Document:

Exhibit
10.33

 

 

OWENS-ILLINOIS

 

2004
EXECUTIVE LIFE INSURANCE PLAN

 

FOR
NON-U.S. EMPLOYEES

 

 

Effective December 1,
2004

 

 

OWENS-ILLINOIS

2004
EXECUTIVE LIFE INSURANCE PLAN

FOR
NON-U.S. EMPLOYEES

 

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

 

W I T N E S S E T H:

 

WHEREAS, the Company
entered into a Death Benefit Only Agreement effective April 1, 2000 (the “2000
DBO Agreement”) with certain of its non-U.S. employees whereunder the Company
assumed an unsecured obligation to provide the beneficiaries of such non-U.S.
employees with a death benefit in an amount set forth in such DBO Agreement and
whereunder in order to fund the Company’s obligation certain policies of
insurance were purchased on the life of each participating non-U.S. employee;
and

 

WHEREAS, the Company
wishes to establish this Plan to provide for the continued funding and
consistent administration of the aforementioned death benefit obligation under
non-equity endorsement split-dollar arrangements with respect to non–U.S.
employees and non-U.S. retirees covered by a DBO Agreement and other non-U.S.
employees who satisfy the eligibility requirements of this Plan.

 

NOW, WHEREFORE, it is
hereby agreed as follows:

 

Article I
- Purpose

 

1.1                                 The
primary purpose of this Plan is to support the Employers in attracting and
retaining qualified executive non-U.S. personnel, by providing for
pre-retirement and post-retirement death benefits in an amount set forth in an
existing DBO Agreement or as otherwise determined by the Company, as
hereinafter provided and subject to certain limits hereinafter stated. The
Company has determined that the foregoing can best be provided under non-equity
endorsement split-dollar life insurance arrangements, and an insurance policy
has been or will be applied for on the life of each of the Participants. By
execution of this Plan, the Company agrees to purchase such insurance policies
under non-equity endorsement split-dollar arrangements and to pay the premiums
thereon subject to the provisions of the Plan.

 

 

Article II
- Definitions

 

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

 

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

 

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

 

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

 

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

 

2.6                                 Company’s Obligation.  Under the Plan the Company assumes an
unsecured obligation to pay a Participant’s (or his or her Assignee’s)
Beneficiary prior to such Participant’s Retirement a death benefit equal to an
amount determined by the Company with respect to such Participant and as set
forth in the Agreement with such Participant, which amount shall not be less
than the death benefit set forth in the Participant’s DBO Agreement if such DBO
Agreement is in effect on the Effective Date. 
The Company’s Obligation shall be extinguished or reduced with respect
to a Participant (or his or her Assignee) upon the payment of the Death Benefit
to the Participant’s (or his or her Assignee’s) Beneficiary in accordance with
paragraph 8.3, upon the transfer of the Policy insuring the Participant’s life
in accordance with paragraph 10.1, or if the Participant’s Termination Date
occurs for any reason other than such Participant’s Retirement, Disability or
death in accordance with paragraph 9.2. 
To the extent that the Company’s Obligation is not fully extinguished as
provided in the preceding sentence, the Company shall be liable for any such
deficiency in accordance with paragraph 8.3.

 

2.7                                 Death Benefit.  The
portion of the face amount of the Policy payable upon a Participant’s death to
the Participant’s (or his or her Assignee’s) Beneficiary as specified
herein.  In the case of a Participant who
is a Non-U.S. Retiree on the 

 

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Effective Date, the Death
Benefit shall equal the amount of the death benefit set forth in the
Participant’s DBO Agreement.  In the case
of each other Participant, the Death Benefit shall be the amount set forth in
the Agreement with the Participant as determined by the Company.

 

2.8                                 Disability.  A Participant’s
inability, solely because of disease or injury for which the Participant is
under the care of a qualified physician, to work within his or her own
occupation, as determined for purposes of the Owens-Illinois Long-Term
Disability Plan, a component of the Owens-Illinois, Inc. Salary Employees
Welfare Benefit Plan or such other long-term disability plan established by the
Participant’s Employer in which the Participant is eligible to participate.

