	
  December 31,
  2008

  	
   

  	
  C$1,725,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  C$1,725,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  C$1,725,000

  	
   

  
	
  September 30,
  2009

  	
   

  	
  C$1,725,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  C$1,725,000

  	
   

  
	
  March 31,
  2010

  	
   

  	
  C$1,725,000

  	
   

  
	
  June 30,
  2010

  	
   

  	
  C$1,725,000

  	
   

  
	
  September 30,
  2010

  	
   

  	
  C$1,725,000

  	
   

  
	
  December 31,
  2010

  	
   

  	
  C$1,725,000

  	
   

  
	
  March 31,
  2011

  	
   

  	
  C$1,725,000

  	
   

  
	
  June 30,
  2011

  	
   

  	
  C$1,725,000

  	
   

  
	
  September 30,
  2011

  	
   

  	
  C$29,325,000

  	
   

  
	
  December 31,
  2011

  	
   

  	
  C$29,325,000

  	
   

  
	
  March 31,
  2012

  	
   

  	
  C$29,325,000

  	
   

  
	
  Tranche C Term
  Loan Maturity Date

  	
   

  	
  C$29,325,000

  	
   

  
	
  Total:

  	
   

  	
  C$138,000,000

  	
   

  

 

; provided that the scheduled installments of
principal of the Tranche C Term Loans set forth above shall be reduced in
connection with any voluntary or mandatory prepayments of the Tranche C Term
Loans in accordance with subsection 2.4B(iii) and increased ratably
in connection with any increase of the Tranche C Term Loans pursuant to
subsection 2.1A(vi); and provided, further that the Tranche C Term Loans and
all other amounts owed hereunder with respect to the Tranche C Term Loans shall
be paid in full no later than June 15, 2012, and the final installment
payable by O-I Canada in respect of the Tranche C Term Loans on such date shall
be in an amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by O-I Canada under this Agreement with
respect to the Tranche C Term Loans.

(iv)       Scheduled Payments of Tranche D Term
Loans. OIEG shall make principal payments on the Tranche D Term Loans in
Euro on the dates and in the amounts set forth below:

 82
 

 

 

	
  Date

  	
   

  	
   

  	
   

  	
  Scheduled Repayment -

  Tranche D Term Loans

  	
   

  
	
  December 31,
  2006

  	
   

  	
  €500,000

  	
   

  
	
  March 31,
  2007

  	
   

  	
  €500,000

  	
   

  
	
  June 30,
  2007

  	
   

  	
  €500,000

  	
   

  
	
  September 30,
  2007

  	
   

  	
  €500,000

  	
   

  
	
  December 31,
  2007

  	
   

  	
  €500,000

  	
   

  
	
  March 31,
  2008

  	
   

  	
  €500,000

  	
   

  
	
  June 30,
  2008

  	
   

  	
  €500,000

  	
   

  
	
  September 30,
  2008

  	
   

  	
  €500,000

  	
   

  
	
  December 31,
  2008

  	
   

  	
  €500,000

  	
   

  
	
  March 31, 2009

  	
   

  	
  €500,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  €500,000

  	
   

  
	
  September 30,
  2009

  	
   

  	
  €500,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  €500,000

  	
   

  
	
  March 31,
  2010

  	
   

  	
  €500,000

  	
   

  
	
  June 30,
  2010

  	
   

  	
  €500,000

  	
   

  
	
  September 30,
  2010

  	
   

  	
  €500,000

  	
   

  
	
  December 31,
  2010

  	
   

  	
  €500,000

  	
   

  
	
  March 31,
  2011

  	
   

  	
  €500,000

  	
   

  
	
  June 30,
  2011

  	
   

  	
  €500,000

  	
   

  
	
  September 30,
  2011

  	
   

  	
  €500,000

  	
   

  
	
  December 31,
  2011

  	
   

  	
  €500,000

  	
   

  
	
  March 31,
  2012

  	
   

  	
  €500,000

  	
   

  
	
  June 30,
  2012

  	
   

  	
  €500,000

  	
   

  
	
  September 30,
  2012

  	
   

  	
  €500,000

  	
   

  
	
  December 31,
  2012

  	
   

  	
  €500,000

  	
   

  
	
  March 31,
  2013

  	
   

  	
  €500,000

  	
   

  
	
  Tranche D Term
  Loan Maturity Date

  	
   

  	
  €187,000,000

  	
   

  
	
  Total:

  	
   

  	
  €200,000,000

  	
   

  

 

; provided that the scheduled installments of
principal of the Tranche D Term Loans set forth above shall be reduced in
connection with any voluntary or mandatory prepayments of the Tranche D Term
Loans in accordance with subsection 2.4B(iii) and increased ratably
in connection with any increase of the Tranche D Term Loans pursuant to
subsection 2.1A(vi); and provided, further that the Tranche D Term Loans and
all other amounts owed hereunder with respect to the Tranche D Term Loans shall
be paid in full no later than June 14, 2013, and the final installment
payable by OIEG in respect of the Tranche D Term Loans on such date shall be 

 83
 

 

in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by OIEG under this
Agreement with respect to the Tranche D Term Loans.

B.            Prepayments.

(i)            Voluntary Prepayments. Borrowers
may, upon written or telephonic notice to Administrative Agent on or prior to
12:00 Noon (New York time) (i) on the date of prepayment (in the case
of Base Rate Loans), (ii) three Business Days’ prior written or telephonic
notice (in the case of Eurocurrency Rate Loans (other than Eurocurrency Rate
Loans denominated in ADollars) or B/A Discount Rate Loans) or (iii) four
Business Days’ prior written or telephonic notice (in the case of Eurocurrency
Rate Loans denominated in ADollars), which notice, if telephonic, shall be
promptly confirmed in writing to Administrative Agent and which notice
Administrative Agent will promptly transmit by telephone, electronic mail or
facsimile to each Lender, at any time and from time to time prepay any Term
Loan, Revolving Loan or Offshore Revolving Loan in whole or in part in an
aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in
excess of that amount; provided, however, that if a Eurocurrency
Rate Loan or a B/A Discount Rate Loan is prepaid on a date other than the last
day of the Interest Period applicable thereto, the prepaying Borrower shall be
liable for any payments required by subsection 2.6D(iii). Notice of
prepayment having been given as aforesaid, the principal amount of the Loans
specified in such notice shall become due and payable on the prepayment date.

(ii)           Mandatory Prepayments of Loans and
Mandatory Reductions of Revolving Loan Commitments. The Loans shall be
prepaid and/or the Revolving Loan Commitments shall be permanently reduced,
and/or to the extent set forth in subsection 2.4B(iii), the L/C Collateral
Account shall be funded in each case in the amount and under the circumstances
set forth below:

(a)           Prepayments from Net Asset Sale
Proceeds. (i) No later than the third Business Day after the date of
receipt by Company or any of its Subsidiaries that are Loan Parties (including
Borrowers) of any Net Asset Sale Proceeds in respect of any Triggering Asset
Sale by Company or any of its Subsidiaries that are Loan Parties (including
Borrowers), the Borrowers shall prepay Term Loans in an amount equal to the
lesser of (x) the portion of the Net Asset Sale Proceeds permitted to be
applied to the Loans under the terms of the Intercreditor Agreement and (y) the
aggregate amount of Term Loans outstanding, and (ii) in the event of a
Triggering Asset Sale by a foreign Wholly-Owned Subsidiary of Company that is
not an Offshore Borrower or Offshore Guarantor, not later than the third
Business Day after receipt by such Foreign Subsidiary of any Net Asset Sale
Proceeds, if and to the extent such Net Asset Sale Proceeds may be repatriated
or otherwise transferred (by reason of payment of intercompany note or
otherwise) to a Borrower or Borrowers with Term Loans outstanding without (in
the reasonable judgment of Company) resulting in a material tax or other
liability to Company or its Subsidiaries, such Net Asset Sale Proceeds shall be
applied pursuant to clause (i), above.

 84
 

 

 

(b)           Prepayments from Excess Cash Flow.
No later than ninety (90) days after the last day of such Fiscal Year
(commencing with the Fiscal Year ending December 31, 2007), if there shall
be Consolidated Excess Cash Flow for such Fiscal Year, the Consolidated
Leverage Ratio as of the end of such Fiscal Year is greater than 4.25:1 and
Owens-Brockway’s senior secured debt ratings are below BB- by S&P or below
Ba3 from Moody’s (or Owens-Brockway fails to maintain a senior secured debt
rating from S&P or Moody’s), Borrowers shall prepay the Term Loans in an
amount equal to 50% of such Consolidated Excess Cash Flow.

(c)           Prepayments and Reductions from
Net Insurance/Condemnation Proceeds. No later than the third Business Day
following the date of receipt by Administrative Agent or by Company or any of
its Subsidiaries that are Loan Parties (including Borrowers) of any Net
Insurance/Condemnation Proceeds that are required to be applied to prepay the
Loans and/or reduce the Revolving Loan Commitments pursuant to the provisions
of subsection 5.4B, the Borrowers shall (i) prepay the Term Loans in
an amount equal to the lesser of (A) the portion of the Net
Insurance/Condemnation Proceeds permitted to be applied to the Loans under the
terms of the Intercreditor Agreement and (B) the aggregate amount of Term
Loans outstanding, and (ii) permanently reduce the Revolving Loan
Commitments by an amount equal to the Revolving Loan Commitments multiplied by
the positive difference (if any) between the Net Insurance/Condemnation
Proceeds permitted to be applied to the Loans under the terms of the
Intercreditor Agreement and amounts applied to the Term Loans under clause (i) of
this subsection.

(d)           Prepayments and Reductions from
Net Debt Proceeds Other Than From Receivables Sale Indebtedness. No later
than the third Business Day after the date of receipt by Holdings, Company or
any of its Subsidiaries (including Borrowers) of any Net Debt Proceeds (other
than those arising from the issuance of Receivables Sale Indebtedness and other
than those arising from unsecured New Senior Debt incurred at a time when the
aggregate amount outstanding in respect of Existing Holdings Senior Notes due
2007, the Existing Holdings Senior Notes due 2008 and the Existing
Owens-Brockway Senior Notes due 2009 is $200,000,000 or less):

(1)  (i) the Borrowers shall prepay the Term
Loans in an amount equal to such Net Debt Proceeds and (ii) the Revolving
Loan Commitments shall be permanently reduced by an amount equal to the
positive difference (if any) between the Net Debt Proceeds and the amounts
thereof applied to the Term Loans under clause (i) of this subsection; or

(2)  at the written election of Borrowers’ Agent
delivered to Administrative Agent not later than the third Business Day after
receipt of such Net Debt Proceeds, so long as the Note Redemption Conditions
are satisfied, and Borrowers’ Agent has 

 85
 

 

delivered an Officers’
Certificate to such effect and stating that the Borrowers intend to use such
Net Debt Proceeds to redeem, repurchase or otherwise repay Inside Maturity
Notes within 180 days (other than Existing Holdings Senior Notes due 2010 in
the case of Net Debt Proceeds from Net European Refinancing Debt), the Borrowers
may retain such proceeds and apply the same within such 180-day period to
redeem, repurchase or otherwise repay such Inside Maturity Notes; provided,
that, any such Net Debt Proceeds not so applied within such 180-day
period shall be applied within one (1) business day to prepay the Term
Loans and/or reduce the Revolving Loan Commitments pursuant to clause (1) above.

(e)           Prepayments
and Reductions from Net Debt Proceeds from Receivables Sale Indebtedness.
No later than the third Business Day after the date of receipt by Holdings,
Company or any of its Subsidiaries (including Owens-Brockway) of any Net Debt
Proceeds arising from the issuance of Receivables Sale Indebtedness: (A) the
Borrowers shall prepay the Term Loans in an amount equal to the lesser of (x) the
Net Debt Proceeds permitted to be applied to the Loans under the terms of the
Intercreditor Agreement and (y) the aggregate amount outstanding under the
Term Loans, and (B) the Revolving Loan Commitments shall be permanently
reduced by an amount equal to the positive difference (if any) between the Net
Debt Proceeds permitted to be applied to the Loans under the terms of the
Intercreditor Agreement and the amounts applied to the Term Loans under the
foregoing clause (A).

(f)            Prepayments due to Excess Total
Utilization. Owens-Brockway shall make such prepayments of Revolving Loans
(and cause the relevant Offshore Borrowers to make prepayments of Offshore
Revolving Loans) to the extent necessary so that the Total Utilization of
Revolving Loan Commitments at any time does not exceed the Revolving Loan
Commitments then in effect. ACI shall make prepayments of the Australian
Revolving Loans to the extent necessary so that the Total Utilization of
Australian Revolving Loan Commitments does not exceed the Offshore Sublimit
then in effect for ACI. O-I Canada shall make prepayments of the Canadian
Revolving Loans to the extent necessary so that the Total Utilization of
Canadian Revolving Loan Commitments does not exceed the Offshore Sublimit then
in effect for O-I Canada. OIEG shall make prepayments of the Dutch Revolving
Loans to the extent necessary so that the Total Utilization of Dutch Revolving
Loan Commitments does not exceed the Offshore Sublimit then in effect for OIEG.
O-I Europe shall make prepayments of the Swiss Revolving Loans to the extent
necessary so that the Total Utilization of Swiss Revolving Loan Commitments
does not exceed the Offshore Sublimit then in effect for O-I Europe.

(g)           Officers’
Certificate. Concurrently with any prepayment of the Loans and/or reduction
of the Revolving Loan Commitments pursuant to subsections 2.4B(ii)(a)-(e),
prepaying or reducing Borrowers shall deliver to 

 86
 

 

Administrative
Agent an Officers’ Certificate demonstrating the calculation of the amount of
the applicable Net Asset Sale Proceeds, Consolidated Excess Cash Flow, Net
Insurance/Condemnation Proceeds or Net Debt Proceeds, as the case may be, that
gave rise to such prepayment and/or reduction. In the event that the applicable
Borrower shall subsequently determine that the actual amount was greater than
the amount set forth in such Officers’ Certificate, the Borrowers shall
promptly cause an additional prepayment of the Loans (and/or, if applicable,
the Revolving Loan Commitments shall be permanently reduced) in an amount equal
to the amount of such excess, and the applicable Borrower shall concurrently
therewith deliver to Administrative Agent an Officers’ Certificate
demonstrating the derivation of the additional amount resulting in such excess.

(iii)          Application of Prepayments. Any
voluntary prepayments pursuant to subsection 2.4B(i) shall be applied
as specified by the applicable Borrower in the applicable notice of prepayment;
provided that in the event the applicable Borrower fails to specify the Loans
to which any such prepayment by it shall be applied, such prepayment shall be first
to repay outstanding Revolving Loans and Offshore Revolving Loans ratably, in
accordance with their respective outstanding principal balances to the full
extent thereof, second to repay outstanding Term Loans ratably, in
accordance with their respective outstanding principal balances to the full
extent thereof, and third to the L/C Collateral Account until the L/C
Collateral Account holds an amount equal to the Aggregate Available Amount (as
defined in the Security Agreement). Any mandatory prepayment pursuant to
subsections 2.4B(ii)(a)-(e) shall be applied as set forth in such
subsections; provided  that mandatory prepayments of the Term
Loans shall be made among the Tranche A Term Loans, Tranche B Term Loans,
Tranche C Term Loans, Tranche D Term Loans, Additional Term Loans (if any) and
Refinancing Term Loans (if any) in a manner specified by Borrowers’ Agent (and
if no such manner is specified, ratably in accordance with their outstanding
principal amounts); provided  that in no event shall any
prepayment pursuant to subsection 2.4B(ii) require the repayment of more
than 25% of the principal amount of the Tranche C Term Loans within five (5) years
of the date of advance (and amounts of Tranche C Term Loans outstanding in
excess of such amount during such five (5) year period shall be deemed not
to be outstanding during such five (5) year period solely for purposes of
subsection 2.4B(ii)); and amounts applied to any particular tranche of Term
Loans shall be applied first to reduce the scheduled installments of principal
of the applicable Term Loans set forth in subsection 2.4B due within 12
months of such repayment and second to reduce all remaining installments pro
rata (except for mandatory prepayments of Term Loans under
subsection 2.4B(ii)(b), which shall be applied to all such installments in
forward order of maturity); provided  further, if at the time of
such mandatory prepayment, the Term Loans have been repaid in full and (to the
extent such prepayment is required to be applied to the Revolving Loan
Commitments) the amount of such prepayment exceeds the sum of the Revolving
Loan Commitments then in effect the amount by which such prepayment exceeds
such amount shall be applied to the L/C Collateral Account until the L/C
Collateral Account holds an amount equal to the Aggregate Available Amount (as
defined in the Security Agreement). Any mandatory prepayment of any Type of
Term Loans, Revolving Loans or Offshore Revolving Loans shall be applied first
to Base Rate Loans of the applicable Type to the full extent thereof before
application to Eurocurrency Rate Loans or B/A 

 87
 

 

Discount Rate
Loans of such Type as determined by Administrative Agent, in each case in a
manner which minimizes the amount of any payments required to be made by the
applicable Borrowers pursuant to subsection 2.6D(iii). All prepayments of
Eurocurrency Rate Loans, B/A Discount Rate Loans, Term Loans and Offshore
Revolving Loans shall include payment of accrued interest on the principal
amount so prepaid and shall be applied to payment of interest before
application to principal.

C.            Manner and Time of Payment. Except
as provided in subsection 2.7C or 2.8F, all payments of principal,
interest and fees hereunder and under the Loans by Borrowers shall be made
without defense, setoff, counterclaim or other deduction and in Same Day Funds
and delivered to Administrative Agent not later than 12:00 Noon (New York time)
on the date due at the Funding and Payment Office for the account of Lenders,
in the applicable currency; funds received by Administrative Agent after the
applicable time shall be deemed to have been paid by the relevant Borrower on
the next succeeding Business Day. Company and each Borrower hereby authorize
Administrative Agent to charge their accounts with Administrative Agent in
order to cause timely payment to be made to Administrative Agent of all
principal, interest and fees due hereunder (subject to sufficient funds being
available in its accounts for that purpose); provided that
Administrative Agent shall give Company or the Borrower whose accounts are
being so charged notice of such charges prior thereto or as soon as reasonably
practicable thereafter.

D.            Apportionment of Payments. Aggregate
principal and interest payments in respect of Term Loans, Revolving Loans and
Offshore Revolving Loans and, to the extent payments are made by Borrowers
after payments have been made by Lenders pursuant to subsection 2.8E,
payments in respect of Letters of Credit, shall be apportioned among the Term
Loans, Revolving Loans, Offshore Revolving Loans and reimbursement obligations
in respect of Letters of Credit to which such payments relate, payments of the
aggregate commitment fees and Letter of Credit commissions shall be apportioned
ratably among Revolving Lenders, or in the case of commitment fees under
subsection 2.3A(ii), Tranche B Term Loans, in each case proportionally to their
respective Pro Rata Shares. All principal and interest payments in respect of
the Domestic Overdraft Account shall be transferred to and retained by
Administrative Agent; provided that Administrative Agent shall
distribute to each Lender that has purchased a participation in amounts due
with respect to the Domestic Overdraft Account pursuant to subsection 2.1B
such Lender’s Pro Rata Share of any payments subsequently received by
Administrative Agent in respect of such amounts due with respect to the
Domestic Overdraft Account. All principal and interest payments in respect of
any Offshore Overdraft Account shall be transferred to and retained by the
relevant Offshore Overdraft Account Provider; provided that such
Offshore Overdraft Account Provider shall transfer to the Administrative Agent
that portion of any payments subsequently received by such Offshore Overdraft
Account Provider in respect of amounts due with respect to such Offshore
Overdraft Account necessary to permit Administrative Agent to distribute to
each Lender that has purchased a participation in such amounts due pursuant to
subsection 2.1D such Lender’s Pro Rata Share of such payments. Administrative
Agent (or, in the case of payments received by any Issuing Lender from a
Borrower after payments have been made to such Issuing Lender by Lenders
pursuant to subsection 2.8C, such Issuing Lender) shall promptly
distribute to each Lender, at its primary address set forth below its name on
the appropriate signature page hereof or at such other address as any
Lender may request, its share of all such payments in respect of Term Loans,
Revolving 

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Loans, Letters of Credit,
the Domestic Overdraft Account, the Offshore Overdraft Accounts and Offshore
Revolving Loans received by Administrative Agent (or such Issuing Lender) and
the commitment fees of such Lender when received by Administrative Agent
pursuant to subsection 2.3A. Notwithstanding the foregoing provisions of
this subsection 2.4D, (i) with respect to any Lender which fails to
fund the purchase of all or any part of its participation in a Letter of Credit
as required by subsection 2.8E, its participation in the Domestic
Overdraft Amount as required under subsection 2.1B, its participation in
an Offshore Overdraft Amount as required under subsection 2.1D (such
Lender being a “Defaulting Participating
Lender”), all amounts which would otherwise be payable or allocable
to such Defaulting Participating Lender under this subsection 2.4D shall
instead be paid by Administrative Agent to the Issuing Lender (in the case of a
failure to fund the purchase of a participation in a Letter of Credit under
subsection 2.8E), Administrative Agent (in the case of a failure to fund
the purchase of a participation in the Domestic Overdraft Amount under
subsection 2.1B) the applicable Offshore Overdraft Account Provider (in
the case of a failure to fund a purchase of a participation in an Offshore
Overdraft Amount under subsection 2.1D) (each, a “Recipient”),
until such Recipient has received, either pursuant to this proviso or otherwise
from such Defaulting Participating Lender, an amount equal to the amount such
Defaulting Participating Lender failed to so fund plus interest at the
customary rate set by such Recipient for the correction of errors among banks
for three Business Days and thereafter at the Base Rate plus the Applicable
Base Rate Margin (and in the case such Defaulting Participating Lender is a
Defaulting Participating Lender with respect to more than one Recipient, such
amounts shall be paid to such Recipients ratably in accordance with amounts
owed to such Recipients by such Defaulting Participating Lender); (ii) if,
pursuant to the provisions of subsection 2.6D, any Notice of Borrowing or
Notice of Conversion/Continuation is withdrawn as to any Affected Lender or if
any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of
Eurocurrency Rate Loans or B/A Discount Rate Loans, Administrative Agent shall
give effect thereto in apportioning payments received thereafter and (iii) from
and after the occurrence of the CAM Exchange Date, Administrative Agent shall
apportion all payments received by it in the manner specified in Section 7
and Section 2.10.

E.             Payments on Non-Business Days.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, the payment shall be made on the next succeeding Business
Day and such extension of time shall be included in the computation of the
payment of interest hereunder or of the commitment fees and other fees
hereunder, as the case may be.

F.             Notation of Payment. Each
Lender agrees that before disposing of any Note held by it, or any part thereof
(other than by granting participations therein to a Federal Reserve Bank
pursuant to subsection 10.2D), that Lender will make a notation thereon of
all Loans and principal payments previously made thereon and of the date to
which interest thereon has been paid and will notify the Borrower obligated
under such Note and Administrative Agent of the name and address of the
transferee of that Note; provided that the failure to make (or any error
in the making of) a notation of any Loan made under such Note or to notify such
Borrower or Administrative Agent of the name and address of such transferee
shall not limit or otherwise affect the obligation of such Borrower hereunder
or under such Note with respect to any Loan and payments of principal or
interest hereunder or on any such Note.

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G.            Voluntary Reductions of
Commitments and Offshore Sublimits. Borrowers’ Agent shall have the right,
at any time and from time to time, (i) to terminate in whole or
permanently reduce in part, without premium or penalty, the Revolving Loan
Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Revolving Loan Commitments at the
time of such proposed termination or reduction, (ii) to terminate in whole
or reduce in part, without premium or penalty, the Australian Revolving Loan
Commitments in an amount up to the amount by which the Australian Revolving
Loan Commitments exceed the Total Utilization of Australian Revolving Loan
Commitments at the time of such proposed termination or reduction, (iii) to
terminate in whole or reduce in part, without premium or penalty, the Canadian
Revolving Loan Commitments in an amount up to the amount by which the Canadian
Revolving Loan Commitments exceed the Total Utilization of Canadian Revolving
Loan Commitments at the time of such proposed termination or reduction, (iv) to
terminate in whole or reduce in part, without premium or penalty, the Dutch
Revolving Loan Commitments in an amount up to the amount by which the Dutch
Revolving Loan Commitments exceed the Total Utilization of the Dutch Revolving
Loan Commitments at the time of such proposed termination or reduction, and (v) to
terminate in whole or reduce in part, without premium or penalty, the Swiss
Revolving Loan Commitments in an amount up to the amount by which the Swiss
Revolving Loan Commitments exceed the Total Utilization of the Swiss Revolving
Loan Commitments at the time of such proposed termination or reduction.

Borrowers’ Agent shall give not less than three
Business Days’ prior written notice to Administrative Agent designating the
date (which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction. Promptly after receipt of a notice of such
termination or partial reduction, Administrative Agent shall notify each Lender
of the proposed termination or partial reduction. Such termination or partial
reduction of any of the Offshore Revolving Loan Commitments or the Revolving
Loan Commitments shall be effective on the date specified in the notice
delivered by Borrowers’ Agent and shall reduce the applicable Offshore
Revolving Loan Commitment or the Revolving Loan Commitment, as the case may be,
of each Lender proportionately to its Pro Rata Share. Any such partial
reduction of the Revolving Loan Commitments or the Offshore Revolving Loan
Commitments shall be in an aggregate minimum amount of $5,000,000, and integral
multiples of $1,000,000 in excess of that amount.

2.5          Use
of Proceeds

A.            Revolving Loans and Offshore
Revolving Loans; Term Loans; Additional Term Loans; Refinancing Term Loans.
The proceeds of any Revolving Loans shall be used to provide for the working
capital requirements and general corporate purposes of Borrowers and their
Subsidiaries, which may include the repayment of obligations outstanding under the
Existing Credit Agreement and payment of fees and expenses related to this
Agreement, the payment of the Domestic Overdraft Amount pursuant to
subsection 2.1B, the reimbursement to any Issuing Lender of any amounts
drawn under any Letters of Credit issued by such Issuing Lender for the account
of Owens-Brockway as provided in subsection 2.8D, the payment or
prepayment of the Term Loans, the making of intercompany loans and dividends to
Company and its Subsidiaries for their own general corporate purposes and the
making of other Restricted Junior Payments permitted by subsection 6.5. In
addition, the proceeds of Revolving Loans may 

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only be used to
redeem, repay or otherwise repurchase Inside Maturity Notes (or make Restricted
Junior Payments to Holdings for the purpose of doing same), whether at maturity
or otherwise, if after giving effect to the making of such Revolving Loans and
the application of the proceeds thereof, the Consolidated Senior Secured
Leverage Ratio is less than 3.00:1.00 and the Revolving Loan Commitments then
in effect would exceed the Total Utilization of Revolving Loan Commitments by
at least $150,000,000. The proceeds of any Offshore Revolving Loans shall be
used to provide for the working capital requirements and general corporate
purposes of the applicable Offshore Borrower and its Subsidiaries, which may
include the payment of Offshore Overdraft Amounts pursuant to
subsection 2.1D, the reimbursement to any Issuing Lender of any amounts
drawn under any Letters of Credit issued by such Issuing Lender for the account
of an Offshore Borrower as provided in subsection 2.8D and the making and
repayment of intercompany loans to such Subsidiaries for their own general
corporate purposes. The proceeds of the Term Loans shall be used to repay all
obligations outstanding under the Existing Credit Agreement, to pay fees and
expenses related to this Agreement and, in the case of Tranche B Term Loans
made under the Delayed Draw Commitments, to purchase, redeem or repay Existing
Owens-Brockway Senior Secured Notes due 2009. The proceeds of any Additional
Term Loans or Refinancing Term Loans may be used for any purpose permitted by
this Agreement; provided, that, the proceeds of any Additional
Term Loans or Refinancing Term Loans may only be used to redeem, repay or
otherwise repurchase the Inside Maturity Notes if, after giving effect to the
making of such Loans and the application of the proceeds thereof, the
Consolidated Senior Secured Leverage Ratio is less than 3.00:1.00 and the
Revolving Loan Commitments exceed the Total Utilization of the Revolving Loan
Commitments by at least $150,000,000.

B.            Letters of Credit. Letters of Credit shall be issued solely for the purposes
specified in the definitions of Commercial Letter of Credit and Standby Letter
of Credit.

C.            Margin Regulations. No
portion of the proceeds of any borrowing under this Agreement shall be used by
any Borrower in any manner which would cause the borrowing or the application
of such proceeds to violate Regulation U, Regulation T, or Regulation X of the
Board of Governors of the Federal Reserve System or any other regulation of
such Board or to violate the Exchange Act, in each case as in effect on the
date or dates of such borrowing and such use of proceeds.

2.6          Special
Provisions Governing Eurocurrency Rate Loans and B/A Discount Rate Loans

Notwithstanding other provisions of this Agreement,
the following provisions shall govern with respect to Eurocurrency Rate Loans
and B/A Discount Rate Loans as to the matters covered:

A.            Determination of Interest Rate.
As soon as practicable after 11:00 A.M. (New York time) on each Interest
Rate Determination Date with respect to Eurocurrency Rate Loans and 11:00 A.M.
(New York time) on the first day of an applicable Interest Period in the case
of B/A Discount Rate Loans, Administrative Agent shall determine (which
determination shall, absent manifest or demonstrable error, be final,
conclusive and binding upon all parties) the interest rate which shall apply to
the Loans for which an interest rate is then being 

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determined for the
applicable Interest Period (subject to any changes in the Applicable
Eurocurrency Margin pursuant to the terms of the definition thereof) and shall
promptly give notice thereof (in writing or by telephone and confirmed in
writing) to the applicable Borrowers and to each affected Lender.

B.            Substituted Rate of Borrowing.
In the event that on any Interest Rate Determination Date any Lender (including
Administrative Agent) shall have determined (which determination shall, absent
manifest or demonstrable error, be final and conclusive and binding upon all
parties but, with respect to the following clauses (i) and (ii)(b), shall
be made only after consultation with the applicable Borrower and Administrative
Agent) that:

(i)            by reason of any changes arising
after the date of this Agreement affecting the applicable interbank markets or
affecting the position of that Lender in such market, adequate and fair means
do not exist for ascertaining the applicable interest rate on the basis
provided for in the definitions of Eurocurrency Rate or B/A Discount Rate with
respect to the Eurocurrency Rate Loans and B/A Discount Rate Loans,
respectively, as to which an interest rate determination is then being made; or

(ii)           by reason of (a) any change
after the date hereof in any applicable law or governmental rule, regulation or
order (or any interpretation thereof and including the introduction of any new
law or governmental rule, regulation or order) or (b) other circumstances
affecting that Lender or the Eurocurrency or B/A Discount Rate Loan markets or
the position of that Lender in either such market (such as for example, but not
limited to, official reserve requirements required by Regulation D or by the
Bank of England, the Financial Services Authority, the European Central Bank or
any other relevant monetary or regulatory authority to the extent not given
effect in the Eurocurrency Rate), the Eurocurrency Rate or the B/A Discount
Rate shall not represent the effective pricing to that Lender for Dollar, Euro,
Canadian Dollar or ADollar deposits of comparable amounts for the relevant
period;

then, and in any such event, that Lender shall be an
Affected Lender and it shall promptly (and in any event as soon as possible
after being notified of a borrowing, conversion or continuation) give notice
(by telephone and confirmed in writing) to the applicable Borrower and
Administrative Agent (which notice Administrative Agent shall promptly transmit
to each other relevant Lender) of such determination. Thereafter, the
applicable Borrower shall pay to the Affected Lender with respect to such
Borrower’s Eurocurrency Rate Loans and/or B/A Discount Rate Loans, upon written
demand therefor, such additional amounts (in the form of an increased rate of,
or a different method of calculating, interest or otherwise as the Affected
Lender in its sole discretion shall reasonably determine) as shall be required
to cause the Affected Lender to receive interest with respect to such Affected
Lender’s Eurocurrency Rate Loans and/or B/A Discount Rate Loans for the
Interest Period(s) following that Interest Rate Determination Date at a
rate per annum equal to the sum of the effective pricing to the Affected Lender
for Dollar deposits, Euro deposits, Canadian Dollar deposits or ADollar
deposits, as applicable, to make or maintain its Eurocurrency Rate Loans and/or
B/A Discount Rate Loans plus the Applicable Eurocurrency Margin. A
certificate as to additional amounts owed the Affected Lender, showing in
reasonable detail the basis for the calculation thereof, submitted in good
faith to the relevant 

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Borrower and Administrative Agent by the Affected
Lender shall, absent manifest or demonstrable error, be final and conclusive
and binding upon all of the parties hereto.

C.            Required Termination and
Prepayment. If on any date any Lender shall have reasonably determined
(which determination shall, absent manifest or demonstrable error, be final and
conclusive and binding upon all parties) that the making or continuation of its
Eurocurrency Rate Loans, B/A Discount Rate Loans or Loans to an Offshore
Borrower has become unlawful by compliance by that Lender in good faith with
any law, governmental rule, regulation or order (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, that Lender shall be an Affected Lender and it
shall promptly give notice (by telephone and confirmed in writing) to the
applicable Borrower, Administrative Agent (which notice Administrative Agent
shall promptly transmit to each Lender) of that determination. Subject to the
following subsection 2.6D, the obligation of the Affected Lender to make
or maintain its Eurocurrency Rate Loans, B/A Discount Rate Loans or Loans to an
Offshore Borrower, as the case may be, during any such period shall be
terminated at the earlier of the termination of the Interest Period then in
effect or when required by law and Owens-Brockway or the relevant Offshore
Borrower shall, no later than the termination of the Interest Period in effect
at the time any such determination pursuant to this subsection 2.6C is
made, or earlier when required by law, repay the Eurocurrency Rate Loans, B/A
Discount Rate Loans or other applicable Loans, as the case may be, of the
Affected Lender, together with all interest accrued thereon.

D.            Options of Borrowers. In lieu
of paying an Affected Lender such additional moneys as are required by
subsection 2.6B or the prepayment of an Affected Lender required by
subsection 2.6C, Borrowers may exercise any one of the following options:

(i)            If the determination by an Affected
Lender relates only to Eurocurrency Rate Loans or B/A Discount Rate Loans then
being requested by a Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, such Borrower may by giving notice (by telephone and
confirmed in writing) to Administrative Agent (who shall promptly give similar
notice to each relevant Lender) no later than the date immediately prior to the
date on which such Eurocurrency Rate Loans or B/A Discount Rate Loans are to be
made, converted or continued, withdraw as to the Affected Lender that Notice of
Borrowing or such Notice of Conversion/Continuation and such Affected Lender
shall thereupon make or maintain its Pro Rata Share of the Loan then being
requested, converted or continued as a Base Rate Loan;

(ii)           Upon written notice to Administrative
Agent, the applicable Borrower may terminate the obligations of Lenders to make
or maintain Loans as, and to convert Loans into, Eurocurrency Rate Loans or B/A
Discount Rate Loans, as applicable, and, in any such event, the applicable
Borrower shall, prior to the time any payment pursuant to subsection 2.6C
is required to be made or, if the provisions of subsection 2.6B are applicable,
at the end of the then current Interest Period, convert all of the Eurocurrency
Rate Loans (other than any such Loans denominated in ADollars or Euro) and/or
B/A Discount Rate Loans, as applicable, into Base Rate Loans in the manner
contemplated by subsection 2.2D but without satisfying the advance notice
requirements therein;

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(iii)          The applicable Borrower may give
notice (by telephone and confirmed in writing) to the Affected Lender and
Administrative Agent and require the Affected Lender to make the Eurocurrency
Rate Loan or B/A Discount Rate Loan then being requested as a Base Rate Loan or
to continue to maintain its outstanding Base Rate Loan then the subject of a
Notice of Conversion/ Continuation as a Base Rate Loan or to convert its
Eurocurrency Rate Loans or B/A Discount Rate Loans then outstanding that are so
affected into Base Rate Loans at the end of the then current Interest Period
(or at such earlier time as prepayment is otherwise required to be made
pursuant to subsection 2.6C) in the manner contemplated by
subsection 2.2D but without satisfying the advance notice requirements
therein, that notice to pertain only to the Loans of the Affected Lender and to
have no effect on the obligations of the other Lenders to make or maintain Eurocurrency
Rate Loans or B/A Discount Rate Loans or to convert Base Rate Loans into
Eurocurrency Rate Loans or B/A Discount Rate Loans; or

(iv)          Solely with respect to Loans
denominated in Euro or ADollars, the applicable Borrower may give notice (by
telephone and confirmed in writing) to the Affected Lender and Administrative
Agent and require the Affected Lender to make the Eurocurrency Rate Loan then
being requested at a rate determined by the Administrative Agent as the all in
cost of funds for such Affected Lender to fund a borrowing of Loans denominated
in Euros or ADollars, as applicable, with maturities comparable to the Interest
Period applicable thereto, so long as such Affected Lender may legally do so.

E.             Compensation. The applicable
Borrower shall compensate each Lender, upon written request by that Lender
(which request shall set forth in reasonable detail the basis for requesting
such amounts), for all reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Eurocurrency Rate Loans or B/A Discount
Rate Loans, and any loss sustained by that Lender in connection with the
re-employment of such funds), which that Lender may sustain with respect to Borrowers’
Eurocurrency Rate Loans or B/A Discount Rate Loans:  (i) if for any reason (other than a
default by that Lender) a borrowing of any Eurocurrency Rate Loan or B/A
Discount Rate Loan does not occur on a date specified therefor in a Notice of
Borrowing, a Notice of Conversion/Continuation or a telephonic request for
borrowing or conversion/continuation or a successive Interest Period does not
commence after notice therefor is given pursuant to subsection 2.2D, (ii) if
any prepayment or other principal payment of any of its Eurocurrency Rate Loans
or B/A Discount Rate Loans occurs on a date prior to the last day of the
Interest Period applicable to that Loan, (iii) if any prepayment of any of
such Lender’s Eurocurrency Rate Loans or B/A Discount Rate Loans is not made on
any date specified in a notice of prepayment given by the applicable Borrower,
or (iv) as a consequence of any other default by such Borrower to repay
such Lender’s Eurocurrency Rate Loans or B/A Discount Rate Loans when required
by the terms of this Agreement.

F.             Quotation of Eurocurrency Rate.
Anything herein to the contrary notwithstanding, if on any Interest Rate
Determination Date no Eurocurrency Rate is available by reason of the failure
of all Reference Lenders to provide offered quotations to Administrative Agent
in accordance with the definition of “Eurocurrency Rate,” Administrative Agent
shall give Borrowers and each Lender prompt notice thereof and the Loans other
than Loans denominated in Euro or ADollars requested shall be made as Base Rate
Loans and all such Loans denominated 

 94
 

 

in Euro or ADollars shall
bear interest at a rate determined by Administrative Agent as the all-in cost
of funds for such Lender to fund a borrowing of Loans denominated in Euros or
ADollars, as applicable, with maturities comparable to the Interest Period
applicable thereto.

G.            Market Disruption Respecting B/A
Discount Rate Loans.

If Administrative Agent makes a determination (acting
reasonably and in good faith), which determination shall be conclusive and
binding upon O-I Canada, and notifies O-I Canada, that there no longer exists
an active market for bankers’ acceptances, or for B/A Discount Rate Loans by
the applicable Lenders, then:

(a) the right of
O-I Canada to request B/A Discount Rate Loans from any Lender shall be
suspended until Administrative Agent determines that the circumstances causing
such suspension no longer exist, and so notifies O-I Canada;

(b) any
outstanding Notice of Borrowing requesting a B/A Discount Rate Loan shall be
deemed to be a Notice of Borrowing requesting a Base Rate Loan in the amount
specified in the original Notice of Borrowing, unless O-I Canada withdraws such
original Notice by written notice to the Administrative Agent received no later
than noon (Toronto time) one Business Day prior to the date of the requested
Borrowing specified in such original Notice;

(c) any
outstanding Notice of Conversion requesting a conversion of a Base Rate Loan
into a B/A Discount Rate Loan shall be deemed to be a Notice of Continuation
requesting a continuation of such Loan as a Base Rate Loan; and

(d) any
outstanding Notice of Continuation requesting a continuation of a B/A Discount
Rate Loan shall be deemed to be a Notice of Conversion requesting a conversion
of such Loan into a Base Rate Loan.

Administrative Agent
shall promptly notify O-I Canada and the applicable Lenders of any suspension
of O-I Canada’s right to request the B/A Discount Rate Loans and of any
termination of any such suspension.

H.            Booking of Loans. Any Lender
may make, carry or transfer Loans at, to, or for the account of, any of its
branch offices or the office of an Affiliate of that Lender.

I.              Assumptions Concerning Funding
of Eurocurrency Rate Loans. Calculation of all amounts payable to a Lender
under this subsection 2.6 shall be made with respect to Eurocurrency Rate
Loans, as though that Lender had actually funded its relevant Eurocurrency Rate
Loan through the purchase of a deposit bearing interest at the rate obtained
pursuant to the definition of Eurocurrency Rate in an amount equal to the
amount of that Eurocurrency Rate Loan and having a maturity comparable to the
relevant Interest Period and through the transfer of such deposit from an
offshore office of that Lender to a domestic office of that Lender in the
United States of America; provided, however, that each Lender may
fund each of its Eurocurrency Rate Loans in any manner it sees fit and the
foregoing assumptions shall be utilized only for the calculation of amounts
payable under this subsection 2.6.

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J.             Eurocurrency Rate Loans and B.A
Discount Rate Loans After Default. Unless Requisite Lenders shall otherwise
agree, after the occurrence of and during the continuance of an Event of
Default, no Borrower may elect to have a Loan be made or maintained as, or
converted to, a Eurocurrency Rate Loan or B/A Discount Rate Loan after the
expiration of any Interest Period then in effect for that Loan.

K.            Affected Lenders’ Obligation to
Mitigate. Each Lender agrees that, as promptly as practicable after it
becomes aware of the occurrence of an event or the existence of a condition
that would cause it to be an Affected Lender under subsection 2.6B or
2.6C, it will, to the extent not inconsistent with such Lender’s internal
policies, use reasonable commercial efforts to make, fund or maintain the
affected Loans of such Lender through another lending office of such Lender if
as a result thereof the additional moneys which would otherwise be required to
be paid in respect of such Loans pursuant to subsection 2.6B would be
materially reduced or the illegality or other adverse circumstances which would
otherwise require prepayment of such Loans pursuant to subsection 2.6C
would cease to exist and if, as determined by such Lender, in its sole
discretion, the making, funding or maintaining of such Loans through such other
lending office would not otherwise materially adversely affect such Loans or
such Lender. The applicable Borrower hereby agrees to pay all reasonable
expenses incurred by any Lender in utilizing another lending office of such
Lender pursuant to this subsection 2.6K.

