Document:

Exhibit 
10.1

 

 

WORLD OPERATIONS

 

 

March 31, 2004

 

 

Mr. Steve McCracken

296 Old Kennett Road

Kennett Square, PA 19348

 

 

Dear Steve:

 

We are
delighted to confirm that you will join us as Chairman and Chief Executive
Officer on the terms set forth below.

 

1.                                       Position.  President and Chief Executive Officer and a
member of the Board of Directors of Owens-Illinois, Inc. (the “Board”
and the “Company,” respectively), effective April 1, 2004.  Chairman of the Board following the
Company’s 2004 Annual Meeting of Shareholders.

 

2.                                       Base
Salary.  $700,000 per year, plus
such increases, if any, as may be determined from time to time by the Board (“Base
Salary”).

 

3.                                       Annual
Bonus.  You will participate in the
Company’s Senior Management Incentive Plan, as amended from time to time (or
any successor plan).  Your target bonus
will be 150% of Base Salary (the “Target Bonus”).  Your annual bonus can reach 300% of Base
Salary if you exceed target annual incentives by up to 20%.  Your annual bonus for 2004 will be not less
than $350,000.

 

4.                                       Equity
Arrangements.

 

a.                                       Purchased
Equity.  As soon as practicable
following the date hereof, but in no event later than April 9, 2004, you
will purchase from the Company a number of shares of the Company’s common
stock, par value $0.01 per share (the “Common Stock”), for an aggregate
purchase price of $750,000, with the number of shares calculated by dividing
(x) that aggregate purchase price, by (y) the per-share closing price of the
Common Stock on the New York Stock Exchange (the “Fair Market Value”) on
the trading day immediately preceding the date of purchase.

 

b.                                      Initial
Restricted Share Award.  On
April 1, 2004, you will be granted an award of restricted shares in
respect of 155,000 shares (“Restricted Shares”) of Common Stock under
the Company’s Amended and Restated 1997 Equity Participation Plan (the

 

 

“Equity Participation Plan”).  Subject to your continued employment with
the Company, 50% of the Restricted Shares will vest on the second anniversary
of the date of grant, 25% on the third anniversary of the date of grant, and
the remaining 25% on the fourth anniversary of the date of grant.

 

c.                                       Initial
Stock Option.  On April 1,
2004, you will be granted a non-qualified stock option to purchase 335,000
shares of Common Stock (the “Stock Option”) under the Equity
Participation Plan.  The Stock Option will have a per-share
exercise price equal to the Fair Market Value on the trading day immediately
preceding the date of grant, and will expire ten years and one day following
the date of grant subject to earlier expiration in accordance with the terms of
the standard non-qualified stock option agreement under the Equity
Participation Plan.  Subject to your continued
employment with the Company, 50% of the Stock Option will become exercisable on
the 5th anniversary of the date of grant, and the remaining 50% will
become exercisable on the 6th anniversary of the date of
grant.  The Stock Option will, however,
become exercisable on an accelerated basis, as indicated below, after the first
anniversary of the date of grant if the average Fair Market Value per share for
any period of 20 consecutive trading days (commencing after such first
anniversary) is at least equal to the product of the Fair Market Value per
share on the date of grant times the amount shown below under “Stock Price
Multiple.”

 

	
  Stock Price Multiple

  	
   

  	
  Exercisable
  Percentage

  
	
  112.0%

  	
   

  	
  25

  	
  %

  
	
  134.5%

  	
   

  	
  50

  	
  %

  
	
  160.5%

  	
   

  	
  75

  	
  %

  
	
  192.5%

  	
   

  	
  100

  	
  %

  

 

d.                                      Future Equity-Incentive Awards.  You will be eligible for future equity-incentive awards in the
sole discretion of the Board.

 

5.                                       Employee
Benefits and Perquisites.  You will
participate in the Company’s employee benefit plans (except for severance or
incentive plans) as in effect from time to time, including its health plan and
life insurance plan (collectively, the “Employee Benefits”), on the same
basis as those benefits are generally made available to other senior executives
of the Company.  You will be provided
with four weeks (20 days) per year of paid vacation.  You will have use of a Company car and will be reimbursed for
reasonable fees paid for financial consulting. 
You will participate in the Company’s supplemental retirement plan, with
accelerated vesting in order to meet the service requirements after five years
of service, and we intend to work with you to coordinate your pension benefits
with those you earned from your former employer.