 

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

 

2.10                           Effective Date.  December 1,
2004.

 

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

 

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

 

2.13                           Non-U.S. Employee. 
Any non-U.S. citizen performing services for an Employer for which Form
W-2 compensation (or compensation which would normally be reported on Form W-2
if paid by a U.S. Employer) is paid.  For
purposes of this Plan, an employee’s citizenship and status as a Non-U.S.
Employee shall be determined on the date of such employee’s initial employment
with an Employer.

 

2.14                           Non-U.S. Retiree. 
Any former Non-U.S. Employee who became a Participant before
his or her Termination Date and whose Agreement remains in effect after his or
her Termination Date, and any former Non-U.S. Employee on the Effective Date
whose DBO Agreement with the Company continues in effect on the Effective Date.

 

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

 

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

 

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2.17                           Plan.  This
Owens-Illinois 2004 Executive Life Insurance Plan for Non-U.S. Employees.

 

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

 

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

 

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

 

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

 

2.22                           Retirement. 
Retirement from employment with an Employer at a time and under
circumstances whereby a Participant would be eligible for an immediately
payable early or normal retirement benefit under the Owens-Illinois Salary
Retirement Plan or such other retirement plan established by the Participant’s
Employer in which the Participant is eligible to participate, as from time to
time in effect.

 

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

 

Article III
- Eligibility

 

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

 

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

 

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

 

Article IV
- Application for Insurance

 

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

 

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

 

Article V
- Payment of Premiums

 

5.1                                 On
or before the due date of each periodic Policy premium payable during the 

 

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

 

5.2                                 To
the extent that a Participant insured by a Policy is deemed to have recognized
taxable income each year by reason of an Employer paying the premium amounts
for life insurance benefits under a Policy, the Employer will fully gross up
the amount thereof to cover all applicable national, federal, state,
provincial, and local income taxes and withholdings thereon. The gross up shall
be computed on the basis of the highest then applicable income tax and
withholding rates and shall take into account and include the income taxes and
withholdings paid by an Employer.  The
amount to be reported as income each year shall include the amount of such
economic benefit plus the additional amount attributable to the Employer’s
grossing up such amount to cover such taxes and withholdings. The Employer will
furnish the Participant with an appropriate statement of the amount of such
income reportable by the Participant for national, federal, state, provincial
and local income tax purposes.

 

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

 

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

 

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Article VI
– Endorsement of Death Benefit

 

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

 

Article VII
- Policy Interests and Rights

 

7.1                                 At
any time while the Agreement applicable to a Policy remains in effect, the
Company shall be the exclusive Owner of the Policy and shall be entitled to exercise
all the rights of ownership of the Policy. The rights of ownership which shall
be exercisable by the Company shall include all of the rights of the “owner”
which are specified in the Policy, including but not limited to the right to
withdraw or borrow against any cash surrender value of the Policy, direct the
allocation of amounts paid into each Policy, and the entire value of the
Policy, among any investment options available under the Policy, sell, assign,
pledge as collateral, or otherwise transfer, exchange or encumber the Policy,
and maintain its possession, subject only to a Participant’s (or his or her
Assignee’s) right under the terms of the Agreement and the Plan to designate or
change the Beneficiary or settlement option with respect to the Death Benefit
endorsed to the Participant (or his or her Assignee) with respect to such
Policy.

 

Article VIII –
Beneficiary’s Death Benefit and Satisfaction of Company’s Obligation

 

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

 

8.2                                 Upon
the death of a Participant, the Company and the Beneficiary shall take appropriate
action to promptly obtain the insurance proceeds payable under the Policy if
the Company is the owner of such Policy at such time. The proceeds thereof
representing the Death Benefit endorsed to the Participant (or his or her
Assignee), as set forth in 

 

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Article VI, shall be
paid to the Beneficiary in accordance with the Participant’s (or his or her
Assignee’s) designation, the Beneficiary’s instructions and the terms of the Policy.  The balance of such proceeds, if any, shall
be paid to the Company in a single sum.