L.            Calculation of Spot Rates. On
each Calculation Date with respect to any Offshore Currency or, in the case of
a Letter of Credit, other non-Dollar currency, the Administrative Agent shall
determine the Spot Rate as of such Calculation Date with respect to such
currency (it being acknowledged and agreed that Administrative Agent shall use
the Spot Rates so calculated for the purposes of determining compliance with
subsections 2.1A(v) and 2.1C with respect to any borrowing request
and subsection 2.8A(i) with respect to any request for a Letter of Credit
denominated in a non-Dollar currency, but shall not use such Spot Rate for
purposes of calculating the Dollar Equivalent of Loans made in an Offshore
Currency for purposes of calculating the Total Utilization of Revolving Loan
Commitments for purposes of calculating commitment fees under subsection
2.3A(i)). Any Spot Rate so determined shall become effective on the first
Business Day immediately following the relevant Calculation Date (each, a “Reset  Date”)
and shall remain effective until the next succeeding Reset Date. Administrative
Agent shall promptly notify Borrowers of each determination of a Spot Rate
hereunder. Solely for purposes of calculating the Total Utilization of
Revolving Loan Commitments for purposes of calculating commitment fees under
subsection 2.3A(i), Administrative Agent shall determine the Dollar Equivalent
of any Loan made in an Offshore Currency based on the Spot Rate as of the date
such Loan is made, and the amount so determined shall be deemed to be the
Dollar Equivalent of such Loan for such purpose until such Loan is repaid.

2.7          Capital
Adequacy Adjustment; Increased Costs; Taxes

A.            Capital Adequacy. If any
Lender shall have determined in good faith that the adoption, effectiveness,
phase-in or applicability after the date hereof of any law, rule or
regulation (or any provision thereof) regarding capital adequacy, or any change
therein or in the interpretation or administration thereof after the date
hereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or 

 96
 

 

compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender’s Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder to a level below that which such Lender
or such controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation with
regard to capital adequacy), then from time to time, within fifteen Business
Days after receipt by Borrowers from such Lender of the statement referred to
in the next sentence, Borrowers shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction; provided that a Lender shall not be
entitled to avail itself of the benefit of this subsection 2.7A to the
extent that any such reduction in return was incurred more than six months
prior to the time it first makes a demand therefor, unless the circumstance
giving rise to such reduced return arose or became applicable retrospectively,
in which case no time limit shall apply (provided that such Lender has
notified Borrowers within six months from the date such circumstances arose or
became applicable). Each Lender, upon determining in good faith that any
additional amounts will be payable pursuant to this subsection 2.7A, will
give prompt written notice thereof to Borrowers’ Agent (with a copy to
Administrative Agent), which notice shall set forth in reasonable detail the
basis of the calculation of such additional amounts.

B.            Compensation for Increased Costs
and Taxes. Subject to the provisions of subsection 2.7C (which shall
be conclusive with respect to the matters covered thereby), in the event that
any Lender shall determine in good faith (which determination shall, absent
manifest or demonstrable error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental
rule, regulation or order), or any determination of a court or Governmental
Authority, in each case that is adopted after the date hereof, or compliance by
such Lender with any guideline, request or directive issued or made after the
date hereof by any central bank or other Governmental Authority or quasi
Governmental Authority, including, without limitation, any agency of the
European Monetary Union (whether or not having the force of law):

(i)            subjects such Lender (or its
applicable lending office) to any additional Tax (other than any Excluded Tax
or Covered Tax subject to subsection 2.7C) with respect to this Agreement
or any of the Loans or any of its obligations hereunder, or changes the basis
of taxation of payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;

(ii)           imposes, modifies or holds applicable
any reserve (including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such Lender
(other than any such reserve or other requirements with respect to Eurocurrency
Rate Loans that are reflected in the definition of Eurocurrency Rate); or

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(iii)          imposes any other condition on or
affecting such Lender (or its applicable lending office) or its obligations
hereunder or any applicable interbank market, other than with respect to Taxes;

and the result of any of the foregoing is to increase
the cost to such Lender of agreeing to make, making or maintaining Loans
hereunder or to reduce any amount received or receivable by such Lender (or its
applicable lending office) with respect thereto; then, in any such case,
Owens-Brockway shall promptly pay (or cause the applicable Offshore Borrower to
promptly pay) to such Lender, upon written demand and receipt of the written
notice referred to below, such additional amount or amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Lender in its sole discretion shall determine) as may be necessary to
compensate such Lender on an after-tax basis for any such increased cost or
reduction in amounts received or receivable hereunder; provided that any
increased cost arising as a result of any of the foregoing other than in
respect of Taxes shall apply only to Eurocurrency Rate Loans and B/A Discount
Rate Loans; provided  further that a Lender shall not be entitled
to avail itself of the benefit of this subsection 2.7B to the extent that
any such increased cost or reduction was incurred more than six months prior to
the time it gives notice to Borrowers’ Agent (as provided in the next sentence)
of the relevant circumstance, unless such circumstance arose or became
applicable retrospectively, in which case no time limit shall apply (provided
that such Lender has notified Borrowers’ Agent within six months from the date
such circumstances arose or became applicable). Such Lender shall deliver to
Borrowers’ Agent a written notice, setting forth in reasonable detail the basis
for calculating the additional amounts owed to such Lender under this
subsection 2.7B, which statement shall be conclusive and binding upon all
parties hereto absent manifest or demonstrable error. If any event described
above would otherwise result in any Lender (or its applicable lending office)
being subject to any additional Tax or other cost for which a Borrower would be
required to indemnify such Lender under the provisions of this
subsection 2.7, then such Lender shall use its reasonable efforts to avoid
the imposition of such Taxes or other costs if doing so would not, in the
reasonable judgment of such Lender, be otherwise adverse to such Lender.

C.            Withholding of Taxes.

(i)            Payments to Be Free and Clear.
Except to the extent required by law, all sums payable by any Borrower or any
other Person under this Agreement and the other Loan Documents shall be paid
free and clear of and without any deduction or withholding on account of any
Covered Tax imposed, levied, collected, withheld or assessed by or within the
United States of America, Australia, the Netherlands, Canada, Switzerland or
any political subdivision in or of any of the foregoing or any other
jurisdiction from or to which a payment is made by or on behalf of such
Borrower or any other Person or in respect of any participation by any Lender
in any Obligation or by any federation or organization of which the United
States of America, Australia, the Netherlands, Canada, Switzerland or any other
such jurisdiction is a member at the time of payment.

(ii)           Withholding in respect of Payments.
If any Borrower or any other Person is required by law to make any deduction or
withholding on account of any Tax 

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from
any sum paid or payable by such Borrower or other Person to any Person under
any of the Loan Documents:

(a)           such Borrower or other Person shall
notify Administrative Agent of any such requirement or any change in any such
requirement as soon as such Borrower or other Person becomes aware of it;

(b)           such Borrower or other Person shall
pay any such Tax before the date on which penalties attach thereto, such
payment to be made (if the liability to pay is imposed on such Borrower or
other Person) for its own account or (if that liability is imposed on
Administrative Agent, a Lender or another Person, as the case may be) on behalf
of and in the name of Administrative Agent, such Lender or such other Person;

(c)           (1) with respect to any Borrower
or other Person other than ACI, in the event such Tax is a Covered Tax, the sum
payable by such Borrower or other Person in respect of which the relevant
deduction, withholding or payment is required shall be increased to the extent
necessary to ensure that, after the making of that deduction, withholding or
payment, Administrative Agent, such Lender or such other Person, as the case
may be, receives on the due date and retains (free from any liability in
respect of any such deduction, withholding or payment) a net sum equal to what
it would have received and so retained had no such deduction, withholding or
payment in respect of Covered Taxes been required or made; and (2) solely
with respect to ACI and amounts payable thereby, in the event such Tax is a Covered
Tax, ACI shall pay an additional amount by way of indemnity so that
Administrative Agent or such Lender, as the case may be, receives on the due
date and retains (free and clear of any Tax on such additional amount) the full
amount it would have received and so retained had no such deduction,
withholding or payment in respect of Covered Taxes been required or made; ACI (y) acknowledges
that its indemnity under paragraph (c) is a separate and independent
obligation from its obligation to pay interest in respect of the Tranche A Term
Loans and Australian Offshore Revolving Loans, and is not discharged by reason
of its withholding amounts on account of Australian withholding tax and
remitting those amounts to the Australian taxation authorities, and (z) subject
to subsection 2.7C(iii) below, waives any right which it may have
(whether under statute or otherwise) to be reimbursed by any Lender or Agent
for any amounts which it may from time to time pay under that indemnity; and

(d)           within 30 days after paying any sum
from which it is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which it is required by
clause (b) above to pay, such Borrower or other Person shall deliver to
Administrative Agent evidence reasonably satisfactory to the other affected
parties of such deduction, withholding or payment and of the remittance thereof
to the relevant taxing or other authority;

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The provisions of this subsection 2.7C(ii) apply
to any Australian interest withholding tax (including fines and penalties),
whether:

(1)                                  deducted
or remitted by ACI, or

(2)                                  otherwise
recovered by the Australian taxation authorities from ACI, or

(3)                                  paid
directly by a Lender to the Australian taxation authorities, or

(4)                                  recovered
by the Australian taxation authorities either directly from a Lender or from
amounts payable by a Person in Australia to a Lender.

(iii)          Payment of Certain Taxes and
Indemnification by the Borrowers. Without limiting the provisions of
subsection 2.7C(ii) above, the Borrowers shall timely pay to the
relevant Governmental Authority in accordance with applicable law any present or
future stamp or documentary taxes or any other excise or property taxes,
charges, fees, expenses or similar levies arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document. In addition, the Borrowers shall indemnify each Lender, each
Tax Transferee and Administrative Agent, within 10 days after demand therefor,
for the full amount of any Covered Taxes (including Covered Taxes imposed or
asserted on or attributable to amounts payable under this section 2.7C)
paid by such Lender, Tax Transferee or Administrative Agent, as the case may
be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Covered Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to a
Borrower by a Lender or Tax Transferee (with a copy to Administrative Agent),
or by Administrative Agent on its own behalf or on behalf of a Lender or Tax
Transferee, shall be conclusive absent manifest error.

(iv)          Tax Refund. If any Borrower
determines in good faith that a reasonable basis exists for contesting a
Covered Tax, the relevant Lender or Tax Transferee or Administrative Agent, as
applicable, shall cooperate with such Borrower (but shall have no obligation to
disclose any confidential information, unless arrangements satisfactory to the
relevant Lender have been made to preserve the confidential nature of such
information) in challenging such Tax at such Borrower’s expense if requested by
such Borrower (it being understood and agreed that none of Administrative Agent
or any Lender shall have any obligation to contest, or any responsibility for
contesting, any Tax). If a Lender shall become aware that it is entitled to
receive a refund (whether by way of a direct payment or by offset) in respect
of a Covered Tax as to which it has been indemnified by a Borrower or with
respect to which a Borrower has paid additional amounts pursuant to this
subsection 2.7C or subsection 2.7B, it shall promptly notify such Borrower of
the availability of such refund (unless it was made aware of such refund by a
Borrower) and shall, within 30 days after the receipt of a request from such
Borrower, apply for such refund at such Borrower’s sole expense. If any Lender,
Tax Transferee or Administrative Agent, as applicable, receives a refund 

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(whether
by way of a direct payment or by offset) of any Covered Tax for which a payment
has been made pursuant to this subsection 2.7C or subsection 2.7B
which, in the reasonable good faith judgment of such Lender, Tax Transferee or
Administrative Agent, as the case may be, is allocable to such payment made
under this subsection 2.7C or subsection 2.7B, the amount of such
refund shall be paid to such Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this
subsection 2.7C or subsection 2.7B with respect to the Taxes giving rise to
such refund), net of all out-of-pocket expenses of such Lender, Tax Transferee
or Administrative Agent, as the case may be, and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund), provided that such Borrower, upon the request of such Lender, Tax
Transferee or Administrative Agent agrees to repay the amount paid over to such
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Lender, Tax Transferee or Administrative Agent
in the event such Lender, Tax Transferee or Administrative Agent is required to
repay such refund to such Governmental Authority. This paragraph shall not be
construed to require any Lender, Tax Transferee or Administrative Agent to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to any Borrower or any other Person.

(v)           Tax Certificates. (1) Each
Lender with Tranche B Term Loan Exposure or Revolving Loan Commitments that is
organized under the laws of any jurisdiction other than the United States of
America or any state or other political subdivision thereof shall deliver to
Administrative Agent for transmission to Owens-Brockway, on or before the
Closing Date in the case of a Lender party hereto on such date, or on the date
of the Assignment and Acceptance pursuant to which it becomes a Lender (in the
case of each other Lender), and at such other times as may be necessary in the
determination of Borrowers’ Agent or Administrative Agent (each in the
reasonable exercise of its discretion), such certificates, documents or other
evidence, properly and accurately completed and duly executed by such Lender
(including, without limitation, Internal Revenue Service Form W-8BEN
or Form W-8ECI or any other certificate or statement of exemption
required by Treasury Regulations Section 1.1441-4(a) or Section 1.1441-6(c) or
any successor thereto) to establish that such Lender is not subject to or is
subject to a reduced rate of deduction or withholding of United States federal
income tax under Section 1441 or 1442 of the Internal Revenue Code or
otherwise (or under any comparable provisions of any successor statute) with
respect to any payments to such Lender of principal, interest, fees or other
amounts payable under any of the Loan Documents and shall deliver to the
appropriate Person upon request such other certificates, documents or other
evidence as may be required from time to time, properly completed and duly
executed by such Lender, to establish the basis for any applicable exemption
from or reduction of United States federal income tax under Section 1441
or 1442 of the Internal Revenue Code or otherwise (or under any comparable
provisions of any successor statute) with respect to any payments to such
Lender of principal, interest, fees, commissions or any other amount payable
under any of the Loan Documents by Owens-Brockway, (2) each Lender with
Tranche C Term Loan Exposure or Canadian Revolving Loan Commitments shall
deliver to the appropriate Person such application forms, certificates, documents
or other evidence as may be reasonably requested from time to time by O-I
Canada, properly completed and duly executed by such Lender, to 

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enable O-I Canada,
to the extent permitted by applicable law, to be able to pay interest on the
Tranche C Term Loans or Canadian Revolving Loan Commitments of such Lender
without withholding or deduction, or at reduced rates of withholding or
deduction, for or on account of any Canadian income tax, (3) each Lender
with Tranche D Term Loan Exposure or Dutch Revolving Loan Commitments shall
deliver to the appropriate Person such application forms, certificates,
documents or other evidence as may be reasonably requested from time to time by
OIEG, properly completed and duly executed by such Lender, to enable OIEG, to the
extent permitted by applicable law, to be able to pay interest on the Tranche D
Term Loans or Dutch Revolving Loan Commitments of such Lender without
withholding or deduction, or at reduced rates of withholding or deduction, for
or on account of any Dutch income tax and (4) each Lender with Swiss
Revolving Loan Commitments shall deliver to the appropriate Person such
application forms, certificates, documents or other evidence as may be
reasonably requested from time to time by O-I Europe, properly completed and
duly executed by such Lender, to enable O-I Europe, to the extent permitted by
applicable law, to be able to pay interest on the Swiss Revolving Loan
Commitments of such Lender without withholding or deduction, or at reduced
rates of withholding or deduction, for or on account of any Swiss income tax.

Each Arranger will
cooperate with ACI, and will do or provide such other things as may be
reasonably requested from time to time by ACI, to demonstrate that the
requirements of section 128F of the Income Tax Assessment Act of 1936
(Commonwealth of Australia) were satisfied in relation to the issues of Tranche
A Term Loans, Tranche A Term Loan Notes, Australian Revolving Loans and
Australian Revolving Loan Notes under this Agreement, so that payment of interest
under each of the above-mentioned Loans will be exempt from withholding
tax under the Income Tax Assessment Act of 1936 (Commonwealth of Australia). Non-compliance
by either Arranger with this paragraph shall not relieve ACI of its obligations
under subsections 2.7C(i), 2.7C(ii) or 2.7C(ii).

D.            Replacement of Lender. If any
Borrower receives a notice pursuant to subsections 2.6B, 2.6C, 2.7A, 2.7B or
2.7C, so long as no Event of Default shall have occurred and be continuing and
such Borrower has obtained a commitment from another Lender or an Eligible
Assignee to become a Lender for all purposes under this Agreement and to assume
all obligations of the Lender to be replaced, such Borrower may require the
Lender giving such notice to assign all of its Loans, its Commitments and its
other Obligations to such other Lender or Eligible Assignee, at par, pursuant
to and in accordance with the provisions of subsection 10.2B; provided
that, prior to or concurrently with such replacement (i) the applicable
Borrower has paid or caused to be paid to the Lender giving such notice all
principal, interest, fees and other amounts due and owing to such Lender
hereunder through such date of replacement (including any amounts payable under
subsection 2.6D(iii)), (ii) the applicable Borrower has paid to
Administrative Agent the processing and recordation fee required to be paid
pursuant to subsection 10.2B(i); and (iii) all of the requirements
for such assignment contained in subsection 10.2B, including, without
limitation, the receipt by Administrative Agent of an executed Assignment and
Acceptance and other supporting documents, have been fulfilled.

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2.8          Letters
of Credit

A.            Letters of Credit. Subject to
the terms and conditions of this Agreement and in reliance upon the
representations and warranties of Company and Borrowers set forth herein,
Borrowers’ Agent may request on behalf and for the account of any Borrower
(other than O-I Canada; provided, however, Borrowers’ Agent may
request that a Letter of Credit be issued for the account of Owens-Brockway
which will support an obligation of O-I Canada), in accordance with the
provisions of this subsection 2.8A, in addition to requesting that Lenders
make Loans pursuant to subsection 2.1, that on and after the Closing Date one
or more Issuing Lenders issue, and one or more Issuing Lenders will issue,
subject to the terms and conditions hereof, Standby Letters of Credit and
Commercial Letters of Credit for the account of such Borrower. Issuances of
Letters of Credit shall be subject to the following limitations:

(i)            Borrowers’ Agent shall not request
that any Lender issue, and no Lender shall have any obligation hereunder to
issue, any Letter of Credit if, after giving effect to such issuance, the Total
Utilization of Revolving Loan Commitments would exceed the Revolving Loan
Commitments then in effect;

(ii)           Borrowers’ Agent shall not request
that any Lender issue and no Lender shall have any obligation hereunder to
issue, any Letter of Credit for the account of any Offshore Borrower if, after
giving effect to such issuance (i) the Total Utilization of Australian
Revolving Loan Commitments would exceed the Australian Revolving Loan
Commitments then in effect; (iii) the Total Utilization of Canadian
Revolving Loan Commitments would exceed the Canadian Revolving Commitments then
in effect, (iii) the Total Utilization of Dutch Revolving Loan Commitments
would exceed the Dutch Revolving Loan Commitments then in effect or (iv) the
Total Utilization of Swiss Revolving Loan Commitments would exceed the Swiss
Revolving Loan Commitments then in effect;

(iii)          In no event shall any Issuing Lender
issue (w) any Letter of Credit (1) having a tenor other than sight or
(2) having an expiration date later than ten days prior to the Revolving
Loan Commitment Termination Date; (x) subject to the foregoing clause (w),
any Standby Letter of Credit having an expiration date more than one year after
its date of issuance; provided that, subject to the foregoing
clause (w) and to subsection 2.8A(iv), this clause (x) shall
not prevent any Issuing Lender from issuing a Standby Letter of Credit having
an expiration date up to two years after its date of issuance if such Standby
Letter of Credit will be used by the applicable Borrower in connection with, or
in lieu of, posting an appeal bond; provided, further that,
subject to the foregoing clause (w), this clause (x) shall not prevent any
Issuing Lender from agreeing that a Standby Letter of Credit will automatically
be extended annually for a period not to exceed one year unless such Issuing
Lender gives notice that it will not extend; provided, further
that such Issuing Lender shall deliver a written notice to Administrative Agent
setting forth the last day on which such Issuing Lender may give notice that it
will not extend (the “Notification Date”
with respect to such Standby Letter of Credit) at least ten Business Days prior
to such Notification Date; and provided, further that, unless
Requisite Lenders otherwise consent, such Issuing Lender shall give notice that
it will not extend if it has knowledge that an Event of Default has occurred 

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and
is continuing on such Notification Date; or (y) any Commercial Letter of
Credit having an expiration date which is more than 180 days after its date of
issuance or which is less than 30 days prior to the Revolving Loan Commitment
Termination Date or which is otherwise unacceptable to such Issuing Lender in
its reasonable discretion;

(iv)          Borrowers’ Agent shall not request
that any Issuing Lender issue, and no Lender shall have any obligation
hereunder to issue, any Standby Letter of Credit having an expiration date more
than one year after its date of issuance which will be used by a Borrower in
connection with, or in lieu of, posting an appeal bond if, after giving effect
to such issuance, the Letter of Credit Usage in respect of all such Standby
Letters of Credit would exceed $25,000,000;

(v)           Borrowers’ Agent shall not request
that any Issuing Lender issue, and no Lender shall have any obligation
hereunder to issue, any Standby Letter of Credit of the type described in
clause (i), (v), (vi) or (ix) of the definition thereof for the
purpose of supporting Indebtedness of Holdings, if after giving effect to such
issuance, the Letter of Credit Usage in respect of all such Standby Letters of
Credit would exceed $100,000,000; and

(vi)          Borrowers’ Agent shall not request
that any Issuing Lender issue, and no Lender shall have any obligation
hereunder to issue, any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage in respect of all Letters of Credit would
exceed $350,000,000.

The issuance of any Letter of Credit in accordance
with the provisions of this subsection 2.8 shall be given effect in the
calculation of the Total Utilization of Revolving Loan Commitments and shall
require the satisfaction of each condition set forth in subsections 3.1, 3.2
and 3.3.

The Borrowers, the Lenders and the Administrative
Agent agree that upon the effectiveness of this Agreement, each Letter of
Credit previously issued for the account of the Borrowers that is outstanding
on the Closing Date and listed on Schedule C (each such letter of credit
being referred to herein as an “Existing Letter of Credit”)
shall for all purposes of this Agreement be deemed a Letter of Credit issued
and outstanding under this Agreement as of the Closing Date for the account of
the applicable Borrower under and pursuant to the terms of this Agreement, and
all fees payable under subsection 2.8F with respect to such Existing
Letters of Credit shall accrue from the Closing Date. All Existing Letters of
Credit as of the date hereof are described in Schedule C annexed hereto.

Immediately upon the issuance of any Letter of Credit
by an Issuing Lender, each Revolving Lender other than such Issuing Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from such
Issuing Lender a participation in such Letter of Credit and drawings thereunder
in an amount equal to such Lender’s Pro Rata Share of the maximum amount which
is or at any time may become available to be drawn thereunder, and each such
Lender shall fund such participation in accordance with subsection 2.8E.

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B.            Notice of Request for Issuance. Whenever a
Borrower desires the issuance of a Letter of Credit, it shall cause Borrowers’
Agent to deliver to Administrative Agent and to the Lender which the Borrowers’
Agent has requested to issue such Letter of Credit a Notice of Request for
Issuance of Letter of Credit no later than 1:00 P.M. (New York time) at
least five Business Days, or such shorter period as may be agreed to by an
Issuing Lender in any particular instance, in advance of the proposed date of
issuance. The Notice of Request for Issuance of Letter of Credit shall specify (i) the
Borrower for whose account the Letter of Credit has been requested in
accordance with subsection 2.8A, (ii) the proposed date of issuance
(which shall be a business day under the laws of the jurisdiction of the
Issuing Lender), (iii) the face amount of the Letter of Credit, (iv) in
the case of a Letter of Credit which the Borrowers’ Agent requests to be
denominated in a currency other than Dollars, the currency in which the
Borrowers’ Agent requests such Letter of Credit to be issued, (v) the
expiration date of the Letter of Credit, (vi) the name and address of the
beneficiary, and (vii) the Lender which the Borrowers’ Agent has requested
to issue such Letter of Credit; and such Notice of Request for Issuance of
Letter of Credit shall further certify that subsection 3.2B is satisfied
on and as of the date of issuance of such Letter of Credit. As soon as
practicable after delivery of such notice with respect to any Letter of Credit,
the Issuing Lender for such Letter of Credit shall be determined as provided in
subsection 2.8C(ii). Prior to the date of issuance, the Borrowers’ Agent
shall specify a precise description of the documents and the verbatim text of
any certificate to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of Credit, would require
the Issuing Lender to make payment under the Letter of Credit; provided
that the Issuing Lender, in its sole reasonable judgment, may require changes
in any such documents and certificates. In determining whether to pay under any
Letter of Credit, the Issuing Lender shall be responsible only to determine
that the documents and certificates required to be delivered under that Letter
of Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit.

C.            Determination of Issuing Lender.

(i)            Borrowers’ Agent may request any
Revolving Lender to issue a Letter of Credit and, upon receipt by such Lender
of a notice from Borrowers’ Agent pursuant to subsection 2.8B requesting
the issuance of a Letter of Credit, such Lender shall promptly notify the
Borrowers’ Agent and Administrative Agent whether or not, in its sole
discretion, it has elected to issue such Letter of Credit. If such Lender
elects to issue such Letter of Credit, such Lender shall be the Issuing Lender
with respect thereto. If such Lender declines to issue such Letter of Credit,
the Borrowers’ Agent may request any other Revolving Lender to issue such
Letter of Credit, by delivering the notice described in subsection 2.8B to
such Lender. In the event that all Lenders shall have declined to issue such
Letter of Credit, Administrative Agent shall be obligated to issue the Letter
of Credit requested by Borrowers’ Agent and shall be the Issuing Lender with
respect to such Letter of Credit; provided  that Administrative
Agent shall not be obligated to issue any Letter of Credit (1) denominated
in a foreign currency which in the reasonable judgment of Administrative Agent
is not readily and freely available or (2) if any Lender with a Revolving
Loan Commitment is a Defaulting Participating Lender at such time, unless
Administrative Agent has entered into arrangement satisfactory to it and the
applicable Borrower to eliminate Administrative Agent’s risk with respect to
the participation in Letters of Credit by such Defaulting Participating Lender,
including by 

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cash
collateralizing such Defaulting Participating Lender’s Pro Rata Share of the
L/C Disbursements.

(ii)           Each Issuing Lender which elects to
issue or amend a Letter of Credit shall promptly give written notice to
Administrative Agent, and the applicable Borrower of the information required
under subsection 2.8B(i) - (v) relating to such Letter of Credit
and shall provide a copy of such Letter of Credit (as amended, if applicable)
to Administrative Agent, and the applicable Borrower. Promptly after receipt of
such notice, Administrative Agent shall notify each Revolving Lender (other
than the Issuing Lender) of the amount of its respective participation therein,
determined in accordance with subsection 2.8A.

(iii)          In the event that Administrative Agent
is not the Issuing Lender in respect of a Commercial Letter of Credit, the
Issuing Lender of such Commercial Letter of Credit will deliver to
Administrative Agent, promptly on the first Business Day of each week such
Commercial Letter of Credit is outstanding, a report setting forth the daily
aggregate outstandings for the previous week under such Commercial Letter of
Credit. Administrative Agent shall deliver to each Lender, promptly after the
end of each calendar month and upon each payment by Administrative Agent to
Lenders of the letter of credit fees described in subsection 2.8F(1)(b), a
report setting forth, for the period from the date of the last such report, the
daily aggregate amount available to be drawn (to the extent such amounts have
been reported to Administrative Agent pursuant to the immediately preceding
sentence) under each Commercial Letter of Credit issued by each Issuing Lender.

D.            Payment of Amounts Drawn Under
Letters of Credit. In the event of any drawing under any Letter of Credit,
the Issuing Lender shall notify the Borrower at whose request the Letter of
Credit was issued and Administrative Agent on or before the date which is two
Business Days prior to the date on which such Issuing Lender intends to honor
such drawing (unless such Letter of Credit by its terms requires the Issuing
Lender to honor a drawing on or prior to the second Business Day following such
drawing, in which case the Issuing Lender shall notify the Borrower at whose
request the Letter of Credit was issued and Administrative Agent as soon as
reasonably practicable but in any event on or before the date on which such
Issuing Lender intends to honor such drawing), and the Borrower at whose
request the Letter of Credit was issued shall reimburse such Issuing Lender on
the date on which such drawing is honored, in each case in an amount in either
the currency in which such Letter of Credit is denominated or in Dollars and in
Same Day Funds equal to the amount of such drawing (which amount, in the case
of a reimbursement in Dollars of a drawing under a Letter of Credit which is
denominated in a currency other than Dollars, shall be calculated by reference
to the applicable Spot Rate); provided  that, anything contained
in this Agreement to the contrary notwithstanding, unless the Borrower at whose
request the Letter of Credit was issued shall have notified Administrative
Agent and such Issuing Lender prior to 11:00 a.m. (New York time) on the
Business Day immediately prior to the date of such drawing that the Borrower at
whose request the Letter of Credit was issued intends to reimburse such Issuing
Lender for the amount of such drawing with funds other than the proceeds of
Loans, the Borrower at whose request the Letter of Credit was issued shall be
deemed to have given a Notice of Borrowing to Administrative Agent requesting
Lenders to make Revolving Loans (or Offshore Revolving Loans, as applicable) to
such 

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Borrower which are Base
Rate Loans (or, in the case of any such Loans denominated in Euro or ADollars,
Eurocurrency Rate Loans with an Interest Period of one month), on the date on
which such drawing is honored, in an amount in the currency in which the Letter
of Credit is denominated (if denominated in ADollars, Euro or Dollars), and
otherwise in Dollars, equal to the amount of such honored drawing (which
amount, in the case of a drawing under a Letter of Credit which is denominated
in a currency other than ADollars, Euro or Dollars, shall be calculated by
reference to the applicable Spot Rate for Dollars on the date such drawing is
honored), and subject to satisfaction or waiver of the conditions specified in
subsection 3.2B, Lenders shall, on the date of such requested borrowing,
make Revolving Loans (or Offshore Revolving Loans, as applicable) to such
Borrower which are Base Rate Loans (or, in the case of any such Loans
denominated in Euro or ADollars, Eurocurrency Rate Loans with an Interest
Period of one month), in the amount of such drawing as aforesaid, the proceeds
of which shall be applied directly by Administrative Agent to reimburse such
Issuing Lender for the amount of such drawing, and if for any reason proceeds
of Revolving Loans (or Offshore Revolving Loans, as applicable) are not
received by such Issuing Lender on such date in an amount equal to the amount
of such drawing, Borrowers shall reimburse such Issuing Lender in an amount in
the currency in which the Letter of Credit is denominated (if denominated in
ADollars, Euro or Dollars), and otherwise in Dollars, on the business day
(under the laws of the jurisdiction of such Issuing Lender) immediately
following the date on which reimbursement of such drawing is required as
provided above, in an amount in Same Day Funds equal to the excess of the
amount of such drawing over the amount of such Revolving Loans, if any, which
are so received, plus accrued interest on such amount at the rate set forth in
subsection 2.8F(2).

E.             Payment by Lenders with Respect
to Letters of Credit. In the event that Borrowers shall fail to reimburse
an Issuing Lender as provided in subsection 2.8D in either the currency in
which such Letter of Credit is denominated or, in the case of a Letter of
Credit denominated in a currency other than Euro or ADollars, in an amount in
Dollars (calculated, in the case of a drawing under a Letter of Credit
denominated in a currency other than Dollars, by reference to the applicable
Spot Rate on the date such drawing is honored) equal to the amount of any
drawing honored by such Issuing Lender under a Letter of Credit issued by it,
such Issuing Lender shall promptly notify Administrative Agent of the
unreimbursed amount of such drawing and Administrative Agent shall promptly
notify each Revolving Lender of such unreimbursed amount and of such Lender’s
respective participation therein pursuant to this subsection 2.8E. Each
such Lender shall make available to such Issuing Lender an amount equal to its
respective participation, in the currency in which the Letter of Credit is
denominated (if denominated in ADollars or Euro), and otherwise in Dollars, and
in Same Day Funds, at the office of such Issuing Lender specified in such
notice, not later than 1:00 P.M. (New York time) on the business day
(under the laws of the jurisdiction of such Issuing Lender) after the date
notified by such Issuing Lender (provided, that, such Issuing
Lender may request that such purchase of participations be transacted through
Administrative Agent). In the event that any Revolving Lender fails to make
available to such Issuing Lender the amount of such Lender’s required
participation in such Letter of Credit as provided in this
subsection 2.8E, such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest at the customary rate
set by such Issuing Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate plus the Applicable Base Rate
Margin. Nothing in this subsection 2.8 shall be deemed to prejudice the
right of any Lender to recover from such Issuing Lender any amounts made
available by such Lender to such Issuing Lender 

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pursuant to this
subsection 2.8E in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit by such
Issuing Lender in respect of which payment was made by such Lender constituted
gross negligence or willful misconduct on the part of such Issuing Lender. Each
Issuing Lender shall distribute to each other Lender which has paid all amounts
payable by it under this subsection 2.8E with respect to any Letter of
Credit issued by such Issuing Lender such other Lender’s Pro Rata Share of all
payments received by such Issuing Lender from Borrowers in reimbursement of
drawings honored by such Issuing Lender under such Letter of Credit when such
payments are received. Notwithstanding subsection 2.8D, any reimbursements by
Borrowers of amounts drawn on any Letter of Credit after participations in such
unreimbursed drawing have been purchased by Lenders under this subsection 2.8E
shall be made in the currency in which such participations were purchased.

F.             Compensation. Borrowers
agree to pay the following amounts to each Issuing Lender for its own account
with respect to Letters of Credit issued by it (with respect to paragraphs (1)(a) and
(3) below) and to Administrative Agent for the account of each Revolving
Lender (with respect to paragraphs 1(b) and (2) below) with respect
to all Letters of Credit:

(1)           with respect to each Letter of
Credit, (a) an administrative fee equal to 0.125% per annum of the maximum
amount available from time to time to be drawn under such Letter of Credit (but
in no event less than $250 per annum), payable in arrears on and to (but
excluding) each January 1, April 1, July 1 and October 1 of
each year and calculated on the basis of a 360-day year and the actual
number of days elapsed; and (b) a Letter of Credit Fee payable to the
Lenders equal to (x) the Applicable Eurocurrency Margin as in effect for
Revolving Loans from time to time multiplied by (y) the maximum amount
available from time to time to be drawn under such Letter of Credit, per annum
payable in arrears on and to (but excluding) each January 1, April 1,
July 1 and October 1 of each year and calculated on the basis of a 360-day
year and the actual number of days elapsed which Letter of Credit Fee shall be
shared by all Revolving Lenders in accordance with their respective Pro Rata
Shares;

(2)           with respect to drawings made under
any Letter of Credit, interest, payable on demand, on the amount paid by such
Issuing Lender in respect of each such drawing from the date of payment of the
drawing through the date such amount is reimbursed by Borrowers (including any
such reimbursement out of the proceeds of Loans pursuant to
subsection 2.8D) at a rate equal to the sum of the Base Rate plus
the Applicable Base Rate Margin plus 2.00% per annum; and

(3)           with respect to the issuance,
amendment or transfer of, or payment of a drawing under, each Letter of Credit,
documentary and processing charges in accordance with such Issuing Lender’s
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.

For purposes of this subsection 2.8F, (a) the
maximum amount available to be drawn under any Letter of Credit as of any date
of determination shall be determined as of the close of business on such date
and (b) any amount described in such clauses which is denominated in a
currency other than Dollars shall be valued in Dollars based on the applicable
Spot Rate for Dollars for such currency as of the applicable date of
determination. Promptly 

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upon receipt by Administrative Agent of any amount
described in clause (1)(b) of this subsection 2.8F, Administrative
Agent shall distribute to each Revolving Lender its Pro Rata Share of such
amount. In the event Lenders have funded participations in a Letter of Credit
pursuant to subsection 2.8E, the Issuing Lender in respect of such Letter
of Credit may request that interest payments with respect thereto to
participants be administered by and through the Administrative Agent.

G.            Obligations Absolute. The
obligation of Borrowers to reimburse each Issuing Lender for drawings made
under the Letters of Credit issued by it and the obligations of Revolving
Lenders under subsection 2.8E shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, any of the following
circumstances:

(1)           any lack of validity or
enforceability of any Letter of Credit;

(2)           the existence of any claim, set-off,
defense or other right which any Loan Party may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such transferee may be acting), such Issuing Lender, any
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Borrower or one of its Subsidiaries and the
beneficiary for which the Letter of Credit was procured);

(3)           any draft, demand, certificate or any
other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;

(4)           payment by such Issuing Lender under
any Letter of Credit against presentation of a demand, draft or certificate or
other document which does not substantially comply with the terms of such
Letter of Credit, provided that such payment does not constitute gross
negligence or willful misconduct of such Issuing Lender as determined by a
court of competent jurisdiction;

(5)           any other circumstance or happening
whatsoever, which is similar to any of the foregoing; or

(6)           the fact that an Event of Default or
a Potential Event of Default shall have occurred and be continuing.

H.            Additional Payments. If by
reason of (a) any change after the date hereof in applicable law,
regulation, rule, decree or regulatory requirement or any change after the date
hereof in the interpretation or application by any judicial or regulatory
authority of any law, regulation, rule, decree or regulatory requirement (in
each case other than any law, regulation, rule, decree or regulatory
requirement regarding capital adequacy) or (b) compliance by any Issuing
Lender or any Lender with any direction, request or requirement (whether or not
having the force of law) of any governmental or monetary authority imposed
after the date hereof including, without limitation, Regulation D (but
excluding, however, any direction, request or requirement regarding capital
adequacy):

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(i)            such Issuing Lender or any Lender
shall be subject to any tax, levy, charge or withholding of any nature or to
any variation thereof or to any penalty with respect to the maintenance or
fulfillment of its obligations under this subsection 2.8, whether directly
or by such being imposed on or suffered by such Issuing Lender or any Lender;

(ii)           any reserve, deposit or similar
requirement is or shall be applicable, imposed or modified in respect of any
Letters of Credit issued by such Issuing Lender or participations therein
purchased by any Lender; or

(iii)          there shall be imposed on such Issuing
Lender or any Lender any other condition regarding this subsection 2.8,
any Letter of Credit or any participation therein;

and the result of the foregoing is to directly or
indirectly increase the cost to such Issuing Lender or any Lender of issuing,
making or maintaining any Letter of Credit or of purchasing or maintaining any
participation therein, or to reduce the amount receivable in respect thereof by
such Issuing Lender or any Lender, then and in any such case such Issuing
Lender or such Lender may, at any time within six months after the additional
cost is incurred or the amount received is reduced, notify Borrowers, and
Borrowers shall pay within ten days of receipt of such notice such amounts as
such Issuing Lender or such Lender may specify to be necessary to compensate
such Issuing Lender or such Lender for such additional cost or reduced receipt,
together with interest on such amount from 10 days after the date of such
demand until payment in full thereof at a rate equal at all times to the Base
Rate per annum. The determination by such Issuing Lender or any Lender, as the
case may be, of any amount due pursuant to this subsection 2.8H as set
forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on all of the parties hereto.

I.              Indemnification; Nature of
Issuing Lender’s Duties. In addition to amounts payable as elsewhere
provided in this subsection 2.8, (i) Owens-Brockway hereby agrees to
protect, indemnify, pay and save each Issuing Lender harmless from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys’ fees and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of the Letters of Credit for the
account of any Borrower, other than as a result of the gross negligence or
willful misconduct of such Issuing Lender as determined by a court of competent
jurisdiction or (B) the failure of such Issuing Lender to honor a drawing
under any Letter of Credit for the account of any Borrower as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or Governmental Authority (all such acts or omissions
herein called “Government Acts”); and (ii) the Offshore Borrowers hereby
agree to protect, indemnify, pay and save each Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys’ fees and allocated costs
of internal counsel) which such Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit for the account of any Offshore Borrower, other than as a result of the
gross negligence or willful misconduct of such Issuing Lender as determined by
a court of competent jurisdiction or (B) the 

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failure of such Issuing
Lender to honor a drawing under any Letter of Credit for the account of any
Offshore Borrower as a result of Government Acts.

Subject to the preceding paragraph, as between each
relevant Borrower and each Issuing Lender, such Borrower assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit issued by such
Issuing Lender on account of that Borrower by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the foregoing,
such Issuing Lender shall not be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of such Letters
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of any such Letter of Credit to comply fully with conditions
required in order to draw upon such Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, facsimile, electronic mail or otherwise; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of such Issuing Lender,
including, without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of any of such Issuing Lender’s rights
or powers hereunder; provided, however, that such Issuing Lender
shall be responsible for any payment it makes under any Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not substantially comply with the terms of such Letter of Credit in the
event such payment constitutes gross negligence or willful misconduct of such
Issuing Lender as determined by a court of competent jurisdiction.

In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or omitted by
any Issuing Lender under or in connection with the Letters of Credit issued by
it or the related certificates, if taken or omitted in good faith and in the
absence of gross negligence or willful misconduct, shall not put such Issuing
Lender under any resulting liability to Borrowers.

Notwithstanding anything to the contrary contained in
this subsection 2.8I, Borrowers shall have no obligation to indemnify any
Issuing Lender in respect of any liability incurred by such Issuing Lender
arising solely out of the gross negligence or willful misconduct of such
Issuing Lender, as determined by a court of competent jurisdiction, or out of
the wrongful dishonor by such Issuing Lender of proper demand for payment made
under the Letters of Credit issued by it.

