10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2008
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-12084

LIBBEY INC.

(Exact name of registrant as specified in its charter)

Delaware	34-1559357
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)
300 Madison Avenue, Toledo, Ohio (Address of Principal Executive Offices)	43604 (Zip Code)

(419) 325-2100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.  Yes o     No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.  Yes o     No þ

The aggregate market value (based on the consolidated tape closing price on June 30, 2008) of the voting stock beneficially held by non-affiliates of the registrant was approximately $107,136,156. For the sole purpose of making this calculation, the term “non-affiliate” has been interpreted to exclude directors and executive officers of the registrant. Such interpretation is not intended to be, and should not be construed to be, an admission by the registrant or such directors or executive officers that any such persons are “affiliates” of the registrant, as that term is defined under the Securities Act of 1934.

The number of shares of common stock, $.01 par value, of the registrant outstanding as of February 28, 2009 was 14,741,087.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Items 10, 11, 12, 13 and 14 of Form 10-K is incorporated by reference into Part III hereof from the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held May 7, 2009 (“Proxy Statement”).

Certain information required by Part II of this Form 10-K is incorporated by reference from registrant’s 2008 Annual Report to Shareholders where indicated.

TABLE OF CONTENTS

PART I
	ITEM 1.	BUSINESS	3
	ITEM 1A.	RISK FACTORS	10
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	19
	ITEM 2.	PROPERTIES	20
	ITEM 3.	LEGAL PROCEEDINGS	21
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	21
		EXECUTIVE OFFICERS OF THE REGISTRANT	21
PART II
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES	23
	ITEM 6.	SELECTED FINANCIAL DATA	25
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
	ITEM 7A.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	46
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	48
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	110
	ITEM 9A.	CONTROLS AND PROCEDURES	110
	ITEM 9B.	OTHER INFORMATION	111
PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	111
	ITEM 11.	EXECUTIVE COMPENSATION	111
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	111
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	112
	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	112
PART IV
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	112
SIGNATURES			113
INDEX TO FINANCIAL STATEMENT SCHEDULE			115
CERTIFICATIONS			C-1
EX-10.29
EX-10.30
EX-10.31
EX-10.32
EX-10.33
EX-10.34
EX-10.35
EX-10.36
EX-10.37
EX-10.38
EX-10.39
EX-13.1
EX-21
EX-23
EX-24
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Libbey desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, forecasts and projections, and the beliefs and assumptions of our management. Words such as “expect,” “anticipate,” “target,” “believe,” “intend,” “may,” “planned,” “potential,” “should,” “will,” “would,” variations of such words, and similar expressions are intended to identify these forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

PART I

ITEM 1.   BUSINESS

General

Libbey Inc. (Libbey or the Company) is the leading producer of glass tableware products in the Western Hemisphere, in addition to supplying to key markets throughout the world. We have the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere and are one of the largest glass tableware manufacturers in the world. We produce glass tableware in five countries and sell to over 100 countries. We design and market, under our LIBBEY^®, Crisa^®, Royal Leerdam^®, World^® Tableware, Syracuse^® China and Traex^® brand names, an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware, and plastic items for sale primarily in the foodservice, retail and business-to-business markets. Our global sales force presents all of our products to the global marketplace in a coordinated fashion. Through our subsidiary B.V. Koninklijke Nederlandsche Glasfabriek Leerdam (Royal Leerdam), we manufacture high-quality glass stemware under the Royal Leerdam^® brand name. Through our subsidiary Crisal-Cristalaria Automátic S.A. (Crisal), we manufacture glass tableware in Portugal for our worldwide customer base. We also market ceramic dinnerware under the Syracuse^® China brand name through our subsidiary Syracuse China. Through our World Tableware subsidiary, we import metal flatware, hollowware, serveware and ceramic dinnerware for resale. We design, manufacture and distribute an extensive line of plastic items for the foodservice industry under the Traex^® brand name through our subsidiary Traex Company. We are the largest glass tableware manufacturer in Latin America through our subsidiary Crisa Libbey Commercial, S. de R.L. de C.V. (Crisa) which goes to market under the Crisa^® brand name. We have a state-of-the-art glass tableware manufacturing facility in China that has been operational since the first quarter of 2007. See note 20 to the Consolidated Financial Statements for segment information. Libbey was incorporated in Delaware in 1987, but traces its roots back to The W. L. Libbey & Son Company, an Ohio corporation formed in 1888, when it began operations in Toledo, Ohio.

Our website can be found at www.libbey.com. We make available, free of charge, at this website all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, including our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, as well as amendments to those reports. These reports are made available on our website as soon as reasonably practicable after their filing with, or furnishing to, the Securities and Exchange Commission and can also be found at www.sec.gov.

Growth Strategy

Our vision is to be the premier provider of tabletop glassware and related products worldwide. To achieve this vision, we have a growth strategy that emphasizes internal growth as well as growth in low-cost countries through acquired businesses and green meadow facilities. Having completed the acquisition of Crisa in 2006 and

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manufacturing at our glass tableware manufacturing facility in China in 2007, our focus for 2008 was on internal growth and improving our liquidity and capital structure.

We continue to focus on our strong brand recognition and identity. We understand that our customers are key to our success. Therefore, we continue to assist our customers by providing new product development and improved service and support. New product development continues to be an essential competency of the Company, creating excitement for our customers in all trade areas, around the world. Libbey introduced over 250 distinct new shapes worldwide in 2008, coupled with many additional sizes, decorations, color variations and packaging alternatives for our discriminating customers. In addition, our expanded manufacturing platform in Mexico, Portugal and China provides a cost-competitive source of glass tableware, enabling us to grow our tableware business in North American and International markets, including in Asia-Pacific markets, where we expect to continue to grow.

Products

Our tableware products consist of glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware, and plastic items. Our glass tableware includes tumblers, stemware (including wine glasses), mugs, bowls, ashtrays, bud vases, salt and pepper shakers, shot glasses, canisters, candleholders and various other items. Royal Leerdam produces high-quality stemware. Crisal produces glass tableware, mainly tumblers, stemware and glassware accessories. Crisa’s glass tableware product assortment includes the product types produced by Libbey, as well as glass bakeware and handmade glass tableware. In addition, Crisa products include blender jars, washing machine windows, meter covers and other glass products sold principally to original equipment manufacturers. Through our Syracuse China and World Tableware subsidiaries, we offer a wide range of ceramic dinnerware products. These include plates, bowls, platters, cups, saucers and other tableware accessories. Our World Tableware subsidiary provides an extensive selection of metal flatware, including knives, forks, spoons and serving utensils. In addition, World Tableware sells metal hollowware, including serving trays, chafing dishes, pitchers and other metal tableware accessories. Through our Traex subsidiary, we sell a wide range of plastic products. These include warewashing and storage racks, trays, dispensers and organizers for the foodservice industry. Our global sales force presents all of our products to the global marketplace in a coordinated fashion.

We also have an agreement to be the exclusive distributor of Luigi Bormioli glassware in the U.S. and Canada to foodservice users. Luigi Bormioli, based in Italy, is a highly regarded supplier of high-end glassware used in many of the finest eating and drinking establishments.

Customers

The customers for our tableware products include approximately 500 foodservice distributors in the U.S. and Canada. In the retail market, we sell to mass merchants, department stores, retail distributors, national retail chains and specialty housewares stores. In addition, our business-to-business market primarily includes customers that use glass containers for candle and floral applications, gourmet food packaging companies, and various OEM applications. In Mexico, we sell to retail mass merchants and wholesale distributors, as well as candle and food packers, and various OEM users of custom molded glass. In Europe, we market glassware to retailers and approximately 150 distributors and decorators that service the retail, foodservice and highly developed business-to-business channel, which includes large breweries and distilleries, for which products are decorated with company logos for promotional and resale purposes. We also have other customers who use our products for promotional or other private uses. In China, we sell to distributors and wholesalers. No single customer accounts for 10 percent or more of our sales, although the loss of any of our major customers could have a meaningful effect on us.

Sales, Marketing and Distribution

Approximately 70 percent of our sales are to customers located in North America, and 30 percent of our sales are to customers located outside of North America. For segment information for the last three fiscal years, see note 20 to the Consolidated Financial Statements. We sell our products to over 100 countries around the world, competing in the tableware markets of Latin America, Asia and Europe, as well as North America.

We have our own sales staff of professionals who call on customers and distributors. In addition, we retain the services of manufacturing representative organizations to assist in selling our products.

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We also have a marketing staff located at our corporate headquarters in Toledo, Ohio, as well as in Mexico, the Netherlands and China. They engage in developing strategies relating to product development, pricing, distribution, advertising and sales promotion.

We operate distribution centers located at or near each of our manufacturing facilities (see Properties section). In addition, we operate distribution centers for our Crisa-supplied products in Laredo, Texas; and for our World Tableware and Traex products in West Chicago, Illinois. Our Syracuse China products will begin moving through the West Chicago distribution center throughout 2009. We also operate a distribution center for many of our products at Gorinchem, in the Netherlands. The glass tableware manufacturing and distribution centers are strategically located (geographically) to enable us to supply significant quantities of our product to virtually all of our customers on a timely and cost effective basis.

The majority of our sales are in the foodservice, retail and business-to-business markets, which are further detailed below.

Foodservice

We have, according to our estimates, the leading market share in glass tableware sales in the U.S. and Canadian foodservice market. Syracuse China, World Tableware and Traex are recognized as long-established suppliers of high-quality ceramic dinnerware, metal flatware, hollowware and serveware, and plastic items, respectively. They are among the leading suppliers of their respective product categories to foodservice end users. The majority of our tableware sales to foodservice end users are made through a network of foodservice distributors. The distributors, in turn, sell to a wide variety of foodservice establishments, including national and regional hotel chains, national and regional restaurant chains, independently owned bars and restaurants, and casinos.

Retail

Our primary customers in the retail market are national and international mass merchants. In recent years, we have been able to increase our retail sales by increasing our sales to specialty housewares stores and value-oriented retailers. This year, we were recognized for increasing our overall U.S. market share in the casual glass beverageware market to over 40%. Royal Leerdam and Crisa sell to similar retail clients in Europe and Mexico, while Crisal is increasingly positioned with retailers on the Iberian Peninsula. With this retail representation, we are positioned to successfully introduce profitable new products. We also operate outlet stores located at or near the majority of our manufacturing locations. In addition, we sell selected items on the internet at www.libbey.com.

Business-to-Business

Royal Leerdam and Crisal supply glassware to the business-to-business channel of distribution in Europe. Customers in this channel include marketers who decorate our glassware with company logos and resell these products to large breweries and distilleries, which redistribute the glassware for promotional purposes and resale. Our business-to-business channel in North America includes candle, floral applications and blender jars, as well as washing machine windows and meter covers. The craft industries and gourmet food packing companies are also business-to-business consumers of glassware.

Seasonality

Primarily due to the impact of consumer buying patterns and production activity, our sales and operating income, excluding special charges, tends to be stronger in the second and fourth quarters and weaker in the first and third quarters of each year. In addition, our cash flow from operations tends to be stronger in the second half of the year and weaker in the first half of the year due to seasonal working capital needs.

Backlog

As of December 31, 2008, our backlog was approximately $31.1 million, compared to approximately $41.4 million at December 31, 2007. The decrease was the result of the significant de-stocking by our distributors that took place in the fourth quarter of 2008 as well as the Company’s ability to turn incoming orders at a faster pace

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given the overall slower business conditions we experienced in the fourth quarter. Backlog includes orders confirmed with a purchase order for products scheduled to be shipped to customers in a future period. Because orders may be changed and/or cancelled, we do not believe that our backlog is necessarily indicative of actual sales for any future period.

Manufacturing and Sourcing

In North America, we currently own and operate three glass tableware manufacturing plants — two in the United States (one in Toledo, Ohio and one in Shreveport, Louisiana) and one in Monterrey, Mexico. We also own and operate two non-glass facilities in the USA, including a plastics plant in Dane, Wisconsin and a ceramic dinnerware plant in Syracuse, New York. The Syracuse manufacturing plant will cease production in April 2009. In Europe, we own and operate two glass tableware manufacturing plants — one in Leerdam, the Netherlands, and the other in Marinha Grande, Portugal. In Asia, we own and operate a glass tableware production facility in Langfang, China.

The manufacture of our tableware products involves the use of automated processes and technologies. We design much of our glass tableware production machinery, and we continuously refine it to incorporate technological advances to create a competitive advantage. We believe that our production machinery and equipment continue to be adequate for our needs in the foreseeable future, but we continue to invest in ways to further improve our production efficiency and reduce our cost profile.

Our glass tableware products generally are produced using one of two manufacturing methods or, in the case of certain stemware, a combination of such methods. Most of our tumblers, stemware and other glass tableware products are produced by forming molten glass in molds with the use of compressed air. These products are known as “blown” glass products. Our other glass tableware products and the stems of certain stemware are “pressware” products, which are produced by pressing molten glass into the desired product shape.

Ceramic dinnerware is also produced through the forming of raw materials into the desired product shape and is either manufactured at our Syracuse, New York, production facility (through April, 2009) or imported primarily from China and Bangladesh. We source all metal flatware and metal hollowware through our World Tableware subsidiary, primarily from China. Plastic products are also produced through the injection molding of raw materials into the desired shape and are manufactured at our Dane, Wisconsin, production facility or imported primarily from Taiwan and China.

To assist in the manufacturing process, we employ a team of engineers whose responsibilities include efforts to improve and upgrade our manufacturing facilities, equipment and processes. In addition, they provide engineering required to manufacture new products and implement the large number of innovative changes continuously being made to our product designs, sizes and shapes. See “Research and Development” below for additional information.

Materials

Our primary materials are sand, lime, soda ash, corrugated packaging, clay, resins and colorants. Historically, these materials have been available in adequate supply from multiple sources. However, there may be temporary shortages of certain materials due to weather or other factors, including disruptions in supply caused by material transportation or production delays. Such shortages have not previously had, and are not expected in the future to have, a material adverse effect on our operations. Natural gas is a primary source of energy in most of our production processes, and variability in the price for natural gas has had and could continue to have an impact on our profitability. Historically, we have used natural gas hedging contracts to partially mitigate this impact. In addition, resins are a primary source of materials for our Traex operation, and, historically, the price for resins has fluctuated, directly impacting our profitability. We also experience fluctuations in the cost to deliver materials to our facilities, and such changes may affect our earnings and cash flow.

Research and Development

Our core competencies include our engineering excellence and world-class manufacturing techniques. Our focus is to increase the quality of our products and enhance the profitability of our business through research and

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development. We will continue to invest in strategic research and development projects that will further enhance our ability to compete in our core business.

We employ a team of engineers, in addition to external consultants, to conduct research and development. Our expenditures on research and development activities related to new and/or improved products and processes were $1.7 million in 2008, $1.5 million in 2007, and $2.3 million in 2006. These costs were expensed as incurred.

Patents, Trademarks and Licenses

Based upon market research and surveys, we believe that our trade names and trademarks, as well as our product shapes and styles, enjoy a high degree of consumer recognition and are valuable assets. We believe that the Libbey^®, Syracuse^® China, World^® Tableware, Crisa^®, Royal Leerdam^® and Traex^® trade names and trademarks are material to our business.

We have rights under a number of patents that relate to a variety of products and processes. However, we do not consider that any patent or group of patents relating to a particular product or process is of material importance to our business as a whole.

Competitors

Our business is highly competitive, with the principal competitive factors being customer service, price, product quality, new product development, brand name, and delivery time.

Competitors in glass tableware include, among others:

•  Arc International (a private French company), which manufactures and distributes glass tableware worldwide;

•  Pasabahce (a unit of Sisecam, a Turkish Company), which manufactures glass tableware at various sites throughout the world and sells to retail, foodservice and business-to-business customers worldwide;

•  The Anchor Hocking Company (which is owned by Monomoy Capital Partners, L.P.), which manufactures and distributes glass beverageware, industrial products and bakeware primarily to retail, industrial and foodservice markets in the U.S. and Canada.

•  Oneida Ltd., which sources glass tableware from foreign manufacturers;

•  Bormioli Rocco group, which manufactures glass tableware in Europe, where the majority of its sales are to retail and foodservice customers; and

•  Various sourcing companies.

Other materials such as plastics also compete with glassware.

Competitors in U.S. ceramic dinnerware include, among others:

•  Homer Laughlin;

•  Oneida Ltd.;

•  Steelite; and

•  Various sourcing companies.

Competitors in metalware include:

•  Oneida Ltd.;

•  Walco, Inc.; and

•  Various sourcing companies.

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Competitors in plastic products are, among others:

•  Cambro Manufacturing Company;

•  Carlisle Companies Incorporated; and

•  Various sourcing companies.

Environmental Matters

Our operations, in common with those of industry generally, are subject to numerous existing laws and governmental regulations designed to protect the environment, particularly regarding plant wastes and emissions and solid waste disposal. We also may be subject to proposed laws and governmental regulations as they become finalized. We have shipped, and we continue to ship, waste materials for off-site disposal. However, we are not named as a potentially responsible party with respect to any waste disposal site matters pending prior to June 24, 1993, the date of Libbey’s initial public offering and separation from Owens-Illinois, Inc. (Owens-Illinois). Owens-Illinois has been named as a potentially responsible party or other participant in connection with certain waste disposal sites to which we also may have shipped wastes prior to June 24, 1993. We may bear some responsibility in connection with those shipments. Pursuant to an indemnification agreement between Owens-Illinois and Libbey, Owens-Illinois has agreed to defend and hold us harmless against any costs or liabilities we may incur in connection with any such matters identified and pending as of June 24, 1993, and to indemnify us for any liability that results from these matters in excess of $3 million. We believe that if it is necessary to draw upon this indemnification, collection is probable.

Pursuant to the indemnification agreement referred to above, Owens-Illinois is defending us with respect to the King Road landfill. In January 1999, the Board of Commissioners of Lucas County, Ohio instituted a lawsuit against Owens-Illinois, Libbey and numerous other defendants. (Fifty-nine companies were named in the complaint as potentially responsible parties.) In the lawsuit, which was filed in the United States District Court for the Northern District of Ohio, the Board of Commissioners sought to recover contribution for past and future costs incurred by the County in response to the release or threatened release of hazardous substances at the King Road landfill formerly operated and closed by the County. The Board of Commissioners dismissed the lawsuit without prejudice in October 2000. At the time of the dismissal, the parties to the lawsuit anticipated that the Board of Commissioners would re-file the lawsuit after obtaining more information as to the appropriate environmental remedy. As of this date, it does not appear that re-filing of the lawsuit is imminent. In view of the uncertainty as to re-filing of the suit, the numerous defenses that may be available against the County on the merits of its claim for contribution, the uncertainty as to the environmental remedy, and the uncertainty as to the number of potentially responsible parties, it currently is not possible to quantify any exposure that Libbey may have with respect to the King Road landfill.

Subsequent to June 24, 1993, we have been named a potentially responsible party at four other sites. In each case, the claims have been settled for immaterial amounts. We do not anticipate that we will be required to pay any further sums with respect to these sites unless unusual and unanticipated contingencies occur.

On October 10, 1995, Syracuse China Company, our wholly owned subsidiary, acquired from The Pfaltzgraff Co. and certain of its subsidiary corporations, the assets operated by them as Syracuse China, The Pfaltzgraff Co. and the New York State Department of Environmental Conservation (DEC) entered into an Order on Consent effective November 1, 1994, that required Pfaltzgraff to prepare a Remedial Investigation and Feasibility Study (RI/FS) to develop a remedial action plan for the site (which includes among other items a landfill and wastewater and sludge ponds and adjacent wetlands located on the property purchased by Syracuse China Company) and to remediate the site. Although Syracuse China Company was not a party to the Order on Consent, as part of the Asset Purchase Agreement with The Pfaltzgraff Co. Syracuse China Company agreed to share a part of the remediation and related expense up to the lesser of 50 percent of such costs or $1,350,000. Construction of the approved remedy began in 2000 and was substantially completed in 2003. Accordingly, Syracuse China Company’s obligation with respect to the associated costs has been satisfied.

In addition, Syracuse China Company has been named as a potentially responsible party by reason of its potential ownership of certain property that adjoins its plant and that has been designated a sub-site of a superfund site. We believe that any contamination of the sub-site was caused by and will be remediated by other parties at no

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cost to Syracuse China Company. Those other parties have acquired ownership of the sub-site, and their acquisition of the sub-site should end any responsibility of Syracuse China with respect to the sub-site. We believe that, even if Syracuse China Company were deemed to be responsible for any expense in connection with the contamination of the sub-site, it is likely the expense would be shared with Pfaltzgraff pursuant to the Asset Purchase Agreement.

By letter dated October 31, 2008, the DEC and United States Environmental Protection Agency (EPA) made a demand upon Syracuse China Company and several other companies for recovery of approximately $12.5 million of direct and indirect costs allegedly expended by the DEC and EPA in connection with the clean-up of the Onondaga Lake Superfund site. The numerous recipients of the demand are in the process of reviewing information provided by DEC and EPA to substantiate the demand. At this time it is not certain that the operations on Syracuse China’s Court Street property had any connection with the problems at this Superfund site. There is an indemnification agreement with The Pfaltzgraff Co. that contemplates that the parties will share any costs for off-premise liability up to an aggregate of $7,500,000. The Company has no reason to believe that the indemnification would not be honored if it became necessary for the Company to draw upon that indemnification.

In connection with the closure of our City of Industry, California, glassware manufacturing facility, on December 30, 2004, we sold the property on which the facility was located to an entity affiliated with Sares-Regis Group, a large real estate development and investment firm. Pursuant to the purchase agreement, the buyer leased the property back to us in order to enable us to cease operations, to relocate equipment to our other glassware manufacturing facilities, to demolish the improvements on the property and to remediate certain environmental conditions affecting the property. All demolition and required remediation were completed by December 31, 2005, and the lease was terminated on that date. We have agreed to indemnify the buyer for hazardous substances located on, in, or under, or migrating from, the property prior to December 31, 2005. We do not expect to incur any significant future losses related to this site.

We regularly review the facts and circumstances of the various environmental matters affecting us, including those covered by indemnification. Although not free of uncertainties, we believe that our share of the remediation costs at the various sites, based upon the number of parties involved at the sites and the estimated cost of undisputed work necessary for remediation based upon known technology and the experience of others, will not be material to us. There can be no assurance, however, that our future expenditures in such regard will not have a material adverse effect on our financial position or results of operations.

In addition, occasionally the federal government and various state authorities have investigated possible health issues that may arise from the use of lead or other ingredients in enamels such as those used by us on the exterior surface of our decorated products. In that connection, Libbey Glass Inc. and numerous other glass tableware manufacturers, distributors and importers entered into a consent judgment on August 31, 2004 in connection with an action, Leeman v. Arc International North America, Inc. et al, Case No. CGC-003-418025 (Superior Court of California, San Francisco County) brought under California’s so-called “Proposition 65.” Proposition 65 requires businesses with ten or more employees to give a “clear and reasonable warning” prior to exposing any person to a detectable amount of a chemical listed by the state as covered by this statute. Lead is one of the chemicals covered by that statute. Pursuant to the consent judgment, Libbey Glass Inc. and the other defendants (including Anchor Hocking and Arc International North America, Inc.) agreed, over a period of time, to reformulate the enamels used to decorate the external surface of certain glass tableware items to reduce the lead content of those enamels.

Capital expenditures for property, plant and equipment for environmental control activities were not material during 2008. We believe that we are in material compliance with applicable federal, state and local environmental laws, and we are not aware of any regulatory initiatives that are expected to have a material effect on our products or operations.

Employees

Our employees are vital to achieving our vision to be “the premier provider of tabletop glassware and related products worldwide” and our mission “to create value by delivering quality products, great service and strong financial results through the power of our people worldwide.” We strive to achieve our vision and mission through our values of customer focus, performance, continuous improvement, teamwork, respect and development.

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We employed 7,306 persons at December 31, 2008. Approximately 60 percent of our employees are employed outside the U.S., and the majority of our employees are paid hourly and covered by collective bargaining agreements. The agreement with our unionized employees in Shreveport, Louisiana expires on December 15, 2011. Agreements with our unionized employees in Toledo, Ohio expire on September 30, 2010. Crisa’s collective bargaining agreements with its unionized employees have no expiration, but wages are reviewed annually and benefits are reviewed every two years. Crisal does not have a written collective bargaining agreement with its unionized employees but does have an oral agreement that is revisited annually. Royal Leerdam’s collective bargaining agreement with its unionized employees expires on July 1, 2009.

ITEM 1A.   RISK FACTORS

The following factors are the most significant factors that can impact year-to-year comparisons and may affect the future performance of our businesses. New risks may emerge, and management cannot predict those risks or estimate the extent to which they may affect our financial performance.

Our high level of debt, as well as incurrence of additional debt, may limit our operating flexibility, which could adversely affect our results of operations and financial condition and prevent us from fulfilling our obligations.

We have a high degree of financial leverage. As of December 31, 2008, we had $550.3 million of debt outstanding, net of unamortized discounts and warrants, of which approximately $34.5 million consisted of debt secured by a first-priority lien on our assets and $450.3 million consisted of the Senior Secured Notes, which are secured by a second-priority lien on our collateral, and the PIK Notes, which are secured by a third-priority lien on our collateral. Our ABL Facility provides for borrowings up to $150.0 million by Libbey Glass and Libbey Europe B.V. (a non-guarantor subsidiary), of which, as of December 31, 2008, we had borrowed $34.5 million, with another $8.4 million of availability being used for outstanding letters of credit. As a result of borrowing base limitations, an additional $44.6 million was immediately available for borrowing. We have a loan (“RMB Loan Contract”) in the amount of RMB 250 million (approximately $36.7 million) from China Construction Bank Corporation Langfang Economic Development Area Sub-Branch (“CCBC”). We used the proceeds of the RMB Loan Contract to finance the construction of our greenfield facility in China. As of December 31, 2008, we had borrowed the entire amount available under that line of credit. We also have a loan in the amount of RMB 50 million (approximately $7.3 million) from CCBC to finance the working capital needs of our China facility (“RMB Working Capital Loan”). As of December 31, 2008, we had borrowed the entire amount available under that line of credit. In January 2007, we entered into an 11 million euro loan (approximately $15.5 million) with Banco Espirito Santo, S.A. (“BES Euro Line”). As of December 31, 2008, we had borrowed the entire amount available under that line of credit. Our ABL Facility, the indenture governing the Senior Secured Notes and the indenture governing the PIK Notes require us to comply with certain covenants, including limits on additional indebtedness, certain business activities and investments and, under certain circumstances in the case of our ABL Facility, the maintenance of financial ratios. See “Management’s Discussion and Analysis; Capital Resources and Liquidity — Borrowings” below. We may incur additional debt in the future.

Our high degree of leverage, as well as the incurrence of additional debt, could have important consequences for our business, such as:

•  making it more difficult for us to satisfy our financial obligations, including with respect to the Senior Secured Notes and the PIK Notes;

•  limiting our ability to make capital investments in order to expand our business;

•  limiting our ability to obtain additional debt or equity financing for working capital, capital expenditures, product development, debt service requirements, acquisitions or other purposes;

•  limiting our ability to invest operating cash flow in our business and future business opportunities, because we use a substantial portion of these funds to service debt and because our covenants restrict the amount of our investments;

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•  limiting our ability to withstand business and economic downturns and/or place us at a competitive disadvantage compared to our competitors that have less debt, because of the high percentage of our operating cash flow that is dedicated to servicing our debt; and

•  limiting our ability to reinstate dividends, which we suspended in February 2009.

•  limiting our ability to obtain additional financing in sufficient amounts and/or on acceptable terms in the near future or when our debt obligations reach maturity. Our ABL Facility expires in December 2010, the Senior Notes expire in June 2011, and the PIK notes expire in December 2011.

If we cannot service our debt or if we fail to meet our covenants, we could have substantial liquidity problems. In those circumstances, we might have to sell assets, delay planned investments, obtain additional equity capital or restructure our debt. Depending on the circumstances at the time, we may not be able to accomplish any of these actions on favorable terms or at all.

In addition, the indenture governing the Senior Secured Notes and the indenture governing the PIK Notes contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our indebtedness.

Our cost-reduction projects may not result in anticipated savings in operating costs.

We may not be able to achieve anticipated cost reductions. Our ability to achieve cost savings and other benefits within expected time frames is subject to many estimates and assumptions. These estimates and assumptions are subject to significant economic, competitive and other uncertainties, some of which are beyond our control. If these estimates and assumptions are incorrect, if we experience delays, or if other unforeseen events occur, our business, financial condition and results of operations could be adversely impacted.

Slowdowns in the retail, travel, restaurant and bar, or entertainment industries, such as those caused by general economic downturns, terrorism, health concerns or strikes or bankruptcies within those industries, could reduce our revenues and production activity levels.

Our business is affected by the health of the retail, travel, restaurant, bar or entertainment industries. Expenditures in these industries are sensitive to business and personal discretionary spending levels and may decline during general economic downturns. Additionally, travel is sensitive to safety concerns, and thus may decline after incidents of terrorism, during periods of geopolitical conflict in which travelers become concerned about safety issues, or when travel might involve health-related risks. For example, demand for our products in the foodservice industry, which is critical to our success, was significantly impacted by the events of September 11, 2001 and the global economic recession of 2008, particularly in the fourth quarter.

Recent volatility in financial markets and the deterioration of national and global economic conditions could materially adversely impact our operations, financial results and/or liquidity including as follows:

•  the financial stability of our customers or suppliers may be compromised, which could result in additional bad debts for the Company or non-performance by suppliers;

•  it may become more costly or difficult to obtain financing or refinance our debt in the future;

•  the value of our assets held in pension plans may decline; and/or

•  our assets may be impaired or subject to write down or write off.

Uncertainty about current global economic conditions may cause consumers of our products to postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values. This could have a material adverse impact on the demand for our products and on our financial condition and operating results. A further deterioration of economic conditions would likely exacerbate these adverse effects and could result in a wide-ranging and prolonged impact on general business conditions, thereby negatively impacting our operations, financial results and/or liquidity.

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If we have a fair value impairment in a business segment, net earnings and net worth could be materially adversely affected by a write down of goodwill or intangible assets.

We have $192.9 million of goodwill and intangible assets recorded on the Consolidated Balance Sheets as of December 31, 2008. We are required to periodically determine if our goodwill or intangible assets have become impaired, in which case we would write down the impaired portion of these assets. We recorded a charge of $11.9 million in 2008 to write down a portion of our goodwill and intangible assets. If we were required to write down all or a significant portion of our goodwill or intangible assets, our net earnings and net worth could be materially adversely affected.

We face intense competition and competitive pressures that could adversely affect our results of operations and financial condition.

Our business is highly competitive, with the principal competitive factors being customer service, price, product quality, new product development, brand name, and delivery time. Advantages or disadvantages in any of these competitive factors may be sufficient to cause the customer to consider changing manufacturers.

Competitors in glass tableware include, among others:

•  Imports from around the world, including varied and numerous factories from China;

•  Arc International (a private French company), which manufactures and distributes glass tableware worldwide;

•  Pasabahce (a unit of Sisecam, a Turkish company), which manufactures glass tableware at various sites throughout the world and sells to all sectors of the glass industry worldwide;

•  Oneida Ltd., which sources glass tableware from foreign manufacturers;

•  The Anchor Hocking Company (which is owned by Monomoy Capital Partners, L.P.), which manufactures and distributes glass beverageware, industrial products and bakeware to primarily to the retail, industrial and foodservice markets;

•  Bormioli Rocco Group, which manufactures glass tableware in Europe, where the majority of its sales are to retail and foodservice customers; and

•  Numerous other sourcing companies.

In addition, tableware made of other materials such as plastics competes with glassware.

Some of our competitors have greater financial and capital resources than we do and continue to invest heavily to achieve increased production efficiencies. Competitors may have incorporated more advanced technology in their manufacturing processes, including more advanced automation techniques. Our labor and energy costs may also be higher than those of some foreign producers of glass tableware. We may not be successful in managing our labor and energy costs or gaining operating efficiencies that may be necessary to remain competitive. In addition, our products may be subject to competition from low-cost imports that intensify the price competition we face in our markets. Finally, we may need to increase incentive payments in our marketing incentive programs in order to remain competitive. Increases in these payments would adversely affect our operating margins.

Competitors in the U.S. market for ceramic dinnerware include, among others: Homer Laughlin; Oneida Ltd.; Steelite; and various sourcing companies. Competitors in metalware include, among others: Oneida Ltd.; Walco, Inc.; and various sourcing companies. Competitors in plastic products include, among others: Cambro Manufacturing Company; Carlisle Companies Incorporated; and various sourcing companies. In Mexico, where a larger portion of our sales are in the retail market, our primary competitors include imports from foreign manufacturers located in countries such as China, France, Italy and Colombia, and Vidriera Santos and Vitro Par in the candle category. Competitive pressures from these competitors and producers could adversely affect our results of operations and financial condition.

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International economic and political factors could affect demand for imports and exports, and our financial condition and results of operations could be adversely impacted as a result.

Our operations may be affected by actions of foreign governments and global or regional economic developments. Global economic events, such as changes in foreign import/export policy, the cost of complying with environmental regulations or currency fluctuations, could also affect the level of U.S. imports and exports, thereby affecting our sales. Foreign subsidies, foreign trade agreements and each country’s adherence to the terms of these agreements can raise or lower demand for our products. National and international boycotts and embargoes of other countries’ or U.S. imports and/or exports, together with the raising or lowering of tariff rates, could affect the level of competition between our foreign competitors and us. Foreign competition has, in the past, and may, in the future, result in increased low-cost imports that drive prices downward. The World Trade Organization met in November 2001 in Doha, Qatar, where members launched new multilateral trade negotiations aimed at improving market access, reducing and eventually phasing out all forms of export subsidies and substantially reducing trade-distorting domestic support. The current trade-weighted tariff rate applicable to glass tableware products that are imported into the U.S. and are of the type we manufacture in North America is approximately 18.4 percent. However, any negative changes to international agreements that lower duties or improve access to U.S. markets for our competitors, particularly changes arising out of the World Trade Organization’s Doha round of negotiations (although none are expected in 2009), could have an adverse effect on our financial condition and results of operations. As we execute our strategy of acquiring manufacturing platforms in lower cost regions and increasing our volume of sales in overseas markets, our dependence on international markets and our ability to effectively manage these risks has increased and will continue to increase significantly.

We may not be able to effectively integrate future businesses we acquire.

Any future acquisitions are subject to various risks and uncertainties, including:

•  the inability to integrate effectively the operations, products, technologies and personnel of the acquired companies (some of which are spread out in different geographic regions) and to achieve expected synergies;

•  the potential disruption of existing business and diversion of management’s attention from day-to-day operations;

•  the inability to maintain uniform standards, controls, procedures and policies or correct deficient standards, controls, procedures and policies, including internal controls and procedures sufficient to satisfy regulatory requirements of a public company in the U.S.;

•  the incurrence of contingent obligations that were not anticipated at the time of the acquisitions;

•  the failure to obtain necessary transition services such as management services, information technology services and others;

•  the need or obligation to divest portions of the acquired companies; and

•  the potential impairment of relationships with customers.

In addition, we cannot assure you that the integration and consolidation of newly acquired businesses will achieve any anticipated cost savings and operating synergies. The inability to integrate and consolidate operations and improve operating efficiencies at newly acquired businesses could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to achieve the international growth contemplated by our strategic plan.

Our strategy contemplates significant growth in international markets in which we have significantly less experience than we have in our domestic operations. Since we intend to benefit from our international initiatives primarily by expanding our sales in the local markets of other countries, our success depends on continued growth in these markets, including Europe, Latin America and Asia-Pacific.

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Natural gas, the principal fuel we use to manufacture our products, is subject to fluctuating prices; fluctuations in natural gas prices could adversely affect our results of operations and financial condition.

Natural gas is the primary source of energy in most of our production processes. We do not have long-term contracts for natural gas and are therefore subject to market variables and widely fluctuating prices. Consequently, our operating results are strongly linked to the cost of natural gas. As of December 31, 2008, we had forward contracts in place to hedge approximately 76 percent of our estimated 2009 natural gas needs with respect to our North American manufacturing facilities and approximately 44 percent of our estimated 2009 natural gas needs with respect to our International manufacturing facilities. For the years ended December 31, 2008 and 2007, we spent approximately $69.6 million and $60.6 million, respectively, on natural gas. We have no way of predicting to what extent natural gas prices will rise in the future. To the extent that we are not able to offset increases in natural gas prices, such as by passing along the cost to our customers, these increases could adversely impact our margins and operating performance.

If we are unable to obtain sourced products or materials at favorable prices, our operating performance may be adversely affected.

Sand, soda ash, lime, corrugated packaging and resins are the principal materials we use. In addition, we obtain glass tableware, ceramic dinnerware, metal flatware and hollowware from third parties. We may experience temporary shortages due to disruptions in supply caused by weather, transportation, production delays or other factors that would require us to secure our sourced products or raw materials from sources other than our current suppliers. If we are forced to procure sourced products or materials from alternative suppliers, we may not be able to do so on terms as favorable as our current terms or at all. In addition, resins are a primary material for our Traex operation and, historically, the price for resins has fluctuated with the price of oil, directly impacting our profitability. Material increases in the cost of any of these items on an industry-wide basis may have an adverse impact on our operating performance and cash flows if we are unable to pass on these increased costs to our customers.

Charges related to our employee pension and postretirement welfare plans resulting from market risk and headcount realignment may adversely affect our results of operations and financial condition.

In connection with our employee pension and postretirement welfare plans, we are exposed to market risks associated with changes in the various capital markets. Changes in long-term interest rates affect the discount rate that is used to measure our obligations and related expense. Our total pension and postretirement welfare expense, including pension settlement and curtailment charges, for all U.S. and non-U.S. plans was $19.0 million and $14.4 million for the years ended December 31, 2008 and 2007, respectively. Changes in the equity and debt securities markets affect our pension plan asset performance and related pension expense. Based on year-end data, sensitivity to these key market risk factors is as follows:

•  A change of 1.0 percent in the discount rate would change our total pension and postretirement welfare expense by approximately $1.9 million.

•  A change of 1.0 percent in the expected long-term rate of return on plan assets would change total pension expense by approximately $2.2 million.

As part of our total expense, we incurred pension curtailment charges of $1.1 million and nonpension postretirement impairment charges of $3.1 million during 2008. The charges in 2008 were triggered by our announcement in December 2008 that our Syracuse China manufacturing plant will be shut down in April 2009. For further discussion, see notes 9, 11 and 12 to our Consolidated Financial Statements. To the extent that we experience additional headcount shifts or changes as we continue to implement our capacity realignment programs, we may incur further expenses related to our employee pension and postretirement welfare plans, which could have a material adverse effect on our results of operations and financial condition.

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Our business requires significant capital investment and maintenance expenditures that we may be unable to fulfill.

Our operations are capital intensive, requiring us to maintain a large fixed cost base. Our total capital expenditures were $45.7 million for the year ended December 31, 2008, and $43.1 million for the year ended December 31, 2007.

Our business may not generate sufficient operating cash flow, and external financing sources may not be available in an amount sufficient to enable us to make anticipated capital expenditures.

Our business requires us to maintain a large fixed cost base that can affect our profitability.

The high levels of fixed costs associated with operating glass production plants encourage high levels of output, even during periods of reduced demand, which can lead to excess inventory levels and exacerbate the pressure on profit margins. Our profitability is dependent, in part, on our ability to spread fixed costs over an increasing number of products sold and shipped, and if we reduce our rate of production, our costs per unit increase, negatively impacting our gross margins. Decreased demand or the need to reduce inventories can lower our ability to absorb fixed costs and materially impact our results of operations.

Unexpected equipment failures may lead to production curtailments or shutdowns.

Our manufacturing processes are dependent upon critical glass-producing equipment, such as furnaces, forming machines and lehrs. This equipment may incur downtime as a result of unanticipated failures. We may in the future experience facility shutdowns or periods of reduced production as a result of these equipment failures. Unexpected interruptions in our production capabilities would adversely affect our productivity and results of operations for the affected period. We also may face shutdowns if we are unable to obtain enough energy in the peak heating seasons.

If our investments in new technology and other capital expenditures do not yield expected returns, our results of operations could be reduced.

The manufacture of our tableware products involves the use of automated processes and technologies. We designed much of our glass tableware production machinery internally and have continued to develop and refine this equipment to incorporate advancements in technology. We will continue to invest in equipment and make other capital expenditures to further improve our production efficiency and reduce our cost profile. To the extent that these investments do not generate targeted levels of returns in terms of efficiency or improved cost profile, our financial condition and results of operations could be adversely affected.

We rely on increasingly complex information systems for management of our manufacturing, distribution, sales and other functions. If our information systems fail to perform these functions adequately or if we experience an interruption in their operation, our business and results of operations could suffer.

All of our major operations, including manufacturing, distribution, sales and accounting, are dependent upon our complex information systems. Our information systems are vulnerable to damage or interruption from:

•  earthquake, fire, flood, hurricane and other natural disasters;

•  power loss, computer systems failure, internet and telecommunications or data network failure; and

•  hackers, computer viruses, software bugs or glitches.

Any damage or significant disruption in the operation of such systems or the failure of our information systems to perform as expected could disrupt our business, result in decreased sales, increased overhead costs, excess inventory and product shortages, and otherwise adversely affect Libbey’s operations, financial performance and condition. We take significant steps to mitigate the potential impact of each of these risks, but there can be no assurance that these procedures would be completely successful.

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We may not be able to renegotiate collective bargaining agreements successfully when they expire; organized strikes or work stoppages by unionized employees may have an adverse effect on our operating performance.

We are party to collective bargaining agreements that cover most of our manufacturing employees. The agreement with our unionized employees in Shreveport, Louisiana expires on December 15, 2011. Agreements with our unionized employees in Toledo, Ohio expire on September 30, 2010. Crisa’s collective bargaining agreements with its unionized employees have no expiration, but wages are reviewed annually and benefits are reviewed every two years. Crisal does not have a written collective bargaining agreement with its unionized employees but does have an oral agreement that is revisited annually. Royal Leerdam’s collective bargaining agreement with its unionized employees expires on July 1, 2009.

We may not be able to successfully negotiate new collective bargaining agreements without any labor disruption. If any of our unionized employees were to engage in a strike or work stoppage prior to expiration of their existing collective bargaining agreements, or if we are unable in the future to negotiate acceptable agreements with our unionized employees in a timely manner, we could experience a significant disruption of operations. In addition, we could experience increased operating costs as a result of higher wages or benefits paid to union members upon the execution of new agreements with our labor unions. We could also experience operating inefficiencies as a result of preparations for disruptions in production, such as increasing production and inventories. Finally, companies upon which we are dependent for raw materials, transportation or other services could be affected by labor difficulties. These factors and any such disruptions or difficulties could have an adverse impact on our operating performance and financial condition.

In addition, we are dependent on the cooperation of our largely unionized workforce to implement and adopt the LEAN initiatives that are critical to our ability to improve our production efficiency. The effect of strikes and other slowdowns may adversely affect the degree and speed with which we can adopt LEAN optimization objectives and the success of that program.

We are subject to risks associated with operating in foreign countries. These risks could adversely affect our results of operations and financial condition.

We operate manufacturing and other facilities throughout the world. As a result of our international operations, we are subject to risks associated with operating in foreign countries, including:

•  political, social and economic instability;

•  war, civil disturbance or acts of terrorism;

•  taking of property by nationalization or expropriation without fair compensation;

•  changes in government policies and regulations, including with respect to environmental matters;

•  devaluations and fluctuations in currency exchange rates;

•  imposition of limitations on conversions of foreign currencies into dollars or remittance of dividends and other payments by foreign subsidiaries;

•  imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries;

•  ineffective intellectual property protection;

•  hyperinflation in certain foreign countries; and

•  impositions or increase of investment and other restrictions or requirements by foreign governments.

The risks associated with operating in foreign countries may have a material adverse effect on our results of operations and financial condition.

16

High levels of inflation and high interest rates in Mexico could adversely affect the operating results and cash flows of Crisa.

Although the annual rate of inflation, as measured by changes in the Mexican National Consumer Price Index, was only 5.1 percent for 2008 and 3.8 percent for 2007, Mexico has historically experienced high levels of inflation and high domestic interest rates. If Mexico experiences high levels of inflation, Crisa’s operating results and cash flows could be adversely affected, and, more generally, high inflation might result in lower demand or lower growth in demand for our products, thereby adversely affecting our results of operations and financial condition.

Fluctuation of the currencies in which we conduct operations could adversely affect our financial condition and results of operations.

Changes in the value of the various currencies in which we conduct operations relative to the U.S. dollar, including the euro, the Mexican peso and the Chinese Yuan (“RMB”), may result in significant changes in the indebtedness of our non-U.S. subsidiaries.

Currency fluctuations between the U.S. dollar and the currencies of our non-U.S. subsidiaries affect our results as reported in U.S. dollars, particularly the earnings of Crisa as expressed under U.S. GAAP, and will continue to affect our financial income and expense, our revenues from international settlements.

Fluctuations in the value of the foreign currencies in which we operate relative to the U.S. dollar could reduce the cost competitiveness of our products or those of our subsidiaries.

Major fluctuations in the value of the euro, the Mexican peso or the RMB relative to the U.S. dollar and other major currencies could reduce the cost competitiveness of our products or those of our subsidiaries, as compared to foreign competition. For example, if the U.S. dollar has appreciated relative to the euro, the Mexican peso or the RMB, reducing the purchasing power of those currencies compared to the U.S. dollar and making our U.S.-manufactured products more expensive in the euro zone, Mexico and China, respectively, compared to the products of local competitors. An appreciation of the U.S. dollar against the euro, the Mexican peso or the RMB also increases the cost of U.S. dollar-denominated purchases for our operations in the euro zone, Mexico and China, respectively, including purchases of raw materials. We would be forced to deduct these cost increases from our profit margin or attempt to pass them along to consumers. These fluctuations could adversely affect our results of operations and financial condition.

Devaluation or depreciation of, or governmental conversion controls over, the foreign currencies in which we operate could affect our ability to convert the earnings of our foreign subsidiaries into U.S. dollars.

Major devaluation or depreciation of the Mexican peso could result in disruption of the international foreign exchange markets and may limit our ability to transfer or to convert Crisa’s Mexican peso earnings into U.S. dollars and other currencies upon which we will rely in part to satisfy our debt obligations. While the Mexican government does not currently restrict, and for many years has not restricted, the right or ability of Mexican or foreign persons or entities to convert pesos into U.S. dollars or to transfer other currencies out of Mexico, the government could institute restrictive exchange rate policies in the future; restrictive exchange rate policies could adversely affect our results of operations and financial condition.

In addition, the government of China imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in the availability of foreign currency may restrict the ability of our Chinese subsidiaries to remit sufficient foreign currency to make payments to us. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the Chinese State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate government authorities is required where RMB are to be converted into foreign currencies and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies. In the future, the Chinese government could institute restrictive exchange rate policies for current account transactions. These policies could adversely affect our results of operations and financial condition.

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If our hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings.

In order to mitigate variation in our operating results due to commodity price fluctuations, we have derivative financial instruments that hedge certain of our interest rate risks associated with long-term debt, commodity price risks associated with forecasted future natural gas requirements and foreign exchange rate risks associated with transactions denominated in a currency other than the U.S. dollar. The results of our hedging practices could be positive, neutral or negative in any period depending on price changes of the hedged exposures. We account for derivatives in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS Nos. 137 and 138. These derivatives qualify for hedge accounting if the hedges are highly effective and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. If our hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges will impact our results of operations and could significantly impact our earnings.

We are subject to various environmental and legal requirements and may be subject to new legal requirements in the future; these requirements could have a material adverse effect on our operations.

Our operations and properties, both in the U.S. and abroad, are subject to extensive laws, ordinances, regulations and other legal requirements relating to environmental protection, including legal requirements governing investigation and clean-up of contaminated properties as well as water discharges, air emissions, waste management and workplace health and safety. These legal requirements frequently change and vary among jurisdictions. Compliance with these legal requirements, or the failure to comply with these requirements, may have a material adverse effect on our operations.

We have incurred, and expect to incur, costs to comply with environmental legal requirements, and these costs could increase in the future. Many environmental legal requirements provide for substantial fines, orders (including orders to cease operations) and criminal sanctions for violations. These legal requirements may apply to conditions at properties that we presently or formerly owned or operated, as well as at other properties for which we may be responsible, including those at which wastes attributable to the Company were disposed. A significant order or judgment against us, the loss of a significant permit or license or the imposition of a significant fine may have a material adverse effect on operations.

We have received notice from the New York Stock Exchange (NYSE) that we are not in compliance with the exchange’s continued listing standards because our market capitalization and stockholders’ equity are less than $75 million.

The listing of our common stock on the NYSE is at risk because we do not comply with the NYSE’s continued listing standards. Those standards require that our average market capitalization not be less than $75 million over a consecutive 30 trading-day period and that our stockholders’ equity not be less than $75 million. We were notified by the NYSE on February 17, 2009 that Libbey’s market capitalization and stockholders’ equity are below those criteria. While Libbey has a period of eighteen months from the date it received notice to cure this non-compliance, and we have a number of options to cure under consideration, there can be no assurance that we will be able to cure this deficiency in the time permitted. In addition, there can be no guarantee that the Company will remain in compliance with other continued listing requirements related to market capitalization and minimum stock price.

In the current environment there can be no assurance that we will not be in violation of other NYSE listing standards, some of which may not be curable.

Our failure to protect our intellectual property or prevail in any intellectual property litigation could materially and adversely affect our competitive position, reduce revenue or otherwise harm our business.

Our success depends in part on our ability to protect our intellectual property rights. We rely on a combination of patent, trademark, copyright and trade secret laws, licenses, confidentiality and other agreements to protect our intellectual property rights. However, this protection may not be fully adequate. Our intellectual property rights may be challenged or invalidated, an infringement suit by us against a third party may not be successful and/or third

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parties could adopt trademarks similar to our own. In particular, third parties could design around or copy our proprietary furnace, manufacturing and mold technologies, which are important contributors to our competitive position in the glass tableware industry. We may be particularly susceptible to these challenges in countries where protection of intellectual property is not strong. In addition, we may be accused of infringing or violating the intellectual property rights of third parties. Any such claims, whether or not meritorious, could result in costly litigation and divert the efforts of our personnel. Our failure to protect our intellectual property or prevail in any intellectual property litigation could materially and adversely affect our competitive position, reduce revenue or otherwise harm our business.

Our business may suffer if we do not retain our senior management.

We depend on our senior management. The loss of services of any of the members of our senior management team could adversely affect our business until a suitable replacement can be found. There may be a limited number of persons with the requisite skills to serve in these positions, and we may be unable to locate or employ such qualified personnel on acceptable terms.

Payment of severance or retirement benefits earlier than anticipated could strain our cash flow.

Certain members of our senior management have employment and change in control agreements that provide for substantial severance payments and retirement benefits. We are required to fund a certain portion of these payments according to a predetermined schedule, but some of our nonqualified obligations are currently unfunded. Should these senior managers leave our employ under circumstances entitling them to severance or retirement benefits, or become disabled or die, before we have funded these payments, the need to pay these severance or retirement benefits ahead of their anticipated schedule could put a strain on our cash flow and have a material adverse effect on our financial condition.

We may face a risk when we return to the market to refinance our debt as a result of the recent downgrade of the Company’s debt by Moody’s Investor Service.

In February 2009 Moody’s Investors Service downgraded Libbey Glass Inc.’s (“Libbey Glass”) debt ratings, including its corporate family and probability of default ratings to B3 from B2, and the rating on its second lien senior secured notes to B3 from B2. Libbey’s SGL-3 speculative grade liquidity rating was unchanged.

According to Moody’s, the SGL-3 rating reflects adequate liquidity, supported by the expectation that planned cash flow improvement, moderate cash balances, and availability under its asset-based revolver, although declining, should be sufficient to fund internal needs over the next twelve months.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.   PROPERTIES

At December 31, 2008 the Company had the following square footage at plants and warehouse/distribution facilities:

	North American Glass				North American Other				International
Location	Owned		Leased		Owned		Leased		Owned		Leased
Toledo, Ohio:
Manufacturing		974,000		—
Warehousing/Distribution		988,000		590,000
Shreveport, Louisiana:
Manufacturing		525,000		—
Warehousing/Distribution		166,000		646,000
Syracuse, New York(1):
Manufacturing						549,000		—
Warehousing/Distribution						104,000		—
Dane, Wisconsin:
Manufacturing						56,000		—
Warehousing/Distribution						62,000		—
Monterrey, Mexico:
Manufacturing		543,000		122,000
Warehousing/Distribution		228,000		627,000
Leerdam, Netherlands:
Manufacturing										141,000		—
Warehousing/Distribution										127,000		326,000
Mira Loma, California(1):
Warehousing/Distribution		—		351,000
Laredo, Texas:
Warehousing/Distribution		149,000		117,000
West Chicago, Illinois:
Warehousing/Distribution						—		249,000
Marinha Grande, Portugal:
Manufacturing										217,000		—
Warehousing/Distribution										193,000		13,000
Langfang, China:
Manufacturing										195,000		—
Warehousing/Distribution										232,000		—

(1) We have announced our intention to cease production at our Syracuse China ceramic dinnerware manufacturing facility in April 2009 and to cease operations at our Mira Loma distribution center in June 2009, when the current lease expires.

These facilities have an aggregate floor space of 8.5 million square feet. We own approximately 64% and lease approximately 36% of this floor space. In addition to the facilities listed above, our headquarters (Toledo, Ohio), some warehouses (various locations), sales offices (various locations), showrooms (various locations) and various outlet stores are located in leased space. We also utilize various warehouses as needed on a month-to-month basis.

All of our properties are currently being utilized for their intended purpose. In the opinion of management, all of our facilities are well maintained and adequate for our planned operational requirements.

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ITEM 3.   LEGAL PROCEEDINGS

We are involved in various routine legal proceedings arising in the ordinary course of our business. No pending legal proceeding is deemed to be material.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers have a wealth of business knowledge, experience and commitment to Libbey. In 2008, each of Mr. Meier, Chairman of the Board and Chief Executive Officer, and Mr. Reynolds, Executive Vice President and Chief Operating Officer, celebrated 38 years of service with Libbey. In addition, the average years of service of all of our executive officers is 18 years.

Name and Title	Professional Background
John F. Meier Chairman and Chief Executive Officer	Mr. Meier, 61, has been Chairman of the Board and Chief Executive Officer of Libbey since the Company went public in June 1993. Since joining the Company in 1970, Mr. Meier has served in various marketing positions, including a five-year assignment with Durobor, S.A., Belgium. In 1990, Mr. Meier was named General Manager of Libbey and a corporate Vice President of Owens-Illinois, Inc., Libbey’s former parent company. Mr. Meier is a member of the Board of Directors of Cooper Tire & Rubber Company (NYSE: CTB) and Applied Industrial Technologies (NYSE: AIT). Mr. Meier has been a director of the Company since 1987.
Richard I. Reynolds Executive Vice President and Chief Operating Officer	Mr. Reynolds, 62, has served as Libbey’s Executive Vice President and Chief Operating Officer since 1995. Mr. Reynolds was Libbey’s Vice President and Chief Financial Officer from June 1993 to 1995. From 1989 to June 1993, Mr. Reynolds was Director of Finance and Administration. Mr. Reynolds has been with Libbey since 1970 and has been a director of the Company since 1993.
Gregory T. Geswein Vice President and Chief Financial Officer	Mr. Geswein, 54, joined Libbey Inc. as Vice President, Chief Financial Officer on May 23, 2007. Prior to joining Libbey, Mr. Geswein was Senior Vice President, Chief Financial Officer of Reynolds & Reynolds Company in Dayton, Ohio, from 2005 through April 2007. Before joining Reynolds & Reynolds, Mr. Geswein was Senior Vice President, Chief Financial Officer for Diebold, Inc. from 2000 to 2005 and Senior Vice President, Chief Financial Officer of Pioneer-Standard Electronics Inc. from 1999 to 2000. Prior to joining Pioneer-Standard Electronics, Mr. Geswein spent 14 years at Mead Corporation (now MeadWestvaco) in successive financial management positions, including Vice President and Controller, and Treasurer.
Jonathan S. Freeman Vice President, Global Supply Chain	Mr. Freeman, 47, joined Libbey Inc. as Vice President, Global Supply Chain on May 7, 2007. Prior to joining Libbey, Mr. Freeman was with Delphi Corporation and Packard Electric Systems, a division of General Motors (the former parent of Delphi), since 1985, serving most recently as Director of Global Logistics. Mr. Freeman has worked in a wide range of operations and supply chain assignments in the United States, Mexico and Europe.

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Name and Title	Professional Background
Kenneth G. Wilkes Vice President, General Manager International Operations	Mr. Wilkes, 51, has served as Vice President, General Manager International Operations since May 2003. He served as Vice President and Chief Financial Officer of the Company from November 1995 to May 2003. From August 1993 to November 1995, Mr. Wilkes was Vice President and Treasurer of the Company. Prior to joining the Company, Mr. Wilkes was a Senior Corporate Banker, Vice President of The First National Bank of Chicago.
Scott M. Sellick Vice President and Chief Accounting Officer	Mr. Sellick, 46, has served as Vice President, Chief Accounting Officer since May 2007. He served as Vice President, Chief Financial Officer from May 2003 to May 2007. From May 2002 to May 2003, Mr. Sellick was Libbey’s Director of Tax and Accounting. From August 1997 to May 2002, he served as Director of Taxation. Before joining the Company in August 1997, Mr. Sellick was Tax Director for Stant Corporation and worked in public accounting for Deloitte & Touche in the audit and tax areas.
Kenneth A. Boerger Vice President and Treasurer	Mr. Boerger, 50, has been Vice President and Treasurer since July 1999. From 1994 to July 1999, Mr. Boerger was Corporate Controller and Assistant Treasurer. Since joining the Company in 1984, Mr. Boerger has held various financial and accounting positions. He has been involved in the Company’s financial matters since 1980, when he joined Owens-Illinois, Inc., Libbey’s former parent company.
Daniel P. Ibele Vice President, General Sales Manager, North America	Mr. Ibele, 48, has served as Vice President, General Sales Manager, North America since June 2006. From March 2002 to June 2006 he was Vice President, General Sales Manager of the Company. Previously, Mr. Ibele had been Vice President, Marketing and Specialty Operations since September 1997. Mr. Ibele was Vice President and Director of Marketing at Libbey from 1995 to September 1997. From the time he joined Libbey in 1983 until 1995, Mr. Ibele held various marketing and sales positions.
Timothy T. Paige Vice President- Administration	Mr. Paige, 51, has been Vice President-Administration since December 2002. From January 1997 until December 2002, Mr. Paige was Vice President and Director of Human Resources of the Company. From May 1995 to January 1997, Mr. Paige was Director of Human Resources of the Company. Prior to joining the Company, Mr. Paige was employed by Frito-Lay, Inc. in human resources management positions.
Susan A. Kovach Vice President, General Counsel and Secretary	Ms. Kovach, 49, has been Vice President, General Counsel and Secretary of the Company since July 2004. She joined Libbey in December 2003 as Vice President, Associate General Counsel and Assistant Secretary. Prior to joining Libbey, Ms. Kovach was Of Counsel to Dykema, LLP from 2001 through November 2003. She served from 1997 to 2001 as Vice President, General Counsel and Corporate Secretary of Omega Healthcare Investors, Inc. (NYSE: OHI). From 1998 to 2000 she held the same position for Omega Worldwide, Inc., a NASDAQ-listed firm providing management services and financing to the aged care industry in the United Kingdom and Australia. Prior to joining Omega Healthcare Investors, Inc., Ms. Kovach was a partner in Dykema LLP from 1995 through November 1997 and an associate in Dykema LLP from 1985 to 1995.

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PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock and Dividends

Libbey Inc. common stock is listed for trading on the New York Stock Exchange under the symbol LBY. The price range for the Company’s common stock as reported by the New York Stock Exchange and dividends declared for our common stock were as follows:

	2008						2007
					Cash						Cash
	Price Range				Dividend		Price Range				Dividend
	High		Low		Declared		High		Low		Declared
First Quarter	$	17.60	$	12.96	$	0.025	$	14.28	$	11.17	$	0.025
Second Quarter	$	17.81	$	7.43	$	0.025	$	24.65	$	13.98	$	0.025
Third Quarter	$	11.25	$	6.44	$	0.025	$	24.06	$	13.76	$	0.025
Fourth Quarter	$	8.63	$	1.04	$	0.025	$	19.32	$	14.28	$	0.025

The closing market price of our common stock on March 2, 2009 was $0.81 per share.

On March 2, 2009, there were 829 registered common shareholders of record. We paid a regular quarterly cash dividend from the time of Initial Public Offering in 1993 until we suspended the dividend in February 2009. The declaration of future dividends is within the discretion of the Board of Directors of Libbey and depends upon, among other things, business conditions, earnings and the financial condition of Libbey.

Comparison of Cumulative Total Returns

The graph below compares the total stockholder return on our common stock to the cumulative total return for the Standard & Poor’s SmallCap 600 Index (“S&P SmallCap 600”), a broad market index; the Russell 2000 Index (“Russell 2000”), a small-cap index to which Libbey was added as component in June 2007; the Standard & Poor’s Housewares & Specialties Index, a capitalization-weighted index that measures the performance of the housewares’ sector of the Standard & Poor’s SmallCap Index (“Housewares-Small”); and our peer group. The indices reflect the year-end market value of an investment in the stock of each company in the index, including additional shares assumed to have been acquired with cash dividends, if any.

There are no other glass tableware manufacturers with stock that is publicly traded in the United States. Accordingly, we chose the companies in our peer group because they are manufacturers with revenues comparable to ours. The peer group is limited to those companies for whom market quotations are available and consists of Ameron International Corporation, Ametek Inc., Blyth Inc., Brady Corporation, Church & Dwight Inc., EnPro Industries Inc., ESCO Technologies Inc., Graco Inc., Jarden Corporation, Johnson Outdoors, Inc., Lancaster Colony Corporation, Milacron Inc., Polaris Industries Inc., Sypris Solutions Inc., Teradyne Inc., Thermadyne Holdings Corporation, Tupperware Brands Corporation, Waters Corporation, and Woodward Governor Company.

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The graph assumes a $100 investment in our common stock on January 1, 2004, and also assumes investments of $100 in each of the S&P SmallCap 600, the Russell 2000, the Housewares-Small index and the peer group, respectively, on January 1, 2004. The value of these investments on December 31 of each year from 2004 through 2008 is shown in the table below the graph.

TOTAL SHAREHOLDER RETURN

	Annual Return Percentage Years Ending
Company Name/Index	Dec 04			Dec 05			Dec 06		Dec 07			Dec 08
Libbey Inc.		(20.64	)		(52.89	)		21.97		29.12			(92.00	)
S&P SmallCap 600 Index		22.65			7.68			15.12		(0.30	)		(31.07	)
Russell 2000 Index		18.33			4.55			18.37		(1.57	)		(33.79	)
S&P 600 Housewares & Specialties		(2.68	)		(37.48	)		10.07		8.57			(40.75	)
Peer Group		22.07			(5.85	)		14.43		17.05			(35.61	)

			Indexed Returns Years Ending
	Base
	Period
Company Name/Index	Dec 03		Dec 04		Dec 05		Dec 06		Dec 07		Dec 08
Libbey Inc.		100		79.36		37.38		45.60		58.88		4.71
S&P SmallCap 600 Index		100		122.65		132.07		152.04		151.59		104.48
Russell 2000 Index		100		118.33		123.72		146.44		144.15		95.44
S&P 600 Housewares & Specialties		100		97.32		60.84		66.97		72.71		43.08
Peer Group		100		122.07		114.93		131.51		153.93		99.12

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Equity Compensation Plan Information

Following are the number of securities and weighted average exercise price thereof under our compensation plans approved and not approved by security holders as of December 31, 2008:

	Number of				Number of
	Securities to be				Securities
	Issued Upon		Weighted Average		Remaining Available
	Exercise of		Exercise Price of		for Future Issuance
	Outstanding		Outstanding		Under Equity
	Options, Warrants		Options, Warrants		Compensation Plans
Plan Category	and Rights		and Rights		(1)
Equity compensation plans approved by security holders		1,473,977	$	22.37		1,207,798
Equity compensation plans not approved by security holders		—		—		—
Total		1,473,977	$	22.37		1,207,798

(1) This total includes 751,598 securities that are available for grant under the Libbey Inc. 2006 Omnibus Incentive Plan and 456,200 securities that are available under the Libbey Inc. 2002 Employee Stock Purchase Plan (ESPP). See note 14 to the Consolidated Financial Statements for further disclosure with respect to these plans.

Issuer Purchases of Equity Securities

Following is a summary of the 2008 fourth quarter activity in our share repurchase program:

					Total Number of		Maximum Number
					Shares Purchased		of Shares that May
					as Part of Publicly		Yet Be Purchased
	Total Number of		Average Price Paid		Announced Plans		Under the Plans or
Period	Shares Purchased		per Share		or Programs		Programs(1)
October 1 to October 31, 2008		—		—		—		1,000,000
November 1 to November 30, 2008		—		—		—		1,000,000
December 1 to December 31, 2008		—		—		—		1,000,000
Total		—		—		—		1,000,000

(1) We announced on December 10, 2002, that our Board of Directors authorized the purchase of up to 2,500,000 shares of our common stock in the open market and negotiated purchases. There is no expiration date for this plan. In 2003, 1,500,000 shares of our common stock were purchased for $38.9 million. No additional shares were purchased in 2008, 2007, 2006, 2005 or 2004. Our ABL Facility and the indentures governing the Senior Secured Notes and the PIK Notes significantly restrict our ability to repurchase additional shares.