 

6.                                       Relocation.  The Company will reimburse you for
reasonable and customary relocation expenses (including temporary living
expenses and the 5% brokerage commission on the sale of your home in Kennett
Square, Pennsylvania) under its policies incurred by you in connection with the
relocation of your primary residence (and personal belongings).  The

 

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Company also will pay you an amount up to
$300,000 in the event the sale of your home in Kennett Square, Pennsylvania
results in a loss to you (i.e., the amount received by you, net of any
unreimbursed brokerage commissions, is less than $1,500,000).

 

7.                                       Miscellaneous.

 

a.                                       Governing
Law.  This letter agreement (“Letter
Agreement”) will be governed by and construed in accordance with the laws
of the State of Ohio, without regard to conflicts of laws principles thereof.

 

b.                                      Entire
Agreement/Amendments.  This Letter
Agreement and the provisions of Appendix A contain the entire
understanding of the parties with respect to your employment by the
Company.  Appendix A is made a
part of this Letter Agreement and is incorporated by reference.  This Letter Agreement (including Appendix
A) may not be amended except by written instrument signed by the parties
hereto.  This Letter Agreement replaces
and supercedes any prior agreements between the parties, whether written or
oral.

 

c.                                       No
Waiver.  The failure of the Company
or you to insist upon strict adherence to any term of this Letter Agreement
will not be considered a waiver of such party’s rights or deprive such party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Letter Agreement.

 

d.                                      Executive
Representation.  You represent to
the Company that the execution of this Letter Agreement by you and the
performance by you of your duties to the Company will not constitute a breach
of, or otherwise contravene, the terms of any employment agreement or other
agreement or policy to which you are a party or otherwise bound.

 

e.                                       Withholding
Taxes.  The Company may withhold
from the amounts payable under this Letter Agreement any amounts required by
law.

 

f.                                         Counterparts.  This Letter Agreement may be signed in
counterparts, each of which will be an original.

 

3

 

Steve, we look
forward with great pleasure to working with you.  Please counter-sign this
Letter Agreement in the space indicated below, and return an original to my
attention.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/James W. Baehren

  	
   

  
	
   

  	
  By: James W. Baehren

  
	
   

  	
  Its:  Senior Vice President

  
	
   

  	
   

  
	
  Acknowledged and
  Agreed:

  	
   

  
	
   

  	
   

  
	
  STEVE MCCRACKEN

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/Steven R. McCracken

  	
   

  	
   

  
				

 

4

 

—  Appendix A —

 

Provisions Relating to Termination of
Employment and Restrictive Covenants

 

This Appendix A forms a part of the Letter
Agreement between Owens-Illinois, Inc. and Steve McCracken, dated
March 31, 2004, to which this Appendix A is attached.  Capitalized terms used herein will have the
meaning set forth in the Letter Agreement, unless otherwise defined below.

 

Paragraph 1.                              Termination
of Employment.

 

a.                                       By
the Company Without Cause.  Your
employment may be terminated by the Company at any time without Cause (as
defined below, but which does not include termination due to your disability),
in which case you will receive:

 

(i)                                     the
Accrued Rights (as defined below);

 

(ii)                                  subject
to your continued compliance with the provisions of Paragraphs 2 and 3 of this Appendix
A, an amount equal to two times the sum of (x) your Base Salary, and (y)
your Target Bonus, payable in equal monthly installments over a period of 24
months after termination of employment; and

 

(iii)                               continued
coverage under the Company’s health plan in which you participated at the time
of your termination of employment for a period of up to 24 months, subject to
your payment of the same premiums you would have paid as an active employee; provided
that this continued coverage will terminate if you become covered under a
subsequent employer’s health plan.

 

Following such termination of employment,
except as set forth in this Paragraph 1(a), you will have no further rights to
any other compensation or benefits under the Letter Agreement and this Appendix
A.

 

b.                                      By
the Company For Cause or by Your Resignation For Any Reason.  Your employment may be terminated by the
Company at any time for Cause and will terminate automatically upon your
resignation for any reason.  If your
employment is terminated by the Company for Cause, or if you resign, you will
receive the Accrued Rights. Following such termination of employment, except as
set forth in this Paragraph 1(b), you will have no further rights to any other
compensation or benefits under the Letter Agreement and this Appendix A.

 

c.                                       Certain
Definitions.