 

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

 

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

 

Article IX
- Retirement or Other Termination of Employment

 

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

 

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

 

8

 

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

 

Article X
– Transfer of Policy

 

10.1                           Notwithstanding
paragraph 9.1 to the contrary, the Company shall transfer the ownership of the
Policy insuring a Non-U.S. Retiree’s life to such Non-U.S. Retiree (or his or
her Assignee) on such Non-U.S. Retiree’s Distribution Date whereupon the
Company and the Employer shall be under no further obligation to make premium
payments or to take any other action to maintain the Policy in force or
preserve the Policy’s Death Benefit in any manner.  Notwithstanding paragraph 8.3 to the
contrary, the Company’s Obligation shall be fully extinguished and the
obligations of the Company and the Employer under the terms of the Plan and the
Agreement with such Non-U.S. Retiree (or his or her Assignee) to provide the
Death Benefit shall terminate if the current accumulation value of the
transferred Policy at the Distribution Date is sufficient at then current
mortality charges and a guaranteed 4% crediting rate to keep such Policy in
force until the date such Non-U.S. Retiree reaches age 100 (the maturity age of
the Policy) in an amount at least equal to the Death Benefit.  If the current accumulation value of the
transferred Policy at the Distribution Date is not sufficient at then current
mortality charges and a guaranteed 4% crediting rate to keep such Policy in
force until the date such Non-U.S. Retiree reaches age 100 (the maturity age of
the Policy) in an amount at least equal to the Death Benefit, then the Company’s
Obligation shall be reduced to an amount equal to the difference between the
Company’s Obligation immediately prior to the transfer of such Policy and the
amount of Death Benefit supported by the transferred Policy’s current
accumulation value at the Distribution Date.

 

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

 

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

 

Article XI – Assignment by
Participant

 

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

 

Article XII - Plan
Termination

 

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

 

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

 

Article XIII - Plan
Amendments

 

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

 

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Article XIV
- Insurance Company

 

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

 

Article XV
- Administration and Claims

 

15.1                           The
following provisions of this paragraph 15.1 shall apply if and only if the Plan
is determined to constitute an employee welfare benefit plan under Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”):

 

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

 

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

 

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

 

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

 

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

 

(i)                                     The
Owner of a Policy, a Beneficiary, or a duly authorized representative thereof
may make a claim for benefits by filing a claim with the Administrator on a form
made available for that purpose. The Administrator shall make the initial
determination as to the treatment of the claim and give the claimant notice
thereof within 90 days after receipt of the claim. If for any reason a claim
for benefits under this Plan is denied by the Administrator, it shall deliver
to the claimant a written 

 

11

 

explanation setting forth
the specific reason for the denial, pertinent references to the Plan provision
on which the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in obtaining a
review of the claim, all written in a manner calculated to be understood by the
claimant. For this purpose:

 

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

 

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

 

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

 

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

 

Article XVI
- Miscellaneous

 

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

 

16.2                           The
Plan and the Plan Documents shall not constitute an inducement or consideration
for the employment of any Non-U.S. Employee or Participant and shall not give
any Non-U.S. Employee or Participant any right to be retained in the employ of
any Employer, and each Employer hereby retains the right to discharge any
Non-U.S. 

 

12

 

Employee or Participant at any time, in
accordance with the personnel policies of the Employer, or as provided in any
employment agreement between the Employer and the Non-U.S. Employee or
Participant.

 

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

 

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

 

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

 

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

 

 

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

 

 

	
   

  	
  OWENS-ILLINOIS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas L. Young

  
	
   

  	
   

  	
  Thomas L. Young

  
	
  Attest:

  	
   

  	
  Executive Vice
  President and 

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
  /s/ James W. Baehren

  	
   

  	
   

  	
   

  
	
  James W. Baehren

  	
   

  	
   

  	
   

  
	
  Senior Vice President,

  	
   

  	
   

  	
   

  
	
  Chief Administrative
  Officer and 

  	
   

  	
   

  	
   

  
	
  General Counsel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

13

 

OWENS-ILLINOIS

2004
EXECUTIVE  LIFE INSURANCE PLAN FOR
NON-U.S. EMPLOYEES

PARTICIPATION
AGREEMENT

 

(Exhibit
A to the

Owens-Illinois
2004 Executive Life Insurance Plan for Non-U.S. Employees)

 

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

 

	
  Jefferson
  Pilot Policy Number

  	
   