ITEM 6.   SELECTED FINANCIAL DATA

Information with respect to Selected Financial Data is incorporated by reference to our 2008 Annual Report to Shareholders.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

This document and supporting schedules contain statements that are not historical facts and constitute projections, forecasts or forward-looking statements. For a description of the forward-looking statements and risk factors that may affect our performance, see the “Risk Factors” section above.

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Additionally, for an understanding of the significant factors that influenced our performance during the past three years, the following should be read in conjunction with the audited Consolidated Financial Statements and Notes.

OVERVIEW

GENERAL

Headquartered in Toledo, Ohio, Libbey has the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere and is one of the largest glass tableware manufacturers in the world. We also import metal flatware, hollowware, serveware and ceramic dinnerware for resale. In addition, we design, manufacture and distribute an extensive line of plastic items for the foodservice industry.

EXECUTIVE OVERVIEW

Through the third quarter, we experienced strong net sales and operating earnings. However, the growing global economic and financial crisis in the later part of 2008 resulted in considerable weakening in overall consumer confidence. This reached beyond our North American markets and affected the global markets for our products as well. Our net sales for 2008 were $810.2 million as compared to $814.2 million for 2007 and income from operations was a loss of $5.5 million as compared to $66.1 million for 2007. The $71.6 million reduction in income from operations was primarily driven by the following factors:

•  Lower production activity and an unfavorable mix of sales.

•  Higher natural gas, electricity and cartons costs.

•  Special charges of $45.1 million related to the announced closures of our ceramic dinnerware manufacturing facility in Syracuse, New York and distribution center in Mira Loma, California, goodwill and other intangible asset impairment charges related to our International reporting segment and fixed asset impairment charges in our North American Glass reporting segment.

Despite the difficult year we had a number of highlights in 2008 among them are the following:

•  Our leading U.S. retail market share gained 600 basis points. We now have 40.6 percent of the casual beverage ware market in the U.S.

•  Our U.S. retail business grew 4.0 percent.

•  Our leading U.S. foodservice position of approximately 56.0 percent was solidified with no less than seven vendor of the year awards from the most prominent players in our foodservice industry.

•  Our Crisa business in Mexico continued its leading market share with approximately 60.0 percent of the overall Mexican market.

•  Our newest business, Libbey China, serviced 55 countries from our state-of-the- art factory near Beijing, which opened in 2007. In the domestic Chinese market, we are shipping product to every province.

•  Our businesses in Europe are the third largest producer of casual beverage ware within the 27 member countries of the European Union.

•  Our factory in Shreveport, Louisiana, is now transformed into a LEAN facility and organized along Value Streams. Productivity improvements for the year were 3.3 percent, a strong performance.

•  Our Toledo, Ohio, factory is in its fifth year as a LEAN enterprise. Notable results have been achieved in this, our most complicated factory, with a 45.0 percent reduction in changeover time on our machines.

We have taken the following actions to reduce our costs, right size our capacity and conserve cash to withstand the global economic downturn:

•  In December of 2008, we announced the closing of our Syracuse China ceramic dinnerware factory, in Syracuse, New York, and the closing of our Mira Loma, California distribution center.

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•  We have implemented a salary hiring freeze.

•  The salaries of officers of the Company were reduced by 7.5 percent, and the salaries of most other U.S. salaried employees were reduced by 5.0 percent.

•  We suspended the Company matching contributions to our salaried employees’ 401(k) accounts.

•  We suspended the dividend on Libbey stock until conditions warrant reinstatement.

•  We reduced our capital expenditures budget to $20.0 million for 2009.

•  We reduced our International workforce by 500 employees since October 2008.

If, in 2009, consumer confidence and the global economy continue to weaken, additional actions may be necessary. Conversely, if the global economy recovers, we are well positioned to respond to increased demand.

RESULTS OF OPERATIONS

The following table presents key results of our operations for the years 2008, 2007 and 2006:

							Variance												Variance
							In			In									In		In
Year End December 31,	2008(2)			2007			Dollars			Percent			2007			2006(3)			Dollars		Percent
	Dollars in thousands, except percentages and per-share amounts
Net sales	$	810,207		$	814,160		$	(3,953	)		(0.5	)%	$	814,160		$	689,480		$	124,680		18.1	%
Gross profit	$	109,337		$	157,669		$	(48,332	)		(30.7	)%	$	157,669		$	123,164		$	34,505		28.0	%
Gross profit margin		13.5	%		19.4	%								19.4	%		17.9	%
(Loss) income from operations (IFO)	$	(5,548	)	$	66,101		$	(71,649	)		(108.4	)%	$	66,101		$	19,264		$	46,837		243.1	%
IFO margin		(0.7	)%		8.1	%								8.1	%		2.8	%
(Loss) earnings before interest and income taxes after minority interest (EBIT)(1)	$	(4,429	)	$	74,879		$	(79,308	)		(105.9	)%	$	74,879		$	17,948		$	56,931		317.2	%
EBIT margin		(0.5	)%		9.2	%								9.2	%		2.6	%
Earnings before interest, taxes, depreciation and amortization (EBITDA)(1)	$	40,001		$	116,451		$	(76,450	)		(65.6	)%	$	116,451		$	53,504		$	62,947		117.6	%
EBITDA margin		4.9	%		14.3	%								14.3	%		7.8	%
Net loss	$	(80,463	)	$	(2,307	)	$	(78,156	)		NM		$	(2,307	)	$	(20,899	)	$	18,592		89.0	%
Net loss margin		(9.9	)%		(0.3	)%								(0.3	)%		(3.0	)%
Diluted net loss per share	$	(5.48	)	$	(0.16	)	$	(5.32	)		NM		$	(0.16	)	$	(1.47	)	$	1.31		89.1	%

NM = Not meaningful

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(1)	We believe that EBIT and EBITDA, non-GAAP financial measures, are useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance. For reconciliation from net loss to EBIT and EBITDA, see the “Reconciliation of Non-GAAP Financial Measures” section below.
(2)	Includes pre-tax special charges of $45.5 million related to the closing of Syracuse China manufacturing facility, the closing of Mira Loma distribution center, fixed asset impairments related to the North American segment and impairment of goodwill and other intangibles in the International segment (see note 9 to the Consolidated Financial Statements ).
(3)	Includes pre-tax special charges of $23.4 million related to Crisa’s capacity rationalization and write-off of finance fees (see note 9 to the Consolidated Financial Statements).

Discussion of 2008 vs. 2007 Results of Operations

Net Sales

In 2008, net sales decreased 0.5 percent including a favorable currency impact of 1.2 percent, to $810.2 million from $814.2 million in 2007. The decrease in net sales was primarily attributable to decreased sales within the North American Glass and North American Other segments. Within North American Glass, shipments to foodservice customers declined over 10.0 percent and net sales of Crisa product in Mexican pesos experienced an unfavorable currency impact of $2.1 million. Partially offsetting the decrease in net sales was an increase of more than 4.0 percent in shipments to U.S. retail glassware customers. Within North American Other, shipments of Syracuse China products declined 17.9 percent, shipments of World Tableware products declined 3.9 percent and Traex net sales were flat compared to the prior year period. International net sales grew 12.3 percent on the strength of increased shipments of Libbey China product of 171.3 percent, a 7.5 percent increase of Crisal product, a modest increase in shipments at Royal Leerdam and a favorable currency impact of 7.9 percent.

Gross Profit

Gross profit decreased in 2008 by $48.3 million, or 30.7 percent, compared to 2007. Gross profit as a percentage of net sales decreased to 13.5 percent in 2008, compared to 19.4 percent in 2007. Contributing to the decrease in gross profit and gross profit margin were $18.7 million of special charges (see note 9 to the Consolidated Financial Statements). Of that amount, $14.0 million of special charges related to the announced closing of our Syracuse China manufacturing facility, $0.2 million related to the announced closure of our Mira Loma distribution center and $4.5 million related to fixed asset impairment charges in our North American Glass segment. In addition, 2008 gross profit includes $13.9 million for higher natural gas and electricity costs, $4.9 million for increased carton costs, $3.4 million of additional depreciation and an unfavorable mix of net sales. Partially offsetting these higher costs were lower distribution costs.

(Loss) Income from operations

Income from operations was a loss of $(5.5) million in 2008, compared to income from operations of $66.1 million in 2007. Income from operations as a percentage of net sales decreased to (0.7) percent in 2008, compared to 8.1 percent in 2007. Contributing to the decrease in income from operations and income from operations margin are the lower gross profit and gross profit margin (discussed above), the special charges related to the announced closure of our Syracuse China manufacturing facility ($13.9 million) and the closure of our Mira Loma distribution center ($0.7 million) and the impairment charge on goodwill and other intangibles within our International segment of $11.9 million (see note 9 to the Consolidated Financial Statements). Partially offsetting these were lower selling, general and administrative expenses.

(Loss) earnings before interest and income taxes after minority interest (EBIT)

Earnings before interest and income taxes decreased by $79.3 million, or 105.9 percent, from earnings of $74.9 million in 2007 to a loss of $(4.4) million in 2008. EBIT as a percentage of net sales decreased to (0.5) percent in 2008, compared to 9.2 percent in 2007. The reduced EBIT was mostly a result of the reduction in income from operations (discussed above), $5.5 million non-recurring gain on the land sales at Royal Leerdam and Syracuse China in 2007, and higher prior-year foreign currency translation gains of $1.3 million.

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Earnings before interest, taxes, depreciation and amortization (EBITDA)

EBITDA decreased by $76.5 million, or 65.6 percent, from $116.5 million in 2007 to $40.0 million in 2008. As a percentage of net sales, EBITDA was 4.9 percent in 2008, compared to 14.3 percent in 2007. The key contributors to the reduction in EBITDA were those factors discussed above under “(Loss) earnings before interest and income taxes after minority interest (EBIT).” Depreciation and amortization increased $2.9 million to $44.4 million, primarily due to a full year of depreciation related to our facility in China.

Net loss and diluted loss per share

We reported a net loss of $80.5 million, or loss of $5.48 per diluted share, in 2008, compared to a net loss of $2.3 million, or loss of $0.16 per diluted share, in 2007. The net loss as a percentage of net sales was 9.9 percent, compared to 0.3 percent in 2007. The increase in net loss was driven primarily by the items discussed above under “(Loss) earnings before interest and income taxes after minority interest (EBIT),” in addition to a $3.8 million increase in interest expense. These were partially offset by a $5.0 million decrease in income tax provision. The $3.8 million increase in interest expense is the result of higher debt, partially offset by slightly lower variable interest rates compared to 2007. Income tax provision decreased $5.0 million and the effective tax rate decreased from 125.7 percent in 2007 to a negative 8.5 percent in 2008. The change in the effective tax rate is primarily due to our provision for income taxes being significantly impacted by the recognition of valuation allowances in the United States, the Netherlands and Portugal. Changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions, tax planning structures and changes in tax laws have also impacted the effective tax rate.

Discussion of 2007 vs. 2006 Results of Operations

Net Sales

In 2007, net sales increased 18.1 percent, including a favorable currency impact of 1.4 percent, to $814.2 million from $689.5 million in 2006. The increase in net sales was primarily attributable to the full year consolidation of Crisa, the Company’s former joint venture in Mexico, and an 11.3 percent increase in shipments to U.S. and Canadian retail glassware customers in North American Glass. International net sales grew 28.0 percent, reflecting the commencement of shipments from Libbey’s new factory in China. Net sales from Royal Leerdam and Crisal customers increased over 21.0 percent compared to 2006, including a favorable currency impact of 9.1 percent. North American Other net sales increased 5.8 percent, as shipments of World Tableware products increased 9.0 percent while shipments of Syracuse China products were up 5.0 percent.

Gross Profit

Gross profit increased in 2007 by $34.5 million, or 28.0 percent, compared to 2006. Gross profit as a percentage of net sales increased to 19.4 percent in 2007, compared to 17.9 percent in 2006. Contributing to the increase in gross profit and gross profit margin were the full year consolidation of Crisa, higher sales and higher production activity, including the benefit of Crisa’s capacity rationalization — “Project Tiger.” In addition, 2006 gross profit included an inventory write-down of $2.2 million related to “Project Tiger.” Partially offsetting these improvements were higher distribution expenses, higher natural gas expense and expenses related to the start-up of our new facility in China.

Income from operations

Income from operations was $66.1 million in 2007, compared to income from operations of $19.3 million in 2006. Income from operations as a percentage of net sales increased to 8.1 percent in 2007, compared to 2.8 percent in 2006. Contributing to the increase in income from operations and income from operations margin is the higher gross profit and gross profit margin (discussed above), the non-recurrence of $16.3 million of special charges related to “Project Tiger,” offset by an increase in selling, general and administrative expenses primarily due to the full year consolidation of Crisa.

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Earnings before interest and income taxes (EBIT)

Earnings before interest and income taxes increased by $56.9 million, or 317.2 percent, from $17.9 million in 2006 to $74.9 million in 2007. EBIT as a percentage of net sales increased to 9.2 percent in 2007, compared to 2.6 percent in 2006. The contributors to the improvement in EBIT compared to the prior period are the same as those discussed above under “Income from Operations.” In addition, we recognized a $4.3 million gain on the sale of land in the Netherlands and a $1.1 million gain on the sale of excess land in Syracuse, N.Y. We also recorded a currency translation gain of $2.0 million in 2007, compared to a currency translation loss of $1.0 million in 2006, and a decrease of approximately $2.8 million in charges related to the ineffectiveness on our natural gas contracts as compared to 2006.

Earnings before interest, taxes, depreciation and amortization (EBITDA)

EBITDA increased by $62.9 million, or 117.6 percent, from $53.5 million in 2006 to $116.5 million in 2007. As a percentage of net sales, EBITDA was 14.3 percent in 2007, compared to 7.8 percent in 2006. The key contributors to the increase in EBITDA were those factors discussed above under “Earnings before interest and income taxes (EBIT).” Depreciation and amortization, adjusted for minority interest in 2006, increased $5.9 million to $41.6 million, primarily due to the consolidation of Crisa and depreciation related to our new facility in China.

Net loss and diluted loss per share

We reported a net loss of $2.3 million, or loss of $0.16 per diluted share, in 2007, compared to a net loss of $20.9 million, or loss of $1.47 per diluted share, in 2006. The net loss as a percentage of net sales was 0.3 percent, compared to 3.0 percent in 2006. The decrease in net loss was driven primarily by the items discussed above under “Earnings before interest and income taxes (EBIT),” offset by a $19.3 million increase in interest expense and a $19.0 million increase in income taxes. The $19.3 million increase in interest expense is the result of the refinancing consummated on June 16, 2006, which resulted in higher debt and higher average interest rates. Income taxes increased $19.0 million and the effective tax rate increased from 27.1 percent in 2006 to 125.7 percent in 2007. The increase in income taxes and the effective tax rate was primarily driven by a non-cash tax charge of $15.3 million to establish a full valuation allowance against the net deferred income tax asset balance in the U.S.

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SEGMENT RESULTS OF OPERATIONS

The following table summarizes the results of operations for our three segments described as follows:

•  North American Glass-includes sales of glass tableware from subsidiaries throughout the United States, Canada and Mexico.

•  North American Other-includes sales of ceramic dinnerware; metal tableware, hollowware and serveware; and plastic items from subsidiaries in the United States.

•  International-includes worldwide sales of glass tableware from subsidiaries outside the United States, Canada and Mexico.

							Variance												Variance
							In			In									In			In
Year End December 31,	2008			2007			Dollars			Percent			2007			2006			Dollars			Percent
	Amounts in thousands, except percentages and per-share amounts
Net Sales:
North American Glass	$	554,128		$	568,495		$	(14,367	)		(2.5	)%	$	568,495		$	476,696		$	91,799			19.3	%
North American Other		111,029			121,217			(10,188	)		(8.4	)%		121,217			114,581			6,636			5.8	%
International		153,532			136,727			16,805			12.3	%		136,727			106,798			29,929			28.0	%
Eliminations		(8,482	)		(12,279	)								(12,279	)		(8,595	)
Consolidated	$	810,207		$	814,160		$	(3,953	)		(0.5	)%	$	814,160		$	689,480		$	124,680			18.1	%
Earnings (loss) before interest and taxes (EBIT):
North American Glass	$	25,495		$	54,492		$	(28,997	)		(53.2	)%	$	54,492		$	5,471		$	49,021			896.0	%
North American Other		(17,696	)		15,670			(33,366	)		(212.9	)%		15,670			9,382			6,288			67.0	%
International		(12,228	)		4,717			(16,945	)		(359.2	)%		4,717			3,161			1,556			49.2	%
Consolidated	$	(4,429	)	$	74,879		$	(79,308	)		(105.9	)%	$	74,879		$	18,014		$	56,865			315.7	%
EBIT Margin:
North American Glass		4.6	%		9.6	%								9.6	%		1.1	%
North American Other		(15.9	)%		12.9	%								12.9	%		8.2	%
International		(8.0	)%		3.4	%								3.4	%		3.0	%
Consolidated		(0.5	)%		9.2	%								9.2	%		2.6	%
Special Charges (excluding write-off of financing fees):
North American Glass	$	5,356		$	—		$	5,356			100.0	%	$	—		$	18,534		$	(18,534	)		100.0	%
North American Other		28,252			—			28,252			100.0	%		—			(42	)		42			100.0	%
International		11,890			—			11,890			100.0	%		—			—			—
Consolidated	$	45,498		$	—		$	45,498			100.0	%	$	—		$	18,492		$	(18,492	)		100.0	%

Discussion of 2008 vs. 2007 Segment Results of Operations

North American Glass

Net sales decreased 2.5 percent from $568.5 million in 2007 to $554.1 million in 2008. Of the total decrease in net sales, approximately 4.5 percent is attributable to reduced shipments to foodservice and business-to-business glassware customers. Partially offsetting this decline are increased shipments to U.S. and Canadian retail glassware customers, representing 1.0 percent of the change, and increased shipments of Crisa products to Crisa customers, representing 0.8 percent of the change offset by an unfavorable currency impact of 0.3 percent.

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EBIT decreased by $29.0 million to $25.5 million in 2008, compared to $54.5 million in 2007. EBIT as a percentage of net sales decreased to 4.6 percent in 2008, compared to 9.6 percent in 2007. The key contributors to the reduction in EBIT were special charges recorded in 2008 related to the announced closing of the Mira Loma distribution center of $0.9 million and the fixed asset impairment charges of $4.5 million (see note 9 to the consolidated financial statements); the impact of lower net sales and reduced operating activity in North American Glass operations of $16.6 million; higher natural gas and electricity charges of $8.5 million; increased carton costs of $1.5 million; and an approximately $2.3 million decrease in non-operating income primarily related to foreign currency translation losses and non-recurring gains on the prior-year sale of environmental credits. Partially offsetting the EBIT reduction is a decrease of $5.3 million in North American Glass selling, general and administrative expense primarily resulting from lower incentive-based compensation and favorable rulings in connection with an outstanding dispute regarding a warehouse lease in Mexico.

North American Other

Net sales decreased 8.4 percent to $111.0 million in 2008 from $121.2 million in 2007. Of the total decline in net sales, approximately 6.4 percent is attributed to a reduction in shipments of Syracuse China products and 1.7 percent is attributed to a reduction in shipments of World Tableware products. Shipments of Traex products were flat in 2008 as compared to 2007.

EBIT declined by $33.4 million to a loss of $(17.7) million in 2008, compared to income of $15.7 million in 2007. EBIT as a percentage of net sales decreased to (15.9) percent in 2008, compared to 12.9 percent in 2007. The key contributors to the reduction in EBIT were lower net sales and operating activity at Syracuse China of $4.4 million and special charges recorded related to the announced closing of the Syracuse China manufacturing facility in early April 2009 of $28.3 million (see note 9 to the Consolidated Financial Statements). A non-recurring gain on the sale of excess land at Syracuse China was recorded in 2007 in other income (expense) of $1.1 million. Partially offsetting these were lower North American Other selling, general and administrative expenses of $0.4 million primarily resulting from lower incentive-based compensation.

International

In 2008, net sales increased 12.3 percent to $153.5 million from $136.7 million in 2007. Of the total increase in net sales, approximately 8.8 percent is attributed to an increase in shipments to Libbey China customers and a favorable currency impact of 1.2 percent. On a constant currency basis, shipments to Royal Leerdam and Crisal customers declined by 4.2 percent offset by a favorable currency impact of 6.8 percent.

EBIT decreased by $16.9 million to a loss of $(12.2) million in 2008, compared to income of $4.7 million in 2007. EBIT as a percentage of net sales decreased to (8.0) percent in 2008, compared to 3.4 percent in 2007. The key contributors to the reduction in EBIT were the goodwill and other intangibles impairment charge of $11.9 million (see note 9 to the Consolidated Financial Statements); increased natural gas and electricity costs of approximately $5.7 million; increased carton costs of $3.4 million; increased depreciation expense of $2.8 million (a result of Libbey China having a full year of production in 2008); and a $2.2 million increase in selling, general and administrative expenses primarily related to the increased net sales. A non-recurring gain on the sale of excess land at Royal Leerdam was recorded in 2007 in other income (expense) of $4.3 million. Partially offsetting these costs was the impact of higher net sales and operating activity of $8.6 million at our Libbey China facility and $3.9 million at our European facilities.

Discussion of 2007 vs. 2006 Segment Results of Operations

North American Glass

Net sales increased 19.3 percent from $476.7 million in 2006 to $568.5 million in 2007. Of the total increase in net sales, approximately 14.5 percent is attributable to the consolidation of Crisa, 2.7 percent relates to shipments to retail glassware customers, approximately 1.1 percent relates to shipments to foodservice and industrial glassware customers and approximately 0.7 percent relates to shipments to export customers outside of North America.

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EBIT increased by $49.0 million to $54.5 million in 2007, compared to $5.5 million in 2006. EBIT as a percentage of net sales increased to 9.6 percent in 2007, compared to 1.1 percent in 2006. The key contributors to the improvement in EBIT were the impact of higher net sales and operating activity in North American Glass operations of $11.6 million, the full year consolidation of Crisa of approximately $9.1 million and an approximately $6.2 million increase in non-operating income primarily related to foreign currency translation gains, non-recurring charges on Crisa’s prior year natural gas contracts and the sale of environmental credits. In addition, EBIT increased due to a $4.7 million reduction in North American Glass selling, general and administrative expense primarily resulting from lower incentive-based compensation. The prior year included a fixed asset charge and inventory write-down of $18.5 million related to Crisa’s capacity rationalization (“Project Tiger”). Offsetting these improvements was an increase in natural gas expense of $1.9 million.

North American Other

Net sales increased 5.8 percent to $121.2 million in 2007 from $114.6 million in 2006. Of the total increase in net sales, approximately 3.7 percent is attributed to an increase in shipments of World Tableware products and approximately 1.8 percent is attributed to an increase in shipments of Syracuse China products.

EBIT increased by $6.3 million to $15.7 million in 2007, compared to $9.4 million in 2006. EBIT as a percentage of net sales increased to 12.9 percent in 2007, compared to 8.2 percent in 2006. The key contributors to the increased EBIT were higher net sales and operating activity at Syracuse China of $3.6 million, higher net sales of World Tableware products of approximately $2.7 million, higher net sales and operating activity at Traex of $0.3 million and a $1.1 million gain on the sale of excess land at Syracuse China. Partially offsetting these improvements were higher North American Other selling, general and administrative expenses of $1.8 million primarily resulting from the increased net sales.

International

In 2007, net sales increased 28.0 percent to $136.7 million from $106.8 million in 2006. Of the total increase in net sales, approximately 12.7 percent is attributed to an increase in shipments to Royal Leerdam and Crisal customers, approximately 7.4 percent relates to shipments from Libbey China, and approximately 9.1 percent relates to a stronger euro compared to the prior year.

EBIT increased by $1.6 million to $4.7 million in 2007, compared to $3.2 million in 2006. EBIT as a percentage of net sales increased to 3.4 percent in 2007, compared to 3.0 percent in 2006. The key contributors to the increased EBIT were increased net sales and operating activity at Royal Leerdam and Crisal of $5.8 million and a $4.3 million gain on the sale of excess land in the Netherlands. Partially offsetting these improvements were start-up costs at Libbey China of approximately $2.4 million, higher natural gas expense in Europe of approximately $3.4 million, a $2.0 million reduction in equity earnings from our 49 percent ownership of Crisa prior to the acquisition of the remaining 51 percent in June of 2006 and a $0.7 million increase in selling, general and administrative expenses primarily related to the increased net sales.

CAPITAL RESOURCES AND LIQUIDITY

Balance Sheet and Cash flows

Cash and Equivalents

At December 31, 2008, our cash balance decreased to $13.3 million from $36.5 million at December 31, 2007. The $23.2 million decrease was primarily due to a $19.6 million payment to Vitro S.A. de C.V in January, 2008 and to fund our operating requirements.

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Working Capital

The following table presents working capital components for 2008 and 2007:

							Variance
December 31,	2008			2007			In Dollars			In Percent
	Amounts in thousands, except percentages, DSO, DIO, DPO and DWC
Accounts receivable — net	$	76,072		$	93,333		$	(17,261	)		(18.5	)%
DSO(1)		34.3			41.8
Inventories — net	$	185,242		$	194,079		$	(8,837	)		(4.6	)%
DIO(2)		83.5			87.1
Accounts payable	$	54,428		$	73,593		$	(19,165	)		(26.0	)%
DPO(3)		24.5			33.0
Working capital(4)	$	206,886		$	213,819		$	(6,933	)		(3.2	)%
DWC(5)		93.3			95.9
Percentage of net sales		25.5	%		26.3	%

DSO, DIO, DPO and DWC are all calculated using net sales as the denominator and a 365-day calendar year.

(1)	Days sales outstanding (DSO) measures the number of days it takes to turn receivables into cash.
(2)	Days inventory outstanding (DIO) measures the number of days it takes to turn inventory into cash.
(3)	Days payable outstanding (DPO) measures the number of days it takes to pay the balances of our accounts payable.
(4)	Working capital is defined as net accounts receivable plus net inventories less accounts payable. See “Reconciliation of Non-GAAP Financial Measures” below for the calculation of this non-GAAP financial measure and for further discussion as to the reasons we believe this non-GAAP financial measure is useful.
(5)	Days working capital (DWC) measures the number of days it takes to turn our working capital into cash.

Working capital, defined as net accounts receivable plus net inventories less accounts payable, decreased by $6.9 million in 2008, compared to 2007. As a percentage of net sales, working capital decreased to 25.5 percent in 2008, compared to 26.3 percent in 2007. The decrease in working capital is primarily the result of our continued efforts to increase cash flow through reductions in working capital.

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Borrowings

The following table presents our total borrowings:

	Interest				December 31,		December 31,
	Rate			Maturity Date	2008		2007
	(Dollars in thousands)
Borrowings under ABL facility		floating		December 16, 2010	$	34,538	$	7,366
Senior notes		floating(1	)	June 1, 2011		306,000		306,000
PIK notes(2)		16.00	%	December 1, 2011		148,946		127,697
Promissory note		6.00	%	January, 2009 to September, 2016		1,666		1,830
Notes payable		floating		January 2009		3,284		622
RMB loan contract		floating		July 2012 to January 2014		36,675		34,275
RMB working capital loan		floating		March, 2010		7,335		6,855
Obligations under capital leases		floating		January, 2009 to May, 2009		302		1,018
BES Euro line		floating		January, 2010 to January, 2014		15,507		15,962
Other debt		floating		September, 2009		630		1,432
Total borrowings						554,883		503,057
Less — unamortized discounts and warrants						4,626		6,423
Total borrowings — net(3)(4)					$	550,257	$	496,634

(1)	See “Derivatives” below and Note 8 to the Consolidated Financial Statements.
(2)	Additional PIK notes were issued each June 1 and December 1, commencing December 1, 2006, to pay the semi-annual interest. During the first three years, interest is payable by the issuance of additional PIK notes.
(3)	Total borrowings includes notes payable, long-term debt due within one year and long-term debt as stated in our Consolidated Balance Sheets.
(4)	See “Contractual Obligations” below for scheduled payments by period.

We had total net borrowings of $550.3 million at December 31, 2008, compared to total net borrowings of $496.6 million at December 31, 2007. The $53.6 million increase in borrowings was the result of additional PIK notes issued on June 1 and December 1 and additional borrowings under our ABL facility.

Of our total indebtedness, $204.3 million is subject to fluctuating interest rates at December 31, 2008. A change of one percentage point in such rates would result in a change in interest expense of approximately $2.0 million on an annual basis.

Included in interest expense is the amortization of discounts and warrants on the Senior Notes and PIK Notes and financing fees of $5.0 million, $5.1 million and $1.6 million for December 31, 2008, December 31, 2007 and December 31, 2006, respectively.

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Cash Flow

The following table presents key drivers to free cash flow for 2008, 2007 and 2006:

							Variance												Variance
Year Ended December 31,	2008			2007			In Dollars			In Percent			2007			2006			In Dollars			In Percent
	(Dollars in thousands, except percentages)
Net cash (used in) provided by operating activities	$	(1,040	)	$	51,457		$	(52,497	)		(102.0	)%	$	51,457		$	54,858		$	(3,401	)		(6.2	)%
Capital expenditures		(45,717	)		(43,121	)		2,596			6.0	%		(43,121	)		(73,598	)		(30,477	)		(41.4	)%
Acquisitions and related costs		—			—			—			—			—			(78,434	)		(78,434	)		(100.0	)%
Proceeds from asset sales and other		117			8,213			(8,096	)		(98.6	)%		8,213			—			8,213			100.0	%
Free cash flow(1)	$	(46,640	)	$	16,549		$	(63,189	)		(381.8	)%	$	16,549		$	(97,174	)	$	113,723			117.0	%

(1) We believe that free cash flow (net cash (used in) provided by operating activities, less capital expenditures and acquisitions and related costs, plus proceeds from asset sales and other) is a useful metric for evaluating our financial performance, as it is a measure we use internally to assess performance. See “Reconciliation of Non-GAAP Financial Measures” below for a reconciliation of net cash provided by (used in) operating activities to free cash flow and a further discussion as to the reasons we believe this non-GAAP financial measure is useful.

Discussion of 2008 vs. 2007 Cash Flow

Our net cash used in operating activities was $1.0 million in 2008, compared to net cash provided by operating activities of $51.5 million in 2007, or a decrease of $52.5 million. The decrease is primarily related to a decrease in earnings, higher uses of cash for pension contributions and a $19.6 million payment to Vitro related to the 2006 acquisition of Crisa, offset by improved working capital management.

Net cash used in investing activities was $45.6 million in 2008, compared to $34.9 million in 2007, or an increase of $10.7 million. The primary contributors to this increase were the non-recurring proceeds from asset sales and other items of $8.2 million in 2007, primarily attributable to the sale of excess land in Syracuse, N.Y. and the Netherlands.

Free cash flow was $(46.6) million in 2008, compared to 16.5 million in 2007, a decrease of $63.2 million. The primary contributors to this decrease are the result of the changes in net cash (used in) provided by operating activities and the non-recurring proceeds from asset sales and other items of $8.2 million in 2007 as discussed above.

Net cash provided by financing activities was $25.8 million in 2008, compared to $22.4 million net cash used in financing activities in 2007. The 2008 net cash provided by financing activities resulted from the reduction in free cash flow and the change in cash and cash equivalents discussed above.

Discussion of 2007 vs. 2006 Cash Flow

Our net cash provided by operating activities was $51.5 million in 2007, compared to net cash provided by operating activities of $54.9 million in 2006, or a decrease of $3.4 million. The decrease is primarily related to an increase in earnings more than offset by higher uses of cash for inventory and pension contributions.

Net cash used in investing activities was $34.9 million in 2007, compared to $152.0 million in 2006, or a decrease of $117.1 million. The primary contributors to this reduction were the purchase of Crisa in 2006 for $78.4 million, a $30.5 million decrease in capital expenditures (driven by a reduction in spending resulting from the completion of the construction of our new facility in China in 2006), and proceeds from asset sales and other items of $8.2 million in 2007, primarily attributable to the sale of excess land in Syracuse, N.Y. and the Netherlands.

Net cash used by financing activities was $22.4 million in 2007, compared to $135.3 million net cash provided by financing activities in 2006. The net cash used by financing activities in 2007 is primarily attributable to the

36

repayment of borrowings under our ABL facility, partially offset by new working capital facilities in Europe and China. The 2006 net cash provided by financing activities resulted from the additional debt incurred in connection with the acquisition of Crisa and the construction of our production facility in China.

Free cash flow was $16.5 million in 2007, compared to $(97.2) million in 2006, an improvement of $113.7 million. The primary contributors to this improvement are the result of the changes in net cash used in investing activities discussed above. These were partially offset by a decrease in cash flow from operating activities as discussed above.

Derivatives

We have Interest Rate Protection Agreements (Rate Agreements) with respect to $200 million of debt as a means to manage our exposure to variable interest rates. The Rate Agreements effectively convert this portion of our long-term borrowings from variable rate debt to fixed-rate debt, thus reducing the impact of interest rate changes on future results. The fixed interest rate for our borrowings related to the Rate Agreements at December 31, 2008, excluding applicable fees, is 5.24 percent per year and the total interest rate, including applicable fees, is 12.24 percent per year. The average maturity of these Rate Agreements is 0.9 years at December 31, 2008. Total remaining debt not covered by the Rate Agreements has fluctuating interest rates with a weighted average rate of 9.57 percent per year at December 31, 2008. The fair market value for the Rate Agreements at December 31, 2008 and 2007, respectively, was $(6.8) million and $(5.3) million.

We also use commodity futures contracts related to forecasted future natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid from adverse price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, generally six or more months in the future. At December 31, 2008, we had commodity futures contracts for 5,280,000 million British Thermal Units (BTU’s) of natural gas with a fair market value of $(14.9) million. We have hedged a portion of our forecasted transactions through December 2011. At December 31, 2007, we had commodity futures contracts for 2,820,000 million BTU’s of natural gas with a fair market value of $(1.8) million.

During December 2008, we announced the closing of the Syracuse China facility in early April 2009 (see note 9 to the Consolidated Financial Statements). At the time of the announcement we held natural gas contracts for the Syracuse China facility with a settlement date after March 2009 of 165,000 million British Thermal Units (BTU’s). The closure of this facility has rendered the forecasted transactions related to these contracts not probable of occurring. Under FASB Statement No. 133, Accounting for Derivative Instrument and Hedging Activities (FAS 133), when the forecasted transactions of a hedging relationship become not probable of occurring, the gains or losses that have been classified in Other Comprehensive Income in prior periods for those contracts effected should be reclassified into earnings. We recognized $0.4 million in other income (expense) on the Consolidated Statement of Operations relating to these contracts.

In January 2008, we entered into a series of foreign currency contracts to sell Canadian dollars. As of December 31, 2008, all of these contracts have expired. During 2007, we entered into a foreign currency contract for 212.0 million pesos for a contractual payment due to Vitro in January 2008, related to the Crisa acquisition. The fair market value of the foreign currency contract at December 31, 2007 was $0.4 million.

Share Repurchase Program

Since mid-1998, we have repurchased 5,125,000 shares for $140.7 million, as authorized by our Board of Directors. As of December 31, 2008, authorization remains for the purchase of an additional 1,000,000 shares. During 2008 and 2007, we did not repurchase any common stock. Our ABL Facility and the indentures governing the Senior Secured Notes and the PIK Notes significantly restrict our ability to repurchase additional shares.

We are using a portion of the repurchased common stock to fund our Employee Stock Benefit Plans. See note 14 to the Consolidated Financial Statements for further discussion.

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Contractual Obligations

The following table presents our existing contractual obligations at December 31, 2008 and related future cash requirements:

	Payments Due by Period
			Less than						More than
Contractual Obligations(3)	Total		1 Year		1-3 Years		3-5 Years		5 Years
	Dollars in thousands
Borrowings	$	554,883	$	4,401	$	501,049	$	35,355	$	14,078
Interest payments(2)		171,162		53,614		112,442		5,024		82
Long term operating leases		120,863		16,809		26,805		19,693		57,556
Pension and nonpension(1)		263,900		20,900		73,300		74,100		95,600
Total obligations	$	1,110,808	$	95,724	$	713,596	$	134,172	$	167,316

(1)	It is difficult to estimate future cash contributions as such amounts are a function of actual investment returns, withdrawals from the plan, changes in interest rates, and other factors uncertain at this time. However, we have included our best estimate for contributions through 2016.
(2)	The obligations for interest payments are based on December 31, 2008 debt levels and interest rates.
(3)	Amounts reported in local currencies have been translated at 2008 exchange rates.

In addition to the above, we have commercial commitments secured by letters of credit and guarantees. Our letters of credit outstanding at December 31, 2008, totaled $8.4 million.

The Company is unable to make a reasonably reliable estimate as to when cash settlement with taxing authorities may occur for our unrecognized tax benefits. Therefore, our liability for unrecognized tax benefits is not included in the table above. See note 10 to the Consolidated Financial Statements for additional information.

Capital Resources and Liquidity

Historically, cash flows generated from operations and our borrowing capacity under our ABL facility have allowed us to meet our cash requirements, including capital expenditures and working capital needs. Remaining unused availability on the ABL Facility was $44.6 million at December 31, 2008 and $89.7 million at December 31, 2007. However, we were greatly impacted by recessionary pressures in 2008, especially during the fourth quarter of the year, and we anticipate that the global economic recession will continue throughout 2009 and perhaps beyond. In addition, interest on our PIK Notes will be payable in cash beginning December 1, 2009. Although we have taken a number of steps to enhance our liquidity in 2008 and to date in 2009 (including those announced in February, 2009), if cash generated from operations is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or arrange additional debt financing. Global financial markets and economic conditions have been, and continue to be, disrupted and volatile. The credit and capital markets have become exceedingly distressed. These issues, along with significant write-offs in the financial services sector, the re-pricing of credit risk and the current weak economic conditions, have made it difficult, and will likely continue to make it difficult, to obtain funding in future periods. If cash from operations and cash available from our ABL Facility are not sufficient to meet our needs, we cannot assure you that we will be able to obtain additional financing in sufficient amounts and/or on acceptable terms in the near future or when our ABL Facility expires in December 2010. Furthermore, because of the current price of our stock, we cannot anticipate that it would be desirable to sell additional equity, even if we were able to do so.

Off-Balance Sheet Arrangements

Until June 16, 2006, we were a joint venture partner owning 49% in Vitrocrisa Holding, S. de R.L. de C.V. and related companies, the largest glass tableware manufacturer in Latin America. On June 16, 2006, we purchased the remaining 51 percent equity interest in the joint venture (see note 4 to the Consolidated Financial Statements). Through June 15, 2006, we recorded our 49 percent interest in the joint venture using the equity method of accounting. From this joint venture, we recorded equity earnings (loss), dividends and certain technical assistance

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income. We also had a reciprocal distribution agreement with our joint venture partner that gave us exclusive distribution rights with respect to the joint venture’s glass tableware products in the U.S. and Canada, and gave the joint venture the exclusive distribution rights with respect to our glass tableware products in Latin America. In addition, we guaranteed a portion of the joint venture’s bank debt. While we owned 49 percent of the joint venture, we evaluated this investment and related arrangements in accordance with Financial Accounting Standards Board (FASB) Interpretation No. 46R, “Consolidation of Variable Interest Entities” (FIN 46R), and determined that the joint venture was a Variable Interest Entity (VIE), as defined by FIN 46R; however, we were not considered the primary beneficiary, as we did not absorb the majority of expected losses or receive the majority of expected residual returns. Therefore, the joint venture was not consolidated in our Consolidated Financial Statements through June 15, 2006. Since we acquired the remaining 51 percent of the joint venture on June 16, 2006, we have consolidated its financial results. See notes 4 and 5 to the Consolidated Financial Statements for disclosure regarding financial information relating to Crisa.

Reconciliation of Non-GAAP Financial Measures

We sometimes refer to data derived from consolidated financial information but not required by GAAP to be presented in financial statements. Certain of these data are considered “non-GAAP financial measures” under Securities and Exchange Commission (SEC) Regulation G. We believe that non-GAAP data provide investors with a more complete understanding of underlying results in our core business and trends. In addition, we use non-GAAP data internally to assess performance. Although we believe that the non-GAAP financial measures presented enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered an alternative to GAAP.

Reconciliation of net loss to EBIT and EBITDA

Year Ended December 31,	2008			2007			2006
	Dollars in thousands
Net loss	$	(80,463	)	$	(2,307	)	$	(20,899	)
Add: Interest expense		69,720			65,888			46,594
Add: Provision (benefit) for income taxes		6,314			11,298			(7,747	)
(Loss) Earnings before interest and income taxes after minority interest (EBIT)		(4,429	)		74,879			17,948
Add: Depreciation and amortization (adjusted for minority interest)		44,430			41,572			35,556
Earnings before interest, taxes, deprecation and amortization, after minority interest adjustment (EBITDA)	$	40,001		$	116,451		$	53,504

We define EBIT as net income before interest expense and income taxes, after minority interest adjustment. The most directly comparable U.S. GAAP financial measure is earnings before interest, income taxes and minority interest.

We believe that EBIT is an important supplemental measure for investors in evaluating operating performance in that it provides insight into company profitability. Libbey’s senior management uses this measure internally to measure profitability. EBIT also allows for a measure of comparability to other companies with different capital and legal structures, which accordingly may be subject to different interest rates and effective tax rates.

The non-GAAP measure of EBIT does have certain limitations. It does not include interest expense, which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand operations. Because this is a material and recurring item, any measure that excludes it has a material limitation. EBIT may not be comparable to similarly titled measures reported by other companies.

We define EBITDA as net income before interest expense, income taxes, depreciation and amortization, after minority interest adjustment. The most directly comparable U.S. GAAP financial measure is earnings before interest, income taxes and minority interest.

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We believe that EBITDA is an important supplemental measure for investors in evaluating operating performance in that it provides insight into company profitability and cash flow. Libbey’s senior management uses this measure internally to measure profitability and to set performance targets for managers. It also has been used regularly as one of the means of publicly providing guidance on possible future results. EBITDA also allows for a measure of comparability to other companies with different capital and legal structures, which accordingly may be subject to different interest rates and effective tax rates, and to companies that may incur different depreciation and amortization expenses or impairment charges.

The non-GAAP measure of EBITDA does have certain limitations. It does not include interest expense, which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand operations. EBITDA also excludes depreciation and amortization expenses. Because these are material and recurring items, any measure that excludes them has a material limitation. EBITDA may not be comparable to similarly titled measures reported by other companies.

Reconciliation of net cash provided by operating activities to free cash flow

Year Ended December 31,	2008			2007			2006
	Dollars in thousands
Net cash (used in) provided by operating activities	$	(1,040	)	$	51,457		$	54,858
Less: Capital expenditures		(45,717	)		(43,121	)		(73,598	)
Less: Acquisition and related costs		—			—			(78,434	)
Plus: Proceeds from asset sales and other		117			8,213			—
Free cash flow	$	(46,640	)	$	16,549		$	(97,174	)

We define free cash flow as net cash (used in) provided by operating activities, less capital expenditures and acquisition related costs, adjusted for proceeds from asset sales and other. The most directly comparable U.S. GAAP financial measure is net cash (used in) provided by operating activities.

We believe that free cash flow is important supplemental information for investors in evaluating cash flow performance in that it provides insight into the cash flow available to fund such things as discretionary debt service, acquisitions and other strategic investment opportunities. It is a measure of performance we use to internally evaluate the overall performance of the business.

Free cash flow is used in conjunction with and in addition to results presented in accordance with U.S. GAAP. Free cash flow is neither intended to represent nor be an alternative to the measure of net cash provided by operating activities recorded under U.S. GAAP. Free cash flow may not be comparable to similarly titled measures reported by other companies.

Reconciliation of working capital

December 31,	2008		2007
	Dollars in thousands
Accounts receivable — net	$	76,072	$	93,333
Plus: Inventories — net		185,242		194,079
Less: Accounts payable		54,428		73,593
Working capital	$	206,886	$	213,819

We define working capital as net accounts receivable plus net inventories less accounts payable.

We believe that working capital is important supplemental information for investors in evaluating liquidity in that it provides insight into the availability of net current resources to fund our ongoing operations. Working capital is a measure used by management in internal evaluations of cash availability and operational performance.

Working capital is used in conjunction with and in addition to results presented in accordance with U.S. GAAP. Working capital is neither intended to represent nor be an alternative to any measure of liquidity and operational

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performance recorded under U.S. GAAP. Working capital may not be comparable to similarly titled measures reported by other companies.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires us to make judgments, estimates and assumptions that affect the reported amounts in the Consolidated Financial Statements and accompanying notes. Note 2 to the Consolidated Financial Statements describes the significant accounting policies and methods used in their preparation. The areas described below are affected by critical accounting estimates and are impacted significantly by judgments and assumptions in the preparation of the Consolidated Financial Statements. Actual results could differ materially from the amounts reported based on these critical accounting estimates.

Revenue Recognition

Revenue is recognized when products are shipped and title and risk of loss have passed to the customer. Revenue is recorded net of returns, discounts and sales incentive programs offered to customers. We offer various incentive programs to a broad base of customers, and we record accruals for these as sales occur. These programs typically offer incentives for purchase activities by customers that include growth objectives. Criteria for payment include the achievement by customers of certain purchase targets and the purchase by customers of particular product types. Management regularly reviews the adequacy of the accruals based on current customer purchases, targeted purchases and payout levels.

Allowance for Doubtful Accounts

Our accounts receivable balance, net of reserves, was $76.1 million in 2008, compared to $93.3 million in 2007. The reserve balance was $10.5 million in 2008, compared to $11.7 million in 2007. The allowance for doubtful accounts is established through charges to the provision for bad debts. We regularly evaluate the adequacy of the allowance for doubtful accounts based on historical trends in collections and write-offs, our judgment as to the probability of collecting accounts and our evaluation of business risk. This evaluation is inherently subjective, as it requires estimates that are susceptible to revision as more information becomes available. Accounts are determined to be uncollectible when the debt is deemed to be worthless or only recoverable in part and are written off at that time through a charge against the allowance.

Allowance for Slow-Moving and Obsolete Inventory

We identify slow-moving or obsolete inventories and estimate appropriate allowance provisions accordingly. We provide inventory allowances based upon excess and obsolete inventories driven primarily by future demand forecasts. At December 31, 2008, our inventories were $185.2 million, with loss provisions of $6.6 million, compared to inventories of $194.1 million and loss provisions of $6.4 million at December 31, 2007.

Asset Impairment

Fixed Assets

We review fixed assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether impairment has occurred typically requires various estimates and assumptions. In 2008, we wrote down certain assets to fair value at our Syracuse China manufacturing facility based upon appraisals. We also wrote down certain fixed assets within our North American Glass segment. These write-downs are further disclosed in notes 7 and 9 to the Consolidated Financial Statements.

Goodwill and Indefinite Life Intangible Assets

Goodwill impairment tests are completed for each reporting unit on an annual basis, or more frequently in certain circumstances where impairment indicators arise. When performing our test for impairment, we use the discounted cash flow method, which incorporates the weighted average cost of capital of a hypothetical third party

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buyer to compute the fair value of each reporting unit. The fair value is then compared to the carrying value. To the extent that fair value exceeds the carrying value, no impairment exists.

However, to the extent the carrying value exceeds fair value, we compare the implied fair value of goodwill to its book value to determine if an impairment should be recorded. This was done as of October 1st for each year presented. As of October 1, 2008, our review did not indicate an impairment of goodwill. During the fourth quarter of 2008, the global economic environment weakened, causing an adverse effect on our business environment. This was a trigger event, which caused us to test for goodwill impairment as of December 31, 2008. As a result of the December 31, 2008 testing, we recorded a goodwill impairment charge of $9.4 million at our International segment. This impairment is further disclosed in notes 5, 6 and 9 to the Consolidated Financial Statements.

Individual indefinite life intangible assets are also evaluated for impairment on an annual basis, or more frequently in certain circumstances where impairment indicators arise. When performing our test for impairment, we use the discounted cash flow method to compute the fair value, which is then compared to the carrying value of the indefinite life intangible asset. To the extent that fair value exceeds the carrying value, no impairment exists. This was done as of October 1st for each year presented. As of October 1, 2008, our review did not indicate an impairment of indefinite life intangible assets. During the fourth quarter of 2008, the global economic environment weakened, causing an adverse effect on our business environment. This was a trigger event, which caused us to test for impairment on our indefinite life intangible assets as of December 31, 2008. As a result of the December 31, 2008 testing, we recorded an indefinite life intangible asset impairment charge of $2.5 million at our International segment. The announcement in December, 2008 that we will be closing our Syracuse China manufacturing facility in April 2009 was an impairment trigger event for the Syracuse China reporting unit. An impairment loss for intangible assets of $0.3 million was recorded in 2008 for our Syracuse China facility. These impairments are further disclosed in notes 5, 6 and 9 to the Consolidated Financial Statements.

If the Company’s projected future cash flows were lower, or if the assumed weighted average cost of capital were higher, the testing performed as of October 1, 2008 and December 31, 2008, may have indicated an impairment of one or more of the Company’s other reporting units and, as a result, the related goodwill at other reporting units would have been impaired.

Self-Insurance Reserves

We use self-insurance mechanisms to provide for potential liabilities related to workers’ compensation and employee health care benefits that are not covered by third-party insurance. Workers’ compensation accruals are recorded at the estimated ultimate payout amounts based on individual case estimates. In addition, we record estimates of incurred-but-not-reported losses based on actuarial models.

Although we believe that the estimated liabilities for self-insurance are adequate, the estimates described above may not be indicative of current and future losses. In addition, the actuarial calculations used to estimate self-insurance liabilities are based on numerous assumptions, some of which are subjective. We will continue to adjust our estimated liabilities for self-insurance, as deemed necessary, in the event that future loss experience differs from historical loss patterns.

Pension Assumptions

The following are the assumptions used to determine the benefit obligations and pretax income effect for our pension plan benefits for 2008, 2007 and 2006:

	U.S. Plans						Non-U.S. Plans
	2008		2007		2006		2008		2007		2006
Discount rate		6.41% to 6.48%		6.16% to 6.32%		5.82% to 5.91%		5.70% to 8.50%		5.50% to 8.50%		4.50% to 8.75%
Expected long-term rate of return on plan assets		8.25%		8.50%		8.75%		6.00%		6.50%		6.50%
Rate of compensation increase		2.63% to 5.25%		3.00% to 6.00%		3.00% to 6.00%		2.00% to 4.30%		2.00% to 4.30%		2.00 to 3.50%

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Two critical assumptions, discount rate and expected long-term rate of return on plan assets, are important elements of plan expense and asset/liability measurement. We evaluate these critical assumptions on our annual measurement date of December 31. Other assumptions involving demographic factors such as retirement age, mortality and turnover are evaluated periodically and are updated to reflect our experience. Actual results in any given year often will differ from actuarial assumptions because of demographic, economic and other factors.

The discount rate enables us to estimate the present value of expected future cash flows on the measurement date. The rate used reflects a rate of return on high-quality fixed income investments that match the duration of expected benefit payments at our December 31 measurement date. The discount rate at December 31 is used to measure the year-end benefit obligations and the earnings effects for the subsequent year. A lower discount rate increases the present value of benefit obligations and increases pension expense.

To determine the expected long-term rate of return on plan assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. The expected long-term rate of return on plan assets at December 31 is used to measure the earnings effects for the subsequent year.

Sensitivity to changes in key assumptions based on year-end data is as follows:

•  A change of 1.0 percent in the discount rate would change our total pension expense by approximately $1.6 million.

•  A change of 1.0 percent in the expected long-term rate of return on plan assets would change total pension expense by approximately $2.2 million.

Nonpension Postretirement Assumptions

We use various actuarial assumptions, including the discount rate and the expected trend in health care costs, to estimate the costs and benefit obligations for our retiree welfare plan. The discount rate is determined based on high-quality fixed income investments that match the duration of expected retiree medical benefits at our December 31 measurement date. The discount rate at December 31 is used to measure the year-end benefit obligations and the earnings effects for the subsequent year. The following are the actuarial assumptions used to determine the benefit obligations and pretax income effect for our nonpension postretirement benefits:

	U.S. Plans									Non-U.S. Plans
	2008			2007			2006			2008			2007			2006
Discount rate		6.36	%		6.16	%		5.77	%		5.98	%		5.14	%		4.87	%
Initial health care trend		7.50	%		8.00	%		8.50	%		7.50	%		8.00	%		8.50	%
Ultimate health care trend		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%
Years to reach ultimate trend rate		5			7			7			5			7			7

Sensitivity to changes in key assumptions is as follows:

•  A change of 1.0 percent in the discount rate would change the nonpension postretirement expense by $0.3 million.

•  A change of 1.0 percent in the health care trend rate would not have a material impact upon the nonpension postretirement expense.

Income Taxes

The company is subject to income taxes in the U.S. and various foreign jurisdictions. Management judgment is required in evaluating our tax positions and determining our provision for income taxes. Throughout the course of business, there are numerous transactions and calculations for which the ultimate tax determination is uncertain. When management believes certain tax positions may be challenged despite our belief that the tax return positions are supportable, the company establishes reserves for tax uncertainties based on estimates of whether additional taxes will be due. We adjust these reserves taking into consideration changing facts and circumstances, such as an outcome of a tax audit. The income tax provision includes the impact of reserve provisions and changes to reserves

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that are considered appropriate. Accruals for tax contingencies are provided for in accordance with the requirements of FIN 48.

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax attribute carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. FAS No. 109, “Accounting for Income Taxes,” requires that a valuation allowance be recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in which the Company conducts its operations or otherwise incurs taxable income or losses. We have recorded valuation allowances against our U.S., Netherlands, Portugal and China deferred income tax assets and against certain deferred income tax assets in Mexico.

Derivatives and Hedging

We use derivatives to manage a variety of risks, including risks related to interest rates and commodity prices. Accounting for derivatives as hedges requires that, at inception and over the term of the arrangement, the hedged item and related derivative meet the requirements for hedge accounting. The rules and interpretations related to derivatives accounting are complex. Failure to apply this complex guidance will result in all changes in the fair value of the derivative being reported in earnings, without regard to the offsetting in the fair value of the hedged item. The accompanying financial statements reflect consequences of loss hedge accounting for certain positions.

In evaluating whether a particular relationship qualifies for hedge accounting, we first determine whether the relationship meets the strict criteria to qualify for exemption from ongoing effectiveness testing. For a relationship that does not meet these criteria, we test effectiveness at inception and quarterly thereafter by determining whether changes in the fair value of the derivative offset, within a specified range, change the fair value of the hedged item. If the fair value changes fail this test, we discontinue applying hedge accounting to that relationship prospectively.

Stock-Based Compensation Expense

On January 1, 2006, we adopted SFAS 123-R, which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors. Stock-based compensation expense recognized under SFAS 123-R for fiscal 2008 was $3.5 million.

Upon adoption of SFAS 123-R, we began estimating the value of employee share-based compensation on the date of grant using the Black-Scholes model. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the award, and actual and projected employee stock option exercise behaviors. The use of the Black-Scholes model requires extensive actual employee exercise behavior data and a number of complex assumptions including expected volatility, risk-free interest rate, and expected dividends. See note 14 of the Consolidated Financial Statements for additional information.

New Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosure about fair value measurements. This statement clarifies how to measure fair value as permitted under other accounting pronouncements but does not require any new fair value measurements. In February 2008, the FASB issued FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157,” (“FSP157-2”) which delays until January 1, 2009 the effective date of SFAS 157 for nonfinancial assets and liabilities, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis. In October 2008, the FASB issued FASB Staff Position 157-3, “Determining the Fair Value of a Financial Asset when the Market for That Asset is Not Active” (“FSP 157-3”), which clarifies the application of SFAS 157 as it relates to the valuation of financial assets in a market that is not active for those financial assets. FSP 157-3 was effective upon issuance. We adopted SFAS 157 as

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of January 1, 2008, but have not applied it to non-recurring, nonfinancial assets and liabilities. The adoption of SFAS 157 and its related FSP’s (FSP 157-2 and FSP 157-3) had no impact on our consolidated results of operations and financial condition. We will be required to adopt SFAS 157 for nonfinancial assets and liabilities effective beginning on January 1, 2009. We do not believe adoption of SFAS 157 for nonfinancial assets and liabilities will have a material impact on our consolidated financial statements. See note 17 of the Consolidated Financial Statements for additional information.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option of Financial Assets and Financial Liabilities — Including an Amendment of SFAS No. 115” (“SFAS 159”), which is effective for fiscal years beginning after November 15, 2007. This statement permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. We adopted SFAS 159 as of January 1, 2008. The adoption of SFAS 159 had no impact on our consolidated results of operations and financial condition, as we did not elect to apply the provisions of SFAS 159 to any financial instruments as of January 1, 2008.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”), which changes how business combinations are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. SFAS 141R is effective January 1, 2009 for Libbey and will be applied prospectively. The impact of adopting SFAS 141R will depend on the nature and terms of future acquisitions.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”), which changes the accounting and reporting standards for the noncontrolling interests in a subsidiary in consolidated financial statements. SFAS 160 recharacterizes minority interests as noncontrolling interests and requires noncontrolling interests to be classified as a component of shareholders equity. SFAS 160 is effective January 1, 2009 for Libbey, and requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. We do not believe adoption of SFAS 160 will have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”), which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS 161 is effective for Libbey beginning January 1, 2009. We are currently evaluating the potential impact, if any, of adoption of SFAS 161 on our consolidated financial statements.

In April 2008, the FASB issued Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” FSP 142-3 is effective beginning on January 1, 2009. We are currently evaluating the potential impact, if any, of the adoption of FSP 142-3 on our consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”), which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements. The implementation of this standard will not have a material impact on our consolidated financial statements.

In June 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. It also clarifies the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of EITF 07-5, if any, on our consolidated financial statements.

In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP 03-6-1”). FSP 03-6-1 addresses

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whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of SFAS No. 128, “Earnings per Share.” FSP 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, with all prior period EPS data being adjusted retrospectively. Early adoption is not permitted. We are currently evaluating the potential impact, if any, of the adoption of FSP 03-6-1 on our consolidated financial statements.

In December 2008, the FASB issued FASB Staff Position 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”, (“FSP 132(R)-1”). FSP 132(R)-1 amends FASB Statement No. 132 (revised 2003) “Employers’ Disclosures about Pensions and Other Postretirement Benefits” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. FSP 132(R)-1 is effective for financial statements issued for fiscal years ending after December 15, 2009. We are currently evaluating the potential impact of the adoption of FSP 132(R)-1, and it is likely that the adoption of this guidance will increase the disclosures in the financial statements related to the assets of our pension and other postretirement benefit plans.

ITEM 7A.   QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Currency

We are exposed to market risks due to changes in currency values, although the majority of our revenues and expenses are denominated in the U.S. dollar. The currency market risks include devaluations and other major currency fluctuations relative to the U.S. dollar, euro, RMB or Mexican peso that could reduce the cost competitiveness of our products compared to foreign competition.

Interest Rates

We are exposed to market risk associated with changes in interest rates on our floating debt and have entered into Interest Rate Protection Agreements (Rate Agreements) with respect to $200.0 million of debt as a means to manage our exposure to fluctuating interest rates. The Rate Agreements effectively convert this portion of our long-term borrowings from variable rate debt to fixed-rate debt, thus reducing the impact of interest rate changes on future income. We had $204.3 million of debt subject to fluctuating interest rates at December 31, 2008. A change of one percentage point in such rates would result in a change in interest expense of approximately $2.0 million on an annual basis. If the counterparties to these Rate Agreements were to fail to perform, we would no longer be protected from interest rate fluctuations by these Rate Agreements. However, we do not anticipate nonperformance by the counterparties. All interest rate swap counterparties were rated AA- or better as of December 31, 2008, by Standard and Poors.

Natural Gas

We are also exposed to market risks associated with changes in the price of natural gas due to either general market forces, or in the case of our operations in China, by government mandate. We use commodity futures contracts related to forecasted future natural gas requirements of our manufacturing operations. The objective of these futures contracts is to limit the fluctuations in prices paid on the underlying natural gas commodity. We consider the forecasted natural gas requirements of our manufacturing operations in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, generally six or more months in the future. For our natural gas requirements that are not hedged, we are subject to changes in the price of natural gas, which affect our earnings and cash flows. If the counterparties to these futures contracts were to fail to perform, we would no longer be protected from natural gas fluctuations by the futures contracts. However, we

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do not anticipate nonperformance by these counterparties. All counterparties were rated A and AA- as of December 2008 by Standard and Poors.

Retirement Plans

We are exposed to market risks associated with changes in the various capital markets. Changes in long-term interest rates affect the discount rate that is used to measure our benefit obligations and related expense. Changes in the equity and debt securities markets affect the performance of our pension plans’ asset and related pension expense and cash funding requirements. Sensitivity to these key market risk factors is as follows:

•  A change of 1.0 percent in the discount rate would change our total expense by approximately $1.9 million.

•  A change of 1.0 percent in the expected long-term rate of return on plan assets would change total pension expense by approximately $2.2 million.

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ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	Page
Reports of Independent Registered Public Accounting Firms		49
Consolidated Balance Sheets at December 31, 2008 and 2007		51
For the years ended December 31, 2008, 2007 and 2006:
Consolidated Statements of Operations		52
Consolidated Statements of Shareholders’ Equity		53
Consolidated Statements of Cash Flows		54
Notes to Consolidated Financial Statements:
Note 1 Description of the Business		55
Note 2 Significant Accounting Policies		55
Note 3 Balance Sheet Details		60
Note 4 Acquisitions		61
Note 5 Investments in Unconsolidated Affiliates		62
Note 6 Purchased Intangible Assets and Goodwill		64
Note 7 Property, Plant and Equipment		65
Note 8 Borrowings		66
Note 9 Special Charges		71
Note 10 Income Taxes		75
Note 11 Pension		79
Note 12 Nonpension Postretirement Benefits		83
Note 13 Net Income per Share of Common Stock		86
Note 14 Employee Stock Benefit Plans		86
Note 15 Derivatives		93
Note 16 Comprehensive Income (Loss)		94
Note 17 Fair Value		95
Note 18 Operating Leases		96
Note 19 Other Income (Expense)		96
Note 20 Segments		96
Note 21 Condensed Consolidated Guarantor Financial Statements		99
Selected Quarterly Financial Data (unaudited)		108

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Libbey Inc.

We have audited the accompanying consolidated balance sheets of Libbey Inc. as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule included at Item 15. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Libbey Inc. at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method for accounting for stock-based compensation and defined benefit pension plans and other postretirement plans, respectively, in 2006.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Libbey Inc.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2009 expressed an unqualified opinion thereon.

/s/  Ernst & Young LLP

Toledo, Ohio

March 16, 2009

49

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Libbey Inc.

We have audited Libbey Inc.’s internal control over financial reporting as of December 31, 2008 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Libbey Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Libbey Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Libbey Inc. as of December 31, 2008 and 2007, and the related consolidated results of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008 and our report dated March 16, 2009 expressed an unqualified opinion thereon.

/s/  Ernst & Young LLP

Toledo, Ohio

March 16, 2009

50

Libbey Inc.

Consolidated Balance Sheets

December 31,	Footnote Reference			2008			2007
	Dollars in thousands, except per-share amounts
ASSETS
Current assets:
Cash & equivalents				$	13,304		$	36,539
Accounts receivable — net		(note 3	)		76,072			93,333
Inventories — net		(note 3	)		185,242			194,079
Prepaid and other current assets		(notes 3 & 15	)		17,167			20,431
Total current assets					291,785			344,382
Other assets:
Pension asset		(note 11	)		9,351			3,253
Deferred income taxes		(note 10	)		—			855
Purchased intangible assets — net		(notes 4, 6 & 9	)		26,121			30,731
Goodwill		(notes 4, 6 & 9	)		166,736			177,360
Other assets		(note 3	)		9,975			13,113
Total other assets					212,183			225,312
Property, plant, and equipment — net		(notes 7 & 9	)		317,586			329,777
Total assets				$	821,554		$	899,471
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Notes payable		(note 8	)	$	3,284		$	622
Accounts payable					54,428			73,593
Salaries and wages					22,597			28,659
Accrued liabilities		(note 3	)		39,675			41,415
Accrued special charges		(note 9	)		4,248			38
Payable to Vitro					—			19,575
Pension liability (current portion)		(note 11	)		1,778			1,883
Nonpension postretirement benefits (current portion)		(note 12	)		4,684			3,528
Derivative liability		(notes 15 & 17	)		17,936			1,847
Deferred income taxes		(note 10	)		1,279			4,462
Long-term debt due within one year		(note 8	)		1,117			913
Total current liabilities					151,026			176,535
Long-term debt		(note 8	)		545,856			495,099
Pension liability		(note 11	)		109,505			71,709
Nonpension postretirement benefits		(note 12	)		57,197			45,667
Deferred income taxes		(note 10	)		3,648			—
Other long-term liabilities		(notes 3, 15 & 17	)		12,211			17,346
Total liabilities					879,443			806,356
Stockholders’ equity:
Common stock, par value $.01 per share, 50,000,000 shares authorized, 18,697,630 shares issued (18,697,630 shares issued in 2007)					187			187
Capital in excess of par value (includes warrants of $1,034 and 485,309 shares in 2008 and 2007)					309,275			306,874
Treasury stock, at cost, 3,967,486 shares (4,133,074 in 2007)					(106,411	)		(110,780	)
Retained deficit					(145,154	)		(60,689	)
Accumulated other comprehensive loss		(note 16	)		(115,786	)		(42,477	)
Total shareholders’ equity					(57,889	)		93,115
Total liabilities and shareholders’ equity				$	821,554		$	899,471

See accompanying notes

51

Libbey Inc.

