S-4

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As filed with the Securities and Exchange Commission on February 14, 2003

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

OWENS-ILLINOIS GROUP, INC.
OWENS-BROCKWAY GLASS CONTAINER INC.

(Exact Name of Registrants as Specified in Their Charters)
Subsidiary Guarantors Listed on "Table of Guarantors" on Following Page.

OWENS-BROCKWAY GLASS CONTAINER INC.			OWENS-ILLINOIS GROUP, INC.
Delaware	3221	22-2784144	Delaware	6719	34-1559348
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)	(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

One SeaGate
Toledo, Ohio 43666
(419) 247-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
Thomas L. Young, Esq.
Executive Vice President and General Counsel
Owens-Brockway Glass Container Inc.
One SeaGate
Toledo, Ohio 43666
(419) 247-5000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)

Copies to:
Tracy K. Edmonson, Esq.
Latham & Watkins LLP
505 Montgomery Street, Suite 1900
San Francisco, California 94111
(415) 391-0600

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

        If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration number for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier, effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Offering Price per Note(1)	Proposed Aggregate Offering Price(1)	Amount of Registration Fee
83/4% Senior Secured Notes due 2012	$625,000,000	100%	$625,000,000	$57,500
Guarantees of the 83/4% Senior Secured Notes due 2012(2)	—(2)	—(2)	—(2)	—(2)

(1)

Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(f).

(2)

No separate consideration will be received with respect to these guarantees and, therefore, no registration fee is attributable to them.

The Registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until Registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this registration statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.

TABLE OF GUARANTORS

Name	State of Jurisdiction of Organization	I.R.S. Employer Identification Number	PSICC Number
ACI America Holdings Inc.	Delaware	95-3827440	6719
Brockway Realty Corporation	Pennsylvania	25-1422361	6531
Brockway Research, Inc.	Delaware	22-2057496	3999
Continental PET Technologies, Inc.	Delaware	06-1088896	3089
Martell Medical Products, Incorporated	California	33-0073253	3999
NHW Auburn, LLC	New York	16-1503116	4225
OB Cal South Inc.	Delaware	31-1500116	6719
OI AID STS Inc.	Delaware	22-2784146	6719
OI Auburn Inc.	Delaware	34-1836936	4923
OI Australia Inc.	Delaware	34-1864776	6719
OI Brazil Closure Inc.	Delaware	34-1864772	6719
OI California Containers Inc.	Delaware	31-1500115	6719
OI Castalia STS Inc.	Delaware	22-2784161	7999
OI Consol STS Inc.	Delaware	22-2784152	6719
OI Ecuador STS Inc.	Delaware	22-2784138	6719
OI Europe & Asia Inc.	Delaware	34-1818324	6719
OI General Finance Inc.	Delaware	34-1736802	6719
OI General FTS Inc.	Delaware	22-2784178	6719
O-I Health Care Holding Corp.	Delaware	22-2784204	6719
O-I Holding Company, Inc.	Ohio	34-1473902	6719
OI Hungary Inc.	Delaware	34-1816803	6719
OI International Holdings Inc.	Delaware	34-1882569	6719
OI Levis Park STS Inc.	Delaware	22-2784158	6519
OI Medical Inc.	Delaware	51-0350206	6719
OI Peru STS Inc.	Delaware	34-1730214	6719
OI Plastic Products FTS Inc.	Delaware	34-1559354	6719
OI Poland Inc.	Delaware	34-1748755	6719
OI Puerto Rico STS Inc.	Delaware	22-2784132	6719
OI Regioplast STS Inc.	Delaware	34-1743397	6719
OI Venezuela Plastic Products Inc.	Delaware	34-1880159	6719
OIB Produvisa Inc.	Delaware	34-1576858	6719
Overseas Finance Company	Delaware	34-1649746	6719
Owens-Brockway Glass Container Trading Company	Delaware	34-1766218	6719
Owens-Brockway Packaging, Inc.	Delaware	34-1559346	6719
Owens-Brockway Plastic Products Inc.	Delaware	95-2097550	3089
Owens-Illinois Closure Inc.	Delaware	22-2784127	3299
Owens-Illinois General Inc.	Delaware	22-2784167	6719
Owens-Illinois Prescription Products Inc.	Delaware	22-2784124	3999
Owens-Illinois Specialty Products Puerto Rico, Inc.	New Jersey	66-0414062	3089
Product Design & Engineering, Inc.	Minnesota	41-0751022	6719
SeaGate, Inc.	Ohio	31-1300476	7389
SeaGate II, Inc.	Ohio	31-1686352	7389
SeaGate III, Inc.	Ohio	31-1686355	7389
Specialty Packaging Licensing Company	Delaware	62-1256003	6719
Universal Materials, Inc.	Ohio	34-1349747	6719

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2003

PROSPECTUS

OWENS-BROCKWAY GLASS CONTAINER INC.

OFFER TO EXCHANGE

$625,000,000 aggregate principal amount of its
8³/4% Senior Secured Notes due 2012
which have been registered under the Securities Act,
for any and all of its outstanding 8³/4% Senior Secured Notes due 2012

•

The exchange offer expires at 5:00 p.m., New York City time, on March     , 2003, unless extended.

•

We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of a new series of notes which are registered under the Securities Act.

•

The exchange offer is not subject to any conditions other than that it not violate applicable law or any applicable interpretation of the staff of the SEC.

•

You may withdraw tenders of outstanding notes at any time before the exchange offer expires.

•

The exchange of notes will not be a taxable event for U.S. federal income tax purposes.

•

We will not receive any proceeds from the exchange offer.

•

The terms of the new series of notes are substantially identical to the outstanding notes, except for transfer restrictions and registration rights relating to the outstanding notes.

•

The notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis by our indirect parent, Owens-Illinois Group, Inc., and by certain domestic subsidiaries of Owens-Illinois Group, Inc. so long as they continue to guarantee the secured credit agreement. If we cannot make payments on the notes when they are due, the guarantors must make them instead. Under certain circumstances the guarantees may be released without action by, or consent of, the holders of the notes.

•

The notes and guarantees are secured, subject to the terms of the collateral documents under the secured credit agreement, on a pari passu basis with obligations under the secured credit agreement and our outstanding $1.0 billion of 8⁷/8% Senior Secured Notes due 2009 by: (1) a security interest in substantially all the assets (other than intercompany debt and securities) of Owens-Illinois Group, Inc. and of substantially all the domestic subsidiaries of Owens-Illinois Group, Inc.; and (2) a pledge by Owens-Illinois Group, Inc. of the stock of, and intercompany debt owing to Owens-Illinois Group, Inc. by, all its direct subsidiaries (other than the stock of, and intercompany debt owing to Owens-Illinois Group, Inc. by, OI General FTS Inc.), and a pledge by Owens-Brockway Packaging, Inc. of the stock of, and intercompany debt owing to Owens-Brockway Packaging, Inc. by, Owens-Brockway Glass Container Inc. Certain additional collateral secures the obligations under the secured credit agreement. Under certain circumstances, the collateral securing the notes and guarantees may be released without action by, or consent of, the holders of the notes. The trustee does not control the dispostion or release of the collateral.

•

You may tender outstanding notes only in denominations of $1,000 and multiples of $1,000.

•

Our affiliates may not participate in the exchange offer.

Please refer to "Risk Factors" beginning on page 22 of this prospectus for
a description of the risks you should consider when evaluating this investment.

        We are not making this exchange offer in any state where it is not permitted.

Neither the Securities and Exchange Commission nor any state securities commission has approved of the notes or determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is February     , 2003.

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	22
Forward Looking Statements	34
The Exchange Offer	35
Use Of Proceeds	44
Capitalization Of Owens-Illinois Group, Inc.	45
Selected Consolidated Financial Data Of Owens-Illinois Group, Inc.	46
Management's Discussion And Analysis Of Financial Condition And Results Of Operations Of Owens-Illinois Group, Inc.	50
Business	65
Management	80
Compensation Of Executive Officers And Directors	83
Security Ownership Of Certain Beneficial Owners And Management	88
Certain Relationships And Related Transactions	90
Description Of Certain Indebtedness	91
Description Of Notes	95
Certain U.S. Federal Income Tax Considerations	145
Plan Of Distribution	146
Legal Matters	147
Experts	147
Where You Can Find More Information	147
Index to Financial Statements	F-1

        We have not authorized any dealer, salesperson or other person to give any information or to make any representations to you other than the information contained in this prospectus. You must not rely on any information or representations not contained in this prospectus as if we had authorized it. This prospectus does not offer to sell or solicit an offer to buy any securities other than the registered notes to which it relates, nor does it offer to buy any of these notes in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.

        The information contained in this prospectus is current only as of the date on the cover page of this prospectus, and may change after that date.

i

MARKET, RANKING AND OTHER DATA

        The data included in this prospectus regarding markets and ranking, including the size of certain markets and our position, the position of Owens-Illinois Group, Inc. and the position of our competitors and competitors of Owens-Illinois Group, Inc. within these markets, are based on independent industry publications, reports of government agencies or other published industry sources and our estimates and those of Owens-Illinois Group, Inc. based on each of our management's knowledge and experience in the markets in which we and Owens-Illinois Group, Inc. operate. Our estimates and those of Owens-Illinois Group, Inc. have been based on information obtained from customers, suppliers, trade and business organizations and other contacts in the markets in which we and Owens-Illinois Group, Inc. operate. We and Owens-Illinois Group, Inc. believe these estimates to be accurate as of the date of this prospectus. However, this information may prove to be inaccurate because of the method by which we or Owens-Illinois Group, Inc. obtained some of the data for these estimates or because this information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in a survey of market size.

ii

PROSPECTUS SUMMARY

This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all the information that may be important to you. For a more complete understanding of this offering, we encourage you to read this entire prospectus and the documents to which we refer you. You should read the following summary together with the more detailed information and consolidated financial statements and the notes to those statements included elsewhere in this prospectus. Unless otherwise specified or the context requires otherwise, reference in this prospectus to:

•

"Company" or "we," "us" or "our" refers to Owens-Brockway Glass Container Inc., the issuer of the notes, and its direct and indirect subsidiaries on a consolidated basis; and

•

"OI Group" refers to Owens-Illinois Group, Inc., the indirect parent of Owens-Brockway Glass Container Inc., and its direct and indirect subsidiaries on a consolidated basis, including Owens-Brockway Glass Container Inc.

We will refer to the offerings of the private notes as the "private offerings." Unless indicated otherwise, the term "notes" refers to both the private notes and the exchange notes.

Investors should carefully consider the information set forth under "Risk Factors." In addition, some statements include forward-looking information which involves risks and uncertainties.

Owens-Illinois Group, Inc.

        OI Group is one of the world's leading manufacturers of packaging products. OI Group is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. In addition, OI Group is a leading manufacturer in North America of plastic containers, plastic closures and plastic prescription containers. OI Group also has plastics packaging operations in South America, Europe, Australia and New Zealand. Consistent with its strategy to continue to strengthen its existing packaging businesses, OI Group has acquired 18 glass container businesses in 18 countries since 1991, including businesses in South America, Central and Eastern Europe and the Asia Pacific region, and six plastics packaging businesses with operations in 11 countries. OI Group had net sales of approximately $5.4 billion and $4.3 billion, Adjusted EBITDA (as defined on page 21) of approximately $1.3 billion and $1.0 billion and net earnings (loss) of approximately $357 million and $(201.7) million, for the year ended December 31, 2001 and for the nine months ended September 30, 2002, respectively, and consolidated total assets of approximately $9.8 billion at September 30, 2002.

        OI Group believes it is a technological leader in the worldwide glass container and plastics packaging segments of the rigid packaging market. During the five years ended December 31, 2001, OI Group invested more than $2.3 billion in capital expenditures (excluding acquisitions) and more than $342 million in research, development and engineering to, among other things, improve labor and machine productivity, increase capacity in growing markets and commercialize technology into new products.

Owens-Brockway Glass Container Inc.

        We are an indirect, wholly-owned subsidiary of OI Group and a leading manufacturer of glass containers throughout the world. Approximately one of every two glass containers made worldwide is made by us, our affiliates or our licensees. Worldwide glass container sales represented 66% and 68% of OI Group's consolidated net sales for the year ended December 31, 2001 and for the nine months ended September 30, 2002. For the nine months ended September 30, 2002, we manufactured approximately 40% of all glass containers sold by domestic producers in the U.S., making us the leading manufacturer of glass containers in the U.S. We are the leading glass container manufacturer in 17 of the 19 countries where we compete in the glass container segment of the rigid packaging market

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and the sole manufacturer of glass containers in eight of these countries. We had net sales of approximately $3.7 billion and $3.0 billion and net earnings of approximately $69 million and $151 million for the year ended December 31, 2001 and for the nine months ended September 30, 2002, respectively, and our consolidated total assets were approximately $5.9 billion at September 30, 2002.

        We and OI Group are headquartered at One SeaGate, Toledo, Ohio 43666, and our phone number is (419) 247-5000. We are a Delaware corporation incorporated on March 9, 1987.

Recent Developments

OI Group Results for 2002

Summary

        OI Group's 2002 net sales were $5.640 billion compared with $5.403 billion in 2001, an increase of 4.4%. Consolidated EBIT (as defined on page 21) was $889.2 million for 2002 compared with Adjusted EBIT (as defined on page 21) of $856.6 million for 2001, an increase of 3.8%.

        Interest expense for 2002 was $421.7 million, down $8.3 million from 2001 interest, adjusted to exclude an unusual expense of $4.0 million. This decline was mainly due to lower interest rates on variable rate debt, partially offset by the first quarter 2002 issuance of $1 billion principal amount of 8⁷/8% Senior Secured Notes due 2009 and the fourth quarter 2002 issuances of 8³/4% Senior Secured Notes due 2012 totaling $625 million. Proceeds from the Senior Secured Notes were used to repay lower cost, variable rate debt borrowed under the secured credit agreement.

        OI Group reported a net loss for 2002 of $151.4 million compared with 2001 net earnings of $356.6 million. Earnings before extraordinary items and the cumulative effect of the change in method of accounting for goodwill were $318.2 million in 2002 compared with $360.7 million in 2001. Earnings in 2001, adjusted to exclude both goodwill amortization of $92.3 million and the net gain from unusual items of $161.7 million, were $291.3 million.

        Consolidated debt at December 31, 2002 was $5,346.2 million compared with $5,400.9 million at December 31, 2001, a reduction of $54.7 million.

Business Review

        The Glass Containers segment reported 2002 net sales of $3,875.2 million, up 8.5% from $3,572.3 million a year ago. The segment also reported EBIT of $709.0 million for 2002 compared with Adjusted EBIT of $627.1 million for 2001, an increase of 13.1%. EBIT margins in 2002 improved to 18.3% from 17.6% in 2001.

        North American glass container operations achieved a 16% increase in both sales and EBIT for the full year 2002 compared with 2001, with over half the EBIT increase resulting from the Canadian operations acquired early in the fourth quarter of 2001.

        South American glass container operations reported lower sales and EBIT for the full year 2002 as compared with 2001. The decreases were due to unfavorable currency translation rates compared with 2001 and slightly lower unit sales volumes, primarily caused by political and economic uncertainty in Venezuela. A national strike in Venezuela that began in early December caused energy supply curtailments that forced OI Group to idle its two plants in the country. Sales and EBIT for 2002 were adversely affected by approximately $20 million and $5 million, respectively. In early February, the affiliate began to prepare for resumption of production at one of the facilities based on its expectation that both suppliers and customers were beginning to resume limited operations.

2

        European glass container operations reported improved sales, EBIT, and EBIT margins for the full year 2002 compared with 2001 as a result of higher unit shipments, higher selling prices, improved manufacturing performance, and favorable currency translation rates.

        Asia Pacific glass container operations recorded a 5% increase in both sales and EBIT for the full year 2002 compared with 2001. Higher unit shipments and favorable currency translation rates were partially offset by modestly lower selling prices and higher warehousing and distribution costs.

        For 2002, the Plastics Packaging segment reported net sales of $1,765.2 million compared with net sales of $1,825.7 million in 2001. The sales decline was mainly due to competitive pricing pressures, the absence of sales from several small businesses that were sold during the past twelve months, and the pass-through effects on sales of lower resin prices. Partially offsetting this decline was an increase in unit shipments for most product lines. Plastics Packaging EBIT was $258.2 million in 2002 compared with Adjusted EBIT of $287.2 million in 2001. The EBIT decline was largely due to the competitive pricing pressures mentioned above, and two events which occurred in the third quarter: 1) an unfavorable accounting adjustment at one of our foreign affiliates principally for the write down of inventories to net realizable value, and 2) reduced sales and EBIT within our advanced technology systems business, as a major customer discontinued production in the United States and relocated that production to the Singapore.

Effective Tax Rate

        OI Group's effective tax rate for 2002 was 30.1%. This compares with an effective rate of 30.3% for 2001, adjusted to exclude the effects of goodwill amortization and unusual items.

Asbestos-Related Matters

        OI Inc.'s asbestos-related cash payments for 2002 were $221.1 million, a reduction of $24.8 million, or 10.1%, from 2001. OI Inc. estimates that the number of plaintiffs and claimants involved in asbestos claims pending against OI Inc. at December 31, 2002 was 24,000, down from 27,000 at December 31, 2001. OI Group anticipates that cash flows from operations and other sources will be sufficient provide adequate funds to OI Inc. to meet its asbestos-related obligations in 2003. Also, OI Inc. collected $24.8 million in asbestos-related insurance proceeds during 2002. OI Inc.'s remaining receivable for asbestos-related insurance is approximately $12 million, which it expects to collect over the next two years.

3

OI Group Condensed Consolidated Results of Operations (dollars in millions)

			Year ended December 31,
			2002			2001
Revenues:
	Net sales		$	5,640.4		$	5,402.5
	Royalties and net technical assistance			24.2			24.6
	Equity earnings			27.0			19.4
	Interest			24.1			26.9
	Other(a)			44.4			539.9
				5,760.1			6,013.3
Costs and expenses:
	Manufacturing, shipping, and delivery			4,413.4			4,218.4
	Research and development			41.1			41.2
	Engineering			38.9			31.4
	Selling and administrative(b)			318.6			341.3
	Interest(c)			421.7			434.0
	Other(d)			34.8			279.8
				5,268.5			5,346.1
Earnings before items below				491.6			667.2
Provision for income taxes(e)				147.9			286.4
Minority share owners' interests in earnings of subsidiaries				25.5			20.1
Earnings before extraordinary items and cumulative effect of accounting change				318.2			360.7
Extraordinary charges from early extinguishment of debt, net of applicable income taxes(f)				(9.6	)		(4.1	)
Cumulative effect of accounting change(g)				(460.0	)		—
Net earnings (loss)			$	(151.4	)	$	356.6
Adjusted earnings data(h):
	Adjusted earnings data required by FAS No. 142(h):
		Earnings before extraordinary items and cumulative effect of accounting change	$	318.2		$	453.0
		Net earnings (loss)		(151.4	)		448.9
	Earnings before extraordinary items and cumulative effect of accounting, adjusted to exclude goodwill amortization and unusual items(i)			318.2			291.3

(a)

Amount for 2001 includes gains totaling $470.4 million ($296.4 million after tax) for: (1) $13.1 million ($12.0 after tax) related to the sale of the label business and the sale of a minerals business in Australia, and (2) $457.3 million ($284.4 million after tax) related to the sale of the Harbor Capital Advisors business.

(b)

Amount for 2001 includes charges of $30.9 million ($19.4 million after tax) related to special employee benefit programs.

(c)

Amount for 2001 includes expense of $4.0 million ($2.8 million after tax) related to interest on the resolution of the transfer of pension assets and liabilities for a previous acquisition and divestiture.

(d)

Amount for 2001 includes charges totaling $129.5 million ($106.5 million after tax and minority share owners' interests) for: (1) $79.9 million ($63.9 million after tax and minority share owners' interests) related to restructuring and impairment charges at certain international glass operations,

4

principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (2) $8.5 million ($5.3 million after tax) for certain contingencies; (3) $31.0 million (pretax and after tax) related to the loss on the sale of facilities in India;(4) $7.9 million ($4.9 million after tax) related to restructuring manufacturing capacity in the medical devices business; and (5) $2.2 million ($1.4 million after tax) related to restructuring initiatives at certain Plastics Packaging facilities.

(e)

Amount for 2001 includes a charge of $6.0 million to adjust tax liabilities in Italy as a result of tax legislation.

(f)

The 2002 write-off of unamortized deferred finance fees related to indebtedness repaid prior to its scheduled maturity totaled $15.4 million, less applicable income taxes of $5.8 million.

The 2001 write-off of unamortized deferred finance fees related to indebtedness repaid prior to its scheduled maturity totaled $6.6 million, less applicable income taxes of $2.5 million.

(g)

On January 1, 2002, OI Group adopted Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" ("FAS No. 142"). As required by FAS No. 142, the transitional goodwill impairment loss of $460.0 million is recognized as the cumulative effect of a change in method of accounting.

(h)

Earnings for 2001 have been adjusted to eliminate goodwill amortization of $92.3 million as required by FAS No. 142.

(i)

Earnings before extraordinary items and cumulative effect of accounting change of $360.7 million for 2001 have been adjusted to exclude the aggregate net gain after tax of $161.7 million relating to the unusual items described in notes (a) through (e)above and to exclude goodwill amortization of $92.3 million.

5

OI Group Consolidated Supplemental Financial Data (dollars in millions)

		Year Ended December 31,
		2002			2001
Segment Data
Net sales:
	Glass Containers	$	3,875.2		$	3,572.3
	Plastics Packaging		1,765.2			1,825.7
	Other		—			4.5
Segment and consolidated net sales		$	5,640.4		$	5,402.5
EBIT(a)(b):
	Glass Containers	$	709.0		$	534.5
	Plastics Packaging		258.2			249.5
	Other		—			3.0
Segment EBIT			967.2			787.0
Eliminations and other retained items			(78.0	)		379.6
EBIT before goodwill amortization			889.2			1,166.6
Amortization of goodwill(a)			—			(92.3	)
EBIT		$	889.2		$	1,074.3
Other Data
EBITDA		$	1,346.8		$	1,598.1
Adjusted EBIT(b)			889.2			856.6
Adjusted EBITDA(b)			1,348.8			1,288.1
Amortization:
	Goodwill		—			92.3
	Intangibles and other deferred items		29.4			28.3
	Deferred finance fees		23.1			19.9
	Total amortization		52.5			140.5
Depreciation			428.2			403.2
Additions to property, plant, and equipment			496.0			531.9

	December 31, 2002		December 31, 2001
Total debt	$	5,346.2	$	5,400.9
Share owner's equity		2,022.1		2,322.0

(a)

In accordance with FAS No. 142, goodwill is no longer amortized beginning in 2002. In order to facilitate comparisons, goodwill amortization in 2001 has been reclassified out of the Glass Containers and Plastics Packaging segments and reported separately.

(b)

EBIT for 2001 includes gains totaling $470.4 million for: (1) $13.1 million related to the sale of the label business and the sale of a minerals business in Australia, and (2) $457.3 million related to the sale of the Harbor Capital Advisors business.

EBIT for 2001 also includes charges totaling $160.4 million for: (1) $79.9 million related to restructuring and impairment charges at certain international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (2) $31.0 million related to the loss on the sale of facilities in India; (3) $7.9 million related to restructuring manufacturing capacity in the medical devices business; (4) $2.2 million related to

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restructuring initiatives at certain Plastics Packaging facilities; (5) $30.9 million related to special employee benefit programs; and (6) $8.5 million for certain contingencies.

Such gains (charges) are included as follows in consolidated EBIT and EBITDA for 2001:

Glass Containers	$	(92.6	)
Plastics Packaging		(37.7	)
Other		2.8
Total Product Segments		(127.5	)
Eliminations and other retained items		437.5
Consolidated Totals	$	310.0

The net gain of $310.0 million has been excluded from Adjusted EBIT and Adjusted EBITDA. In order to facilitate comparisons, Adjusted EBIT for 2001 also excludes goodwill amortization.

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Competitive Strengths

Leader in Glass and Plastics Packaging

•

OI Group is one of the world's leading manufacturers of glass and plastics packaging



•

We are a leading glass container manufacturer in 17 of 19 countries where we compete and the sole manufacturer of glass containers in 8 of these countries



•

We, our affiliates or our licensees produce approximately one of every two glass containers made worldwide



•

In plastics, OI Group is a leader in custom blow-molded and injection-molded packaging products



•

OI Group believes its leadership in glass and plastics packaging provides opportunity to attract and retain "blue chip" customers, many of which have a worldwide presence

Technology Leader and Innovator

•

OI Group's research, development and engineering ("RD&E") activities have yielded significant labor and machine productivity gains over time



•

OI Group believes its RD&E expenditures relative to its competitors are among the highest in the worldwide rigid packaging market



•

We believe we are often the glass container supplier of choice for multi-national consumer companies due to our leadership in glass technology and status as low-cost producer



•

In plastics packaging, OI Group is a leader in product development and innovation and believes it is one of the few suppliers with capability to provide the customer with "complete package" consisting of the container and the closure



•

OI Group believes its new product development cycle is one of the shortest in the plastics packaging industry



•

OI Group's plastics packaging innovations include the "child resistant" closure for prescription containers, the plastic Heinz ketchup bottle with oxygen barriers and a multi-layer plastic beer bottle being used by Anheuser-Busch, Coors and Miller Brewing

Low-Cost Producer

•

We believe we are the low-cost producer in the glass container segment of the North American rigid packaging market, as well as the low-cost producer in most of the international glass container segments in which we compete



•

Much of our cost advantage is due to our proprietary equipment and process technology



•

Over the last 10 years, we have more than doubled our overall glass container labor and machine productivity in the United States, measured by output produced per man-hour



•

Glass machine development activities and systematic upgrading of production equipment throughout the 1980's and 1990's have given us low-cost leadership in the glass container segment in most of the countries in which we compete

8

Worldwide Licensee Network

•

We license our proprietary glass container technology to 25 companies in 25 countries



•

In plastics packaging, OI Group has technical assistance agreements with 24 companies in 14 countries



•

The worldwide licensee network provides a stream of revenue to support OI Group's development activities and an opportunity to participate in the rigid packaging market in countries where it does not already have a direct presence



•

OI Group's technical agreements enable it to apply "best practices" developed by its worldwide licensee network

Experienced Management Team

•

OI Group's management team has demonstrated an ability to deploy assets, improve productivity, and rationalize production capacity, while at the same time maintaining its leadership position in glass and plastics packaging



•

OI Group is a direct, wholly-owned subsidiary of Owens-Illinois, Inc. ("OI Inc.")



•

OI Inc.'s and the Company's 18 executive officers average approximately 30 years of experience with OI Inc. and its predecessor

Business Strategy

        OI Group's business strategy is to continue to (1) strengthen its existing packaging businesses and (2) apply its leading edge technology to improve quality, service, profitability and cash flow. In addition, consistent with past practice, OI Group is considering strategic transactions, including acquisitions, that will complement, strengthen and enhance growth in its worldwide glass and plastics packaging operations. OI Group is evaluating a number of these transactions on a preliminary basis but it is not certain that any of these transactions will advance beyond the preliminary stages or be completed.

Continue to Strengthen Existing Packaging Businesses

•

OI Group is strengthening its existing packaging businesses and intends to pursue growth opportunities in these businesses



•

We are targeting stable and growing end-uses in the glass container segment of the North American rigid packaging market, particularly those such as beer, that would benefit from our high productivity machines and strategic plant locations; in the U.S., we manufacture more glass containers for packaging beer than any other company



•

We believe demographic and economic trends in certain developing regions of the world, particularly portions of South America, Eastern and Central Europe and the Asia Pacific region, will lead to an increase in the demand for glass containers in these markets over time



•

OI Group plans to pursue growth opportunities in its plastics packaging segment, both in the U.S. and internationally



•

Growth in plastics packaging will focus on end-uses where customers seek distinctive and functional packaging to differentiate or enhance their products

Continue to Apply Leading Edge Technology to Improve Quality, Service, Profitability and Cash Flow

•

OI Group's strategy includes continued pursuit of labor and machine productivity improvements over time in an effort to improve quality, service, profitability and cash flow

9

•

OI Group intends to develop and employ new technology and improved "best practices" in an effort to continue to lower production costs, while at the same time preserving superior product quality



•

OI Group believes that maintaining its leadership in technology is key to being successful in rigid packaging markets around the world



•

Over the last ten years, we have more than doubled our overall glass container labor and machine productivity in the United States, as measured by output produced per man-hour

10

Organizational Structure

(1)

OI Inc. is a public company listed on the New York Stock Exchange. OI Inc. has $1.7 billion of outstanding public debt securities.

(2)

These subsidiaries (other than OI General FTS Inc.), including six foreign subsidiaries, may borrow under the $2.45 billion revolving loan facility portion of the secured credit agreement. Borrowings by the six foreign subsidiaries under the secured credit agreement are limited to a total of $1.41 billion. Certain foreign subsidiaries guarantee the borrowings by the six foreign subsidiaries under the secured credit agreement. OI General FTS Inc. is jointly and severally liable for the revolving loan facility.

11

The Exchange Offer

The Exchange Offer	We are offering to exchange the exchange notes for the outstanding private notes that are properly tendered and accepted. You may tender outstanding private notes only in denominations of $1,000 and multiples of $1,000. We will issue the exchange notes on or promptly after the exchange offer expires. As of the date of this prospectus, $625,000,000 principal amount of private notes is outstanding.
Expiration Date	The exchange offer will expire at 5:00 p.m., New York City time, on March     , 2003, unless extended, in which case the expiration date will mean the latest date and time to which we extend the exchange offer.
Conditions to the Exchange Offer	The exchange offer is not subject to any condition other than that it not violate applicable law or any applicable interpretation of the staff of the SEC. The exchange offer is not conditioned upon any minimum principal amount of private notes being tendered for exchange.
Procedures for Tendering Private Notes	If you wish to tender your private notes for exchange notes pursuant to the exchange offer you must transmit to U.S. Bank National Association as exchange agent, on or before the expiration date, either:
	•    a computer generated message transmitted through The Depository Trust Company's Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer in which you acknowledge and agree to be bound by the terms of the letter of transmittal; or
	•    a properly completed and duly executed letter of transmittal, which accompanies this prospectus, or a facsimile of the letter of transmittal, together with your private notes and any other required documentation, to the exchange agent at its address listed in this prospectus and on the front cover of the letter of transmittal.
	If you cannot satisfy either of these procedures on a timely basis, then you should comply with the guaranteed delivery procedures described below. By executing the letter of transmittal, you will make the representations to us described under "The Exchange Offer—Procedures for Tendering."
Special Procedures for Beneficial Owners	If you are a beneficial owner whose private notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your private notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must either (1) make appropriate arrangements to register ownership of the private notes in your name or (2) obtain a properly completed bond power from the registered holder before completing and executing the letter of transmittal and delivering your private notes.

12

Guaranteed Delivery Procedures	If you wish to tender your private notes and time will not permit the documents required by the letter of transmittal to reach the exchange agent before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, you must tender your private notes according to the guaranteed delivery procedures described in this prospectus under the heading "The Exchange Offer—Guaranteed Delivery Procedures."
Acceptance of the Private Notes and Delivery of the Exchange Notes	Subject to the satisfaction or waiver of the conditions to the exchange offer, we will accept for exchange any and all private notes which are validly tendered in the exchange offer and not withdrawn before 5:00 p.m., New York City time, on the expiration date.
Withdrawal Rights	You may withdraw the tender of your private notes at any time before 5:00 p.m., New York City time, on the expiration date, by complying with the procedures for withdrawal described in this prospectus under the heading "The Exchange Offer—Withdrawal of Tenders."
Certain U.S. Federal Tax Considerations	The exchange of notes will not be a taxable event for United States federal income tax purposes. For a discussion of certain federal tax consideration relating to the exchange of notes, see "Certain U.S. Federal Income Tax Considerations."
Exchange Agent	U.S. Bank National Association, the trustee under the indenture governing the notes, is serving as the exchange agent.
Consequences of Failure to Exchange	If you do not exchange your private notes for exchange notes, you will continue to be subject to the restrictions on transfer provided in the private notes and in the indenture governing the private notes. In general, the private notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently plan to register the private notes under the Securities Act.
Registration Rights Agreement	You are entitled to exchange your private notes for exchange notes with substantially identical terms. This exchange offer satisfies this right. After the exchange offer is completed, you will no longer be entitled to any exchange or registration rights with respect to your private notes.

        We explain the exchange offer in greater detail beginning on page 35.

13

The Exchange Notes

The summary below describes the principal terms of the exchange notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The "Description of Notes" section of this prospectus contains a more detailed description of the terms and conditions of the exchange notes.

The form and terms of the exchange notes are the same as the form and terms of the private notes, except that the exchange notes will be registered under the Securities Act and, therefore, the exchange notes will not be subject to the transfer restrictions, registration rights and provisions providing for an increase in the interest rate applicable to the private notes. The exchange notes will evidence the same debt as the private notes, and both the private notes and the exchange notes are governed by the same indenture.

Issuer	Owens-Brockway Glass Container Inc., a Delaware corporation.
Securities	$625,000,000 principal amount of 83/4% Senior Secured Notes.
Maturity	November 15, 2012.
Interest	Annual rate: 83/4%. Payment frequency: every six months on May 15 and November 15. First payment: May 15, 2003.
Guarantees	The notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis by our indirect parent, OI Group, and by certain domestic subsidiaries of OI Group so long as they continue to guarantee the secured credit agreement. If we cannot make payments on the notes when they are due, the guarantors must make them instead. As of September 30, 2002, on a pro forma basis after giving effect to the offering of the notes and the application of the estimated net proceeds therefrom, OI Group would have had approximately $5.4 billion of total consolidated indebtedness, which includes approximately $1.9 billion of secured indebtedness under the secured credit agreement. As of and for the nine months ended September 30, 2002, the non-guarantor subsidiaries represented in the aggregate approximately 46% of OI Group's consolidated net sales, 45% of OI Group's consolidated Adjusted EBITDA and 44% of OI Group's consolidated total assets. As of September 30, 2002, the liabilities of the non-guarantor subsidiaries on a consolidated basis were approximately $2.2 billion.
Ranking	The notes are senior obligations of Owens-Brockway Glass Container and rank pari passu in right of payment to all the current and future senior debt of Owens-Brockway Glass Container, including its obligations under the secured credit agreement and its 87/8% Senior Secured Notes due 2009, and rank senior in right of payment to the subordinated obligations of Owens-Brockway Glass Container. The guarantees of the notes rank equal in right of payment to the guarantees of OI Group and the subsidiary guarantors of their existing and future senior obligations, including their obligations under the secured credit agreement and the 87/8% Senior Secured Notes due 2009, and senior in right of payment to all subordinated obligations of those guarantors, which include the guarantees by OI Group and Owens-Brockway Packaging, Inc. ("OI Packaging") of the obligations of OI Group's parent, OI Inc., related to its $1.7 billion of outstanding public debt securities. The notes are effectively subordinated to obligations under the secured credit agreement, under which there would have been outstanding, on a pro forma basis after giving effect to the offering of the notes and the application of the estimated net proceeds therefrom, borrowings of $1.9 billion at September 30, 2002, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement aggregating $106.1 million at September 30, 2002 and obligations related to OI Inc.'s $1.7 billion of outstanding public debt securities, to the extent these obligations are secured by collateral that does not secure the notes. The notes may also be effectively subordinated to certain indebtedness incurred to refinance borrowings under the secured credit agreement to the extent that such indebtedness is secured by collateral that does not secure the notes. See "Risk Factors—Risks Relating to the Notes—Notes Effectively Subordinated to Certain Secured Credit Agreement Obligations and Obligations of OI Inc.—The notes are effectively subordinated to the obligations under the secured credit agreement, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement and obligations related to OI Inc.'s $1.7 billion of outstanding public debt securities to the extent these obligations are secured by collateral that does not secure the notes." In addition, the notes and the guarantees of the notes will be effectively junior to any liabilities, including trade payables, of any non-guarantor subsidiaries.

14

Collateral	The notes and guarantees of the notes are secured, subject to the terms of the collateral documents under the secured credit agreement, on a pari passu basis with obligations under the secured credit agreement and our outstanding $1.0 billion of 87/8% Senior Secured Notes due 2009 by:
	(1)    a security interest in substantially all the assets (other than intercompany debt and securities) of OI Group and of substantially all the domestic subsidiaries of OI Group; and
	(2)    a pledge by OI Group of the stock of, and intercompany debt owing to OI Group by, all its direct subsidiaries (other than the stock of, and intercompany debt owing to OI Group by, OI General FTS Inc.) and a pledge by OI Packaging of the stock of, and intercompany debt owing to OI Packaging by, Owens-Brockway Glass Container.

15

	Certain additional collateral, including the stock of OI General FTS Inc. owned by OI Group and intercompany debt owing to OI Group by OI General FTS Inc., secures the obligations under the secured credit agreement. OI General FTS Inc. and its subsidiaries do not conduct any manufacturing operations and are primarily involved in providing administrative and general corporate services to OI Group and its subsidiaries.
	Except as permitted and contemplated by, and subject to the terms of, the secured credit agreement and the pledge agreement (as amended, modified, replaced or refunded), OI Group will not further pledge the stock of, or intercompany debt owing to OI Group by, OI General FTS Inc. as security or otherwise unless the notes and guarantees are secured on a pari passu basis with the applicable indebtedness by this collateral.
Release of Guarantees and Collateral	Under certain circumstances, the collateral securing the notes may be released without action by, or consent of, the holders of the notes or the trustee under the indenture. In general, the lenders under the secured credit agreement have the power to terminate and release the pledges and the security interests under the secured credit agreement and the notes when the obligations under the secured credit agreement have been paid in full, when OI Inc. and OI Group achieve investment grade debt ratings or upon the approval of the requisite percentage of lenders under the secured credit agreement. In addition, any guaranty of the notes may be released without action by, or consent of, the holders of the notes or the trustee under the indenture if the guarantor is no longer a guarantor of obligations:
	•    under the secured credit agreement;
	•    owing to lenders or their affiliates as lending facilities as permitted by the terms of the secured credit agreement; and
	•    under interest rate and currency agreements with lenders or their affiliates as permitted by the terms of the secured credit agreement.
	Upon release of a guarantor of the notes under its guarantee, the collateral documents provide that the security interest in the assets of that guarantor securing the notes and the guarantees will be released simultaneously. If collateral that secures the notes is later repledged or guarantees which guaranty the notes are reinstated under the secured credit agreement (including any amended and restated secured credit agreement or new credit agreement), such collateral will be pledged, subject to the terms of the collateral documents under the secured credit agreement (including any amended and restated secured credit agreement or new credit agreement), on a pari passu basis with obligations under the secured credit agreement to secure the notes, and such guarantees will be executed in favor of the notes.

16

Optional Redemption	On or after November 15, 2007, we may redeem some or all of the notes at any time at the redemption prices described in the section entitled "Description of Notes—Optional Redemption." Prior to November 15, 2005, we may use the net proceeds of certain equity offerings by OI Inc. to redeem up to 35% of the notes at the price listed in the section entitled "Description of Notes—Optional Redemption."
Change of Control	If we, OI Inc. or OI Group experience specific kinds of changes of control, we must offer to repurchase the notes at 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and liquidated damages, if any, unless we have exercised our right to redeem the notes as described in the section entitled "Description of Notes—Optional Redemption," including our right, prior to November 15, 2007, to redeem all of the outstanding notes in the event of a change of control.
Basic Covenants of the Indenture	The indenture governing the notes contains covenants which, among other things, restrict the ability of OI Group and its restricted subsidiaries to:
	•    borrow money;
	•    pay dividends on, or redeem or repurchase, stock;
	•    make investments;
	•    create liens;
	•    enter into certain transactions with affiliates; and
	•    sell certain assets or merge with or into other companies.
	On and after July 2, 2003, we will be permitted to assign our obligations under the notes and the indenture to OI Inc., and we and each guarantor will thereafter be released from our obligations under the notes, the guarantees thereof and the indenture, provided that (1) OI Inc. assumes all of the obligations under the notes and the indenture and (2) the obligations of each domestic borrower under the secured credit agreement have been or will be concurrently assumed by OI Inc. in accordance with the terms of the secured credit agreement. Under the secured credit agreement, the domestic borrowers may assign or transfer their rights and obligations to OI Inc. and all of OI Inc.'s subsidiaries will be concurrently released from their guarantees upon the consent of the requisite lenders if OI Inc. has achieved and maintains immediately following the assumption (including the assumption of the notes) the investment grade ratings specified under the secured credit agreement and if all obligations of subsidiaries of OI Inc. in respect of the $1.7 billion of outstanding public debt securities of OI Inc., the notes and certain other debt have been released and assumed by OI Inc. For more information, see the section entitled "Description of Notes—Certain Covenants."

17

Use of Proceeds
We will not receive any cash proceeds from the exchange offer.

        You should refer to the section entitled "Risk Factors" for an explanation of the material risks of investing in the notes.

18

SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
OWENS-ILLINOIS GROUP, INC.

        The summary selected consolidated financial data of OI Group presented below relates to each of the five years in the period ended December 31, 2001 and the nine months ended September 30, 2002 and 2001. The financial data for each of the four years in the period ended December 31, 2001 were derived from OI Group's audited consolidated financial statements. The financial data for the year ended December 31, 1997 and for the nine months ended September 30, 2002 and 2001 were derived from unaudited consolidated financial statements. The results for the nine months are not necessarily indicative of the results to be expected for the full year. For more information, see the "Consolidated Financial Statements" included elsewhere in this prospectus.

			Years ended December 31,															Nine months ended September 30,
			2001			2000			1999			1998(a)			1997			2002(b)			2001
			(dollars in millions)
Consolidated operating results:
	Net sales		$	5,402.5		$	5,552.1		$	5,522.9		$	5,306.3		$	4,658.5		$	4,280.3		$	4,056.1
	Other revenue(c)			610.8			262.7			263.8			193.0			169.9			81.6			585.5
				6,013.3			5,814.8			5,786.7			5,499.3			4,828.4			4,361.9			4,641.6
Costs and expenses:
		Manufacturing, shipping and delivery		4,218.4			4,359.1			4,296.4			4,075.6			3,666.4			3,310.6			3,147.9
		Research, engineering, selling, administrative and other(d)		693.7			810.6			566.6			584.7			407.0			327.2			511.6
		Earnings before interest expense and items below		1,101.2			645.1			923.7			839.0			755.0			724.1			982.1
		Interest expense(e)		434.0			486.7			425.9			380.0			302.7			314.0			335.5
		Earnings before items below		667.2			158.4			497.8			459.0			452.3			410.1			646.6
		Provision for income taxes(f)		286.4			64.1			185.5			162.3			148.5			129.5			267.9
		Minority share owners' interests in earnings of subsidiaries		20.1			22.0			13.2			20.2			31.4			15.6			12.8
		Earnings before extraordinary items and cumulative effect of accounting change	$	360.7		$	72.3		$	299.1		$	276.5		$	272.4		$	265.0		$	365.9
Other data:
	Cash provided by operating activities		$	620.3		$	541.7		$	677.3		$	716.9		$	517.2		$	553.3		$	300.4
	Investing activities:
		Additions to property, plant and equipment		(531.9	)		(481.4	)		(650.4	)		(573.5	)		(471.3	)		(343.2	)		(344.1	)
		Other investing activities		420.7			17.3			303.1			(3,659.1	)		(79.7	)		19.2			563.3
	Cash provided by (utilized in) investing activities			(111.2	)		(464.1	)		(347.3	)		(4,232.6	)		(551.0	)		(324.0	)		219.2
	Cash provided by (utilized in) financing activities			(578.9	)		(153.8	)		(327.5	)		3,573.0			110.3			(203.4	)		(546.0	)
	EBIT(g)			1,074.3			612.6			895.2			809.8			731.4			706.3			960.9
	EBITDA(h)			1,598.1			1,152.0			1,431.6			1,266.3			1,070.8			1,047.4			1,347.8
	Adjusted EBIT(i)			856.6			955.8			972.7			947.2			768.5			706.3			679.0
	Adjusted EBITDA(j)			1,288.1			1,400.3			1,411.6			1,327.0			1,068.6			1,047.4			996.7
	Depreciation			403.2			412.6			403.7			358.5			283.5			321.1			299.1
	Amortization of excess cost and intangibles (b)			120.6			126.8			132.7			98.0			55.9			20.0			87.8
	Amortization of deferred finance fees (included in interest expense)			19.9			10.1			8.9			7.4			4.1			16.7			13.4
	Ratio of total debt to Adjusted EBITDA			4.2	x		4.2	x		4.2	x		4.5	x		3.1	x
	Ratio of Adjusted EBITDA to interest expense			3.0	x		2.9	x		3.3	x		3.5	x		3.5	x		3.3	x		3.0	x
	Ratio of earnings to fixed charges(k)			2.5	x		1.3	x		2.1	x		2.1	x		2.4	x		2.3	x		2.9	x
Balance sheet data (at end of period):
	Working capital		$	899		$	881		$	892		$	905		$	660		$	921		$	959
	Excess of purchase cost over net assets acquired, net of accumulated amortization (goodwill)			2,995			3,101			3,294			3,315			1,295			2,636			2,919
	Total assets			9,993			10,080			10,521			10,818			6,576			9,751			9,801
	Total debt			5,401			5,850			5,939			5,917			3,324			5,386			5,313
	Share owner's equity			2,322			2,107			2,327			2,522			1,273			2,005			2,325

(a)

Results of operations and other data since April 1998 include the acquisition of the worldwide glass and plastics packaging businesses of BTR plc and the related financings.

19

(b)

OI Group changed its method of accounting for goodwill and discontinued the amortization of goodwill effective January 1, 2002. Goodwill amortization for the nine months ended September 30, 2001 amounted to $69.2 million.

(c)

Other revenue in 2001 includes: (1) a gain of $457.3 million ($284.4 million after tax) related to the sale of the Harbor Capital Advisors business; and (2) gains totaling $13.1 million ($12.0 million after tax) related to the sale of the label business and the sale of a minerals business in Australia.

Other revenue in 1999 includes gains totaling $40.8 million ($23.6 million after tax and minority share owners' interests) related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia.

Other revenue in 1998 includes: (1) a gain of $18.5 million ($11.4 million after tax) related to the termination of a license agreement, net of charges for related equipment write-offs and capacity adjustments, under which OI Group had produced plastic multipack carriers for beverage cans; and (2) a loss of $5.7 million ($3.5 million after tax) on the sale of a discontinued operation by an equity investee.

Other revenue in 1997 includes a gain of $16.3 million (pretax and after tax) from the sale of the remaining 49% interest in Kimble Glass.

Other revenue for the nine months ended September 30, 2001 includes: (1) a gain of $457.3 million ($284.4 million after tax) related to the sale of the Harbor Capital Advisors business; and (2) gains totaling $13.1 million ($12.0 million after tax) related to the sale of the label business and the sale of a minerals business in Australia.

(d)

Amount for 2001 includes: (1) charges of $82.1 million ($65.3 million after tax and minority share owners' interests) related to restructuring and impairment charges at certain international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (2) a charge of $31.0 million (pretax and after tax) related to the loss on the sale of facilities in India; (3) charges of $30.9 million ($19.4 million after tax) related to special employee benefit programs; (4) a charge of $8.5 million ($5.3 million after tax) for certain contingencies; and (5) a charge of $7.9 million ($4.9 million after tax) related to restructuring manufacturing capacity in the medical devices business.

In 2000, OI Group recorded pretax charges totaling $248.3 million ($171.0 million after tax and minority share owners' interests) for the following: (1) $122.4 million ($77.3 million after tax and minority share owners' interests) related to the consolidation of manufacturing capacity; (2) a net charge of $52.4 million ($32.6 million after tax) related to early retirement incentives and special termination benefits for 350 U.S. salaried employees; (3) $40.0 million (pretax and after tax) related to the impairment of property, plant and equipment at facilities in India; and (4) $33.5 million ($21.1 million after tax and minority share owners' interests) related principally to the write-off of software and related development costs.

Amount for 1999 includes charges totaling $20.8 million ($14.0 million after tax and minority share owners' interests) related principally to restructuring costs and write-offs of certain assets in Europe and South America.

In 1998, OI Group recorded: (1) charges of $72.6 million ($47.4 million after tax and minority share owners' interests) related principally to a plant closing in the U.K. and restructuring costs at certain international affiliates; and (2) a net charge of $0.9 million ($0.6 million after tax) for the settlement of certain environmental litigation and the reduction of previously established reserves for guarantees of certain lease obligations of a previously divested business.

In 1997, OI Group recorded charges of $14.1 million ($8.7 million after tax) principally for guarantees of certain lease obligations of a previously divested business.

Amount for the nine months ended September 30, 2001 includes; (1) charges of $79.9 million ($63.9 million after tax and minority share owners' interests) related to restructuring and impairment charges at certain international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (2) charges of $30.9 million ($19.4 million after tax) related to special employee benefit programs; and (3) a charge of $8.5 million ($5.3 million after tax) for certain contingencies.

(e)

Amount for 2001 includes a net interest charge of $4.0 million ($2.8 million after tax) related to interest on the resolution of the transfer of pension assets and liabilities for a previous acquisition and divestiture.

Assuming $175.0 million of the notes had been issued at a 0.549% premium at the beginning of 2001 and assuming $450.0 million of the notes had been outstanding at the beginning of 2001 and further assuming the 8⁷₈% Senior Secured Notes due 2009 also had been outstanding at the beginning of 2001, interest expense would have been $42.9 million higher for the year ended December 31, 2001 and $22.3 million higher for the nine months ended September 30, 2002. Net earnings would have been $26.6 million lower for the year ended December 31, 2001 and net losses would have been $13.9 million higher for the nine months ended September 30, 2002.

(f)

Amount for 2001 includes a $6.0 million charge to adjust tax liabilities in Italy as a result of recent legislation.

Amount for 2000 includes a fourth quarter benefit of $9.3 million to adjust net income tax liabilities in Italy as a result of recent legislation.

In 1998, OI Group recorded a credit of $15.1 million to adjust net deferred income tax liabilities as a result of a reduction in Italy's statutory income tax rate.

Amount for the nine months ended September 30, 2001 includes a $6.0 million charge to adjust tax liabilities in Italy as a result of recent legislation.

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(g)

EBIT consists of consolidated earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries, extraordinary charges, and cumulative effect of accounting change.

(h)

EBITDA consists of EBIT before depreciation and amortization of excess cost and intangibles. EBITDA is presented because OI Group believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in OI Group's industry. However, other companies in OI Group's industry may calculate EBITDA differently than OI Group does. EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of OI Group's operating performance or any other measures of performance derived in accordance with generally accepted accounting principles. See "Consolidated Financial Statements—Consolidated Cash Flows."

(i)

OI Group evaluates performance and allocates resources based on EBIT excluding unusual items and goodwill amortization ("Adjusted EBIT"). Unusual items consist of the gains, losses and charges discussed in Notes (c) and (d) above. The reconciliation from EBIT to Adjusted EBIT is as follows:

		Years ended December 31,														Nine months ended September 30,
		2001			2000		1999			1998			1997			2002		2001
		(in millions)
EBIT		$	1,074.3		$	612.6	$	895.2		$	809.8		$	731.4		$	706.3	$	960.9
Add (deduct):
	Gain on sale of Harbor Capital Advisors business		(457.3	)															(457.3	)
	Gains on sales of label business and minerals business		(13.1	)															(13.1	)
	Gains on sale of glass plant and mold business							(40.8	)
	Net gain on termination of license agreement										(18.5	)
	Sale of discontinued operations by equity investee										5.7
	Gain on sale of 49% interest in Kimble Glass													(16.3	)
	Restructuring and impairment, principally international glass		82.1																79.9
	Loss on the sale of facilities in India		31.0
	Special employee benefit programs		30.9																30.9
	Charges related to certain contingencies		8.5																8.5
	Restructuring manufacturing capacity in the medical devices business		7.9
	Consolidation of manufacturing capacity					122.4
	Early retirement incentives/special termination benefits					52.4
	Impairment of property, plant and equipment in India					40.0
	Write-off of software and related development costs					33.5
	Restructuring and asset write-offs in Europe/South America							20.8
	U.K. plant closing and international restructuring										72.6
	Settle environmental litigation/reduce reserve for guarantees										0.9
	Charge for guarantees of lease obligations													14.1
	Goodwill amortization		92.3			94.9		97.5			76.7			39.3			—		69.2
Adjusted EBIT		$	856.6		$	955.8	$	972.7		$	947.2		$	768.5		$	706.3	$	679.0

(j)

Adjusted EBITDA represents EBITDA excluding the unusual gains, losses and charges discussed in Notes (c) and (d) and summarized in Note (i) above. Adjusted EBITDA is presented because OI Group believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in OI Group's industry. However, other companies in OI Group's industry may present Adjusted EBITDA differently than OI Group does. Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of OI Group's operating performance or any other measures of performance derived in accordance with generally accepted accounting principles. See "Consolidated Financial Statements—Consolidated Cash Flows."



(k)

For purposes of these computations, earnings consist of earnings before income taxes, minority share owners' interests in earnings of subsidiaries, extraordinary items and cumulative effect of accounting change plus fixed charges. Fixed charges consist primarily of interest on indebtedness, including amortization of deferred finance fees, plus that portion of lease rental expense representative of the interest factor. Pretax earnings and fixed charges also include the proportional share of 50%-owned investees.

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RISK FACTORS

        You should carefully consider the following risks in addition to the other information set forth in this prospectus before making a decision to exchange your private notes for exchange notes in the exchange offer. The risk factors set forth below are generally applicable to the private notes as well as the exchange notes.

Risks Relating to the Notes

Substantial Leverage—Our substantial indebtedness and the substantial indebtedness of OI Group could adversely affect our financial health and prevent us from fulfilling our obligations under the notes.

        We and OI Group have now and, after the exchange offer, will continue to have a significant amount of debt. As of September 30, 2002, on a pro forma basis after giving effect to the offering of the notes and the application of the estimated net proceeds therefrom, we and our consolidated subsidiaries would have had approximately $2.8 billion of total consolidated debt outstanding and OI Group would have had approximately $5.4 billion of total consolidated debt outstanding, which includes approximately $1.9 billion of secured indebtedness under the secured credit agreement and approximately $1.7 billion of outstanding public debt securities of OI Group's parent, OI Inc. OI Group's ratio of earnings to fixed charges was 2.5x and 2.3x for the year ended December 31, 2001 and nine months ended September 30, 2002, respectively.

        This substantial indebtedness could have important consequences to you. For example, it could:

•

make it difficult for us to satisfy our obligations with respect to the notes;

•

increase our vulnerability to general adverse economic and industry conditions;

•

increase our vulnerability to interest rate increases for the portion of the unhedged debt under the secured credit agreement;

•

require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, development efforts and other general corporate purposes;

•

limit our flexibility in planning for, or reacting to, changes in our business and the rigid packaging market;

•

place us at a competitive disadvantage relative to our competitors that have less debt; and

•

limit, along with the financial and other restrictive covenants in the documents governing our indebtedness, among other things, our ability to borrow additional funds.

Ability to Service Debt—To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

        Our ability to make payments on and to refinance our indebtedness, including the notes, and to fund working capital, capital expenditures, acquisitions, development efforts and other general corporate purposes depends on our ability to generate cash in the future. Similarly, the ability of the guarantors of the notes to make payments on and refinance their indebtedness will depend on their ability to generate cash in the future. Neither we nor the guarantors can assure you that any of us will generate sufficient cash flow from operations, or that future borrowings will be available under the secured credit agreement, in an amount sufficient to enable any of us to pay our indebtedness, including the notes, or to fund other liquidity needs. If short term interest rates increase, our debt service cost will increase because some of our debt is subject to short term variable interest rates. OI Group's annual interest expense for 2001, on a pro forma basis assuming $175.0 million of the notes had been issued at a 0.549% premium with interest at 8³/4% at the beginning of 2001 and assuming $450.0 million of the notes had been outstanding at the beginning of 2001 and further assuming the 8⁷/8% Senior Secured Notes due 2009 also had been outstanding at the beginning of 2001, would have

22

been $476.9 million. Based on the amount of variable rate debt outstanding during 2001, after giving pro forma effect to the issuance of the notes and the issuance of the 8⁷/8% Senior Secured Notes due 2009, a 1% increase in variable interest rates for 2001 would have increased OI Group's annual pro forma interest expense by $23.1 million to $500.0 million. The notes are effectively subordinated to obligations under the secured credit agreement, under which there were outstanding, on a pro forma basis after giving effect to the offerings of notes and the application of the estimated net proceeds therefrom, borrowings of $1.9 billion at September 30, 2002, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement aggregating $106.1 million at September 30, 2002 and obligations related to OI Inc.'s $1.7 billion of outstanding public debt securities, to the extent these obligations are secured by collateral that does not secure the notes.

        Since you will not have a claim as a creditor against the subsidiaries that are not guarantors of the notes, the indebtedness and other liabilities of those subsidiaries will be effectively senior to your claims. As of September 30, 2002, the total indebtedness on a consolidated basis (excluding any indebtedness under the secured credit agreement) of the non-guarantor subsidiaries was approximately $1.1 billion, and their total liabilities on a consolidated basis were approximately $2.2 billion.

        We and the guarantors may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. If either we or the guarantors are unable to generate sufficient cash flow and are unable to refinance or extend outstanding borrowings on commercially reasonable terms or at all, we and the guarantors may have to:

•

reduce or delay capital expenditures planned for replacements, improvements and expansions;

•

sell assets;

•

restructure debt; and/or

•

obtain additional debt or equity financing.

        We cannot assure you that we or the guarantors could effect or implement any of these alternatives on satisfactory terms, if at all.

Cash Used to Satisfy Other Obligations—A portion of our cash flow will be used to make payments to OI Inc. to satisfy certain debt, preferred stock and litigation-related obligations, including settlement of asbestos-related claims.

        Although our indirect parent, OI Inc., does not conduct any operations, it has substantial obligations to make payments on its $1.7 billion of outstanding public debt securities, to pay dividends on its outstanding preferred stock, to satisfy claims of persons for exposure to asbestos-containing products and related expenses and to pay other ordinary course obligations. OI Inc. relies primarily on distributions from its subsidiaries, including us, to meet these obligations. OI Inc. makes semi-annual interest payments of $64.8 million on its $1.7 billion of outstanding public debt securities. In addition, OI Inc. pays quarterly dividends of $5.4 million on 9,050,000 shares of its $2.375 convertible preferred stock. OI Inc.'s asbestos-related payments were $245.9 million and $221.1 million for the years ended December 31, 2001 and 2002, respectively. In the first quarter of 2002, OI Inc. established an additional liability of $475 million (in addition to previously recorded charges of $1.775 billion) to cover its estimated indemnity payments and legal fees arising from outstanding asbestos personal injury lawsuits and claims and asbestos personal injury lawsuits and claims filed in the next several years.

        As a result of the magnitude of OI Inc.'s obligations for asbestos-related lawsuits and its dependence on the cash flows of its subsidiaries, we expect that a substantial portion of our cash flow will be used to make payments to OI Inc. to allow it to satisfy these obligations. These payments will reduce the cash flow we could use to make payments on the notes. For additional information regarding OI Inc.'s asbestos-related lawsuits, claims and payments, see the footnote entitled "Contingencies" to Consolidated Financial Statements of OI Group.

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Debt Restrictions—OI Group and its subsidiaries, including us, may not be able to finance future needs or adapt their business plans to changes because of restrictions placed on them by the secured credit agreement, the indenture and the instruments governing other indebtedness.

        The secured credit agreement, the indenture governing the 8⁷/8% Senior Secured Notes due 2009, the indenture governing the notes and certain of the agreements governing other indebtedness contain affirmative and negative covenants that limit the ability of OI Group and its subsidiaries, including us, to take certain actions. For example, the indenture restricts, among other things, the ability of OI Group and its restricted subsidiaries to borrow money, pay dividends on, or redeem or repurchase, stock, make investments, create liens, enter into certain transactions with affiliates and sell certain assets or merge with or into other companies. These restrictions could adversely affect OI Group's and our ability to operate our businesses and may limit OI Group's and our ability to take advantage of potential business opportunities as they arise.

        Failure to comply with these or other covenants and restrictions contained in the secured credit agreement, the indenture governing the 8⁷/8% Senior Secured Notes due 2009, the indenture governing the notes, or agreements governing other indebtedness could result in a default under those agreements, and the debt under those agreements, together with accrued interest, could then be declared immediately due and payable. If a default occurs under the secured credit agreement, the lenders could cause all of the outstanding debt obligations under the secured credit agreement to become due and payable, which would result in a default under the notes and could lead to an acceleration of obligations related to the notes. A default under the secured credit agreement, the indenture governing the 8⁷/8% Senior Secured Notes due 2009, the indenture governing the notes, or agreements governing other indebtedness could also lead to an acceleration of debt under other debt instruments that contain cross acceleration or cross-default provisions. Upon a default or cross-default, the collateral agent, at the direction of the lenders under the secured credit agreement could proceed against the collateral. There may be insufficient collateral to fully repay the indebtedness under the secured credit agreement, the 8⁷/8% Senior Secured Notes due 2009, the notes, and other senior indebtedness from time to time secured by the collateral at the time of any default.

Additional Borrowings Available—Despite current indebtedness levels, OI Group and its subsidiaries may still be able to incur substantially more debt. This could further exacerbate certain risks described above.

        OI Group and its subsidiaries may be able to incur substantial additional debt in the future, including debt secured by the collateral that secures the notes and additional debt under the secured credit agreement. In addition, if OI Group designates some of its restricted subsidiaries under the indenture as unrestricted subsidiaries, those unrestricted subsidiaries would be permitted to borrow beyond the limitations specified in the indenture and engage in other activities in which restricted subsidiaries may not engage. After giving effect to the issuance of the notes and the application of the estimated net proceeds therefrom, at September 30, 2002, the revolving loan facility under the secured credit agreement would have had unused borrowing capacity of $479.1 million. Adding new debt to current debt levels could make it difficult for us to satisfy our obligations with respect to the notes.

Notes Effectively Subordinated to Debt of Non-Guarantor Subsidiaries—The notes are effectively subordinated to all indebtedness of our subsidiaries that are not guarantors of the notes.

        You will not have any claim as a creditor against the subsidiaries that are not guarantors of the notes, and the indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will be effectively senior to your claims. As of and for the nine months ended September 30, 2002, the non-guarantor subsidiaries represented in the aggregate approximately 46% of OI Group's consolidated net sales, 45% of OI Group's consolidated Adjusted EBITDA and 44% of OI Group's consolidated total assets. As of September 30, 2002, the liabilities of the non-guarantor subsidiaries on a consolidated basis were approximately $2.2 billion. The non-guarantor subsidiaries include the foreign borrowers and foreign guarantors under the offshore subfacilities under

24

the secured credit agreement. The notes are effectively subordinated to claims against these foreign subsidiaries under the secured credit agreement. In the event of a bankruptcy, liquidation, reorganization or other winding up of any of the non-guarantor subsidiaries, holders of their indebtedness and their trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us.

        In addition, under the indenture, non-guarantor subsidiaries are permitted to incur substantial amounts of additional debt and OI Group and its restricted subsidiaries are permitted to make an unlimited amount of investments in non-guarantor subsidiaries. Therefore, the notes would be effectively subordinated to this additional indebtedness that may be incurred by the non-guarantor subsidiaries. In addition, if OI Group or its restricted subsidiaries invest additional amounts in non-guarantor subsidiaries, in the event of a bankruptcy, liquidation, reorganization or other winding up of any of the non-guarantor subsidiaries, assets that otherwise could be used to satisfy our obligations under the notes will first be used to satisfy the obligations of the non-guarantor subsidiaries.

Notes Effectively Subordinated to Certain Secured Credit Agreement Obligations and Obligations of OI Inc.—The notes are effectively subordinated to the obligations under the secured credit agreement, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement and obligations related to OI Inc.'s $1.7 billion of outstanding public debt securities to the extent these obligations are secured by collateral that does not secure the notes.

        In addition to the collateral securing the notes and guarantees, the obligations of the domestic borrowers and the domestic guarantors under the secured credit agreement are secured by certain additional collateral described in detail under "Description of Notes—Collateral."

        As a result, to the extent collateral does not secure the notes, the notes are effectively subordinated to the obligations under the secured credit agreement, obligations owing to lenders or their affiliates as lending facilities as permitted by the terms of the secured credit agreement and obligations under interest rate and currency agreements with lenders or their affiliates as permitted by the terms of the secured credit agreement. In the event of a bankruptcy, liquidation, reorganization or other winding up of us or OI Group, those assets that do not secure the notes will not be available to pay our obligations on the notes unless and until payment in full of the obligations under the secured credit agreement. Likewise, if the lenders under the secured credit agreement accelerate the obligations under the secured credit agreement, then those lenders would be entitled to exercise the remedies available to a secured lender under applicable law, and those lenders would have a claim on those assets that do not secure the notes before any holder of the notes. You would participate with respect to those assets ratably with all holders of other unsecured indebtedness that is deemed to be of the same class as the notes, and potentially with other general creditors.

        Similarly, the guarantees of the notes are effectively subordinated to the extent of the collateral that does not secure those guarantees.

        In addition, OI Inc.'s $1.7 billion of outstanding public debt securities are secured by a second priority lien on the capital stock owned by, and intercompany debt owed to, OI Group and OI Packaging. The collateral securing OI Inc.'s $1.7 billion of outstanding public debt securities includes the capital stock of, and intercompany debt owing to OI Group by, OI General FTS Inc., which have not been pledged to secure the notes.

        In the event of a foreclosure on the collateral that secures the obligations under the secured credit agreement, obligations owing to lenders or their affiliates as lending facilities as permitted by the terms of the secured credit agreement, obligations under interest rate and currency agreements with lenders or their affiliates as permitted by the terms of the secured credit agreement, OI Inc.'s obligations under the $1.7 billion of outstanding public debt securities and the notes, there could be proceeds from the disposition of that collateral that would not have to be shared with holders of the notes. As a result, lenders under the secured credit agreement and holders of OI Inc.'s $1.7 billion of outstanding public

25

debt securities may recover a greater percentage of the amounts owed to them than holders of the notes.

Dilution of Collateral—The collateral securing the notes may be diluted under certain circumstances.

        The collateral securing the notes also secures $1.0 billion of 8⁷/8% Senior Secured Notes due 2009 and the $2.45 billion revolving loan facility under the secured credit agreement. The commitment amounts under the secured credit agreement could be increased in the future. In addition, the collateral securing the notes secures obligations owing to lenders or their affiliates as lending facilities as permitted by the terms of the secured credit agreement and obligations under interest rate and currency agreements with lenders or their affiliates as permitted by the terms of the secured credit agreement. This collateral may secure additional senior indebtedness that OI Group or certain of its subsidiaries incurs in the future, subject to restrictions on their ability to incur debt and liens under the secured credit agreement and the indenture. Your rights to the collateral would be diluted by any increase in the indebtedness secured by this collateral.

Disposition and Release of Collateral—The lenders under the secured credit agreement have the right to control the disposition and release of collateral in their sole discretion.

        Upon the earlier of:

•

payment in full of all obligations under the secured credit agreement and the cancellation or termination of the secured credit agreement and related letters of credit and the written election of the applicable pledgor(s) or grantor(s);

•

the first date on which the pledged collateral no longer secures any obligations under the secured credit agreement and upon the written election of the applicable pledgor(s) or grantor(s); and

•

the achievement of "investment grade" debt ratings for OI Inc.'s and OI Group's long term unsecured debt (in the case of Moody's Investors Service, Inc., a rating of Baa3 or higher, and, in the case of Standard & Poor's Ratings Services, a rating of BBB- or higher);

the security interests securing the notes will terminate and the collateral will be released. In addition, lenders under the secured credit agreement have the ability to direct the collateral agent to release all or any portion of the collateral upon the approval of the requisite percentage of lenders under the secured credit agreement. In addition, in the event of an asset sale not prohibited by the secured credit agreement or the collateral documents, the assets subject to such sale will be released as collateral under the secured credit agreement. None of these actions by the lenders, or the applicable pledgor(s) or grantor(s) under the secured credit agreement or related collateral documents, require action by, or the consent of, any holder of the notes or the trustee under the indenture or constitute a default under the indenture. The release of collateral would eliminate the security for the notes and the collateral securing the guarantees thereof, the 8⁷/8% Senior Secured Notes due 2009, the secured credit agreement and any other indebtedness secured thereby.

        Because the lenders under the secured credit agreement control the disposition of the collateral securing the secured credit agreement and the notes, if there were an event of default under the notes, the lenders could decide not to proceed against the collateral, regardless of whether or not there is a default under the secured credit agreement. In such event, the only remedy available to the holders of the notes would be to sue for payment on the notes and the guarantees. By virtue of the direction of the administration of the pledges and security interests and the release of collateral, actions may be taken under the collateral documents that may be adverse to you.

Release of Guarantees—The lenders under the secured credit agreement have the discretion to release the guarantees under the secured credit agreement in a variety of circumstances.

26

        Any guaranty of the notes may be released without action by, or consent of, any holder of the notes or the trustee under the indenture, at the discretion of the then obligor on the notes, if the guarantor is no longer a guarantor of obligations under the secured credit agreement, of obligations owing to lenders or their affiliates as lending facilities as permitted by the terms of the secured credit agreement and of obligations under interest rate and currency agreements with lenders or their affiliates as permitted by the terms of the secured credit agreement. The lenders under the secured credit agreement have the discretion to release the guarantees under the secured credit agreement in a variety of circumstances. In the case of the release of collateral consisting of the stock of a guarantor of the notes, that release would cause the guarantor's guaranty to be released if the release occurs in the context of an asset sale of such guarantor that is not prohibited by the secured credit agreement or the collateral documents. Upon release of a guarantor of the notes under its guarantee, the collateral documents will provide that the security interests in the assets of that guarantor securing the notes and guarantees will be released simultaneously. You will not have a claim as a creditor against any subsidiary that is no longer a guarantor of the notes, and the indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will effectively be senior to your claims.

Further Collateral Pledges Subject to Avoidance—Any future pledge of collateral might be avoidable by a trustee in bankruptcy.

        Any future pledge of collateral in favor of the collateral agent for the benefit of the indenture trustee might be avoidable by the pledgor (as debtor in possession) or by its trustee in bankruptcy if certain events or circumstances exist or occur, including, among others, if the pledgor is insolvent at the time of the pledge, the pledge permits the holders of the notes to receive a greater recovery than if the pledge had not been given and a bankruptcy proceeding in respect of the pledgor is commenced within 90 days following the pledge, or, in certain circumstances, a longer period.

Covenant Relief for Investment Grade Rating—If the notes receive an investment grade rating, we will no longer be subject to most of the covenants in the indenture.

        If at any time the notes receive an "investment grade" rating from Standard & Poor's Ratings Services and Moody's Investors Service, Inc., subject to certain additional conditions, OI Group and its restricted subsidiaries will no longer be subject to most of the covenants set forth in the indenture. In the event of such release, the covenants will not be restored, even if the notes were later rated below investment grade by either or both of these rating agencies. See "Description of Notes—Certain Covenants—Fall-Away Event."

        On and after July 2, 2003, we will be permitted to assign our obligations under the notes and the indenture to OI Inc., and we and each guarantor will thereafter be released from our obligations under the notes, the guarantees thereof and the indenture, provided that (1) OI Inc. assumes all of the obligations under the notes and the indenture and (2) the obligations of each domestic borrower under the secured credit agreement have been or will be concurrently assumed by OI Inc. in accordance with the terms of the secured credit agreement. As a result, holders of the notes could look only to OI Inc. to satisfy the obligations on the notes. See "Description of Notes—Certain Covenants—Merger, Consolidation or Sale of Assets."

Fraudulent Transfer—Federal and state laws permit a court to void the notes or the guarantees under certain circumstances.

        The issuance of the notes and the guarantees may be subject to review under federal or state fraudulent transfer laws. While the relevant laws may vary from state to state, under such laws, the payment of consideration or the issuance of a guarantee will be a fraudulent conveyance if (1) we paid the consideration, or any guarantor issued guarantees, with the intent of hindering, delaying or defrauding creditors, or (2) we or any of the guarantors received less than reasonably equivalent value

27

or fair consideration in return for paying the consideration or issuing their respective guarantees, and, in the case of (2) above only, one of the following is also true:

•

we or any of the guarantors were insolvent, or became insolvent, when we or they paid the consideration;

•

paying the consideration or issuing the guarantees left us or the applicable guarantor with an unreasonably small amount of capital; or

•

we or the applicable guarantor, as the case may be, intended to, or believed that we or it would, be unable to pay debts as they matured.

        If the payment of the consideration or the issuance of any guarantee were a fraudulent conveyance, a court could, among other things, void our obligations regarding the payment of the consideration or void any of the guarantors' obligations under their respective guarantees, as the case may be, and require the repayment of any amounts paid thereunder.

        Generally, an entity will be considered insolvent if:

•

the sum of its debts is greater than the fair value of its property;

•

the present fair value of its assets is less than the amount that it will be required to pay on its existing debts as they become due; or

•

it cannot pay its debts as they become due.

        We believe that immediately after the issuance of the notes and the guarantees, we and each of the guarantors will be solvent, will have sufficient capital to carry on our respective businesses and will be able to pay our respective debts as they mature. However, we cannot be sure as to what standard a court would apply in making these determinations or that a court would reach the same conclusions with regard to these issues.

Change of Control—The secured credit agreement provides that certain change of control events constitute an event of default. In the event of a change of control, we may not be able to satisfy all of our obligations under the secured credit agreement, the notes or other indebtedness.

        If we, OI Inc. or OI Group experiences specific kinds of changes of control, we will be required to offer to repurchase all outstanding notes and all outstanding 8⁷/8% Senior Secured Notes due 2009. However, the secured credit agreement provides that certain change of control events constitute an event of default under the secured credit agreement. An event of default would entitle the lenders thereunder to, among other things, cause all outstanding debt obligations under the secured credit agreement to become due and payable and to proceed against their collateral, which includes collateral securing the notes and the guarantees. We cannot assure you that we would have sufficient assets or be able to obtain sufficient third party financing on favorable terms to satisfy all of our obligations under the secured credit agreement, the notes, the 8⁷/8% Senior Secured Notes due 2009 or other indebtedness.

        Any future credit agreements or other agreements relating to indebtedness to which we become a party may contain restrictions on our ability to offer to repurchase the notes in connection with a change of control. In the event a change of control occurs at a time when we are prohibited from offering to purchase the notes, we could seek consent to offer to purchase the notes or attempt to refinance the borrowings that contain such a prohibition. If we do not obtain the consent or refinance the borrowings, we would remain prohibited from offering to purchase the notes. In such case, our failure to offer to purchase the notes would constitute a default under the indenture, which, in turn, could result in amounts outstanding under any future credit agreement or other agreements relating to indebtedness being declared due and payable. Any such declaration could have adverse consequences to us and the holders of the notes.

28

        The provisions relating to a change of control included in the indenture may increase the difficulty for a potential acquiror to obtain control of us. In addition, some important corporate events, such as leveraged recapitalizations, that would increase the level of our indebtedness, would not constitute a "change of control" under the indenture.

No Prior Market for the Exchange Notes—You cannot be sure that an active trading market will develop for the exchange notes.

        The exchange notes are a new issue of securities for which there is currently no trading market. We do not intend to apply for listing of the exchange notes on any U.S. Exchange. We have been informed by the initial purchasers of the private notes that they intend to make a market in the exchange notes. However, the initial purchasers may cease their market-making at any time. In addition, the liquidity of the trading market in the exchange notes, and the market price quoted for these notes, may be adversely affected by changes in the overall market for high yield securities and by changes in our financial performance or in the prospects for companies in our industry generally. As a result, you cannot be sure that an active trading market will develop for the exchange notes.

Risks Relating to the Business of OI Group

Funded Status of Pension Plans—Recognition of a minimum pension liability may cause a significant reduction in net worth.

        Due to broad declines in the stock market, the fair values of the assets in OI Group's U.S. pension plans have declined during the last several years. Statement of Financial Accounting Standards No. 87, "Accounting for Pensions," requires balance sheet recognition of a minimum liability if the fair value of plan assets is less than the accumulated benefit obligation ("ABO") at the end of the year. The fair values of OI Group's U.S. pension plans exceeded the ABO at December 31, 2002; therefore, no recognition of a minimum liability was required. However, if the fair values of the U.S. plans' assets at December 31, 2003 decrease or if the discount rate used to calculate the ABO decreases, OI Group may be required to write off most of its prepaid pension asset and record a liability equal to the excess of ABO over the fair value of the assets at December 31, 2003. The resulting noncash charge would not reduce reported earnings. It would be recorded directly as a decrease in the Accumulated Other Comprehensive Income component of share owner's equity. While OI Group cannot estimate the minimum liability with any certainty at this time, it believes that the required adjustment would significantly reduce OI Inc.'s net worth. For OI Group's major pension plan in the United Kingdom, the ABO exceeded the plan assets at December 31, 2002. The required adjustment, after tax effect, reduced net worth at December 31, 2002 by $91.5 million. The lenders under the secured credit agreement have recently amended that agreement to provide that any changes in Accumulated Other Comprehensive Income related to minimum pension liabilities will be excluded for purposes of calculating OI Inc.'s net worth under the "Maintenance of Net Worth" covenant in the secured credit agreement. Even if the fair values of the U.S. plans' assets are less than ABO at December 31, 2003, OI Group believes it will not be required to make cash contributions to the U.S. plans for at least several years.

Goodwill—A significant write down of goodwill would have a material adverse effect on our reported results of operations and net worth.

        On January 1, 2002, OI Group adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS No. 142"). OI Group no longer amortizes goodwill, but will review its goodwill balance for impairment at least once a year using the business valuation methods required by FAS No. 142. These methods include the use of a weighted average cost of capital to calculate the present value of the expected future cash flows of OI Group's reporting units. Future

29

changes in the cost of capital, expected cash flows, or other factors may cause OI Group's goodwill to be impaired, resulting in a noncash charge against results of operations to write down goodwill for the amount of impairment. If a significant write down is required, the charge would have a material adverse effect on OI Group's reported results of operations and net worth.

International Operations—OI Group is subject to risks associated with operating in foreign countries.

        OI Group operates manufacturing and other facilities throughout the world. Net sales from international operations totaled approximately $2.3 billion and $1.9 billion, representing approximately 43% and 45% of OI Group's net sales for the year ended December 31, 2001 and for the nine months ended September 30, 2002. As a result of its international operations, OI Group is 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;



•

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;



•

hyperinflation in certain foreign countries; and



•

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

        The unusually severe economic, market and/or currency exchange conditions in South America, Europe and the Asia Pacific region adversely affected operating results in 1999, 2000 and 2001. In addition, OI Group has continued to be negatively affected in 2002 by weakness in certain South American currencies, which reduced U.S. dollar sales and earnings of foreign affiliates in that region. The risks associated with operating in foreign countries may have a material adverse effect on operations. A national strike in Venezuela that began in early December caused energy supply curtailments that forced OI Group's Venezuelan affiliate to idle the two plants in that country. In early February, the affiliate began to prepare for resumption of production at one of the facilities based on its expectation that both suppliers and customers were beginning to resume limited operations.

Competition—We face intense competition from other glass container producers, as well as from makers of alternative forms of packaging. Competitive pressures could adversely affect our financial health.

        We are subject to significant competition from other glass container producers, as well as from makers of alternative forms of packaging, such as aluminum cans and plastic containers. We compete with each of our rigid packaging competitors on the basis of price, quality, service and the marketing attributes of the container. Advantages or disadvantages in any of these competitive factors may be sufficient to cause the customer to consider changing suppliers and/or to use an alternative form of packaging. For example, during 2001, our sales of glass containers for juice and iced tea products in the U.S. declined by approximately $27.0 million due to conversions from glass to plastic containers. Our principal competitors among glass container producers in the U.S. are Saint-Gobain Containers Inc., a wholly-owned subsidiary of Compagnie de Saint-Gobain, and Anchor Glass Container Corporation.

30

        In supplying glass containers outside of the U.S., we compete directly with Compagnie de Saint-Gobain in Italy and Brazil, Rexam plc and Ardagh plc in the U.K., Vetropack in the Czech Republic and Amcor Limited in Australia. In other locations in Europe, we compete indirectly with a variety of glass container firms including Compagnie de Saint-Gobain, BSN Glasspack, Vetropack and Rexam plc.

        In addition to competing with other large, well-established manufacturers in the glass container segment, we compete with manufacturers of other forms of rigid packaging, principally aluminum cans and plastic containers, on the basis of quality, price and service. The principal competitors producing metal containers are Crown Cork & Seal Company, Inc., Rexam plc, Ball Corporation and Silgan Holdings Inc. The principal competitors producing plastic containers are Consolidated Container Holdings, LLC, Graham Packaging Company, Plastipak Packaging, Inc. and Silgan Holdings Inc. We also compete with manufacturers of non-rigid packaging alternatives, including flexible pouches and aseptic cartons, in serving the packaging needs of juice customers.

        Pressures from competitors and producers of alternative forms of packaging have resulted in excess capacity in certain countries in the past and have led to significant pricing pressures in the rigid packaging market.

High Energy Costs—Higher energy costs worldwide and interrupted power supplies may have a material adverse effect on operations.

        Electrical power and natural gas are vital to OI Group's operations and it relies on a continuous power supply to conduct its business. In 2001, higher energy costs worldwide impacted OI Group's operations and earnings at a level that it did not anticipate, resulting in an approximate $50 million increase in energy costs over 2000. In 2002, energy costs were somewhat lower than 2001; however, if energy costs substantially increase in the future, OI Group could experience a significant increase in operating costs, which may have a material adverse effect on future operating income.

        In addition, certain locations in which OI Group has operations have experienced power shortages that resulted in periodic "rolling" blackouts to maintain the stability of the power grid. Certain of OI Group's facilities are susceptible to power interruptions as long as any such energy crisis exists. Frequent power interruptions may have a material adverse effect on operations.

Integration Risks—OI Group may not be able to effectively integrate businesses it acquires.

        Consistent with past practice, OI Group is considering strategic transactions, including acquisitions, that will complement, strengthen and enhance growth in its worldwide glass and plastics packaging operations. OI Group is evaluating a number of these transactions on a preliminary basis but it is not certain that any of these transactions will advance beyond the preliminary stages or be completed. Any recent or future acquisitions are subject to various risks and uncertainties, including:

•

the inability to assimilate effectively the operations, products, technologies and personnel of the acquired companies (some of which are located in diverse geographic regions);



•

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;



•

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 anticipated cost savings and operating synergies.

31

Customer Consolidation—The continuing consolidation of OI Group's customer base may intensify pricing pressures and have a material adverse effect on operations.

        Over the last ten years, many of OI Group's largest customers have acquired companies with similar or complementary product lines. This consolidation has increased the concentration of OI Group's business with its largest customers. In many cases, such consolidation has been accompanied by pressure from customers for lower prices, reflecting the increase in the total volume of product purchased or the elimination of a price differential between the acquiring customer and the company acquired. Increased pricing pressures from OI Group's customers may have a material adverse effect on operations.

Seasonality and Raw Materials—Profitability could be affected by varied seasonal demands and the availability of raw materials.

        Due principally to the seasonal nature of the brewing, iced tea and other beverage industries, in which demand is stronger during the summer months, sales of OI Group's products have varied and are expected to vary by quarter. Shipments in the U.S. and Europe are typically greater in the second and third quarters of the year, while shipments in South America and Asia Pacific are typically greater in the first and fourth quarters of the year. Unseasonably cool weather during peak demand periods can reduce demand for certain beverages packaged in OI Group's containers.

        The raw materials that OI Group uses have historically been available in adequate supply from multiple sources. For certain raw materials, however, there may be temporary shortages due to weather or other factors, including disruptions in supply caused by raw material transportation or production delays. These shortages, as well as material increases in the cost of any of the principal raw materials that OI Group uses, may have a material adverse effect on operations.

Environmental Risks—OI Group is subject to various environmental legal requirements and may be subject to new legal requirements in the future. These requirements may have a material adverse effect on operations.

        OI Group's 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. Such legal requirements frequently change and are different in every jurisdiction. OI Group's operations and properties, both in the U.S. and abroad, must comply with these legal requirements. These requirements may have a material adverse effect on operations.

        OI Group has incurred, and expects to incur, costs for its operations 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 OI Group presently or formerly owned or operated, as well as at other properties for which OI Group may be responsible, including those at which wastes attributable to OI Group were disposed. A significant order or judgment against OI Group, the loss of a significant permit or license or the imposition of a significant fine may have a material adverse effect on operations.