 

(i)                                     “Cause”
means (A) your continued failure substantially to perform your duties to
the Company or any of its subsidiaries or affiliates (other than as a result of
total or partial incapacity due to physical or mental illness) for a period of
10 days following written notice by the Company to you of such failure, (B)
your commission of a felony under the laws of the United States or any state
thereof or a misdemeanor involving moral turpitude, (C) your willful
malfeasance or willful misconduct in connection with your duties to the
Company, its subsidiaries or affiliates, or any act or omission which is

 

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injurious to
the financial condition or business reputation of the Company or any of its
subsidiaries or affiliates, or (D) your breach of the provisions of Paragraphs
2 or 3 of this Appendix A.

 

(ii)                                  “Accrued
Rights” means: (A) the Base Salary through the date of termination; (B) any
annual bonus earned but unpaid for any previously completed fiscal year; (C)
such Employee Benefits as to which you may be entitled; and (D) any
supplemental retirement plan vesting as to which you may be entitled under
Section 5 of the Letter Agreement.

 

d.                                      Release.  Your receipt of any amounts under this
Paragraph 1 (other than the Accrued Rights) will be subject to and conditioned
on your execution and non-revocation of a general release on terms reasonably
satisfactory to the Company.

 

Paragraph 2.                              Non-Competition.

 

a.                                       You
acknowledge and recognize the highly competitive nature of the businesses of
the Company and its affiliates and accordingly agree as follows:

 

(i)                                     While
employed and for a period of one year thereafter, you will not, directly or
indirectly: (A) engage in, invest in, or enter into the employ of or otherwise
render any services to, any business that competes with the business of the
Company or its affiliates (including, without limitation, businesses which the
Company or its affiliates have specific plans to conduct in the future and as
to which you are aware of such planning) in any geographical area where the
Company or its affiliates manufactures, produces, sells, leases, rents,
licenses or otherwise provides its products or services (a “Competitive
Business”); or (B) interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the date of the Letter
Agreement) between the Company or any of its affiliates and customers, clients,
suppliers, or investors of the Company or its affiliates.  Notwithstanding anything to the contrary in this Letter
Agreement, you may own up to 2% of the securities of any person engaged in the
business of the Company or its affiliates that are publicly traded.

 

(ii)                                  While
employed by the Company and for a period of two years thereafter, you will not,
directly or indirectly: (A) solicit or encourage any employee of the Company or
its affiliates to leave the employment of the Company or its affiliates; or (B)
hire any employee who was employed by the Company or its affiliates within one
year prior to termination of your employment.

 

b.                                      It
is expressly understood and agreed that, although you and the Company consider
the restrictions contained in this Paragraph 2 to be reasonable, if a final
judicial determination is made by a court of competent jurisdiction that the
time or territory or any other restriction contained in this Appendix A
is an unenforceable restriction against you, the provisions of this Appendix
A will not be rendered void but will be deemed amended to apply as

 

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to such maximum time and territory and to
such maximum extent as such court may judicially determine or indicate to be
enforceable.  Alternatively, if any
court of competent jurisdiction finds that any restriction contained in this Appendix
A is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding will not affect the enforceability of any of the
other restrictions contained herein.

 

Paragraph 3.                              Confidentiality.  You may not disclose to any person outside
the Company any non-public, proprietary or confidential information concerning
the business of the Company, and its subsidiaries and affiliates, unless such
information is required by law to be disclosed.

 

Paragraph 4.                              Specific
Performance.  You acknowledge and
agree that the Company’s remedies at law for a breach or threatened breach of
any of the provisions of Paragraph 2 or Paragraph 3 would be inadequate and the
Company would suffer irreparable damages as a result of such breach or
threatened breach.  Accordingly, you
agree that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company, without posting any bond, will be entitled to
cease making any payments or providing any benefit otherwise required by the
Letter Agreement and/or Appendix A and obtain equitable relief in the
form of specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.