2.9                               O-I
General as Borrowers’ Agent

O-I General is hereby appointed Borrowers’ agent
hereunder by each Borrower (in such capacity “Borrowers’
Agent”). Each Borrower hereby authorizes, directs and empowers O-I
General to act for and in the name of such Borrower and as its agent hereunder 

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and under the other instruments and agreements
referred to herein. O-I General hereby accepts each such appointment. Each
Borrower hereby irrevocably authorizes O-I General to take such action on such
Borrower’s behalf and to exercise such powers hereunder, under the other Loan
Documents, and under the other agreements and instruments referred to herein or
therein as may be contemplated being taken or exercised by such Borrower by the
terms hereof and thereof, together with such powers as may be incidental
thereto, including, without limitation, to borrow hereunder and deliver Notices
of Borrowing, Notices of Conversion/Continuation, Notices of Issuance of Letter
of Credit and Compliance Certificates hereunder, to convert, continue, repay or
prepay Loans made hereunder, to reduce the Commitments, to pay interest, fees,
costs and expenses incurred in connection with the Loans, this Agreement, the
other Loan Documents, and the other agreements and instruments referred to
herein or therein, to receive from or deliver to any Agent any notices,
statements, reports, certificates or other documents or instruments
contemplated herein, in the other Loan Documents or in any other agreement or
instrument referred to herein and to receive from or transmit to any Agent any
Loan proceeds or payments. Each Agent and each Lender shall be entitled to rely
on the appointment and authorization of O-I General with respect to all matters
related to this Agreement, the other Loan Documents and any other agreements or
instruments referred to herein or therein whether or not any particular
provision hereof or thereof specifies that such matters may or shall be
undertaken by Borrowers’ Agent. In reliance hereon, each Agent and each Lender
may deal with O-I General alone with the same effect as if such Agent or
such Lender had dealt with each Borrower separately and individually.

2.10        Collection
Allocation Mechanism

A.            Implementation of Collection
Allocation Mechanism. On the CAM Exchange Date, (i) the Commitments
shall terminate as provided in Section 7, (ii) Revolving Lenders shall
purchase their required participations in the Domestic Overdraft Amount, the
Offshore Overdraft Amount pursuant to subsection 2.1B and 2.1D(ii),
respectively, and in unreimbursed L/C Disbursements pursuant to subsection
2.8E, (iii) all Loans and all Offshore Overdraft Amounts denominated in an
Offshore Currency shall be converted into, and all such amounts due thereunder
shall accrue and be payable in, Dollars at the applicable Spot Rate on such
date, and on and after such date the interest rate applicable to all such Loans
shall be the rate applicable to overdue Loans of the relevant type that are
Base Rate Loans hereunder and the 
interest rate applicable to such Offshore Overdraft Amount shall be the
rate applicable to overdue Revolving Loans in Dollars that are Base Rate Loans
hereunder, and (iv) the Lenders shall automatically and without further
action (and without regard to the provisions of subsection 10.2) be deemed
to have exchanged interests in the Specified Obligations such that in lieu of
the interest of each Lender in each such Specified Obligation in which it shall
participate as of such date, such Lender shall hold an interest in every one of
the Specified Obligations,  whether or
not such Lender shall previously have participated therein, equal to such
Lender’s CAM Percentage thereof.

B.            Binding Nature of Collection
Allocation Mechanism. Each Lender hereby consents and agrees (and each
Borrower hereby consents) to the CAM Exchange, and each Lender agrees that the
CAM Exchange shall be binding upon its successors and assigns and any Person
that acquires a participation in its interests in any Specified Obligation. Each
Borrower agrees from time to time to execute and deliver to the Administrative
Agent all participation 

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certificates and other
instruments and documents as the Administrative Agent shall reasonably request
to evidence and confirm the respective interests of the Lenders after giving
effect to the CAM Exchange, and each Lender agrees to surrender any promissory
notes originally received by it in connection with its Loans constituting
Specified Obligations hereunder to the Administrative Agent against delivery of
new promissory notes evidencing its interests in the Specified Obligations with
respect to the Loans; provided that the failure of any Borrower to execute or
deliver or of any Lender to accept any such promissory note, instrument or
document shall not affect the validity or effectiveness of the CAM Exchange.

C.            Payments Subsequent to CAM
Exchange Date. As a result of the CAM Exchange, upon and after the CAM
Exchange Date, each payment received by the Administrative Agent or Collateral
Agent pursuant to any Loan Document in respect of the Specified Obligations,
and each distribution made by Collateral Agent pursuant to any Collateral
Documents in respect of the Specified Obligations, shall be distributed to the
Lenders pro rata in accordance with their respective CAM Percentages. Any
direct payment received by a Lender upon or after the CAM Exchange Date,
including by way of set-off, in respect of a Specified Obligation shall be paid
over to the Administrative Agent for distribution to the Lenders in accordance
herewith.

D.            Subsequent LC Disbursements. If,
on or after the CAM Exchange Date, an Issuing Lender makes an LC Disbursement
that is not reimbursed by the applicable Borrower, then (i) each
applicable Revolving Lender (determined without giving effect to the CAM
Exchange) shall, in accordance with subsection 2.8E, promptly purchase from the
Issuing Bank a participation in such LC Disbursement in the amount of such
Revolving Lender’s applicable Pro Rata Percentage of such LC Disbursement
(without giving effect to the CAM Exchange) and (ii) the Administrative
Agent shall redetermine the CAM Percentages after giving effect to such LC
Disbursement and the purchase of participations therein by the applicable
Revolving Lenders. Each such redetermination shall be binding on each of the
Lenders and their successors and assigns and shall be conclusive, absent
manifest error.

SECTION 3

CONDITIONS TO CLOSING
DATE; LOANS AND LETTERS OF CREDIT

The obligations of Lenders to make the Loans and to issue Letters of
Credit hereunder, is subject to the satisfaction of the following conditions.

3.1          Conditions to Closing Date

In addition to the conditions precedent specified in
subsection 3.2, the effectiveness of this Agreement is subject to the
prior or concurrent satisfaction of the following conditions:

A.            Loan Party Documents. On or
before the Closing Date, Company shall, and shall cause each other Loan Party
to, deliver to Administrative Agent with such number of originally executed
copies as Administrative Agent may request the following with respect to 

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Company or such other
Loan Party, as the case may be, each, unless otherwise noted, dated the Closing
Date:

(i)          Copies of the Organizational Documents
of such Person, certified by the Secretary of State of its jurisdiction of
organization (or other applicable authority) or, if such document is of a type
that may not be so certified, certified by the secretary or similar officer of
such Person, together with a good standing certificate from the Secretary of
State (or other applicable authority) of its jurisdiction of organization (if
available from such jurisdiction) and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of such
jurisdiction, each dated a recent date prior to the Closing Date;

(ii)           Resolutions of the Governing Body of
such Person approving and authorizing the execution, delivery and performance
of the Loan Documents to which it is a party, certified as of the Closing Date
by the secretary or in the case of foreign Loan Parties, a similar officer of such
Person as being in full force and effect without modification or amendment;

(iii)          Signature and incumbency certificates
of the officers of such Person executing the Loan Documents to which it is a
party;

(iv)          Executed originals of the Loan
Documents to which such Person is a party; provided  that the
Tranche A Term Loan Notes and Australian Revolving Loan Notes shall be
delivered immediately after the making of the initial Australian Revolving
Loans; and

(v)           Such other customary documents as
Agents may reasonably request.

B.            Fees. Owens-Brockway shall
have paid, or caused to have been paid, to Administrative Agent, for
distribution (as appropriate), Agents and Arrangers, the fees payable on the
Closing Date referred to in subsection 2.3.

C.            Repayment
of Existing Credit Agreement and Related Liens; Existing Letters of Credit. On the Closing Date, Company and its Subsidiaries shall have (a) repaid
in full all Indebtedness and other amounts outstanding under the Existing
Credit Agreement, (b) terminated any commitments to lend or make other
extensions of credit thereunder (except the commitment to lend to ACI under the
Nominal Restatement), (c) deliver to Administrative Agent all documents or
instruments including lien releases and terminations necessary to satisfy the
requirements of subsection 3.1K, and (d) made arrangements satisfactory to
Administrative Agent with respect to any letters of credit outstanding
thereunder that are not Existing Letters of Credit.

D.            Redemption of BSN Senior
Subordinated Notes. Evidence satisfactory to Administrative Agent that BSN
is delivering documents necessary to irrevocably call the BSN Senior
Subordinated Notes for redemption on or before August 15, 2006.

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E.             Representations and Warranties;
Performance of Agreements. Company and each Borrower shall have delivered
to Administrative Agent an Officers’ Certificate, in form and substance
satisfactory to Agents, to the effect that the representations and warranties
in Section 4, are true, correct and complete in all material respects on
and as of the Closing Date to the same extent as though made on and as of that
date (or, to the extent such representations and warranties specifically relate
to an earlier date, that such representations and warranties were true, correct
and complete in all material respects on and as of such earlier date) and that
the appropriate Loan Party or Loan Parties shall have performed in all material
respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the Closing Date
except as otherwise disclosed to and agreed to in writing by Agents.

F.             Opinions of Counsel to Loan
Parties. Lenders shall have received originally executed copies of one or
more favorable written opinions of (i) Latham & Watkins LLP,
special counsel to Company and (ii) James W. Baehren, general counsel of
the Company, in each case in form and substance reasonably satisfactory to
Agents and their counsel, dated as of June 14, 2006 (this Agreement
constituting a written request by Loan Parties to such counsel to deliver such
opinions to Lenders).

G.            Opinions of Foreign Counsel. Lenders
shall have received originally executed copies of one or more favorable written
opinions of Clayton Utz, Australian counsel to ACI, Stewart, McKelvey,
Sterling, Scales and Osler, Hoskin & Harcourt LLP, Canadian counsel to
O-I Canada, Stibbe, Dutch counsel to Administrative Agent, Carrard Paschoud
Heim & Associes, Swiss counsel to Administrative Agent, and Latham &
Watkins LLP, special counsel to O-I UK, dated as of June 14, 2006 as to
such matters as Agents acting on behalf of Lenders may reasonably request.

H.            Solvency Assurances. On the
Closing Date, Administrative Agent and Lender shall have received an Officers’
Certificate of Company dated the Closing Date, in form and substance
satisfactory to Agents and with appropriate attachments, demonstrating that,
after giving effect to the consummation of the transactions contemplated by the
Loan Documents on the Closing Date, Company and its Subsidiaries on a
consolidated basis and each Borrower individually will be Solvent.

I.              Evidence of Insurance. Administrative
Agent shall have received a certificate from Company’s and/or Borrowers’
respective insurance brokers or other evidence satisfactory to it that all
insurance required to be maintained pursuant to subsection 5.4 with
respect to Company and its Domestic Subsidiaries is in full force and effect
and that Collateral Agent on behalf of Lenders has been named as additional
insured and/or loss payee thereunder to the extent required under
subsection 5.4.

J.             Intercreditor Agreement. The
Intercreditor Agreement, substantially in the form of Exhibit XVII
annexed hereto, shall have been fully executed and delivered and shall be in
full force and effect.

K.            Security Interests in Personal
Property. Administrative Agent shall have received evidence satisfactory to
it that the Loan Parties shall have taken or caused to be taken 

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(or will have taken
within applicable perfection periods) all such actions, executed and delivered
or caused to be executed and delivered all such agreements, documents and
instruments, made or caused to be made all such filings and made (or
substantially concurrently with the Closing Date will make) any related
payments of filing fees, taxes or similar expenditures that may be necessary
or, in the opinion of Agents, desirable in order to create in favor of
Collateral Agent, for the benefit of Lenders, and holders of the Other Lender
Guarantied Obligations, a valid and (upon such filing and recording or other
means of perfection) perfected First Priority security interest in
substantially all present and after acquired personal property Collateral. Such
actions shall include the following:

(i)            Stock Certificates and
Instruments. Delivery to Collateral Agent of (a) certificates (which
certificates shall be accompanied by irrevocable undated stock powers, duly
endorsed in blank and otherwise satisfactory in form and substance to
Collateral Agent (or the equivalent thereof in any applicable jurisdiction))
representing all Capital Stock of Subsidiaries pledged pursuant to the Pledge
Agreement, the Security Agreement and, if required thereby,  the Offshore Security Agreements and (b) all
intercompany notes required to be pledged pursuant to the Pledge Agreement or
Security Agreement;

(ii)           Lien Searches and UCC Termination
Statements. Delivery to Collateral Agent of (a) the results of a
recent search, by a Person satisfactory to Collateral Agent, of all effective
UCC financing statements and fixture filings which may have been made with
respect to any personal or mixed property of any Company or any Domestic
Subsidiary that is a Loan Party, together with copies of all such filings
disclosed by such search, and (b) UCC termination statements duly executed
by all applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or fixture
filings disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens created by the Collateral Documents or
otherwise permitted to remain outstanding pursuant to the terms of this
Agreement).

(iii)          UCC Financing Statements. Delivery
to Collateral Agent of UCC financing statements and, where appropriate fixture
filings, duly authorized by each applicable Loan Party with respect to all
personal and mixed property Collateral of such Loan Party, for filing in all
jurisdictions deemed necessary or desirable by Collateral Agent to perfect the
security interest created in such collateral pursuant to the Collateral
Documents.

(iv)          PPSA Financing Statements. Financing
statements with respect to all present and after acquired personal property
Collateral of O-I Canada shall have been filed in all jurisdictions deemed
necessary or desirable by Collateral Agent to perfect the security interest
created in such collateral pursuant to the Collateral Documents.

(v)           IP Filing. To the extent
required by Agents, delivery to Collateral Agent of all cover sheets or other
documents or instruments required to be filed with any IP Filing Office in
order to create or perfect Liens in respect of any material IP Collateral,
together with releases duly executed (if necessary) of security interests by
all applicable 

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Persons
for filing in all applicable jurisdictions as may be necessary to terminate any
effective filings in any IP Filing Office in respect of any IP Collateral
(other than any such filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement).

(vi)          Foreign Pledge Agreements. Execution
and delivery to Collateral Agent of foreign pledge agreements with respect to
the Capital Stock owned by Company or a Domestic Subsidiary of all Foreign
Subsidiaries that are Material Subsidiaries with respect to which Collateral
Agent deems a foreign pledge agreement necessary or advisable to perfect,
continue perfection, or otherwise protect the First Priority Liens granted to
Collateral Agent on behalf of Lenders and the holders of the Other Lender
Guarantied Obligations in such Capital Stock, and the taking of all such other
actions under the laws of such jurisdictions as Collateral Agent may deem
necessary or advisable to perfect, continue the perfection of, or otherwise
protect such Liens.

L.            Offshore Collateral Documents and
Offshore Guaranties. Administrative Agent shall have received duly executed
and delivered copies of the Offshore Collateral Documents and the Offshore Guaranties
and all related documentation, all in form, substance and scope satisfactory to
Agents.

M.           Closing Date Mortgages; Closing
Date Mortgage Policies; etc. Administrative Agent shall have received from
Company and each applicable Subsidiary Guarantor:

(i)            Closing
Date Mortgages. Fully executed and notarized Mortgages or amendments
to Mortgages securing the Existing Owens-Brockway Senior Secured Notes such
that they also secure the Obligations (each a “Closing Date Mortgage” and, collectively, the “Closing Date Mortgages”), in proper form
for recording in all appropriate places in all applicable jurisdictions,
encumbering each Real Property Asset listed in Schedule 3.1L
annexed hereto (each a “Closing Date
Mortgaged Property” and, collectively, the “Closing Date Mortgaged Properties”); and

(ii)           Matters Relating to Flood Hazard
Properties. (a) Customary evidence as to whether (1) any Closing
Date Mortgaged Property is a Flood Hazard Property and (2) the community
in which any such Flood Hazard Property is located is participating in the
National Flood Insurance Program, (b) if there are any such Flood Hazard
Properties, such Loan Party’s written acknowledgement of receipt of written
notification from Administrative Agent (1) as to the existence of each such
Flood Hazard Property and (2) as to whether the community in which each
such Flood Hazard Property is located is participating in the National Flood
Insurance Program, and (c) in the event any such Flood Hazard Property is
located in a community that participates in the National Flood Insurance
Program, evidence that Company has obtained flood insurance in respect of such
Flood Hazard Property to the extent required under the applicable regulations
of the Board of Governors of the Federal Reserve System.

N.            Completion of Proceedings. All
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental 

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thereto not previously
found acceptable by Agents, acting on behalf of Lenders, and its counsel shall
be satisfactory in form and substance to Agents and such counsel, and Agents
and such counsel shall have received all such counterpart originals or
certified copies of such documents as Agents may reasonably request.

O.            Projections and
Business Plan. The Lenders shall have received detailed financial
projections for each of the Borrowers’ Fiscal Years ending on or prior to December 31,
2010 and the underlying business plan upon which such projections are based,
all in form, substance and scope reasonably satisfactory to the Agents.

P.            Material Adverse
Effect. There shall have been no change in the business or financial
condition of any Loan Party since December 31, 2005 which has had a
Material Adverse Effect.

3.2          Conditions
to All Loans.

The obligations of Lenders to make Loans on each
Funding Date are subject to the following further conditions precedent:

A.            Administrative Agent shall have
received on or before that Funding Date, in accordance with the provisions of
subsection 2.1E, an originally executed Notice of Borrowing, in each case
signed by a duly authorized officer of the applicable Borrower.

B.            As of that Funding Date:

(i)            Except with respect to Loans under
the Delayed Draw Commitments, the proceeds of which are to be used to fund a
redemption of Inside Maturity Notes for which irrevocable notice has been given
(a “Redemption Draw”), the
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of such earlier
date;

(ii)           Except in the case of a Redemption
Draw, no event shall have occurred and be continuing or would result from the
consummation of the borrowing contemplated by such Notice of Borrowing that
would constitute an Event of Default or a Potential Event of Default. In the
case of a Redemption Draw, no Event of Default (or Potential Event of Default)
shall have occurred and be continuing under subsections 7.1, 7.6, 7.7 or
7.9 (with respect to a Borrower);

(iii)          Each Loan Party shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before that
Funding Date;

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(iv)          No order, judgment or decree of any
arbitrator or Governmental Authority shall purport to enjoin or restrain any
Lender from making the Loans to be made by it on that Funding Date; and

(v)           The making of the Loans requested on
such Funding Date shall not violate Regulation U of the Board of Governors of
the Federal Reserve System.

3.3          Conditions
to Letters of Credit

The issuance of any Letter of Credit (other than
Existing Letters of Credit) hereunder (whether or not the applicable Issuing
Lender is obligated to issue such Letter of Credit) is subject to the following
conditions precedent:

A.            On or before the date of issuance of
the initial Letter of Credit pursuant to this Agreement, the initial Loans
shall have been made.

B.            On or before the date of issuance of
such Letter of Credit, Administrative Agent shall have received, in accordance
with the provisions of subsection 2.8B, an originally executed Notice of
Request for Issuance of Letter of Credit (or a facsimile copy thereof) in each
case signed by a duly authorized officer of the Borrower requesting the Letter
of Credit, together with all other information specified in
subsection 2.8B and such other documents or information as the applicable
Issuing Lender may reasonably require in connection with the issuance of such Letter
of Credit.

C.            On the date of issuance of such
Letter of Credit, all conditions precedent described in subsection 3.1 and
subsection 3.2 shall be satisfied to the same extent as if the issuance of
such Letter of Credit were the making of a Loan and the date of issuance of
such Letter of Credit were a Funding Date.

SECTION 4

LOAN PARTIES’ REPRESENTATIONS AND WARRANTIES

In order to induce Lenders to enter into this
Agreement, to induce the Lenders to thereafter make Term Loans, Revolving Loans
and Offshore Revolving Loans hereunder, to induce Administrative Agent to make
overdrafts under the Domestic Overdraft Account, to induce the Offshore
Overdraft Account Providers to make overdrafts under the Offshore Overdraft
Accounts, to induce Issuing Lenders to issue Letters of Credit and to induce
Lenders to purchase participations in Letters of Credit, in the Domestic
Overdraft Amount and in the Offshore Overdraft Amounts, Company and each
Borrower represents and warrants to each Lender, on the Closing Date, and on
each other Funding Date and on the date of issuance of each Letter of Credit,
that the following statements are true, correct and complete (which
representations and warranties made by an Offshore Borrower shall be limited to
such Offshore Borrower and its Subsidiaries):

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4.1          Organization,
Powers, Good Standing, Business and Subsidiaries

A.            Organization and Powers. Each
of the Loan Parties is a company, duly organized (or incorporated), validly
existing and, where applicable, in good standing under the laws of its
jurisdiction of formation. Each of the Loan Parties has all requisite
organizational power and authority to own and operate its properties, to carry
on its business as now conducted and proposed to be conducted, to enter into
each Loan Document to which it is a party and to carry out the transactions
contemplated hereby and thereby, and, in the case of Borrowers, to issue the
Notes.

B.            Good Standing. Each of the
Loan Parties is (to the extent such concept is relevant) in good standing
wherever necessary to carry on its present business and operations, except in
jurisdictions in which the failure to be in good standing has not had and will
not have a Material Adverse Effect.

C.            Subsidiaries. All of the
Subsidiaries of Company and their jurisdictions of organization or
incorporation are identified in Schedule 4.1 annexed hereto, as
said Schedule 4.1 may be supplemented from time to time pursuant to the
provisions of subsection 5.1(xi). The Capital Stock of each of the
Subsidiaries of Company identified in Schedule 4.1 annexed hereto
(as so supplemented), is duly authorized, validly issued, fully paid and
nonassessable and as of the Closing Date none of such Capital Stock constitutes
Margin Stock. Each of the Subsidiaries of Company identified in Schedule 4.1
annexed hereto (as so supplemented) is a company duly organized (or
incorporated), validly existing and, where applicable, in good standing under
the laws of its respective jurisdiction of organization set forth therein, has
all requisite power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified to do business and (to the extent such concept is relevant) in good
standing where applicable in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, in each case
except where failure to be so qualified or in good standing or a lack of such
power and authority has not had and could not reasonably be expected to result
in a Material Adverse Effect. Schedule 4.1 annexed hereto (as so
supplemented) correctly sets forth, as of the Closing Date, the ownership
interest of Company and each of its Subsidiaries in each of the Subsidiaries of
Company identified therein.

4.2          Authorization
of Borrowing, Etc.

A.            Authorization of Borrowing. The
execution, delivery and performance of the Loan Documents and the issuance,
delivery and payment of the Notes have been duly authorized by all necessary
organizational action by each Loan Party which is a party thereto.

B.            No Conflict. The execution,
delivery and performance by each Loan Party of the Loan Documents to which it
is a party and the issuance, delivery and performance of the Notes do not and
will not (i) violate any provision of law applicable to such Loan Party,
the Organizational Documents of such Loan Party, or any order, judgment or
decree of any court or other agency of government binding on such Loan Party, (ii) conflict
with, result in a material breach of or constitute (with due notice or lapse of
time or both) a material default under any Contractual Obligation of Company or
any of its Subsidiaries, (iii) result in or require the creation or
imposition of any Lien (other than Liens in favor of Collateral Agent) upon any
of the 

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properties or assets of
Company or any of its Subsidiaries, or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, other than those approvals
and consents which have been obtained.

C.            Governmental Consents. The
execution, delivery and performance by each Loan Party of the Loan Documents to
which it is a party and the issuance, delivery and performance of the Notes did
not, do not and will not require any registration with, consent or approval of,
or notice to, or other action to, with or by, any federal, state or other
Governmental Authority or regulatory body except for filings, consents or
notices that have been or will be made during the period in which they are
required to be made.

D.            Binding Obligations. This
Agreement and the other Loan Documents executed prior to the date of this
Agreement are, and the other Loan Documents and the Notes that are executed
subsequent to the date of this Agreement, when executed and delivered will be,
the legally valid and binding obligations of the applicable Loan Parties,
enforceable against the applicable Loan Parties in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability.

4.3          Financial
Condition

Borrowers have heretofore delivered to Lenders, at
Lenders’ request, the audited consolidated balance sheet of Holdings and its
Subsidiaries as at December 31, 2005 and the
related consolidated statements of income, stockholders’ equity and cash flows
of Holdings and its Subsidiaries for the Fiscal Year then ended and the
unaudited consolidated balance sheet of Holdings and its Subsidiaries and the
unaudited consolidated balance sheet of Company and its Subsidiaries as of March 31,
2006 and the related unaudited consolidated statements of income and cash flows
of Company and its Subsidiaries for the periods then ended. All such statements
were prepared in conformity with GAAP. All such consolidated financial
statements fairly present the consolidated financial position of Holdings and
its Subsidiaries as at the date thereof and the consolidated results of
operations and cash flows of Holdings and its Subsidiaries for the period
covered thereby. Neither Holdings nor any of its Subsidiaries has any material
contingent liability or material liability for taxes, long-term lease or
unusual forward or long-term commitment, which is not reflected in the
foregoing financial statements or in the most recent consolidated financial
statements delivered pursuant to subsection 5.1 of this Agreement, except for
those incurred since the date of such financial statements that are not
prohibited hereunder.

4.4          No
Adverse Material Change

Since December 31, 2005, except as publicly
disclosed in filings by Holdings or any Borrower with the Securities and
Exchange Commission prior to the Closing Date, there has been no change in the
business, operations, properties, assets or condition (financial or otherwise)
of Company and its Subsidiaries, which has been, either in any case or in the
aggregate, materially adverse to Company and its Subsidiaries, taken as a
whole.

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4.5          Litigation;
Adverse Facts

Except as disclosed in Holdings’ annual report on Form 10-K
for the Fiscal Year ended December 31, 2005, there is no action, suit,
proceeding, governmental investigation or arbitration of which Company has
knowledge (whether or not purportedly on behalf of Company or any of its
Subsidiaries) at law or in equity or before or by any federal, state,
provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, pending or, to the
knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries which would
reasonably be expected to result in a Material Adverse Effect.

4.6          Payment
of Taxes

Except to the extent permitted by subsection 5.3,
all material tax returns and reports of Holdings and each of its Subsidiaries
required to be filed by any of them have been timely filed, and all material
taxes, assessments, fees and other governmental charges upon such Persons and
upon their respective properties, assets, income and franchises which are due
and payable have been paid when due and payable.

4.7          Governmental
Regulation

Neither Holdings nor any of its Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of 2005 or the
Investment Company Act of 1940.

4.8          Securities
Activities

A.            Neither Holdings nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock.

B.            Following application of the
proceeds of each Loan, not more than 25% of the value of the assets (either of
Company only or of Company and its Subsidiaries on a consolidated basis)
subject to the provisions of subsection 6.2 or 6.7, or subject to any similar
restriction contained in any agreement or instrument between Company and any
Lender or any Affiliate of any Lender relating to Indebtedness and within the
scope of subsection 7.2, was or will be attributable to Margin Stock.

4.9          Employee
Benefit Plans

A.            Each of Holdings and each of its
Subsidiaries is in compliance with all applicable provisions of ERISA, the
Internal Revenue Code and other applicable federal, state or foreign law with
respect to each Plan, and has performed all of its obligations under each Plan,
except to the extent that failure to comply, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Holdings,
each of its Subsidiaries and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Internal Revenue
Code, except to the extent that a failure to do so would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, and
no application for a 

 122
 

 

funding waiver or an
extension of any amortization period pursuant to Section 412 of the
Internal Revenue Code has been made with respect to any Plan.

B.            (i) No ERISA Event has occurred
or is reasonably expected to occur; (ii) no Pension Plan which is
reasonably likely to be terminated has any Unfunded Pension Liability in an
amount which, individually or in the aggregate for all such Pension Plans
(excluding for purposes of such computation any such Pension Plans with respect
to which assets exceed benefit liabilities), would reasonably be expected to
have a Material Adverse Effect if such Pension Plan or Pension Plans were then
terminated; and (iii) none of Holdings, any of its Subsidiaries or any
ERISA Affiliate has engaged in a transaction that could be subject to Section 4069
or 4212(c) of ERISA that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

C.            As of the date hereof, Company and
its Subsidiaries have made full payment when due of all required contributions
to any Foreign Plan, except to the extent that a failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

4.10        Disclosure

No representation or warranty of any Loan Party
contained in this Agreement, any Loan Document or any other document,
certificate or written statement furnished to Lenders by or on behalf of any
Loan Party for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to such Loan Party in the case of any document not
furnished by it) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made. The projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by
Company and its Subsidiaries to be reasonable at the time made, it being
recognized by Lenders that such projections as to future events are not to be
viewed as facts and that actual results during the period or periods covered by
any such projections may differ from the projected results.

4.11        Environmental
Protection

Company and each of its Subsidiaries are in compliance
with all applicable Environmental Laws in respect of the conduct of its
business and the ownership of its property, except such noncompliance as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Without limiting the effect of the preceding sentence:

A.            to the best of Company’s knowledge,
neither Company nor any of its Subsidiaries has received a complaint, order,
citation, notice or other written communication with respect to the existence
or alleged existence of a violation of, or liability arising under, any
Environmental Law, the outcome of which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect; and

B.            to the best of Company’s knowledge
there are no environmental, health or safety conditions existing at any real
property owned, operated or leased by Company or any of 

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its existing or former
Subsidiaries or any of their respective predecessors, including off-site
treatment or disposal facilities used by Company or any of its existing or
former Subsidiaries for waste treatment or disposal, which would reasonably be
expected to require any construction or other capital costs or clean-up
obligations to be incurred prior to the final scheduled maturity of the
Obligations in order to assure compliance with any Environmental Law, including
provisions regarding clean-up, to the extent that any of such conditions,
construction or other capital costs or clean-up obligations, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect.

4.12        Title
to Properties; Liens; Real Property; Intellectual Property

A.            Title to Properties; Liens. Company and its Subsidiaries have (i) good, sufficient
and legal title to (in the case of fee or freehold interests in Real Property
Assets), (ii) valid leasehold interests in (in the case of Ground
Leasehold Interests, or other leasehold interests in the UK, in Real Property
Assets or personal property), or (iii) good title to (in the case of all
other personal property), all of their respective properties and assets
reflected in the financial statements referred to in subsection 4.3 or in
the most recent financial statements delivered pursuant to subsection 5.1,
in each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 6.7 and except for such defects that individually or in the
aggregate, would not have a Material Adverse Effect.

B.            Real Property. As
of the Closing Date, Schedule 4.12B annexed hereto contains a true,
accurate and complete list of all fee and Ground Leasehold Interests (or in the
UK, all freehold and leasehold interests) in any Real Property Assets with an
insurable or assessed value in excess of $50,000,000.

C.            Intellectual Property. As of
the Closing Date, Company and its Subsidiaries own or have the right to use all
Intellectual Property used in the conduct of their business, except where the
failure to own or have such right to use, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, and Loan Parties do not know of any valid basis
for any such claim except for such claims that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. The use of such Intellectual Property by Company and its Subsidiaries
does not infringe on the rights of any Person, except for such claims and
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

4.13        Solvency

Each Loan Party is and, upon the incurrence of any
Obligations by such Loan Party on any date on which this representation is
made, will be, Solvent.

4.14        Matters
Relating to Collateral

A.            Creation, Perfection and Priority
of Liens. As of the Closing Date, the execution and delivery of the
Collateral Documents by Loan Parties, together with (i) the actions 

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taken on or prior to or
after the date hereof pursuant to subections 5.9 and 5.10, and (ii) the
delivery to Collateral Agent of any Collateral not delivered to Collateral
Agent at the time of execution and delivery of the applicable Collateral
Document (all of which Collateral has been so delivered) are effective to
create in favor of Collateral Agent for the benefit of Lenders, as security for
the respective Secured Obligations (as defined in the applicable Collateral
Document in respect of any Collateral), a valid First Priority Lien on all of
the Collateral (except for Collateral for which the absence or failure of the
Lien on such Collateral would not constitute an Event of Default under
subsection 7.12), and all filings and other actions necessary or desirable
to perfect and maintain the perfection and First Priority status of such Liens
have been duly made or taken and remain in full force and effect (or will be
duly made or taken within applicable time periods), other than the periodic
filing of UCC continuation statements and such other ongoing filings as may be
required in the other jurisdictions in which Collateral is located.

B.            Governmental Authorizations. No authorization, approval or other action by, and no notice
to or filing with, any Governmental Authority is required for either (i) the
pledge or grant by any Loan Party of the Liens purported to be created in favor
of Collateral Agent pursuant to any of the Collateral Documents or (ii) the
exercise by Collateral Agent of any rights or remedies in respect of any
Collateral (whether specifically granted or created pursuant to any of the
Collateral Documents or created or provided for by applicable law), except for
filings or recordings contemplated by subsection 4.14A and except as may
be required, in connection with the disposition of any Collateral, by laws
generally affecting the offering and sale of securities.

C.            Absence of Third-Party Filings. Except such as may have been filed in favor of Collateral
Agent as contemplated by subsection 4.14A and to evidence permitted lease
obligations and other Liens permitted pursuant to subsection 6.2, (i) no
effective UCC financing statement, fixture filing or other instrument similar
in effect covering all or any part of the Collateral is on file in any filing
or recording office, (ii) no effective filing covering all or any part of
the IP Collateral is on file in the PTO or the U.S. Copyright Office (or
analogous foreign agencies with respect to Collateral secured by the Offshore
Collateral Documents), and (iii) no effective filings, registrations or
other notices of Liens exist in relation to any of the Loan Parties or any of
the Collateral at any agencies, registries offices or relevant governmental or
other regulatory bodies outside the United States of America.

4.15        Credit
Agreement Under Indentures.

This Agreement is the “Credit Agreement” as described
in the indentures governing the Existing Owens-Brockway Senior Secured Notes
and the Existing Owens-Brockway Senior Unsecured Notes and Borrowers’ Agent
hereby designates this Agreement as such.

4.16        Professional
Market Party Representation

For the purposes of the Dutch Banking Act, OIEG, or
any other Dutch entity acceding to this Agreement as a borrower (each, a “Dutch Borrower”) (a) represents and warrants on the
date of this Agreement that it has verified the status of each party which is a
Lender to a Dutch Borrower under this Agreement on such date and that each
Lender to a Dutch 

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Borrower is a PMP, and (b) if on the date on
which a Person becomes a Lender to a Dutch Borrower, it is a requirement of
Netherlands law that such Person is a PMP, represents and warrants that it has
verified the status of such Person on such date and each such Person is a PMP.

SECTION 5

COMPANY’S AFFIRMATIVE
COVENANTS

Company and each Borrower covenants and agrees that,
so long as any of the Commitments hereunder shall be in effect and until
payment in full of all of the Loans, the Offshore Overdraft Amounts and the
Domestic Overdraft Amount, the cancellation or expiration of all Letters of
Credit and the reimbursement of all amounts drawn thereunder, unless Requisite
Lenders shall otherwise give prior written consent, Company and each Borrower
shall perform, and shall cause each of their respective Subsidiaries to
perform, all covenants in this Section 5.

5.1          Financial
Statements and Other Reports

Company and Borrowers will maintain, and cause
Holdings and each of their respective Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated financial statements of
Holdings and Company in conformity with GAAP. Company and Borrowers will
deliver, or cause to be delivered, to Administrative Agent (for distribution to
the Lenders):

(i)            Quarterly Financials. as soon
as practicable and in any event within 45 days after the end of each Fiscal
Quarter, other than quarters which are the last quarter in a Fiscal Year, the
consolidated balance sheets of Holdings and Company as at the end of such
period and the related consolidated statements of income and cash flows of
Holdings and Company for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, setting forth in comparative
form the corresponding figures for the corresponding periods of the previous
Fiscal Year and, with respect to the consolidated statements of income, the
corresponding figures from the consolidated plan and financial forecast for the
current Fiscal Year delivered pursuant to subsection 5.1(x), all in
reasonable detail and certified by the chief accounting officer, the chief
financial officer, the treasurer, an assistant treasurer, the controller or an
assistant controller of Company that they fairly present the consolidated
financial condition of Holdings and Company as at the dates indicated and the
consolidated results of operations and cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustment;

(ii)           Year-End Financials. as soon
as practicable and in any event within 90 days after the end of each Fiscal
Year of Company (a) the audited consolidated balance sheets of Holdings
and Company as at the end of such Fiscal Year and the related consolidated
statements of income, stockholders’ equity and cash flows of Holdings and
Company for such Fiscal Year, setting forth in comparative form the
corresponding figures for the previous year, all in reasonable detail, each
accompanied by a report thereon of an independent registered public accounting
firm of recognized national 

 126
 

 

standing
selected by Company which report shall be unqualified as to going concern and
scope of audit and shall state that such financial statements present fairly
the consolidated financial position of Holdings and Company, respectively, at
the dates indicated and the consolidated results of their operations and cash
flows for the periods indicated in conformity with GAAP and that the audit by
such accounting firm of such consolidated financial statements was conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), and (b) the consolidated balance sheet of each Borrower
as at the end of such Fiscal Year and the related consolidated statement of
income of each Borrower for such Fiscal Year, setting forth in comparative form
the corresponding figures for the previous year, prepared on an internal basis
as maintained by Company and Holdings in their financial reporting systems and
in a form reasonably satisfactory to Administrative Agent;

(iii)          Officers’ Certificates and
Compliance Certificates. together with each delivery of financial
statements of Holdings and/or Company pursuant to subdivisions (i) and (ii) above,
(a) an Officers’ Certificate of Company stating that the signers thereof
have reviewed the terms of this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period covered
by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that such signers
do not have knowledge of the existence as at the date of the Officers’
Certificate, of any condition or event which constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto; and (b) a
Compliance Certificate demonstrating compliance (as determined in accordance
with GAAP) during and at the end of such accounting periods with the
restrictions contained in subsections 6.1–6.12 and, in addition, a written
statement of the chief accounting officer, chief financial officer, treasurer,
any assistant treasurer, controller or any assistant controller of Company
describing in reasonable detail (A) the differences between the financial
information contained in such financial statements and the information
contained in the Compliance Certificate relating to Company’s compliance with
subsections 6.6 and 6.8 and (B) the non-recurring cash charges added back
to Consolidated Net Income for purposes of calculating Consolidated Adjusted
EBITDA pursuant to clause (vii) of the definition thereof;

(iv)          Certification Regarding Change in
Accounting Principles. to the extent required pursuant to clause (a) or
(b) below, together with each delivery of financial statements pursuant to
subdivisions (i) or (ii) of this subsection 5.1, a written
statement from the chief accounting officer, chief financial officer,
treasurer, an assistant treasurer, controller or any assistant controller of
Company setting forth (a) if necessary to explain any material changes in
the consolidated financial statements caused by the adoption of new accounting
principles, a comparison and reconciliation of the consolidated financial
statements with pro forma consolidated financial statements prepared as if the
new accounting principles had not been adopted (it being understood that,
subject to the following clause (b), only one such statement shall be required
with respect to any particular adoption of any new accounting principles) and (b) during
the 

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pendency
of any negotiations provided for in subsection 10.9 resulting from any
change in accounting principles and policies, the differences which would have
resulted if such financial statements had been prepared without giving effect
to such change;

(v)           SEC Filings and Press Releases.
promptly upon their becoming available, copies of (a) all annual reports
and proxy statements sent or made available generally by Holdings to its
security holders or by any Subsidiary of Holdings to its security holders other
than Holdings or another Subsidiary, (b) all reports (including, without
limitation, its Annual Report on Form 10-K and its Quarterly Report
on Form 10-Q) and all registration statements of Holdings or any of
its Subsidiaries filed with the Securities and Exchange Commission on Forms S-2,
S-3, S-4 and 8-K, and (c) all press releases concerning
Holdings’ earnings made available generally by Holdings or any of its
Subsidiaries to the public;

(vi)          Events of Default, Etc. promptly
upon any Responsible Officer of Company or any Borrower obtaining knowledge (a) of
any condition or event which constitutes an Event of Default or Potential Event
of Default, or becoming aware that any Lender or Administrative Agent has given
any notice or taken any other action with respect to a claimed Event of Default
or Potential Event of Default under this Agreement, or (b) of the
occurrence of any event or change (including any event or change relating to
environmental or ERISA matters) that has caused or evidences, or would
reasonably be expected to give rise to, either in any case or in the aggregate,
a Material Adverse Effect, an Officers’ Certificate specifying the nature and
period of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such claimed default,
Event of Default, Potential Event of Default, event or condition, and what
action Company or such Borrower has taken, is taking and proposes to take with
respect thereto;

(vii)         Litigation or Other Proceedings.
promptly upon any Responsible Officer of Company or any Borrower obtaining
knowledge of (a) the institution of, or non-frivolous threat of, any
action, suit, proceeding, governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or any
of its Subsidiaries not previously disclosed by Company or a Borrower to
Lenders, or (b) any material development in any such action, suit,
proceeding, governmental investigation or arbitration, which, in either case,
if adversely determined, would reasonably be expected to cause a Material
Adverse Effect, written notice thereof to Lenders and provide such other
information as may be reasonably available to it to enable Lenders and their
counsel to evaluate such matters;

(viii)        ERISA Events. promptly upon
becoming aware of the occurrence of or forthcoming occurrence of any ERISA
Event, a written notice specifying the nature thereof, what action Company, any
of its Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;

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(ix)           ERISA Notices. with reasonable
promptness, copies of (a) all notices received by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer
Plan sponsor concerning an ERISA Event; and (b) copies of such other documents
or governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent or any Lender through Administrative Agent shall
reasonably request;

(x)            Financial Plans. as soon as
practicable and in any event within 90 days after the beginning of each Fiscal
Year of Company, a consolidated plan and financial forecast, prepared in
accordance with Company’s normal accounting procedures applied on a consistent
basis, for such Fiscal Year of Company and its Subsidiaries, including, without
limitation, (a) a forecasted consolidated balance sheet, consolidated
statement of income and consolidated statement of cash flows of Company for
such Fiscal Year, and (b) the amount of forecasted capital expenditures
and unallocated overhead for such Fiscal Year;

(xi)           New Subsidiaries. within 90
days of the end of each Fiscal Year, a written notice setting forth with
respect to all Persons becoming Subsidiaries of Company on such date during the
previous Fiscal Year, (a) the date on which such Person became a
Subsidiary of Company and (b) all of the data required to be set forth in Schedule
4.1 annexed hereto with respect to all Subsidiaries of Company (it being
understood that such written notice shall be deemed to supplement Schedule
4.1 annexed hereto for all purposes of this Agreement);

(xii)          Overdraft Reporting. promptly
upon request by Administrative Agent, if any Offshore Overdraft Account
Provider has not provided the information required pursuant to subsection 2.1D(v) in
a timely manner, a written report in form satisfactory to Administrative Agent
setting forth activity with respect to the applicable Offshore Overdraft
Accounts for the requested period and the applicable Offshore Overdraft Amount
outstanding as of the end of the period covered by such report;

(xiii)         Other Information. with
reasonable promptness, such other information and data with respect to Company
or any of its Subsidiaries as from time to time may be reasonably requested by
any Lender through Administrative Agent.

