Document:

EX-10.6

 

Exhibit
10.6

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of May 7, 2007, between LIBBEY INC., a
Delaware corporation (the “Company”), and Jonathan S. Freeman (the “Executive”).

          WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed
by the Company, to serve as an officer of the Company upon the terms and conditions set forth
herein.

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

     1. Term of Agreement. The term of this Agreement shall commence on the date of this
Agreement (the “Effective Date”) and shall continue through December 31, 2007, provided however,
that commencing on January 1, 2008 and each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless not later than September 30 of the year
preceding such extension of the term, the Company shall have given written notice to the Executive
that it does not wish to extend this Agreement beyond the expiration of the then current term.
Employment hereunder by the Company or its affiliates shall continue indefinitely during the term
of this Agreement until terminated as provided in Section 4. Not withstanding the foregoing, the
term of this Agreement shall automatically end on the last day of the month in which the Executive
reaches age 65.

     2. Position and Duties.

          (a) Position. The Executive hereby agrees to serve as an officer of the Company and
shall perform all duties assigned by the Company commensurate with such position and shall devote
the Executive’s best efforts to the performance of services to the Company in accordance with the
terms hereof and as may reasonably be requested by the Company. For purposes of this Agreement
“Officer” of the Company shall mean an executive elected by the Board of Directors of the Company
(the “Board”) as an officer and who enters into a written employment agreement authorized by the
Board.

          (b) Other Activities. While employed pursuant to this Agreement, the Executive shall
not, other than in the performance of duties inherent in, and in furtherance of, the business of
the Company, engage in any other business or commercial activity as an employee, consultant, or any
other capacity, whether or not any compensation is received therefore, provided, however, that
nothing herein shall prevent the Executive from (i) making and managing personal investments, (ii)
performing occasional assistance to family members and friends, including but not limited to
service as a director of a family owned or private business enterprise, (iii) engaging in community
and/or charitable activities, including without limitation service as a director, trustee or
officer of an educational, welfare, social, religious or civic organization or charity, (iv)
serving as a trustee or director or similar position of a public corporation or public business
enterprise, but for only one such public corporation or public business enterprise at any one time,
or (v) engaging in such other activities as are approved in writing by the Chief Executive Officer,
in each case (i) – (v) which singly or in the aggregate do

 

 

not interfere with the proper performance of the Executive’s duties and responsibilities to
the Company and are consistent with Section 9 of this Agreement.

     3. Compensation. In consideration of the performance of his duties hereunder, the
Executive shall be entitled to receive the salary, bonus and benefits set forth on Schedule A. All
amounts payable to the Executive under this Section 3 shall be paid in accordance with the
Company’s regular payroll practices (e.g., timing of payments and standard employee deductions,
such as income and employment tax withholdings, medical benefit contributions and parking fees
among others). No additional compensation shall be payable to the Executive by reason of the
number of hours worked or any hours worked on Saturdays, Sundays or holidays, by reason of special
responsibilities assumed (whether on behalf of the Company or any of its subsidiaries or
affiliates), special projects completed, or otherwise. The Executive’s compensation shall be
reviewed by the Chief Executive Officer, the Board or the Compensation Committee of the Board (the
“Compensation Committee”) periodically for possible merit increases and other changes as such
reviewer deems appropriate.

     4. Termination of Employment. Either party may terminate the Executive’s employment
hereunder at any time and for any reason, without advance notice; provided, however, that if the
Executive’s employment is terminated for any of the following reasons, the following provisions
shall apply:

          (a) Termination for Cause. If the Executive’s employment is terminated for Cause, the
Company shall pay to the Executive all base salary, when due, through the Date of Termination at
the then current rate in effect at the time the Notice of Termination (as defined in Section 4(f))
is given plus, all other amounts and benefits to which the Executive is entitled under any pension
plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and
other benefits of the Company or provided by law, at the time such payments are due and the Company
shall have no further obligations to the Executive under this Agreement. Without waiving any rights
the Company may have hereunder or otherwise, the Company hereby expressly reserves its rights to
proceed against the Executive for damages in connection with any claim or cause of action that the
Company may have arising out of or related to the Executive’s employment hereunder. “Cause” shall
mean (a) the Executive’s willful and continued failure to substantially perform the Executive’s
duties with the Company (other than any such failure resulting from an incapacity due to physical
or mental illness or any such actual or anticipated failure after the Executive’s issuance of a
Notice of Termination (as defined in Section 4(d)) for Good Reason), after a written demand for
substantial performance is delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive has not substantially
performed the Executive’s duties, (b) the Executive’s willful and continued failure to
substantially follow and comply with the specific and lawful directives of the Board, as reasonably
determined by the Board (other than any such failure resulting from an incapacity due to physical
or mental illness or any such actual or anticipated failure after the Executive’s issuance of a
Notice of Termination for Good Reason), after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies the manner in which
the Board believes that the Executive has not substantially followed or complied with the
directives of the Board, (c) the Executive’s willful commission of an act of fraud or dishonesty
resulting in material economic or financial injury to the Company, or (d) the Executive’s willful
engagement in illegal conduct or gross misconduct, in each case which is
materially and demonstrably injurious to the Company.

2

 

For purposes of this Section 4(a), no
act, or failure to act, shall be deemed “willful” unless done, or omitted to be done, by the
Executive not in good faith. Notwithstanding the foregoing, the Executive shall not be deemed
terminated for Cause pursuant to this section unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board (after reasonable notice to the Executive, an opportunity for the Executive, together
with counsel, to be heard before the Board and a reasonable opportunity to cure), finding that in
the Board’s good faith opinion, the Executive was guilty any of the conduct set forth above in this
section and specifying the particulars thereof in reasonable detail.

          (b) Death. If the Executive’s employment is terminated due to the Executive’s death,
within sixty (60) days after the Company receives written notice of appointment of a personal
representative (on behalf of the Executive’s estate), the Executive’s estate shall be entitled to
compensation, vesting and benefits as described under Section 5(a) below.

          (c) Permanent Disability. If the Executive’s employment is terminated due to
Executive’s Permanent Disability, the Executive shall be entitled to such compensation, vesting and
benefits as described under Section 5(b) below, which in addition to any payments under the
Company’s long-term disability policy, shall constitute full and complete satisfaction of the
Company’s obligations hereunder. For purposes of this Agreement, “Permanent Disability” means any
incapacity due to physical or mental illness, a result of which is that the Executive shall have
been absent from the full-time performance of his duties with the Company for six (6) consecutive
months and the Executive shall not have returned to the full-time performance of his duties within
thirty (30) days after written notice of termination is given to the Executive.

          (d) Termination Without Cause or For Good Reason. If the Executive’s employment is
terminated by the Executive with “Good Reason” or by the Company without cause, the Executive shall
be entitled to such compensation, vesting and benefits as described under Section 5(b) below. For
purposes of this Agreement, the following circumstances shall constitute “Good Reason” unless such
circumstances are fully corrected (provided such circumstances are capable of correction) prior to
the Date of Termination (as defined in section 4(g)):

	 	1)	 	The Executive ceases to be an Officer of the
Company reporting to another Officer.
	 
	 	2)	 	The Executive’s Base Salary is reduced by a
greater percentage than the reduction applicable to any other Officer.
	 
	 	3)	 	There is a reduction in the incentive
compensation target established for the position held by the Executive
that is not similarly applied in the same or similar manner to all
other Officers.
	 
	 	4)	 	There is a reduction or elimination of an
executive benefit or an employee benefit which reduction is not
applicable to all other Officers in the same or similar manner provided
however the number of awards made pursuant to any stock option or equity participation plan

3

 

	 	 	 	
is at the discretion of the Chief Executive Officer, the Compensation
Committee or the Board at all times and shall in no case be deemed to be
Good Reason.

	 	5)	 	There is a material breach of this Agreement by
the Company that is not remedied prior to the expiration of the thirty
(30) day period after receipt of written notice thereof given by the
Executive to the Company.
	 
	 	6)	 	The Company exercises its right not to extend
the term of this Agreement beyond the then current term, unless such
right is exercised with respect to all employment agreements in effect
with respect to other Officers. For purposes of this Section 4 (d) 6)
the term employment agreements does not include agreements of the type
described in Section 11(n) relating to a change in control of the
Company.

The Executive’s right to terminate employment for Good Reason pursuant to this Section 4(d) shall
not be affected by the Executive’s incapacity due to physical or mental illness or continued
employment provided however. Good Reason shall be asserted in writing delivered to the Chief
Executive Officer within ninety (90) days of the date the Executive knew or should have known of
the event giving rise to the Good Reason and if not so asserted within the ninety (90) day period
shall be deemed to be conclusively waived.

     (e) Termination by Resignation or Retirement. If the Executive’s employment is
terminated by the Executive’s resignation or retirement, other than at the written request of the
Company or for Good Reason, the Company shall pay the Executive all base salary, when due, through
the date of termination at the then current rate in effect at the time the Notice of Termination is
given plus all other amounts and benefits to which the Executive is entitled under any compensation
plan, or practice of the Company, pension plan, retirement savings plan, equity participation plan,
stock purchase plan, medical benefits and other benefits of the Company or provided by law, at the
time such payments are due and the Company shall have no further obligations to the Executive under
this Agreement.

     (f) Notice of Termination. Any purported termination of the Executive’s employment by
the Company or by the Executive (other than termination due to death which shall terminate
employment automatically, voluntary resignation or retirement not for Good Reason) shall be
communicated by written Notice of Termination to the other party hereto in accordance with Section
4. “Notice of Termination” shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s employment under the
provision so indicated.