Consolidated Statements of Operations

Year Ended December 31,	Footnote Reference			2008			2007			2006
	Dollars in thousands, except per-share amounts
Net sales		(note 2	)	$	810,207		$	814,160		$	689,480
Freight billed to customers					2,422			2,207			2,921
Total revenues					812,629			816,367			692,401
Cost of sales		(notes 2 & 9	)		703,292			658,698			569,237
Gross profit					109,337			157,669			123,164
Selling, general and administrative expenses					88,451			91,568			87,566
Impairment of goodwill		(note 9	)		9,434			—			—
Special charges		(note 9	)		17,000			—			16,334
(Loss) income from operations					(5,548	)		66,101			19,264
Equity earnings — pretax		(note 5	)		—			—			1,986
Other income (expense)		(notes 9 & 19	)		1,119			8,778			(3,236	)
(Loss) earnings before interest, income taxes and minority interest					(4,429	)		74,879			18,014
Interest expense		(note 8	)		69,720			65,888			46,594
(Loss) income before income taxes and minority interest					(74,149	)		8,991			(28,580	)
Provision (benefit) for income taxes		(note 10	)		6,314			11,298			(7,747	)
Loss before minority interest					(80,463	)		(2,307	)		(20,833	)
Minority interest		(note 2	)		—			—			(66	)
Net loss				$	(80,463	)	$	(2,307	)	$	(20,899	)
Net loss per share:
Basic		(note 13	)	$	(5.48	)	$	(0.16	)	$	(1.47	)
Diluted		(note 13	)	$	(5.48	)	$	(0.16	)	$	(1.47	)
Weighted average shares:
Outstanding		(note 13	)		14,672			14,472			14,182
Diluted		(note 13	)		14,672			14,472			14,182

See accompanying notes

52

Libbey Inc.

Consolidated Statements of Shareholders’ Equity

												Accumulated
												Other
	Common		Capital in			Treasury						Comprehensive
	Stock		Excess of			Stock			Retained			Loss
	Amount(1)		Par Value			Amount(1)			Deficit			(note 16)			Total
			Dollars in thousands, except per-share amounts
Balance December 31, 2005	$	187	$	301,025		$	(132,520	)	$	(17,966	)	$	(31,121	)	$	119,605
Comprehensive loss:
Net loss										(20,899	)					(20,899	)
Effect of derivatives — net of tax													(6,829	)		(6,829	)
Net minimum pension liability (including equity investments) — net of tax													10,650			10,650
Effect of exchange rate fluctuation													3,070			3,070
Total comprehensive loss (note 16)																(14,008	)
Adoption of FAS 158 — net of tax													(21,779	)		(21,779	)
Stock compensation expense				1,322												1,322
Issuance of warrants				1,034												1,034
Stock issued from treasury							3,093									3,093
Dividends — $0.10 per share										(1,417	)					(1,417	)
Balance December 31, 2006		187		303,381			(129,427	)		(40,282	)		(46,009	)		87,850
Comprehensive income:
Net loss										(2,307	)					(2,307	)
Effect of derivatives — net of tax													(3,224	)		(3,224	)
Net minimum pension liability — net of tax													(2,956	)		(2,956	)
Effect of exchange rate fluctuation													9,712			9,712
Total comprehensive income (note 16)																1,225
Stock options exercised				88												88
Income tax benefit on stock options				20												20
Stock compensation expense				3,385												3,385
Stock issued from treasury							18,647			(16,654	)					1,993
Dividends — $0.10 per share										(1,446	)					(1,446	)
Balance December 31, 2007		187		306,874			(110,780	)		(60,689	)		(42,477	)		93,115
Comprehensive loss:
Net loss										(80,463	)					(80,463	)
Effect of derivatives — net of tax													(10,300	)		(10,300	)
Net minimum pension liability — net of tax													(58,607	)		(58,607	)
Effect of exchange rate fluctuation													(4,402	)		(4,402	)
Total comprehensive loss (note 16)																(153,772	)
Stock compensation expense				3,466												3,466
Stock issued from treasury				(1,065	)		4,369			(2,536	)					768
Dividends — $0.10 per share										(1,466	)					(1,466	)
Balance December 31, 2008	$	187	$	309,275		$	(106,411	)	$	(145,154	)	$	(115,786	)	$	(57,889	)

(1) Share amounts are as follows:

	Common Stock		Treasury
	Shares		Stock Shares			Total
Balance December 31, 2005		18,689,710		4,681,721			14,007,989
Stock issued from treasury		—		(323,546	)		323,546
Balance December 31, 2006		18,689,710		4,358,175			14,331,535
Stock options exercised		7,920		—			7,920
Stock issued from treasury		—		(225,101	)		225,101
Balance December 31, 2007		18,697,630		4,133,074			14,564,556
Stock issued from treasury		—		(165,588	)		165,588
Balance December 31, 2008		18,697,630		3,967,486			14,730,144

See accompanying notes

53

Libbey Inc.

Consolidated Statements of Cash Flows

Year Ended December 31,	Footnote Reference			2008			2007			2006
				Dollars in thousands
Operating activities:
Net loss				$	(80,463	)	$	(2,307	)	$	(20,899	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		(notes 6 & 7	)		44,430			41,572			35,720
Loss (gain) on sale of assets					101			(4,923	)		—
Equity earnings — net of tax		(note 5	)		—			—			(1,493	)
Change in accounts receivable					16,518			3,951			9,745
Change in inventories					(2,027	)		(22,949	)		10,545
Change in accounts payable					(19,460	)		5,726			(739	)
PIK interest		(note 8	)		21,249			18,217			—
Income taxes		(note 10	)		9,275			10,271			(30,995	)
Special charges		(note 9	)		46,326			(920	)		20,023
Change in Vitro payable		(note 4	)		(19,575	)		—			—
Pension and postretirement		(notes 11 & 12	)		(18,604	)		(3,061	)		9,885
Accrued interest and amortization of discounts, warrants and financing fees					4,165			4,578			5,868
Accrued liabilities and prepaid expenses					(6,634	)		(2,004	)		13,706
Other operating activities					3,659			3,306			3,492
Net cash (used in) provided by operating activities					(1,040	)		51,457			54,858
Investing activities:
Additions to property, plant and equipment					(45,717	)		(43,121	)		(73,598	)
Acquisition and related costs, net of cash acquired		(note 4	)		—			—			(78,434	)
Proceeds from asset sales and other					117			8,213			—
Net cash used in investing activities					(45,600	)		(34,908	)		(152,032	)
Financing activities:
Net borrowings/(repayments) on ABL credit facility					30,601			(41,122	)		43,968
Net revolving credit facility					—			—			(149,078	)
Other net borrowings (repayments)					(3,307	)		20,272			(81,030	)
Other borrowings					—			—			31,393
Note payments					—			—			(100,000	)
Note proceeds					—			—			407,260
Debt financing fees					—			(219	)		(15,798	)
Stock options exercised		(note 14	)		—			108			—
Dividends paid					(1,466	)		(1,446	)		(1,417	)
Net cash (used in) provided by financing activities					25,828			(22,407	)		135,298
Effect of exchange rate fluctuations on cash					(2,423	)		631			400
(Decrease) increase in cash					(23,235	)		(5,227	)		38,524
Cash & equivalents at beginning of year					36,539			41,766			3,242
Cash & equivalents at end of year				$	13,304		$	36,539		$	41,766
Supplemental disclosure of cash flows information:
Cash paid during the year for interest				$	42,888		$	43,340		$	28,268
Cash (refunded) paid during the year for income taxes				$	(2,276	)	$	(6,128	)	$	12,839

See accompanying notes

54

LIBBEY INC.

Notes to Consolidated Financial Statements

(Dollars in thousands, except share data and per-share amounts)

1.   Description of the Business

Libbey is the leading producer of glass tableware products in the Western Hemisphere, in addition to supplying to key markets throughout the world. We produce glass tableware in five countries and sell to customers in over 100 countries. We have the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere and are one of the largest glass tableware manufacturers in the world. We design and market an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware, and plastic items to a broad group of customers in the foodservice, retail and business-to-business markets. We own and operate two glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in the Netherlands, Portugal, China and Mexico. We also own and operate a ceramic dinnerware plant in New York (see note 9 on closure effective April, 2009) and a plastics plant in Wisconsin. In addition, we import products from overseas in order to complement our line of manufactured items. The combination of manufacturing and procurement allows us to compete in the global tableware market by offering an extensive product line at competitive prices.

2.   Significant Accounting Policies

Basis of Presentation  The Consolidated Financial Statements include Libbey Inc. and its majority-owned subsidiaries (collectively, Libbey or the Company). Our fiscal year end is December 31st. Prior to June 16, 2006, we recorded our 49 percent interest in Crisa using the equity method. On June 16, 2006, we acquired the remaining 51 percent of Crisa; as a result, effective that date Crisa’s results are included in the Consolidated Financial Statements. Prior to October 13, 2006, we owned 95 percent of Crisal-Cristalaria Automatica S.A. (Crisal). The 5 percent equity interest of Crisal that we did not own prior to October 13, 2006 is shown as minority interest in the Consolidated Financial Statements. On October 13, 2006, we acquired the remaining 5 percent of Crisal. All material intercompany accounts and transactions have been eliminated. The preparation of financial statements and related disclosures in conformity with United States generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ materially from management’s estimates.

Consolidated Statements of Operations  Net sales in our Consolidated Statements of Operations include revenue earned when products are shipped and title and risk of loss have passed to the customer. Revenue is recorded net of returns, discounts and incentives offered to customers. Cost of sales includes cost to manufacture and/or purchase products, warehouse, shipping and delivery costs, royalty expense and other costs.

Revenue Recognition  Revenue is recognized when products are shipped and title and risk of loss have passed to the customer. Revenue is recorded net of returns, discounts and incentives offered to customers. We estimate returns, discounts and incentives at the time of sale based on the terms of the agreements, historical experience and forecasted sales. We continually evaluate the adequacy of these methods used to estimate returns, discounts and incentives.

Cash and cash equivalents  The Company considers all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with various financial institutions.

Accounts Receivable and Allowance for Doubtful Accounts  We record trade receivables when revenue is recorded in accordance with our revenue recognition policy and relieve accounts receivable when payments are received from customers. The allowance for doubtful accounts is established through charges to the provision for bad debts. We regularly evaluate the adequacy of the allowance for doubtful accounts based on historical trends in collections and write-offs, our judgment as to the probability of collecting accounts and our evaluation of business risk. This evaluation is inherently subjective, as it requires estimates that are susceptible to revision as more information becomes available. Accounts are determined to be uncollectible when the debt is deemed to be worthless or only recoverable in part and are written off at that time through a charge against the allowance.

55

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Inventory Valuation  Inventories are valued at the lower of cost or market. The last-in, first-out (LIFO) method was used for 34.5 percent and 40.7 percent of our inventories in 2008 and 2007, respectively. The remaining inventories are valued using either the first-in, first-out (FIFO) or average cost method. For those inventories valued on the LIFO method, the excess of FIFO, or weighted average cost over LIFO, was $18.3 million and $17.4 million for 2008 and 2007, respectively.

Purchased Intangible Assets and Goodwill  Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142), requires goodwill and purchased indefinite life intangible assets to be reviewed for impairment annually, or more frequently if impairment indicators arise. Intangible assets with lives restricted by contractual, legal or other means will continue to be amortized over their useful lives. As of October 1st of each year, we update our separate impairment evaluations for both goodwill and indefinite life intangible assets. In 2008 and 2007, our October 1st assessment did not indicate any impairment of goodwill or indefinite life intangibles. However, in the fourth quarter of 2008, we identified certain indicators of impairment and we updated our review as of December 31st. Our December 31st assessment resulted in an impairment of goodwill and purchased intangible assets of $11.9 million in our International segment and $0.3 million related to our Syracuse China subsidiary. For further disclosure on goodwill and intangibles, see note 6.

Software  We account for software in accordance with Statement of Position (SOP) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” Software represents the costs of internally developed and purchased software packages for internal use. Capitalized costs include software packages, installation and/or internal labor costs. These costs generally are amortized over a five-year period.

Property, Plant and Equipment  Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 3 to 14 years for equipment and furnishings and 10 to 40 years for buildings and improvements. Maintenance and repairs are expensed as incurred.

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Measurement of an impairment loss for long-lived assets that we expect to hold and use is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Due to the announcement of our closure of our Syracuse China manufacturing facility and our Mira Loma distribution center, we wrote down the values of certain assets to fair value. See note 9 for further disclosure.

Self-Insurance Reserves  Self-Insurance reserves reflect the estimated liability for group health and workers’ compensation claims not covered by third-party insurance. We accrue estimated losses based on actuarial models and assumptions as well as our historical loss experience. Workers’ compensation accruals are recorded at the estimated ultimate payout amounts based on individual case estimates. In addition, we record estimates of incurred-but-not-reported losses based on actuarial models.

Pension and Nonpension Postretirement Benefits  Effective January 1, 2006, we adopted SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132 R (effective December 31, 2006). SFAS 158 requires recognition of the over-funded or under-funded status of pension and other postretirement benefit plans on the balance sheet. Under SFAS 158, gains and losses, prior service costs and credits and any remaining prior transaction amounts under SFAS 87 and SFAS 106 that have not yet been recognized through net periodic benefit cost are recognized in accumulated other comprehensive income, net of tax effect where appropriate.

The U.S. pension plans cover our hourly employees and those salaried U.S.-based employees hired before January 1, 2006. The non-U.S. pension plans cover the employees of our wholly-owned subsidiaries Royal Leerdam, located in the Netherlands, and Crisa, located in Mexico, and our active Canadian employees. For further discussion see note 11.

56

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

We also provide certain postretirement health care and life insurance benefits covering substantially all U.S. and Canadian salaried employees hired before January 1, 2004. Employees are generally eligible for benefits upon reaching a certain age and completion of a specified number of years of creditable service. Benefits for most hourly retirees are determined by collective bargaining. Under a cross-indemnity agreement, Owens-Illinois, Inc. assumed liability for the nonpension postretirement benefit of our retirees who had retired as of June 24, 1993. Therefore, the benefits related to these retirees are not included in our liability.

Income Taxes  Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax attribute carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. FAS No. 109, “Accounting for Income Taxes,” requires that a valuation allowance be recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized.

Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in which the Company conducts its operations or otherwise incurs taxable income or losses. In the United States, the Company has recorded a full valuation allowance against its deferred income tax assets. In addition, valuation allowances have been recorded in the Netherlands, Portugal, Mexico and China.

Effective January 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes by establishing minimum standards for the recognition and measurement of tax positions taken or expected to be taken in a tax return. Under the requirements of FIN 48, we must review all of our tax positions and make a determination as to whether our position is more likely than not to be sustained upon examination by taxing authorities. If a tax position meets the more likely than not standard, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more likely than not to be realized upon ultimate settlement or disposition of the underlying issue. See note 10 for further disclosure.

Derivatives  We account for derivatives in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS Nos. 137 and 138. We hold derivative financial instruments to hedge certain of our interest rate risks associated with long-term debt, commodity price risks associated with forecasted future natural gas requirements and foreign exchange rate risks associated with occasional transactions denominated in a currency other than the U.S. dollar. These derivatives (except for all natural gas contracts entered into by Crisa before our June 16, 2006 acquisition of the remaining 51 percent of Crisa, the foreign currency contracts and some natural gas contracts at Syracuse China) qualify for hedge accounting since the hedges are highly effective, and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. While we intend to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in earnings. See additional discussion at note 15.

Foreign Currency Translation  Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive income. Income and expense accounts are translated at average exchange rates during the year. The effect of exchange rate changes on transactions denominated in currencies other than the functional currency is recorded in other income (expense).

Stock-Based Compensation Expense  Effective January 1, 2006, we adopted SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123-R) “Accounting for Stock-Based Compensation” (SFAS No. 123), which requires share-based compensation transactions to be accounted for using a fair-value-based method and the resulting cost recognized in our financial statements. Share-based compensation cost is measured based on the fair value of the

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Notes to Consolidated Financial Statements — (Continued)

equity instruments issued. SFAS No. 123-R applies to all of our outstanding unvested share-based payment awards as of January 1, 2006, and all prospective awards using the modified prospective transition method without restatement of prior periods. The impact of applying the provisions of SFAS No. 123-R was a pre-tax charge of $3.5 million, $3.4 million and $1.3 million, respectively for 2008, 2007 and 2006. See note 14 for additional information.

Research and Development  Research and development costs are charged to the Consolidated Statements of Operations when incurred. Expenses for 2008, 2007 and 2006, respectively, were $1.7 million, $1.5 million and $2.3 million.

Advertising Costs  We expense all advertising costs as incurred, and the amounts were immaterial for all periods presented.

Computation of Income Per Share of Common Stock  Basic net income per share of common stock is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per share of common stock is computed using the weighted average number of shares of common stock outstanding and dilutive potential common share equivalents during the period.

Treasury Stock  Treasury stock purchases are recorded at cost. During 2008, 2007 and 2006, we did not purchase any treasury stock. During 2008, 2007, and 2006, we issued 165,588, 225,101 and 323,546 shares from treasury stock at an average cost of $26.39, $28.68, and $31.15 respectively.

Reclassifications  Certain amounts in prior years’ financial statements have been reclassified to conform to the presentation used in the year ended December 31, 2008.

New Accounting Standards  In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”).  SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosure about fair value measurements. This statement clarifies how to measure fair value as permitted under other accounting pronouncements but does not require any new fair value measurements. In February 2008, the FASB issued FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157,” (“FSP157-2”) which delays until January 1, 2009 the effective date of SFAS 157 for nonfinancial assets and liabilities, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis. In October 2008, the FASB issued FASB Staff Position 157-3, “Determining the Fair Value of a Financial Asset when the Market for That Asset is Not Active” (“FSP 157-3”), which clarifies the application of SFAS 157 as it relates to the valuation of financial assets in a market that is not active for those financial assets. FSP 157-3 was effective upon issuance. We adopted SFAS 157 as of January 1, 2008, but have not applied it to non-recurring, nonfinancial assets and liabilities. The adoption of SFAS 157 and its related FSP’s (FSP 157-2 and FSP 157-3) had no impact on our consolidated results of operations and financial condition. We will be required to adopt SFAS 157 for nonfinancial assets and liabilities effective beginning on January 1, 2009. We do not believe adoption of SFAS 157 for financial assets and liabilities will have a material impact on our consolidated financial statements. See note 17 of the Consolidated Financial Statements for additional information.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option of Financial Assets and Financial Liabilities — Including an Amendment of SFAS No. 115” (“SFAS 159”), which is effective for fiscal years beginning after November 15, 2007. This statement permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. We adopted SFAS 159 as of January 1, 2008. The adoption of SFAS 159 had no impact on our consolidated results of operations and financial condition, as we did not elect to apply the provisions of SFAS 159 to any financial instruments as of January 1, 2008.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”), which changes how business combinations are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. SFAS 141R is effective January 1, 2009 for Libbey and will be applied prospectively. The impact of adopting SFAS 141R will depend on the nature and terms of future acquisitions.

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Notes to Consolidated Financial Statements — (Continued)

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”), which changes the accounting and reporting standards for the noncontrolling interests in a subsidiary in consolidated financial statements. SFAS 160 recharacterizes minority interests as noncontrolling interests and requires noncontrolling interests to be classified as a component of shareholders equity. SFAS 160 is effective January 1, 2009 for Libbey, and requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. We do not believe adoption of SFAS 160 will have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”), which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS 161 is effective for Libbey beginning January 1, 2009. We are currently evaluating the potential impact, if any, of adoption of SFAS 161 on our consolidated financial statements.

In April 2008, the FASB issued Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” FSP 142-3 is effective beginning on January 1, 2009. We are currently evaluating the potential impact, if any, of the adoption of FSP 142-3 on our consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”), which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements. The implementation of this standard will not have a material impact on our consolidated financial statements.

In June 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. It also clarifies the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of EITF 07-5, if any, of the adoption of EITF 07-5 on our consolidated financial statements.

In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP 03-6-1”). FSP 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of SFAS No. 128, “Earnings per Share.” FSP 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, with all prior period EPS data being adjusted retrospectively. Early adoption is not permitted. We are currently evaluating the potential impact, if any, of the adoption of FSP 03-6-1 on our consolidated financial statements.

In December 2008, the FASB issued FASB Staff Position 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP 132(R)-1”). FSP 132(R)-1 amends FASB Statement No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. FSP 132(R)-1 is effective for financial statements issued for fiscal years ending after December 15, 2009. We are currently evaluating the potential impact of the adoption of FSP 132(R)-1, and it is likely that the adoption of this guidance will increase the disclosures in the financial statements related to the assets of our pension and other postretirement benefit plans.

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Notes to Consolidated Financial Statements — (Continued)

3.   Balance Sheet Details

The following tables provide detail of selected balance sheet items:

	December 31,
	2008		2007
Accounts receivable:
Trade receivables	$	74,393	$	91,435
Other receivables		1,679		1,898
Total accounts receivable, less allowances of $10,479 and $11,711	$	76,072	$	93,333
Inventories:
Finished goods	$	163,817	$	170,386
Work in process		2,805		4,052
Raw materials		5,748		5,668
Repair parts		10,271		11,137
Operating supplies		2,601		2,836
Total inventories, less allowances of $6,582 and $6,435	$	185,242	$	194,079
Prepaid and other current assets:
Prepaid expenses	$	14,865	$	13,551
Derivative asset		—		359
Refundable and prepaid income taxes		2,302		6,521
Total prepaid and other current assets	$	17,167	$	20,431
Other assets:
Deposits	$	43	$	596
Finance fees — net of amortization		8,183		11,194
Other		1,749		1,323
Total other assets	$	9,975	$	13,113
Accrued liabilities:
Accrued incentives	$	12,760	$	14,236
Workers compensation		9,384		9,485
Medical liabilities		2,736		2,450
Interest		4,575		5,218
Commissions payable		1,135		1,381
Accrued liabilities		9,085		8,645
Total accrued liabilities	$	39,675	$	41,415
Other long-term liabilities:
Derivative liability	$	3,693	$	5,249
Deferred liability		1,566		1,254
Other		6,952		10,843
Total other long-term liabilities	$	12,211	$	17,346

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

4.   Acquisitions

Crisa

On June 16, 2006, we purchased from Vitro, S.A. de C.V. the remaining 51 percent of the shares of Vitrocrisa Holding, S. de R.L. de C.V. and related companies (Crisa), located in Monterrey, Mexico, that we did not previously own. The purchase price was $80.0 million in addition to $4.9 million of acquisition costs. In addition, we refinanced approximately $71.9 million of Crisa’s existing indebtedness, $23.0 million of which we guaranteed prior to our purchase of the remaining 51 percent of the shares of Crisa. In connection with the acquisition, Crisa transferred to Vitro the pension liability for Crisa employees who had retired as of the closing date. Vitro also agreed to forgive $0.4 million of net intercompany payables owed to it and to defer receipt of approximately $9.4 million of net intercompany payables until August 15, 2006, and approximately $19.6 million of net intercompany payables until January 15, 2008. In addition, Vitro waived its right to receive profit sharing payments of approximately $1.3 million from Libbey under the now-terminated distribution agreement. Crisa transferred to Vitro real estate (land and buildings) on which one of Crisa’s two manufacturing facilities is located, but Crisa retained the right to occupy the facility transferred to Vitro for up to three years. Concurrently, Vitro transferred to Crisa ownership of the land on which a leased, state-of-the-art distribution center is located, along with racks and conveyors that Crisa leased from an affiliate of Vitro. Also, Vitro agreed not to compete with Crisa anywhere in the world (with limited exceptions) for five years.

Crisa is the largest glass tableware manufacturers in Latin America and has a significant percentage of the glass tableware market in Mexico. This acquisition is consistent with our strategy to expand our manufacturing platform into low-cost countries in order to become a more cost-competitive source of high-quality glass tableware.

In establishing the opening balance sheet under step acquisition accounting, we recorded 49 percent of the historical book value of the assets acquired and liabilities assumed of Crisa due to our existing 49 percent ownership of Crisa, and 51 percent of the fair values of the assets acquired and liabilities assumed as of the date of acquisition. The following is a summary of 51 percent of the assigned fair values of the assets acquired and liabilities assumed as of the date of acquisition.

Current assets and other assets	$	40,639
Property, plant and equipment		37,190
Intangible assets		21,675
Goodwill		56,115
Total assets acquired		155,619
Less liabilities assumed:
Current liabilities		42,181
Long-term liabilities		28,547
Total liabilities assumed		70,728
Cash purchase price, including acquisition costs		84,891
Less: Cash acquired		6,429
Cash purchase price, net of cash acquired	$	78,462

The purchase price allocation for the Crisa acquisition was finalized in the second quarter of 2007. The primary changes relate to the initial restructuring cost estimates and estimated tax receivables. The impact of these items did not materially change the initial purchase price allocation from December 31, 2006.

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Notes to Consolidated Financial Statements — (Continued)

The following table is a summary of the goodwill associated with the excess of the purchase price over the fair value of assets acquired and liabilities assumed as a result of the purchase price allocation. This table provides the details for 100 percent of the goodwill created by the purchase of the remaining 51 percent interest in Crisa, which is included in the North American Glass reporting segment:

Inferred Enterprise purchase price ($80.0 million divided by 51)%	$	156,863
Less: assets received/liabilities forgiven		(4,457	)
Add: acquisition costs		4,891
Add: adjustment to reflect 49% of inferred purchase price to actual		1,855
Aggregate enterprise purchase price		159,152
Add: fair value liabilities assumed		156,256
Less: fair value assets acquired		(189,946	)
Total enterprise goodwill	$	125,462

Intangible assets acquired of approximately $21.7 million consist of trademarks and trade names, patented technologies, customer lists and non-compete covenants. The patented technologies, customer lists and non-compete covenants are being amortized over an average life of 7.7 years. Amortization of these intangible assets was $1.1 million, $1.1 million, and $0.6 million for 2008, 2007 and 2006, respectively. Trademarks and trade names are valued at approximately $8.9 million and are not subject to amortization.

Crisa’s results of operations are included in our Consolidated Financial Statements starting June 16, 2006. Prior to June 16, 2006, 49 percent of Crisa’s earnings were accounted for under the equity method.

The pro forma unaudited results of operations, assuming we consummated the acquisition of Crisa as of January 1, 2006, are as follows:

	2006
Net sales	$	763,553
Earnings before interest and taxes	$	29,791
Net loss	$	(15,258	)
Net loss per share:
Basic	$	(1.08	)
Diluted	$	(1.08	)
Depreciation and amortization	$	41,806

In June 2006, we announced plans to consolidate Crisa’s two principal manufacturing facilities into a single facility in order to reduce fixed costs (“Project Tiger”). In connection with this consolidation, we recognized special charges of approximately $18.9 million in 2006, representing our existing 49 percent indirect ownership interest in the fixed assets related to the facility closed and the inventory related to product lines discontinued. For the additional 51 percent ownership interest acquired, the write down of the fixed assets and inventory was included in the purchase price allocation. These special charges are described in note 9. In addition, a $3.2 million reserve related to statutory severance for approximately 650 hourly employees of Crisa was recognized as additional acquisition cost in accordance with Emerging Issues Task Force No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” We substantially completed the consolidation in 2007.

5.   Investments in Unconsolidated Affiliates

Prior to June 16, 2006, we were a 49 percent equity owner in Crisa. On June 16, 2006, we purchased the remaining 51 percent of Crisa. See note 4 for additional information. We recorded our 49 percent interest in Crisa using the equity method for the periods prior to June 15, 2006.

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Notes to Consolidated Financial Statements — (Continued)

A condensed statement of operations for Crisa (including adjustments for U.S. GAAP equity method accounting) for the period ended June 15, 2006 follows:

Period Ended June 15,	2006
Total revenues	$	87,520
Cost of sales		71,204
Gross profit		16,316
Selling, general and administrative expenses		10,993
Income from operations		5,323
Remeasurement gain		2,934
Other expense		(103	)
Earnings before interest and taxes		8,154
Interest expense		4,099
Income before income taxes		4,055
Income taxes		1,006
Net income	$	3,049

For periods prior to June 16, 2006, we recorded 49 percent of Crisa’s income before income taxes in the line “equity earnings-pretax” in our Consolidated Statements of Operations. We recorded 49 percent of Crisa’s income taxes in the line “provision (benefit) for income taxes” in our Consolidated Statements of Operations. These items are shown below:

Period Ended June 15,	2006
Equity earnings — pretax	$	1,986
Provision for income taxes		493
Net equity earnings	$	1,493

On our Consolidated Statements of Cash Flows, we recorded the net equity earnings (loss) amount as a component of operating activities.

Interpretation No. 46 “Consolidation of Variable Interest Entities” (FIN 46R), requires a company that holds a variable interest in an entity to consolidate the entity if the company’s interest in the variable interest entity (VIE) is such that the company will absorb a majority of the VIE’s expected losses and/or receive a majority of the VIE’s expected residual returns, and therefore is the primary beneficiary. Our 49 percent equity ownership in Crisa began in 1997. We determined that, prior to our acquisition of the remaining 51 percent of Crisa on June 16, 2006, Crisa was a VIE. Our analysis was based upon our agreements with the former joint venture, specifically, our 49 percent participation in equity earnings, dividends, certain contractual technical assistance arrangements, and a distribution agreement giving us exclusive distribution rights to sell Crisa’s glass tableware products in the U.S. and Canada, and giving Crisa the exclusive distribution rights for our glass tableware products in Latin America. In addition, we guaranteed a portion of Crisa’s bank debt. We evaluated this investment and related arrangements, and we determined that we were not the primary beneficiary and should not consolidate Crisa into our Consolidated Financial Statements for any period prior to June 16, 2006.

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Notes to Consolidated Financial Statements — (Continued)

6.   Purchased Intangible Assets and Goodwill

Purchased Intangibles

Changes in purchased intangibles balances are as follows:

	2008			2007
Beginning balance	$	30,731		$	31,492
Impairment		(2,756	)		—
Amortization		(1,344	)		(1,650	)
Foreign currency impact		(510	)		889
Ending balance	$	26,121		$	30,731

Purchased intangible assets are composed of the following:

December 31,	2008		2007
Indefinite life intangible assets	$	13,056	$	16,143
Definite life intangible assets, net of accumulated amortization of $11,971 and $10,447		13,065		14,588
Total	$	26,121	$	30,731

Amortization expense for definite life intangible assets was $1.3 million, $1.7 million and $1.8 million for years 2008, 2007 and 2006, respectively.

Indefinite life intangible assets are composed of trade names and trademarks that have an indefinite life and are therefore individually tested for impairment on an annual basis, or more frequently in certain circumstances where impairment indicators arise, in accordance with SFAS No. 142. Our measurement date for impairment testing is October 1st of each year. When performing our test for impairment of individual indefinite life intangible assets, we use a relief from royalty method to determine the fair market value that is compared to the carrying value of the indefinite life intangible asset. Our October 1st review for 2008 and 2007 did not indicate impairment of our indefinite life intangible assets. As of December 31, 2008, we performed another impairment test as the severe global economic downturn represented a significant adverse condition in our business environment, which was an indicator of impairment. As a result of this analysis, we concluded that intangibles of $2.5 million associated with our International segment were impaired. We also announced in December, 2008 that our Syracuse China manufacturing facility will be shut down by early April, 2009. This was an indicator of impairment for the Syracuse China reporting unit (part of our North American Other segment), and, based on our analysis, we concluded that intangibles of $0.3 million were impaired. These impairment charges were included in Special charges on the Consolidated Statement of Operations.

The definite life intangible assets primarily consist of technical assistance agreements, noncompete agreements, customer relationships and patents. The definite life assets are generally amortized over a period ranging from 3 to 20 years. The weighted average remaining life on the definite life intangible assets is 9.7 years at December 31, 2008.

Future estimated amortization expense of definite life intangible assets is as follows:

2009	2010	2011	2012	2013
$1,353	$1,353	$1,214	$1,098	$1,098

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Goodwill

Changes in goodwill balances are as follows:

	2008											2007
	North			North								North		North
	American			American								American		American
	Glass			Other		International			Total			Glass		Other		International			Total
Beginning balance	$	153,239		$	14,317	$	9,804		$	177,360		$	151,120	$	14,317	$	9,443		$	174,880
Impairment		—			—		(9,434	)		(9,434	)		—		—		—			—
Other		(820	)		—		—			(820	)		2,119		—		(731	)		1,388
Foreign currency impact		—			—		(370	)		(370	)		—		—		1,092			1,092
Ending balance	$	152,419		$	14,317	$	—		$	166,736		$	153,239	$	14,317	$	9,804		$	177,360

Other, in the table above, relates to adjustments to the fair value of assets acquired and liabilities assumed and to income tax adjustments affecting the fair value of assets acquired and liabilities assumed related to the Crisa acquisition, and adjustments to the fair value of assets acquired and liabilities assumed related to the Royal Leerdam acquisition.

Goodwill impairment tests are completed for each reporting unit on an annual basis, or more frequently in certain circumstances where impairment indicators arise. When performing our test for impairment, we use the discounted cash flow method, which incorporates the weighted average cost of capital of a hypothetical third party buyer to compute the fair value of each reporting unit. The fair value is then compared to the carrying value. To the extent that fair value exceeds the carrying value, no impairment exists. However, to the extent the carrying value exceeds the fair value, we compare the implied fair value of goodwill to its book value to determine if an impairment should be recorded. Our annual review was performed as of October 1st for each year presented, and our review for 2008 and 2007 did not indicate an impairment of goodwill. However, the severe global economic downturn during the later part of the fourth quarter of 2008 represented a significant adverse change in our business environment, which was considered an indicator of impairment. An updated goodwill impairment analysis was performed as of December 31, 2008. As a result of this analysis, goodwill impairment of $9.4 million was recorded in our International operations, and was included in Impairment of goodwill on the Consolidated Statement of Operations.

7.   Property, Plant and Equipment

Property, plant and equipment consists of the following:

December 31,	2008		2007
Land	$	23,744	$	23,859
Buildings		82,496		81,010
Machinery and equipment		417,544		410,183
Furniture and fixtures		14,296		13,735
Software		21,241		21,381
Construction in progress		20,763		14,783
Gross property, plant and equipment		580,084		564,951
Less accumulated depreciation		262,498		235,174
Net property, plant and equipment	$	317,586	$	329,777

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 3 to 14 years for equipment and 10 to 40 years for buildings and improvements. Software consists of internally developed and purchased software

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

packages for internal use. Capitalized costs include software packages, installation, and/or certain internal labor costs. These costs are generally amortized over a five-year period. Depreciation expense was $42.9 million, $39.9 million and $33.8 million for the years 2008, 2007, and 2006, respectively.

During 2008, we recorded $9.7 million of reductions in the carrying value of our long-lived assets in accordance with SFAS No. 144. This charge was included in Special charges on the Consolidated Statement of Operations. Under SFAS No. 144, long-lived assets are tested for recoverability if certain events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable. The announcement of the closure of the Syracuse China reporting unit indicated that the carrying value of our long-lived assets may not be recoverable and we performed an impairment review. We then recorded impairment charges for property, plant and equipment to the extent the amounts by which the carrying amounts of these assets exceeded their fair values. Fair value was determined by appraisals. See note 9 for further discussion of these and other special charges.

In addition, we wrote off certain fixed assets within our North American Glass reporting segment that had become idled and were no longer being used in our production process. A non-cash charge of $4.5 million was recorded in cost of sales on the Consolidated Statement of Operations. See note 9 for further discussion of these special charges.

8.   Borrowings

On June 16, 2006, Libbey Glass Inc. issued $306.0 million aggregate principal amount of floating rate senior secured notes (Senior Notes) due June 1, 2011, and $102.0 million aggregate principal amount of senior subordinated secured pay-in-kind notes (PIK Notes), due December 1, 2011. Concurrently, Libbey Glass Inc. entered into a new $150 million Asset Based Loan facility (ABL Facility) expiring December 16, 2010.

Historically, cash flows generated from operations and our borrowing capacity under our ABL facility have allowed us to meet our cash requirements, including capital expenditures and working capital needs. Remaining unused availability on the ABL Facility was $44.6 million at December 31, 2008 and $89.7 million at December 31, 2007. However, we were greatly impacted by recessionary pressures in 2008, especially during the fourth quarter of the year, and we anticipate that the global economic recession will continue throughout 2009 and perhaps beyond. In addition, interest on our PIK Notes will be payable in cash beginning December 1, 2009. Although we have taken a number of steps to enhance our liquidity in 2008 and to date in 2009 (including those announced in February, 2009), if cash generated from operations is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or arrange additional debt financing. Global financial markets and economic conditions have been, and continue to be, disrupted and volatile. The credit and capital markets have become exceedingly distressed. These issues, along with significant write-offs in the financial services sector, the re-pricing of credit risk and the current weak economic conditions, have made it difficult, and will likely continue to make it difficult, to obtain funding in future periods. If cash from operations and cash available from our ABL Facility are not sufficient to meet our needs, we cannot assure you that we will be able to obtain additional financing in sufficient amounts and/or on acceptable terms in the near future or when our debt obligations reach maturity. Our ABL Facility expires in December 2010, the Senior Notes expire in June 2011, and the PIK notes expire in December 2011. Furthermore, because of the current price of our stock, we cannot anticipate that it would be desirable to sell additional equity, even if we were able to do so. However, based upon our operating plans and current forecast expectations including that the global economy does not deteriorate further, we anticipate that we will generate positive cash flow from operations and, if necessary, have sufficient cash availability from our ABL Facility to meet our liquidity needs for at least one year beyond December 31, 2008.

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Notes to Consolidated Financial Statements — (Continued)

Borrowings consist of the following:

	Interest				December 31,		December 31,
	Rate			Maturity Date	2008		2007
Borrowings under ABL facility		Floating		December 16, 2010	$	34,538	$	7,366
Senior notes		Floating(1	)	June 1, 2011		306,000		306,000
PIK notes(2)		16.00	%	December 1, 2011		148,946		127,697
Promissory note		6.00	%	January 2009 to September 2016		1,666		1,830
Notes payable		Floating		January 2009		3,284		622
RMB loan contract		Floating		July 2012 to January 2014		36,675		34,275
RMB working capital loan		Floating		March 2010		7,335		6,855
Obligations under capital leases		Floating		January 2009 to May 2009		302		1,018
BES Euro line		Floating		January 2010 to January 2014		15,507		15,962
Other debt		Floating		September 2009		630		1,432
Total borrowings						554,883		503,057
Less — unamortized discounts and warrants						4,626		6,423
Total borrowings — net						550,257		496,634
Less — current portion of borrowings						4,401		1,535
Total long-term portion of borrowings — net					$	545,856	$	495,099

(1)	See Interest Rate Protection Agreements below.
(2)	Additional PIK notes were issued each June 1 and December 1, commencing on December 1, 2006, to pay the semi-annual interest. During the first three years, interest is payable by the issuance of additional PIK notes.

Annual maturities for all of our total borrowings for the next five years and beyond are as follows:

2009	2010	2011	2012	2013	Thereafter
$4,401	$43,638	$457,411	$13,590	$21,765	$14,078

ABL Facility

The ABL Facility is with a group of six banks and provides for a revolving credit and swing line facility permitting borrowings for Libbey Glass and Libbey Europe up to an aggregate of $150.0 million, with Libbey Europe’s borrowings being limited to $75.0 million. Borrowings under the ABL Facility mature December 16, 2010. Swing line borrowings are limited to $15.0 million, with swing line borrowings for Libbey Europe being limited to €7.5 million. Loans comprising each CBFR (CB Floating Rate) Borrowing, including each Swingline Loan, bear interest at the CB Floating Rate plus the Applicable Rate, and euro-denominated swing line borrowings (Eurocurrency Loans) bear interest calculated at the Netherlands swing line rate, as defined in the ABL Facility. The Applicable Rates for CBFR Loans and Eurocurrency Loans vary depending on our aggregate remaining availability. The Applicable Rates for CBFR Loans and Eurocurrency Loans were 0.0 percent and 1.75 percent, respectively, at December 31, 2008. There were no Libbey Glass borrowings under the facility at December 31, 2008 and December 31, 2007, while Libbey Europe had outstanding borrowings of $34.5 million and $7.4 million at December 31, 2008 and December 31, 2007, respectively. The interest rate was 5.02 percent and 6.63 percent at

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

December 31, 2008 and December 31, 2007, respectively. Interest is payable on the last day of the interest period, which can range from one month to six months.

All borrowings under the ABL Facility are secured by a first priority security interest in (i) substantially all assets of (a) Libbey Glass and (b) substantially all of Libbey Glass’s present and future direct and indirect domestic subsidiaries, (ii) (a) 100 percent of the stock of Libbey Glass, (b) 100 percent of the stock of substantially all of Libbey Glass’s present and future direct and indirect domestic subsidiaries, (c) 100 percent of the non-voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries and (d) 65 percent of the voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries, and (iii) substantially all proceeds and products of the property and assets described in clauses (i) and (ii) of this sentence. Additionally, borrowings by Libbey Europe under the ABL Facility are secured by a first priority security interest in (i) substantially all of the assets of Libbey Europe, the parent of Libbey Europe and certain of its subsidiaries, (ii) 100 percent of the stock of Libbey Europe and certain subsidiaries of Libbey Europe, and (iii) substantially all proceeds and products of the property and assets described in clauses (i) and (ii) of this sentence.

We pay a Commitment Fee, as defined by the ABL Facility, on the total credit provided under the Facility. The Commitment Fee varies depending on our aggregate availability. The Commitment Fee was 0.25 percent at December 31, 2008. No compensating balances are required by the Agreement. The Agreement does not require compliance with a fixed charge coverage ratio covenant, unless aggregate unused availability falls below $15.0 million. If our aggregate unused ABL availability falls below $15.0 million, the fixed charge coverage ratio requirement would be 1:10 to 1:00. The fixed charge coverage ratio is defined as earnings before interest, taxes, depreciation, amortization and minority interest (EBITDA) minus capital expenditures to fixed charges (EBITDA minus capital expenditures / fixed charges). Among the items included in the calculation of fixed charges are: cash interest expense, scheduled principal payments on outstanding debt and capital lease obligations, taxes paid in cash, dividends paid in cash and required cash contributions to our pension plans in excess of expense.

The borrowing base under the ABL Facility is determined by a monthly analysis of the eligible accounts receivable, inventory and fixed assets. The borrowing base is the sum of (a) 85 percent of eligible accounts receivable, (b) the lesser of (i) 85 percent of the net orderly liquidation value (NOLV) of eligible inventory, (ii) 65 percent of eligible inventory, or (iii) $75.0 million and (c) the lesser of $25.0 million and the aggregate of (i) 75 percent of the NOLV of eligible equipment and (ii) 50 percent of the fair market value of eligible real property.

The available total borrowing base is offset by real estate and ERISA reserves totaling $9.2 million and mark-to-market reserves for natural gas and interest rate swaps of $15.2 million. The ABL Facility also provides for the issuance of $30.0 million of letters of credit, which are applied against the $150.0 million limit. At December 31, 2008, we had $8.4 million in letters of credit outstanding under the ABL Facility. Remaining unused availability on the ABL Facility was $44.6 million at December 31, 2008 and $89.7 million at December 31, 2007.

Senior Notes

Libbey Glass and Libbey Inc. entered into a purchase agreement pursuant to which Libbey Glass agreed to sell $306.0 million aggregate principal amount of floating rate senior secured notes due 2011 to the initial purchasers named in a private placement. The net proceeds, after deducting a discount and the estimated expenses and fees, were approximately $289.8 million. On February 15, 2007, we exchanged $306.0 million aggregate principal amount of our floating rate senior secured notes due 2011, which have been registered under the Securities Act of 1933, as amended (Senior Notes), for the notes sold in the private placement. The Senior Notes bear interest at a rate equal to six-month LIBOR plus 7.0 percent and were offered at a discount of 2 percent of face value. Interest with respect to the Senior Notes is payable semiannually on June 1 and December 1. The stated interest rate was 9.57 percent at December 31, 2008.

We have Interest Rate Protection Agreements (Rate Agreements) with respect to $200.0 million of debt as a means to manage our exposure to fluctuating interest rates. The Rate Agreements effectively convert this portion of

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

our long-term borrowings from variable rate debt to fixed-rate debt, thus reducing the impact of interest rate changes on future income. The fixed interest rate for our borrowings related to the Rate Agreements at December 31, 2008, excluding applicable fees, is 5.24 percent per year and the total interest rate, including applicable fees, is 12.24 percent per year. The average maturity of these Rate Agreements is 0.9 years at December 31, 2008. Total remaining Senior Notes not covered by the Rate Agreements have fluctuating interest rates with a weighted average rate of 9.57 percent per year at December 31, 2008. If the counterparties to these Rate Agreements were to fail to perform, these Rate Agreements would no longer protect us from interest rate fluctuations. However, we do not anticipate nonperformance by the counterparties. All interest rate swap counterparties’ credit ratings were rated AA- or better as of December 2008, by Standard and Poors.

The fair market value for the Rate Agreements at December 31, 2008, was a $6.8 million liability. The fair value of the Rate Agreements is based on the market standard methodology of netting the discounted expected future variable cash receipts and the discounted future fixed cash payments. The variable cash receipts are based on an expectation of future interest rates derived from observed market interest rate forward curves. We do not expect to cancel these agreements and expect them to expire as originally contracted.

The Senior Notes are guaranteed by Libbey Inc. and all of Libbey Glass’s existing and future domestic subsidiaries that guarantee any of Libbey Glass’s debt or debt of any subsidiary guarantor (see Note 21). The Senior Notes and related guarantees have the benefit of a second-priority lien, subject to permitted liens, on collateral consisting of substantially all the tangible and intangible assets of Libbey Glass and its domestic subsidiary guarantors that secure all of the indebtedness under Libbey Glass’s ABL Facility. The Collateral does not include the assets of non-guarantor subsidiaries that secure the ABL Facility.

PIK Notes

Concurrently with the execution of the purchase agreement with respect to the Senior Notes, Libbey Glass and Libbey Inc. entered into a purchase agreement (Unit Purchase Agreement) pursuant to which Libbey Glass agreed to sell, to a purchaser named in the private placement, units consisting of $102.0 million aggregate principal amount 16.0 percent senior subordinated secured pay-in-kind notes due 2011 (PIK Notes) and detachable warrants to purchase 485,309 shares of Libbey Inc. common stock (Warrants) exercisable on or after June 16, 2006 and expiring on December 1, 2011. The warrant holders do not have voting rights. The net proceeds, after deducting a discount and estimated expenses and fees, were approximately $97.0 million. The proceeds were allocated between the Warrants and the underlying debt based on their respective fair values at the time of issuance. The amount allocated to the Warrants has been recorded in equity, with the offset recorded as a discount on the underlying debt. Each Warrant is exercisable at $11.25. The PIK Notes were offered at a discount of 2 percent of face value. Interest is payable semiannually on June 1 and December 1, but during the first three years interest is payable by issuance of additional PIK Notes. Interest on PIK notes is payable in cash beginning on December 1, 2009. At December 31, 2008, the total principal balance of the PIK Notes, including additional PIK Notes issued as payment for interest, was $148.9 million.

The obligations of Libbey Glass under the PIK Notes are guaranteed by Libbey Inc. and all of Libbey Glass’s existing and future domestic subsidiaries that guarantee any of Libbey Glass’s debt or debt of any subsidiary guarantor (see Note 21). The PIK Notes and related guarantees are senior subordinated obligations of Libbey Glass and the guarantors of the PIK Notes and are entitled to the benefit of a third-priority lien, subject to permitted liens, on the collateral that secures the Senior Notes.

Promissory Note

In September 2001, we issued a $2.7 million promissory note in connection with the purchase of our Laredo, Texas warehouse facility. At December 31, 2008, and December 31, 2007, we had $1.7 million and $1.8 million, respectively, outstanding on the promissory note. Interest with respect to the promissory note is paid monthly.

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Notes Payable

We have an overdraft line of credit for a maximum of €2.3 million. The $3.3 million outstanding at December 31, 2008, was the U.S. dollar equivalent under the euro-based overdraft line and the interest rate was 5.58 percent. Interest with respect to the note payable is paid monthly.

RMB Loan Contract

On January 23, 2006, Libbey Glassware (China) Co., Ltd. (Libbey China), an indirect wholly owned subsidiary of Libbey Inc., entered into an RMB Loan Contract (RMB Loan Contract) with China Construction Bank Corporation Langfang Economic Development Area Sub-Branch (CCB). Pursuant to the RMB Loan Contract, CCB agreed to lend to Libbey China RMB 250.0 million, or the equivalent of approximately $36.7 million, for the construction of our production facility in China and the purchase of related equipment, materials and services. The loan has a term of eight years and bears interest at a variable rate as announced by the People’s Bank of China. As of the date of the initial advance under the Loan Contract, the annual interest rate was 5.51 percent, and as of December 31, 2008, the annual interest rate was 7.01 percent. As of December 31, 2008, the outstanding balance was RMB 250.0 million (approximately $36.7 million). Interest is payable quarterly. Payments of principal in the amount of RMB 30.0 million (approximately $4.4 million) and RMB 40.0 million (approximately $5.9 million) must be made on July 20, 2012, and December 20, 2012, respectively, and three payments of principal in the amount of RMB 60.0 million (approximately $8.8 million) each must be made on July 20, 2013, December 20, 2013, and January 20, 2014, respectively. The obligations of Libbey China are secured by a guarantee executed by Libbey Inc. for the benefit of CCB.

RMB Working Capital Loan

In March 2007, Libbey China entered into a RMB 50.0 million working capital loan with CCB. The 3-year term loan matures on March 14, 2010, has a current interest rate of 7.56 percent, and is secured by a Libbey Inc. guarantee. At December 31, 2008, the U.S. dollar equivalent on the line was $7.3 million. Interest is payable quarterly.

Obligations Under Capital Leases

We lease certain machinery and equipment under agreements that are classified as capital leases. These leases were assumed in the Crisal acquisition. The cost of the equipment under capital leases is included in the Consolidated Balance Sheets as property, plant and equipment, and the related depreciation expense is included in the Consolidated Statements of Operations.

The future minimum lease payments required under the capital leases as of December 31, 2008 are $0.3 million, all due within one year.

BES Euro Line

In January 2007, Crisal entered into a seven year, €11.0 million line of credit (approximately $15.5 million) with Banco Espírito Santo, S.A. (BES). The $15.5 million outstanding at December 31, 2008, was the U.S. dollar equivalent under the line at an interest rate of 6.75 percent. Payment of principal in the amount of €1.1 million (approximately $1.6 million) is due in January 2010, payment of €1.6 million (approximately $2.3 million) is due in January 2011, payment of €2.2 million (approximately $3.1 million) is due in January 2012, payment of €2.8 million (approximately $3.9 million) is due in January 2013 and payment of €3.3 million (approximately $4.6 million) is due in January 2014. Interest with respect to the line is paid every six months.

Other Debt

The other debt of $0.6 million consists primarily of government-subsidized loans for equipment purchases at Crisal.

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Fair Value of Borrowings

The fair value of the Company’s debt has been calculated based on quoted market prices for the same or similar issues. Our floating rate $306 million Senior Notes due June, 2011 had an estimated fair value of $104.0 million at December 31, 2008. The $148.9 million PIK notes have been held by a single holder since inception, and there is no active market from which a fair value could be derived. The value of the remainder of our debt approximates carrying value. At December 31, 2007, we believed that the carrying amounts reasonably approximated the fair values of the outstanding debt issues for all of our borrowings.

9.   Special Charges

Capacity Realignment

In August, 2004, we announced that we were re-aligning our production capacity in order to improve our cost structure. In mid-February, 2005, we ceased operations at our manufacturing facility in City of Industry, California, and began realignment of production among our other domestic glass manufacturing facilities.

The following table summarizes the capacity realignment charge incurred in 2006:

	December 31,
	2006
Net gain on land sale	$	(359	)
Employee termination cost & other		61
Included in special charges		(298	)
Total pretax capacity realignment charge	$	(298	)

The 2006 activity reflects changes in accounting estimate of the reserves on the employee termination costs and the site clean up costs. These charges were recorded in the North American Glass reporting segment. There were no special charges incurred in 2008 or 2007 related to the capacity realignment.

Salaried Workforce Reduction Program

In the second quarter of 2005, we announced a ten percent reduction of our North American salaried workforce, or approximately 70 employees, in order to reduce our overall costs.

The following table summarizes the salaried workforce reduction charge incurred in 2006:

	December 31,
	2006
Employee termination costs	$	(70	)
Included in special charges		(70	)
Total pretax salaried workforce reduction charge	$	(70	)

The 2006 activity represents a change in accounting estimate of our employee termination reserve as of December 31, 2006. There were no special charges incurred in 2008 or 2007 related to the salaried workforce reduction program.

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The following reflects the balance sheet activity related to the salaried workforce reduction program for the years ended December 31, 2008 and December 31, 2007:

	Balance at									Balance at
	January 1,		Total Credit		Cash			Non-cash		December 31,
	2008		to Earnings		Payments			Utilization		2008
Employee termination costs	$	38	$	—	$	(38	)	$	—	$	—
Total	$	38	$	—	$	(38	)	$	—	$	—

	Balance at									Balance at
	January 1,		Total Credit		Cash			Non-cash		December 31,
	2007		to Earnings		Payments			Utilization		2007
Employee termination costs	$	219	$	—	$	(181	)	$	—	$	38
Total	$	219	$	—	$	(181	)	$	—	$	38

The employee termination costs for 2007 are included in accrued special charges on the Consolidated Balance Sheets. These charges were recorded in the North American Glass and North American Other reporting segments.

Crisa Restructuring

In June 2006, we announced plans to consolidate Crisa’s two principal manufacturing facilities into one facility and to discontinue certain product lines in order to reduce fixed costs (“Project Tiger”). As part of the consolidation plan, a $3.2 million severance reserve was established related to statutory severance obligations for approximately 650 employees.

The following table summarizes the Crisa restructuring charge incurred in 2006 within the North American Glass segment:

	December 31,
	2006
Inventory write-down	$	2,158
Included in cost of sales		2,158
Fixed asset write-down		16,702
Included in special charges		16,702
Total Crisa restructuring charge	$	18,860

There were no special charges incurred in 2008 or 2007 related to the Crisa restructuring program.

The employee termination costs and other of $3.2 million in 2006, relates to severance reserves established in step acquisition accounting for Crisa explained in note 4.

Write-off of Finance Fees

In June 2006, we wrote off unamortized finance fees of $4.9 million related to debt of Libbey and Crisa that we refinanced. These charges were recorded as interest expense on the Consolidated Statement of Operations and are reflected in the North American Glass reporting segment.

Facility Closures

In December 2008, we announced that the Syracuse China manufacturing facility and our Mira Loma, California distribution center would be shut down in early to mid-2009 in order to reduce costs, and we accordingly recorded a pretax charge of $29.1 million. The principal components of the charge included fixed asset write-

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

downs, inventory write-downs, employee severance related costs for the approximately 305 employees impacted by the closures and pension and postretirement charges.

We performed an analysis to determine the appropriate carrying value of inventory located at Syracuse China and Mira Loma. A lower of cost or market adjustment was recorded in the fourth quarter of 2008 in the amount of $9.8 to properly state our ending inventory values. This charge was included in cost of sales on the Consolidated Statements of Operations.

In the fourth quarter of 2008, we recorded a $9.7 million reduction in the carrying value of our long-lived assets in accordance with SFAS No. 144. Under SFAS No. 144, long-lived assets are tested for recoverability if certain events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable. The announcement of the closure of the Syracuse China reporting unit indicated that the carrying value of our long-lived assets may not be recoverable and we performed an impairment review. We then recorded impairment charges, for property, plant and equipment, based upon the amounts by which the carrying amounts of these assets exceeded their fair values. Fair value was determined by independent outside appraisals. This charge was included in special charges on the Consolidated Statements of Operations.

We recorded a charge of $9.0 million related to the announced closures for employee-related costs and other. Of this amount, $4.2 million was included in cost of sales in the Consolidated Statements of Operations for pension and non-pension postretirement welfare costs. An additional $4.8 million included primarily severance, medical benefits and outplacement services for the employees. This amount was included in special charges in the Consolidated Statements of Operations.

Further, depreciation expense was increased by $0.3 million at Syracuse in 2008 to reflect the shorter remaining life of the assets. This was recorded in cost of sales on the Consolidated Statements of Operations, in the North American Other reporting segment.

In addition, natural gas hedges in place for the Syracuse China facility are no longer deemed effective, as the forecasted transactions related to these contracts are not probable of occurring. This resulted in a charge of $0.4 million to other income (expense) on the Consolidated Statements of Operations, in the North American Other reporting segment. See note 15 for further discussion of derivatives.

The following table summarizes the facility closure charge in 2008:

	December 31, 2008
	North		North
	American		American
	Glass		Other			Total
Inventory write-down	$	192	$	9,576		$	9,768
Pension & postretirement welfare		—		4,170			4,170
Fixed asset depreciation		—		261			261
Included in cost of sales		192		14,007			14,199
Fixed asset write-down		65		9,660			9,725
Employee termination cost & other		618		4,202			4,820
Included in special charges		683		13,862			14,545
Ineffectiveness of natural gas hedge		—		(383	)		(383	)
Included in other income(expense)		—		(383	)		(383	)
Total pretax charge	$	875	$	28,252		$	29,127

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The following reflects the balance sheet activity related to the facility closure charge for the year ended December 31, 2008:

	Reserve													Reserve
	Balances		Total					Inventory &						Balances at
	at January 1,		Charge to		Cash			Fixed Asset			Non-Cash			December 31,
	2008		Earnings		Payments			Write Downs			Utilization			2008
Inventory write-down	$	—	$	9,768	$	—		$	(9,768	)	$	—		$	—
Pension & postretirement welfare		—		4,170		—			—			(4,170	)		—
Fixed asset depreciation		—		261		—			—			(261	)		—
Fixed asset write-down		—		9,725		—			(9,725	)		—			—
Employee termination cost & other		—		4,820		(8	)		—			(564	)		4,248
Ineffectiveness of natural gas hedges		—		383		—			—			(383	)		—
Total	$	—	$	29,127	$	(8	)	$	(19,493	)	$	(5,378	)	$	4,248

The ending balance of $4.2 million for 2008 was included in accrued special charges on the Consolidated Balance Sheets and we expect this to result in cash payments in 2009. These charges were recorded in the North American Other and North American Glass reporting segments in 2008.

Intangible Asset Impairment

Goodwill and intangible assets were tested for impairment in accordance with SFAS No. 142 and an impairment charge was incurred in the amount of $11.9 million for both goodwill and intangibles associated with Royal Leerdam and Crisal, which are in our International reporting segment. $9.4 million of this charge was included in impairment of goodwill and $2.5 million was recorded in special charges on the Consolidated Statements of Operations. For further discussion of goodwill and intangibles impairment, see note 6.

Fixed asset Impairment

During 2008, we wrote down certain fixed assets within our North American Glass segment that had become idled and no longer were being used in our production process. The non-cash charge of $4.5 million was included in cost of sales on the Consolidated Statements of Operations.

Summary of Total Special Charges

The following table summarizes the special charges mentioned above and their classifications in the Consolidated Statements of Operations:

	December 31,			December 31,		December 31,
	2008			2007		2006
Cost of sales	$	18,681		$	—	$	2,158
Impairment of goodwill		9,434			—		—
Special charges		17,000			—		16,334
Other income (expense)		(383	)		—		—
Interest expense		—			—		4,906
Total special charges	$	45,498		$	—	$	23,398

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

10.   Income Taxes

The provisions (benefits) for income taxes were calculated based on the following components of earnings (loss) before income taxes:

Year Ended December 31,	2008			2007			2006
United States	$	(79,496	)	$	(11,871	)	$	(13,295	)
Non-U.S.		5,347			20,862			(15,285	)
Total (loss) earnings before tax	$	(74,149	)	$	8,991		$	(28,580	)

The current and deferred provisions (benefits) for income taxes were:

Year Ended December 31,	2008			2007			2006
Current:
U.S. federal	$	(724	)	$	(6,768	)	$	(7,502	)
Non-U.S.		2,798			3,207			3,059
U.S. state and local		181			132			(85	)
Total current income tax provision (benefit)		2,255			(3,429	)		(4,528	)
Deferred:
U.S. federal		1,855			16,752			1,409
Non-U.S.		2,204			(2,183	)		(4,199	)
U.S. state and local		—			158			(429	)
Total deferred income tax provision (benefit)		4,059			14,727			(3,219	)
Total:
U.S. federal		1,131			9,984			(6,093	)
Non-U.S.		5,002			1,024			(1,140	)
U.S. state and local		181			290			(514	)
Total income tax provision (benefit)	$	6,314		$	11,298		$	(7,747	)

75

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The significant components of our deferred income tax assets and liabilities are as follows:

December 31,	2008			2007
Deferred income tax assets:
Pension	$	31,305		$	18,099
Nonpension postretirement benefits		22,244			18,181
Other accrued liabilities		30,733			21,542
Receivables		2,414			1,843
Net operating loss carry forwards		30,379			8,923
Tax credits		8,862			8,016
Total deferred income tax assets		125,937			76,604
Deferred income tax liabilities:
Property, plant and equipment		23,102			29,032
Inventories		7,400			9,360
Intangibles and other assets		12,920			12,964
Total deferred income tax liabilities		43,422			51,356
Net deferred income tax asset before valuation allowance		82,515			25,248
Valuation allowance		(87,442	)		(28,855	)
Net deferred income tax liability	$	(4,927	)	$	(3,607	)

The net deferred income tax assets at December 31 of the respective year-ends were included in the Consolidated Balance Sheet as follows:

December 31,	2008			2007
Noncurrent deferred income tax asset	$	—		$	855
Current deferred income tax liability		(1,279	)		(4,462	)
Noncurrent deferred income tax liability		(3,648	)		—
Net deferred income tax (liability) asset	$	(4,927	)	$	(3,607	)

The 2008 deferred income tax asset for net operating loss carry forwards of $30.4 million relates to pre-tax losses incurred in the Netherlands of $17.7 million, in Mexico of $5.0 million, in Portugal of $14.3 million, in China of $8.8 million, in U.S. federal jurisdiction of $51.4 million and in U.S. state jurisdictions of $11.9 million. During 2008, we wrote off $14.0 million in U.S. state net operating loss carry forwards, which carried a full valuation allowance, due to the closure of facilities or changes in state law. Our foreign net operating loss carry forwards of $45.8 million will expire before 2019. Our federal U.S. net operating loss carry forward of $51.4 million will expire before 2029. The U.S. state net operating loss carry forward of $11.9 million will expire by 2023. The 2007 deferred asset for net operating loss carry forwards of $8.9 million relates to pre-tax losses incurred in the Netherlands of $14.9 million, in Mexico of $6.9 million, in Portugal of $11.7 million, and in U.S. state jurisdictions of $23.1 million. The 2007 U.S. federal net operating loss was carried back to offset taxable income reported in previous years; therefore, no deferred income tax asset was established.

The Company has a tax holiday in China, which will expire in 2013. The Company recognized no benefit from the tax holiday in 2008 or 2007.

The 2008 deferred tax credits of $8.9 million consist of $2.0 million of U.S. federal tax credits and $6.9 million of foreign credits. During 2008 we wrote off $1.7 million in U.S. state credits, which carried a full valuation allowance, due to the closure of facilities or changes in state law. The U.S. federal tax credits are foreign tax credits associated with undistributed earnings of our Canadian operations, which are not permanently reinvested, general

76

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

business credits and alternative minimum tax credits. The foreign credits of $6.9 million can be carried forward indefinitely. The 2007 deferred tax credits of $8.0 million consist of $1.7 million of U.S. federal tax credits, $1.7 million of U.S. state tax credits and $4.6 million of foreign credits.

In assessing the need for a valuation allowance, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized on a quarterly basis or whenever events indicate that a review is required. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income (including reversals of deferred income tax liabilities) during the periods in which those temporary differences reverse. As a result, we consider the historical and projected financial results of the legal entity or consolidated group recording the net deferred income tax asset as well as all other positive and negative evidence.

The valuation allowance activity for the years ended December 31 is as follows:

Year Ended December 31,	2008			2007			2006
Beginning balance	$	28,855		$	6,575		$	3,033
Charged to provision for income taxes		37,247			18,917			2,942
Charged (credited) to other accounts		21,340	(1)		3,363	(1)		600	(2)
Ending balance	$	87,442		$	28,855		$	6,575

(1)	Increase relates principally to changes in Accumulated Other Comprehensive Income.
(2)	Increase relates to valuation allowance recorded through acquisition goodwill.

The valuation allowance increased to $87.4 million at December 31, 2008 from $28.9 million at December 31, 2007. This increase was primarily attributable to increases in net operating loss carry forwards, long-lived asset impairment charges and pension and non-pension postretirement benefits. Furthermore, a valuation allowance was recorded for the net deferred tax assets in Portugal. The valuation allowance increased to $28.9 million at December 31, 2007 from $6.6 million at December 31, 2007. The increase was primarily attributable to the increase of our U.S. valuation allowance to record a full valuation allowance against these assets due to the near term effects on U.S. profitability of increasing interest expense and the general softening of the U.S. economy and its related impact on consumer demand. The valuation allowance increased to $6.6 million at December 31, 2006 from $3.0 at December 31, 2005. The increase is primarily due to the valuation allowances placed against the non-U.S. net operating losses in the Netherlands and certain legal entities in Mexico.