Company and
Borrowers shall be deemed to have delivered reports referred to in clauses (i),
(ii), (iii) or (v) of this subsection 5.1 when (A) such reports
or other information have been posted on the Internet website of the Securities
and Exchange Commission (http://www.sec.gov) or on its own Internet website as
previously identified to Agents and Lenders, and (B) Company and Borrowers
have notified Administrative Agent by electronic mail of such posting; provided
that if any Agent or any Lender requests such information to be delivered in
hard copies, Company and/or any Borrower, as applicable, shall furnish to such
Agent or Lender, as applicable, such information accordingly.

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5.2          Corporate
Existence, Etc.

Company and each Borrower will at all times preserve
and keep in full force and effect its corporate existence and rights and
franchises material to its business and the businesses of each of its
Subsidiaries; provided, however, that the existence of any such
Subsidiary (other than any Borrower) may be terminated if its parent
corporation determines that such termination is in the best interest of such
parent corporation.

5.3          Payment
of Taxes and Claims; Tax Consolidation

A.            Company and each Borrower will, and
will cause each of its Subsidiaries to, pay all material taxes, assessments and
other governmental charges imposed upon it or any of its properties or assets
or in respect of any of its franchises, business, income or property before any
material penalty accrues thereon, and all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have become
due and payable and which by law have or may become a material Lien upon any of
its properties or assets, prior to the time when any material penalty or fine
shall be incurred with respect thereto; provided that no such charge or claim
need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.

B.            Company will not, nor will it permit
any of its Subsidiaries to, file or consent to the filing of any consolidated
income tax return with any Person (other than Holdings or any of its Subsidiaries
or such other Person as may be reasonably acceptable to Requisite Lenders).

5.4                               Maintenance
of Properties; Insurance; Application of Net Insurance/Condemnation Proceeds

A.            Company and Borrowers will maintain
or cause to be maintained in good repair, working order and condition all
material properties used or useful in the business of Company and its
Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Company and Borrowers
will each maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and business of its Subsidiaries against loss or damage of the
kinds customarily insured against by corporations of established reputation
engaged in the same or similar businesses and similarly situated, of such types
and in such amounts as are customarily carried under similar circumstances by
such other corporations (“Industry Standards”)
and may self insure to the extent, and only to the extent, consistent with
Industry Standards. Without limiting the generality of the foregoing, Company
will maintain or cause to be maintained (i) flood insurance with respect
to each Flood Hazard Property that is located in a community that participates
in the National Flood Insurance Program, in each case in compliance with any
applicable regulations of the Board of Governors of the Federal Reserve System,
and (ii) replacement value casualty insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts, with
such deductibles, and covering such risks as are at all times satisfactory to
Collateral Agent in its commercially reasonable judgment. Each such policy of
insurance shall (a) name Collateral Agent for the benefit of 

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Lenders as an additional
insured thereunder as its interests may appear and (b) in the case of each
casualty insurance policy, contain a loss payable clause or endorsement,
satisfactory in form and substance to Collateral Agent, that names Collateral
Agent for the benefit of Lenders as the loss payee thereunder for any covered
loss in excess of $25,000,000 and provides for at least 30 days’ prior written
notice to Collateral Agent of any modification or cancellation of such policy.

B.            Application of Net
Insurance/Condemnation Proceeds. Upon receipt by Company or any other Loan
Party, or by Collateral Agent as loss payee, of any Net Insurance/Condemnation
Proceeds, so long as no Event of Default shall have occurred and be continuing,
Company or such other Loan Party may retain such proceeds pending a
determination by Company or the applicable Loan Party as to whether Company or
applicable Loan Party (a) will repair, restore or replace the assets in
respect of which such Net Insurance/Condemnation Proceeds were received or (b) will
elect to cause prepayments of the Loans and/or the reduction of the Revolving
Loan Commitments as provided in subsection 2.4B. The failure by Company or
such Loan Party to make an election under the preceding sentence on or before
the date that is 120 days after receipt of the Net Insurance/Condemnation
Proceeds shall be deemed an election to cause the prepayments of the Loans
and/or the reduction in the Revolving Commitments as provided in
subsection 2.4B and the Borrowers shall prepay the Loans and make any
other payments required under the Intercreditor Agreement in an amount equal to
such Net Insurance/Condemnation Proceeds. If an Event of Default shall have
occurred and be continuing, the applicable Loan Party shall deliver to
Collateral Agent for application to the Loans if Collateral Agent so elects an
amount equal to such portion of such Net Insurance/Condemnation Proceeds to
prepay the Loans (and/or reduce the Revolving Loan Commitments) as provided in
subsection 2.4B subject to any limitations contained in the Intercreditor
Agreement. Upon any election pursuant to clause (a) above, Company or the
applicable Loan Party shall, following such election, diligently pursue the
repair, restoration or replacement of the assets in respect of which such Net
Insurance/Condemnation Proceeds were received. If any portion of such Net
Insurance/Condemnation Proceeds are not used to repair, replace or restore the
assets in respect of which such Net Insurance/Condemnation Proceeds were
received within, in the case of any such proceeds that would constitute “Excess
Proceeds” under the indenture governing the Existing Owens-Brockway Senior
Secured Notes or the Existing Owens-Brockway Senior Unsecured Notes if not so
used by a date certain, 355 days of such receipt (or Company and/or the
applicable Loan Party cease the diligent pursuit of the same), any amount of
such Net Insurance/Condemnation Proceeds not so used shall be applied to prepay
the Term Loans and/or reduce Revolving Loan Commitments as provided in
subsection 2.4B and shall be otherwise applied as required by the
Intercreditor Agreement.

5.5          Inspection

Company and Borrowers shall permit any authorized
representatives designated by any Lender, at the expense of that Lender, to
visit and inspect any of the properties of Company or any of its Subsidiaries,
including its and their financial and accounting records, and to make copies
and take extracts therefrom, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants, all
upon reasonable notice and at such reasonable times during normal business
hours and as often as may be reasonably requested.

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5.6          Compliance
with Laws, Etc.

Company, Borrowers and its/their Subsidiaries shall
exercise all due diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders (including all Environmental
Laws) of any Governmental Authority, noncompliance with which in any case or in
the aggregate would reasonably be expected to result in a Material Adverse
Effect.

5.7          Securities
Activities

Following the application of the proceeds of any
Loans, not more than 25% of the value of the assets (either of Company only or
of Company and its Subsidiaries on a consolidated basis) subject to the
provisions of subsection 6.2 or 6.7, or subject to any similar restriction
contained in any agreement or instrument between Company and any Lender or any
Affiliate of any Lender relating to Indebtedness and within the scope of
subsection 7.2, will be attributable to Margin Stock.

5.8          Environmental
Matters

A.            Environmental Disclosure. Company
will deliver to Administrative Agent (for distribution to the Lenders):

(i)            Environmental Audits and Reports.
As soon as practicable following receipt thereof, copies of all non-privileged
environmental audits, investigations, analyses and reports of any kind or
character, whether prepared by personnel of Company, any Borrower or any of its
Domestic Subsidiaries or by independent consultants, Governmental Authorities
or any other Persons, with respect to significant environmental matters at any
Mortgaged Property that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect or with respect to any
Environmental Claims that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect;

(ii)           Notice of Certain Releases,
Remedial Actions, Etc. Within 90 days following the end of each Fiscal
Year, a written summary describing in reasonable detail (a) any Release
required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, and (b) any
remedial action taken by Company, any Borrower or any other Subsidiary in
response to (1) any Hazardous Materials Activities the existence of which
could reasonably be expected to result in one or more Environmental Claims
having, individually or in the aggregate, a Material Adverse Effect, or (2) any
Environmental Claims that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.

(iii)          Written Communications Regarding
Environmental Claims, Releases, Etc. As soon as practicable following the
sending or receipt thereof by Company or any of its Subsidiaries, a copy of any
and all non-privileged written communications with respect to  any Environmental Claims that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.

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(iv)          Notice of Certain Proposed Actions
Having Environmental Impact. In addition to the quarterly reporting
required under subsection 5.1(xi), prompt written notice describing in
reasonable detail (a) any proposed acquisition of stock, assets, or
property by Company or any of its Subsidiaries that could reasonably be
expected to (1) expose Company or any of its Subsidiaries to, or result
in, Environmental Claims that could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect or (2) affect
the ability of Company or any of its Subsidiaries to maintain in full force and
effect all material Governmental Authorizations required under any
Environmental Laws for their respective operations and (b) any proposed
action to be taken by Company or any of its Subsidiaries to modify current
operations in a manner that could reasonably be expected to subject Company or
any of its Subsidiaries to any material additional obligations or requirements
under any Environmental Laws that could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.

B.            Company’s Actions Regarding
Hazardous Materials Activities, Environmental Claims and Violations of Environmental
Laws.

(i)            Remedial Actions Relating to
Hazardous Materials Activities. Company and each Borrower shall, in
compliance with all applicable Environmental Laws, promptly undertake, and
shall cause each of its Subsidiaries promptly to undertake, any and all
investigations, studies, sampling, testing, abatement, cleanup, removal,
remediation or other response actions necessary to remove, remediate, clean up
or abate any Hazardous Materials Activity on, under or about any Mortgaged
Property that is in violation of any Environmental Law that presents a material
risk of giving rise to a material Environmental Claim.

(ii)           Actions with Respect to
Environmental Claims and Violations of Environmental Laws. Company and each
Borrower shall promptly take, and shall cause each of its Subsidiaries promptly
to take, any and all actions necessary to (i) cure any violation of
applicable Environmental Laws by Company, any Borrower or its or their
Subsidiaries that could reasonably be expected to result in, individually or in
the aggregate, a Material Adverse Effect and (ii) make an appropriate
response to any Environmental Claim against Company or any of its Subsidiaries
and discharge any obligations it may have to any Person thereunder where
failure to do so could reasonably be expected to result in, individually or in
the aggregate, a Material Adverse Effect.

C.            Environmental Review and Investigation. If (a) Administrative Agent
reasonably believes that Company or any Borrower or any of its or their
Subsidiaries has breached any representation, warranty or covenant contained in
this subsection 5.8 or that there has been a material violation of
Environmental Laws at any Mortgaged Property or by Company, any Borrower or any
of its or their Subsidiaries at any other location or (b) an Event of
Default has occurred and is continuing, conduct an investigation (including by
retention, at Company’s expense, an independent professional consultant to do
so) of any Mortgaged Property; provided  that, in the case of any
Facility no longer owned, leased, operated or used by Company, any Borrower or
any of its or their Subsidiaries, Company shall only be obligated to use its
best efforts to obtain permission for Administrative Agent’s professional
consultant to conduct an 

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investigation of such
Facility. For purposes of conducting such a review and/or investigation,
Company and each Borrower hereby grants to Administrative Agent and its agents,
employees, consultants and contractors the right to enter into or onto any
Mortgaged Property currently owned, leased, operated or used by Company, any
Borrower or any of its or their Subsidiaries and to perform such tests on such
property (including taking samples of soil, groundwater and suspected
asbestos-containing materials) as are reasonably necessary in connection
therewith. Any such investigation of any Facility shall be conducted, unless
otherwise agreed to by Company, the relevant Borrower and Administrative Agent,
during normal business hours and, to the extent reasonably practicable, shall
be conducted so as not to interfere with the ongoing operations at such
Facility or to cause any damage or loss to any property at such Facility. Company,
Borrowers and Administrative Agent hereby acknowledge and agree that any report
of any investigation conducted at the request of Administrative Agent pursuant
to this subsection 5.8C will be subject to the provisions of
subsection 10.20 and will be obtained and shall be used by Administrative
Agent and Lenders solely for the purposes of Lenders’ internal credit
decisions, to monitor and police the Loans and to protect Lenders’ security
interests created by the Loan Documents or in connection with any transaction
relating to the Loans or to such Facility. Administrative Agent agrees to
deliver a copy of any such report to Company with the understanding that
Company and each Borrower acknowledge and agree that (x) it will indemnify
and hold harmless Administrative Agent and each Lender from any costs, losses
or liabilities relating to Company’s use of or reliance on such report, (y) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (z) by delivering such report to Company,
neither Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.

5.9                               Execution
of Subsidiary Guaranty and Security Agreement After the Closing Date.

A.            Execution of Subsidiary Guaranty and Security Agreement. If (a) any
wholly-owned Domestic Subsidiary of Company existing on the Closing Date (other
than the Harbor Capital Subsidiaries) that has not previously executed the
Subsidiary Guaranty or (b) any Person becomes a wholly-owned Domestic
Subsidiary of Company after the Closing Date (other than a Domestic Subsidiary
formed in connection with any Receivables Sale Indebtedness and other than any
Domestic Subsidiary subject to a restriction permitted under subsection 6.2B
prohibiting such Subsidiary’s execution of the Subsidiary Guaranty and/or the
Security Agreement), and such Subsidiary owns or acquires assets with an
aggregate fair market value (without netting such fair market value against any
liability of such Subsidiary) exceeding $30,000,000, Borrowers’ Agent will
promptly notify Administrative Agent of that fact and cause such Domestic
Subsidiary to execute and deliver to Administrative Agent a counterpart of the
Subsidiary Guaranty and a counterpart of the Security Agreement and to take all
such further actions and execute all such further documents and instruments as
may be necessary or, in the opinion of Collateral Agent, desirable to create in
favor of Collateral Agent, for the benefit of Lenders, a valid and perfected
First Priority Lien on all of the personal and mixed property assets of such
Domestic Subsidiary described in the applicable forms of Collateral Documents. To the extent any such Subsidiary is owned by
a Subsidiary Guarantor, the Capital Stock of such Subsidiary shall be pledged
pursuant to the Security Agreement.

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B.            Foreign Subsidiaries. If (a) any Foreign Subsidiary that
is a direct wholly-owned Subsidiary of an Offshore Borrower or Offshore
Guarantor organized under the laws of the jurisdiction of such Offshore
Borrower or Offshore Guarantor, or (b) any Person becomes a direct
wholly-owned Subsidiary of an Offshore Borrower or Offshore Guarantor organized
in the jurisdiction of such Offshore Borrower (other than O-I Europe) or
Offshore Guarantor (other than any special purpose vehicle formed in connection
with the incurrence or maintenance of Receivables Sale Indebtedness permitted
hereunder), and such Subsidiary owns or acquires assets with an aggregate fair
market value (without netting such fair value against a liability of such
Subsidiary) exceeding $30,000,000, Borrowers’ Agent will promptly notify
Collateral Agent of that fact and cause such Subsidiary, to the extent legally
permissible, to execute and deliver to Collateral Agent a counterpart of the
applicable Offshore Guaranty and a counterpart of (or accession document to)
the applicable Offshore Security Agreement and such documents and instruments
and take such further actions as may be necessary, or in the reasonable opinion
of Collateral Agent, desirable to create in favor of Collateral Agent, for the
benefit of Lenders, a valid and perfected First Priority Lien on all of the
personal and mixed property assets of such Subsidiary described in the
applicable forms of Collateral Documents. If,
on or after the Closing Date, a wholly-owned Foreign Subsidiary becomes a
Foreign Subsidiary directly owned by a Subsidiary Guarantor, the Capital Stock
of such Foreign Subsidiary shall be pledged pursuant to the Security Agreement
unless Collateral Agent agrees otherwise due to the illegality or
impracticality of such pledge or because the costs of obtaining such pledge are
excessive in relation to the value of the security to be afforded thereby. Borrowers
shall cause foreign pledge agreements with respect to the Capital Stock of O-I
Manufacturing Netherlands B.V. and Veglarec B.V. to be executed and delivered
to Collateral Agent as soon as reasonably practicable after the redemption of
the BSN Senior Subordinated Notes.

C.            Subsidiary Organizational Documents, Legal Opinions, Etc. Company
and Borrowers shall deliver to Administrative Agent, together with such Loan
Documents, (i) certified copies of such Subsidiary’s Organizational
Documents, together with, if such Subsidiary is a Domestic Subsidiary, a good
standing certificate from the Secretary of State (or other applicable
authority) of the jurisdiction of its organization, each to be dated a recent
date prior to their delivery to Administrative Agent, (ii) a certificate
executed by the secretary or, in the case of a Foreign Subsidiary, similar
officer of such Subsidiary as to (a) the fact that the attached
resolutions of the Governing Body of such Subsidiary approving and authorizing
the execution, delivery and performance of such Loan Documents are in full
force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Subsidiary executing such
Loan Documents, and (iii) if such Subsidiary owns assets with a value in
excess of $100,000,000, a favorable opinion of counsel to such Subsidiary, in
form and substance satisfactory to Administrative Agent and its counsel, as to (a) the
due organization and (where applicable) good standing of such Subsidiary, (b) the
due authorization, execution and delivery by such Subsidiary of such Loan
Documents, (c) the enforceability of such Loan Documents against such
Subsidiary and (d) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Administrative Agent may reasonably request, all of the foregoing
to be satisfactory in form and substance to Administrative Agent and its
counsel.

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5.10        Real
Estate Matters

If after the Closing Date (i) Company, any
Borrower, any Subsidiary Guarantor, or any Offshore Guarantor acquires any fee
or Ground Leasehold Interest in a Real Property Asset (or freehold title, in
the case of a Real Property Asset located in the UK) the acquisition cost of
which (including purchase-money Indebtedness or assumed Indebtedness) or
insurable value of which exceeds $50,000,000 and which is not subject to a
Permitted Lien prohibiting such encumbrance or (ii) at the time any Person
becomes a Subsidiary Guarantor or Offshore Guarantor, such Person owns or holds
any fee or Ground Leasehold Interest in a Real Property Asset (or freehold
title, in the case of a Real Property Asset located in the UK) with an assessed
or insurable value in excess of $50,000,000 excluding any such Real Property
Asset the encumbrancing of which requires the consent of (in the case of clause
(ii) above) a then-existing senior lienholder, where Company and its
Subsidiaries are unable to obtain such senior lienholder’s consent (any Real
Property Asset described in clause (i) and any such non-excluded Real
Property Asset described in the clause (ii) above being an “Additional Mortgaged Property”), Company or such Subsidiary
Guarantor shall deliver to Collateral Agent, as soon as practicable after such
Person acquires such Additional Mortgaged Property or becomes a Subsidiary
Guarantor or Offshore Guarantor, as the case may be, the following as
applicable:

(i)            Mortgage. A fully executed
and notarized Mortgage, duly recorded in all appropriate places in all
applicable jurisdictions, encumbering the interest of such Loan Party in such
Additional Mortgaged Property (any such Mortgage encumbering an Additional
Mortgaged Property being an “Additional Mortgage”);

(ii)           Landlord Consents and Estoppels;
Recorded Leasehold Interests. In the case of each Additional Mortgaged
Property located in the United States of America and consisting of a Ground
Leasehold Interest, (a) a Landlord Consent and Estoppel with respect
thereto (to the extent such Loan Party can obtain same using its commercially
reasonable efforts) and (b) evidence that such Ground Leasehold Interest
is a Recorded Leasehold Interest;

(iii)          Matters Relating to Flood Hazard
Properties. With respect to each Additional Mortgaged Property located in
the United States of America:  (a) evidence,
which may be in the form of a letter from an insurance broker or a municipal engineer,
as to (1) whether such Additional Mortgaged Property is a Flood Hazard
Property and (2) if so, whether the community in which such Flood Hazard
Property is located is participating in the National Flood Insurance Program, (b) if
such Additional Mortgaged Property is a Flood Hazard Property, such Loan Party’s
written acknowledgement of receipt of written notification from Administrative
Agent (1) that such Additional Mortgaged Property is a Flood Hazard
Property and (2) as to whether the community in which such Flood Hazard
Property is located is participating in the National Flood Insurance Program,
and (c) in the event such Additional Mortgaged Property is a Flood Hazard
Property that is located in a community that participates in the National Flood
Insurance Program, evidence that Company has obtained flood insurance in
respect of such Flood Hazard Property to the extent required under the
applicable regulations of the Board of Governors of the Federal Reserve System;
and

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(iv)          Environmental Audit. If
reasonably required by Administrative Agent, reports and other information, in
form, scope and substance reasonably satisfactory to Administrative Agent and
prepared by environmental consultants reasonably satisfactory to Administrative
Agent, concerning any material environmental hazards or liabilities to which
Company or any of its Subsidiaries may be subject with respect to such
Additional Mortgaged Property.

SECTION 6

COMPANY’S NEGATIVE
COVENANTS

Company and each Borrower covenants and agrees that,
so long as any of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans, the Notes, the Offshore Overdraft Amounts
and the Domestic Overdraft Amount and other Obligations and the cancellation or
expiration of all Letters of Credit and reimbursement of all amounts drawn
thereunder, unless Requisite Lenders shall otherwise give prior written
consent, Company and each Borrower shall perform, and shall cause each of its
respective Subsidiaries to perform, all covenants in this Section 6.

6.1          Indebtedness

Company and each Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or guaranty, or otherwise become or remain directly or indirectly liable
with respect to, any Indebtedness, except:

(i)            Loan Parties may become and remain
liable with respect to the Obligations and may guaranty the Obligations and the
Other Lender Guarantied Obligations pursuant to their respective Guaranties;

(ii)           Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations permitted by
subsection 6.4 and, upon any matured obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations so
extinguished;

(iii)          Company and its Subsidiaries may
become and remain liable with respect to Indebtedness in respect of Capital
Leases and Purchase Money Indebtedness in a principal amount outstanding at any
time not exceeding the greater of (a) $450,000,000 and (b) 7.5% of
Consolidated Tangible Net Assets, calculated on a Pro Forma Basis;

(iv)          Company may become and remain liable
with respect to Indebtedness to any of its Subsidiaries, and any Subsidiary of
Company may become and remain liable with respect to Indebtedness to Company or
any other Subsidiary of Company; provided that, (a) all such
intercompany Indebtedness owed by Company or any Borrower shall be subordinated
in right of payment to the payment in full of the Obligations pursuant to the
terms of the applicable promissory notes or an intercompany subordination
agreement, and (b) any payment by any Subsidiary of Company under any
guaranty of the Obligations shall result in a pro  tanto reduction
of the amount of any intercompany Indebtedness owed by such Subsidiary to Owens-Brockway
or to any of its

 137
 

 

Subsidiaries for
whose benefit such payment is made; and Company may become and remain liable
with respect to Indebtedness to Holdings; provided that such
Indebtedness shall be evidenced by the amended and restated subordinated
intercompany notes dated as of the Closing Date (which subordinated notes shall
not be further amended without the consent of Administrative Agent);

(v)           Company and its Subsidiaries, as
applicable, may remain liable with respect to Indebtedness or the commitments
therefor described in Schedule 6.1 annexed hereto and any extensions,
renewals and refinancings of the Indebtedness or the commitments therefor
described in Part I thereof to the extent that such extensions,
renewals and refinancings thereof do not result in an increase in the aggregate
principal amount or commitment amount of such Indebtedness as described in such
Part I;

(vi)          Company and Packaging may remain
liable with respect to the Existing Holdings Senior Notes on a subordinated
basis;

(vii)         Company and the other Loan Parties may
become and remain liable with respect to New Senior Debt;

(viii)        Company and Packaging may become and
remain liable with respect to Refinancing Senior Debt on a subordinated basis;

(ix)           Company and Packaging may become and
remain liable with respect to New Junior Debt on a subordinated or unsecured
basis or both;

(x)            OIEG or another Foreign Subsidiary
reasonably acceptable to Administrative Agent may become and remain liable with
respect to New European Refinancing Debt;

(xi)           In addition to Indebtedness permitted
by the other clauses of this subsection, Foreign Subsidiaries of Company may
become and remain liable with respect to other Indebtedness in an aggregate
principal amount not to exceed $700,000,000 at any time outstanding (inclusive
of amounts outstanding or committed under Schedule 6.1, Part II);

(xii)          In addition to Indebtedness permitted
by the other clauses of this subsection, Company and its Subsidiaries may
become and remain liable with respect to other Indebtedness in an aggregate
principal amount not to exceed $300,000,000 at any time outstanding;

(xiii)         Company and its Subsidiaries may become
and remain liable with respect to Acquired Indebtedness; and

(xiv)        Company and its Subsidiaries may become
and remain liable with respect to Receivables Sale Indebtedness.

 138

 

 

6.2          Liens
and Related Matters

A.            Prohibition on Liens. Company
and each Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or permit to exist any Lien on or
with respect to any property or asset of any kind (including any document or
instrument in respect of goods or accounts receivable) of Company, any Borrower
or any of their Subsidiaries, whether now owned or hereafter acquired, or any
income or profits therefrom, or file or permit the filing of, or permit to
remain in effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the UCC or
under any similar recording or notice statute, except:

(i)            Permitted Encumbrances;

(ii)           Liens granted pursuant to the
Collateral Documents;

(iii)          Liens described in Schedule B
annexed hereto (“Existing Liens”)
and Liens securing Indebtedness incurred to refinance any Indebtedness secured
by Existing Liens so long as (a) the principal amount of such refinancing
Indebtedness does not exceed the principal amount (or, if greater, the
committed amount) of the Indebtedness refinanced thereby (plus the amount of
any related premiums, fees and expenses) and (b) such refinancing
Indebtedness is not secured by any collateral which did not secure the
Indebtedness refinanced thereby;

(iv)          Liens securing Purchase Money
Indebtedness permitted by subsection 6.1(iii) and arising from the giving,
simultaneously with or within 180 days after the acquisition, construction or
improvement of real property or tangible personal property, of any purchase
money Lien (including vendors’ rights under purchase contracts under an
agreement whereby title is retained for the purpose of securing the purchase
price thereof) on real property or tangible personal property acquired,
constructed or improved and not theretofore owned by Company, any Borrower or
any of its Subsidiaries, or from the acquiring of real property or tangible
personal property not theretofore owned by Company, any Borrower or any of its
Subsidiaries subject to any then-existing Lien (whether or not assumed), or
from the extension, renewal or replacement of any Indebtedness secured by any
of the foregoing Liens so long as the aggregate principal amount thereof and
the security therefor is not thereby increased; provided, however,
that in each case (a) such Lien is limited to such acquired, constructed
or improved real or tangible personal property and fixed improvements, if any,
then existing or thereafter erected thereon, and (b) the principal amount
of the Indebtedness secured by such Lien, together (without duplication) with
the principal amount of all other Indebtedness secured by Liens on such
property, shall not exceed the cost (which shall be deemed to include, without
duplication, the amount of Indebtedness secured by Liens, including existing
Liens, on such property) of such property to Company, any Borrower or its
applicable Subsidiary;

(v)           [omitted]

 139
 

 

 

(vi)          Liens on acquired assets securing Acquired
Indebtedness; provided that such Liens were created prior to and not in
anticipation of the acquisition of such acquired assets or acquired Subsidiary;

(vii)         In addition to Liens permitted by the
other clauses of this subsection, Liens on the assets of Foreign Subsidiaries
securing Indebtedness or other obligations of such Foreign Subsidiaries (other
than ACI, O-I Canada, OIEG, O-I Europe, and/or any of the Offshore Guarantors);

(viii)        In addition to Liens permitted by the
other clauses of this subsection, Liens securing obligations of Company and its
Subsidiaries in an aggregate principal amount not to exceed $300,000,000 at any
time outstanding;

(ix)           Liens securing Receivables Sale
Indebtedness; provided that such Liens encumber solely the receivables
so sold and customary related assets (including cash reserves established in
connection therewith); and

(x)            Liens on deposits of cash or Cash
Equivalents securing bona-fide hedging arrangements with Lenders or Affiliates
thereof.

B.            No Restrictions on Subsidiary
Distributions to Company or Other Subsidiaries. Company and Borrowers will
not, and will not permit any of its or their Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such
Subsidiary’s Capital Stock owned by Company or any other Subsidiary of Company,
(ii) repay or prepay any Indebtedness owed by such Subsidiary to Company
or any other Subsidiary of Company, (iii) make loans or advances to
Company or any other Subsidiary of Company, or (iv) transfer any of its
property or assets to Company or any other Subsidiary of Company, except for
such restrictions or encumbrances existing by reason of (a) any
restrictions existing under any of the Loan Documents or any other agreements
or contracts in effect on the Closing Date, (b) any restrictions with
respect to any Person that becomes a Subsidiary of Company after the Closing
Date under any agreement in existence at the time such Person becomes such a
Subsidiary, (c) any restrictions with respect to any Subsidiary of Company
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, (d) any restrictions with respect to any Subsidiary of Company
all or substantially all of whose assets consist of property encumbered by
Liens permitted under subsection 6.2A, (e) restrictions imposed by
applicable laws, (f) restrictions under leases of, or mortgages and other
agreements relating to Liens on specified property or assets limiting or
prohibiting transfers of such property or assets (including, without
limitation, non-assignment clauses, due-on-sale clauses and clauses prohibiting
junior Liens), (g) any restrictions under indentures governing New Senior
Debt or New European Refinancing Debt, which restrictions are either
substantially the same as those under clause (h) or are approved by
Administrative Agent, which approval will not be unreasonably withheld or
delayed so long as such restrictions are similar to comparable transactions in
the market at the time such Indebtedness is issued, (h) any restrictions
under the indentures governing the Existing Owens-Brockway Senior Secured Notes
and the Existing Owens-Brockway Senior Unsecured Notes, and (i) any
restrictions existing under any agreement 

 140
 

 

that amends, refinances
or replaces any agreement containing restrictions permitted under the preceding
clauses (a) through (h); provided that the terms and conditions of any
such agreement, as they relate to any such restrictions, are no less favorable
to Company, Borrowers and such Subsidiaries, as applicable, taken as a whole,
than those under the agreement so amended, refinanced or replaced.

6.3          Investments;
Acquisitions

Company and Borrowers shall not, and shall not permit
any of its or their Subsidiaries to, directly or indirectly, make or own any
Investment in any Person, including any Joint Venture, or acquire, by purchase
or otherwise, all or substantially all the business, property or fixed assets
of, or Capital Stock or other ownership interest of any Person, or any division
or line of business of any Person (each such acquisition, an “Acquisition”) except:

(i)            Company and its Domestic
Subsidiaries may make and own Investments in Cash Equivalents and the Foreign
Subsidiaries may make and own Investments in Cash Equivalents and short term
investments similar to Cash Equivalents customarily used in the countries in
which they are located;

(ii)           Company and its Subsidiaries may
continue to own the Investments owned by them as of the Closing Date in any
Subsidiaries of Company, and Company and its Subsidiaries may make and own
additional equity Investments in Loan Parties (other than O-I Europe) and
Foreign Subsidiaries that are not Loan Parties may make and own additional
equity investments in other non-Loan Parties;

(iii)          Company and its Subsidiaries may make
intercompany loans to the extent permitted under subsection 6.1(iv); provided,
that the aggregate amount of such intercompany loans made in cash by
Loan Parties (other than O-I Europe) to non-Loan Parties or O-I Europe from and
after the Closing Date and outstanding at any time shall not exceed
$500,000,000 minus the amount of Investments made by Loan Parties (other than
O-I Europe) in non-Loan Parties or O-I Europe pursuant to subsection 6.3(vi) from
and after the Closing Date;

(iv)          Company and its Subsidiaries may
continue to own the Investments owned by them and described in Schedule 6.3
annexed hereto;

(v)           Company and its Subsidiaries may make
Acquisitions (and Company and its Domestic Subsidiaries may make Investments in
Foreign Subsidiaries necessary to consummate any such Acquisition) so long as
immediately after giving effect to such Acquisition, the Borrowers are in
compliance with the financial covenants set forth in subsection 6.6 as of
the last day of the Fiscal Quarter most recently ended calculated on a Pro Forma
Basis after giving effect to such Acquisition and the Revolving Loan
Commitments then in effect exceed the Total Utilization of Revolving Loan
Commitments by at least $150,000,000;

(vi)          Company and its Subsidiaries may make
additional Investments in their respective Foreign Subsidiaries; provided,
that, the amount of all such Investments made after the Closing Date
minus the aggregate amount of all cash dividends, 

 141
 

 

distributions and
other cash payments actually received by Company and its Subsidiaries (other than
Foreign Subsidiaries) from their respective Foreign Subsidiaries after the
Closing Date, shall not exceed $250,000,000; and provided, still
further, that upon and from and after the first such date that the
Consolidated Leverage Ratio is less than 3.5:1, Company and its Subsidiaries
may make additional Investments in their respective Foreign Subsidiaries such
that the aggregate amount for all such Investments (including those made after
the Closing Date and prior to such first such date) minus the aggregate amount
of all cash dividends, distributions and other cash payments actually received
by Company and its Subsidiaries (other than Foreign Subsidiaries) from their
respective Foreign Subsidiaries after the Closing Date (including those
received after the Closing Date and prior to such first such date) does not
exceed $500,000,000;

(vii)         Company and its Subsidiaries may make
and own Investments arising in connection with Commodities Agreements entered
into in accordance with current industry practice (at the time of making any
such Investment) or the past practices of Company and its Subsidiaries;

(viii)        Company may acquire and hold obligations
of one or more officers or other employees of Company or its Subsidiaries in
connection with such officers’ or employees’ acquisition of shares of Holdings’
common stock, so long as no cash is actually advanced by Company or any of its
Subsidiaries to such officers or employees in connection with the acquisition
of any such obligations;

(ix)           Company and its Subsidiaries may
receive and hold promissory notes and other non-cash consideration received in
connection with any Asset Sale or other sales of assets permitted by subsection
6.7;

(x)            Company and its Subsidiaries may
acquire Securities in connection with the satisfaction or enforcement of
Indebtedness or claims due or owing to Company or any of its Subsidiaries or as
security for any such Indebtedness or claim;

(xi)           In addition to Investments permitted
by the other clauses of this subsection, Company and its Subsidiaries may make
and own other Investments (including intercompany loans permitted by subsection
6.1(iv)) after the Closing Date in an aggregate amount not to exceed an amount
equal to (a) 10% of Company’s Consolidated Tangible Net Assets calculated
on a Pro Forma Basis plus (b) the amount of Consolidated Excess
Cash Flow not required to be applied to prepay Loans pursuant to
subsection 2.4B(ii)(e) plus (c) the amount of net Cash
proceeds contributed to Company by Holdings from issuances of Holdings Common Stock
or Permitted Preferred Stock; and

(xii)          Company
and its Subsidiaries may enter into and consummate transactions described in
subsection 6.7(i) and 6.7(ix).

 142
 

 

 

6.4          Contingent
Obligations

Company and Borrowers shall not, and shall not permit
any of its or their Subsidiaries to, directly or indirectly, create or become
or remain liable with respect to any Contingent Obligation, except:

(i)            Loan Parties may become and remain
liable with respect to Contingent Obligations under their respective
Guaranties;

(ii)           Company, Borrowers and its and their
Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit in an aggregate amount not to
exceed at any time $350,000,000 and Contingent Obligations in respect of other
letters of credit and surety bonds in an aggregate amount not to exceed at any
time $150,000,000;

(iii)          Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations under Hedge
Agreements with respect to Indebtedness;

(iv)          Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations in respect of
customary indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets;

(v)           Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations under
guarantees in the ordinary course of business of the obligations of suppliers,
customers, franchisees and licensees of Company and its Subsidiaries in an
aggregate amount not to exceed at any time $100,000,000;

(vi)          Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations in respect of
any Indebtedness of Company or any of its Subsidiaries to the extent such Indebtedness
is specifically permitted by subsection 6.1 (other than Existing Holdings
Senior Notes, Refinancing Senior Debt, New Junior Debt and except to the extent
the obligors for any particular issuance of Indebtedness are otherwise
specifically restricted by this Agreement);

(vii)         Company and its Subsidiaries, as
applicable, may remain liable with respect to Contingent Obligations described
in Schedule 6.4 annexed hereto and any extensions, renewals and
refinancings thereof to the extent that such extensions, renewals and
refinancings thereof do not result in an increase in the aggregate amount of
Contingent Obligations as described in Schedule 6.4;

(viii)        Company and its Subsidiaries may become
and remain liable with respect to Contingent Obligations in respect of any
obligation of Company or any of its Subsidiaries not prohibited under this
Agreement (other than any obligation with respect to Indebtedness);

(ix)           Company and Packaging may become and
remain liable on a subordinated basis with respect to Existing Holdings Senior
Notes, Refinancing Senior 

 143
 

 

Debt and New
Junior Debt; provided Company and Packaging may become and remain liable
with respect to New Junior Debt on an unsubordinated basis if such New Junior
Debt is unsecured;

(x)            Company, Packaging and Subsidiary
Guarantors may remain liable with respect to the Existing Owens Brockway Senior
Secured Notes and Senior Unsecured Notes, and may become and remain liable with
respect to New Senior Debt and New European Refinancing Debt; and

(xi)           In addition to Contingent Obligations
permitted by the other clauses of this subsection, Company and its Subsidiaries
may become and remain liable with respect to other Contingent Obligations; provided
that the maximum aggregate principal liability, contingent or otherwise, of
Company and its Subsidiaries in respect of all such Contingent Obligations
shall at no time exceed $300,000,000.

6.5          Restricted
Junior Payments

Company and Borrowers shall not, and shall not permit
any of its and their Subsidiaries to, directly or indirectly, declare, order,
pay, make or set apart any sum for any Restricted Junior Payment; provided
that Company and its Subsidiaries may (i) make Holdings Ordinary Course
Payments to the extent then due and payable, so long as Holdings applies the amount
of any such Restricted Junior Payment for such purpose; (ii) make
Restricted Junior Payments to Holdings for purchases of Common Stock of
Holdings in connection with the administration of Holdings’ employee benefits
program and repurchases of employee shares; (iii) make regularly scheduled
payments of interest in respect of any Subordinated Indebtedness in accordance
with the terms of, and only to the extent required by, and subject to the
subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued, as such indenture
or other agreement may be amended from time to time to the extent not
prohibited by subsection 6.12A; provided, in the case of Company’s
intercompany notes to Holdings, such payments of interest shall be limited to
non-cash payments on a basis consistent with past practices; (iv) make
payments of intercompany indebtedness other than payments of Company’s
intercompany Indebtedness to Holdings and (v) otherwise make Restricted
Junior Payments to Holdings in an aggregate amount equal not to exceed (a) $100,000,000
plus (b) 50% of Consolidated Net Income of Holdings and its
Subsidiaries for the period (taken as a single accounting period) from December 31,
2004 to the end of the most recent Fiscal Quarter ending at least 45 days prior
to the date of such Restricted Junior Payment (or, if such Consolidated Net
Income shall be a deficit, minus 100% of such deficit), and excluding items
treated as balance sheet adjustments for foreign currency transactions, provided,
that, the amount under this clause (b) shall never be less than
zero, plus (c) an amount equal to 100% of the net Cash proceeds
contributed to Company from issuances of Holdings Common Stock, Permitted
Preferred Stock (or from the issuance of other convertible equity interests of
Holdings or convertible debt issued by Holdings which, in either case, have
been converted into Holdings Common Stock or Permitted Preferred Stock)
(excluding, however, any such equity interests or convertible debt issued to
Company or its Subsidiaries and excluding any such proceeds utilized as
consideration for an Acquisition not prohibited hereunder) minus (d) the
an amount equal to the aggregate amount of Investments made pursuant to subsection
6.3(xi) after the Closing Date less the aggregate amount of all cash dividends,
distributions and other cash 

 144
 

 

payments actually received by Company and its Loan
Party Subsidiaries from their respective non-Loan Party Foreign Subsidiaries
after the Closing Date. The provisions of this subsection 6.5 shall not be
breached by the payment of any Restricted Junior Payments to Holdings for the
purposes of Holdings making a dividend payment under clause (x) of
Holdings Ordinary Course Payments definition within 60 days after the
declaration of the dividend by Holdings, if at such date of declaration, the
making of such payment would not have been in violation of this subsection.