        A number of governmental authorities both in the U.S. and abroad have enacted, or are considering, legal requirements that would mandate certain rates of recycling, the use of recycled materials, and/or limitations on certain kinds of packaging materials such as plastics. In addition, some companies with packaging needs have responded to such developments, and/or to perceived environmental concerns of consumers, by using containers made in whole or in part of recycled

32

materials. Such developments may reduce the demand for some of OI Group's products, and/or increase OI Group's costs, which may have a material adverse effect on operations.

Labor Relations—OI Group is party to collective bargaining agreements with labor unions. Organized strikes or work stoppages by unionized employees may have a material adverse effect on operations.

        OI Group is party to a number of collective bargaining agreements with labor unions, several of which will expire in 2005, and at September 30, 2002, covered approximately 87% of OI Group's union-affiliated employees in the U.S. Upon the expiration of any collective bargaining agreement, OI Group's inability to negotiate acceptable contracts with labor unions could result in strikes by the affected workers and increased operating costs as a result of higher wages or benefits paid to union members. If the unionized workers were to engage in a strike or other work stoppage, OI Group could experience a significant disruption of operations and/or higher ongoing labor costs, which may have a material adverse effect on operations.

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FORWARD LOOKING STATEMENTS

        This prospectus includes forward looking statements. We have based these forward looking statements on our current expectations and projections about future events. These forward looking statements are subject to risks, uncertainties, and assumptions about us and our subsidiaries, and OI Group and its subsidiaries, including, among other things, factors discussed under the heading "Risk Factors" and the following:

•

foreign currency fluctuations relative to the U.S. dollar;



•

changes in capital availability or cost, including interest rate fluctuations;



•

general political, economic and competitive conditions in markets and countries where we have operations, including disruptions in the supply chain, competitive pricing pressures, inflation or deflation, and changes in tax rates and laws;



•

consumer preferences for alternative forms of packaging;



•

fluctuations in raw material and labor costs;



•

availability of raw materials;



•

costs and availability of energy;



•

transportation costs;



•

consolidation among competitors and customers;



•

the ability to integrate operations of acquired businesses;



•

unanticipated expenditures with respect to environmental, safety and health laws;



•

performance by customers of their obligations under purchase agreements; and



•

timing and occurrence of events, including events related to asbestos-related claims against OI Inc., which are beyond our control.

        We caution you that although we believe that the assumptions on which the forward looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward looking statements also could be materially incorrect. In light of these and other uncertainties, you should not regard the inclusion of a forward looking statement in this prospectus as a representation by us or OI Group that our plans and objectives or those of OI Group will be achieved, and you should not place undue reliance on these forward looking statements. We undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward looking events discussed in this prospectus might not occur.

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

        We issued $450.0 million of the private notes on November 13, 2002 and $175.0 million of the private notes on December 18, 2002, in each case to Salomon Smith Barney Inc., Banc of America Securities LLC, Deutsche Bank Securities Inc., Banc One Capital Markets, Inc., Scotia Capital (USA) Inc., Goldman, Sachs & Co., Barclays Capital Inc., BNP Paribas Securities Corp., Credit Lyonnais Securities (USA) Inc., Fleet Securities, Inc., McDonald Investments Inc., SG Cowen Securities Corporation, BNY Capital Markets, Inc. and TD Securities (USA) Inc., the initial purchasers, pursuant to a purchase agreement. The initial purchasers subsequently sold the private notes to "qualified institutional buyers," as defined in Rule 144A under the Securities Act, in reliance on Rule 144A, and outside the United States under Regulation S of the Securities Act. As a condition to each sale of the private notes, we entered into a registration rights agreement with the initial purchasers on November 13, 2002 and December 18, 2002, respectively. Pursuant to each of these registration rights agreements, we agreed that we would:

(1)

file an exchange offer registration statement with the SEC on or prior to March 13, 2003;



(2)

use our commercially reasonable efforts to have the exchange offer registration statement declared effective by the SEC on or prior to June 1, 2003;



(3)

keep the exchange offer open for a period of not less than the minimum period required under applicable law, but in no event for less than 20 business days;



(4)

use our commercially reasonable efforts to consummate the exchange offer within 40 days after the exchange offer registration statement is declared effective.

        Upon the effectiveness of the exchange offer registration statement, we will offer the exchange notes in exchange for the private notes. We filed copies of the registration rights agreements as exhibits to the registration statement.

Resale of the Exchange Notes

        Based upon an interpretation by the staff of the SEC contained in no-action letters issued to third parties, we believe that you may exchange private notes for exchange notes in the ordinary course of business. For further information on the SEC's position, see Exxon Capital Holdings Corporation, available May 13, 1988, Morgan Stanley & Co. Incorporated, available June 5, 1991 and Shearman & Sterling, available July 2, 1993, and other interpretive letters to similar effect. You will be allowed to resell exchange notes to the public without further registration under the Securities Act and without delivering to purchasers of the exchange notes a prospectus that satisfies the requirements of Section 10 of the Securities Act so long as you do not participate, do not intend to participate, and have no arrangement with any person to participate, in a distribution of the exchange notes. However, the foregoing does not apply to you if you are: a broker-dealer who purchased the exchange notes directly from us to resell pursuant to Rule 144A or any other available exemption under the Securities Act; or you are an "affiliate" of ours within the meaning of Rule 405 under the Securities Act.

        In addition, if you are a broker-dealer, or you acquire exchange notes in the exchange offer for the purpose of distributing or participating in the distribution of the exchange notes, you cannot rely on the position of the staff of the SEC contained in the no-action letters mentioned above and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, unless an exemption from registration is otherwise available.

        Each broker-dealer that receives exchange notes for its own account in exchange for private notes, which the broker-dealer acquired as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. The

35

letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. A broker-dealer may use this prospectus, as it may be amended or supplemented from time to time, in connection with resales of exchange notes received in exchange for private notes which the broker- dealer acquired as a result of market-making or other trading activities.

Terms of the Exchange Offer

        Upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal, we will accept any and all private notes validly tendered and not withdrawn before the expiration date. We will issue $1,000 principal amount of exchange notes in exchange for each $1,000 principal amount of outstanding private notes surrendered pursuant to the exchange offer. You may tender private notes only in integral multiples of $1,000.

        The form and terms of the exchange notes are the same as the form and terms of the private notes except that:

•

we will register the exchange notes under the Securities Act and, therefore, the exchange notes will not bear legends restricting their transfer; and



•

holders of the exchange notes will not be entitled to any of the rights of holders of private notes under the registration rights agreements, which rights will terminate upon the completion of the exchange offer.

The exchange notes will evidence the same debt as the private notes and will be issued under the same indenture, so the exchange notes and the private notes will be treated as a single class of debt securities under the indenture.

        As of the date of this prospectus, $625,000,000 in aggregate principal amount of the private notes are outstanding and registered in the name of Cede & Co., as nominee for The Depository Trust Company. Only registered holders of the private notes, or their legal representative or attorney-in-fact, as reflected on the records of the trustee under the indenture, may participate in the exchange offer. We will not set a fixed record date for determining registered holders of the private notes entitled to participate in the exchange offer.

        You do not have any appraisal or dissenters' rights under the indenture in connection with the exchange offer. We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreements and the applicable requirements of the Securities Act, the Exchange Act and the rules and regulations of the SEC.

        We will be deemed to have accepted validly tendered private notes when, as and if we had given oral or written notice of acceptance to the exchange agent. The exchange agent will act as your agent for the purposes of receiving the exchange notes from us.

        If you tender private notes in the exchange offer you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of private notes pursuant to the exchange offer. We will pay all charges and expenses, other than the applicable taxes described below, in connection with the exchange offer.

Expiration Date; Extensions; Amendments

        The term expiration date will mean 5:00 p.m., New York City time on                        , 2003, unless we, in our sole discretion, extend the exchange offer, in which case the term expiration date will mean the latest date and time to which we extend the exchange offer.

36

        To extend the exchange offer, we will:

•

notify the exchange agent of any extension orally or in writing; and



•

mail to each registered holder an announcement that will include disclosure of the approximate number of private notes deposited to date,

each before 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

        We reserve the right, in our reasonable discretion:

•

to delay accepting any private notes:



•

to extend the exchange offer; or



•

if any conditions listed below under "—Conditions" are not satisfied, to terminate the exchange offer by giving oral or written notice of the delay, extension or termination to the exchange agent.

        We will follow any delay in acceptance, extension or termination as promptly as practicable by oral or written notice to the registered holders. If we amend the exchange offer in a manner we determine constitutes a material change, we will promptly disclose the amendment in a prospectus supplement that we will distribute to the registered holders. We will also extend the exchange offer for a period of five to ten business days, depending upon the significance of the amendment and the manner of disclosure, if the exchange offer would otherwise expire during the five to ten business day period.

Interest on the Exchange Notes

        The exchange notes will bear interest at the same rate and on the same terms as the private notes. Consequently, the exchange notes will bear interest at a rate equal to 8³/4% per annum (calculated using a 360-day year). Interest will be payable semi-annually on each May 15 and November 15, commencing May 15, 2003.

        You will receive interest on May 15, 2003 from the date of initial issuance of the exchange notes, plus an amount equal to the accrued interest on the private notes from November 13, 2002 to the date of exchange. We will deem the right to receive any interest accrued on the private notes waived by you if we accept your private notes for exchange.

Procedures for Tendering

        You may tender private notes in the exchange offer only if you are a registered holder of private notes. To tender in the exchange offer, you must:

•

complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal;



•

have the signatures guaranteed if required by the letter of transmittal; and



•

mail or otherwise deliver the letter of transmittal or the facsimile to the exchange agent at the address listed below under "—Exchange Agent" for receipt before the expiration date.

        In addition, either:

•

the exchange agent must receive certificates for the private notes along with the letter of transmittal into its account at the depositary pursuant to the procedure for book-entry transfer described below before the expiration date;

37

•

the exchange agent must receive a timely confirmation of a book-entry transfer of the private notes, if the procedure is available, into its account at the depositary pursuant to the procedure for book-entry transfer described below before the expiration date; or



•

you must comply with the guaranteed delivery procedures described below.

        Your tender, if not withdrawn before the expiration date, will constitute an agreement between you and us in accordance with the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

        The method of delivery of private notes and the letter of transmittal and all other required documents to the exchange agent is at your election and risk. We recommend that instead of delivery by mail, you use an overnight or hand delivery service, properly insured. In all cases, you should allow sufficient time to assure delivery to the exchange agent before the expiration date. You should not send letters of transmittal or private notes to us. You may request your respective brokers, dealers, commercial banks, trust companies or nominees to effect the transactions described above for you.

        If you are a beneficial owner of private notes whose private notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, before completing and executing the letter of transmittal and delivering the private notes you must either:

•

make appropriate arrangements to register ownership of the private notes in your name; or



•

obtain a properly completed bond power from the registered holder.

        The transfer of registered ownership may take considerable time. Unless the private notes are tendered:

(1)

by a registered holder who has not completed the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" on the letter of transmittal; or



(2)

for the account of: a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.; a commercial bank or trust company having an office or correspondent in the United States; or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act that is a member of one of the recognized signature guarantee programs identified in the letter of transmittal,

an eligible guarantor institution must guarantee the signatures on a letter of transmittal or a notice of withdrawal described below under "—Withdrawal of Tenders."

        If the letter of transmittal is signed by a person other than the registered holder, the private notes must be endorsed or accompanied by a properly completed bond power, signed by the registered holder as the registered holder's name appears on the private notes.

        If the letter of transmittal or any private notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, they should so indicate when signing, and unless waived by us, they must submit evidence satisfactory to us of their authority to so act with the letter of transmittal.

        The exchange agent and the depositary have confirmed that any financial institution that is a participant in the depositary's system may utilize the depositary's Automated Tender Offer Program to tender notes.

        We will determine in our sole discretion all questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tendered private notes, which determination will be final and binding. We reserve the absolute right to reject any and all private notes not properly tendered or

38

any private notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular private notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, you must cure any defects or irregularities in connection with tenders of private notes within the time we determine. Although we intend to notify you of defects or irregularities with respect to tenders of private notes, neither we, the exchange agent nor any other person will incur any liability for failure to give you that notification. Unless waived, we will not deem tenders of private notes to have been made until you cure the defects or irregularities.

        While we have no present plan to acquire any private notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any private notes that are not tendered in the exchange offer, we reserve the right in our sole discretion to purchase or make offers for any private notes that remain outstanding after the expiration date. We also reserve the right to terminate the exchange offer, as described below under "—Conditions," and, to the extent permitted by applicable law, purchase private notes in the open market, in privately negotiated transactions or otherwise. The terms of any of those purchases or offers could differ from the terms of the exchange offer.

        If you wish to tender private notes in exchange for exchange notes in the exchange offer, we will require you to represent that:

•

you are not an affiliate of ours;



•

you will acquire any exchange notes in the ordinary course of your business; and



•

at the time of completion of the exchange offer, you have no arrangement with any person to participate in the distribution of the exchange notes.

        In addition, in connection with the resale of exchange notes, any participating broker-dealer who acquired the private notes for its own account as a result of market-making or other trading activities must deliver a prospectus meeting the requirements of the Securities Act. The SEC has taken the position that participating broker-dealers may fulfill their prospectus delivery requirements with respect to the exchange notes, other than a resale of an unsold allotment from the original sale of the notes, with this prospectus.

Return of Notes

        If we do not accept any tendered private notes for any reason described in the terms and conditions of the exchange offer or if you withdraw or submit private notes for a greater principal amount than you desire to exchange, we will return the unaccepted, withdrawn or non-exchanged notes without expense to you as promptly as practicable. In the case of private notes tendered by book-entry transfer into the exchange agent's account at the depositary pursuant to the book-entry transfer procedures described below, we will credit the private notes to an account maintained with the depositary as promptly as practicable.

Book-Entry Transfer

        The exchange agent will make a request to establish an account with respect to the private notes at the depositary for purposes of the exchange offer within two business days after the date of this prospectus, and any financial institution that is a participant in the depositary's systems may make book-entry delivery of private notes by causing the depositary to transfer the private notes into the exchange agent's account at the depositary in accordance with the depositary's procedures for transfer. However, although delivery of private notes may be effected through book-entry transfer at the depositary, you must transmit and the exchange agent must receive, the letter of transmittal or a

39

facsimile of the letter of transmittal, with any required signature guarantees and any other required documents, at the address below under "—Exchange Agent" on or before the expiration date or pursuant to the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

        If you wish to tender your private notes and (1) the notes are not immediately available or (2) you cannot deliver the private notes, the letter of transmittal or any other required documents to the exchange agent before the expiration date, you may effect a tender if:

(1)

the tender is made through an eligible guarantor institution;



(2)

before the expiration date, the exchange agent receives from the eligible guarantor institution a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided by us, that: states your name and address, the certificate number(s) of the private notes and the principal amount of private notes tendered, states that the tender is being made by that notice of guaranteed delivery, and guarantees that, within three New York Stock Exchange trading days after the expiration date, the eligible guarantor institution will deposit with the exchange agent the letter of transmittal, together with the certificate(s) representing the private notes in proper form for transfer or a confirmation of a book-entry transfer, as the case may be, and any other documents required by the letter of transmittal; and



(3)

within five New York Stock Exchange trading days after the expiration date, the exchange agent receives a properly executed letter of transmittal, as well as the certificate(s) representing all tendered private notes in proper form for transfer and all other documents required by the letter of transmittal.

        Upon request, the exchange agent will send to you a notice of guaranteed delivery if you wish to tender your notes according to the guaranteed delivery procedures described above.

Withdrawal of Tenders

        Except as otherwise provided in this prospectus, you may withdraw tenders of private notes at any time before 5:00 p.m. on the expiration date.

        To withdraw a tender of private notes in the exchange offer, the exchange agent must receive a written or facsimile transmission notice of withdrawal at its address listed in this prospectus before the expiration date. Any notice of withdrawal must:

•

specify the name of the person who deposited the private notes to be withdrawn;



•

identify the private notes to be withdrawn, including the certificate number(s) and principal amount of the private notes; and



•

be signed in the same manner as the original signature on the letter of transmittal by which the private notes were tendered, including any required signature guarantees.

        We will determine in our sole discretion all questions as to the validity, form and eligibility of the notices, and our determination will be final and binding on all parties. We will not deem any properly withdrawn private notes to have been validly tendered for purposes of the exchange offer, and we will not issue exchange notes with respect to those private notes, unless you validly retender the withdrawn private notes. You may retender properly withdrawn private notes by following one of the procedures described above under "—Procedures for Tendering" at any time before the expiration date.

40

Conditions

        Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or exchange the exchange notes for, any private notes, and may terminate the exchange offer as provided in this prospectus before the acceptance of the private notes, if, in our reasonable judgment, the exchange offer violates applicable law, rules or regulations or an applicable interpretation of the staff of the SEC.

        If we determine in our reasonable discretion that any of these conditions are not satisfied, we may:

•

refuse to accept any private notes and return all tendered private notes to you;



•

extend the exchange offer and retain all private notes tendered before the exchange offer expires, subject, however, to your rights to withdraw the private notes; or



•

waive the unsatisfied conditions with respect to the exchange offer and accept all properly tendered private notes that have not been withdrawn.

        If the waiver constitutes a material change to the exchange offer, we will promptly disclose the waiver by means of a prospectus supplement that we will distribute to the registered holders of the private notes, and we will extend the exchange offer for a period of five to ten business days, depending upon the significance of the waiver and the manner of disclosure to the registered holders, if the exchange offer would otherwise expire during the five to ten business day period.

Termination of Rights

        All of your rights under the registration rights agreements will terminate upon consummation of the exchange offer except with respect to our continuing obligations:

•

to indemnify you and parties related to you against liabilities, including liabilities under the Securities Act; and



•

to provide, upon your request, the information required by Rule 144A(d)(4) under the Securities Act to permit resales of the notes pursuant to Rule 144A.

Shelf Registration

        If:

(1)

we and the guarantors are not permitted to consummate the exchange offer because the exchange offer is not permitted by applicable law or SEC policy; or



(2)

any holder of transfer restricted securities notifies us prior to the 20th day following consummation of the exchange offer that:



(a)

it is prohibited by law or SEC policy from participating in the exchange offer; or



(b)

that it may not resell the exchange notes acquired by it in the exchange offer to the public without delivering a prospectus and the prospectus contained in the exchange offer registration statement is not appropriate or available for such resales; or



(c)

that it is a broker-dealer and owns private notes acquired directly from us or an affiliate of us,

we and the guarantors will file with the SEC a shelf registration statement to cover resales of the private notes by the holders thereof who satisfy certain conditions relating to the provision of information in connection with the shelf registration statement.

41

        For purposes of the preceding, "transfer restricted securities" means each private note until:

(1)

the date on which such note has been exchanged by a person other than a broker-dealer for an exchange note in the exchange offer;



(2)

following the exchange by a broker-dealer in the exchange offer of a private note for an exchange note, the date on which such exchange note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the exchange offer registration statement;



(3)

the date on which such private note has been effectively registered under the Securities Act and disposed of in accordance with the shelf registration statement; or



(4)

the date on which such private note is distributed to the public pursuant to Rule 144 under the Securities Act.

Liquidated Damages

        If:

(1)

we and the guarantors fail to file any of the registration statements required by the registration rights agreements on or before the date specified for such filing; or



(2)

any of such registration statements is not declared effective by the SEC on or prior to the date specified for such effectiveness; or



(3)

we and the guarantors fail to consummate the exchange offer within 40 days after the exchange offer registration statement is declared effective; or



(4)

the shelf registration statement or the exchange offer registration statement is declared effective but thereafter ceases to be effective or usable in connection with resales or exchanges of transfer restricted securities during the periods specified in the registration rights agreements (each such event referred to in clauses (1) through (4) above, a "registration default");

then we and the guarantors will pay liquidated damages to each holder of outstanding notes ("liquidated damages") during the period of one or more registration defaults, with respect to the first 90-day period immediately following the occurrence of the first registration default in an amount equal to 0.25% per annum (which amount will be increased by an additional 0.25% per annum for each subsequent 90-day period that any liquidated damages continue to accrue; provided that the amounts at which liquidated damages accrue may in no event exceed 1.0% per annum) in respect of the transfer restricted securities held by such holder until the applicable registration statement is filed, the exchange offer registration statement is declared effective and the exchange offer is consummated or the shelf registration statement is declared effective or again becomes effective, as the case may be.

Exchange Agent

        We have appointed U.S. Bank National Association as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or

42

the letter of transmittal and requests for a notice of guaranteed delivery to the exchange agent addressed as follows:

By registered or Certified Mail:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration
By Overnight Delivery:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration
By Hand Delivery:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration
By Facsimile:
(651) 244-0711
Attention: Corporate Trust Administration
Confirm by Telephone:
(651) 244-8677

        Delivery to an address other than the one stated above or transmission via a facsimile number other than the one stated above will not constitute a valid delivery.

Fees and Expenses

        We will bear the expenses of soliciting tenders. We are making the principal solicitation by mail; however, our officers and regular employees may make additional solicitations by facsimile, telephone or in person.

        We have not retained any dealer manager in connection with the exchange offer and will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses.

        We will pay the cash expenses incurred in connection with the exchange offer which we estimate to be approximately $250,000. These expenses include registration fees, fees and expenses of the exchange agent and the trustee, accounting and legal fees and printing costs, among others.

        We will pay all transfer taxes, if any, applicable to the exchange of notes pursuant to the exchange offer. If, however, a transfer tax is imposed for any reason other than the exchange of the private notes pursuant to the exchange offer, then you must pay the amount of the transfer taxes. If you do not submit satisfactory evidence of payment of the taxes or exemption from payment with the letter of transmittal, we will bill the amount of the transfer taxes directly to you.

Consequence of Failures to Exchange

        Participation in the exchange offer is voluntary. We urge you to consult your financial and tax advisors in making your decisions on what action to take. Private notes that are not exchanged for exchange notes pursuant to the exchange offer will remain restricted securities. Accordingly, those private notes may be resold only:

•

to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A;


•

in a transaction meeting the requirements of Rule 144 under the Securities Act;


•

outside the United States to a foreign person in a transaction meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act;


•

in accordance with another exemption from the registration requirements of the Securities Act and based upon an opinion of counsel if we so request;


•

to us; or


•

pursuant to an effective registration statement.

        In each case, the private notes may be resold only in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction.

43

USE OF PROCEEDS

        The exchange offer satisfies an obligation under the registration rights agreements. We will not receive any cash proceeds from the exchange offer.

        The net proceeds from the sale of the private notes, including premium and accrued interest and after deducting estimated discounts, commissions and offering expenses, were approximately $616.0 million. The net proceeds were used to repay the outstanding term loan and permanently reduce a portion of the revolving loan facility under the secured credit agreement, which matures on March 31, 2004. The weighted average interest rate on borrowings under the secured credit agreement at September 30, 2002 was 3.8%.

44

CAPITALIZATION OF OWENS-ILLINOIS GROUP, INC.

        The following table presents, as of September 30, 2002, the (1) actual consolidated capitalization of OI Group and (2) capitalization of OI Group as adjusted to reflect the offerings of the notes and application of the net proceeds therefrom. You should read this table in conjunction with the Consolidated Financial Statements and the notes thereto included elsewhere in this prospectus. For more information, see also the section entitled "Selected Consolidated Financial Data of Owens-Illinois Group, Inc."

				At September 30, 2002
				Actual			As Adjusted
				(in millions)
Current debt:
	Short-term loans			$	42.3		$	42.3
	Long-term debt due within one year				22.6			22.6
			Total current debt	$	64.9		$	64.9
Long-term debt:
	Secured credit agreement:(a)
		Revolving credit facility		$	2,414.9		$	1,863.9
		Term loan			65.0			—
			Total secured credit agreement		2,479.9			1,863.9
87/8% Senior Secured Notes due 2009					1,000.0			1,000.0
83/4% Senior Secured Notes due 2012(a)					—			625.0
Payable to OI Inc.					1,700.0			1,700.0
Other					163.8			163.8
			Total long-term debt		5,343.7			5,352.7
Share owner's equity:
	Common stock, par value $.01 per share, 1,000 shares authorized, 100 shares issued and outstanding				—			—
	Capital in excess of par value				1,632.0			1,632.0
	Retained earnings(b)				961.6			958.8
	Accumulated other comprehensive income (loss)				(588.8	)		(588.8	)
			Total share owner's equity		2,004.8			2,002.0
Total capitalization				$	7,348.5		$	7,354.7

(a)

In November 2002, the Company issued $450 million of its 8³/4% Senior Secured Notes due 2012, the net proceeds of which were used to repay the remaining $65 million of the outstanding term loan under the secured credit agreement and to permanently reduce the revolving credit facility under the secured credit agreement by $376 million. In December 2002, the Company issued $175 million of its 8³/4% Senior Secured Notes due 2012, the net proceeds of which were used to permanently reduce the revolving credit facility under the secured credit agreement. At September 30, 2002, OI Group had unused borrowing capacity of $479.1 million available under the secured credit agreement, after giving effect to the issuance of $625 million of the notes.

(b)

Reflects the write-off of unamortized finance fees of $4.4 million less tax benefits of $1.6 million.

45

SELECTED CONSOLIDATED FINANCIAL DATA OF OWENS-ILLINOIS GROUP, INC.

        The selected consolidated financial data for OI Group presented below relates to each of the five years in the period ended December 31, 2001 and the nine months ended September 30, 2002 and 2001. The financial data for each of the four years in the period ended December 31, 2001 were derived from OI Group's audited consolidated financial statements. The financial data for the year ended December 31, 1997 and for the nine months ended September 30, 2002 and 2001 were derived from unaudited consolidated financial statements. The results for the nine months are not necessarily indicative of the results to be expected for the full year. For more information, see the "Consolidated Financial Statements" included elsewhere in this prospectus.

			Years ended December 31,														Nine months ended September 30,
			2001			2000		1999			1998(a)			1997			2002(b)			2001
								(dollars in millions)
Consolidated operating results:
	Net sales		$	5,402.5		$	5,552.1	$	5,522.9		$	5,306.3		$	4,658.5		$	4,280.3		$	4,056.1
	Other revenue(c)			610.8			262.7		263.8			193.0			169.9			81.6			585.5
				6,013.3			5,814.8		5,786.7			5,499.3			4,828.4			4,361.9			4,641.6
	Costs and expenses:
		Manufacturing, shipping and delivery		4,218.4			4,359.1		4,296.4			4,075.6			3,666.4			3,310.6			3,147.9
		Research, engineering, selling, administrative and other(d)		693.7			810.6		566.6			584.7			407.0			327.2			511.6
		Earnings before interest expense and items below		1,101.2			645.1		923.7			839.0			755.0			724.1			982.1
		Interest expense(e)		434.0			486.7		425.9			380.0			302.7			314.0			335.5
		Earnings before items below		667.2			158.4		497.8			459.0			452.3			410.1			646.6
		Provision for income taxes(f)		286.4			64.1		185.5			162.3			148.5			129.5			267.9
		Minority share owners' interests in earnings of subsidiaries		20.1			22.0		13.2			20.2			31.4			15.6			12.8
		Earnings before extraordinary items and cumulative effect of accounting change		360.7			72.3		299.1			276.5			272.4			265.0			365.9
		Extraordinary charges from early extinguishment of debt, net of applicable income taxes		(4.1	)				(0.8	)		(14.1	)		(104.5	)		(6.7	)		(4.1	)
		Cumulative effect of accounting change(b)																(460.0	)
		Net earnings (loss)	$	356.6		$	72.3	$	298.3		$	262.4		$	167.9		$	(201.7	)	$	361.8

46

Other data:
	Cash provided by operating activities			$	620.3		$	541.7		$	677.3		$	716.9		$	517.2		$	553.3		$	300.4
	Investing activities:
		Additions to property, plant, and equipment			(531.9	)		(481.4	)		(650.4	)		(573.5	)		(471.3	)		(343.2	)		(344.1	)
		Other investing activities			420.7			17.3			303.1			(3,659.1	)		(79.7	)		19.2			563.3
			Cash provided by (utilized in) investing activities		(111.2	)		(464.1	)		(347.3	)		(4,232.6	)		(551.0	)		(324.0	)		219.2
	Cash provided by (utilized in) financing activities				(578.9	)		(153.8	)		(327.5	)		3,573.0			110.3			(203.4	)		(546.0	)
	EBIT(g)				1,074.3			612.6			895.2			809.8			731.4			706.3			960.9
	EBITDA(h)				1,598.1			1,152.0			1,431.6			1,266.3			1,070.8			1,047.4			1,347.8
	Adjusted EBIT(i)				856.6			955.8			972.7			947.2			768.5			706.3			679.0
	Adjusted EBITDA(j)				1,288.1			1,400.3			1,411.6			1,327.0			1,068.6			1,047.4			996.7
	Depreciation				403.2			412.6			403.7			358.5			283.5			321.1			299.1
	Amortization of excess cost and intangibles(b)				120.6			126.8			132.7			98.0			55.9			20.0			87.8
	Amortization of deferred finance fees (included in interest expense)				19.9			10.1			8.9			7.4			4.1			16.7			13.4
	Ratio of total debt to Adjusted EBITDA				4.2	x		4.2	x		4.2	x		4.5	x		3.1	x		—			—
	Ratio of Adjusted EBITDA to interest expense				3.0	x		2.9	x		3.3	x		3.5	x		3.5	x		3.3	x		3.0	x
	Ratio of earnings to fixed charges(k)				2.5	x		1.3	x		2.1	x		2.1	x		2.4	x		2.3	x		2.9	x
Balance sheet data (at end of period):
	Working capital			$	899		$	881		$	892		$	905		$	660		$	921		$	959
	Excess of purchase cost over net assets acquired, net of accumulated amortization (goodwill)				2,995			3,101			3,294			3,315			1,295			2,636			2,919
	Total assets				9,993			10,080			10,521			10,818			6,576			9,751			9,801
	Total debt				5,401			5,850			5,939			5,917			3,324			5,386			5,313
	Share owner's equity				2,322			2,107			2,327			2,522			1,273			2,005			2,325

(a)

Results of operations and other data since April 1998 include the acquisition of the worldwide glass and plastics packaging businesses of BTR plc and the related financings.

(b)

OI Group changed its method of accounting for goodwill and discontinued the amortization of goodwill effective January 1, 2002. Goodwill amortization for the nine months ended September 30, 2001 amounted to $69.2 million.

(c)

Other revenue in 2001 includes: (1) a gain of $457.3 million ($284.4 million after tax) related to the sale of the Harbor Capital Advisors business; and (2) gains totaling $13.1 million ($12.0 million after tax) related to the sale of the label business and the sale of a minerals business in Australia.

Other revenue in 1999 includes gains totaling $40.8 million ($23.6 million after tax and minority share owners' interests) related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia.

Other revenue in 1998 includes: (1) a gain of $18.5 million ($11.4 million after tax) related to the termination of a license agreement, net of charges for related equipment write-offs and capacity adjustments, under which OI Group had produced plastic multipack carriers for beverage cans; and (2) a loss of $5.7 million ($3.5 million after tax) on the sale of a discontinued operation by an equity investee.

Other revenue in 1997 includes a gain of $16.3 million (pretax and after tax) from the sale of the remaining 49% interest in Kimble Glass.

Other revenue for the nine months ended September 30, 2001 includes: (1) a gain of $457.3 million ($284.4 million after tax) related to the sale of the Harbor Capital Advisors business; and (2) gains totaling $13.1 million ($12.0 million after tax) related to the sale of the label business and the sale of a minerals business in Australia.

(d)

Amount for 2001 includes: (1) charges of $82.1 million ($65.3 million after tax and minority share owners' interests) related to restructuring and impairment charges at certain international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (2) a charge of $31.0 million (pretax and after tax) related to the loss on the sale of facilities in India; (3) charges of $30.9 million ($19.4 million after tax)

47

related to special employee benefit programs; (4) a charge of $8.5 million ($5.3 million after tax) for certain contingencies; and (5) a charge of $7.9 million ($4.9 million after tax) related to restructuring manufacturing capacity in the medical devices business.

In 2000, OI Group recorded pretax charges totaling $248.3 million ($171.0 million after tax and minority share owners' interests) for the following: (1) $122.4 million ($77.3 million after tax and minority share owners' interests) related to the consolidation of manufacturing capacity; (2) a net charge of $52.4 million ($32.6 million after tax) related to early retirement incentives and special termination benefits for 350 U.S. salaried employees; (3) $40.0 million (pretax and after tax) related to the impairment of property, plant and equipment at facilities in India; and (4) $33.5 million ($21.1 million after tax and minority share owners' interests) related principally to the write-off of software and related development costs.

Amount for 1999 includes charges totaling $20.8 million ($14.0 million after tax and minority share owners' interests) related principally to restructuring costs and write-offs of certain assets in Europe and South America.

In 1998, OI Group recorded: (1) charges of $72.6 million ($47.4 million after tax and minority share owners' interests) related principally to a plant closing in the U.K. and restructuring costs at certain international affiliates; and (2) a net charge of $0.9 million ($0.6 million after tax) for the settlement of certain environmental litigation and the reduction of previously established reserves for guarantees of certain lease obligations of a previously divested business.

In 1997, OI Group recorded charges of $14.1 million ($8.7 million after tax) principally for guarantees of certain lease obligations of a previously divested business.

Amount for the nine months ended September 30, 2001 includes: (1) charges of $79.9 million ($63.9 million after tax and minority share owners' interests) related to restructuring and impairment charges at certain international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (2) charges of $30.9 million ($19.4 million after tax) related to special employee benefit programs; and (3) a charge of $8.5 million ($5.3 million after tax) for certain contingencies.

(e)

Amount for 2001 includes a net interest charge of $4.0 million ($2.8 million after tax) related to interest on the resolution of the transfer of pension assets and liabilities for a previous acquisition and divestiture.

Assuming $175.0 million of the notes had been issued at a 0.549% premium at the beginning of 2001 and assuming $450.0 million of the notes had been outstanding at the beginning of 2001 and further assuming the 8⁷/8% Senior Secured Notes due 2009 also had been outstanding at the beginning of 2001, interest expense would have been $42.9 million higher for the year ended December 31, 2001 and $22.3 million higher for the nine months ended September 30, 2002. Net earnings would have been $26.6 million lower for the year ended December 31, 2001 and net losses would have been $13.9 million higher for the nine months ended September 30, 2002.

(f)

Amount for 2001 includes a $6.0 million charge to adjust tax liabilities in Italy as a result of recent legislation.

Amount for 2000 includes a fourth quarter benefit of $9.3 million to adjust net income tax liabilities in Italy as a result of recent legislation.

In 1998, OI Group recorded a credit of $15.1 million to adjust net deferred income tax liabilities as a result of a reduction in Italy's statutory income tax rate.

Amount for the nine months ended September 30, 2001 includes a $6.0 million charge to adjust tax liabilities in Italy as a result of recent legislation.

(g)

EBIT consists of consolidated earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries, extraordinary charges, and cumulative effect of accounting change.

(h)

EBITDA consists of EBIT before depreciation and amortization of excess cost and intangibles. EBITDA is presented because OI Group believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in OI Group's industry. However, other companies in OI Group's industry may calculate EBITDA differently than OI Group does. EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of OI Group's operating performance or any other measures of performance derived in accordance with generally accepted accounting principles. See "Consolidated Financial Statements—Consolidated Cash Flows."

48

(i)

OI Group evaluates performance and allocates resources based on EBIT excluding unusual items and goodwill amortization ("Adjusted EBIT"). Unusual items consist of the gains, losses and charges discussed in Notes (c) and (d) above. The reconciliation from EBIT to Adjusted EBIT is as follows:

		Years ended December 31,														Nine months ended September 30,
		2001			2000		1999			1998			1997			2002		2001
							(in millions)
EBIT		$	1,074.3		$	612.6	$	895.2		$	809.8		$	731.4		$	706.3	$	960.9
Add (deduct):
	Gain on sale of Harbor Capital Advisors business		(457.3	)															(457.3	)
	Gains on sales of label business and minerals business		(13.1	)															(13.1	)
	Gains on sale of glass plant and mold business							(40.8	)
	Net gain on termination of license agreement										(18.5	)
	Sale of discontinued operations by equity investee										5.7
	Gain on sale of 49% interest in Kimble Glass													(16.3	)
	Restructuring and impairment, principally international glass		82.1																79.9
	Loss on the sale of facilities in India		31.0
	Special employee benefit programs		30.9																30.9
	Charges related to certain contingencies		8.5																8.5
	Restructuring manufacturing capacity in the medical devices business		7.9
	Consolidation of manufacturing capacity					122.4
	Early retirement incentives/special termination benefits					52.4
	Impairment of property, plant and equipment in India					40.0
	Write-off of software and related development costs					33.5
	Restructuring and asset write-offs in Europe/South America							20.8
	U.K. plant closing and international restructuring										72.6
	Settle environmental litigation/reduce reserve for guarantees										0.9
	Charge for guarantees of lease obligations													14.1
	Goodwill amortization		92.3			94.9		97.5			76.7			39.3			—		69.2
Adjusted EBIT		$	856.6		$	955.8	$	972.7		$	947.2		$	768.5		$	706.3	$	679.0

(j)

Adjusted EBITDA represents EBITDA excluding the unusual gains, losses and charges discussed in Notes (c) and (d) and summarized in Note (i) above. Adjusted EBITDA is presented because OI Group believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in OI Group's industry. However, other companies in OI Group's industry may present Adjusted EBITDA differently than OI Group does. Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of OI Group's operating performance or any other measures of performance derived in accordance with generally accepted accounting principles. See "Consolidated Financial Statements—Consolidated Cash Flows."

(k)

For purposes of these computations, earnings consist of earnings before income taxes, minority share owners' interests in earnings of subsidiaries, extraordinary items and cumulative effect of accounting change plus fixed charges. Fixed charges consist primarily of interest on indebtedness, including amortization of deferred finance fees, plus that portion of lease rental expense representative of the interest factor. Pretax earnings and fixed charges also include the proportional share of 50%-owned investees.

49

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF OWENS-ILLINOIS GROUP, INC.

Results of Operations

First Nine Months 2002 compared with First Nine Months 2001

        OI Group recorded earnings before extraordinary items and cumulative effect of accounting change of $265.0 million for the first nine months of 2002 compared to earnings before extraordinary items of $365.9 million for the first nine months of 2001. The net loss for the first nine months of 2002 of $201.7 million reflects $6.7 million of an extraordinary charge from the early extinguishment of debt and $460.0 million from the cumulative effect the change in accounting for goodwill. Net earnings of $361.8 million for 2001 reflect $4.1 million of an extraordinary charge from the early extinguishment of debt. Excluding the effects of the 2002 extraordinary item and cumulative effect of accounting change, OI Group's first nine months 2002 net earnings of $265.0 million increased $28.9 million, or 12.2% from the first nine months 2001 earnings, excluding extraordinary and unusual items and goodwill amortization, of $236.1 million. Consolidated EBIT for the first nine months of 2002 was $706.3 million, an increase of $27.3 million, or 4.0%, compared to the first nine months 2001 EBIT, excluding unusual items and goodwill amortization, of $679.0 million. The increase is principally due to higher EBIT for the Glass Containers segment, partially offset by lower EBIT for the Plastics Packaging segment and lower EBIT from eliminations and other retained items, as further discussed below. Interest expense, net of interest income and the 2001 unusual interest expense of $4.0 million, decreased $14.1 million from the 2001 period. The effects of lower short-term variable interest rates were partially offset by the January 2002 issuance of $1.0 billion principal amount of 8⁷/8% Senior Secured Notes due 2009. Proceeds from the 8⁷/8% Senior Secured Notes due 2009 were used to reduce a variable-rate term loan under the Secured Credit Agreement. OI Group's estimated effective tax rate for the first nine months of 2002 was 31.6%. This compares with a rate of 31.3% for the first nine months of 2001, and 30.3% for the full year of 2001, adjusted to exclude the effects of goodwill amortization and unusual items. The increase in the 2002 estimated rate compared to the full year of 2001 is primarily the result of decreased international and domestic tax benefits and credits and a shift in estimated international earnings toward countries with higher effective tax rates.

        Capsule segment results (in millions of dollars) for the first nine months of 2002 and 2001 were as follows:

Net sales to unaffiliated customers	2002		2001
Glass Containers	$	2,916.2	$	2,639.9
Plastics Packaging		1,364.1		1,411.7
Other				4.5
Segment totals	$	4,280.3	$	4,056.1

EBIT(a)	2002			2001(b)(c)
Glass Containers	$	549.5		$	412.3
Plastics Packaging		217.9			214.5
Other					3.0
Segment totals		767.4			629.8
Eliminations and other retained items		(61.1	)		400.3
Consolidated EBIT before goodwill amortization		706.3			1,030.1
Amortization of goodwill					(69.2	)
Consolidated totals	$	706.3		$	960.9

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(a)

EBIT consists of consolidated earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries, extraordinary items and cumulative effect of accounting change.

(b)

Amount for the nine months ended September 30, 2001 included a net gain of $351.1 million related to the following: (1) a gain of $457.3 million related to the sale of OI Group's Harbor Capital business; (2) charges of $79.9 million related to restructuring and impairment charges at certain of OI Group's international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (3) charges of $30.9 million related to special employee benefit programs; (4) a charge of $8.5 million for certain contingencies; (5) a gain of $10.3 million from the sale of a minerals business in Australia; and (6) a gain of $2.8 million from the sale of OI Group's labels business.

Such charges (gains) are included as follows in consolidated EBIT for the nine months ended September 30, 2001:

Glass Containers	$	61.6
Plastics Packaging		27.6
Other		(2.8	)
Total Product Segments		86.4
Eliminations and other retained items		(437.5	)
Consolidated Totals	$	(351.1	)

(c)

In accordance with FAS No. 142, goodwill is no longer amortized beginning in 2002. In order to facilitate comparisons, goodwill amortization for 2001 has been reclassified out of the Glass Containers and Plastics Packaging segments and reported separately.

        Consolidated net sales for the first nine months of 2002 increased $224.2 million, or 5.5%, over the prior year. Net sales of the Glass Containers segment increased $276.3 million, or 10.5%, over 2001. In North America, the additional sales from the October 2001 acquisition of the Canadian glass container operations and increased shipments of containers for liquor and wine and were partially offset by decreased shipments of containers for food, teas and juices. The combined U.S. dollar sales of the segment's other foreign affiliates increased from the prior year. Increased shipments throughout most of Europe and the Asia Pacific region and favorable currency translation rates throughout most of Europe and the Asia Pacific region were partially offset by unfavorable currency translation rates throughout most of South America and the absence of the glass container operations in India. The effect of changing foreign currency exchange rates increased U.S. dollar sales of the segment's foreign affiliates in Europe and the Asia Pacific region by approximately $49 million. The effect of changing foreign currency exchange rates decreased U.S. dollar sales of the segment's foreign affiliates in South America by approximately $43 million. Net sales of the Plastics Packaging segment decreased $47.6 million, or 3.4%, from 2001. Increased shipments of plastic containers for food, bottled water, juice and health and personal care and closures for juice and other beverages, were more than offset by lower unit pricing in some product lines, and the effects of lower resin costs on pass-through arrangements with customers. The effects of lower resin cost pass-throughs decreased sales approximately $20 million compared to the first nine months of 2001.

        Excluding the effects of the 2001 unusual items, consolidated EBIT for the first nine months of 2002 increased $27.3 million, or 4.0%, to $706.3 million from the 2001 adjusted EBIT of $679.0 million, adjusted to exclude goodwill amortization. EBIT of the Glass Containers segment increased $75.6 million to $549.5 million, compared to adjusted EBIT of $473.9 million in 2001. The combined U.S. dollar EBIT of the segment's foreign affiliates increased from prior year. Increased shipments throughout most of Europe and the Asia Pacific region and moderately improved pricing in some

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regions were partially offset by lower shipments in Brazil and Colombia and unfavorable currency translation rates throughout most of South America. In North America, Glass Container EBIT increased over 2001 principally as a result of the addition of the Canadian glass container operations in the fourth quarter of 2001, moderately improved pricing, increased shipments of containers for liquor and wine and the recognition of the remaining deferred income associated with the early termination of an energy supply agreement, partially offset by the conversion of certain food and beverage containers to plastic packaging. EBIT of the Plastics Packaging segment decreased $24.2 million, or 10.0%, to $217.9 million compared to adjusted EBIT of $242.1 million in 2001. Increased shipments of plastic containers for food, bottled water, juice and health and personal care and closures for juice and other beverages as well as improved manufacturing performance were more than offset by lower unit pricing in some product lines, a $4.1 million unfavorable accounting adjustment at one of the segment's foreign affiliates largely due to the write down of inventories to net realizable value, and discontinued production for a major customer in the advanced technology systems business as the customer moves production from the U.S. to the Far East. OI Group is commissioning a new factory in the Far East to continue to supply this customer and expects to be fully operational early in 2003. The Plastics Packaging segment operates in a number of highly competitive markets and has incurred significant pricing pressure in some product lines which OI Group expects to partially offset by increased unit volume, improved productivity and reduced costs. EBIT from eliminations and other retained items, excluding 2001 unusual items, decreased $23.9 million from 2001 reflecting lower net financial services income due to the sale of OI Group's Harbor Capital Advisors business in the second quarter of 2001 as well as higher information systems spending and certain employee benefit costs.

        Results for the first nine months of 2001 included the following unusual items: (1) a gain of $457.3 million ($284.4 million after tax) related to the sale of OI Group's Harbor Capital Advisors business; (2) pretax gains totaling $13.1 million ($12.0 million after tax) related to the sale of OI Group's label business and the sale of a minerals business in Australia; (3) charges of $79.9 million ($63.9 million after tax and minority share owners' interests) related to restructuring and impairment charges at certain of OI Group's international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (4) charges of $30.9 million ($19.4 million after tax) related to special employee benefit programs; (5) a charge of $8.5 million ($5.3 million after tax) for certain contingencies; (6) a $6.0 million charge to adjust tax liabilities in Italy as a result of recent legislation; and (7) a net interest charge of $4.0 million ($2.8 million after tax) related to interest on the resolution of the transfer of pension assets and liabilities for a previous acquisition and divestiture.

Comparison of 2001 with 2000

        For the year ended December 31, 2001, OI Group recorded earnings of $360.7 million before an extraordinary item compared to net earnings of $72.3 million for 2000. Net earnings of $356.6 million for 2001 reflect $4.1 million of an extraordinary charge from the early extinguishment of debt. Excluding the effects of unusual items for both 2001 and 2000 discussed in the table below, OI Group's 2001 earnings of $199.0 million before an extraordinary item decreased $35.0 million, or 15.0%, from 2000 earnings of $234.0 million.

        The following table lists unusual items (in millions of dollars) recorded in 2001 and 2000, and their related effects on both EBIT and earnings before extraordinary items. EBIT is defined as earnings

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before interest income, interest expense, provision for income taxes, minority share owners' interest in earnings of subsidiaries, and extraordinary charges.

		2001						2000
		EBIT			Earnings before extraordinary item			EBIT		Earnings before extraordinary item
As reported		$	1,074.3		$	360.7		$	612.6	$	72.3
Unusual items—charges (credits):
	Gain on the sale of the Harbor Capital Advisors business		(457.3	)		(284.4	)
	Gain on the sale of the label business and the sale of a minerals business in Australia		(13.1	)		(12.0	)
	Restructuring and impairment charges at certain international and domestic operations		82.1			65.3
	Loss on the sale of facilities in India		31.0			31.0
	Special employee benefit programs		30.9			19.4
	Charges related to certain contingencies		8.5			5.3
	Restructuring manufacturing capacity in the medical devices business		7.9			4.9
	Charges to adjust net income tax liabilities in Italy					6.0
	Net interest on the resolution of the transfer of pension assets and liabilities for a previous acquisition					2.8
	Charges related to consolidation of manufacturing capacity								122.4		77.3
	Charges related to early retirement incentives and special termination benefits								52.4		32.6
	Charges related to impairment of property, plant, and equipment in India								40.0		40.0
	Other charges, principally related to the write-off of software								33.5		21.1
	Benefit related to an adjustment of tax liabilities in Italy as a result of recent legislation										(9.3	)
Before unusual items		$	764.3		$	199.0		$	860.9	$	234.0

        Consolidated EBIT, excluding unusual items, for 2001 was $764.3 million, a decrease of $96.6 million, or 11.2%, compared to 2000 EBIT, excluding unusual items, of $860.9 million. The decrease is attributable to lower EBIT for both the Glass Containers segment and the Plastics Packaging segment. Results of both segments are discussed further below. Interest expense, net of interest income and unusual items, decreased $51.1 million from 2000 due principally to lower interest rates and decreased levels of debt. Exclusive of the adjustment for net income tax liabilities in Italy and other unusual items previously discussed, the effective tax rate for 2001 was 38.1%. This compares with a rate of 36.9% for 2000, excluding the adjustment for net income tax liabilities in Italy and other unusual items. The increase in the 2001 rate compared to 2000 is primarily the result of the non-recurrence of certain international and domestic tax benefits and credits.

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        Capsule segment results (in millions of dollars) for 2001 and 2000 were as follows (a):

Net sales to unaffiliated customers	2001		2000
Glass Containers	$	3,571.2	$	3,695.6
Plastics Packaging		1,817.5		1,787.6
Other		13.8		68.9
Segment and consolidated net sales	$	5,402.5	$	5,552.1

EBIT(b)	2001(c)			2000(d)
Glass Containers	$	489.9		$	401.2
Plastics Packaging		218.1			238.0
Other		(13.3	)		1.1
Segment EBIT		694.7			640.3
Eliminations and other retained items		379.6			(27.7	)
Consolidated EBIT	$	1,074.3		$	612.6

(a)

See "Consolidated Financial Statements—Segment Information."

(b)

EBIT consists of consolidated earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries and extraordinary charges.

(c)

Amount for 2001 includes: (1) a gain of $457.3 million related to the sale of the Harbor Capital Advisors business; (2) a $10.3 million gain from the sale of a minerals business in Australia; (3) a $2.8 million gain from the sale of the label business; (4) charges of $82.1 million related to restructuring and impairment charges at certain international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (5) a charge of $31.0 million related to the loss on the sale of facilities in India; (6) charges of $30.9 million related to special employee benefit programs; (7) a charge of $8.5 million for certain contingencies; and (8) a charge of $7.9 million related to restructuring manufacturing capacity in the medical devices business.

        Such charges (gains) are included as follows in consolidated EBIT for 2001 (in millions of dollars):

Glass Containers	$	92.6
Plastics Packaging		29.8
Other		5.1
Total Product Segments		127.5
Eliminations and other retained items		(437.5	)
Consolidated Totals	$	(310.0	)

(d)

Amount for 2000 includes charges totaling $248.3 million for the following: (1) $122.4 million related to the consolidation of manufacturing capacity; (2) a net charge of $52.4 million related to early retirement incentives and special termination benefits for 350 U.S. salaried employees; (3) $40.0 million related to the impairment of property, plant and equipment at facilities in India; and (4) $33.5 million related principally to the write-off of software and related development costs.

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These items were recorded in the third quarter of 2000. Such items are included as follows in consolidated EBIT for 2000 (in millions of dollars):

Glass Containers	$	186.0
Plastics Packaging		11.2
Total Product Segments		197.2
Eliminations and other retained items		51.1
Consolidated Totals	$	248.3

        Consolidated net sales for 2001 decreased $149.6 million, or 2.7%, over the prior year. Net sales of the Glass Containers segment decreased $124.4 million from 2000. In North America, the additional sales from the acquisition of the Canadian operations were more than offset by decreased shipments of containers for beer producers and conversions of certain juice and iced tea from glass to plastic containers. The combined U.S. dollar sales of the segment's foreign affiliates decreased from the prior year. Increased shipments from operations throughout most of Europe and South America were more than offset by the effects of a strong U.S. dollar and lower shipments from operations in the United Kingdom and most of the Asia Pacific region. The effect of changing foreign currency exchange rates reduced U.S. dollar sales of the segment's foreign affiliates by approximately $140 million. Net sales of the Plastics Packaging segment increased $29.9 million, or 1.7%, over 2000, reflecting increased shipments of plastic containers and closures for food and health care, as well as prescription products, and the effects of higher resin costs on pass-through arrangements with customers, partially offset by lower shipments of plastic containers for juice and other beverages and the effect of changing foreign currency exchange rates, principally in Australia. The effects of higher resin costs increased sales by approximately $32 million compared to 2000.

        Segment EBIT for 2001, excluding the 2001 and 2000 unusual items, decreased $15.3 million to $822.2 million, or 15.2% of net sales, from 2000 segment EBIT of $837.5 million, or 15.1% of net sales. Consolidated operating expense (consisting of selling and administrative, engineering, and research and development expenses) as a percentage of net sales was 7.7% in 2001 compared to 6.5% in 2000. The increase in operating expenses is attributed to lower pension income and higher costs of certain employee benefit programs. EBIT of the Glass Containers segment decreased $4.7 million, or 0.8%, to $582.5 million, compared to $587.2 million in 2000. The combined U.S. dollar EBIT of the segment's foreign affiliates increased from prior year. Increased shipments from operations throughout most of Europe and South America were partially offset by the effects of a strong U.S. dollar, higher energy costs worldwide, and lower shipments from operations in the United Kingdom and most of the Asia Pacific region. In the United States, Glass Container EBIT decreased from 2000 principally due to higher energy costs, which have not been fully recovered through price adjustments. EBIT of the Plastics Packaging segment decreased $1.3 million, or 0.5%, to $247.9 million, compared to $249.2 million in 2000. Increased shipments of plastic containers and closures for food and health care, as well as prescription products, were more than offset by lower shipments of plastic containers for juice and other beverages and one-time costs associated with the relocation of a U.S. manufacturing operation to a new and larger facility to accommodate a growing business base.

        Eliminations and other retained items, excluding the 2001 and 2000 unusual items, declined $81.3 million from 2000 reflecting lower net financial services income due to the sale of the Harbor Capital Advisors business, higher spending on information systems, and certain employee benefit costs increases.

        The 2001 results include a net pretax gain of $310.0 million ($170.5 million after tax and minority share owners' interest) for the following: (1) a gain of $457.3 million ($284.4 million after tax) related to the sale of the Harbor Capital Advisors business; (2) gains totaling $13.1 million ($12.0 million after tax) related to the sale of the label business and the sale of a minerals business in Australia;

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(3) charges of $82.1 million ($65.3 million after tax and minority share owners' interests) related to restructuring and impairment charges at certain international glass operations, principally Venezuela and Puerto Rico, as well as certain other domestic and international operations; (4) a charge of $31.0 million (pretax and after tax) related to the loss on the sale of facilities in India; (5) charges of $30.9 million ($19.4 million after tax) related to special employee benefit programs; (6) a charge of $8.5 million ($5.3 million after tax) for certain contingencies; and (7) a charge of $7.9 million ($4.9 million after tax) related to restructuring manufacturing capacity in the medical devices business.

        The 2000 results include pretax charges totaling $248.3 million ($171.0 million after tax and minority share owners' interests) for the following: (1) $122.4 million ($77.3 million after tax and minority share owners' interests) related to the consolidation of manufacturing capacity; (2) a net charge of $52.4 million ($32.6 million after tax) related to early retirement incentives and special termination benefits for 350 United States salaried employees; (3) $40.0 million (pretax and after tax) related to the impairment of property, plant and equipment at facilities in India; and (4) $33.5 million ($21.1 million after tax and minority share owners' interests) related principally to the write-off of software and related development costs.

Comparison of 2000 with 1999

        For the year ended December 31, 2000, OI Group recorded net earnings of $72.3 million compared to earnings before extraordinary items of $299.1 million for 1999. Net earnings of $298.3 million for 1999 reflect $0.8 million of extraordinary charges from the early extinguishment of debt. Excluding the effects of unusual items for both 2000 and 1999 discussed in the table below, OI Group's 2000 earnings of $234.0 million decreased $55.5 million, or 19.2%, from 1999 earnings before extraordinary items of $289.5 million.

        The 2000 results include the unusual items discussed above. The 1999 results included the following unusual items: (1) gains totaling $40.8 million ($23.6 million after tax and minority share owners' interests) related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia and (2) charges totaling $20.8 million ($14.0 million after tax and minority share owners' interests) related principally to restructuring costs and write-offs of certain assets in Europe and South America.

        Consolidated EBIT, excluding unusual items, for 2000 was $860.9 million, a decrease of $14.3 million, or 1.6%, compared to consolidated EBIT for 1999, excluding unusual items, of $875.2 million. The decrease is attributable to lower EBIT for the Plastics Packaging segment, partially offset by slightly higher EBIT for the Glass Containers segment. Results of both segments are discussed further below. Interest expense, net of interest income, increased $56.8 million from the 1999 period due principally to higher interest rates. The $8.8 million increase in minority share owners' interests in earnings of subsidiaries resulted from higher net earnings of certain foreign affiliates, principally the affiliates in Colombia, Venezuela and Brazil. Exclusive of the adjustment for net income tax liabilities in Italy and other unusual items previously discussed, the effective tax rate for 2000 was 36.9%. This compares with a rate of 36.9% for 1999, excluding unusual items.

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        Capsule segment results (in millions of dollars) for 2000 and 1999 were as follows (a):

Net sales to unaffiliated customers	2000		1999
Glass Containers	$	3,695.6	$	3,762.6
Plastics Packaging		1,787.6		1,686.7
Other		68.9		73.6
Segment and consolidated net sales	$	5,552.1	$	5,522.9

EBIT	2000(b)			1999
Glass Containers	$	401.2		$	602.4	(c)
Plastics Packaging		238.0			277.7
Other		1.1			9.2
Segment EBIT		640.3			889.3
Eliminations and other retained items		(27.7	)		5.9
Consolidated EBIT	$	612.6		$	895.2

(a)

See "Consolidated Financial Statements—Segment Information."

(b)

EBIT for 2000 includes charges totaling $248.3 million for the following: (1) $122.4 million related to the consolidation of manufacturing capacity; (2) a net charge of $52.4 million related to early retirement incentives and special termination benefits for 350 U.S. salaried employees; (3) $40.0 million related to the impairment of property, plant and equipment at facilities in India; and (4) $33.5 million related principally to the write-off of software and related development costs. These items were recorded in the third quarter of 2000. These items decreased segment EBIT as follows: Glass Containers—$186.0 million; Plastics Packaging—$11.2 million; Eliminations and other retained items—$51.1 million.

(c)

EBIT for 1999 includes: (1) gains totaling $40.8 million related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia; and (2) charges totaling $20.8 million related principally to restructuring costs and write-offs of certain assets in Europe and South America.

        Consolidated net sales for 2000 increased $29.2 million, or 0.5%, over the prior year. Net sales of the Glass Containers segment decreased $67.0 million from 1999. In the U.S., the effect of increased shipments of containers for beer producers was partially offset by lower shipments of certain food containers. The combined U.S. dollar sales of the segment's foreign affiliates decreased from the prior year due to the strength of the U.S. dollar. Increased shipments from the operations throughout most of Europe, South America and the Asia Pacific region were more than offset by lower shipments from the operations in the U.K. and the effects of a strong U.S. dollar. The effect of changing foreign currency exchange rates reduced U.S. dollar sales of the segment's foreign affiliates by approximately $230 million. Net sales of the Plastics Packaging segment increased $100.9 million, or 6.0%, over 1999, reflecting increased shipments of plastic containers for juices, closures for food and beverages, and the effects of higher resin costs on pass-through arrangements with customers, partially offset by lower shipments of household, health care and personal care containers. The effects of higher resin costs increased sales by approximately $90 million compared to 1999.

        Segment EBIT for 2000, excluding unusual items, decreased $31.8 million to $837.5 million, or 15.1% of net sales, from 1999 segment EBIT, excluding unusual items, of $869.3 million, or 15.7% of net sales. Consolidated operating expense (consisting of selling and administrative, engineering, and research and development expenses) as a percentage of net sales was 6.5% in 2000 compared to 6.8% in 1999. EBIT of the Glass Containers segment increased $4.8 million, or 0.8%, to $587.2 million,

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compared to $582.4 million in 1999. The combined U.S. dollar EBIT of the segment's foreign affiliates increased from the prior year. Increased shipments from the operations throughout most of Europe, South America, and the Asia Pacific region, and a gain from the restructuring of the ownership in two small joint ventures in South America were partially offset by the effects of a strong U.S. dollar, higher energy costs worldwide, and expenses associated with the scheduled rebuild of a glass melting furnace in Australia. In the U.S., Glass Container EBIT decreased from 1999 principally due to higher energy costs and conversions of juice and iced tea bottles from glass to plastic containers, partially offset by further improvements in cost structure. EBIT of the Plastics Packaging segment decreased $28.5 million, or 10.3%, to $249.2 million, compared to $277.7 million in 1999. Increased shipments of plastic containers for juices and closures for food and beverages were more than offset by lower shipments of household, health care, and personal care containers and costs incurred in connection with the start-up of new custom polyethylene terephthalate (PET) capacity, including a new plastic bottle plant.

        Eliminations and other retained items improved $17.5 million from 1999 principally due to higher net financial services income.

        The 2000 results included pretax charges totaling $248.3 million ($171.0 million after tax and minority share owners' interests) for the following: (1) $122.4 million ($77.3 million after tax and minority share owners' interests) related to the consolidation of manufacturing capacity; (2) a net charge of $52.4 million ($32.6 million after tax) related to early retirement incentives and special termination benefits for 350 U.S. salaried employees; (3) $40.0 million ($40.0 million after tax) related to the impairment of property, plant and equipment at facilities in India; and (4) $33.5 million ($21.1 million after tax and minority share owners' interests) related principally to the write-off of software and related development costs.

        The 1999 results included the following unusual items: (1) gains totaling $40.8 million ($23.6 million after tax and minority share owners' interests) related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia; and (2) charges totaling $20.8 million ($14.0 million after tax and minority share owners' interests) related principally to restructuring costs and write-offs of certain assets in Europe and South America.

Restructuring and Impairment Charges

        The second quarter of 2001 operating results included pretax charges of $79.9 million, principally related to a restructuring program and impairment at certain of the international and domestic operations. The charge included the impairment of assets at OI Group's affiliate in Puerto Rico and the consolidation of manufacturing capacity and the closing of a facility in Venezuela. The program also included consolidation of capacity at certain other international and domestic facilities in response to decisions about pricing and market strategy. OI Group expects its actions related to these restructuring and impairment charges to be completed during the next several quarters. The cost savings resulting from the 2001 restructuring are not expected to be material on an annual basis.

        The 2000 operating results included a pretax charge of $248.3 million recorded in the third quarter, principally related to a restructuring and capacity realignment program. The restructuring and capacity realignment program, initiated in the third quarter of 2000, included the consolidation of manufacturing capacity and a reduction of 350 employees in the U.S. salaried work force, or about 10%, principally as a result of early retirement incentives. Also included in the charge was a write-down of plant and equipment for OI Group's glass container affiliate in India and certain other asset write-offs, including $27.9 million for software which had been abandoned. Manufacturing capacity consolidations principally involved U.S. glass container facilities and reflect technology-driven improvements in productivity, conversions from some juice and similar products to plastic containers,

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decisions regarding pricing and volume, and the further concentration of production in the most strategically-located facilities.

Capital Resources and Liquidity

        OI Group's total debt at September 30, 2002 was $5.39 billion, compared to $5.40 billion at December 31, 2001 and $5.31 billion at September 30, 2001.

        In April 2001, OI Group and certain of OI Group's subsidiaries entered into the secured credit agreement with a group of banks, which expires on March 31, 2004. The secured credit agreement provides for a $3.0 billion revolving credit facility and a $65 million term loan (initially $1.5 billion). The borrowers under the secured credit agreement used the proceeds therefrom to repay intercompany amounts owed to OI Inc., which in turn used the proceeds from the repayment of such intercompany amounts to repay amounts outstanding under, and terminate, its existing credit agreement.

        At September 30, 2002, OI Group had available credit totaling $3.065 billion under the secured credit agreement, of which $479.1 million had not been utilized. At September 30, 2001 OI Group had $621.4 million of credit which had not been utilized under the secured credit agreement. The decrease is due in large part to the $150 million purchase of the Canadian glass container assets of Consumers Packaging Inc. in October 2001. Cash provided by operating activities was $553.3 million for the first nine months 2002 compared to $300.4 million for the first nine months of 2001.

        In January 2002, the Company issued $1.0 billion of its 8⁷/8% Senior Secured Notes due February 15, 2009. The 8⁷/8% Senior Secured Notes due 2009 are guaranteed by substantially all of OI Group's domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company used the net cash proceeds from the notes to reduce the outstanding term loan under the secured credit agreement by $980 million. As a result, OI Group wrote off unamortized deferred financing fees in January 2002 related to the term loan and recorded an extraordinary charge totaling $10.9 million less applicable income taxes of $4.2 million.

        In November and December 2002, the Company issued a total of $625 million of its 8³/4% Senior Secured Notes due November 15, 2012. The notes are guaranteed by substantially all of OI Group's domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company used the net cash proceeds from the notes to repay the remaining $65 million of the outstanding term loan under the secured credit agreement and to permanently reduce the revolving credit facility under the secured credit agreement by $551 million. As a result, OI Group wrote off unamortized deferred financing fees related to the term loan and the revolving credit facility and recorded extraordinary charges totaling $4.4 million less applicable income taxes of $1.6 million.

        OI Inc. has substantial obligations related to semiannual interest payments on $1.7 billion of outstanding public debt securities. In addition, OI Inc. pays aggregate annual dividends of $21.5 million on 9,050,000 shares of its $2.375 convertible preferred stock. OI Inc. also makes, and expects in the future to make, substantial indemnity payments and payments for legal fees and expenses in connection with asbestos-related lawsuits and claims. OI Inc.'s asbestos-related payments for the nine months ended September 30, 2002 were $167.4 million down from $186.8 million for the first nine months of 2001. OI Inc. expects that the gross amount of total asbestos-related payments will be moderately lower in 2002 compared to 2001. OI Inc. relies primarily on distributions from OI Group to meet these obligations. Based on OI Inc.'s expectations regarding future payments for lawsuits and claims, and also based on OI Group's expected operating cash flow, OI Group believes that the payments to OI Inc. for any deferred amounts of previously settled or otherwise determined lawsuits and claims, and the resolution of presently pending and anticipated future lawsuits and claims associated with asbestos, will not have a material adverse effect upon OI Group's liquidity on a short-term or long-term basis.

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        The secured credit agreement contains covenants and provisions that, among other things, restrict the ability of OI Group and its subsidiaries to dispose of assets, incur additional indebtedness, prepay other indebtedness or amend certain debt instruments, pay dividends, create liens on assets, enter into contingent obligations, enter into sale and leaseback transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, change the business conducted by OI Group and its subsidiaries, engage in certain transactions with affiliates and otherwise restrict certain corporate activities. In addition, the secured credit agreement contains financial covenants that require OI Group and its subsidiaries to maintain, based upon the financial statements of OI Inc. and its subsidiaries on a consolidated basis, specified financial ratios and tests, including minimum fixed charge coverage ratios, maximum leverage ratios, minimum net worth and specified capital expenditure tests.

        OI Group anticipates that cash flow from its operations and from utilization of credit available through March 2004 under the secured credit agreement will be sufficient to fund its operating and seasonal working capital needs, debt service and other obligations including payments to OI Inc. described above.

        The indenture for the notes restricts, among other things, the ability of OI Group and its restricted subsidiaries to borrow money, pay dividends on, or redeem or repurchase, stock, make investments, create liens, enter into certain transactions with affiliates and sell certain assets or merge with or into other companies.

        The following information summarizes OI Group's significant contractual cash obligations at December 31, 2001 (millions of dollars).

			Payments due by period
			Total		Less than one year		1-3 years		4+ years
Contractual cash obligations:
	Long-term debt		$	5,358.3	$	30.8	$	2,848.6	$	2,478.9
	Capital lease obligations			2.2				2.2
	Operating leases			243.1		62.0		120.1		61.0
		Total contractual cash obligations	$	5,603.6	$	92.8	$	2,970.9	$	2,539.9

			Amount of commitment expiration per period
			Total		Less than one year		1-3 years		4+ years
Other commercial commitments:
	Lines of credit (included in the long-term debt in the table above)		$	2,410.4			$	2,410.4
	Standby letters of credit			98.2	$	98.2
	Guarantees			35.3					$	35.3
		Total commercial commitments	$	2,543.9	$	98.2	$	2,410.4	$	35.3

Critical Accounting Estimates

        OI Group's analysis and discussion of its financial condition and results of operations are based upon its consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. OI Group evaluates these estimates and assumptions on an ongoing basis, including but not limited to those related to pension benefit plans and goodwill. Estimates and

60

assumptions are based on historical and other factors believed to be reasonable under the circumstances. The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results, under conditions and circumstances different from those assumed, may differ from estimates. The impact and any associated risks related to estimates and assumptions are discussed within Management's Discussion and Analysis of Financial Condition and Results of Operations, as well as in the Notes to Condensed Consolidated Financial Statements, if applicable, where estimates and assumptions affect OI Group's reported and expected financial results.

        OI Group believes that accounting for pension benefit plans and goodwill involves the more significant judgments and estimates used in the preparation of its consolidated financial statements:

Pension Benefit Plans

        Because of their historically well-funded status, OI Group's principal pension benefit plans contributed pretax credits to earnings of approximately $62.8 million for the first nine months of 2002 and approximately $72.8 million for the first nine months of 2001. OI Group expects that the amount of such credits for the full year 2002 will be approximately 15% lower than the full year of 2001. The 2002 decrease in pretax pension credits is attributed to lower expected return on assets and the addition of certain pension plans from the acquisition of the Canadian glass container assets of Consumers Packaging Inc.

        Future effects on operating results depend on economic conditions and investment performance. For example, a one-half percentage point change in the actuarial assumption regarding the expected return on assets would result in a change of approximately $15 million in pretax pension credits for the full year. In addition, changes in external factors, including the fair values of plan assets and the discount rate used to calculate plan liabilities, could result in balance sheet recognition of a minimum pension liability. If the plans' accumulated benefit obligations ("ABO") exceed the fair value of their assets at December 31, 2003, OI Group will be required to write off most of its prepaid pension asset and record a liability equal to the excess of the ABO over the fair value of the assets. The noncash charge would result in a decrease in the Accumulated Other Comprehensive Income component of share owner's equity that would significantly reduce net worth.

Goodwill

        Beginning in 2002, OI Group will evaluate goodwill annually (or more frequently if impairment indicators arise) for impairment. Goodwill impairment testing is performed using the business enterprise value ("BEV") of each reporting unit which is calculated as of a measurement date, by determining the present value of debt-free, after tax future cash flows, discounted at the weighted average cost of capital of a hypothetical third party buyer. This BEV is then compared to the book value of each reporting unit as of the measurement date to assess whether an impairment exists. If certain assumptions change, thereby reducing the BEV, such as EBIT projections, cash flow projections, or the risk adjusted cost of capital, goodwill may have to be written down. If the write down is significant, the charge would have a material adverse effect on reported results of operations and net worth.

Quantitative and Qualitative Disclosure about Market Risk

        All borrowings under the April 2001 secured credit agreement, including borrowings by foreign subsidiaries, are denominated in U.S. dollars. As described below, certain amounts borrowed under the agreement by foreign subsidiaries have been swapped into the subsidiaries' functional currencies.

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        In January 2002, the Company completed a $1.0 billion private placement of its 8⁷/8% Senior Secured Notes due 2009. The Company used the net cash proceeds from the notes to reduce the outstanding term loan under the Secured Credit Agreement by $980 million. In November 2002, the Company completed a $450 million private placement of its 8³/4% Senior Secured Notes due 2012. The Company used the net cash proceeds from the notes to repay the remaining $65 million of the outstanding term loan under the secured credit agreement and the remaining $376 million was used to permanently reduce the revolving loan facility under the secured credit agreement. In December 2002, the Company completed a $175 million private placement of its 8³/4% Senior Secured Notes due 2012. The Company used the net cash proceeds from the notes to permanently reduce the revolving loan facility under the secured credit agreement. As a result, OI Group's exposure to variable interest rates has been reduced and the maturity of a significant portion of its debt has been extended.

Foreign Currency Exchange Rate Risk

        A substantial portion of OI Group's operations consists of manufacturing and sales activities conducted by affiliates in foreign jurisdictions. The primary foreign markets served by OI Group's affiliates are in Australia, South America (principally Colombia, Brazil and Venezuela) and Europe (principally Italy, the U.K. and Poland). In general, revenues earned and costs incurred by OI Group's major foreign affiliates are denominated in their respective local currencies. Consequently, OI Group's reported financial results could be affected by factors such as changes in foreign currency exchange rates or highly inflationary economic conditions in the foreign markets in which OI Group's affiliates operate. When the U.S. dollar strengthens against foreign currencies, the reported dollar value of local currency EBIT generally decreases; when the U.S. dollar weakens against foreign currencies, the reported U.S. dollar value of local currency EBIT generally increases.

        Subject to other business and tax considerations, OI Group's strategy is to mitigate the economic effects of currency exchange rate fluctuations on that portion of foreign currency EBIT which is expected to be invested elsewhere or remitted to the parent company. OI Group's foreign affiliates generally invest their excess funds in U.S. dollars or dollar-based instruments, where such instruments are available with acceptable interest rates and terms. In those countries where the local currency is the designated functional currency, however, this strategy exposes OI Group to reported losses or gains in the event the foreign currency strengthens or weakens against the U.S. dollar. OI Group believes that the benefit of investing excess cash in U.S. dollars or their equivalent outweighs the risk of reporting losses or gains from currency exchange rate fluctuations. In those countries with hyper-inflationary economies, where the U.S. dollar is the designated functional currency, this investment strategy for excess funds mitigates the risk of reported losses or gains.

        Because most of OI Group's foreign affiliates operate within their local economic environment, OI Group believes it is appropriate to finance those operations with local currency borrowings to the extent practicable. Considerations which influence the amount of such borrowings include long- and short-term business plans, tax implications, and the availability of borrowings with acceptable interest rates and terms. In those countries where the local currency is the designated functional currency, this strategy mitigates the risk of reported losses or gains in the event the foreign currency strengthens or weakens against the U.S. dollar. In those countries where the U.S. dollar is the designated functional currency, however, local currency borrowings expose OI Group to reported losses or gains in the event the foreign currency strengthens or weakens against the U.S. dollar.

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        OI Group's secured credit agreement provides for U.S. dollar borrowings by certain foreign affiliates. As of September 30, 2002, amounts outstanding under the secured credit agreement borrowed by foreign affiliates were:

Affiliate Location	Millions of U.S. Dollars
Australia	$	861.7
United Kingdom		83.0
	$	944.7

        A significant portion of the above borrowings along with U.S. dollar borrowings through intercompany loans, has been swapped into local currencies using currency swaps. OI Group accounts for these swaps as fair value hedges. As such, the changes in the value of the swaps are included in other expense and are expected to substantially offset any exchange rate gains or losses on the related U.S. dollar borrowings.

        As of September 30, 2002, OI Group's affiliate in Australia has swapped $650.0 million of borrowings into $1,275.0 million of Australian dollars. This swap matures on March 31, 2003, with interest resets every 90 days. The interest reset terms of the swap approximate the terms of the U.S. dollar borrowings. This derivative instrument swaps both the interest and principal from U.S. dollars to Australian dollars and also swaps the interest rate from a U.S. based rate to an Australian based rate. OI Group's affiliate in the United Kingdom has swapped $200.0 million of bank and intercompany borrowings into 139.0 million British pounds. This swap also matures on March 31, 2003, with interest resets every 90 days. This derivative instrument swaps both the interest and principal from U.S. dollars to British pounds and also swaps the interest rate from a U.S. based rate to a British based rate.

        On October 1, 2001, OI Group completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. for a purchase price of approximately $150 million and the assumption of certain liabilities. OI Group financed this purchase through borrowings under the secured credit agreement, which were transferred to Canada through intercompany loans in U.S. dollars. OI Group's affiliate in Canada has entered into swap transactions to manage the affiliate's exposure to fluctuating foreign exchange rates by swapping the principal and interest portion of the intercompany loan. At September 30, 2002, the Canadian affiliate has swapped $90.0 million of U.S. dollar borrowings into $142.0 million Canadian dollars. This swap matures on October 1, 2003. This derivative instrument swaps both the interest and principal from U.S. dollars to Canadian dollars and also swaps the interest rate from a U.S. based rate to a Canadian based rate. The affiliate has also entered into a forward hedge related to the fourth quarter interest receivable and payable related to the previous swap. The affiliate has also entered in forward hedges which effectively swap $10 million of U.S. dollar borrowings into $16 million Canadian dollars. These hedges swap both the interest and principal from U.S. dollars to Canadian dollars and mature monthly.

        The remaining portion of OI Group's consolidated debt which was denominated in foreign currencies was not significant.

        OI Group believes it does not have material foreign currency exchange rate risk related to local currency denominated financial instruments (i.e., cash, short-term investments and long-term debt) of its foreign affiliates.

Interest Rate Risk

        OI Group's interest expense is most sensitive to changes in the general level of U.S. interest rates applicable to its U.S. dollar indebtedness. To mitigate the impact of fluctuations in variable interest

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rates, OI Group could, at its option, convert to fixed interest rates by either refinancing variable rate debt with fixed rate debt or entering into interest rate swaps.

        The following table provides information about OI Group's significant interest rate risk at September 30, 2002.

		Outstanding		Fair value
		(dollars in millions)
Variable rate debt:
Secured Credit Agreement, matures March 31, 2004:
	Revolving Loans, interest at a Eurodollar based rate plus 2.00%	$	2,414.9	$	2,414.9
	Term Loan, interest at a Eurodollar based rate plus 2.50%	$	65.0	$	65.0

        The fair value of OI Inc.'s $1.7 billion outstanding debt securities being guaranteed by OI Group at September 30, 2002 was $1,516.6 million.

Commodity Risk

        OI Group is exposed to fluctuation of various commodity prices, most significantly, the changes in prices related to natural gas. OI Group purchases a significant amount of natural gas at nationally quoted market prices. OI Group uses commodity futures contracts related to a portion of its forecasted future natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid and the potential volatility in earnings or cash flows from future price movements. In January of 2002, OI Group entered into commodity futures contracts for approximately 50% of its domestic natural gas usage (approximately 800 million BTUs) through the end of 2002. OI Group has also entered into additional contracts during 2002 in order to hedge approximately 50% of its North American natural gas needs through the first quarter 2003. At September 30, 2002, an unrealized net gain of $1.8 million (net of tax) related to these commodity futures contracts was included in Other Comprehensive Income. There was no ineffectiveness recognized during the nine months ended September 30, 2002.

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BUSINESS

        OI Group is one of the world's leading manufacturers of packaging products. OI Group is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. In addition, OI Group is a leading manufacturer in North America of plastic containers, plastic closures and plastic prescription containers. OI Group also has plastics packaging operations in South America, Europe, Australia and New Zealand. Consistent with its strategy to continue to strengthen its existing packaging businesses, OI Group has acquired 18 glass container businesses in 18 countries since 1991, including businesses in South America, Central and Eastern Europe and the Asia Pacific region, and six plastics packaging businesses with operations in 11 countries.

        OI Group believes it is a technological leader in the worldwide glass container and plastics packaging segments of the rigid packaging market. During the five years ended December 31, 2001, OI Group invested more than $2.3 billion in capital expenditures (excluding acquisitions) and more than $342.0 million in research, development and engineering to, among other things, improve labor and machine productivity, increase capacity in growing markets and commercialize technology into new products.

        OI Group is a holding company with subsidiaries operating in two product segments:

•

Glass Containers, manufactured by us; and



•

Plastics Packaging, manufactured principally by subsidiaries of OI Plastic Products FTS Inc.

Glass Containers

        We are an indirect, wholly-owned subsidiary of OI Group and a leading manufacturer of glass containers throughout the world. Approximately one of every two glass containers made worldwide is made by us, our affiliates or our licensees. Worldwide glass container sales represented 66% of OI Group's consolidated net sales for the year ended December 31, 2001 and 68% of those sales for the nine months ended September 30, 2002. For the nine months ended September 30, 2002, we manufactured approximately 40% of all glass containers sold by domestic producers in the U.S., making us the leading manufacturer of glass containers in the U.S. We are the leading glass container manufacturer in 17 of the 19 countries where we compete in the glass container segment of the rigid packaging market and the sole manufacturer of glass containers in eight of these countries.

Products and Services

        In the U.S., we produce glass containers for malt beverages including beer and ready to drink low alcohol refreshers, food, tea, juice, liquor, wine and pharmaceuticals. We also produce glass containers for soft drinks, principally outside the U.S. We manufacture these products in a wide range of sizes, shapes and colors. As a leader in glass container innovation, we are active in new product development.

Customers

        In most of the countries where we compete, we have the leading position in the glass container segment of the rigid packaging market (based on units sold). Our largest customers include many of the leading manufacturers and marketers of glass packaged products in the world. In the U.S., the majority of our customers for glass containers are brewers, food producers, distillers and wine vintners. Outside of the U.S., glass container customers also include soft drink bottlers. Our largest U.S. glass container customers include (in alphabetical order) Anheuser-Busch, Cadbury, Coors, Gerber,

65

H.J. Heinz and Miller Brewing. Our largest international glass container customers include Diageo, Foster's, Heineken, Labatt, Lion Nathan and Molson. We are the sole glass container supplier to many of these "blue chip" customers.

        We sell most of our glass container products directly to customers under annual or multi-year supply agreements. We also sell some of our products through distributors. Glass containers are typically scheduled for production in response to customers' orders for their quarterly requirements.

Markets and Competitive Conditions

        The principal markets for our glass container products are in North America, South America, Europe and the Asia Pacific region. We believe we are the low-cost producer in the glass container segment of the North American rigid packaging market, as well as the low-cost producer in most of the international glass container segments in which we compete. Much of this cost advantage is due to the proprietary equipment and process technology we use. Our machine development activities and systematic upgrading of production equipment in the 1980's and 1990's have given us low-cost leadership in the glass container segment in many of the countries in which we compete, a key strength to competing successfully in the rigid packaging market.

        We have the leading share of the glass container segment of the U.S. rigid packaging market based on units sold by domestic producers in the U.S., with our sales representing approximately 40% of that segment for the nine months ended September 30, 2002. Our principal glass container competitors in the U.S. are Saint-Gobain Containers Inc., a wholly-owned subsidiary of Compagnie de Saint-Gobain, and Anchor Glass Container Corporation.

        In supplying glass containers outside of the U.S., we compete directly with Compagnie de Saint-Gobain in Italy and Brazil, Rexam plc and Ardagh plc in the U.K., Vetropack in the Czech Republic and Amcor Limited in Australia. In other locations in Europe, we compete indirectly with a variety of glass container firms including Compagnie de Saint-Gobain, BSN Glasspack, Vetropack and Rexam plc. Except as mentioned above, we do not compete with any large, multi-national glass container manufacturers in South America or the Asia Pacific region.

        In addition to competing with other large, well-established manufacturers in the glass container segment, we compete with manufacturers of other forms of rigid packaging, principally aluminum cans and plastic containers, on the basis of quality, price and service. The principal competitors producing metal containers are Crown Cork & Seal Company, Inc., Rexam plc, Ball Corporation and Silgan Holdings Inc. The principal competitors producing plastic containers are Consolidated Container Holdings, LLC, Graham Packaging Company, Plastipak Packaging, Inc. and Silgan Holdings Inc. We also compete with manufacturers of non-rigid packaging alternatives, including flexible pouches and aseptic cartons, in serving the packaging needs of juice customers.

        Our unit shipments of glass containers in countries outside of the U.S. have grown substantially from levels of the early 1990's. We have added to our international operations by acquiring glass container companies, many of which have leading positions in growing or established markets, increasing capacity at select foreign affiliates, and maintaining the global network of glass container companies that license our technology. In many developing countries, our international glass operations have benefited in the last ten years from increased consumer spending power, a trend toward the privatization of industry, a favorable climate for foreign investment, lowering of trade barriers and global expansion programs by multi-national consumer companies. Due to the weighting of labor as a production cost, glass containers have a significant cost advantage over plastic and metal containers in developing countries where labor wage rates are relatively low.