 

7Exhibit
10.2

 

OWENS-ILLINOIS

 

1997 EQUITY PARTICIPATION PLAN

 

RESTRICTED STOCK AGREEMENT

 

THIS RESTRICTED STOCK AGREEMENT, dated as
of April 1, 2004 is made by and between Owens-Illinois, Inc., a Delaware
corporation (the “Company”) and Steven R. McCracken, an employee of the Company
or a Parent Corporation or a Subsidiary (the “Employee”):

 

WHEREAS, the Company has established the
Owens-Illinois 1997 Equity Participation Plan (the “Plan”); and

 

WHEREAS, the Plan provides for the issuance
of shares of the Company’s Common Stock , subject to certain restrictions
thereon and to other conditions stated herein; and

 

WHEREAS, pursuant to the terms of a certain
letter agreement dated March 31, 2004 between the Company and the Employee
(the “Letter Agreement”), the Company agreed to issue the shares of Restricted
Stock provided for herein to the Employee; and

 

NOW, THEREFORE, in consideration of the
mutual covenants herein contained and other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto do hereby agree as
follows:

 

ARTICLE I.

 

DEFINITIONS

 

Whenever the following
terms are used in this Agreement, they shall have the meaning specified below,
unless the context clearly indicates to the contrary.  Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Plan.  The
masculine pronoun shall include the feminine and neuter and the singular the
plural, where the context so indicates.

 

Section 1.1.                                Cause

 

“Cause” shall mean
(A) the Employee’s continued failure substantially to perform your duties
to the Company or any of its Subsidiaries or affiliates (other than as a result
of total or partial incapacity due to physical or mental illness) for a period
of ten (10) days following written notice by the Company to the Employee of
such failure, (B) the Employee’s commission of a felony under the laws of the
United States or any state thereof or a misdemeanor involving moral turpitude,
(C) the Employee’s willful malfeasance or willful misconduct in connection with
his duties to the Company, its Subsidiaries or affiliates, or any act or
omission which is injurious to the financial condition or business reputation
of the Company or any of its Subsidiaries or affiliates, or (D) the Employee’s
breach of the provisions of Paragraphs 2 or 3 of Appendix A of the
Letter Agreement.

 

1

 

Section 1.2.                                Common
Stock

 

“Common Stock” shall mean
the common stock of the Company, $.01 par value.

 

Section 1.3.                                Competing
Business

 

“Competing Business”
shall mean any business that competes with the business of the Company or its
affiliates (including, without limitation, businesses which the Company or its
affiliates have specific plans to conduct in the future and as to which you are
aware of such planning) in any geographical area where the Company or its
affiliates manufactures, produces, sells, leases, rents, licenses or otherwise
provides its products or services.

 

Section 1.4.                                Exchange
Act

 

“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended.

 

Section 1.5.                                Fair
Market Value

 

“Fair Market Value” of a
share of the Company’s stock as of a given date shall be: (i) the closing price
of a share of the Company’s stock on the principal exchange on which shares of
the Company’s stock are then trading, if any, on the day previous to such date,
or, if shares were not traded on the day previous to such date, then on the
next preceding trading day during which a sale occurred; or (ii) if such stock
is not traded on an exchange but is quoted on NASDAQ or a successor quotation
system, (1) the last sales price (if the stock is then listed as a National
Market Issue under the NASD National Market System) or (2) the mean between the
closing representative bid and asked prices (in all other cases) for the stock
on the day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if such stock is not publicly traded on an exchange
and not quoted on NASDAQ or a successor quotation system, the mean between the
closing bid and asked prices for the stock, on the day previous to such date,
as determined in good faith by the Compensation Committee of the Board of
Directors of the Company (the “Committee”); or (iv) if the Company’s stock is
not publicly traded, the fair market value established by the Committee acting
in good faith.

 

Section 1.6.                                Parent
Corporation

 

“Parent Corporation”
shall mean any corporation in an unbroken chain of corporations ending with the
Company if each of the corporations other than the Company then owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

 

Section 1.7.                                Plan

 

“Plan” shall mean the
Company’s 1997 Equity Participation Plan.

 

2

 

Section 1.8.                                Restrictions

 

“Restrictions” shall mean
the reacquisition and transferability restrictions imposed upon Restricted
Stock under this Agreement.

 

Section 1.9.                                Restricted
Stock

 

“Restricted Stock” shall
mean Common Stock issued under this Agreement and subject  to the Restrictions imposed hereunder.

 

Section 1.10.                         Rule
16b-3

 

“Rule 16b-3” shall mean
that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended
from time to time.

 

Section 1.11.                         Secretary

 

“Secretary” shall mean
the Secretary of the Company.

 

Section 1.12.                         Securities
Act

 

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

 

Section 1.13.                         Subsidiary

 

“Subsidiary” shall mean
any corporation in an unbroken chain of corporations beginning with the Company
if each of the corporations other than the last corporation in the unbroken
chain then owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.  “Subsidiary” shall also
mean any partnership in which the Company and or any Subsidiary owns more than
fifty (50%) percent of the capital or profits interests.