6.6          Financial
Covenants

A.            Maximum Leverage Ratio. Company
and Borrowers shall not permit the Consolidated Leverage Ratio as of the last
day of the Fiscal Quarter ending on any of the dates set forth below,
calculated on a Pro Forma Basis, to exceed the correlative ratio indicated:

	
  Fiscal Quarter Ending

  	
   

  	
   

  	
   

  	
  Maximum Consolidated

  Leverage Ratio

  	
   

  
	
  September 30,
  2006

  	
   

  	
  4.80: 1.00

  	
   

  
	
  December 31,
  2006

  	
   

  	
  4.80: 1.00

  	
   

  
	
  March 31,
  2007

  	
   

  	
  4.80: 1.00

  	
   

  
	
  June 30,
  2007

  	
   

  	
  4.80: 1.00

  	
   

  
	
  September 30,
  2007

  	
   

  	
  4.80: 1.00

  	
   

  
	
  December 31,
  2007

  	
   

  	
  4.40: 1.00

  	
   

  
	
  March 31,
  2008

  	
   

  	
  4.40: 1.00

  	
   

  
	
  June 30,
  2008

  	
   

  	
  4.40: 1.00

  	
   

  
	
  September 30,
  2008

  	
   

  	
  4.40: 1.00

  	
   

  
	
  December 31,
  2008

  	
   

  	
  4.15: 1.00

  	
   

  
	
  March 31,
  2009

  	
   

  	
  4.15: 1.00

  	
   

  
	
  June 30,
  2009

  	
   

  	
  4.15: 1.00

  	
   

  
	
  September 30,
  2009

  	
   

  	
  4.15: 1.00

  	
   

  
	
  December 31, 2009
  and the last day of each Fiscal Quarter thereafter

  	
   

  	
  3.95: 1.00

  	
   

  

 

B.            Minimum
Interest Coverage Ratio. Company and Borrowers shall not permit the
Interest Coverage Ratio as of the last day of the Fiscal Quarter ending
on any of the dates set forth below, calculated on a Pro Forma Basis, to be less than the correlative ratio indicated:

 145
 

 

 

	
  Fiscal Quarter Ending

  	
   

  	
   

  	
   

  	
  Minimum Interest

  Coverage Ratio

  	
   

  
	
  September 30,
  2006

  	
   

  	
  2.10: 1.00

  	
   

  
	
  December 31,
  2006

  	
   

  	
  2.10: 1.00

  	
   

  
	
  March 31,
  2007

  	
   

  	
  2.10: 1.00

  	
   

  
	
  June 30,
  2007

  	
   

  	
  2.10: 1.00

  	
   

  
	
  September 30,
  2007

  	
   

  	
  2.10: 1.00

  	
   

  
	
  December 31,
  2007

  	
   

  	
  2.25: 1.00

  	
   

  
	
  March 31,
  2008

  	
   

  	
  2.25: 1.00

  	
   

  
	
  June 30,
  2008

  	
   

  	
  2.25: 1.00

  	
   

  
	
  September 30,
  2008

  	
   

  	
  2.25: 1.00

  	
   

  
	
  December 31,
  2008

  	
   

  	
  2.40: 1.00

  	
   

  
	
  March 31,
  2009

  	
   

  	
  2.40: 1.00

  	
   

  
	
  June 30,
  2009

  	
   

  	
  2.40: 1.00

  	
   

  
	
  September 30,
  2009

  	
   

  	
  2.40: 1.00

  	
   

  
	
  December 31, 2009
  and the last day of each Fiscal Quarter thereafter

  	
   

  	
  2.55: 1.00

  	
   

  

 

6.7          Restriction
on Fundamental Changes; Asset Sales

Company and Borrowers shall not, and shall not permit
any of its and their Subsidiaries to enter into any transaction of merger,
amalgamation or consolidation, or liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as
lessor or sublessor), transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business, property or assets
(including its notes or receivables and Capital Stock of a Subsidiary, whether
newly issued or outstanding), whether now owned or hereafter acquired, except:

(i)            any Subsidiary of Company (other
than a Borrower) may be merged or amalgamated with or into Company, any
Borrower, any Subsidiary Guarantor or any Offshore Guarantor, or be liquidated,
wound up or dissolved, or all or any part of its business, property or assets
may be conveyed, sold, leased, transferred or otherwise disposed of (including
its notes or receivables and Capital Stock), in one transaction or a series of
transactions, to Company, any Borrower, any Subsidiary Guarantor or any
Offshore Guarantor; provided that, in the case of such a merger or
amalgamation, Company, such Borrower, such Subsidiary Guarantor or such
Offshore Guarantor shall be the continuing or surviving Person;

(ii)           Company and its Subsidiaries may
sell, lease, sublease or otherwise dispose of assets in transactions that do
not constitute Asset Sales and sell inventory and other personal and real
property held for resale in the ordinary course of business;

(iii)          Company and its Subsidiaries may
dispose of obsolete, worn out or surplus property in the ordinary course of
business;

(iv)          Company and its Subsidiaries may make
Asset Sales of assets having an aggregate book value (at the time of
disposition) not in excess of 10% of 

 146
 

 

Company’s
Consolidated Tangible Net Assets, calculated on a Pro Forma Basis, in any
Fiscal Year and 15% of Company’s Consolidated Tangible Net Assets, calculated
on a Pro Forma Basis, during the term of this Agreement; provided that (a) the
consideration received for such assets shall be in an amount at least equal to the
fair market value thereof and (b) the Net Asset Sale Proceeds arising from
such Asset Sales shall be applied as required under subsection 2.4;

(v)           in order to resolve disputes that
occur in the ordinary course of business, Company and its Subsidiaries may
discount or otherwise compromise for less than the face value thereof, notes or
accounts receivable in accordance with past practice and Company and
Subsidiaries may sell accounts receivable to the extent that the proceeds of
Receivables Sale Indebtedness are applied as required by
subsection 2.4B(ii)(f);

(vi)          Company and its Subsidiaries may make
Acquisitions and Investments permitted by subsection 6.3;

(vii)         Company or a Subsidiary may sell or
dispose of shares of Capital Stock of any of its Subsidiaries in order to
qualify members of the Governing Body of the Subsidiary if required by
applicable law;

(viii)        any Person (other than Holdings or a
Borrower) may be merged or amalgamated with or into Company or any Subsidiary
if the acquisition of the Capital Stock of such Person by Company or such
Subsidiary would not be prohibited pursuant to subsection 6.3; provided
that (a) in the case of Company or a Borrower, Company or such Borrower
shall be the continuing or surviving Person, (b) if a Subsidiary is not
the surviving or continuing Person, the surviving Person becomes a Subsidiary
and complies with the provisions of subsections 5.9 and 5.10 and (c) no
Potential Event of Default or Event of Default shall have occurred or be
continuing after giving effect thereto;

(ix)           any Subsidiary of Company (other than
a Borrower) may be merged or amalgamated with or into any other Subsidiary of
Company (other than a Borrower) or be liquidated, wound up or dissolved, or all
or any part of its business, property or assets may be conveyed, sold, leased
or otherwise disposed of (including its notes or receivables and Capital
Stock), in one transaction or a series of transactions to any other Subsidiary
of Company (other than a Borrower), so long as, at the time of such event,
neither Subsidiary is a Subsidiary Guarantor or an Offshore Guarantor;

(x)            any Foreign Subsidiary organized
under the laws of the UK or any member state of the European Union may sell,
transfer or otherwise dispose of inventory to O-I Europe in connection with the
implementation of Company’s new European business model; and

(xi)           each of Premier Glass Packaging
Limited, United Glass (Properties) Limited, Key Glassworks Limited and Robsons
Border Transport Limited may be wound up;

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provided,
that, notwithstanding any of the foregoing clauses or anything else in
this Agreement to the contrary, (i) Owens-Brockway may not issue any new
Capital Stock to any Person other than to Packaging, and (ii) Packaging
may not convey, sell, transfer or otherwise dispose of any Capital Stock in
Owens-Brockway, other than the security interest therein pledged to Collateral
Agent pursuant to the Pledge Agreement.

6.8          Consolidated
Capital Expenditures

Company and Borrowers shall not, and shall not permit
its or their Subsidiaries to, make or incur Consolidated Capital Expenditures,
in any Fiscal Year, in an aggregate amount in excess of the Maximum
Consolidated Capital Expenditures Amount for such Fiscal Year.

6.9          Transactions
with Shareholders and Affiliates

(i)            Company and Borrowers shall not, and
shall not permit any of its or their Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
holder of 5% or more of any class of equity Securities of Company or Holdings
or with any Affiliate of Company or Holdings or of any such holder, on terms
that are less favorable to Company or that Subsidiary, as the case may be, than
those that might be obtained at the time from Persons who are not such a holder
or Affiliate; provided that the foregoing restriction shall not apply to
(A) any transaction between Company and any of its Subsidiaries or between
any of its Subsidiaries, (B) customary fees paid to members of the Board
of Directors of Company and its Subsidiaries, (C) transactions approved by
a majority of the disinterested members of the Board of Directors or other
similar governing body of Company or the applicable Subsidiary, (D) transactions
permitted under subsection 6.5, (E) the payment by Owens Insurance, Ltd.
to Holdings of insurance settlement amounts received, consistent with past
practices or (F) any transaction between or among Holdings, Company, any
Borrower or any other Subsidiary, subject to the restrictions of subsection 6.9(ii) below.

(ii)           Company and Borrowers shall not, and
shall not permit any of its or their Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange or any property or the rendering of any service) between such
Person and Holdings that is not consistent generally with past practices.

6.10        Sales
and Lease Backs

Company and Borrowers shall not, and shall not permit
any of its or their Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as a guarantor or other surety with respect to any lease
entered into after the date hereof, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) that Company or any of its Subsidiaries has sold
or transferred or is to sell or transfer to any other Person (other than
Company or any of its Subsidiaries) or (ii) that Company or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property that has been or is to be sold or transferred by Company or any of its
Subsidiaries to any 

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Person (other than Company or any of its Subsidiaries)
in connection with such lease; provided that Company and its
Subsidiaries may become and remain liable as lessee, guarantor or other surety
with respect to any such lease if and to the extent that Company or any of its
Subsidiaries would be permitted to enter into, and remain liable under, such
lease to the extent that the transaction would be permitted under subsection
6.1, assuming the sale and lease back transaction constituted Indebtedness in a
principal amount equal to the gross proceeds of the sale.

6.11        Conduct
of Business

From and after the Closing Date, Company and Borrowers
shall not, and shall not permit any of its or their Subsidiaries to,
fundamentally or substantively alter the character of its business from that
conducted by Company and its Subsidiaries, taken as a whole, as of the Closing
Date.

6.12                        Amendments
of Documents Relating to Restricted Debt Obligations; No Prepayments of
Restricted Debt Obligations

A.            Amendments of Documents Relating
to Restricted Debt Obligations. Company and Borrowers shall not, and shall
not permit Holdings or any of its or their Subsidiaries to, amend or otherwise
change, or consent to any amendment or change to, the terms of any Restricted
Debt Obligations, or make any payment (including making any Restricted Junior
Payment to permit Holdings to make any such payment) consistent with an
amendment thereof or change thereto, if the effect of such amendment or change
is to increase the interest rate on such Restricted Debt Obligations, change
(to earlier dates) any dates upon which payments of principal or interest are
due thereon, change any event of default or condition to an event of default
with respect thereto (other than the waiver of any such default by the holders
of such Restricted Debt Obligations, to eliminate any such event of default or
increase any grace period related thereto), change the redemption, prepayment
or defeasance provisions thereof, change any subordination provisions thereof
(or of any guaranty thereof other than to release such guaranty), or change any
collateral therefor (other than to release such collateral), or if the effect
of such amendment or change, together with all other amendments or changes
made, is to increase materially the obligations of the obligor thereunder or to
confer any additional rights on the holders of such Restricted Debt Obligations
(or a trustee or other representative on their behalf) which would be adverse
to Company or Lenders (as determined by Administrative Agent  in its reasonable judgment).

B.            No Prepayments of Restricted Debt
Obligations. Company and Borrowers shall not make, and shall not permit any
of its or their Subsidiaries to make, any voluntary or optional payment on
Restricted Debt Obligations (or in the case of Inside Maturity Notes, any
payment at maturity) or to make any Restricted Junior Payment to Holdings to
permit Holdings to make any voluntary or optional payment on Restricted Debt
Obligations (or in the case of Inside Maturity Notes, any payment at maturity)
except that Company or any of its Subsidiaries shall be entitled to redeem,
repay, repurchase or defease (or make a Restricted Junior Payment to Holdings
to permit Holdings to redeem, repay, repurchase or defease) Inside Maturity
Notes with the proceeds of Revolving Loans, Additional Term Loans or Refinancing
Term Loans, in each case to the extent permitted under subsection 2.5A or,
so long as the Note Redemption Conditions are satisfied, with Net Debt Proceeds
or, with other funds available to Company and 

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its Subsidiaries to do so (provided, that, any such
payments made with such other funds prior to six (6) months prior to the
final maturity of any such Inside Maturity Notes shall only be permitted if,
after giving effect to such payment, the Revolving Loan Commitments exceed the
Total Utilization of Revolving Loan Commitments by at least $150,000,000 and
the Consolidated Senior Secured Leverage Ratio in less than 3.00:1.00). In
addition, Company and its Subsidiaries may redeem, repay or repurchase (or make
a Restricted Junior Payment to Holdings to permit Holdings to redeem, repay or
repurchase) Existing Owens-Brockway Senior Secured Notes due 2009 with the
proceeds of the Tranche B Term Loans made under the Delayed Draw Commitments. So
long as the applicable payment of any Restricted Debt Obligation is permitted
by this subsection 6.12B, the payment of accrued interest, fees, expenses and
premiums in connection therewith may also be made with proceeds of Revolving
Loans or with other funds available to Company and its Subsidiaries to do so.

SECTION 7

EVENTS OF DEFAULT

If any of the following conditions or events (“Events of Default”) shall occur and be continuing:

7.1          Failure
to Make Payments When Due

Failure to pay any installment of principal of any
Loan when due, whether at stated maturity, by acceleration, by notice of
prepayment or otherwise; failure to make reimbursement with respect to any
Letter of Credit when due; or failure to pay any interest on any Loan or any
other amount due under this Agreement within five days after the date due; or

7.2          Default
in Other Agreements

A.            Failure of Holdings, any Borrower or
any of its or their Subsidiaries to pay when due any principal or interest on
any Indebtedness (other than Indebtedness referred to in subsection 7.1)
or guaranties of Indebtedness (other than Company’s Guaranty of the Obligations
under Section 9, the Subsidiary Guaranty or the Offshore Guaranties) or
amounts due in respect of early termination of Hedge Agreements in an
individual principal amount of $50,000,000 or more or with an aggregate
principal amount of $100,000,000 or more, in each case beyond the end of any
period prior to which the obligee thereunder is prohibited from accelerating
payment thereunder; or

B.            Breach or default by Holdings, any
Borrower or any of its or their Subsidiaries with respect to any other term of
any evidence of any Indebtedness (other than Indebtedness referred to in
subsection 7.1) or guaranties of Indebtedness (other than Company’s
Guaranty of the Obligations under Section 9, the Subsidiary Guaranty or the
Offshore Guaranties) in an individual principal amount of $50,000,000 or more
or with an aggregate principal amount of $100,000,000 or more (or any loan
agreement, mortgage, indenture or other agreement relating thereto) if the
effect of such failure, default or breach is to cause, or (in the case of a
breach or default with respect to a material term of the applicable
Indebtedness or guaranty) to permit the holder or holders of that Indebtedness
or guaranty (or a trustee on behalf 

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of such holder or holders) then to cause, that
Indebtedness or guaranty to become or be declared due prior to its stated
maturity (or the stated maturity of any underlying obligation, as the case may
be); provided that such failure, default or breach has not been waived
by such holder or holders or trustee on behalf of such holder or holders; or

C.            The occurrence of any event under
any evidence of any Existing Owens-Brockway Senior Secured Notes or Existing
Owens-Brockway Senior Unsecured Notes, or any New Senior Debt, Refinancing
Senior Debt or New Junior Debt issued after the Closing Date, if the effect of
such occurrence (without giving effect to any right of Company or its
Subsidiaries to optionally redeem such Indebtedness) is to cause or to permit
the holder/holders of such Indebtedness (or a trustee on behalf of such holder
or holders) to require that all of the Indebtedness be repurchased or repaid
prior to its stated maturity; or

7.3          Breach
of Certain Covenants

Failure of Company or any Borrower to perform or
comply with any term or condition contained in subsections 2.5 or 5.2 or Section 6
of this Agreement; or

7.4          Breach
of Warranty

Any representation or warranty made by any Loan Party
in any Loan Document or in any statement or certificate at any time given by
any Loan Party in writing pursuant hereto or thereto or in connection herewith
or therewith shall be false in any material respect on the date as of which
made or deemed made; or

7.5          Other
Defaults under Agreement or Loan Documents

Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any other Loan Document
other than those referred to above in subsections 7.1, 7.3 or 7.4 and such
default shall not have been remedied or waived within 30 days after receipt of
notice from Administrative Agent of such default; or

7.6          Involuntary
Bankruptcy; Appointment of Receiver, Etc.

A.            (i)  A court having
jurisdiction in the premises shall enter a decree or order for relief in
respect of Holdings, Company, Owens-Brockway, any Offshore Borrower or any of
their respective Material Subsidiaries in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect (whether in the United States of America, the UK,
Australia, Canada, the Netherlands, Switzerland or any other jurisdiction),
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable law; or (ii) an involuntary case is commenced
against Holdings, Company, Owens-Brockway, any Offshore Borrower or any of
their respective Material Subsidiaries under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect (whether in the
United States of America, the UK, Australia, Canada, the Netherlands,
Switzerland or any other jurisdiction); or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver,
receiver-manager, liquidator, sequestrator, trustee, custodian, administrator,
administrative receiver or other officer having similar powers over Holdings,
Company, Owens-Brockway, any Offshore Borrower or any of their respective
Material 

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Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or the involuntary appointment of an interim
receiver, receiver-manager, trustee, administrator, administrative receiver or
other custodian of Holdings, Company, Owens-Brockway, any Offshore Borrower or
any of their respective Material Subsidiaries for all or a substantial part of
its property; or the issuance of a warrant of attachment, execution or similar
process against any substantial part of the property of Holdings, Company,
Owens-Brockway, any Offshore Borrower or any of their respective Material
Subsidiaries, and the continuance of any such events in subpart (ii) for
60 days unless dismissed, bonded or discharged; or

7.7          Voluntary
Bankruptcy; Appointment of Receiver, Etc.

Holdings, Company, Owens-Brockway, any Offshore
Borrower or any of their respective Material Subsidiaries shall have an order
for relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect (whether in the United States of America, Australia,
Canada, the Netherlands, Switzerland or any other jurisdiction), or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to or apply for the appointment of or taking possession by a
receiver, receiver-manager, trustee, administrator, administrative receiver or
other custodian for all or a substantial part of its property; the making by
Holdings, Company, Owens-Brockway, any Offshore Borrower or any of their
respective Material Subsidiaries of any general assignment for the benefit of
creditors; or the inability or failure of Holdings, Company, Owens-Brockway,
any Offshore Borrower or any of their respective Material Subsidiaries, or the
admission by Holdings, Company, Owens-Brockway, any Offshore Borrower or any of
their respective Material Subsidiaries in writing of its inability to pay its
debts as such debts become due; or the Board of Directors or other governing
body (or any committee thereof) of Holdings, Company, Owens-Brockway, any
Offshore Borrower or any of their respective Material Subsidiaries (or any
committee thereof) adopts any resolution or otherwise authorizes action to
approve any of the foregoing; provided, however, that no Event of
Default shall be deemed to have occurred for purposes of this
subsection 7.7 in the event that any Australian Subsidiary other than ACI,
with the consent of Administrative Agent (which consent shall not be
unreasonably withheld), commences a voluntary winding up with respect to itself
for the purposes of a solvent reconstruction or amalgamation under Australian
law; or

7.8          Judgments
and Attachments

Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess
of $50,000,000 or (ii) in the aggregate at any time an amount in excess of
$100,000,000 (in either case not adequately covered by insurance as to which
the insurance company has acknowledged coverage) shall be entered or filed against
Holdings, Owens-Brockway, any Offshore Borrower or any of their respective
Material Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days or in any
event later than five days prior to the date of any proposed sale thereunder;
or

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7.9          Dissolution

Any order, judgment or decree shall be entered against
Holdings, Owens-Brockway, any Offshore Borrower or any of their respective
Material Subsidiaries decreeing the dissolution or split up of Holdings or that
Borrower or that Subsidiary and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or

7.10        Change
of Control

A Change of Control shall have occurred; or

7.11        Employee
Benefit Plans

An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan; or

7.12        Invalidity
of Guaranties; Failure of Security

At any time after the execution and delivery thereof, (i) any
of the Guaranties for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) in any material respect or shall be declared to be
null and void, (ii) any Collateral Document shall cease to be in full
force and effect (other than by reason of a release of Collateral thereunder in
accordance with the terms hereof or thereof or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) in any
material respect or shall be declared null and void, or Collateral Agent shall
not have or shall cease to have a valid and perfected First Priority Lien in
any Collateral purported to be covered thereby securing only the obligations
purported to be covered thereby, in each case (A) if such
unenforceability, nullity or invalidity (in the aggregate with any other such
unenforceability, nullity or invalidity) relates to Collateral the value of
which exceeds $250,000,000 and (B) such unenforceability, nullity or
invalidity did not arise from the failure of Collateral Agent, Administrative
Agent or any Lender to take any action within its control, or (iii) any
Loan Party shall contest the validity or enforceability of any Loan Document in
writing or deny in writing that it has any further liability, including with
respect to future advances by Lenders, under any Loan Document to which it is a
party; or

7.13        Activities
of Holdings; OI General FTS; Harbor Capital Subsidiaries and their respective
Subsidiaries

Holdings shall engage in any activity other than the
ownership of the Capital Stock and intercompany debt of Company and activities
related to the administration of claims for asbestos-related liabilities, and
other activities constituting substantially the same business conducted by
Holdings as of the Closing Date, or OI General FTS shall engage in any activity
other than the ownership of the Capital Stock and intercompany debt of its
Subsidiaries and other activities constituting substantially the same business
conducted by OI General FTS as of the Closing Date, or any of the Harbor
Capital Subsidiaries shall engage in any activity other than the activities
constituting the same business conducted by such Subsidiaries as of the Closing
Date or acquire any material assets from and after the Closing Date,

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THEN (i) upon the occurrence of any Event of
Default described in the foregoing subsection 7.6 or 7.7, (A) each of
(x) the unpaid principal amount of and accrued interest on the Loans, (y) the
Domestic Overdraft Amount and the Offshore Overdraft Amounts and all accrued
and unpaid interest thereon, and (z) an amount equal to the maximum amount
which may at any time be drawn under all Letters of Credit then outstanding
(whether or not any beneficiary under any Letter of Credit shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letter of Credit), in each case
outstanding to (or issued for the account of) any Borrower that is subject of a
decree, order, case, proceeding, assignment, admission or other event giving
rise to such Event of Default shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by each Borrower, and the
obligation of Administrative Agent to honor any overdraft in respect of the
Domestic Overdraft Account, the obligation of any Offshore Overdraft Account
Provider to honor any overdraft in respect of any Offshore Overdraft Account,
the obligation of each Lender to make any Loan, the obligation of
Administrative Agent to issue any Letter of Credit for the account of any
Borrower and the right of any other Lender to issue any Letter of Credit
hereunder shall thereupon automatically terminate and (B) Requisite
Lenders (or Administrative Agent, at the direction or with the consent of
Requisite Lenders) may, by written notice to Borrowers, declare an amount equal
to the amounts described in clauses (x), (y) and (z) above
outstanding to or issued for the account of all other Borrowers (or such of
such other Borrowers as Requisite Lenders may direct) to be, and the same shall
forthwith become due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by each Borrower
and (ii) upon the occurrence of any other Event of Default, Requisite
Lenders (or Administrative Agent, at the direction or with the consent of
Requisite Lenders) may, by written notice to Borrowers, declare an amount equal
to the amounts described in clauses (x), (y) and (z) above with
respect to any or all Borrowers to be, and the same shall forthwith become, due
and payable, without (except for such notice) presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by
each Borrower, together with accrued interest thereon, and the obligation of
Administrative Agent to honor any overdraft in respect of the Domestic
Overdraft Account, the obligation of any Offshore Overdraft Account Provider to
honor any overdraft in respect of any Offshore Overdraft Account, the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit for the account of any Borrower and the
right of any other Lender to issue any Letter of Credit hereunder shall
thereupon terminate; provided that the foregoing shall not affect in any
way (A) the right of Administrative Agent to cause Revolving Lenders to
make Revolving Loans in order to repay the then outstanding Domestic Overdraft
Amount as provided in (and subject to the conditions set forth in)
subsection 2.1B, (B) the obligations of Revolving Lenders to purchase
from Administrative Agent participations in the Domestic Overdraft Amount as
provided in subsection 2.1B, (C) the obligations of Revolving Lenders
to purchase from Issuing Lenders participations in the unreimbursed amount of
any drawings under any Letters of Credit as provided in subsection 2.8E,
or (D) the obligations of Revolving Lenders to purchase participations in
Offshore Overdraft Amounts as provided in subsection 2.1D.

Any amounts described in clause (z) above, when
received by Administrative Agent, shall be held by Administrative Agent in the
L/C Collateral Account, for the benefit of Lenders, as collateral security for the
Obligations of Company and Owens-Brockway in respect of all outstanding Letters
of Credit, and Company and Owens-Brockway hereby (X) grants to 

 154
 

 

Administrative Agent a security interest in all such
amounts, together with any interest accrued thereon and any Investments of such
amounts, as security for such Obligations, (Y) agrees to execute and
deliver to Administrative Agent all such documents and instruments as may be
necessary or, in the opinion of Administrative Agent, desirable in order to
more fully evidence, perfect or protect such security interest, and (Z) agrees
that, upon the honoring by any Issuing Lender of any drawing under a Letter of
Credit issued by it, Administrative Agent is authorized and directed to apply
any amounts held as collateral security in accordance with the terms of this
paragraph to reimburse such Issuing Lender for the amount of such drawing.

Notwithstanding the foregoing, if at any time within
60 days after acceleration of the maturity of any Loan, Borrowers shall pay all
arrears of interest and all payments on account of principal which shall have
become due otherwise than by acceleration (with interest on principal and, to
the extent permitted by law, on overdue interest, at the rates specified in
this Agreement or the Notes) and all Events of Default and Potential Events of
Default (other than non-payment of principal of and accrued interest on the
Loans and the Notes, and payments of amounts referred to in clause (z) above,
in each case which is due and payable solely by virtue of acceleration) shall
be remedied or waived pursuant to subsection 10.7, then Requisite Lenders
by written notice to Borrowers may rescind and annul the acceleration and its
consequences (and upon such written notice all obligations of each Lender
hereunder shall be reinstated, in each case as in effect immediately prior to
such acceleration), and Administrative Agent shall return to the applicable
Loan Party any amounts held by Administrative Agent pursuant to the immediately
preceding paragraph as cash collateral in the L/C Collateral Account in respect
of amounts described in clause (z) above; but such action shall not affect
any subsequent Event of Default or Potential Event of Default or impair any
right consequent thereon.

Anything contained in this Agreement to the contrary
notwithstanding, after the occurrence of an Event of Default and the
acceleration of the maturity of any Loans, all payments relating to such Loans
and all other Specified Obligations shall be made to Administrative Agent for
the account of Lenders and all amounts received by Administrative Agent which
are to be applied to the payment of the Obligations in respect of such Loans
and other Specified Obligations shall be distributed to Lenders in accordance
with subsection 2.10.

SECTION 8

AGENTS

8.1          Appointments

DB is hereby appointed Administrative Agent hereunder
by each Lender and each Lender hereby authorizes Administrative Agent to act
hereunder and under the other instruments and agreements referred to herein
(including without limitation the Guaranties, the Collateral Documents and the
Intercreditor Agreement) as its agent hereunder and thereunder, and DB agrees
to act as such upon the express conditions contained in this Section 8,
the Guaranties, the Collateral Documents and the Intercreditor Agreement. DBTCA
is hereby appointed as Collateral Agent hereunder by each Lender and each
Lender hereby authorizes Collateral Agent to act under the Guaranties,
Collateral Documents and the Intercreditor Agreement as its agent thereunder
and DBTCA agrees to act as such upon the express conditions contained in this 

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Section 8, the Collateral Documents and the
Intercreditor Agreement. BAS is hereby appointed Syndication Agent hereunder by
each Lender and BAS agrees to act as such upon the express conditions contained
in this Section 8. The provisions of this Section 8 are solely for
the benefit of Agents and Lenders, and no Borrower shall have any rights as a
third party beneficiary of any of the provisions hereof (except with respect to
the provisions relating solely to consent rights set forth in
subsection 8.6). In performing their functions and duties under this
Agreement, Agents shall act solely as agents of Lenders (except in connection
with the exercise of consent rights pursuant to subsection 10.7A) and do
not assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Company or any of its Subsidiaries.

8.2          Powers;
General Immunity

A.            Duties Specified. Each Lender
irrevocably authorizes each of Administrative Agent and Collateral Agent to
take such action on such Lender’s behalf and to exercise such powers hereunder
and under the other instruments and agreements referred to herein to which it
is a party (including without limitation the Guaranties, the Collateral
Documents and the Intercreditor Agreement) as are specifically delegated to
such Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Each Agent shall have only those duties and
responsibilities which are expressly specified for such Agent in this
Agreement, the Guaranties, the Collateral Documents and the Intercreditor
Agreement and may perform such duties by or through its agents or employees. The
Syndication Agent shall have no powers or duties hereunder except as expressly
specified in this Agreement. The duties of Agents shall be mechanical and
administrative in nature; Agents shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect of this Agreement or the other instruments
and agreements referred to herein except as expressly set forth herein or
therein. The title of “Joint Lead Arrangers” or “Joint Bookrunners” or “Syndication
Agent” or “Co-Documentation Agents” provided to certain Lenders in the
introductory paragraph to this Agreement is honorary only and does not impose
any duty or obligation on such Lenders.

B.            No Responsibility for Certain
Matters. No Agent shall be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement, the Guaranties, the Collateral Documents, the
Intercreditor Agreement or any Notes issued hereunder, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents in connection herewith or
therewith furnished or made by such Agent to Lenders or by or on behalf of any
Borrower to any Agent or any Lender or be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or the use of Letters of Credit or of the existence or
possible existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, Administrative
Agent shall have no any liability arising from (i) confirmations of the
amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof or (ii) failure for any reason whatsoever to deliver a
Loan Limitation Notice or notice thereof to any Lender pursuant to
subsection 2.1E(iii) 

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in connection with any Revolving Loan or Offshore
Revolving Loan requested by any Borrower hereunder.

C.            Exculpatory Provisions. Neither
Agents nor any of their respective officers, directors, employees or agents
shall be liable to Lenders for any action taken or omitted hereunder or in
connection herewith (including without limitation any act or omission under the
Guaranties, the Collateral Documents or the Intercreditor Agreement) unless
caused by its or their gross negligence or willful misconduct. If an Agent or
Agents shall request instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this Agreement, or
the other instruments and agreements referred to herein, such Agent or Agents,
as the case may be, shall be entitled to refrain from such act or taking such
action unless and until such Agent or Agents, as the case may be, shall have
received instructions from Requisite Lenders. Without prejudice to the
generality of the foregoing, (i) each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any communication, instrument or
document believed by it in good faith to be genuine and correct and to have
been signed or sent by the proper person or persons, and shall be entitled to
rely and shall be protected in relying on opinions and judgments of attorneys
(who may be attorneys for Company and its Subsidiaries), accountants, experts
and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against any Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
the other instruments and agreements referred to herein in accordance with the
instructions of Requisite Lenders. Each Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
or the other instruments and agreements referred to herein unless and until it
has obtained the instructions of Requisite Lenders.

D.            Agents Entitled to Act as Lender.
The agency hereby created shall in no way impair or affect any of the rights
and powers of, or impose any duties or obligations upon, any Agent in its
individual capacity as a Lender hereunder. With respect to its participation in
the Loans and Letters of Credit, each Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not performing the duties and functions delegated to it hereunder and the
term “Lender” or “Lenders” or any similar term shall, unless the context
clearly otherwise indicates, include each Agent in its individual capacity. Each
Agent and each of its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with any Borrower or any Affiliate of any Borrower as if it were not
performing the duties specified herein, and may accept fees and other
consideration from any Borrower for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.

8.3                               Representations
and Warranties; No Responsibility for Appraisal of Creditworthiness

Each Lender represents and warrants that it has made
its own independent investigation of the financial condition and affairs of
Company and the Borrowers in connection with the making of the Loans, the
extensions of credit under the Domestic Overdraft Account and the Offshore
Overdraft Accounts (in the case of Administrative Agent and each Lender that is
an Offshore Overdraft Account Provider) and the issuance of Letters of Credit hereunder
and such Lender’s purchasing of participations in such Loans, the Domestic
Overdraft Account, the 

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Offshore Overdraft Accounts or such Letters of Credit
and has made and shall continue to make its own appraisal of the
creditworthiness of Company and the Borrowers. No Agent shall have any duty or
responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto whether coming
into its possession before the making of the Loans or the issuance of the
Letters of Credit or any time or times thereafter and no Agent shall have any
further responsibility with respect to the accuracy of or the completeness of the
information provided to Lenders.

8.4          Right
to Indemnity

Each Lender severally agrees to indemnify each Agent,
proportionately to its Pro Rata Share as in effect on the date on which
indemnification is sought hereunder, to the extent such Agent shall not have
been reimbursed by Borrowers, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against such Agent in performing its duties hereunder
or in any way relating to or arising out of this Agreement or the other
instruments and agreements referred to herein; provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent’s gross negligence or willful misconduct. If any
indemnity furnished to an Agent for any purpose shall, in the opinion of such
Agent, be insufficient or become impaired, such Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.

8.5          Registered
Persons Treated as Owners

Agents may deem and treat the Persons listed as
Lenders in the Register as the owners of the corresponding Loans listed therein
for all purposes hereof unless and until an Assignment and Acceptance effecting
the assignment or transfer thereof shall have been accepted by Administrative
Agent and recorded in the Register as provided in subsection 10.2B(ii). Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, transferee or
assignee of the corresponding Loan.

8.6          Successor
Agents and Domestic Overdraft Account Provider

(i)            Administrative
Agent may resign at any time by giving 30 days’ prior written notice thereof to
Lenders and Borrowers’ Agent, and Administrative Agent may be removed at any
time with or without cause by an instrument or concurrent instruments in
writing delivered to Borrowers’ Agent and Administrative Agent and signed by
Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five days’ notice to Company and
Borrowers’ Agent, to appoint a successor Administrative Agent; provided
that so long as no Event of Default shall have occurred and be continuing such
appointment shall be subject to the consent of Borrowers’ Agent, which consent
shall not be unreasonably 

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withheld. Upon the acceptance of any appointment as an Administrative
Agent hereunder by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Administrative
Agent, and the retiring or removed Administrative Agent shall be discharged
from its duties and obligations as Administrative Agent under this Agreement. If no such successor shall have been so appointed by
the Requisite Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation,
then the retiring Agent may on behalf of the Lenders, appoint a successor Agent
(which shall be a bank with an office in the United States, or an Affiliate of
any such bank with an office in the United States) provided that if the Agent
shall notify Borrower’s Agent and the Lenders that no qualifying person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Agent shall
be discharged from its duties and obligations hereunder and under the other
Loan Documents (except that in the case of any collateral security held by
Collateral Agent on behalf of the Lenders under any of the Loan Documents, the
retiring Collateral Agent shall continue to hold such collateral security as
nominee until such time as a successor Collateral Agent is appointed) and (2) all
payments, communications and determinations provided to be made by, to or
through an Agent shall instead be made by or to each Lender directly, until
such time as the Requisite Lenders appoint a successor Agent as provided for
above in this paragraph. After
any retiring or removed Administrative Agent’s resignation or removal hereunder
as Administrative Agent, the provisions of this Section 8 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

(ii)           Any resignation or removal of
Administrative Agent pursuant to this subsection 8.6 shall also constitute
the resignation or removal of Administrative Agent as the provider of the
Domestic Overdraft Account and the resignation or removal of Administrative
Agent or its Affiliate (including DBTCA, if applicable) as Collateral Agent,
and any successor Administrative Agent appointed pursuant to this
subsection 8.6 shall, upon its acceptance of, and as a condition to, such
appointment, become the successor provider of the Domestic Overdraft Account
and Collateral Agent for all purposes hereunder. In the event of any such
resignation or removal (a) Owens-Brockway shall repay in full the Domestic
Overdraft Amount and all other amounts owing to the retiring or removed
Administrative Agent under the Domestic Overdraft Agreement, and (b) Borrowers
and the retiring or removed Administrative Agent shall terminate the Domestic
Overdraft Agreement to which they are a party and Company and the successor
Administrative Agent shall enter into a successor Domestic Overdraft Agreement.

8.7                               Intercreditor
Agreements, Subsidiary Guaranty and Collateral Documents

Each Lender hereby authorizes Collateral Agent to
enter into the Intercreditor Agreement in the form of Exhibit XVII
attached hereto on behalf of and for the benefit of that Lender, and agrees to
be bound by the terms of the Intercreditor Agreement. Each Lender hereby
authorizes Collateral Agent to enter into the Guaranties, the Intercreditor
Agreement, and 

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each Collateral Document, and to take all action
contemplated by the Guaranties, the Intercreditor Agreement and the Collateral
Documents; provided that Collateral Agent shall not enter into or
consent to any amendment, modification, termination or waiver of any provision
contained in the Intercreditor Agreement without the prior consent of the
Requisite Lenders. In addition, each Lender authorizes DBTCA to hold loans made
by it under the Nominal Restatement in trust for the benefit of the Lenders
and, as beneficiaries of the nominal loans to ACI under the Nominal
Restatement, each Lender authorizes and directs DBTCA, in its capacity as
lender agent under the Amended and Restated Intercreditor Agreement, to
acknowledge that the Existing Credit Agreement, as amended and restated
pursuant to the Nominal Restatement, is no longer the “Credit Agreement” for
purposes of the Intercreditor Agreement.

Upon the proposed sale,
transfer or other disposition of any Collateral by Company or any of its
Subsidiaries in accordance with this Agreement for which Company or such
Subsidiary desires to obtain a security interest release from Collateral Agent,
Company or such Subsidiary shall deliver an Officers’ Certificate (x) stating
that the Collateral subject to such disposition is being sold, transferred or
otherwise disposed of in compliance with the terms of this Agreement and (y) specifying
the Collateral being sold, transferred or otherwise disposed of in the proposed
transaction. Upon the receipt of such Officers’ Certificate, Collateral Agent
is authorized, at Borrowers’ expense, so long as Collateral Agent has no reason
to believe that the Officers’ Certificate so delivered with respect to such
sale is not true and correct, to execute and deliver such releases of its
security interest in such Collateral which is to be so sold, transferred or
disposed of, as may be reasonably requested by Company or such Subsidiary. If
Requisite Lenders, or if required, all Lenders, consent to the release or
reconveyance of any of the Collateral, Collateral Agent is authorized to, at
Borrowers’ expense, release, and to execute and deliver any necessary releases
of its security interest in such Collateral in connection therewith and all
such reconveyances or transfers shall be without recourse to Collateral Agent
or the Lenders and without representation or warranty of any kind. Each
Lender agrees that no Lender shall have any right individually to seek to
enforce the Guaranties or to realize upon the security granted by any
Collateral Document, it being understood and agreed that such rights and
remedies may be exercised by Collateral Agent for the benefit of Lenders and
the parties to the Intercreditor Agreement upon the terms of the Collateral
Documents and the Intercreditor Agreement. Upon the satisfaction of the
Collateral Release Conditions and delivery by Borrowers’ Agent of an Officers’
Certificate to such effect, Collateral Agent shall at Borrowers’ expense so
long as Collateral Agent has no reason to believe that the statements in such
Officers Certificate are not true and correct, execute and deliver releases of
its security interests in all Collateral (except for Capital Stock) as may be
reasonably requested by the Borrowers’ Agent, provided, that, if
at any time after such a release of Collateral a Downgrade occurs, then (x) upon
the request of Collateral Agent, Company, each Borrower and each other Loan
Party shall, at the sole expense of Borrowers, take any action and execute all
documents necessary or desirable in the reasonable opinion of Collateral Agent
to reattach Liens on Collateral under the Collateral Documents and each Loan
Party shall deliver within seventy-five (75) days of such Downgrade originals
of all Pledged Securities to Collateral Agent to the extent so requested and
otherwise required to be delivered pursuant to the provisions of this Agreement
and the other Collateral Documents and Collateral Agent may make (or cause the
applicable Person to make) any filings (UCC or otherwise) necessary to effect
the Liens granted pursuant to the Collateral Documents.

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8.8                               Quebec
Security

For greater certainty, and
without limiting the powers of the Collateral Agent or any other Person acting
as an agent or mandatary for the Collateral Agent hereunder or under any of the
other Loan Documents, each Lender hereby acknowledges that, for purposes of
holding any security granted by any of the Borrowers on property pursuant to
the laws of the Province of Quebec to secure obligations of such Borrower under
any debenture, bond or other title of indebtedness issued by a Borrower, the
Collateral Agent shall be the holder of an irrevocable power of attorney (fondé de pouvoir) (within the meaning of
the Civil Code of Quebec) for all
present and future Lenders, and in particular for all present and future
holders of any debenture, bond or other title of indebtedness issued by a
Borrower. Each Lender hereby irrevocably constitutes, to the extent necessary,
the Collateral Agent as the holder of an irrevocable power of attorney (fondé de pouvoir) (within the meaning of Article 2692
of the Civil Code of Quebec) in
order to hold security granted by any Borrower in the Province of Quebec to
secure the obligations of such Borrower under any debenture, bond or other
title of indebtedness that may be issued by a Borrower and pledged in favour of
the Collateral Agent for the benefit of the Lenders. Each assignee of a Lender
shall be deemed to have confirmed and ratified the constitution of the
Collateral Agent as the holder of such irrevocable power of attorney (fondé de pouvoir) by execution of the
Assignment and Acceptance. The execution by the Collateral Agent, acting as fondé de pouvoir and mandatary, prior to
this Agreement, of any deeds of hypothec or other security documents is hereby
ratified and confirmed. Notwithstanding the provisions of Section 32 of
the An Act respecting the special powers of
legal persons (Quebec), the Collateral Agent may acquire and be the
holder of any debenture, bond or other title of indebtedness issued under any
deed of hypothec and issue of bonds executed by any Borrower in favour of the
Collateral Agent as fondé de pouvoir.
Each Borrower hereby acknowledges that such debenture or bond constitutes a
title of indebtedness, as such term is used in Article 2692 of the Civil Code of Quebec.

The Collateral Agent, acting
as holding of an irrevocable power of attorney (fondé de pouvoir), shall have the same rights, powers,
immunities, indemnities and exclusions from liability as are prescribed in
favour of the Collateral Agent in the Agreement, which shall apply mutatis mutandis. Without limitation, the
provisions of Section 8.6 of this Agreement shall apply mutatis mutandis to the resignation and
appointment of a successor Collateral Agent, acting as the holder of an
irrevocable power of attorney (fondé de
pouvoir).

SECTION 9

COMPANY GUARANTY

9.1          Guaranty

Company hereby irrevocably and unconditionally
guaranties the due and punctual payment of all Obligations of all Borrowers
hereunder and any Other Permitted Credit Exposure, when the same shall become
due, whether at stated maturity, by required payment, declaration, demand or
otherwise (including amounts which would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code), and
agrees to pay any and all costs and expenses (including reasonable fees and
disbursements of counsel and allocated costs of 

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internal counsel) incurred by Collateral Agent, Agents
or Lenders or their Affiliates party to such Other Permitted Credit Exposure
(each, a “Guarantied Party” and
collectively, the “Guarantied Parties”)
in enforcing or preserving any rights under this Guaranty (all such obligations
collectively, the “Guarantied Obligations”);
provided, that, in order to enjoy the benefit of the foregoing
guaranty any such Lender or Affiliate thereof party to any such Other Permitted
Credit Exposure shall execute and deliver to Collateral Agent, during such time
as such Lender is a Lender under this Agreement, an acknowledgment to the
Intercreditor Agreement agreeing to be bound thereby and acknowledged by
Borrowers’ Agent. Any Lender or Affiliate thereof obtaining the benefit of the
foregoing guaranty with respect to Other Permitted Credit Exposure shall remain
a Guarantied Party hereunder with respect to such Other Permitted Credit
Exposure only for so long as such Lender remains a Lender under this Agreement.

9.2          Waivers

A.            Company agrees that the Guarantied
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from it, and that Company will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guarantied
Obligation.