Reconciliation from the statutory U.S. federal income tax rate of 35.0% to the consolidated effective income tax rate was as follows:

Year Ended December 31,	2008			2007			2006
Statutory U.S. federal income tax rate		35.0	%		35.0	%		35.0	%
Increase (decrease) in rate due to:
Non-U.S. income tax differential		4.7			(73.2	)		3.9
U.S. state and local income taxes, net of related U.S. federal income taxes		(0.2	)		6.2			1.7
U.S. federal credits		1.0			(5.9	)		0.5
Foreign permanent adjustments		(2.6	)		32.1			1.7
Foreign federal credits		4.8			(69.2	)		—
Valuation allowance		(50.3	)		210.5			(10.8	)
Other		(0.9	)		(9.8	)		(4.9	)
Consolidated effective income tax rate		(8.5	)%		125.7	%		27.1	%

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Significant components of our refundable and prepaid income taxes, classified in the Consolidated Balance Sheet as prepaid and other current assets, are as follows:

December 31,	2008			2007
U.S. federal	$	1,102		$	5,804
Non-U.S.		1,276			(167	)
U.S. state and local		(76	)		884
Total prepaid income taxes	$	2,302		$	6,521

U.S. income taxes and non-U.S. withholding taxes were not provided for on a cumulative total of approximately $53.3 million at December 31, 2008 and $35.0 million in 2007 of undistributed earnings for certain non-U.S. subsidiaries. We intend to reinvest these earnings indefinitely in the non-U.S. operations. Determination of the net amount of unrecognized U.S. income tax and potential foreign withholdings with respect to these earnings is not practicable.

The company is subject to income taxes in the U.S. and various foreign jurisdictions. Management judgment is required in evaluating our tax positions and determining our provision for income taxes. Throughout the course of business, there are numerous transactions and calculations for which the ultimate tax determination is uncertain. When management believes certain tax positions may be challenged despite our belief that the tax return positions are supportable, the company establishes reserves for tax uncertainties based on estimates of whether additional taxes will be due. We adjust these reserves taking into consideration changing facts and circumstances, such as an outcome of a tax audit. The income tax provision includes the impact of reserve provisions and changes to reserves that are considered appropriate. Accruals for tax contingencies are provided for in accordance with the requirements of FIN 48.

At December 31, 2008 and 2007, we had $2.3 million and $2.7 million, respectively, of total gross unrecognized tax benefits, of which approximately $0.9 million and $1.3 million, respectively, would impact the effective tax rate, if recognized. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties, is as follows:

	2008			2007
Beginning balance	$	2,729		$	7,162
Additions based on tax positions related to the current year		29			143
Additions for tax positions of prior years		1,567			1,090
Reductions for tax positions of prior years		(1,020	)		(2,754	)
Reductions due to lapse of statute of limitations		(1,004	)		(2,201	)
Reductions due to settlements with tax authorities		—			(711	)
Ending balance	$	2,301		$	2,729

We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. We recognized a $0.5 benefit in 2008 and a $0.2 benefit in 2007 in our Consolidated Statements of Operations from a reduction in interest and penalties for uncertain tax positions. At December 31, 2008, we had $2.5 million and $3.0 million accrued for interest and penalties respectively, net of tax benefit at December 31, 2008 and December 31, 2007, respectively.

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

We file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. As of December 31, 2008, the tax years that remained subject to examination by major tax jurisdictions were as follows:

Jurisdiction	Open Years
Canada		2005-2008
China		2006-2008
Mexico		2003-2008
Netherlands		2006-2008
Portugal		2005-2008
United States		2004-2008

We are currently under examination by the U.S. Internal Revenue Service for our 2006 and 2007 tax years but, due to the status of the exam, it is not practicable to estimate the impact of potential settlement. We do not anticipate a significant change in the total amount of unrecognized income tax benefits within the next twelve months.

11.   Pension

We have pension plans covering the majority of our employees. Benefits generally are based on compensation for salaried employees and job grade and length of service for hourly employees. Our policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. In addition, we have an unfunded supplemental employee retirement plan (SERP) that covers salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension plans cover the salaried U.S.-based employees of Libbey hired before January 1, 2006 and most hourly U.S.-based employees. The non-U.S. pension plans cover the employees of our wholly owned subsidiaries Royal Leerdam and Crisa. The Crisa plan is not funded.

Effect on Operations

The components of our net pension expense, including the SERP, are as follows:

	U.S. Plans									Non-U.S. Plans									Total
Year Ended December 31,	2008			2007			2006			2008			2007			2006			2008			2007			2006
Service cost (benefits earned during the period)	$	5,388		$	5,923		$	5,998		$	1,669		$	1,849		$	1,479		$	7,057		$	7,772		$	7,477
Interest cost on projected benefit obligation		15,634			14,606			13,824			4,729			4,013			2,727			20,363			18,619			16,551
Expected return on plan assets		(17,567	)		(16,039	)		(15,732	)		(3,265	)		(2,750	)		(2,287	)		(20,832	)		(18,789	)		(18,019	)
Amortization of unrecognized:
Prior service cost (credit)		2,381			2,086			2,083			(212	)		(187	)		(177	)		2,169			1,899			1,906
Actuarial loss		1,308			2,140			2,552			293			347			151			1,601			2,487			2,703
Transition obligations		—			—			—			142			143			185			142			143			185
Curtailment charge		1,070			—			—			—			—			—			1,070			—			—
Settlement charge		—			—			2,045			—			—			—			—			—			2,045
Pension expense	$	8,214		$	8,716		$	10,770		$	3,356		$	3,415		$	2,078		$	11,570		$	12,131		$	12,848

We incurred a pension curtailment charge of $1.1 million in the fourth quarter of 2008 related to the announced closing of our Syracuse China plant. See note 9 for further discussion. We incurred pension settlement charges of $2.0 million during December, 2006. The pension settlement charges were triggered by excess lump sum distributions taken by employees, which required us to record unrecognized gains and losses in our pension plan accounts.

79

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Actuarial Assumptions

Following are the assumptions used to determine the financial statement impact for our pension plan benefits for 2008, 2007 and 2006:

	U.S. Plans						Non-U.S. Plans
	2008		2007		2006		2008		2007		2006
Discount rate		6.41% to 6.48%		6.16% to 6.32%		5.82% to 5.91%		5.70% to 8.50%		5.50% to 8.50%		4.50% to 8.75%
Expected long-term rate of return on plan assets		8.25%		8.50%		8.75%		6.00%		6.50%		6.50%
Rate of compensation increase		2.63% to 5.25%		3.00% to 6.00%		3.00 to 6.00%		2.00% to 4.30%		2.00% to 4.30%		2.00% to 3.50%

We account for our defined benefit pension plans on an expense basis that reflects actuarial funding methods. Two critical assumptions, discount rate and expected long-term rate of return on plan assets, are important elements of plan expense and asset/liability measurement. We evaluate these critical assumptions on our annual measurement date of December 31st. Other assumptions involving demographic factors such as retirement age, mortality and turnover are evaluated periodically and are updated to reflect our experience. Actual results in any given year often will differ from actuarial assumptions because of demographic, economic and other factors.

The discount rate enables us to estimate the present value of expected future cash flows on the measurement date. The rate used reflects a rate of return on high-quality fixed income investments that match the duration of expected benefit payments at our December 31 measurement date. The discount rate at December 31 is used to measure the year-end benefit obligations and the earnings effects for the subsequent year. A higher discount rate decreases the present value of benefit obligations and decreases pension expense.

To determine the expected long-term rate of return on plan assets for our funded plans, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. The expected long-term rate of return on plan assets at December 31st is used to measure the earnings effects for the subsequent year. The assumed long-term rate of return on assets is applied to a calculated value of plan assets that recognizes gains and losses in the fair value of plan assets compared to expected returns over the next five years. This produces the expected return on plan assets that is included in pension expense. The difference between the expected return and the actual return on plan assets is deferred and amortized over five years. The net deferral of past asset gains (losses) affects the calculated value of plan assets and, ultimately, future pension expense (income).

Sensitivity to changes in key assumptions, based on year-end data, is as follows:

•  A change of 1.0 percent in the discount rate would change our total pension expense by approximately $1.6 million.

•  A change of 1.0 percent in the expected long-term rate of return on plan assets would change total pension expense by approximately $2.2 million.

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Projected Benefit Obligation (PBO) and Fair Value of Assets

The changes in the projected benefit obligations and fair value of plan assets are as follows:

	U.S. Plans						Non-U.S. Plans						Total
December 31,	2008			2007			2008			2007			2008			2007
Change in projected benefit obligation:
Projected benefit obligation, beginning of year	$	253,814		$	253,301		$	72,772		$	65,743		$	326,586		$	319,044
Service cost		5,388			5,923			1,669			1,849			7,057			7,772
Interest cost		15,634			14,606			4,729			4,013			20,363			18,619
Plan amendments		688			2,537			—			—			688			2,537
Exchange rate fluctuations		—			—			(7,897	)		4,593			(7,897	)		4,593
Actuarial (gains) loss		(5,040	)		(7,057	)		(7,089	)		(2,427	)		(12,129	)		(9,484	)
Plan participants’ contributions		—			—			1,090			1,099			1,090			1,099
Curtailments		(258	)		—			—			—			(258	)		—
Benefits paid		(13,355	)		(15,496	)		(4,377	)		(2,098	)		(17,732	)		(17,594	)
Projected benefit obligation, end of year	$	256,871		$	253,814		$	60,897		$	72,772		$	317,768		$	326,586
Change in fair value of plan assets:
Fair value of plan assets, beginning of year	$	206,943		$	199,023		$	49,304		$	41,458		$	256,247		$	240,481
Actual return on plan assets		(44,671	)		12,376			(3,362	)		1,046			(48,033	)		13,422
Exchange rate fluctuations		—			—			(2,039	)		5,108			(2,039	)		5,108
Employer contributions		21,437			11,040			4,866			2,691			26,303			13,731
Plan participants’ contributions		—			—			1,090			1,099			1,090			1,099
Benefits paid		(13,355	)		(15,496	)		(4,377	)		(2,098	)		(17,732	)		(17,594	)
Fair value of plan assets, end of year	$	170,354		$	206,943		$	45,482		$	49,304		$	215,836		$	256,247
Funded ratio		66.3	%		81.5	%		74.7	%		67.8	%		67.9	%		78.5	%
Funded status and net accrued pension benefit cost	$	(86,517	)	$	(46,871	)	$	(15,415	)	$	(23,468	)	$	(101,932	)	$	(70,339	)

The 2008 net accrued pension benefit cost of $101.9 million is represented by a non current asset in the amount of $9.4 million, a current liability in the amount of $1.8 million and a long-term liability in the amount of $109.5 million on the Consolidated Balance Sheet. The 2007 net accrued pension benefit cost of $70.3 million is represented by a non current asset in the amount of $3.3 million, a current liability in the amount of $1.9 million and a long-term liability in the amount of $71.7 million on the Consolidated Balance Sheet. The current portion reflects the amount of expected benefit payments that are greater than the plan assets on a plan-by-plan basis.

The pre-tax amounts recognized in accumulated other comprehensive loss as of December 31, 2008 and 2007, are as follows:

December 31,	2008		2007		2008		2007		2008		2007
Net loss	$	87,771	$	31,933	$	6,483	$	9,765	$	94,254	$	41,698
Prior service cost		12,306		15,275		1,905		1,809		14,211		17,084
Transition obligation		—		—		574		861		574		861
Total cost	$	100,077	$	47,208	$	8,962	$	12,435	$	109,039	$	59,643

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The pre-tax amounts in accumulated other comprehensive loss as of December 31, 2008, that are expected to be recognized as components of net periodic benefit cost during 2009 are as follows:

	U.S. Plans		Non-U.S. Plans			Total
Net loss	$	1,268	$	376		$	1,644
Prior service cost (credit)		2,242		(207	)		2,035
Transition obligation		—		113			113
Total cost	$	3,510	$	282		$	3,792

We contributed $21.4 million to the U.S. pension plans in 2008, compared to $11.0 million in 2007. We contributed $4.9 million in 2008 to the non-U.S. pension plan compared to $2.7 million in 2007. It is difficult to estimate future cash contributions, as such amounts are a function of actual investment returns, withdrawals from the plans, changes in interest rates and other factors uncertain at this time. However, at this time, we anticipate making cash contributions of approximately $12.8 million into the U.S. pension plans and $3.4 million into the non-U.S. pension plans in 2009.

Pension benefit payment amounts are anticipated to be paid from the plans as follows:

Year	U.S. Plans		Non-U.S. Plans		Total
2009	$	16,890	$	2,525	$	19,415
2010	$	16,402	$	2,577	$	18,979
2011	$	16,906	$	2,809	$	19,715
2012	$	17,656	$	2,849	$	20,505
2013	$	18,597	$	3,146	$	21,743
2014-2018	$	100,952	$	22,436	$	123,388

Accumulated Benefit Obligation in Excess of Plan Assets

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan asset at December 31, 2008 and 2007 were as follows:

December 31, 2008	U.S. Plans		Non-U.S. Plans		Total
Projected benefit obligation	$	256,871	$	24,767	$	281,638
Accumulated benefit obligation	$	252,228	$	20,832	$	273,060
Fair value of plan assets	$	170,354	$	—	$	170,354

December 31, 2007	U.S. Plans		Non-U.S. Plans		Total
Projected benefit obligation	$	253,814	$	26,720	$	280,534
Accumulated benefit obligation	$	246,532	$	21,980	$	268,512
Fair value of plan assets	$	206,943	$	—	$	206,943

Plan Asset Allocation

The asset allocation for our U.S. pension plans at the end of 2008 and 2007 and the target allocation for 2009, by asset category, are as follows.

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

	Target
	Allocation			Percentage of Plan Assets at Year End
U.S. Plans Asset Category	2009			2008			2007
Equity securities		55	%		44	%		59	%
Debt securities		25	%		37	%		26	%
Real estate		5	%		4	%		4	%
Other		15	%		15	%		11	%
Total		100	%		100	%		100	%

The asset allocation for our Royal Leerdam pension plans at the end of 2008 and 2007 and the target allocation for 2009, by asset category, are as follows.

	Target
	Allocation			Percentage of Plan Assets at Year End
Non-U.S. Plans Asset Category	2009			2008			2007
Equity securities		34	%		24	%		29	%
Debt securities		51	%		58	%		53	%
Real estate		10	%		12	%		13	%
Other		5	%		6	%		5	%
Total		100	%		100	%		100	%

Our investment strategy is to control and manage investment risk through diversification across asset classes and investment styles. Assets will be diversified among traditional investments in equity and fixed income instruments, as well as alternative investments including real estate and hedge funds. It would be anticipated that a modest allocation to cash would exist within the plans, since each investment manager is likely to hold some cash in its portfolio.

12.   Nonpension Postretirement Benefits

We provide certain retiree health care and life insurance benefits covering our U.S. and Canadian salaried and non-union hourly employees hired before January 1, 2004 and a majority of our union hourly employees. Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Benefits for most hourly retirees are determined by collective bargaining. Under a cross-indemnity agreement, Owens-Illinois, Inc. assumed liability for the nonpension postretirement benefits of Libbey retirees who had retired as of June 24, 1993. Accordingly, obligations for these employees are excluded from the Company’s financial statements. The U.S. nonpension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey. The non-U.S. nonpension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are not funded.

83

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Effect on Operations

The provision for our nonpension postretirement benefit expense consists of the following:

	U.S. Plans								Non-U.S. Plans									Total
Year Ended December 31,	2008		2007			2006			2008			2007			2006			2008		2007			2006
Service cost (benefits earned during the period)	$	1,099	$	795		$	743		$	1		$	1		$	2		$	1,100	$	796		$	745
Interest cost on projected benefit obligation		2,979		2,245			2,050			129			94			95			3,108		2,339			2,145
Amortization of unrecognized:																			—		—			—
Prior service cost (credit)		2,967		(884	)		(884	)		—			—			—			2,967		(884	)		(884	)
(Gain) loss		239		79			45			(33	)		(51	)		(64	)		206		28			(19	)
Nonpension postretirement benefit expense	$	7,284	$	2,235		$	1,954		$	97		$	44		$	33		$	7,381	$	2,279		$	1,987

Prior service cost for 2008 includes a charge of $3.1 million to write off unrecognized prior service cost related to the announced closure of our Syracuse China manufacturing operation. See note 9 for further discussion.

Actuarial Assumptions

The following are the actuarial assumptions used to determine the benefit obligations and pretax income effect for our nonpension postretirement benefits:

	U.S. Plans									Non-U.S. Plans
	2008			2007			2006			2008			2007			2006
Discount rate		6.36	%		6.16	%		5.77	%		5.89	%		5.14	%		4.87	%
Initial health care trend		7.50	%		8.00	%		8.50	%		7.50	%		8.00	%		8.50	%
Ultimate health care trend		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%
Years to reach ultimate trend rate		5			7			7			5			7			7

We use various actuarial assumptions, including the discount rate and the expected trend in health care costs, to estimate the costs and benefit obligations for our retiree health plan. The discount rate is determined based on high-quality fixed income investments that match the duration of expected retiree medical benefits at our December 31 measurement date to establish the discount rate. The discount rate at December 31 is used to measure the year-end benefit obligations and the earnings effects for the subsequent year.

The health care cost trend rate represents our expected annual rates of change in the cost of health care benefits. The trend rate noted above represents a forward projection of health care costs as of the measurement date.

Sensitivity to changes in key assumptions is as follows:

•  A 1.0 percent change in the health care trend rate would not have a material impact upon the nonpension postretirement expense.

•  A 1.0 percent change in the discount rate would change the nonpension postretirement expense by $0.3 million.

84

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Accumulated Postretirement Benefit Obligation

The components of our nonpension postretirement benefit obligation are as follows:

	U.S. Plans						Non-U.S. Plans						Total
December 31,	2008			2007			2008			2007			2008			2007
Change in accumulated nonpension postretirement benefit obligation:
Benefit obligation, beginning of year	$	46,878		$	39,802		$	2,317		$	1,945		$	49,195		$	41,747
Service cost		1,099			795			1			1			1,100			796
Interest cost		2,979			2,245			129			94			3,108			2,339
Plan participants’ contributions		1,092			1,235			70			212			1,162			1,447
Plan amendments		3,429			4,209			—			—			3,429			4,209
Actuarial (gain) loss		8,292			4,240			240			13			8,532			4,253
Exchange rate fluctuations		—			—			(560	)		419			(560	)		419
Benefits paid		(3,915	)		(5,648	)		(170	)		(367	)		(4,085	)		(6,015	)
Benefit obligation, end of year	$	59,854		$	46,878		$	2,027		$	2,317		$	61,881		$	49,195
Funded status and accrued benefit cost	$	(59,854	)	$	(46,878	)	$	(2,027	)	$	(2,317	)	$	(61,881	)	$	(49,195	)

The 2008 net accrued postretirement benefit cost of $61.9 million is represented by a current liability in the amount of $4.7 million and a long-term liability in the amount of $57.2 million on the Consolidated Balance Sheet. The 2007 net accrued postretirement benefit cost of $49.2 million is represented by a current liability in the amount of $3.5 million and a long-term liability in the amount of $45.7 million on the Consolidated Balance Sheet.

The pre-tax amounts recognized in accumulated other comprehensive loss as of December 31, 2008, are as follows:

	U.S. Plans				Non-U.S. Plans						Total
December 31,	2008		2007		2008			2007			2008		2007
Net loss (gain)	$	15,347	$	6,962	$	(597	)	$	(1,015	)	$	14,750	$	5,947
Prior service cost (credit)		2,091		1,960					—			2,091		1,960
Total cost (credit)	$	17,438	$	8,922	$	(597	)	$	(1,015	)	$	16,841	$	7,907

The pre-tax amounts in accumulated other comprehensive loss of December 31, 2008, that are expected to be recognized as a credit to net periodic benefit cost during 2009 are as follows:

	U.S. Plans			Non U.S. Plans			Total
Net loss (gain)	$	821		$	(30	)	$	791
Prior service credit		(512	)					(512	)
Total credit	$	309		$	(30	)	$	279

85

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Nonpension postretirement benefit payments net of estimated future Medicare Part D subsidy payments and future retiree contributions, are anticipated to be paid as follows:

Fiscal Year	U.S. Plans		Non U.S. Plans		Total
2009	$	4,527	$	157	$	4,684
2010	$	4,872	$	159	$	5,031
2011	$	5,263	$	160	$	5,423
2012	$	5,736	$	157	$	5,893
2013	$	5,734	$	155	$	5,889
2014-2018	$	27,732	$	740	$	28,472

Prior to September 1, 2008, we also provided retiree health care benefits to certain union hourly employees through participation in a multi-employer retiree health care benefit plan. This was an insured, premium-based arrangement. Related to this plan, approximately $0.5 million, $0.5 million and $0.7 million were charged to expense for the years ended December 31, 2008, 2007 and 2006, respectively. During the second quarter of 2008, we amended our U.S. non-pension postretirement plans to cover employees and retirees previously covered under the multi-employer plan. This plan amendment was effective September 1, 2008 and resulted in a charge of $3.4 million to other comprehensive loss during the second quarter of 2008.

13.   Net Income per Share of Common Stock

The following table sets forth the computation of basic and diluted earnings per share:

Year Ended December 31,	2008			2007			2006
Numerator for earnings per share — net (loss) income that is available to common shareholders	$	(80,463	)	$	(2,307	)	$	(20,899	)
Denominator for basic earnings per share — weighted-average shares outstanding		14,671,500			14,472,011			14,182,314
Effect of dilutive securities(1)		—			—			—
Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions		14,671,500			14,472,011			14,182,314
Basic loss per share	$	(5.48	)	$	(0.16	)	$	(1.47	)
Diluted loss per share	$	(5.48	)	$	(0.16	)	$	(1.47	)

(1) The effect of employee stock options, warrants, restricted stock units, performance shares and the employee stock purchase plan (ESPP), 237,802, 283,009 and 11,584 shares for the years ended December 31, 2008, 2007 and 2006, respectively, were anti-dilutive and thus not included in the earnings per share calculation. These amounts would have been dilutive if not for the net loss.

When applicable, diluted shares outstanding include the dilutive impact of in-the-money options, which are calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the tax-effected proceeds that hypothetically would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares.

14.   Employee Stock Benefit Plans

We have three stock-based employee compensation plans. We also have an Employee Stock Purchase Plan (ESPP) under which eligible employees may purchase a limited number of shares of Libbey Inc. common stock at a discount. As a cost savings initiative, we have announced that the ESPP will be terminated effective May 31, 2009.

86

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

On January 1, 2006, the Company adopted Financial Accounting Standards Board (FASB) SFAS No. 123-R. SFAS No. 123-R requires that compensation cost relating to share-based payment transactions be recognized in the financial statements. Share-based compensation cost is measured based on the fair value of the equity or liability instruments issued. SFAS No. 123-R applies to all of our outstanding unvested share-based payment awards as of January 1, 2006, and all prospective awards using the modified prospective transition method without restatement of prior periods.

On December 6, 2005, the Company’s Board of Directors, acting as the Compensation Committee of the whole, accelerated the vesting of all outstanding and unvested nonqualified stock options granted through 2004 under the Company’s 1999 Equity Participation Plan and Amended and Restated 1999 Equity Participation Plan. As a result, options to purchase 258,731 shares of the Company’s common stock became exercisable on December 6, 2005. Of that amount, options that were granted through 2004 to the Company’s named executive officers became immediately exercisable. In the case of each of the stock options in question, the exercise price greatly exceeded the fair market value of the Company’s common stock on December 6, 2005. The decision to accelerate vesting of these options was made primarily to avoid recognition of compensation expense related to these underwater stock options in financial statements relating to future fiscal periods. By accelerating these underwater stock options, the Company has reduced the stock option expense it otherwise would have been required to record by approximately $0.4 million in 2006, $0.1 million in 2007 and $0.04 million in 2008 on a pre-tax basis.

Equity Participation Plan Program Description

We have three equity participation plans: (1) the Libbey Inc. Amended and Restated Stock Option Plan for Key Employees, (2) the Amended and Restated 1999 Equity Participation Plan of Libbey Inc. and (3) the Libbey Inc. 2006 Omnibus Incentive Plan. Although options previously granted under the Libbey Inc. Amended and Restated Stock Option Plan for Key Employees and the Amended and Restated 1999 Equity Participation Plan of Libbey Inc. remain outstanding, no further grants of equity-based compensation may be made under those plans. However, up to a total of 1,500,000 shares of Libbey Inc. common stock are available for issuance as equity-based compensation under the Libbey Inc. 2006 Omnibus Incentive Plan. Under the Libbey Inc. 2006 Omnibus Incentive Plan, grants of equity-based compensation may take the form of stock options, stock appreciation rights, performance shares or units, restricted stock or restricted stock units or other stock-based awards. Employees and directors are eligible for awards under this plan. During 2008, there were grants of 147,976 stock options, 80,368 performance shares, 100,725 restricted stock units and 1,500 stock appreciation rights. During 2007, there were grants of 284,122 stock options, 71,644 performance shares, 190,304 restricted stock units and 4,500 stock appreciation rights. All option grants have an exercise price equal to the fair market value of the underlying stock on the grant date. The vesting period of options, stock appreciation rights and restricted stock units outstanding as of December 31, 2008, is generally four years. Stock options are amortized over the vesting period using the FASB Interpretation No. 28, “Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, an interpretation of APB Opinions No. 15 and 25” (FIN 28), expense attribution methodology. The impact of applying the provisions of SFAS No. 123-R is a pre-tax compensation expense of $3.5 million, $3.4 million and $1.3 million in selling, general and administrative expenses in the Consolidated Statement of Operations for 2008, 2007 and 2006, respectively.

Non-Qualified Stock Option and Employee Stock Purchase Plan (ESPP) Information

We have an ESPP under which 950,000 shares of common stock have been reserved for issuance. Eligible employees may purchase a limited number of shares of common stock at a discount of up to 15 percent of the market value at certain plan-defined dates. The ESPP terminates on May 31, 2009. In 2008 and 2007, shares issued under the ESPP totaled 113,247 and 105,453, respectively. At December 31, 2008, 456,200 shares were available for issuance under the ESPP. At December 31, 2007, 469,447 shares were available for issuance under the ESPP. Repurchased common stock is being used to fund the ESPP.

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LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

A participant may elect to have payroll deductions made during the offering period in an amount not less than 2 percent and not more than 20 percent of the participant’s compensation during the option period. The option period starts on the offering date (June 1st) and ends on the exercise date (May 31st). In no event may the option price per share be less than the par value per share ($.01) of common stock. All options and rights to participate in the ESPP are nontransferable and subject to forfeiture in accordance with the ESPP guidelines. In the event of certain corporate transactions, each option outstanding under the ESPP will be assumed or the successor corporation or a parent or subsidiary of such successor corporation will substitute an equivalent option. Compensation expense for 2008, 2007 and 2006 related to the ESPP is $0.6 million, $0.5 million and $0.4 million, respectively.

Stock option compensation expense of $1.1 million, $0.8 million and $0.3 million is included in the Consolidated Statements of Operations for 2008, 2007 and 2006, respectively.

The Black-Scholes option-pricing model was developed for use in estimating the value of traded options that have no vesting restrictions and are fully transferable. There were 147,976 stock option grants made during 2008. Under the Black-Scholes option-pricing model, the weighted-average grant-date fair value of options granted during 2008 is $7.34. There were 284,132 and 10,000 stock option grants made during 2007 and 2006, respectively. Under the Black-Scholes option-pricing model, the weighted-average grant-date fair value of option granted during 2007 and 2006 was $7.22 and $3.32, respectively. The fair value of each option is estimated on the date of grant with the following weighted-average assumptions:

	2008			2007			2006
Stock option grants:
Risk-free interest		3.30	%		4.64	%		4.57	%
Expected term		6.3 years			6.1 years			6.5 years
Expected volatility		48.20	%		47.40	%		37.90	%
Dividend yield		0.65	%		0.71	%		3.19	%
Employee Stock Purchase Plan:
Risk-free interest		2.18	%		4.91	%		4.99	%
Expected term		12 months			12 months			12 months
Expected volatility		57.30	%		60.04	%		58.30	%
Dividend yield		0.89	%		0.43	%		2.20	%

•  The risk-free interest rate is based on the U.S. Treasury yield curve at the time of grant and has a term equal to the expected life.

•  The expected term represents the period of time the options are expected to be outstanding. Additionally, we use historical data to estimate option exercises and employee forfeitures. The Company uses the Simplified Method defined by the SEC Staff Accounting Bulletin No. 107, “Share-Based Payment” (SAB 107), to estimate the expected term of the option, representing the period of time that options granted are expected to be outstanding.

•  The expected volatility was developed based on historic stock prices commensurate with the expected term of the option. We use projected data for expected volatility of our stock options based on the average of daily, weekly and monthly historical volatilities of our stock price over the expected term of the option and other economic data trended into future years.

•  The dividend yield is calculated as the ratio based on our most recent historical dividend payments per share of common stock at the grant date to the stock price on the date of grant.

88

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Information with respect to our stock option activity for 2008, 2007, and 2006 is as follows:

						Weighted-Average
				Weighted-Average		Remaining		Aggregate
				Exercise Price per		Contractual life		Intrinsic
Options	Shares			Share		(In years)		Value
Outstanding balance at December 31, 2005		1,555,556		$	28.04		6	$	—
Granted		10,000			10.20
Exercised		—			—
Canceled		(153,930	)		28.03
Outstanding balance at December 31, 2006		1,411,626			27.43		5	$	100
Granted		284,132			14.60
Exercised		(7,920	)		11.11
Canceled		(167,542	)		31.26
Outstanding balance at December 31, 2007		1,520,296			24.67		5	$	1,181
Granted		147,976			15.08
Exercised		—			—
Canceled		(194,295	)		34.98
Outstanding balance at December 31, 2008		1,473,977		$	22.37		5	$	—
Exercisable at December 31, 2008		1,076,152		$	25.16			$	—

Intrinsic value for share-based instruments is defined as the difference between the current market value and the exercise price. SFAS No. 123-R requires the benefits of tax deductions in excess of the compensation cost recognized for those stock options (excess tax benefit) to be classified as financing cash flows. There were no stock options exercised during 2008, 7,920 stock options exercised in 2007 and no stock options exercised in 2006.

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Libbey Inc. closing stock price of $1.25 as of December 31, 2008, which would have been received by the option holders had all option holders exercised their options as of that date. As of December 31, 2008, 1,076,527 outstanding options were exercisable, and the weighted average exercise price was $25.16. As of December 31, 2007, 1,183,286 outstanding options were exercisable, and the weighted average exercise price was $27.70. As of December 31, 2006, 1,315,790 outstanding options were exercisable, and the weighted average exercise price was $28.58.

As of December 31, 2008, $1.0 million of total unrecognized compensation expense related to nonvested stock options is expected to be recognized within the next three years on a weighted-average basis. The total fair value of shares vested during 2008 is $0.5 million. Shares issued for exercised options are issued from treasury stock.

89

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The following table summarizes our nonvested stock option activity for 2008, 2007 and 2006:

				Weighted-Average
	Shares			Value (per Share)
Nonvested at January 1, 2006		145,260		$	3.82
Granted		10,000		$	3.32
Vested		(57,644	)	$	3.82
Canceled		(1,780	)	$	3.82
Nonvested at December 31, 2006		95,836		$	3.82
Granted		284,132		$	7.22
Vested		(34,172	)	$	3.75
Canceled		(8,786	)	$	4.57
Nonvested at December 31, 2007		337,010		$	6.67
Granted		147,976		$	7.34
Vested		(87,536	)	$	5.54
Canceled		—		$	—
Nonvested at December 31, 2008		397,450		$	7.17

Performance Share Information

Performance share compensation expense of $0.2 million, $0.6 million and $0.3 million for 2008, 2007 and 2006, respectively, is included in our Statement of Operations.

Under the Libbey Inc. 2006 Omnibus Incentive Plan, we grant select executives and key employees performance shares. The number of performance shares granted to an executive is determined by dividing the value to be transferred to the executive, expressed in U.S. dollars and determined as a percentage of the executive’s long-term incentive target (which in turn is a percentage of the executive’s base salary on January 1 of the year in which the performance shares are granted), by the average closing price of Libbey Inc. common stock over a period of 60 consecutive trading days ending on the date of the grant.

The performance shares are settled by issuance to the executive of one share of Libbey Inc. common stock for each performance share earned. Performance shares are earned only if and to the extent we achieve certain company-wide performance goals over performance cycles of between 1 and 3 years.

90

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

A summary of the activity for performance shares under the Libbey Inc. 2006 Omnibus Incentive Plan for 2008, 2007 and 2006 is presented below:

Performance Shares	Shares
Outstanding balance at January 1, 2006		—
Granted		71,139
Issued		—
Canceled		—
Outstanding balance at December 31, 2006		71,139
Granted		71,644
Issued		(29,185	)
Canceled		—
Outstanding balance at December 31, 2007		113,598
Granted		80,368
Issued		(14,626	)
Canceled		—
Outstanding balance at December 31, 2008		179,340

Of this amount, 14,387 performance shares were earned as of December 31, 2008, and as a result, 14,387 shares of Libbey Inc. common stock were issued in February 2009 to the executives in settlement of these performance shares.

The weighted-average grant-date fair value of the performance shares granted during 2008, 2007 and 2006 was $15.35, $12.97 and $9.88, respectively. As of December 31, 2008, there was $0.6 million of total unrecognized compensation cost related to nonvested performance shares granted. That cost is expected to be recognized over a period of 2 years. Shares issued for performance share awards are issued from treasury stock.

Stock and Restricted Stock Unit Information

Compensation expense of $1.6 million, $1.5 million and $0.3 million for 2008, 2007 and 2006, respectively, is included in our Statement of Operations to reflect grants of restricted stock units and of stock.

Under the Libbey Inc. 2006 Omnibus Incentive Plan, we grant members of our Board of Directors restricted stock units or shares of unrestricted stock. The restricted stock units or shares granted to Directors are immediately vested and all compensation expense is recognized in our Statement of Operations in the year the grants are made. In addition, we grant restricted stock units to select executives, and we grant shares of restricted stock to key employees. The restricted stock units granted to select executives vest generally over four years. The restricted stock units granted to key employees generally vest on the first anniversary of the grant date.

91

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

A summary of the activity for restricted stock units under the Libbey Inc. 2006 Omnibus Incentive Plan for 2008 and 2007 is presented below:

Restricted Stock Units	Shares
Outstanding balance at January 1, 2007		—
Granted		190,304
Awarded		(20,146	)
Canceled		—
Outstanding balance at December 31, 2007		170,158
Granted		100,725
Awarded		(67,972	)
Canceled		(300	)
Outstanding balance at December 31, 2008		202,611

The weighted-average grant-date fair value of the restricted stock units granted during 2008 and 2007 was $14.63 and $13.91, respectively. As of December 31, 2008, there was $1.1 million of total unrecognized compensation cost related to nonvested restricted stock units granted. That cost is expected to be recognized over a period of 3 years. Shares issued for restricted stock unit awards are issued from treasury stock.

Employee 401(k) Plan Retirement Fund and Non-Qualified Executive Savings Plan

We sponsor the Libbey Inc. Salary and Hourly 401(k) Plans (the Plan) to provide retirement benefits for our employees. As allowed under Section 401(k) of the Internal Revenue Code, the Plan provides tax-deferred salary contributions for eligible employees.

For the Salary Plan, employees can contribute from 1 percent to 50 percent of their annual salary on a pre-tax basis, up to the annual IRS limits. During 2008 and 2007, we matched 100 percent on the first 1 percent and matched 50 percent on the next two to five percent of pretax contributions to a maximum of 3.5 percent of compensation. During 2006, we matched an amount equal to 50 percent of employee pretax contributions up to the first 6 percent of eligible earnings that are contributed by employees. For the Hourly Plan, employees can contribute from 1 percent to 25 percent of their annual pay up to the annual IRS limits. We match 50 percent of the first 6 percent of eligible earnings that are contributed by employees on a pretax basis. Therefore, the maximum matching contribution that we may allocate to each participant’s account did not exceed $8,050 for the Salary Plan or $6,900 for the Hourly Plan for the 2008 calendar year due to the $230,000 annual limit on eligible earnings imposed by the Internal Revenue Code. Starting in 2003, we used treasury stock for the company match contributions to the Plans; however, we discontinued that practice as to salaried positions beginning January 1, 2007, and effective January 1, 2008 we discontinued that practice with hourly positions also. All matching contributions are now made in cash and vest immediately.

Effective January 1, 2005, employees who meet the age requirements and reach the Plan contribution limits can make a catch-up contribution not to exceed the lesser of 50 percent of their eligible compensation or the limit of $5,000 set forth in the Internal Revenue Code for the 2008 calendar year. The catch-up contributions are not eligible for matching contributions.

We have a non-qualified Executive Savings Plan (ESP) for those employees whose salaries exceed the IRS limit. Libbey matched employee contributions under the ESP. Libbey’s matching contribution during 2008 equaled 100 percent of the first one percent and 50 percent of the next two to five percent of eligible earnings that were contributed on a pretax basis by the employees.

92

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Our matching contributions to both Plans totaled $2.6 million, $2.6 million, and $2.2 million in 2008, 2007, and 2006, respectively. The company suspended matching contributions under the Plans for salaried and non-union employees effective March 16, 2009.

15.   Derivatives

We hold derivative financial instruments to hedge certain interest rate risks associated with our long-term debt, commodity price risks associated with forecasted future natural gas requirements and foreign exchange rate risks associated with transactions denominated in a currency other than the U.S. dollar. Most of these derivatives, except for certain natural gas contracts at Syracuse China and the foreign currency contracts, qualify for hedge accounting since the hedges are highly effective, and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. While we intend to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings.

During December 2008, we announced the closing of the Syracuse China facility in early April 2009 (see note 9). At the time of the announcement we held natural gas contracts for the Syracuse China facility with a settlement date after March 2009 of 165,000 million British Thermal Units (BTU’s). The closure of this facility has rendered the forecasted transactions related to these contracts not probable of occurring. Under FASB Statement No. 133, Accounting for Derivative Instrument and Hedging Activities (FAS 133), when the forecasted transactions of a hedging relationship becomes not probable of occurring, the gains or losses that have been classified in Other Comprehensive Income in prior periods for those contracts effected should be reclassified into earnings. We recognized $0.4 million in other income (expense) on the Consolidated Statement of Operations relating to these contracts.

We use commodity futures contracts related to forecasted future natural gas requirements. The objective of these futures contracts and other derivatives is to limit the fluctuations in prices paid from adverse price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, generally six or more months in the future. The fair values of these instruments are determined from market quotes. At December 31, 2008, we had commodity futures contracts for 5,280,000 million BTU’s of natural gas with a fair market value of $(14.9) million. We have hedged a portion of forecasted transactions through December 2011. At December 31, 2007, we had commodity futures contracts for 2,820,000 million BTU’s of natural gas with a fair market value of $(1.8) million.

We also use Interest Rate Protection Agreements (Rate Agreements) to manage our exposure to variable interest rates. These Rate Agreements effectively convert a portion of our borrowings from variable rate debt to fixed-rate debt, thus reducing the impact of interest rate changes on future results. These instruments are valued using the market standard methodology of netting the discounted expected future variable cash receipts and the discounted future fixed cash payments. The variable cash receipts are based on an expectation of future interest rates derived from observed market interest rate forward curves. At December 31, 2008, we had Rate Agreements for $200.0 million of variable rate debt with a fair market value of $(6.8) million. At December 31, 2007, we had Rate Agreements for $200.0 million of variable rate debt with a fair market value of $(5.3) million.

Our foreign currency exposure arises from transactions denominated in a currency other than the U.S. dollar, primarily associated with anticipated purchases of new equipment or net investment in a foreign operation. The fair values of these instruments are determined from market quotes. We have not changed our methods of calculating these values or developing underlying assumptions. The values of these derivatives will change over time as cash receipts and payments are made and as market conditions change. In January 2008, we entered into a series of foreign currency contracts to sell Canadian dollars. As of December 31, 2008 all of these contracts have expired. During April 2007, we entered into a foreign currency contract for 212.0 million pesos for a contractual payment

93

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

due to Vitro in January 2008, related to the Crisa acquisition. The fair value of this contract was $0.4 million as of December 31, 2007.

The fair values of the Rate Agreements, commodity contracts and foreign currency contracts are included in our Consolidated Balance Sheets in derivative liability, other long term liabilities and prepaid and other current assets.

We do not believe we are exposed to more than a nominal amount of credit risk in our interest rate, natural gas and foreign currency hedges, as the counterparties are established financial institutions. All counterparties were rated A or better as of December 31, 2008, by Standard and Poors.

Most of our derivatives qualify and are designated as cash flow hedges (except certain natural gas contracts at Syracuse China) at December 31, 2008. Hedge accounting is applied only when the derivative is deemed to be highly effective at offsetting changes in fair values or anticipated cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses would be recorded to earnings immediately. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in other income (expense) on the Consolidated Statement of Operations. We recognized a loss of $0.5 million and $0.4 million for December 31, 2008 and 2007, respectively, representing the total ineffectiveness of all cash flow hedges.

The effective portion of changes in the fair value of a derivative that is designated as and meets the required criteria for a cash flow hedge is recorded in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. Amounts reclassified into earnings related to rate agreements are included in interest expense and natural gas futures contracts in natural gas expense included in cost of sales.

16.   Comprehensive Income (Loss)

Total comprehensive (loss) income (net of tax) includes:

Year Ended December 31,	2008			2007			2006
Net loss	$	(80,463	)	$	(2,307	)	$	(20,899	)
Effect of derivatives, net of tax benefit of $3,390, $0 and $1,263		(10,300	)		(3,224	)		(6,829	)
Minimum pension liability and intangible pension asset (including equity investments for 2006), net of tax provision of $282, $0 and $4,733		(58,607	)		(2,956	)		10,650
Effect of exchange rate fluctuation		(4,402	)		9,712			3,070
Total comprehensive (loss) income	$	(153,772	)	$	1,225		$	(14,008	)

Accumulated other comprehensive loss (net of tax) includes:

December 31,	2008			2007			2006
Minimum pension liability and intangible pension asset (including equity investments for 2006)	$	(103,407	)	$	(44,800	)	$	(20,065	)
Adoption of SFAS 158		—			—			(21,779	)
Derivatives		(16,610	)		(6,310	)		(3,086	)
Exchange rate fluctuation		4,231			8,633			(1,079	)
Total	$	(115,786	)	$	(42,477	)	$	(46,009	)

94

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The change in other comprehensive loss related to cash flow hedges is as follows:

Year Ended December 31,	2008			2007			2006
Change in fair value of derivative instruments	$	(13,690	)	$	(3,224	)	$	(8,092	)
Less: Income tax benefit		3,390			—			1,263
Other comprehensive loss related to derivatives	$	(10,300	)	$	(3,224	)	$	(6,829	)

The following table identifies the detail of cash flow hedges in accumulated other comprehensive (loss) income:

December 31,	2008			2007			2006
Balance at beginning of year	$	(6,310	)	$	(3,086	)	$	3,743
Current year impact of changes in value (net of tax):
Rate agreements		(1,077	)		(6,423	)		1,015
Natural gas		(9,223	)		3,199			(7,844	)
Subtotal		(10,300	)		(3,224	)		(6,829	)
Balance at end of year	$	(16,610	)	$	(6,310	)	$	(3,086	)

17.   Fair Value

We adopted SFAS 157 as of January 1, 2008, but we have not applied the statement to non-recurring, nonfinancial assets and liabilities. The adoption of SFAS 157 did not have a material impact on our fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

•  Level 1 — Quoted prices in active markets for identical assets or liabilities.

•  Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

•  Level 3 — Unobservable inputs based on our own assumptions.

	Fair Value at December 31, 2008
	Level 1		Level 2			Level 3		Total
Commodity futures natural gas contracts	$	—	$	(14,868	)	$	—	$	(14,868	)
Interest rate protection agreements	$	—	$	(6,761	)	$	—	$	(6,761	)
Total derivative liability	$	—	$	(21,629	)	$	—	$	(21,629	)

The fair values of our interest rate protection agreements are based on the market standard methodology of netting the discounted expected future variable cash receipts and the discounted future fixed cash payments. The variable cash receipts are based on an expectation of future interest rates derived from observed market interest rate forward curves. The fair values of our commodity futures natural gas contracts are determined using observable market inputs. Since these inputs are observable in active markets over the terms that the instruments are held, the derivatives are classified as Level 2 in the hierarchy. We also evaluate Company and counterparty risk in determining fair values. The total derivative liability is recorded on the Consolidated Balance Sheets with $17.4 million in derivative liability and $3.7 million in other long term liabilities.

95

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The commodity futures natural gas contracts and interest rate protection agreements are hedges of either recorded assets or liabilities or anticipated transactions. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the above table.

18.   Operating Leases

Rental expense for all non-cancelable operating leases, primarily for warehouses, was $18.5 million, $15.8 million and $10.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Future minimum rentals under operating leases are as follows:

					2014 and
2009	2010	2011	2012	2013	Thereafter
$16,809	$14,296	$12,509	$10,334	$9,359	$57,556

19.   Other Income (Expense)

Items included in other income (expense) in the Consolidated Statements of Operations are as follows:

Year Ended December 31,	2008			2007		2006
Gain on sales of land at Syracuse and Royal Leerdam	$	—		$	5,457	$	—
Gain (loss) on currency translation		668			1,962		(1,021	)
Hedge ineffectiveness(1)		(461	)		423		(2,406	)
Other		912			936		191
Total other income (expense)	$	1,119		$	8,778	$	(3,236	)

(1) Includes $(0.4) million related to gas hedges at Syracuse China in 2008. See note 9.

20.   Segments

With the acquisition of Crisa and our growing focus on the global market, effective for the quarter ended September 30, 2006, we formed three reportable segments from which we derive revenue from external customers. We have reclassified prior period amounts to conform to the current presentation. Some operating segments were aggregated to arrive at the disclosed reportable segments. The segments are distinguished as follows:

•  North American Glass — includes sales of glass tableware from subsidiaries throughout the United States, Canada and Mexico.

•  North American Other — includes sales of ceramic dinnerware; metal tableware, hollowware and serveware; and plastic items from subsidiaries in the United States.

•  International — includes worldwide sales of glass tableware from subsidiaries outside the United States, Canada and Mexico.

96

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

The accounting policies of the segments are the same as those described in note 2 of the Notes to Consolidated Financial Statements. We do not have any customers who represent 10 percent or more of total sales. We evaluate the performance of our segments based upon sales and Earnings Before Interest and Taxes and Minority Interest (EBIT). Intersegment sales are consummated at arm’s length and are reflected in eliminations in the table below.

December 31,	2008			2007			2006
Net Sales:
North American Glass	$	554,128		$	568,495		$	476,696
North American Other		111,029			121,217			114,581
International		153,532			136,727			106,798
Eliminations		(8,482	)		(12,279	)		(8,595	)
Consolidated	$	810,207		$	814,160		$	689,480
EBIT:
North American Glass	$	25,495		$	54,492		$	5,471
North American Other		(17,696	)		15,670			9,382
International		(12,228	)		4,717			3,161
Consolidated	$	(4,429	)	$	74,879		$	18,014
Special charges (excluding write-off of financing fees) (see note 9):
North American Glass	$	5,356		$	—		$	18,534
North American Other		28,252			—			(42	)
International		11,890			—			—
Consolidated	$	45,498		$	—		$	18,492
Equity earnings:
North American Glass	$	—		$	—		$	—
North American Other		—			—			—
International		—			—			1,986
Consolidated	$	—		$	—		$	1,986
Depreciation & amortization:
North American Glass	$	26,004		$	25,558		$	22,102
North American Other		3,123			3,328			3,450
International		15,303			12,686			10,168
Consolidated	$	44,430		$	41,572		$	35,720
Capital expenditures:
North American Glass	$	21,170		$	25,711		$	30,286
North American Other		611			1,474			1,173
International		23,936			15,936			42,139
Consolidated	$	45,717		$	43,121		$	73,598

97

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

December 31,	2008			2007			2006
Total assets:
North American Glass	$	840,403		$	927,431		$	849,751
North American Other		54,089			83,064			86,795
International		429,749			443,132			421,315
Eliminations		(502,687	)		(554,156	)		(479,730	)
Consolidated	$	821,554		$	899,471		$	878,131
Reconciliation of EBIT to net loss:
Segment EBIT	$	(4,429	)	$	74,879		$	18,014
Interest Expense		(69,720	)		(65,888	)		(46,594	)
Income Taxes		(6,314	)		(11,298	)		7,747
Minority Interest		—			—			(66	)
Net Loss	$	(80,463	)	$	(2,307	)	$	(20,899	)

Total assets for our North American Other reporting segment previously reported for 2007 and 2006 were overstated by $285.4 million and $282.3 million for 2007 and 2006, respectively. Total assets previously included holding companies with inter-company investments which should have been reported on the eliminations line in this footnote disclosure. The reclassification had no impact on our previously reported consolidated balance sheets, consolidated statements of operations, including net income and earnings per share, consolidated statements of shareholders’ equity or consolidated statements of cash flows for any period.

Our operations by geographic areas for 2008, 2007 and 2006 are presented below. Intercompany sales to affiliates represent products that are transferred between geographic areas on a basis intended to reflect as nearly as possible the market value of the products. Net sales to customers located in the U.S., Mexico, and Other regions are shown in the table below. The long-lived assets include net fixed assets, goodwill and equity investments.

	United States		Mexico		All Other		Eliminations			Consolidated
2008
Net sales:
Customers	$	451,794	$	131,383	$	227,030				$	810,207
Intercompany		50,825		9,402		3,555	$	(63,782	)		—
Total net sales	$	502,619	$	140,785	$	230,585	$	(63,782	)	$	810,207
Long-lived assets	$	139,673	$	199,583	$	145,066	$	—		$	484,322
2007
Net sales:
Customers	$	459,294	$	123,966	$	230,900				$	814,160
Intercompany		52,617		8,774		2,925	$	(64,316	)		—
Total net sales	$	511,911	$	132,740	$	233,825	$	(64,316	)	$	814,160
Long-lived assets	$	160,662	$	202,924	$	143,551	$	—		$	507,137
2006
Net sales:
Customers	$	437,159	$	65,322	$	186,999				$	689,480
Intercompany		22,817		3,921		1,187	$	(27,925	)		—
Total net sales	$	459,976	$	69,243	$	188,186	$	(27,925	)	$	689,480
Long-lived assets	$	167,156	$	194,876	$	129,793	$	—		$	491,825

98

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

21.   Condensed Consolidated Guarantor Financial Statements

Libbey Glass is a direct, 100 percent owned subsidiary of Libbey Inc. and the issuer of the Senior Notes and the PIK Notes. The obligations of Libbey Glass under the Senior Notes and the PIK Notes are fully and unconditionally and jointly and severally guaranteed by Libbey Inc. and by certain indirect, 100 percent owned domestic subsidiaries of Libbey Inc. as described below. All are related parties that are included in the Consolidated Financial Statements for the year ended December 31, 2008.

At December 31, 2008, December 31, 2007 and December 31, 2006, Libbey Inc.’s indirect, 100 percent owned domestic subsidiaries were Syracuse China Company, World Tableware Inc., LGA4 Corp., LGA3 Corp., The Drummond Glass Company, LGC Corp., Traex Company, Libbey.com LLC, LGFS Inc., LGAC LLC and Crisa Industrial LLC (collectively, the “Subsidiary Guarantors”). The following tables contain condensed consolidating financial statements of (a) the parent, Libbey Inc., (b) the issuer, Libbey Glass, (c) the Subsidiary Guarantors, (d) the indirect subsidiaries of Libbey Inc. that are not Subsidiary Guarantors (collectively, “Non-Guarantor Subsidiaries”), (e) the consolidating elimination entries, and (f) the consolidated totals.

99

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Statement of Operations

	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
Year Ended December 31, 2008	(Parent)			(Issuer)			Guarantors			Subsidiaries		Eliminations			Consolidated
	(Dollars in thousands)
Net sales	$	—		$	392,738		$	111,029		$	363,625	$	(57,185	)	$	810,207
Freight billed to customers		—			743			1,220			459		—			2,422
Total revenues		—			393,481			112,249			364,084		(57,185	)		812,629
Cost of sales		—			345,669			104,683			310,125		(57,185	)		703,292
Gross profit		—			47,812			7,566			53,959		—			109,337
Selling, general and administrative expenses		—			44,269			11,265			32,917		—			88,451
Special charges		—			683			13,861			11,890		—			26,434
Income (loss) from operations		—			2,860			(17,560	)		9,152		—			(5,548	)
Other income (expense)		—			(2,332	)		(504	)		3,955		—			1,119
Earnings (loss) before interest and income taxes and minority interest		—			528			(18,064	)		13,107		—			(4,429	)
Interest expense		—			62,730			1			6,989		—			69,720
Earnings (loss) before income taxes and minority interest		—			(62,202	)		(18,065	)		6,118		—			(74,149	)
Provision (benefit) for income taxes		—			(7,380	)		9,284			4,410		—			6,314
Net income (loss) before minority interest		—			(54,822	)		(27,349	)		1,708		—			(80,463	)
Minority interest and equity in net income (loss) of subsidiaries		(80,463	)		(25,641	)		—			—		106,104			—
Net income (loss)	$	(80,463	)	$	(80,463	)	$	(27,349	)	$	1,708	$	106,104		$	(80,463	)
The following represents the total special charges included in the above Statement of Operations (see note 9):
Special charges included in:
Cost of sales	$	—		$	3,795		$	14,007		$	879	$	—		$	18,681
Special charges		—			683			13,861			11,890		—			26,434
Other income (expense)		—			—			(383	)		—		—			(383	)
Total pretax special charges	$	—		$	4,478		$	28,251		$	12,769	$	—		$	45,498
Special charges net of tax	$	—		$	4,478		$	28,251		$	12,523	$	—		$	45,252

100

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Statement of Operations

	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
Year Ended December 31, 2007	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
	(Dollars in thousands)
Net sales	$	—		$	409,788		$	121,217		$	341,799		$	(58,644	)	$	814,160
Freight billed to customers		—			566			1,341			300			—			2,207
Total revenues		—			410,354			122,558			342,099			(58,644	)		816,367
Cost of sales		—			335,575			96,934			284,833			(58,644	)		658,698
Gross profit		—			74,779			25,624			57,266			—			157,669
Selling, general and administrative expenses		—			46,551			11,442			33,575			—			91,568
Income (loss) from operations		—			28,228			14,182			23,691			—			66,101
Other income (expense)		—			4,284			1,334			3,160			—			8,778
Earnings (loss) before interest and income taxes and minority interest		—			32,512			15,516			26,851			—			74,879
Interest expense		—			60,090			—			5,798			—			65,888
Earnings (loss) before income taxes and minority interest		—			(27,578	)		15,516			21,053			—			8,991
Provision (benefit) for income taxes		—			(34,654	)		19,497			26,455			—			11,298
Net income (loss) before minority interest		—			7,076			(3,981	)		(5,402	)		—			(2,307	)
Minority interest and equity in net income (loss) of subsidiaries		(2,307	)		(9,383	)		—			—			11,690			—
Net income (loss)	$	(2,307	)	$	(2,307	)	$	(3,981	)	$	(5,402	)	$	11,690		$	(2,307	)

101

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Statement of Operations

	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
Year Ended December 31, 2006	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
	(Dollars in thousands)
Net sales	$	—		$	386,924		$	114,581		$	211,041		$	(23,066	)	$	689,480
Freight billed to customers		—			765			1,382			774			—			2,921
Total revenues		—			387,689			115,963			211,815			(23,066	)		692,401
Cost of sales		—			314,342			96,715			181,246			(23,066	)		569,237
Gross profit		—			73,347			19,248			30,569			—			123,164
Selling, general and administrative expenses		—			59,172			7,614			20,780			—			87,566
Special charges		—			(326	)		(42	)		16,702			—			16,334
Income (loss) from operations		—			14,501			11,676			(6,913	)		—			19,264
Equity earnings (loss) — pretax		—			—			612			1,374			—			1,986
Other income (expense)		—			(803	)		26			(2,459	)		—			(3,236	)
Earnings (loss) before interest and income taxes and minority interest		—			13,698			12,314			(7,998	)		—			18,014
Interest expense		—			36,577			2			10,015			—			46,594
Earnings (loss) before income taxes and minority interest		—			(22,879	)		12,312			(18,013	)		—			(28,580	)
Provision (benefit) for income taxes		—			(12,821	)		5,298			(224	)		—			(7,747	)
Net income (loss) before minority interest		—			(10,058	)		7,014			(17,789	)		—			(20,833	)
Minority interest and equity in net income (loss) of subsidiaries		(20,899	)		(10,841	)		—			(66	)		31,740			(66	)
Net income (loss)	$	(20,899	)	$	(20,899	)	$	7,014		$	(17,855	)	$	31,740		$	(20,899	)
The following represents the total special charges included in the above Statement of Operations (see note 9):
Special charges included in:
Cost of sales	$	—		$	—		$	—		$	2,158		$	—		$	2,158
Special charges		—			(326	)		(42	)		16,702			—			16,334
Interest expense		—			3,490			—			1,416			—			4,906
Total pretax special charges	$	—		$	3,164		$	(42	)	$	20,276		$	—		$	23,398
Special charges net of tax	$			$	2,307		$	(31	)	$	14,779		$	—		$	17,055

102

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Balance Sheet

	Libbey			Libbey					Non-
	Inc.			Glass			Subsidiary		Guarantor
December 31, 2008	(Parent)			(Issuer)			Guarantors		Subsidiaries		Eliminations			Consolidated
	(Dollars in thousands)
Cash and equivalents	$	—		$	6,453		$	413	$	6,438	$	—		$	13,304
Accounts receivable — net		—			32,789			6,076		37,207		—			76,072
Inventories — net		—			58,924			26,892		99,426		—			185,242
Other current assets		—			4,731			316		12,120		—			17,167
Total current assets		—			102,897			33,697		155,191		—			291,785
Other non-current assets		—			6,723			43		12,560		—			19,326
Investments in and advances to subsidiaries		(57,889	)		406,812			272,761		143,459		(765,143	)		—
Goodwill and purchased intangible assets — net		—			28,216			15,780		148,861		—			192,857
Total other assets		(57,889	)		441,751			288,584		304,880		(765,143	)		212,183
Property, plant and equipment — net		—			91,367			7,697		218,522		—			317,586
Total assets	$	(57,889	)	$	636,015		$	329,978	$	678,593	$	(765,143	)	$	821,554
Accounts payable	$	—		$	9,370		$	2,794	$	42,264	$	—		$	54,428
Accrued and other current liabilities		—			36,589			19,700		35,908		—			92,197
Notes payable and long-term debt due within one year		—			215			—		4,186		—			4,401
Total current liabilities		—			46,174			22,494		82,358		—			151,026
Long-term debt		—			451,772			—		94,084		—			545,856
Other long-term liabilities		—			140,936			14,185		27,440		—			182,561
Total liabilities		—			638,882			36,679		203,882		—			879,443
Total shareholders’ equity		(57,889	)		(2,867	)		293,299		474,711		(765,143	)		(57,889	)
Total liabilities and shareholders’ equity	$	(57,889	)	$	636,015		$	329,978	$	678,593	$	(765,143	)	$	821,554

103

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Balance Sheet

	Libbey		Libbey				Non-
	Inc.		Glass		Subsidiary		Guarantor
December 31, 2007	(Parent)		(Issuer)		Guarantors		Subsidiaries		Eliminations			Consolidated
	(Dollars in thousands)
Cash and equivalents	$	—	$	20,834	$	532	$	15,173	$	—		$	36,539
Accounts receivable — net		—		39,249		9,588		44,496		—			93,333
Inventories — net		—		71,856		37,890		84,333		—			194,079
Other current assets		—		9,243		467		10,721		—			20,431
Total current assets		—		141,182		48,477		154,723		—			344,382
Other non-current assets		—		12,955		596		3,670		—			17,221
Investments in and advances to subsidiaries		93,115		346,905		277,576		130,751		(848,347	)		—
Goodwill and purchased intangible assets — net		—		26,833		16,089		165,169		—			208,091
Total other assets		93,115		386,693		294,261		299,590		(848,347	)		225,312
Property, plant and equipment — net		—		100,742		19,389		209,646		—			329,777
Total assets	$	93,115	$	628,617	$	362,127	$	663,959	$	(848,347	)	$	899,471
Accounts payable	$	—	$	20,126	$	7,246	$	46,221	$	—		$	73,593
Accrued and other current liabilities		—		46,184		7,614		47,609		—			101,407
Notes payable and long-term debt due within one year		—		209		—		1,326		—			1,535
Total current liabilities		—		66,519		14,860		95,156		—			176,535
Long-term debt		—		428,896		—		66,203		—			495,099
Other long-term liabilities		—		96,622		5,496		32,604		—			134,722
Total liabilities		—		592,037		20,356		193,963		—			806,356
Total shareholders’ equity		93,115		36,580		341,771		469,996		(848,347	)		93,115
Total liabilities and shareholders’ equity	$	93,115	$	628,617	$	362,127	$	663,959	$	(848,347	)	$	899,471

104

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Statement of Cash Flows

	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
Year Ended December 31, 2008	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
	(Dollars in thousands)
Net income (loss)	$	(80,463	)	$	(80,463	)	$	(27,349	)	$	1,708		$	106,104		$	(80,463	)
Depreciation and amortization		—			14,904			3,123			26,403			—			44,430
Other operating activities		80,463			65,694			24,718			(29,778	)		(106,104	)		34,993
Net cash provided by (used in) operating activities		—			135			492			(1,667	)		—			(1,040	)
Additions to property, plant & equipment		—			(13,003	)		(611	)		(32,103	)		—			(45,717	)
Other investing activities		—			117			—			—			—			117
Net cash provided by (used in) investing activities		—			(12,886	)		(611	)		(32,103	)		—			(45,600	)
Net borrowings		—			(164	)		—			27,458			—			27,294
Other financing activities		—			(1,466	)		—			—			—			(1,466	)
Net cash provided by (used in) financing activities		—			(1,630	)		—			27,458			—			25,828
Exchange effect on cash		—			—			—			(2,423	)		—			(2,423	)
Increase (decrease) in cash		—			(14,381	)		(119	)		(8,735	)		—			(23,235	)
Cash at beginning of period		—			20,834			532			15,173			—			36,539
Cash at end of period	$	—		$	6,453		$	413		$	6,438		$	—		$	13,304

105

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Statement of Cash Flows

	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
Year Ended December 31, 2007	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
	(Dollars in thousands)
Net income (loss)	$	(2,307	)	$	(2,307	)	$	(3,981	)	$	(5,402	)	$	11,690		$	(2,307	)
Depreciation and amortization		—			15,143			3,329			23,100			—			41,572
Other operating activities		2,307			606			648			20,321			(11,690	)		12,192
Net cash provided by (used in) operating activities		—			13,442			(4	)		38,019			—			51,457
Additions to property, plant & equipment		—			(10,508	)		(1,474	)		(31,139	)		—			(43,121	)
Other investing activities		—			(3,237	)		1,501			9,949			—			8,213
Net cash provided by (used in) investing activities		—			(13,745	)		27			(21,190	)		—			(34,908	)
Net borrowings (repayments)		—			(155	)		—			(20,695	)		—			(20,850	)
Other financing activities		—			(1,557	)		—			—			—			(1,557	)
Net cash provided by (used in) financing activities		—			(1,712	)		—			(20,695	)		—			(22,407	)
Exchange effect on cash		—			—			—			631			—			631
Increase (decrease) in cash		—			(2,015	)		23			(3,235	)		—			(5,227	)
Cash at beginning of period		—			22,849			509			18,408			—			41,766
Cash at end of period	$	—		$	20,834		$	532		$	15,173		$	—		$	36,539

106

LIBBEY INC.

Notes to Consolidated Financial Statements — (Continued)

Libbey Inc.