     (g) Date of Termination, Etc. “Date of Termination” shall mean (a) if the Executive’s
employment is terminated due to death, the date of death; (b) if the Executive’s employment is
terminated for Permanent Disability, thirty (30) days after Notice of Termination is given
(provided that the Executive has not returned to the full-time performance of the
Executive’s duties during such thirty (30) day period), (c) if the Executive’s employment is

4

 

terminated for Cause or for Good Reason, or for any other reason (other than death, Disability,
voluntary resignation or retirement not for Good Reason), the date specified in the Notice of
Termination (which, in the case of a termination for Cause shall not be less than thirty (30) days
from the date such Notice of Termination is given, and in the case of a termination for Good Reason
shall not be less than fifteen (15) nor more than sixty (60) days from the date such Notice of
Termination is given) or (d) if the Executive’s employment is terminated by the Executive’s
resignation or retirement, other than at the written request of the Company or for Good Reason, the
Date of Termination shall be the date when the Executive ceases to be an employee of the Company by
reason of the resignation or retirement. Notwithstanding anything to the contrary contained in this
Section 4(g), if within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or otherwise; provided, however,
that the Date of Termination shall be extended by a notice of dispute only if such notice is given
in good faith and the party giving such notice pursues the resolution of such dispute with
reasonable diligence; provided, further, that in the event of the Executive’s death pending a
dispute, if the resolution of such dispute is ultimately in the Executive’s favor, then the Date of
Termination shall be the date specified in the Notice of Termination.

     5. Compensation upon Termination.

          (a) Death. If the Executive’s employment with the Company is terminated by reason of
the Executive’s death, the Executive’s estate shall be entitled to the following:

          (i) payment of the Executive’s base salary accrued through the Date of Termination;

          (ii) payment of the Executive’s incentive compensation under all plans in effect at the
Date of Termination paid at target but prorated over the period of each applicable plan
through the Date of Termination;

          (iii) one (1) times the sum of the Executive’s annual base salary at the then current
rate in effect as of the Date of Termination payable in one (1) lump-sum payment;

          (iv) continuation of the Executive’s medical, prescription drug, dental and vision
benefits for the Executive’s covered dependents for a period of twelve (12) months following
the Date of Termination without any contribution required of the Executive’s dependents; and

          (v) The Executive’s equity participation awards granted pursuant to any equity
participation plan of the Company shall immediately vest as of the Date of Termination and
be exercisable for a period of three years following the Date of Termination or for such
longer period following the Date of Termination specified by the award granted to the
Executive, provided however, nothing in this Agreement shall act to extend the term of any
equity participation award and no equity participation award
may

5

 

be exercised after the expiration of the term of the award specified in the award
granted to the Executive.

          (b) Termination for Permanent Disability, Without Cause or for Good Reason. If the
Executive’s employment with the Company is terminated for Permanent Disability, or by the Company
without Cause, or by the Executive for Good Reason, the Executive shall be entitled to the
following:

     (i) payment of the Executive’s base salary accrued through the Date of Termination;

     (ii) payment of the Executive’s annual incentive compensation paid at the lesser of the
Executive’s annual target or the average percentage of the target paid to all other
Officers, but prorated over the period of each applicable plan through the Date of
Termination;

     (iii) payment of the Executive’s long term incentive compensation under all plans in
effect at the Date of Termination paid at the Executive’s target, but prorated over the
period of each applicable plan through the Date of Termination;

     (iv) two (2) times the sum of Executive’s annual Base Compensation at the then current
rate in effect at the time of the Notice of Termination, payable in equal installments over
a period of twenty-four (24) months following the Date of Termination, or at the election of
the Company payable in one (1) lump-sum payment;

     (v) payment of the Executive’s annual incentive compensation pursuant to the terms of
the annual incentive compensation plan at the lesser of the Executive’s annual target or the
average percentage of the target paid to all other Officers, for all annual compensation
periods ending twenty four (24) months after the Date of Termination, with the final payment
prorated to the end of the twenty four month period;

     (vi) continuation of the Executive’s medical, prescription drug, dental and life
insurance benefits for a period of twenty-four (24) months following the Date of Termination
without any contribution required of the Executive and the dependents of the Executive; and

     (vii) the Executive’s equity participation awards granted pursuant to any equity
participation plan of the Company shall immediately vest as of the Date of Termination and
be exercisable for a period of three years following the Date of Termination or for such
longer period following the Date of Termination specified by the award granted to the
Executive, provided however, nothing in this Agreement shall act to extend the term of any
equity participation award and no equity participation award may be exercised after the
expiration of the term of the award specified in the award granted to the Executive.

     (c)  Payments. Payment of benefits under Section 5 (a) is subject to reasonable
evidence of authority to act for the decedent’s estate. Payment of benefits under

6

 

Sections 5 (b)(ii),(iii),(iv) and (v) are subject to the release provided under Section 5 (d)
becoming effective. Except as otherwise provided in this Agreement or accelerated by the Company at
its election all payments under this Section 5 shall be made in accordance with the Company’s
normal pay practices, and shall be subject to applicable withholdings. Continuation of benefits
under Section 5(a)(iv) or 5(b)(vi), shall be in addition to and not concurrent with any
continuation rights Executive may have under the Consolidated Omnibus Budget Reconciliation Act of
1985, or similar state law.

     (d) Release. Payment of any amount to, or on behalf of, the Executive pursuant to
Sections 5(b)(ii),(iii),(iv) and (v) of this Agreement and Executive’s acceptance of such amounts
shall be subject to the execution of a general waiver and release of claims in the form attached
hereto as Exhibit A or such other form as the Company may reasonably request to provide a complete
release of all claims and causes of action the Executive or the Executive’s estate may have against
the Company except claims and causes of action arising out of, or related to, the obligations of
the Company pursuant to this Agreement and Claims (as defined in Exhibit A) for vested benefits
under any pension plan, retirement plan and savings plan, rights under any equity participation
plan and stock purchase plan and rights to continuation of medical care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law.

     (e) No Offset for Benefits. There shall be no offset to any compensation or other
benefits otherwise payable to, or on behalf of, the Executive pursuant to the terms of Section 5 of
this Agreement as a result of the receipt by Executive of any pension, retirement or other benefit
payments (including, but not limited to, accrued vacation) except that there shall be an offset for
severance compensation payable pursuant to the Company’s benefit plans and programs based on the
length of service with the Company and except as provided by Section 11(n).

     (f) Excise Tax.

     (i) Anything in this Agreement to the contrary notwithstanding, if it shall be
determined that any payment or distribution to the Executive or for the Executive’s benefit
(whether paid or payable or distributed or distributable) pursuant to the terms of this
Agreement or otherwise (the “Payment”) would be subject to the excise tax imposed by section
4999 of the Code or any successor provision (the “Excise Tax”), then the Executive shall be
entitled to receive from the Company an additional payment (the “Gross-Up Payment”) in an
amount such that the net amount of the Payment and the Gross-Up Payment retained by the
Executive after the calculation and deduction of all Excise Taxes (including any interest or
penalties imposed with respect to such taxes) on the payment and all federal, state and
local income tax, employment tax and Excise Tax (including any interest or penalties imposed
with respect to such taxes) on the Gross-Up Payment provided for in this Section 5(g), and
taking into account any lost or reduced tax deductions on account of the Gross-Up Payment,
shall be equal to the Payment;

     (viii) all determinations required to be made under this Section 5, including whether
and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the
assumptions to be utilized in arriving at such
determinations

7

 

shall be made in good faith by the Accountants (as defined below) which
shall provide the Executive and the Company with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice
from the Executive or the Company that has received or will receive a Payment. For the
purposes of this Section 5(f), the “Accountants” shall mean the Company’s independent
certified public accountants serving immediately prior to the change in control that with
other events results in the imposition of the Excise Tax. In the event that the Accountants
are also serving as accountant or auditor for the individual, entity or group effecting a
change in control that with other events results in the imposition of the Excise Tax, the
Company shall appoint another recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall also be referred to herein as the
“Accountants”). All fees and expenses of the Accountants shall be borne solely by the
Company. For the purposes of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute
payments” within the meaning of section 280G of the Code, and all “parachute payments” in
excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be
treated as subject to the Excise Tax, unless and except to the extent that in the opinion of
the Accountants such Payments (in whole or in part) either do not constitute “parachute
payments” or represent reasonable compensation for services actually rendered (within the
meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such
“parachute payments” are otherwise not subject to such Excise Tax. For purposes of
calculating whether the Excise Tax is applicable and determining the amount of the Gross-Up
Payment, (A) to the extent not otherwise specified herein, reasonable assumptions and
approximations may be made, (B) good faith interpretations of the Code may be relied upon
and (C) the Executive shall be deemed to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment
is to be made and to pay any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in Federal income taxes which could be obtained
from the deduction of such state or local taxes if paid in such year (determined without
regard to limitations on deductions based upon the amount of your adjusted gross income),
and to have otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up Payment in the
Executive’s adjusted gross income. To the extent practicable, any Gross-Up Payment with
respect to any Payment shall be paid by the Company at the time the Executive is entitled to
receive the Payment and in no event will any Gross-Up Payment be paid later than five days
after the receipt by the Executive of the Accountant’s determination. Any determination by
the Accountants shall be binding upon the Company and the Executive. As a result of
uncertainty in the application of section 4999 of the Code at the time of the initial
determination by the Accountants hereunder, it is possible that the Gross-Up Payment made
will have been an amount less than the Company should have paid pursuant to this Section
5(f) (the “Underpayment”). In the event that the Company exhausts its remedies pursuant to
Section 5(f) and the Executive is required to make a payment of any Excise Tax, the
Underpayment shall be promptly paid by the Company to or for the Executive’s benefit;
and

     (ix) the Executive shall notify the Company in writing of any claim by

8

 

the Internal
Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable after the
Executive is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the date on which
the Executive gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes, interest and/or penalties with respect to such claim is due). If
the Company notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:

     (A) give the Company any information reasonably requested by the Company
relating to such claim;

     (B) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;

     (C) cooperate with the Company in good faith in order to effectively contest
such claim; and

     (D) permit the Company to participate in any proceedings relating to such
claims;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify the Executive for and hold the Executive harmless from, on an after-tax
basis, any Excise Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of all related costs and expenses.
Without limiting the foregoing provisions of this Section 5(f), the Company shall control
all proceedings taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall indemnify the
Executive for and hold the Executive harmless from, on an after-tax basis, any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance (including
as a result of any forgiveness by the Company of such advance); provided, further, that any
extension of
the statute of limitations relating to the payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Company’s control of the contest shall be
limited to

9

 

issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.