B.            Company waives presentation of,
demand of, and protest of any Guarantied Obligation and also waives notice of
protest for nonpayment. The obligations of Company under this Guaranty shall
not be affected by:

(i)            the failure of any Guarantied Party
or any other Person to assert any claim or demand or to enforce any right or
remedy against Company, any Borrower or any Subsidiary under the provisions of
this Agreement, any other Loan Document or any document relating to Other
Permitted Credit Exposure or any other agreement or otherwise,

(ii)           any extension or renewal of any
provision of any thereof,

(iii)          any rescission, waiver, amendment or
modification of any of the terms or provisions of this Agreement, any other
Loan Document or any document relating to Other Permitted Credit Exposure or
any instrument or agreement executed pursuant hereto or thereto,

(iv)          the failure to perfect any security
interest in, or the release of, any of the security held by any Guarantied
Party, Collateral Agent, any Agent or any other Person for any of the
Guarantied Obligations, or

(v)           the failure of any Guarantied Party
or any other Person to exercise any right or remedy against any Borrower or any
guarantor of any of the Guarantied Obligations.

C.            Company further agrees that this
Guaranty constitutes a guaranty of payment when due and not of collection and
waives any right to require that any resort be had by any Guarantied Party or
any other Person to any of the security held for payment of any of the 

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Guarantied Obligations or to any balance of any
deposit account or credit on the books of any Guarantied Party or any other
Person in favor of a Borrower or any other Person.

D.            The obligations of Company under
this Section 9 shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise of any of the
Guarantied Obligations, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any of the Guarantied Obligations, the
discharge of any Borrower or any other guarantor from any of the Guarantied
Obligations in a bankruptcy or similar proceeding, or otherwise (including due
to any expropriation, confiscation, nationalization or requisition by any
Governmental Authority). Without limiting the generality of the foregoing, the
obligations of Company under this Section 9 shall not be discharged or
impaired or otherwise affected by the failure of any Guarantied Party,
Collateral Agent, any Agent or any other Person to assert any claim or demand
or to enforce any remedy under this Agreement, any other Loan Document or any
document relating to Other Permitted Credit Exposure or any other agreement, by
any waiver or modification of any hereof or thereof, by any default, or any
other act or thing or event or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of Company or
which would otherwise operate as a discharge of Company as a matter of law or
equity.

E.             Company further agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of principal of, interest on or
any other amount with respect to any Guarantied Obligation is rescinded or must
otherwise be restored by any Guarantied Party, Collateral Agent, any Agent or
any other Person upon the bankruptcy or reorganization of Company, any other
Person or otherwise.

9.3          Payment

Company further agrees, in furtherance of the
foregoing and not in limitation of any other right which any Guarantied Party,
Collateral Agent, any Agent or any other Person may have at law or in
equity against Company by virtue hereof, upon the failure of any Borrower to
pay any of the Guarantied Obligations when and as the same shall become due,
whether by required prepayment, declaration or otherwise (including amounts
which would become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code), Company will forthwith pay, or cause to be paid, in cash,
to Collateral Agent for the ratable benefit of Guarantied Parties, an amount
equal to the sum of the unpaid principal amount of such Guarantied Obligations
then due as aforesaid, accrued and unpaid interest on such Guarantied
Obligations (including, without limitation, interest which, but for the filing
of a petition in a bankruptcy, reorganization or other similar proceeding with
respect to any Borrower, would have accrued on such Guarantied Obligations) and
all other Guarantied Obligations then owed to Guarantied Parties as aforesaid. All
such payments shall be applied promptly from time to time by Collateral Agent:

First, to the payment of the costs
and expenses of any collection or other realization under this Guaranty,
including reasonable compensation to Collateral Agent and its 

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agents and counsel, and all expenses, liabilities and
advances made or incurred by Collateral Agent in connection therewith;

Second, (i) upon and during the
effectiveness of the Intercreditor Agreement, to the payment of the Guarantied
Obligations as provided in Section 3 of the Intercreditor Agreement and (ii) except
as set forth in clause (i), to the payment of the Guarantied Obligations for
the ratable benefit of the holders thereof; and

Third, after payment in full of all
Guarantied Obligations, to the payment to Company, or its successors or
assigns, or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then remaining from
such payments.

9.4          Waiver
of Subrogation, Etc.

Company hereby waives any claim, right or remedy,
direct or indirect, that it now has or may hereafter have against any Borrower
or any of its other Subsidiaries or any of its assets in connection with this Section 9
or the performance by Company of its obligations hereunder, in each case
whether such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise and including without limitation (a) any
right of subrogation, reimbursement or indemnification that Company now has or
may hereafter have against any Borrower or Subsidiary thereof, (b) any
right to enforce, or to participate in, any claim, right or remedy that
Collateral Agent or any other Guarantied Party now has or may hereafter have
against any Borrower or a Subsidiary thereof, and (c) any benefit of, and
any right to participate in, any collateral or security now or hereafter held
by Collateral Agent or any other Guarantied Party. In addition, until the
Guarantied Obligations shall have been paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been cancelled,
Company shall withhold exercise of any right of contribution it may have
against any other guarantor of the Guarantied Obligations as a result of any
payment hereunder. Company further agrees that, to the extent the waiver of its
rights of subrogation, reimbursement, indemnification and contribution as set
forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any such rights of subrogation, reimbursement or
indemnification Company may have against any Borrower or any of its other
Subsidiaries or against any collateral or security, and any such rights of
contribution a guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights Collateral Agent or any Guarantied Party
may have against any Borrower or other guarantor, to all right, title and
interest Collateral Agent or any Guarantied Party may have in any such
collateral or security, and to any right Collateral Agent or any Guarantied
Party may have against such other guarantor. If any amount shall be paid to
Company on account of any such subrogation, reimbursement, indemnification or
contribution rights at any time when all Guarantied Obligations shall not have
been paid in full, such amount shall be held in trust for Collateral Agent on
behalf of Guarantied Parties and shall forthwith be paid over to Collateral
Agent for the benefit of Guarantied Parties to be credited and applied against
the Guarantied Obligations, whether matured or unmatured, in accordance with
the terms hereof.

Collateral Agent has been appointed to act on behalf
of Guarantied Parties hereunder by Lenders for their benefit and, by their
acceptance of the benefits hereof, the holders 

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of any Other Lender Guarantied Obligations. Except as
otherwise provided in the next succeeding paragraph, Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action, solely in accordance with this Guaranty and
this Agreement; provided that, except as otherwise provided in the
Intercreditor Agreement, Collateral Agent shall exercise, or refrain from
exercising, any remedies hereunder in accordance with the instructions of
Requisite Lenders. In furtherance of the foregoing provisions of this
paragraph, each holder of Other Lender Guarantied Obligations, by its
acceptance of the benefits hereof, agrees that it shall have no right
individually to enforce this Section 9, it being understood and agreed by
such holder that all rights and remedies hereunder may be exercised solely by
Collateral Agent for the benefit of the Guarantied Parties in accordance with
the terms of this paragraph and that all decisions of the Requisite Lenders
shall be binding on such holders.

Anything contained in this Guaranty to the contrary
notwithstanding, upon and during the effectiveness of the Intercreditor
Agreement no Guarantied Party shall be entitled to take any action whatsoever
to enforce any term or provision of this Guaranty except through Collateral
Agent in accordance with the terms of the Intercreditor Agreement.

9.5          Termination

At such time as all Obligations have been paid in full
and all Commitments have terminated and all Letters of Credit have expired or
have been cancelled, the provisions of this Section 9 shall be of no
further force and effect as to any Other Lender Guarantied Obligations
guaranteed hereby unless an Event of Default described in subsection 7.6
or subsection 7.7 shall then be continuing.

9.6          Security

The obligations of Company under this Section 9
are secured pursuant to the Pledge Agreement and the Security Agreement.

SECTION 10

MISCELLANEOUS

10.1        Representation
of Lenders

A.            General. Each Lender hereby
represents that it will make each Loan hereunder for its own account in the
ordinary course of its business and without a view to distribution of such
Loans within the meaning of the Securities Act or the Exchange Act or other
federal securities laws; provided, however, that, subject to
subsection 10.2, the disposition of the Notes or other evidences of
Indebtedness held by that Lender shall at all times be within its exclusive
control.

B.            Professional Market Party under
Dutch Law.

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(i)            Each Lender with a Tranche D Term
Loan Commitment and/or a Dutch Revolving Loan Commitment which is a party to
this Agreement on the date of this Agreement represents and warrants to OIEG on
the date hereof that it is a PMP.

(ii)           If on the date on which a Person
becomes a Lender with a Tranche D Term Loan Exposure and/or a Dutch Revolving
Loan Commitment it is a requirement of Netherlands law that such Person is a
PMP, each such new Lender represents and warrants to OIEG on the date on which
it becomes a party to this Agreement as a Lender that it is a PMP.

(iii)          Each Lender or Person giving
representations pursuant to this subsection 10.1B acknowledges that OIEG has
relied upon such representation and warranty.

10.2                        Assignments
and Participations in Loans, Notes and Letters of Credit

A.            General. Each Lender shall,
subject to the provisions of this subsection 10.2, have the right at any
time to (i) sell, assign, transfer or negotiate to any Eligible Assignee,
or (ii) sell participations to any Person in, all or any part of any Loan
or Loans made by it or its Commitments or its Letters of Credit or
participations therein or any other interest herein or in any other Obligations
owed to it. No such sale, assignment, transfer or negotiation of any Term Loan
or Term Loan Commitment or participation therein by a Lender shall require a
ratable sale, assignment, transfer or negotiation of any Revolving Loans or
Revolving Loan Commitment of such Lender or any other Term Loan or Term Loan
Commitment of such Lender, and no such sale, assignment, transfer or
negotiation of the Revolving Loans or Revolving Loan Commitment or
participation therein by a Lender shall require a ratable sale, assignment,
transfer or negotiation of any Term Loan or Term Loan Commitment of such Lender.
However, an assignment of a Revolving Loan Commitment shall automatically
constitute an assignment of a pro rata portion of the assigning Lender’s
Offshore Revolving Loan Commitments to the assignee and Offshore Revolving Loan
Commitments may not be otherwise assigned. Prior to the termination of the
Revolving Loan Commitments and Offshore Revolving Loan Commitments, Revolving
Loans may not be assigned without a concurrent assignment of the Revolving Loan
Commitment (in at least the amount of such assigned Revolving Loan) to the
assignee of the Loan. Except as otherwise provided in this
subsection 10.2, no Lender shall, as between any Borrower and such Lender,
be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or any granting of participations in,
all or any part of the Loans, Commitments, Letters of Credit or participations
therein or the other Obligations owed to such Lender.

B.            Assignments.

(i)            Amounts and Terms of Assignments.
Each Loan, Commitment, Letter of Credit or participation therein or other
Obligation may (a) be assigned in any amount (of a constant and not a
varying percentage) to another Lender, or to an Affiliate or Related Fund of
the assigning Lender or another Lender, with the giving of notice to Borrowers’
Agent and Administrative Agent (provided  that, if such Related
Fund is not a Lender, such assignment shall be in an amount not less than
$1,000,000 in the case of a 

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Term Loan or Term
Loan Commitment and $2,500,000 in the case of a Revolving Loan Commitment,
Letter of Credit or participation therein or other Obligation) or (b) be
assigned in an amount (of a constant and not a varying percentage) of not less
than $1,000,000 in the case of a Term Loan or Term Loan Commitment and
$2,500,000 in the case of a Revolving Loan Commitment, Letter of Credit or
participation therein or other Obligation (or such lesser amount (X) as
shall constitute the aggregate amount of all Loans, Commitments, Letters of
Credit or participations therein and other Obligations of the assigning Lender
or (Y) so long as, after giving effect to such assignment and any other
assignments concurrently being made to the assignee, such assignee receives not
less than $1,000,000 of Term Loans or Term Loan Commitment, or $2,500,000 of
Revolving Loans, Commitments, or other Obligations assigned to it) to any other
Eligible Assignee with the giving of notice to Borrowers’ Agent and
Administrative Agent and, if no Event of Default shall have occurred and be
continuing, with the consent of Borrowers’ Agent and Administrative Agent
(which consent of Borrowers’ Agent and Administrative Agent shall not be
unreasonably withheld, withdrawn, delayed or denied; provided  that
the inability of an Eligible Assignee to satisfy the requirements set forth in
subsection 2.7C(v) of this Agreement, if applicable, shall constitute
reasonable grounds for withholding such consent; provided  further,
that it shall also be reasonable for Borrowers’ Agent to withhold consent to an
assignment of the Revolving Loan Commitments or Swiss Revolving Loans to an
entity that is not a “bank” under the laws of the country of its organization
if such assignment would cause withholding tax to be imposed on the Swiss
Revolving Loans; provided  further, that it shall also be
reasonable for Borrowers’ Agent to withhold consent to an assignment of Tranche
D Term Loans, Tranche D Term Loan Commitment, or Revolving Loan Commitment if,
upon request, such assignee does not represent or otherwise establish to the
satisfaction of the Borrowers’ Agent that it is a PMP); and provided  yet
further, however, that any assignment in accordance with clause (b) 
made by Administrative Agent or Syndication Agent or their respective
Affiliates as part the primary syndication or after the occurrence and during
the continuation of an Event of Default or if required by applicable law shall
not require the consent of the Borrowers’ Agent. To the extent of any such
assignment in accordance with either clause (a) or (b) above, the
assigning Lender shall be relieved of its obligations with respect to its
Loans, Commitments, Letters of Credit or participations therein or other
Obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance,
together with, with respect to assignments which occur following the Closing
Date, a processing and recordation fee of $3,500 payable to Administrative
Agent and such certificates, documents or other evidence, if any, with respect
to United States federal income tax withholding and foreign tax withholding
matters as the assignee under such Assignment and Acceptance may be required to
deliver to Administrative Agent pursuant to subsection 2.7C(v). Upon such
execution, delivery and acceptance, from and after the effective date specified
in such Assignment and Acceptance, (y) the assignee thereunder shall be a
party hereto and a “Lender” hereunder to the extent of the portion of any such
Obligation or Commitment so assigned hereunder and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender hereunder,
including, without limitation, the obligation in 

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subsection 10.20
to maintain the confidentiality of all non-public information received by it
pursuant to this Agreement and (z) the assigning Lender thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations (except as otherwise provided in
subsection 10.11) under this Agreement (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning Lender’s
rights and obligations under this Agreement, such assigning Lender shall cease
to be a party hereto); provided that, if the assignee of the assigning
Lender is an Affiliate of such Lender, such assignee shall not be entitled to
receive any greater amount pursuant to subsections 2.6D(iii) or 2.7
than the assigning Lender would have been entitled to receive in respect of the
amount of the assignment effected by such assigning Lender to such Affiliate
had no such assignment occurred. The Commitments hereunder shall be modified to
reflect the Commitments of such assignee and any remaining Commitments of such
assigning Lender and, if any such assignment occurs after the issuance of a
Note to the assigning Lender hereunder, if requested pursuant to
subsection 2.1G(iv), new Notes shall be issued upon request to the
assignee and to the assigning Lender, substantially in the form of Exhibit IV-A,
Exhibit IV-B, Exhibit IV-C, Exhibit IV-D, Exhibit V,
or Exhibit VI annexed hereto, as the case may be, with appropriate
insertions, to reflect the new Commitments and/or outstanding Loans, as the
case may be, of the assignee and the assigning Lender.

(ii)           Acceptance by Administrative
Agent; Recordation in Register. Subject to the requirements of
subsection 10.2A and 10.2B(i), upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee representing that it
is an Eligible Assignee, together with the processing and recordation fee
referred to in subsection 10.2B(i) and any certificates, documents or
other evidence with respect to United States federal income tax withholding and
foreign tax withholding matters that such assignee may be required to deliver
to Administrative Agent pursuant to subsection 2.7C(v), Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit X hereto and if Administrative
Agent and Borrowers’ Agent have consented to the assignment evidenced thereby
(in each case to the extent such consent is required pursuant to
subsection 10.2B(i)), (a) accept such Assignment and Acceptance by
executing a counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such assignment), (b) record
the information contained therein in the Register, and (c) give prompt
notice thereof to Borrowers’ Agent. Administrative Agent shall maintain a copy
of each Assignment and Acceptance delivered to and accepted by it as provided
in this subsection 10.2B(ii).

C.            Participations. The holder of
any participation, other than an Affiliate of the Lender granting such
participation, shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting (i) the
extension of the regularly scheduled maturity of any portion of the principal
amount of or interest on any Loan allocated to such participation; and (ii) a
reduction of the principal amount of or the rate of interest payable on any
Loan or payments due in repayment of draws under Letters of Credit allocated to
such participation and all amounts payable by each Borrower hereunder shall be
determined as if such Lender had not sold such participation. A Lender which
has sold a 

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participation in its Loans or Commitments shall
require the holder of such participation to agree in writing to comply with the
provisions of subsection 10.20 and if a Lender desires to give any
prospective participant a copy of any non-public information obtained by
Lenders pursuant to the requirements of this Agreement which has been
identified as such by any Borrower, such Lender shall require such prospective
participant to agree to hold such information in accordance with such
prospective participant’s customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices prior to its delivery of such material to such prospective
participant. Each Borrower hereby acknowledges and agrees that, only for
purposes of subsections 2.6D(iii), 2.7, 10.5 and 10.6, any participation will
give rise to a direct obligation of such Borrower to the participant and the
participant shall be considered to be a “Lender”; provided that no
participant shall be entitled to receive any greater amount pursuant to
subsections 2.6D(iii) or 2.7 than the transferor Lender would have been
entitled to receive in respect of the amount of the participation effected by
such transferor Lender to such participant had no such participation occurred,
unless such participation resulted from the CAM Exchange.

D.            Assignments to Federal Reserve
Banks. In addition to the assignments and participations permitted under
the foregoing provisions of this subsection 10.2, any Lender may assign
and pledge all or any portion of its Loans, the other Obligations owed to such
Lender, and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve Bank; and any
Lender that is a fund that invests in bank loans may without the consent of or
notice to the Administrative Agent or any Borrower, pledge all or any portion
of its rights under this Agreement and the other Loan Documents (including,
without limitation, the Notes held by it) to any trustee for, or any other
representative of, holders of obligations owed, or securities issued, by such fund,
as security for such obligations or securities; provided that any
foreclosure or similar action by such trustee shall be subject to the
provisions of this subsection concerning assignments; provided that
(i) no Lender shall, as between any Borrower, and such Lender, be relieved
of any of its obligations hereunder as a result of any such assignment and
pledge and (ii) in no event shall such Federal Reserve Bank be considered
to be a “Lender” or be entitled to require the assigning Lender to take or omit
to take any action hereunder.

E.             Successor Offshore Overdraft
Providers. Any Offshore Overdraft Account Provider may resign at any time
by giving 30 days’ prior written notice thereof to the Lenders, the relevant
Offshore Borrower and Administrative Agent. Upon (i) any such notice of
resignation, upon five days notice to Lenders and Administrative Agent, or (ii) an
assignment by such Offshore Overdraft Account Provider of all of its Revolving
Loan Commitment, such Offshore Borrower shall have the right to appoint a
Lender with Revolving Loan Exposure as successor Offshore Overdraft Account
Provider with respect to the applicable Borrower; provided that such
appointment shall be subject to the consent of Administrative Agent, which
consent shall not be unreasonably withheld. Upon the acceptance of any such
appointment as an Offshore Overdraft Account Provider hereunder by a successor
Offshore Overdraft Account Provider, the relevant Offshore Borrower shall repay
in full the relevant Offshore Overdraft Amount and all other amounts owing to
the resigning Offshore Overdraft Account Provider under the relevant Offshore
Overdraft Agreement, and such Borrower and the resigning Offshore Overdraft
Account Provider shall terminate such Offshore Overdraft Agreement and the 

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successor Offshore Overdraft Account Provider shall
enter into a successor Offshore Overdraft Agreement.

F.             Information. Each Lender may
furnish any information concerning Company and its Subsidiaries in the
possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants), subject to
subsection 10.20.

10.3        Expenses

Owens-Brockway agrees to promptly pay (i) all the
actual and reasonable costs and expenses of preparation of this Agreement and
the other Loan Documents and all the costs of furnishing all opinions by
counsel for the Loan Parties (including without limitation any opinions
requested by Lenders as to any legal matters arising hereunder), and of each
Loan Party’s performance of and compliance with all agreements and conditions
contained herein on their part to be performed or complied with; (ii) the
reasonable fees, expenses and disbursements of counsel to Administrative Agent
in connection with the negotiation, preparation, execution and administration
of this Agreement, the other Loan Documents, the Letters of Credit and the
Loans hereunder, and any amendments and waivers hereto or thereto; and (iii) after
the occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys’ fees, including allocated costs of internal counsel, and
costs of settlement) incurred by any Agent or Lender in enforcing any
Obligations of or in collecting any payments due from any Borrower hereunder or
under the Notes or any of the other Loan Documents by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or of
any insolvency or bankruptcy proceedings.

10.4        Indemnity

In addition to the payment of expenses pursuant to
subsection 10.3, Owens-Brockway agrees to indemnify, pay and hold Agents
and Lenders and the officers, directors, employees, agents, trustees and
affiliates (including the Joint Lead Arrangers and Joint Bookrunners) of Agents
and Lenders (collectively called the “Indemnitees”)
harmless from and against, any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto), which may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or the
other Loan Documents, Lenders’ agreement to make the Loans or the use or
intended use of the proceeds of the Loans or the issuance of Letters of Credit
hereunder and Lenders’ agreement to purchase participations therein as provided
for herein or the use or intended use of the Letters of Credit or the honoring
of overdrafts under the Domestic Overdraft Agreement or the purchase of
participations by Lenders in the Domestic Overdraft Amount or in the Offshore
Overdraft Amounts (the “indemnified liabilities”);
provided that Owens-Brockway shall not have any obligation to an
Indemnitee hereunder with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of that Indemnitee (it being
acknowledged by Owens-Brockway that the entry into the Nominal Restatement and
the making of the Loans thereunder at ACI’s request shall not constitute gross
negligence or 

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willful misconduct). Owens-Brockway also agrees to
indemnify and hold harmless the Indemnitees from any claim, demand or liability
for broker’s or finder’s fees alleged to have been incurred in connection with
any transactions contemplated by this Agreement and any expenses, including
reasonable legal fees, arising in connection with any such claim, demand or
liability. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Owens-Brockway shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them.

10.5        Set
Off

For so long as any of the Obligations are secured by
one or more Real Property Assets located in the State of California, each
Lender agrees not to charge or offset any amount owed to it by any Loan Party
against any of the accounts, property or assets of any Loan Party without the
prior written consent of Collateral Agent. Subject to the foregoing sentence,
in addition to any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, but in all cases subject to
subsection 10.6, upon the occurrence and during the continuance of any
Event of Default, each Lender is hereby authorized by Company and each Borrower
at any time or from time to time, without notice to Company or such Borrower,
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all deposits (general or special,
including, but not limited to, Indebtedness evidenced by certificates of
deposit, whether matured or unmatured but not including trust accounts and in
whatever currency denominated) and any other Indebtedness at any time held or
owing by that Lender or any Affiliate thereof to or for the credit or the
account of Company or such Borrower against and on account of the obligations
and liabilities of Company or such Borrower to that Lender under this
Agreement, the Notes, the Domestic Overdraft Agreement, the Offshore Overdraft
Agreements and the Letters of Credit, including, but not limited to, all claims
of any nature or description arising out of or connected with this Agreement,
the Letters of Credit or the Notes or the other Loan Documents, irrespective of
whether or not (a) that Lender shall have made any demand hereunder or (b) that
Lender shall have declared the principal of and the interest on the Loans and
Notes, any obligations of Company or such Borrower in respect of the Letters of
Credit and other amounts due hereunder to be due and payable as permitted by Section 7
and although said obligations and liabilities, or any of them, may be
contingent or unmatured.

10.6        Ratable
Sharing

Lenders hereby agree among themselves that if any of
them shall, through the exercise of any right of counterclaim, setoff, banker’s
lien or otherwise (other than a voluntary prepayment of Loans, a mandatory
prepayment of Loans, a scheduled repayment of Loans, or a payment made under
subsection 2.10, in each case made and applied in accordance with this
Agreement) or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal and interest then due with respect to the Loans
owed to that Lender, the amount then due to that Lender with respect to the
Domestic Overdraft Amount or any Offshore Overdraft Amount or any Letter of
Credit or Offshore Revolving Loan or any participation therein, or any fees or 

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commissions payable hereunder or under the other Loan
Documents (collectively, the “Aggregate Amounts Due”
to such Lender) which is greater than the proportion received by any other
Lender in respect to the Aggregate Amounts Due to such other Lender, then the
Lender receiving such proportionately greater payment shall (y) notify each
other Lender and Administrative Agent of such receipt and (z) purchase
participations (which it shall be deemed to have done simultaneously upon the
receipt of such payment) in the Aggregate Amounts Due to the other Lenders
so that all such recoveries of Aggregate Amounts Due shall be shared by the
Lenders in proportion to the Aggregate Amounts Due them; provided that
if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered from such Lender, those purchases
shall be rescinded and the purchase prices paid for such participations shall
be returned to that Lender to the extent of such recovery, but without interest.
Company and each Borrower expressly consent to the foregoing arrangement and
agrees that any holder of a participation so purchased and any other subsequent
holder of a participation in any Loan or Letter of Credit or the Domestic
Overdraft Amount or any Offshore Overdraft Amount otherwise acquired may
exercise any and all rights of banker’s lien, setoff or counterclaim with
respect to any and all monies owing by Company or such Borrower to that holder
as fully as if that holder were a holder of such a Loan or Letter of Credit or
the Domestic Overdraft Amount or any Offshore Overdraft Amount in the amount of
the participation held by that holder.

10.7        Amendments
and Waivers

A.            Except as set forth in subsections
2.1A(vi) and (vii), no amendment, modification, termination or waiver of
any provision of this Agreement, and no consent to any departure by Company or
any Borrower therefrom, shall in any event be effective without the written
consent of Requisite Lenders; provided that no such amendment,
modification, termination, waiver or consent shall, without the consent of each
Lender (with Obligations directly affected in the case of the following clause
(i)):  (i) extend the scheduled
final maturity of any Loan or extend the stated expiration date of the
Revolving Loan Commitments or the Offshore Revolving Loan Commitments beyond
the Revolving Loan Commitment Termination Date or any Letter of Credit beyond
the Revolving Loan Commitment Termination Date or the date for reimbursement of
any amount drawn thereunder beyond the Revolving Loan Commitment Termination
Date, or reduce the rate of interest (other than any waiver of any increase in
the interest rate applicable to any of the Loans pursuant to
subsection 2.2E) or fees in respect of the Revolving Loan Commitments, the
Offshore Revolving Loan Commitments, the Loans or the Letters of Credit, or extend
or waive the time of payment of interest or fees in respect thereof, or reduce
or forgive the principal amount of any of the Obligations (including any
Obligation to reimburse the amount of any drawing honored under any Letter of
Credit), (ii) amend, modify, terminate or waive any provision of this
subsection 10.7 or any other provision of this Agreement expressly
requiring the approval or concurrence of all Lenders, (iii) reduce the
percentage specified in the definition of Requisite Lenders or change the
definition of “Pro Rata Share” (it
being understood that, with respect to the Additional Term Loans and
Refinancing Term Loans and, with the consent of Requisite Lenders (determined
before giving effect to the proposed action), with respect to other Indebtedness,
additional extensions of credit pursuant to this Agreement may be included in
determining what constitutes Requisite Lenders and in determining the Pro Rata
Shares of Lenders, in each case on substantially the same basis as the
Revolving Loan Commitments and the Revolving Loans or the Term Loan Commitments
and the Term Loans are included in such determinations on the 

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Closing Date), (iv) release Company from the
Company Guaranty, (v) release all or substantially all of the Collateral
(other than any such release upon the achievement of the Collateral Release
Conditions in accordance with subsection 8.7), (vi) amend, waive or modify
the ratable treatment of Lenders pursuant to subsection 10.6 or the penultimate
sentence of subsection 2.4G or (vii) permit any Interest Period for any
Eurocurrency Rate Loan or B/A Discount Rate Loan to exceed nine months; provided,
further, that no such amendment, modification, termination, waiver or
consent shall (1) increase the Term Loan Commitment or the Revolving Loan
Commitment of any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that (A) amendments,
modifications or waivers of conditions precedent, covenants, Potential Events
of Default or Events of Default, mandatory reductions in the Revolving Loan
Commitments or of mandatory prepayments of Term Loans or Revolving Loans, shall
not constitute an increase of the Term Loan Commitment or the Revolving Loan
Commitment of any Lender and (B) an increase in the available portion of
the Revolving Loan Commitment of any Lender shall not constitute an increase in
the Revolving Loan Commitment of such Lender); (2) amend, modify,
terminate or waive any provision of subsection 2.1B or any other provision
of this Agreement directly affecting the Domestic Overdraft Account or the
Domestic Overdraft Amount (including any provision relating to the repayment of
the Domestic Overdraft Amount with the proceeds of Revolving Loans or relating
to the obligations of Lenders to purchase participations in the Domestic
Overdraft Amount) without the consent of Administrative Agent; (3) amend,
modify, terminate or waive any provision of this Agreement directly affecting
an Offshore Overdraft Account or an Offshore Overdraft Amount (including any
provision relating to the repayment of such Offshore Overdraft Amount with the
proceeds of Offshore Revolving Loans or relating to the obligations of Lenders
to purchase participations in such Offshore Overdraft Amount) without the
consent of the applicable Offshore Overdraft Provider; (4) amend, modify,
terminate or waive any provision of this Agreement relating to the obligations
of Lenders to purchase participations in Letters of Credit without the written
concurrence of Administrative Agent and each other Issuing Lender which has a
Letter of Credit then outstanding or which has not been reimbursed for a
drawing under a Letter of Credit issued by it; or (5) amend, modify,
terminate or waive any provision of Section 8 applicable to any Agent without
the consent of such Agent. In addition, no amendment, modification, termination
or waiver of (a) subsection 2.4 that alters the application of any
mandatory or voluntary prepayment as between Classes without the written
concurrence of Requisite Class Lenders of each Class that is being
allocated a lesser amount of any such prepayment as a result thereof, provided
that Requisite Lenders may waive, in whole or in part, any mandatory prepayment
and Requisite Lenders (in addition to each Lender that thereby increases its
Commitment) may increase the aggregate amount of the Commitments, in each case
so long as the application, as between Classes, of any portion of such
prepayment which is still required to be made is not altered, and (b) any
provision of subsection 2.10 that disproportionately disadvantages any Class relative
to any other Class shall be effective without the written concurrence of
Requisite Class Lenders of such disproportionately disadvantaged Class.

B.            If Company receives a statement of
amounts due pursuant to subsections 2.6B, 2.6C, 2.7A, 2.7B or 2.7C from a
Lender or a Lender (a “Non-Consenting Lender”)
refuses to consent to an amendment, modification or waiver of this Agreement
that, pursuant to subsection 10.7A,
requires consent of 100% of the Lenders or 100% of the Lenders with Obligations
directly affected (any such Lender, a “Subject
Lender”), so long as (i) no Event of Default
shall have occurred and be continuing and Company has obtained a 

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commitment from another Lender or an Eligible Assignee
to purchase at par the Subject Lender’s Loans and assume the Subject Lender’s
Commitments and all other obligations of the Subject Lender hereunder, (ii) such
Lender is not an Issuing Lender with respect to any Letters of Credit
outstanding (unless all such Letters of Credit are terminated or arrangements
acceptable to such Issuing Lender (such as a “back-to-back” letter of credit)
are made) and Company may require the Subject Lender to assign all of its Loans
and Commitments to such other Lender, Lenders, Eligible Assignee or Eligible
Assignees pursuant to the provisions of subsection 10.1B; provided
that, prior to or concurrently with such replacement, (1) the Subject
Lender shall have received payment in full of all principal, interest, fees and
other amounts (including all amounts under subsections 2.6D, 2.7 and/or 2.8B
(if applicable)) through such date of replacement and a release from its
obligations under the Loan Documents, (2) the processing fee required to
be paid by subsection 10.1B(i) shall have been paid to Administrative
Agent, (3) all of the requirements for such assignment contained in
subsection 10.1B, including, without limitation, the consent of
Administrative Agent (if required) and the receipt by Administrative Agent of
an executed Assignment Agreement 
executed by the assignee (Administrative Agent being hereby authorized
to execute any Assignment Agreement on behalf of a Subject Lender relating to
the assignment of Loans and/or Commitments of such subject Lender to effectuate
any assignment consistent with the terms of this subsection 10.7B) and other
supporting documents, have been fulfilled, and (4) in the event
such Subject Lender is a Non-Consenting Lender, each assignee shall consent, at
the time of such assignment, to each matter in respect of which such Subject
Lender was a Non-Consenting Lender and Company also requires each other Subject
Lender that is a Non-Consenting Lender to assign its Loans and Commitments. For
the avoidance of doubt, if a Lender is a Non-Consenting Lender solely because
it refused to consent to an amendment, modification or waiver that required the
consent of 100% of Lenders with Obligations directly affected thereby (which
amendment, modification or waiver did not accordingly require the consent of
100% of all Lenders), the Loans and Commitments of such Non-Consenting Lender
that are subject to the assignments required by this subsection 10.7B
shall include only those Loans and Commitments that constitute the Obligations
directly affected by the amendment, modification or waiver to which such
Non-Consenting Lender refused to provide its consent.

C.            Administrative Agent may, but shall
have no obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company or any
Borrower in any case shall entitle Company or any Borrower to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 10.7 shall be binding upon each Lender at the time outstanding,
each future Lender and, if signed by Company or any Borrower, on such Company
and such Borrower.

10.8        Independence
of Covenants

All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.

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10.9        Change
in Accounting Principles, Fiscal Year or Tax Laws

If (i) any changes in accounting principles and
policies from those used in the preparation of the financial statements
referred to in subsection 4.3 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar
functions) would result in a change in the method of calculation of
financial covenants, standards or terms found in Section 1, Section 5
and Section 6 hereof, (ii) there is any change in Company’s or
Holdings’ Fiscal Quarter or Fiscal Year, or (iii) there is a material
change in federal tax laws which materially affects Company’s ability to comply
with the financial covenants, standards or terms found in Section 1, Section 5
and Section 6 hereof, the parties hereto agree to enter into negotiations
in order to amend such provisions (in accordance with subsection 10.7) so
as to equitably reflect such changes with the desired result that the criteria
for evaluating Company’s financial condition shall be the same after such
changes as if such changes had not been made.

10.10      Notices

A.            Unless otherwise specifically
provided herein, any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served, facsimiled or
sent by United States mail or by courier service and shall be deemed to have
been given when delivered in person or by courier service, by receipt of
facsimile or when received through the United States mail, registered or
certified, with postage prepaid and properly addressed; provided that notices
to Administrative Agent or any Borrower shall not be effective until received. For
the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this
subsection 10.10) shall be as set forth under each party’s name on
the signature pages hereof or in the applicable Assignment and Acceptance.
All notices to any Borrower provided for hereunder shall be copied concurrently
to Borrowers’ Agent.

B.            Notices and other communications to
or by Administrative Agent, Collateral Agent and Lenders hereunder may be
delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by
Administrative Agent (with the written consent of Borrowers’ Agent, in the case
of procedures for deliveries to a Loan Party), provided that the foregoing
shall not apply to notices pursuant to Section 2 unless otherwise
agreed by Administrative Agent and the applicable Lender. Administrative Agent
or Borrowers may, in their discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

C.            Unless Administrative Agent
otherwise prescribes, (i) notices and other communications sent to an
e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is sent
after 5:00 p.m. (New York time), such notice or

 175
 

 

communication
shall be deemed to have been sent at the opening of business on the next
Business Day for the recipient, and (ii) notices or communications posted
to an Internet or intranet website shall be deemed received upon the deemed
receipt by the intended recipient at its e-mail address as described in the
foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

10.11      Survival
of Warranties and Certain Agreements

A.            All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement, the making of the Loans hereunder, the execution and delivery of the
Notes and the issuance of the Letters of Credit.

B.            Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements of Company and each
Borrower set forth in subsections 2.6D(iii), 2.7, 10.3, 10.4 and 10.21 and the
agreements of Lenders set forth in subsections 8.2C, 8.4, 10.5, 10.6 and 10.20
shall survive the payment of the Loans, the Notes, the Offshore Overdraft
Amounts and the Domestic Overdraft Amount, the cancellation or expiration of
the Letters of Credit and the termination of this Agreement.

10.12      Failure
or Indulgence Not Waiver; Remedies Cumulative

No failure or delay on the part of Administrative
Agent or any Lender in the exercise of any power, right or privilege hereunder
or under the other Loan Documents shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under this Agreement or the other
Loan Documents are cumulative to and not exclusive of, any rights or remedies
otherwise available.

10.13      Severability

In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

10.14      Obligations
Several; Independent Nature of Lenders’ Rights

The obligation of each Lender hereunder is several,
and no Lender shall be responsible for the obligation or commitment of any
other Lender hereunder. Nothing contained in this Agreement and no action taken
by Lenders pursuant hereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall, subject to Section 7, be entitled
to protect and enforce its rights arising out of this Agreement and it shall
not be necessary for any other Lender to be joined as an additional party in
any proceeding for such purpose.

 176
 

 

10.15      Headings

Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.

10.16      Applicable
Law

THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

10.17      Successors
and Assigns

This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of Lenders. Neither
the rights or obligations of Company or any Borrower under the Loan Documents
nor any interest therein may be assigned without the written consent of all
Lenders. Lenders’ rights of assignment are subject to subsection 10.2.

10.18      Consent
to Jurisdiction and Service of Process

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY
OR ANY BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY AND EACH BORROWER,
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, EACH IRREVOCABLY

(I)            ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;

(II)           WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

(III)         AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY OR SUCH BORROWER AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SUBSECTION 10.10;

(IV)         AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY OR SUCH BORROWER IN
ANY

 177
 

 

SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT;

 

(V)          AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION; AND

(VI)         AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.18
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.

10.19      Waiver
of Jury Trial

EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on this waiver in entering into this
Agreement, and that each will continue to rely on this waiver in their related
future dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO
THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.

10.20      Confidentiality

Lenders shall hold all non-public information obtained
prior to or after the execution of this Agreement (including pursuant to the
requirements of this Agreement or any other Loan Document) which has been
identified as such by Company or any of its Subsidiaries in accordance with
their customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and in any event (i) subject
to subsection 10.2, may make disclosure reasonably required by any bona
fide transferee or participant in connection with the contemplated transfer of
any Commitment, any Loan, any Letter of Credit or any participation therein; (ii) may
make disclosure as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that,

 178
 

 

unless specifically prohibited by applicable law or
court order, each Lender shall notify Borrowers’ Agent of any request by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and (iii) may make
disclosure to their Affiliates and respective advisors in connection herewith
or in connection with any proposed swap or derivative transaction with the Company
and its Subsidiaries, provided that each such Affiliate is advised of
and agrees in writing to be bound by the provisions of this
subsection 10.20; and further  provided that in no event
shall any Lender be obligated or required to return any materials furnished by
Company or any of its Subsidiaries. Each Lender’s obligations under this
subsection 10.20 shall survive the termination of this Agreement and any
release of such Lender’s obligations under this Agreement pursuant to
subsection 10.2B(i); and provided, further, that, subject to the
applicable Lender’s compliance with this subsection 10.20, no Lender shall
be liable for any damages arising from the use by others of non-public
information or other materials obtained through internet, Intralinks or similar
information transmission systems in connection with the Loan Documents and the
transactions contemplated thereunder.

10.21      Judgment
Currency

A.            If, for the purposes of obtaining
judgment in any court, it is necessary to convert a sum due hereunder in any
currency (the “Original Currency”)
into another currency (the “Other Currency”),
the parties hereto agree, to the fullest extent permitted by law, that the rate
of exchange used shall be that at which in accordance with normal banking
procedures Administrative Agent or a Lender could purchase the Original
Currency with such Other Currency in New York, New York on the Business Day
immediately preceding the day on which any such judgment, or any relevant part
thereof, is given.

B.            The obligations of Company and each
Borrower in respect of any sum due from it to any Agent or Lender hereunder
shall, notwithstanding any judgment in such Other Currency, be discharged only
to the extent that on the Business Day following receipt by such Agent or
Lender of any sum adjudged to be so due in such Other Currency such Agent or
Lender may in accordance with normal banking procedures purchase the Original
Currency with such Other Currency; if the Original Currency so purchased is
less than the sum originally due such Agent or Lender in the Original Currency,
Company and such Borrower agree, as a separate obligation and notwithstanding
any such judgment, to indemnify such Agent or Lender against such loss, and if
the Original Currency so purchased exceeds the sum originally due to such Agent
or Lender in the Original Currency, such Agent or Lender shall remit such
excess to such Borrower.

10.22      Limitation
on Offshore Borrower Obligations

Notwithstanding anything herein to the contrary, no
provision of this Agreement shall render any Offshore Borrower liable for the
Obligations of Company or of Owens-Brockway.

 179
 

 

10.23      Counterparts

Any amendments, waivers, consents, or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts, together shall
constitute but one and the same instrument.

10.24      USA
Patriot Act

Each Lender hereby notifies
Company that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record
information that identifies Loan Parties, which information includes the name
and address of each Loan Party and other information that will allow such
Lender to identify such Loan Party in accordance with the Act.

 180

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first written
above.