  	
  Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

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

 

	
  {Beneficiary:

  	
  {Relationship:                                                }

  
	
                                                 }

  	
   

  
	
  {Address:                                                            }

  	
   

  
	
  {                   

  	
  {Tax ID (Social Security) Number}

  
	
                                                    }

  	
   

  
	
  {                                                                           }

  	
  {                                                        }

  

 

IT IS AGREED:

 

A.                                   By
executing this Agreement, the Participant agrees and acknowledges that any
existing Death Benefit Only Agreement he or she has entered into with the
Company is now hereby terminated and that any obligations of the Company under
said Death Benefit Only Agreement are being replaced by the Company’s
Obligation under the Plan and this Participation Agreement.

 

B.                                     All
of the terms, provisions, and conditions of the Plan are hereby incorporated
into this Agreement.  Capitalized terms
defined in the Plan and not otherwise defined in this Agreement shall have the
meaning assigned in the Plan.

 

C.                                     Commencing
on                                   ,
the Participant agrees to participate in the Plan and become subject to its
terms, and the Company agrees that the Participant’s Employer(s) or former Employer(s)
will contribute premiums in accordance with the Plan for the period of time and
in the amounts determined thereunder. Both parties to this 

 

 

Agreement understand that benefits under
the Plan shall be provided by the above identified Policy issued or to be
issued by the Insurance Company.

 

D.                                    Notwithstanding
the foregoing provisions of this Agreement or any contrary provisions of the
Plan, the Company agrees that at any time while this Agreement remains in
effect before the Participant’s Termination Date, or on or after the
Participant’s Termination Date if such Termination Date occurred by reason of
the Participant’s Retirement or Disability, or in the case of a Non-U.S.
Retiree on the Effective Date, the Death Benefit payable to the Beneficiary shall
equal $                                               ;

 

E.                                      The
Company shall be the sole owner of the Policy, but by executing this Agreement
the Company hereby irrevocably endorses to the Participant the Death Benefit
under the Policy as described in paragraph D above.  During such time as the Company is the owner
of the Policy, the Company will be entitled to receive the amount of any death
benefit paid under the Policy in excess of the Death Benefit payable to the
Beneficiary.  If the Participant terminates
his or her employment by reason of his or her Retirement or Disability, or if
the Participant is a Non-U.S. Retiree on the Effective Date, the Company will
transfer the ownership of the Policy to the Participant on his or her
Distribution Date. If the Participant terminates his or her employment for
reasons other than Retirement or Disability, the Participant shall have the
right to acquire the Policy from the Company for its then current fair market
value and to pay all future premiums thereon.

 

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

 

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

 

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

 

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

 

2

 

Dated as of the            
day of                                          ,
20         .

 

 

	
  PARTICIPANT:

  	
  OWENS-ILLINOIS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  
	
  Name 

  	
   

  	
   

  	
  Name 

  	
   

  	
   

  
	
   

  	
   

  
	
  Social Security Number 

  	
   

  	
   

  	
  Tax ID Number: 

  	
   

  	
   

  
									

 

3

 

OWENS-ILLINOIS

2004
EXECUTIVE  LIFE INSURANCE PLAN FOR
NON-U.S. EMPLOYEES

PARTICIPATION
AGREEMENT

 

(Exhibit
A-1 to the

Owens-Illinois
2004 Executive Life Insurance Plan for Non-U.S. Employees)

 

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

 

	
  Jefferson
  Pilot Policy Number

  	
   

  	
  Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

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

 

IT IS AGREED:

 

A.                                   By
executing this Agreement, the Assignee agrees and acknowledges that any
existing Death Benefit Only Agreement the Participant entered into with the
Company is now hereby terminated and that any obligations of the Company’s
under said Death Benefit Only Agreement are being replaced by the Company’s
Obligation under the Plan and this Participation Agreement.

 

B.                                     All
of the terms, provisions, and conditions of the Plan are hereby incorporated
into this Agreement.  Capitalized terms
defined in the Plan and not otherwise defined in this Agreement shall have the
meaning assigned in the Plan.