Condensed Consolidating Statement of Cash Flows

	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
Year Ended December 31, 2006	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
	(Dollars in thousands)
Net income (loss)	$	(20,899	)	$	(20,899	)	$	7,014		$	(17,855	)	$	31,740		$	(20,899	)
Depreciation and amortization		—			16,841			3,364			15,515			—			35,720
Other operating activities		20,899			26,297			(7,699	)		32,280			(31,740	)		40,037
Net cash provided by (used in) operating activities		—			22,239			2,679			29,940			—			54,858
Additions to property, plant & equipment		—			(8,537	)		(1,173	)		(63,888	)		—			(73,598	)
Other investing activities		—			(229,009	)		(1,297	)		151,872			—			(78,434	)
Net cash (used in) investing activities		—			(237,546	)		(2,470	)		87,984			—			(152,032	)
Net borrowings		—			248,554			—			(96,041	)		—			152,513
Other financing activities		—			(13,215	)		—			(4,000	)		—			(17,215	)
Net cash provided by (used in) financing activities		—			235,339			—			(100,041	)		—			135,298
Exchange effect on cash		—			—			—			400			—			400
Increase (decrease) in cash		—			20,032			209			18,283			—			38,524
Cash at beginning of period		—			2,817			300			125			—			3,242
Cash at end of period	$	—		$	22,849		$	509		$	18,408		$	—		$	41,766

107

Selected Quarterly Financial Data (unaudited)

The following tables present selected quarterly financial data for the years ended December 31, 2008 and 2007:

	First Quarter						Second Quarter						Third Quarter						Fourth Quarter
	2008			2007			2008			2007			2008			2007			2008			2007
Net sales	$	187,276		$	179,496		$	224,828		$	207,123		$	211,536		$	202,431		$	186,567		$	225,110
Gross profit	$	30,337		$	32,415		$	42,168		$	44,189		$	37,934		$	38,250		$	(1,102	)	$	42,815
Gross profit margin		16.2	%		18.1	%		18.8	%		21.3	%		17.9	%		18.9	%		(0.6	)%		19.0	%
Selling, general & administrative expenses	$	20,859		$	22,034		$	23,451		$	23,667		$	23,377		$	23,571		$	20,764		$	22,296
Special charges	$	—		$	—		$	—		$	—		$	—		$	—		$	26,434		$	—
Income (loss) from operations (IFO)	$	9,478		$	10,381		$	18,717		$	20,522		$	14,557		$	14,679		$	(48,300	)	$	20,519
IFO margin		5.1	%		5.8	%		8.3	%		9.9	%		6.9	%		7.3	%		(25.9	)%		9.1	%
Earnings (loss) before interest and income taxes (EBIT)	$	10,231		$	12,226		$	19,303		$	21,161		$	13,557		$	16,240		$	(47,520	)	$	25,252
EBIT margin		5.5	%		6.8	%		8.6	%		10.2	%		6.4	%		8.0	%		(25.5	)%		11.2	%
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$	21,527		$	21,442		$	30,541		$	31,871		$	24,456		$	28,025		$	(36,523	)	$	35,113
EBITDA margin		11.5	%		11.9	%		13.6	%		15.4	%		11.6	%		13.8	%		(19.6	)%		15.6	%
Net income (loss)	$	(3,477	)	$	(1,754	)	$	(2,119	)	$	3,956		$	(5,958	)	$	445		$	(68,909	)	$	(4,954	)
Net income margin		(1.9	)%		(1.0	)%		(0.9	)%		1.9	%		(2.8	)%		0.2	%		(36.9	)%		(2.2	)%
Diluted earnings (loss) per share	$	(0.24	)	$	(0.12	)	$	(0.14	)	$	0.27		$	(0.40	)	$	0.03		$	(4.70	)	$	(0.34	)
Accounts receivable — net	$	95,096		$	94,384		$	111,849		$	103,423		$	102,781		$	108,993		$	76,072		$	93,333
DSO		42.2			44.9			48.6			48.2			44.2			49.6			34.3			41.8
Inventories — net	$	208,180		$	179,807		$	202,464		$	188,636		$	204,485		$	199,294		$	185,242		$	194,079
DIO		92.5			85.5			88.0			87.9			87.9			90.7			83.5			87.1
Accounts payable	$	66,080		$	62,792		$	70,246		$	63,704		$	58,468		$	56,045		$	54,428		$	73,593
DPO		29.4			29.9			30.5			29.7			25.1			25.5			24.5			33.2
Working capital	$	237,196		$	211,399		$	244,067		$	228,355		$	248,798		$	252,242		$	206,886		$	213,819
DWC		105.3			100.5			106.1			106.4			107.0			114.7			93.3			95.7
Percent of net sales		28.9	%		27.5	%		29.1	%		29.2	%		29.3	%		31.4	%		25.5	%		26.3	%
Net cash provided by (used in) operating activities	$	(28,139	)	$	(37	)	$	5,080		$	4,362		$	13,309		$	11,352		$	8,710		$	35,780
Free cash flow	$	(37,450	)	$	(7,761	)	$	(3,175	)	$	(8,587	)	$	990		$	2,664		$	(7,005	)	$	30,233
Total borrowings — net	$	511,060		$	488,359		$	536,701		$	493,317		$	525,702		$	491,742		$	550,257		$	496,634

108

The following table represents special charges (see note 9) included in the above quarterly data for the years ended December 31, 2008 and 2007:

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	2008		2007		2008		2007		2008		2007		2008			2007
Special charges included in:
Cost of sales	$	—	$	—	$	—	$	—	$	—	$	—	$	18,681		$	—
Special charges		—		—		—		—		—		—		26,434			—
Other income (expense)		—		—		—		—		—		—		(383	)		—
Total pre-tax special charges	$	—	$	—	$	—	$	—	$	—	$	—	$	45,498		$	—
Special charges — net of tax	$	—	$	—	$	—	$	—	$	—	$	—	$	45,252		$	—

Stock Market Information

Libbey Inc. common stock is listed for trading on the New York Stock Exchange under the symbol LBY. The price range for the Company’s common stock as reported by the New York Stock Exchange and dividends declared for our common stock were as follows:

	2008						2007
					Cash						Cash
	Price Range				Dividend		Price Range				Dividend
	High		Low		Declared		High		Low		Declared
First Quarter	$	17.60	$	12.96	$	0.025	$	14.28	$	11.17	$	0.025
Second Quarter	$	17.81	$	7.43	$	0.025	$	24.65	$	13.98	$	0.025
Third Quarter	$	11.25	$	6.44	$	0.025	$	24.06	$	13.76	$	0.025
Fourth Quarter	$	8.63	$	1.04	$	0.025	$	19.32	$	14.28	$	0.025

109

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.   CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act of 1934 (the “Exchange Act”) reports are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, we have investments in certain unconsolidated entities. As we do not control or manage these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

Report of Management

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

110

Management has used the framework set forth in the report entitled “Internal Control — Integrated Framework” published by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission to evaluate the effectiveness of the Company’s internal control over financial reporting. Management has concluded that the Company’s internal control over financial reporting was effective as of the end of the most recent fiscal year. The Company’s independent registered public accounting firm, Ernst & Young LLP, that audited the Company’s Consolidated Financial Statements, has issued an attestation report on the Company’s internal control over financial reporting.

Changes in Internal Control

There has been no change in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

ITEM 9B.   OTHER INFORMATION

None.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to executive officers of Libbey is incorporated herein by reference to Item 4 of this report under the caption “Executive Officers of the Registrant.” Information with respect to directors of Libbey is incorporated herein by reference to the information set forth under the caption “Libbey Corporate Governance-Who are the current members of Libbey’s Board of Directors?” in the Proxy Statement. Certain information regarding compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to the information set forth under the caption “Stock Ownership — Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement. Information with respect to the Audit Committee members, the Audit Committee financial experts, and material changes in the procedures by which shareholders can recommend nominees to the Board of Directors is incorporated herein by reference to the information set forth under the captions “Libbey Corporate Governance-Who are the current members of Libbey’s Board of Directors?”, “— What is the role of the Board’s Committees?” and “— How does the Board select nominees for the Board?” in the Proxy Statement.

Libbey’s Code of Business Ethics and Conduct applicable to its Directors, Officers (including Libbey’s principal executive officer and principal financial & accounting officer) and employees, along with the Audit Committee Charter, Nominating and Governance Committee Charter, Compensation Committee Charter and Corporate Governance Guidelines is posted on Libbey’s website at www.libbey.com. Libbey’s Code of Business Ethics and Conduct is also available to any shareholder who submits a request in writing addressed to Susan A. Kovach, Vice President, General Counsel and Secretary, Libbey Inc., 300 Madison Avenue, P.O. Box 10060, Toledo, Ohio 43699-0060. In the event that Libbey amends or waives any of the provisions of the Code of Business Ethics and Conduct applicable to the principal executive officer or principal financial & accounting officer, Libbey intends to disclose the subsequent information on Libbey’s website.

ITEM 11.   EXECUTIVE COMPENSATION

Information regarding executive compensation is incorporated herein by reference to the information set forth under the captions “Compensation Discussion and Analysis” in the Proxy Statement.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information regarding security ownership of certain beneficial owners and management is incorporated herein by reference to the information set forth under the captions “Stock Ownership — Who are the largest owners of Libbey stock?” and “— How much stock do Libbey’s directors and officers own?” in the Proxy Statement.

111

Information regarding equity compensation plans is incorporated herein by reference to Item 5 of this report under the caption “Equity Compensation Plan Information.”

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information regarding certain relationships and related transactions is incorporated herein by reference to the information set forth under the caption “Libbey Corporate Governance-Certain Relationships and Related Transactions — What related party transactions involved directors or related parties?” and ‘‘— How does the Board determine which directors are considered independent?” in the Proxy Statement.

ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES

Information regarding principal accounting fees and services is incorporated herein by reference to the information set forth under the caption “Audit-Related Matters — Who are Libbey’s auditors?” and “— What fees has Libbey paid to its auditors for fiscal year 2008 and 2007?” in the Proxy Statement.

PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES

a) Index of Financial Statements and Financial Statement Schedule Covered by Report of Independent Auditors.

	Page
Reports of Independent Registered Public Accounting Firms		49
Consolidated Balance Sheets at December 31, 2008 and 2007		51
For the years ended December 31, 2008, 2007 and 2006:
Consolidated Statements of Operations		52
Consolidated Statements of Shareholders’ Equity		53
Consolidated Statements of Cash Flows		54
Notes to Consolidated Financial Statements		55
Selected Quarterly Financial Data (Unaudited)		107
Financial Statement Schedule of Libbey Inc. for the years ended December 31, 2008, 2007 and 2006 for Schedule II Valuation and Qualifying Accounts (Consolidated)		S-1

All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is included in the Consolidated Financial Statements or the accompanying notes.

b) The accompanying Exhibit Index is hereby incorporated by reference. The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report.

112

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LIBBEY INC.

by:  /s/  Gregory T. Geswein

Gregory T. Geswein

Vice President and Chief Financial Officer

Date: March 16, 2009

113

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title
William A. Foley	Director
Peter C. McC. Howell	Director
Carol B. Moerdyk	Director
Jean-René Gougelet	Director
Terence P. Stewart	Director
Carlos V. Duno	Director
Deborah G. Miller	Director
John C. Orr	Director
Richard I. Reynolds	Director, Executive Vice President, Chief Operating Officer
John F. Meier	Chairman of the Board of Directors, Chief Executive Officer

By:  /s/  Gregory T. Geswein

Gregory T. Geswein

Attorney-In-Fact

Date: March 16, 2009

/s/  Gregory T. Geswein

Gregory T. Geswein

Vice President and Chief
Financial Officer (Principal Accounting Officer)

Date: March 16, 2009

114

EXHIBIT INDEX

S-K Item
601 No.				Document
	2	.0	—	Asset Purchase Agreement dated as of September 22, 1995 by and among The Pfaltzgraff Co., The Pfaltzgraff Outlet Co., Syracuse China Company of Canada Ltd., LG Acquisition Corp. and Libbey Canada Inc., Acquisition of Syracuse China Company (filed as Exhibit 2.0 to Libbey Inc.’s Current Report on Form 8-K dated September 22, 1995 and incorporated herein by reference).
	2	.1	—	Asset Purchase Agreement dated as of December 2, 2002 by and between Menasha Corporation and Libbey Inc. (filed as Exhibit 2.2 to Libbey Inc.’s Annual Report on Form 10-K for the year-ended December 31, 2002, and incorporated herein by reference).
	2	.2	—	Stock Purchase Agreement dated as of December 31, 2002 between BSN Glasspack N.V. and Saxophone B.V. (filed as Exhibit 2.3 to Libbey Inc.’s Annual Report on Form 10-K for the year-ended December 31, 2002, and incorporated herein by reference).
	3	.1	—	Restated Certificate of Incorporation of Libbey Inc. (filed as Exhibit 3.1 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	3	.2	—	Amended and Restated By-Laws of Libbey Inc. (filed as Exhibit 3.2 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	3	.3	—	Certificate of Incorporation of Libbey Glass Inc. (incorporated by reference to Exhibit 3.3 to Libbey Glass Inc.’s Registration Statement on Form S-4; File No. 333-139358).
	3	.4	—	Amended and Restated By-Laws of Libbey Glass Inc. (incorporated by reference to Exhibit 3.4 to Libbey Glass Inc.’s Registration Statement on Form S-4; File No. 333-139358).
	4	.1	—	Certificate of Incorporation of Libbey Glass Inc. (incorporated by reference to Exhibit 3.3).
	4	.2	—	Amended and Restated By-Laws of Libbey Glass Inc. (incorporated by reference to Exhibit 3.4).
	4	.3	—	Indenture, dated as of June 16, 2006, by and among Libbey Glass Inc., Libbey Inc., and all of the Libbey Glass Inc.’s direct and indirect Domestic Subsidiaries existing on the Issuance Date and The Bank of New York Trust Company, N.A., with respect to $306.0 million aggregate principal amount of Floating Rate Senior Secured Notes due 2011 (filed as Exhibit 4.2 to Libbey Inc.’s Current Report on Form 8-K filed on June 21, 2006 and incorporated herein by reference).
	4	.4	—	Form of Floating Rate Senior Secured Note due 2011 (filed as Exhibit 4.4 to Libbey Glass Inc.’s Registration Statement on Form S-4; File No. 333-139358).
	4	.5	—	Registration Rights Agreement, dated June 16, 2006, by and among Libbey Glass Inc., as issuer, Libbey Inc., as Parent Guarantor, and the Guarantors named in Schedule 1 thereto and J.P. Morgan Securities Inc., Bear, Stearns & Co. Inc., and BNY Capital Markets, Inc., as initial purchasers (filed as Exhibit 4.4 to Libbey Inc.’s Current Report on Form 8-K filed on June 21, 2006 and incorporated herein by reference).
	4	.6	—	Credit Agreement, dated June 16, 2006, among Libbey Glass Inc. and Libbey Europe B.V., Libbey Inc., the other loan parties thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, LaSalle Bank Midwest National Association, Wells Fargo Foothill, LLC, Fifth Third Bank, and J.P. Morgan Securities Inc., as Sole Bookrunner and Sole Lead Arranger (filed as Exhibit 4.1 to Libbey Inc.’s Current Report on Form 8-K filed on June 12, 2006 and incorporated herein by reference).
	4	.7	—	Indenture, dated June 16, 2006, among Libbey Glass Inc., Libbey Inc., the Subsidiary Guarantors party thereto and Merrill Lynch PCG, Inc. (filed as Exhibit 4.5 to Libbey Inc.’s Current Report on Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4	.8	—	Form of 16% Senior Subordinated Secured Pay-in-Kind Note due 2011 (filed as Exhibit 4.6 to Libbey Inc.’s Current Report on Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4	.9	—	Warrant, issued June 16, 2006 (filed as Exhibit 4.7 to Libbey Inc.’s Current Report on Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4	.10	—	Registration Rights Agreement, dated June 16, 2006, among Libbey Inc. and Merrill Lynch PCG, Inc. (filed as Exhibit 4.8 to Libbey Inc.’s Current Report on Form 8-K filed June 21, 2006 and incorporated herein by reference).

115

S-K Item
601 No.				Document
	4	.11	—	Intercreditor Agreement, dated June 16, 2006, among Libbey Glass Inc., JP Morgan Chase Bank, N.A., The Bank of New York Trust Company, N.A., Merrill Lynch PCG, Inc. and the Loan Parties party thereto (filed as Exhibit 4.9 to Libbey Inc.’s Current Report on Form 8-K filed on June 21, 2006 and incorporated herein by reference).
	4	.12	—	Amendment and Waiver, dated as of November 7, 2008, to the Credit Agreement, dated as of June 16, 2006, among Libbey Glass Inc. and Libbey Europe B.V., each as a Borrower and together, the Borrowers, Libbey Inc., as a Loan Guarantor, the other Loan Parties party thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent with respect to the US Loans, J.P. Morgan Europe Limited, as Administrative Agent with respect to the Netherlands Loans, Bank of America, N.A. (f/k/a LaSalle Bank Midwest National Association), as Syndication Agent, Wells Fargo Foothill, LLC and Fifth Third Bank, as Co-Documentation Agents and J.P. Morgan Securities Inc., as Sole Bookrunner and Sole Lead Arranger (filed as Exhibit 4.10 to Libbey Inc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by this reference).
	10	.1	—	Management Services Agreement dated as of June 24, 1993 between Owens-Illinois General Inc. and Libbey Glass Inc. (filed as Exhibit 10.2 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	10	.2	—	Tax Allocation and Indemnification Agreement dated as of May 18, 1993 by and among Owens-Illinois, Inc., Owens-Illinois Group, Inc. and Libbey Inc. (filed as Exhibit 10.3 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	10	.3	—	Pension and Savings Plan Agreement dated as of June 17, 1993 between Owens-Illinois, Inc. and Libbey Inc. (filed as Exhibit 10.4 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	10	.4	—	Cross-Indemnity Agreement dated as of June 24, 1993 between Owens-Illinois, Inc. and Libbey Inc. (filed as Exhibit 10.5 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	10	.5	—	Form of Non-Qualified Stock Option Agreement between Libbey Inc. and certain key employees participating in the Libbey Inc. Stock Option Plan for Key Employees (filed as Exhibit 10.8 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference).
	10	.6	—	Description of Libbey Inc. Senior Executive Life Insurance Plan (filed as Exhibit 10.9 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference).
	10	.7	—	The Amended and Restated Libbey Inc. Stock Option Plan for Key Employees (filed as Exhibit 10.14 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference).
	10	.8	—	Libbey Inc. Guarantee dated as of October 10, 1995 in favor of The Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse China Company of Canada Ltd. guaranteeing certain obligations of LG Acquisition Corp. and Libbey Canada Inc. under the Asset Purchase Agreement for the Acquisition of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as Exhibit 10.17 to Libbey Inc.’s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by reference).
	10	.9	—	Susquehanna Pfaltzgraff Co. Guarantee dated as of October 10, 1995 in favor of LG Acquisition Corp. and Libbey Canada Inc. guaranteeing certain obligations of The Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse China Company of Canada, Ltd. under the Asset Purchase Agreement for the Acquisition of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as Exhibit 10.18 to Libbey Inc.’s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by reference).

116

S-K Item
601 No.				Document
	10	.10	—	Letter Agreement dated as of October 10, 1995 by and between The Pfaltzgraff Co., The Pfaltzgraff Outlet Co., Syracuse China Company of Canada Ltd., LG Acquisition Corp. and Libbey Canada Inc., amending the Letter Agreement dated September 22, 1995 filed as part of the Asset Purchase Agreement for the Acquisition of Syracuse China (Exhibit 2.0) (filed as Exhibit 10.19 to Libbey Inc.’s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by reference).
	10	.11	—	The Amended and Restated Libbey Inc. Senior Management Incentive Plan (filed as Exhibit 10.22 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 and incorporated herein by reference).
	10	.12	—	First Amended and Restated Libbey Inc. Executive Savings Plan (filed as Exhibit 10.23 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference).
	10	.13	—	Form of Non-Qualified Stock Option Agreement between Libbey Inc. and certain key employees participating in The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.69 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference).
	10	.14	—	The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.67 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
	10	.15	—	First Amendment to Parent Guaranty Agreement Dated December 21, 2004 (filed as Exhibit 10.74 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).
	10	.16	—	Stock Promissory Sale and Purchase Agreement between VAA -- Vista Alegre Atlantis SGPS, SA and Libbey Europe B.V. dated January 10, 2005 (filed as Exhibit 10.76 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).
	10	.17	—	Libbey Inc. 2006 Deferred Compensation Plan for Outside Directors (filed as Exhibit 99.1 to the Libbey Inc.’s Current Report on Form 8-K filed December 12, 2005, and as exhibit 10.74 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	10	.18	—	RMB Loan Contract between Libbey Glassware (China) Company Limited and China Construction Bank Corporation Langfang Economic Development Area Sub-branch entered into January 23, 2006 (filed as exhibit 10.75 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	10	.19	—	Guarantee Contract executed by Libbey Inc. for the benefit of China Construction Bank Corporation Langfang Economic Development Area Sub-branch (filed as exhibit 10.76 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	10	.20	—	Limited Waiver and Second Amendment to Purchase Agreement, dated June 16, 2006, among Vitro, S.A. de C.V., Crisa Corporation, Crisa Libbey S.A. de C.V., Vitrocrisa Holdings, S. de R.L. de C.V., Vitrocrisa S. de R.L. de C.V., Vitrocrisa Comercial S. de R.L. de C.V., Crisa Industrial, L.L.C., Libbey Mexico, S. de R.L. de C.V., Libbey Europe B.V., and LGA3 Corp. (filed as exhibit 10.1 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10	.21	—	Guaranty, dated May 31, 2006, executed by Libbey Inc. in favor of Fondo Stiva S.A. de C.V. (filed as exhibit 10.2 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10	.22	—	Guaranty Agreement, dated June 16, 2006, executed by Libbey Inc. in favor of Vitro, S.A. de C.V. (filed as exhibit 10.3 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10	.23	—	Transition Services Agreement, dated June 16, 2006, among Crisa Libbey S.A. de C.V., Vitrocrisa Holding, S. de R.L. de C.V., Vitrocrisa S. de R.L. de C.V., Vitrocrisa Comercial, S. de R.L. de C.V., Crisa Industrial, L.L.C. and Vitro S.A. de C.V. (filed as exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed June 21, 2006 and incorporated herein by reference).

117

S-K Item
601 No.				Document
	10	.24	—	2006 Omnibus Incentive Plan of Libbey Inc. (filed as Exhibit 10.1 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10	.25	—	Libbey Inc. Amended and Restated Deferred Compensation Plan for Outside Directors (incorporated by reference to Exhibit 10.61 to Libbey Glass Inc.’s Registration Statement on Form S-4; File No. 333-139358).
	10	.26	—	Form of Registered Global Floating Rate Senior Secured Note, Series B, due 2011 (filed as exhibit 10.55 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2006 and incorporated herein by reference).
	10	.27	—	2009 Director Deferred Compensation Plan (filed as Exhibit 10.51 to Libbey Inc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by this reference).
	10	.28	—	Executive Deferred Compensation Plan (filed as Exhibit 10.52 to Libbey Inc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by this reference).
	10	.29	—	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and John F. Meier.
	10	.30	—	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and Richard I. Reynolds.
	10	.31	—	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and Gregory T. Geswein.
	10	.32	—	Form of Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and the respective executive officers identified on Appendix 1 thereto.
	10	.33	—	Amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc. and John F. Meier.
	10	.34	—	Form of amended and restated change in control agreement dated as of December 31, 2008 and the respective executive officers identified on Appendix 1 thereto.
	10	.35	—	Form of amended and restated change in control agreement dated as of December 31, 2008 and the respective individuals identified on Appendix 1 thereto.
	10	.36	—	Form of Amended and Restated Indemnity Agreement dated as of December 31, 2008 between Libbey Inc. and the respective officers identified on Appendix 1 thereto.
	10	.37	—	Form of Amended and Restated Indemnity Agreement dated as of December 31, 2008 between Libbey Inc. and the respective outside directors identified on Appendix 1 thereto.
	10	.38	—	Amended and Restated Libbey Inc. Supplemental Retirement Benefit Plan effective December 31, 2008.
	10	.39	—	Amendment to the First Amended and Restated Libbey Inc. Executive Savings Plan effective December 31, 2008.
	12	.1	—	Statement Regarding Computation of Ratios (incorporated by reference to Exhibit 12.1 to Libbey Glass Inc.’s Registration Statement on Form S-4; File No. 333-139358).
	13	.1	—	Selected Financial Information included in Registrant’s 2008 Annual Report to Shareholders (filed herein).
	21		—	Subsidiaries of the Registrant (filed herein).
	23		—	Consent of Ernst & Young LLP (filed herein).
	24		—	Power of Attorney (filed herein).
	31	.1	—	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein).
	31	.2	—	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein).
	32	.1	—	Chief Executive Officer Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herein).
	32	.2	—	Chief Financial Officer Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herein).

118

INDEX TO FINANCIAL STATEMENT SCHEDULE

	Page
Financial Statement Schedule of Libbey Inc. for the years ended December 31, 2008, 2007, and 2006 for Schedule II Valuation and Qualifying Accounts (Consolidated)		S-1

119

LIBBEY INC.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS (Consolidated)

Years ended December 31, 2008, 2007 and 2006

				Allowance for			Valuation
				Slow Moving			Allowance
	Allowance for			and Obsolete			for Deferred
	Doubtful Accounts			Inventory			Tax Asset
	(Dollars in thousands)
Balance at December 31, 2005	$	13,396		$	7,590		$	3,033
Charged to expense or other accounts		3,602			6,215			3,542
Deductions		(5,491	)		(8,026	)
Balance at December 31, 2006		11,507			6,139			6,575
Charged to expense or other accounts		1,760			2,285			22,280
Deductions		(1,556	)		(1,989	)
Balance at December 31, 2007		11,711			6,435			28,855
Charged to expense or other accounts		181			2,391			58,587
Deductions		(1,413	)		(2,244	)
Balance at December 31, 2008	$	10,479		$	6,582		$	87,442

S-1

EX-10.29

Ex 10.29

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of December 31, 2008, between LIBBEY INC., a Delaware corporation (the “Company”), and JOHN F. MEIER (the “Executive”).

          WHEREAS, the Company and the Executive previously entered into an Employment Agreement dated as of March 22, 2004 (the “March 2004 Agreement”) setting forth the terms and conditions upon which the Executive agreed to serve as an officer of the Company.

          WHEREAS, the Company and the Executive desire to amend the March 2004 Agreement in certain respects and, as so amended, to restate it in its entirety.

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend and restate the March 2004 Agreement, effective January 1, 2009, to provide as follows:

     1. Term of Agreement. The term of this Agreement shall commence on January 1, 2009 and shall continue through December 31, 2009. Commencing on January 1, 2010 and each January 1 thereafter, the term of this Agreement shall be extended automatically for one additional year unless, on or before September 30 of the then-current term, the Company gives written notice to the Executive that the Company does not wish to extend this Agreement beyond the expiration of the then current term. For example, if the Company does not desire to renew this Agreement for the 2011 calendar year, the Company must, on or before September 30, 2010, give written notice to the Executive that the Company does not wish to extend the term of this Agreement for the 2011 calendar year. The Company’s employment of the Executive under this Agreement shall continue indefinitely during the term of this Agreement until terminated as provided in Section 4. Notwithstanding the foregoing, the term of this Agreement shall automatically end on the last day of the month in which the Executive reaches age 65.

     2. Position and Duties.

          (a) Position. The Executive hereby agrees to serve as the Chief Executive Officer of the Company and to perform all duties assigned by the Company commensurate with his or her position. The Executive shall devote the Executive’s best efforts to the performance of services to the Company in accordance with the terms of this Agreement and as the Company reasonably may request. The Company shall nominate the Executive for election as a member of the Board of Directors of the Company (the “Board”) and all other officers of the Company shall report to the Executive or as the Executive may direct and shall be responsible for such functions as assigned to them by the Executive.

          (b) Other Activities. While employed pursuant to this Agreement, the Executive shall not, other than in the performance of duties inherent in, and in furtherance of, the business of the Company, engage in any other business or commercial activity as an employee, consultant, or in any other capacity, whether or not any compensation is received therefore. Nothing in the preceding sentence shall prevent the Executive from (i) making and managing personal investments, (ii) performing occasional assistance to family members and friends, including but not limited to service as a director of a family-owned or private business

enterprise, (iii) engaging in community and/or charitable activities, including without limitation service as a director, trustee or officer of an educational, welfare, social, religious or civic organization or charity, (iv) serving as a trustee or director or similar position of a public corporation or public business enterprise, but for only two such public corporations or public business enterprises at any one time, or (v) engaging in such other activities as are approved in writing by the Chief Executive Officer. The Executive shall refrain, however, from engaging in any of the acts described in clauses (i) — (v) of the preceding sentence to the extent that they singly or in the aggregate interfere with the proper performance of the Executive’s duties and responsibilities to the Company or are inconsistent with Section 9 of this Agreement.

     3. Compensation. In consideration of the performance of his duties under this Agreement, the Executive shall be entitled to receive the salary, bonus and benefits set forth on Schedule 1. All amounts payable to the Executive under this Section 3 shall be paid in accordance with the Company’s benefit plans and programs and regular payroll practices (e.g., timing of payments and standard employee deductions, such as income and employment tax withholdings, medical benefit contributions and parking fees, among others). No additional compensation shall be payable to the Executive by reason of the number of hours worked or any hours worked on Saturdays, Sundays or holidays, by reason of special responsibilities assumed (whether on behalf of the Company or any of its subsidiaries or affiliates), special projects completed, or otherwise. The Executive’s compensation shall be reviewed by the Board or the Compensation Committee of the Board (the “Compensation Committee”) periodically for possible merit increases and other changes as such reviewer deems appropriate.

     4. Termination of Employment. Either party may terminate the Executive’s employment under this Agreement at any time and for any reason, without advance notice. However:

          (a) Termination for Cause. If the Company terminates the Executive’s employment for Cause, then the Company shall pay to the Executive his base salary, through the Date of Termination (as defined in Section 4(g) of this Agreement) at the rate in effect at the time the Company provides the Notice of Termination (as defined in Section 4(f)). The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. The Company shall have no further obligations to the Executive under this Agreement. Without waiving any rights the Company may have hereunder or otherwise, the Company expressly reserves its rights to proceed against the Executive for damages in connection with any claim or cause of action that the Company may have arising out of or related to the Executive’s employment hereunder. “Cause” means (i) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive issues a Notice of Termination for Good Reason (as defined in Section 4(d)) to substantially perform the Executive’s duties, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive’s issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially

2

followed or complied with the directives of the Board, (iii) the Executive’s willful commission of an act of fraud or dishonesty that results in material economic or financial injury to the Company, or (iv) the Executive’s willful engagement in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. For purposes of this Section 4(a), no act, or failure to act, shall be deemed “willful” unless the Executive’s commission of the act or failure to act is not in good faith. In any event, the Company may not terminate the Executive for Cause unless and until the Company has delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (³/₄) of the entire membership of the Board at a meeting of the Board (after reasonable notice to the Executive, an opportunity for the Executive, together with counsel, to be heard before the Board and a reasonable opportunity to cure), finding, in the Board’s good faith opinion, that the Executive engaged in any of the conduct set forth above in clauses (i) through (iv) of the definition of “Cause” and specifying in reasonable detail the particulars of the conduct at issue.

          (b) Death. If the Executive is by the Company pursuant to this Agreement at the time of the Executive’s death, then the Executive’s employment shall be terminated automatically concurrently with his death. In that event, the Company shall pay to the Executive’s estate, within sixty (60) days after the Company receives written notice of appointment of a personal representative (on behalf of the Executive’s estate), the amount set forth in clauses (i) through (iii) of Section 5(a), plus all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement.

          (c) Permanent Disability. If the Company terminates the Executive’s employment due to the Executive’s Permanent Disability, the Company shall pay to the Executive base salary, in accordance with the Company’s normal payroll practices, through the Date of Termination at the rate in effect at the time the Company gives the Executive Notice of Termination. The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, long-term disability policy, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement. For purposes of this Agreement, “Permanent Disability” means any incapacity due to physical or mental illness as a result of which the Executive is absent from the full-time performance of his duties with the Company for six (6) consecutive months and does not return to the full-time performance of his duties within thirty (30) days after the Company gives Notice of Termination to the Executive.

          (d) Termination Without Cause or For Good Reason. If the Company terminates the Executive’s employment without Cause or the Executive terminates his employment for “Good Reason” (other than on account of death or Permanent Disability), the Executive shall be entitled to the compensation, vesting and benefits as described in Section 5(b) below. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following events unless they are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination:

     (i) The Executive ceases to be the Chief Executive Officer of the Company reporting to the Board;

3

     (ii) The Executive’s Base Salary is reduced by a greater percentage than the reduction applicable to any other Officer;

     (iii) There is a reduction in the annual incentive compensation opportunity or Equity Compensation (as defined in Section 5(b)(iii)(A) below) opportunity (i.e., percentage of the Executive’s base salary represented by awards of Equity Compensation of any type) established for the position held by the Executive and the reduction is not applied in the same or similar manner to all other executive officers;

     (iv) There is a reduction or elimination of an executive benefit or an employee benefit and the reduction is not applicable to all other Officers in the same or similar manner;

     (v) The Executive at any time fails to be elected as a member of the Board;

     (vi) There is a change in the reporting or responsibilities of any other Officer not approved by the Executive;

     (vii) There is a material breach of this Agreement by the Company and the Company does not remedy it prior to the expiration of thirty (30) days after receipt of written notice of the breach given by the Executive to the Company;

     (viii) The Company exercises its right not to extend the term of this Agreement beyond the then current term, unless the Company concurrently exercises its right not to renew the employment agreements in effect with respect to (A) the then-current Chief Financial Officer of the Company and (B)(i) the then-current Chief Operating Officer of the Company or (ii) if the Company has appointed one or more Presidents and the position of Chief Operating Officer is unfilled, the then-current President(s). For purposes of this Section 4 (d)(6), the term “employment agreements” does not include the Letter Agreement (as defined in Section 11(n)) or similar agreements relating to a change in control of the Company.

If the Executive does not deliver to the Board, within ninety (90) days after the date on which the Executive knew or should have known of the Good Reason event, written notice specifying in reasonable detail the particulars giving rise to the Good Reason Event, the Executive shall be deemed conclusively to have waived that particular Good Reason Event (but not any subsequent Good Reason Event) even if the Executive’s failure to give timely notice of the Good Reason event is a result of the Executive’s incapacity due to physical or mental illness.

          (e) Termination by Resignation or Retirement. If the Executive terminates his employment by resigning or retiring, other than at the written request of the Company or for Good Reason, the Company shall pay the Executive base salary through the Date of Termination at the rate in effect at the time the Notice of Termination is given. In addition, the Company shall pay or provide to the Executive all other amounts and benefits to which the Executive is entitled under any compensation plan or practice of the Company, pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and

4

other benefits of the Company or provided by law, at the time such payments are due. The Company shall have no further obligations to the Executive under this Agreement.

          (f) Notice of Termination. A party who purports to terminate the Executive’s employment (other than as a result of death or as a result of resignation or retirement that is not at the written request of the Company and is not for Good Reason) shall provide to the other party Notice of Termination in accordance with Section 4. “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement upon which the terminating party is relying and that sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

          (g) Date of Termination, Etc. “Date of Termination” means the date on which the Executive incurs a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     5. Compensation upon Termination.

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

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

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

     (iii) Two (2) times the sum of the Executive’s annual base salary at the then current rate in effect as of the Date of Termination payable in one (1) lump-sum payment;

     (iv) Continuation of the Executive’s medical, prescription drug, dental and vision benefits (collectively, “Medical Insurance Benefits”) for the Executive’s covered dependents for a period of twelve (12) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive’s dependents are eligible for coverage pursuant to this Section 5(a)(iv), the Executive’s dependents shall pay the cost, on an after-tax basis, for the continued Medical Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive’s dependents such that, after payment of all taxes incurred by the Executive’s dependents as a result of their receipt of the Medical Insurance Benefits and payment by the Company, the Executive’s dependents will retain an amount equal to the amount they paid during the immediately preceding calendar year for the Medical Insurance Benefits; and

     (v) Awards to the Executive pursuant to any Equity Compensation plan of the Company shall vest immediately as of the Date of Termination and, if applicable, be exercisable for a period of three years following the Date of

5

Termination or for such longer period following the Date of Termination specified by the award granted to the Executive; provided however, that nothing in this Agreement shall act to extend the term of any Equity Compensation award and no Equity Compensation award that has an option feature (i.e., a feature that requires that the grantee take an affirmative action to obtain the benefit of the award) may be exercised after the expiration of the term of the award specified in the award granted to the Executive.

        (b) Termination for Permanent Disability, Without Cause or for Good Reason. If the Company terminates the Executive’s employment for Permanent Disability or without Cause, or the Executive terminates his employment for Good Reason (other than as a result of the Executive’s death or Permanent Disability), the Executive shall be entitled to the following:

     (i) Payment, not later than five (5) business days after the Date of Termination, of the Executive’s base salary accrued through the Date of Termination;

     (ii) With respect to the Executive’s annual incentive compensation opportunity during the year in which the Date of Termination occurs, payment of an amount equal to the Executive’s target award, prorated through the Date of Termination; provided, however, that in any event the amount payable pursuant to this clause shall not be less than 50% of the Executive’s target award. The amount payable pursuant to this clause shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the year in which the Date of Termination occurs;

     (iii) If the Executive is eligible under any “performance-based” equity Compensation plans (as defined below) as of the date on which Notice of Termination is given, payment of the applicable Equity Compensation (or, in the Compensation Committee’s discretion, cash equal in value to the applicable Equity Compensation) actually earned for each performance cycle during which the Date of Termination occurs, but prorated through the Date of Termination. The amount required to be paid pursuant to this clause (iii) shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the end of each applicable performance cycle. For purposes of this Agreement, the following terms have the meanings given them below:

          (A) “Equity Compensation” means shares of common stock, whether or not restricted, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and/ or any other equity-based or equity-related award.

          (B) A compensation plan shall be deemed a “performance-based equity compensation plan” if the plan provides that Equity Compensation may be earned pursuant to the plan and the plan provides that the amount of, or the entitlement to, the Equity Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by the date not later than ninety (90) days after the commencement of the

6

performance period, provided that the outcome is substantially uncertain at the time the criteria are established. A performance-based equity compensation plan also may provide for payments based upon subjective performance criteria, provided that—

          (1) The subjective performance criteria are bona fide and relate to the performance of the Executive, a group of employees that includes the Executive, or a business unit for which the Executive provides services (which may include the entire Company); and

          (2) The determination that any subjective performance criteria have been met is not made by the Executive or a family member of the Executive, or a person under the effective control of the Executive or such a family member, and no amount of the compensation of the person making the determination is effectively controlled in whole or in part by the Executive or such a family member;

     (iv) A lump sum payment equal to three (3) times the sum of (A) Executive’s annual Base Compensation at the rate in effect on the date on which Notice of Termination is given and (B) the Executive’s target annual incentive compensation opportunity at the time the Notice of Termination is given. The amount required to be paid pursuant to this clause (iv) shall be paid, subject to Section 5(c), not later than five (5) business days after the Date of Termination;

     (v) Continuation of the Executive’s medical, prescription drug, dental and life insurance benefits (collectively, “Insurance Benefits”) for a period of twenty-four (24) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive is eligible for coverage pursuant to this Section 5(a)(v), Executive shall pay the cost, on an after-tax basis, for the continued Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive such that, after payment of all taxes incurred by the Executive as a result of his receipt of the Insurance Benefits and payment by the Company, the Executive will retain an amount equal to the amount the Executive paid during the immediately preceding calendar year for the Insurance Benefits; and

     (vi) Any awards of Equity Compensation (other than “performance-based” Equity Compensation”) that have been granted to the Executive and that have not vested as of the Date of Termination shall vest immediately on the Date of Termination. To the extent that any such awards (such as stock options or stock appreciation rights) contain an option feature (i.e., a feature that requires that the grantee take an affirmative action in order to obtain the benefit of the award), they shall be exercisable for a period of three years following the Date of Termination or for such longer period following the Date of Termination as is specified in the award agreements governing the award(s). However, the immediately preceding sentence shall not be deemed to extend the term of any award of Equity Compensation that, by the terms of the agreement governing it, is scheduled to expire unless exercised prior to the expiration of the three (3) year period referred to in the immediately preceding sentence.

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          (c) Payments. Payment of benefits under Section 5(a) is subject to reasonable evidence of authority to act for the decedent’s estate. Payment of benefits under clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) is conditioned on the release provided under Section 5(d) becoming effective. Except as otherwise provided in this Agreement, all payments under this Agreement shall be subject to applicable withholdings. Notwithstanding any provisions of this Section 5 to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to policies adopted by the Company) on the Executive’s Date of Termination, amounts that otherwise would be payable, pursuant to clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement (as well as any other payment or benefit that the Executive is entitled to receive upon the Executive’s separation from service that would be considered to be deferred compensation under Section 409A of the Code), during the six (6) month period immediately following the Date of Termination (the “Delayed Payments”) will instead be paid or made available on the earlier of (i) the first day of the seventh month following the Executive’s Date of Termination and (ii) the Executive’s death (the applicable date, the “Initial Payment Date”). Continuation of benefits under Section 5(a)(iv) or 5(b)(vi), shall be in addition to and not concurrent with any continuation rights Executive may have under the Consolidated Omnibus Budget Reconciliation Act of 1985, or similar state law.

          (d) Release. Payment of any amount to and the provision of any benefits to, or on behalf of, the Executive pursuant to any of clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement and Executive’s acceptance of such amounts shall be conditioned on the Executive’s execution and delivery to the Company, no later than sixty (60) days after the Date of Termination, of a general waiver and release of claims in the form attached hereto as Exhibit A or in such other form as the Company may reasonably request to provide a complete release of all claims and causes of action the Executive or the Executive’s estate may have against the Company, except claims and causes of action arising out of, or related to, the obligations of the Company pursuant to this Agreement and Claims (as defined in Exhibit A) for vested benefits under any pension plan, retirement plan and savings plan, rights under any Equity Compensation plan and stock purchase plan and rights to continuation of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law.

          (e) No Offset for Benefits. There shall be no offset to any compensation or other benefits otherwise payable to, or on behalf of, the Executive pursuant to the terms of Section 5 of this Agreement as a result of the receipt by Executive of any pension, retirement or other benefit payments (including, but not limited to, accrued vacation) except as provided by Section 11(n).

          (f) Excise Tax.

     (i) Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution to the Executive or for the Executive’s benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise (the “Payment”) would be subject to the excise tax imposed by section 4999 of the Code or any successor provision (the “Excise Tax”), then the Executive shall be entitled to receive from the Company an additional payment (the “Gross-Up Payment”) in an amount such that the net amount of the Payment and the Gross-Up Payment retained by the Executive after the calculation and deduction of all Excise Taxes (including

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any interest or penalties imposed with respect to such taxes) on the payment and all federal, state and local income tax, employment tax and Excise Tax (including any interest or penalties imposed with respect to such taxes) on the Gross-Up Payment provided for in this Section 5(g), and taking into account any lost or reduced tax deductions on account of the Gross-Up Payment, shall be equal to the Payment;

     (ii) Notwithstanding any provision of this Agreement to the contrary, but giving effect to any redetermination of the amount of Gross-Up payments otherwise required by this Section 5(f), if but for this sentence the Company would be obligated to make a Gross-Up Payment to the Executive, and the aggregate “present value” of the “parachute payments” to be paid or provided to the Executive under this Agreement or otherwise does not exceed 1.10 multiplied by three times the Executive’s “base amount,” then the payments and benefits to be paid or provided under this Agreement will be reduced (or repaid to the Company, if previously paid or provided) to the minimum extent necessary so that no portion of any payment or benefit to the Executive, as so reduced or repaid, constitutes an “excess parachute payment.” For purposes of this Section 5(f)(ii), the terms “excess parachute payment,” “present value,” “parachute payment,” and “base amount” have the meanings assigned to them by Section 280G of the Code. The determination of whether any reduction in or repayment of such payments or benefits to be provided under this Agreement is required pursuant to this Section 5(f)(ii) will be made at the expense of the Company, if requested by the Executive or the Company, by the Accountants (as defined in Section 5(f)(iii)). Appropriate adjustments will be made to amounts previously paid to the Executive, or to amounts not paid pursuant to this Section 5(f)(ii), as the case may be, to reflect properly a subsequent determination that the Executive owes more or less Excise Tax than the amount previously determined to be due. If a Payment intended to be provided under the Agreement is required to be reduced pursuant to this Section 5(f)(ii), the payments shall be reduced in the following order of priority: payments pursuant to Section 5(b)(iv), payments pursuant to Section 5(b)(v) and payments pursuant to Section 5(b)(ii), with any Equity Compensation having an option feature being the last payments to be subject to reduction.

     (iii) All determinations required to be made under this Section 5, including whether and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations, shall be made in good faith by the Accountants (as defined below), which shall provide the Executive and the Company with detailed supporting calculations with respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice from the Executive or the Company that has received or will receive a Payment. For the purposes of this Section 5(f), the “Accountants” shall mean the Company’s independent certified public accountants serving immediately prior to the change in control that with other events results in the imposition of the Excise Tax. If the Accountants are also serving as accountant or auditor for the individual, entity or group effecting a change in control that with other events results in the imposition of the Excise Tax, the Company shall appoint another recognized public accounting firm to make the determinations required hereunder (which accounting firm shall also be

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referred to herein as the “Accountants”). All fees and expenses of the Accountants shall be borne solely by the Company. For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax. For purposes of calculating whether the Excise Tax is applicable and determining the amount of the Gross-Up Payment, (A) to the extent not otherwise specified herein, reasonable assumptions and approximations may be made, (B) good faith interpretations of the Code may be relied upon and (C) the Executive shall be deemed to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Executive’s adjusted gross income), and to have otherwise allowable deductions for Federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income. Any determination by the Accountants shall be binding upon the Company and the Executive. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than the Company should have paid pursuant to this Section 5(f) (the “Underpayment”). If the Company exhausts its remedies pursuant to Section 5(f) and the Executive is required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by the Company to the Executive or for his benefit; and

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

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

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

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

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

     (v) Notwithstanding any other provision of this Section 5(f) to the contrary and subject to Section 5(c), all taxes and expenses described in this Section 5(f) shall be paid or reimbursed within five (5) business days after the Executive submits evidence of incurrence of such taxes and/or expenses, provided that in all events such reimbursement will be made no later than the end of the year following the year in which the applicable taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, no later than the end of the year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). Each provision of reimbursements

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pursuant to this Section 5(f) shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed by the Company in one taxable year in no event will affect the amount of expenses required to be reimbursed or in-kind benefits required to be provided by the Company in any other taxable year.

     6. Termination Obligations.

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

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

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

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

     7. Records and Confidential Data.

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

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

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

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

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

     8. Assignment of Inventions.

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

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

          (c) Duty to Disclose and Assist. The Executive agrees to promptly disclose in writing all Inventions to the Company, and to provide all assistance reasonably requested by the Company in the preservation of the Company’s interests in the Inventions including obtaining patents in any country throughout the world. Such services will be without additional compensation if the Executive is then employed by the Company and for reasonable compensation and subject to his reasonable availability if he is not. If the Company cannot, after reasonable effort, secure the Executive’s signature on any document or documents needed to apply for or prosecute any patent, copyright, or other right or protection relating to an Invention, whether because of his physical or mental incapacity or for any other reason

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whatsoever, the Executive hereby irrevocably designates and appoints the Company and its duly authorized Officers and agents as his agent and attorney-in-fact, to act for and on his behalf and in his name and stead for the purpose of executing and filing any such application or applications and taking all other lawfully permitted actions to further the prosecution and issuance of patents, copyrights, or similar protections thereon, with the same legal force and effect as if executed by the Executive.

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

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

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

     9. Additional Covenants.

          (a) Non-Interference with Customer Accounts. Executive covenants and agrees that (i) during employment and (ii) for a period of twelve (12) months commencing on the Date of Termination, except as may be required by Executive’s employment by the Company, Executive shall not directly or indirectly, personally or on behalf of any other person, business, corporation, or entity, contact or do business with any customer of the Company with respect to any product, business activity or service which is competitive with any product, business, activity or service of the type sold or provided by the Company.

          (b) Non-Competition. In consideration of and in connection with the benefits provided to the Executive under this Agreement and in order to protect the goodwill of the Company, the Executive hereby agrees that if the Executive’s employment is terminated, then, unless the Company otherwise agrees in writing, for a period of twelve (12) months commencing on the Date of Termination, the Executive shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any

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entity engaged in a business which sells, in competition with the Company and its affiliates, the same type of products as sold by the Company, including without limitation glass tableware, ceramic dinnerware, metal flatware and plastic supplies to the foodservice industry other than as a shareholder or beneficial owner owning five percent (5%) or less of the outstanding securities of a public company. Without limiting the foregoing, currently the following business operations among others sell, in competition with the Company and its affiliates, the same type of products as sold by the Company and its affiliates: Anchor Hocking; Arc International and its affiliate Cardinal International, Inc.; Oneida Ltd.; and any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

          (c) No Diversion. The Executive covenants and agrees that in addition to the other Covenants set forth in this Section 9, (i) during his employment and (ii) for a period of twelve (12) months following his Date of Termination, Executive shall not divert or attempt to divert or take advantage of or attempt to take advantage of any actual or potential business opportunities of the Company (e.g., joint ventures, other business combinations, investment opportunities, potential investors in the Company, and other similar opportunities) of which the Executive became aware as a result of his employment with the Company.

          (d) Non-Recruitment. The Executive acknowledges that the Company has invested substantial time and effort in assembling its present workforce. Accordingly, the Executive covenants and agrees that during employment and for period of twelve (12) months commencing on the Date of Termination, the Executive shall not either for the Executive’s own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venture owner or shareholder or otherwise on behalf of any other person, firm or corporation directly or indirectly entice, solicit, attempt to solicit, or seek to induce or influence any Officer or employee of the Company to leave his or her employment with the Company or to offer employment to any person who on or during the six (6) month period immediately preceding the date of such solicitation or offer was an employee of the Company; provided, however, that this Section 9(d) shall not be deemed to be breached with respect to an employee or former employee of the Company who responds to a general advertisement seeking employment or who otherwise initiates contact for the purpose of seeking employment.

          (e) Non-Disparagement. Executive covenants and agrees that during the Executive’s employment and for period of twelve (12) months commencing on the Date of Termination, Executive shall not induce or incite claims of discrimination, wrongful discharge, or any other claims against the Company or any of its directors, Officers, employees or equity holders, by any other persons, executives or entities, and the Executive shall not undertake any harassing or disparaging conduct directed at the Company or any of its directors, Officers, employees or equity holders, other than such statements made as part of testimony compelled by law or legal process.

          (f) Remedies. The Executive acknowledges that should the Executive violate any of the covenants contained in Sections 6, 7, 8 or 9 hereof (collectively, the “Covenants”), it would be difficult to determine the resulting damages to the Company and, in addition to any other remedies it may have, the Company shall be entitled to (i) temporary injunctive relief without being required to post a bond, (ii) permanent injunctive relief without the necessity of proving actual damage and (iii) forfeiture of all benefits otherwise payable to or for the account of the Executive under Sections 5(b)(ii), (iii), (iv) and (v) following the violation. The Executive shall be liable to pay all costs including reasonable attorneys’ fees which the

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Company may incur in enforcing or defending, to any extent, these Covenants, whether or not litigation is actually commenced and including litigation of any appeal taken or defended by the Company, where the Company succeeds in enforcing any part of these Covenants. The Company may elect to seek one or more of these remedies at its sole discretion on a case by case basis. Failure to seek any or all remedies in one case does not restrict the Company from seeking any remedies in another situation. Such action by the Company shall not constitute a waiver of any of its rights.

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

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

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

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

     11. Miscellaneous Provisions.

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

          (b) Notices. All notices and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as properly

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

If to the Executive:

John F. Meier
5500 Little
Sylvania, Ohio 43560

If to the Company:

Libbey Inc.
300 Madison Avenue
P.O. Box 10060
Toledo, Ohio 43604
Facsimile: (419) 325-2585
Attention: Secretary

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

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

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

          (e) Waiver of Jury Trial. The parties hereby waive, release and relinquish any and all rights they may have to a trial by jury with RESPECT to any actions TO ENFORCE AN ARBITRATOR’S DECISION PURSUANT TO SECTION 11(l) OF THIS AGREEMENT.

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

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

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

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

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

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

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

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

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          (n) Effect on Other Agreements. It is the intention of the parties hereto and thereto that this Agreement provide benefits that are not otherwise provided by the Letter Agreement dated as of December 31, 2008, between the Executive and the Company (the “Letter Agreement”), which provides to the Executive certain benefits in connection with a Change in Control (as defined in the Letter Agreement). If the Executive’s employment is terminated prior to, or the two (2) year period following, a Change in Control and the Executive is entitled to benefits under the Letter Agreement as a result of or in connection with his termination of employment, then the Executive shall not be entitled to benefits under this Agreement in connection with his termination of employment.

          (o) Coordination with Deferred Compensation Plans. If and to the extent that the Executive has elected, pursuant to the Executive Savings Plan (“ESP”), the Executive Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of compensation, including without limitation any performance-based Equity Compensation or other Equity-Based Compensation (as defined in the DCP), the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to the Executive and the timing of any such distribution. However, the terms of this Agreement or, in the case of a termination of the Executive’s employment in connection with a Change in Control, the Letter Agreement, shall govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based Equity Compensation and other Equity-Based Compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (p) Compliance with Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

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

LIBBEY INC.
By:
Name:	Susan A. Kovach
Title:	Vice President, General Counsel & Secretary
Name: John F. Meier

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SCHEDULE 1

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

a.	The annual performance incentive compensation plan for corporate Officers (currently the “Senior Management Incentive Plan”). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 90% of annual base salary) and any subsequent revisions.
b.	The long term incentive compensation plan (currently the Libbey Inc. Long Term Incentive Compensation Plan). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 150% of annual base salary) and any subsequent revisions.
c.	Stock option and equity participation plan (currently the 2006 Omnibus Incentive Plan of Libbey Inc.)
d.	Libbey Inc. Retirement Savings Plan
e.	Financial Investment Counseling
f.	Executive Physical
g.	Executive Deferred Compensation Plan
h.	Such other benefit plans and arrangements as the Company provides, from time to time, to salaried employees generally

EXHIBIT A

GENERAL RELEASE AND WAIVER OF CLAIMS

          The undersigned, ___resident of the State of ___(“Releasor”), in accordance with and pursuant to the terms of Section 5(d) of the Amended and Restated Employment Agreement (the “Agreement”), dated as of December 31, 2008, between Libbey Inc., a Delaware corporation (the “Company”), and Releasor, and the consideration therein provided, except as set forth herein, hereby remises, releases and forever discharges and covenants not to sue, and by these presents does for Releasor and Releasor’s legal representatives, trustees, beneficiaries, heirs and assigns (Releasor and such persons referred to herein, collectively, as the “Releasing Parties”) hereby remise, release and forever discharge and covenant not to sue the Company and its affiliates and the respective Officers, directors, employees, equity holders, agent and representatives of each of them and all of their respective successor and assigns (each a “Released Party” and collectively, the “Released Parties”), of and from any and all manner of actions, proceedings, claims, causes of action, suits, promises, damages, judgments, executions, claims and demands, of any nature whatsoever, and of every kind and description, choate and inchoate, known or unknown, at law or in equity (collectively, “Claims”), which the Releasing Parties, or any of them, now have or ever had, or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever, against the Released Parties, and each of them, from the beginning of time to the date hereof;

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

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

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

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

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

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

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

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

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

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

Dated: _________, 20___.

RELEASOR:

Name:

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EX-10.30

Exhibit 10.30

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of December 31, 2008, between LIBBEY INC., a Delaware corporation (the “Company”), and RICHARD I. REYNOLDS (the "Executive”).

          WHEREAS, the Company and the Executive previously entered into an Employment Agreement dated as of March 22, 2004 (the “March 2004 Agreement”) setting forth the terms and conditions upon which the Executive agreed to serve as an officer of the Company.

          WHEREAS, the Company and the Executive desire to amend the March 2004 Agreement in certain respects and, as so amended, to restate it in its entirety.

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend and restate the March 2004 Agreement, effective January 1, 2009, to provide as follows:

     1. Term of Agreement. The term of this Agreement shall commence on January 1, 2009 and shall continue through December 31, 2009. Commencing on January 1, 2010 and each January 1 thereafter, the term of this Agreement shall be extended automatically for one additional year unless, on or before September 30 of the then-current term, the Company gives written notice to the Executive that the Company does not wish to extend this Agreement beyond the expiration of the then current term. For example, if the Company does not desire to renew this Agreement for the 2011 calendar year, the Company must, on or before September 30, 2010, give written notice to the Executive that the Company does not wish to extend the term of this Agreement for the 2011 calendar year. The Company’s employment of the Executive under this Agreement shall continue indefinitely during the term of this Agreement until terminated as provided in Section 4. Notwithstanding the foregoing, the term of this Agreement shall automatically end on the last day of the month in which the Executive reaches age 65.

     2. Position and Duties.

          (a) Position. The Executive hereby agrees to serve as an officer of the Company and to perform all duties assigned by the Company commensurate with his or her position. The Executive shall devote the Executive’s best efforts to the performance of services to the Company in accordance with the terms of this Agreement and as the Company reasonably may request.

          (b) Other Activities. While employed pursuant to this Agreement, the Executive shall not, other than in the performance of duties inherent in, and in furtherance of, the business of the Company, engage in any other business or commercial activity as an employee, consultant, or in any other capacity, whether or not any compensation is received therefore. Nothing in the preceding sentence shall prevent the Executive from (i) making and managing personal investments, (ii) performing occasional assistance to family members and friends, including but not limited to service as a director of a family-owned or private business enterprise, (iii) engaging in community and/or charitable activities, including without limitation service as a director, trustee or officer of an educational, welfare, social, religious or civic organization or charity, (iv) serving as a trustee or director or similar position of a public

corporation or public business enterprise, but for only one such public corporation or public business enterprise at any one time, or (v) engaging in such other activities as are approved in writing by the Chief Executive Officer. The Executive shall refrain, however, from engaging in any of the acts described in clauses (i) — (v) of the preceding sentence to the extent that they singly or in the aggregate interfere with the proper performance of the Executive’s duties and responsibilities to the Company or are inconsistent with Section 9 of this Agreement.

     3. Compensation. In consideration of the performance of his duties under this Agreement, the Executive shall be entitled to receive the salary, bonus and benefits set forth on Schedule 1. All amounts payable to the Executive under this Section 3 shall be paid in accordance with the Company’s benefit plans and programs and regular payroll practices (e.g., timing of payments and standard employee deductions, such as income and employment tax withholdings, medical benefit contributions and parking fees, among others). No additional compensation shall be payable to the Executive by reason of the number of hours worked or any hours worked on Saturdays, Sundays or holidays, by reason of special responsibilities assumed (whether on behalf of the Company or any of its subsidiaries or affiliates), special projects completed, or otherwise. The Executive’s compensation shall be reviewed by the Chief Executive Officer, the Board or the Compensation Committee of the Board (the “Compensation Committee”) periodically for possible merit increases and other changes as such reviewer deems appropriate.

     4. Termination of Employment. Either party may terminate the Executive’s employment under this Agreement at any time and for any reason, without advance notice. However:

          (a) Termination for Cause. If the Company terminates the Executive’s employment for Cause, then the Company shall pay to the Executive his base salary, through the Date of Termination (as defined in Section 4(g) of this Agreement) at the rate in effect at the time the Company provides the Notice of Termination (as defined in Section 4(f)). The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. The Company shall have no further obligations to the Executive under this Agreement. Without waiving any rights the Company may have hereunder or otherwise, the Company expressly reserves its rights to proceed against the Executive for damages in connection with any claim or cause of action that the Company may have arising out of or related to the Executive’s employment hereunder. “Cause” means (i) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive issues a Notice of Termination for Good Reason (as defined in Section 4(d)) to substantially perform the Executive’s duties, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive’s issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially followed or complied with the directives of the Board, (iii) the Executive’s willful commission of an act of fraud or dishonesty that results in material economic or financial injury to the Company, or (iv) the Executive’s willful engagement in illegal conduct or gross misconduct that

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is materially and demonstrably injurious to the Company. For purposes of this Section 4(a), no act, or failure to act, shall be deemed “willful” unless the Executive’s commission of the act or failure to act is not in good faith. In any event, the Company may not terminate the Executive for Cause unless and until the Company has delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (³/₄) of the entire membership of the Board at a meeting of the Board (after reasonable notice to the Executive, an opportunity for the Executive, together with counsel, to be heard before the Board and a reasonable opportunity to cure), finding, in the Board’s good faith opinion, that the Executive engaged in any of the conduct set forth above in clauses (i) through (iv) of the definition of “Cause” and specifying in reasonable detail the particulars of the conduct at issue.

          (b) Death. If the Executive is by the Company pursuant to this Agreement at the time of the Executive’s death, then the Executive’s employment shall be terminated automatically concurrently with his death. In that event, the Company shall pay to the Executive’s estate, within sixty (60) days after the Company receives written notice of appointment of a personal representative (on behalf of the Executive’s estate), the amount set forth in clauses (i) through (iii) of Section 5(a), plus all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement.

          (c) Permanent Disability. If the Company terminates the Executive’s employment due to the Executive’s Permanent Disability, the Company shall pay to the Executive base salary, in accordance with the Company’s normal payroll practices, through the Date of Termination at the rate in effect at the time the Company gives the Executive Notice of Termination. The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, long-term disability policy, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement. For purposes of this Agreement, “Permanent Disability” means any incapacity due to physical or mental illness as a result of which the Executive is absent from the full-time performance of his duties with the Company for six (6) consecutive months and does not return to the full-time performance of his duties within thirty (30) days after the Company gives Notice of Termination to the Executive.

          (d) Termination Without Cause or For Good Reason. If the Company terminates the Executive’s employment without Cause or the Executive terminates his employment for “Good Reason” (other than on account of death or Permanent Disability), the Executive shall be entitled to the compensation, vesting and benefits as described in Section 5(b) below. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following events unless they are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination:

     (i) The Executive ceases to be an Officer of the Company reporting to another Officer;

     (ii) The Executive’s Base Salary is reduced by a greater percentage than the reduction applicable to any other Officer;

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     (iii) There is a reduction in the annual incentive compensation opportunity or Equity Compensation (as defined in Section 5(b)(iii)(A) below) opportunity (i.e., percentage of the Executive’s base salary represented by awards of Equity Compensation of any type) established for the position held by the Executive and the reduction is not applied in the same or similar manner to all other executive officers;

     (iv) There is a reduction or elimination of an executive benefit or an employee benefit and the reduction is not applicable to all other Officers in the same or similar manner;

     (v) There is a material breach of this Agreement by the Company and the Company does not remedy it prior to the expiration of thirty (30) days after receipt of written notice of the breach given by the Executive to the Company;

     (vi) The Company exercises its right not to extend the term of this Agreement beyond the then current term, unless the Company concurrently exercises its right not to renew the employment agreements in effect with respect to (A) the then-current Chief Executive Officer of the Company and (B) the then-current Chief Financial Officer of the Company. If however, at the time that the Company gives notice of non-renewal to the Executive, John F. Meier has ceased to serve the Company as Chief Executive Officer and there is no written employment agreement in effect with respect to the individual selected to replace Mr. Meier as Chief Executive Officer on either an interim or permanent basis, then the giving of notice of non-renewal to the Executive shall constitute “Good Reason.” For purposes of this Section 4 (d)(6), the term “employment agreements” does not include the Letter Agreement (as defined in Section 11(n)) or similar agreements relating to a change in control of the Company.

If the Executive does not deliver to the Chief Executive Officer, within ninety (90) days after the date on which the Executive knew or should have known of the Good Reason event, written notice specifying in reasonable detail the particulars giving rise to the Good Reason Event, the Executive shall be deemed conclusively to have waived that particular Good Reason Event (but not any subsequent Good Reason Event) even if the Executive’s failure to give timely notice of the Good Reason event is a result of the Executive’s incapacity due to physical or mental illness.

          (e) Termination by Resignation or Retirement. If the Executive terminates his employment by resigning or retiring, other than at the written request of the Company or for Good Reason, the Company shall pay the Executive base salary through the Date of Termination at the rate in effect at the time the Notice of Termination is given. In addition, the Company shall pay or provide to the Executive all other amounts and benefits to which the Executive is entitled under any compensation plan or practice of the Company, pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law, at the time such payments are due. The Company shall have no further obligations to the Executive under this Agreement.

          (f) Notice of Termination. A party who purports to terminate the Executive’s employment (other than as a result of death or as a result of resignation or retirement that is not at the written request of the Company and is not for Good Reason) shall provide to the other

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party Notice of Termination in accordance with Section 4. “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement upon which the terminating party is relying and that sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

          (g) Date of Termination, Etc. “Date of Termination” means the date on which the Executive incurs a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     5. Compensation upon Termination.

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

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

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

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

     (iv) Continuation of the Executive’s medical, prescription drug, dental and vision benefits (collectively, “Medical Insurance Benefits”) for the Executive’s covered dependents for a period of twelve (12) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive’s dependents are eligible for coverage pursuant to this Section 5(a)(iv), the Executive’s dependents shall pay the cost, on an after-tax basis, for the continued Medical Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive’s dependents such that, after payment of all taxes incurred by the Executive’s dependents as a result of their receipt of the Medical Insurance Benefits and payment by the Company, the Executive’s dependents will retain an amount equal to the amount they paid during the immediately preceding calendar year for the Medical Insurance Benefits; and

     (v) Awards to the Executive pursuant to any Equity Compensation plan of the Company shall vest immediately as of the Date of Termination and, if applicable, be exercisable for a period of three years following the Date of Termination or for such longer period following the Date of Termination specified by the award granted to the Executive; provided however, that nothing in this Agreement shall act to extend the term of any Equity Compensation award and no Equity Compensation award that has an option feature (i.e., a feature that requires that the grantee take an affirmative action to obtain the benefit of the

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

          (b) Termination for Permanent Disability, Without Cause or for Good Reason. If the Company terminates the Executive’s employment for Permanent Disability or without Cause, or the Executive terminates his employment for Good Reason (other than as a result of the Executive’s death or Permanent Disability), the Executive shall be entitled to the following:

     (i) Payment, not later than five (5) business days after the Date of Termination, of the Executive’s base salary accrued through the Date of Termination;

     (ii) With respect to the Executive’s annual incentive compensation opportunity during the year in which the Date of Termination occurs, payment of an amount equal to the Executive’s target award, prorated through the Date of Termination; provided, however, that in any event the amount payable pursuant to this clause shall not be less than 50% of the Executive’s target award. The amount payable pursuant to this clause shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the year in which the Date of Termination occurs;

     (iii) If the Executive is eligible under any “performance-based” equity Compensation plans (as defined below) as of the date on which Notice of Termination is given, payment of the applicable Equity Compensation (or, in the Compensation Committee’s discretion, cash equal in value to the applicable Equity Compensation) actually earned for each performance cycle during which the Date of Termination occurs, but prorated through the Date of Termination. The amount required to be paid pursuant to this clause (iii) shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the end of each applicable performance cycle. For purposes of this Agreement, the following terms have the meanings given them below:

          (A) “Equity Compensation” means shares of common stock, whether or not restricted, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and/ or any other equity-based or equity-related award.