 

Section 1.14.                         Termination
of Employment

 

“Termination of Employment”
shall mean the time when the employee-employer relationship between the
Employee and the Company, a Parent Corporation or a Subsidiary is terminated
for any reason, with or without Cause, including, but not by way of limitation,
a termination by resignation, discharge, death, disability or retirement; but
excluding (a) terminations where there is a simultaneous reemployment or
continuing employment of the Employee by the Company, a Parent Corporation or
any Subsidiary, (b) terminations where the Employee continues a
relationship (e.g., as a director or as a consultant) with the Company, a
Parent Corporation or a Subsidiary.  The
Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of Employment.  Notwithstanding any other provision of this
Agreement, the

 

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Company or any Subsidiary
has the absolute and unrestricted right to terminate the Employee’s employment
at any time for any reason whatsoever, with or without Cause.

 

ARTICLE II.

 

ISSUANCE OF RESTRICTED STOCK

 

Section 2.1.                                Issuance
of Restricted Stock

 

 In consideration of the services rendered or
to be rendered to the Company, a Parent Corporation or a Subsidiary pursuant to
the terms of the Letter Agreement and for other good and valuable consideration
which the Committee has determined to be equal to the par value of its Common
Stock, on the date hereof the Company issues to the Employee 155,000 shares of
its Common Stock, upon the terms and conditions set forth in this Agreement.

 

Section 2.2.                                No
Right to Continued Employment

 

Nothing in this Agreement
or in the Plan shall confer upon the Employee any right to continue in the
employee of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company, any Parent
Corporation or any Subsidiary, which are hereby expressly reserved, to
discharge the Employee at any time for any reasons whatsoever, with or without
Cause.

 

ARTICLE III.

 

RESTRICTIONS

 

Section 3.1.                                Reacquisition
of Restricted Stock

 

Until vested, the shares
of Restricted Stock issued to the Employee pursuant to this Agreement are
subject to reacquisition by the Company immediately upon a Termination of
Employment other than from death or total disability (as determined by the
Committee in accordance with Company plans and policies), in which event all
unvested shares of Restricted Stock shall immediately fully vest and all
Restrictions with respect to such shares of Restricted Stock shall immediately
expire.  Following any reacquisition by
the Company pursuant to this Section 3.1, the Company shall promptly pay
to the Employee an amount equal to the product of $.01 times the number of
shares of Restricted Stock reacquired.

 

Section 3.2.                                Lapse
of Restrictions.

 

The Restricted Stock
shall vest, and all Restrictions thereon shall immediately expire as follows:
(a) 50% of the Restricted Shares will vest on April 1, 2006, (b) 25% of
the Restricted Shares will vest on April 1, 2007, and (c) the remaining
25% of the Restricted Shares will vest on April 1, 2008.  Upon the vesting of the shares and subject
to Section 5.3, the Company shall cause new certificates to be issued with
respect to such vested shares and delivered to the Employee or his legal representative,
free from the legend provided for in Section 3.3 and any of

 

4

 

the other
Restrictions.  Such vested shares shall
cease to be considered Restricted Stock subject to the terms and conditions of
this Agreement.

 

Section 3.3.                                Legend.

 

Certificates representing
shares of Restricted Stock issued pursuant to this Agreement shall, until all
restrictions lapse and new certificates are issued pursuant to
Section 3.2, bear the following legend:

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING REQUIREMENTS AND
MAY BE SUBJECT TO REACQUISTION BY THE COMPANY UNDER THE TERMS OF THAT CERTAIN
RESTRICTED STOCK AGREEMENT BY AND BETWEEN OWENS-ILLINOIS, INC. (THE “COMPANY”)
AND THE HOLDER OF THE SECURITIES.  PRIOR
TO VESTING OF OWNERSHIP IN THE SECURITIES, THEY MAY NOT BE DIRECTLY OR
INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES. 
COPIES OF THE ABOVE REFERENCED AGREEMENT ARE ON FILE AT THE OFFICES OF
THE COMPANY AT ONE SEAGATE, TOLEDO, OHIO 43604.