 

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

 

D.                                    Notwithstanding
the foregoing provisions of this Agreement or any contrary provisions of the
Plan, the Company agrees that at any time while this Agreement remains in
effect before the Participant’s Termination Date, or on or after the
Participant’s Termination Date if such Termination Date occurred by reason of
the Participant’s Retirement or 

 

 

Disability, or in the
case of a Non-U.S. Retiree on the Effective Date, the Death Benefit payable to
the Beneficiary shall equal $                                  .

 

E.                                      The
Company shall be the sole owner of the Policy, but by executing this Agreement
the Company hereby irrevocably endorses to the Assignee the Death Benefit under
the Policy as described in paragraph D above and acknowledges and accepts the
Participant’s irrevocable assignment of his or her interest in the Company’s
Obligation to the Assignee. During such time as the Company is the owner of the
Policy, the Company will be entitled to receive the amount of any death benefit
paid under the Policy in excess of the Death Benefit payable to the
Beneficiary.  If the Participant
terminates his or her employment by reason of his or her Retirement or
Disability, or if the Participant is a Non-U.S. Retiree on the Effective Date,
the Company will transfer the ownership of the Policy to the Assignee on the
Participant’s Distribution Date. If the Participant terminates his or her
employment for reasons other than Retirement or Disability, the Assignee shall
have the right to acquire the Policy from the Company for its then current fair
market value and to pay all future premiums thereon.

 

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

 

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

 

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

 

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

 

2

 

Dated as of the              
day of                                              ,
20        .

 

 

	
  ASSIGNEE:

  	
  OWENS-ILLINOIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name 

  	
   

  	
   

  	
  Name 

  	
   

  	
   

  
	
   

  	
   

  
	
  Address 

  	
   

  	
   

  	
  Tax ID Number:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Social Security Number 

  	
   

  	
   

  	
   

  
											

 

3Exhibit 10.34

 

SECOND AMENDED AND RESTATED OWENS-ILLINOIS,
INC.

SENIOR MANAGEMENT INCENTIVE PLAN

 

Effective January 1, 2004

 

1.                                      History
and purpose.

 

1.1                               The Owens-Illinois, Inc.
Senior Management Incentive Plan, initially adopted by the Board of Directors
of Owens-Illinois, Inc. effective on January 1, 1991 was amended in the
form of the Amended and Restated Owens-Illinois, Inc. Senior Management
Incentive Plan and further amended by a First, Second and Third Amendment
thereto (the “Original Plan”) effective on or as of January 1, 1993.  Pursuant to paragraph 8 of the Original Plan,
said Board has duly authorized the further amendment and restatement of the
Original Plan, effective on or as of January 1, 2004, in the form of this
Second Amended and Restated Owens-Illinois, Inc. Senior Management Incentive
Plan.  The provisions of the Original
Plan shall continue to govern with respect to Award Periods (as defined in the
Original Plan) commencing before January 1, 2004 and with respect to all
matters related thereto.

 

1.2                               The purposes of this
Second Amended and Restated Owens-Illinois, Inc. Senior Management Incentive
Plan are to reward officers and other management employees who contribute to
the success of the Company, by making the amount of their compensation
significantly contingent upon the Company’s financial performance, and to
attract and retain officers and other management employees of exceptional
ability.

 

2.                                      Definitions.  The following capitalized terms used in the
Plan have the respective meanings set forth in this Section:

 

“Award” means the periodic bonus award granted to a Participant under
this Plan.

 

“Board” means the Board of Directors of OI.

 

“Bonus Pool” means, for each year, the sum of all Target Bonuses for
such year, as described in paragraph 5.1 hereof.

 

“CEO” means the Chief Executive Officer of OI.

 

“Committee” means the Compensation Committee of the Board or any other
committee of the Board to which administrative authority with respect to the
Plan may be delegated by the Board.

 

“Company” means OI together with any corporation (or unincorporated
business entity) 50 percent or more of the voting shares (or other ownership
interests) of which are owned, directly or indirectly, by OI.

 

“Deferred Compensation Plan” means any plan or arrangement adopted by
the Company whereby a Participant may be permitted, at his option, to defer the
actual receipt of an Award otherwise payable to him under this Plan.