          (B) A compensation plan shall be deemed a “performance-based equity compensation plan” if the plan provides that Equity Compensation may be earned pursuant to the plan and the plan provides that the amount of, or the entitlement to, the Equity Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by the date not later than ninety (90) days after the commencement of the performance period, provided that the outcome is substantially uncertain at the time the criteria are established. A performance-based equity compensation plan also may provide for payments based upon subjective performance criteria, provided that—

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               (1) The subjective performance criteria are bona fide and relate to the performance of the Executive, a group of employees that includes the Executive, or a business unit for which the Executive provides services (which may include the entire Company); and

               (2) The determination that any subjective performance criteria have been met is not made by the Executive or a family member of the Executive, or a person under the effective control of the Executive or such a family member, and no amount of the compensation of the person making the determination is effectively controlled in whole or in part by the Executive or such a family member;

     (iv) A lump sum payment equal to two (2) times the sum of (A) Executive’s annual Base Compensation at the rate in effect on the date on which Notice of Termination is given and (B) the Executive’s target annual incentive compensation opportunity at the time the Notice of Termination is given. The amount required to be paid pursuant to this clause (iv) shall be paid, subject to Section 5(c), not later than five (5) business days after the Date of Termination;

     (v) Continuation of the Executive’s medical, prescription drug, dental and life insurance benefits (collectively, “Insurance Benefits”) for a period of twenty-four (24) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive is eligible for coverage pursuant to this Section 5(a)(v), Executive shall pay the cost, on an after-tax basis, for the continued Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive such that, after payment of all taxes incurred by the Executive as a result of his receipt of the Insurance Benefits and payment by the Company, the Executive will retain an amount equal to the amount the Executive paid during the immediately preceding calendar year for the Insurance Benefits; and

     (vi) Any awards of Equity Compensation (other than “performance-based” Equity Compensation”) that have been granted to the Executive and that have not vested as of the Date of Termination shall vest immediately on the Date of Termination. To the extent that any such awards (such as stock options or stock appreciation rights) contain an option feature (i.e., a feature that requires that the grantee take an affirmative action in order to obtain the benefit of the award), they shall be exercisable for a period of three years following the Date of Termination or for such longer period following the Date of Termination as is specified in the award agreements governing the award(s). However, the immediately preceding sentence shall not be deemed to extend the term of any award of Equity Compensation that, by the terms of the agreement governing it, is scheduled to expire unless exercised prior to the expiration of the three (3) year period referred to in the immediately preceding sentence.

        (c) Payments. Payment of benefits under Section 5(a) is subject to reasonable evidence of authority to act for the decedent’s estate. Payment of benefits under clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) is conditioned on the release provided under Section 5(d) becoming effective. Except as otherwise provided in this Agreement, all payments

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under this Agreement shall be subject to applicable withholdings. Notwithstanding any provisions of this Section 5 to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to policies adopted by the Company) on the Executive’s Date of Termination, amounts that otherwise would be payable, pursuant to clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement (as well as any other payment or benefit that the Executive is entitled to receive upon the Executive’s separation from service that would be considered to be deferred compensation under Section 409A of the Code), during the six (6) month period immediately following the Date of Termination (the “Delayed Payments”) will instead be paid or made available on the earlier of (i) the first day of the seventh month following the Executive’s Date of Termination and (ii) the Executive’s death (the applicable date, the “Initial Payment Date”). Continuation of benefits under Section 5(a)(iv) or 5(b)(vi), shall be in addition to and not concurrent with any continuation rights Executive may have under the Consolidated Omnibus Budget Reconciliation Act of 1985, or similar state law.

          (d) Release. Payment of any amount to and the provision of any benefits to, or on behalf of, the Executive pursuant to any of clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement and Executive’s acceptance of such amounts shall be conditioned on the Executive’s execution and delivery to the Company, no later than sixty (60) days after the Date of Termination, of a general waiver and release of claims in the form attached hereto as Exhibit A or in such other form as the Company may reasonably request to provide a complete release of all claims and causes of action the Executive or the Executive’s estate may have against the Company, except claims and causes of action arising out of, or related to, the obligations of the Company pursuant to this Agreement and Claims (as defined in Exhibit A) for vested benefits under any pension plan, retirement plan and savings plan, rights under any Equity Compensation plan and stock purchase plan and rights to continuation of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law.

          (e) No Offset for Benefits. There shall be no offset to any compensation or other benefits otherwise payable to, or on behalf of, the Executive pursuant to the terms of Section 5 of this Agreement as a result of the receipt by Executive of any pension, retirement or other benefit payments (including, but not limited to, accrued vacation) except as provided by Section 11(n).

          (f) Excise Tax.

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

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reduced tax deductions on account of the Gross-Up Payment, shall be equal to the Payment;

     (ii) Notwithstanding any provision of this Agreement to the contrary, but giving effect to any redetermination of the amount of Gross-Up payments otherwise required by this Section 5(f), if but for this sentence the Company would be obligated to make a Gross-Up Payment to the Executive, and the aggregate “present value” of the “parachute payments” to be paid or provided to the Executive under this Agreement or otherwise does not exceed 1.10 multiplied by three times the Executive’s “base amount,” then the payments and benefits to be paid or provided under this Agreement will be reduced (or repaid to the Company, if previously paid or provided) to the minimum extent necessary so that no portion of any payment or benefit to the Executive, as so reduced or repaid, constitutes an “excess parachute payment.” For purposes of this Section 5(f)(ii), the terms “excess parachute payment,” “present value,” “parachute payment,” and “base amount” have the meanings assigned to them by Section 280G of the Code. The determination of whether any reduction in or repayment of such payments or benefits to be provided under this Agreement is required pursuant to this Section 5(f)(ii) will be made at the expense of the Company, if requested by the Executive or the Company, by the Accountants (as defined in Section 5(f)(iii)). Appropriate adjustments will be made to amounts previously paid to the Executive, or to amounts not paid pursuant to this Section 5(f)(ii), as the case may be, to reflect properly a subsequent determination that the Executive owes more or less Excise Tax than the amount previously determined to be due. If a Payment intended to be provided under the Agreement is required to be reduced pursuant to this Section 5(f)(ii), the payments shall be reduced in the following order of priority: payments pursuant to Section 5(b)(iv), payments pursuant to Section 5(b)(v) and payments pursuant to Section 5(b)(ii), with any Equity Compensation having an option feature being the last payments to be subject to reduction.

     (iii) All determinations required to be made under this Section 5, including whether and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations, shall be made in good faith by the Accountants (as defined below), which shall provide the Executive and the Company with detailed supporting calculations with respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice from the Executive or the Company that has received or will receive a Payment. For the purposes of this Section 5(f), the “Accountants” shall mean the Company’s independent certified public accountants serving immediately prior to the change in control that with other events results in the imposition of the Excise Tax. If the Accountants are also serving as accountant or auditor for the individual, entity or group effecting a change in control that with other events results in the imposition of the Excise Tax, the Company shall appoint another recognized public accounting firm to make the determinations required hereunder (which accounting firm shall also be referred to herein as the “Accountants”). All fees and expenses of the Accountants shall be borne solely by the Company. For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute

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payments” within the meaning of section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax. For purposes of calculating whether the Excise Tax is applicable and determining the amount of the Gross-Up Payment, (A) to the extent not otherwise specified herein, reasonable assumptions and approximations may be made, (B) good faith interpretations of the Code may be relied upon and (C) the Executive shall be deemed to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Executive’s adjusted gross income), and to have otherwise allowable deductions for Federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income. Any determination by the Accountants shall be binding upon the Company and the Executive. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than the Company should have paid pursuant to this Section 5(f) (the “Underpayment”). If the Company exhausts its remedies pursuant to Section 5(f) and the Executive is required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by the Company to the Executive or for his benefit; and

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

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

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

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

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

     (v) Notwithstanding any other provision of this Section 5(f) to the contrary and subject to Section 5(c), all taxes and expenses described in this Section 5(f) shall be paid or reimbursed within five (5) business days after the Executive submits evidence of incurrence of such taxes and/or expenses, provided that in all events such reimbursement will be made no later than the end of the year following the year in which the applicable taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, no later than the end of the year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). Each provision of reimbursements pursuant to this Section 5(f) shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed by the Company in one taxable year in no event will affect the amount of expenses required to be reimbursed or in-kind benefits required to be provided by the Company in any other taxable year.

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     6. Termination Obligations.

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

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

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

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

     7. Records and Confidential Data.

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

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

          (c) Following the Executive’s termination hereunder, as soon as possible after the Company’s written request, the Executive will return to the Company all written Confidential Information that has been provided to the Executive, and the Executive will destroy all copies of any analyses, compilations, studies or other documents prepared by the Executive or for the Executive’s use containing or reflecting any Confidential Information. Within ten (10) business days of the receipt of such request by the Executive, the Executive shall, upon written

12

request of the Company, deliver to the Company a notarized document certifying that such written Confidential Information has been returned or destroyed in accordance with this Section 7(c).

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

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

     8. Assignment of Inventions.

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

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

          (c) Duty to Disclose and Assist. The Executive agrees to promptly disclose in writing all Inventions to the Company, and to provide all assistance reasonably requested by the Company in the preservation of the Company’s interests in the Inventions including obtaining patents in any country throughout the world. Such services will be without additional compensation if the Executive is then employed by the Company and for reasonable compensation and subject to his reasonable availability if he is not. If the Company cannot, after reasonable effort, secure the Executive’s signature on any document or documents needed to apply for or prosecute any patent, copyright, or other right or protection relating to an Invention, whether because of his physical or mental incapacity or for any other reason whatsoever, the Executive hereby irrevocably designates and appoints the Company and its duly authorized Officers and agents as his agent and attorney-in-fact, to act for and on his behalf and in his name and stead for the purpose of executing and filing any such application or applications and taking all other lawfully permitted actions to further the prosecution and issuance of patents, copyrights, or similar protections thereon, with the same legal force and effect as if executed by the Executive.

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

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

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

     9. Additional Covenants.

          (a) Non-Interference with Customer Accounts. Executive covenants and agrees that (i) during employment and (ii) for a period of twelve (12) months commencing on the Date of Termination, except as may be required by Executive’s employment by the Company, Executive shall not directly or indirectly, personally or on behalf of any other person, business, corporation, or entity, contact or do business with any customer of the Company with respect to any product, business activity or service which is competitive with any product, business, activity or service of the type sold or provided by the Company.

          (b) Non-Competition. In consideration of and in connection with the benefits provided to the Executive under this Agreement and in order to protect the goodwill of the Company, the Executive hereby agrees that if the Executive’s employment is terminated, then, unless the Company otherwise agrees in writing, for a period of twelve (12) months commencing on the Date of Termination, the Executive shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any entity engaged in a business which sells, in competition with the Company and its affiliates, the same type of products as sold by the Company, including without limitation glass tableware, ceramic dinnerware, metal flatware and plastic supplies to the foodservice industry other than as a shareholder or beneficial owner owning five percent (5%) or less of the outstanding securities of a public company. Without limiting the foregoing, currently the following business operations among others sell, in competition with the Company and its affiliates, the same type of products as sold by the Company and its affiliates: Anchor Hocking; Arc International and its

14

affiliate Cardinal International, Inc.; Oneida Ltd.; and any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

          (c) No Diversion. The Executive covenants and agrees that in addition to the other Covenants set forth in this Section 9, (i) during his employment and (ii) for a period of twelve (12) months following his Date of Termination, Executive shall not divert or attempt to divert or take advantage of or attempt to take advantage of any actual or potential business opportunities of the Company (e.g., joint ventures, other business combinations, investment opportunities, potential investors in the Company, and other similar opportunities) of which the Executive became aware as a result of his employment with the Company.

          (d) Non-Recruitment. The Executive acknowledges that the Company has invested substantial time and effort in assembling its present workforce. Accordingly, the Executive covenants and agrees that during employment and for period of twelve (12) months commencing on the Date of Termination, the Executive shall not either for the Executive’s own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venture owner or shareholder or otherwise on behalf of any other person, firm or corporation directly or indirectly entice, solicit, attempt to solicit, or seek to induce or influence any Officer or employee of the Company to leave his or her employment with the Company or to offer employment to any person who on or during the six (6) month period immediately preceding the date of such solicitation or offer was an employee of the Company; provided, however, that this Section 9(d) shall not be deemed to be breached with respect to an employee or former employee of the Company who responds to a general advertisement seeking employment or who otherwise initiates contact for the purpose of seeking employment.

          (e) Non-Disparagement. Executive covenants and agrees that during the Executive’s employment and for period of twelve (12) months commencing on the Date of Termination, Executive shall not induce or incite claims of discrimination, wrongful discharge, or any other claims against the Company or any of its directors, Officers, employees or equity holders, by any other persons, executives or entities, and the Executive shall not undertake any harassing or disparaging conduct directed at the Company or any of its directors, Officers, employees or equity holders, other than such statements made as part of testimony compelled by law or legal process.

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

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

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

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

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

     11. Miscellaneous Provisions.

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

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

If to the Executive:

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Richard I. Reynolds
7238 Copperwood Lane
Sylvania, Ohio 43560

If to the Company:

Libbey Inc.
300 Madison Avenue
P.O. Box 10060
Toledo, Ohio 43604
Facsimile: (419) 325-2585
Attention: Secretary

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

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

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

          (e) Waiver of Jury Trial. The parties hereby waive, release and relinquish any and all rights they may have to a trial by jury with RESPECT to any actions TO ENFORCE AN ARBITRATOR’S DECISION PURSUANT TO SECTION 11(l) OF THIS AGREEMENT.

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

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

          (h) Limitation on Liabilities. If the Executive is awarded any damages as compensation for any breach of this Agreement or a breach of any covenant contained in this Agreement (whether express or implied by either law or fact), such damages shall be limited to

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contractual damages (including reasonable attorneys’ fees) and shall exclude (i) punitive damages and (ii) consequential and/or incidental damages (e.g., lost profits and other indirect or speculative damages). The maximum amount of damages that the Executive may recover for any reason shall be all amounts owed (but not yet paid) to the Executive pursuant to this Agreement.

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

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

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

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

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

          (n) Effect on Other Agreements. It is the intention of the parties hereto and thereto that this Agreement provide benefits that are not otherwise provided by the Letter Agreement dated as of December 31, 2008, between the Executive and the Company (the “Letter Agreement”), which provides to the Executive certain benefits in connection with a Change in Control (as defined in the Letter Agreement). If the Executive’s employment is terminated prior to, or the two (2) year period following, a Change in Control and the Executive is entitled to benefits under the Letter Agreement as a result of or in connection with his termination of employment, then the Executive shall not be entitled to benefits under this Agreement in connection with his termination of employment.

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          (o) Coordination with Deferred Compensation Plans. If and to the extent that the Executive has elected, pursuant to the Executive Savings Plan (“ESP”), the Executive Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of compensation, including without limitation any performance-based Equity Compensation or other Equity-Based Compensation (as defined in the DCP), the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to the Executive and the timing of any such distribution. However, the terms of this Agreement or, in the case of a termination of the Executive’s employment in connection with a Change in Control, the Letter Agreement, shall govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based Equity Compensation and other Equity-Based Compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (p) Compliance with Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

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

LIBBEY INC.
By:
Name:	Susan A. Kovach
Title:	Vice President, General Counsel & Secretary
Name: Richard I. Reynolds

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SCHEDULE 1

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

a.	The annual performance incentive compensation plan for corporate Officers (currently the “Senior Management Incentive Plan”). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 75% of annual base salary) and any subsequent revisions.
b.	The long term incentive compensation plan (currently the Libbey Inc. Long Term Incentive Compensation Plan). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 115% of annual base salary) and any subsequent revisions.
c.	Stock option and equity participation plan (currently the 2006 Omnibus Incentive Plan of Libbey Inc.)
d.	Libbey Inc. Retirement Savings Plan
e.	Financial Investment Counseling
f.	Executive Physical
g.	Executive Deferred Compensation Plan
h.	Such other benefit plans and arrangements as the Company provides, from time to time, to salaried employees generally

EXHIBIT A

GENERAL RELEASE AND WAIVER OF CLAIMS

          The undersigned, ___resident of the State of ___(“Releasor”), in accordance with and pursuant to the terms of Section 5(d) of the Amended and Restated Employment Agreement (the “Agreement”), dated as of December 31, 2008, between Libbey Inc., a Delaware corporation (the “Company”), and Releasor, and the consideration therein provided, except as set forth herein, hereby remises, releases and forever discharges and covenants not to sue, and by these presents does for Releasor and Releasor’s legal representatives, trustees, beneficiaries, heirs and assigns (Releasor and such persons referred to herein, collectively, as the “Releasing Parties”) hereby remise, release and forever discharge and covenant not to sue the Company and its affiliates and the respective Officers, directors, employees, equity holders, agent and representatives of each of them and all of their respective successor and assigns (each a “Released Party” and collectively, the “Released Parties”), of and from any and all manner of actions, proceedings, claims, causes of action, suits, promises, damages, judgments, executions, claims and demands, of any nature whatsoever, and of every kind and description, choate and inchoate, known or unknown, at law or in equity (collectively, “Claims”), which the Releasing Parties, or any of them, now have or ever had, or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever, against the Released Parties, and each of them, from the beginning of time to the date hereof;

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

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

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

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

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

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

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

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

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

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

Dated: _______, 20___.

RELEASOR:

Name:

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EX-10.31

Exhibit 10.31

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of December 31, 2008, between LIBBEY INC., a Delaware corporation (the “Company”), and GREGORY T. GESWEIN (the "Executive”).

          WHEREAS, the Company and the Executive previously entered into an Employment Agreement dated as of May 23, 2007 (the “May 2007 Agreement”) setting forth the terms and conditions upon which the Executive agreed to serve as an officer of the Company.

          WHEREAS, the Company and the Executive desire to amend the May 2007 Agreement in certain respects and, as so amended, to restate it in its entirety.

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend and restate the May 2007 Agreement, effective January 1, 2009, to provide as follows:

     1. Term of Agreement. The term of this Agreement shall commence on January 1, 2009 and shall continue through December 31, 2009. Commencing on January 1, 2010 and each January 1 thereafter, the term of this Agreement shall be extended automatically for one additional year unless, on or before September 30 of the then-current term, the Company gives written notice to the Executive that the Company does not wish to extend this Agreement beyond the expiration of the then current term. For example, if the Company does not desire to renew this Agreement for the 2011 calendar year, the Company must, on or before September 30, 2010, give written notice to the Executive that the Company does not wish to extend the term of this Agreement for the 2011 calendar year. The Company’s employment of the Executive under this Agreement shall continue indefinitely during the term of this Agreement until terminated as provided in Section 4. Notwithstanding the foregoing, the term of this Agreement shall automatically end on the last day of the month in which the Executive reaches age 65.

     2. Position and Duties.

          (a) Position. The Executive hereby agrees to serve as an officer of the Company and to perform all duties assigned by the Company commensurate with his or her position. The Executive shall devote the Executive’s best efforts to the performance of services to the Company in accordance with the terms of this Agreement and as the Company reasonably may request.

          (b) Other Activities. While employed pursuant to this Agreement, the Executive shall not, other than in the performance of duties inherent in, and in furtherance of, the business of the Company, engage in any other business or commercial activity as an employee, consultant, or in any other capacity, whether or not any compensation is received therefore. Nothing in the preceding sentence shall prevent the Executive from (i) making and managing personal investments, (ii) performing occasional assistance to family members and friends, including but not limited to service as a director of a family-owned or private business enterprise, (iii) engaging in community and/or charitable activities, including without limitation service as a director, trustee or officer of an educational, welfare, social, religious or civic organization or charity, (iv) serving as a trustee or director or similar position of a public

corporation or public business enterprise, but for only one such public corporation or public business enterprise at any one time, or (v) engaging in such other activities as are approved in writing by the Chief Executive Officer. The Executive shall refrain, however, from engaging in any of the acts described in clauses (i) — (v) of the preceding sentence to the extent that they singly or in the aggregate interfere with the proper performance of the Executive’s duties and responsibilities to the Company or are inconsistent with Section 9 of this Agreement.

     3. Compensation. In consideration of the performance of his duties under this Agreement, the Executive shall be entitled to receive the salary, bonus and benefits set forth on Schedule 1. All amounts payable to the Executive under this Section 3 shall be paid in accordance with the Company’s benefit plans and programs and regular payroll practices (e.g., timing of payments and standard employee deductions, such as income and employment tax withholdings, medical benefit contributions and parking fees, among others). No additional compensation shall be payable to the Executive by reason of the number of hours worked or any hours worked on Saturdays, Sundays or holidays, by reason of special responsibilities assumed (whether on behalf of the Company or any of its subsidiaries or affiliates), special projects completed, or otherwise. The Executive’s compensation shall be reviewed by the Chief Executive Officer, the Board or the Compensation Committee of the Board (the “Compensation Committee”) periodically for possible merit increases and other changes as such reviewer deems appropriate.

     4. Termination of Employment. Either party may terminate the Executive’s employment under this Agreement at any time and for any reason, without advance notice. However:

          (a) Termination for Cause. If the Company terminates the Executive’s employment for Cause, then the Company shall pay to the Executive his base salary, through the Date of Termination (as defined in Section 4(g) of this Agreement) at the rate in effect at the time the Company provides the Notice of Termination (as defined in Section 4(f)). The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. The Company shall have no further obligations to the Executive under this Agreement. Without waiving any rights the Company may have hereunder or otherwise, the Company expressly reserves its rights to proceed against the Executive for damages in connection with any claim or cause of action that the Company may have arising out of or related to the Executive’s employment hereunder. “Cause” means (i) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive issues a Notice of Termination for Good Reason (as defined in Section 4(d)) to substantially perform the Executive’s duties, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive’s issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially followed or complied with the directives of the Board, (iii) the Executive’s willful commission of an act of fraud or dishonesty that results in material economic or financial injury to the Company, or (iv) the Executive’s willful engagement in illegal conduct or gross misconduct that

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is materially and demonstrably injurious to the Company. For purposes of this Section 4(a), no act, or failure to act, shall be deemed “willful” unless the Executive’s commission of the act or failure to act is not in good faith. In any event, the Company may not terminate the Executive for Cause unless and until the Company has delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (³/₄) of the entire membership of the Board at a meeting of the Board (after reasonable notice to the Executive, an opportunity for the Executive, together with counsel, to be heard before the Board and a reasonable opportunity to cure), finding, in the Board’s good faith opinion, that the Executive engaged in any of the conduct set forth above in clauses (i) through (iv) of the definition of “Cause” and specifying in reasonable detail the particulars of the conduct at issue.

          (b) Death. If the Executive is by the Company pursuant to this Agreement at the time of the Executive’s death, then the Executive’s employment shall be terminated automatically concurrently with his death. In that event, the Company shall pay to the Executive’s estate, within sixty (60) days after the Company receives written notice of appointment of a personal representative (on behalf of the Executive’s estate), the amount set forth in clauses (i) through (iii) of Section 5(a), plus all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement.

          (c) Permanent Disability. If the Company terminates the Executive’s employment due to the Executive’s Permanent Disability, the Company shall pay to the Executive base salary, in accordance with the Company’s normal payroll practices, through the Date of Termination at the rate in effect at the time the Company gives the Executive Notice of Termination. The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, long-term disability policy, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement. For purposes of this Agreement, “Permanent Disability” means any incapacity due to physical or mental illness as a result of which the Executive is absent from the full-time performance of his duties with the Company for six (6) consecutive months and does not return to the full-time performance of his duties within thirty (30) days after the Company gives Notice of Termination to the Executive.

          (d) Termination Without Cause or For Good Reason. If the Company terminates the Executive’s employment without Cause or the Executive terminates his employment for “Good Reason” (other than on account of death or Permanent Disability), the Executive shall be entitled to the compensation, vesting and benefits as described in Section 5(b) below. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following events unless they are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination:

     (i) The Executive ceases to be an Officer of the Company reporting to another Officer;

     (ii) The Executive’s Base Salary is reduced by a greater percentage than the reduction applicable to any other Officer;

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     (iii) There is a reduction in the annual incentive compensation opportunity or Equity Compensation (as defined in Section 5(b)(iii)(A) below) opportunity (i.e., percentage of the Executive’s base salary represented by awards of Equity Compensation of any type) established for the position held by the Executive and the reduction is not applied in the same or similar manner to all other executive officers;

     (iv) There is a reduction or elimination of an executive benefit or an employee benefit and the reduction is not applicable to all other Officers in the same or similar manner;

     (v) There is a material breach of this Agreement by the Company and the Company does not remedy it prior to the expiration of thirty (30) days after receipt of written notice of the breach given by the Executive to the Company;

     (vi) The Company exercises its right not to extend the term of this Agreement beyond the then current term, unless the Company concurrently exercises its right not to renew the employment agreements in effect with respect to (A) the then-current Chief Executive Officer of the Company and (B)(i) the then-current Chief Operating Officer of the Company or (ii) if the Company has appointed one or more Presidents and the position of Chief Operating Officer is unfilled, the then-current President(s). If however, at the time that the Company gives notice of non-renewal to the Executive, John F. Meier has ceased to serve the Company as Chief Executive Officer and there is no written employment agreement in effect with respect to the individual selected to replace Mr. Meier as Chief Executive Officer on either an interim or permanent basis, then the giving of notice of non-renewal to the Executive shall constitute “Good Reason.” For purposes of this Section 4 (d)(6), the term “employment agreements” does not include the Letter Agreement (as defined in Section 11(n)) or similar agreements relating to a change in control of the Company.

If the Executive does not deliver to the Chief Executive Officer, within ninety (90) days after the date on which the Executive knew or should have known of the Good Reason event, written notice specifying in reasonable detail the particulars giving rise to the Good Reason Event, the Executive shall be deemed conclusively to have waived that particular Good Reason Event (but not any subsequent Good Reason Event) even if the Executive’s failure to give timely notice of the Good Reason event is a result of the Executive’s incapacity due to physical or mental illness.

          (e) Termination by Resignation or Retirement. If the Executive terminates his employment by resigning or retiring, other than at the written request of the Company or for Good Reason, the Company shall pay the Executive base salary through the Date of Termination at the rate in effect at the time the Notice of Termination is given. In addition, the Company shall pay or provide to the Executive all other amounts and benefits to which the Executive is entitled under any compensation plan or practice of the Company, pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law, at the time such payments are due. The Company shall have no further obligations to the Executive under this Agreement.

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          (f) Notice of Termination. A party who purports to terminate the Executive’s employment (other than as a result of death or as a result of resignation or retirement that is not at the written request of the Company and is not for Good Reason) shall provide to the other party Notice of Termination in accordance with Section 4. “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement upon which the terminating party is relying and that sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

          (g) Date of Termination, Etc. “Date of Termination” means the date on which the Executive incurs a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     5. Compensation upon Termination.

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

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

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

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

     (iv) Continuation of the Executive’s medical, prescription drug, dental and vision benefits (collectively, “Medical Insurance Benefits”) for the Executive’s covered dependents for a period of twelve (12) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive’s dependents are eligible for coverage pursuant to this Section 5(a)(iv), the Executive’s dependents shall pay the cost, on an after-tax basis, for the continued Medical Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive’s dependents such that, after payment of all taxes incurred by the Executive’s dependents as a result of their receipt of the Medical Insurance Benefits and payment by the Company, the Executive’s dependents will retain an amount equal to the amount they paid during the immediately preceding calendar year for the Medical Insurance Benefits; and

     (v) Awards to the Executive pursuant to any Equity Compensation plan of the Company shall vest immediately as of the Date of Termination and, if applicable, be exercisable for a period of three years following the Date of Termination or for such longer period following the Date of Termination specified by the award granted to the Executive; provided however, that nothing in this Agreement shall act to extend the term of any Equity Compensation award and

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no Equity Compensation award that has an option feature (i.e., a feature that requires that the grantee take an affirmative action to obtain the benefit of the award) may be exercised after the expiration of the term of the award specified in the award granted to the Executive.

        (b) Termination for Permanent Disability, Without Cause or for Good Reason. If the Company terminates the Executive’s employment for Permanent Disability or without Cause, or the Executive terminates his employment for Good Reason (other than as a result of the Executive’s death or Permanent Disability), the Executive shall be entitled to the following:

     (i) Payment, not later than five (5) business days after the Date of Termination, of the Executive’s base salary accrued through the Date of Termination;

     (ii) With respect to the Executive’s annual incentive compensation opportunity during the year in which the Date of Termination occurs, payment of an amount equal to the Executive’s target award, prorated through the Date of Termination; provided, however, that in any event the amount payable pursuant to this clause shall not be less than 50% of the Executive’s target award. The amount payable pursuant to this clause shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the year in which the Date of Termination occurs;

     (iii) If the Executive is eligible under any “performance-based” equity Compensation plans (as defined below) as of the date on which Notice of Termination is given, payment of the applicable Equity Compensation (or, in the Compensation Committee’s discretion, cash equal in value to the applicable Equity Compensation) actually earned for each performance cycle during which the Date of Termination occurs, but prorated through the Date of Termination. The amount required to be paid pursuant to this clause (iii) shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the end of each applicable performance cycle. For purposes of this Agreement, the following terms have the meanings given them below:

          (A) “Equity Compensation” means shares of common stock, whether or not restricted, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and/ or any other equity-based or equity-related award.

          (B) A compensation plan shall be deemed a “performance-based equity compensation plan” if the plan provides that Equity Compensation may be earned pursuant to the plan and the plan provides that the amount of, or the entitlement to, the Equity Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by the date not later than ninety (90) days after the commencement of the performance period, provided that the outcome is substantially uncertain at the time the criteria are established. A performance-based equity compensation plan

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also may provide for payments based upon subjective performance criteria, provided that—

          (1) The subjective performance criteria are bona fide and relate to the performance of the Executive, a group of employees that includes the Executive, or a business unit for which the Executive provides services (which may include the entire Company); and

          (2) The determination that any subjective performance criteria have been met is not made by the Executive or a family member of the Executive, or a person under the effective control of the Executive or such a family member, and no amount of the compensation of the person making the determination is effectively controlled in whole or in part by the Executive or such a family member;

     (iv) A lump sum payment equal to two (2) times the sum of (A) Executive’s annual Base Compensation at the rate in effect on the date on which Notice of Termination is given and (B) the Executive’s target annual incentive compensation opportunity at the time the Notice of Termination is given. The amount required to be paid pursuant to this clause (iv) shall be paid, subject to Section 5(c), not later than five (5) business days after the Date of Termination;

     (v) Continuation of the Executive’s medical, prescription drug, dental and life insurance benefits (collectively, “Insurance Benefits”) for a period of twenty-four (24) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive is eligible for coverage pursuant to this Section 5(a)(v), Executive shall pay the cost, on an after-tax basis, for the continued Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive such that, after payment of all taxes incurred by the Executive as a result of his receipt of the Insurance Benefits and payment by the Company, the Executive will retain an amount equal to the amount the Executive paid during the immediately preceding calendar year for the Insurance Benefits; and

     (vi) Any awards of Equity Compensation (other than “performance-based” Equity Compensation”) that have been granted to the Executive and that have not vested as of the Date of Termination shall vest immediately on the Date of Termination. To the extent that any such awards (such as stock options or stock appreciation rights) contain an option feature (i.e., a feature that requires that the grantee take an affirmative action in order to obtain the benefit of the award), they shall be exercisable for a period of three years following the Date of Termination or for such longer period following the Date of Termination as is specified in the award agreements governing the award(s). However, the immediately preceding sentence shall not be deemed to extend the term of any award of Equity Compensation that, by the terms of the agreement governing it, is scheduled to expire unless exercised prior to the expiration of the three (3) year period referred to in the immediately preceding sentence.

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          (c) Payments. Payment of benefits under Section 5(a) is subject to reasonable evidence of authority to act for the decedent’s estate. Payment of benefits under clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) is conditioned on the release provided under Section 5(d) becoming effective. Except as otherwise provided in this Agreement, all payments under this Agreement shall be subject to applicable withholdings. Notwithstanding any provisions of this Section 5 to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to policies adopted by the Company) on the Executive’s Date of Termination, amounts that otherwise would be payable, pursuant to clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement (as well as any other payment or benefit that the Executive is entitled to receive upon the Executive’s separation from service that would be considered to be deferred compensation under Section 409A of the Code), during the six (6) month period immediately following the Date of Termination (the “Delayed Payments”) will instead be paid or made available on the earlier of (i) the first day of the seventh month following the Executive’s Date of Termination and (ii) the Executive’s death (the applicable date, the “Initial Payment Date”). Continuation of benefits under Section 5(a)(iv) or 5(b)(vi), shall be in addition to and not concurrent with any continuation rights Executive may have under the Consolidated Omnibus Budget Reconciliation Act of 1985, or similar state law.

          (d) Release. Payment of any amount to and the provision of any benefits to, or on behalf of, the Executive pursuant to any of clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement and Executive’s acceptance of such amounts shall be conditioned on the Executive’s execution and delivery to the Company, no later than sixty (60) days after the Date of Termination, of a general waiver and release of claims in the form attached hereto as Exhibit A or in such other form as the Company may reasonably request to provide a complete release of all claims and causes of action the Executive or the Executive’s estate may have against the Company, except claims and causes of action arising out of, or related to, the obligations of the Company pursuant to this Agreement and Claims (as defined in Exhibit A) for vested benefits under any pension plan, retirement plan and savings plan, rights under any Equity Compensation plan and stock purchase plan and rights to continuation of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law.

          (e) No Offset for Benefits. There shall be no offset to any compensation or other benefits otherwise payable to, or on behalf of, the Executive pursuant to the terms of Section 5 of this Agreement as a result of the receipt by Executive of any pension, retirement or other benefit payments (including, but not limited to, accrued vacation) except as provided by Section 11(n).

          (f) Excise Tax.

     (i) Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution to the Executive or for the Executive’s benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise (the “Payment”) would be subject to the excise tax imposed by section 4999 of the Code or any successor provision (the “Excise Tax”), then the Executive shall be entitled to receive from the Company an additional payment (the “Gross-Up Payment”) in an amount such that the net amount of the Payment and the Gross-Up Payment retained by the Executive after the calculation and deduction of all Excise Taxes (including

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any interest or penalties imposed with respect to such taxes) on the payment and all federal, state and local income tax, employment tax and Excise Tax (including any interest or penalties imposed with respect to such taxes) on the Gross-Up Payment provided for in this Section 5(g), and taking into account any lost or reduced tax deductions on account of the Gross-Up Payment, shall be equal to the Payment;

     (ii) Notwithstanding any provision of this Agreement to the contrary, but giving effect to any redetermination of the amount of Gross-Up payments otherwise required by this Section 5(f), if but for this sentence the Company would be obligated to make a Gross-Up Payment to the Executive, and the aggregate “present value” of the “parachute payments” to be paid or provided to the Executive under this Agreement or otherwise does not exceed 1.10 multiplied by three times the Executive’s “base amount,” then the payments and benefits to be paid or provided under this Agreement will be reduced (or repaid to the Company, if previously paid or provided) to the minimum extent necessary so that no portion of any payment or benefit to the Executive, as so reduced or repaid, constitutes an “excess parachute payment.” For purposes of this Section 5(f)(ii), the terms “excess parachute payment,” “present value,” “parachute payment,” and “base amount” have the meanings assigned to them by Section 280G of the Code. The determination of whether any reduction in or repayment of such payments or benefits to be provided under this Agreement is required pursuant to this Section 5(f)(ii) will be made at the expense of the Company, if requested by the Executive or the Company, by the Accountants (as defined in Section 5(f)(iii)). Appropriate adjustments will be made to amounts previously paid to the Executive, or to amounts not paid pursuant to this Section 5(f)(ii), as the case may be, to reflect properly a subsequent determination that the Executive owes more or less Excise Tax than the amount previously determined to be due. If a Payment intended to be provided under the Agreement is required to be reduced pursuant to this Section 5(f)(ii), the payments shall be reduced in the following order of priority: payments pursuant to Section 5(b)(iv), payments pursuant to Section 5(b)(v) and payments pursuant to Section 5(b)(ii), with any Equity Compensation having an option feature being the last payments to be subject to reduction.

     (iii) All determinations required to be made under this Section 5, including whether and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations, shall be made in good faith by the Accountants (as defined below), which shall provide the Executive and the Company with detailed supporting calculations with respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice from the Executive or the Company that has received or will receive a Payment. For the purposes of this Section 5(f), the “Accountants” shall mean the Company’s independent certified public accountants serving immediately prior to the change in control that with other events results in the imposition of the Excise Tax. If the Accountants are also serving as accountant or auditor for the individual, entity or group effecting a change in control that with other events results in the imposition of the Excise Tax, the Company shall appoint another recognized public accounting firm to make the determinations required hereunder (which accounting firm shall also be

9

referred to herein as the “Accountants”). All fees and expenses of the Accountants shall be borne solely by the Company. For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax. For purposes of calculating whether the Excise Tax is applicable and determining the amount of the Gross-Up Payment, (A) to the extent not otherwise specified herein, reasonable assumptions and approximations may be made, (B) good faith interpretations of the Code may be relied upon and (C) the Executive shall be deemed to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Executive’s adjusted gross income), and to have otherwise allowable deductions for Federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income. Any determination by the Accountants shall be binding upon the Company and the Executive. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than the Company should have paid pursuant to this Section 5(f) (the “Underpayment”). If the Company exhausts its remedies pursuant to Section 5(f) and the Executive is required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by the Company to the Executive or for his benefit; and

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

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

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

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

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

     (v) Notwithstanding any other provision of this Section 5(f) to the contrary and subject to Section 5(c), all taxes and expenses described in this Section 5(f) shall be paid or reimbursed within five (5) business days after the Executive submits evidence of incurrence of such taxes and/or expenses, provided that in all events such reimbursement will be made no later than the end of the year following the year in which the applicable taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, no later than the end of the year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). Each provision of reimbursements

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pursuant to this Section 5(f) shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed by the Company in one taxable year in no event will affect the amount of expenses required to be reimbursed or in-kind benefits required to be provided by the Company in any other taxable year.

     6. Termination Obligations.

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

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

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

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

     7. Records and Confidential Data.

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

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

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

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

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

     8. Assignment of Inventions.

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

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

          (c) Duty to Disclose and Assist. The Executive agrees to promptly disclose in writing all Inventions to the Company, and to provide all assistance reasonably requested by the Company in the preservation of the Company’s interests in the Inventions including obtaining patents in any country throughout the world. Such services will be without additional compensation if the Executive is then employed by the Company and for reasonable compensation and subject to his reasonable availability if he is not. If the Company cannot, after reasonable effort, secure the Executive’s signature on any document or documents needed to apply for or prosecute any patent, copyright, or other right or protection relating to an Invention, whether because of his physical or mental incapacity or for any other reason

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whatsoever, the Executive hereby irrevocably designates and appoints the Company and its duly authorized Officers and agents as his agent and attorney-in-fact, to act for and on his behalf and in his name and stead for the purpose of executing and filing any such application or applications and taking all other lawfully permitted actions to further the prosecution and issuance of patents, copyrights, or similar protections thereon, with the same legal force and effect as if executed by the Executive.

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

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

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

     9. Additional Covenants.

          (a) Non-Interference with Customer Accounts. Executive covenants and agrees that (i) during employment and (ii) for a period of twelve (12) months commencing on the Date of Termination, except as may be required by Executive’s employment by the Company, Executive shall not directly or indirectly, personally or on behalf of any other person, business, corporation, or entity, contact or do business with any customer of the Company with respect to any product, business activity or service which is competitive with any product, business, activity or service of the type sold or provided by the Company.

          (b) Non-Competition. In consideration of and in connection with the benefits provided to the Executive under this Agreement and in order to protect the goodwill of the Company, the Executive hereby agrees that if the Executive’s employment is terminated, then, unless the Company otherwise agrees in writing, for a period of twelve (12) months commencing on the Date of Termination, the Executive shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any

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entity engaged in a business which sells, in competition with the Company and its affiliates, the same type of products as sold by the Company, including without limitation glass tableware, ceramic dinnerware, metal flatware and plastic supplies to the foodservice industry other than as a shareholder or beneficial owner owning five percent (5%) or less of the outstanding securities of a public company. Without limiting the foregoing, currently the following business operations among others sell, in competition with the Company and its affiliates, the same type of products as sold by the Company and its affiliates: Anchor Hocking; Arc International and its affiliate Cardinal International, Inc.; Oneida Ltd.; and any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

          (c) No Diversion. The Executive covenants and agrees that in addition to the other Covenants set forth in this Section 9, (i) during his employment and (ii) for a period of twelve (12) months following his Date of Termination, Executive shall not divert or attempt to divert or take advantage of or attempt to take advantage of any actual or potential business opportunities of the Company (e.g., joint ventures, other business combinations, investment opportunities, potential investors in the Company, and other similar opportunities) of which the Executive became aware as a result of his employment with the Company.

          (d) Non-Recruitment. The Executive acknowledges that the Company has invested substantial time and effort in assembling its present workforce. Accordingly, the Executive covenants and agrees that during employment and for period of twelve (12) months commencing on the Date of Termination, the Executive shall not either for the Executive’s own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venture owner or shareholder or otherwise on behalf of any other person, firm or corporation directly or indirectly entice, solicit, attempt to solicit, or seek to induce or influence any Officer or employee of the Company to leave his or her employment with the Company or to offer employment to any person who on or during the six (6) month period immediately preceding the date of such solicitation or offer was an employee of the Company; provided, however, that this Section 9(d) shall not be deemed to be breached with respect to an employee or former employee of the Company who responds to a general advertisement seeking employment or who otherwise initiates contact for the purpose of seeking employment.

          (e) Non-Disparagement. Executive covenants and agrees that during the Executive’s employment and for period of twelve (12) months commencing on the Date of Termination, Executive shall not induce or incite claims of discrimination, wrongful discharge, or any other claims against the Company or any of its directors, Officers, employees or equity holders, by any other persons, executives or entities, and the Executive shall not undertake any harassing or disparaging conduct directed at the Company or any of its directors, Officers, employees or equity holders, other than such statements made as part of testimony compelled by law or legal process.

          (f) Remedies. The Executive acknowledges that should the Executive violate any of the covenants contained in Sections 6, 7, 8 or 9 hereof (collectively, the “Covenants”), it would be difficult to determine the resulting damages to the Company and, in addition to any other remedies it may have, the Company shall be entitled to (i) temporary injunctive relief without being required to post a bond, (ii) permanent injunctive relief without the necessity of proving actual damage and (iii) forfeiture of all benefits otherwise payable to or for the account of the Executive under Sections 5(b)(ii), (iii), (iv) and (v) following the violation. The Executive shall be liable to pay all costs including reasonable attorneys’ fees which the

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Company may incur in enforcing or defending, to any extent, these Covenants, whether or not litigation is actually commenced and including litigation of any appeal taken or defended by the Company, where the Company succeeds in enforcing any part of these Covenants. The Company may elect to seek one or more of these remedies at its sole discretion on a case by case basis. Failure to seek any or all remedies in one case does not restrict the Company from seeking any remedies in another situation. Such action by the Company shall not constitute a waiver of any of its rights.

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

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

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

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

     11. Miscellaneous Provisions.

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

          (b) Notices. All notices and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as properly

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

If to the Executive:

Gregory T. Geswein
2649 Forestvale Road
Toledo, OH 43615

If to the Company:

Libbey Inc.
300 Madison Avenue
P.O. Box 10060
Toledo, Ohio 43604
Facsimile: (419) 325-2585
Attention: Secretary

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

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

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

          (e) Waiver of Jury Trial. The parties hereby waive, release and relinquish any and all rights they may have to a trial by jury with RESPECT to any actions TO ENFORCE AN ARBITRATOR’S DECISION PURSUANT TO SECTION 11(l) OF THIS AGREEMENT.

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

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

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

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

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

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

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

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

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          (n) Effect on Other Agreements. It is the intention of the parties hereto and thereto that this Agreement provide benefits that are not otherwise provided by the Letter Agreement dated as of December 31, 2008, between the Executive and the Company (the “Letter Agreement”), which provides to the Executive certain benefits in connection with a Change in Control (as defined in the Letter Agreement). If the Executive’s employment is terminated prior to, or the two (2) year period following, a Change in Control and the Executive is entitled to benefits under the Letter Agreement as a result of or in connection with his termination of employment, then the Executive shall not be entitled to benefits under this Agreement in connection with his termination of employment.

          (o) Coordination with Deferred Compensation Plans. If and to the extent that the Executive has elected, pursuant to the Executive Savings Plan (“ESP”), the Executive Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of compensation, including without limitation any performance-based Equity Compensation or other Equity-Based Compensation (as defined in the DCP), the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to the Executive and the timing of any such distribution. However, the terms of this Agreement or, in the case of a termination of the Executive’s employment in connection with a Change in Control, the Letter Agreement, shall govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based Equity Compensation and other Equity-Based Compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (p) Compliance with Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

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

LIBBEY INC.
By:
Name:	Susan A. Kovach
Title:	Vice President, General Counsel & Secretary
Name: Gregory T. Geswein

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SCHEDULE 1

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

a.	The annual performance incentive compensation plan for corporate Officers (currently the “Senior Management Incentive Plan”). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 60% of annual base salary) and any subsequent revisions.
b.	The long term incentive compensation plan (currently the Libbey Inc. Long Term Incentive Compensation Plan). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 80% of annual base salary) and any subsequent revisions.
c.	Stock option and equity participation plan (currently the 2006 Omnibus Incentive Plan of Libbey Inc.)
d.	Libbey Inc. Retirement Savings Plan
e.	Financial Investment Counseling
f.	Executive Physical
g.	Executive Deferred Compensation Plan
h.	Such other benefit plans and arrangements as the Company provides, from time to time, to salaried employees generally

EXHIBIT A

GENERAL RELEASE AND WAIVER OF CLAIMS

          The undersigned, ___resident of the State of ___(“Releasor”), in accordance with and pursuant to the terms of Section 5(d) of the Amended and Restated Employment Agreement (the “Agreement”), dated as of December 31, 2008, between Libbey Inc., a Delaware corporation (the “Company”), and Releasor, and the consideration therein provided, except as set forth herein, hereby remises, releases and forever discharges and covenants not to sue, and by these presents does for Releasor and Releasor’s legal representatives, trustees, beneficiaries, heirs and assigns (Releasor and such persons referred to herein, collectively, as the “Releasing Parties”) hereby remise, release and forever discharge and covenant not to sue the Company and its affiliates and the respective Officers, directors, employees, equity holders, agent and representatives of each of them and all of their respective successor and assigns (each a “Released Party” and collectively, the “Released Parties”), of and from any and all manner of actions, proceedings, claims, causes of action, suits, promises, damages, judgments, executions, claims and demands, of any nature whatsoever, and of every kind and description, choate and inchoate, known or unknown, at law or in equity (collectively, “Claims”), which the Releasing Parties, or any of them, now have or ever had, or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever, against the Released Parties, and each of them, from the beginning of time to the date hereof;

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

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

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

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

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

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

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

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

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

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

Dated: _______, 20___.

RELEASOR:

Name:

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EX-10.32

Exhibit 10.32

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of December 31, 2008, between LIBBEY INC., a Delaware corporation (the “Company”), and [Insert name of Executive from Appendix 1] (the “Executive”).

          WHEREAS, the Company and the Executive previously entered into an Employment Agreement dated as of March 22, 2004 (the “March 2004 Agreement”) setting forth the terms and conditions upon which the Executive agreed to serve as an officer of the Company.

          WHEREAS, the Company and the Executive desire to amend the March 2004 Agreement in certain respects and, as so amended, to restate it in its entirety.

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend and restate the March 2004 Agreement, effective January 1, 2009, to provide as follows:

     1. Term of Agreement. The term of this Agreement shall commence on January 1, 2009 and shall continue through December 31, 2009. Commencing on January 1, 2010 and each January 1 thereafter, the term of this Agreement shall be extended automatically for one additional year unless, on or before September 30 of the then-current term, the Company gives written notice to the Executive that the Company does not wish to extend this Agreement beyond the expiration of the then current term. For example, if the Company does not desire to renew this Agreement for the 2011 calendar year, the Company must, on or before September 30, 2010, give written notice to the Executive that the Company does not wish to extend the term of this Agreement for the 2011 calendar year. The Company’s employment of the Executive under this Agreement shall continue indefinitely during the term of this Agreement until terminated as provided in Section 4. Notwithstanding the foregoing, the term of this Agreement shall automatically end on the last day of the month in which the Executive reaches age 65.

     2. Position and Duties.

          (a) Position. The Executive hereby agrees to serve as an officer of the Company and to perform all duties assigned by the Company commensurate with his or her position. The Executive shall devote the Executive’s best efforts to the performance of services to the Company in accordance with the terms of this Agreement and as the Company reasonably may request.

          (b) Other Activities. While employed pursuant to this Agreement, the Executive shall not, other than in the performance of duties inherent in, and in furtherance of, the business of the Company, engage in any other business or commercial activity as an employee, consultant, or in any other capacity, whether or not any compensation is received therefore. Nothing in the preceding sentence shall prevent the Executive from (i) making and managing personal investments, (ii) performing occasional assistance to family members and friends, including but not limited to service as a director of a family-owned or private business enterprise, (iii) engaging in community and/or charitable activities, including without limitation service as a director, trustee or officer of an educational, welfare, social, religious or civic organization or charity, (iv) serving as a trustee or director or similar position of a public

corporation or public business enterprise, but for only one such public corporation or public business enterprise at any one time, or (v) engaging in such other activities as are approved in writing by the Chief Executive Officer. The Executive shall refrain, however, from engaging in any of the acts described in clauses (i) — (v) of the preceding sentence to the extent that they singly or in the aggregate interfere with the proper performance of the Executive’s duties and responsibilities to the Company or are inconsistent with Section 9 of this Agreement.

     3. Compensation. In consideration of the performance of his duties under this Agreement, the Executive shall be entitled to receive the salary, bonus and benefits set forth on Schedule 1. All amounts payable to the Executive under this Section 3 shall be paid in accordance with the Company’s benefit plans and programs and regular payroll practices (e.g., timing of payments and standard employee deductions, such as income and employment tax withholdings, medical benefit contributions and parking fees, among others). No additional compensation shall be payable to the Executive by reason of the number of hours worked or any hours worked on Saturdays, Sundays or holidays, by reason of special responsibilities assumed (whether on behalf of the Company or any of its subsidiaries or affiliates), special projects completed, or otherwise. The Executive’s compensation shall be reviewed by the Chief Executive Officer, the Board or the Compensation Committee of the Board (the “Compensation Committee”) periodically for possible merit increases and other changes as such reviewer deems appropriate.

     4. Termination of Employment. Either party may terminate the Executive’s employment under this Agreement at any time and for any reason, without advance notice. However:

          (a) Termination for Cause. If the Company terminates the Executive’s employment for Cause, then the Company shall pay to the Executive his base salary, through the Date of Termination (as defined in Section 4(g) of this Agreement) at the rate in effect at the time the Company provides the Notice of Termination (as defined in Section 4(f)). The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. The Company shall have no further obligations to the Executive under this Agreement. Without waiving any rights the Company may have hereunder or otherwise, the Company expressly reserves its rights to proceed against the Executive for damages in connection with any claim or cause of action that the Company may have arising out of or related to the Executive’s employment hereunder. “Cause” means (i) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive issues a Notice of Termination for Good Reason (as defined in Section 4(d)) to substantially perform the Executive’s duties, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive’s issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially followed or complied with the directives of the Board, (iii) the Executive’s willful commission of an act of fraud or dishonesty that results in material economic or financial injury to the Company, or (iv) the Executive’s willful engagement in illegal conduct or gross misconduct that

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is materially and demonstrably injurious to the Company. For purposes of this Section 4(a), no act, or failure to act, shall be deemed “willful” unless the Executive’s commission of the act or failure to act is not in good faith. In any event, the Company may not terminate the Executive for Cause unless and until the Company has delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (³/₄) of the entire membership of the Board at a meeting of the Board (after reasonable notice to the Executive, an opportunity for the Executive, together with counsel, to be heard before the Board and a reasonable opportunity to cure), finding, in the Board’s good faith opinion, that the Executive engaged in any of the conduct set forth above in clauses (i) through (iv) of the definition of “Cause” and specifying in reasonable detail the particulars of the conduct at issue.

          (b) Death. If the Executive is by the Company pursuant to this Agreement at the time of the Executive’s death, then the Executive’s employment shall be terminated automatically concurrently with his death. In that event, the Company shall pay to the Executive’s estate, within sixty (60) days after the Company receives written notice of appointment of a personal representative (on behalf of the Executive’s estate), the amount set forth in clauses (i) through (iii) of Section 5(a), plus all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement.

          (c) Permanent Disability. If the Company terminates the Executive’s employment due to the Executive’s Permanent Disability, the Company shall pay to the Executive base salary, in accordance with the Company’s normal payroll practices, through the Date of Termination at the rate in effect at the time the Company gives the Executive Notice of Termination. The Company also shall pay to the Executive all other amounts and benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, long-term disability policy, medical benefits and other benefits of the Company or provided by law. Company shall have no further obligations to the Executive’s estate under this Agreement. For purposes of this Agreement, “Permanent Disability” means any incapacity due to physical or mental illness as a result of which the Executive is absent from the full-time performance of his duties with the Company for six (6) consecutive months and does not return to the full-time performance of his duties within thirty (30) days after the Company gives Notice of Termination to the Executive.

          (d) Termination Without Cause or For Good Reason. If the Company terminates the Executive’s employment without Cause or the Executive terminates his employment for “Good Reason” (other than on account of death or Permanent Disability), the Executive shall be entitled to the compensation, vesting and benefits as described in Section 5(b) below. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following events unless they are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination:

     (i) The Executive ceases to be an Officer of the Company reporting to the Chief Executive Officer;

     (ii) The Executive’s Base Salary is reduced by a greater percentage than the reduction applicable to any other Officer;

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     (iii) There is a reduction in the annual incentive compensation opportunity or Equity Compensation (as defined in Section 5(b)(iii)(A) below) opportunity (i.e., percentage of the Executive’s base salary represented by awards of Equity Compensation of any type) established for the position held by the Executive and the reduction is not applied in the same or similar manner to all other executive officers;

     (iv) There is a reduction or elimination of an executive benefit or an employee benefit and the reduction is not applicable to all other Officers in the same or similar manner;

     (v) There is a material breach of this Agreement by the Company and the Company does not remedy it prior to the expiration of thirty (30) days after receipt of written notice of the breach given by the Executive to the Company;

     (vi) The Company exercises its right not to extend the term of this Agreement beyond the then current term, unless the Company concurrently exercises its right not to renew the employment agreements in effect with respect to the then-current members of Group B (as defined below). “Group B” means the following individuals Kenneth A. Boerger, Jonathan S. Freeman, Daniel P. Ibele, Susan Allene Kovach, Timothy T. Paige, Scott M. Sellick and Kenneth G. Wilkes. If the employment of any individual listed in the preceding sentence is terminated by the Company for Cause or by the individual without Good Reason, that individual shall no longer be a member of Group B. For purposes of this Section 4 (d)(6), the term “employment agreements” does not include the Letter Agreement (as defined in Section 11(n)) or similar agreements relating to a change in control of the Company.

If the Executive does not deliver to the Chief Executive Officer, within ninety (90) days after the date on which the Executive knew or should have known of the Good Reason event, written notice specifying in reasonable detail the particulars giving rise to the Good Reason Event, the Executive shall be deemed conclusively to have waived that particular Good Reason Event (but not any subsequent Good Reason Event) even if the Executive’s failure to give timely notice of the Good Reason event is a result of the Executive’s incapacity due to physical or mental illness.

        (e) Termination by Resignation or Retirement. If the Executive terminates his employment by resigning or retiring, other than at the written request of the Company or for Good Reason, the Company shall pay the Executive base salary through the Date of Termination at the rate in effect at the time the Notice of Termination is given. In addition, the Company shall pay or provide to the Executive all other amounts and benefits to which the Executive is entitled under any compensation plan or practice of the Company, pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefits and other benefits of the Company or provided by law, at the time such payments are due. The Company shall have no further obligations to the Executive under this Agreement.

        (f) Notice of Termination. A party who purports to terminate the Executive’s employment (other than as a result of death or as a result of resignation or retirement that is not at the written request of the Company and is not for Good Reason) shall provide to the other party Notice of Termination in accordance with Section 4. “Notice of Termination” means a

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written notice that indicates the specific termination provision in this Agreement upon which the terminating party is relying and that sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

          (g) Date of Termination, Etc. “Date of Termination” means the date on which the Executive incurs a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     5. Compensation upon Termination.

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

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

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

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

     (iv) Continuation of the Executive’s medical, prescription drug, dental and vision benefits (collectively, “Medical Insurance Benefits”) for the Executive’s covered dependents for a period of twelve (12) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive’s dependents are eligible for coverage pursuant to this Section 5(a)(iv), the Executive’s dependents shall pay the cost, on an after-tax basis, for the continued Medical Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive’s dependents such that, after payment of all taxes incurred by the Executive’s dependents as a result of their receipt of the Medical Insurance Benefits and payment by the Company, the Executive’s dependents will retain an amount equal to the amount they paid during the immediately preceding calendar year for the Medical Insurance Benefits; and

     (v) Awards to the Executive pursuant to any Equity Compensation plan of the Company shall vest immediately as of the Date of Termination and, if applicable, be exercisable for a period of three years following the Date of Termination or for such longer period following the Date of Termination specified by the award granted to the Executive; provided however, that nothing in this Agreement shall act to extend the term of any Equity Compensation award and no Equity Compensation award that has an option feature (i.e., a feature that requires that the grantee take an affirmative action to obtain the benefit of the award) may be exercised after the expiration of the term of the award specified in the award granted to the Executive.

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        (b) Termination for Permanent Disability, Without Cause or for Good Reason. If the Company terminates the Executive’s employment for Permanent Disability or without Cause, or the Executive terminates his employment for Good Reason (other than as a result of the Executive’s death or Permanent Disability), the Executive shall be entitled to the following:

     (i) Payment, not later than five (5) business days after the Date of Termination, of the Executive’s base salary accrued through the Date of Termination;

     (ii) With respect to the Executive’s annual incentive compensation opportunity during the year in which the Date of Termination occurs, payment of an amount equal to the Executive’s target award, prorated through the Date of Termination; provided, however, that in any event the amount payable pursuant to this clause shall not be less than 50% of the Executive’s target award. The amount payable pursuant to this clause shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the year in which the Date of Termination occurs;

     (iii) If the Executive is eligible under any “performance-based” equity Compensation plans (as defined below) as of the date on which Notice of Termination is given, payment of the applicable Equity Compensation (or, in the Compensation Committee’s discretion, cash equal in value to the applicable Equity Compensation) actually earned for each performance cycle during which the Date of Termination occurs, but prorated through the Date of Termination. The amount required to be paid pursuant to this clause (iii) shall be paid, subject to Section 5(c), between January 1 and March 15 of the year following the end of each applicable performance cycle. For purposes of this Agreement, the following terms have the meanings given them below:

          (A) “Equity Compensation” means shares of common stock, whether or not restricted, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and/ or any other equity-based or equity-related award.

          (B) A compensation plan shall be deemed a “performance-based equity compensation plan” if the plan provides that Equity Compensation may be earned pursuant to the plan and the plan provides that the amount of, or the entitlement to, the Equity Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by the date not later than ninety (90) days after the commencement of the performance period, provided that the outcome is substantially uncertain at the time the criteria are established. A performance-based equity compensation plan also may provide for payments based upon subjective performance criteria, provided that—

          (1) The subjective performance criteria are bona fide and relate to the performance of the Executive, a group of employees that

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includes the Executive, or a business unit for which the Executive provides services (which may include the entire Company); and

          (2) The determination that any subjective performance criteria have been met is not made by the Executive or a family member of the Executive, or a person under the effective control of the Executive or such a family member, and no amount of the compensation of the person making the determination is effectively controlled in whole or in part by the Executive or such a family member;

     (iv) A lump sum payment equal to two (2) times the sum of (A) Executive’s annual Base Compensation at the rate in effect on the date on which Notice of Termination is given and (B) the Executive’s target annual incentive compensation opportunity at the time the Notice of Termination is given. The amount required to be paid pursuant to this clause (iv) shall be paid, subject to Section 5(c), not later than five (5) business days after the Date of Termination;

     (v) Continuation of the Executive’s medical, prescription drug, dental and life insurance benefits (collectively, “Insurance Benefits”) for a period of twenty-four (24) months following the Date of Termination. On or about January 31 of the first full calendar year after the Date of Termination, and on each anniversary thereof for each year during which the Executive is eligible for coverage pursuant to this Section 5(a)(v), Executive shall pay the cost, on an after-tax basis, for the continued Insurance Benefits, and concurrently therewith the Company will make a payment to the Executive such that, after payment of all taxes incurred by the Executive as a result of his receipt of the Insurance Benefits and payment by the Company, the Executive will retain an amount equal to the amount the Executive paid during the immediately preceding calendar year for the Insurance Benefits; and

     (vi) Any awards of Equity Compensation (other than “performance-based” Equity Compensation”) that have been granted to the Executive and that have not vested as of the Date of Termination shall vest immediately on the Date of Termination. To the extent that any such awards (such as stock options or stock appreciation rights) contain an option feature (i.e., a feature that requires that the grantee take an affirmative action in order to obtain the benefit of the award), they shall be exercisable for a period of three years following the Date of Termination or for such longer period following the Date of Termination as is specified in the award agreements governing the award(s). However, the immediately preceding sentence shall not be deemed to extend the term of any award of Equity Compensation that, by the terms of the agreement governing it, is scheduled to expire unless exercised prior to the expiration of the three (3) year period referred to in the immediately preceding sentence.

          (c) Payments. Payment of benefits under Section 5(a) is subject to reasonable evidence of authority to act for the decedent’s estate. Payment of benefits under clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) is conditioned on the release provided under Section 5(d) becoming effective. Except as otherwise provided in this Agreement, all payments under this Agreement shall be subject to applicable withholdings. Notwithstanding any provisions of this Section 5 to the contrary, if the Executive is a “specified employee” (within the

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meaning of Section 409A of the Code and determined pursuant to policies adopted by the Company) on the Executive’s Date of Termination, amounts that otherwise would be payable, pursuant to clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement (as well as any other payment or benefit that the Executive is entitled to receive upon the Executive’s separation from service that would be considered to be deferred compensation under Section 409A of the Code), during the six (6) month period immediately following the Date of Termination (the “Delayed Payments”) will instead be paid or made available on the earlier of (i) the first day of the seventh month following the Executive’s Date of Termination and (ii) the Executive’s death (the applicable date, the “Initial Payment Date”). Continuation of benefits under Section 5(a)(iv) or 5(b)(vi), shall be in addition to and not concurrent with any continuation rights Executive may have under the Consolidated Omnibus Budget Reconciliation Act of 1985, or similar state law.

          (d) Release. Payment of any amount to and the provision of any benefits to, or on behalf of, the Executive pursuant to any of clauses (ii), (iii), (iv), (v) and (vi) of Section 5(b) of this Agreement and Executive’s acceptance of such amounts shall be conditioned on the Executive’s execution and delivery to the Company, no later than sixty (60) days after the Date of Termination, of a general waiver and release of claims in the form attached hereto as Exhibit A or in such other form as the Company may reasonably request to provide a complete release of all claims and causes of action the Executive or the Executive’s estate may have against the Company, except claims and causes of action arising out of, or related to, the obligations of the Company pursuant to this Agreement and Claims (as defined in Exhibit A) for vested benefits under any pension plan, retirement plan and savings plan, rights under any Equity Compensation plan and stock purchase plan and rights to continuation of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law.

          (e) No Offset for Benefits. There shall be no offset to any compensation or other benefits otherwise payable to, or on behalf of, the Executive pursuant to the terms of Section 5 of this Agreement as a result of the receipt by Executive of any pension, retirement or other benefit payments (including, but not limited to, accrued vacation) except as provided by Section 11(n).

          (f) Excise Tax.

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

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     (ii) Notwithstanding any provision of this Agreement to the contrary, but giving effect to any redetermination of the amount of Gross-Up payments otherwise required by this Section 5(f), if but for this sentence the Company would be obligated to make a Gross-Up Payment to the Executive, and the aggregate “present value” of the “parachute payments” to be paid or provided to the Executive under this Agreement or otherwise does not exceed 1.10 multiplied by three times the Executive’s “base amount,” then the payments and benefits to be paid or provided under this Agreement will be reduced (or repaid to the Company, if previously paid or provided) to the minimum extent necessary so that no portion of any payment or benefit to the Executive, as so reduced or repaid, constitutes an “excess parachute payment.” For purposes of this Section 5(f)(ii), the terms “excess parachute payment,” “present value,” “parachute payment,” and “base amount” have the meanings assigned to them by Section 280G of the Code. The determination of whether any reduction in or repayment of such payments or benefits to be provided under this Agreement is required pursuant to this Section 5(f)(ii) will be made at the expense of the Company, if requested by the Executive or the Company, by the Accountants (as defined in Section 5(f)(iii)). Appropriate adjustments will be made to amounts previously paid to the Executive, or to amounts not paid pursuant to this Section 5(f)(ii), as the case may be, to reflect properly a subsequent determination that the Executive owes more or less Excise Tax than the amount previously determined to be due. If a Payment intended to be provided under the Agreement is required to be reduced pursuant to this Section 5(f)(ii), the payments shall be reduced in the following order of priority: payments pursuant to Section 5(b)(iv), payments pursuant to Section 5(b)(v) and payments pursuant to Section 5(b)(ii), with any Equity Compensation having an option feature being the last payments to be subject to reduction.