     6. Termination Obligations.

          (a) The Executive hereby acknowledges and agrees that all personal property and equipment
furnished to or prepared by the Executive in the course of or incident to the Executive’s
employment by the Company belongs to the Company and shall be promptly returned to the Company upon
termination of the employment. “Personal property” includes, without limitation, all books,
manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials,
or copies thereof (including computer files), and all other proprietary information relating to the
business of the Company or any affiliate. Following termination of employment, the Executive will
not retain any written or other tangible material containing any proprietary information or
Confidential Information (as defined below) of the Company or any affiliate of the Company.

          (b) Upon termination of the employment, the Executive shall be deemed to have resigned from
all offices and directorships then held with the Company or any affiliate of the Company.

          (c) The representations and warranties contained herein and the Executive’s obligations and/or
agreements under Sections 6, 7, 8, 9, 10 and 11 hereof shall survive termination of the employment
and the expiration of this Agreement.

          (d) Construction. Any reference to the Company in this Section 6 shall include the Company
and any entity which owns, is owned by or under common ownership with the Company (an “Affiliate”).

     7. Records and Confidential Data.

          (a) The Executive acknowledges that in connection with the performance of his duties during
the term of this Agreement, the Company will make available to the Executive, or the Executive will
have access to, certain Confidential Information (as defined below) of the Company. The Executive
acknowledges and agrees that any and all Confidential Information learned or obtained by the
Executive during the course of his employment by the Company or otherwise (including, without
limitation, information that the Executive obtained through or in connection with the Executive’s
stock ownership in and employment by the Company prior to the date hereof) whether developed by the
Executive alone or in conjunction with others or otherwise, shall be and is the property of the
Company.

          (b) The Executive shall keep all Confidential Information confidential and will not use such
Confidential Information other than in connection with the Executive’s discharge of his duties
hereunder. The Executive will safeguard the Confidential Information from unauthorized disclosure.
This covenant is not intended to, and does not limit in any way, any of
the Executive’s duties or obligations to the Company under statutory or common law not to
disclose or to make personal use of the Confidential Information or trade secrets.

10

 

          (c) Following the Executive’s termination hereunder, as soon as possible after the Company’s
written request, the Executive will return to the Company all written Confidential Information
which has been provided to the Executive and the Executive will destroy all copies of any analyses,
compilations, studies or other documents prepared by the Executive or for the Executive’s use
containing or reflecting any Confidential Information. Within ten (10) business days of the
receipt of such request by the Executive, the Executive shall, upon written request of the Company,
deliver to the Company a notarized document certifying that such written Confidential Information
has been returned or destroyed in accordance with this Section 7(c).

          (d) For the purposes of this Agreement, “Confidential Information” shall mean all confidential
and proprietary information of the Company, including, without limitation, the Company’s marketing
strategies, pricing policies or characteristics, customers and customer information, product or
product specifications, designs, software systems, cost of equipment, customer lists, business or
business prospects, plans, proposals, codes, marketing studies, research, reports, investigations,
public relations methods, or other information of similar character. For purposes of this
Agreement, the Confidential Information shall not include and the Executive’s obligations under
this Section 7 shall not extend to (i) information which is available in the public domain, (ii)
information obtained by the Executive from third persons (other than employees of the Company or
its affiliates) not under agreement to maintain the confidentiality of the same and (iii)
information which is required to be disclosed by law or legal process.

          (e) Construction. Any reference to the Company in this Section 7 shall include the
Company and its Affiliates.

     8. Assignment of Inventions.

          (a) Definition of Inventions. “Inventions” mean discoveries, developments concepts,
ideas, methods, designs, improvements, inventions, formulas, processes, techniques, programs,
know-how and data, whether or not patentable or registerable under copyright or similar statutes,
except any of the foregoing that (i) is not related to the business of the Company or the Company’s
actual or demonstrable research or development, (ii) does not involve the use of any equipment,
supplies, facility or Confidential Information of the Company, (iii) was developed entirely on the
Executive’s own time, and (iv) does not result from any work performed by the Executive for the
Company.

          (b) Assignment. The Executive agrees to and hereby does assign to the Company, without
further consideration, all of his right, title and interest in any and all Inventions the Executive
may make during the term hereof.

          (c) Duty to Disclose and Assist. The Executive agrees to promptly disclose in writing
all Inventions to the Company, and to provide all assistance reasonably requested by the Company in
the preservation of the Company’s interests in the Inventions including obtaining patents in any
country throughout the world. Such services will be without additional
compensation if the Executive is then employed by the Company and for reasonable compensation
and subject to his reasonable availability if he is not. If the Company cannot, after reasonable
effort, secure the Executive’s signature on any document or documents

11

 

needed to apply for or
prosecute any patent, copyright, or other right or protection relating to an Invention, whether
because of his physical or mental incapacity or for any other reason whatsoever, the Executive
hereby irrevocably designates and appoints the Company and its duly authorized Officers and agents
as his agent and attorney-in-fact, to act for and on his behalf and in his name and stead for the
purpose of executing and filing any such application or applications and taking all other lawfully
permitted actions to further the prosecution and issuance of patents, copyrights, or similar
protections thereon, with the same legal force and effect as if executed by the Executive.

          (d) Ownership of Copyrights. The Executive agrees that any work prepared for the
Company which is eligible for United States copyright protection or protection under the Universal
Copyright Convention or other such laws or protections including, but not limited to, the Berne
Copyright Convention and/or the Buenos Aires Copyright Convention shall be a work made for hire and
ownership of all copyrights (including all renewals and extensions) therein shall vest in the
Company. If any such work is deemed not to be a work made for hire for any reason, the Executive
hereby grants, transfers and assigns all right, title and interest in such work and all copyrights
in such work and all renewals and extensions thereof to the Company, and agrees to provide all
assistance reasonably requested by the Company in the establishment, preservation and enforcement
of the Company’s copyright in such work, such assistance to be provided at the Company’s expense
but without any additional compensation to the Executive. The Executive hereby agrees to and does
hereby waive the enforcement of all moral rights with respect to the work developed or produced
hereunder, including without limitation any and all rights of identification of authorship and any
and all rights of approval, restriction or limitation on use or subsequent modifications.

          (e) Litigation. The Executive agrees to render assistance and cooperation to the
Company at its request regarding any matter, dispute or controversy with which the Company may
become involved and of which the Executive has or may have reason to have knowledge, information or
expertise. Such services will be without additional compensation if the Executive is then employed
by the Company and for reasonable compensation and subject to his reasonable availability if he is
not.

          (f) Construction. Any reference to the Company in this Section 7 shall include the
Company and its Affiliates.

     9. Additional Covenants.

          (a) Non-Interference with Customer Accounts. Executive covenants and agrees that (i)
during employment and (ii) for a period of twenty four (24) months commencing on the Date of
Termination, except as may be required by Executive’s employment by the Company, Executive shall
not directly or indirectly, personally or on behalf of any other person, business, corporation, or
entity, contact or do business with any customer of the Company with respect to any product,
business activity or service which is competitive with any product, business, activity or service
of the type sold or provided by the Company.

          (b) Non-Competition. In consideration of and in connection with the benefits provided
to the Executive under this Agreement and in order to protect the goodwill of the Company, the
Executive hereby agrees that if the Executive’s employment is terminated, then,

12

 

unless the Company
otherwise agrees in writing, for a period of twenty four (24) months commencing on the Date of
Termination, the Executive shall not, directly or indirectly, own, manage, operate, join, control
or participate in the ownership, management, operation or control of, or be connected as a
director, officer, employee, partner, consultant or otherwise with any entity engaged in a business
which sells, in competition with the Company and its affiliates, the same type of products as sold
by the Company, including without limitation glass tableware, ceramic dinnerware, metal flatware
and plastic supplies to the foodservice industry other than as a shareholder or beneficial owner
owning five percent (5%) or less of the outstanding securities of a public company. Without
limiting the foregoing, currently the following business operations among others sell, in
competition with the Company and its affiliates, the same type of products as sold by the Company
and its affiliates: Arc International, Anchor Hocking, currently a unit of Newell Rubbermaid Inc.,
Cardinal International, Inc., Indiana Glass Company, currently a unit of Lancaster Colony
Corporation, Oneida Ltd. and any glass tableware manufacturer, seller or importer for Bormioli
Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of
companies of Turkey including Pasabahce.

          (c) No Diversion. The Executive covenants and agrees that in addition to the other
Covenants set forth in this Section 9, (i) during his employment and (ii) for a period of two years
following his Date of Termination, Executive shall not divert or attempt to divert or take
advantage of or attempt to take advantage of any actual or potential business opportunities of the
Company (e.g., joint ventures, other business combinations, investment opportunities, potential
investors in the Company, and other similar opportunities) of which the Executive became aware as a
result of his employment with the Company.

          (d) Non-Recruitment. The Executive acknowledges that the Company has invested
substantial time and effort in assembling its present workforce. Accordingly, the Executive
covenants and agrees that during employment and for period of twenty four (24) months commencing on
the Date of Termination, the Executive shall not either for the Executive’s own account or jointly
with or as a manager, agent, officer, employee, consultant, partner, joint venture owner or
shareholder or otherwise on behalf of any other person, firm or corporation directly or indirectly
entice, solicit, attempt to solicit, or seek to induce or influence any Officer or employee of the
Company to leave his or her employment with the Company or to offer employment to any person who on
or during the six (6) month period immediately preceding the date of such solicitation or offer was
an employee of the Company; provided, however, that this Section 9(d) shall not be deemed to be
breached with respect to an employee or former employee of the Company who responds to a general
advertisement seeking employment or who otherwise initiates contact for the purpose of seeking
employment.

          (e) Non-Disparagement. Executive covenants and agrees that during the Executive’s
employment and for period of twenty four (24) months commencing on the Date of Termination,
Executive shall not induce or incite claims of discrimination, wrongful discharge, or any other
claims against the Company or any of its directors, Officers, employees or equity holders, by any
other persons, executives or entities, and the Executive shall not undertake
any harassing or disparaging conduct directed at the Company or any of its directors,
Officers, employees or equity holders, other than such statements made as part of testimony
compelled by law or legal process.