 

 

“Equity Participation Plan” means the 1997 Equity Participation Plan of
Owens-Illinois, Inc. executed May 15, 1997, as amended from time to time.

 

“Fair Market Value” shall have the meaning set forth in the Equity
Participation Plan.

 

“OI” means Owens-Illinois, Inc., a Delaware corporation.

 

“Operating Results” means the Company’s or a Unit’s annual results from
operations for any Performance Period, determined in accordance with paragraph
7 hereof and expressed as a percentage of the Performance Period’s Performance
Objective.

 

“Participant” means an officer or other management employee of the
Company who is eligible to participate in this Plan in accordance with
paragraph 4 hereof.

 

“Performance Objective” means the annual objective established in
accordance with paragraph 6 hereof for the operating performance of the Company
or a Unit.

 

“Performance Period” means the calendar year or any other period that
the CEO or the Committee may determine.

 

“Plan” means this Second Amended and Restated Owens-Illinois, Inc.
Senior Management Incentive Plan as set forth herein or as from time to time amended.

 

“Restricted Stock” shall have the meaning set forth in the Equity
Participation Plan.

 

“Share” means a share of common stock, par value $0.01 per share, of
the Company.

 

“Target Bonus” means an amount established each year in accordance with
paragraph 5 hereof equal to a stated percentage of a Participant’s annual base
salary.

 

“Unit” means an operating unit or subsidiary of the Company.

 

Words of the masculine gender include correlative words of the feminine
and neuter genders and vice versa, and words denoting the singular include the
plural and vice versa.

 

 

3.                                      Administration.

 

3.1                               The Plan will be
administered by the CEO, whose administrative powers hereunder shall include
the powers to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make any other determinations that he
deems necessary or desirable for the administration of the Plan.  The CEO may correct any defect or omission or
reconcile any inconsistency in the Plan in the manner and to the extent the CEO
deems necessary or desirable.  Any
decision of the CEO in the interpretation and administration of the Plan, as
described herein, shall lie within his sole and absolute discretion and shall
be final, conclusive, and binding on all parties concerned.  Determinations made by the CEO under the Plan
need not be uniform and may be made selectively among Participants, whether or
not such Participants are similarly situated.

 

3.2                               The Board, in its
discretion on recommendation of the CEO, shall be authorized at any time and
from time to time to modify any Performance Objective, and the Committee, in
its discretion on recommendation of the CEO, shall be authorized at any time
and from time to time to adjust the amount of any Target Bonus and/or the size
of the Bonus Pool; and to accelerate or defer the payment of Awards.

 

4.                                      Eligibility
and participation.

 

4.1                               Each person who, at the
beginning of 200_ or any subsequent calendar year, is an elected corporate
officer of OI shall be eligible to participate in the Plan for such year.  Each person who first becomes an elected
corporate officer of OI during 200_ or any subsequent calendar year shall be
eligible to participate in the Plan for at least the balance of such year or,
if approved by the Committee on recommendation of the CEO, for the entire year.

 

4.2                               The CEO shall designate
those persons who shall be Participants for each Performance Period.  The CEO may prospectively or retroactively
suspend or withdraw such approval with respect to any such Participant for all
or any part of any year.

 

5.                                      Target
Bonuses.

 

5.1                               A Target Bonus shall be
established each year for each Participant, equal in amount to a stated
percentage, not to exceed 100 percent, of his base salary for such year.

 

5.2                               The Committee shall
establish the Target Bonus of the CEO, and the CEO shall establish the Target
Bonuses of all other Participants under this Plan.  Target Bonuses shall be based on an
evaluation of the responsibilities of each Participant and of each Participant’s
potential to contribute to the attainment of the Performance Objective of the
Company or the Participant’s Unit for such year.  Target Bonuses shall be established before or
as soon as practicable after the beginning of each year, and each Participant
shall thereupon be notified of his Target Bonus.

 

 

5.3                               If the rate of a
Participant’s base salary is changed during a year after his Target Bonus has
been established, the amount of his Target Bonus shall be adjusted to equal the
stated percentage of his actual base salary before and after the change.