     (iii) All determinations required to be made under this Section 5, including whether and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations, shall be made in good faith by the Accountants (as defined below), which shall provide the Executive and the Company with detailed supporting calculations with respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice from the Executive or the Company that has received or will receive a Payment. For the purposes of this Section 5(f), the “Accountants” shall mean the Company’s independent certified public accountants serving immediately prior to the change in control that with other events results in the imposition of the Excise Tax. If the Accountants are also serving as accountant or auditor for the individual, entity or group effecting a change in control that with other events results in the imposition of the Excise Tax, the Company shall appoint another recognized public accounting firm to make the determinations required hereunder (which accounting firm shall also be referred to herein as the “Accountants”). All fees and expenses of the Accountants shall be borne solely by the Company. For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to

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the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax. For purposes of calculating whether the Excise Tax is applicable and determining the amount of the Gross-Up Payment, (A) to the extent not otherwise specified herein, reasonable assumptions and approximations may be made, (B) good faith interpretations of the Code may be relied upon and (C) the Executive shall be deemed to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Executive’s adjusted gross income), and to have otherwise allowable deductions for Federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income. Any determination by the Accountants shall be binding upon the Company and the Executive. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than the Company should have paid pursuant to this Section 5(f) (the “Underpayment”). If the Company exhausts its remedies pursuant to Section 5(f) and the Executive is required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by the Company to the Executive or for his benefit; and

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

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

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

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

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

     (v) Notwithstanding any other provision of this Section 5(f) to the contrary and subject to Section 5(c), all taxes and expenses described in this Section 5(f) shall be paid or reimbursed within five (5) business days after the Executive submits evidence of incurrence of such taxes and/or expenses, provided that in all events such reimbursement will be made no later than the end of the year following the year in which the applicable taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, no later than the end of the year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). Each provision of reimbursements pursuant to this Section 5(f) shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed by the Company in one taxable year in no event will affect the amount of expenses required to be reimbursed or in-kind benefits required to be provided by the Company in any other taxable year.

     6. Termination Obligations.

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

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

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

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

     7. Records and Confidential Data.

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

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

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

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written Confidential Information has been returned or destroyed in accordance with this Section 7(c).

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

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

     8. Assignment of Inventions.

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

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

          (c) Duty to Disclose and Assist. The Executive agrees to promptly disclose in writing all Inventions to the Company, and to provide all assistance reasonably requested by the Company in the preservation of the Company’s interests in the Inventions including obtaining patents in any country throughout the world. Such services will be without additional compensation if the Executive is then employed by the Company and for reasonable compensation and subject to his reasonable availability if he is not. If the Company cannot, after reasonable effort, secure the Executive’s signature on any document or documents needed to apply for or prosecute any patent, copyright, or other right or protection relating to an Invention, whether because of his physical or mental incapacity or for any other reason whatsoever, the Executive hereby irrevocably designates and appoints the Company and its duly authorized Officers and agents as his agent and attorney-in-fact, to act for and on his behalf and in his name and stead for the purpose of executing and filing any such application or applications and taking all other lawfully permitted actions to further the prosecution and issuance of patents, copyrights, or similar protections thereon, with the same legal force and effect as if executed by the Executive.

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

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

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

     9. Additional Covenants.

          (a) Non-Interference with Customer Accounts. Executive covenants and agrees that (i) during employment and (ii) for a period of twelve (12) months commencing on the Date of Termination, except as may be required by Executive’s employment by the Company, Executive shall not directly or indirectly, personally or on behalf of any other person, business, corporation, or entity, contact or do business with any customer of the Company with respect to any product, business activity or service which is competitive with any product, business, activity or service of the type sold or provided by the Company.

          (b) Non-Competition. In consideration of and in connection with the benefits provided to the Executive under this Agreement and in order to protect the goodwill of the Company, the Executive hereby agrees that if the Executive’s employment is terminated, then, unless the Company otherwise agrees in writing, for a period of twelve (12) months commencing on the Date of Termination, the Executive shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any entity engaged in a business which sells, in competition with the Company and its affiliates, the same type of products as sold by the Company, including without limitation glass tableware, ceramic dinnerware, metal flatware and plastic supplies to the foodservice industry other than as a shareholder or beneficial owner owning five percent (5%) or less of the outstanding securities of a public company. Without limiting the foregoing, currently the following business operations among others sell, in competition with the Company and its affiliates, the same type of products as sold by the Company and its affiliates: Anchor Hocking; Arc International and its

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affiliate Cardinal International, Inc.; Oneida Ltd.; and any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

          (c) No Diversion. The Executive covenants and agrees that in addition to the other Covenants set forth in this Section 9, (i) during his employment and (ii) for a period of twelve (12) months following his Date of Termination, Executive shall not divert or attempt to divert or take advantage of or attempt to take advantage of any actual or potential business opportunities of the Company (e.g., joint ventures, other business combinations, investment opportunities, potential investors in the Company, and other similar opportunities) of which the Executive became aware as a result of his employment with the Company.

          (d) Non-Recruitment. The Executive acknowledges that the Company has invested substantial time and effort in assembling its present workforce. Accordingly, the Executive covenants and agrees that during employment and for period of twelve (12) months commencing on the Date of Termination, the Executive shall not either for the Executive’s own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venture owner or shareholder or otherwise on behalf of any other person, firm or corporation directly or indirectly entice, solicit, attempt to solicit, or seek to induce or influence any Officer or employee of the Company to leave his or her employment with the Company or to offer employment to any person who on or during the six (6) month period immediately preceding the date of such solicitation or offer was an employee of the Company; provided, however, that this Section 9(d) shall not be deemed to be breached with respect to an employee or former employee of the Company who responds to a general advertisement seeking employment or who otherwise initiates contact for the purpose of seeking employment.

          (e) Non-Disparagement. Executive covenants and agrees that during the Executive’s employment and for period of twelve (12) months commencing on the Date of Termination, Executive shall not induce or incite claims of discrimination, wrongful discharge, or any other claims against the Company or any of its directors, Officers, employees or equity holders, by any other persons, executives or entities, and the Executive shall not undertake any harassing or disparaging conduct directed at the Company or any of its directors, Officers, employees or equity holders, other than such statements made as part of testimony compelled by law or legal process.

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

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

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

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

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

     11. Miscellaneous Provisions.

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

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

If to the Executive:

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[Name and address of officer listed on Appendix 1]

If to the Company:

Libbey Inc.
300 Madison Avenue
P.O. Box 10060
Toledo, Ohio 43604
Facsimile: (419) 325-2585
Attention: Secretary

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

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

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

          (e) Waiver of Jury Trial. The parties hereby waive, release and relinquish any and all rights they may have to a trial by jury with RESPECT to any actions TO ENFORCE AN ARBITRATOR’S DECISION PURSUANT TO SECTION 11(l) OF THIS AGREEMENT.

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

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

          (h) Limitation on Liabilities. If the Executive is awarded any damages as compensation for any breach of this Agreement or a breach of any covenant contained in this Agreement (whether express or implied by either law or fact), such damages shall be limited to contractual damages (including reasonable attorneys’ fees) and shall exclude (i) punitive damages and (ii) consequential and/or incidental damages (e.g., lost profits and other indirect or

17

speculative damages). The maximum amount of damages that the Executive may recover for any reason shall be all amounts owed (but not yet paid) to the Executive pursuant to this Agreement.

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

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

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

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

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

          (n) Effect on Other Agreements. It is the intention of the parties hereto and thereto that this Agreement provide benefits that are not otherwise provided by the Letter Agreement dated as of December 31, 2008, between the Executive and the Company (the “Letter Agreement”), which provides to the Executive certain benefits in connection with a Change in Control (as defined in the Letter Agreement). If the Executive’s employment is terminated prior to, or the two (2) year period following, a Change in Control and the Executive is entitled to benefits under the Letter Agreement as a result of or in connection with his termination of employment, then the Executive shall not be entitled to benefits under this Agreement in connection with his termination of employment.

          (o) Coordination with Deferred Compensation Plans. If and to the extent that the Executive has elected, pursuant to the Executive Savings Plan (“ESP”), the Executive

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Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of compensation, including without limitation any performance-based Equity Compensation or other Equity-Based Compensation (as defined in the DCP), the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to the Executive and the timing of any such distribution. However, the terms of this Agreement or, in the case of a termination of the Executive’s employment in connection with a Change in Control, the Letter Agreement, shall govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based Equity Compensation and other Equity-Based Compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (p) Compliance with Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

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

LIBBEY INC.
By:
Name:	John F. Meier
Title:	Chairman and Chief Executive Officer
Name: [Insert Name of Executive from Appendix 1]

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APPENDIX 1

Each of the executives below is a party to an agreement in substantially this form:

Kenneth A. Boerger

Jonathan S. Freeman

Daniel P. Ibele

Susan A. Kovach

Timothy T. Paige

Scott M. Sellick

Kenneth G. Wilkes

SCHEDULE 1

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

a.	The annual performance incentive compensation plan for corporate Officers (currently the “Senior Management Incentive Plan”). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 45% of annual base salary) and any subsequent revisions.
b.	The long term incentive compensation plan (currently the Libbey Inc. Long Term Incentive Compensation Plan). The target percentage for an Executive’s participation shall be the target percentage currently in effect for the position as of the date of this Agreement (namely, 50% of annual base salary) and any subsequent revisions.
c.	Stock option and equity participation plan (currently the 2006 Omnibus Incentive Plan of Libbey Inc.)
d.	Libbey Inc. Retirement Savings Plan
e.	Financial Investment Counseling
f.	Executive Physical
g.	Executive Deferred Compensation Plan
h.	Such other benefit plans and arrangements as the Company provides, from time to time, to salaried employees generally

2

EXHIBIT A

GENERAL RELEASE AND WAIVER OF CLAIMS

          The undersigned, ___resident of the State of ___(“Releasor”), in accordance with and pursuant to the terms of Section 5(d) of the Amended and Restated Employment Agreement (the “Agreement”), dated as of December 31, 2008, between Libbey Inc., a Delaware corporation (the “Company”), and Releasor, and the consideration therein provided, except as set forth herein, hereby remises, releases and forever discharges and covenants not to sue, and by these presents does for Releasor and Releasor’s legal representatives, trustees, beneficiaries, heirs and assigns (Releasor and such persons referred to herein, collectively, as the “Releasing Parties”) hereby remise, release and forever discharge and covenant not to sue the Company and its affiliates and the respective Officers, directors, employees, equity holders, agent and representatives of each of them and all of their respective successor and assigns (each a “Released Party” and collectively, the “Released Parties”), of and from any and all manner of actions, proceedings, claims, causes of action, suits, promises, damages, judgments, executions, claims and demands, of any nature whatsoever, and of every kind and description, choate and inchoate, known or unknown, at law or in equity (collectively, “Claims”), which the Releasing Parties, or any of them, now have or ever had, or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever, against the Released Parties, and each of them, from the beginning of time to the date hereof;

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

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

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

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

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

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

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

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

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

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

Dated: _______, 20___.

RELEASOR:

Name:

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EX-10.33

Exhibit 10.33

Susan Allene Kovach

Vice President, General Counsel
  and Secretary
Direct: (419) 325-2378
Fax: (419) 325-2585
susan.kovach@libbey.com

December 31, 2008

John F. Meier
5500 Little
Sylvania, OH 43560

Dear John,

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

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

In order to induce you to remain in its employ, the Company hereby agrees that after this letter agreement (this “Agreement”) has been fully executed, you shall receive the severance benefits set forth in this Agreement if your employment with the Company is terminated under the circumstances described below subsequent to a Change in Control (as defined in Section 2), and you shall receive the compensation set forth in Section 5(a) through (c) below upon the occurrence of a Change in Control even if your employment is not terminated in connection with, or subsequent to, the Change in Control.

     1. Term of Agreement. The term of this Agreement, which amends and restates the letter agreement between you and the Company dated May 23, 2007, shall commence on January 1, 2009, and shall continue in effect through December 31, 2009. Commencing on January 1, 2010 and on each January 1 thereafter, the term of this Agreement shall be extended automatically for one additional year unless the Company gives you written notice, not later than September 30 of the preceding calendar year, that the Company does not wish to extend this Agreement for the subsequent year. For example, if the Company does not desire

300 Madison Avenue, Toledo, Ohio 43604

Mr. John F. Meier
December 31, 2008
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to renew this Agreement for the 2011 calendar year, the Company must, on or before September 30, 2010, give you written notice that the term of this Agreement will not be renewed for the 2011 calendar year. If a Change in Control occurs during the original or any extended term of this Agreement, the term of this Agreement shall continue in effect for a period of not less than thirty-six (36) months beyond the month in which such Change in Control occurred.

     2. Change in Control. For purposes of this Agreement, a Change in Control shall be deemed to occur if:

          (a) any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities. For purposes of this Agreement, the term “Person” is used as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the term “Person” shall not include the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. For purposes of this Agreement, the term “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act;

          (b) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), Continuing Directors (as defined below) cease for any reason to constitute at least a majority of the Board. The term “Continuing Directors” means (i) individuals who were members of the Board at the beginning of the two (2) year period referred to above and (ii) any individuals elected to the Board, after the beginning of the two (2) year period referred to above, by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. Notwithstanding the immediately preceding sentence, an individual who is elected to the Board after the beginning of the two (2) year period shall not be deemed a Continuing Director if the individual was designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a), (c) or (d);

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

          (d) the consummation of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

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December 31, 2008
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     3. Termination Following Change in Control.

          (a) General. If, during the term of this Agreement, a Change in Control occurs and the Company terminates your employment without Cause (as defined below), or you terminate your employment for Good Reason (as defined below), within the two (2) year period immediately following the date on which the Change in Control occurs, then you shall be entitled to the benefits provided in Section 4(c) of this Agreement, and those benefits shall be paid notwithstanding the subsequent expiration of the term of this Agreement. In addition, you shall be entitled to the benefits provided in Section 4(c) if:

     (i) After the occurrence of a Potential Change in Control (as defined in Section 9 below) and prior to the date on which the Change in Control actually occurs, the Company terminates your employment without Cause (other than as a result of your Permanent Disability, as defined below) or you terminate your employment upon an event that would be considered Good Reason if it were to occur after a Change in Control; or

     (ii) Prior to the occurrence of a Potential Change in Control, the Company terminates your employment without Cause (other than as a result of Permanent Disability) or you terminate your employment upon an event that would be considered Good Reason if it were to occur after a Change in Control and you reasonably demonstrate that the Company’s termination of your employment or the events giving rise to Good Reason (A) was or were at the request of, or was or were induced by, a third party who has taken steps reasonably calculated to effect a Change of Control, or (B) otherwise arose in connection with or in anticipation of a Change in Control.

Notwithstanding anything to the contrary in this Agreement, you shall not be entitled to any payment under Section 4 of this Agreement if your employment is terminated as a result of your death or Permanent Disability. “Permanent Disability” means any incapacity due to physical or mental illness as a result of which you are absent from the full-time performance of your duties with the Company for six (6) consecutive months and do not return to the full-time performance of your duties within thirty (30) days after the Company gives Notice of Termination (as defined in Section 3(d) below) to you.

          (b) Cause. “Cause” means the occurrence of any of the following events: (i) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after your issuance of a Notice of Termination for Good Reason to substantially perform your duties with the Company after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; (ii) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after your issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; (iii) your willful commission of an act of fraud or dishonesty resulting in material economic or financial injury to the Company; or (iv) your willful engagement in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. For purposes of this Section 3(b), no act, or failure to act, on your part shall be deemed “willful”

Mr. John F. Meier
December 31, 2008
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unless your commission of the act or failure to act is not in good faith. In any event, the Company may not terminate your employment for Cause pursuant to Sections 3(b)(i), (ii) or (iv) hereof unless and until the Company has delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after reasonable notice to you, an opportunity for you, together with your counsel, to be heard before the Board and a reasonable opportunity to cure), finding, in the Board’s good faith opinion, that you engaged in any of the conduct set forth in the definition of “Cause” above and specifying in reasonable detail the particulars of the conduct at issue.

          (c) Good Reason. “Good Reason” means the occurrence, after a Change in Control, of any of the following circumstances unless, in the case of Sections 3(c)(i), (v), (vi), (vii) or (viii), such circumstances are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination (as defined in Section 3(e)) specified in the applicable Notice of Termination:

     (i) the assignment to you of any duties inconsistent with the position in the Company that you held immediately prior to the Change in Control, a significant adverse alteration in the nature or status of your responsibilities or the conditions of your employment from those in effect immediately prior to the Change in Control, including by virtue of the Company ceasing to be a publicly-held corporation, or any other action by the Company that results in a material diminution in your position, authority, duties or responsibilities;

     (ii) the Company’s reduction of your annual base salary as in effect on the date of this Agreement or as the same may be increased from time to time after the date of this Agreement;

     (iii) the relocation of the Company’s offices at which you are principally employed immediately prior to the date of the Change in Control (your “Principal Location”) to a location more than thirty (30) miles from that location, or the Company’s requiring you, without your written consent, to be based anywhere other than your Principal Location, except for required travel on the Company’s business to an extent substantially consistent with your business travel obligations prior to the Change in Control;

     (iv) the Company’s failure to pay to you any portion of your current compensation or to pay to you any portion of an installment of deferred compensation under any deferred compensation program of the Company within seven (7) business days of the date on which the compensation is due;

     (v) the Company’s failure to continue in effect any material compensation or benefit plan or practice in which you participate immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the Company’s failure to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the Change in Control;

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December 31, 2008
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     (vi) the Company’s failure to continue to provide you with benefits substantially similar in the aggregate to those enjoyed by you under any of the Company’s life insurance, medical, health and accident, disability, pension, retirement, or other benefit plans or practices in which you and your eligible family members were participating at the time of the Change in Control, the taking of any action by the Company that would directly or indirectly materially reduce any of those benefits, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control (or, if more favorable to you, on the basis of the terms of your initial employment with the Company);

     (vii) the Company’s failure to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 6 hereof; or

     (viii) any purported termination of your employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(d) hereof (and, if applicable, the requirements of Section 3(b) hereof), which purported termination shall not be effective for purposes of this Agreement.

Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

          (d) Notice of Termination. Any purported termination of your employment by the Company or by you (other than termination as a result of your death, in which case your employment shall terminate automatically) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7. “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

          (e) Date of Termination, Etc. “Date of Termination” means the date on which you incur a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     4. Compensation Upon Termination. Upon termination of your employment pursuant to Section 3 above, the benefits to which you are entitled, subject to the terms and conditions of this Agreement, are:

          (a) If the Company terminates your employment for Cause or you terminate your employment other than for Good Reason, then the Company shall pay you, in accordance with the Company’s normal pay practices, your base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan or practice of the Company in effect at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

Mr. John F. Meier
December 31, 2008
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        (b) If your employment with the Company is terminated by reason of your death or Permanent Disability, you or your estate and dependents, if any, will be entitled to the benefits to which you are entitled, under the Amended and Restated Employment Agreement dated as of December 31, 2008 (the “Amended Employment Agreement”) between you and the Company, by reason of your death or Permanent Disability, as the case may be.

        (c) If you terminate your employment for Good Reason or the Company terminates your employment without Cause (other than as a result of your death or Permanent Disability), in each case in accordance with the terms of Section 3 above, then you shall be entitled to the benefits provided below:

     (i) The Company shall pay to you your base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan or practice of the Company in effect at the time the payments are due;

     (ii) In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, at the time specified in Section 4(d), a lump-sum severance payment equal to the sum of the following:

(A)	three (3) times the greater of your annual base salary at the rate in effect as of the Date of Termination or your annual base salary at the rate in effect immediately prior to the Change in Control; and
(B)	three (3) times the greater of (1) your target annual incentive compensation as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater, or (2) your annual bonus for the year immediately preceding the Date of Termination;

     (iii) For a period of one (1) year following the Date of Termination, the Company shall, at its sole expense as incurred, provide you with financial planning services of substantially the same type and scope as those with which the Company was providing you immediately prior to the Date of Termination, or, if more favorable to you, the date of the Change in Control, provided that in no event will the amount of financial planning services provided by the Company in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided to you, in any other taxable year;

     (iv) For a period of two (2) years following the Date of Termination, the Company shall, at its sole expense as incurred, provide you with outplacement services, the scope and provider of which shall be selected by you in your sole discretion, provided that the Company’s out-of-pocket cost under this Section 4(c)(iv) shall not exceed fifteen thousand dollars ($15,000);

     (v) For a period of thirty-six (36) months after the Date of Termination, the Company shall continue to provide you and your eligible family members, on the terms set forth in the remaining provisions of this Section 4(c)(v), with medical and dental

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December 31, 2008
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health benefits at least equal to those that would have been provided to you and them if your employment had not been terminated or, if more favorable to you, as in effect generally at any time thereafter; provided, however, that if you become employed by another employer and are eligible to receive medical and dental health benefits under that employer’s plans, the Company’s obligations under this Section 4(c)(v) shall be reduced to the extent comparable benefits are actually received by you during the thirty-six (36) month period following your termination, and any such benefits actually received by you shall be reported to the Company. If under the terms of the Company’s benefit plans or programs you are ineligible to continue to be so covered, the Company shall provide you with substantially equivalent coverage through other sources. You agree to pay the cost, on an after-tax basis, for the continued medical and dental coverage, subject to Section 4(d), on or about January 31 of the year following the year in which the Date of Termination occurs and continuing on or about each January 31 until the year following the last year of your coverage pursuant to this Section 4(c)(v), and concurrently therewith the Company will make a payment to you such that, after payment of all taxes incurred by you as a result of your receipt of the continued medical and dental coverage and payment by the Company, you retain an amount equal to the amount you paid during the immediately preceding calendar year for the medical and dental benefit plan coverage described in this Section. At the termination of the benefits coverage under this Section 4(c)(v), you, your spouse and your dependents shall be entitled to continuation coverage pursuant to section 4980B of the Code, sections 601-608 of the Employee Retirement Income Security Act of 1974, as amended, and under any other applicable law, to the extent required by such laws, as if you had terminated employment with the Company on the date such benefits coverage terminates.

     (vi) (A) Anything in this Agreement to the contrary notwithstanding, but subject to Section 4(c)(vi)(B), if it shall be determined that any payment or distribution to you or for your benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise (the “Payment”) would be subject to the excise tax imposed by section 4999 of the Code (the “Excise Tax”), then you shall be entitled to receive from the Company an additional payment (the “Gross-Up Payment”) in an amount such that the net amount of the Gross-Up Payment retained by you after the calculation and deduction of any and all federal, state and local income tax, employment tax and Excise Tax (including any interest or penalties imposed with respect to such taxes) on the Gross-Up Payment provided for in this Section 4(c)(vi), and taking into account any lost or reduced tax deductions on account of the Gross-Up Payment, shall be equal to the Excise Tax;

          (B) Notwithstanding any provision of this Agreement to the contrary, but giving effect to any redetermination of the amount of Gross-Up payments otherwise required by this Section 4(c)(vi), if but for this sentence, the Company would be obligated to make a Gross-Up Payment to the Executive, and the aggregate “present value” of the “parachute payments” to be paid or provided to you under this Agreement or otherwise does not exceed 1.10 multiplied by three times your “base amount,” then the payments and benefits to be paid or provided under this Agreement will be reduced (or repaid to the Company, if previously paid or provided) to the minimum extent necessary so that no portion of any payment or benefit to you, as so reduced or repaid, constitutes an “excess parachute payment.” For purposes of this Section 4(c)(vi)(B), the terms “excess parachute payment,” “present value,” “parachute payment,” and

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December 31, 2008
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“base amount” will have the meanings assigned to them by Section 280G of the Code. The determination of whether any reduction in or repayment of such payments or benefits to be provided under this Agreement is required pursuant to this Section 4(c)(vi)(B) will be made at the expense of the Company, if requested by you or the Company, by the Accountants (as defined in Section 4(c)(vi)(C)). Appropriate adjustments will be made to amounts previously paid to you, or to amounts not paid pursuant to this Section 4(c)(vi)(B), as the case may be, to reflect properly a subsequent determination that you owe more or less Excise Tax than the amount previously determined to be due. If a Payment intended to be provided under the Agreement is required to be reduced pursuant to this Section 4(c)(vi)(B), the payments shall be reduced in the following order of priority: payments pursuant to Section 4(c)(ii), payments pursuant to Section 4(c)(v), payments pursuant to Section 4(c)(iii) and payments pursuant to Section 4(c)(iv).

          (C) All determinations required to be made under this Section 4(c)(vi), including whether and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations, shall be made by the Accountants (as defined below), which shall provide you and the Company with detailed supporting calculations with respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice from you or the Company that you have received or will receive a Payment. For the purposes of this Section 4(c)(vi), the “Accountants” shall mean the Company’s independent certified public accountants serving immediately prior to the Change in Control. If the Accountants are also serving as accountant or auditor for the individual, entity or group effecting the Change in Control, you shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accountants hereunder). All fees and expenses of the Accountants shall be borne solely by the Company.

For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made and to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of your adjusted gross income), and to have otherwise allowable deductions for Federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Payment in your adjusted gross income. To

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December 31, 2008
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the extent practicable, but subject to Section 4(c)(vi)(D), any Gross-Up Payment with respect to any Payment shall be paid by the Corporation at the time you are entitled to receive the Payment and in no event will any Gross-Up Payment be paid later than five days after the receipt by you of the Accountant’s determination. Any determination by the Accountants shall be binding upon the Company and you. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than the Company should have paid pursuant to this Section 4(c)(vi) (the “Underpayment”). In the event that the Company exhausts its remedies pursuant to Section 4(c)(vi)(C) and you are required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by the Company to or for your benefit; and

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

(1)	give the Company any information reasonably requested by the Company relating to such claim;
(2)	take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;
(3)	cooperate with the Company in good faith in order to effectively contest such claim; and
(4)	permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify you for and hold you harmless from, on an after-tax basis, any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of all related costs and expenses. Without limiting the foregoing provisions of this Section 4(c)(vi), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and

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December 31, 2008
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may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agree to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify you for and hold you harmless from, on an after-tax basis, any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance (including as a result of any forgiveness by the Company of such advance); provided, further, that any extension of the statute of limitations relating to the payment of taxes for the taxable year of you with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and you shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority;

          (E) Notwithstanding any other provision of this Section 4(c)(vi) to the contrary and subject to Section 4(d), all taxes and expenses described in this Section 4(c)(vi) shall be paid or reimbursed within five (5) business days after you submit evidence of incurrence of such taxes and/or expenses, provided that in all events such reimbursement will be made no later than the end of the year following the year in which the applicable taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, no later than the end of the year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). Each provision of reimbursements pursuant to this Section 4(c)(vi) shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed by the Company in one taxable year in no event will affect the amount of expenses required to be reimbursed or in-kind benefits required to be provided by the Company in any other taxable year.

     (vii) In any situation where under applicable law the Company has the power to indemnify (or advance expenses to) you in respect of any judgments, fines, settlements, loss, cost or expense (including attorneys’ fees) of any nature related to or arising out of your activities as an agent, employee, officer or director of the Company or in any other capacity on behalf of or at the request of the Company, the Company shall promptly on written request, indemnify (and advance expenses to) you to the fullest extent permitted by applicable law, including but not limited to making such findings and determinations and taking any and all such actions as the Company may, under applicable law, be permitted to have the discretion to take so as to effectuate

Mr. John F. Meier
December 31, 2008
Page 11

such indemnification or advancement. Such agreement by the Company shall not be deemed to impair any other obligation of the Company respecting your indemnification otherwise arising out of this or any other agreement or promise of the Company or under any statute;

      (viii) The Company shall pay you, at the time specified in Section 4(d), a lump-sum payment in an amount equal to the additional benefits that you would have accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan maintained by the Company for your benefit had you continued your employment with the Company for three (3) additional years following your Date of Termination, assuming you were fully vested under such plans, or $250,000, whichever is greater; provided that if you are eligible to receive grandfathered benefits under the Company’s pension plan, the provisions of this Section 4(c)(viii) shall apply to such grandfathered benefits, without reduction for age, in addition to any other benefits to which you are entitled under this Section 4(c)(viii).

          (d) The payments provided for in Sections 4(c)(i) shall be made not later than the fifth business day following the Date of Termination. Notwithstanding any provisions of this Section 4 to the contrary, if you are a “specified employee” (within the meaning of Section 409A of the Code, the amounts that otherwise would be payable pursuant to Sections 4(c)(ii), (iii), (v), (vi) and (viii) and Section 5(d) of this Agreement (as well as any other payment or benefit that you are entitled to receive upon your separation from service and that would be considered to be deferred compensation under Section 409A of the Code) during the six-month period immediately following the Date of Termination (the “Delayed Payments”) will instead be paid or made available on the earlier of (i) the first day of the seventh month following your Date of Termination and (ii) your death. Each payment to be made to you under the provisions of this Agreement will be considered to be a separate payment and not one of a series of payments for purposes of Section 409A of the Code. Further, coverages provided during one taxable year will not affect the degree to which coverages will be provided in any other taxable year.

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

     5.  Performance-based Equity Compensation; Other Equity-Based Awards; Annual Incentive Compensation.

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

Mr. John F. Meier
December 31, 2008
Page 12

          (b) Upon the occurrence of a Change in Control, the Company shall pay to you, in cash, an amount equal to the value of any Equity Compensation (as defined below) that is “performance-based” (as defined below) and that is earned, accrued, allocated or awarded with respect to your service during any performance period or periods that include the date on which the Change in Control occurred. The amount payable to you will be calculated as if the performance-based Equity Compensation were earned at the targeted rate and shall be prorated through the date on which the Change in Control occurs based upon the number of days on which you were employed by the Company during the applicable performance period(s). For purposes of this Agreement, “Equity Compensation” means restricted stock units, performance shares, performance units and restricted shares, and the shares that the Company is obligated to issue at the time restricted stock units, performance shares or performance units are earned, or deemed earned, by you. Compensation is “performance-based” if the compensation may be earned pursuant to a plan that provides that the amount of, or the entitlement to, the compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organization or individual performance criteria are considered pre-established if established in writing by the date not later than ninety (90) days after the commencement of the performance period, provided that the outcome is substantially uncertain at the time the criteria are established. Compensation also is “performance-based” if the plan provides for payments based upon subjective performance criteria, provided that —

     (i) The subjective performance criteria are bona fide and relate to your performance or the performance of a group of employees that includes you, or a business unit for which you provide services (which may include the entire Company); and

     (ii) The determination that any subjective performance criteria have been met is not made by you or a member of your family or a person under the effective control of you or a member of your family, and no amount of the compensation of the person making the determination is effectively controlled in whole or in part by the you or a member of your family.

          (c) If a Change in Control occurs during the term of the Agreement, then the Company shall pay to you, within five (5) business days after the Change in Control, an amount, calculated as if all objectives under the Company’s annual incentive compensation plan for the year in which the Change in Control occurs were achieved at targeted levels, equal to your target (as in effect on the date of the Change in Control) annual incentive compensation opportunity for the year in which the Change in Control occurs, prorated through the date of the Change in Control; provided, however, that in no event shall the amount payable to you pursuant to this Section 5(c) be less than fifty percent (50%) of your target annual incentive compensation opportunity for the year in which the Change in Control occurs.

          (d) If a Change in Control occurs during the term of this Agreement, then each outstanding share of restricted stock and each outstanding restricted share unit (other than a performance-based share of restricted stock or restricted share unit) granted to you under any of the Company’s incentive plans or other similar plans (an “Equity-Based Award”) shall, immediately prior to the Change in Control, be converted into a right to receive an amount equal to the value of one share of the Company’s common stock based on the closing stock price on the last trading day immediately preceding the Change in Control (a “Cash Equivalent

Mr. John F. Meier
December 31, 2008
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Unit”). Subject to the following sentence and any deferral election you may have made pursuant to the Executive Savings Plan, the Executive Deferred Compensation Plan or any other non-qualified deferred compensation plan, the Cash Equivalent Units shall vest and be paid to you at the same time and upon the same conditions as the Equity-Based Awards from which the Cash Equivalent Units were converted. If, prior to the vesting and payment of all of the Cash Equivalent Units and within the two-year period following the Change in Control, you terminate your employment for Good Reason or the Company terminates your employment without Cause or for Permanent Disability, subject to Section 4(d), the remaining Cash Equivalent Units shall vest and the Company shall pay to you within five (5) business days after the Date of Termination, an amount equal to the value of your remaining Cash Equivalent Units.

     6. Successors; Binding Agreement.

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

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

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

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

          (a) Non-Compete. In consideration of and in connection with the benefits provided to you under this Agreement, and in order to protect the goodwill of the Company, you hereby agree that, if your employment is terminated under circumstances that entitle you to benefits under Section 4(c), then, for a period of twelve (12) months commencing on the Date of Termination, you shall not, directly or indirectly, own, manage, operate, join, control or

Mr. John F. Meier
December 31, 2008
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participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any of the following entities (or any subsidiary of any such entity) other than as a shareholder or beneficial owner owning 5% or less of the outstanding securities of a public company: Anchor Hocking; Arc International or its affiliate Cardinal International, Inc.; Oneida LTD; or any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

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

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

     9. Funding of Obligations. In order to partially fund its obligations to provide benefits under this Agreement (including, without limitation, its obligations under Section 4(c)(vi)) the Company shall establish and fund a trust for your benefit and the benefit of other executives of the Company with whom the Company has entered into agreements similar to this Agreement. The trust shall be a grantor trust described in section 671 of the Code. If the Company has not, prior to the occurrence of a Potential Change in Control (as defined below), fully funded its obligations to provide benefits under this Agreement, then upon the occurrence of a Potential Change in Control, the Company shall, to the extent the amount contributed would not be treated as property transferred in connection with the performance of services for purposes of Code Section 83, as provided in Section 409A(b)(3) of the Code, fully fund its obligations to provide benefits hereunder (including, without limitation, its obligations under

Mr. John F. Meier
December 31, 2008
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Section 4(c)(vi)) by irrevocably contributing funds to such trust on your behalf. The amount to be contributed by the Company to the trust shall not be less than the then present value of the Company’s obligations under Section 4 hereof, as determined by the firms serving as the Company’s actuaries and accountants immediately prior to the Change in Control. Such actuaries and accountants shall be paid by the Company. The establishment and funding of such trust shall not affect the obligation of the Company to provide benefits under the terms of this Agreement. For purposes of this Agreement a “Potential Change in Control” shall be deemed to occur if:

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

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

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

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

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

Mr. John F. Meier
December 31, 2008
Page 16

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

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

     13. Suits, Actions, Proceedings, Etc..

          (a) Jurisdiction and Venue. No suit, action or proceeding with respect to this Agreement, nor any judgment entered by any court in respect thereof, may be brought in any court, domestic or foreign, or before any similar domestic or foreign authority, other than in a court of competent jurisdiction in the State of Ohio, and you and the Company hereby irrevocably waive any right which you or the Company, as applicable, may otherwise have had to bring such a suit, action, proceeding or judgment in any other court, domestic or foreign, or before any similar domestic or foreign authority. You and the Company hereby submit to the exclusive jurisdictions of such courts for the purpose of any such suit, action, proceeding or judgment. By your execution and delivery of this Agreement, you appoint the Secretary of the Company, at the Company’s office in Toledo, Ohio, as your agent upon which process may be served in any such suit, action or proceeding; and by its execution and delivery of this Agreement, the Company appoints the Secretary of the Company, at its office in Toledo, Ohio, as its agent upon which process may be served in any such suit, action or proceeding. Service of process upon such applicable agent, together with actual notice of such service given to you or the Company, as applicable, in the manner provided in Section 7 hereof, shall be deemed in every respect effective service of process upon the applicable party in any suit, action, proceeding or judgment. Nothing herein shall be deemed to limit the ability of you or the Company to serve any such writs, process or summonses in any other manner permitted by applicable law. You and the Company hereby irrevocably waive any objections which you or the Company, as applicable, may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Ohio, and hereby further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, in the event that no court of competent jurisdiction in the State of Ohio will accept such jurisdiction and venue, then any suit, action or proceeding with respect to this Agreement, or any judgment entered by any court in respect thereof, may be brought in any court of competent jurisdiction in the continental United States which has jurisdiction over such suit, proceeding or action and the parties thereto.

          (b) Compensation During Dispute, Etc.. Your compensation during any disagreement, dispute, controversy, claim, suit, action or proceeding (collectively, a “Dispute”) arising out of or relating to this Agreement or the interpretation of this Agreement shall be as follows: If there is a termination by you or the Company followed by a Dispute as to whether you are entitled to the payments and other benefits provided under this Agreement, then, during the period of that Dispute the Company shall pay you one hundred percent (100%) of the amount specified in Section 4(c), if, but only if, you agree in writing that if the Dispute is resolved against you, you shall promptly refund to the Company all payments you receive under Sections 4(c)(i) and 4(c)(ii) of this Agreement plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly.

Mr. John F. Meier
December 31, 2008
Page 17

          (c) Legal Fees. The Company shall pay to you all reasonable legal fees and expenses incurred by you in connection with any Dispute arising out of or relating to this Agreement or the interpretation thereof (including, without limitation, all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or in seeking to obtain or enforce any right or benefit provided by this Agreement, or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder) ), provided any such reimbursement of reasonable attorneys’ fees and other cost shall be made not later than December 31 of the year following the year in which you incurred the expense. In no event will the amount of expenses so reimbursed by the Company in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

     14. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein, including, without limitation, any prior severance agreements, is hereby terminated and cancelled; provided, however, that the Employment Agreement, dated as of December 15, 2003 by and between you and the Company, as amended, shall remain in full force and effect and shall, pursuant to the terms and conditions thereof, provide certain severance benefits to you upon certain terminations of employment. Any of your rights hereunder shall be in addition to any rights you may otherwise have under benefit plans or agreements of the Company to which you are a party or in which you are a participant, including, but not limited to, any Company sponsored employee benefit plans and stock options plans. Provisions of this Agreement shall not in any way abrogate your rights under such other plans and agreements.

     15. Coordination with Deferred Compensation Plans; Compliance with Section 409A of the Code.

          (a) If and to the extent that you have elected, pursuant to the Executive Savings Plan (“ESP”), the Executive Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of your compensation, including without limitation any performance-based Equity Compensation or other Equity-Based Compensation (as defined in the DCP), the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to you and the timing of any such distribution. However, the terms of this Agreement or, in the absence of a Change in Control as defined in this Agreement, any employment agreement to which you and the Company are party (or, if you are not party to an employment agreement with the Company, any Company-sponsored severance policy providing benefits to you in the event of a termination of your employment) shall govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based Equity Compensation and other Equity-Based Compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (b) To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner

Mr. John F. Meier
December 31, 2008
Page 18

consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

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

Sincerely, LIBBEY INC.
By:
	Susan Allene Kovach
	Vice President, General Counsel and Secretary

Agreed and Accepted as of the
31st day of December, 2008

John F. Meier                        

EX-10.34

Exhibit 10.34

John F. Meier

Chairman and Chief Executive Officer
Direct: (419) 325-2501
Fax: (419) 325-2585
MEIERJF@libbey.com

December 31, 2008

[Name and Address of Officer listed on Appendix 1]

Dear                     ,

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

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

In order to induce you to remain in its employ, the Company hereby agrees that after this letter agreement (this “Agreement”) has been fully executed, you shall receive the severance benefits set forth in this Agreement if your employment with the Company is terminated under the circumstances described below subsequent to a Change in Control (as defined in Section 2), and you shall receive the compensation set forth in Section 5(a) through (c) below upon the occurrence of a Change in Control even if your employment is not terminated in connection with, or subsequent to, the Change in Control.

     1. Term of Agreement. The term of this Agreement, which amends and restates the letter agreement between you and the Company dated May 23, 2007, shall commence on January 1, 2009, and shall continue in effect through December 31, 2009. Commencing on January 1, 2010 and on each January 1 thereafter, the term of this Agreement shall be extended automatically for one additional year unless the Company gives you written notice, not later than September 30 of the preceding calendar year, that the Company does not wish to extend this Agreement for the subsequent year. For example, if the Company does not desire to renew this Agreement for the 2011 calendar year, the Company must, on or before September 30, 2010, give you written notice that the term of this Agreement will not be

300 Madison Avenue, Toledo, Ohio 43604

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 2

renewed for the 2011 calendar year. If a Change in Control occurs during the original or any extended term of this Agreement, the term of this Agreement shall continue in effect for a period of not less than thirty-six (36) months beyond the month in which such Change in Control occurred.

     2. Change in Control. For purposes of this Agreement, a Change in Control shall be deemed to occur if:

          (a) any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities. For purposes of this Agreement, the term “Person” is used as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the term “Person” shall not include the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. For purposes of this Agreement, the term “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act;

          (b) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), Continuing Directors (as defined below) cease for any reason to constitute at least a majority of the Board. The term “Continuing Directors” means (i) individuals who were members of the Board at the beginning of the two (2) year period referred to above and (ii) any individuals elected to the Board, after the beginning of the two (2) year period referred to above, by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. Notwithstanding the immediately preceding sentence, an individual who is elected to the Board after the beginning of the two (2) year period shall not be deemed a Continuing Director if the individual was designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a), (c) or (d);

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

          (d) the consummation of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 3

        3. Termination Following Change in Control.

            (a) General. If, during the term of this Agreement, a Change in Control occurs and the Company terminates your employment without Cause (as defined below), or you terminate your employment for Good Reason (as defined below), within the two (2) year period immediately following the date on which the Change in Control occurs, then you shall be entitled to the benefits provided in Section 4(c) of this Agreement, and those benefits shall be paid notwithstanding the subsequent expiration of the term of this Agreement. In addition, you shall be entitled to the benefits provided in Section 4(c) if:

     (i) After the occurrence of a Potential Change in Control (as defined in Section 9 below) and prior to the date on which the Change in Control actually occurs, the Company terminates your employment without Cause (other than as a result of your Permanent Disability, as defined below) or you terminate your employment upon an event that would be considered Good Reason if it were to occur after a Change in Control; or

     (ii) Prior to the occurrence of a Potential Change in Control, the Company terminates your employment without Cause (other than as a result of Permanent Disability) or you terminate your employment upon an event that would be considered Good Reason if it were to occur after a Change in Control and you reasonably demonstrate that the Company’s termination of your employment or the events giving rise to Good Reason (A) was or were at the request of, or was or were induced by, a third party who has taken steps reasonably calculated to effect a Change of Control, or (B) otherwise arose in connection with or in anticipation of a Change in Control.

Notwithstanding anything to the contrary in this Agreement, you shall not be entitled to any payment under Section 4 of this Agreement if your employment is terminated as a result of your death or Permanent Disability. “Permanent Disability” means any incapacity due to physical or mental illness as a result of which you are absent from the full-time performance of your duties with the Company for six (6) consecutive months and do not return to the full-time performance of your duties within thirty (30) days after the Company gives Notice of Termination (as defined in Section 3(d) below) to you.

            (b) Cause. “Cause” means the occurrence of any of the following events: (i) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after your issuance of a Notice of Termination for Good Reason to substantially perform your duties with the Company after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; (ii) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after your issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; (iii) your willful commission of an act of fraud or dishonesty resulting in material economic or financial injury to the Company; or (iv) your willful engagement in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. For purposes of this Section 3(b), no act, or failure to act, on your part shall be deemed “willful”

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unless your commission of the act or failure to act is not in good faith. In any event, the Company may not terminate your employment for Cause pursuant to Sections 3(b)(i), (ii) or (iv) hereof unless and until the Company has delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after reasonable notice to you, an opportunity for you, together with your counsel, to be heard before the Board and a reasonable opportunity to cure), finding, in the Board’s good faith opinion, that you engaged in any of the conduct set forth in the definition of “Cause” above and specifying in reasonable detail the particulars of the conduct at issue.

        (c) Good Reason. “Good Reason” means the occurrence, after a Change in Control, of any of the following circumstances unless, in the case of Sections 3(c)(i), (v), (vi), (vii) or (viii), such circumstances are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination (as defined in Section 3(e)) specified in the applicable Notice of Termination:

     (i) the assignment to you of any duties inconsistent with the position in the Company that you held immediately prior to the Change in Control, a significant adverse alteration in the nature or status of your responsibilities or the conditions of your employment from those in effect immediately prior to the Change in Control, including by virtue of the Company ceasing to be a publicly-held corporation, or any other action by the Company that results in a material diminution in your position, authority, duties or responsibilities;

     (ii) the Company’s reduction of your annual base salary as in effect on the date of this Agreement or as the same may be increased from time to time after the date of this Agreement;

     (iii) the relocation of the Company’s offices at which you are principally employed immediately prior to the date of the Change in Control (your “Principal Location”) to a location more than thirty (30) miles from that location, or the Company’s requiring you, without your written consent, to be based anywhere other than your Principal Location, except for required travel on the Company’s business to an extent substantially consistent with your business travel obligations prior to the Change in Control;

     (iv) the Company’s failure to pay to you any portion of your current compensation or to pay to you any portion of an installment of deferred compensation under any deferred compensation program of the Company within seven (7) business days of the date on which the compensation is due;

     (v) the Company’s failure to continue in effect any material compensation or benefit plan or practice in which you participate immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the Company’s failure to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the Change in Control;

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     (vi) the Company’s failure to continue to provide you with benefits substantially similar in the aggregate to those enjoyed by you under any of the Company’s life insurance, medical, health and accident, disability, pension, retirement, or other benefit plans or practices in which you and your eligible family members were participating at the time of the Change in Control, the taking of any action by the Company that would directly or indirectly materially reduce any of those benefits, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control (or, if more favorable to you, on the basis of the terms of your initial employment with the Company);

     (vii) the Company’s failure to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 6 hereof; or

     (viii) any purported termination of your employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(d) hereof (and, if applicable, the requirements of Section 3(b) hereof), which purported termination shall not be effective for purposes of this Agreement.

Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

          (d) Notice of Termination. Any purported termination of your employment by the Company or by you (other than termination as a result of your death, in which case your employment shall terminate automatically) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7. “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

          (e) Date of Termination, Etc. “Date of Termination” means the date on which you incur a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     4. Compensation Upon Termination. Upon termination of your employment pursuant to Section 3 above, the benefits to which you are entitled, subject to the terms and conditions of this Agreement, are:

          (a) If the Company terminates your employment for Cause or you terminate your employment other than for Good Reason, then the Company shall pay you, in accordance with the Company’s normal pay practices, your base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan or practice of the Company in effect at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

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          (b) If your employment with the Company is terminated by reason of your death or Permanent Disability, you or your estate and dependents, if any, will be entitled to the benefits to which you are entitled, under the Amended and Restated Employment Agreement dated as of December 31, 2008 (the “Amended Employment Agreement”) between you and the Company, by reason of your death or Permanent Disability, as the case may be.

          (c) If you terminate your employment for Good Reason or the Company terminates your employment without Cause (other than as a result of your death or Permanent Disability), in each case in accordance with the terms of Section 3 above, then you shall be entitled to the benefits provided below:

     (i) The Company shall pay to you your base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan or practice of the Company in effect at the time the payments are due;

     (ii) In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, at the time specified in Section 4(d), a lump-sum severance payment equal to the sum of the following:

(A)	three (3) times the greater of your annual base salary at the rate in effect as of the Date of Termination or your annual base salary at the rate in effect immediately prior to the Change in Control; and
(B)	three (3) times the greater of (1) your target annual incentive compensation as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater, or (2) your annual bonus for the year immediately preceding the Date of Termination;

     (iii) For a period of one (1) year following the Date of Termination, the Company shall, at its sole expense as incurred, provide you with financial planning services of substantially the same type and scope as those with which the Company was providing you immediately prior to the Date of Termination, or, if more favorable to you, the date of the Change in Control, provided that in no event will the amount of financial planning services provided by the Company in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided to you, in any other taxable year;

     (iv) For a period of two (2) years following the Date of Termination, the Company shall, at its sole expense as incurred, provide you with outplacement services, the scope and provider of which shall be selected by you in your sole discretion, provided that the Company’s out-of-pocket cost under this Section 4(c)(iv) shall not exceed fifteen thousand dollars ($15,000);

     (v) For a period of thirty-six (36) months after the Date of Termination, the Company shall continue to provide you and your eligible family members, on the terms set forth in the remaining provisions of this Section 4(c)(v), with medical and dental

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health benefits at least equal to those that would have been provided to you and them if your employment had not been terminated or, if more favorable to you, as in effect generally at any time thereafter; provided, however, that if you become employed by another employer and are eligible to receive medical and dental health benefits under that employer’s plans, the Company’s obligations under this Section 4(c)(v) shall be reduced to the extent comparable benefits are actually received by you during the thirty-six (36) month period following your termination, and any such benefits actually received by you shall be reported to the Company. If under the terms of the Company’s benefit plans or programs you are ineligible to continue to be so covered, the Company shall provide you with substantially equivalent coverage through other sources. You agree to pay the cost, on an after-tax basis, for the continued medical and dental coverage, subject to Section 4(d), on or about January 31 of the year following the year in which the Date of Termination occurs and continuing on or about each January 31 until the year following the last year of your coverage pursuant to this Section 4(c)(v), and concurrently therewith the Company will make a payment to you such that, after payment of all taxes incurred by you as a result of your receipt of the continued medical and dental coverage and payment by the Company, you retain an amount equal to the amount you paid during the immediately preceding calendar year for the medical and dental benefit plan coverage described in this Section. At the termination of the benefits coverage under this Section 4(c)(v), you, your spouse and your dependents shall be entitled to continuation coverage pursuant to section 4980B of the Code, sections 601-608 of the Employee Retirement Income Security Act of 1974, as amended, and under any other applicable law, to the extent required by such laws, as if you had terminated employment with the Company on the date such benefits coverage terminates.

     (vi) (A) Anything in this Agreement to the contrary notwithstanding, but subject to Section 4(c)(vi)(B), if it shall be determined that any payment or distribution to you or for your benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise (the “Payment”) would be subject to the excise tax imposed by section 4999 of the Code (the “Excise Tax”), then you shall be entitled to receive from the Company an additional payment (the “Gross-Up Payment”) in an amount such that the net amount of the Gross-Up Payment retained by you after the calculation and deduction of any and all federal, state and local income tax, employment tax and Excise Tax (including any interest or penalties imposed with respect to such taxes) on the Gross-Up Payment provided for in this Section 4(c)(vi), and taking into account any lost or reduced tax deductions on account of the Gross-Up Payment, shall be equal to the Excise Tax;

            (B) Notwithstanding any provision of this Agreement to the contrary, but giving effect to any redetermination of the amount of Gross-Up payments otherwise required by this Section 4(c)(vi), if but for this sentence, the Company would be obligated to make a Gross-Up Payment to the Executive, and the aggregate “present value” of the “parachute payments” to be paid or provided to you under this Agreement or otherwise does not exceed 1.10 multiplied by three times your “base amount,” then the payments and benefits to be paid or provided under this Agreement will be reduced (or repaid to the Company, if previously paid or provided) to the minimum extent necessary so that no portion of any payment or benefit to you, as so reduced or repaid, constitutes an “excess parachute payment.” For purposes of this Section 4(c)(vi)(B), the terms “excess parachute payment,” “present value,” “parachute payment,” and

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“base amount” will have the meanings assigned to them by Section 280G of the Code. The determination of whether any reduction in or repayment of such payments or benefits to be provided under this Agreement is required pursuant to this Section 4(c)(vi)(B) will be made at the expense of the Company, if requested by you or the Company, by the Accountants (as defined in Section 4(c)(vi)(C)). Appropriate adjustments will be made to amounts previously paid to you, or to amounts not paid pursuant to this Section 4(c)(vi)(B), as the case may be, to reflect properly a subsequent determination that you owe more or less Excise Tax than the amount previously determined to be due. If a Payment intended to be provided under the Agreement is required to be reduced pursuant to this Section 4(c)(vi)(B), the payments shall be reduced in the following order of priority: payments pursuant to Section 4(c)(ii), payments pursuant to Section 4(c)(v), payments pursuant to Section 4(c)(iii) and payments pursuant to Section 4(c)(iv).

          (C) All determinations required to be made under this Section 4(c)(vi), including whether and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations, shall be made by the Accountants (as defined below), which shall provide you and the Company with detailed supporting calculations with respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice from you or the Company that you have received or will receive a Payment. For the purposes of this Section 4(c)(vi), the “Accountants” shall mean the Company’s independent certified public accountants serving immediately prior to the Change in Control. If the Accountants are also serving as accountant or auditor for the individual, entity or group effecting the Change in Control, you shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accountants hereunder). All fees and expenses of the Accountants shall be borne solely by the Company.

For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made and to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of your adjusted gross income), and to have otherwise allowable deductions for Federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Payment in your adjusted gross income. To

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the extent practicable, but subject to Section 4(c)(vi)(D), any Gross-Up Payment with respect to any Payment shall be paid by the Corporation at the time you are entitled to receive the Payment and in no event will any Gross-Up Payment be paid later than five days after the receipt by you of the Accountant’s determination. Any determination by the Accountants shall be binding upon the Company and you. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than the Company should have paid pursuant to this Section 4(c)(vi) (the “Underpayment”). In the event that the Company exhausts its remedies pursuant to Section 4(c)(vi)(C) and you are required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by the Company to or for your benefit; and

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

(1)	give the Company any information reasonably requested by the Company relating to such claim;
(2)	take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;
(3)	cooperate with the Company in good faith in order to effectively contest such claim; and
(4)	permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify you for and hold you harmless from, on an after-tax basis, any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of all related costs and expenses. Without limiting the foregoing provisions of this Section 4(c)(vi), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and

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may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agree to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify you for and hold you harmless from, on an after-tax basis, any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance (including as a result of any forgiveness by the Company of such advance); provided, further, that any extension of the statute of limitations relating to the payment of taxes for the taxable year of you with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and you shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority;

          (E) Notwithstanding any other provision of this Section 4(c)(vi) to the contrary and subject to Section 4(d), all taxes and expenses described in this Section 4(c)(vi) shall be paid or reimbursed within five (5) business days after you submit evidence of incurrence of such taxes and/or expenses, provided that in all events such reimbursement will be made no later than the end of the year following the year in which the applicable taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, no later than the end of the year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). Each provision of reimbursements pursuant to this Section 4(c)(vi) shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed by the Company in one taxable year in no event will affect the amount of expenses required to be reimbursed or in-kind benefits required to be provided by the Company in any other taxable year.

    (vii) In any situation where under applicable law the Company has the power to indemnify (or advance expenses to) you in respect of any judgments, fines, settlements, loss, cost or expense (including attorneys’ fees) of any nature related to or arising out of your activities as an agent, employee, officer or director of the Company or in any other capacity on behalf of or at the request of the Company, the Company shall promptly on written request, indemnify (and advance expenses to) you to the fullest extent permitted by applicable law, including but not limited to making such findings and determinations and taking any and all such actions as the Company may, under applicable law, be permitted to have the discretion to take so as to effectuate

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such indemnification or advancement. Such agreement by the Company shall not be deemed to impair any other obligation of the Company respecting your indemnification otherwise arising out of this or any other agreement or promise of the Company or under any statute;

     (viii) The Company shall pay you, at the time specified in Section 4(d), a lump-sum payment in an amount equal to the additional benefits that you would have accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan maintained by the Company for your benefit had you continued your employment with the Company for three (3) additional years following your Date of Termination, assuming you were fully vested under such plans, or $250,000, whichever is greater; provided that if you are eligible to receive grandfathered benefits under the Company’s pension plan, the provisions of this Section 4(c)(viii) shall apply to such grandfathered benefits, without reduction for age, in addition to any other benefits to which you are entitled under this Section 4(c)(viii).

          (d) The payments provided for in Sections 4(c)(i) shall be made not later than the fifth business day following the Date of Termination. Notwithstanding any provisions of this Section 4 to the contrary, if you are a “specified employee” (within the meaning of Section 409A of the Code, the amounts that otherwise would be payable pursuant to Sections 4(c)(ii), (iii), (v), (vi) and (viii) and Section 5(d) of this Agreement (as well as any other payment or benefit that you are entitled to receive upon your separation from service and that would be considered to be deferred compensation under Section 409A of the Code) during the six-month period immediately following the Date of Termination (the “Delayed Payments”) will instead be paid or made available on the earlier of (i) the first day of the seventh month following your Date of Termination and (ii) your death. Each payment to be made to you under the provisions of this Agreement will be considered to be a separate payment and not one of a series of payments for purposes of Section 409A of the Code. Further, coverages provided during one taxable year will not affect the degree to which coverages will be provided in any other taxable year.

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

     5.  Performance-based Equity Compensation; Other Equity-Based Awards; Annual Incentive Compensation.

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

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          (b) Upon the occurrence of a Change in Control, the Company shall pay to you, in cash, an amount equal to the value of any Equity Compensation (as defined below) that is “performance-based” (as defined below) and that is earned, accrued, allocated or awarded with respect to your service during any performance period or periods that include the date on which the Change in Control occurred. The amount payable to you will be calculated as if the performance-based Equity Compensation were earned at the targeted rate and shall be prorated through the date on which the Change in Control occurs based upon the number of days on which you were employed by the Company during the applicable performance period(s). For purposes of this Agreement, “Equity Compensation” means restricted stock units, performance shares, performance units and restricted shares, and the shares that the Company is obligated to issue at the time restricted stock units, performance shares or performance units are earned, or deemed earned, by you. Compensation is “performance-based” if the compensation may be earned pursuant to a plan that provides that the amount of, or the entitlement to, the compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organization or individual performance criteria are considered pre-established if established in writing by the date not later than ninety (90) days after the commencement of the performance period, provided that the outcome is substantially uncertain at the time the criteria are established. Compensation also is “performance-based” if the plan provides for payments based upon subjective performance criteria, provided that –

     (i) The subjective performance criteria are bona fide and relate to your performance or the performance of a group of employees that includes you, or a business unit for which you provide services (which may include the entire Company); and

     (ii) The determination that any subjective performance criteria have been met is not made by you or a member of your family or a person under the effective control of you or a member of your family, and no amount of the compensation of the person making the determination is effectively controlled in whole or in part by the you or a member of your family.

          (c) If a Change in Control occurs during the term of the Agreement, then the Company shall pay to you, within five (5) business days after the Change in Control, an amount, calculated as if all objectives under the Company’s annual incentive compensation plan for the year in which the Change in Control occurs were achieved at targeted levels, equal to your target (as in effect on the date of the Change in Control) annual incentive compensation opportunity for the year in which the Change in Control occurs, prorated through the date of the Change in Control; provided, however, that in no event shall the amount payable to you pursuant to this Section 5(c) be less than fifty percent (50%) of your target annual incentive compensation opportunity for the year in which the Change in Control occurs.

          (d) If a Change in Control occurs during the term of this Agreement, then each outstanding share of restricted stock and each outstanding restricted share unit (other than a performance-based share of restricted stock or restricted share unit) granted to you under any of the Company’s incentive plans or other similar plans (an “Equity-Based Award”) shall, immediately prior to the Change in Control, be converted into a right to receive an amount equal to the value of one share of the Company’s common stock based on the closing stock price on the last trading day immediately preceding the Change in Control (a “Cash Equivalent

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Unit”). Subject to the following sentence and any deferral election you may have made pursuant to the Executive Savings Plan, the Executive Deferred Compensation Plan or any other non-qualified deferred compensation plan, the Cash Equivalent Units shall vest and be paid to you at the same time and upon the same conditions as the Equity-Based Awards from which the Cash Equivalent Units were converted. If, prior to the vesting and payment of all of the Cash Equivalent Units and within the two-year period following the Change in Control, you terminate your employment for Good Reason or the Company terminates your employment without Cause or for Permanent Disability, subject to Section 4(d), the remaining Cash Equivalent Units shall vest and the Company shall pay to you within five (5) business days after the Date of Termination, an amount equal to the value of your remaining Cash Equivalent Units.

     6. Successors; Binding Agreement.

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

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

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

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

          (a) Non-Compete. In consideration of and in connection with the benefits provided to you under this Agreement, and in order to protect the goodwill of the Company, you hereby agree that, if your employment is terminated under circumstances that entitle you to benefits under Section 4(c), then, for a period of twelve (12) months commencing on the Date of Termination, you shall not, directly or indirectly, own, manage, operate, join, control or

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 14

participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any of the following entities (or any subsidiary of any such entity) other than as a shareholder or beneficial owner owning 5% or less of the outstanding securities of a public company: Anchor Hocking; Arc International or its affiliate Cardinal International, Inc.; Oneida LTD; or any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

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

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

     9. Funding of Obligations. In order to partially fund its obligations to provide benefits under this Agreement (including, without limitation, its obligations under Section 4(c)(vi)) the Company shall establish and fund a trust for your benefit and the benefit of other executives of the Company with whom the Company has entered into agreements similar to this Agreement. The trust shall be a grantor trust described in section 671 of the Code. If the Company has not, prior to the occurrence of a Potential Change in Control (as defined below), fully funded its obligations to provide benefits under this Agreement, then upon the occurrence of a Potential Change in Control, the Company shall, to the extent the amount contributed would not be treated as property transferred in connection with the performance of services for purposes of Code Section 83, as provided in Section 409A(b)(3) of the Code, fully fund its obligations to provide benefits hereunder (including, without limitation, its obligations under

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 15

Section 4(c)(vi)) by irrevocably contributing funds to such trust on your behalf. The amount to be contributed by the Company to the trust shall not be less than the then present value of the Company’s obligations under Section 4 hereof, as determined by the firms serving as the Company’s actuaries and accountants immediately prior to the Change in Control. Such actuaries and accountants shall be paid by the Company. The establishment and funding of such trust shall not affect the obligation of the Company to provide benefits under the terms of this Agreement. For purposes of this Agreement a “Potential Change in Control” shall be deemed to occur if:

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

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

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

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

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

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 16

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

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

     13. Suits, Actions, Proceedings, Etc..

          (a) Jurisdiction and Venue. No suit, action or proceeding with respect to this Agreement, nor any judgment entered by any court in respect thereof, may be brought in any court, domestic or foreign, or before any similar domestic or foreign authority, other than in a court of competent jurisdiction in the State of Ohio, and you and the Company hereby irrevocably waive any right which you or the Company, as applicable, may otherwise have had to bring such a suit, action, proceeding or judgment in any other court, domestic or foreign, or before any similar domestic or foreign authority. You and the Company hereby submit to the exclusive jurisdictions of such courts for the purpose of any such suit, action, proceeding or judgment. By your execution and delivery of this Agreement, you appoint the Secretary of the Company, at the Company’s office in Toledo, Ohio, as your agent upon which process may be served in any such suit, action or proceeding; and by its execution and delivery of this Agreement, the Company appoints the Secretary of the Company, at its office in Toledo, Ohio, as its agent upon which process may be served in any such suit, action or proceeding. Service of process upon such applicable agent, together with actual notice of such service given to you or the Company, as applicable, in the manner provided in Section 7 hereof, shall be deemed in every respect effective service of process upon the applicable party in any suit, action, proceeding or judgment. Nothing herein shall be deemed to limit the ability of you or the Company to serve any such writs, process or summonses in any other manner permitted by applicable law. You and the Company hereby irrevocably waive any objections which you or the Company, as applicable, may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Ohio, and hereby further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, in the event that no court of competent jurisdiction in the State of Ohio will accept such jurisdiction and venue, then any suit, action or proceeding with respect to this Agreement, or any judgment entered by any court in respect thereof, may be brought in any court of competent jurisdiction in the continental United States which has jurisdiction over such suit, proceeding or action and the parties thereto.

          (b) Compensation During Dispute, Etc.. Your compensation during any disagreement, dispute, controversy, claim, suit, action or proceeding (collectively, a “Dispute”) arising out of or relating to this Agreement or the interpretation of this Agreement shall be as follows: If there is a termination by you or the Company followed by a Dispute as to whether you are entitled to the payments and other benefits provided under this Agreement, then, during the period of that Dispute the Company shall pay you one hundred percent (100%) of the amount specified in Section 4(c), if, but only if, you agree in writing that if the Dispute is resolved against you, you shall promptly refund to the Company all payments you receive under Sections 4(c)(i) and 4(c)(ii) of this Agreement plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly.

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 17

          (c) Legal Fees. The Company shall pay to you all reasonable legal fees and expenses incurred by you in connection with any Dispute arising out of or relating to this Agreement or the interpretation thereof (including, without limitation, all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or in seeking to obtain or enforce any right or benefit provided by this Agreement, or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder) ), provided any such reimbursement of reasonable attorneys’ fees and other cost shall be made not later than December 31 of the year following the year in which you incurred the expense. In no event will the amount of expenses so reimbursed by the Company in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

     14. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein, including, without limitation, any prior severance agreements, is hereby terminated and cancelled; provided, however, that the Employment Agreement, dated as of December 15, 2003 by and between you and the Company, as amended, shall remain in full force and effect and shall, pursuant to the terms and conditions thereof, provide certain severance benefits to you upon certain terminations of employment. Any of your rights hereunder shall be in addition to any rights you may otherwise have under benefit plans or agreements of the Company to which you are a party or in which you are a participant, including, but not limited to, any Company sponsored employee benefit plans and stock options plans. Provisions of this Agreement shall not in any way abrogate your rights under such other plans and agreements.

     15. Coordination with Deferred Compensation Plans; Compliance with Section 409A of the Code.

          (a) If and to the extent that you have elected, pursuant to the Executive Savings Plan (“ESP”), the Executive Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of your compensation, including without limitation any performance-based Equity Compensation or other Equity-Based Compensation (as defined in the DCP), the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to you and the timing of any such distribution. However, the terms of this Agreement or, in the absence of a Change in Control as defined in this Agreement, any employment agreement to which you and the Company are party (or, if you are not party to an employment agreement with the Company, any Company-sponsored severance policy providing benefits to you in the event of a termination of your employment) shall govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based Equity Compensation and other Equity-Based Compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (b) To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 18

consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

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

Sincerely, LIBBEY INC.
By:
	John F. Meier
	Chairman and Chief Executive Officer

Agreed and Accepted as of the
31st day of December, 2008

[Name of Officer listed on Appendix 1]

[Name and Address of Officer listed on Appendix 1]
December 31, 2008
Page 19

Appendix 1

Each of the executives below is a party to an agreement in substantially this form:

Richard I. Reynolds

Gregory T. Geswein

Kenneth A. Boerger

Jonathan S. Freeman

Daniel P. Ibele

Susan A. Kovach

Timothy T. Paige

Scott M. Sellick

Kenneth G. Wilkes

EX-10.35

Exhibit 10.35

Susan Allene Kovach

Vice President, General Counsel
   and Secretary
Direct: (419) 325-2378
Fax: (419) 325-2585
susan.kovach@libbev.com

December 31, 2008

[Name and address of individual listed on Appendix 1]

Dear                     ,

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

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

In order to induce you to remain in its employ, the Company hereby agrees that after this letter agreement (this “Agreement”) has been fully executed, you shall receive the severance benefits set forth in this Agreement if your employment with the Company is terminated under the circumstances described below subsequent to a Change in Control (as defined in Section 2), and you shall receive the compensation set forth in Section 5(a) through (c) below upon the occurrence of a Change in Control even if your employment is not terminated in connection with, or subsequent to, the Change in Control.