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        Our majority ownership positions in international glass affiliates are summarized below:

Company/Country	Ownership %
ACI Operations Pty. Ltd., Australia	100.0
ACI Operations New Zealand Ltd., New Zealand	100.0
Avirunion, a.s., Czech Republic	100.0
Karhulan Lasi Oy, Finland	100.0
OI Canada Corp., Canada	100.0
United Glass Ltd., United Kingdom	100.0
United Hungarian Glass, Hungary	100.0
Vidrieria Rovira S.A., Spain	100.0
PT Kangar Consolidated Industries, Indonesia	100.0
A/S Jarvakandi Klaas, Estonia	99.9
AVIR S.p.A., Italy	99.7
Owens-Illinois Polska S.A., Poland	99.4
Vidrios Industriales S.A., Peru	96.0
Companhia Industrial Sao Paulo e Rio, Brazil	79.4
Owens-Illinois de Venezuela, C.A., Venezuela	74.0
ACI Guangdong Glass Company Ltd., China	70.0
ACI Shanghai Glass Company Ltd., China	70.0
Wuhan Owens Glass Container Company Ltd., China	70.0
Cristaleria del Ecuador S.A., Ecuador	69.0
Cristaleria Peldar S.A., Colombia	58.4

        North America.    In addition to our glass container operations in the U.S., our affiliate in Canada is the sole manufacturer of glass containers in that country.

        South America.    Our affiliates in Colombia, Ecuador and Peru are the sole manufacturers of glass containers in those countries. In both Brazil and Venezuela, we are the leading manufacturer of glass containers. In South America, there is a large infrastructure for returnable/refillable glass containers. However, with improving economic conditions in South America after the recessions of the late 1990's, our unit sales of non-returnable glass containers have grown in Venezuela, Colombia and Brazil.

        Europe.    Our European glass container business has operations in eight countries and is one of the largest in Europe. In Italy, our wholly-owned affiliate, AVIR, is the leading manufacturer of glass containers and operates 13 glass container plants. AVIR accounted for approximately 49% of our total European glass container sales in 2001. United Glass, our affiliate in the U.K., is a leading manufacturer of glass containers for the U.K. spirits business. In Poland, we are the leading glass container manufacturer and currently operate two plants. Our affiliate in the Czech Republic, Avirunion, is the leading glass container manufacturer in that country and also ships a portion of its beer bottle production to Germany. In Hungary, we are the sole glass container manufacturer and serve the Hungarian food industry. In Finland and the Baltic country of Estonia, we are the only manufacturer of glass containers. We coordinate our production activities between Finland and Estonia in order to efficiently serve the Finnish, Baltic and Russian markets. In recent years, Western European brewers have been establishing beer production facilities in Central Europe and the Russian Republic. Because these new beer plants use high-speed filling lines, they require high quality glass containers in order to operate properly. We believe we are well-positioned to meet this growing demand. In Spain, we serve the market for wine bottles in the Barcelona area.

        Asia Pacific.    We have glass operations in four countries in the Asia Pacific region: Australia, New Zealand, Indonesia and China. Our Asia Pacific affiliates are the leading manufacturers of glass

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containers in most of the countries in which they compete. In Australia, we operate five glass container plants, including a plant focused on serving the needs of the rapidly growing Australian wine industry. In New Zealand, we are the sole glass container manufacturer. In Indonesia, our affiliate supplies the Indonesian market and exports glass containers for food and pharmaceutical products to Australian customers. In China, the glass container segments of the packaging market are regional and highly fragmented with a number of local competitors. We have three modern glass container plants in China manufacturing high-quality beer bottles to serve Foster's as well as Anheuser-Busch, which is now producing Budweiser® in and for the Chinese market.

        We continue to focus on serving the needs of leading multi-national consumer companies as they pursue international growth opportunities. We believe that we and our affiliates are often the glass container partner of choice for such multi-national consumer companies due to our leadership in glass technology and our status as a low-cost producer in most of the markets we serve.

Manufacturing

        We believe we are the low-cost producer in the glass container segment of the North American rigid packaging market, as well as the low-cost producer in most of the international glass segments in which we compete. Much of this cost advantage is due to the proprietary equipment and process technology we use. We believe our glass forming machines, developed and refined by our engineering group, are significantly more efficient and productive than those used by our competitors. Our machine development activities and systematic upgrading of production equipment in the 1980's and 1990's have given us low-cost leadership in the glass container segment in most of the countries in which we compete, a key strength to competing successfully in the rigid packaging market.

        Over the last ten years, we have more than doubled our overall glass container labor and machine productivity in the U.S., as measured by output produced per man-hour. By applying our technology and worldwide "best practices," during this period we decreased the number of production employees required per glass-forming machine line in the U.S. by over 35%, and we increased the daily output of our glass-forming machines by approximately 40%.

Methods of Distribution

        Due to the significance of transportation costs and the importance of timely delivery, glass container manufacturing facilities are generally located close to customers. In the U.S., most of our glass container products are shipped by common carrier to customers within a 250-mile radius of a given production site. In addition, our glass container operations outside the U.S. export some products to customers beyond their national boundaries, which may include transportation by rail and ocean delivery in combination with common carriers. We also operate several machine and mold shops that manufacture high-productivity glass-forming machines, molds and related equipment.

Suppliers and Raw Materials

        The primary raw materials used in our glass container operations are sand, soda ash and limestone. Each of these materials, as well as the other raw materials we use to manufacture glass containers, have historically been available in adequate supply from multiple sources. For certain raw materials, however, there may be temporary shortages due to weather or other factors, including disruptions in supply caused by raw material transportation or production delays.

        Worldwide suppliers of sand used in the production of glass containers include Unimin Corporation, SCR Sibelco, U.S. Silica and Quarzwerke. There are a number of suppliers of limestone

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and other minerals; these firms are regional rather than worldwide in scope. Historically, prices for sand, limestone and other minerals have not been subject to dramatic fluctuations.

        Worldwide suppliers of soda ash include Solvay, FMC Corporation, OCI Chemical, IMC Corporation and General Chemical Partners. Historically, prices for soda ash have not been subject to dramatic fluctuations, except for temporary spikes or troughs from time to time.

Glass Recycling

        We are an important contributor to the recycling effort in the U.S. and continue to melt substantial recycled glass tonnage in our glass furnaces. If sufficient high-quality recycled glass were available on a consistent basis, we have the technology to operate using 100% recycled glass. Using recycled glass in our manufacturing process reduces energy costs and prolongs the operating life of our glass melting furnaces.

Facilities

        We have glass container operations located in 19 countries. The following table lists the locations of our glass container plants and related facilities:

North America		Europe		Asia Pacific	South America
California	Oklahoma	Czech Republic	Poland	Australia	Brazil
Hayward	Muskogee	Sokolov	Antoninek	Adelaide	Descalvado(#)
Los Angeles	Oregon	Teplice	Jaroslaw	Brisbane	Manaus(+)
Oakland	Portland	Estonia	Spain	Melbourne	Rio de Janeiro
Tracy	Pennsylvania	Jarvakandi	Barcelona	Melbourne(§)	Sao Paulo
Colorado	Brockway	Finland	United Kingdom	Perth	Colombia
Wheat Ridge(*)	Brockway(+)	Karhula	Alloa	Sydney	Buga
Georgia	Clarion	Hungary	Birmingham(+)	China	Cali(+)
Atlanta	Crenshaw	Oroshaza	Devilla(#)	Guangzhou	Envigado
Illinois	Texas	Italy	Harlow	Shanghai	Soacha
Godfrey(+)	Waco	Asti		Tianjin(§)	Zipaquira(§)
Streator	Virginia	Bari		Wuhan	Zipaquira(#)
Indiana	Danville	Bologna		Indonesia	Ecuador
Lapel	Toano	Milan (2 plants)		Jakarta	Guayaquil
Michigan	Canada	Napoli		New Zealand	Peru
Charlotte	British Columbia	Napoli(§)		Auckland	Callao
New York	New Brunswick	Pordenone			Venezuela
Auburn	Ontario (3 plants)	Rome			Valencia
North Carolina	Quebec	Termi			Valera
Winston-Salem		Trento (2 plants)
Ohio		Treviso
Zanesville

(*)

A 50-50 joint venture with Coors Brewing Company

(+)

Machine manufacturing

(#)

Silica sand plant

(§)

Mold shop

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Plastics Packaging

        OI Group is a leading manufacturer in North America of plastic containers, plastic closures and plastic prescription containers. OI Group also has plastics packaging operations in South America, Europe, Australia and New Zealand. Plastics packaging sales represented 34% of OI Group's consolidated net sales for the year ended December 31, 2001 and 32% of those sales for the nine months ended September 30, 2002.

Manufacturing and Products

        The plastics packaging business utilizes two basic manufacturing processes:

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Blow-Molded Plastics Packaging

        Blow-molding is a plastics manufacturing process where pre-heated plastic is captured inside a hollow mold and using pressurized air is blown, much like a balloon, into a container. After being cooled, the mold is opened and the plastic product is removed.

        In blow-molded plastics packaging, OI Group is a leading U.S. manufacturer of high density polyethylene (HDPE) containers. OI Group manufactures these containers for products for the food and beverage, household, personal care, health care and chemical and automotive fluid end-use categories.

        OI Group is also a leading worldwide manufacturer of PET blow-molded containers. Many of these PET containers are manufactured using multiple layers of plastic, with each layer having a different function. Some of these plastic layers have "barrier" properties, effectively blocking the escape of carbon dioxide out of, and the permeation of oxygen into, the packaged product thereby maintaining product quality and extending shelf life. Examples of products packaged in multi-layer PET containers include Heinz ketchup and Gatorade® sports drink. Major brewers, such as Anheuser-Busch, Coors and Miller Brewing, are now marketing beer packaged in OI Group's multi-layer PET beer bottles.

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Injection-Molded Plastics Packaging

        Injection molding is a plastics manufacturing process where plastic resin in the form of pellets or powder is melted and then injected or otherwise forced under pressure into a mold. The mold is then cooled and the product is removed from the mold.

        OI Group develops and produces injection-molded plastic closures and closure systems, which typically incorporate functional features such as tamper evidence and child resistance or dispensing. Other products include trigger sprayers for household cleaning products, finger and lotion pumps for fragrances and cosmetics, as well as injection-molded containers for deodorant and toothpaste.

        The prescription product unit manufactures injection-molded plastic prescription containers. These products are sold primarily to drug wholesalers, major drug chains and mail order pharmacies. Containers for prescriptions include ovals, vials, ointment jars, dropper bottles and automation friendly prescription containers.

Customers

        OI Group's largest customers (in alphabetical order) for plastic containers and closures include Bristol-Myers Squibb, H.J. Heinz, Johnson & Johnson, PepsiCo (Dole®, Gatorade®, Tropicana®), Procter & Gamble and Unilever. The largest customers for prescription containers include

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AmeriSourceBergen, Cardinal Health, Eckerd Drug, McKesson, Merck-Medco, Rite-Aid and Walgreens.

        OI Group sells most plastic containers, plastic closures and plastic prescription containers directly to customers under annual or multi-year supply agreements. These supply agreements typically allow a pass-through of resin price increases and decreases, except for the prescription business. OI Group also sells some of its products through distributors.

Markets and Competitive Conditions

        Major markets for plastics packaging include the food and beverage, household products, personal care products, health care products and chemical and automotive fluid industries.

        The plastics segment of the rigid packaging market is competitive and fragmented due to generally available technology, low costs of entry and customer emphasis on low package cost. A large number of competitors exist on both a national and regional basis. OI Group competes with other manufacturers in the plastic containers segment on the basis of quality, price, service and product design. The principal competitors producing plastic containers are Consolidated Container Holdings, LLC, Graham Packaging Company, Plastipak Packaging, Inc. and Silgan Holdings Inc. OI Group emphasizes total package supply (i.e., bottle and closure system), diversified market positions, proprietary technology and products, new package development and packaging innovation. The plastic closures segment is divided into various categories in which several suppliers compete for business on the basis of quality, price, service and product design.

        OI Group's approach has been to identify and serve areas of the plastics packaging segment where customers seek distinctive and functional packaging to differentiate their products among an array of choices offered to consumers. OI Group believes it is a leader in technology and development of custom products and has a leading market position in the U.S. for such products. OI Group believes its plastic containers and plastic closures businesses have a competitive advantage as a result of one of the shortest new product development cycles in the industry, enabling it to respond quickly to customer needs in the rapidly changing custom plastic containers and closures segments. OI Group's product innovations in plastics packaging include in-mold labeling for custom-molded bottles and multi-layer bottles containing post-consumer recycled (PCR) plastic.

Manufacturing

        The exact type of blow-molding manufacturing process OI Group uses is dependent on the plastic product type and package requirements. These blow-molding processes include: various types of extrusion blow-molding for medium- and large-sized HDPE, low density polyethelene (LDPE), polypropylene and polyvinyl chloride (PVC) containers; stretch blow-molding for medium-sized PET containers; injection blow-molding for small health care and personal care containers in various materials; two-stage PET blow-molding for high volume, high performance mono-layer, multi-layer and heat-set PET containers; and proprietary blow-molding for drain-back systems and other specialized applications.

        Injection-molding is used in the manufacture of plastic closures, trigger sprayers, deodorant canisters, ink cartridges and vials. Compression-molding, an advanced type of injection-molding, is used for high volume carbonated soft drink and other beverage closures that require tamper evidence.

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Methods of Distribution

        In the U.S., most of OI Group's plastic containers, plastic closures and plastic prescription containers are shipped by common carrier. In addition, OI Group's plastics packaging operations outside the U.S. export some products to customers beyond their national boundaries, which may include transportation by rail and ocean delivery in combination with common carriers.

Suppliers and Raw Materials

        OI Group manufactures containers and closures using HDPE, LDPE, polypropylene, PVC, PET and various other plastic resins. OI Group also purchases large quantities of master batch colorants, corrugated materials and labels. In general, these raw materials are available in adequate supply from multiple sources. However, for certain raw materials, there may be temporary shortages due to market conditions and other factors.

        Worldwide suppliers of plastic resins used in the production of plastics packaging include Voridian (formerly Eastman Chemical), Dow Chemical, ExxonMobil, Basell, Chevron Phillips and BP Solvay. Historically, prices for plastic resins have been subject to dramatic fluctuations. However, resin cost pass-through provisions are typical in OI Group's supply contracts with its plastics packaging customers.

        With the exceptions of PolyOne, Ampacet and Clariant, each of which do business worldwide, most suppliers of batch colorants are regional in scope. Historically, prices for these raw materials have been subject to dramatic fluctuations. However, cost recovery for batch colorants is included in resin pass-through provisions which are typical in OI Group's supply contracts with its plastics packaging customers.

        Worldwide suppliers of corrugated materials include International Paper, Georgia-Pacific, Weyerhaeuser, Temple-Inland, Stone-Smurfit Container and Jefferson Smurfit Group. Historically, prices for corrugated materials have not been subject to dramatic fluctuations, except for temporary spikes or troughs from time to time.

        With the exception of Fuji Seal (Japan) and its subsidiary, American Fuji Seal, most suppliers of plastic labels are regional in scope. Historically, prices for these raw materials have not been subject to dramatic fluctuations.

Recycling

        Recycling content legislation, which has been enacted in several states, requires that a certain specified minimum percentage of recycled plastic be included in certain new plastic containers. OI Group has met such legislated standards in part due to its material and multi-layer process technology. OI Group's plastic containers are made with PCR plastic constituting somewhere between 25% and 100% of the material used to produce the container. In addition, its plastics plants also recycle virtually all of the internal scrap generated in the production process.

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Facilities

        OI Group has 41 plastics manufacturing plants in the U.S. and Puerto Rico, as well as plastics packaging operations located in nine countries outside of the U.S. The following table lists the locations of the plastics packaging plants:

North America			Europe	Asia Pacific	South America
Arizona		Nevada	Finland	Australia	Brazil
Tolleson		Henderson	Ryttyla	Adelaide	Sorocaba
California		New Hampshire	Hungary	Berri	Venezuela
	La Mirada	Bedford	Gyor	Brisbane (3 plants)	Valencia
	Modesto	Nashua	Netherlands	Drouin
Connecticut		New Jersey	Etten-Leur	Melbourne (5 plants)
	Bridgeport	Belvidere	United Kingdom	Perth (2 plants)
Florida		Edison	Chalgrove	Sydney (2 plants)
	Kissimmee	Washington		Wadonga
Georgia		North Carolina		New Zealand
	Cartersville	Hamlet		Auckland
	Rossville	Rocky Mount		Christchurch
Illinois		Ohio
	Chicago	Berlin
	Vandalia	Bowling Green
Indiana		Cincinnati
	Franklin	Findlay
	Sullivan	Fremont
Iowa		Pennsylvania
	Iowa City	Brookville
Kentucky		Erie
	Florence	Hazleton
	(2 plants)	South Carolina
Maryland		Greenville
	Baltimore	Texas
Michigan		El Paso
	Constantine	Rockwall
Mississippi		Virginia
	Hattiesburg	Alta Vista
Missouri		Harrisonburg
	Kansas City	Puerto Rico
	St. Louis	Las Piedras
		Mexico
		Mexico City
		Pachuca

        In addition, a plastics packaging plant is under construction for the manufacture and assembly of plastic ink cartridges in Singapore.

Technical Assistance License Agreements

        We license our proprietary glass container technology to 25 companies in 25 countries. In plastics packaging, OI Group has technical assistance agreements with 24 companies in 14 countries. These agreements cover areas ranging from manufacturing and engineering assistance, to support in functions such as marketing, sales and administration. The worldwide licensee network provides a stream of revenue to support OI Group's development activities and gives it the opportunity to participate in the rigid packaging market in countries where it does not already have a direct presence. In addition, OI Group's technical agreements enable it to apply "best practices" developed by its worldwide licensee network. For the year ended December 31, 2001 and the nine months ended September 30, 2002,

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OI Group earned $24.6 million and $18.5 million, respectively, in royalties and net technical assistance revenue.

Research and Development

        Research and development constitutes an important part of OI Group's activities. Research and development expenditures were $41.2 million, $46.7 million and $37.5 million for 2001, 2000 and 1999, respectively. In addition, engineering expenditures were $31.4 million, $31.3 million and $42.2 million for 2001, 2000 and 1999, respectively. OI Group's research, development and engineering activities include new products, manufacturing process control, automatic inspection and further automation.

Environmental and Other Governmental Regulation

        OI Group's worldwide operations, in common with those of the industry generally, 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. Capital expenditures for property, plant and equipment for environmental control activities were not material during 2001 or for the nine months ended September 30, 2002.

        In August 1998, the Company received a Notice of Violation from the United States Environmental Protection Agency regarding alleged opacity violations at its Oakland, California glass container plant from the period of 1994 through 1997. Certain furnaces at the plant are equipped with monitors that continuously monitor opacity. During this period, these furnaces had occasional upset and breakdown conditions that caused opacity excursions that were reported to the local air quality management district. This action by the U.S. EPA involves the same incidents that were resolved with the local air quality management district. The Company has reached a settlement in principle with the U.S. EPA under which it will pay certain monetary penalties.

        In September 2001, the Virginia Department of Environmental Quality issued a Notice of Violation to the Company's plant located in Toano, Virginia, alleging violations of certain regulations in connection with certain changes that were made to the furnaces during repairs. The Company has reached a settlement with the Virginia Department of Environmental Quality under which it will voluntarily install abatement equipment, agreed to certain production capacity limitations that are not expected to materially impact operations, and paid certain monetary penalties.

        The monetary penalties for the Oakland matter and the Toano matter are not expected to exceed $425,000 in the aggregate.

        A number of governmental authorities, both in the U.S. and abroad, have enacted, or are considering, legal requirements that would mandate certain rates of recycling, the use of recycled materials and/or limitations on certain kinds of packaging materials such as plastics. OI Group believes that governmental authorities in both the U.S. and abroad will continue to enact and develop such legal requirements.

        In the U.S., sales of non-refillable glass beverage bottles and other convenience packages are affected by mandatory deposit laws and other types of restrictive legislation. As of January 1, 2002, there were nine states with mandatory deposit laws in effect. A number of states and local governments have enacted or are considering legislation to promote curbside recycling and recycled content legislation as alternatives to mandatory deposit laws. Although such legislation is not uniformly developed, OI Group believes that states and local governments will continue to enact and develop curbside recycling and recycling content legislation.

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        Plastic containers have also been the subject of legislation in various states, which requires that a certain specified minimum percentage of recycled plastic be included in new plastic products. OI Group utilizes recycled plastic resin in its manufacturing processes.

        Although OI Group is unable to predict what environmental legal requirements may be adopted in the future, it has not made, and does not anticipate making, material expenditures with respect to environmental protection. However, the compliance costs associated with environmental legal requirements may result in future additional costs to operations.

Intellectual Property Rights

        The Company has a large number of patents that relate to a wide variety of products and processes, has a substantial number of patent applications pending, and is licensed under several patents of others. While in the aggregate the Company's patents are of material importance to its businesses, the Company does not consider that any patent or group of patents relating to a particular product or process is of material importance when judged from the standpoint of any segment or its businesses as a whole.

        The Company has a number of intellectual property rights, comprised of both patented and proprietary technology, that make the Company's glass forming machines more efficient and productive than those used by our competitors. In addition, the efficiency of the Company's glass forming machines is enhanced by the Company's overall approach to cost efficient manufacturing technology, which extends from batch house to warehouse. This technology is proprietary to the Company through a combination of issued patents, pending applications, copyrights, trade secret and proprietary know-how.

        Upstream of the glass forming machine, there is technology to deliver molten glass to the forming machine at high rates of flow and fully conditioned to be homogeneous in consistency, viscosity and temperature for efficient forming into glass containers. The Company has proprietary know-how in (a) the batch house, where raw materials are stored, measured and mixed, (b) the furnace control system and furnace combustion, and (c) the forehearth and feeding system to deliver such homogeneous glass to the forming machines.

        In the Company's glass container manufacturing processes, computer control and electro-mechanical mechanisms are commonly used for feeding molten glass to the forming machines. Various patents held by the Company describe electro-mechanical mechanisms and related technology used for feeding molten glass to the forming machines. Others represent electro-mechanical mechanisms and related technology used by the Company for shearing glass gobs for delivery to the forming machines. Additional U.S. patents and various pending applications represent technology used by the Company for measuring and precisely delivering glass gobs to the forming machines.

        Downstream of the glass forming machines there is patented and unpatented technology for ware handling, annealing, coating and inspection, which further enhance the overall efficiency of the manufacturing process.

        While the above patents and intellectual property rights are representative of the technology used in the Company's glass manufacturing operations, there are numerous other pending patent applications, trade secrets and other proprietary know-how and technology, as supplemented by administrative and operational best practices, which contribute to the Company's competitive advantage. As noted above, however, the Company does not consider that any patent or group of patents relating to a particular product or process is of material importance when judged from the standpoint of any segment or its businesses as a whole.

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Seasonality

        Sales of particular glass container and plastics packaging products such as beer and food containers are seasonal. Shipments in the U.S. and Europe are typically greater in the second and third quarters of the year, while shipments in South America and the Asia Pacific region are typically greater in the first and fourth quarters of the year.

Employees

        OI Group employed approximately 29,700 persons at December 31, 2001. A majority of OI Group's hourly workers are covered by collective bargaining agreements. Several collective bargaining agreements, which at September 30, 2002 covered approximately 87% of OI Group's union-affiliated employees in the U.S., extend through various dates in 2005. OI Group considers its employee relations to be good.

Legal Proceedings—OI Group

        In April 1999, Crown Cork & Seal Technologies Corporation ("CCS") filed suit against Continental PET Technologies, Inc. ("CPT"), a wholly-owned subsidiary of OI Group, in the United States District Court for the District of Delaware alleging that certain plastic containers manufactured by CPT, primarily multi-layer PET containers with barrier properties, infringe CCS's U.S. Patent 5,021,515 relating to an oxygen-scavenging material. CCS is a party to an agreement with Chevron Philips Chemical Company ("Chevron") under which Chevron has rights to sublicense certain CCS patents, including, Chevron believed, the patent involved in the suit against CPT. To avoid the cost of litigation, CPT took a sublicense from Chevron under the patent in suit and other patents. Chevron then entered the suit to defend and assert its right to sublicense the patent in suit to CPT. In November 2002, the Delaware District Court concluded that Chevron did not have the rights it purported to sublicense to CPT.

        Subject to any appeal by Chevron, the decision will allow CCS to pursue its lawsuit against CPT, which is in its initial stages and was stayed pending resolution of the Chevron claims. In the lawsuit, CCS seeks certain monetary damages and injunctive relief. At such time as the suit against CPT is reinstituted, CPT will pursue all defenses available to it. However, if the Court were to reach conclusions adverse to CPT on the claims for monetary damages asserted by CCS, OI Group believes such determination would not have a material adverse effect on OI Group's consolidated results of operations and financial position, and any such damages would be covered in part by third party indemnification. Additionally, an adverse decision with respect to CCS's request for injunctive relief is not likely to have a material adverse effect on OI Group because OI Group believes that it can pursue alternative technologies for the manufacture of multi-layer PET containers with barrier properties.

        Certain other litigation is pending against OI Group, in many cases involving ordinary and routine claims incidental to the business of OI Group and in others presenting allegations that are nonroutine and involve compensatory, punitive or treble damage claims as well as other types of relief. The ultimate legal and financial liability of OI Group in respect to this pending litigation cannot be estimated with certainty. However, OI Group believes, based on its examination and review of such matters and experience to date, that such ultimate liability will not have a material adverse effect on its results of operations or financial condition.

Legal Proceedings—OI Inc.

        OI Inc. is one of a number of defendants (typically from 20 to 100 or more) in a substantial number of lawsuits filed in numerous state and federal courts by persons alleging bodily injury (including death) as a result of exposure to dust from asbestos fibers. OI Inc. relies primarily on

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distributions from its subsidiaries, including the Company, to fund its indemnity payments and legal fees related to these lawsuits.

        From 1948 to 1958, one of OI Inc.'s former business units commercially produced and sold approximately $40 million of a high-temperature, calcium-silicate based pipe and block insulation material containing asbestos. OI Inc. exited the pipe and block insulation business in April 1958. The traditional asbestos personal injury lawsuits and claims relating to such production and sale of asbestos material typically allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and, in some cases, punitive damages in various amounts (herein referred to as "asbestos claims").

        As of September 30, 2002, OI Inc. has determined that it is a named defendant in asbestos lawsuits and claims involving approximately 23,000 plaintiffs and claimants. The total amount of relief sought by plaintiffs and claimants cannot be determined because the amount is often not required to be stated in an initial claim or lawsuit and because settlements are often reached before claims and lawsuits advance to the point where such amounts would be required to be specified.

        Additionally, OI Inc. has claims-handling agreements in place with many plaintiffs' counsel throughout the country. These agreements require evaluation and negotiation regarding whether particular claimants qualify under the criteria established by such agreements. The criteria for such claims include verification of a compensable illness and a reasonable probability of exposure to a product manufactured by OI Inc.'s former business unit during its manufacturing period ending in 1958. Some plaintiffs' counsel have historically withheld claims under these agreements for later presentation while focusing their attention on active litigation in the tort system. OI Inc. believes that as of September 30, 2002 there are no more than 19,000 of such preexisting but presently unasserted claims against OI Inc. that are not included in the total of pending claims specified in the preceding paragraph. OI Inc. further believes that the bankruptcies of additional co-defendants, as discussed below, have resulted in an acceleration of the presentation and disposition of a number of these previously withheld preexisting claims under such agreements, which claims would otherwise have been presented and disposed of over the next several years. This acceleration is reflected in an increased number of pending asbestos claims and, to the extent disposed, contributes to an increase in asbestos-related payments which is expected to continue in the near term.

        OI Inc. is also a defendant in other asbestos-related lawsuits or claims involving maritime workers, medical monitoring claimants, co-defendants and property damage claimants. Based upon its past experience, OI Inc. believes that these categories of lawsuits and claims will not involve any material liability and they are not included in the above description of pending matters.

        Since receiving its first asbestos claim, OI Inc., as of September 30, 2002, has disposed of the asbestos claims of approximately 282,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $5,500. OI Inc.'s indemnity payments for these claims have varied on a per claim basis, and are expected to continue to vary considerably over time. As discussed above, a part of OI Inc.'s objective is to achieve, where possible, resolution of asbestos claims pursuant to claims-handling agreements. Under such agreements, qualification by meeting certain illness and exposure criteria has tended to reduce the number of claims presented to OI Inc. that would ultimately be dismissed or rejected due to the absence of impairment or product exposure evidence. OI Inc. expects that as a result, although aggregate spending may be lower, there may be an increase in the per claim average indemnity payment involved in such resolution. In this regard, although the average of such payments has been somewhat higher following the implementation of the claims-handling agreements in the mid-1990s, the annual average amount has not varied materially from year to year in recent years.

        OI Inc. believes that its ultimate asbestos-related contingent liability (i.e., its indemnity or other claim disposition costs plus related legal fees) cannot be estimated with certainty. In 1993, OI Inc. established a liability of $975 million to cover indemnity payments and legal fees associated with the

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resolution of outstanding and expected future asbestos lawsuits and claims. In 1998, an additional liability of $250 million was established. During the third quarter of 2000, OI Inc. established an additional liability of $550 million to cover OI Inc.'s estimated indemnity payments and legal fees arising from outstanding asbestos personal injury lawsuits and claims and asbestos personal injury lawsuits and claims expected to be filed in the ensuing several years. OI Inc.'s ability to reasonably estimate its liability has been significantly affected by the volatility of asbestos-related litigation in the United States, the expanding list of non-traditional defendants that have been sued in this litigation and found liable for substantial damage awards, the continued use of litigation screenings to generate new lawsuits, the large number of claims asserted or filed by parties who claim prior exposure to asbestos materials but have no present physical impairment as a result of such exposure, and the growing number of co-defendants that have filed for bankruptcy. Since the beginning of 2000, A. P. Green Industries, Inc., Armstrong World Industries, Babcock & Wilcox, Federal-Mogul Corporation, Fibreboard Corporation, G-I Holdings (GAF), Harbison-Walker Refractories Group, Kaiser Aluminum Corporation, North American Refractories Co., Owens Corning, Pittsburgh-Corning, Plibrico Company, Porter Hayden Company, USG Corporation, W. R. Grace & Co. and several other smaller companies have sought protection under Chapter 11 of the Bankruptcy Code.

        OI Inc. has continued to monitor trends which may affect its ultimate liability and has continued to analyze the developments and variables affecting or likely to affect the resolution of pending and future asbestos claims against OI Inc. OI Inc. expects that the gross amount of total asbestos-related payments will be moderately lower in 2003 compared to 2002 and will continue to decline thereafter as the preexisting but presently unasserted claims withheld under the claims handling agreements are presented to OI Inc. and as the number of potential claimants continues to decrease. However, the trend toward lower aggregate annual payments has not occurred as soon as had been anticipated when the additional liability was established in 2000. In addition, the number of claims and lawsuits filed against OI Inc. has exceeded the number anticipated at that time. In early March 2002, OI Inc. initiated a comprehensive review to determine whether further adjustment of asbestos-related liabilities was appropriate. At the conclusion of this review in April, OI Inc. determined that an additional charge of $475 million would be appropriate to adjust the reserve for estimated future asbestos-related costs. The material components of OI Inc.'s accrual, including this additional accrued amount, are the following: (i) OI Inc.'s estimate at that date of the reasonably probable contingent liability for asbestos claims already asserted against OI Inc., (ii) OI Inc.'s estimate at that date of the contingent liability for preexisting but unasserted asbestos claims for prior periods arising under its administrative claims-handling agreements with various plaintiffs' counsel, (iii) OI Inc.'s estimate at that time of the contingent liability for asbestos claims not yet asserted against OI Inc., but which OI Inc. believes it is reasonably probable will be asserted in the next several years, to the degree that such an estimation as to future claims is possible, and (iv) OI Inc.'s estimate of legal defense costs likely to be incurred in connection with the foregoing types of claims.

        The significant assumptions underlying the material components of OI Inc.'s accrual are:

        (a)  the extent to which settlements are limited to claimants who were exposed to OI Inc.'s asbestos-containing insulation prior to its exit from that business in 1958;

        (b)  the extent to which claims are resolved under OI Inc.'s administrative claims agreements or on terms comparable to those set forth in those agreements;

        (c)  the extent of reduction in the inventory of pending serious disease cases;

        (d)  the extent to which OI Inc. is able to successfully defend itself at trial;

        (e)  the extent of actions by courts to eliminate or reduce the diversion of financial resources for unimpaired claimants and so-called forum shopping;

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        (f)    the extent to which additional defendants with substantial resources and assets are required to participate significantly in the resolution of future asbestos cases and claims;

        (g)  the number and timing of co-defendant bankruptcies; and

        (h)  the extent to which the resolution of co-defendant bankruptcies divert resources to unimpaired claimants.

        OI Inc. believes that any possible loss or range of loss in addition to the foregoing charge cannot be reasonably estimated. While OI Inc. cannot reasonably estimate the precise timing of payment, OI Inc. believes that its liabilities for the next several years will not exceed the amount accrued based on its expectation of moderate declines in annual spending for asbestos-related costs.

        OI Inc. has previously pursued recovery of its losses from third parties, particularly its insurance carriers, and has largely resolved all of its significant coverage claims. OI Inc. expects some further recovery from deferred payment provisions of existing settlement agreements and from pursuing certain additional reimbursement claims. However, OI Inc. does not expect to recover additional material amounts in excess of the recorded receivable of $13.8 million at September 30, 2002.

        The ultimate amount of distributions which may be required to be made by the Company and other subsidiaries of OI Inc. to fund OI Inc.'s asbestos-related payments cannot be estimated with certainty. OI Inc.'s reported results of operations for 2002 have been materially affected by the $475 million first quarter charge and asbestos-related payments continue to be substantial. Any possible future additional accrual would likewise materially affect OI Inc.'s results of operations in the period in which it might be recorded. Also, the continued use of significant amounts of cash for asbestos-related costs has affected and will continue to affect OI Inc.'s cost of borrowing and its ability to pursue global or domestic acquisitions. However, OI Inc. believes that its operating cash flows and other sources of liquidity will be sufficient to pay its obligations for asbestos-related costs and to fund its working capital and capital expenditure requirements on a short-term and long-term basis.

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MANAGEMENT

Executive Officers and Directors

        We are an indirect, wholly-owned subsidiary of OI Inc. All of our executive officers and directors hold the same position with OI Inc. and receive no separate compensation from the Company. The following table sets forth certain information with respect to the executive officers and directors of OI Inc. as of January 31, 2003.

Name and Age	Position
Executive Officers
Joseph H. Lemieux (71)	Chairman and Chief Executive Officer
Terry L. Wilkison (61)	Executive Vice President, Plastics Group General Manager
Thomas L. Young (58)	Executive Vice President, Administration and General Counsel
John Bachey (54)	Vice President, Glass Container Sales and Marketing
James W. Baehren (52)	Vice President, Director of Finance and Secretary
Joseph V. Conda (61)	Vice President, General Manager of Prescription Products
L. Richard Crawford (41)	Vice President, Global Glass Technology
Jeffrey A. Denker (55)	Treasurer
Larry A. Griffith (56)	Vice President, General Manager of Plastic Containers
W. Bruce Larsen (49)	Vice President, General Manager of Food and Beverage
Gerald J. Lemieux (45)	Vice President, Corporate Strategy
Michael D. McDaniel (54)	Vice President, General Manager of Closure and Specialty Products
Philip McWeeny (63)	Vice President, General Counsel—Corporate and Assistant Secretary
Gilberto Restrepo (62)	Vice President, General Manager of Latin American Glass Container Operations
Peter J. Robinson (59)	Vice President, General Manager of Asia Pacific Operations
Robert A. Smith (61)	Vice President, General Manager of Domestic Glass Container
Franco Todisco (59)	Vice President, General Manager of European Operations
Edward C. White (55)	Vice President and Controller Directors
Directors
Joseph H. Lemieux (71)	Chairman and Chief Executive Officer
Thomas L. Young (58)	Director and Executive Vice President, Administration and General Counsel
George R. Roberts (59)	Director
Michael W. Michelson (51)	Director
James H. Greene, Jr. (52)	Director
Edward A. Gilhuly (43)	Director
Robert J. Dineen (73)	Director
John J. McMackin, Jr. (51)	Director
Anastasia D. Kelly (53)	Director
Gary F. Colter (57)	Director

Mr. Lemieux has been Chairman of the Board of the Company since 1991, Chief Executive Officer of the Company since 1990 and a director since 1987. Mr. Lemieux was President and Chief Operating Officer of the Company and its predecessor from 1986 to 1990. Mr. Lemieux is a director of Manor Care, Inc. He is chairman of the Executive Committee.

Mr. Wilkison has been Executive Vice President, Plastics Group General Manager since 2000. He previously served as Executive Vice President, Latin American Operations (1998-2000), Executive Vice President (1993-1997) and Executive Vice President, Domestic Packaging Operations (1993-1996).

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Mr. Young has been Executive Vice President, Administration and General Counsel and a director since 1998. He previously served as Executive Vice President, Administration, General Counsel, and Secretary (1993-1998). Mr. Young is a director of Manor Care, Inc.

Mr. Bachey has been Vice President since 1997 and Vice President of Glass Container Sales and Marketing since 2000. He previously served as General Manager, European and Latin American Plastics Operations (1999-2000), General Manager, Europe and Latin America, Continental PET Technologies (1998-1999) and Vice President of Glass Container Sales and Marketing (1996-1997).

Mr. Baehren has been Corporate Secretary since 1998 and Vice President, Director of Finance since 2001. He previously served as Associate General Counsel (1996-2001).

Mr. Conda has been Vice President since 1998 and Vice President and General Manager of Prescription Products since 2000. He previously served as Vice President of Glass Container Sales and Marketing (1997-2000) and Vice President and General Manager of Prescription Products (1996-1997).

Mr. Crawford has been Vice President since 2000 and Vice President, Global Glass Technology since 2002. He previously served as Manufacturing Manager of Domestic Glass Container (2000-2002), Vice President of Domestic Glass Container and Area Manufacturing Manager, West Coast (1997-2000) and Domestic Glass Container Area Manufacturing Manager (1994-1997).

Mr. Denker has been Treasurer since 1998. He previously served as Assistant Treasurer (1988-1998) and Director of International Finance (1987-1998).

Mr. Griffith has been Vice President since 1990 and Vice President and General Manager of Plastic Containers since 2001. He previously served as Vice President and General Manager of Closure and Specialty Products (1998-2001), Vice President of International Operations (1997-1998), Vice President and Chief Information Officer (1996-1998) and General Manager of Plastic Components Operations (1996-1997).

Mr. Larsen has been Vice President since 1997 and Vice President, General Manager of Food and Beverage since 2002. He previously served as Vice President and General Manager of Continental PET Technologies (2001-2002), as Vice President and General Manager of Plastic Containers (1999-2001), as Vice President and Director of Operations, Plastic Containers (1998-1999) and as Vice President and Director of Manufacturing, Plastic Containers (1993-1998).

Mr. Gerald J. Lemieux has been Vice President since 1997 and Vice President, Corporate Strategy since 2002. He previously served as Vice President, General Manager of Domestic Glass Container (1997-2002) and as Vice President, Domestic Glass Container Finance and Administration (1992-1997). Mr. Gerald J. Lemieux is the son of Mr. Joseph H. Lemieux.

Mr. McDaniel has been Vice President since 1992 and Vice President and General Manager of Closure and Specialty Products since 2001. He previously served as Vice President and General Manager of Continental PET Technologies (1998-2001) and Vice President and General Manager of Closure and Specialty Products (1991-1998).

Mr. McWeeney has been Vice President and General Counsel—Corporate since 1988.

Mr. Restrepo has been Vice President since 2000 and General Manager of Latin American Glass Container Operations since 2000. He previously served as Vice President of International Operations and General Manager, Western Region—Latin America (1997-2000). Mr. Restrepo has been the President of Cristaleria Peldar, S.A. since 1982.

Mr. Robinson has been Vice President since 1999 and General Manager of Asia Pacific Operations since 1998. Prior to joining the Company, Mr. Robinson served as Chief Executive of ACI Packaging Group (1988-1998).

Mr. Smith has been Vice President since 1993 and Vice President, General Manager of Domestic Glass Container since 2000. He previously served as Vice President and Technical Director (1998-2002), Vice

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President of International Operations (1997-1998) and Vice President of Glass Container Manufacturing (1993-1997).

Mr. Todisco has been Vice President since 1999 and General Manager European Operations since 1999. Prior to joining the Company, Mr. Todisco served as President of AVIR S.p.A. (1994-1999).

Mr. White has been Vice President since 2002 and Controller since 1999. He previously served as Vice President and Director of Finance, Planning, and Administration—International Operations (1997-1999) and Financial Director of OI Group's affiliates in Finland and Poland (1996-1997).

Mr. Roberts has been a director since 1987. Mr. Roberts is a Founding Partner of Kohlberg Kravis Roberts & Co., L.P. and, effective January 1, 1996, he became a managing member of the limited liability company which is the general partner of Kohlberg Kravis Roberts & Co., L.P. Mr. Roberts also is a general partner of KKR Associates, L.P. Mr. Roberts is a director of Accuride Corporation, Alliance Imaging, Inc., Amphenol Corporation, Borden, Inc., The Boyds Collection, Ltd., DPL Inc., Evenflo Company Inc., IDEX Corporation, KinderCare Learning Centers, Inc., KSL Recreation Group, Inc., PRIMEDIA, Inc., Safeway Inc. and Spalding Holdings Corporation. He is a member of the Executive Committee.

Mr. Michelson has been a director since 1987. Mr. Michelson has been a member of the limited liability company which is the general partner of Kohlberg Kravis Roberts & Co., L.P. since January 1, 1996. Prior thereto, he was a general partner of Kohlberg Kravis Roberts & Co., L.P. Mr. Michelson also is a general partner of KKR Associates, L.P. Mr. Michelson is a director of Alliance Imaging, Inc., Amphenol Corporation, AutoZone, Inc. and KinderCare Learning Centers, Inc. He is chairman of the Compensation Committee and a member of the Executive Committee.

Mr. Greene has been a director since 1987. Mr. Greene was a general partner of Kohlberg Kravis Roberts & Co., L.P. from January 1, 1993 until January 1, 1996, when he became a member of the limited liability company which is the general partner of Kohlberg Kravis Roberts & Co., L.P. Mr. Greene has been a general partner of KKR Associates, L.P. since January 1, 1993, and prior thereto was a limited partner of KKR Associates, L.P. and an executive of Kohlberg Kravis Roberts & Co., L.P. Mr. Greene is a director of Accuride Corporation, Birch Telecom, Inc., Safeway Inc. and Shoppers Drug Mart Corporation. He is a member of the Compensation Committee.

Mr. Gilhuly has been a director since 1987. Mr. Gilhuly was a general partner of Kohlberg Kravis Roberts & Co., L.P. from January 1, 1995 until January 1, 1996, when he became a member of the limited liability company which is the general partner of Kohlberg Kravis Roberts & Co., L.P. Mr. Gilhuly has been a general partner of KKR Associates, L.P. since January 1, 1995, and prior thereto was a limited partner of KKR Associates, L.P. and an executive of Kohlberg Kravis Roberts & Co., L.P. Mr. Gilhuly is a director of Layne Christensen Company, MedCath Corporation and Rockwood Specialties, Inc. He is a member of the Executive and Compensation Committees.

Mr. McMackin has been a director since 1994. Mr. McMackin has been a member of the law firm of Williams & Jensen, P.C. for more than five years.

Mr. Dineen has been a director since 1994. Mr. Dineen has been Chairman of the Board of Directors of Layne Christensen Company since 1992. Prior to 1993, Mr. Dineen was President and Chief Executive Officer of The Marley Company for more than five years. Mr. Dineen is a director of Layne Christensen Company. He is chairman of the Audit Committee.

Ms. Kelly has been a director since 2002. Ms. Kelly served as an executive officer of Sears, Roebuck and Co. from 1999 to 2003. She previously served as Senior Vice President (1996-1999) and General Counsel and Secretary (1995-1999) of Fannie Mae, a financial services company. She is a member of the Audit Committee.

Mr. Colter has been a director since 2002. Mr. Colter has been President of CRS Inc. since 2002. He previously served as Vice Chairman of KPMG Canada, 2000-2002; Global Managing Partner, Financial Advisory Services, of KPMG International, 1998-2000; and Vice Chairman of KPMG Canada, 1989-1998. He is a member of the Audit Committee.

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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

Director Compensation

        All of the Company's directors are also directors of OI Inc. Directors who are not officers of OI Inc. and the Company are paid a fee of $55,000 annually plus expenses associated with meetings of OI Inc.'s and the Company's Boards and receive no separate compensation from the Company. In addition, each director who is not an officer of the Company receives a grant under OI Inc.'s Directors Stock Option Plan of an option for 5,000 shares of OI Inc.'s Common Stock annually on the day immediately following the date of the annual meeting of share owners. Options are priced at the fair market value of the Common Stock on the date of grant, have a term of ten years and one day and vest on the first anniversary of the grant date.

Executive Compensation

        All of our executive officers hold the same position with OI Inc. and receive no separate compensation from the Company. The following table shows, for the years ended December 31, 1999, 2000 and 2001, the cash compensation paid by OI Inc. and its subsidiaries, as well as certain other compensation paid or accrued for those years, to the Chief Executive Officer and the four most highly compensated executive officers of the Company and OI Inc. (the "named executive officers") in all capacities in which they served.

											Long Term Compensation
		Annual Compensation									Awards				Payouts
Name and Principle Position	Year	Salary ($)(1)			Bonus ($)(2)			Other Annual Compensation ($)(3)			Restricted Stock Award(s) ($)			Securities Underlying Options/SAR's (#)(4)	Long Incentive Payouts ($)(5)		All Other Compensation ($)(6)
Joseph H. Lemieux Chairman and Chief Executive Officer	2001 2000 1999	$	696,667 650,797 625,697		$	525,000 137,500 278,750		$	1,125,954 346,287 77,681	(7)	$	1,307,468 856,286 2,322,094	(8)	160,000 160,000 160,000	$	335,644 100,358 105,651	$	66,449 64,163 54,243	(9)(10)
Peter J. Robinson V.P., General Manager, Asia Pacific Operations	2001 2000 1999		432,401 471,726 480,168	(11)		544,063 405,879 463,543	(12)		598,911 0 0			602,000 0 558,750	(13)	75,000 100,000 100,000		146,096 124,616 0		4,404 4,446 4,555	(14)
R. Scott Trumbull(15) Executive V.P.—Chief Financial Officer	2001 2000 1999		311,667 292,500 277,500			240,000 180,000 160,000			467,216 104,202 29,846			451,500 0 419,063	(16)	75,000 75,000 75,000		108,202 94,502 97,718		12,976 12,594 11,100	(10)
Terry L. Wilkison Executive V.P.—Plastics Group General Manager	2001 2000 1999		315,833 292,500 277,500			250,000 200,000 160,000			413,241 33,005 11,791			451,500 0 419,063	(17)	100,000 75,000 75,000		108,272 73,093 78,778		8,489 5,956 883	(10)
Thomas L. Young Executive V.P.— Administration and General Counsel	2001 2000 1999		315,833 292,500 276,333			250,000 200,000 160,000			459,331 85,921 29,057			451,500 0 558,750	(18)	100,000 75,000 75,000		107,848 91,763 93,600		8,106 12,948 11,053	(10)

(1)	Includes amounts deferred at the election of the named executive officer pursuant to the salary reduction provisions of the Stock Purchase and Savings Program.
(2)	Except as otherwise provided in footnote 12 below, the amounts disclosed in this column represent awards under the Owens-Illinois, Inc. Senior Management Incentive Plan for the year indicated. Except as otherwise provided in footnote 8 below, amounts, if any, deferred at the election of a named executive officer are included in the year earned.
(3)	The amounts disclosed in this column represent amounts reimbursed during the year for the payment of taxes, including taxes due in connection with the grant in 2001 of shares of restricted stock under OI Inc.'s 1997 Equity Participation Plan in the following amounts: Mr. Lemieux, $974,049; Mr. Robinson, $566,932; Mr. Trumbull, $436,818; Mr. Wilkison, $385,527; and Mr. Young, $436,818.
(4)	No SAR's were granted to any of the named executive officers during 2001.
(5)	The amounts disclosed in this column represent awards under the Owens-Illinois, Inc. Performance Award Plan for the year indicated. Except as otherwise provided in footnote 8 below, amounts, if any, deferred at the election of an executive officer are included in the year earned.

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(6)	Except as otherwise provided in footnotes 9, 10 and 14 below, the amounts disclosed in this column for 2001 represent matching cash contributions by OI Inc. to the Stock Purchase and Savings Program ("SPASP") and the Executive Deferred Savings Plan, both defined contribution plans. The SPASP is a tax-qualified defined contribution plan intended to satisfy the requirements of Section 401(k) of the Internal Revenue Code of 1986. OI Inc. contributes to each participant's account maintained under the SPASP an amount of OI Inc. stock equal to 50% of the participant's contributions to the SPASP but not more than 4% of (a) the participant's earnings or (b) $170,000 for 2001, whichever is lower. The difference between the theoretical OI Inc. matching contribution under the SPASP for each participant, without regard to the legally imposed maximum, and the maximum contribution permitted under law is used to determine the number of theoretical shares of OI Inc. Common Stock which would have been purchased for the participants account in the absence of the IRS limitation on participant's earnings in excess of $170,000 for 2001. Amounts deferred into the Executive Deferred Savings Plan at the election of the participant may be credited to either a cash deferral account earning interest at a prescribed rate or an OI Inc. stock deferral account. Any balance in the plan is paid in cash to the individual at termination of employment.
(7)	The amount shown reflects $1,065,060 reimbursed to Mr. Lemieux in 2001 for the payment of taxes, including the amount of $974,049 representing taxes due in connection with the grant of 160,000 shares of restricted stock in 2001. The amount shown also reflects the values of certain perquisites provided by OI Inc. to Mr. Lemieux totaling $60,894, of which $28,359 is attributable to his personal use of OI Inc. aircraft and $19,819 is attributable to financial planning provided by OI Inc.
(8)	Represents 188,689 shares of restricted stock granted to Mr. Lemieux under OI Inc.'s 1997 Equity Participation Plan of which 28,689 was granted in lieu of cash payments in the amounts of $175,000 and $111,881 pursuant to elections by Mr. Lemieux under OI Inc.'s Senior Management Incentive Plan and Performance Award Plan, respectively. As of December 31, 2001, Mr. Lemieux held 390,105 shares of restricted stock of OI Inc. with a value of $3,897,149 (determined by the closing price of the Common Stock on the New York Stock Exchange on December 31, 2001).
(9)	Also includes a premium of $37,270 paid by OI Inc. on a whole life insurance policy owned by Mr. Lemieux.
(10)	Includes the following amounts equal to the value of premiums paid by OI Inc. in connection with life insurance policies issued pursuant to the Owens-Illinois Executive Life Insurance Plan and Participation Agreements entered into between OI Inc. and certain named executive officers during 2001: Mr. Lemieux, $9,328; Mr. Trumbull, $926; Mr. Wilkison, $1,689; and Mr. Young, $1,306.
(11)	Includes payment in the amount of $84,124, which payments were made to Mr. Robinson in lieu of contributions on his behalf to a superannuation fund to provide post-retirement pension benefits.
(12)	Includes $119,265 paid to Mr. Robinson under the ACI Packaging Services Pty Limited Senior Executive Retention and Confidentiality Agreement. Mr. Robinson's bonus is provided under a separate bonus plan relating to OI Inc.'s Asia Pacific business.
(13)	As of December 31, 2001, Mr. Robinson held phantom stock units under OI Inc.'s 1997 Equity Participation Plan with respect to 20,000 shares of Common Stock of OI Inc. and 100,000 shares of restricted stock of OI Inc. with a combined value of $1,198,800 (determined by the closing price of the Common Stock on the New York Stock Exchange on December 31, 2001).
(14)	Represents the statutory minimum amounts contributed by OI Inc. to a superannuation fund on behalf of Mr. Robinson.
(15)	Mr. Trumbull retired as Executive Vice President and Chief Financial Officer of the Company as of the end of 2002.
(16)	As of December 31, 2001, Mr. Trumbull held 90,000 shares of restricted stock of OI Inc. with a value of $899,100 (determined by the closing price of the Common Stock on the New York Stock Exchange on December 31, 2001).
(17)	As of December 31, 2001, Mr. Wilkison held 90,000 shares of restricted stock of OI Inc. with a value of $899,100 (determined by the closing price of the Common Stock on the New York Stock Exchange on December 31, 2001).
(18)	As of December 31, 2001, Mr. Young held 95,000 shares of restricted stock of OI Inc. with a value of $949,050 (determined by the closing price of the Common Stock on the New York Stock Exchange on December 31, 2001).

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Option/SAR Grants in Last Fiscal Year(1)

        The following table provides information on option grants for OI Common Stock in 2001 to the named executive officers.

	Individual Grants
								Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(3)
	Number of Securities Underlying Options/SARs Granted (#)
			% of Total Options/SARs Granted to Employees in Fiscal Year
Name					Exercise or Base Price ($/Sh)		Expiration Date
								5%		10%
Joseph H. Lemieux	160,000(2	)	9.3	%	$	5.6875	01/03/11	$	572,294	$	1,450,306
Peter J. Robinson	75,000(2	)	4.3	%		5.6875	01/03/11		268,263		679,831
R. Scott Trumbull	75,000(2	)	4.3	%		5.6875	01/03/11		268,263		679,831
Terry L. Wilkison	100,000(2	)	5.8	%		5.6875	01/03/11		357,684		906,441
Thomas L. Young	100,000(2	)	5.8	%		5.6875	01/03/11		357,684		906,441

(1)

No SARs were granted to any of the named executive officers during 2001.

(2)

Exercises of one-half of the options are permitted after each of the fifth and sixth anniversaries of the date of the grant; provided, options shall become exercisable after the first anniversary of the date of the grant thereof at the time when the average fair market value per share (as evidenced by the closing price of the underlying stock on the principal exchange on which it is traded) for any period of 20 consecutive trading days (commencing after such first anniversary) is at least equal to the product of the fair market value per share on the date of grant times the amount shown below under "Stock Price Multiple" as to the percentage of the shares of stock initially subject to the option shown below under "Exercise Percentage."

Stock Price Multiple		Resulting Stock Price		Exercise Percentage
120	%	$	6.83	25	%
144	%		8.19	50	%
172	%		9.78	75	%
206	%		11.72	100	%

Under the Second Amended and Restated Stock Option Plan for Key Employees of Owens-Illinois, Inc., for all options granted between January 1, 1992 and December 31, 1996, rights to receive Additional Options, as defined in the Second Amended and Restated Stock Option Plan for Key Employees of Owens-Illinois, Inc., are attached to each option and Additional Options will be granted upon exercise, subject to certain conditions, if the exercise price is paid using shares of Common Stock owned by the optionee or the related tax obligation is paid using shares of Common Stock owned by the optionee or by relinquising Common Stock which the optionee is entitled to receive upon the exercise of the options. Under the 1997 Equity Participation Plan of Owens-Illinois, Inc., for all options granted under the plan, rights to receive Additional Options, as defined in the 1997 Equity Participation Plan of Owens-Illinois, Inc., are attached to each option and Additional Options will be granted upon exercise, subject to certain conditions, if the exercise price is paid using shares of Common Stock owned by the optionee or the related tax obligation is paid using shares of Common Stock owned by the optionee or by relinquishing Common Stock which the optionee is entitled to receive upon the exercise of the options.

(3)

Based on actual option term and annual compounding. The assumed annual rates of appreciation of 5 and 10 percent would result in the price of OI Inc.'s Common Stock increasing to $9.264 and $14.752, respectively.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values

        Shown below is information with respect to the unexercised options to purchase OI Inc.'s Common Stock granted in 2001 and prior years to the named executive officers and held by them at December 31, 2001. No options were exercised by named executive officers in 2001.

85

	At December 31, 2001		At December 31, 2001(1)
	Number of Securities Underlying Unexercised Options/SARs		Value of Unexercised In-the-Money Options/SARs
Name	Exercisable	Unexercisable	Exercisable		Unexercisable
Joseph H. Lemieux	325,000	790,000	$	0	$	688,400
Peter J. Robinson	0	375,000		0		322,688
R. Scott Trumbull	47,500	326,250		0		322,688
Terry L. Wilkison	0	325,000		0		430,250
Thomas L. Young	83,491	381,250		0		430,250

(1)

Based on the closing price of OI Inc.'s Common Stock on the New York Stock Exchange on that date of $9.99.

Long-Term Incentive Plans—Awards in Last Fiscal Year

        The named executive officers are covered by OI Inc.'s Performance Award Plan ("PAP") under which eligible employees receive annual cash awards payable at the end of the three-year period covered by the grant of the award. Award payouts under PAP are based on the average annual attainment of the performance objectives set by the Compensation Committee of OI Inc.'s Board. For the 2001-2003 award period, performance will be evaluated in comparison to OI Inc.'s attained level of earnings per share relative to objectives for that period. The target amounts shown below are earned by OI Inc. performance at the level of 100% of the established objectives, with such payment percentage increasing or decreasing four percentage points for each single percentage point increase or decrease, respectively, in performance.

	Performance or Other Period Until Maturation or Payout	Estimated Future Payouts under Non-Stock Price-Based Plans
Name
		Threshold		Target		Maximum
Joseph H. Lemieux	2001-2003	$	106,750	$	543,750	(1	)
Peter J. Robinson	2001-2003		29,120		145,600	(1	)
R. Scott Trumbull	2001-2003		26,080		130,400	(1	)
Terry L. Wilkison	2001-2003		26,496		132,480	(1	)
Thomas L. Young	2001-2003		26,400		132,000	(1	)

(1)

The maximum dollar amount that may be earned under PAP is not capped.

Pension Plans

        The following table illustrates the estimated annual benefits payable under the Owens-Illinois Salary Retirement Plan (the "Retirement Plan") and nonqualified retirement plans in various average earnings classifications upon normal retirement at age 65:

	Years of Credited Service
Highest Three-Year Average Annual Earnings
	20		25		30		35		40		45
$  200,000	$	52,532	$	65,664	$	78,797	$	91,930	$	104,050	$	116,170
400,000		108,594		135,743		162,891		190,040		213,330		237,570
600,000		165,737		207,171		248,606		290,040		322,610		358,970
800,000		222,880		278,600		334,320		390,040		431,890		480,370
1,000,000		280,023		350,029		420,034		490,040		541,170		601,770
1,200,000		337,166		421,457		505,749		590,040		650,450		723,170
1,400,000		394,309		492,886		591,463		690,040		759,730		844,570
1,600,000		451,451		564,314		677,177		790,040		869,010		965,970
1,800,000		508,594		635,743		762,891		890,040		978,290		1,087,370
2,000,000		565,737		707,171		848,606		990,040		1,087,570		1,208,770
2,200,000		622,880		778,600		934,320		1,090,040		1,196,850		1,330,170

        The above pension table illustrates benefits calculated on a straight-life annuity basis, and reflects the greater of the regular benefit or the "grandfathered" benefit available under the formula in effect prior to January 1, 1989. The regular benefit does not contain an offset for social security or other amounts, whereas the "grandfathered" benefit does provide for a partial offset for social security benefits.

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        The compensation covered by the plans under which the benefits are summarized in the table above equals the sum of base salary, Senior Management Incentive Plan and Performance Award Plan payments, as reported in the Summary Compensation Table for the named executive officers for the last three fiscal years, and is equal to the highest three-year average of such amounts. At January 31, 2002, Mr. Lemieux had 44 years of credited service, Mr. Trumbull had 30 years of credited service, Mr. Wilkison had 3 years of credited service and Mr. Young had 25 years of credited service under the Retirement Plan. To the extent that benefits in the preceding table cannot, under the limitations of the Code, be provided under the Retirement Plan, such benefits will be provided under OI Inc.'s Supplemental Retirement Benefit Plan (the "SRBP"). Peter J. Robinson is not covered by an OI Inc.- sponsored pension plan.

        A significant portion of the pension benefits payable to certain named executive officers is provided under the SRBP. Such benefits have historically represented an unfunded liability of OI Inc. OI Inc. previously provided for funding of a significant portion of the retirement benefits due under the SRBP through cash payments to certain participants in the plan. Such funding arrangements offset the liabilities under the SRBP at the time of such funding.

        Employment Agreements.    OI Inc. entered into employment agreements with certain officers, including the named executive officers listed above, that entitle the participants to receive their base salaries and to participate in designated benefit plans of OI Inc. The agreements provide for termination of employment at any time, with or without cause, and the benefit plans designated therein and each employee's rights to receive salary and bonuses pursuant thereto are subject to modification by OI Inc. in its sole discretion.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth certain information regarding the beneficial ownership of OI Inc. Common Stock as of January 31, 2003 with respect to each of OI Inc.'s directors, named executive officers and all directors and officers, and as of March 11, 2002 with respect to all other beneficial owners of more than five percent of OI Inc.'s outstanding Common Stock (except as otherwise noted in the footnotes below) known to OI Inc. Joseph H. Lemieux, R. Scott Trumbull, Gerald J. Lemieux and L. Richard Crawford own 30,000, 28,000, 2,500 and 200 shares of OI Inc.'s $2.375 Convertible Preferred Stock, respectively, which shares are reflected in the totals shown below at a conversion rate of 0.9491 shares of Common Stock for each share of Convertible Preferred Stock. No other director, nominee for director, named executive officer or other executive officer beneficially owned any of OI Inc.'s preferred stock.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned(1)		Percentage
KKR Associates, L.P.(2) 9 West 57th Street New York, New York 10019	36,000,000		24.5	%
Alliance Capital Management L.P.(3) 1290 Avenue of the Americas New York, New York 10104	18,235,104		12.4
FMR Corp.(4) 82 Devonshire Street Boston, Massachusetts 02109	7,642,679		5.2
Massachusetts Financial Services Company(5) 500 Boylston Street Boston, Massachusetts 02116	7,626,133		5.2
State Street Bank and Trust Company(6) 225 Franklin Street Boston, MA 02110	20,370,812		13.9
Joseph H. Lemieux(1)	1,536,402	(7)(8)	1.0
Thomas L. Young(1)	328,832	(7)(8)	0.2
Gary F. Colter (1)	—		—
Robert J. Dineen(1)	27,282		—
Edward A. Gilhuly(2)	10,000		—
James H. Greene, Jr.(2)	—		—
Anastasia D. Kelly	1,000		—
John J. McMackin, Jr.(1)	28,019		—
Michael W. Michelson(2)(9)	20,000		—
George R. Roberts(2)	—		—
Peter J. Robinson(1)	254,750	(7)(8)	0.2
R. Scott Trumbull(1)	424,308	(7)(8)	0.3
Terry L. Wilkison(1)	284,542	(7)(8)	0.2
All directors and executive officers as a group (other than as set forth in relation to KKR Associates, L.P.) (27 persons)(1)	4,500,103	(7)(8)	3.0

(1)

For purposes of this table, a person or group of persons is deemed to have "beneficial ownership" of any shares as of a given date if such person has the right to acquire such shares within 60 days after such date. For purposes of computing the percentage of outstanding shares held by each person or group of persons named above on a given date, any security which such person or persons has the right to acquire within 60 days after such date is deemed to be outstanding, but is

88

not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The information includes: all currently exercisable options granted to Messrs. Lemieux, Young, Dineen, McMackin, Robinson, Trumbull and Wilkison. The number of shares beneficially owned includes 602,500 shares subject to options granted to Mr. Lemieux; 169,532 shares subject to options granted to Mr. Young; 18,182 shares subject to options granted to Mr. Dineen; 18,391 shares subject to options granted to Mr. McMackin; 33,750 shares subject to options granted to Mr. Robinson; 168,750 shares subject to options granted to Mr. Trumbull; 128,750 shares subject to options granted to Mr. Wilkison; and 1,909,505 shares subject to options granted to all directors and officers as a group (other than as set forth in relation to KKR Associates, L.P.). For purposes of this table, Mr. Robinson is deemed to have "beneficial ownership" of 20,000 phantom stock units issued under OI Inc.'s 1997 Equity Participation Plan.

(2)

Shares shown as owned by KKR Associates, L.P. are owned of record by three limited partnerships of which KKR Associates, L.P. is the sole general partner and as to which it possesses sole voting and investment power. KKR Associates is a limited partnership of which George R. Roberts, Michael W. Michelson, James H. Greene, Jr., Edward A. Gilhuly (all directors of the Company), Henry R. Kravis, Robert I. MacDonnell, Paul E. Raether, Michael T. Tokarz, Perry Golkin, and Scott Stuart are the general partners. Such persons may be deemed to share beneficial ownership of the shares shown as owned by KKR Associates, L.P. The foregoing persons disclaim beneficial ownership of such shares of OI Inc.

(3)

The Schedule 13G received by OI Inc. from AXA Financial, Inc. indicated that Alliance Capital Management L.P. is the beneficial owner of 18,235,104 shares of the Common Stock on behalf of client discretionary investment advisory accounts, with sole power to vote or to direct the vote on 11,575,848 shares, shared power to vote or direct the vote on 1,158,867 shares and the sole power to dispose or to direct the disposition of 18,235,104 shares. Alliance Capital Management L.P. is majority owned by AXA Financial, Inc. In turn, AXA Financial, Inc. is majority owned by AXA, which is controlled by AXA Conseil Vie Assurance Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle and AXA Courtage Assurance Mutuelle.

(4)

The Schedule 13G received by OI Inc. from FMR Corp. ("FMR"), Edward C. Johnson 3d, Abigail P. Johnson and Fidelity Management & Research Company ("Fidelity"), a wholly-owned subsidiary of FMR, indicated that FMR is the beneficial owner of 7,642,679 shares of the Common Stock, with sole power to vote or to direct the vote of 858,700 shares and the sole power to dispose or to direct the disposition of 7,642,679 shares. Fidelity is the beneficial owner of 6,783,979 shares of the Common Stock as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. That number includes 749,409 shares of Common Stock resulting from the assumed conversion of 789,600 shares of OI Inc.'s $2.375 Convertible Preferred Stock (0.9491 shares of Common Stock for each share of Convertible Preferred Stock). Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the funds each has sole power to dispose of the 6,783,979 shares owned by the Funds. Neither FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds. Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp. is the beneficial owner of 269,600 shares of Common Stock as a result of its serving as investment manager of the institutional account(s). Edward C. Johnson 3d and FMR Corp., through its control of Fidelity Management Trust Company, each has sole dispositive power over 269,600 shares and sole power to vote or to direct the voting of 269,600 shares of Common Stock owned by the institutional account(s) as reported above. Fidelity International Limited is the beneficial owner of 589,100 shares of Common Stock.

(5)

The Schedule 13G received by OI Inc. from Massachusetts Financial Services Company ("MFS") indicated that MFS, together with certain other non-reporting entities, is the beneficial owner of 7,626,133 shares of the Common Stock, with sole power to vote or to direct the vote on 7,626,133

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shares and the sole power to dispose or to direct the disposition of 7,626,133 shares. That number includes 325,873 shares of Common Stock resulting from the assumed conversion of 343,350 shares of OI Inc.'s $2.375 Convertible Preferred Stock (0.9491 shares of Common Stock for each share of Convertible Preferred Stock).

(6)

The Schedule 13G received by OI Inc. from State Street Bank and Trust Company ("State Street"), acting in various fiduciary capacities, indicated it is beneficial owner of 20,370,812 shares of Common Stock, with sole voting power with respect to 1,315,886 shares of Common Stock, shared voting power with respect to 18,959,672 shares of Common Stock, sole dispositive power with respect to 12,639,310 shares of Common Stock, and shared dispositive power with respect to 7,731,502 shares of Common Stock. The majority of the shares with respect to which State Street is the beneficial owner are owned on behalf of (a) the Owens-Illinois Hourly Supplemental Retirement Plan, (b) the Owens-Illinois Non-Union Retirement and Savings Plan, (c) the Owens-Illinois Stock Purchase and Savings Program, and (d) the Owens-Illinois Long Term Savings Plan.

(7)

The table includes the number of shares of Common Stock that Joseph H. Lemieux, Thomas L. Young, R. Scott Trumbull, Terry L. Wilkison and all directors and officers as a group (other than as set forth in relation to KKR Associates, L.P.) held in the Stock Purchase and Savings Program as of January 31, 2003. No shares are held in such program for Peter J. Robinson.

(8)

The number of shares shown as beneficially owned includes the following number of shares of unvested restricted stock over which the following persons or group had voting, but not investment, power as of January 31, 2003; Mr. Lemieux—409,143 shares; Mr. Young—115,000 shares; Mr. Robinson—118,000 shares; Mr. Trumbull—108,000 shares; Mr. Wilkison—110,000 shares; and all directors and officers as a group (other than as set forth in relation to KKR Associates, L.P.)—1,337,002 shares. The number of shares shown as beneficially owned by Mr. Robinson also includes 20,000 phantom stock units issued under OI Inc.'s 1997 Equity Participation Plan.

(9)

Does not include 3,000 shares of Common Stock held in an irrevocable trust created by Mr. Michelson for the benefit of his children with respect to which Mr. Michelson disclaims any beneficial ownership. The limited partnership agreements pursuant to which two of the limited partnerships noted in footnote 2 above (the "KKR Partnerships") were organized, by their terms, expired on December 31, 2000. The limited partnership agreement may be amended by all of the limited partners to extend the term beyond such date. No such amendment has been adopted. There can be no assurance that KKR Associates, L.P., as general partner of the KKR Partnerships, will seek an amendment or, if sought, that an amendment will be approved by the limited partners. In connection with the dissolution and winding up of the limited partnerships, KKR Associates, L.P. has sole discretion regarding the timing (which may be one or more years after the expiration of the partnership agreements) and manner of the disposition of any Common Stock held by such limited partnerships, including public or private sales of such Common Stock, the distribution of such Common Stock to the limited partners of the limited partnerships or a combination of the foregoing.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        During 2002, the law firm of Williams & Jensen, P.C., of which Mr. McMackin is a member, received fees for legal services in connection with various matters. It is anticipated that OI Inc. will continue to utilize the services of Williams & Jensen, P.C. on various matters.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

The Secured Credit Agreement

        As of September 30, 2002, the secured credit agreement consisted of an aggregate of $3.065 billion in financing under (1) a $65 million term loan (the "Term Facility") extended to Owens-Brockway Glass Container Inc. and (2) a $3.0 billion revolving loan facility (including the subfacilities described below, the "Revolving Facility") consisting of a general revolving loan facility of $2.5 billion available to OI Plastic Products FTS Inc. and Owens-Brockway Glass Container Inc. (collectively, with OI General FTS Inc., the "Domestic Borrowers") and a $500.0 million tranche of separated funded loans of OI Plastic Products FTS Inc. The Company used a portion of the net cash proceeds from the issuance of $450.0 million of the 8³/4% Senior Secured Notes due 2012 to repay in full the Term Facility. OI General FTS Inc. has repaid in full its term loan under the secured credit agreement but remains jointly and severally liable for all revolving loans. Each Domestic Borrower is jointly and severally liable for loans made to any borrower under the Revolving Facility. The Revolving Facility also includes:

•

a $300.0 million subfacility (the "U.K. Subfacility") available to certain of OI Group's U.K. subsidiaries (the "U.K. Borrowers");



•

a $1.1 billion subfacility (the "Australian Subfacility") available to certain of OI Group's Australian subsidiaries (the "Australian Borrowers"); and



•

a $10.0 million subfacility (the "Italian Subfacility") available to certain of OI Group's Italian subsidiaries (the "Italian Borrowers").

Each U.K. Borrower is jointly and severally liable for the obligations of each other U.K. Borrower. Each Australian Borrower is jointly and severally liable for the obligations of each other Australian Borrower. Each Italian Borrower is jointly and severally liable for the obligations of each other Italian Borrower. In addition, the Revolving Facility includes a $500.0 million letter of credit subfacility available to the Domestic Borrowers, the U.K. Borrowers and the Australian Borrowers and certain overdraft facilities.

        The Revolving Facility expires on March 31, 2004. As of September 30, 2002, loans of $2.4 billion were outstanding under the Revolving Facility and $106.0 million of issued but undrawn letters of credit were outstanding.

        Loans under the Revolving Facility bear interest, generally at the applicable borrower's option, at:

•

the higher of (A) the prime rate or (B) 50 basis points over an averaged federal funds rate, plus in either case 75 basis points, if the applicable leverage ratio then in effect under the secured credit agreement is less than 3.5:1, or 100 basis points, if the applicable leverage ratio is greater than or equal to 3.5:1; or



•

a reserve adjusted Eurodollar rate plus 175 basis points, if the applicable leverage ratio then in effect under the secured credit agreement is less than 3.5:1, or 200 basis points, if the applicable leverage ratio is greater than or equal to 3.5:1.

        Each Domestic Borrower has guaranteed the obligations of each borrower under the secured credit agreement (including the offshore subfacilities). In addition, the secured credit agreement (including the offshore subfacilities) is guaranteed by OI Group and substantially all other direct and indirect domestic subsidiaries of OI Group. The U.K. Borrowers have guaranteed the obligations of the Australian Borrowers and the Italian Borrowers under the secured credit agreement. In addition, certain wholly-owned U.K. subsidiaries of the U.K. Borrowers (the "U.K. Guarantors") have guaranteed the obligations of the U.K. Borrowers under the U.K. Subfacility; and certain wholly-owned Australian subsidiaries of the Australian Borrowers (the "Australian Guarantors") have guaranteed the obligations of the Australian Borrowers under the Australian Subfacility.

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        The secured credit agreement and the domestic guaranties of the secured credit agreement, subject to certain exceptions and limitations, are secured on a first priority basis by substantially all of the assets of OI Group and substantially all of the assets of substantially all present and future direct and indirect domestic subsidiaries of OI Group, including the stock and intercompany debt of such subsidiaries. In addition, the U.K. Subfacility and the guaranties of the U.K. Borrowers and U.K. Guarantors are secured by substantially all of the assets of the U.K. Borrowers and U.K. Guarantors, and the Australian Subfacility and the guaranties of the Australian Borrowers and the Australian Guarantors are secured by substantially all of the assets of the Australian Borrowers and the Australian Guarantors. Real property with an acquisition cost or insurable value of less than $25.0 million has generally been excluded. The secured credit agreement also requires under certain circumstances certain additional existing and future subsidiaries to guaranty the secured credit agreement and grant security interests in their assets to secure the secured credit agreement. The secured credit agreement and related collateral documents provide that, subject to certain conditions, the domestic guaranties and liens supporting the secured credit agreement may be shared from time to time with specified types of other obligations owing to lenders or affiliates of lenders party to the secured credit agreement incurred or guaranteed by OI Group or its subsidiaries as lending facilities and interest rate and currency agreements and certain other indebtedness permitted by the secured credit agreement, including the notes. In the event the rating for OI Inc.'s and OI Group's long term unsecured debt from Standard & Poor's Ratings Services and Moody's Investors Service, Inc. is BBB- and Baa3 or higher, respectively, and acknowledged by the collateral agent, the security interests in the collateral securing the secured credit agreement will terminate, provided that no default exists and all of OI Inc.'s outstanding public debt securities, the notes and other institutional debt shall be and remain unsecured. The Domestic Borrowers may assign or transfer their rights and obligations under the secured credit agreement to OI Inc. and all of OI Inc.'s subsidiaries will be concurrently released from their guarantees upon the consent of the requisite percentage of lenders under the secured credit agreement if OI Inc. has achieved, and immediately following such assumption maintains, specified investment grade ratings and all obligations of subsidiaries of OI Inc. in respect of OI Inc.'s outstanding public debt securities, the notes and certain other debt have been released and assumed by OI Inc.

        Loans and commitments under the secured credit agreement are subject to mandatory prepayment and reduction under certain circumstances from proceeds of permitted asset sales (including sales of receivables), the sale or issuance of permitted debt securities, the sale or issuance of certain equity securities, and from insurance and condemnation proceeds, in each case received by OI Group and/or OI Group's subsidiaries (with certain exceptions for non-U.S. subsidiaries), and in some cases by OI Inc. Voluntary prepayment of any of the loans under the secured credit agreement is permitted in whole or in part with prior notice and without premium or penalty (other than funding losses), subject to limitations as to minimum amounts.

        The secured credit agreement contains covenants and provisions that, among other things, restrict the ability of OI Group and its subsidiaries to dispose of assets, incur additional indebtedness, prepay other indebtedness or amend certain debt instruments, pay dividends, create liens on assets, enter into contingent obligations, enter into sale and leaseback transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, change the business conducted by OI Group and its subsidiaries, engage in certain transactions with affiliates and otherwise restrict certain corporate activities.

        In addition, the secured credit agreement contains financial covenants that require OI Group and its subsidiaries to maintain, based upon the financial statements of OI Inc. and its subsidiaries on a consolidated basis, the following financial ratios and tests:

        The fixed charge coverage ratio (the ratio of cash flow available for fixed charges to fixed charges) must be at least 1.25 to 1.0 for any fiscal quarter through September 30, 2003 and at least 1.30 to 1.0 for any fiscal quarter through March 31, 2004.

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        The leverage ratio (the ratio of total debt to adjusted EBITDA) may not exceed 4.50 to 1.0 as of the last day of each fiscal quarter through March 31, 2003, may not exceed 4.25 to 1.0 as of the last day of each fiscal quarter through September 30, 2003 and may not exceed 4.0 to 1.0 as of the last day of each fiscal quarter through March 31, 2004.

        Consolidated net worth may not at any time be less than the sum of (i) $1.65 billion plus (ii) 60% of consolidated adjusted net income for the period from January 1, 2001 through the date of calculation taken as one accounting period plus (iii) 90% of any after-tax gains or losses attributable to asset sales for the period from January 1, 2001 through the date of calculation taken as one accounting period.

        Capital expenditures cannot exceed $615 million in 2002 and $625 million in each of 2003 and 2004.

        At September 30, 2002, the borrowers under the secured credit agreement were in compliance with all of these requirements.

        Events of default under the secured credit agreement include, among other matters: (1) any failure to pay principal when due or to reimburse letters of credit when reimbursement is due, or to pay interest, fees or other amounts within five days after the date due; (2) any failure by OI Inc. or any of its subsidiaries to pay when due principal or interest on certain indebtedness that gives rise to a right of acceleration, and other breaches or defaults by OI Inc. or its subsidiaries under such indebtedness similarly giving rise to acceleration rights; (3) the breach by OI Group or certain of its subsidiaries of certain covenants, representations or warranties in the secured credit agreement; (4) any other default by OI Group or certain subsidiaries under the secured credit agreement that has not been remedied or waived within 30 days of the requisite notice; (5) certain events of bankruptcy, insolvency or dissolution of OI Inc., OI Group, any borrower or any material subsidiary, and certain material judgments entered against the same; (6) a change of control of OI Inc., OI Group or the Company as defined in the secured credit agreement; (7) certain ERISA and pension-related matters and liabilities; (8) material impairment of the guarantees or the collateral security; and (9) certain changes in the activities of OI Inc.

Senior Secured Notes due 2009 and 2012

        In January 2002, the Company issued $1.0 billion of the 8⁷/8% Senior Secured Notes due 2009. In November 2002, the Company issued $450.0 million of the 8³/4% Senior Secured Notes due 2012. In December 2002, Company issued $175.0 million of the 8³/4% Senior Secured Notes due 2012. The 8⁷/8% Senior Secured Notes due 2009 are senior obligations of the Company and rank pari passu in right of payment with all current and future senior debt of the Company, including its obligations under the secured credit agreement and the 8³/4% Senior Secured Notes due 2012. The guarantees of the 8⁷/8% Senior Secured Notes due 2009 rank equal in right of payment to the guarantees of OI Group and the subsidiary guarantors of their existing and future senior obligations, including their obligations under the secured credit agreement and the 8³/4% Senior Secured Notes due 2012. The terms of the 8⁷/8% Senior Secured Notes due 2009, including the collateral securing those notes and guarantees thereof, are substantially similar to the terms of the 8³/4% Senior Secured Notes due 2012.

Indebtedness of OI Inc.

        OI Inc. has issued the following outstanding public debt securities:

        $300 million of 7.85% Senior Notes due 2004

        $350 million of 7.15% Senior Notes due 2005

        $300 million of 8.10% Senior Notes due 2007

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        $250 million of 7.35% Senior Notes due 2008

        $250 million of 7.50% Senior Debentures due 2010

        $250 million of 7.80% Senior Debentures due 2018

        OI Inc.'s obligations under these outstanding public debt securities are guaranteed on a subordinated basis by OI Group and OI Packaging. The guarantees and the outstanding public debt securities are secured by a second priority lien on the intercompany debt owed to and capital stock owned by OI Group and OI Packaging.

        The guarantees by OI Group and OI Packaging are subordinated to the prior payment in full in cash of all obligations of these guarantors under the secured credit agreement, obligations owing to lenders or their affiliates as lending facilities as permitted by the terms of the secured credit agreement and obligations under interest rate and currency agreements with lenders or their affiliates as permitted by the terms of the secured credit agreement. The guarantees will also be subordinated to the guarantees by OI Group and OI Packaging of our obligations under the notes. Each of OI Group and OI Packaging will be released and relieved of any obligations under its guarantee of OI Inc.'s outstanding public debt securities (1) in the event of a sale or other disposition of all or substantially all of the assets of such guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of its capital stock, to a person that is not a subsidiary of OI Inc., or (2) at the discretion of OI Inc., in the event that the guarantor is no longer a guarantor of: (A) the obligations under the secured credit agreement; (B) obligations under certain interest rate and currency agreements with lenders or their affiliates as permitted by the terms of the secured credit agreement; and (C) obligations owing to lenders or their affiliates as lending facilities as permitted by the terms of the secured credit agreement.

        The security interests are second in priority to the liens granted to the senior secured parties under the pledge agreement, which currently consist of the collateral agent for the benefit of the lenders under the secured credit agreement, lenders or their affiliates party to certain interest rate and currency agreements as permitted by the terms of the secured credit agreement and lenders and their affiliates under lending facilities as permitted by the terms of the secured credit agreement, the 8⁷/8% Senior Secured Notes due 2009, and which will include the holders of the notes. The security interests securing OI Inc.'s outstanding public debt securities will terminate and the collateral will be released upon the earlier of:

•

payment in full of all obligations under the secured credit agreement and the cancellation or termination of the secured credit agreement and related letters of credit and the written election of OI Group and OI Packaging;



•

the first date on which the pledged collateral no longer secures any obligations under the secured credit agreement and upon the written election of OI Group and OI Packaging; and



•

the achievement of "investment grade" debt ratings for OI Inc.'s and OI Group's long term unsecured debt (in the case of Moody's Investors Service, Inc., a rating of Baa3 or higher, and, in the case of Standard & Poor's Ratings Services, a rating of BBB- or higher).

        In addition, lenders under the secured credit agreement have the ability to direct the collateral agent to release the collateral upon the approval of the requisite percentage of lenders under the secured credit agreement.

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DESCRIPTION OF NOTES

        You can find the definitions of certain terms used in this description under the subheading "—Certain Definitions." In this description, the word "Company" refers only to Owens-Brockway Glass Container Inc. and not to any of its Subsidiaries, the term "OI Packaging" refers to Owens-Brockway Packaging, Inc., the Company's direct parent, and not to any of its Subsidiaries and the term "OI Group" refers to Owens-Illinois Group, Inc., the Company's indirect parent, and not to any of its Subsidiaries. OI Group and certain of the Subsidiaries of OI Group guarantee the notes and therefore are subject to many of the provisions contained in this Description of Notes.

        The Company issued the private notes, and will issue the exchange notes, under an Indenture dated as of January 24, 2002, as supplemented by a third supplemental indenture dated as of the Issue Date and a supplement thereto dated December 18, 2002 (as supplemented, the "Indenture") among itself, the Guarantors and U.S. Bank National Association, as trustee (the "Trustee") in a private transaction that is not subject to the registration requirements of the Securities Act. The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").

        The following description is a summary of the material provisions of the Indenture and the Collateral Documents (as defined below). It does not restate those agreements in their entirety. We urge you to read the Indenture and the Collateral Documents because they, and not this description, define your rights as Holders of the notes. Certain defined terms used in this description but not defined below under "—Certain Definitions" have the meanings assigned to them in the Indenture.

Brief Description of the Notes and the Guarantees

The Notes

        The notes:

•

are senior obligations of the Company secured on the basis described below;



•

are pari passu in right of payment with existing, and any future, senior Indebtedness of the Company; and



•

are guaranteed on a senior basis by the Guarantors.

The Guarantees

        The notes are guaranteed by OI Group and all Domestic Subsidiaries of OI Group that guarantee the Credit Agreement and will be guaranteed by any future Domestic Subsidiaries of OI Group that guarantee the Credit Agreement. As of the Issue Date, all of OI Group's Subsidiaries, other than its Foreign Subsidiaries, were "Domestic Subsidiaries." In the future, OI Group may have additional Subsidiaries which are not Domestic Subsidiaries and may also have additional Domestic Subsidiaries which do not guarantee the notes.

        Each Guarantee of the notes:

•

is a senior obligation of the Guarantor secured on the basis described below; and



•

is pari passu in right of payment with existing, and any future, senior Indebtedness of the Guarantor.