 

6.                                      Performance
Objectives.  The Board, on
recommendation of the CEO, shall establish one or more Performance Objectives
for each Performance Period, each of which shall be expressed as the
attainment, at the end of such Period, of a specified measurable operating,
financial, or other objective, such as (but not limited to) one or more of the
following criteria:  (i) earnings before
or after taxes (including earnings before interest, taxes depreciation and
amortization); (ii) net income; (iii) operating income; (iv) earnings per
Share; (v) book value per Share; (vi) return on equity; (vii) expense
management; (viii) return on investment before or after the cost of capital;
(ix) improvements in capital structure; (x) profitability of an identifiable
business unit or product; (xi) maintenance or improvement of profit margins;
(xii) stock price; (xiii) market share; (xiv) revenues or sales; (xv) costs;
(xvi) cash flow; (xvii) working capital; (xviii) return on assets; (xix) cost
reduction goals; (xx) return on sales; (xxi) gross margin; (xxii) debt
reduction; (xxiii) new product launches; (xxiv) completion of joint ventures,
divestitures, acquisitions or other corporate transactions; (xxv) new business
or expansion of customers or clients; or (xxvi) productivity improvement. The
foregoing criteria may relate to the Company, one or more its subsidiaries or
one or more of its Units or any combination of the foregoing, and may be
applied on an absolute basis and/or be relative to one or more peer group
companies or indices, or any combination thereof, all as the Board
determines.  In addition, the CEO or the
Committee may adjust, modify or amend the above business criteria, either in
establishing any Performance Objective or in determining the extent to which
any Performance Objective has been achieved. 
Without limiting the generality of the foregoing, the CEO or the
Committee shall have the authority, at any time it establishes a Performance
Objective for the applicable Performance Period, to make equitable adjustments
in the business criteria in recognition of unusual or non-recurring events
affecting the Company or any Unit, in response to changes in applicable laws or
regulation, or to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to
the disposal of a segment of a business or related to a change in accounting
principles, or as the CEO or Committee determines to be appropriate to reflect
a true measurement of the profitability of the Company or its operating units,
as applicable and to otherwise satisfy the purposes of this Plan.  Each Performance Period’s Performance
Objective(s) shall be established before or as soon as practicable after the
beginning of such Period, and each Participant shall thereupon be notified
thereof.

 

7.                                      Operating
Results.  As soon as practicable
after the end of each Performance Period, the specific objective or objectives
used as the Performance Objective(s) for such Period for the Company and each
Unit shall be determined and reported to the Board and the CEO.  The Operating Results for each Performance
Period, for purposes of the Plan, shall be the 

 

 

percentage which the specific objective or objectives used as the
Performance Objective(s) for such Period, as so reported, is of the Performance
Objective(s) for such Period.

 

8.                                      Determination
of Awards.

 

8.1                               The Operating Results of
the Company or a Participant’s Unit shall determine the extent to which a Participant’s
Award shall be paid to such Participant. 
However, and notwithstanding paragraph 8.2 hereof to the contrary, the
CEO, in his discretion, may reduce or eliminate the Award of any Participant
for any Performance Period to the extent the CEO determines that such
Participant’s performance for such Period did not materially contribute to the
Operating Results for such year or that any act or omission by such Participant
has adversely affected (or can be reasonably expected to adversely affect) the
Company or the Participant’s Unit.

 

8.2                               If the Company’s
Operating Results are less than 90 percent, none of the Participant’s Award
will be paid.  If the Company’s Operating
Results are exactly 90 percent, 50 percent of the Participant’s Target Bonus
will be paid as an Award.  For each
percentage point by which the Company’s Operating Results exceed 90 percent but
not 120 percent, an additional 5% percent of the Participant’s Target Bonus
will be paid as an Award.  No more than
200 percent of the Participant’s Target Bonus shall be paid as an Award
regardless of the level of the Company’s Operating Results.

 

9.                                      Payment
of Awards.

 

9.1                               Except to the extent
deferred at the option of a Participant in accordance with a Deferred
Compensation Plan, and/or except to the extent distributable in the form of
Restricted Stock at the option of a Participant in accordance with paragraph
9.4 hereof, each Participant’s Award for each year, determined in accordance
with paragraph 8 hereof, shall be paid to him in cash no later than March 15
of the following year.