          (f) Remedies. The Executive acknowledges that should the Executive

13

 

violate any of the
covenants contained in Sections 6, 7, 8, or 9 hereof (collectively, the “Covenants”), it would be
difficult to determine the resulting damages to the Company and, in addition to any other remedies
it may have, the Company shall be entitled to (x) temporary injunctive relief without being
required to post a bond, (y) permanent injunctive relief without the necessity of proving actual
damage and (z) forfeiture of all benefits otherwise payable to or for the account of the Executive
under Sections 5(b)(ii),(iii),(iv) and (v) following the violation. The Executive shall be liable
to pay all costs including reasonable attorneys’ fees which the Company may incur in enforcing or
defending, to any extent, these Covenants, whether or not litigation is actually commenced and
including litigation of any appeal taken or defended by the Company, where the Company succeeds in
enforcing any part of these Covenants. The Company may elect to seek one or more of these remedies
at its sole discretion on a case by case basis. Failure to seek any or all remedies in one case
does not restrict the Company from seeking any remedies in another situation. Such action by the
Company shall not constitute a waiver of any of its rights.

          (g) Severability and Modification of any Unenforceable Covenant. It is the parties’
intent that each of the Covenants be read and interpreted with every reasonable inference given to
its enforceability. However, it is also the parties’ intent that if any term, provision or
condition of the Covenants is held to be invalid, void or unenforceable, the remainder of the
provisions thereof shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. Finally, it is also the parties’ intent that if it is determined any of the
Covenants are unenforceable because of over breadth, then the covenants shall be modified so as to
make it reasonable and enforceable under the prevailing circumstances.

          (h) Tolling. If the Executive breaches any Covenant, the running of the period of
restriction shall be automatically tolled and suspended for the amount of time that the breach
continues, and shall automatically recommence when the breach is remedied so that the Company shall
receive the benefit of the Executive’s compliance with the Covenants. This paragraph shall not
apply to any period for which the Company is awarded and receives actual monetary damages for
breach by the Executive of a Covenant with respect to which this paragraph applies.

          (i) Construction. Any reference to the Company in this Section 9 shall include the
Company and its affiliates.

     10. No Assignment. This Agreement and the rights and duties hereunder are personal to
the Executive and shall not be assigned, delegated, transferred, pledged or sold by the Executive
without the prior written consent of the Company. The Executive hereby acknowledges and agrees
that the Company may assign, delegate, transfer, pledge or sell this Agreement and the rights and
duties hereunder (a) to an affiliate of the Company or (b) to any third party in connection with
(i) the sale of all or substantially all of the assets of the Company or (ii) a stock purchase,
merger, or consolidation involving the Company. This Agreement shall
inure to the benefit of and be enforceable by the parties hereto, and their respective heirs,
personal representatives, successors and assigns.

     11. Miscellaneous Provisions.

          (a) Payment of Taxes. Except as specifically provided for in this Agreement,

14

 

to the
extent that any taxes become payable by the Executive by virtue of any payments made or benefits
conferred by the Company, the Company shall not be liable to pay or obligated to reimburse the
Executive for any such taxes or to make any adjustment under this Agreement. Any payments
otherwise due under this Agreement to the Executive, including, but not limited to, the base salary
and any bonus compensation shall be reduced by any required withholding for federal, state and/or
local taxes and other appropriate payroll deductions.

          (b) Notices. All notices and other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be considered as properly given or made
(i) if delivered personally or (ii) after the expiration of five days from the date upon which such
notice was mailed from within the United States by certified mail, return receipt requested,
postage prepaid, (iii) upon receipt by prepaid telegram or facsimile transmission (with written
confirmation of receipt) or (iv) after the expiration of the second business day following deposit
with an overnight delivery service. All notices given or made pursuant hereto shall be so given or
made to the parties at the following addresses:

If to the Executive:

Jonathan S. Freeman

806 Majestic

Rochester Hills, MI 48306

If to the Company:

Libbey Inc.

300 Madison Avenue

P.O. Box 10060

Toledo, Ohio 43604

Facsimile: (419) 325-2585

Attention: Secretary

The address of any party hereto may be changed by a notice in writing given in accordance with the
provisions hereof.

          (c) Severability. If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, such provision shall be severed and enforced
to the extent possible or modified in such a way as to make it enforceable, and the invalidity,
illegality or unenforceability thereof shall not affect the validity, legality or enforceability of
the remaining provisions of this Agreement.

          
15

 

          (d) Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio applicable to contracts executed in and to be performed entirely
within that state, except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement, and as to those
matters, the law of the jurisdiction under which the respective entity derives its powers shall
govern. The parties irrevocably agree that all actions to enforce an arbitrator’s decision
pursuant to Section 11(l) of this Agreement shall be instituted and litigated only in federal,
state or local courts sitting in Toledo, Ohio and each of such parties hereby consents to the
exclusive jurisdiction and venue of such court and waives any objection based on forum non
conveniens.

          (e) WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE, RELEASE AND RELINQUISH ANY AND
ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTIONS TO ENFORCE AN ARBITRATOR’S
DECISION PURSUANT TO SECTION 11(l) OF THIS AGREEMENT.

          (f) Counterparts. This Agreement may be executed in counterparts, each of which shall
be an original, but all of which shall constitute one and the same instrument.

          (g) Entire Understanding. This Agreement including all Exhibits and Recitals hereto
which are incorporated herein by this reference, together with the other agreements and documents
being executed and delivered concurrently herewith by the Executive, the Company and certain of its
affiliates, constitute the entire understanding among all of the parties hereto and supersedes any
prior understandings and agreements, written or oral, among them respecting the subject matter
within.

          (h) Limitation on Liabilities. If the Executive is awarded any damages as
compensation for any breach of this Agreement or a breach of any covenant contained in this
Agreement (whether express or implied by either law or fact), such damages shall be limited to
contractual damages (including reasonable attorneys’ fees) and shall exclude (i) punitive damages
and (ii) consequential and/or incidental damages (e.g., lost profits and other indirect or
speculative damages). The maximum amount of damages that the Executive may recover for any reason
shall be all amounts owed (but not yet paid) to the Executive pursuant to this Agreement.

          (i) Pronouns and Headings. As used herein, all pronouns shall include the masculine,
feminine, neuter, singular and plural thereof wherever the context and facts require such
construction. The headings, titles and subtitles herein are inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof.

          (j) Amendment. Except as set forth in Sections 9(g) and 11(c) above, this Agreement
shall not be changed or amended unless in writing and signed by both the Executive and the Chairman
of the Board of Directors or unless amended by the Company in any manner provided that the rights
and benefits of the Executive shall not be diminished by any amendment made by the Company without
the Executive’s written consent to such amendment.

16

 

          (K) Advice of Counsel. The Executive acknowledges (i) that he has consulted with or has
had the opportunity to consult with independent counsel of his own choice concerning this Agreement
and has been advised to do so by the Company, and (ii) that he has read and understands this
Agreement, is fully aware of its legal effect, and has entered into it freely based on his own
judgment.

          (l) Arbitration. Notwithstanding anything herein to the contrary, in the event that
there shall be a dispute among the parties arising out of or relating to this Agreement, or the
breach thereof, the parties agree that such dispute shall be resolved by final and binding
arbitration in Toledo, Ohio, administered by the American Arbitration Association (the “AAA”), in
accordance with AAA’s Employment ADR Rules. The arbitrator’s decision shall be final and binding
upon the parties, and may be entered and enforced in any court of competent jurisdiction by either
of the parties. The arbitrator shall have the power to grant temporary, preliminary and permanent
relief, including without limitation, injunctive relief and specific performance. The arbitrator’s
fees and expenses shall be paid by the Company.

          (m) Attorney’s Fees. If any arbitration or other proceeding, including without
limitation any hearing before the Board, any arbitration proceeding, any proceeding to enforce an
arbitration award, any legal action and any appeal, is brought by one party against the other
relating to, or in connection with this Agreement, the Company shall reimburse the Executive
reasonable attorneys’ fees and other costs within a reasonable time after the same are incurred in
addition to any other relief to which the Executive may be entitled.

          (n) Effect on Other Agreements. It is the intention of the parties hereto and thereto
that this Agreement provide benefits which are not otherwise provided by the Letter Agreement dated
as of May 7, 2007, between the Executive and the Company (the “Letter Agreement”) that provides to
Executive certain benefits if a change of control (as defined in the Letter Agreement) of the
Company occurs. Therefore, if during the term of this Agreement the Executive is entitled to
payment under both this Agreement and the Letter Agreement, the Executive shall only receive the
greater of the benefits provided under this Agreement or under the Letter Agreement, but not both.
If Executive receives benefits under this Agreement, all rights to receive any benefits under the
Letter Agreement shall be waived, and vice versa.

     IN WITNESS WHEREOF, this Agreement has been executed as of the date and year first above
written.