 

Section 3.4.                                Merger,
Consolidation, Acquisition, Liquidation or Dissolution

 

Notwithstanding any other
provision of this Agreement, upon the merger or consolidation of the Company
into another corporation, the acquisition by another corporation or person
(excluding any employee benefit plan of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company) of
all or substantially all of the Company ‘s assets or 51% or more of the
Company’s then outstanding voting stock, or the liquidation or dissolution of
the Company, the Committee shall then provide by resolution adopted prior to
such event that, at some time prior to the effective date of such event, all
shares of Restricted Stock not previously reacquired pursuant to
Section 3.1 shall fully vest and all Restrictions with respect to such
shares of Restricted Stock shall immediately expire.

 

Section 3.5.                                Restrictions
on New Shares

 

In the event that the
outstanding shares of the Company’s 
Common Stock are hereafter changed into or exchanged for a different
number of kind of shares or other securities of the Company or of another
corporation pursuant to a merger of the Company into another corporation, or
the exchange of all or substantially all of the assets of the Company for the
securities of another corporation, or the acquisition by another corporation or
person (excluding any employee benefit plan of the Company or any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company) of 51% or more of the Company’s then outstanding voting stock, or the
liquidation or dissolution of the Company, or a stock split-up or stock
dividend, such new, additional or different shares or securities which are held
or received by the Employee in his capacity as a holder of Restricted Stock
shall be considered to be Restricted Stock and shall be subject to all of the
Restrictions, unless the Committee provides,

 

5

 

pursuant to
Section 3.4 for the accelerated vesting and expiration of the Restrictions
on the shares of Restricted Stock underlying the distribution of the new,
additional or different shares or securities.

 

ARTICLE IV.

 

NON-COMPETITION/NON-SOLICITATION

 

Section 4.1.                                Covenant
Not to Compete

 

Employee covenants and
agrees that prior to Employee’s Termination of Employment and for a period of
one (1) year following the Employee’s Termination of Employment, Employee will
not, directly or indirectly: (a) engage in, invest in, or enter into the employ
of or otherwise render any services to, any Competing Business, or (b)
interfere with, or attempt to interfere with, business relationships (whether
formed before, on or after the date of the Letter Agreement) between the
Company or any of its affiliates and customers, clients, suppliers, or
investors of the Company or its affiliates.  Notwithstanding anything to the contrary in this
Agreement, the Employee may own up to 2% of the securities of any person
engaged in the business of the Company or its affiliates that are publicly
traded.

 

Section 4.2.                                Non-Solicitation of Employees

 

Employee covenants and
agrees that prior to Employee’s Termination of Employment and for a period of
two (2) year following the Employee’s Termination of Employment, Employee will
not, directly or indirectly: (a) solicit or encourage any employee of the
Company or its affiliates to leave the employment of the Company or its
affiliates; or (B) hire any employee who was employed by the Company or its
affiliates within one year prior to Employee’s Termination of Employment.

 

ARTICLE V.

 

MISCELLANEOUS

 

Section 5.1.                                Administration

 

The Committee shall have
the power to interpret the Plan and this Agreement, and to adopt such rules for
the administration, interpretation, and application of the Plan as are
consistent therewith, to interpret, amend or revoke any such rules.  All action taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons. In its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan or this Agreement
except with respect to matters which under Rule 16b-3, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion
of the Committee.  No member of the Committee
or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan

 

6

 

or the Restricted Stock,
and all members of the Committee and the Board shall be fully protected by the
Company in respect of any such action, determination or interpretation.

 

Section 5.2.                                Restricted
Stock Not Transferable

 

No Restricted Stock or
any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Employee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
hypothecation, encumbrance, assignment or any other means, whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), any attempted disposition thereof shall be null and
void and of no effect; provided however, that this Section 5.2 shall not
prevent transfers by will or by the applicable laws of descent and
distribution.

 

Section 5.3.                                Conditions
to Issuance of Stock Certificates

 

The Company shall not be
required to issue or deliver any certificate or certificates for shares of
stock pursuant to this Agreement prior to fulfillment of all of the following
conditions:

 

(a)                                  The
admission of such shares to listing on all stock exchanges on which such class
of stock is then listed; and

 

(b)                                 The
completion of any registration or other qualification of such shares under any
state or federal law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body, which the
Committee shall, in its sole discretion, deem necessary or advisable; and

 

(c)                                  The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Committee shall, in its sole discretion,
determine to be necessary or advisable; and

 

(d)                                 Subject
to Section 5.10 the payment by the Employee of all amounts which, under
federal, state or local tax law, the Company (or other employer corporation) is
required to withhold upon issuance of Restricted Stock and/or the lapse or
removal of any of the Restrictions; and

 

(e)                                  The
lapse of such reasonable period of time as the Committee may from time to time
establish for reasons of administrative convenience.