        As of the Issue Date, all of OI Group's Subsidiaries were "Restricted Subsidiaries." However, under the circumstances described below under the subheading "—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries," OI Group will be permitted to designate certain of its

95

subsidiaries as "Unrestricted Subsidiaries." The Unrestricted Subsidiaries will not be subject to any of the restrictive covenants in the Indenture and will not guarantee the notes.

Principal, Maturity and Interest

        The Indenture does not limit the maximum aggregate principal amount of notes that the Company may issue thereunder. The Company will issue an aggregate principal amount of $625,000,000 million of notes in this exchange offer. The Company may issue additional notes (the "additional notes") from time to time after this exchange offer. The notes and any additional notes subsequently issued under the Indenture would be treated as a single series for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.

        In addition to the notes and any additional notes, the Company may issue additional series of debt securities under the Indenture. The terms of any additional debt securities issued under the Indenture will be established pursuant to a resolution of the Board of Directors of the Company and set forth or determined in the manner provided in an officer's certificate or by a supplemental indenture. Any offering of additional notes or additional debt securities under the Indenture is subject to the covenant described below under the caption "—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock."

        The Company will issue notes in denominations of $1,000 and integral multiples of $1,000. The notes will mature on November 15, 2012.

        Interest on the notes will accrue at the rate of 8³/4% per annum and will be payable semi-annually in arrears on May 15 and November 15, commencing on May 15, 2003. The Company will make each interest payment to the Holders of record on the immediately preceding May 1 and November 1.

        Interest on the exchange notes will accrue from the last interest payment date on which interest was paid, or, if no interest was paid on the private notes, from November 13, 2002. Holders whose private notes are accepted for exchange will be deemed to have waived the right to receive any interest accrued on the private notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Methods of Receiving Payments on the Notes

        If a Holder has given wire transfer instructions to the Company, the Company will pay all principal, interest and premium and liquidated damages, if any, on that Holder's notes in accordance with those instructions. All other payments on notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless the Company elects to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders.

Paying Agent and Registrar for the Notes

        The Trustee will initially act as paying agent and registrar. The Company may change the paying agent or registrar without prior notice to the Holders, and the Company or any of its Subsidiaries may act as paying agent or registrar.

Transfer and Exchange

        A Holder may transfer or exchange notes in accordance with the Indenture. The registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any note selected for redemption. Also, the Company is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

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        The registered Holder of a note will be treated as the owner of it for all purposes.

Guarantees

        The Guarantors jointly and severally guarantee the due and punctual payment of principal and of interest on the notes and all other obligations of the Company under the Indenture. The Guarantees of the notes (including the payment of principal of, premium, if any, and interest on the notes) are senior obligations of such Guarantors and rank pari passu in right of payment with all existing and future senior obligations of the Guarantors and rank senior to all subordinated obligations of such Guarantors. The Guarantees are secured to the extent set forth below under "—Collateral." The obligations of each Guarantor under its Guarantee are limited as necessary to prevent that Guarantee from constituting a fraudulent conveyance under applicable law. See "Risk Factors—Risks Relating to the Notes—Fraudulent Transfer—Federal and state laws permit a court to void the notes or the guarantees under certain circumstances."

        Until such time as all Guarantees of the notes by the Guarantors have been released in accordance with the terms of the Indenture, OI Group will cause each Domestic Subsidiary that guarantees the Company's obligations under the Credit Agreement to become a Guarantor under the Indenture and thereby guarantee the notes on the terms and conditions set forth in the Indenture. Upon the release of a Guarantee by a Domestic Subsidiary under the Credit Agreement, the Guarantee of such Domestic Subsidiary under the Indenture will be released and discharged at such time. In the event any such Domestic Subsidiary thereafter guarantees obligations under the Credit Agreement (or such released Guarantee under the Credit Agreement is reinstated or renewed), then such Domestic Subsidiary will guarantee the notes on the terms and conditions set forth in the Indenture.

        A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless:

(1)

immediately after giving effect to that transaction, no Event of Default exists under the Indenture; and



(2)

either:



(a)

the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger is organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of that Guarantor under the Indenture, its Guarantee, the Collateral Documents and the Registration Rights Agreements pursuant to a supplemental indenture satisfactory to the Trustee; or



(b)

such sale or other disposition complies with the "Asset Sale" provisions of the Indenture, including the application of the Net Proceeds therefrom.

        The Guarantee of a Guarantor will be released:

(1)

in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of OI Group, if the sale or other disposition of all or substantially all of the assets of that Guarantor complies with the "Asset Sale" provisions of the Indenture;



(2)

in connection with any sale of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of OI Group,

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if the sale of all such Capital Stock of that Guarantor complies with the "Asset Sale" provisions of the Indenture; or

(3)

if OI Group properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary.

        The Guarantees will also be released in the circumstances described below under the caption "—Certain Covenants—Merger, Consolidation or Sale of Assets."

        The Collateral Documents provide that, upon the release of a Guarantee under the Indenture, the security interests in the assets of that Guarantor securing the notes and Guarantees of the notes will be released simultaneously.

Ranking

        The notes are senior obligations of the Company and rank pari passu in right of payment with all existing and future senior obligations of the Company (including Indebtedness of the Company under the Credit Agreement and under the Existing Senior Notes) and rank senior in right of payment to all subordinated obligations of the Company. The notes are secured to the extent set forth below under "—Collateral" and guaranteed by the Guarantors to the extent set forth above under "—Guarantees." The Guarantees of the notes rank equal in right of payment to the Guarantees of OI Group and the other Guarantors of their existing and future senior obligations, including their obligations under the Credit Agreement and under the Existing Senior Notes, and senior in right of payment to all subordinated obligations of the Guarantors, including the guarantees of OI Group and OI Packaging of the obligations of OI Group's parent, OI Inc., related to $1.7 billion of outstanding public debt securities. The notes are effectively subordinated to obligations under the Credit Agreement and the OI Inc. Senior Notes to the extent such obligations are secured by collateral that does not secure the notes. The notes may also be effectively subordinated to certain Indebtedness incurred to refinance borrowings under the Credit Agreement to the extent that such Indebtedness is secured by collateral that does not secure the notes.

        As of and for nine months ended September 30, 2002, the non-guarantor Subsidiaries represented approximately:

•

46% of OI Group's net sales;



•

45% of OI Group's Consolidated Adjusted EBITDA; and



•

44% of OI Group's consolidated assets.

        The liabilities of the non-guarantor Subsidiaries on a consolidated basis were approximately $2.2 billion as of September 30, 2002.

        As of September 30, 2002, on a pro forma basis after giving effect to the offerings and the use of the estimated net proceeds therefrom, OI Group would have approximately $5.4 billion of total consolidated indebtedness, which includes approximately $1.9 billion of secured indebtedness under the Credit Agreement.

Collateral

        Collateral Securing the Notes.    The notes and the Guarantees of the notes are secured, subject to the terms of the Collateral Documents, on a pari passu basis with the Indebtedness of the Company under the Credit Agreement, the Existing Senior Notes, related documents and liabilities owing to lenders or affiliates of lenders party to the Credit Agreement and in connection with interest rate and currency agreements and certain other Indebtedness permitted by the Credit Agreement.

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        The notes and Guarantees of the notes are secured by:

•

a security interest in substantially all the assets (other than Intercompany Indebtedness and Capital Stock) of OI Group and of substantially all the Domestic Subsidiaries of OI Group; and



•

a pledge by OI Group of the Capital Stock of all its direct Subsidiaries and Intercompany Indebtedness owing to OI Group by such direct Subsidiaries (other than the Capital Stock of OI General FTS Inc. ("OI General FTS") owned by OI Group and Intercompany Indebtedness owing to OI Group by OI General FTS) and a pledge by OI Packaging of the Capital Stock of the Company and Intercompany Indebtedness owing to OI Packaging by the Company.

        Negative Pledge.    Except as permitted and contemplated by, and subject to the terms of, the Credit Agreement and the Pledge Agreement, OI Group will not further pledge the Capital Stock of OI General FTS or the Intercompany Indebtedness of OI General FTS owing to OI Group, as security or otherwise, unless the notes and the Guarantees of the notes are secured on a pari passu basis with the applicable Indebtedness by this collateral.

        Additional Collateral Secures the Credit Agreement.    In addition to the Collateral securing the obligations under the notes and the Guarantees of the notes, the obligations of the Credit Agreement Domestic Borrowers and the domestic guarantors under the Credit Agreement are further secured by:

•

a pledge by OI Group of the Capital Stock of OI General FTS and Intercompany Indebtedness owing to OI Group by OI General FTS;



•

a pledge of the Capital Stock of substantially all of the Domestic Subsidiaries of OI General FTS, OI Plastic Products FTS Inc. and the Company;



•

a pledge of the Intercompany Indebtedness owed to OI General FTS, OI Plastic Products FTS Inc. and the Company and substantially all of their Domestic Subsidiaries; and



•

a pledge of 65% of the stock of the first-tier Foreign Subsidiaries.

In addition to being secured by the above, the offshore subfacilities and related Guarantees under the Credit Agreement are also secured by the assets (including stock and intercompany debt) of certain wholly owned U.K. and Australian Subsidiaries and by the remaining 35% of the stock of the first-tier Foreign Subsidiaries. See "Risk Factors—Risks Relating to the Notes—Notes Effectively Subordinated to Certain Secured Credit Agreement Obligations and Obligations of OI Inc.—The notes are effectively subordinated to the obligations under the secured credit agreement, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement and obligations related to OI Inc.'s $1.7 billion outstanding public debt securities to the extent these obligations are secured by collateral that does not secure the notes."

        Sufficiency of Collateral.    The fair market value of the Collateral is subject to fluctuations based on factors that include, among others, the condition of the packaging products industry, the ability to sell the Collateral in an orderly sale, the condition of the international, national and local economies, the availability of buyers and similar factors. In the event of foreclosure on the collateral, the proceeds from the sale of the collateral, including the Collateral securing the notes and the Guarantees of the notes, may not be sufficient to satisfy in full the Company's obligations under the notes, the Existing Senior Notes and the Credit Agreement and any senior, secured indebtedness ranking pari passu with the notes. The amount to be received upon such a sale would be dependent on numerous factors, including but not limited to the timing and the manner of the sale. In addition, the book value of the Collateral should not be relied on as a measure of realizable value for such assets. By its nature, portions of the Collateral may be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral can be sold in a short period of time in an orderly manner. A significant portion of the Collateral includes assets that may only be usable, and

99

thus retain value, as part of the existing operating businesses of OI Group and its Subsidiaries. Accordingly, any such sale of the Collateral separate from the sale of certain of OI Group's and its Subsidiaries' operating businesses may not be feasible or of significant value. To the extent that third parties enjoy Liens permitted by the Indenture such third parties may have rights and remedies with respect to the assets or property subject to such Liens that, if exercised, could adversely affect the value of the Collateral. In addition, in the event of a bankruptcy, the ability of the Holders to realize upon any of the Collateral may be subject to certain bankruptcy law limitations. See "Risk Factors—Risks Relating to the Notes—Notes Effectively Subordinated to Certain Secured Credit Agreement Obligations and Obligations of OI Inc.—The notes are effectively subordinated to the obligations under the secured credit agreement, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement and obligations related to OI Inc.'s $1.7 billion of outstanding public debt securities to the extent these obligations are secured by collateral that does not secure the notes."

        The Company has the ability to issue additional notes as part of the same series of these notes or in one or more different series, all of which may be secured with the notes and the Existing Senior Notes by the Collateral. OI Group and its Restricted Subsidiaries can increase their Indebtedness but there can be no assurance that there will be a proportionate increase in the value of the Collateral as a percentage of the aggregate principal amount of outstanding notes. See "Risk Factors—Risks Relating to the Notes—Dilution of Collateral—The collateral securing the notes may be diluted under certain circumstances."

Certain Bankruptcy Limitations

        The right of the Collateral Agent to repossess and dispose of the Collateral upon the occurrence of an Event of Default would be significantly impaired by applicable bankruptcy law in the event that a bankruptcy case were to be commenced by or against the Company, OI Group, or any of the Guarantors prior to the Collateral Agent having repossessed and disposed of the Collateral. Upon the commencement of a case for relief under Title 11 of the United States Code, as amended (the "Bankruptcy Code"), a secured creditor such as the Collateral Agent is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from the debtor, without bankruptcy court approval. Moreover, the Bankruptcy Code permits the debtor to continue to retain and use Collateral even though the debtor is in default under the applicable debt instruments provided that the secured creditor is given adequate protection. The meaning of the term "adequate protection" may vary according to circumstances, but it is intended in general to protect the value of the secured creditor's interest in the Collateral and may include cash payments or the granting of additional security, if and at such times as the court in its discretion determines, for any diminution in the value of the Collateral as a result of the stay or repossession or disposition or any use of the Collateral by the debtor during the pendency of the bankruptcy case. A bankruptcy court may determine that a secured creditor may not require compensation for a diminution in the value of the Collateral if the value of the Collateral exceeds the debt it secures.

        In view of the broad equitable powers of a bankruptcy court, it is impossible to predict how long payments under the notes could be delayed following commencement of a bankruptcy case, whether or when the Collateral Agent could repossess or dispose of the Collateral, the value of the Collateral at the time of the bankruptcy petition or whether or to what extent Holders of the notes would be compensated for any delay in payment or loss of value of the Collateral through the requirement of "adequate protection." Any disposition of the Collateral during a bankruptcy case would also require permission from the bankruptcy court. Furthermore, in the event a bankruptcy court determines the value of the Collateral is not sufficient to repay all amounts due on the notes, the Holders of the notes would hold secured claims to the extent of the value of the Collateral to which the Holders of the notes are entitled, and unsecured claims with respect to such shortfall. The Bankruptcy Code only permits the payment and/or accrual of post-petition interest, costs and attorney's fees to a secured

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creditor during a debtor's bankruptcy case to the extent the value of the Collateral is determined by the bankruptcy court to exceed the aggregate outstanding principal amount of the obligations secured by the Collateral.

Optional Redemption

        Except as described below, the notes are not redeemable at the Company's option prior to November 15, 2007. The Company cannot predict with any certainty the criteria that it will use in determining whether to redeem the notes. The general economic environment, the Company's capitalization, the interest rate environment and the Company's cash flow are just a few of the many factors that may influence the Company's decision. The Company may, for example, be more likely to redeem the notes if interest rates are low or if the Company has substantial excess cash flow.

        After November 15, 2007, the Company may redeem all or a part of the notes upon not less than 30 nor more than 60 days notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and liquidated damages, if any, thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on November 15 of the years indicated below:

Year	Percentage
2007	104.375	%
2008	102.917	%
2009	101.458	%
2010 and thereafter	100.000	%

        At any time prior to November 15, 2005, the Company may redeem on any one or more occasions up to 35% of the aggregate principal amount of notes (calculated after giving effect to any issuance of additional notes) at a redemption price of 108.750% of the principal amount thereof, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings by OI Inc. to the extent the net cash proceeds thereof are contributed to the Company or used to purchase from the Company Capital Stock (other than Disqualified Stock) of the Company; provided that:

(1)

at least 65% of the aggregate principal amount of notes (calculated after giving effect to any issuance of additional notes) remains outstanding immediately after the occurrence of such redemption (excluding notes held by OI Inc. and its Subsidiaries); and



(2)

the redemption must occur within 60 days of the date of the closing of such Equity Offering.

        In addition, at any time prior to November 15, 2007, the notes may also be redeemed, in whole but not in part, at the option of the Company upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and liquidated damages, if any, to, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the notes on the relevant interest payment date).

        "Applicable Premium" means, with respect to any note on any redemption date, the greater of:

(1)

1.0% of the principal amount of such note; or



(2)

the excess of:



(a)

the present value at such redemption date of (1) the redemption price of such note at November 15, 2007 (such redemption price being set forth in the table above) plus (2) all

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required interest payments due on such note through November 15, 2007 (including accrued but unpaid interest) computed using a discount rate equal to the Treasury Rate on such redemption date plus 50 basis points; over

(b)

the principal amount of such note.

        "Treasury Rate" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two business days prior to the redemption date (or, if such statistical release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to November 15, 2007; provided, however, that if the period from the redemption date to November 15, 2007 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

Mandatory Redemption

        The Company is not required to make mandatory redemption or sinking fund payments with respect to the notes.

Repurchase at the Option of Holders

Change of Control

        If a Change of Control occurs, unless the Company has exercised its right to redeem the notes as described under "Optional Redemption," each Holder of notes has the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that Holder's notes pursuant to a change of control offer on the terms set forth in the Indenture (a "Change of Control Offer"). In the Change of Control Offer, the Company will offer a payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and liquidated damages, if any, thereon, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the date specified in such notice (the "Change of Control Payment Date"), which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such conflict.

        On the Change of Control Payment Date, the Company will, to the extent lawful:

(1)

accept for payment all notes or portions thereof properly tendered pursuant to the Change of Control Offer;



(2)

deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions thereof so tendered; and



(3)

deliver or cause to be delivered to the Trustee the notes so accepted together with an Officers' Certificate stating the aggregate principal amount of notes or portions thereof being purchased by the Company.

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        The paying agent will promptly mail to each Holder of notes so tendered the Change of Control Payment for such notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each such new note will be in a principal amount of $1,000 or an integral multiple thereof.

        The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

        The indenture for the Existing Senior Notes contains a similar Change of Control covenant.

        The Credit Agreement currently prohibits the Company from voluntarily purchasing the notes or the Existing Senior Notes, and also provides that certain change of control events with respect to OI Inc., OI Group and the Company would constitute a default under that agreement. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing notes, the Company could seek consent to purchase the notes and the Existing Senior Notes or could attempt to refinance its borrowings under the Credit Agreement. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing notes or the Existing Senior Notes. In such case, the Company's failure to purchase tendered notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Credit Agreement.

        The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the notes to require that the Company repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

        The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all notes validly tendered and not withdrawn under such Change of Control Offer.

Asset Sales

        OI Group will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1)

OI Group (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of;



(2)

such Fair Market Value is determined in good faith by OI Group and a certification to that effect is set forth in an Officers' Certificate delivered to the Trustee; and



(3)

at least 75% of the consideration therefor received by OI Group or such Restricted Subsidiary is in the form of cash. For purposes of this provision, each of the following shall be deemed to be cash:



(a)

any liabilities (as shown on OI Group's or such Restricted Subsidiary's most recent balance sheet) of OI Group or any Restricted Subsidiary of OI Group (other than liabilities that are by their terms subordinated to the notes or any Guarantee of the notes) that are assumed by the transferee of any such assets which assumption releases OI Group or such Restricted Subsidiary from further liability;

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(b)

any securities, notes or other obligations received by OI Group or any such Restricted Subsidiary from such transferee that are converted within 180 days by OI Group or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion); and



(c)

any Designated Noncash Consideration received by OI Group or any Restricted Subsidiary of OI Group in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Noncash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed 5.0% of Tangible Assets at the time of the receipt of such Designated Noncash Consideration (with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value);

provided, that the 75% limitation referred to in clause (3) above will not apply to any Asset Sale in which the cash portion of such consideration received therefor on an after-tax basis, determined in accordance with clause (3) above, is equal to or greater than what the after-tax net proceeds would have been had such transaction complied with such 75% limitation.

        Within 360 days after the receipt of any Net Proceeds from an Asset Sale, OI Group or such Restricted Subsidiary may apply such Net Proceeds at its option:

(1)

to repay senior Indebtedness of the Company or any Guarantor and, if the senior Indebtedness of the Company or any Guarantor repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto, if the terms of such revolving credit Indebtedness would require such a commitment reduction; provided, however, that a non-Guarantor Restricted Subsidiary may use the Net Proceeds from an Asset Sale to repay senior Indebtedness of OI Group or any Restricted Subsidiary of OI Group;



(2)

to make payments required to be made with respect to the outstanding OI Inc. Senior Notes;



(3)

to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, a Permitted Business;



(4)

to make a capital expenditure in or that is used or useful in a Permitted Business;



(5)

to acquire other long-term assets in or that are used or useful in a Permitted Business; or



(6)

to make an Investment in any one or more businesses (provided that such Investment in any business may be in the form of the acquisition of Capital Stock so long as it results in OI Group or a Restricted Subsidiary of OI Group, as the case may be, owning a majority of the Capital Stock of such business), properties or assets that replace the businesses, properties and assets that are the subject of such Asset Sale; provided, however, that any such business, properties and assets of OI Group or a Guarantor that are the subject of an Asset Sale are invested in one or more businesses, properties or assets that constitute or are owned or will be owned by a Guarantor or a Restricted Subsidiary that becomes a Guarantor.

Notwithstanding the foregoing, with respect to any Asset Sale by the Company or any Guarantor, such Net Proceeds may only be applied pursuant to items (1) or (6) above and, to the extent such Net Proceeds are applied to, or with respect to, the Company, a Guarantor or a Person or a Restricted Subsidiary that becomes a Guarantor, items (3), (4) or (5) above. Pending the final application of any such Net Proceeds, OI Group or the applicable Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture.

104

        Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company will make an offer (an "Asset Sale Offer") to all Holders of notes and all Holders of other Indebtedness that is pari passu with the notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (including the Existing Senior Notes) to purchase the maximum principal amount of notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and liquidated damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the notes and such other pari passu Indebtedness to be purchased on a pro rata basis based on the principal amount of notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

        The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sales provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such conflict.

        The agreements governing OI Group's Indebtedness or the Company's other Indebtedness contain prohibitions of certain events, including events that would constitute a Change of Control or an Asset Sale. In addition, the exercise by the Holders of notes of their right to require the Company to repurchase the notes upon a Change of Control or an Asset Sale could cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the financial effect of such repurchases on the Company or OI Group. Finally, the Company's ability to pay cash to the Holders of notes upon a repurchase may be limited by the Company's or OI Group's then existing financial resources.

Selection and Notice

        If less than all of the notes are to be redeemed at any time, the Trustee will select notes for redemption as follows:

(1)

if the notes are listed, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or



(2)

if the notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate.

        No notes of $1,000 or less will be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of notes to be redeemed at its registered address. Notices of redemption may not be conditional.

        If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount thereof to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the Holder thereof upon cancellation of the original note. Notes called for redemption become due on the date fixed for

105

redemption. On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption.

Certain Covenants

Fall-Away Event

        If at any time the notes have achieved the Investment Grade Ratings, OI Group and the Restricted Subsidiaries of OI Group will thereafter no longer be subject to the covenants under "—Repurchase at the Option of Holders—Change of Control" and "—Repurchase at the Option of Holders—Asset Sales" or the following provisions of the Indenture under the heading "—Certain Covenants" (even if the notes subsequently cease to have the Investment Grade Ratings):

        "—Restricted Payments,"

        "—Incurrence of Indebtedness and Issuance of Preferred Stock,"

        "—Liens,"

        "—Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries,"

        "—Transactions with Affiliates,"

        "—Additional Guarantees/Pledges," and

        "—Payments for Consent"

(collectively, the "Extinguished Covenants"), provided that if upon the receipt by the notes of the Investment Grade Ratings, a Default or Event of Default has occurred and is continuing under the Indenture, the Company will continue to be subject to the Extinguished Covenants until such time as no Default or Event of Default is continuing.

        Notwithstanding the foregoing, at the time OI Group and the Restricted Subsidiaries are no longer subject to the Extinguished Covenants, neither OI Group nor any of its Domestic Subsidiaries will create, incur, or permit to exist, any Lien on any of their respective assets, whether now owned or hereafter acquired, in order to secure any Indebtedness of either of OI Group or any of its Domestic Subsidiaries, without effectively providing that the notes shall be equally and ratably secured until such time as such Indebtedness is no longer secured by such Lien, except: (i) Liens on cash and Cash Equivalents securing obligations in respect of letters of credit in accordance with the terms of the Credit Agreement; (ii) Liens existing on the Issue Date; (iii) Liens granted after the Issue Date on any assets of OI Group or any of its Domestic Subsidiaries securing Indebtedness of OI Group or any of its Domestic Subsidiaries created in favor of the Holders of the notes; (iv) Liens securing Indebtedness which is incurred to extend, renew or refinance Indebtedness which is secured by Liens permitted to be incurred under the Indenture; provided that such Liens do not extend to or cover any assets of OI Group or any of its Domestic Subsidiaries other than the assets securing the Indebtedness being extended, renewed or refinanced and that the principal or commitment amount of such Indebtedness does not exceed the principal or commitment amount of the Indebtedness being extended, renewed or refinanced at the time of such extension, renewal or refinancing, or at the time the Lien was issued, created or assumed or otherwise permitted; (v) Investment Grade Permitted Liens; or (vi) Liens created in substitution of or as replacement for any Liens permitted by the preceding clauses (i) through (v) or this clause (vi), provided that, based on a good faith determination of an officer of the Company, the assets encumbered under any such substitute or replacement Lien is substantially similar in value to the assets encumbered by the otherwise permitted Lien which is being replaced. Upon the assignment of the Company's obligations under the Indenture to OI Inc. as described in the last paragraph of the covenant described below under the caption "—Merger, Consolidation or Sale of Assets," the limitations described in this paragraph will apply to Liens securing Indebtedness of OI Inc.

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and its Domestic Subsidiaries in lieu of Liens securing Indebtedness of OI Group and its Domestic Subsidiaries.

Restricted Payments

        OI Group will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1)

declare or pay any dividend or make any other distribution on account of OI Group's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving OI Group or any of its Restricted Subsidiaries) or to the direct or indirect holders of OI Group's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of OI Group or such Restricted Subsidiaries); provided that the foregoing will not limit or preclude: (a) the declaration or payment of dividends or distributions to OI Group, the Company or any Guarantor; (b) the declaration or payment of dividends or distributions to holders of Equity Interests of a Guarantor (other than OI Group or a Subsidiary of OI Group) on a pro rata basis with all other holders; or (c) the declaration or payment of dividends or distributions by non-Guarantor Restricted Subsidiaries to the holders of their Equity Interests on a pro rata basis;



(2)

purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving OI Group or any of its Restricted Subsidiaries) any Equity Interests of OI Group or any direct or indirect parent of OI Group;



(3)

purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the notes or the Guarantees of the notes, except for (a) payments of or related to Intercompany Indebtedness (other than Intercompany Indebtedness owing to OI Inc. by OI Group), (b) a payment of interest or principal at the Stated Maturity thereof (other than Intercompany Indebtedness owing to OI Inc. by OI Group) or (c) the purchase, repurchase, defeasance, acquisition or retirement for value of Indebtedness of a Foreign Subsidiary by a Foreign Subsidiary; or



(4)

make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as "Restricted Payments"),

unless, at the time of and after giving effect to such Restricted Payment:

(1)

no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and



(2)

OI Group would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "—Incurrence of Indebtedness and Issuance of Preferred Stock"; and



(3)

such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by OI Group and its Restricted Subsidiaries after January 24, 2002 (excluding Restricted Payments permitted by clauses (2), (3), (4), (6) and (7) of the next succeeding paragraph), is less than the sum, without duplication, of:



(a)

50% of the Consolidated Net Income of OI Group for the period (taken as one accounting period) from April 1, 2002 to the end of OI Group's most recently ended

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fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus

(b)

100% of the aggregate net cash proceeds and the Fair Market Value of marketable securities received by OI Group since January 24, 2002 as a contribution to its common equity capital or from the issue or sale of Equity Interests of OI Group (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of OI Group that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of OI Group); plus

(c)

to the extent that any Restricted Investment that was made after January 24, 2002 is sold or otherwise liquidated, the cash plus the Fair Market Value of any marketable securities received upon the sale or liquidation of such Restricted Investment (less the cost of disposition, if any); plus

(d)

$15.0 million.

        So long as (solely with respect to clauses (2), (3), (5) and (7) below) no Event of Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit:

(1)

the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;



(2)

the redemption, repurchase, retirement, defeasance or other acquisition of any Indebtedness of OI Group or any Restricted Subsidiary of OI Group or of any Equity Interests of OI Group in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of OI Group) of, Equity Interests of OI Group (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(b) of the preceding paragraph;



(3)

the defeasance, redemption, repurchase or other acquisition of the OI Inc. Senior Notes;



(4)

the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of OI Group (other than the OI Inc. Senior Notes) or any Restricted Subsidiary of OI Group with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;



(5)

the repurchase, redemption or other acquisition or retirement (or dividends or distributions to OI Inc. or payments of Intercompany Indebtedness, in each case, to finance such repurchase, retirement or other acquisition) for value of any Equity Interests of OI Inc., OI Group or any Restricted Subsidiary of OI Group held by any member of OI Inc.'s, OI Group's or any Restricted Subsidiary of OI Group's management; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $5.0 million in any twelve-month period;



(6)

any OI Inc. Ordinary Course Payment; and



(7)

dividends or distributions to OI Inc. or payments of Intercompany Indebtedness to allow OI Inc. to pay cash dividends on any shares of preferred stock of OI Inc. outstanding on January 24, 2002, plus dividends on any subsequently issued shares of preferred stock of OI Inc. in an amount not to exceed $25.0 million in any twelve-month period.

        The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or

108

by OI Group or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant shall be determined in good faith by OI Group.

Incurrence of Indebtedness and Issuance of Preferred Stock

        OI Group will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and OI Group will not issue any Disqualified Stock and OI Group will not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or preferred stock; provided, however, that OI Group and any of its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) and may issue preferred stock, if the Fixed Charge Coverage Ratio for OI Group's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period.

        The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"):

(1)

the incurrence by OI Group or its Restricted Subsidiaries of Indebtedness under Credit Facilities (and the incurrence of Guarantees thereof) in an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed $4.5 billion (of which not more than $1.41 billion of such Indebtedness shall be incurred by Restricted Subsidiaries that are not Guarantors);



(2)

the incurrence by OI Group and any Restricted Subsidiary of OI Group of the Existing Indebtedness;



(3)

the incurrence by OI Group, the Company and the Guarantors of Indebtedness represented by the private notes and the related Guarantees issued on the Issue Date and the Exchange Notes to be issued pursuant the Registration Rights Agreements;



(4)

the incurrence by OI Group or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed 3.0% of Tangible Assets;



(5)

the incurrence by OI Group or any of its Restricted Subsidiaries of Indebtedness incurred to finance all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of OI Group or such Restricted Subsidiary, in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (5), not to exceed 5.0% of Tangible Assets, as measured after giving effect to such transaction;



(6)

provided that so long as no Default shall have occurred or be continuing or would be caused thereby, the incurrence by OI Group or any of its Restricted Subsidiaries of Indebtedness in exchange for, or the proceeds of which are or will be used to refund, refinance or replace the $300.0 million aggregate principal amount of 7.85% Senior Notes due 2004, the $350.0 million aggregate principal amount of 7.15% Senior Notes due 2005, the $300.0 million aggregate principal amount of 8.10% Senior Notes due 2007, the $250.0 million aggregate principal

109

amount of 7.35% Senior Notes due 2008 and the $250.0 million aggregate principal amount of 7.50% Senior Debentures due 2010, in each case of OI Inc.;

(7)

the incurrence by OI Group or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are or will be used to refund, refinance or replace Indebtedness (other than Intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (6) or (7) of this paragraph;



(8)

the incurrence by OI Group or any of its Restricted Subsidiaries of Intercompany Indebtedness between or among OI Group and any of its Restricted Subsidiaries and with respect to OI Group only, between OI Group and OI Inc.; provided, however, that:



(a)

if OI Group, the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the notes, in the case of the Company, or the Guarantees of the notes, in the case of OI Group or a Guarantor;



(b)

any incurrence by OI Group of Intercompany Indebtedness to OI Inc. after the Issue Date will be in exchange for cash loans or advances from OI Inc. in the ordinary course of business consistent with past practices; and



(c)

(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than OI Group or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either OI Group or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by OI Group or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (8);




(9)

the incurrence by OI Group or any of its Restricted Subsidiaries of Hedging Obligations;



(10)

provided that so long as no Default shall have occurred or be continuing or would be caused thereby, the incurrence by any Foreign Subsidiary of OI Group of Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, not to exceed $300.0 million, in addition to the $1.41 billion of Indebtedness that may be incurred under clause (1) of this paragraph;



(11)

(i) the Guarantee by the Company or any of the Guarantors of Indebtedness of OI Group or any Restricted Subsidiary of OI Group and (ii) the Guarantee by any Foreign Subsidiary of Indebtedness of OI Group or any Restricted Subsidiary of OI Group, in each case, that was permitted to be incurred by another provision of this covenant;



(12)

the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness for purposes of this covenant or an issuance of Disqualified Stock; provided, in each such case, that the amount thereof is included in Fixed Charges of OI Group as accrued;



(13)

the incurrence by OI Group or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (13), not to exceed $300.0 million;



(14)

Indebtedness arising from agreements of OI Group or a Restricted Subsidiary of OI Group providing for indemnification, adjustment of purchase price or similar obligations, in each

110

case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that (i) such Indebtedness is not reflected on the balance sheet of OI Group or any such Restricted Subsidiary of OI Group (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)) and (ii) the maximum assumable liability in respect of all such Indebtedness that is permitted to be incurred pursuant to this clause (14) shall at no time exceed the gross proceeds including noncash proceeds (the Fair Market Value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by OI Group and its Restricted Subsidiaries in connection with such disposition;

(15)

the incurrence by OI Group or any of its Restricted Subsidiaries of Indebtedness incurred or deemed incurred or cash consideration received from the sale of accounts receivable by OI Group or any of its Restricted Subsidiaries or a special purpose vehicle established by any of them to purchase and sell such receivables;



(16)

obligations in respect of performance and surety bonds and completion guarantees provided by OI Group or any of its Restricted Subsidiaries in the ordinary course of business;



(17)

Indebtedness incurred by OI Group or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers' compensation claims, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; and



(18)

the incurrence by OI Group or any of its Restricted Subsidiaries of Acquired Debt, in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (18), not to exceed 5.0% of Tangible Assets, as measured after giving effect to the transaction for which the Acquired Debt was incurred.

        The Company will not incur any Indebtedness (including Permitted Debt) after the Issue Date that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the notes on substantially similar terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured.

        OI Group will not, and will not permit any Guarantor to, incur any Indebtedness (including Permitted Debt) after the Issue Date that is contractually subordinated in right of payment to any other Indebtedness of OI Group or the Guarantors, as the case may be, unless such Indebtedness is also contractually subordinated in right of payment to the obligations under the notes or Guarantees of the notes on substantially similar terms; provided, however, that no Indebtedness of OI Group or the Guarantors shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of OI Group or the Guarantors solely by virtue of being unsecured.

        For purposes of determining compliance with this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (18) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company will be permitted to

111

classify such item of Indebtedness on the date of its incurrence in any manner that complies with this covenant, or later reclassify all or a portion of such item of Indebtedness. Indebtedness under Credit Facilities outstanding on November 13, 2002 shall be deemed to have been incurred on such date in reliance on the exception provided by clauses (1) or (2) of the definition of Permitted Debt above.

Liens

        Neither OI Group nor any Restricted Subsidiary of OI Group will create, incur, or permit to exist, any Lien on any of their respective assets, whether now owned or hereafter acquired, in order to secure any Indebtedness of either of OI Group or any Restricted Subsidiary of OI Group, without effectively providing that the notes shall be equally and ratably secured until such time as such Indebtedness is no longer secured by such Lien, except:

(1)

Liens on cash and Cash Equivalents securing obligations in respect of letters of credit in accordance with the terms of the Credit Agreement;



(2)

Liens existing on the Issue Date;



(3)

Liens granted after the Issue Date on any assets of OI Group or any of its Restricted Subsidiaries securing Indebtedness of OI Group or any of its Restricted Subsidiaries created in favor of the Holders of the notes;



(4)

Liens securing Indebtedness of OI Group or any Restricted Subsidiary of OI Group which is incurred to extend, renew or refinance Indebtedness which is secured by Liens permitted to be incurred under the Indenture; provided that such Liens do not extend to or cover any assets of OI Group or any Restricted Subsidiary of OI Group other than the assets securing the Indebtedness being extended, renewed or refinanced and that the principal or commitment amount of such Indebtedness does not exceed the principal or commitment amount of the Indebtedness being extended, renewed or refinanced at the time of such extension, renewal or refinancing, or at the time the Lien was issued, created or assumed or otherwise permitted;



(5)

Permitted Liens; and



(6)

Liens created in substitution of or as replacements for any Liens permitted by the preceding clauses (1) through (5) or this clause (6), provided that, based on a good faith determination of an officer of the Company, the assets encumbered under any such substitute or replacement Lien is substantially similar in value to the assets encumbered by the otherwise permitted Lien which is being replaced.

For purposes of the Indenture, the notes and the Guarantees of the notes, so long as the Credit Agreement is in effect, the notes will be considered equally and ratably secured if they are secured pursuant to terms and provisions, including any exclusions or exceptions described therein, no less favorable to the Holders of notes than those set forth in, or contemplated by, the Credit Agreement.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

        OI Group will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any such Restricted Subsidiary to:

(1)

pay dividends or make any other distributions on its Capital Stock to OI Group or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to OI Group or any of its Restricted Subsidiaries;



(2)

make loans or advances to OI Group or any of its Restricted Subsidiaries; or



(3)

transfer any of its properties or assets to OI Group or any of its Restricted Subsidiaries.

112

        However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1)

agreements governing Existing Indebtedness, Credit Facilities, charter documents and shareholder agreements as in effect on the Issue Date, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such Existing Indebtedness, Credit Facilities, charter documents and shareholders agreements as in effect on the Issue Date;



(2)

the Indenture, the notes, the Collateral Documents, the Offshore Collateral Documents and the Guarantees of the notes;



(3)

applicable law;



(4)

any instrument governing Indebtedness or Capital Stock of a Person acquired by OI Group or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred;



(5)

customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices;



(6)

purchase money obligations, including Capital Lease Obligations and obligations under mortgages, for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (3) of the first paragraph of this covenant;



(7)

any agreement for the sale or other disposition of a Restricted Subsidiary of OI Group that restricts any of the foregoing by that Restricted Subsidiary pending its sale or other disposition;



(8)

Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; and



(9)

Permitted Liens or Investment Grade Permitted Liens securing Indebtedness that limit the right of the debtor to dispose of the assets subject to such Lien.

        Nothing contained in this covenant shall prevent OI Group or a Restricted Subsidiary of OI Group from entering into any agreement (x) permitting or providing for the incurrence of Liens otherwise permitted by the "Liens" covenant or (y) restricting the sale or other disposition of property securing Indebtedness.

Merger, Consolidation or Sale of Assets

        OI Group will not, in any transaction or series of transactions, merge or consolidate with or into, or, directly or indirectly, sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to, any Person or Persons, and OI Group will not permit any of its Restricted Subsidiaries to enter into any such transaction or series of transactions if such transaction or series of transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or

113

other disposition of all or substantially all of the properties and assets of OI Group and its Restricted Subsidiaries, on a consolidated basis, to any other Person or Persons, unless at the time and after giving effect thereto:

(1)

either: (a) OI Group or such Restricted Subsidiary, as the case may be, is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than OI Group or such Restricted Subsidiary) (the "Successor Company") or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia;



(2)

the Successor Company (if other than OI Group or such Restricted Subsidiary) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of OI Group or such Restricted Subsidiary (if such Restricted Subsidiary is a Guarantor), as the case may be, under the notes, the Indenture, the Collateral Documents and the Registration Rights Agreements pursuant to agreements reasonably satisfactory to the Trustee;



(3)

immediately after such transaction no Default or Event of Default exists; and



(4)

OI Group or the Successor Company formed by or surviving any such consolidation or merger (if other than OI Group), or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made, will have, immediately after such transaction, a Fixed Charge Coverage Ratio equal to or greater than such ratio for OI Group immediately prior to such transaction.

        This "Merger, Consolidation or Sale of Assets" covenant will not apply to (i) a merger or consolidation of OI Group, the Company or any of the Guarantors with or into any other of the Company, OI Group or any of the Guarantors or the sale, assignment, conveyance, transfer, lease or other disposition of assets between or among the Company, OI Group and any of its Guarantors and (ii) a merger or consolidation of any Foreign Subsidiary with or into OI Group or any of its Restricted Subsidiaries or the sale, assignment, conveyance, transfer, lease or other disposition of assets from any Foreign Subsidiary to OI Group or any of its Restricted Subsidiaries.

        On and after July 2, 2003, the Company will be permitted to assign its obligations under the notes and the Indenture to OI Inc., and the Company and each Guarantor will thereafter be released from its obligations under the notes, the Guarantees thereof and the Indenture provided that (1) OI Inc. assumes all of the obligations under the notes and the Indenture, and (2) the obligations of each Credit Agreement Domestic Borrower under the Credit Agreement have been or will be concurrently assumed by OI Inc. in accordance with the terms of the Credit Agreement. Under the Credit Agreement, the Credit Agreement Domestic Borrowers may assign or transfer their rights and obligations thereunder to OI Inc. and all of OI Inc.'s subsidiaries will be concurrently released from their guarantees upon the consent of the requisite lenders thereunder if the term loans have been repaid, if OI Inc. has achieved and maintains immediately following such assumption (including the assumption of the notes) the investment grade ratings specified under the Credit Agreement and if all obligations of Subsidiaries of OI Inc. in respect of the OI Inc. Senior Notes, the notes and certain other debt have been released and assumed by OI Inc.

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Transactions with Affiliates

        OI Group will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction") involving aggregate payments in consideration in excess of $5.0 million, unless:

(1)

such Affiliate Transaction is on terms that are no less favorable to OI Group or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by OI Group or such Restricted Subsidiary with an unrelated Person; and



(2)

OI Group delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors.

The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1)

transactions between or among OI Group and/or its Restricted Subsidiaries;



(2)

transactions between OI Group and/or its Restricted Subsidiaries on the one hand, and OI Inc. on the other, that are in the ordinary course of business consistent with past practices;



(3)

payment of reasonable directors fees;



(4)

Restricted Payments that are permitted by the provisions of the Indenture described above under the caption "—Restricted Payments";



(5)

the payment of customary annual management, consulting, monitoring and advisory fees and related expenses to KKR and its Affiliates;



(6)

the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of OI Group, any of its direct or indirect parent corporations or any Restricted Subsidiary of OI Group;



(7)

payments by OI Group or any of its Restricted Subsidiaries to KKR and its Affiliates for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of OI Group in good faith;



(8)

transactions in which OI Group or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an investment banking firm of nationally recognized standing stating that such transaction is fair to OI Group or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (1) of the preceding paragraph;



(9)

in addition to any payments referred to in (6) above, payments or loans to officers, directors and employees of OI Group, any of its direct or indirect parent corporations or any Restricted Subsidiary of OI Group for business or personal purposes and other loans and advances, in accordance with any policy of OI Group which shall have been approved by the Board of Directors of OI Group in good faith from time to time, to such officers, directors and employees for travel, entertainment, moving and other relocation expenses made in the ordinary course of business of OI Group, any of its direct or indirect parent corporations or any Restricted Subsidiary of OI Group;

115

(10)

any agreement in effect as of the Issue Date or any amendment thereto (so long as such amendment is not disadvantageous to the Holders in any material respect) or any transaction contemplated thereby;



(11)

transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business which are fair to OI Group or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of OI Group or the senior management thereof;



(12)

the issuance of Equity Interests (other than Disqualified Stock) of OI Group or the Company to any Principal; and



(13)

transactions involving the sale of accounts receivables by OI Group or any of its Restricted Subsidiaries or a special purpose vehicle established by any of them to purchase and sell receivables.

Additional Guarantees/Pledges

        If a Domestic Subsidiary of OI Group or any of its Restricted Subsidiaries guarantees Indebtedness under the Credit Agreement, including the reinstatement or renewal of a Guarantee of Indebtedness under the Credit Agreement previously released under the Credit Agreement, then that Domestic Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the Trustee within 10 business days of the date on which it executes a guarantee under the Credit Agreement.

        If, on or after November 13, 2002, any Domestic Subsidiary of OI Group pledges any property or assets to secure obligations under the Credit Agreement (other than pursuant to the Collateral Documents or as contemplated by the Credit Agreement), then such property or assets will, subject to certain exceptions, also secure the notes.

Designation of Restricted and Unrestricted Subsidiaries

        The Board of Directors of OI Group may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default; provided that in no event shall the business currently operated by the Company be transferred to or held by an Unrestricted Subsidiary. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by OI Group and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be a Restricted Investment made as of the time of such designation and that designation will only be permitted if such Investment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of OI Group may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of OI Group of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption "—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.

Negative Pledge

        Except as contemplated by and permitted by the Credit Agreement and the Collateral Documents, OI Group will not permit any of the issued and outstanding shares of any class of Capital Stock of OI General FTS or any part of the Intercompany Indebtedness owed by OI General FTS to OI Group to

116

be pledged, in each of the foregoing cases as security or otherwise unless the notes and Guarantees of the notes are secured by this collateral on a pari passu basis with the applicable Indebtedness.

Limitations on Issuances of Guarantees of Indebtedness

        OI Group will not permit any of its Domestic Subsidiaries, directly or indirectly, to guarantee the payment of any other Indebtedness of the Company or OI Group unless such Domestic Subsidiary simultaneously executes and delivers a supplemental indenture providing for the Guarantee of the payment of the notes by such Domestic Subsidiary, which Guarantee shall be senior to or pari passu with such Subsidiary's Guarantee of such other Indebtedness.

        Notwithstanding the preceding paragraph, any Guarantee will provide by its terms that it will be automatically and unconditionally released and discharged under the circumstances described above under the caption "—Guarantees." The form of the Guarantee is attached as an exhibit to the Indenture.

Payments for Consent

        OI Group will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture, the notes or the Guarantees unless such consideration is offered to be paid and is paid to all Holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports

        Whether or not required by the SEC, so long as any notes are outstanding, OI Group will furnish to the Holders of the notes, within the time periods specified in the SEC's rules and regulations:

(1)

all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if OI Group were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by OI Group's certified independent accountants; and



(2)

all current reports that would be required to be filed with the SEC on Form 8-K if OI Group were required to file such reports.

        In addition, whether or not required by the SEC, OI Group will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company and the Guarantors have agreed that, for so long as any notes remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Events of Default and Remedies

        Each of the following is an Event of Default:

(1)

default for 30 days in the payment when due of interest on, or liquidated damages, if any, with respect to, the notes;



(2)

default in payment when due of the principal of, or premium, if any, on the notes;

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(3)

failure by OI Group or any of its Restricted Subsidiaries to comply with the provisions described under the captions "—Repurchase at the Option of Holders—Change of Control," "—Repurchase at the Option of Holders—Asset Sales" or "—Certain Covenants—Merger, Consolidation or Sale of Assets";



(4)

failure by OI Group or any of its Restricted Subsidiaries for 60 days after notice to comply with any of the other agreements in the Indenture, the notes, the Guarantees of the notes (with respect to any Guarantor) and the Collateral Documents (with respect to any Restricted Subsidiary which has pledged assets or property to secure its obligations under the Indenture and the notes);



(5)

default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by OI Group or any Restricted Subsidiary (or the payment of which is guaranteed by OI Group or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default:



(a)

is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or



(b)

results in the acceleration of such Indebtedness prior to its express maturity; provided, that an Event of Default will not be deemed to occur with respect to any such accelerated Indebtedness which is repaid or prepaid within 20 business days after such declaration;

and, in any individual case, the principal amount of any such Indebtedness is equal to or in excess of $50.0 million, or such Indebtedness together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $100.0 million or more;

(6)

any final judgment or order for payment of money in excess of $50.0 million in any individual case and $100.0 million in the aggregate at any time shall be rendered against OI Group or any of its Restricted Subsidiaries and such judgment shall not have been paid, discharged or stayed for a period of 60 days;



(7)

except as permitted by the Indenture or the Collateral Documents, any Guarantee of the notes shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee of the notes;



(8)

certain events of bankruptcy or insolvency with respect to the Company, OI Group or any Significant Subsidiary of OI Group; and



(9)

except as permitted by the Collateral Documents, any amendments thereto and the provisions of the Indenture, any of the Collateral Documents ceases to be in full force and effect or ceases to be effective, in all material respects, to create the Lien purported to be created in the Collateral in favor of the Holders for 60 days after notice.

        In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to OI Group or any Significant Subsidiary of OI Group, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately.

        A Holder of notes may not pursue any remedy with respect to the Indenture, the notes, any Guarantee or any Collateral Document unless: (1) the Holder gives to the Trustee written notice of a

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continuing Event of Default; (2) the Holders of at least 25% in principal amount of such notes outstanding make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 30 days after receipt of the request and the offer of indemnity; and (5) during such 30-day period the Holders of a majority in principal amount of the outstanding notes do not give the Trustee a direction which is inconsistent with the request. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest or liquidated damages) if it determines that withholding notice is in their interest.

        The Holders of a majority in aggregate principal amount of the notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or liquidated damages on, or the principal of, the notes.

        The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of Default, the Company is required to deliver to the Trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

        No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the notes, the Indenture, the Guarantees of the notes, the Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Legal Defeasance and Covenant Defeasance

        The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Guarantees of the notes ("Legal Defeasance") except for:

(1)

the rights of Holders of outstanding notes to receive payments in respect of the principal of, or interest or premium and liquidated damages, if any, on such notes when such payments are due from the trust referred to below;



(2)

the Company's obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;



(3)

the rights, powers, trusts, duties and immunities of the Trustee, and the Company's and the Guarantors' obligations in connection therewith; and



(4)

the Legal Defeasance provisions of the Indenture.

        In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with those covenants shall not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation

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and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the notes.

        In order to exercise either Legal Defeasance or Covenant Defeasance:

(1)

the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium and liquidated damages, if any, on the outstanding notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the notes are being defeased to maturity or to a particular redemption date;



(2)

in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;



(3)

in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel confirming that the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;



(4)

no Default or Event of Default shall have occurred and be continuing either: (a) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); or (b) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit;



(5)

such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument to which OI Group or the Company or any of their Restricted Subsidiaries are a party or by which OI Group or the Company or any of such Restricted Subsidiaries are bound;



(6)

the Company must have delivered to the Trustee an Opinion of Counsel to the effect that, assuming no intervening bankruptcy of the Company or any Guarantor between the date of deposit and the 91st day following the deposit and assuming that no Holder is an "insider" of the Company under applicable bankruptcy law, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally;



(7)

the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and



(8)

the Company must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

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Amendment, Supplement and Waiver

        Except as provided in the next two succeeding paragraphs, the notes, the Guarantees thereof and the Indenture as it relates to the notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing default or compliance with any provision of the notes, the Guarantees thereof or the Indenture as it relates to the notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes). Amendments to the Collateral Documents will be made in accordance with their terms.

        Without the consent of each Holder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting Holder):

(1)

reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver;



(2)

reduce the principal of or change the fixed maturity of any note or alter the provisions, or waive any payment, with respect to the redemption of the notes;



(3)

reduce the rate of or change the time for payment of interest on any note;



(4)

waive a Default or Event of Default in the payment of principal of, or interest or premium, or liquidated damages, if any, on the notes (except a rescission of acceleration of the notes by the Holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration);



(5)

make any note payable in money other than U.S. dollars;



(6)

make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of notes to receive payments of principal of, or interest or premium or liquidated damages, if any, on the notes;



(7)

release any Guarantor from any of its obligations under its Guarantee, the Indenture or any Collateral Document, except in accordance with the terms of the Guarantee, the Indenture and any Collateral Document;



(8)

impair the right to institute suit for the enforcement of any payment on or with respect to the notes, the Guarantees of the notes or the Collateral Documents;



(9)

amend, change or modify the obligation of the Company to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with the "—Repurchase at the Option of Holders—Asset Sales" covenant or the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with the "—Repurchase at the Option of Holders—Change of Control" covenant, including, in each case, amending, changing or modifying any definition relating thereto;



(10)

except as otherwise permitted under the "—Merger, Consolidation and Sale of Assets" covenant, consent to the assignment or transfer by OI Group, the Company or any Guarantor of any of their rights or obligations under the Indenture;



(11)

amend or modify any of the provisions of the Indenture or any Guarantee of the notes in a manner material and adverse to the Holders of the notes except (a) in accordance with the terms of the Indenture or such Guarantee or (b) as permitted by the following paragraph;



(12)

amend or modify any of the provisions of the Collateral Documents except (a) in accordance with the terms of such documents or (b) as permitted by the following paragraph; or



(13)

make any change in the preceding amendment and waiver provisions.

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        Notwithstanding the preceding, without the consent of any Holder of notes, the Company, the Guarantors and the Trustee may amend or supplement the notes, the Guarantees, the Indenture as it relates to the notes and the Collateral Documents:

(1)

to cure any ambiguity, defect or inconsistency;



(2)

to provide for uncertificated notes in addition to or in place of certificated notes;



(3)

to provide for the assumption of the Company's or any Guarantor's obligations to Holders of notes in the case of a merger or consolidation or sale of all or substantially all the Company's or such Guarantor's assets;



(4)

to provide for the assumption of the Company's obligations to Holders of the notes by OI Inc. in accordance with the provisions of the Indenture;



(5)

to make any change that would provide any additional rights or benefits to the Holders of notes or that does not adversely affect the legal rights under the Indenture, the Guarantees of the notes or the Collateral Documents of any such Holder (including, but not limited to, adding a Guarantor under the Indenture and adding additional collateral for the benefit of the Holders of the notes);



(6)

to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act; or



(7)

to comply with the "Merger, Consolidation or Sale of Assets" covenant.

        The consent of the Holders of the notes is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.

        After an amendment under the Indenture becomes effective, the Company is required to mail to the Holders of the notes a notice briefly describing such amendment. However, the failure to give such notice to all the Holders of the notes, or any defect therein, will not impair or affect the validity of the amendment.

Satisfaction and Discharge

        The Indenture will be discharged and will cease to be of further effect as to the notes, when:

(1)

either:



(a)

all notes that have been authenticated (except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or



(b)

all notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the Trustee for cancellation for principal, premium and liquidated damages, if any, and accrued interest to the date of maturity or redemption;

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(2)

no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;



(3)

the Company or any Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and



(4)

the Company has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be.

        In addition, the Company must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Intercreditor Agreement

        The Intercreditor Agreement governs, among other things, (i) the direction of the Collateral Agent with respect to the exercise of remedies under the Pledge Agreement, the Security Agreement and the Mortgages, (ii) the distribution of the proceeds of certain asset sales of collateral by OI Group and its subsidiaries and the proceeds of insurance and condemnation awards, and (iii) the distribution of proceeds of any foreclosure upon and sale of collateral under the Pledge Agreement, the Security Agreement and the Mortgages. Pursuant to the Intercreditor Agreement, the lenders under the Credit Agreement direct the Collateral Agent with respect to decisions relating to the exercise of remedies under the Pledge Agreement, the Security Agreement and the Mortgages, including whether to foreclose on the collateral following a default on the notes. Holders of the notes are generally not entitled to share in the proceeds of any asset sales of Collateral by OI Group or any subsidiary or insurance or condemnation proceeds unless pursuant to enforcement actions under the Collateral Documents. Net proceeds of any sales of collateral from an enforcement action are first shared ratably among the senior secured parties (including the Holders of the notes to the extent secured at such time by the collateral giving rise to such proceeds) based upon the relevant amounts due and payable to such senior secured party (less, in the case of the Holders of the notes, proceeds with respect to prior sales held by the Trustee, but not applied to payments on the notes). Amendments to the Intercreditor Agreement necessary to permit the incurrence of additional indebtedness secured by the collateral and to add additional secured parties thereto may be made without the consent of the Trustee or the Holders of the notes, insofar as the foregoing is not prohibited under the Indenture.

The Pledge Agreement

        The Pledge Agreement provides for the pledge by OI Group and OI Packaging of the Capital Stock of, and Intercompany Indebtedness owed to OI Group and OI Packaging by, their respective direct Subsidiaries to secure OI Group's and its Subsidiaries' obligations, including OI Packaging, under or in respect of the Credit Agreement, the Existing Senior Notes and certain other senior indebtedness, and under or in respect of the notes, including their respective Guarantees, in each case on a senior basis, and the obligations under or in respect of OI Inc.'s outstanding public debt securities on a junior basis. The notes will not be secured by the Capital Stock of OI General FTS Inc. and the Intercompany Indebtedness owed by OI General FTS Inc. to OI Group, which is pledged to the lenders under the Pledge Agreement. See "Risk Factors—Risks Relating to the Notes—Notes Effectively Subordinated to Certain Secured Credit Agreement Obligations and Obligations of OI Inc.—The notes are effectively subordinated to the obligations under the secured credit agreement, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement and obligations related to OI Inc.'s $1.7 billion of outstanding public debt securities to the extent these obligations are secured by collateral that does not secure the notes." Upon the occurrence of an Event of Default (as defined in

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the Pledge Agreement), the Pledge Agreement provides for the foreclosure upon and sale of the pledged collateral, including the Collateral pledged to secure the notes, by the Collateral Agent and the ratable distribution of the net proceeds of any such sale (to the extent secured by the applicable collateral) first to the holders of the senior secured obligations and second to the holders of the junior secured obligations, in each case in accordance with the Intercreditor Agreement. In general, the lenders under the Credit Agreement have the power to terminate the Pledge Agreement and release the collateral pledged thereunder when the obligations under the Credit Agreement have been paid in full, when the collateral thereunder no longer secures the obligations under the Credit Agreement, or when OI Inc. and OI Group achieve the investment grade ratings specified in the Credit Agreement and the Collateral Agent acknowledges such ratings. In addition, all or any portion of the collateral pledged under the Pledge Agreement may be released upon the approval of lenders under the Credit Agreement.

Security Agreement and Mortgages

        The Security Agreement and the Mortgages provide for the granting of security interests and liens by OI Group and substantially all its Domestic Subsidiaries in substantially all of their respective personal property (excluding the collateral pledged under the Pledge Agreement) and real property consisting of fee or ground leasehold interests with an individual value in excess of $25.0 million subject to certain exceptions. Subject to certain limitations and exceptions, the security interests granted under the Security Agreement secure the obligations of OI Group and its Subsidiaries under or in respect of the Credit Agreement, the Existing Senior Notes, certain other senior indebtedness and the notes, including their respective Guarantees, and the liens granted by the Mortgages secure the obligations of the applicable mortgagor under or in respect of the Credit Agreement, the Existing Senior Notes, certain other senior indebtedness and the notes, including their respective Guarantees. The collateral under the Security Agreement consisting of the Capital Stock of substantially all of the Domestic Subsidiaries of Credit Agreement Domestic Borrowers, Intercompany Indebtedness owed to the Credit Agreement Domestic Borrowers and substantially all of their Domestic Subsidiaries, and the Capital Stock of the first-tier foreign subsidiaries will not secure the notes. See "Risk Factors—Risks Relating to the Notes—Notes Effectively Subordinated to Certain Secured Credit Agreement Obligations and Obligations of OI Inc. The notes are effectively subordinated to the obligations under the secured credit agreement, certain obligations owing to lenders or their affiliates as permitted under the secured credit agreement and obligations related to OI Inc.'s $1.7 billion of outstanding public debt securities to the extent these obligations are secured by collateral that does not secure the notes." Upon the occurrence of an Event of Default (as defined in the Security Agreement and the Mortgages, as applicable), the Security Agreement and the Mortgages provide for the foreclosure upon and sale of the applicable collateral, including the Collateral pledged to secure the notes, by the Collateral Agent and the distribution of the net proceeds of any such sale (to the extent secured by the applicable collateral) first to the holders of the secured obligations in each case in accordance with the Intercreditor Agreement. In general, the lenders under the Credit Agreement have the power to terminate the Security Agreement and Mortgages and release the collateral thereunder when the obligations under the Credit Agreement have been paid in full, when the collateral thereunder no longer secures the obligations under the Credit Agreement, or when OI Inc. and OI Group achieve the investment grade ratings specified in the Credit Agreement and the Collateral Agent acknowledges such ratings. In addition, all or any portion of the collateral under the Security Agreement and the Mortgages may be released upon the approval of lenders under the Credit Agreement.

Releases of Collateral

        Under the terms of the Collateral Documents, the lenders under the Credit Agreement determine the circumstances and manner in which the collateral, including the Collateral securing the notes and the Guarantees of the notes, shall be disposed of, including, but not limited to, the determination of

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whether to release all or any portion of the Collateral from the Liens created by the Collateral Documents and whether to foreclose on the Collateral following a default on the notes. Generally, upon any sale, transfer or other disposition of Collateral in a transaction not prohibited by the Credit Agreement and the Collateral Documents, including an Asset Sale, the Collateral will be released from the Liens created by the Collateral Documents. Moreover, when the obligations under the Credit Agreement have been paid in full, when the collateral under the Collateral Documents no longer secures the obligations under the Credit Agreement and upon election of the applicable grantors or pledgors, or when OI Inc. and OI Group achieve the investment grade ratings specified in the Credit Agreement and the Collateral Agent acknowledges such ratings, each of the Collateral Documents may be terminated and the collateral, including the Collateral securing the notes and the Guarantees of the notes, thereunder released. The Holders of the notes, however, are entitled, under certain circumstances, to their ratable share of the distribution of the proceeds of the Collateral as described in the Intercreditor Agreement. In connection with releases of collateral, the Company will comply with Section 314(d)(1) of the Trust Indenture Act, as applicable. See "—Intercreditor Agreement." In addition, the Collateral Documents provide that upon release of a Guarantee under the Indenture, the security interest in the assets of that Guarantor securing the notes and the Guarantees of the notes will be released simultaneously. Under the indemnification provisions contained in the Intercreditor Agreement, any pro rata payments due to the Collateral Agent from the Holders of the notes will be deducted from their portion of the proceeds from the Collateral prior to the distribution of such proceeds. The amount of indebtedness secured under the Collateral Documents may be increased without the consent of the Trustee or the Holders of the notes.

Concerning the Trustee

        If the Trustee becomes a creditor of the Company or any Guarantor, the Indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

        The Holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur and be continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Additional Information

        Anyone who receives this prospectus may obtain a copy of the Indenture and the Registration Rights Agreements without charge by writing to Owens-Brockway Glass Container Inc., One SeaGate, Toledo, Ohio 43666, Attention: Investor Relations.

Book-Entry, Delivery and Form

        The exchange notes will be issued in registered, global form in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. The exchange notes will be represented by one or more exchange notes in registered, global form without interest coupons (collectively, the "Global Notes"). The Global Notes will be deposited upon issuance with the Trustee as custodian for The Depository Trust Company ("DTC"), in New York, New York, and registered in the name of DTC or

125

its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below.

        Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominees. Beneficial interests in the Global Notes may not be exchanged for exchange notes in certificated form except in the limited circumstances described below. See "—Exchange of Book-Entry Notes for Certificated Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of Notes in certificated form.

        Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time.

Depository Procedures

        The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The Company takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.

        DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

        DTC has also advised the Company that, pursuant to procedures established by it:

(1)

upon deposit of the Global Notes, DTC will credit the accounts of Participants designated by the exchange agent with portions of the principal amount of the Global Notes; and



(2)

ownership of these interests in the Global Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes).

        Investors in the Global Notes who are Participants in DTC's system may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream) which are Participants in such system. Euroclear and Clearstream will hold interests in the Global Notes on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositories, which are Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear, and Citibank, N.A., as operator of Clearstream. All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the

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ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of an interest in the Global Notes will not have exchange notes registered in their names, will not receive physical delivery of exchange notes in certificated form and will not be considered the registered owners or "Holders" thereof under the Indenture for any purpose.

        Payments in respect of the principal of, and interest and premium and liquidated damages, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the Persons in whose names the notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for:

(1)

any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Notes; or



(2)

any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

        DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the exchange notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of exchange notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

        Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

        Cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal

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procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

        DTC has advised the Company that it will take any action permitted to be taken by a Holder of notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for legended notes in certificated form, and to distribute such notes to its Participants.

        Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither the Company nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective Participants or Indirect Participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

        A Global Note is exchangeable for definitive notes in registered certificated form ("Certificated Notes") if:

(1)

DTC (a) notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes and the Company fails to appoint a successor depositary or (b) has ceased to be a clearing agency registered under the Exchange Act;



(2)

the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or



(3)

there shall have occurred and be continuing a Default or Event of Default with respect to the notes.

        In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in "Notice to Investors," unless that legend is not required by applicable law.

Same Day Settlement and Payment

        The Company will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, interest and liquidated damages, if any) by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. The Company will make all payments of principal, interest and premium and liquidated damages, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. The notes represented by the Global Notes are eligible to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

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        Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised the Company that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC's settlement date.

Certain Definitions

        Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

        "Acquired Debt" means, with respect to any specified Person:

(1)

Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and



(2)

Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

        "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" shall have correlative meanings.

        "Asset Sale" means:

(1)

the sale, lease, conveyance or other disposition of any assets; provided that the sale, conveyance or other disposition of all or substantially all of the assets of OI Group and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption "—Certain Covenants—Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant; and



(2)

the issuance of Equity Interests by any of OI Group's Restricted Subsidiaries or the sale of Equity Interests in any of OI Group's Restricted Subsidiaries.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1)

any single transaction or series of related transactions that involves assets or Equity Interests having a Fair Market Value of less than $10.0 million;



(2)

a transfer of assets between or among OI Group and its Restricted Subsidiaries;



(3)

an issuance of Equity Interests by a Restricted Subsidiary of OI Group to OI Group or to another Restricted Subsidiary of OI Group;



(4)

the sale or lease of equipment, inventory, accounts receivable or other assets in the ordinary course of business;

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(5)

the sale, lease, conveyance or other disposition of any assets securing the Indenture or the Credit Agreement in connection with the enforcement of the security interests contained therein pursuant to the terms of the Intercreditor Agreement;

(6)

the sale or other disposition of cash or Cash Equivalents;

(7)

a Restricted Payment that is permitted by the covenant described above under the caption "—Certain Covenants—Restricted Payments"; and

(8)

the exchange of assets held by OI Group or a Restricted Subsidiary of OI Group for assets held by any Person or entity (including Equity Interests of such Person or entity), provided that (i) the assets received by OI Group or such Restricted Subsidiary of OI Group in any such exchange will immediately constitute, be part of, or be used in a Permitted Business; and (ii) any such assets received are of a comparable Fair Market Value to the assets exchanged as determined in good faith by OI Group.

"Board of Directors" means:

(1)

with respect to a corporation, the board of directors of the corporation;

(2)

with respect to a partnership, the Board of Directors of the general partner of the partnership; and

(3)

with respect to any other Person, the board or committee of such Person serving a similar function.

        "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

"Capital Stock" means:

(1)

in the case of a corporation, corporate stock;

(2)

in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3)

in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4)

any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

"Cash Equivalents" means:

(1)

United States dollars;

(2)

securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof and (a) backed by the full faith and credit of the United States or (b) having a rating of at least AAA from S&P or at least Aaa from Moody's, in each case maturing not more than one year from the date of acquisition;

(3)

securities issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year of the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's;

(4)

certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any lender under the Credit Agreement or any domestic commercial bank having capital and surplus of not less than $250.0 million;

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(5)

repurchase and reverse repurchase obligations for underlying securities of the types described in clauses (2) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above;

(6)

commercial paper having the highest rating obtainable from Moody's or S&P and in each case maturing within one year from the date of creation thereof; and

(7)

money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition or that has a rating of at least AAA from S&P or at least Aaa from Moody's.

        "Change of Control" means the occurrence of any of the following:

(1)

OI Inc. or OI Group becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Principals and their Related Parties, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 35% or more of the total voting power of the Voting Stock of OI Inc.; or

(2)

the first day on which a majority of the members of the Board of Directors of OI Inc. are not Continuing Directors; or

(3)

the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where (A) the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Principals and their Related Parties, becomes, directly or indirectly, the beneficial owner (as defined above) of 35% or more of the voting power of all classes of Voting Stock of the Company; or

(4)

the first day on which OI Inc. fails to own 100% of the issued and outstanding Equity Interests of OI Group.

        "Collateral" means all of the property from time to time in which Liens are purported to be granted to secure the notes or Guarantees of the notes pursuant to the Collateral Documents.

        "Collateral Agent" shall have the meaning given to it in the Credit Agreement.

        "Collateral Documents" means, collectively, the Intercreditor Agreement, the Pledge Agreement and the Security Agreement, each as in effect on the Issue Date and as amended, amended and restated, modified, renewed, replaced or restructured from time to time and the Mortgages each as in effect on the Issue Date and any additional Mortgages created from time to time, and as amended, amended and restated, modified, renewed or replaced from time to time.

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        "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus:

(1)

an amount equal to any extraordinary loss realized by such Person or any of its Restricted Subsidiaries in connection with any sale or other disposition of assets, to the extent such losses were deducted in computing such Consolidated Net Income; plus

(2)

provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(3)

consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including without limitation amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus

(4)

depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges and expenses (excluding any amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash charges and expenses were deducted in computing such Consolidated Net Income; minus

(5)

an amount equal to any extraordinary gain realized by such Person or any of its Restricted Subsidiaries in connection with any sale or other disposition of assets, to the extent such gains were included in computing such Consolidated Net Income; minus

(6)

pension expenses, retiree medical expenses and any other material non-cash items increasing Consolidated Net Income for such period that are disclosed in such Person's financial statements, other than accrual of revenue in the ordinary course of business, in each case without duplication, on a consolidated basis and determined in accordance with GAAP; minus

(7)

net cash payments to OI Inc. by OI Group for (i) claims of persons for exposure to asbestos containing products and expenses related thereto and (ii) dividends on any outstanding preferred stock of OI Inc., in each case without duplication, on a consolidated basis and determined in accordance with GAAP.

        Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation, amortization and other non-cash charges and expenses of, a Restricted Subsidiary of OI Group will be added to Consolidated Net Income to compute Consolidated Cash Flow of OI Group only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to OI Group by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and would not be prohibited, directly or indirectly, by the operation of the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders, other than agreements, instruments, judgments, decrees, orders, statutes, rules and government regulations existing on January 24, 2002.

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        "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(1)

the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Wholly Owned Restricted Subsidiary of the specified Person;

(2)

the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, is prohibited, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, other than agreements, instruments, judgments, decrees, orders, statutes, rules and government regulations existing on January 24, 2002;

(3)

the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition will be excluded;

(4)

the cumulative effect of a change in accounting principles under GAAP will be excluded;

(5)

all extraordinary, unusual or nonrecurring gains and losses (including without limitation any one-time costs incurred in connection with acquisitions) (together with any related provision for taxes) will be excluded;

(6)

any gain or loss (together with any related provision for taxes) realized upon the sale or other disposition of any property, plant or equipment of the specified Person or its Restricted Subsidiaries (including pursuant to any sale and leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss (together with any related provision for taxes) realized upon the sale or other disposition by the specified Person or any Restricted Subsidiary of the specified Person of any Capital Stock of any Person or any Asset Sale will be excluded to the extent that any such gain or loss exceeds $5.0 million with respect to any one occurrence or $15.0 million in the aggregate with respect to gains or losses during any twelve-month period;

(7)

the Net Income of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries; and

(8)

any deduction for minority owners' interest in earnings of Subsidiaries will be excluded.

        "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of OI Inc., who:

(1)

was a member of such Board of Directors on the Issue Date; or

(2)

was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.

        "Credit Agreement" means that certain Secured Credit Agreement, dated as of April 23, 2001, by and among the Borrowers named therein, OI Group and Owens-Illinois General, Inc., as Borrower's Agent, Deutsche Bank Securities Inc., formerly Deutsche Banc Alex. Brown, and Banc of America Securities, LLC, as Joint Lead Arrangers and Joint Book Managers, Deutsche Bank AG, London Branch, as UK Administrative Agent, Deutsche Bank Trust Company Americas, formerly Bankers Trust Company, as Administrative Agent, and the other Agents and the other Lenders named therein, including any related notes, guarantees, collateral documents, instruments and agreements executed in

133

connection therewith, and in each case as amended, amended and restated, modified, renewed, refunded, replaced, substituted or refinanced or otherwise restructured (including but not limited to, the inclusion of additional borrowers thereunder) from time to time.

"Credit Agreement Domestic Borrowers" means the Company, OI General FTS Inc. and OI Plastic Products FTS Inc., to the extent at the time of determination such entity is a borrower under the Credit Agreement and any other Domestic Subsidiary of OI Group that is, at the relevant time, a borrower under the Credit Agreement.

        "Credit Facilities" means (1) one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case with banks or other lenders providing for revolving credit loans, term loans, bankers acceptances, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced, refinanced or otherwise restructured in whole or in part from time to time (collectively, "Bank Facilities"); and (2) notes, debentures or other financing instruments or any combination thereof incurred after the Issue Date ("Non-Bank Refinancing"), including any refinancing thereof, to the extent such Non-Bank Refinancing replaces, refinances or otherwise restructures Indebtedness under Credit Facilities.

        "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

"Designated Noncash Consideration" means the noncash consideration received by OI Group or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers' Certificate setting forth the basis of such valuation, executed by an officer of OI Group or the Company, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration.

        "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable (other than as a result of a change of control or asset sale), pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof (other than as a result of a change of control or asset sale), in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature or are no longer outstanding. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require OI Group or the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that OI Group or the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "—Certain Covenants—Restricted Payments."

        "Domestic Subsidiary" means any Restricted Subsidiary of OI Group other than a Foreign Subsidiary.

        "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

        "Equity Offering" means any public or private sale of common stock (other than Disqualified Stock) of OI Inc. (other than public offerings with respect to common stock registered on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of OI Inc.).

        "Existing Indebtedness" means the aggregate principal or commitment amount of Indebtedness of OI Group and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date, until such amounts are repaid or terminated.

134

        "Existing IRBs" means the Holmes County Ohio 5.85% Industrial Revenue Bonds due 2007, the Kansas City, Missouri Industrial Development Revenue Bonds due 2008 and the City of Mentor, Ohio Industrial Development Bonds due 2004, and any extensions, renewals or refinancings thereof to the extent that such extensions, renewals and refinancings thereof do not result in an increase in the aggregate principal amount of such Existing IRBs.

        "Existing Senior Notes" means the Company's 8⁷₈% Senior Secured Notes due 2009 issued under an indenture dated as of January 24, 2002, as supplemented by the first supplemental indenture dated as of January 24, 2002, and the second supplemental indenture dated as of August 5, 2002, among the Company, the Guarantors and U.S. Bank National Association, as Trustee.

"Fair Market Value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under pressure or compulsion to complete the transaction.

        "Fixed Charge Coverage Ratio" means with respect to any specified Person and its Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any Indebtedness or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period.

        In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1)

acquisitions and dispositions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated on a pro forma basis in accordance with Regulation S-X under the Securities Act;

(2)

the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded;

(3)

the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Subsidiaries following the Calculation Date;

(4)

the consolidated interest expense attributable to interest on any Indebtedness computed on a pro forma basis and (a) bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period and (b) that was not outstanding during the period for which the computation is being made but which bears, at the option of such Person, a fixed or floating rate of interest, shall be computed by applying at the option of such Person either the fixed or floating rate; and

135

(5)

the consolidated interest expense attributable to interest on any working capital borrowings under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such working capital borrowings during the applicable period.

        "Fixed Charges" means, with respect to any specified Person and its Restricted Subsidiaries for any period, the sum, without duplication, of:

(1)

the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to attributable debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus

(2)

the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3)

interest actually paid by the Company or any such Restricted Subsidiary under any Guarantee of Indebtedness or other obligation of any other Person; plus

(4)

the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Stock or preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of OI Group (other than Disqualified Stock) or to OI Group or a Restricted Subsidiary of OI Group, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

        "Foreign Subsidiary" means any Restricted Subsidiary of OI Group which is organized under the laws of a jurisdiction other than the United States of America or any State thereof.

        "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on January 24, 2002.

        "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit.

        "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.

        "Guarantors" means:

(1)

OI Group;

(2)

each direct or indirect Domestic Subsidiary of OI Group (other than the Company) that guarantees the Credit Agreement as of the Issue Date; and

(3)

each future direct or indirect Domestic Subsidiary of OI Group that guarantees the Credit Agreement and executes a Guarantee of the notes in accordance with the provisions of the Indenture;

and their respective successors and assigns.

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        "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under:

(1)

interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in interest rates;

(2)

currency exchange swap agreements, currency exchange cap agreements, currency exchange collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in currency values; and

(3)

commodity swap agreements; commodity cap agreements, commodity collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in commodity prices.

        "Holder" means a Person in whose name a note is registered on the registrar's books.

        "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of:

(1)

borrowed money;

(2)

evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3)

banker's acceptances;

(4)

representing Capital Lease Obligations;

(5)

the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued liability or trade payable; or

(6)

representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes the lesser of the Fair Market Value on the date of incurrence of any asset of the specified Person subject to a Lien securing the Indebtedness of others and the amount of such Indebtedness secured and, to the extent not otherwise included, the Guarantee by the specified Person of any indebtedness of any other Person.

        The amount of any Indebtedness outstanding as of any date shall be:

(1)

the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and

(2)

the principal amount thereof, in the case of any other Indebtedness.

        "Intercompany Indebtedness" means any Indebtedness of OI Group or any Subsidiary of OI Group which, in the case of OI Group, is owing to OI Inc. or any Subsidiary of OI Group and, in the case of any Subsidiary of OI Group, is owing to OI Group or any other Subsidiary of OI Group.

        "Intercreditor Agreement" means the intercreditor agreement, dated as of April 23, 2001, by and among Deutsche Bank Trust Company Americas, formerly Bankers Trust Company, as administrative agent for the lenders party to the Credit Agreement, Deutsche Bank Trust Company Americas, formerly Bankers Trust Company, as Collateral Agent and any other parties thereto, as amended, amended and restated or otherwise modified from time to time.

137

        "Investment Grade Permitted Liens" means:

(1)

Liens arising under the Collateral Documents other than Liens securing the OI Inc. Senior Notes on the Issue Date;



(2)

Liens incurred after the Issue Date on the assets (including shares of Capital Stock and Indebtedness) of OI Group or any Domestic Subsidiary of OI Group; provided, however, that the aggregate amount of Indebtedness and other obligations at any time outstanding secured by such Liens pursuant to clause (1) above and this clause (2) shall not exceed the sum of $5.5 billion plus 50% of Tangible Assets acquired by the Company or any Domestic Subsidiary after January 24, 2002;



(3)

Liens in favor of OI Group or any Domestic Subsidiary of OI Group;



(4)

Liens on property or shares of capital stock of a Person existing at the time such Person is merged with or into or consolidated with OI Group or any Domestic Subsidiary of OI Group; provided that such Liens were not incurred in connection with or in contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with OI Group or the Domestic Subsidiary;



(5)

Liens on property or shares of capital stock existing at the time of acquisition thereof by OI Group or any Domestic Subsidiary of OI Group, provided that such Liens were not incurred in connection with or in contemplation of such acquisition and do not extend to any property other than the property so acquired by OI Group or the Domestic Subsidiary;



(6)

Liens (including extensions and renewals thereof) upon real or personal (whether tangible or intangible) property acquired after the Issue Date, provided that:



(a)

such Lien is created solely for the purpose of securing Indebtedness incurred to finance all or any part of the purchase price or cost of construction or improvement of property, plant or equipment subject thereto and such Lien is created prior to, at the time of or within 12 months after the later of the acquisition, the completion of construction or the commencement of full operation of such property, plant or equipment or to refinance any such Indebtedness previously so secured;



(b)

the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost; and



(c)

any such Lien shall not extend to or cover any property or assets other than such item of property or assets and any improvements on such item;




(7)

Liens to secure any Capital Lease Obligation or operating lease;



(8)

Liens encumbering customary initial deposits and margin deposits;



(9)

Liens securing Indebtedness under Hedging Obligations;



(10)

Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by OI Group or any of its Domestic Subsidiaries in the ordinary course of business of OI Group and its Domestic Subsidiaries;



(11)

Liens on or sales of receivables and customary cash reserves established in connection therewith;



(12)

Liens securing OI Group's or any of its Domestic Subsidiary's obligations in respect of bankers' acceptances issued or created to facilitate the purchase, shipment or storage of inventory or other goods; and

138

(13)

Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor.

        "Investment Grade Ratings" means a debt rating of the notes of BBB- or higher by S&P and Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's or in the event S&P or Moody's shall cease rating the notes and the Company shall select any other Rating Agency, the equivalent of such ratings by such other Rating Agency.

        "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons in the forms of loans (including Guarantees thereof), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If OI Group or any Restricted Subsidiary of OI Group sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of OI Group such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of OI Group, OI Group shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "—Certain Covenants—Restricted Payments." The acquisition by OI Group or any Restricted Subsidiary of OI Group of a Person that holds an Investment in a third Person shall be deemed to be an Investment by OI Group or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investment held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described above under the caption "—Certain Covenants—Restricted Payments."

        "Issue Date" means November 13, 2002.

        "KKR" means Kohlberg Kravis Roberts & Co., L.P., a Delaware limited partnership.

        "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any agreement to give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

        "Moody's" means Moody's Investors Service, Inc. or any successor rating agency.

        "Mortgages" means mortgages as defined under the Credit Agreement securing real property in the United States of America.

        "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends.

        "Net Proceeds" means the aggregate cash proceeds received by OI Group or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of any bona fide direct costs relating to such Asset Sale, including, without limitation, reasonable legal, accounting and investment banking fees, reasonable sales commissions, any reasonable relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness that is paid with the proceeds of such Asset Sale and any

139

reasonable reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP and for the after-tax cost of any indemnification payments (fixed and contingent) attributable to sellers' indemnities to the purchaser.

        "Non-Recourse Debt" means Indebtedness:

(1)

as to which neither OI Group nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender;



(2)

no default with respect to which (including any rights that the Holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any Holder of any other Indebtedness of OI Group or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and



(3)

as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of OI Group or any of its Restricted Subsidiaries.

        "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

"Offshore Collateral Documents" means the Offshore Security Agreements and mortgages (as defined in the Credit Agreement) securing real property outside of the United States of America.

        "Offshore Security Agreements" has the meaning assigned to such term in the Credit Agreement.

        "OI Inc. Ordinary Course Payments" means dividends or other distributions by, or payments of Intercompany Indebtedness from, OI Group to OI Inc. necessary to permit OI Inc. to pay any of the following items which are then due and payable: (i) Permitted OI Inc. Debt Obligations; (ii) claims of persons for exposure to asbestos-containing products and expenses related thereto; (iii) consolidated tax liabilities of OI Inc. and its Subsidiaries; and (iv) general administrative costs and other on-going expenses of OI Inc. in the ordinary course of business consistent with past practices.

        "OI Inc. Senior Notes" means the Indebtedness of OI Inc. outstanding as of any date pursuant to its $300.0 million aggregate principal amount of 7.85% Senior Notes due 2004, $350.0 million aggregate principal amount of 7.15% Senior Notes due 2005, $300.0 million aggregate principal amount of 8.10% Senior Notes due 2007, $250.0 million aggregate principal amount of 7.35% Senior Notes due 2008, $250.0 million aggregate principal amount of 7.50% Senior Debentures due 2010, and $250.0 million aggregate principal amount of 7.80% Senior Debentures due 2018.

        "Permitted Business" means any business conducted or proposed to be conducted (as described in the offering memorandum relating to the private notes) by OI Group and its Restricted Subsidiaries on the Issue Date and other businesses reasonably related or ancillary thereto.

        "Permitted Investments" means:

(1)

any Investment in the Company, OI Group or in a Restricted Subsidiary of OI Group;



(2)

any Investment in cash or Cash Equivalents and, with respect to Foreign Subsidiaries, short term Investments similar to Cash Equivalents customarily used in the countries in which such Foreign Subsidiaries are located;



(3)

any Investment by OI Group or any Restricted Subsidiary of OI Group in a Person, if as a result of such Investment:



(a)

such Person becomes a Restricted Subsidiary of OI Group; or

140

(b)

such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, OI Group or a Restricted Subsidiary of OI Group;




(4)

any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "—Repurchase at the Option of Holders—Asset Sales";



(5)

any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of OI Inc., the Company or OI Group;



(6)

Hedging Obligations;



(7)

advances to employees, officers and directors not in excess of $2.0 million outstanding at any one time, in the aggregate;



(8)

obligations of employees, officers and directors, not in excess of $2.0 million outstanding at any one time, in the aggregate, in connection with such employees', officers' or directors' acquisition of shares of OI Inc. common stock, so long as no cash is actually advanced to such employees, officers or directors in connection with the acquisition of any such shares;



(9)

any Investment existing on the Issue Date; and



(10)

other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other such Investments outstanding at any such time, not to exceed $150.0 million.