	 	 	 	 	 	 	 
	 	 	LIBBEY INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Susan A. Kovach
	 	 
	 

	 	Title:
	 	Vice President, General Counsel & Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name: Jonathan S. Freeman	 	 

17

 

SCHEDULE 1

	1.	 	Base salary of the Executive as of the date of this Agreement and subsequent revisions.
	 
	2.	 	The Executive shall be eligible to participate in the following benefit plans and programs of
the Company:

	 	a.	 	The annual performance incentive compensation plan for corporate Officers
(currently the “Senior Management Incentive Plan”). The target percentage for an
Executive’s participation shall be the target percentage currently in effect for the
position as of the date of this Agreement (namely, 45% of annual base salary) and any
subsequent revisions.
	 
	 	b.	 	The long term incentive compensation plan (currently the Libbey Inc. Long Term
Incentive Compensation Plan). The target percentage for an Executive’s participation
shall be the target percentage currently in effect for the position as of the date of
this Agreement (namely, 60% of annual base salary) and any subsequent revisions.
	 
	 	c.	 	Stock option and equity participation plan (currently the 2006 Omnibus
Incentive Plan of Libbey Inc.)
	 
	 	d.	 	Libbey Inc. Retirement Savings Plan
	 
	 	e.	 	Libbey Inc. Executive Savings Plan
	 
	 	f.	 	Financial Investment Counseling
	 
	 	g.	 	Executive Physical
	 
	 	h.	 	Deferred Compensation Plan (if and when adopted)
	 
	 	i.	 	Such other benefit plans and arrangements as the Company provides, from time to
time, to salaried employees generally

[Signature Page to General release and Waiver of Claims]

 

 

EXHIBIT A

GENERAL RELEASE AND WAIVER OF CLAIMS

          The undersigned, ___resident of the State of ___(“Releasor”), in
accordance with and pursuant to the terms of Section 5(d) of the Employment Agreement (the
“Agreement”), dated as of ___, 2007, between Libbey Inc., a Delaware corporation (the
“Company”), and Releasor, and the consideration therein provided, except as set forth herein,
hereby remises, releases and forever discharges and covenants not to sue, and by these presents
does for Releasor and Releasor’s legal representatives, trustees, beneficiaries, heirs and assigns
(Releasor and such persons referred to herein, collectively, as the “Releasing Parties”) hereby
remise, release and forever discharge and covenant not to sue the Company and its affiliates and
the respective Officers, directors, employees, equity holders, agent and representatives of each of
them and all of their respective successor and assigns (each a “Released Party” and collectively,
the “Released Parties”), of and from any and all manner of actions, proceedings, claims, causes of
action, suits, promises, damages, judgments, executions, claims and demands, of any nature
whatsoever, and of every kind and description, choate and inchoate, known or unknown, at law or in
equity (collectively, “Claims”), which the Releasing Parties, or any of them, now have or ever had,
or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing
whatsoever, against the Released Parties, and each of them, from the beginning of time to the date
hereof;

     (i) arising from Releasor’s employment, compensation, commissions, deferred
compensation plans, insurance, stock ownership, stock options, employee benefits, and other
terms and conditions of employment or employment practices of the Company under federal,
state or local law or regulation, including, but not limited to the Employee Retirement
Income Security Act of 1974, as amended;

     (ii) relating to the termination of Releasor’s employment or the circumstances
surrounding thereof based on any contract, tort, whistleblower, personal injury,
retaliatory, wrongful discharge or any other theory under any federal, state or local
constitution, law, regulation, common law or otherwise; 

     (iii) relating to payment of any
attorneys’ fees incurred by Releasor; and

     (iv) based on any alleged discrimination on the basis of race, color, religion, sex,
age, national origin, handicap, disability or another category protected by any federal,
state or local law or regulation, including, but not limited to, the Age Discrimination in
Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act, the Fair Labor Standards Act, the Older Workers Benefit Protection Act of 1990, or
Executive Order 11246 (as any of these laws or orders may have been amended) or any other
similar federal, state or local labor, employment or anti-discriminatory laws.

          Notwithstanding any other provision of this General Release and Waiver of Claims, Releasor
does not release or waive Releasor’s rights and Claims against the Company arising out of, or
related to, the obligations of the Company pursuant to the Agreement, Claims for Releasor’s vested
benefits under any pension plan, retirement plan and savings plan, rights under any equity
participation plan and stock purchase plan and rights to continuation of

2

 

medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
and any similar state law.

          Releasor represents and warrants on behalf of the Releasing Parties that there has been, and
there will be, no assignment or other transfer of any right or interest in any Claims which
Releasor has or may have against the Released Parties, and Releasor hereby agrees to indemnify and
hold each Released Party harmless from any Claims, costs, expenses and attorney’s fees directly or
indirectly incurred by any of the Released Parties as a result of any person asserting any right or
interest pursuant to his, her or its assignment or transfer of any such right or interest.

          Releasor agrees that if any Releasing Party hereafter commences, joins in, or in any manner
seeks relief through any suit arising out of, based upon, or relating to any of the Claims released
hereunder, or in any manner asserts against any Released Party any of the Claims released
hereunder, then Releasor will pay to such Released Party, in addition to any and all damages and
compensation, direct or indirect, all attorney’s fees incurred in defending or otherwise responding
to such suit or Claims.

          Releasor acknowledges that (i) Releasor has received the advice of legal counsel in connection
with this General Release and Waiver of Claims, (ii) Releasor has read and understands that this is
a General Release and Waiver of Claims, and (iii) Releasor intends to be legally bound by the
same.

          Releasor acknowledges that Releasor has been given the opportunity to consider this Release
for twenty-one (21) days and has been encouraged and given the opportunity to consult with legal
counsel of Releasor’s choosing before signing it. Releasor understands that Releasor shall have
seven (7) days from the date on which Releasor executes this General Release and Waiver of Claims
(as indicated by the date below his signature) to revoke Releasor’s signature and agreement to be
bound hereby by providing written notice of revocation to the Company within such seven (7) day
period. Releasor further understands and acknowledges this Release shall become effective, if not
sooner revoked, on the eighth day after the execution hereof by Releasor (the “Effective Date”).

          IN WITNESS WHEREOF, Releasor has executed and delivered this General Release and Waiver of
Claims on behalf of the Releasing Parties as of the day and year set forth below.

Dated:                     , 20__.

	 	 	 	 	 	 	 
	 	 	RELEASOR:	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 

3EX-10.7

 

Exhibit
10.7

May 7, 2007

Jonathan S. Freeman

806 Majestic

Rochester Hills, MI 48306

Dear Jon:

Libbey Inc. (the “Corporation”) considers it essential to the best interests of its
shareholders to foster the continuous employment of key management personnel. In connection with
this, the Corporation’s Board of Directors (the “Board”) recognizes that, as is the case
with many publicly held corporations, the possibility of a change in control of the Corporation
may exist and that the uncertainty and questions that it may raise among management could result
in the departure or distraction of management personnel to the detriment of the Corporation and
its shareholders.

The Board has decided to reinforce and encourage the continued attention and dedication of members
of the Corporation’s management, including yourself, to their assigned duties without the
distraction arising from the possibility of a change in control of the Corporation.

In order to induce you to remain in its employ, the Corporation hereby agrees that after this
letter agreement (this “Agreement”) has been fully executed, you shall receive the
severance benefits set forth in this Agreement in the event your employment with the Corporation
is terminated under the circumstances described below subsequent to a Change in Control (as
defined in Section 2).

     1. Term of Agreement. This Agreement shall commence on the date hereof and shall
continue in effect through December 31, 2007; provided, however, that commencing on January 1,
2008 and on each January 1 thereafter, the term of this Agreement shall automatically be extended
for one additional year unless, not later than September 30 of the preceding year, the Corporation
shall have given notice that it does not wish to extend this Agreement; provided, further, that if
a Change in Control (as defined in Section 2), occurs during the original or any extended term of
this Agreement, the term of this Agreement shall continue in effect for a period of not less than
thirty-six (36) months beyond the month in which such Change in Control occurred.

     2. Change in Control. No benefits shall be payable hereunder unless there has been a
Change in Control. For purposes of this Agreement, a Change in Control shall be deemed to occur
if:

     (a) any Person (as defined below) is or becomes the Beneficial Owner (as defined
below), directly or indirectly, of securities of the Corporation representing twenty
percent (20%) or more of the combined voting power of the Corporation’s then outstanding
securities. For purposes of this Agreement, the term “Person” is used as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”); provided, however, that the term shall not include the
Corporation, any trustee or other fiduciary holding securities under an employee benefit
plan of the Corporation, and any corporation owned, directly or indirectly, by the
shareholders of the Corporation, in substantially the same proportions as their ownership
of stock of the Corporation, and provided further that for purposes of this subsection (a)
the term person shall not apply to Baron Capital Group, Inc., BAMCO,

 

2

Inc., Baron Capital Management, Inc., Baron Asset Fund or Ronald Baron (collectively
the “Baron Group”), by virtue of their individual or collective beneficial
ownership of securities of the Corporation’s outstanding securities as of the date of this
letter so long as the Baron Group does not individually or collectively, beneficially own,
or increase such beneficial ownership to, twenty-five percent (25%) or more of the combined
voting power of the corporation’s then outstanding securities. For purposes of this
Agreement, the term “Beneficial Owner” shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act;

     (b) during any period of two (2) consecutive years (not including any period prior to
the execution of this Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by a person
who has entered into an agreement with the Corporation to effect a transaction described in
Sections 2(a), (c) or (d)) whose election by the Board or nomination for election by the
Corporation’s shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved (hereinafter referred
to as “Continuing Directors”), cease for any reason to constitute at least a
majority thereof;

     (c) the shareholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 66 2/3% of the
combined voting power of the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;

     (d) the shareholders of the Corporation approve a plan of complete liquidation of the
Corporation or an agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation’s assets; or

     (e) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Corporation representing ten percent (10%) or more of the combined voting
power of the Corporation’s then outstanding securities (a “10% Owner”) and (A) the
identity of the Chief Executive Officer of the Corporation is changed during the period
beginning sixty (60) days before the attainment of the ten percent (10%) beneficial
ownership and ending two (2) years thereafter, or (B) individuals constituting at least
one-third (1/3) of the members of the Board at the beginning of such period shall cease for
any reason to serve on the Board during the period beginning sixty (60) days before the
attainment of the ten percent (10%) beneficial ownership and ending two (2) years
thereafter; provided, however, (i) that this subsection (e) shall not apply to (i) any
Person who is a 10% Owner as of the date hereof so long as such Person does not increase
such beneficial ownership by five percent (5%) or more over the percentage so owned by such
Person as of the date hereof; (ii) that this subsection (e) shall not apply to the Baron
Group by virtue of their individual or collective beneficial ownership of securities of the
Corporation’s outstanding securities as of the date of this letter so long as the Baron
Group does not individually or collectively, beneficially own, or increase such beneficial
ownership to, twenty-five percent (25%) or more of the combined voting power of the
corporation’s then outstanding securities, and (iii) that this subsection (e) shall not
apply to Ariel Capital Management (“Ariel”) by virtue of its

 

3

beneficial ownership of the Corporation’s outstanding securities as of the date of
this Agreement so long as Ariel does not beneficially own, or increase such beneficial
ownership to, twenty percent (20%) or more of the combined voting power of the
Corporation’s then outstanding securities.