	
  

  	
  OWENS-ILLINOIS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  OWENS-BROCKWAY GLASS CONTAINER INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  ACI OPERATIONS PTY LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  O-I CANADA CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  OI EUROPEAN GROUP B.V.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  O-I EUROPE SARL

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 S-1
 

 

 

 

	
  

  	
  OWENS-ILLINOIS GENERAL INC., as Borrowers’ Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 S-2
 

 

 

AGENTS
AND LENDERS:

	
  

  	
  DEUTSCHE BANK AG, NEW YORK BRANCH,

  
	
   

  	
  as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG, New York Branch

  
	
   

  	
   

  	
  90 Hudson Street

  
	
   

  	
   

  	
  MS JCY050-199

  
	
   

  	
   

  	
  Jersey City, New Jersey 07302

  
	
   

  	
   

  	
  Attention: Commercial Loan Division

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG, New York Branch

  
	
   

  	
   

  	
  222 South Riverside Plaza

  
	
   

  	
   

  	
  MS CHI105-2900

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attention: Marla Heller and Linda Stahulak

  

 

 S-3
 

 

 

	
  

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank Trust Company Americas

  
	
   

  	
   

  	
  90 Hudson Street

  
	
   

  	
   

  	
  MS JCY050-199

  
	
   

  	
   

  	
  Jersey City, New Jersey 07302

  
	
   

  	
   

  	
  Attention: Commercial Loan Division

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank Trust Company Americas

  
	
   

  	
   

  	
  222 South Riverside Plaza

  
	
   

  	
   

  	
  MS CHI105-2900

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attention: Marla Heller and Linda Stahulak

  

 

 

 S-4Exhibit 4.2

SECOND AMENDED AND RESTATED INTERCREDITOR
AGREEMENT

This SECOND AMENDED AND
RESTATED INTERCREDITOR AGREEMENT (as amended, amended and restated
or otherwise modified from time to time in accordance with the terms hereof,
herein called this “Agreement”) is
dated as of June 14, 2006 among DEUTSCHE
BANK AG, NEW YORK BRANCH, as administrative agent (“Lender Agent”) for the
lenders (the “Lenders”) party to the Credit Agreement (as hereinafter
defined), DEUTSCHE BANK TRUST COMPANY
AMERICAS (“DBTCA”), as Collateral Agent (as
hereinafter defined), U.S. BANK NATIONAL
ASSOCIATION, as trustee for the holders of the several issuances of
Existing Owens-Brockway Senior Secured Notes (defined below) (in such capacity,
with respect to any individual series, an “Existing
Owens-Brockway Senior Secured Notes Trustee” and collectively, the “Existing Owens-Brockway Senior Secured Notes Trustees”),
THE BANK OF NEW YORK, as trustee for
the holders of each of the several series of the Existing Holdings Senior Notes
(in such capacity, with respect to any individual series, the “Existing Holdings Senior Notes Trustee” and
collectively, the “Existing Holdings Senior
Notes Trustees”), those other persons party to the Original
Intercreditor Agreement (defined below) and the Amended and Restated
Intercreditor Agreement (defined below) set forth in Schedule A attached
hereto, and the other persons who may become parties to this Agreement from
time to time pursuant to and in accordance with Section 6 of this
Agreement.

R E C I T A L S

1.             The prior Lender Agent and certain lenders entered into
a Secured Credit Agreement dated as of April 23, 2001

(as amended through the fourth amendment thereto, the “Original Credit
Agreement”) with Owens-Illinois Group, Inc., a Delaware
corporation (“Company”) and
certain of its subsidiaries.

2.             In connection with the Original Credit Agreement, the
Lender Agent and Collateral Agent executed a certain Intercreditor Agreement
dated as of April 23, 2001 (as amended through the first amendment thereto
and as supplemented by various acknowledgments thereto, the “Original Intercreditor Agreement”) and the
Pledgors and Collateral Agent executed a certain Pledge Agreement dated as of April 23,
2001 (as amended through the first amendment thereto, the “Original
Pledge Agreement”).

3.             After the execution of the Original Intercreditor
Agreement, Owens-Brockway issued the following series of senior secured notes
constituting New Senior Debt under the Original Credit Agreement and the
Original Intercreditor Agreement (collectively, the “Existing Owens-Brockway Senior Secured Notes”): the 8 7/8%
Senior Secured Notes due 2009 in the original aggregate principal amount of
$1,000,000,000, the 7 3/4% Senior Secured Notes due 2011 in the original
aggregate principal amount of $450,000,000 and the 8 3/4% Senior Secured Notes
due 2012 in the original aggregate principal amount of $625,000,000. In
connection with such issuances, the Existing Owens-Brockway Senior Secured
Notes Trustees, as New Senior Debt Representatives, executed acknowledgments to
the Original Intercreditor Agreement, which acknowledgments were acknowledged
by Borrowers’ Agent and delivered to Collateral Agent, and by virtue of such
execution, acknowledgment and delivery, the obligations in respect 

 1
 

 

of the Existing Owens-Brockway Senior Secured Notes
(including the guarantees thereof) became secured by the Collateral Documents
as and to the extent set forth in (i) the Original Credit Agreement, (ii) the
Collateral Documents (as defined below), and (iii) in the case of the 8
3/4% Owens-Brockway Senior Secured Notes due 2012 and those certain 7 3/4%
Owens-Brockway Senior Secured Notes due 2011, as and to the extent set forth in
the acknowledgment to the Original Intercreditor Agreement delivered to Collateral
Agent with respect thereto.

4.             Pursuant to the Original Intercreditor Agreement and the
Original Pledge Agreement, upon satisfaction of the Supplemental Indenture
Condition (as defined in the Original Intercreditor Agreement) and the
execution by the Existing Holdings Senior Notes Trustees of an acknowledgment
to the Original Intercreditor Agreement, acknowledgment of such acknowledgment
by Borrowers’ Agent and delivery of such acknowledgment to Collateral Agent,
certain Existing Holdings Senior Notes (as defined below) issued by
Owens-Illinois, Inc., a Delaware corporation (“Holdings”), under certain Indentures dated as of May 15,
1997 and May 20, 1998 (each as amended, supplemented or otherwise modified
from time to time, an “Existing Holdings
Senior Notes Indenture” and collectively, the “Existing Holdings Senior Notes Indentures”)
entered into with the Existing Holdings Senior Notes Trustees were guarantied
by Company and Packaging on a subordinated basis (the “Existing Holdings Senior Notes Subordinated Guaranty”)
and such guaranty and the Existing Holdings Senior Notes were secured
by certain Domestic Collateral on a subordinated, second-lien basis pursuant to
the Original Pledge Agreement and the Original Intercreditor Agreement. “Existing Holdings Senior Notes” means the
following senior notes and debentures of Holdings: (i) the 8.10% Senior
Notes due 2007 in the original aggregate principal amount of $300,000,000; (ii) the
7.35% Senior Notes due 2008 in the original aggregate principal amount of $250,000,000;
(iii) the 7.50% Senior Debentures due 2010 in the original aggregate
principal amount of $250,000,000; and (iv) the 7.80% Senior Debentures due
2018 in the original aggregate principal amount of $250,000,000. Such
acknowledgments were heretofore executed, delivered and acknowledged with
respect to the Existing Holdings Senior Notes and the Supplemental Indenture
Condition was heretofore satisfied.

5.             Certain lenders and DBTCA as agent and representative
thereof then entered into a certain First Amended and Restated Secured Credit
Agreement as of June 13, 2003 with the Borrowers named therein, Company
and Borrowers’ Agent (as amended through the first amendment thereto, the “First Amended and Restated Credit Agreement”), which amended and restated the Original
Credit Agreement in its entirety.

6.             In connection with the First Amended and Restated Credit
Agreement, the prior Lender Agent and Collateral Agent executed a certain
Amended and Restated Intercreditor Agreement dated as of June 13, 2003 (as
amended through the second amendment thereto and as supplemented by various
acknowledgments thereto, the “Amended and
Restated Intercreditor Agreement”), which amended and restated the
Original Intercreditor Agreement in its entirety, and the Pledgors (as defined
below) and Collateral Agent executed a certain Amended and Restated Pledge
Agreement dated as of June 13, 2003 (as amended through the second
amendment thereto, the “Amended and Restated
Pledge Agreement”).

7.             The lenders and DBTCA as agent and representative
thereof then entered into a certain Second Amended and Restated Secured Credit
Agreement as of March 15, 2004 with the 

 2
 

 

Borrowers named therein,
Company and Borrowers’ Agent (as amended through the first amendment thereto,
the “Second Amended and Restated Credit Agreement”), which amended and restated the First
Amended and Restated Credit Agreement in its entirety, and then entered into a
certain Third Amended and Restated Secured Credit Agreement as of October 7,
2004 with the Borrowers named therein, Company and Borrowers’ Agent (as amended
through the first amendment thereto, the “Third
Amended and Restated Credit Agreement”),
which amended and restated the Second Amended and Restated Credit Agreement in
its entirety.

8.             The lenders, Lender Agent and Collateral Agent have
entered into a certain Credit Agreement as of June 14, 2006 with the
Borrowers named therein, Company and Borrowers’ Agent (as amended, amended and
restated or otherwise modified from time to time, the “Credit Agreement”, which term shall also
include and refer to any successor or replacement facility of Company and/or
its Subsidiaries designated in writing as such by Borrowers’ Agent with
Collateral Agent’s consent and acknowledgment of the termination of the
predecessor Credit Agreement by an agent for the lenders thereunder). The
Credit Agreement replaces the Third Amended and Restated Credit Agreement in
its entirety, has been designated in writing as such by the Borrowers’ Agent in
accordance with the Amended and Restated Intercreditor Agreement, and
Collateral Agent has consented thereto and acknowledged the termination of the
predecessor Third Amended and Restated Credit Agreement by DBTCA, in its
capacity as administrative agent to the lenders thereunder, and Deutsche Bank
AG, New York Branch, as administrative agent to the Lenders party to the Credit
Agreement has become “Lender Agent.” 
Initially capitalized terms used herein without definition are defined
in the Credit Agreement.

9.             After the execution of the Original Intercreditor
Agreement, certain holders of Other Permitted Credit Exposure (as defined
below), executed acknowledgments thereto or to the Amended and Restated
Intercreditor Agreement, as applicable, which acknowledgments were acknowledged
by Borrowers’ Agent and delivered to Collateral Agent, pursuant to which such
persons agreed to be bound by the terms of the Original Intercreditor Agreement
or to the Amended and Restated Intercreditor Agreement, as applicable, and by
virtue of such execution, acknowledgment and delivery, the obligations held by
such holders became guarantied by the Loan Guaranties and secured by the
Collateral Documents as and to the extent set forth in the Original Credit
Agreement, the Loan Guaranties and the Collateral Documents.

10.           In connection with the Credit
Agreement, Lender Agent and Collateral Agent have been directed by Requisite
Obligees, pursuant to Section 9(b) of the Amended and Restated
Intercreditor Agreement, to amend and restate the Amended and Restated
Intercreditor Agreement in its entirety as set forth herein.

11.           Company has guarantied the
Obligations of the Borrowers under the Credit Agreement as well as certain
Other Permitted Credit Exposure, (as defined below) pursuant to Section 9
of the Credit Agreement (the “Company
Guaranty”).

12.           Owens-Brockway has guaranteed (A) all
Offshore Loans made to, and other Obligations of, the Offshore Borrowers and (B) Other
Permitted Credit Exposure, in each case pursuant to a certain Second Amended
and Restated Domestic Borrowers’ Guaranty dated as of June 14, 2006 (as
amended, amended and restated or otherwise modified from time to time, the “Domestic Borrowers’ Guaranty”).

 3
 

 

13.           Owens-Brockway
Packaging, Inc., a Delaware corporation (“Packaging”), and the other Subsidiary Guarantors have
guarantied the Obligations of the Borrowers under the Credit Agreement as well
as certain Other Permitted Credit Exposure pursuant to a certain Second Amended
and Restated Subsidiary Guaranty dated as of June 14, 2006 (as amended,
amended and restated or otherwise modified from time to time, the “Subsidiary Guaranty”).

14.           Company and Packaging (collectively,
the “Pledgors”) have executed and
delivered to Collateral Agent a Second Amended and Restated Pledge Agreement
dated as of June 14, 2006 (as amended, amended and restated or otherwise
modified from time to time, the “Pledge Agreement”;
a copy of the Pledge Agreement as in effect on the date this Agreement becomes
effective is attached to this Agreement as Annex 1).

15.           Owens-Brockway, Company, and the
Subsidiary Guarantors, including Packaging, identified on Schedule 1.1B
annexed to the Credit Agreement have executed and delivered to Collateral Agent
a Second Amended and Restated Security Agreement dated as of June 14, 2006
(as amended, amended and restated or otherwise modified from time to time, the “Security Agreement”; a copy of the Security Agreement as in
effect on the date this Agreement becomes effective is attached to this
Agreement as Annex 2).

16.           Owens-Brockway and certain of the
Subsidiary Guarantors have executed and delivered pursuant to the terms of the
Credit Agreement, the Closing Date Mortgages and shall from time to time
pursuant to the terms of the Credit Agreement execute and deliver Additional
Mortgages, in each case securing a Real Property Asset owned by Owens-Brockway
or a Subsidiary Guarantor (the Closing Date Mortgages and the Additional
Mortgages are referred to herein as the “Mortgages”).
The Pledge Agreement, the Security Agreement and the Mortgages are collectively
referred to herein as the “Collateral
Documents”. All collateral pledged or secured by the Collateral
Documents is collectively referred to herein as the “Domestic
Collateral”.

17.           (a) The obligations of Company
under the Credit Agreement and Packaging under the Subsidiary Guaranty have
been secured by certain Pledged Shares and Pledged Debt on a senior basis
pursuant to the Pledge Agreement, (b) the obligations of Owens-Brockway
under the Credit Agreement and the Domestic Borrowers’ Guaranty, the
obligations of the Company under the Company Guaranty and the obligations of
the Subsidiary Guarantors under the Subsidiary Guaranty have each been secured
by certain Pledged Shares and Pledged Debt and other Domestic Collateral on a
senior basis pursuant to the Security Agreement and (c) the obligations of
Owens-Brockway under the Credit Agreement and the Domestic Borrowers’ Guaranty
and the obligations of certain Subsidiary Guarantors under the Subsidiary
Guaranty have been secured on a senior basis pursuant to the Mortgages.

18.           Subsidiaries and Joint Ventures of
Company have incurred, and it is contemplated that, from time to time in the
future, Subsidiaries and Joint Ventures of Company may incur, obligations to
Lenders or affiliates of Lenders arising out of loans, advances, overdrafts,
interest rate, currency or hedge products and other derivative exposures
(including under Interest Rate Agreements and Currency Agreements) or
extensions of credit to the extent permitted under the Credit Agreement (“Other Permitted Credit Exposure”). Company
has guaranteed such Other Permitted Credit Exposure pursuant to the Company
Guaranty, Owens-Brockway has guaranteed 

 4
 

 

such other Permitted
Credit Exposure pursuant to the Domestic Borrowers’ Guaranty and the Subsidiary
Guarantors have guaranteed such Other Permitted Credit Exposure pursuant to the
Subsidiary Guaranty. Each holder of such Other Permitted Credit Exposure
(including those holders of Other Permitted Credit Exposure set forth on Exhibit I
attached hereto) is referred to herein as an “Other
Permitted Credit Exposure Holder” and, collectively, all such
holders are referred to as the “Other
Permitted Credit Exposure Holders”, and the documents and
instruments evidencing or relating to any such Other Permitted Credit Exposure
are referred to herein as the “Other
Permitted Credit Exposure Documents”. Notwithstanding the foregoing,
an Other Permitted Credit Exposure Holder may only receive the benefit of the
Loan Guaranties and may only be secured by the Domestic Collateral pursuant to
the Collateral Documents if (a) such Other Permitted Credit Exposure
Holder delivers (or, pursuant to the Original Intercreditor Agreement or the
Amended and Restated Intercreditor Agreement, has delivered) to Collateral
Agent a duly executed acknowledgment to this Agreement in the form attached
hereto (or to the Original Intercreditor Agreement or the Amended and Restated
Intercreditor Agreement in the form attached thereto) agreeing to be bound by
the terms hereof, (b) the Borrowers’ Agent has duly executed and delivered
an acknowledgement to such acknowledgement, (c) such holder is (or
becomes) and thereafter remains Lender or an Affiliate of a Lender under the
Credit Agreement and (d) and such Other Permitted Credit Exposure Holder
shall have released and terminated any guaranty by Holdings of Other Permitted
Credit Exposure. Such acknowledgments have previously been so executed,
delivered and acknowledged with respect to the Other Permitted Credit Exposure
described on Exhibit I attached hereto and, notwithstanding
anything to the contrary herein, no further action is required for the holders
of such obligations to continue to receive the benefit of the Loan Guaranties
and such security pursuant to the Collateral Documents.

19.           Company, Owens-Brockway and
Subsidiary Guarantors (collectively, the “Loan
Guarantors”) have entered into and/or will enter into from time to
time (i) the Company Guaranty, (ii) the Domestic Borrowers’ Guaranty
and (iii) the Subsidiary Guaranty, respectively (collectively, the “Loan Guaranties”).

20.           Company, Packaging, Owens-Brockway
and/or the other Subsidiary Guarantors have in the past issued and/or
guarantied, and it is contemplated that, from time to time in the future to the
extent permitted by the Credit Agreement, Company, Packaging, Owens-Brockway
and/or the other Subsidiary Guarantors may issue and/or guaranty, certain New
Senior Debt (any indenture, debenture, note, guaranty or other document
executed by Company, Packaging, Owens-Brockway and or any other Subsidiary
Guarantor in connection with the issuance of any such New Senior Debt
(including any such documents so executed in connection with the issuance of
the Existing Owens-Brockway Senior Secured Notes) is referred to herein as a “New Senior Debt Document” individually and
the “New Senior Debt Documents”
collectively and any trustee or like representative of the holders of any such
New Senior Debt acting in such capacity for the benefit of the holders of New
Senior Debt (including the Existing Owens-Brockway Senior Secured Notes
Trustees) is referred to herein as a “New
Senior Debt Representative”), which New Senior Debt Documents may be
secured by all or any portion of the Domestic Collateral pursuant to the
Collateral Documents; provided, that, for any holder of any New
Senior Debt to receive the benefit of such security it shall cause a New Senior
Debt Representative for such New Senior Debt to execute and deliver to
Collateral Agent an acknowledgment to this Agreement in the form attached
hereto (or shall have caused such a New 

 5
 

 

Senior Debt
Representative for such New Senior Debt to execute and deliver to Collateral
Agent an acknowledgment to the Original Intercreditor Agreement or the Amended
and Restated Intercreditor Agreement in the form attached thereto) agreeing to
be bound by the terms hereof (or thereof), which acknowledgment shall be (or
shall have been) acknowledged by the Borrowers’ Agent. Any such acknowledgment
may designate, as set forth in the acknowledgment for New Senior Debt attached
hereto, that such New Senior Debt is to be secured by the Collateral Documents
equally and ratably (i.e., on the same basis and by the same collateral) with
the Existing Owens-Brockway Senior Secured Notes (any such New Senior Debt for
which such designation is made is being referred to herein as “Specified New Senior Debt”). Acknowledgments
to the Original Intercreditor Agreement have previously been so executed,
delivered and acknowledged with respect to the Existing Owens-Brockway Senior Secured
Notes and, not withstanding anything to the contrary herein, no further action
is required for the holders of such Notes to continue to receive the benefit of
such security pursuant to the Collateral Documents. For the avoidance of doubt,
the term “New Senior Debt” as used herein shall not include the Existing
Owens-Brockway Senior Unsecured Notes.

21.           It is contemplated that, from time to
time to the extent permitted by the Credit Agreement, Holdings, may issue on a
senior basis, and Company and/or Packaging may issue or guaranty, on a
subordinated basis, certain Refinancing Senior Debt. Any indenture, debenture,
note, guaranty or other document executed by Holdings, Company or Packaging in
connection with the issuance of any such Refinancing Senior Debt is referred to
herein as a “Refinancing Senior Debt Document”
individually and the “Refinancing Senior Debt
Documents” collectively, and any trustee or like representative of
the holders of any such Refinancing Senior Debt acting in such capacity for the
benefit of the holders of Refinancing Senior Debt is referred to herein as a “Refinancing Senior Debt Representative”). Refinancing
Senior Debt Documents may be secured, on a subordinated basis, by the Domestic
Collateral pursuant to the Pledge Agreement (but neither the Security Agreement
nor the Mortgages or any other Collateral Documents); provided, that,
for any holder of any Refinancing Senior Debt to receive the benefit of such
security it shall cause a Refinancing Senior Debt Representative for such issue
to execute and deliver to Collateral Agent an acknowledgment to this Agreement
(in the form attached hereto) agreeing to be bound by the terms hereof (which
acknowledgment shall be acknowledged by the Borrowers’ Agent).

22.           It is contemplated that, from time to
time to the extent permitted by the Credit Agreement, Holdings, Company and/or
Packaging may issue or guaranty, on a subordinated basis, New Junior Debt. Any
indenture, debenture, note, guaranty or other document executed by Holdings,
Company or Packaging in connection with the issuance of any such New Junior
Debt is referred to herein as a “New Junior
Debt Document” individually and the “New Junior Debt Documents” collectively. Any trustee or like
representative of the holders of any New Junior Debt acting in such capacity
for the benefit of the holders of New Junior Debt is referred to herein as a “New Junior Debt Representative”. New Junior
Debt Documents may be secured, on a subordinated basis, by the Domestic
Collateral pursuant to the Pledge Agreement (but not the Security Agreement or
the Mortgages or any other Collateral Documents); provided, that,
for any holder of any New Junior Debt to receive the benefit of such security
it shall cause a New Junior Debt Representative for such issue to execute and
deliver to Collateral Agent an acknowledgment to this Agreement (in the form
attached hereto) agreeing to be bound by the terms hereof (which acknowledgment
shall be acknowledged by the Borrowers’ Agent).

 6
 

 

23.           (a) The Lender Agent and any
Other Permitted Credit Exposure Holders secured by the Collateral Documents, (b) and
with respect to any obligations in respect of any New Senior Debt secured by
the Collateral Documents, the New Senior Debt Representative in respect of such
New Senior Debt, (c) and in the event any obligations in respect of any
Refinancing Senior Debt are to be secured by the Pledge Agreement, the
Refinancing Senior Debt Representative in respect to such Refinancing Senior
Debt, (d) and in the event any obligations in respect of any New Junior
Debt are to be secured by the Pledge Agreement, the New Junior Debt
Representative in respect of such New Junior Debt, and (e) the Existing
Senior Notes Trustees in respect of such Existing Holdings Senior Notes and
Collateral Agent (collectively, the “Secured Parties”) desire to set forth certain additional provisions
regarding the appointment, duties and responsibilities of Collateral Agent and
to set forth certain other provisions concerning the obligations of the
Pledgors, Borrowers and the other Subsidiary Guarantors (collectively, the “Grantors”) and the Loan Guarantors to the
Secured Parties under the agreements referred to in the foregoing recitals.

24.           The Secured Parties wish to set forth
their agreement as to the allocation of certain payments to be made from Net
Asset Sale Proceeds of Domestic Collateral and Net Insurance/Condemnation
Proceeds or Net Debt Proceeds arising from the issuance of Receivables Sale
Indebtedness arising therefrom.

25.           The Secured Parties wish to set forth
their agreement as to decisions relating to the exercise of remedies under the
Loan Guaranties and the Collateral Documents and certain limitations on the
exercise of such remedies.

26.           The Secured Parties wish to confirm
their agreement that (a) in no event shall either the Second Priority
Secured Obligations (as defined in the Pledge Agreement) or the Third Priority
Secured Obligations (as defined in the Pledge Agreement), be secured by or have
any rights with respect to the Domestic Collateral under the Security Agreement
or any Mortgage or any other Collateral Document (other than the Pledge
Agreement) or benefit from or have any rights with respect to the Loan
Guaranties, (b) certain remedies under the Pledge Agreement shall not be
taken for the benefit of Second Priority Secured Obligations unless such
remedies are concurrently being exercised for the benefit of Senior Secured
Obligations (as defined in the Pledge Agreement), or unless all such Senior
Secured Obligations have been paid in full in cash and all Commitments and
Letters of Credit have terminated and (c) certain remedies under the
Pledge Agreement shall not be taken for the benefit of any Third Priority
Secured Obligations unless such remedies are being concurrently exercised for
the benefit of the Senior Secured Obligations and the Second Priority Secured
Obligations or unless all such Senior Secured Obligations and/or Second
Priority Secured Obligations have been paid in full in cash and all Commitments
and Letters of Credit have terminated.

27.           The Secured Parties wish to confirm
that certain subordination provisions granting benefits to the holders of
certain senior indebtedness shall not be impaired by the granting of security
interests in collateral, or the exercise of rights with respect to such
collateral, in favor of the holders of certain junior indebtedness.

 7

 

NOW,
THEREFORE, the parties hereto (with the consent and at the
direction of the Requisite Obligees pursuant to the Credit Agreement) agree
that the Amended and Restated Intercreditor Agreement is hereby amended and
restated in its entirety as follows:

SECTION 1.         Appointment As Collateral Agent. The
Lender Agent and each New Senior Debt Representative executing this Agreement
hereby appoints (and/or confirms the appointment of), and each Other Permitted
Credit Exposure Holder, future New Senior Debt Representative, Refinancing
Senior Debt Representative and New Junior Debt Representative that has signed
an acknowledgment to the Original Intercreditor Agreement or the Amended and
Restated Intercreditor Agreement, or that signs this Agreement or an acknowledgment
hereto, by such signing, and each Existing Holdings Senior Notes Trustee
pursuant to an Existing Holdings Senior Notes Indenture or by having signed an
acknowledgment to the Original Intercreditor Agreement or the Amended and
Restated Intercreditor Agreement, appoints (and/or confirms the appointment of)
Deutsche Bank Trust Company Americas to serve as collateral agent and
representative of each such Secured Party under each of the Collateral
Documents and the Loan Guaranties (in such capacity, together with its
successors in such capacity, the “Collateral Agent”)
and authorizes Collateral Agent to act as agent for the Secured Parties for the
purpose of executing and delivering, on behalf of all such Secured Parties, the
Pledge Agreement and, on behalf of the Lender Agent, the Other Permitted Credit
Exposure Holders and the New Senior Debt Representatives (the “Senior Secured Parties”), the Security
Agreement, the Mortgages, the Loan Guaranties (in each case as applicable) and
any other documents or instruments related to any of the foregoing or necessary
to perfect the same and, subject to the provisions of this Agreement, for the
purpose of enforcing the Secured Parties’ rights in respect of the Domestic
Collateral and the obligations of the Grantors under the Collateral Documents
and obligations of the Loan Guarantors under the Loan Guaranties.

SECTION 2.         Decisions Relating to Exercise of
Remedies Vested in Requisite Obligees Under the Credit Agreement, Other
Permitted Credit Exposure Documents, New Senior Debt Documents, Existing
Holdings Senior Notes Indentures, Refinancing Senior Debt Documents, New Junior
Debt Documents, Collateral Documents and Loan Guaranties.

(a)   Collateral Agent agrees to make such demands
and give such notices under the Loan Guaranties and the Collateral Documents as
Requisite Obligees may request, and to take such action to enforce the Loan
Guaranties and the Collateral Documents and to foreclose upon, collect and
dispose of the Domestic Collateral or any portion thereof as may be directed by
Requisite Obligees. For purposes of this Agreement, (i) ”Requisite Obligees” means, for purposes of this Agreement,
including directing Collateral Agent with respect to any of the foregoing
actions to be taken pursuant to any of the Collateral Documents or the Loan
Guaranties, Lenders holding 51% or more of the aggregate principal amount of
the sum of (A) all Loans outstanding, (B) all other credit facilities
utilized (including the stated amount of all Letters of Credit, Domestic and
Offshore Overdraft Amounts and the face amount of all unmatured discounted
bankers’ acceptances, if any) under the Credit Agreement and (C) all
unused Commitments under the Credit Agreement, (ii) provided, that, if the
Obligations (such term being used herein as defined in the Credit Agreement)
have been indefeasibly paid in full in cash and the Credit Agreement and
Letters of Credit have terminated, “Requisite
Obligees” shall mean (1) Secured Parties holding 51% or more of
the aggregate amount of the sum of 

 8
 

 

(A) the principal
amount of the Other Permitted Credit Exposure then secured by Domestic
Collateral with the “principal amount” under Interest Rate Agreements and
Currency Agreements then secured by Domestic Collateral herein deemed to be 20%
of the notional amount under the applicable Interest Rate Agreements and
Currency Agreements or, if an Interest Rate Agreement or Currency Agreement has
been terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early termination
payments then due) under such Interest Rate Agreement or Currency Agreement, as
the case may be) and (B) in the case of the Collateral Documents only (and
not the Loan Guaranties) the aggregate outstanding principal amount of the New
Senior Debt (to the extent such New Senior Debt is then secured by the Domestic
Collateral under the Collateral Documents), provided, that, the
aggregate principal amount of the Existing Owens-Brockway Senior Secured Notes
and any Specified New Senior Debt shall not be included in such calculation
with respect to any direction to Collateral Agent solely to the extent such
direction relates to the Excluded Securities Collateral (as defined in the
Security Agreement), until indefeasible payment in full in cash of all Other
Permitted Credit Exposure secured by the Domestic Collateral and all New Senior
Debt secured by the Domestic Collateral under the Collateral Documents, (2) and,
thereafter, for purposes of directing Collateral Agent with respect to any of
the foregoing actions to be taken under or in respect of the Pledge Agreement
only (and not any Loan Guaranty, the Security Agreement, or any
Mortgage), Secured Parties holding or representing 51% or more of the aggregate
amount of the sum of (A) the aggregate outstanding principal amount of the
Existing Holdings Senior Notes and (B) the aggregate outstanding principal
amount of Refinancing Senior Debt (to the extent such Refinancing Senior Debt
is then secured by Domestic Collateral) until indefeasible payment in full in
cash of such Refinancing Senior Debt and the Existing Holdings Senior Notes and
(3) thereafter, for purposes of directing Collateral Agent with respect to
any of the foregoing actions to be taken under or in respect of the Pledge
Agreement only (and not any Loan Guaranty, the Security Agreement or any
Mortgage), Secured Parties holding or representing 51% or more of the aggregate
outstanding principal amount of New Junior Debt (to the extent such New Junior
Debt is then secured by Domestic Collateral) until indefeasible payment in full
in cash of such New Junior Debt.  Collateral Agent shall not be required to take
any action that is, in its opinion, contrary to law or to the terms of this
Agreement, or any of the Collateral Documents or any of the Loan Guaranties or
which would in its opinion subject it or any of its officers, employees or
directors to liability, and Collateral Agent shall not be required to take any
action under this Agreement or any of the Collateral Documents or any of the
Loan Guaranties, unless and until Collateral Agent shall be indemnified to its
satisfaction by the Secured Parties against any and all losses, costs, expenses
or liabilities in connection therewith.

(b)   Each Secured Party executing (or that has
executed) this Agreement or an acknowledgment to the Original Intercreditor
Agreement or the Amended and Restated Intercreditor Agreement, hereto agrees
that (i) Collateral Agent may act as Requisite Obligees may request
(regardless of whether any Secured Party or any holder represented thereby
agrees, disagrees or abstains with respect to such request), (ii) Collateral
Agent shall have no liability for acting in accordance with such request
(provided such action does not conflict with the express terms of this
Agreement) and (iii) no Secured Party or any holder represented thereby
shall have any liability to any other Secured Party or any holder represented
thereby for any such request. Collateral Agent shall give prompt notice to all
Secured Parties of actions taken pursuant to the instructions of Requisite
Obligees; provided, however, that the failure to give any such
notice 

 9
 

 

shall not impair the
right of Collateral Agent to take any such action or the validity or
enforceability under this Agreement or the applicable Collateral Document or
Loan Guaranties of the action so taken.

(c)   Each Secured Party agrees that unless and
until such Secured Party is entitled to give direction to Collateral Agent
pursuant to Section 2(a) with respect to a Collateral Document
or the Loan Guaranties, the only right of such Secured Party under the
Collateral Documents and the Loan Guaranties is for (i) Other Permitted
Credit Exposure and the New Senior Debt (collectively, with the Obligations
under the Credit Agreement, the “Senior
Secured Obligations”) to be secured by the Domestic Collateral as
provided in the Collateral Documents, and to receive a share of the proceeds of
such Domestic Collateral or any payments under the Loan Guaranties, if any, as
and when provided in the Collateral Documents and Section 3 and Section 4(a) hereof,
(ii) the Refinancing Senior Debt and the Existing Holdings Senior Notes
(and the Existing Holdings Senior Notes Subordinated Guaranty) to be secured by
the Domestic Collateral pledged under the Pledge Agreement (the “Second Priority Secured Obligations”), in
each case for the period and to the extent (but only to the extent) provided
for in the Pledge Agreement and to receive a share of the proceeds of such
Domestic Collateral, if any, as and when provided in Section 12 of
the Pledge Agreement and Section 3 and Section 4(a) hereof,
and (iii) the New Junior Debt to be secured by the Domestic Collateral
pledged under the Pledge Agreement (the “Third
Priority Secured Obligations”) for the period and to the extent (but
only to the extent) provided for in the Pledge Agreement and to receive a share
of the proceeds of such Domestic Collateral, if any, to the extent and at the
times provided in Section 12 of the Pledge Agreement and Section 3
and Section 4(a) hereof. The Secured Parties that are not
Senior Secured Parties and the New Senior Debt Representatives acknowledge that
they have no rights or remedies under or with respect to any of the Loan
Guaranties.

(d)   Notwithstanding anything to the contrary
contained herein or in the Credit Agreement, any Other Permitted Credit
Exposure Document, any Existing Holdings Senior Notes Indenture, any Existing
Holdings Senior Notes Subordinated Guaranty, any New Senior Debt Document, any
Refinancing Senior Debt Document or any New Junior Debt Document, and
irrespective of

(i)            the time, order or method of
attachment or perfection of the security interests created by any Collateral
Document,

(ii)           the time or order of filing or
recording of financing statements or other documents filed or recorded to
perfect security interests in any Domestic Collateral, and

(iii)          the rules for determining
priority under the Uniform Commercial Code or any other law or rule governing
the relative priorities of secured creditors,

any security interest in any Domestic Collateral
heretofore or hereafter granted to secure any Senior Secured Obligations
pursuant to any Collateral Document or otherwise has and shall have priority,
to the extent of any unpaid Senior Secured Obligations, over any security
interest in such Domestic Collateral granted to secure any Second Priority
Secured Obligations or any Third Priority Secured Obligations and any security
interest in any Domestic Collateral 

 10
 

 

heretofore or hereafter granted to secure any Second
Priority Secured Obligations pursuant to the Pledge Agreement or otherwise has
and shall have priority, to the extent of any unpaid Second Priority Secured
Obligations, over any security interest in such Domestic Collateral granted to
secure any Third Priority Secured Obligations.

(e)   Collateral Agent may at any time request
directions from the Requisite Obligees with respect to the Collateral Documents
and the Loan Guaranties as to any course of action or other matter relating
hereto or to any Collateral Document or any Loan Guaranties. Except as
otherwise provided in the Collateral Documents and the Loan Guaranties,
directions given by Requisite Obligees to Collateral Agent hereunder shall be
binding on all Secured Parties for all purposes.

(f)    Subject to the application of proceeds
pursuant to Section 3 or Section 4, as applicable,
Collateral Agent may release the Lien of the Collateral Documents against any
portion of the Domestic Collateral that is the subject of a sale, transfer or
other disposition permitted by the Credit Agreement, made in connection with
Collateral Agent’s exercise of remedies under the Collateral Documents or
otherwise to the extent approved by the Requisite Obligees, including, without
limitation, against any portion of the Domestic Collateral pledged by
Owens-Brockway or a Subsidiary Guarantor under the Security Agreement or a
Mortgage upon the sale, transfer or other disposition of all of the Capital
Stock of and intercompany indebtedness owing by or to Owens-Brockway or such Subsidiary
Guarantor or the direct or indirect parent thereof as permitted by the Credit
Agreement or in connection with Collateral Agent’s exercise of remedies under
the Collateral Documents. In addition, notwithstanding anything to the contrary
in any of the Collateral Documents, upon release of a guarantor of any New
Senior Debt, the Lien of the Collateral Documents against any assets or
property of that guarantor shall no longer secure such New Senior Debt.

(g)   Each Secured Party agrees that no Secured Party
shall have any right to, and agrees that it shall not take any action
whatsoever to enforce any term or provision of any Collateral Document or any
Loan Guaranties or to enforce any of its rights in respect of the Domestic
Collateral, it being understood that all rights and remedies under the
Collateral Documents and the Loan Guaranties shall be executed exclusively by
Collateral Agent in accordance with this Agreement. Without limiting any of the
foregoing, each Secured Party agrees that so long as any of the Senior Secured
Obligations have not been indefeasibly paid in full in cash, in any case under
the Bankruptcy Code with respect to a Loan Party, holders of any Existing
Holdings Senior Notes, Refinancing Senior Debt or New Junior Debt and their respective
trustees or representatives,  (i) shall
not contest any request by the Lender Agent for adequate protection or relief
from the automatic stay and (ii) shall waive any rights to (A) seek
relief from the automatic stay, (B) object to any election by the holders
of Senior Secured Obligations of the application of Section 1111(b) of
the Bankruptcy Code or (C) to object to a borrowing or grant of security
interest by any Grantor pursuant to Section 364 of the Bankruptcy
Code.

SECTION 3.                            Application of Proceeds of Security, Loan
Guaranty Payments.

(a)   Subject to the provisions of Section 4
which shall govern with respect to the allocation of Net Asset Sale Proceeds of
Domestic Collateral or Net Insurance/Condemnation 

 11
 

 

Proceeds arising
therefrom or Net Debt Proceeds arising from the issuance of Receivables Sales
Indebtedness, any and all amounts actually received by Collateral Agent in
connection with the enforcement of the Collateral Documents, including the
proceeds of any sale or other disposition of, collection from or other
realization upon the Domestic Collateral or any portion thereof (collectively, “Proceeds”) shall be applied promptly by Collateral Agent as
follows:

(i)            Proceeds of Domestic Collateral
under the Pledge Agreement shall be applied as follows:

First,
to the payment of the costs and expenses of such sale, collection or other
realization, including reasonable compensation to Collateral Agent and its
agents and counsel, and all expenses, liabilities and advances made or incurred
by Collateral Agent in connection therewith and all amounts for which
Collateral Agent is entitled to indemnification hereunder and all advances
hereunder for the account of Grantors, and to the payment of all costs and
expenses paid or incurred by Collateral Agent in connection with the exercise
of any right or remedy hereunder;

Second,
to the payment of the Senior Secured Obligations (including any Aggregate
Available Amount (as defined in the Security Agreement) deposits into the L/C
Collateral Account for outstanding Letters of Credit, provided that if such
Letters of Credit expire without being fully drawn, then at that time, such
excess amounts shall be applied as provided in this Section 3 to
then outstanding Senior Secured Obligations) for the ratable benefit of the
holders thereof; provided  that, in making such application in
respect of outstanding obligations under New Senior Debt Documents, Collateral
Agent shall be entitled to deduct from the share of such Proceeds otherwise
payable to the New Senior Debt Representatives the New Senior Debt holders’ pro
rata share of all amounts that Collateral Agent has been paid by the Paying
Indemnifying Parties (as defined in Section 7(c)) pursuant to Section 7(c);

Third,
only after payment in full of all Senior Secured Obligations and the Credit
Agreement has terminated and the Letters of Credit cancelled, to the payment of
the Second Priority Secured Obligations for the ratable benefit of the holders
thereof; provided, that, that in making such application in
respect of outstanding obligations under the Existing Holdings Senior Notes,
Collateral Agent shall be entitled to deduct from the share of such Proceeds
otherwise payable to the holders of the Existing Holdings Senior Notes, such
holders’ pro rata share of all amounts that Collateral Agent has been paid by
the Paying Indemnifying Parties pursuant to Section 7(c), provided,
further, that in making such application in respect of obligations
outstanding under Refinancing Senior Debt Documents, Collateral Agent shall be
entitled to deduct from the share of such Proceeds otherwise payable to the
holders of such Refinancing Senior Debt Representatives such Refinancing Senior
Debt holders’ pro rata share of all amounts that Collateral Agent has been paid
by the Paying Indemnifying Parties pursuant to Section 7(c);

Fourth,
only after payment in full of all Senior Secured Obligations and all Second
Priority Secured Obligations, to the payment of the Third Priority Secured
Obligations for the ratable benefit of the holders thereof; provided, that,
in making such 

 12
 

 

application in respect of obligations outstanding
under New Junior Debt Documents, Collateral Agent shall be entitled to deduct
from the share of such Proceeds otherwise payable to the holders of such New
Junior Debt such New Junior Debt holders’ pro rata share of all amounts that
Collateral Agent has been paid by the Paying Indemnifying Parties pursuant to Section 7(c);
and

Fifth,
after payment in full of all Secured Obligations, to applicable Pledgor, or its
successors or assigns, or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct, of any surplus then
remaining from such Proceeds.

(ii)           Proceeds of Domestic Collateral
pledged pursuant to the Security Agreement or any Mortgage shall be applied as
follows:

First, to the payment of all costs
and expenses of such sale, collection or other realization, including
reasonable compensation to Collateral Agent and its agents and counsel, and all
other expenses, liabilities and advances made or incurred by Collateral Agent
in connection therewith, and all amounts for which Collateral Agent is entitled
to indemnification hereunder and all advances made by Collateral Agent
hereunder for the account of Grantors, and to the payment of all costs and
expenses paid or incurred by Collateral Agent in connection with the exercise
of any right or remedy hereunder;

Second, to the ratable payment of
all other Senior Secured Obligations (including any Aggregate Available Amount
(as defined in the Security Agreement) deposits into the L/C Collateral Account
for outstanding Letters of Credit, provided that if such Letters of Credit
expire without being fully drawn, then at that time, such excess amounts shall
be applied as provided in this Section 3 to then outstanding Senior
Secured Obligations) secured by the Security Agreement and the Mortgages (for
the ratable benefit of the holders thereof) and, as to obligations arising
under the Credit Agreement, as provided in the Credit Agreement; provided,
that, no Proceeds of Domestic Collateral arising from the sale,
collection from or other realization upon all or any part of the Excluded
Securities Collateral shall be applied toward payment of obligations in respect
of the Existing Owens-Brockway Senior Secured Notes or any Specified New Senior
Debt (and neither the holders of nor representatives for such Existing
Owens-Brockway Senior Secured Notes nor the holders of any Specified New Senior
Debt shall be entitled to any increased portion of any Proceeds of any other
Collateral due to such exclusion); provided, further, that,
in making such application in respect of outstanding obligations under New
Senior Debt Documents, Collateral Agent shall be entitled to deduct from the
share of such Proceeds otherwise payable to the New Senior Debt Representatives
the New Senior Debt holders’ pro rata share of all amounts that Collateral
Agent has been paid by the Paying Indemnifying Parties pursuant to Section 7(c);
and

Third, to the payment to or upon the
order of the applicable Grantor, or to whosoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.

Until Proceeds are
so applied, Collateral Agent shall hold such Proceeds in its custody in
accordance with its regular procedures for handling deposited funds.