"Permitted Liens" means:

(1)

Liens arising under the Collateral Documents other than Liens securing the OI Inc. Senior Notes on the Issue Date;



(2)

Liens incurred after the Issue Date on the assets (including shares of Capital Stock and Indebtedness) of OI Group or any Restricted Subsidiary of OI Group; provided, however, that the aggregate amount of Indebtedness and other obligations at any time outstanding secured by such Liens pursuant to clause (1) above and this clause (2) shall not exceed the sum of $5.5 billion plus 50% of Tangible Assets acquired by the Company or any Guarantor or that are owned by any Restricted Subsidiary that becomes a Guarantor after January 24, 2002;



(3)

Liens in favor of OI Group or any Restricted Subsidiary of OI Group;



(4)

Liens on property or shares of capital stock of a Person existing at the time such Person is merged with or into or consolidated with OI Group or any Restricted Subsidiary of OI Group; provided that such Liens were not incurred in connection with or in contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with OI Group or the Restricted Subsidiary;



(5)

Liens on property or shares of capital stock existing at the time of acquisition thereof by OI Group or any Restricted Subsidiary of OI Group, provided that such Liens were not incurred in connection with or in contemplation of such acquisition and do not extend to any property other than the property so acquired by OI Group or the Restricted Subsidiary;



(6)

Liens on property or shares of capital stock of any Foreign Subsidiary, including shares of capital stock of any Foreign Subsidiary owned by a Domestic Subsidiary, to secure Indebtedness of a Foreign Subsidiary permitted to be incurred under the Indenture;

141

(7)

Liens (including extensions and renewals thereof) upon real or personal (whether tangible or intangible) property acquired after the Issue Date, provided that:



(a)

such Lien is created solely for the purpose of securing Indebtedness incurred to finance all or any part of the purchase price or cost of construction or improvement of property, plant or equipment subject thereto and such Lien is created prior to, at the time of or within 12 months after the later of the acquisition, the completion of construction or the commencement of full operation of such property, plant or equipment or to refinance any such Indebtedness previously so secured;



(b)

the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost; and



(c)

any such Lien shall not extend to or cover any property or assets other than such item of property or assets and any improvements on such item;




(8)

Liens to secure any Capital Lease Obligation or operating lease;



(9)

Liens encumbering customary initial deposits and margin deposits;



(10)

Liens securing Indebtedness under Hedging Obligations;



(11)

Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by OI Group or any of its Restricted Subsidiaries in the ordinary course of business of OI Group and its Restricted Subsidiaries;



(12)

Liens on or sales of receivables and customary cash reserves established in connection therewith;



(13)

Liens securing OI Group's or any of its Restricted Subsidiaries' obligations in respect of bankers' acceptances issued or created to facilitate the purchase, shipment or storage of inventory or other goods; and



(14)

Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor.

"Permitted OI Inc. Debt Obligations" means Obligations with respect to the OI Inc. Senior Notes and any refinancings of the $300.0 million aggregate principal amount of 7.85% Senior Notes due 2004, the $350.0 million aggregate principal amount of 7.15% Senior Notes due 2005 of OI Inc., the $300.0 million aggregate principal amount of 8.10% Senior Notes due 2007, the $250.0 million aggregate principal amount of 7.35% Senior Notes due 2008 and the $250.0 million aggregate principal amount of 7.50% Senior Debentures due 2010, and the Existing IRBs and up to an additional $50.0 million of IRB financing.

        "Permitted Refinancing Indebtedness" means any Indebtedness of OI Group or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund such other Indebtedness of OI Group or any of its Restricted Subsidiaries (other than Intercompany Indebtedness); provided that:

(1)

the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed for more than 60 days the principal or commitment amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of any premiums necessary to accomplish such refinancing and such expenses incurred in connection therewith);

142

(2)

such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and



(3)

if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes on terms at least as favorable to the Holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

        "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

        "Pledge Agreement" means the Pledge Agreement, dated as of April 23, 2001, by and among OI Group, OI Packaging, and Deutsche Bank Trust Company Americas, formerly Bankers Trust Company, as Collateral Agent, as amended, amended and restated or otherwise modified from time to time.

        "Principals" means KKR and its Affiliates.

        "Rating Agency" means any of:

(1)

S&P;



(2)

Moody's; or



(3)

if S&P or Moody's or both shall not make a rating of the notes publicly available, a security rating agency or agencies, as the case may be, nationally recognized in the United States, selected by the Company, which shall be substituted for S&P or Moody's or both, as the case may be, and, in each case, any successors thereto.

"Related Party" means:

(1)

any controlling stockholder, partner, member, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Principals; or



(2)

any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (1).

Restricted Investment" means an Investment other than a Permitted Investment.

        "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

        "S&P" means Standard & Poor's Ratings Services, a division of McGraw Hill Inc., a New York corporation, or any successor rating agency.

        "Security Agreement" means the Security Agreement, dated as of April 23, 2001, entered into by and among OI Group, each of the direct and indirect subsidiaries of OI Group signatory thereto, each additional grantor that may become a party thereto, and Deutsche Bank Trust Company Americas, formerly Bankers Trust Company, as Collateral Agent, as amended, amended and restated, or otherwise modified from time to time.

        "Significant Subsidiary" means any Restricted Subsidiary of OI Group that would be a "significant subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act, as such Regulation is in effect as of January 24, 2002.

143

        "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

        "Subsidiary" means, with respect to any specified Person:

(1)

any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and



(2)

any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).

        "Tangible Assets" means the total consolidated assets, less goodwill and intangibles, of OI Group and its Restricted Subsidiaries, as shown on the most recent balance sheet of OI Group.

        "Unrestricted Subsidiary" means any Subsidiary of OI Group that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary:

(1)

has no Indebtedness other than Non-Recourse Debt;



(2)

is not party to any agreement, contract, arrangement or understanding with OI Group or any Restricted Subsidiary of OI Group unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to OI Group or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of OI Group;



(3)

is a Person with respect to which neither OI Group nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results;



(4)

has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of OI Group or any of its Restricted Subsidiaries; and



(5)

has at least one director on its Board of Directors that is not a director or executive officer of OI Group or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of OI Group or any of its Restricted Subsidiaries.

        Any designation of a Restricted Subsidiary of OI Group as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption "—Certain Covenants—Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of OI Group as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock," OI Group shall be in default of such covenant.

144

        "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

        "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1)

the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by



(2)

the then outstanding principal amount of such Indebtedness.

        "Wholly Owned Restricted Subsidiary" of any specified Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person and/or by one or more Wholly Owned Restricted Subsidiaries of such Person.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

        The following is a summary of the material United States federal income tax considerations relating to the exchange of your private notes for exchange notes in the exchange offer, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based on laws, regulations, rulings and decisions now in effect, all of which are subject to change possibly with retroactive effect. We have not sought any ruling from the Internal Revenue Service or an opinion of counsel with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the Internal Revenue Service will agree with such statements and conclusions.

        This discussion assumes that the notes are held as capital assets, and this discussion only applies to you if you exchange your private notes for exchange notes in the exchange offer. This discussion also does not address the tax considerations arising under the laws of any foreign, state or local jurisdiction. In addition, this discussion does not address all tax considerations applicable to your particular circumstances or if you are subject to special tax rules, including, without limitation, if you are:

•

a bank, insurance company or other financial institution;



•

a holder subject to the alternative minimum tax;



•

a tax-exempt organization;



•

a foreign person or entity;



•

a dealer in securities or commodities;



•

a trader in securities that elects to use a mark-to-market method of accounting for their securities holdings;



•

a holder whose "functional currency" is not the U.S. dollar;



•

a person that will hold notes as a position in a hedging transaction, "straddle" or "conversion transaction" for tax purposes; or



•

a person deemed to sell notes under the constructive sale provisions of the Internal Revenue Code of 1986, as amended.

        If a partnership holds notes, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a

145

partnership holding our notes, you should consult your tax advisor regarding the tax consequences of the exchange of the private notes for exchange notes in the exchange offer.

YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

        The exchange of private notes for exchange notes will be treated as a "non-event" for federal income tax purposes because the exchange notes will not be considered to differ materially in kind or extent from the private notes. As a result, no material federal income tax consequences will result to you from exchanging private notes for exchange notes.

PLAN OF DISTRIBUTION

        Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Broker-dealers may use this prospectus, as it may be amended or supplemented from time to time, in connection with the resale of exchange notes received in exchange for private notes where the broker-dealer acquired the private notes as a result of market-making activities or other trading activities. We have agreed that for a period of up to 90 days after the date that this registration statement is declared effective by the SEC, we will make this prospectus, as amended or supplemented, available to any broker-dealer that requests it in the letter of transmittal for use in connection with any such resale.

        We will not receive any proceeds from any sale of exchange notes by broker-dealers or any other persons. Broker-dealers may sell exchange notes received by broker-dealers for their own account pursuant to the exchange offer from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to the prevailing market prices or negotiated prices. Broker-dealers may resell exchange notes directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker-dealer and/or the purchasers of the exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of the exchange notes may be deemed to be "underwriters" within the meaning of the Securities Act and any profit on any resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

        We have agreed to pay all expenses incident to our performance of, or compliance with, the registration rights agreements and will indemnify the holders of the notes (including any broker-dealers) against liabilities under the Securities Act.

        By its acceptance of the exchange offer, any broker-dealer that receives exchange notes pursuant to the exchange offer agrees to notify us before using the prospectus in connection with the sale or transfer of exchange notes. The broker-dealer further acknowledges and agrees that, upon receipt of notice from us of the happening of any event which makes any statement in the prospectus untrue in any material respect or which requires the making of any changes in the prospectus to make the statements in the prospectus not misleading or which may impose upon us disclosure obligations that my have a material adverse effect on us, which notice we agree to deliver promptly to the broker-dealer, the broker-dealer will suspend use of the prospectus until we have notified the broker-dealer that delivery of the prospectus may resume and have furnished copies of any amendment or supplement to the prospectus to the broker-dealer.

146

LEGAL MATTERS

        Certain legal matters with regard to the validity of the notes will be passed upon for us and the guarantors by James W. Baehren, Vice President and Secretary of the Company, and Latham & Watkins LLP, San Francisco, California. Certain partners and former partners of Latham & Watkins LLP, members of their families and related persons indirectly own less than 1% of the outstanding shares of common stock of OI Inc.

EXPERTS

        The consolidated financial statements of Owens-Illinois Group, Inc., Owens-Brockway Packaging Inc., Owens-Brockway Glass Container Inc., and OI Plastic Products FTS Inc., at December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 and the financial statement schedule of Owens-Illinois Group, Inc., all appearing in this prospectus and Registration Statement, have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

        This prospectus is part of a registration statement on Form S-4 that we have filed with the SEC under the Securities Act. This prospectus does not contain all of the information set forth in the registration statement. For further information about us and the notes, you should refer to the registration statement. This prospectus summarizes material provisions of contracts and other documents to which we refer you. Since this prospectus may not contain all of the information that you may find important, you should review the full text of these documents. We have filed these documents as exhibits to our registration statement.

        In connection with the exchange offer, OI Group will become subject to the informational reporting requirements of the Securities Exchange Act of 1934, as amended, and will file reports and other information with the SEC. You may read and copy any reports and information statements and other information OI Group files at the public reference facilities of the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain copies of those materials from the SEC by mail at prescribed rates. You should direct requests to the SEC at the SEC's Public Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or by calling (800) SEC-0330. In addition, the SEC maintains a website (www.sec.gov) that contains the reports and other information filed by OI Group. In addition, for so long as any of the notes remains outstanding, we have agreed to make available to any prospective purchaser of the notes or beneficial owner of the notes in connection with any sale thereof the information required by Rule 144A(d)(4) under the Securities Act.

147

INDEX TO FINANCIAL STATEMENTS

OWENS-ILLINOIS GROUP, INC.

	Page
CONSOLIDATED FINANCIAL STATEMENTS OF OWENS-ILLINOIS GROUP, INC.
Report of Independent Auditors	F-2
Consolidated Results of Operations for the years ended December 31, 2001, 2000 and 1999	F-3
Consolidated Balance Sheets at December 31, 2001 and 2000	F-4
Consolidated Share Owner's Equity for the years ended December 31, 2001, 2000 and 1999	F-6
Consolidated Cash Flows for the years ended December 31, 2001, 2000 and 1999	F-7
Statement of Significant Accounting Policies	F-8
Financial Review	F-11
Financial Statement Schedule II—Valuation and Qualifying Accounts	F-34
SUBSIDIARY FINANCIAL STATEMENTS
Owens-Brockway Packaging, Inc.	F-35
Owens-Brockway Glass Container Inc.	F-58
OI Plastic Products FTS Inc.	F-81
FIRST NINE MONTHS 2002 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Owens-Illinois Group, Inc.	F-96
Owens-Brockway Packaging, Inc.	F-117
Owens-Brockway Glass Container Inc.	F-126
OI Plastic Products FTS Inc.	F-136

F-1

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Share Owner
Owens-Illinois Group, Inc.

        We have audited the accompanying consolidated balance sheets of Owens-Illinois Group, Inc. as of December 31, 2001 and 2000, and the related consolidated statements of results of operations, share owner's equity, and cash flows for each of the three years in the period ended December 31, 2001. Our audits also included the financial statement schedule listed in the Index to Financial Statements. 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 auditing standards generally accepted in the 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 Owens-Illinois Group, Inc. at December 31, 2001 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. 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.

Ernst & Young LLP

Toledo, Ohio
January 24, 2002

F-2

Owens-Illinois Group, Inc.
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of dollars)

		Years ended December 31,
		2001			2000		1999
Revenues:
	Net sales	$	5,402.5		$	5,552.1	$	5,522.9
	Royalties and net technical assistance		24.6			25.3		30.3
	Equity earnings		19.4			19.8		22.3
	Interest		26.9			32.5		28.5
	Other		539.9			185.1		182.7
			6,013.3			5,814.8		5,786.7
Costs and expenses:
	Manufacturing, shipping and delivery		4,218.4			4,359.1		4,296.4
	Research and development		41.2			46.7		37.5
	Engineering		31.4			31.3		42.2
	Selling and administrative		341.3			285.1		295.6
	Interest		434.0			486.7		425.9
	Other		279.8			447.5		191.3
			5,346.1			5,656.4		5,288.9
Earnings before items below			667.2			158.4		497.8
Provision for income taxes			286.4			64.1		185.5
Minority share owners' interests in earnings of subsidiaries			20.1			22.0		13.2
Earnings before extraordinary items			360.7			72.3		299.1
Extraordinary charges from early extinguishment of debt, net of applicable income taxes			(4.1	)				(0.8	)
Net earnings		$	356.6		$	72.3	$	298.3

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-3

Owens-Illinois Group, Inc.
CONSOLIDATED BALANCE SHEETS
(Millions of dollars)

			December 31,
			2001		2000
Assets
Current assets:
	Cash, including time deposits of $33.7 ($61.2 in 2000)		$	155.6	$	229.7
	Short-term investments			16.4		19.7
	Receivables, less allowances of $71.1 ($69.9 in 2000)			754.5		770.9
	Inventories			836.7		862.4
	Prepaid expenses			147.0		136.0
	Total current assets			1,910.2		2,018.7
Other assets:
	Equity investments			166.1		181.4
	Repair parts inventories			199.2		232.0
	Prepaid pension			879.5		770.9
	Deposits, receivables and other assets			582.4		490.6
	Excess of purchase cost over net assets acquired, net of accumulated amortization of $690.0 ($597.7 in 2000)			2,995.3		3,101.0
	Total other assets			4,822.5		4,775.9
Property, plant, and equipment:
	Land, at cost			168.8		165.1
	Buildings and equipment, at cost:
		Buildings and building equipment		792.5		817.1
		Factory machinery and equipment		4,368.9		4,301.0
		Transportation, office and miscellaneous equipment		135.7		134.5
		Construction in progress		330.3		244.7
				5,796.2		5,662.4
	Less accumulated depreciation			2,536.3		2,377.5
	Net property, plant, and equipment			3,259.9		3,284.9
Total assets			$	9,992.6	$	10,079.5

F-4

Owens-Illinois Group, Inc.
CONSOLIDATED BALANCE SHEETS (Continued)
(Millions of dollars)

			December 31,
			2001			2000
Liabilities and Share Owner's Equity
Current liabilities:
	Short-term loans		$	40.4		$	89.2
	Accounts payable			457.4			522.7
	Salaries and wages			116.1			83.8
	U.S. and foreign income taxes			12.4			21.4
	Other accrued liabilities			354.4			390.1
	Long-term debt due within one year			30.8			30.8
		Total current liabilities		1,011.5			1,138.0
Long-term debt (including payable to parent of $1,700.0)				5,329.7			5,729.8
Deferred taxes				479.8			275.6
Nonpension postretirement benefits				303.4			296.1
Other liabilities				386.9			360.5
Commitments and contingencies
Minority share owners' interests				159.3			172.9
Share owner's equity:
	Common Stock, par value $.01 per share, 1,000 shares authorized, 100 shares issued and outstanding			—			—
	Other contributed capital			1,735.1			1,806.4
	Retained earnings			1,163.2			806.6
	Accumulated other comprehensive income (loss)			(576.3	)		(506.4	)
		Total share owner's equity		2,322.0			2,106.6
Total liabilities and share owner's equity			$	9,992.6		$	10,079.5

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-5

Owens-Illinois Group, Inc.
CONSOLIDATED SHARE OWNER'S EQUITY
(Millions of dollars)

			Years ended December 31,
			2001			2000			1999
Other contributed capital
	Balance at beginning of year		$	1,806.4		$	1,937.6		$	2,253.1
	Net distribution to OI Inc.			(71.3	)		(131.2	)		(315.5	)
		Balance at end of year		1,735.1			1,806.4			1,937.6
Retained earnings
	Balance at beginning of year			806.6			757.6			459.3
	Net earnings			356.6			72.3			298.3
	Net loss for the month ended December 31, 2000 for the change in the fiscal year end of certain international affiliates						(23.3	)
		Balance at end of year		1,163.2			806.6			757.6
Accumulated other comprehensive income (loss)
	Balance at beginning of year			(506.4	)		(368.6	)		(190.7	)
	Foreign currency translation adjustments			(67.4	)		(137.8	)		(177.9	)
	Change in fair value of certain derivative instruments			(2.5	)
		Balance at end of year		(576.3	)		(506.4	)		(368.6	)
Total share owner's equity			$	2,322.0		$	2,106.6		$	2,326.6
Total comprehensive income (loss)
	Net earnings		$	356.6		$	72.3		$	298.3
	Foreign currency translation adjustments			(67.4	)		(137.8	)		(177.9	)
	Change in fair value of certain derivative instruments			(2.5	)
		Total	$	286.7		$	(65.5	)	$	120.4

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-6

Owens-Illinois Group, Inc.
CONSOLIDATED CASH FLOWS
(Millions of dollars)

			Years ended December 31,
			2001			2000			1999
Operating activities:
	Earnings before extraordinary items		$	360.7		$	72.3		$	299.1
	Non-cash charges (credits):
		Depreciation		403.2			412.6			403.7
		Amortization of deferred costs		140.5			136.9			141.6
		Deferred tax provision (credit)		227.3			(35.8	)		110.8
		Restructuring costs, writeoffs of certain assets and settlement of environmental litigation		129.4			248.3			20.8
		Gains on asset sales		(439.4	)					(40.8	)
		Other		(112.3	)		(104.9	)		(69.8	)
	Change in non-current operating assets			8.0			(43.0	)		(47.1	)
	Change in non-current liabilities			(30.0	)		(28.4	)		(18.6	)
	Change in components of working capital			(67.1	)		(116.3	)		(122.4	)
		Cash provided by operating activities		620.3			541.7			677.3
Investing activities:
	Additions to property, plant and equipment			(531.9	)		(481.4	)		(650.4	)
	Acquisitions, net of cash acquired			(184.6	)		(77.1	)		(34.0	)
	Net cash proceeds from divestitures and other			605.3			94.4			337.1
		Cash utilized in investing activities		(111.2	)		(464.1	)		(347.3	)
Financing activities:
	Additions to long-term debt			3,899.8			182.9			117.5
	Repayments of long-term debt			(1,382.6	)		(377.5	)		(377.3	)
	Increase (decrease) in short-term loans			(44.4	)		(43.8	)		(19.6	)
	Net change in payable to parent			(2,857.0	)		297.6			309.7
	Distribution to parent			(106.5	)		(213.0	)		(356.8	)
	Collateral deposits for certain derivatives			(26.1	)
	Payment of finance fees and debt retirement costs			(62.1	)					(1.0	)
		Cash utilized in financing activities		(578.9	)		(153.8	)		(327.5	)
		Effect of exchange rate fluctuations on cash		(4.3	)		15.6			(16.8	)
		Effect of change in fiscal year end for certain international affiliates					33.2
Decrease in cash				(74.1	)		(27.4	)		(14.3	)
Cash at beginning of period				229.7			257.1			271.4
Cash at end of period			$	155.6		$	229.7		$	257.1

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-7

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

        Basis of Consolidated Statements.    The consolidated financial statements of Owens-Illinois Group, Inc. ("Company") include the accounts of its subsidiaries. Newly acquired subsidiaries have been included in the consolidated financial statements from dates of acquisition. Prior to December 2000, substantially all of the Company's consolidated foreign subsidiaries reported their results of operations on a one-month lag, which allowed additional time to compile their results. The portion of the Company's consolidated net earnings for 2000 that was attributable to the earnings of these subsidiaries for the 12 months ended November 30, 2000 was $64.7 million ($107.5 million before unusual items). Beginning in December 2000, the one-month lag was eliminated. As a result, the December 2000 results of operations for these subsidiaries, which amounted to a net loss of $23.3 million, was recorded directly to retained earnings in December 2000. Earnings of most of these subsidiaries for the month of December are typically lower than most other months due to customer and factory holidays, fewer shipping days, and extended maintenance activity. The loss in December 2000 was greater than recent December periods as a result of lower than normal shipments for the month, lower selling prices due to product mix and currency exchange rates, high energy costs, and increased furnace repair work at several facilities.

        The Company uses the equity method of accounting for investments in which it has a significant ownership interest, generally 20% to 50%. Other investments are accounted for at cost.

        Relationship with Owens-Illinois, Inc.    The Company is a wholly-owned subsidiary of Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from the Company to meet these obligations.

        For federal and certain state income tax purposes, the taxable income of the Company is included in the consolidated tax returns of OI Inc. and income taxes are allocated to the Company on a basis consistent with separate returns. Current income taxes are recorded by the Company on a basis consistent with separate returns.

        Nature of Operations.    The Company is a leading manufacturer of glass containers and plastics packaging products operating in two product segments. The Company's principal product lines in the Glass Containers product segment are glass containers for the food and beverage industries. Sales of the Glass Containers product segment were 66% of the Company's 2001 consolidated sales. The Company has glass container operations located in 19 countries, while the plastics packaging products operations are located in 10 countries. The principal markets and operations for the Company's glass products are in North America, Europe, South America and Australia. The Company's principal product lines in the Plastics Packaging product segment include plastic containers, closures and plastic prescription containers. Major markets for the Company's plastics packaging products include the United States household products, personal care products, health care products, and food and beverage industries.

        Use of Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management of the Company to make estimates and assumptions that affect certain amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, at which time the Company would revise its estimates accordingly.

        Cash.    The Company defines "cash" as cash and time deposits with maturities of three months or less when purchased.

        Fair Values of Financial Instruments.    The carrying amounts reported for cash, short-term investments and short-term loans approximate fair value. In addition, carrying amounts approximate

F-8

fair value for certain long-term debt obligations subject to frequently redetermined interest rates. The Company has guaranteed, on a subordinated basis, OI Inc.'s public debt securities. Fair values of such securities are generally based on public market quotations. Derivative financial instruments are included on the balance sheet at fair value.

        Inventory Valuation.    The Company values most U.S. inventories at the lower of last-in, first-out (LIFO) cost or market. Other inventories are valued at the lower of standard costs (which approximate average costs) or market.

        Excess of Purchase Cost over Net Assets Acquired.    Through December 31, 2001, the excess of purchase cost over net assets acquired was being amortized over 40 years. The Company evaluated the recoverability of long-lived assets based on undiscounted projected cash flows, excluding interest and taxes, when factors indicated that an impairment may have existed. (See "New Accounting Standards").

        Property, Plant, and Equipment.    In general, depreciation is computed using the straight-line method. Renewals and improvements are capitalized. Maintenance and repairs are expensed as incurred.

        Revenue Recognition.    The Company recognizes sales, net of estimated discounts and allowances, when title to products is transferred to customers. Shipping and handling costs are included with manufacturing, shipping, and delivery costs.

        Income Taxes on Undistributed Earnings.    In general, the Company plans to continue to reinvest the undistributed earnings of foreign subsidiaries and foreign corporate joint ventures accounted for by the equity method. Accordingly, taxes are provided only on that amount of undistributed earnings in excess of planned reinvestments.

        Foreign Currency Translation.    The assets and liabilities of most affiliates and associates are translated at current exchange rates and any related translation adjustments are recorded directly in share owner's equity. For the years ended December 31, 2001, 2000 and 1999, the Company's affiliates located in Venezuela operated in a "highly inflationary" economy. As such, certain assets of these affiliates were translated at historical exchange rates and all translation adjustments are reflected in the statements of Consolidated Results of Operations. During 2002, the affiliates in Venezuela will no longer be considered operating in a "highly inflationary" economy. Assets and liabilities will be translated at current exchange rates with any related translation adjustments being recorded directly to share owners' equity.

        New Accounting Standards.    In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations" which is effective for business combinations completed after June 30, 2001. Also in July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS No. 142"), which is effective for goodwill acquired after June 30, 2001. For goodwill acquired prior to June 30, 2001, FAS No. 142 will be effective for fiscal years beginning after December 15, 2001. Under FAS No. 142, goodwill and intangible assets with indefinite lives will no longer be amortized but will be reviewed annually (or more frequently if impairment indicators arise) for impairment.

        The Company estimates that adopting FAS No. 142 will increase 2002 earnings before the effects of the accounting change by approximately $90 million compared to 2001 results. The Company has not completed its assessment of the effects that adopting FAS No. 142 will have on the reported value of goodwill, however, the Company expects that it will record an impairment charge in 2002 in connection with adopting FAS No. 142.

F-9

        In October 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS No. 144"). FAS No. 144 supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS No. 121"). FAS No. 144 provides additional guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset (group) to be disposed of other than by sale (e.g. abandoned) be classified as "held and used" until it is disposed of, and establishes more restrictive criteria to classify an asset (group) as "held for sale," however, it retains the fundamental provisions of FAS No. 121 related to the recognition and measurement of the impairment of long-lived assets to be "held and used." FAS No. 144 is effective for fiscal years beginning after December 15, 2001 and transition is prospective for committed disposal activities that are initiated after the effective date of FAS No. 144's initial application. The impact of adopting FAS No. 144 on the Company's reporting and disclosure is not expected to be material to the Company's financial position or results of operations.

F-10

FINANCIAL REVIEW
Tabular data in millions of dollars.

        Changes in Components of Working Capital Related to Operations.    Changes in the components of working capital related to operations (net of the effects related to acquisitions and divestitures) were as follows (certain amounts from prior year have been reclassified to conform to current presentation):

		2001			2000			1999
Decrease (increase) in current assets:
	Short-term investments	$	3.2		$	10.4		$	(14.9	)
	Receivables		(0.2	)		(43.9	)		(50.2	)
	Inventories		43.2			(50.9	)		(46.9	)
	Prepaid expenses		3.4			0.8			4.4
Increase (decrease) in current liabilities:
	Accounts payable		(36.1	)		0.7			(7.0	)
	Accrued liabilities		(54.7	)		(47.8	)		(22.2	)
	Salaries and wages		12.6			(5.0	)		3.2
	U.S. and foreign income taxes		(38.5	)		19.4			11.2
		$	(67.1	)	$	(116.3	)	$	(122.4	)

        Inventories.    Major classes of inventory are as follows:

	2001		2000
Finished goods	$	641.8	$	651.9
Work in process		6.2		11.7
Raw materials		125.3		130.6
Operating supplies		63.4		68.2
	$	836.7	$	862.4

        If the inventories which are valued on the LIFO method had been valued at standard costs, which approximate current costs, consolidated inventories would be higher than reported by $19.9 million and $23.0 million at December 31, 2001 and 2000, respectively.

        Inventories which are valued at the lower of standard costs (which approximate average costs) or market at December 31, 2001 and 2000 were approximately $501.7 million and $455.4 million, respectively.

F-11

        Equity Investments.    Summarized information pertaining to the Company's equity associates follows:

				2001			2000
At end of year:
	Equity in undistributed earnings:
		Foreign		$	90.0		$	89.3
		Domestic			21.6			19.0
			Total	$	111.6		$	108.3
	Equity in cumulative translation adjustment			$	(54.2	)	$	(46.7	)

				2001		2000		1999
For the year:
	Equity in earnings:
		Foreign		$	7.8	$	5.8	$	9.5
		Domestic			11.6		14.0		12.8
			Total	$	19.4	$	19.8	$	22.3
	Dividends received			$	18.2	$	14.5	$	10.1

        Long-Term Debt.    The following table summarizes the long-term debt of the Company at December 31, 2001 and 2000:

					2001		2000
Secured Credit Agreement:
	Revolving Credit Facility				$	2,410.4
	Term Loan					1,045.0
Second Amended and Restated Credit Agreement:
	Revolving Credit Facility:
		Offshore Loans:
			Australian Dollars
				1.39 billion			$	775.3
			British Pounds
				125.0 million				186.8
			Italian Lira
				18.0 billion				8.7
Payable to OI Inc.						1,700.0		4,557.0
Other						205.1		232.8
						5,360.5		5,760.6
	Less amounts due within one year					30.8		30.8
		Long-term debt			$	5,329.7	$	5,729.8

        In April 2001, certain of the Company's subsidiaries (the "Borrowers") entered into the Secured Credit Agreement (the "Agreement") with a group of banks, which expires on March 31, 2004. The Agreement provides for a $3.0 billion revolving credit facility (the "Revolving Credit Facility") and a $1.5 billion term loan (the "Term Loan"). The Agreement includes an Overdraft Account Facility providing for aggregate borrowings up to $50 million which reduce the amount available for borrowing under the Revolving Credit Facility. The Agreement also provides for the issuance of letters of credit

F-12

totaling up to $500 million, which also reduce the amount available for borrowings under the Revolving Credit Facility. At December 31, 2001, the Company had unused credit of $491.4 million available under the Secured Credit Agreement.

        Prior to April 2001, the Company's significant bank financing was provided under OI Inc.'s April 1998 Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement provided for a $4.5 billion Revolving Credit Facility, which included a $1.75 billion fronted offshore loan revolving facility denominated in certain foreign currencies, subject to certain sublimits, available to certain of the Company's foreign subsidiaries. Borrowings under the Secured Credit Agreement were used to repay all amounts outstanding under, and terminate, the Second Amended and Restated Credit Agreement through the payment of amounts owed to OI Inc.

        The interest rate on borrowings under the Revolving Credit Facility is, at the Borrower's option, the Base Rate or a reserve adjusted Eurodollar rate. The interest rate on borrowings under the Revolving Credit Facility also includes a margin linked to OI Inc.'s Consolidated Leverage Ratio, as defined in the Agreement. The margin is limited to ranges of 1.75% to 2.00% for Eurodollar loans and .75% to 1.00% for Base Rate loans. The interest rate on Overdraft Account loans is the Base Rate minus .50%. The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at December 31, 2001 was 4.14%. Including the effects of cross-currency swap agreements related to Revolving Credit Facility borrowings by the Company's Australian and U.K. subsidiaries, the weighted average interest rate was 4.95%. While no compensating balances are required by the Agreement, the Borrowers must pay a facility fee on the Revolving Credit Facility commitments of .50%.

        The interest rate on borrowings under the Term Loan is, at the Borrowers' option, the Base Rate or a reserve adjusted Eurodollar rate. The interest rate on borrowings under the Term Loan also includes a margin of 2.50% for Eurodollar loans and 1.50% for Base Rate loans. The weighted average interest rate on borrowings outstanding under the Term Loan at December 31, 2001 was 4.50%.

        Borrowings under the Agreement are secured by substantially all of the assets of the Company's domestic subsidiaries and certain foreign subsidiaries which have a book value of approximately $3.5 billion. Borrowings under the Agreement are also secured by a pledge of intercompany debt and equity in most of the Company's domestic subsidiaries and certain stock of certain foreign subsidiaries.

        The Agreement contains covenants and provisions that, among other things, restrict the ability of the Company and its subsidiaries to dispose of assets, incur additional indebtedness, prepay other indebtedness or amend certain debt instruments, pay dividends, create liens on assets, enter into contingent obligations, enter into sale and leaseback transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, change the business conducted by the Company, engage in certain transactions with affiliates and otherwise restrict certain corporate activities. In addition, the Agreement contains financial covenants that require the Company and its subsidiaries to maintain, based upon the financial statements of OI Inc. and its subsidiaries on a consolidated basis, specified financial ratios and tests, including minimum fixed charge coverage ratios, maximum leverage ratios, minimum net worth and specified capital expenditures tests.

        During January 2002, a subsidiary of the Company completed a $1.0 billion private placement of senior secured notes. The notes bear interest at 8⁷/8% and are due February 15, 2009. The notes are guaranteed by the Company and substantially all of its domestic subsidiaries. The assets of substantially all of the Company's domestic subsidiaries are pledged as security for the notes. The issuing subsidiary used the net cash proceeds from the notes to reduce the outstanding term loan under the Agreement by $980.0 million. As such, the Company wrote off unamortized deferred financing fees in January 2002 related to the term loan and recorded an extraordinary charge totaling $10.9 million less applicable income taxes of $4.2 million. The indenture for the notes restricts among other things, the ability of the Company's subsidiaries to borrow money, pay dividends on, or redeem or repurchase stock, make

F-13

investments, create liens, enter into certain transactions with affiliates and sell certain assets or merge with or into other companies.

        Amounts payable to OI Inc. above equal OI Inc.'s total indebtedness. Interest costs on amounts payable to OI Inc. are charged to the Company in the same amount as incurred by OI Inc. On June 26, 2001, OI Inc. sought and received consent from the holders of a majority of the principal amount of each of its six series of senior notes and debentures to amend the indenture governing those securities. The amendments implement a previously announced offer by the Company and a principal subsidiary of the Company to guarantee the senior notes and debentures on a subordinated basis. The fair value of the OI Inc. debt being guaranteed by the Company at December 31, 2001 was $1,545.1 million.

        Annual maturities for all of the Company's long-term debt through 2006 are as follows: 2002, $30.8 million; 2003, $43.4 million; 2004, $2,807.4 million; 2005, $421.1 million; and 2006, $5.2 million. These maturities reflect the issuance of the senior secured notes in January 2002 as noted above.

        Including interest paid by OI Inc., interest paid in cash aggregated $424.7 million, $467.6 million, and $388.1 million for the years ended December 31, 2001, 2000, and 1999, respectively.

        Operating Leases.    Rent expense attributable to all operating leases was $95.0 million in 2001, $77.8 million in 2000, and $73.7 million in 1999. Minimum future rentals under operating leases are as follows: 2002, $62.0 million; 2003, $50.6 million; 2004, $37.9 million; 2005, $31.6 million; 2006, $25.5 million; and 2007 and thereafter, $35.5 million.

        Foreign Currency Translation.    Aggregate foreign currency exchange gains (losses) included in other costs and expenses were $2.6 million in 2001, $(1.0) million in 2000 and $4.9 million in 1999.

        Derivative Instruments.    The terms of OI Inc.'s former bank credit agreement provided for foreign currency borrowings by certain of its international affiliates. Such borrowings provided a natural hedge against a portion of the Company's investment. Under the April 2001 Secured Credit Agreement, international affiliates are only permitted to borrow in U.S. dollars. The Company's affiliates in Australia and the United Kingdom have entered into currency swaps covering their initial borrowings under the Agreement. These swaps are being used to manage the affiliates exposure to fluctuating foreign exchange rates by swapping the principal and interest payments due under the Secured Credit Agreement.

        As of December 31, 2001, the Company's affiliate in Australia has swapped $650.0 million of borrowings into $1,275.0 million of Australian dollars. This swap matures on March 31, 2003, with interest resets every 90 days. The interest reset terms of the swap approximate the terms of the U.S. dollar borrowings. This derivative instrument swaps both the interest and principal from U.S. dollars to Australian dollars and also swaps the interest rate from a U.S. based rate to an Australian based rate. The Company's affiliate in the United Kingdom has swapped $200.0 million of borrowings into 139.0 million British pounds. This swap also matures on March 31, 2003, with interest resets every 90 days. This derivative instrument swaps both the interest and principal from U.S. dollars to British pounds and also swaps the interest rate from a U.S. based rate to a British based rate.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. for a purchase price of approximately $150 million and the assumption of certain liabilities. The Company financed this purchase through borrowings under the secured credit agreement, which were transferred to Canada through intercompany loans in U.S. dollars. The Company's affiliate in Canada has entered into swap transactions to manage the affiliate's exposure to fluctuating foreign exchange rates by swapping the principal and interest portion of the intercompany loan. At December 31, 2001, the Canadian affiliate has swapped $90.0 million of U.S. dollar borrowings into $142.0 million Canadian dollars. This swap matures on October 1, 2003. This

F-14

derivative instrument swaps both the interest and principal from U.S. dollars to Canadian dollars and also swaps the interest rate from a U.S. based rate to a Canadian based rate. The affiliate has also entered into a forward hedge related to the fourth quarter interest receivable and payable related to the previous swap. The affiliate has also entered in forward hedges which effectively swap $10 million of U.S. dollar borrowings into $16 million Canadian dollars. These hedges swap both the interest and principal from U.S. dollars to Canadian dollars and mature monthly.

        The Company recognizes the above derivatives on the balance sheet at fair value. The Company accounts for the above swaps as fair value hedges. As such, the changes in the value of the swaps are included in other expense and are expected to substantially offset any exchange rate gains or losses on the related U.S. dollar borrowings. For the year ended December 31, 2001, the amount not offset was immaterial.

        The Company also uses commodity futures contracts related to forecasted future natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid and the potential volatility in earnings or cash flows from future price movements. During 2001, the Company entered into commodity futures contracts for approximately 75% of its domestic natural gas usage (approximately 1.2 billion BTUs) through March, 2002.

        The Company accounts for the above futures contracts on the balance sheet at fair value. 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 are recorded in accumulated other comprehensive income ("OCI") and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.

        The above futures contracts are accounted for as cash flow hedges at December 31, 2001. Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting anticipated cash flows of the hedged transactions. For hedged forecasted transactions, hedge accounting will be discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses will be recorded to earnings immediately.

        During 2001, an unrealized net loss of $2.5 million (net of tax) related to these commodity futures contracts was included in OCI. There was no ineffectiveness recognized during 2001.

        Accumulated Other Comprehensive Income (Loss).    Foreign currency translation adjustments and changes in certain derivative balances comprise accumulated other comprehensive income (loss). Changes in accumulated other comprehensive income (loss) were as follows:

	2001			2000			1999
Balance at beginning of year	$	(506.4	)	$	(368.6	)	$	(190.7	)
Net effect of exchange rate fluctuations		(70.0	)		(140.6	)		(175.8	)
Deferred income taxes		2.6			2.8			(2.1	)
Change in certain derivative balances		(2.5	)
Balance at end of year	$	(576.3	)	$	(506.4	)	$	(368.6	)

        The net effect of exchange rate fluctuations generally reflects changes in the relative strength of the U.S. dollar against major foreign currencies between the beginning and end of the year.

F-15

        Income Taxes.    Deferred income taxes reflect: (1) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (2) carryovers and credits for income tax purposes. Significant components of the Company's deferred tax assets and liabilities at December 31, 2001 and 2000 are as follows (certain amounts from prior year have been reclassified to conform to current year presentation):

			2001			2000
Deferred tax assets:
	Accrued postretirement benefits		$	106.2		$	103.6
	U.S. federal tax loss carryovers			63.5			149.7
	Alternative minimum tax credits			31.5			23.6
	Other			253.9			296.3
		Total deferred tax assets		455.1			573.2
Deferred tax liabilities:
	Property, plant and equipment			317.1			262.8
	Prepaid pension costs			301.9			254.1
	Inventory			37.4			42.3
	Other			156.8			183.5
		Total deferred tax liabilities		813.2			742.7
		Net deferred tax liabilities	$	(358.1	)	$	(169.5	)

        Deferred taxes are included in the Consolidated Balance Sheets at December 31, 2001 and 2000 as follows:

	2001			2000
Prepaid expenses	$	121.7		$	106.1
Deferred tax liabilities		(479.8	)		(275.6	)
Net deferred tax liabilities	$	(358.1	)	$	(169.5	)

        The provision (benefit) for income taxes consists of the following:

		2001		2000			1999
Current:
	U.S. Federal	$	8.0	$	0.8		$	3.8
	State		19.4		2.1			2.9
	Foreign		31.7		97.0			68.0
			59.1		99.9			74.7
Deferred:
	U.S. Federal		192.2		16.9			111.1
	State		1.2		(9.2	)		11.4
	Foreign		33.9		(43.5	)		(11.7	)
			227.3		(35.8	)		110.8
Total:
	U.S. Federal		200.2		17.7			114.9
	State		20.6		(7.1	)		14.3
	Foreign		65.6		53.5			56.3
		$	286.4	$	64.1		$	185.5

F-16

        The provision for income taxes was calculated based on the following components of earnings (loss) before income taxes:

	2001		2000			1999
Domestic	$	516.8	$	(16.0	)	$	320.9
Foreign		150.4		174.4			176.9
	$	667.2	$	158.4		$	497.8

        Income taxes paid (received) in cash were as follows:

	2001		2000			1999
Domestic	$	8.1	$	(0.7	)	$	11.0
Foreign		52.1		46.4			51.5
	$	60.2	$	45.7		$	62.5

        A reconciliation of the provision for income taxes based on the statutory U.S. Federal tax rate of 35% to the provision for income taxes is as follows:

		2001			2000			1999
Pretax earnings at statutory U.S. Federal tax rate		$	233.5		$	55.4		$	174.2
Increase (decrease) in provision for income taxes due to:
	Amortization of goodwill		31.5			32.1			33.1
	State taxes, net of federal benefit		12.7			(4.1	)		9.3
	Foreign earnings at different rates		(2.7	)		(6.9	)		(7.3	)
	Adjustment for non-U.S. tax law changes		6.0			(9.3	)
	Other items		5.4			(3.1	)		(23.8	)
Provision for income taxes		$	286.4		$	64.1		$	185.5
Effective tax rate			42.9	%		40.4	%		37.3	%

        At December 31, 2001, the Company had unused net operating losses and research tax credits expiring from 2007 to 2021.

        The Company also has unused alternative minimum tax credits which do not expire and will be available to offset future U.S. Federal income tax.

        At December 31, 2001, the Company's equity in the undistributed earnings of foreign subsidiaries for which income taxes had not been provided approximated $562.6 million. It is not practicable to estimate the U.S. and foreign tax which would be payable should these earnings be distributed.

        Participation in OI Inc. Stock Option Plans.    The Company participates in the stock option plans of OI Inc. under which employees of the Company may be granted options to purchase common shares of OI Inc. No options may be exercised in whole or in part during the first year after the date granted. In general, subject to certain accelerated exercisability provisions, 50% of the options become exercisable on the fifth anniversary of the date of the option grant, with the remaining 50% becoming exercisable on the sixth anniversary date of the option grant. In general, options expire following termination of employment or the day after the tenth anniversary date of the option grant.

        All options have been granted at prices equal to the market price of the OI Inc.'s common stock on the date granted. Accordingly, the Company recognizes no compensation expense related to the stock option plans. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (FAS) No. 123, "Accounting for Stock-Based Compensation." If the Company

F-17

had elected to recognize compensation cost based on the fair value of the options granted at grant date as allowed by FAS No. 123, pro forma net income would have been as follows:

		2001		2000		1999
Net income:
	As reported	$	356.6	$	72.3	$	298.3
	Pro forma		347.7		64.3		291.4

        The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	2001		2000		1999
Expected life of options	5 years		5 years		5 years
Expected stock price volatility	69.8	%	62.9	%	36.5	%
Risk-free interest rate	4.85	%	6.60	%	5.10	%
Expected dividend yield	0.00	%	0.00	%	0.00	%

        Pension Benefit Plans.    Net credits to results of operations for all of the Company's pension plans and certain deferred compensation arrangements amounted to $83.4 million in 2001, $88.6 million in 2000 and $58.6 million in 1999.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. As part of the transaction, the Company assumed certain of the pension liabilities of Consumers Packaging. The information below includes the activity of these pension plans from October 1, 2001 through December 31, 2001.

        The Company has pension plans covering substantially all employees located in the U.S., the United Kingdom, Australia and Canada. Benefits generally are based on compensation for salaried employees and on length of service for hourly employees. The Company's policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. The following tables relate to the Company's principal U.S., United Kingdom, Australian and Canadian pension plans.

        The changes in the pension benefit obligations for the year were as follows:

			2001			2000
Obligations at beginning of year			$	2,388.8		$	2,286.5
Change in benefit obligations:
	Service cost			36.6			36.6
	Interest cost			169.3			168.8
	Actuarial loss (gain)			(52.0	)		182.7
	Special separation program benefits						92.2
	Acquisitions			179.2
	Benefit payments			(218.9	)		(348.1	)
	Other			17.6			(29.9	)
		Net increase in benefit obligations		131.8			102.3
Obligations at end of year			$	2,520.6		$	2,388.8

F-18

        The changes in the fair value of the pension plans' assets for the year were as follows:

			2001			2000
Fair value at beginning of year			$	2,948.7		$	3,712.4
Change in fair value:
	Actual return (loss) on plan assets			(120.6	)		(362.9	)
	Benefit payments			(218.9	)		(348.1	)
	Transfer of assets to a special trust to fund qualified current retiree health liabilities						(38.5	)
	Acquisitions			119.9
	Other			14.9			(14.2	)
		Net decrease in fair value of assets		(204.7	)		(763.7	)
Fair value at end of year			$	2,744.0		$	2,948.7

        The funded status of the pension plans at year end was as follows:

		2001		2000
Plan assets at fair value		$	2,744.0	$	2,948.7
Projected benefit obligations			2,520.6		2,388.8
	Plan assets in excess of projected benefit obligations		223.4		559.9
Net unrecognized items:
	Actuarial loss		552.2		170.0
	Prior service cost		49.4		41.0
			601.6		211.0
Net prepaid pension		$	825.0	$	770.9

        The net prepaid pension is included in the Consolidated Balance Sheets at December 31, 2001 and 2000 as follows:

	2001			2000
Prepaid pension	$	879.5		$	770.9
Other liabilities		(54.5	)
	$	825.0		$	770.9

        The components of the net pension credit for the year were as follows:

			2001			2000			1999
Service cost			$	36.6		$	36.6		$	41.8
Interest cost				169.3			168.8			155.2
Expected asset return				(311.0	)		(318.5	)		(280.6	)
Amortization:
	Prior service cost			7.6			7.9			8.1
	(Gain) loss			0.5			(0.2	)		1.1
		Net amortization		8.1			7.7			9.2
Net credit			$	(97.0	)	$	(105.4	)	$	(74.4	)

F-19

        The following selected information is for plans with benefit obligations in excess of the fair value of plan assets:

	2001
Benefit obligations at the end of the year	$	484.7
Fair value of plan assets at the end of the year		411.8

        The following information is for plans with accumulated benefit obligations in excess of the fair value of plan assets:

	2001
Accumulated benefit obligations at the end of the year	$	145.8
Fair value of plan assets at the end of the year		131.5

        The actuarial present value of benefit obligations is based on a weighted discount rate of approximately 7.00% for 2001 and 2000. Future benefits are assumed to increase in a manner consistent with past experience of the plans, which, to the extent benefits are based on compensation, includes assumed salary increases on a weighted scale of approximately 4.75% for 2001 and 2000. The expected weighted long-term rate of return on assets was approximately 10.00% for 2001 and 2000, and 9.50% for 1999. Amortization included in net pension credits is based on the average remaining service of employees. Plan assets include marketable equity securities (which at December 31, 2001 and 2000 included 14,423,621 shares of OI Inc.'s common stock), government and corporate debt securities, real estate and commingled funds.

        The Company also sponsors several defined contribution plans for all salaried and hourly U.S. employees. Participation is voluntary and participants' contributions are based on their compensation. The Company matches substantially all plan participants' contributions up to various limits. Company contributions to these plans amounted to $9.2 million in 2001, $10.2 million in 2000 and $10.5 million in 1999.

        Postretirement Benefits Other Than Pensions.    The Company provides certain retiree health care and life insurance benefits covering substantially all U.S. salaried and certain hourly employees. Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. The information below includes the activity of the related Canadian retiree health care plan from October 1, 2001 through December 31, 2001.

        The changes in the postretirement benefit obligations for the year were as follows:

			2001			2000
Obligations at beginning of year			$	279.5		$	267.5
Change in benefit obligations:
	Service cost			1.8			1.6
	Interest cost			20.5			20.4
	Actuarial loss			22.1			15.2
	Curtailments						5.8
	Special separation program termination benefits						2.0
	Acquisition			31.3
	Benefit payments			(34.0	)		(33.0	)
		Net change in benefit obligations		41.7			12.0
Obligations at end of year			$	321.2		$	279.5

F-20

        The funded status of the postretirement benefit plans at year end was as follows:

		2001			2000
Accumulated postretirement benefit obligations		$	321.2		$	279.5
Net unrecognized items:
	Prior service cost		30.6			43.6
	Actuarial loss		(48.4	)		(27.0	)
			(17.8	)		16.6
Nonpension postretirement benefit obligations		$	303.4		$	296.1

        The components of the net postretirement benefit cost for the year were as follows:

			2001			2000			1999
Service cost			$	1.8		$	1.6		$	2.3
Interest cost				20.5			20.5			19.1
Amortization:
	Prior service cost (credit)			(13.0	)		(13.6	)		(13.7	)
	(Gain) loss			0.8			(0.1	)		1.9
		Net amortization		(12.2	)		(13.7	)		(11.8	)
Net postretirement benefit cost			$	10.1		$	8.4		$	9.6

        Assumed health care cost inflation was based on a weighted average rate of 6.25% in 2001, declining to ultimate rate of 6.00%. A one percentage point decrease in the rate would have decreased the accumulated postretirement benefit obligation at December 31, 2001 by $12.2 million and decreased the net postretirement benefit cost for 2001 by $0.9 million. A one percentage point increase in the rate would have increased the accumulated postretirement benefit obligation at December 31, 2001 by $14.5 million and increased the net postretirement benefit cost for 2001 by $1.0 million. The assumed weighted average discount rates used in determining the accumulated postretirement benefit obligation were 7.25% and 7.50% at December 31, 2001 and 2000, respectively. Amortization included in net postretirement benefit cost is based on the average remaining service of employees.

        Benefits provided by the Company for certain of the hourly retirees are determined by collective bargaining. Most other domestic hourly retirees receive health and life insurance benefits from a multi-employer trust established by collective bargaining. Payments to the trust as required by the bargaining agreements are based upon specified amounts per hour worked and were $6.3 million in 2001, $7.5 million in 2000, and $8.0 million in 1999. Postretirement health and life benefits for retirees of foreign affiliates are generally provided through the national health care programs of the countries in which the affiliates are located.

        Other Revenue.    Other revenue for 2001 includes a gain of $457.3 million related to the sale of the Company's Harbor Capital Advisors business and gains totaling $13.1 million related to the sale of the Company's label business and the sale of a minerals business in Australia. Other revenue for the year ended December 31, 1999 includes gains totaling $40.8 million related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia.

        Other Costs and Expenses.    Other costs and expenses for the year ended December 31, 2001 include pretax charges of $129.5 million related to the following:

•

Impairment charges of $25.2 million at the Company's glass container affiliate in Puerto Rico. While the Company intends to continue to operate this facility, an analysis of cash flows indicated that the long-lived assets, including buildings, furnaces and factory equipment, were impaired. The Company has written down the majority of the long-lived assets of this facility.

F-21

•

Impairment charges of $16.5 million to substantially write off buildings, furnaces and factory equipment related to the permanent closing of a glass container facility in Venezuela.

•

Impairment charges of $31.0 million at various other international and domestic facilities in response to decisions about pricing and market strategy. These charges relate to the permanent closing of one glass facility in Venezuela and two domestic plastics packaging facilities and the abandonment of certain equipment at various locations.

•

Other costs of $9.4 million related to closing facilities and reducing workforce. The total planned workforce reductions will involve approximately 400 employees at an estimated cost of approximately $7.5 million, of which $1.8 million had been paid by December 31, 2001.

•

A charge of $31.0 million related to the loss on the sale of the Company's facilities in India.

•

A charge of $8.5 million for certain contingencies.

•

A charge of $7.9 million related to restructuring manufacturing capacity in the medical devices business.

The Company expects its actions related to the restructuring and impairment charges to be completed during the next several quarters.

        Other costs and expenses for the year ended December 31, 2000 include $248.3 million principally related to a restructuring and capacity realignment program. The restructuring and capacity realignment program, initiated in the third quarter of 2000, includes the consolidation of manufacturing capacity and a reduction of 350 employees in the U.S. salaried work force, or about 10%, principally as a result of early retirement incentives. Also included in the program are a write-down of plant and equipment for the Company's glass container affiliate in India and certain other asset write-offs. Manufacturing capacity consolidations involve three U.S. glass container facilities which were closed and reflect technology-driven improvements in productivity, conversions of some juice and similar products to plastic containers, Company and customer decisions regarding pricing and volume and the further concentration of production in the most strategically-located facilities. The property, plant and equipment at the three facilities, consisting of land, buildings, furnaces and factory equipment, was written down by $49.0 million to substantially write off these assets. The Company expects that it will continue to make cash payments over the next several quarters for benefits and on-going closing costs related to the closing of these facilities. Other 2000 pretax charges of $33.5 million relate principally to a $27.9 million write off of software that had been abandoned. During the third quarter of 2000, the Company decided, principally as a cost control measure, to abandon certain portions of a major software project and wrote off the associated costs.

        As a result of a 10% reduction of the U.S. salaried workforce in 2000, the Company recognized a settlement gain of approximately $40 million related to its defined benefit pension plan. This gain has been included in the net charge of $52.4 million for retirement incentives and special termination benefits.

F-22

        The 2000 pretax charge of $40.0 million was related to the write-down of property, plant and equipment in India. Based on the Company's expectation of future net cash flows of its affiliate in India, the related property, plant, and equipment was written down to realizable values in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."

        Selected information relating to the restructuring accruals follows:

	Capacity realignment			Early retirement incentives and special termination benefits			Write-down of impaired property, plant and equipment			Other, principally software write-off			Total
2000 restructuring charges	$	122.4		$	52.4		$	40.0		$	33.5		$	248.3
Write-down of assets to net realizable value		(49.0	)					(40.0	)		(31.5	)		(120.5	)
Reduction of prepaid pension asset		(13.6	)		(45.8	)								(59.4	)
Increase in nonpension postretirement benefit liability		(0.6	)		(5.4	)								(6.0	)
Net cash paid		(1.5	)		(0.4	)								(1.9	)
Remaining liabilities at December 31, 2000		57.7			0.8			—			2.0			60.5
Restructuring program and impairment		45.6						41.7						87.3
Reversal of second quarter restructuring charge		(5.2	)											(5.2	)
Medical Devices restructuring		7.9												7.9
Write-down of assets to net realizable value		(43.8	)					(41.7	)					(85.5	)
Net cash paid		(24.7	)		(0.8	)								(25.5	)
Remaining liabilities at December 31, 2001	$	37.5		$	—		$	—		$	2.0		$	39.5

        Capacity realignment includes charges for plant closings, severance benefits, and write-downs of assets for disposal or abandonment as a result of restructuring of manufacturing capacity. Write-downs of assets represent the majority of charges for 2001.

        Other costs and expenses for the year ended December 31, 1999 include charges totaling $20.8 million related principally to restructuring costs and write-offs of certain assets in Europe and South America.

        Extraordinary Charges from Early Extinguishment of Debt.    During 2001, the Company wrote off unamortized deferred financing fees related to indebtedness repaid prior to its scheduled maturity. As a result, the Company recorded extraordinary charges totaling $6.6 million less applicable income taxes of $2.5 million. During 1999, OI Inc. incurred redemption premiums and wrote off unamortized deferred financing fees related to indebtedness repaid prior to its scheduled maturity. As a result, the Company was allocated extraordinary charges totaling $1.2 million less applicable income taxes of $0.4 million.

        Contingencies.    The Company's parent, OI Inc., is one of a number of defendants (typically from 20 to 100 or more) in a substantial number of lawsuits filed in numerous state and federal courts by persons alleging bodily injury (including death) as a result of exposure to dust from asbestos fibers. OI Inc. relies primarily on distributions from the Company to fund its indemnity payments and legal fees related to these lawsuits.

F-23

        From 1948 to 1958, one of OI Inc.'s former business units commercially produced and sold approximately $40 million of a high-temperature, calcium-silicate based pipe and block insulation material containing asbestos. OI Inc. exited the pipe and block insulation business in April 1958. The traditional asbestos personal injury lawsuits and claims relating to such production and sale of asbestos material typically allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and punitive damages in various amounts (herein referred to as "asbestos claims").

        The following table shows the approximate number of plaintiffs and claimants involved in asbestos claims pending at the beginning of, disposed of and filed during, and pending at the end of, each of the years listed (eliminating duplicate filings):

	2001	2000	1999
Pending at beginning of year	20,000	17,000	15,000
Disposed	24,000	17,000	10,000
Filed	31,000	20,000	12,000
Pending at end of year	27,000	20,000	17,000

        Additionally, OI Inc. has claims-handling agreements in place with many plaintiff's counsel throughout the country. These agreements require evaluation and negotiation regarding whether particular claimants qualify under the criteria established by such agreements. The criteria for such claims include verification of a compensable illness and a reasonable probability of exposure to a product manufactured by OI Inc.'s former business unit during its manufacturing period ending in 1958. OI Inc. believes that the bankruptcies of additional co-defendants, as discussed below, have resulted in an acceleration of the presentation and disposition of a number of claims under such agreements, which claims would otherwise have been presented and disposed of over the next several years. This acceleration is reflected in an increased number of pending asbestos claims and, to the extent disposed, contributes to an increase in asbestos-related payments which is expected to continue in the near term.

        Since receiving its first asbestos claim, OI Inc., as of December 31, 2001, has disposed of the asbestos claims of approximately 264,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $5,300. Certain of these dispositions have included deferred payment amounts payable over periods ranging from one to seven years. Deferred payments at December 31, 2001 totaled $37 million and are included in the foregoing average indemnity payment per claim. OI Inc.'s indemnity payments for these claims have varied on a per claim basis, and are expected to continue to vary considerably over time.

        OI Inc. believes that its ultimate asbestos-related contingent liability (i.e., its indemnity or other claim disposition costs plus related legal fees) cannot be estimated with certainty. In 1993, OI Inc. established a liability of $975 million to cover indemnity payments and legal fees associated with the resolution of outstanding and expected future asbestos lawsuits and claims. In 1998, an additional liability of $250 million was established. During the third quarter of 2000, OI Inc. established an additional liability of $550 million to cover OI Inc.'s estimated indemnity payments and legal fees arising from outstanding asbestos personal injury lawsuits and claims and asbestos personal injury lawsuits and claims filed in the ensuing several years. OI Inc.'s ability to reasonably estimate its liability has been significantly affected by the volatility of asbestos-related litigation in the United States, the expanding list of non-traditional defendants that have been sued in this litigation and found liable for substantial damage awards, the continued use of litigation screenings to generate new lawsuits, the large number of claims asserted or filed by parties who claim prior exposure to asbestos materials but have no present physical impairment as a result of such exposure, and the growing number of co-defendants that have filed for bankruptcy. Since the beginning of 2000, A. P. Green Industries, Inc., Armstrong World Industries, Babcock & Wilcox, Federal-Mogul Corporation, Fibreboard Corporation,

F-24

G-I Holdings (GAF), Harbison-Walker Refractories Group, Kaiser Aluminum Corporation, North American Refractories Co., Owens Corning, Pittsburgh-Corning, Plibrico Company, Porter Hayden Company, USG Corporation, W. R. Grace & Co. and several other smaller companies have sought protection under Chapter 11 of the Bankruptcy Code.

        OI Inc. has continued to monitor trends which may affect its ultimate liability and has continued to analyze the developments and variables affecting or likely to affect the resolution of pending and future asbestos claims against OI Inc. OI Inc. expects that the gross amount of total asbestos-related payments will be moderately lower in 2002 compared to payments of $245.9 million in 2001 and will continue to decline thereafter as the number of potential claimants continues to decrease. However, the trend toward lower aggregate annual payments has not occurred as soon as had been anticipated when the additional liability was established in 2000. In addition, the number of claims and lawsuits filed against OI Inc. has exceeded the number anticipated at that time. As a result, OI Inc. is continuing to evaluate trends to determine whether further adjustment of the asbestos-related liabilities is appropriate. While the results of this review cannot be estimated at this time, OI Inc. expects that an increase of the liability will be required in order to cover estimated indemnity payments and legal fees arising from asbestos personal injury lawsuits and claims filed in the next several years. Subject to the completion of this review, based on all the factors and matters relating to OI Inc.'s asbestos-related lawsuits and claims, OI Inc. presently believes that the ultimate resolution of its asbestos-related costs and liabilities will not have a material effect on OI Inc.'s financial condition.

        Various litigation is pending against the Company, in many cases involving ordinary and routine claims incidental to the business of the Company and in others presenting allegations that are nonroutine and involve compensatory, punitive or treble damage claims as a well as other types of relief. The ultimate legal and financial liability of the Company in respect to such pending litigation and the ultimate amount of distributions which may be required to be made by the Company and other subsidiaries of OI, Inc. to fund OI Inc.'s asbestos-related payments cannot be estimated with certainty. However, the Company believes, based on its examination and review of such matters and experience to date and subject to the matters discussed above, that such ultimate liability will not be material in relation to the Company's Consolidated Financial Statements.

        Segment Information.    The Company operates in the rigid packaging industry. The Company has two reportable product segments within the rigid packaging industry: (1) Glass Containers and (2) Plastics Packaging. The Glass Containers segment includes operations in North America, Europe, the Asia Pacific region, and South America. The Plastics Packaging segment consists of two business units—consumer products (plastic containers and closures) and prescription products. The Other segment consists primarily of the Company's labels and carriers products business unit, substantially all of which was divested in early 2001.

        The Company evaluates performance and allocates resources based on earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries, and extraordinary charges (collectively "EBIT") excluding unusual items. EBIT for product segments includes an allocation of corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided. For the Company's U.S. pension plans, net periodic pension cost (credit) has been allocated to product segments while the related prepaid pension asset is included in the caption "Eliminations and Other Retained." Net sales as shown in the geographic segment information are based on the location of the Company's affiliate which recorded the sales.

F-25

        Financial information regarding the Company's product segments is as follows (certain prior year amounts have been reclassified in order to conform to current year presentation):

			Glass Containers			Plastics Packaging			Other			Total Product Segments			Eliminations and Other Retained Items			Consolidated Totals
Net sales:
	2001		$	3,571.2		$	1,817.5		$	13.8		$	5,402.5					$	5,402.5
	2000			3,695.6			1,787.6			68.9			5,552.1						5,552.1
	1999			3,762.6			1,686.7			73.6			5,522.9						5,522.9
EBIT, excluding unusual items:
	2001		$	582.5		$	247.9		$	(8.2	)	$	822.2		$	(57.9	)	$	764.3
	2000			587.2			249.2			1.1			837.5			23.4			860.9
	1999			582.4			277.7			9.2			869.3			5.9			875.2
Unusual items:
	2001:
		Gain on the sale of a minerals business in Australia	$	10.3								$	10.3					$	10.3
		Gain on the sale of the Company's label business							$	2.8			2.8						2.8
		Gain on the sale of the Company's Harbor Capital business													$	457.3			457.3
		Restructuring and impairment charges		(64.3	)		(17.8	)					(82.1	)					(82.1	)
		Loss on the sale of the Company's facilities in India		(31.0	)								(31.0	)					(31.0	)
		Special employee benefit programs		(7.6	)		(3.5	)					(11.1	)		(19.8	)		(30.9	)
		Charges related to certain contingencies					(8.5	)					(8.5	)					(8.5	)
		Restructuring manufacturing capacity in the medical devices business								(7.9	)		(7.9	)					(7.9	)

F-26

Unusual items (continued):
	2000:
		Charges related to consolidation of manufacturing capacity	$	(120.4	)	$	(2.0	)			$	(122.4	)				$	(122.4	)
		Charges related to early retirement incentives and special termination benefits		(22.0	)		(9.2	)				(31.2	)	$	(21.2	)		(52.4	)
		Charges related to impairment of property, plant and equipment in India		(40.0	)							(40.0	)					(40.0	)
		Other charges, principally related to the write-off of software		(3.6	)							(3.6	)		(29.9	)		(33.5	)
	1999:
		Gains related to the sales of two manufacturing facilities		40.8								40.8						40.8
		Charges related principally to restructuring costs and write-offs of certain assets in Europe and South America		(20.8	)							(20.8	)					(20.8	)
Depreciation and amortization expense:
	2001		$	342.8		$	181.8		$	6.0	$	530.6		$	13.1		$	543.7
	2000			346.2			177.3			6.4		529.9			19.6			549.5
	1999			348.8			173.0			6.5		528.3			17.0			545.3
Total assets:
	2001		$	5,579.5		$	3,355.0		$	34.9	$	8,969.4		$	1,023.2		$	9,992.6
	2000			5,633.8			3,398.4			117.0		9,149.2			930.3			10,079.5
	1999			6,016.8			3,399.5			109.3		9,525.6			995.6			10,521.2
Capital expenditures (1):
	2001		$	351.3		$	177.2		$	0.5	$	529.0		$	2.9		$	531.9
	2000			290.9			184.9			2.4		478.2			3.2			481.4
	1999			428.4			212.3			3.4		644.1			6.3			650.4

(1)

Excludes property, plant and equipment acquired through acquisitions.

        Financial information regarding the Company's geographic segments is as follows:

F-27

		North America			Europe			Asia Pacific			South America			Total Geographic Segments			Eliminations and Other Retained Items			Consolidated Totals
Net sales:
	2001	$	3,301.1		$	913.0		$	660.6		$	527.4		$	5,402.5					$	5,402.5
	2000		3,390.5			896.9			760.0			504.7			5,552.1						5,552.1
	1999		3,319.4			968.8			814.9			419.8			5,522.9						5,522.9
EBIT, excluding unusual items:
	2001	$	535.8		$	91.8		$	102.2		$	92.4		$	822.2		$	(57.9	)	$	764.3
	2000		555.3			81.8			123.9			76.5			837.5			23.4			860.9
	1999		601.7			101.2			135.1			31.3			869.3			5.9			875.2
Unusual items:
	2001:
	Gain on the sale of a minerals business in Australia							$	10.3					$	10.3					$	10.3
	Gain on the sale of the Company's label business	$	2.8												2.8						2.8
	Gain on the sale of the Company's Harbor Capital Business																	457.3			457.3
	Restructuring and impairment charges		(51.0	)	$	(7.1	)		(0.8	)	$	(23.2	)		(82.1	)					(82.1	)
	Loss on the sale of the Company's facilities in India								(31.0	)					(31.0	)					(31.0	)
	Special employee benefit programs		(7.9	)		(0.7	)		(2.3	)		(0.2	)		(11.1	)		(19.8	)		(30.9	)
	Charges related to certain contingencies		(8.5	)											(8.5	)					(8.5	)
	Restructuring manufacturing capacity in the medial devices business		(7.9	)											(7.9	)					(7.9	)
	2000:
	Charges related to consolidation of manufacturing capacity		(126.0	)								3.6			(122.4	)					(122.4	)
	Charges related to early retirement incentives and special termination benefits		(31.2	)											(31.2	)		(21.2	)		(52.4	)
	Charges related to impairment of property, plant, and equipment in India								(40.0	)					(40.0	)					(40.0	)
	Other											(3.6	)		(3.6	)		(29.9	)		(33.5	)
	1999:
	Gains related to the sales of two manufacturing facilities		30.8									10.0			40.8						40.8
	Charges related principally to restructuring costs and write-offs of certain assets in Europe and South America					(10.8	)					(10.0	)		(20.8	)					(20.8	)

F-28

        The Company's net fixed assets by geographic segment are as follows:

	United States		Foreign		Total
2001	$	1,688.2	$	1,571.7	$	3,259.9
2000		1,721.8		1,563.1		3,284.9
1999		1,755.0		1,689.1		3,444.1

        Reconciliations to consolidated totals are as follows:

				2001			2000			1999
Revenues:
	Net sales for reportable segments			$	5,402.5		$	5,552.1		$	5,522.9
	Royalties and net technical assistance				24.6			25.3			30.3
	Equity earnings				19.4			19.8			22.3
	Interest income				26.9			32.5			28.5
	Other revenue				539.9			185.1			182.7
		Total		$	6,013.3		$	5,814.8		$	5,786.7
Reconciliation of EBIT to earnings before income taxes and minority share owners' interests in earnings:
	EBIT, excluding unusual items for reportable segments			$	822.2		$	837.5		$	869.3
	Unusual items excluded from reportable segment information				(127.5	)		(197.2	)		20.0
	Eliminations and other retained, excluding unusual items				(57.9	)		23.4			5.9
	Unusual items excluded from eliminations and other retained:
		2001:
			Gain on the sale of the Company's Harbor Capital Advisors business		457.3
			Special employee benefit programs		(19.8	)
		2000:
			Charges related to early retirement incentives and special termination benefits					(21.2	)
			Other, principally software write-off					(29.9	)
Net interest expense					(407.1	)		(454.2	)		(397.4	)
Total				$	667.2		$	158.4		$	497.8

        Financial Information for Subsidiary Guarantors and Non-Guarantors.    The following presents condensed consolidating financial information for the Company, segregating: (1) Owens-Illinois Group, Inc. (the "Parent"); (2) Owens-Brockway Glass Container Inc. (the "Issuer"); (3) those domestic subsidiaries which guarantee the 8⁷/8% Senior Secured Notes of the Issuer (the "Guarantor Subsidiaries"); and (4) all other subsidiaries (the "Non-Guarantor Subsidiaries"). The Guarantor Subsidiaries are wholly-owned direct and indirect subsidiaries of the Parent and their guarantees are full, unconditional and joint and several. The Parent is also a guarantor, and its guarantee is full, unconditional, and joint and several.

        Subsidiaries of the Parent and of the Issuer are presented on the equity basis of accounting. Certain reclassifications have been made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries and intercompany balances and transactions.

F-29

        The following information presents consolidating results of operations, balance sheets and cash flows for the periods and at the dates indicated.

		Year ended December 31, 2001
		Parent			Issuer		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Results of Operations
Net sales		$			$	1,636.6	$	1,518.1		$	2,330.9	$	(83.1	)	$	5,402.5
Interest						0.4		2.9			23.6					26.9
Equity earnings from subsidiaries			360.7			31.2		33.6					(425.5	)		—
Other equity earnings						10.9		4.9			3.7		(0.1	)		19.4
Other revenue						36.7		513.2			39.0		(24.4	)		564.5
	Total revenue		360.7			1,715.8		2,072.7			2,397.2		(533.1	)		6,013.3
Manufacturing, shipping, and delivery						1,297.5		1,168.8			1,858.0		(105.9	)		4,218.4
Research, engineering, selling, administrative, and other						112.0		311.8			268.9		1.0			693.7
Net intercompany interest			(199.7	)		135.4		57.4			6.9					—
Other interest expense			199.7			70.1		44.2			120.0					434.0
	Total costs and expenses		—			1,615.0		1,582.2			2,253.8		(104.9	)		5,346.1
Earnings before items below			360.7			100.8		490.5			143.4		(428.2	)		667.2
Provision for income taxes						31.4		200.3			55.7		(1.0	)		286.4
Minority share owners' interests in earnings of subsidiaries											22.9		(2.8	)		20.1
Earnings before extraordinary charge			360.7			69.4		290.2			64.8		(424.4	)		360.7
Extraordinary charge			(4.1	)				(4.1	)				4.1			(4.1	)
Net income (loss)		$	356.6		$	69.4	$	286.1		$	64.8	$	(420.3	)	$	356.6

		Year ended December 31, 2000
		Parent			Issuer			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Results of Operations
Net sales		$			$	1,762.6		$	1,524.9	$	2,336.3	$	(71.7	)	$	5,552.1
Interest						0.5			4.1		27.9					32.5
Equity earnings from subsidiaries			72.3			64.1			20.6				(157.0	)		—
Other equity earnings						9.8			4.3		5.7					19.8
Other revenue						41.5			152.1		40.0		(23.2	)		210.4
	Total revenue		72.3			1,878.5			1,706.0		2,409.9		(251.9	)		5,814.8
Manufacturing, shipping, and delivery						1,408.4			1,164.0		1,880.9		(94.2	)		4,359.1
Research, engineering, selling, administrative and other						249.8			333.9		226.5		0.4			810.6
Net intercompany interest			(352.8	)		219.3			126.7		6.8					—
Other interest expense			352.8			0.3			5.7		127.9					486.7
	Total costs and expenses		—			1,877.8			1,630.3		2,242.1		(93.8	)		5,656.4
Earnings before items below			72.3			0.7			75.7		167.8		(158.1	)		158.4
Provision for income taxes						(19.3	)		22.7		61.0		(0.3	)		64.1
Minority share owners' interests in earnings of subsidiaries									0.1		22.1		(0.2	)		22.0
Net income		$	72.3		$	20.0		$	52.9	$	84.7	$	(157.6	)	$	72.3

F-30

		Year ended December 31, 1999
		Parent			Issuer		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Results of Operations
Net sales		$			$	1,814.6	$	1,440.1		$	2,383.7	$	(115.5	)	$	5,522.9
Interest						0.2		5.5			22.8					28.5
Equity earnings from subsidiaries			299.1			80.8		24.5					(404.4	)		—
Other equity earnings						9.0		3.9			9.4					22.3
Other revenue						74.3		126.9			34.0		(22.2	)		213.0
	Total revenue		299.1			1,978.9		1,600.9			2,449.9		(542.1	)		5,786.7
Manufacturing, shipping, and delivery						1,437.9		1,039.1			1,954.4		(135.0	)		4,296.4
Research, engineering, selling, administrative and other						111.6		271.5			183.5					566.6
Net intercompany interest			(285.7	)		178.5		98.2			9.0					—
Other interest expense			285.7			0.2		6.4			133.6					425.9
	Total costs and expenses		—			1,728.2		1,415.2			2,280.5		(135.0	)		5,288.9
Earnings before items below			299.1			250.7		185.7			169.4		(407.1	)		497.8
Provision for income taxes						71.0		61.7			53.8		(1.0	)		185.5
Minority share owners' interests in earnings of subsidiaries								0.1			10.3		2.8			13.2
Earnings before extraordinary charge			299.1			179.7		123.9			105.3		(408.9	)		299.1
Extraordinary charge			(0.8	)				(0.8	)				0.8			(0.8	)
Net income		$	298.3		$	179.7	$	123.1		$	105.3	$	(408.1	)	$	298.3

		December 31, 2001
		Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
	Accounts receivable	$		$	123.7	$	185.8	$	517.0	$	(72.0	)	$	754.5
	Inventories				162.9		212.1		462.5		(0.8	)		836.7
	Other current assets				1.1		155.2		162.5		0.2			319.0
Total current assets					287.7		553.1		1,142.0		(72.6	)		1,910.2
Investments in and advances to subsidiaries			4,022.0		1,967.5		57.1				(6,046.6	)
Goodwill					554.6		1,447.7		993.0					2,995.3
Other non-current assets					255.0		1,050.0		528.1		(5.9	)		1,827.2
Total other assets			4,022.0		2,777.1		2,554.8		1,521.1		(6,052.5	)		4,822.5
Property, plant and equipment, net					600.9		1,105.9		1,553.1					3,259.9
Total assets		$	4,022.0	$	3,665.7	$	4,213.8	$	4,216.2	$	(6,125.1	)	$	9,992.6
Current liabilities:
	Accounts payable and accrued liabilities			$	183.9	$	317.0	$	496.6	$	(57.2	)	$	940.3
	Short-term loans and long-term debt due within one year						4.8		66.4					71.2
Total current liabilities					183.9		321.8		563.0		(57.2	)		1,011.5
Long-term debt			1,700.0		1,661.3		851.3		1,117.1					5,329.7
Other non-current liabilities and minority interests					92.3		746.9		482.4		7.8			1,329.4
Investment by and advances from parent					1,728.2		2,293.8		2,053.7		(6,075.7	)
Share owner's equity			2,322.0											2,322.0
Total liabilities and share owner's equity		$	4,022.0	$	3,665.7	$	4,213.8	$	4,216.2	$	(6,125.1	)	$	9,992.6

F-31

		December 31, 2000
		Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
	Accounts receivable	$		$	148.1	$	197.1	$	472.5	$	(46.8	)	$	770.9
	Inventories				208.3		237.7		417.4		(1.0	)		862.4
	Other current assets				25.9		114.7		244.4		0.4			385.4
Total current assets			—		382.3		549.5		1,134.3		(47.4	)		2,018.7
Investments in and advances to subsidiaries			6,663.6		1,925.5		37.7				(8,626.8	)		—
Goodwill					574.9		1,510.2		1,015.9					3,101.0
Other non-current assets					264.5		963.5		450.0		(3.1	)		1,674.9
Total other assets			6,663.6		2,764.9		2,511.4		1,465.9		(8,629.9	)		4,775.9
Property, plant and equipment, net					608.3		1,113.2		1,563.4					3,284.9
Total assets		$	6,663.6	$	3,755.5	$	4,174.1	$	4,163.6	$	(8,677.3	)	$	10,079.5
Current liabilities:
	Accounts payable and accrued liabilities	$		$	197.9	$	340.3	$	520.8	$	(41.0	)	$	1,018.0
	Short-term loans and long-term debt due within one year						5.0		115.0					120.0
Total current liabilities			—		197.9		345.3		635.8		(41.0	)		1,138.0
Long-term debt			4,557.0				7.3		1,165.5					5,729.8
Other non-current liabilities and minority interests					136.7		578.8		367.6		22.0			1,105.1
Investment by and advances from parent					3,420.9		3,242.7		1,994.7		(8,658.3	)		—
Share owner's equity			2,106.6											2,106.6
Total liabilities and share owner's equity		$	6,663.6	$	3,755.5	$	4,174.1	$	4,163.6	$	(8,677.3	)	$	10,079.5

			Year ended December 31, 2001
			Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated
Cash Flows
Cash provided by (used in) operating activities			$			$	189.8		$	80.4		$	350.1		$		$	620.3
Investing Activities:
	Additions to property, plant, and equipment						(68.6	)		(156.5	)		(306.8	)				(531.9	)
	Acquisitions, net of cash acquired									(7.6	)		(177.0	)				(184.6	)
	Proceeds from sales						7.0			525.4			72.9					605.3
		Cash provided by (used in) investing activities		—			(61.6	)		361.3			(410.9	)		—		(111.2	)
Financing Activities:
	Net change in payable to OI, Inc.			(2,857.0	)													(2,857.0	)
	Net investment by (distribution to) OI, Inc.			(106.5	)													(106.5	)
	Change in intercompany transactions			2,963.5			(1,767.1	)		(1,271.9	)		75.5					—
	Change in short term debt									(0.3	)		(44.1	)				(44.4	)
	Payments of long term debt						(71.5	)		(461.3	)		(849.8	)				(1,382.6	)
	Borrowings of long term debt						1,732.9			1,305.5			861.4					3,899.8
	Collateral deposits for certain derivatives												(26.1	)				(26.1	)
	Payment of finance fees						(22.5	)		(20.1	)		(19.5	)				(62.1	)
		Cash provided by (used in) financing activities		—			(128.2	)		(448.1	)		(2.6	)		—		(578.9	)
Effect of exchange rate changes on cash													(4.3	)				(4.3	)
Net change in cash				—			—			(6.4	)		(67.7	)		—		(74.1	)
Cash at beginning of period							—			28.7			201.0			—		229.7
Cash at end of period			$	—		$	—		$	22.3		$	133.3		$	—	$	155.6

F-32

			Year ended December 31, 2000
			Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows
Cash provided by (used in) operating activities			$			$	(24.7	)	$	199.2		$	355.2		$	12.0		$	541.7
Investing Activities:
	Additions to property, plant, and equipment						(72.3	)		(175.8	)		(233.3	)					(481.4	)
	Acquisitions, net of cash acquired												(77.1	)					(77.1	)
	Proceeds from sales						1.8			80.3			12.3						94.4
	Cash provided by (used in) investing activities			—			(70.5	)		(95.5	)		(298.1	)		—			(464.1	)
Financing Activities:
	Net change in payable to OI Inc.			297.6															297.6
	Net investment by (distribution to) OI Inc.			(213.0	)														(213.0	)
	Change in intercompany balances			(84.6	)		95.1			(147.4	)		148.9			(12.0	)		—
	Change in short term debt												(43.8	)					(43.8	)
	Payments of long term debt									(5.6	)		(371.9	)					(377.5	)
	Borrowings of long term debt									1.5			181.4						182.9
		Cash provided by (used in) financing activities		—			95.1			(151.5	)		(85.4	)		(12.0	)		(153.8	)
Effect of exchange rate changes on cash													15.6						15.6
Effect of change in fiscal year end for certain international affiliates													33.2						33.2
Net change in cash				—			(0.1	)		(47.8	)		20.5			—			(27.4	)
Cash at beginning of period							0.1			76.5			180.5						257.1
Cash at end of period			$	—		$	—		$	28.7		$	201.0		$	—		$	229.7

			Year ended December 31, 1999
			Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows
Cash provided by (used in) operating activities			$			$	132.9		$	257.9		$	313.8		$	(27.3	)	$	677.3
Investing Activities:
	Additions to property, plant, and equipment						(118.9	)		(201.5	)		(330.0	)					(650.4	)
	Acquisitions, net of cash acquired												(34.0	)					(34.0	)
	Proceeds from sales						61.2			14.2			261.7						337.1
		Cash provided by (used in) investing activities		—			(57.7	)		(187.3	)		(102.3	)		—			(347.3	)
Financing Activities:
	Net change in payable to OI Inc.			309.7															309.7
	Net investment by (distribution to) OI Inc.			(356.8	)														(356.8	)
	Change in intercompany balances			47.1			(75.3	)		(59.0	)		59.9			27.3			—
	Change in short term debt												(19.6	)					(19.6	)
	Payments of long term debt									(4.6	)		(372.7	)					(377.3	)
	Borrowings of long term debt									1.6			115.9						117.5
	Payment of finance fees									(1.0	)								(1.0	)
		Cash provided by (used in) financing activities		—			(75.3	)		(63.0	)		(216.5	)		27.3			(327.5	)
Effect of exchange rate changes on cash													(16.8	)					(16.8	)
Net change in cash				—			(0.1	)		7.6			(21.8	)		—			(14.3	)
Cash at beginning of period				0.2			68.9			202.3			271.4
Cash at end of period			$	—		$	0.1		$	76.5		$	180.5		$	—		$	257.1

F-33

OWENS-ILLINOIS GROUP, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (CONSOLIDATED)

Years ended December 31, 2001, 2000 and 1999
(Millions of Dollars)

Reserves deducted from assets in the balance sheets:

Allowances for losses and discounts on receivables

			Additions
	Balance at beginning of period		Charged to costs and expenses		Other (Note 2)		Deductions (Note 1)		Balance at end of period
2001	$	69.9	$	79.3	$	6.3	$	84.4	$	71.1
2000	$	56.9	$	68.0	$	7.1	$	62.1	$	69.9
1999	$	56.9	$	53.3	$	—	$	53.3	$	56.9

(1)

Deductions from allowances for losses and discounts on receivables represent uncollectible notes and accounts written off.

(2)

Other for 2001 and 2000 relate to acquisitions during the year.

F-34

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Share Owner
Owens-Brockway Packaging, Inc.