     3. Termination Following Change in Control. (i) General. During the term of
this Agreement, if any of the events described in Section 2 constituting a Change in Control shall
have occurred, you shall be entitled to the benefits provided in Section 4(ii) upon the subsequent
termination of your employment, provided that such termination occurs during the term of this
Agreement and within the two (2) year period immediately following the date of such Change in
Control, unless such termination is (a) because of your death or Disability (as defined in Section
3(ii)), (b) by the Corporation for Cause (as defined in Section 3(iii)), or (c) by you other than
(1) for Good Reason (as defined in Section 3(iv)), or (2) in a Covered Resignation (as defined in
Section 3(v)). In the event that you are entitled to such benefits, such benefits shall be paid
notwithstanding the subsequent expiration of the term of this Agreement. In the event your
employment with the Corporation is terminated for any reason and subsequently a Change in Control
occurs, you shall not be entitled to any benefits hereunder.

     (ii) Disability. If, as a result of your incapacity due to physical or mental illness,
you shall have been absent from the full-time performance of your duties with the Corporation for
six (6) consecutive months, and within thirty (30) days after written notice of termination is
given you shall not have returned to the full-time performance of your duties, your employment may
be terminated for “Disability.”

     (iii) Cause. Termination by the Corporation of your employment for “Cause”
shall mean termination (a) upon your willful and continued failure to substantially perform your
duties with the Corporation (other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure after your issuance of a
Notice of Termination (as defined in Section 3(vi)) either (x) for Good Reason, or (y) in
connection with a Covered Resignation, after a written demand for substantial performance is
delivered to you by the Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, (b) upon your willful and continued
failure to substantially follow and comply with the specific and lawful directives of the Board, as
reasonably determined by the Board (other than any such failure resulting from your incapacity due
to physical or mental illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason or in connection with a Covered Resignation), after a written
demand for substantial performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not substantially performed your
duties, (c) upon your willful commission of an act of fraud or dishonesty resulting in material
economic or financial injury to the Corporation, or (d) upon your willful engagement in illegal
conduct or gross misconduct, in each case which is materially and demonstrably injurious to the
Corporation. For purposes of this Section 3(iii), no act, or failure to act, on your part shall be
deemed “willful” unless done, or omitted to be done, by you not in good faith. Notwithstanding the
foregoing, you shall not be deemed terminated for Cause pursuant to Sections 3(iii)(a), (b) or (d)
hereof unless and until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board
at a meeting of the Board (after reasonable notice to you, an opportunity for you, together with
your counsel, to be heard before the Board and a reasonable opportunity to cure), finding that in
the Board’s good faith opinion you were guilty of conduct set forth above in this Section 3(iii)
and specifying the particulars thereof in reasonable detail.

 

4

     (iv) Good Reason. You shall be entitled to terminate your employment for Good Reason.
For purposes of this Agreement, “Good Reason” shall mean, without your express written
consent, the occurrence after a Change in Control of any of the following circumstances unless, in
the case of Sections 3(iv)(a), (e), (f), (g), (h) or (i), such circumstances are fully corrected
(provided such circumstances are capable of correction) prior to the Date of Termination (as
defined in Section 3(vii)) specified in the Notice of Termination given in respect thereof:

	 	(a)	 	the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control, including by virtue of the
Corporation ceasing to be a publicly-held corporation, or any other action by
the Corporation that results in a material diminution in your position,
authority, duties or responsibilities;
	 
	 	(b)	 	the Corporation’s reduction of your annual base salary as in
effect on the date hereof or as the same may be increased from time to time;
	 
	 	(c)	 	the relocation of the Corporation’s offices at which you are
principally employed immediately prior to the date of the Change in Control
(your “Principal Location”) to a location more than thirty (30) miles
from such location, or the Corporation’s requiring you, without your written
consent, to be based anywhere other than your Principal Location, except for
required travel on the Corporation’s business to an extent substantially
consistent with your present business travel obligations;
	 
	 	(d)	 	the Corporation’s failure to pay to you any portion of your
current compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Corporation within
seven (7) days of the date such compensation is due;
	 
	 	(e)	 	the Corporation’s failure to continue in effect any material
compensation or benefit plan or practice in which you participate immediately
prior to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the Corporation’s failure to continue your participation therein (or
in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level of
your participation relative to other participants, as existed at the time of
the Change in Control;
	 
	 	(f)	 	the Corporation’s failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you under
any of the Corporation’s life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or practices in which
you and your eligible family members were participating at the time of the
Change in Control, the taking of any action by the Corporation which would
directly or indirectly materially reduce any of such benefits, or the failure
by the Corporation to provide you with the number of paid vacation

 

5

	 	 	 	days to which you are entitled on the basis of years of service with the
Corporation in accordance with the Corporation’s normal vacation policy in
effect at the time of the Change in Control;
	 
	 	(g)	 	the Corporation’s failure to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
	 
	 	(h)	 	any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(vi) hereof (and, if applicable, the requirements of Section 3(iii)
hereof), which purported termination shall not be effective for purposes of
this Agreement; or
	 
	 	(i)	 	the continuation or repetition, after written notice of
objection from you, of harassing or denigrating treatment of you inconsistent
with your position with the Corporation.

Your right to terminate your employment pursuant to this Section 3(iv) shall not be affected by
your incapacity due to physical or mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.

     (v) Voluntary Termination and Covered Resignation. You shall be entitled to
voluntarily terminate your employment for any reason or no reason at any time after a Change in
Control. Any such termination which occurs within the thirty (30) day period following the first
anniversary of the occurrence of a Change in Control shall constitute a resignation which entitles
you to receive benefits under this Agreement (a “Covered Resignation”).

     (vi) Notice of Termination. Any purported termination of your employment by the
Corporation or by you (other than termination due to death which shall terminate your employment
automatically) shall be communicated by written Notice of Termination to the other party hereto in
accordance with Section 7. “Notice of Termination” shall mean a notice that shall indicate
the specific termination provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.

     (vii) Date of Termination, Etc. “Date of Termination” shall mean (a) if your
employment is terminated due to your death, the date of your death; (b) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your duties during such thirty (30) day
period), and (c) if your employment is terminated pursuant to Section 3(iii), Section 3(iv) or
Section 3(v) or for any other reason (other than death or Disability), the date specified in the
Notice of Termination (which, in the case of a termination for Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given, and in the case of a termination for
Good Reason or in connection with a Covered Resignation shall not be less than fifteen (15) nor
more than sixty (60) days from the date such Notice of Termination is given). Notwithstanding
anything to the contrary contained in this Section 3(vii), if within fifteen (15) days after any
Notice of Termination is given, the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written agreement of the

 

6

parties, or otherwise; provided, however, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.

     4. Compensation Upon Termination. Following a Change in Control during the term of
this Agreement, you shall be entitled to the benefits described below upon termination of your
employment, provided that such termination occurs during the term of this Agreement and within the
two (2) year period immediately following the date of such Change in Control. The benefits to
which you are entitled, subject to the terms and conditions of this Agreement, are:

     (i) If your employment shall be terminated by the Corporation for Cause or by you
other than (x) for Good Reason or (y) pursuant to a Covered Resignation, the Corporation shall pay
you your full base salary, when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation at the time such payments are due, and the
Corporation shall have no further obligations to you under this Agreement.

     (ii) If your employment by the Corporation shall be terminated by you (x) for Good
Reason or (y) pursuant to a Covered Resignation, or by the Corporation other than for Cause or
Disability, then you shall be entitled to the benefits provided below:

	 	(a)	 	the Corporation shall pay to you your full base salary, when
due, through the Date of Termination at the rate in effect at the time Notice
of Termination is given, at the time specified in Section 4(iii), plus all
other amounts to which you are entitled under any compensation plan or practice
of the Corporation at the time such payments are due;
	 
	 	(b)	 	in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as severance
pay to you, at the time specified in Section 4(iii), a lump-sum severance
payment (together with the payments provided in Section 4(ii)(c) below, the
“Severance Payments”) equal to the sum of the following:

	 	(A)	 	three (3) times your annual base salary as in
effect as of the Date of Termination or immediately prior to the Change
in Control, whichever is greater; and
	 
	 	(B)	 	three (3) times the greater of (x) your
targeted annual bonus as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is greater, or
(y) your annual bonus for the year immediately preceding the Date of
Termination;

	 	(c)	 	notwithstanding any provisions of the Corporation’s stock
option plans, incentive plans, or other similar plans, the restricted period
with respect to any restricted stock granted to you thereunder shall lapse and
such shares shall be distributed to you at the time specified in Section
4(iii);
	 
	 	(d)	 	for a period of one (1) year following the Date of Termination,
the Corporation shall, at its sole expense as incurred, provide you with
financial planning services of substantially the same type and scope as

 

7

	 	 	 	those which the Corporation was providing to you immediately prior to the
Date of Termination, or, if more favorable to you, the date of the Change in
Control;
	 
	 	(e)	 	for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred, provide
you with outplacement services, the scope and provider of which shall be
selected by you in your sole discretion;
	 
	 	(f)	 	for a thirty-six (36) month period after such termination, the
Corporation shall continue to provide you and your eligible family members,
based on the cost sharing arrangement between you and the Corporation on the
date of the Change in Control, with medical and dental health benefits at least
equal to those which would have been provided to you and them if your
employment had not been terminated or, if more favorable to you, as in effect
generally at any time thereafter; provided, however, that if you become
re-employed with another employer and are eligible to receive medical and
dental health benefits under another employer’s plans, the Corporation’s
obligations under this Section 4(ii)(f) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually
received by you shall be reported to the Corporation. In the event you are
ineligible under the terms of such benefit plans or programs to continue to be
so covered, the Corporation shall provide you with substantially equivalent
coverage through other sources or will provide you with a lump-sum payment in
such amount that, after all taxes on that amount, shall be equal to the cost to
you of providing yourself such benefit coverage. At the termination of the
benefits coverage under the second preceding sentence, you, your spouse and
your dependents shall be entitled to continuation coverage pursuant to section
4980B of the Internal Revenue Code of 1986, as amended (the “Code”),
sections 601-608 of the Employee Retirement Income Security Act of 1974, as
amended, and under any other applicable law, to the extent required by such
laws, as if you had terminated employment with the Corporation on the date such
benefits coverage terminates. The lump-sum shall be determined on a present
value basis using the interest rate provided in section 1274(b)(2)(B) of the
Code on the Date of Termination.
	 