 

Section 5.4.                                Escrow

 

The Secretary or such other escrow holder as the
Committee may appoint shall retain physical custody of the certificates
representing Restricted Stock, including shares of Restricted Stock issued
pursuant to Section 3.5, until all of the Restrictions expire or shall
have been removed; provided, however, that in no event shall the Employee
retain physical custody of any certificates representing Restricted Stock issued
to him.

 

7

 

Section 5.5.                                Notices

 

Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Employee shall be addressed to him
at the address given beneath his signature hereto.  By a notice given pursuant to this Section 5.5, either party
may hereafter designate a different address for notices to be given to
him.  Any notice which is required to be
given to the Employee shall, if the Employee is then deceased, be given to the
Employee’s personal representative if such representative has previously
informed the Company of his status and address by written notice under this
Section 5.5.  Any notice shall be
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.

 

Section 5.6.                                Rights
as Stockholder

 

Upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to Section 5.4,
the Employee shall have all the rights of a stockholder with respect to said
shares, subject to the restrictions herein (including the provisions of
Section 5.10), including the right to vote the shares and to receive all
dividends or other distributions paid or made with respect to the shares.

 

Section 5.7.                                Titles

 

Titles are provided her
in for convenience only and are not to serve as a basis for interpretation or
construction of this Agreement.

 

Section 5.8.                                Conformity
to Securities Laws

 

The Employee acknowledges
that the Plan and this Agreement is intended to conform to the extent necessary
with all provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including, without limitation, the applicable exemptive conditions
of Rule 16b-3.  Notwithstanding anything
herein to the contrary, this Agreement shall be administered, and the
Restricted Stock shall be issued only in such a manner as to conform to such
laws, rules and regulations.  To the
extent permitted by applicable law, this Agreement and the Restricted Stock
issued hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.

 

Section 5.9.                                Amendments

 

This Agreement and the
Plan may be amended without the consent of the Employee provided that such
amendment would not impair any rights of the Employee under this
Agreement.  No amendment of this
Agreement shall, without the consent of the Employee, impair any rights of the
Employee under this Agreement.

 

8

 

Section 5.10.                         Tax
Withholding

 

The Company’s obligation
: (i) to issue or deliver to the Employee any certificate or certificates for
unrestricted shares of stock; or (ii) to pay to the Employee any dividends or
make any distributions with respect to the Restricted Stock, is expressly
conditioned upon receipt from the Employee, on or prior to the date reasonably
specified by the Company of:

 

(a)                                  Full
payment (in cash or by check ) of any amount that must be withheld by the
Company for federal, state and/or local tax purposes; or

 

(b)                                 Subject
to the Committee’s consent and Section 5.10(c), full payment by delivery
to the Company of unrestricted shares of the Company’s Common Stock previously
owned by the Employee duly endorsed for transfer to the company by the Employee
with an aggregate Fair Market Value (determined, as applicable, as of the date
of the lapse of the restrictions or vesting or as of the date of the
distribution) equal to the amount that must be withheld by the Company for
federal, state and/or local tax purposes; or

 

(c)                                  With
respect to the withholding obligation for shares of Restricted Stock that
become unrestricted shares as of a certain date (the “Vesting Date”), subject
to the committee’s consent, full payment by retention by the Company of a
portion of such shares of Restricted Stock which become unrestricted or vested
with an aggregated Fair Market Value (determined on the Vesting Date) equal to
the amount that must be withheld by the Company for federal, state and/or local
tax purposes; or

 

(d)                                 Subject
to the Committee’s consent, a combination of payments provided for in the
foregoing subsections (a), (b) or (c).

 

Section 5.11.                         Governing
Law

 

This Agreement shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.

 

9

 

IN WITNESS HEREOF, this Agreement has been
executed and delivered by the parties hereto.

 

	
   

  	
   

  	
  OWENS-ILLINOIS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James W. Baehren

  	
   

  
	
   

  	
   

  	
   

  	
  James W. Baehren,
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Steven R. McCracken

  	
   

  	
   

  	
   

  
	
  Steven R. McCracken

  	
   

  	
   

  
						

 

10

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