        We have audited the accompanying consolidated balance sheets of Owens-Brockway Packaging, Inc. as of December 31, 2001 and 2000, and the related consolidated statements of results of operations, net Parent investment, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the 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 Owens-Brockway Packaging, Inc. at December 31, 2001 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

Ernst & Young LLP

Toledo, Ohio
January 24, 2002

F-35

Owens-Brockway Packaging, Inc.
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of dollars)

		Years ended December 31,
		2001		2000		1999
Revenues:
	Net sales	$	3,749.4	$	3,894.1	$	3,970.7
	Other revenue		92.2		110.3		130.0
			3,841.6		4,004.4		4,100.7
Costs and expenses:
	Manufacturing, shipping, and delivery		2,946.4		3,091.7		3,168.6
	Research and development		10.5		15.0		13.0
	Engineering		30.0		31.2		35.2
	Selling and administrative		173.7		170.1		178.5
	Net intercompany interest		156.3		244.1		207.9
	Other interest expense		189.4		126.6		131.2
	Other		159.0		254.5		64.2
			3,665.3		3,933.2		3,798.6
Earnings before items below			176.3		71.2		302.1
Provision for income taxes			87.3		19.8		109.6
Minority share owners' interests in earnings of subsidiaries			19.6		20.6		11.2
Net earnings		$	69.4	$	30.8	$	181.3

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-36

Owens-Brockway Packaging, Inc.
CONSOLIDATED BALANCE SHEETS
(Millions of dollars)

Assets

			December 31,
			2001		2000
Current assets:
	Cash, including time deposits of $28.2 ($45.3 in 2000)		$	124.7	$	169.6
	Short-term investments					3.7
	Receivables including amount from related parties of $1.6 ($1.1 in 2000), less allowances of $32.2 ($40.6 in 2000) for losses and discounts			575.3		568.0
	Inventories			611.0		611.4
	Prepaid expenses			23.9		57.0
		Total current assets		1,334.9		1,409.7
Other assets:
	Equity investments			153.9		164.8
	Repair parts inventories			173.5		201.6
	Prepaid pension			49.8		41.2
	Deposits, receivables, and other assets			421.4		337.4
	Excess of purchase cost over net assets acquired, net of accumulated amortization of $531.0 ($417.2 in 2000)			1,556.2		1,602.3
		Total other assets		2,354.8		2,347.3
Property, plant, and equipment:
	Land, at cost			135.1		130.9
	Buildings and equipment, at cost:
		Buildings and building equipment		526.7		540.7
		Factory machinery and equipment		2,828.9		2,809.3
		Transportation, office, and miscellaneous equipment		79.3		77.5
		Construction in progress		196.8		111.3
				3,766.8		3,669.7
	Less accumulated depreciation			1,663.5		1,546.8
		Net property, plant, and equipment		2,103.3		2,122.9
Total assets			$	5,793.0	$	5,879.9

F-37

Owens-Brockway Packaging, Inc.
CONSOLIDATED BALANCE SHEETS (Continued)
(Millions of dollars)

Liabilities and Net Parent Investment

			December 31,
			2001			2000
Current liabilities:
	Short-term loans		$	40.4		$	80.9
	Accounts payable including amount to related parties of $30.1 ($9.9 in 2000)			337.0			313.9
	Salaries and wages			89.4			67.0
	U.S. and foreign income taxes			0.2			6.3
	Other accrued liabilities			196.0			268.4
	Long-term debt due within one year			26.0			26.1
		Total current liabilities		689.0			762.6
External long-term debt				2,778.5			1,165.5
Deferred taxes				161.9			149.1
Other liabilities				275.7			218.4
Minority share owners' interests				159.7			165.1
Net Parent investment:
	Investment by and advances from parent			2,276.1			3,898.6
	Accumulated other comprehensive loss			(547.9	)		(479.4	)
		Total net Parent investment		1,728.2			3,419.2
Total liabilities and net Parent investment			$	5,793.0		$	5,879.9

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-38

Owens-Brockway Packaging, Inc.
CONSOLIDATED NET PARENT INVESTMENT
(Millions of dollars)

			Years ended December 31,
			2001			2000			1999
Investment by and advances to parent
	Balance at beginning of year		$	3,898.6		$	3,739.8		$	3,712.2
	Net intercompany transactions			(1,691.9	)		153.0			(153.7	)
	Net earnings			69.4			30.8			181.3
	Net loss for the month ended December 31, 2000 for the change in the fiscal year end of certain international affiliates						(25.0	)
		Balance at end of year		2,276.1			3,898.6			3,739.8
Accumulated other comprehensive loss
	Balance at beginning of year			(479.4	)		(343.5	)		(179.9	)
	Foreign currency translation adjustments			(66.0	)		(135.9	)		(163.6	)
	Change in certain derivative instruments			(2.5	)
		Balance at end of year		(547.9	)		(479.4	)		(343.5	)
Total net Parent investment			$	1,728.2		$	3,419.2		$	3,396.3
Total comprehensive income (loss)
	Net earnings		$	69.4		$	30.8		$	181.3
	Foreign currency translation adjustments			(66.0	)		(135.9	)		(163.6	)
	Change in certain derivative instruments			(2.5	)
		Total	$	0.9		$	(105.1	)	$	17.7

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-39

Owens-Brockway Packaging, Inc.
CONSOLIDATED CASH FLOWS
(Millions of dollars)

				Years ended December 31,
				2001			2000			1999
Operating activities:
	Net earnings			$	69.4		$	30.8		$	181.3
	Non-cash charges (credits):
		Depreciation			286.4			298.3			299.0
		Amortization of deferred costs			72.3			62.2			66.1
		Deferred tax provision (credit)			72.5			(64.2	)		45.2
		Restructuring costs and write-offs of certain assets			65.2			186.0			20.8
		(Gains) losses on asset sales			20.7						(40.8	)
		Other			(64.0	)		(80.0	)		(95.7	)
	Change in non-current operating assets				18.9			(16.8	)		(7.8	)
	Reduction of non-current liabilities				(22.1	)		(0.1	)		1.4
	Change in components of working capital				(28.7	)		(80.0	)		(69.9	)
			Cash provided by operating activities		490.6			336.2			399.6
Investing activities:
	Additions to property, plant and equipment				(364.8	)		(301.6	)		(441.9	)
	Acquisitions, net of cash acquired				(169.0	)		(77.2	)		(34.2	)
	Net cash proceeds from divestitures and other				80.0			31.7			327.6
			Cash utilized in investing activities		(453.8	)		(347.1	)		(148.5	)
Financing activities:
	Additions to long-term debt				2,593.0			172.3			222.6
	Repayments of long-term debt				(918.5	)		(357.0	)		(475.8	)
	Decrease in short-term loans				(35.7	)		(40.4	)		(14.9	)
	Net change in intercompany debt				(1,643.0	)		189.9			6.5
	Collateral deposits for certain derivative instruments				(26.1	)
	Payment of finance fees				(45.3	)
			Cash utilized in financing activities		(75.6	)		(35.2	)		(261.6	)
	Effect of exchange rate fluctuations on cash				(6.1	)		16.1			(17.9	)
	Effect of change in fiscal year end for certain international affiliates							31.9
Increase (decrease) in cash					(44.9	)		1.9			(28.4	)
Cash at beginning of year					169.6			167.7			196.1
Cash at end of year				$	124.7		$	169.6		$	167.7

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-40

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

        Basis of Consolidated Statements.    The consolidated financial statements of Owens-Brockway Packaging, Inc. ("Company") include the accounts of its subsidiaries. Newly acquired subsidiaries have been included in the consolidated financial statements from dates of acquisition. Prior to December 2000, substantially all of the Company's consolidated foreign subsidiaries reported their results of operations on a one-month lag, which allowed additional time to compile the results. The portion of the Company's consolidated net earnings for 2000 that was attributable to the earnings of these subsidiaries for the 12 months ended November 30, 2000 was $64.7 million ($107.5 million before unusual items). Beginning in December 2000, the one-month lag was eliminated. As a result, the December 2000 results of operations for these subsidiaries, which amounted to a net loss of $25.0 million, was recorded directly to retained earnings in December 2000. Earnings of most of these subsidiaries for the month of December are typically lower than most other months due to customer and factory holidays, fewer shipping days, and extended maintenance activity. The loss in December 2000 was greater than recent December periods as a result of lower than normal shipments for the month, lower selling prices due to product mix and currency exchange rates, high energy costs, and increased furnace repair work at several facilities.

        The Company uses the equity method of accounting for investments in which it has a significant ownership interest, generally 20% to 50%. Other investments are accounted for at cost.

        Relationship with Owens-Illinois Group, Inc. and Owens-Illinois, Inc.    The Company is a wholly-owned subsidiary of Owens-Illinois Group, Inc. ("OI Group") and an indirect subsidiary of Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

        For federal and certain state income tax purposes, the taxable income of the Company is included in the consolidated tax returns of OI Inc. and income taxes are allocated to the Company on a basis consistent with separate returns.

        Nature of Operations.    The Company is a leading manufacturer of glass container products. The Company's principal product lines in the Glass Containers product segment are glass containers for the food and beverage industries. The Company has glass container operations located in 19 countries. The principal markets and operations for the Company's glass products are in North America, Europe, South America, and Australia. One customer accounted for 11.5%, 10.9%, and 10.3% of the Company's sales in 2001, 2000, and 1999, respectively.

        Use of Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management of the Company to make estimates and assumptions that affect certain amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, at which time the Company would revise its estimates accordingly.

        Cash.    The Company defines "cash" as cash and time deposits with maturities of three months or less when purchased.

        Fair Values of Financial Instruments.    The carrying amounts reported for cash, short-term investments and short-term loans approximate fair value. In addition, carrying amounts approximate fair value for certain long-term debt obligations subject to frequently redetermined interest rates. Derivative financial instruments are included on the balance sheet at fair value.

F-41

        Inventory Valuation.    The Company values most U.S. inventories at the lower of last-in, first-out (LIFO) cost or market. Other inventories are valued at the lower of standard costs (which approximate average costs) or market.

        Excess of Purchase Cost Over Net Assets Acquired.    Through December 31, 2001, the excess of purchase cost over net assets acquired was being amortized over 40 years. The Company evaluated the recoverability of long-lived assets based on undiscounted projected cash flows, excluding interest and taxes, when factors indicate that an impairment may exist. (See "New Accounting Standards).

        Property, Plant, and Equipment.    In general, depreciation is computed using the straight-line method. Renewals and improvements are capitalized. Maintenance and repairs are expensed as incurred.

        Revenue Recognition.    The Company recognizes sales, net of estimated discounts and allowances, when title to products is transferred to customers. Shipping and handling costs are included with manufacturing, shipping, and delivery costs.

        Income Taxes on Undistributed Earnings.    In general, the Company plans to continue to reinvest the undistributed earnings of foreign subsidiaries and foreign corporate joint ventures accounted for by the equity method. Accordingly, taxes are provided only on that amount of undistributed earnings in excess of planned reinvestments.

        Foreign Currency Translation.    The assets and liabilities of certain affiliates and associates are translated at current exchange rates and any related translation adjustments are recorded directly in share owners' equity. For the years ended December 31, 2001, 2000, and 1999, the Company's affiliates located in Venezuela operated in a "highly inflationary" economy. As such, certain assets of these affiliates were translated at historical exchange rates and all translation adjustments are reflected in the statements of Consolidated Results of Operations. Effective January 1, 2002, the affiliates in Venezuela will no longer be considered operating in a "highly inflationary" economy. Assets and liabilities will be translated at current exchange rates with any related translation adjustments being recorded directly to net Parent investment.

        New Accounting Standards.    In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations," which is effective for business combinations completed after June 30, 2001. Also in July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS No. 142"), which is effective for goodwill acquired after June 30, 2001. For goodwill acquired prior to July 1, 2001, FAS No. 142 will be effective for fiscal years beginning after December 15, 2001. Under FAS No. 142, goodwill and intangible assets with indefinite lives will no longer be amortized but will be reviewed annually (or more frequently if impairment indicators arise) for impairment.

        The Company estimates that adopting FAS No. 142 will increase 2002 earnings before the effects of the accounting change by approximately $45 million. The Company has not completed its assessment of the effects that adopting FAS No. 142 will have on the reported value of goodwill.

        In October 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS No. 144"). FAS No. 144 supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS No. 121"). FAS No. 144 provides additional guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset (group) to be disposed of other than by sale (e.g. abandoned) be classified as "held and used" until it is disposed of, and establishes more restrictive criteria to classify an asset (group) as "held for sale", however it retains the fundamental provisions of FAS No. 121 related to the recognition and measurement of the

F-42

impairment of long-lived assets to be "held and used." FAS No. 144 is effective for fiscal years beginning after December 15, 2001 and transition is prospective for committed disposal activities that are initiated after the effective date of FAS No. 144's initial application. The impact of adopting FAS No. 144 on the Company's reporting and disclosure is not expected to be material to the Company's financial position or results of operations.

FINANCIAL REVIEW
Tabular data in millions of dollars

        Changes in Components of Working Capital Related to Operations.    Changes in the components of working capital related to operations (net of the effects related to acquisitions and divestitures) were as follows:

		2001			2000			1999
Decrease (increase) in current assets:
	Short-term investments	$	3.6		$	12.0		$	(15.2	)
	Receivables		2.3			(35.1	)		19.9
	Net intercompany receivable		17.2			(43.9	)		11.0
	Inventories		24.3			(19.5	)		(10.1	)
	Prepaid expenses		0.8			3.8			(25.3	)
Increase (decrease) in current liabilities:
	Accounts payable and accrued liabilities		(46.3	)		(20.1	)		(47.2	)
	Salaries and wages		1.4			(2.6	)		8.6
	U.S. and foreign income taxes		(32.0	)		25.4			(11.6	)
		$	(28.7	)	$	(80.0	)	$	(69.9	)

        Inventories.    Major classes of inventory are as follows:

	2001		2000
Finished goods	$	507.2	$	494.9
Work in process		5.9		7.9
Raw materials		53.5		58.0
Operating supplies		44.4		50.6
	$	611.0	$	611.4

        If the inventories which are valued on the LIFO method had been valued at standard costs, which approximate current costs, consolidated inventories would be higher than reported by $14.7 million and $10.8 million, at December 31, 2001 and 2000, respectively.

        Inventories which are valued at the lower of standard costs (which approximate average costs), or market at December 31, 2001 and 2000 were approximately $465.9 million and $420.0 million, respectively.

        Equity Investments.    Summarized information pertaining to the Company's equity associates follows:

				2001			2000
At end of year:
	Equity in undistributed earnings:
		Foreign		$	86.2		$	85.6
		Domestic			21.6			19.0
			Total	$	107.8		$	104.6
	Equity in cumulative translation adjustment			$	(54.2	)	$	(46.7	)

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				2001		2000		1999
For the year:
	Equity in earnings:
		Foreign		$	7.3	$	4.7	$	8.2
		Domestic			11.6		14.0		12.8
			Total	$	18.9	$	18.7	$	21.0
	Dividends received			$	18.2	$	13.9	$	9.7

        External Long-Term Debt.    The following table summarizes the external long-term debt of the Company at December 31, 2001 and 2000:

					2001		2000
Secured Credit Agreement:
	Revolving Credit Facility				$	1,560.4
	Term Loan					1,045.0
Second Amended and Restated Credit Agreement:
	Revolving Credit Facility:
		Offshore Loans:
			Australian Dollars
				1.39 billion			$	775.3
			British Pounds
				125.0 million				186.8
			Italian Lira
				18.0 billion				8.7
Other						199.1		220.8
						2,804.5		1,191.6
Less amounts due within one year						26.0		26.1
External long-term debt					$	2,778.5	$	1,165.5

        In April 2001, OI Group and certain of its domestic and foreign subsidiaries, including subsidiaries of the Company (the "Borrowers") entered into the Secured Credit Agreement (the "Agreement") with a group of banks, which expires on March 31, 2004. The Agreement provides for a $3.0 billion revolving credit facility (the "Revolving Credit Facility") and a $1.5 billion term loan (the "Term Loan"). The Agreement includes an Overdraft Account Facility providing for aggregate borrowings up to $50 million which reduce the amount available for borrowing under the Revolving Credit Facility. The Agreement also provides for the issuance of letters of credit totaling up to $500 million, which also reduce the amount available for borrowings under the Revolving Credit Facility.

        Under the Secured Credit Agreement, the Company's subsidiaries have a total commitment of $2.0 billion provided by the Revolving Credit Facility and a total commitment of $1.045 billion provided by the Term Loan. At December 31, 2001, the Company's subsidiaries had unused credit of $341.2 million available under the Secured Credit Agreement.

        Prior to April 2001, the Company's significant domestic financing was provided by OI Inc. under the April 1998 Second Amended and Restated Credit Agreement through intercompany loans. Borrowings under the Secured Credit Agreement by the Company's subsidiaries and certain other domestic subsidiaries of OI Group were used to repay all amounts outstanding under, and terminate the Second Amended and Restated Credit Agreement.

        The interest rate on borrowings under the Revolving Credit Facility is, at the Borrower's option, the Base Rate or a reserve adjusted Eurodollar rate. The interest rate on borrowings under the

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Revolving Credit Facility also includes a margin linked to the Company's Consolidated Leverage Ratio, as defined in the Agreement. The margin is limited to ranges of 1.75% to 2.00% for Eurodollar loans and .75% to 1.00% for Base Rate loans. The interest rate on Overdraft Account loans is the Base Rate minus .50%. The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at December 31, 2001 was 4.12%. While no compensating balances are required by the Agreement, the Borrowers must pay a facility fee on the Revolving Credit Facility commitments of .50%.

        The interest rate on borrowings under the Term Loan is, at the Borrowers' option, the Base Rate or a reserve adjusted Eurodollar rate. The interest rate on borrowings under the Term Loan also includes a margin of 2.50% for Eurodollar loans and 1.50% for Base Rate loans. The weighted average interest rate on borrowings outstanding under the Term Loan at December 31, 2001 was 4.50%.

        The Agreement requires, among other things, the maintenance of certain financial ratios, and restricts the creation of liens and certain types of business activities and investments.

        Borrowings under the Agreement are secured by substantially all the assets of the Company's domestic subsidiaries and certain foreign subsidiaries, which have a book value of approximately $1.9 billion. Borrowings are also secured by a pledge of intercompany debt and equity in most of the Company's domestic subsidiaries and certain stock of certain foreign subsidiaries.

        During January 2002, a subsidiary of the Company completed a $1.0 billion private placement of senior secured notes. The notes bear interest at 8⁷/8% and are due February 15, 2009. The notes are guaranteed by OI Group and substantially all of its domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company's subsidiary used substantially all the net cash proceeds from the notes to reduce its outstanding term loan under the Agreement by $980 million. As such, the Company wrote off unamortized deferred financing fees in January 2002 related to the term loan and recorded an extraordinary charge totaling $10.9 million less applicable income taxes of $4.2 million. The indenture for the notes restricts among other things, the ability of the Company and its restricted subsidiaries to borrow money, pay dividends on, or redeem or repurchase stock, make investments, create liens, enter into certain transactions with affiliates, and sell certain assets or merge with or into other companies.

        Annual maturities for all of the Company's long-term debt through 2006 are as follows: 2002, $26.0 million; 2003, $43.0 million; 2004, $1,657.2 million; 2005, $70.9 million; and 2006, $5.0 million. These maturities reflect the issuance of the senior secured notes in January 2002 as noted above.

        Interest paid in cash aggregated $180.5 million for 2001, $117.7 million for 2000, and $116.6 million for 1999.

        Guarantees of Debt.    The Company has guaranteed the borrowings of certain of OI Group's domestic subsidiaries totaling $850 million and has also guaranteed the borrowings of certain foreign subsidiaries under the Agreement.

        During January 2002, an affiliate of the Company completed a $1.0 billion private placement of senior secured notes. The assets of the Company and most of its domestic subsidiaries are pledged as security for the notes. The Company has guaranteed these notes.

        During the second quarter of 2001, OI Inc. sought and received consent from the holders of a majority of the principal amount of each of its six series of senior notes and debentures to amend the indenture governing those securities. The amendments implement a previously announced offer by OI Group and the Company to secure OI Inc.'s obligations under the indentures and the securities with a second lien on the intercompany debt and capital stock of their direct subsidiaries, including the Company. OI Group and the Company have also guaranteed OI Inc.'s obligations under the indentures.

F-45

        Operating Leases.    Rent expense attributable to all operating leases was $59.6 million in 2001, $44.1 million in 2000, and $43.2 million in 1999. Minimum future rentals under operating leases are as follows: 2002, $33.2 million; 2003, $26.2 million; 2004, $17.4 million; 2005, $12.2 million; 2006, $10.7 million; and 2007 and thereafter, $25.5 million.

        Foreign Currency Translation.    Aggregate foreign currency exchange gains (losses) included in other costs and expenses were $3.9 million in 2001, $(0.4) million in 2000, and $4.4 million in 1999.

        Derivative Instruments.    The terms of OI Inc.'s former bank credit agreement provided for foreign currency borrowings by certain of the Company's international affiliates. Such borrowings provided a natural hedge against a portion of the Company's investment. Under the April 2001 Secured Credit Agreement, international affiliates are only permitted to borrow in U.S. dollars. The Company's affiliates in Australia and the United Kingdom have entered into currency swaps covering their initial borrowings under the Agreement. These swaps are being used to manage the affiliates' exposure to fluctuating foreign exchange rates by swapping the principal and interest payments due under the Secured Credit Agreement.

        As of December 31, 2001, the Company's affiliate in Australia has swapped $650.0 million of borrowings into $1,275.0 million Australian dollars. This swap matures on March 31, 2003, with interest resets every 90 days. The interest reset terms of the swap approximate the terms of the U.S. dollar borrowings. This derivative instrument swaps both the interest and principal from U.S. dollars to Australian dollars and also swaps the interest rate from a U.S. based rate to an Australian based rate. The Company's affiliate in the United Kingdom has swapped $200.0 million of borrowings into 139.0 million British pounds. This swap also matures on March 31, 2003, with interest resets every 90 days. This derivative instrument swaps both the interest and principal from U.S. dollars to British pounds and also swaps the interest rate from a U.S. based rate to a British rate.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. for a purchase price of approximately $150 million. The Company financed this purchase through borrowings under the Secured Credit Agreement, which were transferred to Canada through intercompany loans in U.S. dollars. The Company's affiliate in Canada has entered into swap transactions to manage the affiliate's exposure to fluctuating foreign exchange rates by swapping the principal and interest portion of the intercompany loan. At December 31, 2001, the Canadian affiliate has swapped $90.0 million of borrowings into $142.0 million Canadian dollars. This swap matures on October 1, 2003. This derivative instrument swaps both the interest and principal from U.S. dollars to Canadian dollars and also swaps the interest rate from a U.S. based rate to a Canadian based rate. The affiliate has also entered into a forward hedge related to the fourth quarter interest receivable and payable related to the previous swap. The affiliate has also entered in forward hedges which effectively swap $10.0 million of borrowings into $16.0 million Canadian dollars. These hedges swap both the interest and principal from U.S. dollars to Canadian dollars and mature monthly.

        The Company recognizes the above derivatives on the balance sheet at fair value. The Company accounts for the above swaps as fair value hedges. As such, the changes in the value of the swaps are included in other expense and are expected to substantially offset any exchange rate gains or losses on the related U.S. dollar borrowings. For the year ended December 31, 2001, the amount not offset was immaterial.

        The Company also uses commodity futures contracts related to forecasted natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid and the potential volatility in earnings or cash flows from future market price movements. During 2001, the Company entered into commodity futures contracts for approximately 75% of its domestic natural gas usage (approximately 1.2 billion BTUs) through March 2002. The Company has also entered into additional contracts in 2002 with respect to its forecasted natural gas usage through the end of 2002.

F-46

        The Company accounts for the above futures contracts on the balance sheet at fair value. 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 accumulated other comprehensive income ("OCI") and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.

        The above futures contracts are accounted for as cash flow hedges at December 31, 2001. Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting anticipated cash flows of the hedged transactions. For hedged forecasted transactions, hedge accounting will be discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses will be recorded to earnings immediately.

        During 2001, an unrealized net loss of $2.5 million (net of tax) related to these commodity futures contracts was included in OCI. There was no ineffectiveness recognized during the 2001.

        Accumulated Other Comprehensive Loss.    Foreign currency translation adjustments and changes in certain derivative balances comprise accumulated other comprehensive loss. Changes in accumulated other comprehensive loss was as follows:

	2001			2000			1999
Balance at beginning of year	$	(479.4	)	$	(343.5	)	$	(179.9	)
Net effect of exchange rate fluctuations		(68.6	)		(138.7	)		(161.5	)
Deferred income taxes		2.6			2.8			(2.1	)
Change in certain derivative balances		(2.5	)
Balance at end of year	$	(547.9	)	$	(479.4	)	$	(343.5	)

        The net effect of exchange rate fluctuations generally reflects changes in the relative strength of the U.S. dollar against major foreign currencies between the beginning and end of the year.

        Income Taxes.    Deferred income taxes reflect: (1) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (2) carryovers and credits for income tax purposes. Significant components of the Company's deferred tax assets and liabilities at December 31, 2001 and 2000 are as follows (certain amounts from prior year have been reclassified to conform to current year presentation):

			2001			2000
Deferred tax assets:
	Tax loss carryovers		$	19.4		$	15.3
	Other			139.8			130.3
		Total deferred tax assets		159.2			145.6
Deferred tax liabilities:
	Property, plant and equipment			161.8			142.9
	Inventory			35.8			39.2
	Other			117.6			75.7
		Total deferred tax liabilities		315.2			257.8
		Net deferred tax liabilities	$	(156.0	)	$	(112.2	)

F-47

        Deferred taxes are included in the Consolidated Balance Sheets at December 31, 2001 and 2000 as follows:

	2001			2000
Prepaid expenses	$	5.9		$	36.9
Deferred tax liabilities		(161.9	)		(149.1	)
Net deferred tax liabilities	$	(156.0	)	$	(112.2	)

        The provision (benefit) for income taxes consists of the following:

		2001			2000			1999
Current:
	State	$	(0.3	)	$	0.3		$	1.7
	Foreign		15.1			87.9			61.8
			14.8			88.2			63.5
Deferred:
	U.S. Federal		30.1			(17.4	)		56.3
	State		3.6			(5.6	)		6.7
	Foreign		38.8			(45.4	)		(16.9	)
			72.5			(68.4	)		46.1
Total:
	U.S. Federal		30.1			(17.4	)		56.3
	State		3.3			(5.3	)		8.4
	Foreign		53.9			42.5			44.9
		$	87.3		$	19.8		$	109.6

        The provision for income taxes was calculated based on the following components of earnings (loss) before income taxes:

	2001		2000			1999
Domestic	$	58.3	$	(74.8	)	$	153.8
Foreign		118.0		146.0			148.3
	$	176.3	$	71.2		$	302.1

        Income taxes paid in cash were as follows:

	2001		2000		1999
Domestic	$	0.2	$	0.5	$	0.3
Foreign		45.7		44.3		47.1
	$	45.9	$	44.8	$	47.4

F-48

        A reconciliation of the provision for income taxes based on the statutory U.S. Federal tax rate of 35% to the provision for income taxes is as follows:

		2001			2000			1999
Pretax earnings at statutory U.S. Federal tax rate		$	61.7		$	24.9		$	105.8
Increase (decrease) in provision for income taxes due to:
	Amortization of goodwill		15.1			15.6			16.6
	State taxes, net of federal benefit		2.1			(3.4	)		5.5
	Foreign earnings at different rates		(3.4	)		(9.3	)		(17.0	)
	Adjustment for non-U.S. tax law changes		6.0			(9.3	)
	Other items		5.8			1.3			(1.3	)
Provision for income taxes		$	87.3		$	19.8		$	109.6
Effective tax rate			49.5	%		27.9	%		36.3	%

        The Company is included with OI Inc.'s consolidated tax returns. OI Inc. has net operating losses, alternative minimum tax credits, and research and development credits available to offset future U.S. Federal income tax.

        At December 31, 2001, the Company's equity in the undistributed earnings of foreign subsidiaries for which income taxes had not been provided approximated $529.9 million. It is not practicable to estimate the U.S. and foreign tax which would be payable should these earnings be distributed.

        Related Party Transactions.    Charges for administrative services are allocated to the Company by OI Inc. based on an annual utilization level. Such services include compensation and benefits administration, payroll processing, use of certain general accounting systems, auditing, income tax planning and compliance, and treasury services. Management believes that such transactions are on terms no less favorable to the Company than those that could be obtained from unaffiliated third parties. The following information summarizes the Company's significant related party transactions:

		Years ended December 31,
		2001		2000		1999
Revenues:
	Sales to affiliated companies	$	1.0	$	3.1	$	4.3
Expenses:
	Administrative services		18.5		21.5		19.2
	Corporate management fee		16.3		17.9		18.1
Total expenses		$	34.8	$	39.4	$	37.3

        The above expenses are recorded in the statement of operations as follows:

	2000		2001		1999
Cost of sales	$	16.4	$	19.2	$	17.0
Selling, general, and administrative expenses		18.4		20.2		20.3
Total expenses	$	34.8	$	39.4	$	37.3

        Intercompany interest is charged to the Company from OI Inc. based on intercompany debt balances. Intercompany interest expense is calculated using a weighted average interest rate of external borrowings by OI Inc.

F-49

        Participation in OI Inc. Stock Option Plans.    The Company participates in the stock option plans of OI Inc. under which employees of the Company may be granted options to purchase common shares of OI Inc. No options may be exercised in whole or in part during the first year after the date granted. In general, subject to certain accelerated exercisability provisions, 50% of the options become exercisable on the fifth anniversary of the date of the option grant, with the remaining 50% becoming exercisable on the sixth anniversary date of the option grant. In general, options expire following termination of employment or the day after the tenth anniversary date of the option grant.

        All options have been granted at prices equal to the market price of the OI Inc.'s common stock on the date granted. Accordingly, the Company recognizes no compensation expense related to the stock option plans. OI Inc. has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (FAS) No. 123, "Accounting for Stock-Based Compensation."

        A substantial number of the options have been granted to key employees of another subsidiary of OI Inc., some of whose compensation costs are included in an allocation of costs to all operating subsidiaries of OI Inc., including the Company. It is not practical to determine an amount of additional compensation allocable to the Company if OI Inc. had elected to recognize compensation cost based on the fair value of the options granted at grant date as allowed by FAS No. 123.

        Pension Benefit Plans.    The Company participates in OI Inc.'s pension plans for substantially all employees located in the United States. Benefits generally are based on compensation for salaried employees and on length of service for hourly employees. OI Inc.'s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. Independent actuaries determine pension costs for each subsidiary of OI Inc. included in the plans; however, accumulated benefit obligation information and plan assets pertaining to each subsidiary have not been separately determined. As such, the accumulated benefit obligation and the plan assets related to the pension plans for domestic employees have been retained by another subsidiary of OI Inc. Net credits to results of operations for the Company's allocated portion of the domestic pension costs amounted to $77.1 million in 2001, $82.9 million in 2000, and $67.2 million in 1999.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. As part of the transaction, the Company assumed certain of the pension liabilities of Consumers Packaging. The information below includes the activity of these pension plans from October 1, 2001 through December 31, 2001.

        The Company's subsidiaries in the United Kingdom, Australia and Canada also have pension plans covering substantially all employees. The following tables relate to the Company's principal United Kingdom, Australian and Canadian pension plans (the International Pension Plans).

        The changes in the International Pension Plans benefit obligations for the year were as follows:

			2001			2000
Obligations at beginning of year			$	392.7		$	400.5
Change in benefit obligations:
	Service cost			9.3			9.1
	Interest cost			22.9			22.3
	Actuarial (gain) loss			(13.1	)		6.9
	Acquisitions			170.0
	Benefit payments			(25.5	)		(24.6	)
	Other			(11.9	)		(21.5	)
		Net increase (decrease) in benefit obligations		151.7			(7.8	)
Obligations at end of year			$	544.4		$	392.7

F-50

        The changes in the fair value of the International Pension Plans' assets for the year were as follows:

			2001			2000
Fair value at beginning of year			$	416.1		$	459.5
Change in fair value:
	Actual return (loss) on plan assets			(26.6	)		9.2
	Benefit payments			(25.5	)		(24.6	)
	Acquisitions			119.9
	Other			(3.3	)		(28.0	)
		Net increase (decrease) in fair value of assets		64.5			(43.4	)
Fair value at end of year			$	480.6		$	416.1

        The funded status of the International Pension Plans at year end was as follows:

		2001			2000
Plan assets at fair value		$	480.6		$	416.1
Projected benefit obligations			544.4			392.7
	Funded status of the plans		(63.8	)		23.4
Net unrecognized items:
	Actuarial loss		46.7			1.7
	Prior service cost		12.4			16.1
			59.1			17.8
Net prepaid (accrued) pension		$	(4.7	)	$	41.2

        The net prepaid (accrued) pension is included in the Consolidated Balance Sheets at December 31, 2001 and 2000 as follows:

	2001			2000
Prepaid pension	$	49.8		$	41.2
Other liabilities		(54.5	)
	$	(4.7	)	$	41.2

        The components of the International Pension Plans' net pension expense (credit) for the year were as follows:

			2001			2000			1999
Service cost			$	9.3		$	9.1		$	8.7
Interest cost				22.9			22.3			20.3
Expected asset return				(36.8	)		(35.9	)		(26.2	)
Amortization:
	Prior service cost			1.2			0.8			1.0
	Gain						(0.1	)
		Net amortization		1.2			0.7			1.0
Net expense (credit)			$	(3.4	)	$	(3.8	)	$	3.8

F-51

        The following selected information is for plans with benefit obligations in excess of the fair value of plan assets:

	2001
Benefit obligations at the end of the year	$	484.7
Fair value of plan assets at the end of the year		411.8

        The following information is for plans with accumulated benefit obligations in excess of the fair value of plan assets:

	2001
Accumulated benefit obligations at the end of the year	$	145.8
Fair value of plan assets at the end of the year		131.5

        For the International Pension Plans, the actuarial present value of benefit obligations is based on a weighted discount rate of approximately 6.00% for 2001 and 5.25% for 2000. Future benefits are assumed to increase in a manner consistent with past experience of the plans, which, to the extent benefits are based on compensation, includes assumed salary increases on a weighted scale of approximately 4.00% for 2001 and 2000. The expected weighted long-term rate of return on assets was approximately 8.50% for 2001, 7.75% for 2000, and 6.75% for 1999. Amortization included in net pension credits is based on the average remaining service of employees. Plan assets include marketable equity securities, government and corporate debt securities, real estate and commingled funds.

        OI Inc. also sponsors several defined contribution plans for all salaried and hourly U.S. employees of the Company. Participation is voluntary and participants' contributions are based on their compensation. OI Inc. matches substantially all plan participants' contributions up to various limits. OI Inc. charges the Company for its share of the match. The Company's share of the contributions to these plans amounted to $4.8 million in 2001, $5.6 million in 2000, and $5.8 million in 1999.

        Postretirement Benefits Other Than Pensions.    OI Inc. provides certain retiree health care and life insurance benefits covering substantially all U.S. salaried and certain hourly employees. Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Independent actuaries determine postretirement benefit costs for each subsidiary of OI Inc.; however, accumulated postretirement benefit obligation information pertaining to each subsidiary has not been separately determined. As such, the accumulated postretirement benefit obligation has been retained by another subsidiary of OI Inc.

        The Company's net periodic postretirement benefit cost, as allocated by OI Inc., for domestic employees was $4.8 million, $4.2 million, and $4.8 million at December 31, 2001, 2000, and 1999, respectively.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. The information below is the activity of the Canadian related retiree health care plan from October 1, 2001 through December 31, 2001.

F-52

        The changes in the Canadian postretirement benefit obligations were as follows:

			2001
Obligations at beginning of year			$	—
Change in benefit obligations:
	Service cost			0.1
	Interest cost			0.5
	Actuarial loss			0.1
	Acquisition			31.2
	Benefit payments			(0.2	)
		Net change in benefit obligations		31.7
Obligations at end of year			$	31.7

        The funded status of the Canadian postretirement benefit plans at year end was as follows:

		2001
Accumulated postretirement benefit obligations		$	31.7
Net unrecognized items:
	Prior service credits		—
	Actuarial loss		(0.1	)
			(0.1	)
Nonpension postretirement benefit obligations		$	31.6

        The Company's nonpension postretirement benefit obligations are included with other long term liabilities on the balance sheet.

        The components of the Canadian net postretirement benefit cost were as follows:

	2001
Service cost	$	0.1
Interest cost		0.5
Net postretirement benefit cost	$	0.6

        Assumed health care cost inflation was based on a rate of 9.00% in 2001, declining to an ultimate rate of 5.50%. A one percentage point decrease in the rate would have decreased the accumulated postretirement benefit obligation at December 31, 2001 by $4.1 million and decreased the net postretirement benefit cost for 2001 by $0.1 million. A one percentage point increase in the rate would have increased the accumulated postretirement benefit obligation at December 31, 2001 by $5.1 million and increased the net postretirement benefit cost for 2001 by $0.1 million. The assumed weighted average discount rate used in determining the accumulated postretirement benefit obligation was 6.50% at December 31, 2001.

        Benefits provided by OI Inc. for certain of the hourly retirees of the Company are determined by collective bargaining. Most other domestic hourly retirees receive health and life insurance benefits from a multi-employer trust established by collective bargaining. Payments to the trust as required by the bargaining agreements are based upon specified amounts per hour worked and were $6.3 million in 2001, $7.5 million in 2000, and $8.0 million in 1999. Postretirement health and life benefits for retirees of foreign affiliates are generally provided through the national health care programs of the countries in which the affiliates are located.

F-53

        Other Revenue.    Other revenue for the year ended December 31, 2001 includes $10.3 million from the sale of a minerals business in Australia. Other revenue for the year ended December 31, 1999 includes gains totaling $40.8 million related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia.

        Other Costs and Expenses.    Other costs and expenses for the year ended December 31, 2001 include pretax charges of $96.2 million related to the following: (1) charges of $65.2 million principally related to a restructuring program and impairment at certain of the Company's international and domestic operations. The charge includes the impairment of assets at the Company's affiliate in Puerto Rico and the consolidation of manufacturing capacity and the closing of a facility in Venezuela. The charge related to the Puerto Rico facility of $25.2 million related to the impairment of assets. While the Company intends to continue to operate this facility, an analysis of cash flows indicated that the long-lived assets, including buildings, furnaces, and factory equipment were impaired. The Company has written down the majority of the long-lived assets of this facility. As a result of the consolidation of manufacturing capacity and the closing of two facilities in Venezuela, the Company recorded an impairment charge of approximately $22 million to substantially write off buildings, furnaces, and factory equipment. The program also includes consolidation of capacity at certain other international and domestic facilities in response to decisions about pricing and market strategy. The total planned reduction in workforce resulting from these actions will involve approximately 220 employees. The restructuring program included termination benefits of approximately $4.5 million, of which $1.5 million had been paid by December 31, 2001; and (2) a charge of $31.0 million related to the loss on the sale of the Company's facilities in India; The Company expects its actions related to the restructuring and impairment charges to be completed during the next several quarters.

        Other costs and expenses for the year ended December 31, 2000 include charges of $186.0 million principally related to a restructuring and capacity realignment program. The program, initiated in the third quarter of 2000, includes the consolidation of manufacturing capacity and a reduction of 175 employees in the U.S. salaried work force, or about 15%, principally as a result of early retirement incentives. Also included in the program are a write-down of plant and equipment for the Company's glass container affiliate in India and certain other asset write-offs. Charges for manufacturing capacity consolidations of $120.4 million principally involve U.S. glass container facilities and reflect technology-driven improvements in productivity, conversions from some juice and similar products to plastic containers, Company and customer decisions regarding pricing and volume, and the further concentration of production in the most strategically-located facilities. The property, plant and equipment at the three facilities, consisting of land, buildings, furnaces and factory equipment, was written down by $48.0 million to substantially write off these assets. The Company expects that it will continue to make cash payments over the next several quarters for benefits and on-going closing costs related to the closing of these facilities.

        As a result of reducing the U.S. salaried workforce in 2000, the Company recognized a settlement gain of approximately $24 million related to its defined benefit pension plan. This gain has been included in the net charge of $22.0 million for early retirement incentives and special termination benefits.

        The 2000 pretax charge of $40.0 million was related to the write-down of property, plant, and equipment in India. Based on the Company's expectation of future net cash flows of its affiliate in India, the related property, plant, and equipment was written down to realizable values in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."

F-54

        Selected information relating to the restructuring accruals follows:

	Capacity realignment(a)			Early retirement incentives and special termination benefits			Write-down of impaired property, plant and equipment			Other			Total
2000 restructuring charges	$	120.4		$	22.0		$	40.0		$	3.6		$	186.0
Write-down of assets to net realizable value		(48.4	)					(40.0	)		(3.6	)		(92.0	)
Reduction of OI Inc. prepaid pension asset		(13.0	)		(18.2	)								(31.2	)
Increase in OI Inc. nonpension postretirement benefit liability		(0.6	)		(3.2	)								(3.8	)
Net cash paid		(1.2	)		(0.2	)								(1.4	)
Remaining liabilities at December 31, 2000		57.2			0.4			—			—			57.6
2001 restructuring charges		23.5						41.7						65.2
Write-down of assets to net realizable value		(33.7	)					(41.7	)					(75.4	)
Net cash paid		(24.2	)		(0.4	)								(24.6	)
Remaining liabilities at December 31, 2001	$	22.8		$	—		$	—		$	—		$	22.8

(a)

Capacity realignment includes charges for plant closing costs, severance benefits, and write-downs of assets for disposal or abandonment as a result of restructuring of manufacturing capacity. Write-downs of assets represent the majority of the charges for 2001.

        Other costs and expenses for the year ended December 31, 1999 include charges totaling $20.8 million related principally to restructuring costs and write-offs of certain assets in Europe and South America.

        Geographic Information.    The Company operates in the rigid packaging industry. The Company has one primary reportable product segment within the rigid packaging industry: Glass Containers. The Glass Containers segment includes operations in North America, Europe, the Asia Pacific region, and South America.

        The Company evaluates performance and allocates resources based on earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries, and extraordinary charges (collectively "EBIT") excluding unusual items. Net sales as shown in the geographic segment information are based on the location of the Company's affiliate which recorded the sales.

F-55

        Financial information regarding the Company's geographic segments is as follows:

			North America(a)			Europe			Asia Pacific			South America			Total Geographic Segments
Net sales:
	2001		$	1,662.2		$	909.7		$	660.6		$	516.9		$	3,749.4
	2000			1,744.9			894.0			760.7			494.5			3,894.1
	1999			1,777.5			965.6			815.0			412.6			3,970.7
EBIT, excluding unusual items:
	2001		$	306.2		$	93.2		$	102.2		$	91.6		$	593.2
	2000			317.4			81.9			123.9			77.2			600.4
	1999			336.0			97.9			135.0			29.9			598.8
Unusual items:
	2001:
		Gain on the sale of a minerals business in Australia							$	10.3					$	10.3
		Restructuring and impairment charges	$	(35.1	)	$	(6.1	)		(0.8	)	$	(23.2	)		(65.2	)
		Special employee benefit programs		(4.4	)		(0.7	)		(2.3	)		(0.2	)		(7.6	)
		Loss on the sale of the Company's facilities in India								(31.0	)					(31.0	)
	2000:
		Charges related to consolidation of manufacturing capacity		(124.0	)								3.6			(120.4	)
		Charges related to early retirement incentives and special termination benefits		(22.0	)											(22.0	)
		Charges related to impairment of property, plant, and equipment in India								(40.0	)					(40.0	)
		Other											(3.6	)		(3.6	)
	1999:
		Gains related to the sales of two manufacturing facilities		30.8									10.0			40.8
		Charges related principally to restructuring costs and write-offs of certain assets in Europe and South America					(10.8	)					(10.0	)		(20.8	)

(a)

One customer accounted for 11.5%, 10.9%, and 10.3% of the Company's sales in 2001, 2000, and 1999 respectively.

        The Company's net fixed assets by location are as follows:

	United States		Foreign		Total
2001	$	605.0	$	1,498.3	$	2,103.3
2000		612.6		1,510.3		2,122.9
1999		676.7		1,631.1		2,307.8

F-56

        Reconciliations to consolidated totals are as follows:

		2001			2000			1999
Revenues:
	Net sales	$	3,749.4		$	3,894.1		$	3,970.7
	Royalties and net technical assistance		17.2			17.9			21.3
	Equity earnings		18.9			18.7			21.0
	Interest		22.3			27.5			22.4
	Other		33.8			46.2			65.3
	Total	$	3,841.6		$	4,004.4		$	4,100.7
Reconciliation of EBIT to earnings before income taxes and minority share owners' interests in earnings of subsidiaries:
	EBIT, excluding unusual items	$	593.2		$	600.4		$	598.8
	Unusual items		(93.5	)		(186.0	)		20.0
	Net interest expense		(323.4	)		(343.2	)		(316.7	)
	Total	$	176.3		$	71.2		$	302.1

F-57

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Share Owner
Owens-Brockway Glass Container Inc.

        We have audited the accompanying consolidated balance sheets of Owens-Brockway Glass Container Inc. as of December 31, 2001 and 2000, and the related consolidated statements of results of operations, net Parent investment, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the 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 Owens-Brockway Glass Container Inc. at December 31, 2001 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

Ernst & Young LLP

Toledo, Ohio
January 24, 2002

F-58

Owens-Brockway Glass Container Inc.
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of dollars)

		Years ended December 31,
		2001		2000		1999
Revenues:
	Net sales	$	3,749.4	$	3,891.6	$	3,965.2
	Other revenue		92.2		105.5		130.0
			3,841.6		3,997.1		4,095.2
Costs and expenses:
	Manufacturing, shipping, and delivery		2,946.4		3,090.1		3,165.2
	Research and development		10.5		15.0		13.0
	Engineering		30.0		31.2		35.2
	Selling and administrative		173.7		170.1		178.5
	Net intercompany interest		156.3		245.1		208.2
	Other interest expense		189.4		126.6		131.2
	Other		159.0		254.4		64.3
			3,665.3		3,932.5		3,795.6
Earnings before items below			176.3		64.6		299.6
Provision for income taxes			87.3		24.0		108.7
Minority share owners' interests in earnings of subsidiaries			19.6		20.6		11.2
Net earnings		$	69.4	$	20.0	$	179.7

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-59

Owens-Brockway Glass Container Inc.
CONSOLIDATED BALANCE SHEETS
(Millions of dollars)

Assets

			December 31,
			2001		2000
Current assets:
	Cash, including time deposits of $28.2 ($45.3 in 2000)		$	124.7	$	169.6
	Short-term investments					3.7
	Receivables including amount from related parties of $1.6 ($1.1 in 2000), less allowances of $32.2 ($40.6 in 2000) for losses and discounts			575.3		568.0
	Inventories			611.0		611.4
	Prepaid expenses			23.9		57.0
		Total current assets		1,334.9		1,409.7
Other assets:
	Equity investments			153.9		164.4
	Repair parts inventories			173.5		201.6
	Prepaid pension			49.8		41.2
	Deposits, receivables, and other assets			421.4		337.4
	Excess of purchase cost over net assets acquired, net of accumulated amortization of $531.0 ($417.2 in 2000)			1,556.2		1,602.3
		Total other assets		2,354.8		2,346.9
Property, plant, and equipment:
	Land, at cost			135.1		130.9
	Buildings and equipment, at cost:
		Buildings and building equipment		526.7		540.7
		Factory machinery and equipment		2,828.9		2,809.3
		Transportation, office, and miscellaneous equipment		79.3		77.5
		Construction in progress		196.8		111.3
				3,766.8		3,669.7
	Less accumulated depreciation			1,663.5		1,546.8
		Net property, plant, and equipment		2,103.3		2,122.9
Total assets			$	5,793.0	$	5,879.5

F-60

Owens-Brockway Glass Container Inc.
CONSOLIDATED BALANCE SHEETS (Continued)
(Millions of dollars)

Liabilities and Net Parent Investment

			December 31,
			2001			2000
Current liabilities:
	Short-term loans		$	40.4		$	80.9
	Accounts payable including amount to related parties of $30.1 ($9.9 in 2000)			337.0			313.9
	Salaries and wages			89.4			67.0
	U.S. and foreign income taxes			0.2			6.3
	Other accrued liabilities			196.0			266.3
	Long-term debt due within one year			26.0			26.1
		Total current liabilities		689.0			760.5
External long-term debt				2,778.5			1,165.5
Deferred taxes				161.9			149.1
Other liabilities				275.7			218.4
Minority share owners' interests				159.7			165.1
Net Parent investment:
	Investment by and advances from parent			2,276.1			3,900.3
	Accumulated other comprehensive loss			(547.9	)		(479.4	)
		Total net Parent investment		1,728.2			3,420.9
Total liabilities and net Parent investment			$	5,793.0		$	5,879.5

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-61

Owens-Brockway Glass Container Inc.
CONSOLIDATED NET PARENT INVESTMENT
(Millions of dollars)

			Years ended December 31,
			2001			2000			1999
Investment by and advances to parent
	Balance at beginning of year		$	3,900.3		$	3,730.4		$	3,701.8
	Net intercompany transactions			(1,693.6	)		174.9			(151.1	)
	Net earnings			69.4			20.0			179.7
	Net loss for the month ended December 31, 2000 for the change in the fiscal year end of certain international affiliates						(25.0	)
		Balance at end of year		2,276.1			3,900.3			3,730.4
Accumulated other comprehensive loss
	Balance at beginning of year			(479.4	)		(343.5	)		(179.9	)
	Foreign currency translation adjustments			(66.0	)		(135.9	)		(163.6	)
	Change in certain derivative instruments			(2.5	)
		Balance at end of year		(547.9	)		(479.4	)		(343.5	)
Total net Parent investment			$	1,728.2		$	3,420.9		$	3,386.9
Total comprehensive income (loss)
	Net earnings		$	69.4		$	20.0		$	179.7
	Foreign currency translation adjustments			(66.0	)		(135.9	)		(163.6	)
	Change in certain derivative instruments			(2.5	)
		Total	$	0.9		$	(115.9	)	$	16.1

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-62

Owens-Brockway Glass Container Inc.
CONSOLIDATED CASH FLOWS
(Millions of dollars)

			Years ended December 31,
			2001			2000			1999
Operating activities:
	Net earnings		$	69.4		$	20.0		$	179.7
	Non-cash charges (credits):
		Depreciation		286.4			298.3			299.0
		Amortization of deferred costs		72.3			62.2			66.1
		Deferred tax provision (credit)		72.5			(64.2	)		45.2
		Restructuring costs and write-offs of certain assets		65.2			186.0			20.8
		(Gains) losses on asset sales		20.7						(40.8	)
		Other		(64.0	)		(80.0	)		(95.7	)
	Change in non-current operating assets			18.9			(16.8	)		(7.8	)
	Change in non-current liabilities			(22.1	)		(0.1	)		1.4
	Change in components of working capital			(28.7	)		(80.0	)		(69.9	)
		Cash provided by operating activities		490.6			325.4			398.0
Investing activities:
	Additions to property, plant and equipment			(364.8	)		(301.6	)		(441.9	)
	Acquisitions, net of cash acquired			(169.0	)		(77.2	)		(34.2	)
	Net cash proceeds from divestitures and other			80.0			31.7			327.6
		Cash utilized in investing activities		(453.8	)		(347.1	)		(148.5	)
Financing activities:
	Additions to long-term debt			2,593.0			172.3			222.6
	Repayments of long-term debt			(918.5	)		(357.0	)		(475.8	)
	Decrease in short-term loans			(35.7	)		(40.4	)		(14.9	)
	Net change in intercompany debt			(1,643.0	)		200.7			8.1
	Collateral deposits for certain derivative instruments			(26.1	)
	Payment of finance fees			(45.3	)
		Cash utilized in financing activities		(75.6	)		(24.4	)		(260.0	)
	Effect of exchange rate fluctuations on cash			(6.1	)		16.1			(17.9	)
	Effect of change in fiscal year end for certain international affiliates						31.9
Increase (decrease) in cash				(44.9	)		1.9			(28.4	)
Cash at beginning of year				169.6			167.7			196.1
Cash at end of year			$	124.7		$	169.6		$	167.7

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-63

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

        Basis of Consolidated Statements.    The consolidated financial statements of Owens-Brockway Glass Container, Inc. ("Company") include the accounts of its subsidiaries. Newly acquired subsidiaries have been included in the consolidated financial statements from dates of acquisition. Prior to December 2000, substantially all of the Company's consolidated foreign subsidiaries reported their results of operations on a one-month lag, which allowed additional time to compile the results. The portion of the Company's consolidated net earnings for 2000 that was attributable to the earnings of these subsidiaries for the 12 months ended November 30, 2000 was $64.7 million ($107.5 million before unusual items). Beginning in December 2000, the one-month lag was eliminated. As a result, the December 2000 results of operations for these subsidiaries, which amounted to a net loss of $25.0 million, was recorded directly to retained earnings in December 2000. Earnings of most of these subsidiaries for the month of December are typically lower than most other months due to customer and factory holidays, fewer shipping days, and extended maintenance activity. The loss in December 2000 was greater than recent December periods as a result of lower than normal shipments for the month, lower selling prices due to product mix and currency exchange rates, high energy costs, and increased furnace repair work at several facilities.

        The Company uses the equity method of accounting for investments in which it has a significant ownership interest, generally 20% to 50%. Other investments are accounted for at cost.

Relationship with Owens-Brockway Packaging, Inc., Owens-Illinois Group, Inc. and Owens-Illinois, Inc. The Company is a wholly-owned subsidiary of Owens-Brockway Packaging, Inc. ("OB Packaging"), and an indirect subsidiary of Owens-Illinois Group, Inc. ("OI Group") and Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

        For federal and certain state income tax purposes, the taxable income of the Company is included in the consolidated tax returns of OI Inc. and income taxes are allocated to the Company on a basis consistent with separate returns.

        Nature of Operations.    The Company is a leading manufacturer of glass container products. The Company's principal product lines in the Glass Containers product segment are glass containers for the food and beverage industries. The Company has glass container operations located in 19 countries. The principal markets and operations for the Company's glass products are in North America, Europe, South America, and Australia. One customer accounted for 11.5%, 10.9%, and 10.3% of the Company's sales in 2001, 2000, and 1999, respectively.

        Use of Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management of the Company to make estimates and assumptions that affect certain amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, at which time the Company would revise its estimates accordingly.

        Cash.    The Company defines "cash" as cash and time deposits with maturities of three months or less when purchased.

        Fair Values of Financial Instruments.    The carrying amounts reported for cash, short-term investments and short-term loans approximate fair value. In addition, carrying amounts approximate fair value for certain long-term debt obligations subject to frequently redetermined interest rates. Derivative financial instruments are included on the balance sheet at fair value.

F-64

        Inventory Valuation.    The Company values most U.S. inventories at the lower of last-in, first-out (LIFO) cost or market. Other inventories are valued at the lower of standard costs (which approximate average costs) or market.

        Excess of Purchase Cost Over Net Assets Acquired.    Through December 31, 2001, the excess of purchase cost over net assets acquired was being amortized over 40 years. The Company evaluated the recoverability of long-lived assets based on undiscounted projected cash flows, excluding interest and taxes, when factors indicate that an impairment may exist. (See "New Accounting Standards").

        Property, Plant, and Equipment.    In general, depreciation is computed using the straight-line method. Renewals and improvements are capitalized. Maintenance and repairs are expensed as incurred.

        Revenue Recognition.    The Company recognizes sales, net of estimated discounts and allowances, when title to products is transferred to customers. Shipping and handling costs are included with manufacturing, shipping, and delivery costs.

        Income Taxes on Undistributed Earnings.    In general, the Company plans to continue to reinvest the undistributed earnings of foreign subsidiaries and foreign corporate joint ventures accounted for by the equity method. Accordingly, taxes are provided only on that amount of undistributed earnings in excess of planned reinvestments.

        Foreign Currency Translation.    The assets and liabilities of certain affiliates and associates are translated at current exchange rates and any related translation adjustments are recorded directly in share owners' equity. For the years ended December 31, 2001, 2000, and 1999, the Company's affiliates located in Venezuela operated in a "highly inflationary" economy. As such, certain assets of these affiliates were translated at historical exchange rates and all translation adjustments are reflected in the statements of Consolidated Results of Operations. Effective January 1, 2002, the affiliates in Venezuela will no longer be considered operating in a "highly inflationary" economy. Assets and liabilities will be translated at current exchange rates with any related translation adjustments being recorded directly to net Parent investment.

        New Accounting Standards.    In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations," which is effective for business combinations completed after June 30, 2001. Also in July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS No. 142"), which is effective for goodwill acquired after June 30, 2001. For goodwill acquired prior to July 1, 2001, FAS No. 142 will be effective for fiscal years beginning after December 15, 2001. Under FAS No. 142, Goodwill and intangible assets with indefinite lives will no longer be amortized but will be reviewed annually (or more frequently if impairment indicators arise) for impairment.

        The Company estimates that adopting FAS No. 142 will increase 2002 earnings before the effects of the accounting change by approximately $45 million. The Company has not completed its assessment of the effects that adopting FAS No. 142 will have on the reported value of goodwill.

        In October 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS No. 144"). FAS No. 144 supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS No. 121"). FAS No. 144 provides additional guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset (group) to be disposed of other than by sale (e.g. abandoned) be classified as "held and used" until it is disposed of, and establishes more restrictive criteria to classify an asset (group) as "held for sale", however it retains the fundamental provisions of FAS No. 121 related to the recognition and measurement of the

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impairment of long-lived assets to be "held and used." FAS No. 144 is effective for fiscal years beginning after December 15, 2001 and transition is prospective for committed disposal activities that are initiated after the effective date of FAS No. 144's initial application. The impact of adopting FAS No. 144 on the Company's reporting and disclosure is not expected to be material to the Company's financial position or results of operations.

FINANCIAL REVIEW

Tabular data in millions of dollars

        Changes in Components of Working Capital Related to Operations.    Changes in the components of working capital related to operations (net of the effects related to acquisitions and divestitures) were as follows:

		2001			2000			1999
Decrease (increase) in current assets:
	Short-term investments	$	3.6		$	12.0		$	(15.2	)
	Receivables		2.3			(35.1	)		19.9
	Net intercompany receivable		17.2			(43.9	)		11.0
	Inventories		24.3			(19.5	)		(10.1	)
	Prepaid expenses		0.8			3.8			(25.3	)
Increase (decrease) in current liabilities:
	Accounts payable and accrued liabilities		(46.3	)		(20.1	)		(47.2	)
	Salaries and wages		1.4			(2.6	)		8.6
	U.S. and foreign income taxes		(32.0	)		25.4			(11.6	)
		$	(28.7	)	$	(80.0	)	$	(69.9	)

        Inventories.    Major classes of inventory are as follows:

	2001		2000
Finished goods	$	507.2	$	494.9
Work in process		5.9		7.9
Raw materials		53.5		58.0
Operating supplies		44.4		50.6
	$	611.0	$	611.4

        If the inventories which are valued on the LIFO method had been valued at standard costs, which approximate current costs, consolidated inventories would be higher than reported by $14.7 million and $10.8 million, at December 31, 2001 and 2000, respectively.

        Inventories which are valued at the lower of standard costs (which approximate average costs), or market at December 31, 2001 and 2000 were approximately $465.9 million and $420.0 million, respectively.

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        Equity Investments.    Summarized information pertaining to the Company's equity associates follows:

				2001			2000
At end of year:
	Equity in undistributed earnings:
		Foreign		$	86.2		$	85.6
		Domestic			21.6			19.0
			Total	$	107.8		$	104.6
Equity in cumulative translation adjustment				$	(54.2	)	$	(46.7	)

				2001		2000		1999
For the year:
	Equity in earnings:
		Foreign		$	7.3	$	4.7	$	8.2
		Domestic			11.6		14.0		12.8
			Total	$	18.9	$	18.7	$	21.0
Dividends received				$	18.2	$	13.9	$	9.7

        External Long-Term Debt.    The following table summarizes the external long-term debt of the Company at December 31, 2001 and 2000:

				2001		2000
Secured Credit Agreement:
	Revolving Credit Facility			$	1,560.4
	Term Loan				1,045.0
Second Amended and Restated Credit Agreement:
	Revolving Credit Facility:
		Offshore Loans:
			Australian Dollars 1.39 billion			$	775.3
			British Pounds 125.0 million				186.8
			Italian Lira 18.0 billion				8.7
Other					199.1		220.8
					2,804.5		1,191.6
	Less amounts due within one year				26.0		26.1
		External long-term debt		$	2,778.5	$	1,165.5

        In April 2001, OI Group and certain of its subsidiaries, including the Company and certain of its foreign subsidiaries (the "Borrowers") entered into the Secured Credit Agreement (the "Agreement") with a group of banks, which expires on March 31, 2004. The Agreement provides for a $3.0 billion revolving credit facility (the "Revolving Credit Facility") and a $1.5 billion term loan (the "Term Loan"). The Agreement includes an Overdraft Account Facility providing for aggregate borrowings up to $50 million which reduce the amount available for borrowing under the Revolving Credit Facility. The Agreement also provides for the issuance of letters of credit totaling up to $500 million, which also reduce the amount available for borrowings under the Revolving Credit Facility.

        Under the Secured Credit Agreement, the Company and its subsidiaries have a total commitment of $2.0 billion provided by the Revolving Credit Facility and a total commitment of $1.045 billion

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provided by the Term Loan. At December 31, 2001, the Company and its subsidiaries had unused credit of $341.2 million available under the Secured Credit Agreement.

        Prior to April 2001, the Company's significant domestic financing was provided by OI Inc. under the April 1998 Second Amended and Restated Credit Agreement through intercompany loans. Borrowings under the Secured Credit Agreement by the Company, its subsidiaries and certain other domestic subsidiaries of OI Group were used to repay all amounts outstanding under, and terminate the Second Amended and Restated Credit Agreement.

        The interest rate on borrowings under the Revolving Credit Facility is, at the Borrower's option, the Base Rate or a reserve adjusted Eurodollar rate. The interest rate on borrowings under the Revolving Credit Facility also includes a margin linked to the Company's Consolidated Leverage Ratio, as defined in the Agreement. The margin is limited to ranges of 1.75% to 2.00% for Eurodollar loans and .75% to 1.00% for Base Rate loans. The interest rate on Overdraft Account loans is the Base Rate minus .50%. The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at December 31, 2001 was 4.12%. While no compensating balances are required by the Agreement, the Borrowers must pay a facility fee on the Revolving Credit Facility commitments of .50%.

        The interest rate on borrowings under the Term Loan is, at the Borrowers' option, the Base Rate or a reserve adjusted Eurodollar rate. The interest rate on borrowings under the Term Loan also includes a margin of 2.50% for Eurodollar loans and 1.50% for Base Rate loans. The weighted average interest rate on borrowings outstanding under the Term Loan at December 31, 2001 was 4.50%.

        The Agreement requires, among other things, the maintenance of certain financial ratios, and restricts the creation of liens and certain types of business activities and investments.

        Borrowings under the Agreement are secured by substantially all the assets of the Company, its domestic subsidiaries and certain foreign subsidiaries, which have a book value of approximately $1.9 billion. Borrowings are also secured by a pledge of intercompany debt and equity in most of the Company's domestic subsidiaries and certain stock of certain foreign subsidiaries.

        During January 2002, the Company completed a $1.0 billion private placement of senior secured notes. The notes bear interest at 8⁷/8% and are due February 15, 2009. The notes are guaranteed by OI Group and substantially all of its domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company used substantially all the net cash proceeds from the notes to reduce its outstanding term loan under the Agreement by $980 million. As such, the Company wrote off unamortized deferred financing fees in January 2002 related to the term loan and recorded an extraordinary charge totaling $10.9 million less applicable income taxes of $4.2 million. The indenture for the notes restricts among other things, the ability of the Company and its restricted subsidiaries to borrow money, pay dividends on, or redeem or repurchase stock, make investments, create liens, enter into certain transactions with affiliates, and sell certain assets or merge with or into other companies.

        Annual maturities for all of the Company's long-term debt through 2006 are as follows: 2002, $26.0 million; 2003, $43.0 million; 2004, $1,657.2 million; 2005, $70.9 million; and 2006, $5.0 million. These maturities reflect the issuance of the senior secured notes in January 2002 as noted above.

        Interest paid in cash aggregated $180.5 million for 2001, $117.7 million for 2000, and $116.6 million for 1999.

        Guarantees of Debt.    The Company has guaranteed the borrowings of certain of OI Inc.'s domestic subsidiaries totaling $850 million and has also guaranteed the borrowings of certain foreign subsidiaries under the Agreement.

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        Operating Leases.    Rent expense attributable to all operating leases was $59.6 million in 2001, $44.1 million in 2000, and $43.2 million in 1999. Minimum future rentals under operating leases are as follows: 2002, $33.2 million; 2003, $26.2 million; 2004, $17.4 million; 2005, $12.2 million; 2006, $10.7 million; and 2007 and thereafter, $25.5 million.

        Foreign Currency Translation.    Aggregate foreign currency exchange gains (losses) included in other costs and expenses were $3.9 million in 2001, $(0.4) million in 2000, and $4.4 million in 1999.

        Derivative Instruments.    The terms of OI Inc.'s former bank credit agreement provided for foreign currency borrowings by certain of the Company's international affiliates. Such borrowings provided a natural hedge against a portion of the Company's investment. Under the April 2001 Secured Credit Agreement, international affiliates are only permitted to borrow in U.S. dollars. The Company's affiliates in Australia and the United Kingdom have entered into currency swaps covering their initial borrowings under the Agreement. These swaps are being used to manage the affiliates' exposure to fluctuating foreign exchange rates by swapping the principal and interest payments due under the Secured Credit Agreement.

        As of December 31, 2001, the Company's affiliate in Australia has swapped $650.0 million of borrowings into $1,275.0 million Australian dollars. This swap matures on March 31, 2003, with interest resets every 90 days. The interest reset terms of the swap approximate the terms of the U.S. dollar borrowings. This derivative instrument swaps both the interest and principal from U.S. dollars to Australian dollars and also swaps the interest rate from a U.S. based rate to an Australian based rate. The Company's affiliate in the United Kingdom has swapped $200.0 million of borrowings into 139.0 million British pounds. This swap also matures on March 31, 2003, with interest resets every 90 days. This derivative instrument swaps both the interest and principal from U.S. dollars to British pounds and also swaps the interest rate from a U.S. based rate to a British rate.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. for a purchase price of approximately $150 million. The Company financed this purchase through borrowings under the Secured Credit Agreement, which were transferred to Canada through intercompany loans in U.S. dollars. The Company's affiliate in Canada has entered into swap transactions to manage the affiliate's exposure to fluctuating foreign exchange rates by swapping the principal and interest portion of the intercompany loan. At December 31, 2001, the Canadian affiliate has swapped $90.0 million of borrowings into $142.0 million Canadian dollars. This swap matures on October 1, 2003. This derivative instrument swaps both the interest and principal from U.S. dollars to Canadian dollars and also swaps the interest rate from a U.S. based rate to a Canadian based rate. The affiliate has also entered into a forward hedge related to the fourth quarter interest receivable and payable related to the previous swap. The affiliate has also entered in forward hedges which effectively swap $10.0 million of borrowings into $16.0 million Canadian dollars. These hedges swap both the interest and principal from U.S. dollars to Canadian dollars and mature monthly.

        The Company recognizes the above derivatives on the balance sheet at fair value. The Company accounts for the above swaps as fair value hedges. As such, the changes in the value of the swaps are included in other expense and are expected to substantially offset any exchange rate gains or losses on the related U.S. dollar borrowings. For the year ended December 31, 2001, the amount not offset was immaterial.

        The Company also uses commodity futures contracts related to forecasted natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid and the potential volatility in earnings or cash flows from future market price movements. During 2001, the Company entered into commodity futures contracts for approximately 75% of its domestic natural gas usage (approximately 1.2 billion BTUs) through March 2002. The Company has also entered into additional contracts in 2002 with respect to its forecasted natural gas usage through the end of 2002.

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        The Company accounts for the above futures contracts on the balance sheet at fair value. 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 accumulated other comprehensive income ("OCI") and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.

        The above futures contracts are accounted for as cash flow hedges at December 31, 2001. Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting anticipated cash flows of the hedged transactions. For hedged forecasted transactions, hedge accounting will be discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses will be recorded to earnings immediately.

        During 2001, an unrealized net loss of $2.5 million (net of tax) related to these commodity futures contracts was included in OCI. There was no ineffectiveness recognized during 2001.

        Accumulated Other Comprehensive Loss.    Foreign currency translation adjustments and changes in certain derivative balances comprise accumulated other comprehensive loss. Changes in accumulated other comprehensive loss was as follows:

	2001			2000			1999
Balance at beginning of year	$	(479.4	)	$	(343.5	)	$	(179.9	)
Net effect of exchange rate fluctuations		(68.6	)		(138.7	)		(161.5	)
Deferred income taxes		2.6			2.8			(2.1	)
Change in certain derivative balances		(2.5	)
Balance at end of year	$	(547.9	)	$	(479.4	)	$	(343.5	)

        The net effect of exchange rate fluctuations generally reflects changes in the relative strength of the U.S. dollar against major foreign currencies between the beginning and end of the year.

        Income Taxes.    Deferred income taxes reflect: (1) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (2) carryovers and credits for income tax purposes. Significant components of the Company's deferred tax assets and liabilities at December 31, 2001 and 2000 are as follows (certain amounts from prior year have been reclassified to conform to current year presentation):

			2001			2000
Deferred tax assets:
	Tax loss carryovers		$	19.4		$	15.3
	Other			139.8			130.3
		Total deferred tax assets		159.2			145.6
Deferred tax liabilities:
	Property, plant and equipment			161.8			142.9
	Inventory			35.8			39.2
	Other			117.6			75.7
		Total deferred tax liabilities		315.2			257.8
		Net deferred tax liabilities	$	(156.0	)	$	(112.2	)

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        Deferred taxes are included in the Consolidated Balance Sheets at December 31, 2001 and 2000 as follows:

	2001			2000
Prepaid expenses	$	5.9		$	36.9
Deferred tax liabilities		(161.9	)		(149.1	)
Net deferred tax liabilities	$	(156.0	)	$	(112.2	)

        The provision (benefit) for income taxes consists of the following:

		2001			2000			1999
Current:
	State	$	(0.3	)	$	0.3		$	1.7
	Foreign		15.1			87.9			61.8
			14.8			88.2			63.5
Deferred:
	U.S. Federal		30.1			(14.1	)		55.5
	State		3.6			(4.7	)		6.6
	Foreign		38.8			(45.4	)		(16.9	)
			72.5			(64.2	)		45.2
Total:
	U.S. Federal		30.1			(14.1	)		55.5
	State		3.3			(4.4	)		8.3
	Foreign		53.9			42.5			44.9
		$	87.3		$	24.0		$	108.7

        The provision for income taxes was calculated based on the following components of earnings (loss) before income taxes:

	2001		2000			1999
Domestic	$	58.3	$	(81.4	)	$	151.3
Foreign		118.0		146.0			148.3
	$	176.3	$	64.6		$	299.6

        Income taxes paid in cash were as follows:

	2001		2000		1999
Domestic	$	0.2	$	0.5	$	0.3
Foreign		45.7		44.3		47.1
	$	45.9	$	44.8	$	47.4

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        A reconciliation of the provision for income taxes based on the statutory U.S. Federal tax rate of 35% to the provision for income taxes is as follows:

		2001			2000			1999
Pretax earnings at statutory U.S. Federal tax rate		$	61.7		$	22.6		$	104.9
Increase (decrease) in provision for income taxes due to:
	Amortization of goodwill		15.1			15.6			16.6
	State taxes, net of federal benefit		2.1			(2.9	)		5.5
	Foreign earnings at different rates		(3.4	)		(9.3	)		(17.0	)
	Adjustment for non-U.S. tax law changes		6.0			(9.3	)
	Other items		5.8			7.3			(1.3	)
Provision for income taxes		$	87.3		$	24.0		$	108.6
Effective tax rate			49.5	%		37.2	%		36.3	%

        The Company is included with OI Inc.'s consolidated tax returns. OI Inc. has net operating losses, alternative minimum tax credits, and research and development credits available to offset future U.S. Federal income tax.

        At December 31, 2001, the Company's equity in the undistributed earnings of foreign subsidiaries for which income taxes had not been provided approximated $529.9 million. It is not practicable to estimate the U.S. and foreign tax which would be payable should these earnings be distributed.

        Related Party Transactions.    Charges for administrative services are allocated to the Company by OI Inc. based on an annual utilization level. Such services include compensation and benefits administration, payroll processing, use of certain general accounting systems, auditing, income tax planning and compliance, and treasury services. Management believes that such transactions are on terms no less favorable to the Company than those that could be obtained from unaffiliated third parties. The following information summarizes the Company's significant related party transactions:

		Years ended December 31,
		2001		2000		1999
Revenues:
	Sales to affiliated companies	$	1.0	$	3.1	$	4.3
Expenses:
	Administrative services		18.5		21.5		19.2
	Corporate management fee		16.3		17.9		18.1
Total expenses		$	34.8	$	39.4	$	37.3

        The above expenses are recorded in the statement of operations as follows:

	Years ended December 31,
	2001		2000		1999
Cost of sales	$	16.4	$	19.2	$	17.0
Selling, general, and administrative expenses		18.4		20.2		20.3
Total expenses	$	34.8	$	39.4	$	37.3

        Intercompany interest is charged to the Company from OI Inc. based on intercompany debt balances. Intercompany interest expense is calculated using a weighted average interest rate of external borrowings by OI Inc.

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        Participation in OI Inc. Stock Option Plans.    The Company participates in the stock option plans of OI Inc. under which employees of the Company may be granted options to purchase common shares of OI Inc. No options may be exercised in whole or in part during the first year after the date granted. In general, subject to certain accelerated exercisability provisions, 50% of the options become exercisable on the fifth anniversary of the date of the option grant, with the remaining 50% becoming exercisable on the sixth anniversary date of the option grant. In general, options expire following termination of employment or the day after the tenth anniversary date of the option grant.

        All options have been granted at prices equal to the market price of the OI Inc.'s common stock on the date granted. Accordingly, the Company recognizes no compensation expense related to the stock option plans. OI Inc. has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (FAS) No. 123, "Accounting for Stock-Based Compensation."

        A substantial number of the options have been granted to key employees of another subsidiary of OI Inc., some of whose compensation costs are included in an allocation of costs to all operating subsidiaries of OI Inc., including the Company. It is not practical to determine an amount of additional compensation allocable to the Company if OI Inc. had elected to recognize compensation cost based on the fair value of the options granted at grant date as allowed by FAS No. 123.

        Pension Benefit Plans.    The Company participates in OI Inc.'s pension plans for substantially all employees located in the United States. Benefits generally are based on compensation for salaried employees and on length of service for hourly employees. OI Inc.'s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. Independent actuaries determine pension costs for each subsidiary of OI Inc. included in the plans; however, accumulated benefit obligation information and plan assets pertaining to each subsidiary have not been separately determined. As such, the accumulated benefit obligation and the plan assets related to the pension plans for domestic employees have been retained by another subsidiary of OI Inc. Net credits to results of operations for the Company's allocated portion of the domestic pension costs amounted to $77.1 million in 2001, $82.9 million in 2000, and $67.2 million in 1999.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. As part of the transaction, the Company assumed certain of the pension liabilities of Consumers Packaging. The information below includes the activity of these pension plans from October 1, 2001 through December 31, 2001.

        The Company's subsidiaries in the United Kingdom, Australia and Canada also have pension plans covering substantially all employees. The following tables relate to the Company's principal United Kingdom, Australian and Canadian pension plans (the International Pension Plans).

        The changes in the International Pension Plans benefit obligations for the year were as follows:

			2001			2000
Obligations at beginning of year			$	392.7		$	400.5
Change in benefit obligations:
	Service cost			9.3			9.1
	Interest cost			22.9			22.3
	Actuarial (gain) loss			(13.1	)		6.9
	Acquisitions			170.0
	Benefit payments			(25.5	)		(24.6	)
	Other			(11.9	)		(21.5	)
		Net increase (decrease) in benefit obligations		151.7			(7.8	)
Obligations at end of year			$	544.4		$	392.7

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        The changes in the fair value of the International Pension Plans' assets for the year were as follows:

			2001			2000
Fair value at beginning of year			$	416.1		$	459.5
Change in fair value:
	Actual return (loss) on plan assets			(26.6	)		9.2
	Benefit payments			(25.5	)		(24.6	)
	Acquisitions			119.9
	Other			(3.3	)		(28.0	)
		Net increase (decrease) in fair value of assets		64.5			(43.4	)
Fair value at end of year			$	480.6		$	416.1

        The funded status of the International Pension Plans at year end was as follows:

		2001			2000
Plan assets at fair value		$	480.6		$	416.1
Projected benefit obligations			544.4			392.7
	Funded status of the plans		(63.8	)		23.4
Net unrecognized items:
	Actuarial loss		46.7			1.7
	Prior service cost		12.4			16.1
			59.1			17.8
Net prepaid (accrued) pension		$	(4.7	)	$	41.2

        The net prepaid (accrued) pension is included in the Consolidated Balance Sheets at December 31, 2001 and 2000 as follows:

	2001			2000
Prepaid pension	$	49.8		$	41.2
Other liabilities		(54.5	)
	$	(4.7	)	$	41.2

        The components of the International Pension Plans' net pension expense (credit) for the year were as follows:

			2001			2000			1999
Service cost			$	9.3		$	9.1		$	8.7
Interest cost				22.9			22.3			20.3
Expected asset return				(36.8	)		(35.9	)		(26.2	)
Amortization:
	Prior service cost			1.2			0.8			1.0
	Gain						(0.1	)
		Net amortization		1.2			0.7			1.0
Net expense (credit)			$	(3.4	)	$	(3.8	)	$	3.8

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        The following selected information is for plans with benefit obligations in excess of the fair value of plan assets:

	2001
Benefit obligations at the end of the year	$	484.7
Fair value of plan assets at the end of the year		411.8

        The following information is for plans with accumulated benefit obligations in excess of the fair value of plan assets:

	2001
Accumulated benefit obligations at the end of the year	$	145.8
Fair value of plan assets at the end of the year		131.5

        For the International Pension Plans, the actuarial present value of benefit obligations is based on a weighted discount rate of approximately 6.00% for 2001 and 5.25% for 2000. Future benefits are assumed to increase in a manner consistent with past experience of the plans, which, to the extent benefits are based on compensation, includes assumed salary increases on a weighted scale of approximately 4.00% for 2001 and 2000. The expected weighted long-term rate of return on assets was approximately 8.50% for 2001, 7.75% for 2000, and 6.75% for 1999. Amortization included in net pension credits is based on the average remaining service of employees. Plan assets include marketable equity securities, government and corporate debt securities, real estate and commingled funds.

        OI Inc. also sponsors several defined contribution plans for all salaried and hourly U.S. employees of the Company. Participation is voluntary and participants' contributions are based on their compensation. OI Inc. matches substantially all plan participants' contributions up to various limits. OI Inc. charges the Company for its share of the match. The Company's share of the contributions to these plans amounted to $4.8 million in 2001, $5.6 million in 2000, and $5.8 million in 1999.

        Postretirement Benefits Other Than Pensions.    OI Inc. provides certain retiree health care and life insurance benefits covering substantially all U.S. salaried and certain hourly employees. Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Independent actuaries determine postretirement benefit costs for each subsidiary of OI Inc.; however, accumulated postretirement benefit obligation information pertaining to each subsidiary has not been separately determined. As such, the accumulated postretirement benefit obligation has been retained by another subsidiary of OI Inc.

        The Company's net periodic postretirement benefit cost, as allocated by OI Inc., for domestic employees was $4.8 million, $4.2 million, and $4.8 million at December 31, 2001, 2000, and 1999, respectively.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. The information below is the activity of the Canadian related

F-75

retiree health care plan from October 1, 2001 through December 31, 2001. The changes in the Canadian postretirement benefit obligations were as follows:

			2001
Obligations at beginning of year			$	—
Change in benefit obligations:
	Service cost			0.1
	Interest cost			0.5
	Actuarial loss			0.1
	Acquisition			31.2
	Benefit payments			(0.2	)
		Net change in benefit obligations		31.7
Obligations at end of year			$	31.7

        The funded status of the Canadian postretirement benefit plans at year end was as follows:

		2001
Accumulated postretirement benefit obligations		$	31.7
Net unrecognized items:
	Prior service credits		—
	Actuarial loss		(0.1	)
			(0.1	)
Nonpension postretirement benefit obligations		$	31.6

        The Company's nonpension postretirement benefit obligations are included with other long term liabilities on the balance sheet.

        The components of the Canadian net postretirement benefit cost were as follows:

	2001
Service cost	$	0.1
Interest cost		0.5
Net postretirement benefit cost	$	0.6

        Assumed health care cost inflation was based on a rate of 9.00% in 2001, declining to an ultimate rate of 5.50%. A one percentage point decrease in the rate would have decreased the accumulated postretirement benefit obligation at December 31, 2001 by $4.1 million and decreased the net postretirement benefit cost for 2001 by $0.1 million. A one percentage point increase in the rate would have increased the accumulated postretirement benefit obligation at December 31, 2001 by $5.1 million and increased the net postretirement benefit cost for 2001 by $0.1 million. The assumed weighted average discount rate used in determining the accumulated postretirement benefit obligation was 6.50% at December 31, 2001.

        Benefits provided by OI Inc. for certain of the hourly retirees of the Company are determined by collective bargaining. Most other domestic hourly retirees receive health and life insurance benefits from a multi-employer trust established by collective bargaining. Payments to the trust as required by the bargaining agreements are based upon specified amounts per hour worked and were $6.3 million in 2001, $7.5 million in 2000, and $8.0 million in 1999. Postretirement health and life benefits for retirees of foreign affiliates are generally provided through the national health care programs of the countries in which the affiliates are located.

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        Other Revenue.    Other revenue for the year ended December 31, 2001 includes $10.3 million from the sale of a minerals business in Australia. Other revenue for the year ended December 31, 1999 includes gains totaling $40.8 million related to the sales of a U.S. glass container plant and a mold manufacturing business in Colombia.

        Other Costs and Expenses.    Other costs and expenses for the year ended December 31, 2001 include pretax charges of $96.2 million related to the following: (1) charges of $65.2 million principally related to a restructuring program and impairment at certain of the Company's international and domestic operations. The charge includes the impairment of assets at the Company's affiliate in Puerto Rico and the consolidation of manufacturing capacity and the closing of a facility in Venezuela. The charge related to the Puerto Rico facility of $25.2 million related to the impairment of assets. While the Company intends to continue to operate this facility, an analysis of cash flows indicated that the long-lived assets, including buildings, furnaces, and factory equipment were impaired. The Company has written down the majority of the long-lived assets of this facility. As a result of the consolidation of manufacturing capacity and the closing of two facilities in Venezuela, the Company recorded an impairment charge of approximately $22 million to substantially write off buildings, furnaces, and factory equipment. The program also includes consolidation of capacity at certain other international and domestic facilities in response to decisions about pricing and market strategy. The total planned reduction in workforce resulting from these actions will involve approximately 220 employees. The restructuring program included termination benefits of approximately $4.5 million, of which $1.5 million had been paid by December 31, 2001; and (2) a charge of $31.0 million related to the loss on the sale of the Company's facilities in India; The Company expects its actions related to the restructuring and impairment charges to be completed during the next several quarters.

        Other costs and expenses for the year ended December 31, 2000 include charges of $186.0 million principally related to a restructuring and capacity realignment program. The program, initiated in the third quarter of 2000, includes the consolidation of manufacturing capacity and a reduction of 175 employees in the U.S. salaried work force, or about 15%, principally as a result of early retirement incentives. Also included in the program are a write-down of plant and equipment for the Company's glass container affiliate in India and certain other asset write-offs. Charges for manufacturing capacity consolidations of $120.4 million principally involve U.S. glass container facilities and reflect technology-driven improvements in productivity, conversions from some juice and similar products to plastic containers, Company and customer decisions regarding pricing and volume, and the further concentration of production in the most strategically-located facilities. The property, plant and equipment at the three facilities, consisting of land, buildings, furnaces and factory equipment, was written down by $48.0 million to substantially write off these assets. The Company expects that it will continue to make cash payments over the next several quarters for benefits and on-going closing costs related to the closing of these facilities.

        As a result of reducing the U.S. salaried workforce in 2000, the Company recognized a settlement gain of approximately $24 million related to its defined benefit pension plan. This gain has been included in the net charge of $22.0 million for early retirement incentives and special termination benefits.

        The 2000 pretax charge of $40.0 million was related to the write-down of property, plant, and equipment in India. Based on the Company's expectation of future net cash flows of its affiliate in India, the related property, plant, and equipment was written down to realizable values in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."