 

9.2                               In the event of a
Participant’s death after the end of a Performance Period but before his Award,
if any, for such Period has been paid to him, it shall be paid to the
beneficiary or beneficiaries designated by him in writing filed with the
Company or, in the absence of any such designation or if no such designated
beneficiary survives the Participant, to the beneficiary or beneficiaries of
his life insurance under the Company’s Life Insurance Plan.  If there is no such designated beneficiary or
life insurance beneficiary, such Participant’s Award shall be paid to his
estate.

 

9.3                               If a Participant’s
employment with the Company is terminated for any reason during the course of a
year, or if he is transferred to a position with the Company which the CEO
determines no longer qualifies him to be a Participant eligible to participate
in this Plan, the extent, if any, to which his Award for such year will be paid
to him will be determined by the CEO, in his discretion.

 

 

9.4                               From time to time the
Committee may grant to any Participant eligible for an Award under the Plan the
option to receive all or any specified part of such Award in Restricted
Stock.  On or before June 30 of any
year for which the Committee has granted such an option, any Participant to
whom such an option has been granted may elect, by written notice to the
Committee, to receive distribution of all or any specified part of his Award
for such year in the form of Restricted Stock with a Fair Market Value at the
date of distribution equal to 100 percent (or such higher percent as determined
by the Committee) of the dollar amount of such Award or part thereof if payable
in cash.  If so elected, such
distribution shall be made no later than March 15 of the following year,
in accordance with applicable provisions of the Equity Participation Plan.  The terms of the Restricted Stock shall be
set forth in a Restricted Stock Agreement, the form and content of which shall
be approved by the Committee.

 

10.                               Amendment
or termination of the Plan.  The
Board or the Committee, in its sole discretion, may amend, alter, or terminate
the Plan at any time, except that no such action shall adversely affect the
rights of any person with respect to an Award that has become payable in
accordance with paragraph 8 hereof without such person’s consent.

 

11.                               Miscellaneous.

 

11.1                        Neither the Plan nor any action
taken hereunder shall be construed as giving any Participant or other person
any right to continue to be employed by or perform services for the Company,
and the right to terminate the employment of or performance of services of any
Participant at any time and for any reason is specifically reserved to the
Company.

 

11.2                        No rights under this Plan shall
be assignable or transferable, or subject to encumbrance of any nature, except
to the extent that a Participant may designate a beneficiary to receive any
payment to be made following his death. 
If any Participant or beneficiary shall attempt to assign, transfer,
encumber or charge any such right, or should such right be subjected to
attachment, execution, garnishment, sequestration or other legal, equitable or
other process, it shall thereupon pass to such one or more persons as may be
designated by the Committee from among the Participant, any beneficiary
theretofore designated by the Participant, and any spouse, parent, or child of
such Participant or beneficiary.

 

11.3                        With respect to the rights of
Participants under the Plan, the obligations of the Company under the Plan
shall be wholly unsecured.  The Company
shall be under no obligation to reserve, segregate or earmark any cash or other
property for the payment of any amounts under the Plan.

 

 

11.4                        Notwithstanding
anything to the contrary herein, the Committee, in its sole discretion (but
subject to applicable law) may reduce any amounts payable to a Participant
hereunder in order to satisfy any liabilities owed to the Company by the
Participant.

 

11.5                        The
Company shall withhold therefrom such amounts as may be required by federal,
state or local law, and the amount payable under the Plan to the person
entitled thereto shall be reduced by the amount so withheld.

 

11.6                        The
Plan shall be governed by and construed in accordance with the laws of the
State of Ohio applicable to contracts made and to be performed in the State of
Ohio.

 

12.                               Effective
Date.  This Plan, when duly executed,
shall become effective on or as of January 1, 2004.

 

IN WITNESS WHEREOF,
the Board of Directors of Owens-Illinois, Inc., has caused this Second Amended
and Restated Owens-Illinois, Inc. Senior Management Incentive Plan to be
executed by a duly authorized officer of the corporation, this 26th day of January,
2005.

 

	
   

  	
  OWENS-ILLINOIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
      /s/ James W. Baehren

  	
   

  
	
   

  	
   

  	
   Senior Vice President

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