     1. Term of Agreement. The term of this Agreement, which amends and restates the letter agreement between you and the Company dated May 27, 1998, shall commence on January 1, 2009, and continue in effect through December 31, 2009. Commencing on January 1, 2010, and on each January 1 thereafter, the term of this Agreement shall be extended automatically for one (1) additional year unless the Company gives you written notice, not later than September 30 of the preceding calendar year, that the Company does not wish to extend this Agreement for the subsequent year. For example, if the Company does not desire to renew this Agreement for the 2011 calendar year, the Company must, on or before September 30,

300 Madison Avenue, Toledo, Ohio 43604

{Name of Individual Listed on Appendix 1]
December 31, 2008
Page 2

2010, give you written notice that the term of this Agreement will not be renewed for the 2011 calendar year. If a Change in Control (as defined in Section 2) occurs during the original or any extended term of this Agreement, the term of this Agreement shall continue in effect for a period of not less than thirty-six (36) months after the month in which the Change in Control occurred.

     2. Change in Control. For purposes of this Agreement, a Change in Control shall be deemed to occur if:

          (a) any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities. For purposes of this Agreement, the term “Person” is used as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the term “Person” shall not include the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. For purposes of this Agreement, the term “Beneficial Owner” shall have the meaning given to that term in Rule 13d-3 under the Exchange Act;

          (b) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), Continuing Directors (as defined below) cease for any reason to constitute at least a majority of the Board. The term “Continuing Directors” means (i) individuals who were members of the Board at the beginning of the two (2) year period referred to above and (ii) any individuals elected to the Board, after the beginning of the two (2) year period referred to above, by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. Notwithstanding the immediately preceding sentence, an individual who is elected to the Board after the beginning of the two (2) year period shall not be deemed a Continuing Director if the individual was designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a), (c) or (d);

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

          (d) the consummation of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

     3. Termination Following Change in Control.

          (a) General. If, during the term of this Agreement, a Change in Control occurs and the Company terminates your employment without Cause (as defined below), or you terminate your employment for Good Reason (as defined below), within the two (2) year period immediately following the date on which the Change in Control occurs, then you shall be entitled

{Name of Individual Listed on Appendix 1]
December 31, 2008
Page 3

to the benefits provided in Section 4(b) of this Agreement, and those benefits shall be paid notwithstanding the subsequent expiration of the term of this Agreement. In addition, you shall be entitled to the benefits provided in Section 4(b) if:

     (i) After the occurrence of a Potential Change in Control (as defined in Section 9 below) and prior to the date on which the Change in Control actually occurs, the Company terminates your employment without Cause (other than as a result of your Permanent Disability, as defined below) or you terminate your employment upon an event that would be considered Good Reason if it were to occur after a Change in Control; or

     (ii) Prior to the occurrence of a Potential Change in Control, the Company terminates your employment without Cause (other than as a result of Permanent Disability) or you terminate your employment upon an event that would be considered Good Reason if it were to occur after a Change in Control and you reasonably demonstrate that the Company’s termination of your employment, or the events giving rise to Good Reason, (A) was or were at the request of, or was or were induced by, a third party who has taken steps reasonably calculated to effect a Change of Control, or (y) otherwise arose in connection with or in anticipation of a Change in Control.

Notwithstanding anything to the contrary in this Agreement, you shall not be entitled to any payment under Section 4 of this Agreement if your employment is terminated as a result of your death or Permanent Disability. “Permanent Disability” means any incapacity due to physical or mental illness as a result of which you are absent from the full-time performance of your duties with the Company for six (6) consecutive months and do not return to the full-time performance of your duties within thirty (30) days after the Company gives Notice of Termination (as defined in Section 3(d) below) to you.

          (b) Cause. “Cause” means the occurrence of any of the following events: (i) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after your issuance of a Notice of Termination for Good Reason) to substantially perform your duties with the Company after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; (ii) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after your issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; (iii) your willful commission of an act of fraud or dishonesty resulting in material economic or financial injury to the Company; or (iv) your willful engagement in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. For purposes of this Section 3(b), no act, or failure to act, on your part shall be deemed “willful” unless your commission of the act or failure to act is not in good faith. In any event, the Company may not terminate your employment for Cause pursuant to Sections 3(b)(i), (ii) or (iv) hereof unless and until the Company has delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after reasonable notice to you, an opportunity for you, together with your counsel, to be heard before the Board and a reasonable opportunity to cure), finding,

{Name of Individual Listed on Appendix 1]
December 31, 2008
Page 4

in the Board’s good faith opinion, that you engaged in any of the conduct set forth in the definition of “Cause” above and specifying in reasonable detail the particulars of the conduct at issue.

        (c) Good Reason. “Good Reason” means the occurrence, after a Change in Control, of any of the following circumstances unless, in the case of Sections 3(c)(i), (v), (vi), (vii) or (viii), the circumstances are fully corrected (provided such circumstances are capable of correction) prior to the Date of Termination (as defined in Section 3(e)) specified in the applicable Notice of Termination:

     (i) the assignment to you of any duties inconsistent with the position in the Company that you held immediately prior to the Change in Control, a significant adverse alteration in the nature or status of your responsibilities or the conditions of your employment from those in effect immediately prior to the Change in Control, including by virtue of the Company ceasing to be a publicly-held corporation, or any other action by the Company that results in a material diminution in your position, authority, duties or responsibilities;

     (ii) the Company’s reduction of your annual base salary as in effect on the date of this Agreement or as the same may be increased from time to time after the date of this Agreement;

     (iii) the relocation of the Company’s offices at which you are principally employed immediately prior to the date of the Change in Control (your “Principal Location”) to a location more than thirty (30) miles from that location, or the Company’s requiring you, without your written consent, to be based anywhere other than your Principal Location, except for required travel on the Company’s business to an extent substantially consistent with your business travel obligations prior to the Change in Control;

     (iv) the Company’s failure to pay to you any portion of your current compensation or to pay to you any portion of an installment of deferred compensation under any deferred compensation program of the Company within seven (7) business days of the date on which the compensation is due;

     (v) the Company’s failure to continue in effect any material compensation or benefit plan or practice in which you participate immediately prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the Company’s failure to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the Change in Control;

     (vi) the Company’s failure to continue to provide you with benefits substantially similar in the aggregate to those enjoyed by you under any of the Company’s life insurance, medical, health and accident, disability, pension, retirement, or other benefit plans or practices in which you and your eligible family members were participating at the time of the Change in Control, the taking of any action by the

{Name of Individual Listed on Appendix 1]
December 31, 2008
Page 5

Company that would directly or indirectly materially reduce any of those benefits, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control (or, if more favorable to you, on the basis of the terms of your initial employment with the Company);

     (vii) the Company’s failure to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 6 hereof; or

     (viii) any purported termination of your employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(d) hereof (and, if applicable, the requirements of Section 3(b) hereof), which purported termination shall not be effective for purposes of this Agreement.

Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

          (d) Notice of Termination. Any purported termination of your employment by the Company or by you (other than a termination as a result of your death, in which case your employment shall terminate automatically) shall be communicated by written Notice of Termination to the other party in accordance with Section 7. “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

          (e) Date of Termination, Etc. “Date of Termination” means the date on which you incur a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     4. Compensation Upon Termination. Upon termination of your employment pursuant to Section 3 above, the benefits to which you are entitled, subject to the terms and conditions of this Agreement, are:

          (a) If the Company terminates your employment for Cause or you terminate your employment other than for Good Reason, then the Company shall pay you, in accordance with the Company’s normal pay practices, your base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan or practice of the Company in effect at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

          (b) If you terminate your employment for Good Reason or the Company terminates your employment without Cause (other than as a result of your death or Permanent Disability), then you shall be entitled to the benefits provided below:

       (i) The Company shall pay to you your base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other

{Name of Individual Listed on Appendix 1]
December 31, 2008
Page 6

amounts to which you are entitled under any compensation plan or practice of the Company in effect at the time the payments are due;

     (ii) In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, at the time specified in Section 4(c), a lump-sum severance payment equal to the sum of the following:

(A)	two (2) times the greater of your annual base salary at the rate in effect as of the Date of Termination or your annual base salary at the rate in effect immediately prior to the Change in Control; and
(B)	two (2) times the greater of (i) your target annual incentive compensation as in effect as of the Date of Termination or immediately prior to the Change in Control, whichever is greater, or (ii) your annual bonus for the year immediately preceding the Date of Termination;

     (iii) For a period of one (1) year following the Date of Termination, the Company shall, at its sole expense as incurred, provide you with financial planning services of substantially the same type and scope as those with which the Company was providing you immediately prior to the Date of Termination, or, if more favorable to you, the date of the Change in Control, provided that in no event will the amount of financial planning services provided by the Company in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided to you, in any other taxable year;

     (iv) For a period of two (2) years following the Date of Termination, the Company shall, at its sole expense as incurred, provide you with outplacement services, the scope and provider of which shall be selected by you in your sole discretion, provided that the Company’s out-of-pocket cost under this Section 4(b)(iv) shall not exceed fifteen thousand dollars ($15,000);

     (v) For period of twenty-four (24) months after the Date of Termination, the Company shall continue to provide you and your eligible family members, on the terms set forth in the remaining provisions of this Section 4(b)(v), with medical and dental health benefits at least equal to those that would have been provided to you and them if your employment had not been terminated or, if more favorable to you, as in effect generally at any time thereafter; provided, however, that if you become employed by another employer and are eligible to receive medical and dental health benefits under that employer’s plans, the Company’s obligations under this Section 4(b)(v) shall be reduced to the extent comparable benefits are actually received by you during the twenty-four (24) month period following your termination, and any such benefits actually received by you shall be reported to the Company. If under the terms of the Company’s benefit plans or programs you are ineligible to continue to be so covered, the Company shall provide you with substantially equivalent coverage through other sources. You agree to pay the cost, on an after-tax basis, for the continued medical and dental coverage; subject to Section 4(c), on or about January 31 of the year following the year in which the Date of Termination occurs and continuing on or about each January 31 until the year following the last year of your coverage pursuant to this Section 4(b)(v),

{Name of Individual Listed on Appendix 1]
December 31, 2008
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and concurrently therewith the Company will make a payment to you such that, after payment of all taxes incurred by you, you retain an amount equal to the amount you paid during the immediately preceding calendar year for medical, and dental benefit plan coverage described in this Section. At the termination of the benefits coverage under this Section 4(b)(v), you, your spouse and your dependents shall be entitled to continuation coverage pursuant to section 4980B of the Code, sections 601-608 of the Employee Retirement Income Security Act of 1974, as amended, and under any other applicable law, to the extent required by such laws, as if you had terminated employment with the Company on the date such benefits coverage terminates.

     (vi) (A) Anything in this Agreement to the contrary notwithstanding, but subject to Section 4(b)(vi)(B), if it shall be determined that any payment or distribution to you or for your benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise (the “Payment”) would be subject to the excise tax imposed by section 4999 of the Code (the “Excise Tax”), then you shall be entitled to receive from the Company an additional payment (the “Gross-Up Payment”) in an amount such that the net amount of the Gross-Up Payment retained by you after the calculation and deduction of any and all federal, state and local income tax, employment tax and Excise Tax (including any interest or penalties imposed with respect to such taxes) on the Gross-Up Payment provided for in this Section 4(b)(vi), and taking into account any lost or reduced tax deductions on account of the Gross-Up Payment, shall be equal to the Excise Tax.

            (B) Notwithstanding any provision of this Agreement to the contrary, but giving effect to any redetermination of the amount of Gross-Up payments otherwise required by this Section 4(b)(vi), if but for this sentence, the Company would be obligated to make a Gross-Up Payment to the Executive, and the aggregate “present value” of the “parachute payments” to be paid or provided to you under this Agreement or otherwise does not exceed 1.10 multiplied by three times your “base amount,” then the payments and benefits to be paid or provided under this Agreement will be reduced (or repaid to the Company, if previously paid or provided) to the minimum extent necessary so that no portion of any payment or benefit to you, as so reduced or repaid, constitutes an “excess parachute payment.” For purposes of this Section 4(b)(vi)(B), the terms “excess parachute payment,” “present value,” “parachute payment,” and “base amount” will have the meanings assigned to them by Section 280G of the Code. The determination of whether any reduction in or repayment of such payments or benefits to be provided under this Agreement is required pursuant to this Section 4(b)(vi)(B) will be made at the expense of the Company, if requested by you or the Company, by the Accountants (as defined in Section 4(b)(vi)(C)). Appropriate adjustments will be made to amounts previously paid to you, or to amounts not paid pursuant to this Section 4(b)(vi)(B), as the case may be, to reflect properly a subsequent determination that you owe more or less Excise Tax than the amount previously determined to be due. If a Payment intended to be provided under the Agreement is required to be reduced pursuant to this Section 4(b)(vi)(B), the payments shall be reduced in the following order of priority: payments pursuant to Section 4(b)(ii), payments pursuant to Section 4(b)(v), payments pursuant to Section 4(b)(iii) and payments pursuant to Section 4(b)(iv).

            (C) All determinations required to be made under this Section 4(b)(vi), including whether and when the Gross-Up Payment is required and the amount of such

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Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations shall be made by the Accountants (as defined below), which shall provide you and the Company with detailed supporting calculations with respect to such Gross-Up Payment within fifteen (15) business days of the receipt of notice from you or the Company that you have received or will receive a Payment. For the purposes of this Section 4(b)(vi), the “Accountants” means the Company’s independent certified public accountants serving immediately prior to the Change in Control. If the Accountants are also serving as accountant or auditor for the individual, entity or group effecting the Change in Control, you shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accountants hereunder). All fees and expenses of the Accountants shall be borne solely by the Company.

For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as “parachute payments” within the meaning of section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax. Any determination by the Accountants shall be binding upon the Company and you. As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than the Company should have paid pursuant to this Section 4(b)(vi) (the “Underpayment”). In the event that the Company exhausts its remedies pursuant to Section 4(b)(vi)(C) and you are required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by the Company to or for your benefit; and

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

(1)	give the Company any information reasonably requested by the Company relating to such claim;
(2)	take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal

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representation with respect to such claim by an attorney reasonably selected by the Company;

(3)

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

(4)

permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify you for and hold you harmless from, on an after-tax basis, any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of all related costs and expenses. Without limiting the foregoing provisions of this Section 4(b)(vi), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agree to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify you for and hold you harmless from, on an after-tax basis, any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance (including as a result of any forgiveness by the Company of such advance); provided, further, that any extension of the statute of limitations relating to the payment of taxes for the taxable year of you with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and you shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority;

            (E) Notwithstanding any other provision of this Section 4(b)(vi) to the contrary and subject to Section 4(c), all taxes and expenses described in this Section 4(b)(vi) shall be paid or reimbursed within five (5) business days after you submit evidence of incurrence of such taxes and/or expenses, provided that in all events such reimbursement will be made no later than the end of the year following the year in which

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the applicable taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, no later than the end of the year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). Each provision of reimbursements pursuant to this Section 4(b)(vi) shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. Any expense reimbursed by the Company in one taxable year in no event will affect the amount of expenses required to be reimbursed or in-kind benefits required to be provided by the Company in any other taxable year.

     (vii) In any situation where under applicable law the Company has the power to indemnify (or advance expenses to) you in respect of any judgments, fines, settlements, loss, cost or expense (including attorneys’ fees) of any nature related to or arising out of your activities as an agent, employee, officer or director of the Company or in any other capacity on behalf of or at the request of the Company, the Company shall promptly on written request, indemnify (and advance expenses to) you to the fullest extent permitted by applicable law, including but not limited to making such findings and determinations and taking any and all such actions as the Company may, under applicable law, be permitted to have the discretion to take so as to effectuate such indemnification or advancement. Such agreement by the Company shall not be deemed to impair any other obligation of the Company respecting your indemnification otherwise arising out of this or any other agreement or promise of the Company or under any statute;

     (viii) The Company shall pay you, at the time specified in Section 4(c), a lump-sum payment in an amount equal to the additional benefits that you would have accrued under each qualified or nonqualified pension, profit sharing, deferred compensation or supplemental plan maintained by the Company for your benefit had you continued your employment with the Company for two (2) additional years following your Date of Termination, assuming you were fully vested under such plans, or $250,000 if greater; provided that if you are eligible to receive grandfathered benefits under the Company’s pension plan, the provisions of this Section 4(b)(viii) shall apply to such grandfathered benefits, without reduction for age, in addition to any other benefits to which you are entitled under this Section 4(b)(viii).

          (c) The payment provided for in Section 4(b)(i) shall be made not later than the fifth business day following the Date of Termination. Notwithstanding any provisions of this Section 4 to the contrary, if any of you, Terry Hartman, William Herb or Pete Kasper is a “specified employee” (within the meaning of Section 409A of the Code), the amounts that otherwise would be payable pursuant to Sections 4(b)(ii), (iii), (v), (vi) and (viii) and 5(d) of this Agreement (as well as any other payment or benefit that you are entitled to receive upon your separation from service and that would be considered to be deferred compensation under Section 409A of the Code) during the six-month period immediately following the Date of Termination (the “Delayed Payments”) will instead be paid or made available on the earlier of (i) the first day of the seventh month following your Date of Termination and (ii) your death.

          (d) Each payment to be made to you under the provisions of this Agreement will be considered to be a separate payment and not one of a series of payments for purposes

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of Section 409A of the Code. Further, coverages provided during one taxable year will not affect the degree to which coverages will be provided in any other taxable year.

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

     5. Performance-based Equity Compensation; Other Equity-Based Awards; Annual Incentive Compensation.

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

          (b) Upon the occurrence of a Change in Control, the Company shall pay to you, in cash, an amount equal to the value of any Equity Compensation (as defined below) that is “performance-based” (as defined below) and that is earned, accrued, allocated or awarded with respect to your service during any performance period or periods that include the date on which the Change in Control occurred. The amount payable to you will be calculated as if the performance-based Equity Compensation were earned at the targeted rate and shall be prorated through the date on which the Change in Control occurs based upon the number of days on which you were employed by the Company during the applicable performance period(s). For purposes of this Agreement, “Equity Compensation” means restricted stock units, performance shares, performance units and restricted shares and the shares that the Company is obligated to issue at the time restricted stock units, performance shares or performance units are earned, or deemed earned, by you. Compensation is “performance-based” if the compensation may be earned pursuant to a plan that provides that the amount of, or the entitlement to, the compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organization or individual performance criteria are considered pre-established if established in writing by the date not later than ninety (90) days after the commencement of the performance period, provided that the outcome is substantially uncertain at the time the criteria are established. Compensation also is “performance-based” if the plan provides for payments based upon subjective performance criteria, provided that —

       (i) The subjective performance criteria are bona fide and relate to your performance or the performance of a group of employees that includes you, or a business unit for which you provide services (which may include the entire Company): and

       (ii) The determination that any subjective performance criteria have been met is not made by you or a member of your family, or a person under your effective control or the control of a member of your family, and no amount of the compensation of the

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person making the determination is effectively controlled in whole or in part by you or a member of your family.

          (c) If a Change in Control occurs during the term of the Agreement, then the Company shall pay to you, within five (5) business days after the Change in Control, an amount, calculated as if all objectives under the Company’s annual incentive compensation plan for the year in which the Change in Control occurs were achieved at targeted levels, equal to your target (as in effect on the date of the Change in Control) annual incentive compensation opportunity for the year in which the Change in Control occurs, prorated through the date of the Change in Control; provided, however, that in no event shall the amount payable to you pursuant to this Section 5(c) be less than fifty percent (50%) of your target annual incentive compensation opportunity for the year in which the Change in Control occurs.

          (d) If a Change in Control occurs during the term of this Agreement, then each outstanding share of restricted stock and each outstanding restricted share unit (other than a performance-based share of restricted stock or restricted share unit) granted to you under any of the Company’s incentive plans or other similar plans (an “Equity-Based Award”) shall, immediately prior to the Change in Control, be converted into a right to receive an amount equal to the value of one share of the Company’s common stock based on the closing stock price on the last trading day immediately preceding the Change in Control (a “Cash Equivalent Unit”). Subject to the following sentence and any deferral election you may have made pursuant to the Executive Savings Plan, the Executive Deferred Compensation Plan or any other non-qualified deferred compensation plan, the Cash Equivalent Units shall vest and be paid to you at the same time and upon the same conditions as the Equity-Based Awards from which the Cash Equivalent Units were converted. If, prior to the vesting and payment of all of the Cash Equivalent Units and within the two-year period following the Change in Control, you terminate your employment for Good Reason or the Company terminates your employment without Cause or for Permanent Disability, subject to Section 4(c), the remaining Cash Equivalent Units shall vest and the Company shall pay to you within five (5) business days after the Date of Termination, an amount equal to the value of your remaining Cash Equivalent Units.

     6. Successors; Binding Agreement.

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

          (b) This Agreement shall inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein,

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shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

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

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

          (a) Non-Compete. In consideration of and in connection with the benefits provided to you under this Agreement, and in order to protect the goodwill of the Company, you hereby agree that, if your employment is terminated under circumstances that entitle you to benefits under Section 4(b) then, for a period of twelve (12) months commencing on the Date of Termination, you shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any of the following entities (or any subsidiary of any such entity) other than as a shareholder or beneficial owner owning 5% or less of the outstanding securities of a public company: Anchor Hocking; Arc International or its affiliate Cardinal International, Inc.; Oneida LTD; or any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

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

          (c) Non-Solicitation. You hereby agree that, for the period commencing on the Date of Termination and terminating on the second anniversary thereof, you shall not, either on your own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or

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corporation, directly or indirectly solicit or attempt to solicit away from the Company any of its officers or employees or offer employment to any person who, on or during the six (6) months immediately preceding the date of such solicitation or offer, is or was an officer or employee of the Company; provided, however, that a general advertisement to which an employee of the Company responds shall in no event be deemed to result in a breach of this Section 8(c).

     9. Funding of Obligations. In order to partially fund its obligations to provide benefits under this Agreement (including, without limitation, its obligations under Section 4(b)(vi)) the Company shall establish and fund a trust for your benefit and the benefit of other executives of the Company with whom the Company has entered into agreements similar to this Agreement. The trust shall be a grantor trust described in section 671 of the Code. If the Company has not, prior to the occurrence of a Potential Change in Control (as defined below), fully funded its obligations to provide benefits under this Agreement, then, upon the occurrence of a Potential Change in Control, the Company shall, to the extent the amount contributed would not be treated as property transferred in connection with the performance of services for purposes of Code Section 83, as provided in Section 409A(b)(3) of the Code, fully fund its obligations to provide benefits under this Agreement (including, without limitation, its obligations under Section 4(b)(vi)) by irrevocably contributing funds to such trust on your behalf. The amount to be contributed by the Company to the trust shall not be less than the then present value of the Company’s obligations under Section 4 hereof, as determined by the firms serving as the Company’s actuaries and accountants immediately prior to the Change in Control. Such actuaries and accountants shall be paid by the Company. The establishment and funding of the trust shall not affect the obligation of the Company to provide benefits under the terms of this Agreement. For purposes of this Agreement a “Potential Change in Control” shall be deemed to occur if:

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

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

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

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

     10. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party

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

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

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

     13. Suits Actions Proceedings Etc.

          (a) Jurisdiction and Venue. No suit, action or proceeding with respect to this Agreement, nor any judgment entered by any court in respect thereof, may be brought in any court, domestic or foreign, or before any similar domestic or foreign authority, other than in a court of competent jurisdiction in the State of Ohio, and you and the Company hereby irrevocably waive any right which you or the Company, as applicable, may otherwise have had to bring such a suit, action, proceeding or judgment in any other court, domestic or foreign, or before any similar domestic or foreign authority. You and the Company hereby submit to the exclusive jurisdictions of such courts for the purpose of any such suit, action, proceeding or judgment. By your execution and delivery of this Agreement, you appoint the Secretary of the Company, at the Company’s office in Toledo, Ohio, as your agent upon which process may be served in any such suit, action or proceeding; and by its execution and delivery of this Agreement, the Company appoints the Secretary of the Company, at its office in Toledo, Ohio, as its agent upon which process may be served in any such suit, action or proceeding. Service of process upon such applicable agent, together with actual notice of such service given to you or the Company, as applicable, in the manner provided in Section 7 hereof, shall be deemed in every respect effective service of process upon the applicable party in any suit, action, proceeding or judgment. Nothing herein shall be deemed to limit the ability of you or the Company to serve any such writs, process or summonses in any other manner permitted by applicable law. You and the Company hereby irrevocably waive any objections which you or the Company, as applicable, may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Ohio, and hereby further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, in the event that no court of competent jurisdiction in the State of Ohio will accept such jurisdiction and venue, then any suit, action or

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proceeding with respect to this Agreement, or any judgment entered by any court in respect thereof, may be brought in any court of competent jurisdiction in the continental United States which has jurisdiction over such suit, proceeding or action and the parties thereto.

          (b) Compensation During Dispute, Etc. Your compensation during any disagreement, dispute, controversy, claim, suit, action or proceeding (collectively, a “Dispute”) arising out of or relating to this Agreement or the interpretation of this Agreement shall be as follows: If there is a termination by you or the Company followed by a Dispute as to whether you are entitled to the payments and other benefits provided under this Agreement, then, during the period of that Dispute the Company shall pay you one hundred percent (100%) of the amount specified in Sections 4(b) hereof if, but only if, you agree in writing that if the Dispute is resolved against you, you shall promptly refund to the Company all payments you receive under Sections 4(b)(i) and 4(b)(ii) of this Agreement plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly.

          (c) Legal Fees. The Company shall pay to you all reasonable legal fees and expenses incurred by you in connection with any Dispute arising out of or relating to this Agreement or the interpretation thereof (including, without limitation, all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or in seeking to obtain or enforce any right or benefit provided by this Agreement, or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder), provided any such reimbursement of reasonable attorneys’ fees and other cost shall be made not later than December 31 of the year following the year in which you incurred the expense. In no event will the amount of expenses so reimbursed by the Company in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

     14. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein, including, without limitation, any prior severance agreements, is hereby terminated and cancelled. Any of your rights hereunder shall be in addition to any rights you may otherwise have under benefit plans or agreements of the Company to which you are a party or in which you are a participant, including, but not limited to, any Company sponsored employee benefit plans and stock options plans. Provisions of this Agreement shall not in any way abrogate your rights under such other plans and agreements.

     15. Coordination with Deferred Compensation Plans; Compliance with Section 409A of the Code.

          (a) If and to the extent that you have elected, pursuant to the Executive Savings Plan (“ESP”), the Executive Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of your compensation, including without limitation any performance-based Equity Compensation or other Equity-Based Compensation (as defined in the DCP), the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to you and the

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timing of any such distribution. However, the terms of this Agreement or, in the absence of a Change in Control as defined in this Agreement, any employment agreement to which you and the Company are party (or, if you are not party to an employment agreement with the Company, any Company-sponsored severance policy providing benefits to you in the event of a termination of your employment) shall govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based Equity Compensation and other Equity-Based Compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (b) To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

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

Sincerely, LIBBEY INC.
By:
	Susan Allene Kovach
	Vice President, General Counsel and Secretary

Agreed and Accepted as of the
31st day of December, 2008

[Name of Individual Listed on Appendix 1]

{Name of Individual Listed on Appendix 1]
December 31, 2008
Page 18

Appendix 1

Each of the executives below is a party to an agreement in substantially this form:

Robert Bules

Terry Hartman

William Herb

Peter Kasper

EX-10.36

Exhibit 10.36

AMENDED AND RESTATED INDEMNITY AGREEMENT

     This Amended and Restated Agreement (“Agreement”) is made as of December 31, 2008 by and between Libbey Inc., a Delaware corporation (the “Company”), and [Insert Name of Executive Officer listed on Appendix 1] (“Indemnitee”).

RECITALS

     A. Highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation.

     B. The Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The By-laws of the Company require indemnification of the officers and directors of the Company. Indemnitee also may be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”). The By-laws and the DGCL, expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification.

     C. The uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons.

     D. The Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future.

     E. It is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified.

     F. This Agreement is a supplement to and in furtherance of the By-laws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

     G. Indemnitee does not regard the protection available under the Company’s By-laws and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in

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such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he or she be so indemnified.

     H. The Company has determined that it is advisable to amend the Indemnity Agreement dated as of February 1, 2005 between the Company and Indemnitee (the “Original Indemnity Agreement”) in order to provide that the Company will maintain directors and officers liability insurance covering Indemnitee for a period of six (6) years following Indemnitee’s separation from service (as defined by Section 409A of the Internal Revenue Code of 1986, as amended).

     NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby agree that the Original Indemnity Agreement is hereby amended and restated in its entirety as follows:

     Section 1. Services to the Company. Indemnitee agrees to serve as an officer and director of the Company and, at the request of the Company, as a director and/or officer and/or fiduciary of another corporation, partnership, joint venture, trust employee benefit plan or other enterprise. Indemnitee may, at any time and for any reason, resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or any of its subsidiaries or any Enterprise), if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director or officer of the Company, by the Company’s Certificate of Incorporation, the Company’s By-laws, and the General Corporation Law of the State of Delaware. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as an officer and/or director of the Company.

     Section 2. Definitions. As used in this Agreement:

     (a) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

     (b) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

     (i) Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities;

     (ii) Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to

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effect a transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;

     (iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

     (iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

     (v) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

     (c) “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

     (d) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

     (e) “Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

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

     (g) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 13(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this

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Agreement, by litigation or otherwise, Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

     (h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

     (i) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

     (j) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by him or of any action on his part while acting as director or officer of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement; except one initiated by a Indemnitee to enforce his rights under this Agreement.

     (k) Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.

     Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines

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and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding had no reasonable cause to believe that his conduct was unlawful.

     Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

     Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

     Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

     Section 7. Additional Indemnification.

     (a) Notwithstanding any limitation in Sections 3, 4, or 5, if Indemnitee is a party to or is threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor), the Company shall indemnify Indemnitee, to the fullest extent permitted by applicable law, against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding.

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     (b) For purposes of Section 7(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

     (i) to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

     (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

     Section 8. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

     (a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

     (b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(a) hereof), or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act; or

     (c) except as provided in Section 1.3(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board of Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

     Section 9. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, the Company shall advance, to the extent not prohibited by law, the expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made within 30 days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.

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     Section 10. Procedure for Notification and Defense of Claim.

     (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The omission to notify the Company will not relieve the Company from any liability that it may have to Indemnitee otherwise than under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

     (b) The Company will be entitled to participate in the Proceeding at its own expense.

     Section 11. Procedure Upon Application for Indemnification.

     (a) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 10(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

     (b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as provided in this Section 11(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and

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timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection that shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

     Section 12. Presumptions and Effect of Certain Proceedings.

     (a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

     (b) Subject to Section 13(e), if the person, persons or entity empowered or selected under Section 11 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 12(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 11(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such

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meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) of this Agreement.

     (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

     (d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this Section 12(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

     (e) The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

     Section 13. Remedies of Indemnitee.

     (a) Subject to Section 13(e), in the event that (i) a determination is made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 11(a) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 or 6 or the last sentence of Section 11(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or 7 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of his or her entitlement to such indemnification or advancement of Expenses.. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 13(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

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     (b) In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

     (c) If a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

     (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

     (e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

     Section 14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.

     (a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s By-laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder

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or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

     (b) The Company shall maintain an insurance policy or policies providing liability insurance for directors, officers, employees or agents of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company for as long as Indemnitee provides services to the Company and for a period not less than six (6) years after Indemnitee’s separation from service from the Company. Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies, The Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

     (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

     (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

     (e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise.

     Section 15. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as an officer and/or director of the Company or (b) 1 year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 1.3 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs, executors and administrators.

     Section 16. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such

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provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

     Section 17. Enforcement.

     (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer and/or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer and/or director of the Company.

     (b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation of the Company, the By-laws of the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

     Section 18. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

     Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

     Section 20. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

If to Indemnitee, at the address indicated on the signature page of
this Agreement, or such other address as Indemnitee shall provide to
the Company.

If to the Company to:

Libbey Inc.
Attn: General Counsel
300 Madison Avenue
Toledo, Ohio 43604

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or to any other address as may have been furnished to Indemnitee by the Company.

     Section 21. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

     Section 22. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 13(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably RL&F Service Corp, One Rodney Square, 10th Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

     Section 23. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

     Section 24. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

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LIBBEY INC.	INDEMNITEE
By:
	Name: [Insert Name of Executive Officer]
Its:	Address:

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APPENDIX 1

Each of the executives below is a party to an agreement in substantially this form:

John F. Meier

Richard I. Reynolds

Gregory T. Geswein

Kenneth A. Boerger

Jonathan S. Freeman

Daniel P. Ibele

Susan A. Kovach

Timothy T. Paige

Scott M. Sellick

Kenneth G. Wilkes

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EX-10.37

Exhibit 10.37

AMENDED AND RESTATED INDEMNITY AGREEMENT

     This Amended and Restated Indemnification Agreement (“Agreement”) is made as of December 31, 2008 by and between Libbey Inc., a Delaware corporation (the “Company”), and [Insert Name of Outside Director from Appendix 1] (“Indemnitee”).

RECITALS

     A. Highly competent persons have become more reluctant to serve publicly-held corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation.

     B. The Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The By-laws of the Company require indemnification of the officers and directors of the Company. Indemnitee also may be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”). The By-laws and the DGCL, expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification.

     C. The uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons.

     D. The Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future.

     E. It is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified.

     F. This Agreement is a supplement to and in furtherance of the By-laws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

     G. Indemnitee does not regard the protection available under the Company’s By-laws and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in

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such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he or she be so indemnified.

     H. The Company has determined that it is advisable to amend the Indemnity Agreement dated as of February 1, 2005 between the Company and Indemnitee (the “Original Indemnity Agreement”) in order to provide that the Company will maintain directors and officers liability insurance covering Indemnitee for a period of six (6) years following Indemnitee’s separation from service (as defined by Section 409A of the Internal Revenue Code of 1986, as amended).

     NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby agree that the Original Indemnity Agreement is hereby amended and restated in its entirety as follows:

     Section 1. Services to the Company. Indemnitee agrees to serve as a director of the Company. Indemnitee may, at any time and for any reason, resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as a director of the Company.

     Section 2. Definitions. As used in this Agreement:

     (a) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

     (b) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

     (i) Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities;

     (ii) Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;

     (iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or

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consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

     (iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

     (v) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

     (c) “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

     (d) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

     (e) “Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

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

     (g) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 13(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

     (h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of

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professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

     (i) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

     (j) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by him or of any action on his part while acting as director or officer of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement; except one initiated by a Indemnitee to enforce his rights under this Agreement.

     (k) Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.

     Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding had no reasonable cause to believe that his conduct was unlawful.

     Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be

4

indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

     Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

     Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

     Section 7. Additional Indemnification.

     (a) Notwithstanding any limitation in Sections 3, 4, or 5, if Indemnitee is a party to or is threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor), the Company shall indemnify Indemnitee, to the fullest extent permitted by applicable law, against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding.

     (b) For purposes of Section 7(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

     (i) to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

     (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

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     Section 8. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

     (a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

     (b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(a) hereof), or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act; or

     (c) except as provided in Section 1.3(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board of Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

     Section 9. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, the Company shall advance, to the extent not prohibited by law, the expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made within 30 days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.

     Section 10. Procedure for Notification and Defense of Claim.

     (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The omission to notify the Company will not relieve the Company from any liability that it may have to Indemnitee otherwise than under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

     (b) The Company will be entitled to participate in the Proceeding at its own expense.

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     Section 11. Procedure Upon Application for Indemnification.

     (a) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 10(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

     (b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as provided in this Section 11(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection that shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(a) hereof. Upon the due commencement of any judicial proceeding or

7

arbitration pursuant to Section 13(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

     Section 12. Presumptions and Effect of Certain Proceedings.

     (a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

     (b) Subject to Section 13(e), if the person, persons or entity empowered or selected under Section 11 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 12(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 11(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) of this Agreement.

     (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

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     (d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this Section 12(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

     (e) The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

     Section 13. Remedies of Indemnitee.

     (a) Subject to Section 13(e), in the event that (i) a determination is made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 11(a) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 or 6 or the last sentence of Section 11(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or 7 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of his or her entitlement to such indemnification or advancement of Expenses.. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 13(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

     (b) In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

     (c) If a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact

9

necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

     (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

     (e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

     Section 14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.

     (a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s By-laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

     (b) The Company shall maintain an insurance policy or policies providing liability insurance for directors, officers, employees or agents of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company for as long as Indemnitee provides services to the Company and for a period not less than six (6) years after Indemnitee’s separation from service from the Company. Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. The Company has director and officer liability

10

insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

     (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

     (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

     (e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise.

     Section 15. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as an officer of the Company or (b) 1 year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 1.3 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs, executors and administrators.

     Section 16. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

     Section 17. Enforcement.

     (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to

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serve as a director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director of the Company.

     (b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation of the Company, the By-laws of the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

     Section 18. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

     Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

     Section 20. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

If to Indemnitee, at the address indicated on the signature page of
this Agreement, or such other address as Indemnitee shall provide to
the Company.

If to the Company to:

Libbey Inc.
Attn: General Counsel
300 Madison Avenue
Toledo, Ohio 43604

or to any other address as may have been furnished to Indemnitee by the Company.

     Section 21. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its

12

directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

     Section 22. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 13(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably RL&F Service Corp, One Rodney Square, 10th Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

     Section 23. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

     Section 24. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

LIBBEY INC.	INDEMNITEE
By:
	Name: [Insert Name of Outside Director]
Its:	Address:

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APPENDIX 1

Each of the outside directors below is a party to an agreement in substantially this form:

Carlos V. Duno

William A. Foley

Jean-René Gougelet

Peter C. McC. Howell

Deborah G. Miller

Carol B. Moerdyk

John C. Orr

Terence P. Stewart

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EX-10.38

Exhibit 10.38

Libbey Inc.

Supplemental Retirement Benefit Plan

Effective June 24,1993

Amended July 1, 1998

Amended and Restated Effective December 31, 2008

Libbey Inc.

Supplemental Retirement Benefit Plan

(As Amended and Restated Effective December 31, 2008)

ARTICLE I

INTRODUCTION

1.01

The purpose of this Libbey Inc. Supplemental Retirement Benefit Plan (the “Plan”) is to provide certain retirement and related benefits to certain Eligible Employees of Libbey Inc. (the “Company”) whose benefits under the Libbey Inc. Salary Retirement Plan through December 31, 1997 (“1997 Prior Pension Plan”), and under the Libbey Inc. Cash Balance Plan on or after January 1, 1998 (the “Pension Plan”), are or may be subject to certain limitations, as hereinafter described.

1.02.

The plan provides “Excess Benefits” described in Section 3.01 hereof, and “Supplemental Benefits” described in Section 3.02 hereof.

ARTICLE II

DEFINITIONS

2.01	Unless otherwise expressly defined in this Plan, each word or term that is defined in the Pension Plan shall have the same meaning when used in this Plan.
2.02	As used in this Plan, the term “Board” means the Board of Directors of Libbey Inc. or any committee of said Board to which all or any of its powers or duties under the Plan may be delegated.
2.03	As used in this Plan, the term “Eligible Employee” means an Employee or former Employee of the Company with respect to whom one or more benefits are or will become payable under this Plan. No employee hired by the Company on or after January 1, 2006 shall become an Eligible Employee hereunder.
2.04	As used in this Plan, the term “Date of Termination” means the date on which the Eligible Employee incurs a “separation from service” within the meaning of Section 409A of the Code.
2.05	As used in this Plan, the term “Initial Election Date” means January 30 of the year next following the year in which an employee first becomes an Eligible Employee under this Plan in a year beginning on or after January 1, 2008.

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ARTICLE III

EXCESS AND SUPPLEMENTAL BENEFITS

3.01 Excess Benefits under the Plan are benefits unavailable under the Pension Plan by reason of the application of Section 415 of the Code, which imposes limitations on the amount of contributions or benefits that may be provided with respect to a participant under a qualified retirement plan.

3.02 (a) Supplemental Benefits under the Plan are benefits unavailable under the Pension Plan by reason of the application of Section 401(a)(17) of the Code, which imposes limitations on the amounts of annual compensation that may be taken into account under a qualified retirement plan.

(b)

Supplemental Benefits shall include amounts attributable to changes made to the retirement benefit formula of the Owens-Illinois Salary Retirement Plan (the predecessor plan to the 1997 Prior Pension Plan), effective January 1, 1989, and conformed to in such Plan, whereby such Plan’s retirement benefit formulas were modified and the accrued benefit and/or rate of future benefit accruals of certain Eligible Employees were thereby curtailed. Such amounts shall be frozen as of June 30, 1998.

This Section 3.02 shall apply only to Employees or former Employees of the Company who are within the select group of employees described in Section 201(2) of the Employee Retirement Income Security Act, as amended (“ERISA”).

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ARTICLE IV

RETIREMENT AND SURVIVOR

BENEFITS

4.01

Each Eligible Employee shall be entitled to a normal, postponed, early, or vested deferred retirement benefit under this Plan in an amount equal to the excess of (i) the amount of the comparable benefit to which he or she would be entitled under the Pension Plan at the time of his or her commencement of benefits under the Plan, if the limitations and curtailments referred to in Sections 3.01 and 3.02 hereof were not applicable to the Pension Plan, over (ii) the amount of any such comparable benefit payable under the Pension Plan at the time of his or her commencement of benefits under the Plan, taking into account the limitations and curtailments referred to in Sections 3.01 and 3.02 hereof.

4.02

Upon the death of an Eligible Employee prior to commencement of benefits under Section 4.01, a survivor or death benefit shall be payable to the spouse or other beneficiary of such Eligible Employee in an amount equal to the excess of (i) the amount of the comparable benefit that would have been payable under the Pension Plan as a result of his or her death, if the limitations and curtailments referred to in Sections 3.01 and 3.02 hereof were not applicable to the Pension Plan, over (ii) the amount of any such comparable benefit actually payable under the Pension Plan taking into account the limitations and curtailments referred to in Sections 3.01 and 3.02 hereof.

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4.03 (a) Except as provided in Section 4.03(b), the benefit described in Section 4.01 (the “Section 4.01 benefit”) will be paid or commence to be paid on the first day of the month following the later of (i) the Eligible Employee’s Date of Termination or (ii) the date the Eligible Employee attains age 55. The Section 4.01 benefit will be paid or commence to be paid in the form elected by the Eligible Employee pursuant to Section 4.03(e).

(b) Notwithstanding anything in this Plan to the contrary, if an Eligible Employee’s Section 4.01 benefit is paid pursuant to Section 4.03(a)(i) and the Eligible Employee is a “specified employee” (within the meaning of Section 409A of the Code) on the date of the Eligible Employee’s Date of Termination, then amounts that would otherwise be payable pursuant to this Plan during the six-month period immediately following the date of the Eligible Employee’s Date of Termination will instead be paid or made available on the earlier of (i) the first day of the seventh month following the Date of Termination and (ii) the Eligible Employee’s death.

(c) The survivor or death benefit described in Section 4.02 (the “Section 4.02 benefit”) will be paid or commence to be paid on the first day of the third month commencing after the date of the Eligible Employee’s death to the same person(s) to whom the Eligible Employee’s pre-retirement death benefit under the Pension Plan is payable. The Section 4.02 benefit will be paid or commence to be paid in the form elected by the Eligible Employee pursuant to Section 4.03(f).

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(d) Each current employee of the Company who is considered an Eligible Employee as of December 31, 2008 (a “Current Eligible Employee”) may elect no later December 31, 2008, and each current employee who becomes an Eligible Employee after December 31, 2008 (a “New Eligible Employee”) may elect no later than the Initial Election Date, in the manner specified by the Company, whether to receive the Section 4.01 benefit in the form of a single lump sum payment or in the form of a single life annuity. If an Eligible Employee fails to make an election by the applicable due date, the Section 4.01 benefit will be paid in the form of a single lump sum payment. If an Eligible Employee elects to receive payment of the Section 4.01 benefit in the form of a single life annuity, at any time prior to the date payment of the Section 4.01 benefit commences, the Eligible Employee may elect, in the manner specified by the Company, to receive his or her Section 4.01 benefit in one of the optional forms of payment under the Pension Plan, other than the lump sum and level income option (the “Optional Forms”). The Optional Forms shall be subject to all of the terms and conditions applicable to such optional forms of benefits under the Pension Plan, including the factors for determining actuarial equivalents set forth in the Pension Plan that are used to calculate the Optional Forms, but excluding the requirement to obtain spouse consent for particular forms of payment. If the Eligible Employee elects an Optional Form that provides for a benefit to a joint pensioner, the Eligible Employee shall designate such joint pensioner at the time the Eligible Employee elects such Optional Form.

(e) Each Current Eligible Employee may elect no later December 31, 2008, and each New Eligible Employee may elect no later than the Initial Election Date, in

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the manner specified by the Company, whether the Section 4.02 benefit will be paid in the form of a single lump sum payment or in the form of a single life annuity. If an Eligible Employee fails to make a valid election by the applicable due date, the Section 4.02 benefit will be paid in the form of a single lump sum payment.

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ARTICLE V

AMENDMENT OR TERMINATION OF PLAN

5.01	Subject to Sections 5.02, 5.03, and 5.04 hereof, the Board may at any time and from time to time, in its sole discretion, amend, suspend, or terminate the Plan in whole or in part.
5.02	No action taken by the Board pursuant to Section 5.01 hereof may adversely affect the accrued Excess or Supplemental Benefits of any Eligible Employee under the Plan, as of the date of such action, without the consent of such Eligible Employee.
5.03	If the Plan is terminated, actually or constructively, the accrued Excess and Supplemental Benefits of all Eligible Employees hereunder as of the date of such actual or constructive termination shall thereupon become fixed, fully vested, and nonforfeitable. For purposes of determining the amount of such accrued Excess and/or Supplemental Benefits, each Eligible Employee’s benefit under the Pension Plan shall be his or her Accrued Benefit, payable as a single life annuity upon retirement at age 65, thereunder. Benefits which have become fixed, fully vested, and nonforfeitable pursuant to this Section 5.03 shall be paid as provided in Section 4.03 hereof, provided, however, nothing in this Section 5.03 shall prevent an acceleration of payment following the termination of the Plan, as permitted by Treasury Regulation Section 1.409A-3(j)(4)(ix).

- 8 -

5.04 In the event of any transfer or sale of a majority of the stock or of substantially all of the assets and business of the Company, or of a merger or consolidation of the Company into or with another corporation or business entity, this Plan shall continue in full force and effect thereafter, subject to amendment, suspension, or termination in accordance with Sections 5.01, 5.02, and 5.03 hereof by action of the transferee, purchaser, or successor entity.

ARTICLE VI

ADMINISTRATIVE AND MISCELLANEOUS

PROVISIONS

6.01	The Libbey Inc. employee benefits committee shall administer the plan.
6.02	Nothing in the Plan shall confer on any Eligible Employee of the Company any right to continue in the employ of the Company or limit in any way the right of the Company to terminate such Employee’s employment at anytime.
6.03	Rights of Eligible Employees under the Plan shall not be assignable or transferable, or subject to encumbrance or charge of any nature, otherwise than by designation of beneficiary to take effect at date of death.
6.04	Eligible Employees have the status of general unsecured creditors of the Company. Accordingly, the Plan constitutes a mere promise by the Company to make benefit payments in accordance with the provisions of the Plan.
6.05	Participating companies in this Plan are listed in Appendix A hereof.

- 9 -

6.06 This Plan was effective June 24, 1993, was amended effective July 1, 1998, and is hereby amended and restated effective December 31, 2008.

IN WITNESS WHEREOF, the Board has caused the Libbey Inc. Supplemental Retirement Benefit Plan as amended to be executed by its duly authorized delegate this                     day of                                         .

Libbey Inc.

By:

Title:

ATTEST:

By:

Title:

- 10 -

Libbey Inc.

Supplemental Retirement Plan

Appendix A

Companies Participating in the Libbey Inc.

Supplemental Retirement Benefit Plan

Name	Employer #
Libbey Inc.	34-1559357
Libbey Glass Inc.	22-2784107

- 11 -

EX-10.39

Exhibit 10.39

AMENDMENT TO THE FIRST

AMENDED AND RESTATED LIBBEY INC. EXECUTIVE SAVINGS PLAN

     Libbey Inc. hereby adopts this Amendment to the First Amended and Restated Libbey Inc. Executive Savings Plan (the “Executive Savings Plan”). Words and phrases used herein with initial capital letters that are defined in the Executive Savings Plan are used herein as so defined. The purpose of this Amendment is to ensure compliance of the Executive Savings Plan with respect to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). Section 409A applies to compensatory amounts that are “deferred” (for purposes of Section 409A) after December 31, 2004 (“Post-2004 Deferrals”). This Amendment applies only to Post-2004 Deferrals under the Executive Savings Plan. To the extent amounts have been “deferred” (for purposes of Section 409A”) under the Executive Savings Plan on or before December 31, 2004 (“Pre-2005 Deferrals”), this Amendment has no effect and such Pre-2005 Deferrals shall continue to be subject to the terms of the Executive Savings Plan prior to the Amendment. In addition, no further deferrals may be made under the Executive Savings Plan for compensatory amounts that relate to services performed after December 31, 2008. Such amounts are eligible for deferral under the Libbey Inc. Executive Deferred Compensation Plan (the “2009 Plan”). To the extent provisions of the 2009 Plan that are incorporated by reference herein conflict with provisions in the Executive Savings Plan, the provisions of the 2009 Plan control.

     The Executive Savings Plan is amended as follows:

     1. The following shall be added to the end of Section 7.2 of the Executive Savings Plan:

Notwithstanding the foregoing, with respect to Post-2004 Deferrals, the date of payment shall be the date of the Executive’s “separation of service,” as such term is defined in the 2009 Plan, subject to the last two sentences of Section 7.4 of the 2009 Plan, which two sentences are incorporated herein by reference.

     2. The following shall be added to the end of Section 7.3 of the Executive Savings Plan:

Notwithstanding the foregoing, with respect to Post-2004 Deferrals, any such amount not distributed in the initial year of distribution shall be distributed in the Executive’s first taxable year in which the Company reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Section 162(m) of the Code.

     3. The following shall be added to the end of Section 7.4 of the Executive Savings Plan:

Notwithstanding the foregoing, with respect to Post-2004 Deferrals, the payment of such amount shall be made within 60 days following death.

     4. The following shall be added to the end of Section 7.5 of the Executive Savings Plan:

Notwithstanding the foregoing, with respect to Post-2004 Deferrals, payment under this Section 7.5 shall be made in compliance with Section 7.8 of the 2009 Plan, which is incorporated herein by reference.

     5. The following shall be added to the end of Section 9.1 of the Executive Savings Plan:

The preceding section shall not apply with respect to Post-2004 Deferrals.

     Executed as of                      day of December 2008.

LIBBEY INC.

By:

2

EX-13.1

EXHIBIT 13.1

Selected Financial Information included in Registrant’s 2008 Annual Report to Shareholders

Dollars in thousands, except per-share amounts

Year end December, 31	2008(e)			2007			2006 (e) (h)			2005 (e)			2004 (e)			2003			2002 (b) (f)			2001			2000			1999 (e)
Operating Results:
Net sales	$	810,207		$	814,160		$	689,480		$	568,133		$	544,767		$	513,632		$	433,761		$	419,594		$	441,828		$	460,592
Gross profit (e)	$	109,337		$	157,669		$	123,164		$	86,542		$	100,462		$	108,206		$	107,928		$	114,424		$	138,099		$	138,959
Gross profit margin		13.5	%		19.4	%		17.9	%		15.2	%		18.4	%		21.1	%		24.9	%		27.3	%		31.3	%		30.2	%
Selling, general and administrative expenses	$	88,451		$	91,568		$	87,566		$	71,535		$	68,574		$	68,479		$	56,631		$	55,716		$	61,185		$	64,131
Impairment of goodwill and other intangible assets (e)	$	11,890		$	—		$	—		$	9,179		$	—		$	—		$	—		$	—		$	—		$	—
Income (loss) from operations (IFO) (e)	$	(5,548	)	$	66,101		$	19,264		$	(8,917	)	$	23,895		$	39,727		$	51,297		$	58,708		$	76,914		$	73,837
IFO margin		(0.7	)%		8.1	%		2.8	%		(1.6	)%		4.4	%		7.7	%		11.8	%		14.0	%		17.4	%		16.0	%
Equity earnings (loss) — pretax	$	—		$	—		$	1,986		$	(4,100	)	$	(1,435	)	$	4,429		$	6,379		$	6,384		$	12,016		$	8,857
Other income (expense) (e) (f)	$	1,119		$	8,778		$	(3,236	)	$	2,567		$	2,369		$	3,484		$	(12,740	)	$	3,500		$	3,765		$	4,410
Earnings (loss) before interest and income taxes after minority interest (EBIT) (e) (f)	$	(4,429	)	$	74,879		$	17,948		$	(10,484	)	$	24,829		$	47,640		$	44,936		$	68,592		$	92,695		$	87,104
EBIT margin		(0.5	)%		9.2	%		2.6	%		(1.8	)%		4.6	%		9.3	%		10.4	%		16.3	%		21.0	%		18.9	%
Interest expense (h)	$	69,720		$	65,888		$	46,594		$	15,255		$	13,049		$	13,436		$	8,263		$	9,360		$	12,216		$	12,501
Income (loss) before income taxes (e) (f) (h)	$	(74,149	)	$	8,991		$	(28,580	)	$	(25,705	)	$	11,780		$	34,204		$	36,673		$	59,232		$	80,479		$	74,603
Provision (benefit) for income taxes	$	6,314		$	11,298		$	(7,747	)	$	(6,384	)	$	3,528		$	5,131		$	8,618		$	19,840		$	33,613		$	31,175
Effective tax rate		(8.5	)%		125.7	%		27.1	%		24.8	%		30.0	%		15.0	%		23.5	%		33.5	%		41.8	%		41.8	%
Net (loss) income (b) (e) (f) (h)	$	(80,463	)	$	(2,307	)	$	(20,899	)	$	(19,355	)	$	8,252		$	29,073		$	28,055		$	39,392		$	46,866		$	43,428
Net income margin		(9.9	)%		(0.3	)%		(3.0	)%		(3.4	)%		1.5	%		5.7	%		6.5	%		9.4	%		10.6	%		9.4	%
Per-Share Amounts:
Diluted net (loss) income (b) (e) (f) (h)	$	(5.48	)	$	(0.16	)	$	(1.47	)	$	(1.39	)	$	0.60		$	2.11		$	1.82		$	2.53		$	3.01		$	2.64
Dividends paid	$	0.10		$	0.10		$	0.10		$	0.40		$	0.40		$	0.40		$	0.30		$	0.30		$	0.30		$	0.30
Other Information:
EBIT	$	(4,429	)	$	74,879		$	17,948		$	(10,484	)	$	24,829		$	47,640		$	44,936		$	68,592		$	92,695		$	87,104
Depreciation & amortization (b)	$	44,430		$	41,572		$	35,556		$	32,217		$	29,505		$	28,109		$	19,143		$	18,843		$	18,352		$	18,753
EBITDA (c) (e) (f)	$	40,001		$	116,451		$	53,504		$	21,733		$	54,334		$	75,749		$	64,079		$	87,435		$	111,047		$	105,857
EBITDA margin		4.9	%		14.3	%		7.8	%		3.8	%		10.0	%		14.7	%		14.8	%		20.8	%		25.1	%		23.0	%
Employees		7,306			7,442			7,156			3,563			3,808			3,838			3,837			3,218			3,270			3,552
Balance Sheet Data:
Total assets	$	821,554		$	899,471		$	878,131		$	595,784		$	578,204		$	551,116		$	524,527		$	468,082		$	446,707		$	434,395
Total liabilities	$	879,443		$	806,356		$	790,281		$	476,179		$	434,641		$	411,259		$	384,309		$	302,717		$	313,436		$	342,552
Working capital (a)	$	206,886		$	213,819		$	200,060		$	162,426		$	160,265		$	150,999		$	133,301		$	114,421		$	135,837		$	129,632
% of net sales(g)		25.5	%		26.3	%		26.2	%		28.6	%		29.4	%		29.4	%		30.7	%		27.3	%		30.7	%		28.1	%
Total borrowings — net	$	550,257		$	496,634		$	491,232		$	261,679		$	225,372		$	230,933		$	191,178		$	148,032		$	161,404		$	184,626
Cash Flow Data:
Net cash (used in) provided by operating activities	$	(1,040	)	$	51,457		$	54,858		$	38,113		$	42,750		$	29,210		$	55,001		$	52,930		$	37,423		$	70,597
Capital expenditures	$	45,717		$	43,121		$	73,598		$	44,270		$	40,482		$	25,718		$	17,535		$	36,863		$	18,621		$	11,069

114

Year end December, 31	2008(e)			2007		2006 (e) (h)			2005 (e)			2004 (e)		2003		2002 (b) (f)			2001			2000			1999 (e)
Acquisitions and related costs	$	—		$	—	$	78,434		$	28,948		$	—	$	—	$	62,046		$	—		$	—		$	—
Proceeds from asset sales and other	$	117		$	8,213	$	—		$	212		$	16,623	$	897	$	3,523		$	(1,563	)	$	(63	)	$	94
Dividends received from equity investments	$	—		$	—	$	—		$	—		$	980	$	4,900	$	4,659		$	4,918		$	2,940		$	517
Free cash flow (d)	$	(46,640	)	$	16,549	$	(97,174	)	$	(34,893	)	$	19,871	$	9,289	$	(16,398	)	$	19,422		$	21,679		$	60,139
Shares repurchased	$	—		$	—	$	—		$	—		$	—	$	38,918	$	26,837		$	1,229		$	4,053		$	42,828
Dividends paid	$	1,466		$	1,446	$	1,417		$	5,536		$	5,481	$	5,506	$	4,574		$	4,588		$	4,569		$	4,821

(a)	Defined as net accounts receivable plus net inventory less accounts payable.
(b)	Effective January 1, 2002, we adopted SFAS 142, “Goodwill and Other Intangible Assets.”
(c)	We believe that EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP financial measure, is a useful metric for evaluating our financial performance, as it is a measure that we use internally to assess performance.
(d)	We believe that Free Cash Flow (net cash (used in) provided by operating activities, less capital expenditures and acquisition & related costs, plus proceeds from asset sales and other, and dividends received from equity investments), is a useful metric for evaluating our financial performance, as it is the measure that we use internally to assess performance.
(e)	Includes special charges of $45,498 and $18,492 in 2008 and 2006, respectively and is disclosed in note 9 to the Consolidated Financial Statements. We incurred $27,236 in 2005 for our capacity realignment and closure of our City of Industry, California facility, the North American salaried workforce reduction program and the Syracuse China asset impairment. We incurred $14,519 in 2004 for our capacity realignment and closure of our City of Industry, California facility. We incurred $991 in 1999 for the closure of our Canadian facility.
(f)	2002, includes $13,634 of expenses related to an abandoned acquisition.
(g)	The 2006 calculations include Crisa pro forma net sales for 2006.
(h)	Interest expense includes a special charge of $4,906 in 2006 as disclosed in note 9 to the Consolidated Financial Statements.

115

EX-21

EXHIBIT 21

SUBSIDIARIES OF REGISTRANT

Syracuse China Company – Incorporated in Delaware
World Tableware Inc. – Incorporated in Delaware
LGA4 Corp. – Incorporated in Delaware
LGA3 Corp. – Incorporated in Delaware
The Drummond Glass Company – Incorporated in Delaware
Libbey Canada Inc. – Incorporated in Ontario, Canada
Libbey Glass Inc. – Incorporated in Delaware
LGC Corp. – Incorporated in Delaware
Traex Company – Incorporated in Delaware
Libbey.com LLC – Formed in Delaware
LGFS Inc. – Incorporated in Delaware
LGAC LLC – Formed in Delaware
Libbey Europe B.V. – Incorporated in the Netherlands
B.V. Koninklijke Nederlandsche Glasfabriek Leerdam – Incorporated in the Netherlands
Libbey Asia Limited – Formed in Hong Kong
Libbey Glassware (China) Co., Ltd. – Formed in China
Crisal – Cristalaria Automatica, S.A. – Formed in Portugal
Libbey International C.V. – Incorporated in the Netherlands
Libbey Europe Finance Company B.V. – Incorporated in the Netherlands
Libbey Mexico Holdings B.V. – Incorporated in the Netherlands
Crisa Libbey Mexico S. de R.L. de C.V. – Incorporated in Mexico
Crisa Libbey Holdings S. de R.L. de C.V. – Incorporated in Mexico
Crisa Libbey Commercial S. de R.L. de C.V. – Incorporated in Mexico
Crisa Libbey S.A. de C.V. – Incorporated in Mexico
Crisa Industrial LLC – Incorporated in Delaware
Libbey Trading (Beijing) Co. Ltd. – Formed in China

116

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Annual Report (Form 10-K) of Libbey Inc., of our reports dated March 16, 2009, with respect to the consolidated financial statements and schedule of Libbey Inc. and the effectiveness of internal control over financial reporting of Libbey Inc. included in the 2008 Annual Report to Shareholders of Libbey Inc.

We consent to the incorporation by reference in the following Registration Statements:

Form S-3	No. 333-28735	Registration and Related Prospectus for 2,000,000 shares of common stock
	No. 333-147754	Registration and Related Prospectus for 485,309 shares of common stock
	No. 333-151657	Registration and Related Prospectus for various classes of shares in the amount of $550,000,000
Form S-8	No. 33-64726	Libbey Inc. Retirement Savings Plan and the Libbey Inc. Supplemental Retirement Plan
	No. 33-80448	Libbey Inc. Stock Option Plan for Key Employees
	No. 33-98234	Libbey Inc. Amended and Restated Stock Option Plan for Key Employees
	No. 333-49082	The 1999 Equity Participation Plan of Libbey Inc.
	No. 333-88752	Libbey Inc. 2002 Employee Stock Purchase Plan
	No. 333-119413	Amended and Restated 1999 Equity Participation Plan of Libbey Inc.
	No. 333-139089	Libbey Inc. 2006 Omnibus Incentive Plan

/s/ ERNST & YOUNG LLP

Toledo, Ohio
March 16, 2009

117

EX-24

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director or officer, or both, of LIBBEY INC., a Delaware corporation (the “Company”), hereby does constitute and appoint JOHN F. MEIER, RICHARD I. REYNOLDS, SUSAN ALLENE KOVACH and GREGORY T. GESWEIN, with full power to each of them to act alone, as the true and lawful attorneys and agents of the undersigned, with full power of substitution and resubstitution to each of said attorneys, to execute, file or deliver any and all instruments and to do any and all acts and things which said attorneys and agents, or any of them, deem advisable to enable the Company to comply with the Securities Exchange Act of 1934, as amended, and any requirements of the Securities and Exchange Commission in respect thereto, relating to annual reports on Form 10-K, including specifically, but without limitation of the general authority hereby granted, the power and authority to sign his or her name in the name and on behalf of the Company or as a director or officer, or both, of the Company, as indicated below opposite his or her signature to annual reports on Form 10-K for the year ending December 31, 2008, or any amendment or papers supplemental thereto; and each of the undersigned hereby does fully ratify and confirm all that said attorneys and agents, or any of them, or the substitute of any of them, shall do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, each of the undersigned has subscribed these presents as of this 13^th day of March, 2009.

/s/ John F. Meier	Director, Chairman of the Board and
John F. Meier	Chief Executive Officer
/s/ Richard I. Reynolds	Director, Executive Vice President and
Richard I. Reynolds	Chief Operating Officer
/s/ Gregory T. Geswein	Vice President, Chief Financial Officer
Gregory T. Geswein
/s/ Carlos V. Duno	Director
Carlos V. Duno
/s/ William A. Foley	Director
William A. Foley
/s/ Peter C. McC. Howell	Director
Peter C. McC. Howell
/s/ Deborah G. Miller	Director
Deborah G. Miller
/s/ Carol B. Moerdyk	Director
Carol B. Moerdyk
/s/ Jean-René Gougelet	Director
Jean-René Gougelet
/s/ Terence P. Stewart	Director
Terence P. Stewart
/s/ John C. Orr	Director
John C. Orr

118

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John F. Meier, certify that:

1. I have reviewed this annual report on Form 10-K of Libbey Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designated under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By  /s/  John F. Meier

John F. Meier,

Chief Executive Officer

Date March 16, 2009

C-1

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Gregory T. Geswein, certify that:

1. I have reviewed this annual report on Form 10-K of Libbey Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designated under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By  /s/  Gregory T. Geswein

Gregory T. Geswein,

Chief Financial Officer

Date March 16, 2009

C-2

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Libbey Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Annual Report on Form 10-K of Libbey for the year ended December 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Libbey.

/s/  John F. Meier

John F. Meier

Chief Executive Officer

Dated: March 16, 2009

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EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Libbey Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Annual Report on Form 10-K of Libbey for the year ended December 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Libbey.

/s/  Gregory T. Geswein

Gregory T. Geswein

Chief Financial Officer

Dated: March 16, 2009

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