	 	(g)	 	(1) anything in this Agreement to the contrary notwithstanding,
if it shall be determined that any payment or distribution to you or for your
benefit (whether paid or payable or distributed or distributable) pursuant to
the terms of this Agreement or otherwise (the “Payment”) would be
subject to the excise tax imposed by section 4999 of the Code (the “Excise
Tax”), then you shall be entitled to receive from the Corporation an
additional payment (the “Gross-Up Payment”) in an amount such that the
net amount of the Payment and the Gross-Up Payment retained by you after the
calculation and deduction of all Excise Taxes (including any interest or
penalties imposed with respect to such taxes) on the payment and all federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 4(ii)(g), and taking

 

8

	 	 	 	into account any lost or reduced tax deductions on account of the Gross-Up
Payment, shall be equal to the Payment;
	 
	 	 	 	(2) all determinations required to be made under this Section 4(ii)(g),
including whether and when the Gross-Up Payment is required and the amount
of such Gross-Up Payment, and the assumptions to be utilized in arriving at
such determinations shall be made by the Accountants (as defined below)
which shall provide you and the Corporation with detailed supporting
calculations with respect to such Gross-Up Payment within fifteen (15)
business days of the receipt of notice from you or the Corporation that you
have received or will receive a Payment. For the purposes of this Section
4(ii)(g), the “Accountants” shall mean the Corporation’s independent
certified public accountants serving immediately prior to the Change in
Control. In the event that the Accountants are also serving as accountant or
auditor for the individual, entity or group effecting the Change in Control,
you shall appoint another nationally recognized public accounting firm to
make the determinations required hereunder (which accounting firm shall then
be referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne solely by the Corporation.
	 
	 	 	 	For the purposes of determining whether any of the Payments will be subject
to the Excise Tax and the amount of such Excise Tax, such Payments will be
treated as “parachute payments” within the meaning of section 280G of the
Code, and all “parachute payments” in excess of the “base amount” (as
defined under section 280G(b)(3) of the Code) shall be treated as subject
to the Excise Tax, unless and except to the extent that in the opinion of
the Accountants such Payments (in whole or in part) either do not
constitute “parachute payments” or represent reasonable compensation for
services actually rendered (within the meaning of section 280G(b)(4) of the
Code) in excess of the “base amount,” or such “parachute payments” are
otherwise not subject to such Excise Tax. For purposes of determining the
amount of the Gross-Up Payment, you shall be deemed to pay Federal income
taxes at the highest applicable marginal rate of Federal income taxation
for the calendar year in which the Gross-Up Payment is to be made and to
pay any applicable state and local income taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or local taxes if
paid in such year (determined without regard to limitations on deductions
based upon the amount of your adjusted gross income), and to have otherwise
allowable deductions for Federal, state and local income tax purposes at
least equal to those disallowed because of the inclusion of the Gross-Up
Payment in your adjusted gross income. To the extent practicable, any
Gross-Up Payment with respect to any Payment shall be paid by the
Corporation at the time you are entitled to receive the Payment and in no
event will any Gross-Up Payment be paid later than five days after the
receipt by you of the Accountant’s determination. Any determination by the
Accountants shall be binding upon the Corporation and you. As a result of
uncertainty in the

 

9

	 	 	 	application of section 4999 of the Code at the time of the initial
determination by the Accountants hereunder, it is possible that the
Gross-Up Payment made will have been an amount less than the Corporation
should have paid pursuant to this Section 4(ii)(g) (the
“Underpayment”). In the event that the Corporation exhausts its
remedies pursuant to Section 4(ii)(g)(3) and you are required to make a
payment of any Excise Tax, the Underpayment shall be promptly paid by the
Corporation to or for your benefit; and
	 
	 	 	 	(3) you shall notify the Corporation in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
the Corporation of the Gross-Up Payment. Such notification shall be given
as soon as practicable after you are informed in writing of such claim and
shall apprise the Corporation of the nature of such claim and the date on
which such claim is requested to be paid. You shall not pay such claim
prior to the expiration of the 30-day period following the date on which
you give such notice to the Corporation (or such shorter period ending on
the date that any payment of taxes, interest and/or penalties with respect
to such claim is due). If the Corporation notifies you in writing prior to
the expiration of such period that it desires to contest such claim, you
shall:

	 	(A)	 	give the Corporation any information reasonably
requested by the Corporation relating to such claim;
	 
	 	(B)	 	take such action in connection with contesting
such claim as the Corporation shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Corporation;
	 
	 	(C)	 	cooperate with the Corporation in good faith in
order to effectively contest such claim; and permit the Corporation to
participate in any proceedings relating to such claims;

	 	 	 	provided, however, that the Corporation shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify you for and hold you
harmless from, on an after-tax basis, any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of all related costs and expenses.
Without limiting the foregoing provisions of this Section 4(ii)(g), the
Corporation shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct you to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and you agree to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Corporation shall
determine; provided, however, that if the Corporation directs you to pay
such claim and sue for a refund, the Corporation shall advance the

 

10

	 	 	 	amount of such payment to you, on an interest-free basis, and shall
indemnify you for and hold you harmless from, on an after-tax basis, any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance (including as a result of any
forgiveness by the Corporation of such advance); provided, further, that any
extension of the statute of limitations relating to the payment of taxes for
the taxable year of you with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the Corporation’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and you shall
be entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority;
	 
	 	(h)	 	in any situation where under applicable law the Corporation has
the power to indemnify (or advance expenses to) you in respect of any
judgments, fines, settlements, loss, cost or expense (including attorneys’
fees) of any nature related to or arising out of your activities as an agent,
employee, officer or director of the Corporation or in any other capacity on
behalf of or at the request of the Corporation, the Corporation shall promptly
on written request, indemnify (and advance expenses to) you to the fullest
extent permitted by applicable law, including but not limited to making such
findings and determinations and taking any and all such actions as the
Corporation may, under applicable law, be permitted to have the discretion to
take so as to effectuate such indemnification or advancement. Such agreement by
the Corporation shall not be deemed to impair any other obligation of the
Corporation respecting your indemnification otherwise arising out of this or
any other agreement or promise of the Corporation or under any statute;
	 
	 	(i)	 	the Corporation shall furnish you for six (6) years following
the Date of Termination (without reference to whether the term of this
Agreement continues in effect) with directors’ and officers’ liability
insurance insuring you against insurable events which occur or have occurred
while you were a director or officer of the Corporation, such insurance to have
policy limits aggregating not less than the amount in effect immediately prior
to the Change in Control, and otherwise to be in substantially the same form
and to contain substantially the same terms, conditions and exceptions as the
liability issuance policies provided for officers and directors of the
Corporation in force from time to time, provided, however, that such terms,
conditions and exceptions shall not be, in the aggregate, materially less
favorable to you than those in effect on the date hereof; provided, further,
that if the aggregate annual premiums for such insurance at any time during
such period exceed one hundred and fifty percent (150%) of the per annum rate
of premium currently paid by the Corporation for such insurance, then the
Corporation shall provide the maximum coverage that will then be available at
an annual premium equal to one hundred and fifty percent (150%) of such rate;
and

 

11

	 	(j)	 	you shall be fully vested in your accrued benefits under any
qualified or nonqualified pension, profit sharing, deferred compensation or
supplemental plans maintained by the Corporation for your benefit, and the
Corporation shall provide you with additional fully vested benefits under such
plans in an amount equal to the benefits which you would have accrued had you
continued your employment with the Corporation for three (3) additional years
following your Date of Termination; provided, however, that to the extent that
the acceleration of vesting or enhanced accrual of such benefits would violate
any applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay you
a lump-sum payment at the time specified in Section 4(iii) in an amount equal
to the value of such benefits; provided, further, that to the extent that the
present value of all benefits payable to you under this Section 4(ii)(j) is
less than $250,000, the Corporation shall pay you a lump-sum payment at the
time specified in Section 4(iii) in an amount equal to the difference between
$250,000 and the amount of such benefits which are otherwise payable to you
under this Section 4(ii)(j); provided, further, that if you are eligible to
receive grandfathered benefits under the Corporation’s pension plan, the
provisions of this Section 4(ii)(j) shall apply to such grandfathered benefits,
without reduction for age, in addition to any other benefits to which you are
entitled under this Section 4(ii)(j).

     (iii) The payments provided for in Sections 4(ii)(a), (b), (c), (d) and (j) shall
be made not later than the fifth day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before such day, the Corporation
shall pay to you on such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof
can be determined but in no event later than the thirtieth day after the Date of Termination. In
the event that the amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Corporation to you, payable on the fifth
day after demand by the Corporation (together with interest at the rate provided in section
1274(b)(2)(B) of the Code).

     (iv) You shall not be required to mitigate the amount of any payment provided for
in this Section 4 by seeking other employment or otherwise nor, except as provided in Section
4(ii)(f), shall the amount of any payment or benefit provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by another employer or self-employment,
by retirement benefits, by offset against any amount claimed to be owed by you to the Corporation,
or otherwise.

     5. Acceleration of Vesting of Options. Notwithstanding anything contained herein, in
the event of a Change in Control during the term of this Agreement, all outstanding options
(“Options”), if any, granted to you under any of the Corporation’s stock option plans,
incentive plans or other similar plans (or options substituted therefor covering the stock of a
successor corporation) shall, effective immediately prior to such Change in Control, become fully
vested and exercisable as to all shares of stock covered thereby.

 

12

     6. Successors; Binding Agreement.

     (i) The Corporation shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this Agreement and shall
entitle you to terminate your employment and receive compensation from the Corporation in the same
amount and on the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be deemed the Date of
Termination. Unless expressly provided otherwise, “Corporation” as used herein shall mean
the Corporation as defined in this Agreement and any successor to its business and/or assets as
aforesaid.

     (ii) This Agreement shall inure to the benefit of and be enforceable by you and
your personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amount would still be payable to
you hereunder had you continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee
or, if there is no such designee, to your estate.

     7. Notice. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the attention of the
Board with a copy to the Secretary of the Corporation, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.