 13
 

 

(iii)          Any and all amounts actually received
by Collateral Agent in connection with the enforcement of the Loan Guaranties
(collectively, “Loan Guaranty Payments”) shall be
applied as follows:

First, to the payment of all costs
and expenses of such sale, collection or other realization, including
reasonable compensation to Collateral Agent and its agents and counsel, and all
other expenses, liabilities and advances made or incurred by Collateral Agent
in connection therewith, and all amounts for which Collateral Agent is entitled
to indemnification hereunder and all advances made by Collateral Agent
hereunder for the account of Loan Guarantors, and to the payment of all costs
and expenses paid or incurred by Collateral Agent in connection with the
exercise of any right or remedy hereunder;

Second, to the ratable payment of
all other Guarantied Obligations (as defined below), (including any Aggregate
Available Amount (as defined in the Security Agreement) deposited into the L/C
Collateral Account for outstanding Letters of Credit, provided that if such
Letters of Credit expire without being fully drawn, then at that time, such
excess amounts shall be applied as provided in this Section 3 to
then outstanding Guarantied Obligations) (for the ratable benefit of the
holders thereof);  and

Third, to the payment to or upon the
order of the applicable Loan Guarantor, or to whosoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may
direct, of any surplus then remaining from such proceeds.

Until such Loan Guaranty Payments are so applied,
Collateral Agent shall hold such Loan Guaranty Payments in its custody in
accordance with its regular procedures for handling deposited funds. Any Loan
Guaranty Payments received by Collateral Agent relating to the Obligations and
the Other Permitted Credit Exposure (“Guarantied
Obligations”) shall be applied so that each Secured Party with
respect thereto shall receive payment of the same proportionate amount of all
such Guarantied Obligations.

(b)   Subject to the provisions of Section 4
which shall govern with respect to the allocation of Net Asset Sale Proceeds of
Domestic Collateral, Net Insurance/Condemnation Proceeds arising therefrom or
Net Debt Proceeds arising from the issuance of Receivables Sale Indebtedness, (i) any
Proceeds received by Collateral Agent to be distributed under Section 3(a) to
payment of the Senior Secured Obligations shall be applied so that each Secured
Party with respect thereto that is then secured by the Domestic Collateral
giving rise to such Proceeds shall receive payment of the same proportionate
amount of all such Senior Secured Obligations, (ii) any Proceeds received
by Collateral Agent to be distributed under Section 3(a) to
payment of the Second Priority Secured Obligations shall be applied so that
each Secured Party with respect thereto that is then secured by the Domestic
Collateral giving rise to such Proceeds shall receive payment of the same
proportionate amount of all such Second Priority Secured Obligations and, (iii) any
Proceeds received by Collateral Agent to be distributed under Section 3(a) to
payment of the Third Priority Secured Obligations shall be applied so that each
Secured Party with respect thereto that is then secured by the Domestic
Collateral giving rise to such Proceeds shall receive payment of the same
proportionate amount of all such Third Priority Secured Obligations. For
purposes of determining the proportionate amounts of all Senior Secured
Obligations when 

 14
 

 

Proceeds are to be
distributed under this Section 3, the amount of the outstanding
Obligations, Other Permitted Credit Exposure and New Senior Debt, respectively,
shall be deemed to be the principal and interest or face amount or other amount
then due and owing (exclusive of expenses and similar liabilities), as
applicable, then due and payable under the Credit Agreement, the Other
Permitted Credit Exposure Documents (to the extent such Other Permitted Credit
Exposure is then secured by the Domestic Collateral pursuant to the applicable
Collateral Documents), the New Senior Debt Documents (to the extent that the
New Senior Debt with respect thereto is then secured by the Domestic Collateral
under the applicable Collateral Documents). For purposes of determining the
proportionate amounts of all Second Priority Secured Obligations when Proceeds
are to be distributed under this Section 3, the amount of the
outstanding Second Priority Secured Obligations in respect of the Refinancing
Senior Debt and Existing Holdings Senior Notes, respectively shall be deemed to
be the principal and interest then due and payable under the Refinancing Senior
Debt Documents (to the extent such Refinancing Senior Debt with respect thereto
is then secured by the Domestic Collateral under the Pledge Agreement) and the
Existing Holdings Senior Notes. For purposes of determining the proportionate
amounts of all Third Priority Secured Obligations at the time any Proceeds are
to be distributed under this Section 3, the amount of outstanding
New Junior Debt shall be deemed to be the principal and interest then due and
payable under the New Junior Debt Documents (to the extent such New Junior Debt
is then secured by the Domestic Collateral under the Pledge Agreement).

(c)   Payments by Collateral Agent to the Lenders
on account of Proceeds received by Collateral Agent in respect of the
Obligations shall be made to the Lender Agent for distribution to the Lenders
in accordance with the Credit Agreement. Other payments shall be made as
follows: (i)  any payments in respect of Other Permitted Credit Exposure
shall be made as directed by the Other Permitted Credit Exposure Holder to
which obligations under such Other Permitted Credit Exposure are owed; (ii) any
payments in respect of any New Senior Debt shall be paid to the applicable New
Senior Debt Representative for the benefit of the holders of such New Senior
Debt; (iii)  any payments in respect of any Existing Holdings Senior Notes
shall be paid to the applicable Existing Holdings Senior Notes Trustees for the
benefit of holders of such Existing Holdings Senior Notes; (iv) any
payments in respect of any Refinancing Senior Debt shall be paid to the
applicable Refinancing Senior Debt Representative for the benefit of the
holders of such Refinancing Senior Debt; and (v) any payments in respect
of any New Junior Debt shall be paid to the applicable New Junior Debt
Representative for the benefit of the holders of such New Junior Debt.

SECTION 4.         Allocation of Proceeds from Asset Sales
and Net Insurance Condemnation Proceeds of Domestic Collateral, and Net Debt
Proceeds from Receivables Sale Indebtedness. The Lender Agent
acting on behalf of the Lenders, and each Other Permitted Credit Exposure
Holder and each New Senior Debt Representative executing this Agreement or an
acknowledgment to this Agreement, acting on behalf of the holders of New Senior
Debt, the Existing Holdings Senior Notes Trustees, acting on behalf of the
holders of the Existing Holdings Senior Notes, each Refinancing Senior Debt
Representative executing an acknowledgment to this Agreement, acting on behalf
of such holders of Refinancing Senior Debt, and each New Junior Debt
Representative executing an acknowledgement to this Agreement, acting on behalf
of the holders of New Junior Debt, agree, inter  se, that Net
Asset Sale Proceeds of Domestic Collateral and any Net Insurance/Condemnation
Proceeds arising 

 15
 

 

from damage to,
destruction of or condemnation of Domestic Collateral and Net Debt Proceeds
arising from the issuance of Receivables Sales Indebtedness relating to
Domestic Collateral shall be allocated as provided in this Section 4.
Company, Packaging and the other Subsidiary Guarantors agree that any Net Asset
Sale Proceeds of Domestic Collateral or Net Insurance/Condemnation Proceeds
arising therefrom or any Net Debt Proceeds arising from the issuance of
Receivables Sale Indebtedness relating to Domestic Collateral shall be applied
at the times, if any, required under the Credit Agreement as provided in Section 4(a).

(a)   Upon the occurrence of (i) an Asset Sale
of Domestic Collateral which requires a prepayment of the Obligations as
provided in the Credit Agreement or (ii) an event giving rise to Net
Insurance/Condemnation Proceeds arising from damage to, destruction of or
condemnation of Domestic Collateral or the issuance of Receivables Sale
Indebtedness relating to Domestic Collateral giving rise to Net Debt Proceeds
which in each case requires a prepayment of the Obligations as provided in the
Credit Agreement, the applicable Net Asset Sale Proceeds or Net
Insurance/Condemnation Proceeds or Net Debt Proceeds shall be applied to the
payment in cash in full of, to the extent required under the Credit Agreement,
the Obligations, and, to the extent but only to the extent expressly required
by the applicable Financing Agreements the obligations in respect of New Senior
Debt (to the extent such New Senior Debt is then secured by the applicable
Domestic Collateral) in proportion to their respective outstanding amounts of
principal and interest, as the case may be. The allocation set forth in this
paragraph (a) shall apply in all circumstances including, without
limitation, with respect to any case or proceeding under any bankruptcy law or
insolvency law involving creditors’ rights generally; provided, however,
Net Asset Sale Proceeds arising from any Excluded Securities Collateral shall
in no event be applied to the repayment of obligations in respect of the
Existing Owens-Brockway Senior Secured Notes or any Specified New Senior Debt
(and neither the holders nor representatives of such Existing Owens-Brockway
Senior Secured Notes or any Specified New Senior Debt shall be entitled to any
increased portion of any Net Asset Sale Proceeds of any other Collateral due to
such exclusion).

(b)   To the extent received by Company, Packaging
or any other Subsidiary Guarantor such entity shall pay to Collateral Agent all
of the Net Asset Sale Proceeds, Net Insurance/Condemnation Proceeds and Net
Debt Proceeds, which are payable under Section 4(a). Any such
payments received by Collateral Agent directly or pursuant to this Section 4(b) shall
be distributed to the relevant parties, including, if applicable, the New
Senior Debt Representatives in accordance with Section 4(a) and
in the manner provided in Section 3(c).

SECTION 5.         Information. In the
event Collateral Agent proceeds to foreclose upon, collect, sell or otherwise
dispose of or take any other action with respect to the Domestic Collateral, or
any portion thereof, or to enforce any Collateral Document, or proposes to take
any other action pursuant to this Agreement or requests instructions from the
Secured Parties as provided herein, upon the request of Collateral Agent, each
of the following Secured Parties agrees to provide promptly to Collateral Agent
the following information:

(a)   The Lender Agent on behalf of the Lenders
agrees to promptly from time to time notify Collateral Agent of (i) the
aggregate amount of principal of and interest on the Obligations as at such
date as Collateral Agent may specify, (ii) the current Commitment of each
Lender under the Credit Agreement, and (iii) any payment received by the
Lender Agent to be 

 16
 

 

applied to the principal
of or interest on the Obligations. The Lender Agent shall certify as to such
amounts and Collateral Agent shall be entitled to rely conclusively upon such
certification.

(b)   Each Other Permitted Credit Exposure Holder
benefiting from the Loan Guaranties and Other Permitted Credit Exposure
Documents benefited by this Agreement, by having signed or by signing an
acknowledgment to this Agreement or the Original Intercreditor Agreement or the
Amended and Restated Intercreditor Agreement, agrees to promptly from time to
time notify Collateral Agent of (i) the aggregate amount of principal and
interest outstanding with respect to the Other Permitted Credit Exposure to
which such Other Permitted Credit Exposure Documents relate, including the
notional amount under any Interest Rate Agreement or Currency Agreement which
constitutes Other Permitted Credit Exposure, or, if an Interest Rate Agreement
or Currency Agreement has been terminated in accordance with its terms, the
amount then due and payable (exclusive of expenses and similar payments but
including any early termination payments then due) under such Interest Rate
Agreement or Currency Agreement, as the case may be), whether such amounts are
fully guarantied by the Loan Guaranties and the amount, if any, then due and
payable under such Loan Guaranties in respect of such Other Permitted Credit
Exposure, as at such date as Collateral Agent may specify and (ii) any
payment received by such Other Permitted Credit Exposure Holder to be applied
to the principal of or interest on the amounts due with respect to the Other
Permitted Credit Exposure and the Loan Guaranties, including any payment
received with respect to the notional amount under any Interest Rate Agreement
or Currency Agreement, or, if an Interest Rate Agreement or Currency Agreement
has been terminated in accordance with its terms, any early termination
payments under such Interest Rate Agreement or Currency Agreement. The Other
Permitted Credit Exposure Holder shall certify as to such amounts and
Collateral Agent shall be entitled to rely conclusively upon such
certification.

(c)   Each New Senior Debt Representative with
respect to New Senior Debt benefited by this Agreement, by having signed or
signing an acknowledgment to this Agreement or the Original Intercreditor
Agreement or the Amended and Restated Intercreditor Agreement, agrees to
promptly from time to time notify Collateral Agent of (i) the aggregate
amount of principal and interest outstanding under the applicable New Senior
Debt Documents and the amount, if any, then due and payable under such New
Senior Debt Documents, as at such date as Collateral Agent may specify and (ii) any
payment received by such New Senior Debt Representative to be applied to the
principal of or interest on the amounts due with respect to such New Senior
Debt and such New Senior Debt Documents. The New Senior Debt Representative
shall certify as to such amounts and Collateral Agent shall be entitled to rely
conclusively upon such certification.

(d)   Each Refinancing Senior Debt Representative
with respect to Refinancing Senior Debt benefited by this Agreement, by or
signing an acknowledgment to this Agreement, agrees to promptly from time to
time notify Collateral Agent of (i) the aggregate amount of principal and
interest outstanding under the applicable Refinancing Senior Debt Documents and
the amount, if any, then due and payable under such Refinancing Senior Debt
Documents, as at such date as Collateral Agent may specify and (ii) any
payment received by such Refinancing Senior Debt Representative to be applied
to the principal of or interest on the amounts due with respect to such
Refinancing Senior Debt and such Refinancing Senior Debt Documents. The 

 17
 

 

Refinancing Senior Debt
Representative shall certify as to such amounts and Collateral Agent shall be
entitled to rely conclusively upon such certification.

(e)   Collateral Agent may from time to time
request each Existing Holdings Senior Notes Trustee to notify Collateral Agent
of the outstanding principal amount of the Existing Holdings Senior Notes for
which it is trustee and the amount of accrued but unpaid interest thereon, at
such date as Collateral Agent may specify and for each Existing Holdings Senior
Notes Trustee to, or cause the registrar for the Existing Holdings Senior Notes
for which it is trustee to, certify as to such amount as reflected in the
register maintained for such purpose by such Existing Holdings Senior Notes
Trustee or such registrar, as the case may be, and to the extent any such
Existing Holdings Senior Notes Trustee or registrar so certifies, Collateral
Agent shall be entitled to rely conclusively upon such certification. If one or
more Existing Holdings Senior Notes Trustees fail to respond to such a request
by Collateral Agent, Collateral Agent may rely conclusively on the records of
Company for purposes of determining the outstanding principal amount of the
Existing Holdings Senior Notes and/or the amount of accrued but unpaid interest
thereon.

(f)    Each New Junior Debt Representative with
respect to New Junior Debt benefited by this Agreement, by signing an
acknowledgment to this Agreement, agrees to promptly from time to time notify
Collateral Agent of (i) the aggregate amount of principal and interest
outstanding under the applicable Refinancing Senior Debt Documents and the
amount, if any, then due and payable under such Senior Refinancing Debt
Documents, as at such date as Collateral Agent may specify and (ii) any
payment received by such New Junior Debt Representative to be applied to the
principal of or interest on the amounts due with respect to such New Junior
Debt and such New Junior Debt Documents. The New Junior Debt Representative
shall certify as to such amounts and Collateral Agent shall be entitled to rely
conclusively upon such certification.

SECTION 6.                            Future Other Permitted
Credit Exposure Documents; New Senior Debt Documents; Refinancing 

                                                                                                    Senior
Debt Documents; New Junior Debt Documents.

(a)   Each Other Permitted Credit Exposure Holder
may cause its respective Other Permitted Credit Exposure Documents to be secured
by the Collateral Documents and guaranteed by the Loan Guaranties by executing
an acknowledgment in the form contained on the signature pages hereof, and
by delivering such executed acknowledgment (which to be effective must be
acknowledged by the Borrowers’ Agent) to Collateral Agent, by which such Other
Permitted Credit Exposure Holder agrees to be bound by the terms of this
Agreement.

(b)   The holders of each issue of New Senior Debt
may cause such New Senior Debt to be secured by the Collateral Documents by
causing their New Senior Debt Representative to execute an acknowledgement in
the form contained on the signature pages hereof, and by delivering such
executed acknowledgement (which to be effective must be acknowledged by the
Borrowers’ Agent) to Collateral Agent, by which such New Senior Debt
Representative agrees to be bound by the terms of this Agreement.

 18

 

 

(c)   The holders of each issue of Refinancing
Senior Debt may cause such Refinancing Senior Debt to be secured by the Pledge
Agreement by causing their Refinancing Senior Debt Representative to execute an
acknowledgement in the form contained on the signature pages hereof and by
delivering such executed acknowledgement (which to be effective must be
acknowledged by Company and Packaging) to Collateral Agent, by which such
Refinancing Senior Debt Representative agrees to be bound by the terms of this
Agreement.

(d)   The holders of each issue of New Junior Debt
may cause such New Junior Debt to be secured by the Pledge Agreement by causing
their New Junior Debt Representative to execute an acknowledgement in the form
contained on the signature pages hereof and by delivering such executed
acknowledgement (which to be effective must be acknowledged by Company and
Packaging) to Collateral Agent, by which such New Junior Debt Representative
agrees to be bound by the terms of this Agreement.

SECTION 7.         Disclaimers, Indemnity, Etc.

(a)   Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement, the
Collateral Documents or the Loan Guaranties, and Collateral Agent shall not by
reason of this Agreement, the Collateral Documents or the Loan Guaranties be a
trustee for any Secured Party or have any other fiduciary obligation to any
Secured Party (including any obligation under the Trust Indenture Act of 1939,
as amended). Collateral Agent shall not be responsible to any Secured Party for
any recitals, statements, representations or warranties contained in this
Agreement, the Credit Agreement, the Other Permitted Credit Exposure Documents
or any other documents evidencing or relating to any Other Permitted Credit
Exposure, the New Senior Debt Documents (including the Existing Owens-Brockway
Senior Secured Notes and the New Senior Debt Documents therefor), the Existing
Holdings Senior Notes Indentures, the Existing Holdings Senior Notes, the
Existing Holdings Senior Notes Subordinated Guaranty, the Refinancing Senior
Debt Documents, the New Junior Debt Documents, the Collateral Documents or the
Loan Guaranties (collectively, the “Financing Agreements”)
or in any certificate or other document referred to or provided for in, or received
by any of them under, any of the Financing Agreements, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any of
the Financing Agreements or any other document referred to or provided for
therein or any Lien under the Collateral Documents or the perfection or
priority of any such Lien or for any failure by any Party to perform any of its
respective obligations under any of the Financing Agreements. Collateral Agent
may employ agents and attorneys-in-fact and shall not be responsible, except as
to money or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither Collateral Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.

(b)   Collateral Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telex, telecopy, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel to
Holdings or any Subsidiary of Holdings), independent accountants and other
experts selected by Collateral Agent. 

 19
 

 

As to any matters not
expressly provided for by this Agreement, Collateral Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by Requisite Obligees, and such
instructions of Requisite Obligees, and any action taken or failure to act
pursuant thereto, shall be binding on all of the Secured Parties.

(c)   The Lender Agent on behalf of the Lenders and
each Other Permitted Credit Exposure Holder (collectively, the “Paying Indemnifying Parties”) agrees that the Secured
Parties represented by it shall indemnify Collateral Agent, ratably in
accordance with the amount of the obligations held by such Secured Parties
secured by the Collateral Documents, to the extent neither reimbursed by any
Grantor under any Collateral Document nor reimbursed out of any Proceeds
pursuant to Section 3 hereof and the corresponding provisions of
the Collateral Documents for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against Collateral Agent in any way relating to or arising out of any
of the Financing Agreements or any other documents contemplated by or referred
to therein or the transactions contemplated thereby or the enforcement of any
of the terms of any thereof; provided, however, that no such
Secured Party shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of Collateral Agent. Each New
Senior Debt Representative, on behalf of such New Senior Debt Representative
and the holders in respect of which such New Senior Debt Representative is the
Representative, agrees that, as provided in Section 3 hereof, Section 12
of the Pledge Agreement, Section 18 of the Security Agreement and
the application of proceeds provision of each Mortgage, deductions from
distributions otherwise due with respect to such New Senior Debt will be made
so that the holders of such New Senior Debt shall share with the Paying
Indemnifying Parties, ratably in accordance with the amount of New Senior Debt
secured by the Collateral Documents, the payment of the amounts due under the
preceding sentence. As provided in Section 3 hereof, and Section 12
of the Pledge Agreement, deductions from distributions otherwise due with
respect to any Existing Holdings Senior Notes Trustee on behalf of the holders
of Existing Holdings Senior Notes will be made so that such holders of Existing
Holdings Senior Notes shall share with the Paying Indemnifying Parties, ratably
in accordance with the amount (without duplication) of such Existing Holdings
Senior Notes secured by the Pledge Agreement, the payment of the amounts due
under the second preceding sentence. Each Refinancing Senior Debt
Representative, on behalf of such Refinancing Senior Debt Representative and
the holders in respect of which such Refinancing Senior Debt Representative is
the Refinancing Senior Debt Representative, agrees that, as provided in Section 3
hereof, and Section 12 of the Pledge Agreement, deductions from
distributions otherwise due with respect to such Refinancing Senior Debt will
be made so that the holders of such Refinancing Senior Debt will share with the
Paying Indemnifying Parties, ratably in accordance with the amount of Refinancing
Senior Debt secured by the Pledge Agreement, the payment of the amounts due
under the third preceding sentence. Each New Junior Debt Representative, on
behalf of such New Junior Debt Representative and the holders in respect of
which such New Junior Debt Representative is the New Junior Debt
Representative, agrees that, as provided in and Section 3 hereof,
and Section 12 of the Pledge Agreement, deductions from
distributions otherwise due with respect to such New Junior Debt will be made
so that the holders of such New Junior Debt will share with the Paying
Indemnifying Parties, ratably in accordance with the amount of New Junior Debt
secured by the Pledge Agreement, the payment of the amounts due under the
fourth preceding sentence.

 20
 

 

 

(d)   Except for action expressly required of
Collateral Agent hereunder, Collateral Agent shall, notwithstanding anything to
the contrary in Section 7(c) hereof, in all cases be fully
justified in failing or refusing to act hereunder unless it shall be further
indemnified to its satisfaction by the Secured Parties against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

(e)   Collateral Agent may deem and treat the payee
of any promissory note or other evidence of indebtedness relating to the Senior
Secured Obligations, Second Priority Secured Obligations or Third Priority
Secured Obligations as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof, signed by such
payee and in form satisfactory to Collateral Agent, shall have been filed with
Collateral Agent. Any request, authority or consent of any Person who at the
time of making such request or giving such authority or consent is the holder
of any such note or other evidence of indebtedness shall be conclusive and
binding on any subsequent holder, transferee or assignee of such note or other
evidence of indebtedness and of any note or notes or other evidences of
indebtedness issued in exchange therefor.

(f)    Except as expressly provided herein and in
the Collateral Documents, Collateral Agent shall have no duty to take any
affirmative steps with respect to the collection of amounts payable in respect
of the Domestic Collateral. Collateral Agent shall incur no liability to any
Secured Party as a result of any sale of any Domestic Collateral at any private
sale.

(g)   (i)    Until
such time as the Senior Secured Obligations shall have been indefeasibly paid
in full, Collateral Agent may resign at any time by giving at least 30 days’
notice thereof to the Secured Parties (such resignation to take effect as
hereinafter provided) and Collateral Agent may be removed as Collateral Agent
at any time by Requisite Obligees. In the event of such resignation or removal
of Collateral Agent, Requisite Obligees shall thereupon have the right to
appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed by Requisite Obligees and shall have accepted such
appointment within 30 days after the notice of the intent of Collateral Agent
to resign, then the retiring Collateral Agent may, on behalf of the other
Secured Parties, appoint a successor Collateral Agent. Any successor Collateral
Agent appointed pursuant to this clause (i) (A) shall be a commercial
bank organized under the laws of the United States of America or any state
thereof and having a combined capital and surplus of at least $500,000,000 and (B) unless
an Event of Default or Potential Event of Default shall have occurred and be
continuing, shall be approved by Company.

(ii)           After the indefeasible payment in
full in cash of the Senior Secured Obligations and until such time as the
Second Priority Secured Obligations are paid in full, Collateral Agent may
resign at any time by giving at least 30 days’ notice thereof to each Existing
Holdings Senior Notes Trustee (only if the Existing Holdings Senior Notes are
then secured by any of the Domestic Collateral), and each Refinancing Senior
Debt Representative (to the extent such Refinancing Senior Debt is then secured
by any of the Domestic Collateral), (such resignation to take effect as
hereinafter provided) and Collateral Agent may be removed as Collateral Agent
at any time by the appropriate Requisite Obligees. In the event of any such
resignation or removal of Collateral Agent, such Requisite Obligees shall
thereupon have the right to appoint a successor Collateral Agent. If no
successor Collateral Agent shall have been 

 21
 

 

so appointed within 30
days after the notice of the intent of Collateral Agent to resign, then the
retiring Collateral Agent may, on behalf of the Requisite Obligees, appoint a
successor Collateral Agent. Any successor Collateral Agent appointed pursuant
to this clause (ii) (A) shall be a commercial bank organized under
the laws of the United States of America or any state thereof and having a
combined capital and surplus of at least $500,000,000 and (B) unless an
Event of Default or Potential Event of Default shall have occurred and be
continuing, shall, unless such successor Collateral Agent is appointed by the
retiring Collateral Agent, be approved by Company.

(iii)          After the indefeasible payment in full
in cash of all Senior Secured Obligations and Second Priority Secured
Obligations and until such time as the Third Priority Secured Obligations are
paid in full, Collateral Agent may resign at any time by giving at least 30
days’ notice thereof to each New Junior Debt Representative (to the extent such
New Junior Debt is then secured by any of the Domestic Collateral), (such
resignation to take effect as hereinafter provided) and Collateral Agent may be
removed as Collateral Agent at any time by the appropriate Requisite Obligees. In
the event of any such resignation or removal of Collateral Agent, such Requisite
Obligees shall thereupon have the right to appoint a successor Collateral Agent.
If no successor Collateral Agent shall have been so appointed within 30 days
after the notice of the intent of Collateral Agent to resign, then the retiring
Collateral Agent may, on behalf of the Requisite Obligees, appoint a successor
Collateral Agent. Any successor Collateral Agent appointed pursuant to this
clause (iii) (A) shall be a commercial bank organized under the laws
of the United States of America or any state thereof and having a combined
capital and surplus of at least $500,000,000 and (B) unless an Event of
Default or Potential Event of Default shall have occurred and be continuing,
shall, unless such successor Collateral Agent is appointed by the retiring Collateral
Agent, be approved by Company.

(iv)          Upon the acceptance of any appointment
as Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Collateral
Agent, and the retiring or removed Collateral Agent shall thereupon be
discharged from its duties and obligations hereunder. After any retiring or
removed Collateral Agent’s resignation or removal hereunder as Collateral
Agent, the provisions of this Section 7 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Collateral Agent.

(v)           In no event shall Collateral Agent or
any Secured Party be liable or responsible for any funds or investments of
funds held by any Grantor or any affiliates thereof.

SECTION 8.         No Impairment of Subordination in
Rights of Payment. Each New Junior Debt Representative
agrees, which agreement shall be binding upon each and every holder of the New
Junior Debt, that the agreements and obligations of the holders of the New
Junior Debt relating to the subordination of the right of payment of the
holders of the New Junior Debt to the prior payment of “Senior Indebtedness” or
terms of similar import shall not be impaired in any manner by the pledge of
the Domestic Collateral and the security interest granted under the Pledge
Agreement or the exercise of any rights provided thereunder and that the rights
of the holders of such “Senior Indebtedness” shall not be impaired in any
manner by any such action.

 22
 

 

 

SECTION 9.         Miscellaneous.

(a)   All notices and other communications provided
for herein shall be in writing and may be personally served, telecopied,
telexed or sent by United States mail and shall be deemed to have been given
when delivered in person, upon receipt of telecopy or telex or four Business
Days after deposit in the United States mail, registered or certified, with
postage prepaid and properly addressed. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as
provided in this Section 9(a)) shall be as set forth under each
party’s name on the signature pages (including acknowledgments) hereof.

(b)   This Agreement may be modified or waived only
by an instrument or instruments in writing signed by Collateral Agent and the
Lender Agent with the written consent of Requisite Obligees, except that any
modification or waiver adversely affecting a Secured Party’s rights under Sections
3 or 4 hereof shall require the written consent of such Secured
Party; provided, however that, notwithstanding the foregoing, the
written consent of the Secured Parties shall not be required with respect to
amendments, modifications or waivers necessary to permit the incurrence of
additional Indebtedness secured by the Domestic Collateral and entitled to the
benefits of the Pledge Agreement, the Security Agreement and/or the Mortgages
insofar as the foregoing is not prohibited by the Financing Agreements
benefiting such Secured Party, including for the purposes of providing any
successor or replacement credit agreement or bank facility with substantially
the same or similar benefits, rights and priorities hereunder as the Credit
Agreement, and including without limitation any amendments, modifications or
waivers for the purpose of adding appropriate references to additional parties
in, and according such parties the benefits of, any of the provisions hereof in
connection with the incurrence of such Indebtedness.

(c)   This Agreement shall be binding upon and
inure to the benefit of Collateral Agent, each Secured Party and their
respective successors and assigns.

(d)   This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.

(e)   This amendment and restatement of the Amended
and Restated Intercreditor Agreement shall become effective as to the Lenders,
the Lender Agent, the Existing Owens-Brockway Senior Secured Notes Trustees and
Collateral Agent upon the execution of this Agreement by the Lender Agent,
Collateral Agent and the Existing Owens-Brockway Senior Secured Notes Trustees
and the delivery of each such Person’s counterparts to Collateral Agent. Under Section 9(b) of
the Amended and Restated Intercreditor Agreement, the Amended and Restated
Intercreditor Agreement may be amended as set forth herein with the consent of
Requisite Obligees without the consent of any of the other Secured Parties, and
accordingly, upon such execution by Lender Agent and Collateral Agent, this
Agreement shall become effective as to each Existing Holdings Senior Notes
Trustee, each holder of Other Permitted Credit Exposure listed on Exhibit I
attached hereto (each of which has heretofore executed and delivered to
Collateral Agent an acknowledgment to the Original Intercreditor Agreement and
the Amended and Restated Intercreditor Agreement that was acknowledged by
Borrowers’ Agent). This Agreement shall become effective as to each future
Other Permitted Credit 

 23
 

 

Exposure Holder, each
future New Senior Debt Representative, each Refinancing Senior Debt
Representative, and each New Junior Debt Representative, respectively, upon the
execution of an acknowledgment by any such Person or its representative as
contemplated by Section 6 and delivery of such executed
acknowledgment (which to be effective shall also be acknowledged by the
Borrowers’ Agent or Company and Packaging, as applicable) to Collateral Agent.

(f)    Collateral Agent or an Affiliate thereof
shall at all times be the same Person that is Administrative Agent under the
Credit Agreement (for so long as the Credit Agreement exists). Written notice of
resignation by Administrative Agent pursuant to subsection 8.6 of the Credit
Agreement shall also constitute notice of resignation as Collateral Agent under
this Agreement and each of the Collateral Documents; removal of Administrative
Agent pursuant to subsection 8.6 of the Credit Agreement shall also constitute
removal as Collateral Agent under this Agreement and each of the Collateral
Documents; and appointment of a successor Administrative Agent pursuant to
subsection 8.6 of the Credit Agreement shall also constitute appointment of a
successor Collateral Agent under this Agreement and each of the Collateral
Documents unless Administrative Agent designates an Affiliate for such role, in
which case, such appointment of Administrative Agent shall constitute
appointment of such Affiliate as Collateral Agent. Upon the acceptance of any
appointment as Administrative Agent under subsection 8.6 of the Credit
Agreement by a successor Administrative Agent, that successor Administrative
Agent or its designated Affiliate shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed
Collateral Agent under this Agreement, and the retiring or removed Collateral
Agent under this Agreement shall promptly (i) transfer to such successor
Collateral Agent all sums, securities and other items of Collateral held
hereunder or under the Collateral Documents, together with all records and
other documents necessary or appropriate in connection with the performance of
the duties of the successor Collateral Agent under this Agreement and the
Collateral Documents, and (ii) execute and deliver to such successor
Collateral Agent such amendments to financing statements, and take such other
actions, as may be necessary or appropriate in connection with the assignment
to such successor Collateral Agent of the security interests created under the
Collateral Documents, whereupon such retiring or removed Collateral Agent shall
be discharged from its duties and obligations under this Agreement and each of
the Collateral Documents. After any retiring or removed Administrative Agent’s
resignation or removal hereunder as Collateral Agent, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be taken
by it under this Agreement while it was Collateral Agent hereunder.

(g)   THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(h)   Anything contained in this Agreement to the
contrary notwithstanding, each party to this Agreement shall no longer be a
party from and after such time as all of the obligations owing such party and
secured by any of the Collateral Documents or guaranteed by any of the Loan
Guaranties, or the instruments representing the same, shall have ceased to be
outstanding by virtue of the payment in full in cash thereof or the
cancellation thereof or delivery for cancellation thereof in accordance with
their terms.

[Remainder of page intentionally left blank]

 24
 

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.

	
  

  	
  DEUTSCHE
  BANK AG, NEW YORK BRANCH,

  
	
   

  	
  as Lender Agent
  for the Lenders

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice
  Address:

  
	
   

  	
   

  
	
   

  	
  Deutsche Bank AG, New York Branch

  90 Hudson Street

  MS JCY050-199

  Jersey City, New Jersey 07302

  Attention:
  Commercial Loan Division

  
	
   

  	
   

  
	
   

  	
  With a
  copy to:

  
	
   

  	
   

  
	
   

  	
  Deutsche Bank AG, New York Branch

  222 South Riverside Plaza

  MS CHI105-2900

  Chicago, Illinois 60606

  Attention: Marla
  Heller and Linda Stahulak

  

 

 25
 

 

 

	
  

  	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS,

  
	
   

  	
  as Collateral
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice
  Address:

  
	
   

  	
   

  
	
   

  	
  Deutsche Bank Trust Company Americas

  90 Hudson Street

  MS JCY050-199

  Jersey City, New Jersey 07302

  Attention:
  Commercial Loan Division

  
	
   

  	
   

  
	
   

  	
  With a
  copy to:

  
	
   

  	
   

  
	
   

  	
  Deutsche Bank Trust Company Americas

  22 South Riverside Plaza

  MS CHI105-2900

  Chicago, Illinois 60606

  Attention: Marla
  Heller and Linda Stahulak

  

 

 26
 

 

 

U.S. Bank National Association,

	
  

  	
  as trustee for
  each of:

  
	
   

  	
  (i) Owens-Brockway’s
  8 7/8% Senior Secured Notes due 2009;

  
	
   

  	
  (ii) Owens-Brockway’s
  7 3/4% Senior Secured Notes due 2011; and

  
	
   

  	
  (iii) Owens-Brockway’s
  8 3/4% Senior Secured Notes due 2012

  
	
   

  	
   

  	
   

  
	
  

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Notice Address:

 

With a copy to:

 27
 

 

 

EACH PLEDGOR, by
its execution of this Agreement in the space provided below, HEREBY
ACKNOWLEDGES AND AGREES to the foregoing provisions of this Agreement
including, without limitation, Sections 3 and 4 hereof.

 

 

 

[Signature
Blocks to Follow]

 28

 

 

ACKNOWLEDGMENT

[New Senior Debt]

Reference is hereby made
to the Second Amended and Restated Intercreditor Agreement dated as of June 14,
2006, as amended to the date hereof (as so amended, this “Agreement”)
among Deutsche Bank AG New York Branch, as Lender Agent for the lenders party
to the Credit Agreement and Deutsche Bank Trust Company Americas, as Collateral
Agent, in which this Acknowledgment is incorporated. The undersigned Secured
Party represents the holders of New Senior Debt pursuant to which Indebtedness
thereunder is to be secured by the Collateral Documents. The undersigned
Secured Party acknowledges the terms of this Agreement and agrees to be bound
hereby.

[Describe New Senior
Debt] [Include for Specified New Senior Debt] [Notwithstanding anything to the
contrary in this Agreement or the Collateral Documents, the undersigned Secured
Party on behalf of the holders from time to time of the [describe Specified New
Senior Debt] (and with the intent that the obligations under or in respect of
the [describe Specified New Senior Debt] be secured under this Agreement and
the Collateral Documents equally and ratably with (i.e., on the same basis and
by the same collateral as) the Existing Owens-Brockway Senior Secured Notes
[and any other Specified New Senior Debt]) agrees and acknowledges for the
benefit of Collateral Agent and the Borrowers’ Agent that (i) in no event
shall the pledges and security interests made under the Collateral Documents in
favor of Collateral Agent by the Company or any Subsidiaries of the Company in
the Excluded Securities Collateral (as defined in the Security Agreement) or
any proceeds thereof (the “Excluded
Collateral”) be effective for or secure obligations under or in
respect of the [describe Specified New Senior Debt], and (ii) the
undersigned Secured Party expressly disclaims and releases forever any interest
in or benefits of the Excluded Collateral including any right to direct
Collateral Agent or the share in proceeds with respect thereto. The undersigned
Secured Party further agrees and consents to any amendments of the Agreement or
any of the Collateral Documents, and agrees to execute and deliver such
amendments (as necessary) and such other documents as may from time to time be
reasonably requested, for the purpose of more fully reflecting or effectuating
the intent of this paragraph.]

 

	
  

  	
  SECURED PARTY

  
	
   

  	
  [Insert Name of New Senior Debt 

  Representative or other applicable party]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Acknowledged and Agreed: 

  

 

 

 

	
  

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Borrowers’ Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  

 

 

 

ACKNOWLEDGMENT

[Refinancing Senior Debt]

Reference is hereby made
to the Second Amended and Restated Intercreditor Agreement dated as of June 14,
2006, as amended to the date hereof (as so amended, this “Agreement”)
among Deutsche Bank AG New York Branch, as Lender Agent for the lenders party
to the Credit Agreement and Deutsche Bank Trust Company Americas, as Collateral
Agent, in which this Acknowledgment is incorporated. The undersigned Secured
Party represents the holders of Refinancing Senior Debt pursuant to which
Indebtedness thereunder is to be secured by the Pledge Agreement. The
undersigned Secured Party acknowledges the terms of this Agreement and agrees
to be bound hereby.

[Describe Refinancing
Senior Debt]

	
  

  	
  SECURED PARTY

  
	
   

  	
  [Insert Name of Refinancing Senior Debt 

  Representative or other applicable party]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Acknowledged and Agreed: 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Company and
  Packaging

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  

 

 

 

ACKNOWLEDGMENT

[New Junior Debt]

Reference is hereby made
to the Second Amended and Restated Intercreditor Agreement dated as of June 14,
2006, as amended to the date hereof (as so amended, this “Agreement”)
among Deutsche Bank AG New York Branch, as Lender Agent for the lenders party
to the Credit Agreement and Deutsche Bank Trust Company Americas, as Collateral
Agent, in which this Acknowledgment is incorporated. The undersigned Secured
Party represents the holders of New Junior Debt pursuant to which Indebtedness
thereunder is to be secured by the Pledge Agreement. The undersigned Secured
Party acknowledges the terms of this Agreement and agrees to be bound hereby.

[Describe New Junior
Debt]

	
  

  	
  SECURED PARTY

  
	
   

  	
  [Insert Name of New Junior Debt 

  Representative or other applicable party]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Acknowledged and Agreed: 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Company and
  Packaging

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  

 

 

 

ACKNOWLEDGMENT

[Other Permitted Credit Exposure]

Reference is hereby made
to the Second Amended and Restated Intercreditor Agreement dated as of June 14,
2006, as amended to the date hereof (as so amended, this “Agreement”)
among Deutsche Bank AG New York Branch, as Lender Agent for the lenders party
to the Credit Agreement and Deutsche Bank Trust Company Americas, as Collateral
Agent, in which this Acknowledgment is incorporated. The undersigned Secured
Party has issued certain Other Permitted Credit Exposure which Indebtedness
thereunder is to be secured by the Collateral Documents. The undersigned
Secured Party acknowledges the terms of this Agreement (including to the effect
that the undersigned shall only remain entitled to the benefits hereof and of
the Collateral Documents for so long as it is (or becomes) and remains a Lender
or an affiliate of a Lender), the guaranty under Section 9 of the
Credit Agreement, the Domestic Borrowers’ Guaranty and the Subsidiary Guaranty
and agrees to be bound hereby and thereby.

By execution hereof, the
undersigned for the benefit of Owens-Illinois, Inc. releases
Owens-Illinois, Inc. from any guaranty and any other obligations of
Owens-Illinois, Inc. in respect of the Other Permitted Credit Exposure
described below.

[Describe Other Permitted
Credit Exposure]

	
  

  	
  SECURED PARTY

  
	
   

  	
  [Insert Name of Lender]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Acknowledged and Agreed: 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Borrowers’ Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  

 

 

ANNEX 1

to

INTERCREDITOR AGREEMENT

Form of
Pledge Agreement

 Annex 1
 

 

ANNEX 2

to

INTERCREDITOR AGREEMENT

Form of Security Agreement

 

 Annex 2

 

TABLE OF CONTENTS

	
  

  	
   

  	
  

  	
   

  	
  Page

  
	
  SECTION 1.

  	
   

  	
  Appointment As
  Collateral Agent

  	
   

  	
  8

  
	
  SECTION 2.

  	
   

  	
  Decisions Relating to
  Exercise of Remedies Vested in Requisite Obligees Under the Credit Agreement,
  Other Permitted Credit Exposure Documents, New Senior Debt Documents,
  Existing Holdings Senior Notes Indentures, Refinancing Senior Debt Documents,
  New Junior Debt Documents, Collateral Documents and Loan Guaranties

  	
   

  	
  8

  
	
  SECTION 3.

  	
   

  	
  Application of Proceeds
  of Security, Loan Guaranty Payments

  	
   

  	
  11

  
	
  SECTION 4.

  	
   

  	
  Allocation of Proceeds
  from Asset Sales and Net Insurance Condemnation Proceeds of Domestic
  Collateral, and Net Debt Proceeds from Receivables Sale Indebtedness

  	
   

  	
  15

  
	
  SECTION 5.

  	
   

  	
  Information

  	
   

  	
  16

  
	
  SECTION 6.

  	
   

  	
  Other Permitted Credit
  Exposure Documents; New Senior Debt Documents; Refinancing Senior Debt
  Documents; New Junior Debt Documents

  	
   

  	
  18

  
	
  SECTION 7.

  	
   

  	
  Disclaimers, Indemnity,
  Etc

  	
   

  	
  19

  
	
  SECTION 8.

  	
   

  	
  No Impairment of
  Subordination in Rights of Payment

  	
   

  	
  22

  
	
  SECTION 9.

  	
   

  	
  Miscellaneous

  	
   

  	
  23

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