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        Selected information relating to the restructuring accruals follows:

	Capacity realignment(a)			Early retirement incentives and special termination benefits			Write-down of impaired property, plant and equipment			Other			Total
2000 restructuring charges	$	120.4		$	22.0		$	40.0		$	3.6		$	186.0
Write-down of assets to net realizable value		(48.4	)					(40.0	)		(3.6	)		(92.0	)
Reduction of OI Inc. prepaid pension asset		(13.0	)		(18.2	)								(31.2	)
Increase in OI Inc. nonpension postretirement benefit liability		(0.6	)		(3.2	)								(3.8	)
Net cash paid		(1.2	)		(0.2	)								(1.4	)
Remaining liabilities at December 31, 2000		57.2			0.4			—			—			57.6
2001 restructuring charges		23.5						41.7						65.2
Write-down of assets to net realizable value		(33.7	)					(41.7	)					(75.4	)
Net cash paid		(24.2	)		(0.4	)								(24.6	)
Remaining liabilities at December 31, 2001	$	22.8		$	—		$	—		$	—		$	22.8

(a)

Capacity realignment includes charges for plant closing costs, severance benefits, and write-downs of assets for disposal or abandonment as a result of restructuring of manufacturing capacity. Write-downs of assets represent the majority of the charges for 2001.

        Other costs and expenses for the year ended December 31, 1999 include charges totaling $20.8 million related principally to restructuring costs and write-offs of certain assets in Europe and South America.

        Geographic Information.    The Company operates in the rigid packaging industry. The Company has one primary reportable product segment within the rigid packaging industry: Glass Containers. The Glass Containers segment includes operations in North America, Europe, the Asia Pacific region, and South America.

        The Company evaluates performance and allocates resources based on earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries, and extraordinary charges (collectively "EBIT") excluding unusual items. Net sales as shown in the geographic segment information are based on the location of the Company's affiliate which recorded the sales.

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        Financial information regarding the Company's geographic segments is as follows:

			North America(a)			Europe			Asia Pacific			South America			Total Geographic Segments
Net sales:
	2001		$	1,662.2		$	909.7		$	660.6		$	516.9		$	3,749.4
	2000			1,742.4			894.0			760.7			494.5			3,891.6
	1999			1,772.0			965.6			815.0			412.6			3,965.2
EBIT, excluding unusual items:
	2001		$	306.2		$	93.2		$	102.2		$	91.6		$	593.2
	2000			311.8			81.9			123.9			77.2			594.8
	1999			333.8			97.9			135.0			29.9			596.6
Unusual items:
	2001:
		Gain on the sale of a minerals business in Australia							$	10.3					$	10.3
		Restructuring and impairment charges	$	(35.1	)	$	(6.1	)		(0.8	)	$	(23.2	)		(65.2	)
		Special employee benefit programs		(4.4	)		(0.7	)		(2.3	)		(0.2	)		(7.6	)
		Loss on the sale of the Company's facilities in India								(31.0	)					(31.0	)
	2000:
		Charges related to consolidation of manufacturing capacity		(124.0	)								3.6			(120.4	)
		Charges related to early retirement incentives and special termination benefits		(22.0	)											(22.0	)
		Charges related to impairment of property, plant, and equipment in India								(40.0	)					(40.0	)
		Other											(3.6	)		(3.6	)
	1999:
		Gains related to the sales of two manufacturing facilities		30.8									10.0			40.8
		Charges related principally to restructuring costs and write-offs of certain assets in Europe and South America					(10.8	)					(10.0	)		(20.8	)

(a)

One customer accounted for 11.5%, 10.9%, and 10.3% of the Company's sales in 2001, 2000, and 1999 respectively.

        The Company's net fixed assets by location are as follows:

	United States		Foreign		Total
2001	$	605.0	$	1,498.3	$	2,103.3
2000		612.6		1,510.3		2,122.9
1999		676.7		1,631.1		2,307.8

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        Reconciliations to consolidated totals are as follows:

		2001			2000			1999
Revenues:
	Net sales	$	3,749.4		$	3,891.6		$	3,965.2
	Royalties and net technical assistance		17.2			17.9			21.3
	Equity earnings		18.9			18.7			21.0
	Interest		22.3			27.5			22.4
	Other		33.8			41.4			65.3
	Total	$	3,841.6		$	3,997.1		$	4,095.2
Reconciliation of EBIT to earnings before income taxes and minority share owners' interests in earnings of subsidiaries:
	EBIT, excluding unusual items	$	593.2		$	594.8		$	596.6
	Unusual items		(93.5	)		(186.0	)		20.0
	Net interest expense		(323.4	)		(344.2	)		(317.0	)
	Total	$	176.3		$	64.6		$	299.6

F-80

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Share Owner
OI Plastic Products FTS Inc.

        We have audited the accompanying consolidated balance sheets of OI Plastic Products FTS Inc. as of December 31, 2001 and 2000, and the related consolidated statements of results of operations, net Parent investment, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the 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 OI Plastic Products FTS Inc. at December 31, 2001 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

Ernst & Young LLP

Toledo, Ohio
January 24, 2002

F-81

OI Plastic Products FTS Inc.

CONSOLIDATED RESULTS OF OPERATIONS

(Millions of dollars)

		Years ended December 31,
		2001		2000		1999
Revenues:
	Net sales	$	1,661.1	$	1,668.4	$	1,558.7
	Other revenue		14.9		11.3		12.4
			1,676.0		1,679.7		1,571.1
Costs and expenses:
	Manufacturing, shipping, and delivery		1,288.9		1,287.6		1,144.0
	Research and development		30.7		31.6		24.7
	Engineering		1.4		0.3		6.8
	Selling and administrative		70.2		68.5		69.2
	Net intercompany interest		55.5		103.2		87.0
	Other interest expense		38.6		2.7		3.8
	Other		88.8		67.2		55.1
			1,574.1		1,561.1		1,390.6
Earnings before items below			101.9		118.6		180.5
Provision for income taxes			53.3		60.5		83.8
Minority share owners' interests in earnings of subsidiaries			0.5		1.4		2.0
Net earnings		$	48.1	$	56.7	$	94.7

See accompanying Statement of Significant Accounting Policies and Financial Review.

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OI Plastic Products FTS Inc.

CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

Assets

			December 31,
			2001		2000
Current assets:
	Cash		$	10.3	$	34.2
	Receivables including amount from related parties of $9.2 ($8.7 in 2000), less allowances of $38.2 ($29.2 in 2000) for losses and discounts			184.3		192.0
	Inventories			222.9		249.2
	Prepaid expenses			41.1		24.7
		Total current assets		458.6		500.1
Other assets:
	Equity investments			9.2		14.2
	Repair parts inventories			25.6		30.4
	Deposits, receivables, and other assets			95.9		95.3
	Excess of purchase cost over net assets acquired, net of accumulated amortization of $440.2 ($394.7 in 2000)			1,468.2		1,523.6
		Total other assets		1,598.9		1,663.5
Property, plant, and equipment:
	Land, at cost			28.7		29.3
	Buildings and equipment, at cost:
		Buildings and building equipment		212.8		223.6
		Factory machinery and equipment		1,522.6		1,474.8
		Transportation, office, and miscellaneous equipment		22.5		19.4
		Construction in progress		131.1		128.5
				1,917.7		1,875.6
	Less accumulated depreciation			799.3		759.8
		Net property, plant, and equipment		1,118.4		1,115.8
Total assets			$	3,175.9	$	3,279.4

F-83

OI Plastic Products FTS Inc.

CONSOLIDATED BALANCE SHEETS (Continued)

(Millions of dollars)

Liabilities and Net Parent Investment

			December 31,
			2001			2000
Current liabilities:
	Short-term loans					$	8.3
	Accounts payable including amount to related parties of $12.3 ($8.0 in 2000)		$	105.9			114.5
	Salaries and wages			18.2			17.5
	U.S. and foreign income taxes			10.8			13.2
	Other accrued liabilities			47.6			13.6
	Long-term debt due within one year			4.9			4.6
		Total current liabilities		187.4			171.7
External long-term debt				851.3			7.2
Deferred taxes				172.6			173.4
Other liabilities				12.9			1.9
Minority share owners' interests							8.3
Net Parent investment
	Investment by and advances from parent			1,980.0			2,944.1
	Accumulated other comprehensive loss			(28.3	)		(27.2	)
		Total net Parent investment		1,951.7			2,916.9
Total liabilities and net Parent investment			$	3,175.9		$	3,279.4

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-84

OI Plastic Products FTS Inc.

CONSOLIDATED NET PARENT INVESTMENT

(Millions of dollars)

			Years ended December 31,
			2001			2000			1999
Investment by and advances to parent
	Balance at beginning of year		$	2,944.1		$	2,884.7		$	2,742.0
	Net intercompany transactions			(1,012.2	)		4.5			48.0
	Net earnings			48.1			56.7			94.7
	Net loss for the month ended December 31, 2000 for the change in the fiscal year end of certain international affiliates						(1.8	)
		Balance at end of year		1,980.0			2,944.1			2,884.7
Accumulated other comprehensive loss
	Balance at beginning of year			(27.2	)		(25.0	)		(9.7	)
	Foreign currency translation adjustments			(1.1	)		(2.2	)		(15.3	)
		Balance at end of year		(28.3	)		(27.2	)		(25.0	)
Total net Parent investment			$	1,951.7		$	2,916.9		$	2,859.7
Total comprehensive income (loss)
	Net earnings		$	48.1		$	56.7		$	94.7
	Foreign currency translation adjustments			(1.1	)		(2.2	)		(15.3	)
		Total	$	47.0		$	54.5		$	79.4

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-85

OI Plastic Products FTS Inc.

CONSOLIDATED CASH FLOWS

(Millions of dollars)

			Years ended December 31,
			2001			2000			1999
Operating activities:
	Net earnings		$	48.1		$	56.7		$	94.7
	Non-cash charges (credits):
		Depreciation		111.2			107.6			97.6
		Amortization of deferred costs		60.9			60.3			63.7
		Deferred tax provision		42.9			51.9			75.5
		Restructuring costs and write-offs of certain assets		33.3			26.6
		(Gains) losses on asset sales		(2.8	)					4.0
		Other		(10.9	)		(17.9	)		(10.5	)
	Change in non-current operating assets			(1.7	)		(7.4	)		(8.9	)
	Reduction of non-current liabilities						(0.2	)		(1.4	)
	Change in components of working capital			35.7			(83.2	)		(10.0	)
		Cash provided by operating activities		316.7			194.4			304.7
Investing activities:
	Additions to property, plant and equipment			(164.0	)		(176.4	)		(192.3	)
	Acquisitions, net of cash acquired			(15.6	)
	Net cash proceeds from divestitures and other			66.7			4.8			9.2
		Cash utilized in investing activities		(112.9	)		(171.6	)		(183.1	)
Financing activities:
	Net change in intercompany debt			(1,049.5	)		3.5			(103.3	)
	Additions to long-term debt			850.4			1.5			1.6
	Payment of finance fees			(14.9	)
	Decrease in short-term loans			(8.7	)		(3.4	)		(4.8	)
	Repayments of long-term debt			(6.8	)		(10.5	)		(6.9	)
		Cash utilized in financing activities		(229.5	)		(8.9	)		(113.4	)
	Effect of exchange rate fluctuations on cash			1.8			(0.4	)		(1.0	)
	Effect of change in fiscal year end for certain international affiliates						1.2
Increase (decrease) in cash				(23.9	)		14.7			7.2
Cash at beginning of year				34.2			19.5			12.3
Cash at end of year			$	10.3		$	34.2		$	19.5

See accompanying Statement of Significant Accounting Policies and Financial Review.

F-86

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

        Basis of Consolidated Statements.    The consolidated financial statements of OI Plastic Products FTS Inc. ("Company") include the accounts of its subsidiaries. During January 2002, OI Closure FTS, Inc, another subsidiary of Owens-Illinois Inc., was merged into the Company. Since both entities were under common control of Owens-Illinois Inc., the consolidated statement of operations, net parent investment, and cash flows for each of the three years ended December 31, 2001 and the consolidated balance sheets at December 31, 2001 and 2000 include OI Closure FTS, Inc. for all periods at historical cost. Newly acquired subsidiaries have been included in the consolidated financial statements from dates of acquisition. Prior to December 2000, substantially all of the Company's consolidated foreign subsidiaries reported their results of operations on a one-month lag, which allowed additional time to compile the results. Beginning in December 2000, the one-month lag was eliminated. As a result, the December 2000 results of operations for these subsidiaries, which amounted to a net loss of $1.8 million, was recorded directly to retained earnings in December 2000.

        The Company uses the equity method of accounting for investments in which it has a significant ownership interest, generally 20% to 50%. Other investments are accounted for at cost.

        Relationship with Owens-Illinois, Inc. and Owens-Illinois, Group Inc.    The Company is a wholly-owned subsidiary of Owens-Illinois Group, Inc. ("OI Group") and an indirect subsidiary of Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

        For federal and certain state income tax purposes, the taxable income of the Company is included in the consolidated tax returns of OI Inc. and income taxes are allocated to the Company on a basis consistent with separate returns. Current income taxes are recorded by the Company on a basis consistent with separate returns.

        Nature of Operations.    The Company is a leading manufacturer of plastics packaging products. The Company's principal product lines are plastic containers, closures and plastic prescription containers. The Company's principal operations are in North America, however, the Company does have minor operations in Europe and South America. Major markets include the United States household products, personal care products, health care products, and food and beverage industries. One customer accounted for 18.0%, 13.0%, and 12.1% of the Company's sales in 2001, 2000, and 1999 respectively.

        Use of Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management of the Company to make estimates and assumptions that affect certain amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, at which time the Company would revise its estimates accordingly.

        Cash.    The Company defines "cash" as cash and time deposits with maturities of three months or less when purchased.

        Fair Values of Financial Instruments.    The carrying amounts reported for cash, short-term investments and short-term loans approximate fair value. In addition, carrying amounts approximate fair value for certain long-term debt obligations subject to frequently redetermined interest rates. The Company is not a party to any material derivative financial instruments.

        Inventory Valuation.    The Company values most U.S. inventories at the lower of last-in, first-out (LIFO) cost or market. Other inventories are valued at the lower of standard costs (which approximate average costs) or market.

F-87

        Excess of Purchase Cost Over Net Assets Acquired.    Through December 31, 2001, the excess of purchase cost over net assets acquired was being amortized over 40 years. The Company evaluated the recoverability of long-lived assets based on undiscounted projected cash flows, excluding interest and taxes, when factors indicated that an impairment may have existed. (See "New Accounting Standards").

        Property, Plant, and Equipment.    In general, depreciation is computed using the straight-line method. Renewals and improvements are capitalized. Maintenance and repairs are expensed as incurred.

        Revenue Recognition.    The Company recognizes sales, net of estimated discounts and allowances, when title to products is transferred to customers. Shipping and handling costs are included with manufacturing, shipping, and delivery costs.

        Income Taxes on Undistributed Earnings.    In general, the Company plans to continue to reinvest the undistributed earnings of foreign subsidiaries and foreign corporate joint ventures accounted for by the equity method. Accordingly, taxes are provided only on that amount of undistributed earnings in excess of planned reinvestments.

        Foreign Currency Translation.    The assets and liabilities of most affiliates and associates are translated at current exchange rates and any related translation adjustments are recorded directly in share owners' equity. The Company's affiliate located in Venezuela operates in a highly inflationary economy. In such cases, certain assets of this affiliate are translated at historical exchange rates and all translation adjustments are reflected in the statements of consolidated results of operations.

        New Accounting Standards.    In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations" which is effective for business combinations completed after June 30, 2001. Also in July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS No. 142"), which is effective for goodwill acquired after June 30, 2001. For goodwill acquired prior to July 1, 2001, FAS No. 142 will be effective for fiscal years beginning after December 15, 2001. Under FAS No. 142, goodwill and intangible assets with indefinite lives will no longer be amortized but will be reviewed annually (or more frequently if impairment indicators arise) for impairment.

        The Company estimates that adopting FAS No. 142 will increase 2002 earnings before the effects of the accounting change by approximately $45 million. The Company has not completed its assessment of the effects that adopting FAS No. 142 will have on the reported value of goodwill, however, the Company expects that it will record an impairment charge in 2002 in connection with adopting FAS No. 142.

        In October 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS No. 144"). FAS No. 144 supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS No. 121"). FAS No. 144 provides additional guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset (group) to be disposed of other than by sale (e.g. abandoned) be classified as "held and used" until it is disposed of, and establishes more restrictive criteria to classify an asset (group) as "held for sale"; however, it retains the fundamental provisions of FAS No. 121 related to the recognition and measurement of the impairment of long-lived assets to be "held and used." FAS No. 144 is effective for fiscal years beginning after December 15, 2001 and transition is prospective for committed disposal activities that are initiated after the effective date of FAS No. 144's initial application. The impact of adopting FAS No. 144 on the Company's reporting and disclosure is not expected to be material to the Company's financial position or results of operations.

F-88

FINANCIAL REVIEW
Tabular data in millions of dollars.

        Changes in Components of Working Capital Related to Operations.    Changes in the components of working capital related to operations (net of the effects related to acquisitions and divestitures) were as follows:

		2001			2000			1999
Decrease (increase) in current assets:
	Receivables	$	(2.6	)	$	1.5		$	(39.2	)
	Inventories		20.0			(31.6	)		(34.8	)
	Prepaid expenses		3.4			2.7			(2.3	)
Increase (decrease) in current liabilities:
	Accounts payable and accrued liabilities		19.2			(6.9	)		12.5
	Salaries and wages		2.0			(0.1	)		0.6
	U.S. and foreign income taxes		(6.3	)		(48.8	)		53.2
		$	35.7		$	(83.2	)	$	(10.0	)

        Inventories.    Major classes of inventory are as follows:

	2001		2000
Finished goods	$	133.7	$	157.4
Work in process		0.3		3.8
Raw materials		71.7		72.6
Operating supplies		17.2		15.4
	$	222.9	$	249.2

        If the inventories which are valued on the LIFO method had been valued at standard costs, which approximate current costs, consolidated inventories would be higher than reported by $5.2 million and $10.5 million at December 31, 2001 and 2000, respectively.

        Inventories which are valued at the lower of standard costs (which approximate average costs), or market at December 31, 2001 and 2000 were approximately $34.0 million and $33.4 million, respectively.

        External Long-Term Debt.    The following table summarizes the external long-term debt of the Company at December 31, 2001 and 2000:

		December 31
		2001		2000
Secured Credit Agreement:
	Revolving Credit Facility	$	850.0
Other			6.2	$	11.8
			856.2		11.8
Less amounts due within one year			4.9		4.6
	External long-term debt	$	851.3	$	7.2

        In April 2001, OI Group and certain of its domestic and foreign subsidiaries, including the Company (the "Borrowers") entered into the Secured Credit Agreement (the "Agreement") with a group of banks, which expires on March 31, 2004. The Agreement provides for a $3.0 billion revolving

F-89

credit facility (the "Revolving Credit Facility") and a $1.5 billion term loan (the "Term Loan"). The Agreement includes an Overdraft Account Facility providing for aggregate borrowings up to $50 million which reduce the amount available for borrowing under the Revolving Credit Facility. The Agreement also provides for the issuance of letters of credit totaling up to $500 million, which also reduce the amount available for borrowings under the Revolving Credit Facility.

        Under the Secured Credit Agreement, the Company has a total commitment of $1.0 billion provided by the Revolving Credit Facility. The Company has no commitment available under the Term Loan. At December 31, 2001, the Company had unused credit of $150.0 million available under the Secured Credit Agreement.

        Prior to April 2001, the Company's significant financing was provided by OI Inc. under the April 1998 Second Amended and Restated Credit Agreement through intercompany loans. Borrowings under the Secured Credit Agreement by the Company and certain other domestic and foreign subsidiaries of OI Group were used to repay all amounts outstanding under, and terminate, the Second Amended and Restated Credit Agreement.

        The interest rate on borrowings under the Revolving Credit Facility is, at the Borrower's option, the Base Rate or a reserve adjusted Eurodollar rate. The interest rate on borrowings under the Revolving Credit Facility also includes a margin linked to OI Inc.'s Consolidated Leverage Ratio, as defined in the Agreement. The margin is limited to ranges of 1.75% to 2.00% for Eurodollar loans and .75% to 1.00% for Base Rate loans. The interest rate on Overdraft Account loans is the Base Rate minus .50%. The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at December 31, 2001 was 4.17%. While no compensating balances are required by the Agreement, the Borrowers must pay a facility fee on the Revolving Credit Facility commitments of .50%.

        Borrowings under the Agreement are secured by substantially all the assets of the Company and its domestic subsidiaries. Borrowings are also secured by a pledge of intercompany debt and equity in most of the Company's domestic subsidiaries.

        The Agreement requires, among other things, the maintenance of certain financial ratios, and restricts the creation of liens and certain types of business activities and investments.

        Annual maturities for all of the Company's external long-term debt through 2006 are as follows: 2002, $4.9 million; 2003, $0.5 million; 2004, $850.3 million; 2005, $0.2 million; and 2006, $0.2 million.

        Interest paid in cash aggregated $31.7 million for 2001, $0.9 million for 2000, and $1.1 million for 1999.

        Guarantees of Debt.    The Company has guaranteed the borrowings of certain of OI Inc.'s domestic subsidiaries totaling $2,605.4 and has also guaranteed the borrowings of certain foreign affiliates under the Agreement.

        During January 2002, an affiliate of the Company completed a $1.0 billion private placement of senior secured notes. The assets of the Company and most of its domestic subsidiaries are pledged as security for the notes. The Company has guaranteed these notes.

        Operating Leases.    Rent expense attributable to all operating leases was $21.9 million in 2001, $19.1 million in 2000, and $17.4 million in 1999. Minimum future rentals under operating leases are as follows: 2002, $9.0 million; 2003, $5.0 million; 2004, $1.5 million; 2005, $0.6 million; 2006, $0.5 million; and 2007 and thereafter, $2.2 million.

        Foreign Currency Translation.    Aggregate foreign currency exchange gains (losses) included in other costs and expenses were $(1.3) million in 2001, $(0.7) million in 2000, and $0.5 million in 1999.

F-90

        Income Taxes.    Deferred income taxes reflect: (1) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (2) carryovers and credits for income tax purposes. Significant components of the Company's deferred tax assets and liabilities at December 31, 2001 and 2000 are as follows (certain amounts from prior year have been reclassified to conform to current year presentation):

			2001			2000
Deferred tax assets:
	Tax loss carryovers		$	10.9		$	5.3
	Accrued liabilities			20.9			6.6
	Other			24.2			16.8
		Total deferred tax assets		56.0			28.7
Deferred tax liabilities:
	Property, plant and equipment			151.8			142.6
	Inventory			1.6			1.6
	Other			37.0			39.3
		Total deferred tax liabilities		190.4			183.5
		Net deferred tax liabilities	$	(134.4	)	$	(154.8	)

        Deferred taxes are included in the Consolidated Balance Sheets at December 31, 2001 and 2000 as follows:

	2001			2000
Prepaid expenses	$	38.2		$	18.6
Deferred tax liabilities		(172.6	)		(173.4	)
Net deferred tax liabilities	$	(134.4	)	$	(154.8	)

        The provision for income taxes consists of the following:

		2001			2000			1999
Current:
	State	$	1.2		$	(0.4	)	$	2.1
	Foreign		9.2			9.0			6.2
			10.4			8.6			8.3
Deferred:
	U.S. Federal		39.9			45.3			66.9
	State		3.2			6.3			8.2
	Foreign		(0.2	)		0.3			0.4
			42.9			51.9			75.5
Total:
	U.S. Federal		39.9			45.3			66.9
	State		4.4			5.9			10.3
	Foreign		9.0			9.3			6.6
		$	53.3		$	60.5		$	83.8

F-91

        The provision for income taxes was calculated based on the following components of earnings before income taxes:

	2001		2000		1999
Domestic	$	70.5	$	91.4	$	159.4
Foreign		31.4		27.2		21.1
	$	101.9	$	118.6	$	180.5

        Income taxes paid in cash were as follows:

	2001		2000		1999
Domestic	$	1.5	$	0.9	$	2.5
Foreign		6.4		2.1		4.4
	$	7.9	$	3.0	$	6.9

        A reconciliation of the provision for income taxes based on the statutory U.S. Federal tax rate of 35% to the provision for income taxes is as follows:

		2001			2000			1999
Pretax earnings at statutory U.S. Federal tax rate		$	35.7		$	41.5		$	63.2
Increase (decrease) in provision for income taxes due to:
	Amortization of goodwill		16.5			16.5			16.4
	State taxes, net of federal benefit		3.5			3.9			6.7
	Foreign earnings at different rates		(1.7	)		0.3			(1.9	)
	Other items		(0.7	)		(1.7	)		(0.6	)
Provision for income taxes		$	53.3		$	60.5		$	83.8
Effective tax rate			52.3	%		51.0	%		46.4	%

        The Company is included with OI Inc.'s consolidated tax returns. OI Inc. has net operating losses, alternative minimum tax credits, and research and development credits available to offset future U.S. Federal income tax.

        At December 31, 2001, the Company's equity in the undistributed earnings of foreign subsidiaries for which income taxes had not been provided approximated $32.7 million. It is not practicable to estimate the U.S. and foreign tax which would be payable should these earnings be distributed.

        Related Party Transactions.    Charges for administrative services are allocated to the Company by OI Inc. based on an annual utilization level. Such services include compensation and benefits administration, payroll processing, use of certain general accounting systems, auditing, income tax planning and compliance, and treasury services. Management believes that such transactions are on

F-92

terms no less favorable to the Company than those that could be obtained from unaffiliated third parties. The following information summarizes the Company's significant related party transactions:

		Years ended December 31,
		2001		2000		1999
Revenues:
	Sales to affiliated companies	$	8.2	$	7.7	$	2.6
Expenses:
	Administrative services	$	13.2	$	15.6	$	14.6
	Corporate management fee		8.5		8.6		7.8
Total expenses		$	21.7	$	24.2	$	22.4

        The above expenses are recorded in the statement of operations as follows:

Cost of sales	$	11.6	$	13.8	$	12.9
Selling, general, and administrative expenses		10.1		10.4		9.5
Total expenses	$	21.7	$	24.2	$	22.4

        Intercompany interest is charged to the Company from OI Inc. based on its ending intercompany debt balances. Intercompany interest expense is calculated using a weighted average interest rate of external borrowings by OI Inc.

        Participation in OI Inc. Stock Option Plans.    The Company participates in the stock option plans of OI Inc. under which employees of the Company may be granted options to purchase common shares of OI Inc. No options may be exercised in whole or in part during the first year after the date granted. In general, subject to certain accelerated exercisability provisions, 50% of the options become exercisable on the fifth anniversary of the date of the option grant, with the remaining 50% becoming exercisable on the sixth anniversary date of the option grant. In general, options expire following termination of employment or the day after the tenth anniversary date of the option grant.

        All options have been granted at prices equal to the market price of the OI Inc.'s common stock on the date granted. Accordingly, the Company recognizes no compensation expense related to the stock option plans. OI Inc. has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (FAS) No. 123, "Accounting for Stock-Based Compensation."

        A substantial number of the options have been granted to key employees of another subsidiary of OI Inc., some of whose compensation costs are included in an allocation of costs to all operating subsidiaries of OI Inc., including the Company. It is not practical to determine an amount of additional compensation allocable to the Company if OI Inc. had elected to recognize compensation cost based on the fair value of the options granted at grant date as allowed by FAS No. 123.

        Pension Benefit Plans.    The Company participates in OI Inc.'s pension plans for substantially all employees located in the United States. Benefits generally are based on compensation for salaried employees and on length of service for hourly employees. OI Inc.'s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. Independent actuaries determine pension costs for each subsidiary of OI Inc. included in the plans; however, accumulated benefit obligation information and plan assets pertaining to each subsidiary have not been separately determined. As such, the accumulated benefit obligation and the plan assets related to the pension plans for domestic employees have been retained by another subsidiary of OI Inc. Net credits to results of operations for the Company's allocated portion of the domestic pension costs amounted to $13.6 million in 2001, $15.1 million in 2000, and $9.0 million in 1999.

F-93

        OI Inc. also sponsors several defined contribution plans for all salaried and hourly U.S. employees of the Company. Participation is voluntary and participants' contributions are based on their compensation. OI Inc. matches substantially all plan participants' contributions up to various limits.

        OI Inc. charges the Company for its share of the match. The Company's share of the contributions to these plans amounted to $3.5 million in 2001, $3.9 million in 2000, and $4.0 million in 1999.

        Postretirement Benefits Other Than Pensions.    OI Inc. provides certain retiree health care and life insurance benefits covering substantially all U.S. salaried and certain hourly employees. Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Independent actuaries determine postretirement benefit costs for each subsidiary of OI Inc.; however, accumulated postretirement benefit obligation information pertaining to each subsidiary has not been separately determined. As such, the accumulated postretirement benefit obligation has been retained by another subsidiary of OI Inc.

        The Company's net periodic postretirement benefit cost, as allocated by OI Inc., was $2.3 million, $1.9 million, and $2.3 million at December 31, 2001, 2000, and 1999, respectively.

        Other Revenue.    Other revenue for the year ended December 31, 2001 includes $2.8 million from the sale of the Company's label business.

        Other Costs and Expenses.    Other costs and expenses for the year ended December 31, 2001 include: (1) net charges of $16.9 million consisting of $22.1 million for impairment and restructuring charges at certain of the Company's operations offset by a $5.2 million reversal of a prior charge; (2) $7.9 million related to restructuring manufacturing capacity in the medical devices business; and (3) $8.5 million for certain contingencies. The total planned reduction in workforce will involve approximately 180 employees. The restructuring program included termination benefits of approximately $3.5 million, of which $0.2 million had been paid by December 31, 2001. The Company expects its actions related to the restructuring and impairment charges to be completed during the next several quarters.

        Other costs and expenses for the year ended December 31, 2000 include charges of $11.2 million principally related to a restructuring and capacity realignment program. The restructuring and capacity realignment program, initiated in the third quarter of 2000, includes the consolidation of manufacturing capacity and a reduction of 100 employees in the U.S. salaried work force, or about 5%, principally as a result of early retirement incentives.

        As a result of the approximate 5% reduction of the U.S. salaried workforce in 2000, the Company recognized a settlement gain of approximately $8 million related to its defined benefit pension plan. This gain has been included in the net charge of $9.2 million for early retirement incentives and special termination benefits.

F-94

        Selected information relating to restructuring accruals follows:

	Capacity realignment			Early retirement incentives and special retirement benefits			Total
2000 restructuring charges	$	2.0		$	9.2		$	11.2
Write-down of assets to net realizable value		(0.6	)					(0.6	)
Reduction of OI Inc prepaid pension asset		(0.6	)		(7.4	)		(8.0	)
Increase in OI Inc nonpension post-retirement benefit liability					(1.4	)		(1.4	)
Net cash paid		(0.3	)					(0.3	)
Remaining liabilities at December 31, 2000		0.5			0.4			0.9
Restructuring program and impairment		22.1						22.1
Reversal of second quarter restructuring charge		(5.2	)					(5.2	)
Medical Devices restructuring		7.9						7.9
Write-down of assets to net realizable value		(10.1	)					(10.1	)
Net cash paid		(0.5	)		(0.4	)		(0.9	)
Remaining liabilities at December 31, 2001	$	14.7		$	—		$	14.7

        Capacity realignment includes charges for plant closing costs, severance benefits, and write-downs of assets for disposal or abandonment as a result of restructuring of manufacturing capacity. Write-downs of assets represent the majority of the charges for 2001.

F-95

Owens-Illinois Group, Inc.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

Nine months ended September 30, 2002 and 2001

(Dollars in millions)

		2002			2001
		(unaudited)
Revenues:
	Net sales	$	4,280.3		$	4,056.1
	Royalties and net technical assistance		18.5			19.0
	Equity earnings		19.8			13.7
	Interest		17.8			21.2
	Other		25.5			531.6
			4,361.9			4,641.6
Costs and expenses:
	Manufacturing, shipping, and delivery		3,310.6			3,147.9
	Research and development		30.0			31.5
	Engineering		29.1			21.5
	Selling and administrative		241.3			249.1
	Interest		314.0			335.5
	Other		26.8			209.5
			3,951.8			3,995.0
Earnings before items below			410.1			646.6
Provision for income taxes			129.5			267.9
Minority share owners' interests in earnings of subsidiaries			15.6			12.8
Earnings before extraordinary items and cumulative effect of accounting change			265.0			365.9
Extraordinary charges from early extinguishment of debt, net of applicable income taxes			(6.7	)		(4.1	)
Cumulative effect of accounting change			(460.0	)
Net earnings (loss)		$	(201.7	)	$	361.8

See accompanying Notes.

F-96

Owens-Illinois Group, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2002, December 31, 2001, and September 30, 2001

(Dollars in millions)

			Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
			(unaudited)				(unaudited)
Assets
Current assets:
	Cash, including time deposits		$	177.1	$	155.6	$	174.3
	Short-term investments, at cost which approximates market			17.4		16.4		16.6
	Receivables, less allowances for losses and discounts ($60.6 at Sept. 30, 2002, $71.1 at December 31, 2001, and $54.1 at Sept. 30, 2001)			787.4		754.5		870.9
	Inventories			841.1		836.7		792.9
	Prepaid expenses			158.3		147.0		118.6
		Total current assets		1,981.3		1,910.2		1,973.3
Investments and other assets:
	Equity investments			177.7		166.1		177.6
	Repair parts inventories			183.3		199.2		204.8
	Prepaid pension			949.6		879.5		851.8
	Deposits, receivables, and other assets			611.0		582.4		584.2
	Goodwill			2,636.3		2,995.3		2,919.3
		Total other assets		4,557.9		4,822.5		4,737.7
Property, plant, and equipment, at cost				5,857.8		5,796.2		5,554.2
Less accumulated depreciation				2,645.8		2,536.3		2,464.5
	Net property, plant, and equipment			3,212.0		3,259.9		3,089.7
Total assets			$	9,751.2	$	9,992.6	$	9,800.7

F-97

			Sept. 30, 2002			Dec. 31, 2001			Sept. 30, 2001
			(unaudited)						(unaudited)
Liabilities and Share Owner's Equity
Current liabilities:
	Short-term loans and long-term debt due within one year		$	64.9		$	71.2		$	108.6
	Accounts payable			437.1			457.4			427.9
	Other liabilities			558.7			482.9			477.9
		Total current liabilities		1,060.7			1,011.5			1,014.4
Long-term debt				5,321.1			5,329.7			5,203.9
Deferred taxes				507.6			479.8			479.5
Nonpension postretirement benefits				287.7			303.4			274.9
Other liabilities				439.1			386.9			352.1
Commitments and contingencies
Minority share owners' interests				130.2			159.3			151.3
Share owner's equity:
	Common stock, par value $.01 per share 1,000 shares authorized, 100 shares issued and outstanding			—			—			—
	Other contributed capital			1,632.0			1,735.1			1,766.0
	Retained earnings			961.6			1,163.2			1,168.4
	Accumulated other comprehensive income (loss)			(588.8	)		(576.3	)		(609.8	)
		Total share owner's equity		2,004.8			2,322.0			2,324.6
Total liabilities and share owner's equity			$	9,751.2		$	9,992.6		$	9,800.7

See accompanying Notes.

F-98

Owens-Illinois Group, Inc.

CONDENSED CONSOLIDATED CASH FLOWS

Nine months ended September 30, 2002 and 2001

(Dollars in millions)

			2002			2001
			(unaudited)
Cash flows from operating activities:
	Net earnings before extraordinary items and cumulative effect of accounting change		$	265.0		$	365.9
	Non-cash charges:
		Depreciation		321.1			299.1
		Amortization of deferred costs		36.7			101.2
		Restructuring costs and write-offs of certain assets					122.0
		Deferred tax provision		69.2			210.3
		Gains on asset sales and divestitures					(470.3	)
		Other		(108.3	)		(86.2	)
	Change in non-current operating assets			19.9			4.8
	Reduction of non-current liabilities			(16.4	)		(12.9	)
	Change in components of working capital			(33.9	)		(233.5	)
		Cash provided by operating activities		553.3			300.4
Cash flows from investing activities:
	Additions to property, plant, and equipment			(343.2	)		(344.1	)
	Net cash proceeds from divestitures			25.7			594.9
	Acquisitions, net of cash acquired			(6.5	)		(31.6	)
		Cash provided by (utilized in) investing activities		(324.0	)		219.2
Cash flows from financing activities:
	Additions to long-term debt			1,245.9			3,726.0
	Repayments of long-term debt			(1,244.1	)		(1,301.5	)
	Distribution to parent			(154.2	)		(48.8	)
	Net change in payable to parent						(2,857.0	)
	Payment of finance fees			(18.0	)		(62.1	)
	Increase (decrease) in short-term loans			14.0			(2.6	)
	Collateral deposits for certain derivative instruments			(47.0	)
		Cash utilized in financing activities		(203.4	)		(546.0	)
Effect of exchange rate fluctuations on cash				(4.4	)		(29.0	)
Increase (decrease) in cash				21.5			(55.4	)
Cash at beginning of period				155.6			229.7
Cash at end of period			$	177.1		$	174.3

See accompanying Notes.

F-99

Owens-Illinois Group, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data in millions of dollars

1.    Basis of Presentation

        The Condensed Consolidated Financial Statements presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Since the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements of Owens-Illinois Group, Inc. and notes thereto appearing elsewhere in this offering memorandum.

        The Company is a wholly-owned subsidiary of Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

2.    Inventories

        Major classes of inventories are as follows:

	Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Finished goods	$	643.5	$	641.8	$	596.4
Work in process		7.1		6.2		8.1
Raw materials		118.3		125.3		120.0
Operating supplies		72.2		63.4		68.4
	$	841.1	$	836.7	$	792.9

3.    Long-Term Debt

        The following table summarizes the Company's consolidated long-term debt:

			Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Secured Credit Agreement:
	Revolving Credit Facility:
		Revolving Loans	$	2,414.9	$	2,410.4	$	2,288.8
	Term Loan			65.0		1,045.0		1,045.0
Senior Secured Notes:
	8.875%, due 2009			1,000.0
Payable to OI Inc.				1,700.0		1,700.0		1,700.0
Other				163.8		205.1		199.8
				5,343.7		5,360.5		5,233.6
	Less amounts due within one year			22.6		30.8		29.7
		Long-term debt	$	5,321.1	$	5,329.7	$	5,203.9

F-100

        At September 30, 2002, the Company's subsidiary borrowers had unused credit of $479.1 million available under the Secured Credit Agreement.

        The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at September 30, 2002 was 3.84%. Including the effects of cross-currency swap agreements related to Revolving Credit Facility borrowings by the Company's Australian, U.K., and Canadian subsidiaries, the weighted average interest rate was 5.10%.

        The weighted average interest rate on borrowings outstanding under the Term Loan at September 30, 2002 was 4.34%.

        During January 2002, a subsidiary of the Company, Owens-Brockway Glass Container Inc., completed a $1.0 billion private placement of senior secured notes and on August 5, 2002, completed its offer to exchange those notes for notes with the same terms and conditions that have been registered under the Securities Act of 1933. The notes bear interest at 8⁷/8% and are due February 15, 2009. The notes are guaranteed by substantially all of the Company's domestic subsidiaries. The assets of substantially all of the Company's domestic subsidiaries are pledged as security for the notes. The issuing subsidiary used the net cash proceeds from the notes to reduce the outstanding Term Loan under the Agreement by $980.0 million. As a result, the Company wrote off unamortized deferred financing fees in January 2002 related to the Term Loan and recorded an extraordinary charge of $10.9 million less applicable income taxes of $4.2 million. The indenture for the notes restricts, among other things, the ability of the Company's subsidiaries to borrow money, pay dividends on, or redeem or repurchase stock, make investments, create liens, enter into certain transactions with affiliates, and sell certain assets or merge with or into other companies.

        During November 2002, a subsidiary of the Company, Owens-Brockway Glass Container Inc., completed a $450 million private placement of senior secured notes. The notes bear interest at 8³/4% and are due November 15, 2012. The notes are guaranteed by substantially all of the Company's domestic subsidiaries. The assets of substantially all of the Company's domestic subsidiaries are pledged as security for the notes. The issuing subsidiary used the net cash proceeds from the notes to repay the remaining $65 million of the outstanding Term Loan under the Agreement and the remaining $376 million was used to permanently reduce the revolving loan facility under the Agreement. As a result, the Company wrote off unamortized deferred financing fees in November 2002 related to the term loan and recorded an extraordinary charge of $3.2 million less applicable income taxes of $1.2 million. The indenture for the new notes has the same restrictions as the senior secured notes issued in January 2002.

4.    Financial Information for Subsidiary Guarantors and Non-Guarantors

        The following presents condensed consolidating financial information for the Company, segregating: (1) Owens-Illinois Group, Inc. (the "Parent"); (2) Owens-Brockway Glass Container Inc. (the "Issuer"); (3) those domestic subsidiaries which will guarantee the 8⁷/8% Senior Secured Notes of the Issuer (the "Guarantor Subsidiaries"); and (4) all other subsidiaries (the "Non-Guarantor Subsidiaries"). The Guarantor Subsidiaries are wholly-owned direct and indirect subsidiaries of the Parent and their guarantees are full, unconditional and joint and several. The Parent is also a guarantor, and its guarantee is full, unconditional and joint and several.

        Subsidiaries of the Parent and of the Issuer are presented on the equity basis of accounting. Certain reclassifications have been made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminations relate to investments in subsidiaries and inter-company balances and transactions.

F-101

		September 30, 2002
		Parent		Issuer		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
	Accounts receivable	$	—	$	164.6	$	180.8		$	515.9	$	(73.9	)	$	787.4
	Inventories				153.8		202.6			485.4		(0.7	)		841.1
	Other current assets				2.3		162.3			186.2		2.0			352.8
Total current assets			—		320.7		545.7			1,187.5		(72.6	)		1,981.3
Investments in and advances to subsidiaries			3,704.8		2,108.2		(45.7	)				(5,767.3	)		—
Goodwill					547.9		1,038.7			1,049.7					2,636.3
Other non-current assets					245.8		1,097.5			586.5		(8.2	)		1,921.6
Total other assets			3,704.8		2,901.9		2,090.5			1,636.2		(5,775.5	)		4,557.9
Property, plant and equipment, net					598.7		1,100.2			1,513.1					3,212.0
Total assets		$	3,704.8	$	3,821.3	$	3,736.4		$	4,336.8	$	(5,848.1	)	$	9,751.2
Current liabilities:
	Accounts payable and accrued liabilities	$	—	$	218.4	$	299.3		$	517.9	$	(39.8	)	$	995.8
	Short-term loans and long-term debt due within one year						0.2			64.7					64.9
Total current liabilities			—		218.4		299.5			582.6		(39.8	)		1,060.7
Long-term debt			1,700.0		1,685.1		851.0			1,085.0					5,321.1
Other non-current liabilities and minority interests					74.9		724.0			557.7		8.0			1,364.6
Investments by and advances from parent					1,842.9		1,861.9			2,111.5		(5,816.3	)		—
Share owner's equity			2,004.8												2,004.8
Total liabilities and share owners' equity		$	3,704.8	$	3,821.3	$	3,736.4		$	4,336.8	$	(5,848.1	)	$	9,751.2

F-102

		December 31, 2001
		Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
	Accounts receivable	$	—	$	123.7	$	185.8	$	517.0	$	(72.0	)	$	754.5
	Inventories				162.9		212.1		462.5		(0.8	)		836.7
	Other current assets				1.1		155.2		162.5		0.2			319.0
Total current assets			—		287.7		553.1		1,142.0		(72.6	)		1,910.2
Investments in and advances to subsidiaries			4,022.0		1,967.5		57.1				(6,046.6	)		—
Goodwill					554.6		1,447.7		993.0					2,995.3
Other non-current assets					255.0		1,050.0		528.1		(5.9	)		1,827.2
Total other assets			4,022.0		2,777.1		2,554.8		1,521.1		(6,052.5	)		4,822.5
Property, plant and equipment, net					600.9		1,105.9		1,553.1					3,259.9
Total assets		$	4,022.0	$	3,665.7	$	4,213.8	$	4,216.2	$	(6,125.1	)	$	9,992.6
Current liabilities:
	Accounts payable and accrued liabilities	$	—	$	183.9	$	317.0	$	496.6	$	(57.2	)	$	940.3
	Short-term loans and long-term debt due within one year						4.8		66.4					71.2
Total current liabilities			—		183.9		321.8		563.0		(57.2	)		1,011.5
Long-term debt			1,700.0		1,661.3		851.3		1,117.1					5,329.7
Other non-current liabilities and minority interests					92.3		746.9		482.4		7.8			1,329.4
Investments by and advances from parent					1,728.2		2,293.8		2,053.7		(6,075.7	)		—
Share owner's equity			2,322.0											2,322.0
Total liabilities and share owners' equity		$	4,022.0	$	3,665.7	$	4,213.8	$	4,216.2	$	(6,125.1	)	$	9,992.6

F-103

		September 30, 2001
		Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
	Accounts receivable	$	—	$	200.2	$	229.7	$	513.8	$	(72.8	)	$	870.9
	Inventories				166.1		208.0		418.7		0.1			792.9
	Other current assets				21.6		92.0		196.0		(0.1	)		309.5
Total current assets			—		387.9		529.7		1,128.5		(72.8	)		1,973.3
Investments in and advances to subsidiaries			4,024.6		1,863.9		30.2				(5,918.7	)		—
Goodwill					559.7		1,475.3		884.3					2,919.3
Other non-current assets					265.6		1,047.5		510.5		(5.2	)		1,818.4
Total other assets			4,024.6		2,689.2		2,553.0		1,394.8		(5,923.9	)		4,737.7
Property, plant and equipment, net					585.9		1,073.4		1,430.4					3,089.7
Total assets		$	4,024.6	$	3,663.0	$	4,156.1	$	3,953.7	$	(5,996.7	)	$	9,800.7
Current liabilities:
	Accounts payable and accrued liabilities	$	—	$	152.6	$	315.4	$	482.5	$	(44.7	)	$	905.8
	Short-term loans and long-term debt due within one year						4.6		104.0					108.6
Total current liabilities			—		152.6		320.0		586.5		(44.7	)		1,014.4
Long-term debt			1,700.0		1,590.0		852.3		1,061.6					5,203.9
Other non-current liabilities and minority interests					141.4		738.2		371.0		7.2			1,257.8
Investments by and advances from parent					1,779.0		2,245.6		1,934.6		(5,959.2	)		—
Share owner's equity			2,324.6											2,324.6
Total liabilities and share owners' equity		$	4,024.6	$	3,663.0	$	4,156.1	$	3,953.7	$	(5,996.7	)	$	9,800.7

F-104

		Nine months ended September 30, 2002
		Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Results of Operations
Net sales		$	—		$	1,257.2		$	1,150.8		$	1,950.1		$	(77.8	)	$	4,280.3
Interest									1.5			16.3						17.8
Equity earnings from subsidiaries			265.0			122.9			14.0						(401.9	)		—
Other equity earnings						10.6			3.0			6.2						19.8
Other revenue						36.7			16.4			16.3			(25.4	)		44.0
	Total revenue		265.0			1,427.4			1,185.7			1,988.9			(505.1	)		4,361.9
Manufacturing, shipping, and delivery						960.0			876.3			1,567.0			(92.7	)		3,310.6
Research, engineering, selling, administrative, and other						61.6			141.1			124.4			0.1			327.2
Net intercompany interest			(99.4	)		56.7			37.6			5.1						—
Other interest expense			99.4			91.4			34.8			88.4						314.0
	Total costs and expense		—			1,169.7			1,089.8			1,784.9			(92.6	)		3,951.8
Earnings before items below			265.0			257.7			95.9			204.0			(412.5	)		410.1
Provision for income taxes						52.9			16.5			52.4			7.7			129.5
Minority share owners' interests in earnings of subsidiaries												14.7			0.9			15.6
Earnings before extraordinary charge and cumulative effect of accounting change			265.0			204.8			79.4			136.9			(421.1	)		265.0
Extraordinary charge			(6.7	)		(6.7	)								6.7			(6.7	)
Cumulative effect of accounting change			(460.0	)		(47.0	)		(413.0	)		(57.1	)		517.1			(460.0	)
Net income (loss)		$	(201.7	)	$	151.1		$	(333.6	)	$	79.8		$	102.7		$	(201.7	)

F-105

		Nine months ended September 30, 2001
		Parent			Issuer		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Results of Operations
Net sales		$	—		$	1,281.7	$	1,179.1		$	1,666.5	$	(71.2	)	$	4,056.1
Interest						0.4		2.3			18.5					21.2
Equity earnings from subsidiaries			365.9			35.9		7.7					(409.5	)		—
Other equity earnings						7.8		3.8			2.1					13.7
Other revenue						24.6		511.9			30.3		(16.2	)		550.6
	Total revenue		365.9			1,350.4		1,704.8			1,717.4		(496.9	)		4,641.6
Manufacturing, shipping, and delivery						1,005.5		897.2			1,332.0		(86.8	)		3,147.9
Research, engineering, selling, administrative, and other						90.1		235.1			185.6		0.8			511.6
Net intercompany interest			(166.6	)		111.7		49.7			5.2					—
Other interest expense			166.6			47.3		31.0			90.6					335.5
Total costs and expense			—			1,254.6		1,213.0			1,613.4		(86.0	)		3,995.0
Earnings before items below			365.9			95.8		491.8			104.0		(410.9	)		646.6
Provision for income taxes						29.7		194.9			43.7		(0.4	)		267.9
Minority share owners' interests in earnings of subsidiaries								0.1			16.7		(4.0	)		12.8
Earnings before extraordinary charge			365.9			66.1		296.8			43.6		(406.5	)		365.9
Extraordinary charge			(4.1	)				(4.1	)				4.1			(4.1	)
Net income		$	361.8		$	66.1	$	292.7		$	43.6	$	(402.4	)	$	361.8

F-106

			Nine months ended September 30, 2002
			Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated
Cash Flows
Cash provided by operating activities			$	—		$	82.0		$	139.9		$	331.4		$	—	$	553.3
Investing Activities:
	Additions to property, plant, and equipment						(58.0	)		(89.2	)		(196.0	)				(343.2	)
	Acquisitions, net of cash acquired												(6.5	)				(6.5	)
	Proceeds from sales						3.2			12.8			9.7					25.7
		Cash used in investing activities		—			(54.8	)		(76.4	)		(192.8	)		—		(324.0	)
Financing Activities:
	Net distribution to OI Inc.			(154.2	)													(154.2	)
	Change in intercompany transactions			154.2			(33.0	)		(54.4	)		(66.8	)				—
	Change in short term debt												14.0					14.0
	Payments of long term debt						(1,056.1	)		(5.1	)		(182.9	)				(1,244.1	)
	Borrowings of long term debt						1,079.9			0.1			165.9					1,245.9
	Collateral deposits for certain derivatives												(47.0	)				(47.0	)
	Payment of finance fees						(18.0	)										(18.0	)
	Cash used in financing activities			—			(27.2	)		(59.4	)		(116.8	)		—		(203.4	)
Effect of exchange rate change on cash													(4.4	)				(4.4	)
Net change in cash				—			—			4.1			17.4			—		21.5
Cash at beginning of period							—			22.3			133.3					155.6
Cash at end of period			$	—		$	—		$	26.4		$	150.7		$	—	$	177.1

F-107

			Nine months ended September 30, 2001
			Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows
Cash provided by operating activities			$	—		$	50.3		$	95.5		$	172.0		$	(17.4	)	$	300.4
Investing Activities:
	Additions to property, plant, and equipment						(36.8	)		(91.2	)		(216.1	)					(344.1	)
	Acquisitions, net of cash acquired									(4.8	)		(26.8	)					(31.6	)
	Proceeds from sales						0.4			519.0			75.5						594.9
		Cash provided by (used in) investing activities		—			(36.4	)		423.0			(167.4	)		—			219.2
Financing Activities:
	Net change in payable to OI Inc.			(2,857.0	)														(2,857.0	)
	Net investment by OI Inc.			(48.8	)														(48.8	)
	Change in intercompany transactions			2,905.8			(1,581.4	)		(1,359.5	)		17.7			17.4			—
	Change in short term debt									(0.3	)		(2.3	)					(2.6	)
	Payments of long term debt						(48.0	)		(483.8	)		(769.7	)					(1,301.5	)
	Borrowings of long term debt						1,638.0			1,328.8			759.2						3,726.0
	Payment of finance fees						(22.5	)		(20.1	)		(19.5	)					(62.1	)
		Cash used in financing activities		—			(13.9	)		(534.9	)		(14.6	)		17.4			(546.0	)
Effect of exchange rate change on cash													(29.0	)					(29.0	)
Net change in cash				—			—			(16.4	)		(39.0	)		—			(55.4	)
Cash at beginning of period							—			28.7			201.0						229.7
Cash at end of period			$	—		$	—		$	12.3		$	162.0		$	—		$	174.3

5.    Cash Flow Information

        Interest paid in cash aggregated $264.7 million and $279.0 million for the nine months ended September 30, 2002 and 2001, respectively. Income taxes paid in cash totaled $25.2 million and $45.1 million for the nine months ended September 30, 2002 and 2001, respectively.

F-108

6.    Comprehensive Income

        The components of comprehensive income (loss) are: (a) net earnings (loss); (b) change in fair value of certain derivative adjustments; and, (c) foreign currency translation adjustments. Total comprehensive income (loss) for the nine month periods ended September 30, 2002 and 2001 amounted to $(214.2) million and $258.4 million, respectively.

7.    Contingencies

        OI Inc. is one of a number of defendants (typically from 20 to 100 or more) in a substantial number of lawsuits filed in numerous state and federal courts by persons alleging bodily injury (including death) as a result of exposure to dust from asbestos fibers. OI Inc. relies primarily on distributions from its subsidiaries, including the Company, to fund its indemnity payments and legal fees related to these lawsuits.

        From 1948 to 1958, one of OI Inc.'s former business units commercially produced and sold approximately $40 million of a high-temperature, calcium-silicate based pipe and block insulation material containing asbestos. OI Inc. exited the pipe and block insulation business in April 1958. The traditional asbestos personal injury lawsuits and claims relating to such production and sale of asbestos material typically allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and punitive damages in various amounts (herein referred to as "asbestos claims").

        As of September 30, 2002, OI Inc. has determined that it is a named defendant in asbestos lawsuits and claims involving approximately 23,000 plaintiffs and claimants. The total amount of relief sought by plaintiffs and claimants cannot be determined because the amount is often not required to be stated in an initial claim or lawsuit and because settlements are often reached before claims and lawsuits advance to the point where such amounts would be required to be specified.

        Additionally, OI Inc. has claims-handling agreements in place with many plaintiffs' counsel throughout the country. These agreements require evaluation and negotiation regarding whether particular claimants qualify under the criteria established by such agreements. The criteria for such claims include verification of a compensable illness and a reasonable probability of exposure to a product manufactured by OI Inc.'s former business unit during its manufacturing period ending in 1958. Some plaintiffs' counsel have historically withheld claims under these agreements for later presentation while focusing their attention on active litigation in the tort system. OI Inc. believes that as of September 30, 2002 there are no more than 19,000 of such preexisting but presently unasserted claims against OI Inc. that are not included in the total of pending claims specified in the preceding paragraph. OI Inc. further believes that the bankruptcies of additional co-defendants, as discussed below, have resulted in an acceleration of the presentation and disposition of a number these previously withheld preexisting claims under such agreements, which claims would otherwise have been presented and disposed of over the next several years. This acceleration is reflected in an increased number of pending asbestos claims and, to the extent disposed, contributes to an increase in asbestos-related payments which is expected to continue in the near term.

        OI Inc. is also a defendant in other asbestos-related lawsuits or claims involving maritime workers, medical monitoring claimants, co-defendants and property damage claimants. Based upon its past

F-109

experience, OI Inc. believes that these categories of lawsuits and claims will not involve any material liability and they are not included in the above description of pending matters.

        Since receiving its first asbestos claim, OI Inc., as of September 30, 2002, has disposed of the asbestos claims of approximately 282,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $5,500. OI Inc.'s indemnity payments for these claims have varied on a per claim basis, and are expected to continue to vary considerably over time. As discussed above, a part of OI Inc.'s objective is to achieve, where possible, resolution of asbestos claims pursuant to claims-handling agreements. Under such agreements, qualification by meeting certain illness and exposure criteria has tended to reduce the number of claims presented to OI Inc. that would ultimately be dismissed or rejected due to the absence of impairment or product exposure evidence. OI Inc. expects that as a result, although aggregate spending may be lower, there may be an increase in the per claim average indemnity payment involved in such resolution. In this regard, although the average of such payments has been somewhat higher following the implementation of the claims-handling agreements in the mid-1990s, the annual average amount has not varied materially from year to year in recent years.

        OI Inc. believes that its ultimate asbestos-related contingent liability (i.e., its indemnity or other claim disposition costs plus related legal fees) cannot be estimated with certainty. In 1993, OI Inc. established a liability of $975 million to cover indemnity payments and legal fees associated with the resolution of outstanding and expected future asbestos lawsuits and claims. In 1998, an additional liability of $250 million was established. During the third quarter of 2000, OI Inc. established an additional liability of $550 million to cover OI Inc.'s estimated indemnity payments and legal fees arising from outstanding asbestos personal injury lawsuits and claims and asbestos personal injury lawsuits and claims expected to be filed in the ensuing several years. OI Inc.'s ability to reasonably estimate its liability has been significantly affected by the volatility of asbestos-related litigation in the United States, the expanding list of non-traditional defendants that have been sued in this litigation and found liable for substantial damage awards, the continued use of litigation screenings to generate new lawsuits, the large number of claims asserted or filed by parties who claim prior exposure to asbestos materials but have no present physical impairment as a result of such exposure, and the growing number of co-defendants that have filed for bankruptcy. Since the beginning of 2000, A. P. Green Industries, Inc., Armstrong World Industries, Babcock & Wilcox, Federal-Mogul Corporation, Fibreboard Corporation, G-I Holdings (GAF), Harbison-Walker Refractories Group, Kaiser Aluminum Corporation, North American Refractories Co., Owens Corning, Pittsburgh-Corning, Plibrico Company, Porter Hayden Company, USG Corporation, W. R. Grace & Co. and several other smaller companies have sought protection under Chapter 11 of the Bankruptcy Code.

        OI Inc. has continued to monitor trends which may affect its ultimate liability and has continued to analyze the developments and variables affecting or likely to affect the resolution of pending and future asbestos claims against OI Inc. OI Inc. expects that the gross amount of total asbestos-related payments will be moderately lower in 2002 compared to 2001 and will continue to decline thereafter as the preexisting but presently unasserted claims withheld under the claims handling agreements are presented to OI Inc., and as the number of potential future claimants continues to decrease. However, the trend toward lower aggregate annual payments has not occurred as soon as had been anticipated when the additional liability was established in 2000. In addition, the number of claims and lawsuits filed against OI Inc. has exceeded the number anticipated at that time. In early March 2002, OI Inc. initiated a comprehensive review to determine whether further adjustment of asbestos-related liabilities was appropriate. At the conclusion of this review in April, OI Inc. determined that an additional charge of $475 million would be appropriate to adjust the reserve for estimated future asbestos-related costs.

F-110

The material components of OI Inc.'s accrual, including this additional accrued amount, are the following: (i) OI Inc.'s estimate at that date of the reasonably probable contingent liability for asbestos claims already asserted against OI Inc., (ii) OI Inc.'s estimate at that date of the contingent liability for preexisting but unasserted asbestos claims for prior periods arising under its administrative claims-handling agreements with various plaintiffs' counsel, (iii) OI Inc.'s estimate at that time of the contingent liability for asbestos claims not yet asserted against OI Inc., but which OI Inc. believes it is reasonably probable will be asserted in the future, to the degree that such an estimation as to future claims is possible, and (iv) OI Inc.'s estimate of legal defense costs likely to be incurred in connection with the foregoing types of claims.

        The significant assumptions underlying the material components of OI Inc.'s accrual are:

a)

the extent to which settlements are limited to claimants who were exposed to OI Inc.'s    asbestos-containing insulation prior to its exit from that business in 1958;



b)

the extent to which claims are resolved under OI Inc.'s administrative claims agreements or on terms comparable to those set forth in those agreements;



c)

the extent of reduction in the inventory of pending serious disease cases;



d)

the extent to which OI Inc. is able to successfully defend itself at trial;



e)

the extent of actions by courts to eliminate or reduce the diversion of financial resources for unimpaired claimants and so-called forum shopping;



f)

the extent to which additional defendants with substantial resources and assets are required to participate significantly in the resolution of future asbestos cases and claims;



g)

the number and timing of co-defendant bankruptcies; and



h)

the extent to which the resolution of co-defendant bankruptcies divert resources to unimpaired claimants.

        OI Inc. believes that any possible loss or range of loss in addition to the foregoing charge cannot be reasonably estimated. While OI Inc. cannot reasonably estimate the precise timing of payment, OI Inc. believes that its liabilities for the next several years will not exceed the amount accrued based on its expectation of moderate declines in annual spending for asbestos-related costs.

        OI Inc. has previously pursued recovery of its losses from third parties, particularly its insurance carriers, and has largely resolved all of its significant coverage claims. OI Inc. expects some further recovery from deferred payment provisions of existing settlement agreements and from pursuing certain additional reimbursement claims. However, OI Inc. does not expect to recover additional material amounts in excess of the recorded receivable of $13.8 million at September 30, 2002.

        Other litigation is pending against the Company, in many cases involving ordinary and routine claims incidental to the business of the Company and in others presenting allegations that are nonroutine and involve compensatory, punitive or treble damage claims as well as other types of relief.

        The ultimate amount of distributions which may be required to be made by the Company and other subsidiaries of OI Inc. to fund OI Inc.'s asbestos-related payments cannot be estimated with certainty. OI Inc.'s reported results of operations for 2002 have been materially affected by the $475 million first quarter charge and asbestos-related payments continue to be substantial. Any possible future additional accrual would likewise materially affect OI Inc.'s results of operations in the period in

F-111

which it might be recorded. Also, the continued use of significant amounts of cash for asbestos-related costs has affected and will continue to affect the Company's cost of borrowing and its ability to pursue global or domestic acquisitions. However, the Company believes that its operating cash flows and other sources of liquidity will be sufficient to make distributions to OI Inc. for asbestos-related costs and to fund its working capital and capital expenditure requirements on a short-term and long-term basis.

8.    Segment Information

        The Company operates in the rigid packaging industry. The Company has two reportable product segments within the rigid packaging industry: (1) Glass Containers and (2) Plastics Packaging. The Plastics Packaging segment consists of two business units—consumer products (plastic containers and closures) and prescription products. The Other segment consisted of the Company's labels and carriers products business unit, substantially all of which was divested in early 2001.

        The Company evaluates performance and allocates resources based on earnings before interest income, interest expense, provision for income taxes, minority share owners' interests in earnings of subsidiaries, and extraordinary charges, (collectively "EBIT") excluding unusual items. EBIT for product segments includes an allocation of corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided.

        Financial information for the nine-month periods ended September 30, 2002 and 2001 regarding the Company's product segments is as follows (certain amounts from prior year have been reclassified to conform to current year presentation based on changes in internal management reporting):

			Glass Containers			Plastics Packaging			Other		Total Product Segments			Eliminations and Other Retained Items			Consolidated Totals
Net sales:
	September 30, 2002		$	2,916.2		$	1,364.1		$	—	$	4,280.3					$	4,280.3
	September 30, 2001			2,639.9			1,411.7			4.5		4,056.1						4,056.1
EBIT, excluding unusual items and goodwill amortization (see Note 9):
	September 30, 2002		$	549.5		$	217.9		$	—	$	767.4		$	(61.1	)	$	706.3
	September 30, 2001			473.9			242.1			0.2		716.2			(37.2	)		679.0
Unusual items:
	September 30, 2001
		Gain on the sale of a minerals business in Australia	$	10.3							$	10.3					$	10.3
		Gain on the sale of the Company's label business							$	2.8		2.8						2.8
		Gain on the sale of the Company's Harbor Capital business												$	457.3			457.3
		Restructuring and impairment charges		(64.3	)	$	(15.6	)				(79.9	)					(79.9	)
		Special employee benefit programs		(7.6	)		(3.5	)				(11.1	)		(19.8	)		(30.9	)
		Charges related to certain contingencies					(8.5	)				(8.5	)					(8.5	)

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        The reconciliation of EBIT to earnings before income taxes and minority share owners' interests in earnings of subsidiaries for the nine-month periods ended September 30, 2002 and 2001 is as follows:

	Sept. 30, 2002			Sept. 30, 2001
EBIT, excluding unusual items and goodwill amortization, for reportable segments	$	767.4		$	716.2
Unusual items excluded from reportable segment information					(86.4	)
Eliminations and other retained items		(61.1	)		(37.2	)
Unusual items excluded from eliminations and other retained items					437.5
Amortization of goodwill					(69.2	)
Net interest expense		(296.2	)		(314.3	)
Total	$	410.1		$	646.6

9.    New Accounting Standards

FAS No.142. On January 1, 2002, the Company adopted Financial Accounting Standards ("FAS") No. 142, "Goodwill and Other Intangible Assets". As required by FAS No. 142, the Company is no longer amortizing goodwill, but will be reviewing goodwill annually (or more frequently if impairment indicators arise) for impairment.

        During the first quarter of 2002, the Company completed an impairment test under FAS No. 142 using the business enterprise value ("BEV") of each reporting unit. BEV's were calculated as of the measurement date, January 1, 2002, by determining the present value of debt-free, after-tax future cash flows, discounted at the weighted average cost of capital of a hypothetical third party buyer. The BEV of each reporting unit was then compared to the book value of each reporting unit as of the measurement date to assess whether an impairment existed under FAS No. 142. Based on this comparison, the Company determined that an impairment existed in its consumer products reporting unit of the Plastics Packaging segment. The consumer products reporting unit operates in a highly competitive and fragmented industry. Excess capacity in this industry had created downward pricing pressure. The Company lowered its earnings and cash flow projections for this unit for several years following the measurement date which resulted in a lower BEV. Following a review of the valuation of the assets of the consumer products reporting unit, the Company recorded an impairment charge of $460.0 million to reduce the reported value of its goodwill. As required by FAS No. 142, the transitional impairment loss has been recognized as the cumulative effect of a change in method of accounting.

        The following earnings for 2001 have been presented on an adjusted basis to eliminate goodwill amortization of $69.2 million for the nine months ended September 30, 2001, as required by FAS No. 142. The earnings data for 2002 has been presented to provide comparative data to the 2001 adjusted earnings data.

	Nine months ended September 30,
	2002			2001
	(Actual)			(Adjusted)
Earnings before extraordinary items and cumulative effect of accounting change	$	265.0		$	435.1
Net earnings (loss)	$	(201.7	)	$	431.0

F-113

FAS No. 143. In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS No. 143, "Accounting for Asset Retirement Obligations". FAS 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. FAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 and will be adopted by the Company on January 1, 2003. The Company believes that the adoption of FAS No. 143 will not have an impact on the reported results of operations or financial position of the Company.

FAS No. 144. In August 2001, the FASB issued FAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets". FAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. FAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and was adopted by the Company on January 1, 2002. The adoption of FAS No. 144 did not have an impact on the reported results of operations or financial position of the Company.

FAS No. 145. In April 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". Among other things, FAS No. 145 requires gains and losses from early extinguishment of debt to be included in income from continuing operations instead of being classified as extraordinary items as previously required by generally accepted accounting principles. FAS No. 145 is effective for fiscal years beginning after May 15, 2002 and will be adopted by the Company on January 1, 2003. Any gain or loss on early extinguishment of debt that was classified as an extraordinary item in periods prior to adoption must be reclassified into income from continuing operations. The adoption of FAS No. 145 will require the $6.7 million and $4.1 million of extraordinary charges for the nine months ended September 30, 2002 and 2001, respectively, to be reclassified to interest expense and the provision for income taxes.

FAS No. 146. In June 2002, the FASB issued FAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". FAS No. 146 requires that a liability for costs associated with exit or disposal activities be recognized when the liability is incurred. The statement further requires that fair value be used for initial measurement of the liability. FAS No. 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company believes that the adoption of FAS No. 146 will not have a material impact on the reported results of operations or financial position of the Company.

10.  Restructuring Accruals

        During the second quarter of 2001, the Company recorded charges of $79.9 million for a restructuring program and impairment at certain of the Company's international and domestic operations. The charge includes the impairment of assets at the Company's affiliate in Puerto Rico and the consolidation of manufacturing capacity and the closing of a facility in Venezuela. The program also includes consolidation of capacity at certain other international and domestic facilities in response to decisions about pricing and market strategy. The total planned reduction in workforce will involve approximately 400 employees. The Company expects its actions related to these restructuring and impairment charges to be completed during the next several quarters. During the fourth quarter of 2001, the Company recorded additional restructuring charges of $7.4 million, as well as reversing $5.2 million of second quarter charges. Also during the fourth quarter of 2001, the company recorded a charge of $7.9 million related to restructuring capacity in the medical devices business.

F-114

        The Company also has remaining restructuring accruals related to a capacity realignment program initiated in 2000. The program principally involved the closing of three U.S. glass container plants. The Company expects that it will continue to make cash payments over the next several quarters for on-going costs related to the closing of these facilities.

        Selected information relating to the above restructuring accruals follows:

Remaining accruals as of June 30, 2002	$	14.9
Write-down of assets to net realizable value		(2.4	)
Net cash paid		(2.7	)
Remaining accruals as of September 30, 2002	$	9.8

11.  Derivative Instruments

        Under the terms of the April 2001 Secured Credit Agreement, international affiliates are only permitted to borrow in U.S. dollars. In order to manage the international affiliates' exposure to fluctuating foreign exchange rates, the Company's affiliates in Australia and the United Kingdom have entered into currency swaps for the principal portion of their initial borrowings under the Agreement and for their interest payments due under the Agreement.

        As of September 30, 2002, the Company's affiliate in Australia has swapped $650.0 million of borrowings into $1,275.0 million Australian dollars. This swap matures on March 31, 2003, with interest resets every 90 days. The interest reset terms of the swap approximate the terms of the U.S. dollar borrowings. This derivative instrument swaps both the interest and principal from U.S. dollars to Australian dollars and also swaps the interest rate from a U.S.-based rate to an Australian-based rate. The Company's affiliate in the United Kingdom has swapped $200.0 million of borrowings into 139.0 million British pounds. This swap also matures on March 31, 2003, with interest resets every 90 days. This derivative instrument swaps both the interest and principal from U.S. dollars to British pounds and also swaps the interest rate from a U.S.-based rate to a British-based rate.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. for a purchase price of approximately $150 million. The Company financed this purchase through borrowings under the Secured Credit Agreement, of which $100 million was transferred to Canada through intercompany loans in U.S. dollars with the remaining $50 million being transferred as equity. The Company's affiliate in Canada has entered into swap transactions to manage the affiliate's exposure to fluctuating foreign exchange rates by swapping the principal and interest portion of the intercompany loan. At September 30, 2002, the Canadian affiliate has swapped $90.0 million of borrowings into $142.0 million Canadian dollars. This swap matures on October 1, 2003. This derivative instrument swaps both the interest and principal from U.S. dollars to Canadian dollars and also swaps the interest rate from a U.S.-based rate to a Canadian-based rate. The affiliate has also entered in forward exchange contracts which effectively swap $10.0 million of borrowings into $16.0 million Canadian dollars. These hedges swap both the interest and principal from U.S. dollars to Canadian dollars and mature monthly.

        The Company recognizes the above derivatives on the balance sheet at fair value. The Company accounts for the above swaps as fair value hedges. As such, the changes in the value of the swaps are

F-115

included in other expense and are expected to substantially offset any exchange rate gains or losses on the related U.S. dollar borrowings. For the nine months ended September 30, 2002, the amount not offset was immaterial.

        The Company also uses commodity futures contracts related to forecasted natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid and the potential volatility in earnings or cash flows from future market price movements. The Company has entered into commodity futures contracts for approximately 50% of its North American natural gas usage (approximately 960 million BTUs) through the first quarter of 2003.

        The Company accounts for the above futures contracts on the balance sheet at fair value. 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 accumulated other comprehensive income ("OCI") and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.

        The above futures contracts are accounted for as cash flow hedges at September 30, 2002. Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting anticipated cash flows of the hedged transactions. For hedged forecasted transactions, hedge accounting will be discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses will be recorded to earnings immediately.

        At September 30, 2002, an unrealized net gain of $1.8 million, after tax of $1.0 million, related to these commodity futures contracts was included in OCI. There was no ineffectiveness recognized during the nine months ended September 30, 2002.

F-116

Owens-Brockway Packaging, Inc.

CONSOLIDATED RESULTS OF OPERATIONS

(Millions of dollars)

		Nine months ended September 30,
		2002			2001
Revenues:
	Net sales	$	3,049.4		$	2,774.8
	Other revenue		70.4			68.9
			3,119.8			2,843.7
Costs and expenses:
	Manufacturing, shipping, and delivery		2,367.9			2,174.3
	Research and development		6.0			7.9
	Engineering		28.0			21.8
	Selling and administrative		133.0			124.1
	Net intercompany interest		73.1			128.2
	Other interest expense		179.7			137.2
	Other		16.7			115.1
			2,804.4			2,708.6
Earnings before items below			315.4			135.1
Provision for income taxes			94.6			56.0
Minority share owners' interests in earnings of subsidiaries			16.0			12.8
Earnings before extraordinary item and cumulative effect of accounting change			204.8			66.3
Extraordinary charge from early extinguishment of debt, net of applicable income taxes			(6.7	)
Cumulative effect of accounting change			(47.0	)
Net earnings		$	151.1		$	66.3

See accompanying Notes.

F-117

Owens-Brockway Packaging, Inc.

CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

			Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Assets
Current assets:
	Cash, including time deposits		$	127.7	$	124.7	$	145.3
	Receivables including amount from related parties of $7.2 ($1.6 at Dec. 31, 2001, $0.4 at Sept. 30, 2001), less allowances of $25.0 ($32.2 at Dec. 31, 2001, $24.4 at Sept. 30, 2001) for losses and discounts			605.4		575.3		631.8
	Inventories			627.3		611.0		570.6
	Prepaid expenses			23.9		23.9		49.2
		Total current assets		1,384.3		1,334.9		1,396.9
Other assets:
	Equity investments			160.5		153.9		160.4
	Repair parts inventories			157.0		173.5		177.9
	Prepaid pension			57.9		49.8		46.2
	Deposits, receivables, and other assets			475.9		421.4		414.6
	Goodwill			1,607.5		1,556.2		1,452.9
		Total other assets		2,458.8		2,354.8		2,252.0
Property, plant, and equipment, at cost				3,784.4		3,766.8		3,588.1
	Less accumulated depreciation			1,725.6		1,663.5		1,618.0
		Net property, plant, and equipment		2,058.8		2,103.3		1,970.1
Total assets			$	5,901.9	$	5,793.0	$	5,619.0

F-118

Owens-Brockway Packaging Inc.

CONSOLIDATED BALANCE SHEETS (Continued)

(Millions of dollars)

			Sept. 30, 2002			Dec. 31, 2001			Sept. 30, 2001
Liabilities and Net Parent Investment
Current liabilities:
	Short-term loans long-term debt due within one year		$	64.7		$	66.4		$	104.0
	Accounts payable and other liabilities			668.1			622.6			554.0
		Total current liabilities		732.8			689.0			658.0
External long-term debt				2,770.1			2,778.5			2,651.6
Deferred taxes				170.9			161.9			175.9
Other liabilities				344.0			275.7			202.2
Minority share owners' interests				131.1			159.7			152.3
Net Parent investment:
	Investment by and advances from parent			2,299.3			2,276.1			2,355.6
	Accumulated other comprehensive income			(546.3	)		(547.9	)		(576.6	)
		Total net Parent investment		1,753.0			1,728.2			1,779.0
Total liabilities and net Parent investment			$	5,901.9		$	5,793.0		$	5,619.0

See accompanying Notes.

F-119

Owens-Brockway Packaging, Inc.

CONSOLIDATED CASH FLOWS

(Millions of dollars)

			Nine months ended September 30,
			2002			2001
Operating activities:
	Net earnings before extraordinary item and cumulative effect of accounting change		$	204.8		$	66.3
	Non-cash charges (credits):
		Depreciation		227.5			212.4
		Amortization of deferred costs		21.6			50.1
		Deferred tax provision		8.1			13.6
		Restructuring costs and write-offs of certain assets					69.0
		Gains on asset sales					(10.4	)
		Other		(79.8	)		(43.8	)
	Change in non-current operating assets			18.2			10.7
	Change in non-current liabilities			(7.3	)		(7.0	)
	Change in components of working capital			(52.9	)		(167.6	)
		Cash provided by operating activities		340.2			193.3
Investing activities:
	Additions to property, plant and equipment			(241.3	)		(246.7	)
	Acquistions, net of cash acquired			(4.2	)		(18.8	)
	Net cash proceeds from divestitures and other			13.5			75.8
		Cash utilized in investing activities		(232.0	)		(189.7	)
Financing activities:
	Additions to long-term debt			1,245.8			2,420.7
	Repayments of long-term debt			(1,239.0	)		(841.1	)
	Increase in short-term loans			14.0			5.4
	Net change in intercompany debt			(58.8	)		(1,551.2	)
	Collateral deposits for certain derivative instruments			(47.0	)
	Payment of finance fees			(18.0	)		(45.3	)
	Cash utilized in financing activities			(103.0	)		(11.5	)
	Effect of exchange rate fluctuations on cash			(2.2	)		(16.4	)
Increase (decrease) in cash				3.0			(24.3	)
Cash at beginning of period				124.7			169.6
Cash at end of period			$	127.7		$	145.3

See accompanying Notes.

F-120

Owens-Brockway Packaging, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular data in millions of dollars)

1. Basis of Presentation

        The Condensed Consolidated Financial Statements presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Since the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes appearing elsewhere in this offering memorandum.

        The Company is a wholly-owned subsidiary of Owens-Illinois Group, Inc. ("OI Group") and an indirect subsidiary of Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

2. Inventories

        Major classes of inventory are as follows:

	Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Finished goods	$	518.0	$	507.2	$	466.8
Work in process		6.4		5.9		6.2
Raw materials		54.6		53.5		52.8
Operating supplies		48.3		44.4		44.8
	$	627.3	$	611.0	$	570.6

3. External Long-Term Debt

        The following table summarizes the external long-term debt of the Company:

			Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Secured Credit Agreement:
	Revolving Credit Facility		$	1,564.9	$	1,560.4		1,438.8
	Term Loan			65.0		1,045.0		1,045.0
Senior Secured Notes, 8.875%, due 2009				1,000.0
Other				162.6		199.1		192.9
				2,792.5		2,804.5		2,676.7
	Less amounts due within one year			22.4		26.0		25.1
		External long-term debt	$	2,770.1	$	2,778.5	$	2,651.6

        At September 30, 2002, the Company and its subsidiaries had unused credit of $329.1 million available under the Secured Credit Agreement.

F-121

        The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at September 30, 2002 was 3.84%. Including the effects of cross-currency swap agreements related to Revolving Credit Facility borrowings by the Company's Australian, U.K., and Canadian subsidiaries, the weighted average interest rate was 5.80%.

        The weighted average interest rate on borrowings outstanding under the Term Loan at September 30, 2002 was 4.34%.

        During January 2002, a subsidiary of the Company completed a $1.0 billion private placement of senior secured notes. The notes bear interest at 8⁷/8% and are due February 15, 2009. The notes are guaranteed by OI Group and substantially all of its domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company's subsidiary used the net cash proceeds from the notes to reduce its outstanding term loan under the Agreement by $980 million. As such, the Company wrote off unamortized deferred financing fees in January 2002 related to the term loan and recorded an extraordinary charge totaling $10.9 million less applicable income taxes of $4.2 million. The indenture for the notes restricts, among other things, the ability of the Company and its restricted subsidiaries to borrow money, pay dividends on, or redeem or repurchase stock, make investments, create liens, enter into certain transactions with affiliates, and sell certain assets or merge with or into other companies.

        During November 2002, a subsidiary of the Company completed a $450 million private placement of senior secured notes. The notes bear interest at 8³/4% and are due November 15, 2012. The notes are guaranteed by OI Group and substantially all of its domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company's subsidiary used the net cash proceeds from the notes to repay the remaining $65 million of the outstanding term loan under the Agreement and the remaining $376 million was used to reduce the outstanding revolver under the Agreement. As such, the Company wrote off unamortized deferred financing fees in November 2002 related to the term loan and recorded an extraordinary charge of $3.2 million less applicable income taxes of $1.2 million. The indenture for the new notes has the same restrictions as the senior secured notes issued in January 2002.

4. Guarantees of Debt

        The Company has guaranteed the borrowings of certain of OI Inc.'s domestic subsidiaries totaling $850 million and has also guaranteed the borrowings of certain foreign subsidiaries under the Agreement.

5. Cash Flow Information

        Interest paid in cash aggregated $148.3 million and $111.2 million for the nine months ended September 30, 2002 and 2001, respectively. Income taxes paid in cash totaled $24.7 million and $40.0 million for the nine months ended September 30, 2002 and 2001, respectively.

6. Comprehensive Income

        The components of comprehensive income (loss) are: (a) net earnings (loss); (b) change in fair value of certain derivative adjustments; and, (c) foreign currency translation adjustments. Total comprehensive income (loss) for the nine month periods ended September 30, 2002 and 2001 amounted to $152.7 million and $(30.9) million, respectively.

F-122

7. New Accounting Standards

FAS No. 142. On January 1, 2002, the Company adopted Financial Accounting Standards ("FAS") No. 142, "Goodwill and Other Intangible Assets". As required by FAS No. 142, the Company is no longer amortizing goodwill, but will be reviewing goodwill annually (or more frequently if impairment indicators arise) for impairment.

        During the first quarter of 2002, the Company completed an impairment test under FAS No. 142 using the business enterprise value ("BEV") of each reporting unit. BEV's were calculated as of the measurement date, January 1, 2002, by determining the present value of debt-free, after-tax future cash flows, discounted at the weighted average cost of capital of a hypothetical third party buyer. The BEV of each reporting unit was then compared to the book value of each reporting unit as of the measurement date to assess whether an impairment existed under FAS No. 142. Based on this comparison, the Company determined that an impairment existed in its consumer products reporting unit. The consumer plastic products reporting unit operates in a highly competitive and fragmented industry. Excess capacity in this industry had created downward pricing pressure. The Company lowered its earnings and cash flow projections for this unit for several years following the measurement date which resulted in a lower BEV. Following a review of the valuation of the assets of the consumer products reporting unit, the Company recorded an impairment charge of $47.0 million to reduce the reported value of its goodwill. As required by FAS No. 142, the transitional impairment loss has been recognized as the cumulative effect of a change in method of accounting.

        The following earnings 2001 have been presented on an adjusted basis to eliminate goodwill amortization $34.1 million nine months ended September 30, 2001, as required by FAS No. 142. The earnings for 2002 have been presented to provide comparative data to the 2001 adjusted earnings.

	Nine months ended Sept. 30,
	2002		2001
	(Actual)
			(Pro forma)
Earnings before extraordinary item and cumulative effect of accounting change	$	204.8	$	100.4
Net earnings	$	151.1	$	100.4

FAS No. 143. In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS No. 143, "Accounting for Asset Retirement Obligations". FAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. FAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 and will be adopted by the Company on January 1, 2003. The Company believes that the adoption of FAS No. 143 will not have an impact on the reported results of operations or financial position of the Company.

FAS No. 144. In August 2001, the FASB issued FAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets". FAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. FAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and was adopted by the Company on January 1, 2002. The adoption of FAS No. 144 did not have an impact on the reported results of operations or financial position of the Company.

FAS No. 145. In April 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". Among other things,

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FAS No. 145 requires gains and losses from early extinguishment of debt to be included in income from continuing operations instead of being classified as extraordinary items as previously required by generally accepted accounting principles. FAS No. 145 is effective for fiscal years beginning after May 15, 2002 and will be adopted by the Company on January 1, 2003. Any gain or loss on early extinguishment of debt that was classified as an extraordinary item in periods prior to adoption must be reclassified into income from continuing operations. The adoption of FAS 145 will require the $6.7 million extraordinary charge for the nine months ended September 30, 2002 to be reclassified to interest expense and the provision for income taxes.

FAS No. 146. In June 2002, the FASB issued FAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". FAS No. 146 requires that a liability for costs associated with exit or disposal activities be recognized when the liability is incurred. The statement further requires that fair value be used for initial measurement of the liability. FAS No. 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company believes that the adoption of FAS No. 146 will not have a material impact on the reported results of operations or financial position of the Company.

8. Restructuring Accruals

        During the second quarter of 2001, the Company recorded net charges of $65.2 million for a restructuring program and impairment at certain of the Company's international and domestic operations. The charge includes the impairment of assets at the Company's affiliate in Puerto Rico and the consolidation of manufacturing capacity and the closing of a facility in Venezuela. The program also includes consolidation of capacity at certain other international and domestic facilities in response to decisions about pricing and market strategy. The total planned reduction in workforce will involve approximately 220 employees. The Company expects its actions related to these restructuring and impairment charges to be completed during the next several quarters.