     8. Non- Compete, Confidentiality and Non-Solicitation Covenants.

     (i) Non-Compete. In consideration of and in connection with the benefits
provided to you under this Agreement, and in order to protect the goodwill of the Corporation, you
hereby agree that, if your employment is terminated pursuant to a Covered Resignation, then, for a
period of twelve (12) months commencing on the Date of Termination, you shall not, directly or
indirectly, own, manage, operate, join, control or participate in the ownership, management,
operation or control of, or be connected as a director, officer, employee, partner, consultant or
otherwise with any of the following entities (or any subsidiary of any such entity) other than as
a shareholder or beneficial owner owning 5% or less of the outstanding securities of a public
company: Durand International, the Anchor Hocking unit of Newell Co., Cardinal International,
Inc., the Indiana Glass unit of Lancaster Colony Corporation, Oneida LTD or any glass tableware
manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies
of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

     (ii) Confidentiality. You hereby agree that, for the period commencing on
the Date of Termination and terminating on the third anniversary thereof, you shall not, directly
or indirectly, disclose or make available to any person, firm, corporation, association or other

 

13

entity for any reason or purpose whatsoever, any Confidential Information (as defined below).
You agree that, upon termination of your employment with the Corporation, all Confidential
Information in your possession that is in written or other tangible form (together with all copies
or duplicates thereof, including computer files) shall be returned to the Corporation and shall
not be retained by you or furnished to any third party, in any form except as provided herein;
provided, however, that you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known at the time of
disclosure to you, (ii) becomes publicly known or available thereafter other than by any means in
violation of this Agreement or any other duty owed to the Corporation by any person or entity, or
(iii) is lawfully disclosed to you by a third party. As used in this Agreement, the term
“Confidential Information” means: information disclosed to you or known by you as a
consequence of or through your relationship with the Corporation, about the customers, employees,
business methods, public relations methods, organization, procedures or finances, including,
without limitation, information of or relating to customer lists, of the Corporation and its
affiliates.

     (iii) Non-Solicitation. You hereby agree that, for the period commencing on
the Date of Termination and terminating on the third anniversary thereof, you shall not, either on
your own account or jointly with or as a manager, agent, officer, employee, consultant, partner,
joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or
corporation, directly or indirectly solicit or attempt to solicit away from the Corporation any of
its officers or employees or offer employment to any person who, on or during the six (6) months
immediately preceding the date of such solicitation or offer, is or was an officer or employee of
the Corporation; provided, however, that a general advertisement to which an employee of the
Corporation responds shall in no event be deemed to result in a breach of this Section 8(iii).

     9. Funding of Obligations. Within a reasonable time following the execution and
delivery of this Agreement by you and the Corporation, the Corporation shall partially fund its
obligations to provide benefits hereunder (including, without limitation, its obligations under
Section 4(ii)(g)) by establishing and irrevocably partially funding a trust for your benefit and
the benefit of other executives of the Corporation with whom the Corporation has entered into
agreements similar to this Agreement. The Corporation shall initially contribute $1000 to such
trust. Such trust shall be a grantor trust described in section 671 of the Code. Upon the
occurrence of a Potential Change in Control (as defined below), the Corporation shall fully fund
its obligations to provide benefits hereunder (including, without limitation, its obligations
under Section 4(ii)(g)) by irrevocably contributing funds to such trust on your behalf. The amount
of such contribution shall equal the then present value of the Corporation’s obligations under
Section 4 hereof as determined by the firms serving as the Corporation’s actuaries and accountants
immediately prior to the Change in Control. Such actuaries and accountants shall be paid by the
Corporation. The establishment and funding of such trust shall not affect the obligation of the
Corporation to provide benefits under the terms of this Agreement. For purposes of this Agreement
a “Potential Change in Control” shall be deemed to occur if:

     (a) the Corporation enters into an agreement, the consummation of which would result
in the occurrence of a Change in Control;

     (b) any Person (including the Corporation) publicly announces an intention to take or
to consider taking actions which, if consummated, would constitute a Change in Control;

 

14

     (c) any Person who is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Corporation representing ten percent (10%) or more of the combined voting
power of the Corporation’s then outstanding securities, increases such Person’s beneficial
ownership of such securities by five percent (5%) or more of the Corporation’s then
outstanding securities over the percentage so owned by such Person on the date hereof
provided however, (i) that this subsection (c) shall not apply to the Baron Group by virtue
of their individual or collective beneficial ownership of securities of the Corporation’s
outstanding securities as of the date of this letter so long as the Baron Group does not
individually or collectively, beneficially own, or increase such beneficial ownership to,
twenty-five percent (25%) or more of the combined voting power of the corporation’s then
outstanding securities, and (ii) that this subsection (c) shall not apply to Ariel by
virtue of its beneficial ownership of the Corporation’s outstanding securities as of the
date of this Agreement so long as Ariel does not beneficially own, or increase such
beneficial ownership to, twenty percent (20%) or more of the combined voting power of the
Corporation’s then outstanding securities; or

     (d) the Board adopts a resolution to the effect that, for purposes of this Agreement,
a Potential Change in Control has occurred.

     10. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of Ohio without regard to its conflicts of law principles. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions
to such sections. Except as provided in Section 4(ii)(g) hereunder, any payments provided for
hereunder shall be paid net of any applicable withholding required under federal, state or local
law. The obligations of the Corporation under Section 4 shall survive the expiration of the term
of this Agreement. The section headings contained in this Agreement are for convenience only, and
shall not affect the interpretation of this Agreement.

     11. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

     12. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and the
same instrument.

     13. Suits, Actions, Proceedings, Etc..

     (i) Jurisdiction and Venue. No suit, action or proceeding with respect to
this Agreement, nor any judgment entered by any court in respect thereof, may be brought in any
court, domestic or foreign, or before any similar domestic or foreign authority, other than in a
court of competent jurisdiction in the State of Ohio, and you and the Corporation hereby
irrevocably waive any right which you or the Corporation, as applicable, may otherwise have

 

15

had to bring such a suit, action, proceeding or judgment in any other court, domestic or
foreign, or before any similar domestic or foreign authority. You and the Corporation hereby
submit to the exclusive jurisdictions of such courts for the purpose of any such suit, action,
proceeding or judgment. By your execution and delivery of this Agreement, you appoint the
Secretary of the Corporation, at the Corporation’s office in Toledo, Ohio, as your agent upon
which process may be served in any such suit, action or proceeding; and by its execution and
delivery of this Agreement, the Corporation appoints the Secretary of the Corporation, at its
office in Toledo, Ohio, as its agent upon which process may be served in any such suit, action or
proceeding. Service of process upon such applicable agent, together with actual notice of such
service given to you or the Corporation, as applicable, in the manner provided in Section 7
hereof, shall be deemed in every respect effective service of process upon the applicable party in
any suit, action, proceeding or judgment. Nothing herein shall be deemed to limit the ability of
you or the Corporation to serve any such writs, process or summonses in any other manner permitted
by applicable law. You and the Corporation hereby irrevocably waive any objections which you or
the Corporation, as applicable, may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Ohio, and hereby further irrevocably waive any claim that
any such suit, action or proceeding brought in any such court has been brought in an inconvenient
forum. Notwithstanding the foregoing, in the event that no court of competent jurisdiction in the
State of Ohio will accept such jurisdiction and venue, then any suit, action or proceeding with
respect to this Agreement, or any judgment entered by any court in respect thereof, may be brought
in any court of competent jurisdiction in the continental United States which has jurisdiction
over such suit, proceeding or action and the parties thereto.

     (ii) Compensation During Dispute, Etc.. Your compensation during any
disagreement, dispute, controversy, claim, suit, action or proceeding (collectively, a
“Dispute”) arising out of or relating to this Agreement or the interpretation of this
Agreement shall be as follows: If there is a termination by you or the Corporation followed by a
Dispute as to whether you are entitled to the payments and other benefits provided under this
Agreement, then, during the period of that Dispute the Corporation shall pay you fifty percent
(50%) of the amount specified in Sections 4(ii)(a) and 4(ii)(b) hereof, and the Corporation shall
provide you with the other benefits provided in Section 4(ii) of this Agreement, if, but only if,
you agree in writing that if the Dispute is resolved against you, you shall promptly refund to the
Corporation all payments you receive under Sections 4(ii)(a) and 4(ii)(b) of this Agreement plus
interest at the rate provided in Section 1274(d) of the Code, compounded quarterly. If the Dispute
is resolved in your favor, promptly after resolution of the dispute the Corporation shall pay you
the sum that was withheld during the period of the Dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly.

     (iii) Legal Fees. The Corporation shall pay to you all legal fees and
expenses incurred by you in connection with any Dispute arising out of or relating to this
Agreement or the interpretation thereof (including, without limitation, all such fees and
expenses, if any, incurred in contesting or disputing any termination of your employment or in
seeking to obtain or enforce any right or benefit provided by this Agreement, or in connection
with any tax audit or proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder).

     14. Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and any prior

 

16

agreement of the parties hereto in respect of the subject matter contained herein, including,
without limitation, any prior severance agreements, is hereby terminated and cancelled; provided,
however, that the Employment Agreement, dated as of May 7, 2007 by and between you and the
Corporation, as amended, shall remain in full force and effect and shall, pursuant to the terms
and conditions thereof, provide certain severance benefits to you upon certain terminations of
employment. Any of your rights hereunder shall be in addition to any rights you may otherwise have
under benefit plans or agreements of the Corporation to which you are a party or in which you are
a participant, including, but not limited to, any Corporation sponsored employee benefit plans and
stock options plans. Provisions of this Agreement shall not in any way abrogate your rights under
such other plans and agreements.

If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to
the Corporation the enclosed copy of this letter, which shall then constitute our agreement on
this subject.

	 	 	 	 	 	 	 
	 

	 	Sincerely,	 	 
	 
	 	 	 	 	 	 
	 

	 	LIBBEY INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Its: Vice President, General Counsel and Secretary	 	 

Agreed and Accepted as of the

7th day of May, 2007

          
         
       
                    
        
       
       
               
      
          

Jonathan S. Freeman

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}]]