        The Company also has remaining restructuring accruals related to a capacity realignment program initiated in 2000. The program principally involved the closing of three U.S. plants.     The Company expects that it will continue to make cash payments over the next several quarters for on-going costs related to the closing of these facilities.

        Selected information relating to the above restructuring accruals follows:

Remaining accruals as of June 30, 2002	$	9.2
Write-down of assets to net realizable value		(0.8	)
Net cash paid		(2.4	)
Remaining accrual as of September 30, 2002	$	6.0

9. Derivative Instruments

        Under the terms of the April 2001 Secured Credit Agreement, international affiliates are only permitted to borrow in U.S. dollars. In order to manage the international affiliates' exposure to fluctuating foreign exchange rates, the Company's affiliates in Australia and the United Kingdom have entered into currency swaps for the principal portion of their initial borrowings under the Agreement and for their interest payments due under the Agreement.

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        As of September 30, 2002, the Company's affiliate in Australia has swapped $650.0 million of borrowings into $1,275.0 million Australian dollars. This swap matures on March 31, 2003, with interest resets every 90 days. The interest reset terms of the swap approximate the terms of the U.S. dollar borrowings. This derivative instrument swaps both the interest and principal from U.S. dollars to Australian dollars and also swaps the interest rate from a U.S.-based rate to an Australian-based rate. The Company's affiliate in the United Kingdom has swapped $200.0 million of borrowings into 139.0 million British pounds. This swap also matures on March 31, 2003, with interest resets every 90 days. This derivative instrument swaps both the interest and principal from U.S. dollars to British pounds and also swaps the interest rate from a U.S.-based rate to a British-based rate.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. for a purchase price of approximately $150 million. The Company financed this purchase through borrowings under the Secured Credit Agreement, of which $100 million was transferred to Canada through intercompany loans in U.S. dollars with the remaining $50 million being transferred as equity. The Company's affiliate in Canada has entered into swap transactions to manage the affiliate's exposure to fluctuating foreign exchange rates by swapping the principal and interest portion of the intercompany loan. At September 30, 2002, the Canadian affiliate has swapped $90.0 million of borrowings into $142.0 million Canadian dollars. This swap matures on October 1, 2003. This derivative instrument swaps both the interest and principal from U.S. dollars to Canadian dollars and also swaps the interest rate from a U.S.-based rate to a Canadian-based rate. The affiliate has also entered in forward exchange contracts which effectively swap $10.0 million of borrowings into $16.0 million Canadian dollars. These hedges swap both the interest and principal from U.S. dollars to Canadian dollars and mature monthly.

        The Company recognizes the above derivatives on the balance sheet at fair value. The Company accounts for the above swaps as fair value hedges. As such, the changes in the value of the swaps are included in other expense and are expected to substantially offset any exchange rate gains or losses on the related U.S. dollar borrowings. For the nine months ended September 30, 2002, the amount not offset was immaterial.

        The Company also uses commodity futures contracts related to forecasted natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid and the potential volatility in earnings or cash flows from future market price movements. The Company has entered into commodity futures contracts for approximately 50% of its North American natural gas usage (approximately 960 million BTUs) through the first quarter of 2003.

        The Company accounts for the above futures contracts on the balance sheet at fair value. 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 accumulated other comprehensive income ("OCI") and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.

        The above futures contracts are accounted for as cash flow hedges at September 30, 2002. Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting anticipated cash flows of the hedged transactions. For hedged forecasted transactions, hedge accounting will be discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses will be recorded to earnings immediately.

        At September 30, 2002, an unrealized net gain of $1.8 million, after tax of $1.0 million, related to these commodity futures contracts was included in OCI. There was no ineffectiveness recognized during the nine months ended September 30, 2002.

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Owens-Brockway Glass Container Inc.

CONSOLIDATED RESULTS OF OPERATIONS

(Millions of dollars)

		Nine months ended September 30,
		2002			2001
Revenues:
	Net sales	$	3,049.4		$	2,774.8
	Other revenue		70.4			68.9
			3,119.8			2,843.7
Costs and expenses:
	Manufacturing, shipping, and delivery		2,367.9			2,174.3
	Research and development		6.0			7.9
	Engineering		28.0			21.8
	Selling and administrative		133.0			124.1
	Net intercompany interest		73.1			128.2
	Other interest expense		179.7			137.2
	Other		16.7			115.1
			2,804.4			2,708.6
Earnings before items below			315.4			135.1
Provision for income taxes			94.6			56.0
Minority share owners' interests in earnings of subsidiaries			16.0			12.8
Earnings before extraordinary item and cumulative effect of accounting change			204.8			66.3
Extraordinary charge from early extinguishment of debt, net of applicable income taxes			(6.7	)
Cumulative effect of accounting change			(47.0	)
Net earnings		$	151.1		$	66.3

See accompanying Notes.

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Owens-Brockway Glass Container Inc.

CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

			Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Assets
Current assets:
	Cash, including time deposits		$	127.7	$	124.7	$	145.3
	Receivables including amount from related parties of $7.2 ($1.6 at Dec. 31, 2001, $0.4 at Sept. 30, 2001), less allowances of $25.0 ($32.2 at Dec. 31, 2001, $24.4 at Sept. 30, 2001) for losses and discounts			605.4		575.3		631.8
	Inventories			627.3		611.0		570.6
	Prepaid expenses			23.9		23.9		49.2
		Total current assets		1,384.3		1,334.9		1,396.9
Other assets:
	Equity investments			160.5		153.9		160.4
	Repair parts inventories			157.0		173.5		177.9
	Prepaid pension			57.9		49.8		46.2
	Deposits, receivables, and other assets			475.9		421.4		414.6
	Goodwill			1,607.5		1,556.2		1,452.9
		Total other assets		2,458.8		2,354.8		2,252.0
Property, plant, and equipment, at cost				3,784.4		3,766.8		3,588.1
	Less accumulated depreciation			1,725.6		1,663.5		1,618.0
		Net property, plant, and equipment		2,058.8		2,103.3		1,970.1
Total assets			$	5,901.9	$	5,793.0	$	5,619.0

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			Sept. 30, 2002			Dec. 31, 2001			Sept. 30, 2001
Liabilities and Net Parent Investment
Current liabilities:
	Short-term loans long-term debt due within one year		$	64.7		$	66.4		$	104.0
	Accounts payable and other liabilities			668.1			622.6			554.0
		Total current liabilities		732.8			689.0			658.0
External long-term debt				2,770.1			2,778.5			2,651.6
Deferred taxes				170.9			161.9			175.9
Other liabilities				344.0			275.7			202.2
Minority share owners' interests				131.1			159.7			152.3
Net Parent investment:
	Investment by and advances from parent			2,299.3			2,276.1			2,355.6
	Accumulated other comprehensive income			(546.3	)		(547.9	)		(576.6	)
		Total net Parent investment		1,753.0			1,728.2			1,779.0
Total liabilities and net Parent investment			$	5,901.9		$	5,793.0		$	5,619.0

See accompanying Notes.

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Owens-Brockway Glass Container Inc.

CONSOLIDATED CASH FLOWS

(Millions of dollars)

			Nine months ended September 30,
			2002			2001
Operating activities:
	Net earnings before extraordinary item and cumulative effect of accounting change		$	204.8		$	66.3
	Non-cash charges (credits):
		Depreciation		227.5			212.4
		Amortization of deferred costs		21.6			50.1
		Deferred tax provision		8.1			13.6
		Restructuring costs and write-offs of certain assets					69.0
		Gains on asset sales					(10.4	)
		Other		(79.8	)		(43.8	)
	Change in non-current operating assets			18.2			10.7
	Change in non-current liabilities			(7.3	)		(7.0	)
	Change in components of working capital			(52.9	)		(167.6	)
		Cash provided by operating activities		340.2			193.3
Investing activities:
	Additions to property, plant and equipment			(241.3	)		(246.7	)
	Acquistions, net of cash acquired			(4.2	)		(18.8	)
	Net cash proceeds from divestitures and other			13.5			75.8
		Cash utilized in investing activities		(232.0	)		(189.7	)
Financing activities:
	Additions to long-term debt			1,245.8			2,420.7
	Repayments of long-term debt			(1,239.0	)		(841.1	)
	Increase in short-term loans			14.0			5.4
	Net change in intercompany debt			(58.8	)		(1,551.2	)
	Collateral deposits for certain derivative instruments			(47.0	)
	Payment of finance fees			(18.0	)		(45.3	)
	Cash utilized in financing activities			(103.0	)		(11.5	)
	Effect of exchange rate fluctuations on cash			(2.2	)		(16.4	)
Increase (decrease) in cash				3.0			(24.3	)
Cash at beginning of period				124.7			169.6
Cash at end of period			$	127.7		$	145.3

See accompanying Notes.

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Owens-Brockway Glass Container Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular data in millions of dollars)

1. Basis of Presentation

        The Condensed Consolidated Financial Statements presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Since the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes appearing elsewhere in this offering memorandum.

        The Company is a wholly-owned subsidiary of Owens-Brockway Packaging, Inc. ("OB Packaging" or "Parent"), and an indirect subsidiary of Owens-Illinois Group, Inc. ("OI Group") and "Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

2. Inventories

        Major classes of inventory are as follows:

	Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Finished goods	$	518.0	$	507.2	$	466.8
Work in process		6.4		5.9		6.2
Raw materials		54.6		53.5		52.8
Operating supplies		48.3		44.4		44.8
	$	627.3	$	611.0	$	570.6

3. External Long-Term Debt

        The following table summarizes the external long-term debt of the Company:

			Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Secured Credit Agreement:
	Revolving Credit Facility		$	1,564.9	$	1,560.4		1,438.8
	Term Loan			65.0		1,045.0		1,045.0
Senior Secured Notes, 8.875%, due 2009				1,000.0
Other				162.6		199.1		192.9
				2,792.5		2,804.5		2,676.7
	Less amounts due within one year			22.4		26.0		25.1
		External long-term debt	$	2,770.1	$	2,778.5	$	2,651.6

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        At September 30, 2002, the Company and its subsidiaries had unused credit of $329.1 million available under the Secured Credit Agreement.

        The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at September 30, 2002 was 3.84%. Including the effects of cross-currency swap agreements related to Revolving Credit Facility borrowings by the Company's Australian, U.K., and Canadian subsidiaries, the weighted average interest rate was 5.80%.

        The weighted average interest rate on borrowings outstanding under the Term Loan at September 30, 2002 was 4.34%.

        During January 2002, the Company completed a $1.0 billion private placement of senior secured notes. The notes bear interest at 8⁷/8% and are due February 15, 2009. The notes are guaranteed by OI Group and substantially all of its domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company used the net cash proceeds from the notes to reduce its outstanding term loan under the Agreement by $980 million. As a result, the Company wrote off unamortized deferred financing fees in January 2002 related to the term loan and recorded an extraordinary charge totaling $10.9 million less applicable income taxes of $4.2 million. The indenture for the notes restricts, among other things, the ability of the Company and its restricted subsidiaries to borrow money, pay dividends on, or redeem or repurchase stock, make investments, create liens, enter into certain transactions with affiliates, and sell certain assets or merge with or into other companies.

        During November 2002, the Company completed a $450 million private placement of senior secured notes. The notes bear interest at 8³/4% and are due November 15, 2012. The notes are guaranteed by OI Group and substantially all of its domestic subsidiaries. The assets of substantially all of OI Group's domestic subsidiaries are pledged as security for the notes. The Company used the net cash proceeds from the notes to repay the remaining $65 million of the outstanding term loan under the Agreement and the remaining $376 million was used to reduce the outstanding revolver under the Agreement. As such, the Company wrote off unamortized deferred financing fees in November 2002 related to the term loan and recorded an extraordinary charge of $3.2 million less applicable income taxes of $1.2 million. The indenture for the new notes has the same restrictions as the senior secured notes issued in January 2002.

4. Guarantees of Debt

        The Company has guaranteed the borrowings of certain of OI Inc.'s domestic subsidiaries totaling $850 million and has also guaranteed the borrowings of certain foreign subsidiaries under the Agreement.

5. Cash Flow Information

        Interest paid in cash aggregated $148.3 million and $111.2 million for the nine months ended September 30, 2002 and 2001, respectively. Income taxes paid in cash totaled $24.7 million and $40.0 million for the nine months ended September 30, 2002 and 2001, respectively.

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6. Comprehensive Income

        The components of comprehensive income (loss) are: (a) net earnings (loss); (b) change in fair value of certain derivative adjustments; and, (c) foreign currency translation adjustments. Total comprehensive income (loss) for the nine month periods ended September 30, 2002 and 2001 amounted to $152.7 million and $(30.9) million, respectively.

7. New Accounting Standards

FAS No. 142. On January 1, 2002, the Company adopted Financial Accounting Standards ("FAS") No. 142, "Goodwill and Other Intangible Assets". As required by FAS No. 142, the Company is no longer amortizing goodwill, but will be reviewing goodwill annually (or more frequently if impairment indicators arise) for impairment.

        During the first quarter of 2002, the Company completed an impairment test under FAS No. 142 using the business enterprise value ("BEV") of each reporting unit. BEV's were calculated as of the measurement date, January 1, 2002, by determining the present value of debt-free, after-tax future cash flows, discounted at the weighted average cost of capital of a hypothetical third party buyer. The BEV of each reporting unit was then compared to the book value of each reporting unit as of the measurement date to assess whether an impairment existed under FAS No. 142. Based on this comparison, the Company determined that an impairment existed in its consumer products reporting unit. The consumer plastic products reporting unit operates in a highly competitive and fragmented industry. Excess capacity in this industry had created downward pricing pressure. The Company lowered its earnings and cash flow projections for this unit for several years following the measurement date which resulted in a lower BEV. Following a review of the valuation of the assets of the consumer products reporting unit, the Company recorded an impairment charge of $47.0 million to reduce the reported value of its goodwill. As required by FAS No. 142, the transitional impairment loss has been recognized as the cumulative effect of a change in method of accounting.

        The following earnings for 2001 have been presented on an adjusted basis to eliminate goodwill amortization $34.1 million nine months ended September 30, 2001, as required by FAS No. 142. The earnings for 2002 have been presented to provide comparative data to the 2001 adjusted earnings.

	Nine months ended Sept. 30,
	2002		2001
	(Actual)		(Pro forma)
Earnings before extraordinary item and cumulative effect of accounting change	$	204.8	$	100.4
Net earnings	$	151.1	$	100.4

FAS No. 143. In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS No. 143, "Accounting for Asset Retirement Obligations". FAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. FAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 and will be adopted by the Company on January 1, 2003. The Company believes

F-132

that the adoption of FAS No. 143 will not have an impact on the reported results of operations or financial position of the Company.

FAS No. 144. In August 2001, the FASB issued FAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets". FAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. FAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and was adopted by the Company on January 1, 2002. The adoption of FAS No. 144 did not have an impact on the reported results of operations or financial position of the Company.

FAS No. 145. In April 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". Among other things, FAS No. 145 requires gains and losses from early extinguishment of debt to be included in income from continuing operations instead of being classified as extraordinary items as previously required by generally accepted accounting principles. FAS No. 145 is effective for fiscal years beginning after May 15, 2002 and will be adopted by the Company on January 1, 2003. Any gain or loss on early extinguishment of debt that was classified as an extraordinary item in periods prior to adoption must be reclassified into income from continuing operations. The adoption of FAS 145 will require the $6.7 million extraordinary charge for the nine months ended September 30, 2002 to be reclassified to interest expense and the provision for income taxes.

FAS No. 146. In June 2002, the FASB issued FAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". FAS No. 146 requires that a liability for costs associated with exit or disposal activities be recognized when the liability is incurred. The statement further requires that fair value be used for initial measurement of the liability. FAS No. 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company believes that the adoption of FAS No. 146 will not have a material impact on the reported results of operations or financial position of the Company.

8. Restructuring Accruals

        During the second quarter of 2001, the Company recorded net charges of $65.2 million for a restructuring program and impairment at certain of the Company's international and domestic operations. The charge includes the impairment of assets at the Company's affiliate in Puerto Rico and the consolidation of manufacturing capacity and the closing of a facility in Venezuela. The program also includes consolidation of capacity at certain other international and domestic facilities in response to decisions about pricing and market strategy. The total planned reduction in workforce will involve approximately 220 employees. The Company expects its actions related to these restructuring and impairment charges to be completed during the next several quarters.

        The Company also has remaining restructuring accruals related to a capacity realignment program initiated in 2000. The program principally involved the closing of three U.S. plants.     The Company expects that it will continue to make cash payments over the next several quarters for on-going costs related to the closing of these facilities.

F-133

        Selected information relating to the above restructuring accruals follows:

Remaining accruals as of June 30, 2002	$	9.2
Write-down of assets to net realizable value		(0.8	)
Net cash paid		(2.4	)
Remaining accrual as of September 30, 2002	$	6.0

9. Derivative Instruments

        Under the terms of the April 2001 Secured Credit Agreement, international affiliates are only permitted to borrow in U.S. dollars. In order to manage the international affiliates' exposure to fluctuating foreign exchange rates, the Company's affiliates in Australia and the United Kingdom have entered into currency swaps for the principal portion of their initial borrowings under the Agreement and for their interest payments due under the Agreement.

        As of September 30, 2002, the Company's affiliate in Australia has swapped $650.0 million of borrowings into $1,275.0 million Australian dollars. This swap matures on March 31, 2003, with interest resets every 90 days. The interest reset terms of the swap approximate the terms of the U.S. dollar borrowings. This derivative instrument swaps both the interest and principal from U.S. dollars to Australian dollars and also swaps the interest rate from a U.S.-based rate to an Australian-based rate. The Company's affiliate in the United Kingdom has swapped $200.0 million of borrowings into 139.0 million British pounds. This swap also matures on March 31, 2003, with interest resets every 90 days. This derivative instrument swaps both the interest and principal from U.S. dollars to British pounds and also swaps the interest rate from a U.S.-based rate to a British-based rate.

        On October 1, 2001, the Company completed the acquisition of the Canadian glass container assets of Consumers Packaging Inc. for a purchase price of approximately $150 million. The Company financed this purchase through borrowings under the Secured Credit Agreement, of which $100 million was transferred to Canada through intercompany loans in U.S. dollars with the remaining $50 million being transferred as equity. The Company's affiliate in Canada has entered into swap transactions to manage the affiliate's exposure to fluctuating foreign exchange rates by swapping the principal and interest portion of the intercompany loan. At September 30, 2002, the Canadian affiliate has swapped $90.0 million of borrowings into $142.0 million Canadian dollars. This swap matures on October 1, 2003. This derivative instrument swaps both the interest and principal from U.S. dollars to Canadian dollars and also swaps the interest rate from a U.S.-based rate to a Canadian-based rate. The affiliate has also entered in forward exchange contracts which effectively swap $10.0 million of borrowings into $16.0 million Canadian dollars. These hedges swap both the interest and principal from U.S. dollars to Canadian dollars and mature monthly.

        The Company recognizes the above derivatives on the balance sheet at fair value. The Company accounts for the above swaps as fair value hedges. As such, the changes in the value of the swaps are included in other expense and are expected to substantially offset any exchange rate gains or losses on the related U.S. dollar borrowings. For the nine months ended September 30, 2002, the amount not offset was immaterial.

F-134

        The Company also uses commodity futures contracts related to forecasted natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid and the potential volatility in earnings or cash flows from future market price movements. The Company has entered into commodity futures contracts for approximately 50% of its North American natural gas usage (approximately 960 million BTUs) through the first quarter of 2003.

        The Company accounts for the above futures contracts on the balance sheet at fair value. 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 accumulated other comprehensive income ("OCI") and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.

        The above futures contracts are accounted for as cash flow hedges at September 30, 2002. Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting anticipated cash flows of the hedged transactions. For hedged forecasted transactions, hedge accounting will be discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses will be recorded to earnings immediately.

        At September 30, 2002, an unrealized net gain of $1.8 million, after tax of $1.0 million, related to these commodity futures contracts was included in OCI. There was no ineffectiveness recognized during the nine months ended September 30, 2002.

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OI Plastic Products FTS Inc

CONSOLIDATED RESULTS OF OPERATIONS

(Millions of dollars)

		Nine months ended September 30,
		2002			2001
Revenues:
	Net sales	$	1,233.8		$	1,287.7
	Other revenue		11.5			14.2
			1,245.3			1,301.9
Costs and expenses:
	Manufacturing, shipping, and delivery		949.2			986.5
	Research and development		24.0			23.3
	Engineering		1.1
	Selling and administrative		49.2			51.7
	Net intercompany interest		18.6			47.8
	Other interest expense		33.3			26.2
	Other		6.1			64.9
			1,081.5			1,200.4
Earnings before items below			163.8			101.5
Provision for income taxes			59.8			51.9
Minority share owners' interests in earnings of subsidiaries						0.5
Earnings before cumulative effect of accounting change			104.0			49.1
Cumulative effect of accounting change			(413.0	)
Net earnings (loss)		$	(309.0	)	$	49.1

See accompanying Notes.

F-136

OI Plastic Products FTS Inc.

CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

			Sept. 30, 2002			Dec. 31, 2001			Sept. 30, 2001
Assets
Current assets:
	Cash, including time deposits		$	24.4		$	10.3		$	18.4
	Receivables including amount from related parties of $29.9 ($9.2 at Dec. 31, 2001, $8.6 at Sept. 30, 2001), less allowances of $33.9 ($38.2 at Dec. 31, 2001, $29.8 at Sept. 30, 2001) for losses and discounts			202.5			184.3			241.3
	Inventories			212.0			222.9			219.6
	Prepaid expenses			55.5			41.1			33.4
		Total current assets		494.4			458.6			512.7
Other assets:
	Equity investments			6.1			9.2			14.9
	Repair parts inventories			26.3			25.6			26.9
	Deposits, receivables, and other assets			82.7			95.9			102.1
	Goodwill			1,028.8			1,468.2			1,491.2
		Total other assets		1,143.9			1,598.9			1,635.1
Property, plant, and equipment, at cost				1,958.8			1,917.7			1,855.4
	Less accumulated depreciation			842.4			799.3			774.5
		Net property, plant, and equipment		1,116.4			1,118.4			1,080.9
Total assets			$	2,754.7		$	3,175.9		$	3,228.7
Liabilities and Net Parent Investment
Current liabilities:
	Short-term loans and long-term debt due within one year		$	0.2		$	4.9		$	4.6
	Accounts payable and other liabilities			196.6			182.5			174.7
		Total current liabilities		196.8			187.4			179.3
External long-term debt				851.0			851.3			852.3
Deferred taxes				201.0			172.6			170.7
Other liabilities				2.8			12.9			12.8
Net Parent investment
	Investment by and advances from parent			1,545.6			1,980.0			2,046.9
	Accumulated other comprehensive income			(42.5	)		(28.3	)		(33.3	)
		Total net Parent investment		1,503.1			1,951.7			2,013.6
Total liabilities and net Parent investment			$	2,754.7		$	3,175.9		$	3,228.7

See accompanying Notes.

F-137

OI Plastic Products FTS Inc.

CONSOLIDATED CASH FLOWS

(Millions of dollars)

			Nine months ended September 30,
			2002			2001
Operating activities:
	Net earnings before cumulative effect of accounting change		$	104.0		$	49.1
	Non-cash charges (credits):
		Depreciation		89.3			82.7
		Amortization of deferred costs		11.7			45.1
		Deferred tax provision (credit)		36.8			(15.3	)
		Restructuring costs and write-offs of certain assets					23.4
		Gains on asset sales					(2.8	)
		Other		(13.0	)		(13.5	)
	Change in non-current operating assets			(9.1	)		2.6
	Change in components of working capital			(16.7	)		(18.9	)
		Cash provided by operating activities		203.0			152.4
Investing activities:
	Additions to property, plant and equipment			(99.0	)		(97.9	)
	Acquisitions, net of cash acquired			(2.3	)		(12.8	)
	Net cash proceeds from divestitures and other			12.2			62.3
		Cash utilized in investing activities		(89.1	)		(48.4	)
Financing activities:
	Borrowings of long-term debt			0.1			850.3
	Repayments of long-term debt			(5.1	)		(5.3	)
	Net change in intercompany debt			(92.5	)		(929.3	)
	Net change in short-term loans						(8.0	)
	Payment of finance fees						(14.9	)
		Cash utilized in financing activities		(97.5	)		(107.2	)
		Effect of exchange rate fluctuations on cash		(2.3	)		(12.6	)
Increase (decrease) in cash				14.1			(15.8	)
Cash at beginning of period				10.3			34.2
Cash at end of period			$	24.4		$	18.4

See accompanying Notes.

F-138

OI Plastic Products FTS Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular data in millions of dollars)

1. Basis of Presentation

        The Condensed Consolidated Financial Statements presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Since the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing elsewhere in this offering memorandum.

        The Company is a wholly-owned subsidiary of Owens-Illinois Group, Inc. ("OI Group" or "Parent") and an indirect subsidiary of Owens-Illinois, Inc. ("OI Inc."). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness, dividends for preferred stock and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

2. Inventories

        Major classes of inventory are as follows:

	Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Finished goods	$	124.7		133.7	$	128.9
Work in process		0.6		0.3		1.9
Raw materials		63.6		71.7		67.2
Operating supplies		23.1		17.2		21.6
	$	212.0	$	222.9	$	219.6

3. External Long-Term Debt

        The following table summarizes the external long-term debt of the Company.

			Sept. 30, 2002		Dec. 31, 2001		Sept. 30, 2001
Secured Credit Agreement:
	Revolving Credit Facility		$	850.0	$	850.0		850.0
Other				1.2		6.2	$	6.9
				851.2		856.2		856.9
	Less amounts due within one year			0.2		4.9		4.6
		External long-term debt	$	851.0	$	851.3	$	852.3

        At September 30, 2002, the Company had unused credit of $150.0 million available under the Secured Credit Agreement.

        The weighted average interest rate on borrowings outstanding under the Revolving Credit Facility at September 30, 2002 was 3.83%.

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4. Guarantees of Debt

        The Company has guaranteed the borrowings of certain of OI Inc.'s domestic subsidiaries totaling $2,629.9 and has also guaranteed the borrowings of certain foreign affiliates under the Agreement.

        During January 2002, an affiliate of the Company completed a $1.0 billion private placement of senior secured notes. The assets of the Company and most of its domestic subsidiaries are pledged as security for the notes. The Company has guaranteed these notes.

5. Cash Flow Information

        Interest paid in cash aggregated $53.1 million and $21.9 million for the nine months ended September 30, 2002 and 2001, respectively. Income taxes paid in cash totaled $8.0 million and $5.1 million for the nine months ended September 30, 2002 and 2001, respectively.

6. Comprehensive Income

        The components of comprehensive income (loss) are: (a) net earnings (loss); (b) change in fair value of certain derivative adjustments; and, (c) foreign currency translation adjustments. Total comprehensive income (loss) for the nine month periods ended September 30, 2002 and 2001 amounted to $(323.2) million and $43.0 million, respectively.

7. New Accounting Standards

FAS No. 142. On January 1, 2002, the Company adopted Financial Accounting Standards ("FAS") No. 142, "Goodwill and Other Intangible Assets". As required by FAS No. 142, the Company is no longer amortizing goodwill, but will be reviewing goodwill annually (or more frequently if impairment indicators arise) for impairment.

        During the first quarter of 2002, the Company completed an impairment test under FAS No. 142 using the business enterprise value ("BEV") of each reporting unit. BEV's were calculated as of the measurement date, January 1, 2002, by determining the present value of debt-free, after-tax future cash flows, discounted at the weighted average cost of capital of a hypothetical third party buyer. The BEV of each reporting unit was then compared to the book value of each reporting unit as of the measurement date to assess whether an impairment existed under FAS No. 142. Based on this comparison, the Company determined that an impairment existed in its consumer products reporting unit. The consumer plastic products reporting unit operates in a highly competitive and fragmented industry. Excess capacity in this industry had created downward pricing pressure. The Company lowered its earnings and cash flow projections for this unit for several years following the measurement date which resulted in a lower BEV. Following a review of the valuation of the assets of the consumer products reporting unit, the Company recorded an impairment charge of $413.0 million to reduce the reported value of its goodwill. As required by FAS No. 142, the transitional impairment loss has been recognized as the cumulative effect of a change in method of accounting.

        The following earnings for 2001 have been presented on an adjusted basis to eliminate goodwill amortization of $35.1 million for the nine months ended September 30, 2001, as required by FAS

F-140

No. 142. The earnings for 2002 have been presented to provide comparative data to the 2001 adjusted earnings.

	Nine months ended Sept. 30,
	2002			2001
	(Actual)			(Pro forma)
Earnings before cumulative effect of accounting change	$	104.0		$	84.2
Net earnings (loss)	$	(309.0	)	$	84.2

FAS No. 143. In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS No. 143, "Accounting for Asset Retirement Obligations". FAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. FAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 and will be adopted by the Company on January 1, 2003. The Company believes that the adoption of FAS No. 143 will not have an impact on the reported results of operations or financial position of the Company.

FAS No. 144. In August 2001, the FASB issued FAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets". FAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. FAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and was adopted by the Company on January 1, 2002. The adoption of FAS No. 144 did not have an impact on the reported results of operations or financial position of the Company.

FAS No. 145. In April 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". Among other things, FAS 145 requires gains and losses from early extinguishment of debt to be included in income from continuing operations instead of being classified as extraordinary items as previously required by generally accepted accounting principles. FAS No. 145 is effective for fiscal years beginning after May 15, 2002 and will be adopted by the Company on January 1, 2003. Any gain or loss on early extinguishment of debt that was classified as an extraordinary item in periods prior to adoption must be reclassified into income from continuing operations.

FAS No. 146. In June 2002, the FASB issued FAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". FAS No. 146 requires that a liability for costs associated with exit or disposal activities be recognized when the liability is incurred. The statement further requires that fair value be used for initial measurement of the liability. FAS No. 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company believes that the adoption of FAS No. 146 will not have a material impact on the reported results of operations or financial position of the Company.

8. Restructuring Accruals

        During the second quarter of 2001, the Company recorded net charges of $16.9 million for a restructuring program and impairment at certain of the Company's international and domestic operations. The program also includes consolidation of capacity at certain other international and domestic facilities in response to decisions about pricing and market strategy. The total planned reduction in workforce will involve approximately 180 employees. The Company expects its actions

F-141

related to these restructuring and impairment charges to be completed during the next several quarters. During the fourth quarter of 2001, the Company recorded additional restructuring charges of $7.4 million, as well as reversing $5.2 million of second quarter charges. Also during the fourth quarter of 2001, the Company recorded a charge of $7.9 million related to restructuring manufacturing capacity in the medical devices business.

        The Company also has remaining restructuring accruals related to a capacity realignment program initiated in 2000. The Company expects that it will continue to make cash payments over the next several quarters for on-going costs related to the restructuring.

        Selected information relating to the above restructuring accruals follows:

Remaining accruals as of June 30, 2002	$	5.7
Write-down of assets to net realizable value		(1.6	)
Net cash paid		(0.3	)
Remaining accrual as of September 30, 2002	$	3.8

F-142

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Officers and Directors

        The Company is a Delaware corporation. Subsection (b)(7) of Section 102 of the Delaware General Corporation Law (the "DGCL"), enables a corporation in its original certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director to the corporation or its stockholders for monetary damages for violations of the director's fiduciary duty, except (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit.

        Subsection (a) of Section 145 of the DGCL empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding provided that such director or officer acted in good faith in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, provided further that such director or officer had no reasonable cause to believe his conduct was unlawful.

        Subsection (b) of Section 145 empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit provided that such director or officer acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification may be made in respect to any claim, issue or matter as to which such director or officer shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such director or officer is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

        Section 145 further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith; that indemnification and advancement of expenses provided for, by, or granted pursuant to Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him or incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liabilities under Section 145.

        Section 8 of the Certificate of Incorporation (filed as Exhibit 3.1) of the Company, as amended, provides for the elimination of liability of directors to the extent permitted by Section 102(b)(7) of the

II-1

DGCL. Article III, Section 13 of the By-Laws of the Company (filed as Exhibit 3.6) provides for indemnification of the officers and directors of the Company to the extent permitted by applicable law.

        The Company has in effect insurance policies in the amount of $60 million covering all of its directors and officers.

Item 21. Exhibits and Financial Statement Schedules.

        A list of exhibits filed with this registration statement on Form S-4 is set forth on the Exhibit Index and is incorporated in this Item 21 by reference.

Item 22. Undertakings.

(a)

The undersigned registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c)

The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on February 14, 2003.

By:	OWENS-ILLINOIS GROUP, INC.
	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on February 14, 2003.

Signature	Title
James W. Baehren	Vice President and Secretary; Director
Jeffrey A. Denker	Treasurer (Principal Financial Officer)
Edward C. White	Controller and Chief Accounting Officer (Principal Accounting Officer); Director
Thomas L. Young	President, Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer); Director
	By:	/s/  JAMES W. BAEHREN James W. Baehren Attorney-in-fact

II-3

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on February 14, 2003.

By:	OWENS-BROCKWAY GLASS CONTAINER INC.
	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on February 14, 2003.

Signature	Title
Jeffrey A. Denker	Treasurer (Principal Financial Officer)
Robert J. Dineen	Director
Gary F. Colter	Director
Edward A. Gilhuly	Director
James H. Greene, Jr.	Director
Anastasia D. Kelly	Director
Joseph H. Lemieux	Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer); Director
John J. McMackin, Jr.	Director
Michael W. Michelson	Director
George R. Roberts	Director
Edward C. White	Vice President and Comptroller (Principal Accounting Officer)
Thomas L. Young	Executive Vice President, Administration and General Counsel; Director
	By:	/s/  JAMES W. BAEHRENAttorney-in-fact

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

ACI AMERICA HOLDINGS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  RICHARD A. JUN Richard A. Jun	President (Principal Executive Officer)	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-5

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OWENS-ILLINOIS CLOSURE INC. SPECIALTY PACKAGING LICENSING COMPANY
BY:	/S/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  MICHAEL D. MCDANIEL Michael D. McDaniel	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

BROCKWAY REALTY CORPORATION
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-7

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

BROCKWAY RESEARCH, INC. OI AUBURN INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-8

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

CONTINENTAL PET TECHNOLOGIES, INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  W. BRUCE LARSEN W. Bruce Larsen	President (Principal Executive Officer); Director	February 14, 2003
/s/  TERRY L. WILKISON Terry L. Wilkison	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003

II-9

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

MARTELL MEDICAL PRODUCTS, INCORPORATED OI MEDICAL INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  MICHAEL D. MCDANIEL Michael D. McDaniel	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-10

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OB CAL SOUTH INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	President (Principal Executive Officer); Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer); Director	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-11

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI AID STS INC. SEAGATE II, INC. SEAGATE III, INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  THOMAS L. YOUNG Thomas L. Young	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer); Director	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-12

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI AUSTRALIA INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  TERRY L. WILKISON Terry L. Wilkison	President (Principal Executive Officer)	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER
Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-13

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI BRAZIL CLOSURE INC. OWENS-ILLINOIS SPECIALTY PRODUCTS PUERTO RICO, INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  MICHAEL D. MCDANIEL Michael D. McDaniel	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER
Jeffrey A. Denker	Treasurer (Principal Financial Officer); Director	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-14

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI CALIFORNIA CONTAINERS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  L. RICHARD CRAWFORD L. Richard Crawford	President (Principal Executive Officer); Director	February 14, 2003
/s/  GERALD L. LEMIEUX Gerald L. Lemieux	Vice President; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER
Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-15

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI CASTALIA STS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER
Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-16

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI CONSOL STS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  THOMAS L. YOUNG Thomas L. Young	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-17

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI ECUADOR STS INC. O-I HEALTH CARE HOLDING CORP. OI INTERNATIONAL HOLDINGS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  THOMAS L. YOUNG Thomas L. Young	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-18

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI EUROPE & ASIA INC. OI POLAND INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  ROBERT A. SMITH Robert A. Smith	President (Principal Executive Officer); Director	February 14, 2003
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	Vice President; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE
Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-19

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI GENERAL FINANCE INC. OI GENERAL FTS INC. O-I HOLDING COMPANY, INC. OI LEVIS PARK STS INC. OWENS-ILLINOIS GENERAL INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  THOMAS L. YOUNG Thomas L. Young	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer); Director	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-20

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI HUNGARY INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  ROBERT A. SMITH Robert A. Smith	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  LARRY A. GRIFFITH Larry A. Griffith	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Vice President (Principal Accounting Officer)	February 14, 2003

II-21

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February 2003.

OI PERU STS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  ROBERT A. SMITH Robert A. Smith	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-22

SIGNATURE

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI PLASTIC PRODUCTS FTS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  TERRY L. WILKISON Terry L. Wilkison	President (Principal Executive Officer); Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-23

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI PUERTO RICO STS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  ROBERT A. SMITH Robert A. Smith	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-24

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI REGIOPLAST STS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  LARRY A. GRIFFITH Larry A. Griffith	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  ROBERT A. SMITH Robert A. Smith	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-25

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OI VENEZUELA PLASTIC PRODUCTS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  LARRY A. GRIFFITH Larry A. Griffith	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  TERRY L. WILKISON Terry L. Wilkison	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-26

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OIB PRODUVISA INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  ROBERT A. SMITH Robert A. Smith	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-27

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OVERSEAS FINANCE COMPANY
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  JEFFREY A. DENKER Jeffrey A. Denker	President (Principal Executive Officer) and Treasurer (Principal Financial Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-28

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OWENS-BROCKWAY GLASS CONTAINER TRADING COMPANY
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  ROBERT A. SMITH Robert A. Smith	President (Principal Executive Officer); Director	February 14, 2003
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-29

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OWENS-BROCKWAY PACKAGING, INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  THOMAS L. YOUNG Thomas L. Young	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-30

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OWENS-BROCKWAY PLASTIC PRODUCTS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  TERRY L. WILKISON Terry L. Wilkison	President (Principal Executive Officer); Director	February 14, 2003
/s/  LARRY A. GRIFFITH Larry A. Griffith	Vice President; Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-31

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

OWENS-ILLINOIS PRESCRIPTION PRODUCTS INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  JOSEPH V. CONDA Joseph V. Conda	President (Principal Executive Officer); Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-32

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

PRODUCT DESIGN & ENGINEERING, INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  JAMES W. BAEHREN James W. Baehren	President (Principal Executive Officer) and Secretary; Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Vice President; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer); Director	February 14, 2003

II-33

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

SEAGATE, INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  THOMAS L. YOUNG Thomas L. Young	President (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  GERALD J. LEMIEUX Gerald J. Lemieux	Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-34

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

UNIVERSAL MATERIALS, INC.
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation any post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Name	Title	Date
/s/  ERNST F. VALIS Ernst F. Valis	President (Principal Executive Officer); Director	February 14, 2003
/s/  SUSAN SMITH Susan Smith	Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer); Director	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Assistant Treasurer (Principal Accounting Officer)	February 14, 2003

II-35

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toledo, state of Ohio, on the 14th day of February, 2003.

NHW AUBURN, LLC, A NEW YORK LIMITED LIABILITY COMPANY BY OWENS-BROCKWAY GLASS CONTAINER INC., SOLE MEMBER
By:	/s/  JAMES W. BAEHREN Name: James W. Baehren Title: Vice President and Secretary

II-36

EXHIBIT INDEX

Exhibit Number	Exhibit Description
3.1	Certificate of Incorporation of OI Glass Container Domestic STS Inc., dated as of March 8, 1987 (filed as Exhibit 3.1 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.2	Certificate of Amendment of Certificate of Incorporation of OI Glass Container Domestic STS Inc. Before Payment of Capital, dated as of March 9, 1987 (filed as Exhibit 3.2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.3	Certificate of Amendment of Certificate of Incorporation of OI Glass Container Domestic STS Inc., dated as of April 8, 1987 (filed as Exhibit 3.3 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.4	Certificate of Change of Registered Agent and Registered Office of Owens-Illinois Glass Container Inc., dated as of May 26, 1988 (filed as Exhibit 3.4 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.5	Certificate of Merger of O-I Brockway Glass, Inc. into Owens-Illinois Glass Container Inc., dated as of April 30, 1990 (filed as Exhibit 3.5 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.6	By-Laws of Owens-Brockway Glass Container Inc. (filed as Exhibit 3.6 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.7	Certificate of Incorporation of ACI America, Inc., dated as of January 14, 1982 (filed as Exhibit 3.7 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.8	Certificate of Amendment of Certificate of Incorporation of ACI America Inc., dated as of March 18, 1983 (filed as Exhibit 3.8 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.8a	Certificate of Amendment of Certificate of Incorporation of ACI America Holdings Inc., dated as of June 1, 1987 (filed as Exhibit 3.8a to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.9	Certificate of Ownership and Merger Merging ACI America Inc. into ACI America Holdings Inc., dated as of March 30, 1988 (filed as Exhibit 3.9 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.10	Certificate of Amendment of the Certificate of Incorporation of ACI America Holdings Inc., dated as of March 29, 1990 (filed as Exhibit 3.10 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.10a	Certificate of Ownership and Merger Merging Koru Holdings Inc. into ACI America Holdings, Inc., dated as of January 29, 1991 (filed as Exhibit 3.10a to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.11	Certificate of Amendment of Certificate of Incorporation of ACI America Holdings Inc., dated as of December 6, 1996 (filed as Exhibit 3.11 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.12	Articles of Incorporation of Brockway Realty Corporation, dated as of June 7, 1982 (filed as Exhibit 3.22 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.13	Certificate of Incorporation of Standard Container Export Company, dated as of January 2, 1975 (filed as Exhibit 3.23 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.14	Certificate of Amendment of Certificate of Incorporation of Standard Container Export Company, dated as of January 7, 1985 (filed as Exhibit 3.24 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.15	Amended and Restated Certificate of Incorporation of Continental PET Technologies, Inc., dated as of April 13, 1994 (filed as Exhibit 3.25 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.15a	Articles of Incorporation of Martell Medical Products, Incorporated, dated as of July 2, 1984 (filed as Exhibit 3.27 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.16	Articles of Organization of NHW Auburn, LLC, dated as of March 27, 1996 (filed as Exhibit 3.28 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.17	Certificate of Change of NHW Auburn, LLC, dated as of February 15, 2001 (filed as Exhibit 3.29 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.18	Certificate of Amendment of the Articles of Organization of NHW Auburn, LLC, dated as of December 20, 1999 (filed as Exhibit 3.30 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.19	Certificate of Incorporation of OB Cal South Inc., dated as of January 27, 1997 (filed as Exhibit 3.31 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.20	Certificate of Incorporation of OI AID STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.32 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.21	Certificate of Incorporation of OI Auburn Inc., dated as of July 19, 1996 (filed as Exhibit 3.33 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.22	Certificate of Incorporation of OI Australia Inc., dated as of April 16, 1998 (filed as Exhibit 3.34 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.23	Certificate of Incorporation of OI Brazil Closure Inc., dated as of April 27, 1998 (filed as Exhibit 3.35 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.24	Certificate of Incorporation of OB Cal North Inc., dated as of January 27, 1997 (filed as Exhibit 3.36 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.25	Certificate of Amendment of Certificate of Incorporation of OB Cal North Inc., dated as of February 22, 1999 (filed as Exhibit 3.37 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.26	Certificate of Incorporation of OI Castalia STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.38 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.27	Certificate of Incorporation of OI Consol STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.39 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.28	Certificate of Incorporation of OI Ecuador STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.40 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.29	Certificate of Incorporation of OI Europe & Asia Inc., dated as of December 19, 1995 (filed as Exhibit 3.41 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.30	Certificate of Incorporation of OI General Finance Inc., dated as of April 19, 1993 (filed as Exhibit 3.42 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.31	Certificate of Incorporation of OI General FTS Inc., dated as of March 6, 1987 (filed as Exhibit 3.43 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.32	Certificate of Incorporation of Health Care and Retirement Corporation, dated as of March 6, 1987 (filed as Exhibit 3.44 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.33	Certificate of Amendment of Certificate of Incorporation of Health Care and Retirement Corporation, dated as of August 29, 1991 (filed as Exhibit 3.45 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.34	Articles of Incorporation of O-I Care Centers, Inc., dated as of April 4, 1985 (filed as Exhibit 3.46 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.35	Certificate of Amendment by Incorporators to Articles of Incorporation of O-I Care Centers, Inc., dated as of June 5, 1985 (filed as Exhibit 3.47 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.36	Certificate of President and Secretary of O-I Holding Company, Inc. showing Approval and Adoption of Agreement of Merger, dated as of November 1, 1991 (filed as Exhibit 3.48 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.37	Certificate of Merger of O-I Holding Company of Bledsoe County, O-1 Holding Company of Center, O-I Holding Company of Clay County, O-I Holding Company of Fentress County, O-I Holding Company of Macon County, O-I Holding Company of New Boston, O-I Holding Company of Ormond Beach, O-I Holding Company of Senatobia County, O-I Physicians & Surgeons Holding Company, O-I Womens Hospital Holding Company into O-I Holding Company, Inc., dated as of November 1, 1991 (filed as Exhibit 3.49 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.38	Certificate of Incorporation of OI Hungary Inc., dated as of November 3, 1995 (filed as Exhibit 3.50 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.39	Certificate of Incorporation of OI International Holdings Inc., dated as of December 9, 1998 (filed as Exhibit 3.51 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.40	Certificate of Incorporation of OI Levis Park STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.52 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.41	Certificate of Incorporation of OI Medical Inc., dated as of September 14, 1993 (filed as Exhibit 3.55 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.42	Certificate of Incorporation of OI Peru STS Inc., dated as of February 16, 1993 (filed as Exhibit 3.56 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.43	Certificate of Incorporation of OI Plastic Products FTS Inc., dated as of March 6, 1987 (filed as Exhibit 3.57 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.44	Certificate of Incorporation of OI Poland Inc., dated as of August 26, 1993 (filed as Exhibit 3.58 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.45	Certificate of Incorporation of OI Puerto Rico STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.59 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.46	Certificate of Incorporation of OI Regioplast STS Inc., dated as of May 19, 1993 (filed as Exhibit 3.60 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.47	Certificate of Incorporation of OI Venezuela Plastic Products Inc., dated as of November 18, 1998 (filed as Exhibit 3.61 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.48	Certificate of Incorporation of OIB Produvisa Inc., dated as of November 2, 1987 (filed as Exhibit 3.62 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.49	Certificate of Incorporation of Overseas Finance Company, dated as of December 28, 1989 (filed as Exhibit 3.63 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.50	Certificate of Incorporation of Owens-Brockway Glass Container Trading Company, dated as of March 10, 1994 (filed as Exhibit 3.65 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.50a	Certificate of Correction filed to Correct a certain Error in the Certificate of Incorporation of Owens-Brockway Glass Container Trading Company filed in the Office of the Secretary of State of State of Delaware on March 10, 1994, dated as of March 14, 1994 (filed as Exhibit 3.65a to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.51	Certificate of Incorporation of OI Glass Container FTS Inc., dated as of March 6, 1987 (filed as Exhibit 3.66 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.52	Certificate of Amendment of Certificate of Incorporation of OI Glass Container FTS Inc., dated as of December 22, 1988 (filed as Exhibit 3.67 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.53	Certificate of Merger of OI United Glass FTS Inc. into Owens-Brockway Packaging, Inc., dated as of April 27, 1989 (filed as Exhibit 3.68 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.54	Certificate of Merger of OI Santa Rita STS Inc., OI La Porta STS Inc. and OI Kangar STS Inc. into Owens-Brockway Packaging, Inc., dated as of April 30, 1990 (filed as Exhibit 3.69 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.55	Ethyl Development Corporation Restated Certificate of Incorporation, dated as of January 28, 1970 (filed as Exhibit 3.70 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.56	Certificate of Reduction of Capital of Ethyl Development Corporation, dated as of August 20, 1970 (filed as Exhibit 3.71 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.57	Certificate of Ownership and Merger Merging Ethyl Netherlands, Inc. into Ethyl Development Corporation, dated as of April 8, 1971 (filed as Exhibit 3.72 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.58	Certificate of Amendment of Certificate of Incorporation of Ethyl Development Corporation, dated as of June 4, 1984 (filed as Exhibit 3.73 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.59	Certificate of Merger of Brockway Plastics, Inc. into Brockway Imco, Inc., dated as of June 28, 1985 (filed as Exhibit 3.74 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.60	Certificate of Amendment of Certificate of Incorporation of Brockway Plastics, Inc., dated as of July 18, 1988 (filed as Exhibit 3.75 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.61	Certificate of Correction filed to Correct a certain error in the Certificate of Amendment of O-I Brockway Plastics Inc. filed in the Office of the Secretary of State of Delaware on July 18, 1988, dated as of September 14, 1988 (filed as Exhibit 3.76 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.62	Certificate of Ownership Merging IMCO Service Corporation into O-I Brockway Plastics, Inc., dated as of July 3, 1990 (filed as Exhibit 3.77 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.63	Certificate of Merger of Owens-Illinois Plastic Products Inc. into O-I Brockway Plastics, Inc., dated as of December 27, 1994 (filed as Exhibit 3.78 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.64	Certificate of Merger of OI Dougherty STS Inc. into O-I Brockway Plastics, Inc., dated as of December 27, 1994 (filed as Exhibit 3.79 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.65	Certificate of Merger of OI Treitler STS Inc. into O-I Brockway Plastics, Inc., dated as of December 27, 1994 (filed as Exhibit 3.80 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.66	Certificate of Ownership and Merger Merging DBC, Inc. into O-I Brockway Plastics, Inc., dated as of December 27, 1994 (filed as Exhibit 3.81 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.67	Certificate of Amendment of Certificate of Incorporation of O-I Brockway Plastics Inc., dated as of January 5, 1995 (filed as Exhibit 3.82 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.68	Certificate of Ownership and Merger Merging Treitler-Owens, Inc. into Owens-Brockway Plastic Products Inc., dated as of December 21, 1995 (filed as Exhibit 3.83 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.69	Certificate of Incorporation of OI Closure STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.84 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.70	Certificate of Amendment of Certificate of Incorporation of OI Closure STS Inc., dated as of April 9, 1987 (filed as Exhibit 3.85 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.71	Certificate of Merger of Specialty Packaging Products, Inc. into Owens-Illinois Closure Inc., dated as of January 4, 1993 (filed as Exhibit 3.86 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.72	Certificate of Merger of OI US Capital STS Inc. into Owens-Illinois Closure Inc., dated as of December 28, 1993 (filed as Exhibit 3.87 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.73	Certificate of Ownership and Merger Merging U.S. Cap & Closure Inc. into Owens-Illinois Closure Inc., dated as of December 28, 1993 (filed as Exhibit 3.88 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.74	Certificate of Incorporation of OI General STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.89 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.75	Certificate of Amendment of Certificate of Incorporation of OI General STS Inc., dated as of April 9, 1987 (filed as Exhibit 3.90 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.76	Certificate of Merger of Owens-Illinois Inter-America Corporation into Owens-Illinois General Inc., dated as of September 28, 1990 (filed as Exhibit 3.91 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.77	Certificate of Merger of OI UMI STS Inc. and OI MVCURC STS Inc. into Owens-Illinois General Inc., dated as of April 30, 1996 (filed as Exhibit 3.92 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.78	Certificate of Merger of Owens-Illinois Leasing Inc. into Owens-Illinois General Inc., dated as of December 26, 2000 (filed as Exhibit 3.93 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.79	Certificate of Ownership and Merger Merging Maumee Valley Community Urban Redevelopment Corporation into Owens-Illinois General Inc., dated as of May 29, 1996 (filed as Exhibit 3.94 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.80	Certificate of Incorporation of OII Group, Inc., dated as of March 10, 1987 (filed as Exhibit 3.95 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.81	Certificate of Amendment of Certificate of Incorporation of OII Group, Inc., dated as of March 24, 1987 (filed as Exhibit 3.96 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.82	Certificate of Ownership Merging OIB Consumers Glass Inc. into Owens-Illinois Group, Inc., dated as of June 29, 1990 (filed as Exhibit 3.97 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.83	Certificate of Ownership and Merger Merging OIB Finance FTS Inc. into Owens-Illinois Group, Inc., dated as of December 30, 1991 (filed as Exhibit 3.98 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.84	Certificate of Incorporation of OI Prescription Products STS Inc., dated as of March 9, 1987 (filed as Exhibit 3.99 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.85	Certificate of Amendment of Certificate of Incorporation of OI Prescription Products STS Inc., dated as of April 9, 1987 (filed as Exhibit 3.100 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.86	Certificate of Merger of OI Schott STS Inc. into Owens-Illinois Prescription Products Inc., dated as of December 27, 1994 (filed as Exhibit 3.101 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.87	Certificate of Incorporation of Dougherty Brothers Company Puerto Rico, Inc., dated as of February 23, 1984 (filed as Exhibit 3.102 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.88	Certificate of Name Change of Owens-Illinois Specialty Products Puerto Rico, Inc., dated as of September 26, 1988 (filed as Exhibit 3.103 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.89	Articles of Incorporation of Product Designing, Inc., dated as of December 31, 1954 (filed as Exhibit 3.104 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.90	Articles of Amendment of Articles of Incorporation or Certificate of Incorporation of Product Designing, Inc., dated as of January 18, 1955 (filed as Exhibit 3.105 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.91	Certificate of Restated Articles of Incorporation of Product Design & Engineering, Inc., dated as of November 30, 1960 (filed as Exhibit 3.106 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.92	Certificate of Amendment of Articles of Incorporation of Product Design & Engineering, Inc., dated as of December 12, 1985 (filed as Exhibit 3.107 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.93	Certificate of Merger of PDE Acquisition Corp. into Product Design & Engineering, Inc., dated as of December 26, 1986 (filed as Exhibit 3.108 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.94	Certificate of Incorporation of SeaGate, Inc., dated as of October 25, 1979 (filed as Exhibit 3.109 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.95	Certificate of Amendment of Articles of Incorporation of SeaGate, Inc., dated as of September 2, 1982 (filed as Exhibit 3.110 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.96	Articles of Incorporation of SeaGate II, Inc., dated as of December 15, 1999 (filed as Exhibit 3.111 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.97	Articles of Incorporation of SeaGate III, Inc., dated as of December 15, 1999 (filed as Exhibit 3.112 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.98	Certificate of Incorporation of Specialty Packaging Licensing Company, dated as of November 15, 1985 (filed as Exhibit 3.113 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.99	Articles of Incorporation of Universal Materials, Inc., dated as of November 2, 1981 (filed as Exhibit 3.114 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.100	Certificate of Adoption of Amended of Articles of Incorporation of Universal Materials, Inc., dated as of June 7, 1982 (filed as Exhibit 3.115 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.101	Certificate of Adoption of Amended of Articles of Incorporation of Universal Materials, Inc., dated as of July 22, 1982 (filed as Exhibit 3.116 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.102	Form of Bylaws for ACI America Holdings Inc., Brockway Research, Inc., Continental PET Technologies, Inc., OB Cal South Inc., OI AID STS Inc., OI Auburn Inc., OI Australia Inc., OI Brazil Closure Inc., OI California Containers Inc., OI Castalia STS Inc., OI Consol STS Inc., OI Ecuador STS Inc., OI Europe & Asia Inc., OI General Finance Inc., OI General FTS Inc., O-I Health Care Holding Corp., OI Hungary Inc., OI International Holdings Inc., OI Levis Park STS Inc., OI Medical Inc., OI Peru STS Inc., OI Plastic Products FTS Inc., OI Poland Inc., OI Puerto Rico STS Inc., OI Regioplast STS Inc., OI Venezuela Plastic Products Inc., OI Produvisa Inc., Overseas Finance Company, Owens-Brockway Glass Container Trading Company, Owens-Brockway Packaging, Inc., Owens-Brockway Plastic Products Inc., Owens-Illinois Closure Inc., Owens-Illinois General Inc., Owens-Illinois Group, Inc. and Owens-Illinois Prescription Products Inc., and Specialty Packaging Licensing Company (filed as Exhibit 3.117 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.103	Form of Bylaws for O-I Holding Company, Inc., SeaGate, Inc., SeaGate II, Inc., SeaGate III, Inc. and Universal Materials, Inc. (filed as Exhibit 3.118 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)

3.104	Bylaws of Brockway Realty Corporation (filed as Exhibit 3.120 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.104a	Bylaws of Martell Medical Products, Incorporated (filed as Exhibit 3.121 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.105	Bylaws of Owens-Illinois Specialty Products Puerto Rico, Inc. (filed as Exhibit 3.122 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.106	Bylaws of Product Design & Engineering, Inc. (filed as Exhibit 3.123 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
3.107	Bylaws of NHW Auburn, LLC (filed as Exhibit 3.124 to the Amendment No. 2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated May 30, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.1	Indenture, dated as of January 24, 2002, among the Company, the Guarantors (as defined therein) and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.2	First Supplemental Indenture, dated as of January 24, 2002, among the Company, the Guarantors (as defined therein) and U.S. Bank National Association, as Trustee (filed as Exhibit 4.2 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.3	Second Supplemental Indenture, dated as of August 5, 2002, among Owens-Brockway Glass Container, Inc., the Guarantors (as defined therein) and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to Owens-Illinois Group Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, File No. 33-13061-01, and incorporated herein by reference)
4.4*	Third Supplemental Indenture, dated as of November 13, 2002, among Owens-Brockway Glass Container Inc., the Guarantors (as defined therein) and U.S. Bank National Association, as Trustee
4.5*	Additional Supplemental Indenture, dated as of December 18, 2002, among Owens-Brockway Glass Container Inc., the Guarantors (as defined therein) and U.S. Bank National Association, as Trustee
4.6	Indenture, dated as of May 15, 1997, between Owens-Illinois, Inc. and The Bank of New York, as Trustee (filed as Exhibit 4.1 to the Owens-Illinois Group, Inc. Form 8-K dated May 16, 1997, File No. 1-9576, and incorporated herein by reference)
4.7	Officers' Certificate, dated May 16, 1997, establishing the terms of the 7.85% Senior Notes due 2004; including the Form of 7.85% Senior Note due 2004 (filed as Exhibits 4.2 and 4.4, respectively, to the Owens-Illinois, Inc. Form 8-K dated May 16, 1997, File No. 1-9576, and incorporated herein by reference)
4.8	Officers' Certificate, dated May 16, 1997, establishing the terms of the 8.10% Senior Notes due 2007; including the Form of 8.10% Senior Note due 2007 (filed as Exhibits 4.3 and 4.5, respectively, to the Owens-Illinois, Inc. Form 8-K dated May 16, 1997, File No. 1-9576, and incorporated herein by reference)

4.9	Supplemental Indenture, dated as of June 26, 2001 among Owens-Illinois, Inc., Owens-Illinois Group, Inc., Owens-Brockway Packaging, Inc. and The Bank of New York, as Trustee (May 15, 1997 Indenture) (filed as Exhibit 4.2 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, File No. 1-9576, and incorporated herein by reference)
4.10	Indenture, dated as of May 20, 1998, between Owens-Illinois, Inc. and The Bank of New York, as Trustee (filed as Exhibit 4.1 to the Owens-Illinois, Inc. Form 8-K dated May 20, 1998, File No. 1-9576, and incorporated herein by reference)
4.11	Officers' Certificate, dated May 20, 1998, establishing the terms of the 7.15% Senior Notes due 2005; including the Form of 7.15% Senior Note due 2005 (filed as Exhibits 4.2 and 4.6, respectively, to the Owens-Illinois, Inc. Form 8-K dated May 20, 1998, File No. 1-9576, and incorporated herein by reference)
4.12	Officers' Certificate, dated May 20, 1998, establishing the terms of the 7.35% Senior Notes due 2008; including the Form of 7.35% Senior Note due 2008 (filed Exhibits 4.3 and 4.7, respectively, to the Owens-Illinois, Inc. Form 8-K dated May 20, 1998, File No. 1-9576, and incorporated herein by reference)
4.13	Officers' Certificate, dated May 20, 1998, establishing the terms of the 7.50% Senior Notes due 2010; including the Form of 7.50% Senior Note due 2010 (filed as Exhibits 4.4 and 4.8, respectively, to the Owens-Illinois, Inc. Form 8-K dated May 20, 1998, File No. 1-9576, and incorporated herein by reference)
4.14	Officers' Certificate, dated May 20, 1998, establishing the terms of the 7.80% Senior Notes due 2018; including the Form of 7.80% Senior Note due 2018 (filed as Exhibits 4.5 and 4.9, respectively, to the Owens-Illinois, Inc. Form 8-K filed May 20, 1998, File No. 1-9576, and incorporated herein by reference)
4.15	Supplemental Indenture, dated as of June 26, 2001 among Owens-Illinois, Inc., Owens-Illinois Group, Inc., Owens-Brockway Packaging, Inc. and The Bank of New York, as Trustee (May 20, 1998 Indenture) (filed as Exhibit 4.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, File No. 1-9576, and incorporated herein by reference)
4.16	Secured Credit Agreement, dated as of April 23, 2001, by and among the Borrowers named therein, Owens-Illinois Group, Inc. and Owens-Illinois General, Inc., as Borrower's Agent, Deutsche Banc Alex. Brown and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Book Managers, Deutsche Bank AG, London Branch, as UK Administrative Agent, Bankers Trust Company, as Administrative Agent, and the other Agents and the other Lenders named therein (filed as Exhibit 4.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, File No. 1-9576, and incorporated herein by reference)
4.17	First Amendment to Secured Credit Agreement and Consent, dated as of December 31, 2001, by and among the Borrowers named therein, Owens-Illinois Group, Inc. and Owens-Illinois General, Inc., as Borrowers' Agent, the lenders listed therein and Bankers Trust Company, as Administrative Agent and Collateral Agent (filed as Exhibit 4.14 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.18	Second Amendment to Secured Credit Agreement dated as of April 19, 2002 (filed as Exhibit 4.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, File No. 1-9576, and incorporated herein by reference)

4.19	Third Amendment to Secured Credit Agreement, dated September 27, 2002 (filed as Exhibit 4.2 to Owens-Illinois Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ending September 30, 2002, File No. 33-13061-01, and incorporated herein by reference)
4.20	Intercreditor Agreement, dated as of April 23, 2001, by and among Bankers Trust Company, as administrative agent for the lenders party to the Credit Agreement (as defined therein) and Bankers Trust Company, as Collateral Agent (as defined therein) and any other parties thereto (filed as Exhibit 4.4 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, File No. 1-9576, and incorporated herein by reference)
4.21	First Amendment to Intercreditor Agreement, dated as of January 24, 2002, by and among Bankers Trust Company, as administrative agent for the lenders party to the Credit Agreement (as defined therein) and Bankers Trust Company, as Collateral Agent (filed as Exhibit 4.16 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.22	Pledge Agreement, dated as of April 23, 2001, between Owens-Illinois Group, Inc., Owens-Brockway Packaging, Inc., and Bankers Trust Company, as Collateral Agent (as defined therein) and any other parties thereto (filed as Exhibit 4.3 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, File No. 1-9576, and incorporated herein by reference)
4.23	First Amendment to Pledge Agreement, dated as of January 24, 2002, by and among Owens-Illinois Group, Inc., Owens-Brockway Packaging Inc., Bankers Trust Company, as Collateral Agent (as defined therein) and Bankers Trust Company, as administrative agent (filed as Exhibit 4.18 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.24	Security Agreement, dated as of April 23, 2001, between Owens-Illinois Group, Inc., each of the direct and indirect subsidiaries of Owens-Illinois Group, Inc. signatory thereto and Bankers Trust Company, as Collateral Agent (as defined therein) (filed as Exhibit 4.19 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.25	First Amendment to Security Agreement, dated as of January 24, 2002, between Owens-Illinois Group, Inc., each of the direct and indirect subsidiaries of Owens-Illinois Group, Inc. signatory thereto and Bankers Trust Company, as Collateral Agent (as defined therein) (filed as Exhibit 4.20 to the Owens-Illinois Group, Inc. registration statement on Form S-4 dated April 5, 2002, File No. 333-85690-43, and incorporated herein by reference)
4.26*	Registration Rights Agreement, dated as of November 13, 2002, among Owens-Brockway Glass Container Inc., the Guarantors (as defined therein), and Salomon Smith Barney Inc., Banc of America Securities LLC, Deutsche Bank Securities Inc., Banc One Capital Markets, Inc., Scotia Capital (USA) Inc., Goldman, Sachs & Co., Barclays Capital Inc., BNP Paribas Securities Corp., Credit Lyonnais Securities (USA) Inc., Fleet Securities, Inc., McDonald Investments Inc., SG Cowen Securities Corporation, BNY Capital Markets, Inc. and TD Securities (USA) Inc.
4.27*	Registration Rights Agreement, dated as of December 18, 2002, among Owens-Brockway Glass Container Inc., the Guarantors (as defined therein), and Salomon Smith Barney Inc., Banc of America Securities LLC, Deutsche Bank Securities Inc., Banc One Capital Markets, Inc., Scotia Capital (USA) Inc., Goldman, Sachs & Co., Barclays Capital Inc., BNP Paribas Securities Corp., Credit Lyonnais Securities (USA) Inc., Fleet Securities, Inc., McDonald Investments Inc., SG Cowen Securities Corporation, BNY Capital Markets, Inc. and TD Securities (USA) Inc.
5.1*	Opinion of Latham & Watkins LLP

5.2*	Opinion of James W. Baehren
10.1	Amended and Restated Owens-Illinois Supplemental Retirement Benefit Plan (filed as Exhibit 10.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, File No. 1-9576, and incorporated herein by reference)
10.2	First Amendment to Amended and Restated Owens-Illinois Supplemental Retirement Benefit Plan (filed as Exhibit 10.3 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2000, File No. 1-9576, and incorporated herein by reference)
10.3	Form of Employment Agreement between Owens-Illinois, Inc. and various Employees (filed as Exhibit 10(m) to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1987, File No. 1-9576, and incorporated herein by reference)
10.4	Stock Option Plan for Directors of Owens-Illinois, Inc. (filed as Exhibit 4.3 to Owens-Illinois, Inc.'s Form S-8, File No. 33-57141, and incorporated herein by reference)
10.5	First Amendment to Stock Option Plan for Directors of Owens-Illinois, Inc. (filed as Exhibit 10.10 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-9576, and incorporated herein by reference)
10.6	Form of Non-Qualified Stock Option Agreement for use under the Stock Option Plan for Directors of Owens-Illinois, Inc. (filed as Exhibit 4.4 to Owens-Illinois, Inc.'s Form S-8, File No. 33-57141, and incorporated herein by reference)
10.7	Second Amended and Restated Stock Option Plan for Key Employees of Owens-Illinois, Inc. (filed as Exhibit 10.20 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-9576, and incorporated herein by reference)
10.8	First Amendment to Second Amended and Restated Stock Option Plan for Key Employees of Owens-Illinois, Inc. (filed as Exhibit 10.13 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-9576, and incorporated herein by reference)
10.9	Second Amendment to Second Amended and Restated Stock Option Plan for Key Employees of Owens-Illinois, Inc. (filed as Exhibit 10.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 1-9576, and incorporated herein by reference)
10.10	Third Amendment to Second Amended and Restated Stock Option Plan for Key Employees of Owens-Illinois, Inc. (filed as Exhibit 10.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, File No. 1-9576, and incorporated herein by reference)
10.11	Form of Non-Qualified Stock Option Agreement for use under the Amended and Restated Stock Option Plan for Key Employees of Owens-Illinois, Inc. (filed as Exhibit 10.21 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-9576, and incorporated herein by reference)
10.12	Amended and Restated Owens-Illinois, Inc. Senior Management Incentive Plan (filed as Exhibit 10.15 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993, File No. 1-9576, and incorporated herein by reference)
10.13	First Amendment to Amended and Restated Owens-Illinois, Inc. Senior Management Incentive Plan (filed as Exhibit 10.19 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-9576, and incorporated herein by reference)

10.14	Second Amendment to Amended and Restated Owens-Illinois, Inc. Senior Management Incentive Plan (filed as Exhibit 10.2 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 1-9576, and incorporated herein by reference)
10.15	Third Amendment to Amended and Restated Owens-Illinois, Inc. Senior Management Incentive Plan (filed as Exhibit 10.3 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 1-9576, and incorporated herein by reference)
10.16	Amended and Restated Owens-Illinois, Inc. Performance Award Plan (filed as Exhibit 10.16 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1993, File No. 1-9576, and incorporated herein by reference)
10.17	First Amendment to Amended and Restated Owens-Illinois, Inc. Performance Award Plan (filed as Exhibit 10.4 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 1-9576, and incorporated herein by reference)
10.18	Owens-Illinois, Inc. Directors Deferred Compensation Plan (filed as Exhibit 10.26 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-9576, and incorporated herein by reference)
10.19	First Amendment to Owens-Illinois, Inc. Directors Deferred Compensation Plan (filed as Exhibit 10.27 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-9576, and incorporated herein by reference)
10.20	Second Amendment to Owens-Illinois, Inc. Directors Deferred Compensation Plan (filed as Exhibit 10.2 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 1-9576, and incorporated herein by reference)
10.21	Amended and Restated 1997 Equity Participation Plan of Owens-Illinois, Inc. (filed as Exhibit 10.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 1-9576, and incorporated herein by reference)
10.22	Form of Non-Qualified Stock Option Agreement for use under the Amended and Restated 1997 Equity Participation Plan of Owens-Illinois, Inc. (filed as Exhibit 4.3 to Owens-Illinois, Inc.'s Form S-8, File No. 333-47691, and incorporated herein by reference)
10.23	Form of Restricted Stock Agreement for use under the Amended and Restated 1997 Equity Participation Plan of Owens-Illinois, Inc. (filed as Exhibit 4.4 to Owens-Illinois, Inc.'s Form S-8, File No. 333-47691, and incorporated herein by reference)
10.24	Form of Restricted Stock Agreement for use under the Amended and Restated 1997 Equity Participation Plan of Owens-Illinois, Inc. (filed as Exhibit 10.2 to Owens-Illinois, Inc.'s Quarterly report on Form 10-Q for the quarter ended June 30, 1999, File No. 1-9576, and incorporated herein by reference)
10.25	Amendment to Form of Restricted Stock Agreement for use under the Amended and Restated 1997 Equity Participation Plan of Owens-Illinois, Inc. (filed as Exhibit 10.26 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference)
10.26	Form of Phantom Stock Agreement for use under the Amended and Restated 1997 Equity Participation Plan of Owens-Illinois, Inc. (filed as Exhibit 10.3 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 1-9576, and incorporated herein by reference)
10.27	Amendment to the Phantom Stock Agreement (filed as Exhibit 10.28 to Owens-Illinois, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference)

10.28	Owens-Illinois, Inc. Executive Life Insurance Plan (filed as Exhibit 10.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, File No. 1-9576, and incorporated herein by reference)
10.29	Owens-Illinois, Inc. Death Benefit Only Agreement (filed as Exhibit 10.2 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, File No. 1-9576, and incorporated herein by reference)
10.30	Owens-Illinois, Inc. Executive Deferred Savings Plan (filed as Exhibit 10.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, File No. 1-9576, and incorporated herein by reference)
10.31	Second Amendment to Amended and Restated Owens-Illinois Supplemental Retirement Benefit Plan (filed as Exhibit 10.1 to Owens-Illinois, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, File No. I-9576, and incorporated herein by reference)
12.1*	Computation of Ratios of Earnings to Fixed Charges
21.1*	Subsidiaries of the Registrants
23.1*	Consent of Latham & Watkins LLP (included in Exhibit 5.1)
23.2*	Consent of James W. Baehren (included in Exhibit 5.2)
23.3*	Consent of Ernst & Young LLP
24.1*	Powers of Attorney
25.1*	Statement of Eligibility under the Trust Indenture Act of 1939 of U.S. Bank National Association (Form T-1)
99.1*	Letter of Transmittal with Respect to the Exchange Offer
99.2*	Notice of Guaranteed Delivery with Respect to the Exchange Offer
99.3*	Letter to DTC Participants Regarding the Exchange Offer
99.4*	Letter to Beneficial Holders Regarding the Exchange Offer
99.5*	Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9

*

Filed herewith

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TABLE OF GUARANTORS
TABLE OF CONTENTS
MARKET, RANKING AND OTHER DATA
PROSPECTUS SUMMARY
Owens-Illinois Group, Inc.
Owens-Brockway Glass Container Inc.
Recent Developments
Competitive Strengths
Business Strategy
Organizational Structure
The Exchange Offer
The Exchange Notes
SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA OWENS-ILLINOIS GROUP, INC.
RISK FACTORS
FORWARD LOOKING STATEMENTS
THE EXCHANGE OFFER
USE OF PROCEEDS
CAPITALIZATION OF OWENS-ILLINOIS GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL DATA OF OWENS-ILLINOIS GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF OWENS-ILLINOIS GROUP, INC.
BUSINESS
MANAGEMENT
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DESCRIPTION OF CERTAIN INDEBTEDNESS
DESCRIPTION OF NOTES
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO FINANCIAL STATEMENTS OWENS-ILLINOIS GROUP, INC.
REPORT OF INDEPENDENT AUDITORS
Owens-Illinois Group, Inc. CONSOLIDATED RESULTS OF OPERATIONS (Millions of dollars)
Owens-Illinois Group, Inc. CONSOLIDATED BALANCE SHEETS (Millions of dollars)
Owens-Illinois Group, Inc. CONSOLIDATED BALANCE SHEETS (Continued) (Millions of dollars)
Owens-Illinois Group, Inc. CONSOLIDATED SHARE OWNER'S EQUITY (Millions of dollars)
Owens-Illinois Group, Inc. CONSOLIDATED CASH FLOWS (Millions of dollars)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL REVIEW Tabular data in millions of dollars.
OWENS-ILLINOIS GROUP, INC. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (CONSOLIDATED) Years ended December 31, 2001, 2000 and 1999 (Millions of Dollars)
REPORT OF INDEPENDENT AUDITORS
Owens-Brockway Packaging, Inc. CONSOLIDATED RESULTS OF OPERATIONS (Millions of dollars)
Owens-Brockway Packaging, Inc. CONSOLIDATED BALANCE SHEETS (Millions of dollars) Assets
Owens-Brockway Packaging, Inc. CONSOLIDATED BALANCE SHEETS (Continued) (Millions of dollars) Liabilities and Net Parent Investment
Owens-Brockway Packaging, Inc. CONSOLIDATED NET PARENT INVESTMENT (Millions of dollars)
Owens-Brockway Packaging, Inc. CONSOLIDATED CASH FLOWS (Millions of dollars)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL REVIEW Tabular data in millions of dollars
REPORT OF INDEPENDENT AUDITORS
Owens-Brockway Glass Container Inc. CONSOLIDATED RESULTS OF OPERATIONS (Millions of dollars)
Owens-Brockway Glass Container Inc. CONSOLIDATED BALANCE SHEETS (Millions of dollars)
Assets
Owens-Brockway Glass Container Inc. CONSOLIDATED BALANCE SHEETS (Continued) (Millions of dollars)
Liabilities and Net Parent Investment
Owens-Brockway Glass Container Inc. CONSOLIDATED NET PARENT INVESTMENT (Millions of dollars)
Owens-Brockway Glass Container Inc. CONSOLIDATED CASH FLOWS (Millions of dollars)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL REVIEW Tabular data in millions of dollars
REPORT OF INDEPENDENT AUDITORS
OI Plastic Products FTS Inc. CONSOLIDATED RESULTS OF OPERATIONS (Millions of dollars)
OI Plastic Products FTS Inc. CONSOLIDATED BALANCE SHEETS (Millions of dollars)
Assets
OI Plastic Products FTS Inc. CONSOLIDATED BALANCE SHEETS (Continued) (Millions of dollars)
Liabilities and Net Parent Investment
OI Plastic Products FTS Inc. CONSOLIDATED NET PARENT INVESTMENT (Millions of dollars)
OI Plastic Products FTS Inc. CONSOLIDATED CASH FLOWS (Millions of dollars)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL REVIEW Tabular data in millions of dollars.
Owens-Illinois Group, Inc. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS Nine months ended September 30, 2002 and 2001 (Dollars in millions)
Owens-Illinois Group, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2002, December 31, 2001, and September 30, 2001 (Dollars in millions)
Owens-Illinois Group, Inc. CONDENSED CONSOLIDATED CASH FLOWS Nine months ended September 30, 2002 and 2001 (Dollars in millions)
Owens-Illinois Group, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Tabular data in millions of dollars
Owens-Brockway Packaging, Inc. CONSOLIDATED RESULTS OF OPERATIONS (Millions of dollars)
Owens-Brockway Packaging, Inc. CONSOLIDATED BALANCE SHEETS (Millions of dollars)
Owens-Brockway Packaging Inc. CONSOLIDATED BALANCE SHEETS (Continued) (Millions of dollars)
Owens-Brockway Packaging, Inc. CONSOLIDATED CASH FLOWS (Millions of dollars)
Owens-Brockway Packaging, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in millions of dollars)
Owens-Brockway Glass Container Inc. CONSOLIDATED RESULTS OF OPERATIONS (Millions of dollars)
Owens-Brockway Glass Container Inc. CONSOLIDATED BALANCE SHEETS (Millions of dollars)
Owens-Brockway Glass Container Inc. CONSOLIDATED CASH FLOWS (Millions of dollars)
Owens-Brockway Glass Container Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in millions of dollars)
OI Plastic Products FTS Inc CONSOLIDATED RESULTS OF OPERATIONS (Millions of dollars)
OI Plastic Products FTS Inc. CONSOLIDATED BALANCE SHEETS (Millions of dollars)
OI Plastic Products FTS Inc. CONSOLIDATED CASH FLOWS (Millions of dollars)
OI Plastic Products FTS Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in millions of dollars)
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
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EXHIBIT INDEX

EX-4.4

                                                                     EXHIBIT 4.4

                                                                  EXECUTION COPY


               --------------------------------------------------

                       OWENS-BROCKWAY GLASS CONTAINER INC.

                                     ISSUER

                                       AND

               THE GUARANTORS SET FORTH IN ANNEX A ATTACHED HERETO

                        ---------------------------------

                          THIRD SUPPLEMENTAL INDENTURE
                          DATED AS OF NOVEMBER 13, 2002

                      8 3/4% SENIOR SECURED NOTES DUE 2012

                        ---------------------------------

                         U.S. BANK NATIONAL ASSOCIATION

                                     TRUSTEE

               --------------------------------------------------



               Third Supplemental Indenture, dated as of November 13, 2002 (the
"THIRD SUPPLEMENTAL INDENTURE"), to the Indenture, dated as of January 24, 2002
(the "INDENTURE") among Owens-Brockway Glass Container Inc., a Delaware
corporation (the "COMPANY"), the Guarantors (as defined in the Indenture) and
U.S. Bank National Association, a national banking association, as Trustee (the
"TRUSTEE").

                               W I T N E S S E T H

               WHEREAS, the Company duly authorized, executed and delivered to
the Trustee the Indenture to provide for the issuance from time to time of its
Securities (as defined in the Indenture) to be issued in one or more series;

               WHEREAS, the Company and the Guarantors desire and have requested
the Trustee to join it in the execution and delivery of this Third Supplemental
Indenture in order to establish and provide for the issuance by the Company of a
series of Securities designated as its 8 3/4 % Senior Secured Notes due 2012 in
an unlimited aggregate principal amount (the "NOTES"), on the terms set forth
herein;

               WHEREAS, the Company now wishes to issue $450,000,000 of Notes;

               WHEREAS, Section 9.01 of the Indenture provides that a
supplemental indenture may be entered into by the Company, the Guarantors and
the Trustee without the consent of any holder of any Securities to, INTER ALIA,
establish the terms of any Securities permitted by Sections 2.01 and 2.02 of the
Indenture, PROVIDED certain conditions are met;

               WHEREAS, the conditions set forth in the Indenture for the
execution and delivery of this Third Supplemental Indenture have been satisfied;
and

               WHEREAS, all things necessary to make this Third Supplemental
Indenture a valid agreement of the Company, the Guarantors and the Trustee, in
accordance with its terms, and a valid amendment of, and supplement to, the
Indenture have been done.

               NOW THEREFORE:

               There is hereby established a series of Securities to be issued
under the Indenture, which series of Securities shall have the terms set forth
herein and in the Notes, and in consideration of the premises and the purchase
and acceptance of the Notes by the Holders thereof, the Company and the
Guarantors mutually covenant and agree with the Trustee, for the equal and
proportionate benefit of all holders of the Notes, that the Indenture is
supplemented and amended, to the extent and for the purposes expressed herein,
as follows:



                                   ARTICLE 1.

     SCOPE OF THIS THIRD SUPPLEMENTAL INDENTURE

SECTION 1.01.  CHANGES, ETC. APPLICABLE ONLY TO THE NOTES.

               The changes, modifications and supplements to the Indenture
effected by this Third Supplemental Indenture in Sections 2.01 through 2.10
hereof shall only be applicable with respect to, and govern the terms of, the
Notes, which shall not be limited in aggregate principal amount, and shall not
apply to any other Securities which may be issued under the Indenture unless a
supplemental indenture with respect to such other Securities specifically
incorporates such changes, modifications and supplements.

                                   ARTICLE 2.

                           AMENDMENTS TO THE INDENTURE

SECTION 2.01.  AMENDMENTS TO ARTICLE 1.

               Section 1.01 of the Indenture is hereby amended by adding the
following definitions in their proper alphabetical order which, in the event of
a conflict with the definition of terms in the Indenture, shall control:

                    "ACQUIRED DEBT" means, with respect to any specified Person:
     (1) Indebtedness of any other Person existing at the time such other Person
     is merged with or into or became a Restricted Subsidiary of such specified
     Person, whether or not such Indebtedness is incurred in connection with, or
     in contemplation of, such other Person merging with or into, or becoming a
     Restricted Subsidiary of, such specified Person; and (2) Indebtedness
     secured by a Lien encumbering any asset acquired by such specified Person.

                    "ASSET SALE" means: (1) the sale, lease, conveyance or other
     disposition of any assets; PROVIDED that the sale, conveyance or other
     disposition of all or substantially all of the assets of OI Group and its
     Restricted Subsidiaries taken as a whole shall be governed by Article 5 and
     not by Section 4.11; and (2) the issuance of Equity Interests by any of OI
     Group's Restricted Subsidiaries or the sale of Equity Interests in any of
     OI Group's Restricted Subsidiaries. Notwithstanding the preceding, the
     following items shall not be deemed to be Asset Sales: (1) any single
     transaction or series of related transactions that involves assets or
     Equity Interests having a Fair Market Value of less than $10.0 million; (2)
     a transfer of assets between or among OI Group and its Restricted
     Subsidiaries; (3) an issuance of Equity Interests by a Restricted
     Subsidiary of OI Group to OI Group or to another Restricted Subsidiary of
     OI Group; (4) the sale or lease of equipment, inventory, accounts
     receivable or other assets in the ordinary course of business; (5) the
     sale, lease, conveyance or other disposition of any assets securing this
     Indenture or the Credit Agreement in connection with the enforcement of the
     security interests contained therein pursuant to the terms of the
     Intercreditor Agreement; (6) the sale or other disposition of cash or Cash
     Equivalents; (7) a Restricted Payment that is permitted

                                        2


     by Section 4.12; and (8) the exchange of assets held by OI Group or a
     Restricted Subsidiary of OI Group for assets held by any Person or entity
     (including Equity Interests of such Person or entity), PROVIDED that (i)
     the assets received by OI Group or such Restricted Subsidiary of OI Group
     in any such exchange shall immediately constitute, be part of, or be used
     in a Permitted Business; and (ii) any such assets received are of a
     comparable Fair Market Value to the assets exchanged as determined in good
     faith by OI Group.

                    "CASH EQUIVALENTS" means: (1) United States dollars; (2)
     securities issued or directly and fully guaranteed or insured by the United
     States government or any agency or instrumentality thereof and (a) backed
     by the full faith and credit of the United States or (b) having a rating of
     at least AAA from S&P or at least Aaa from Moody's, in each case maturing
     not more than one year from the date of acquisition; (3) securities issued
     by any state of the United States of America or any political subdivision
     of any such state or any public instrumentality thereof maturing within one
     year of the date of acquisition thereof and, at the time of acquisition,
     having the highest rating obtainable from either S&P or Moody's; (4)
     certificates of deposit and eurodollar time deposits with maturities of one
     year or less from the date of acquisition, bankers' acceptances with
     maturities not exceeding one year and overnight bank deposits, in each
     case, with any lender under the Credit Agreement or any domestic commercial
     bank having capital and surplus of not less than $250.0 million; (5)
     repurchase and reverse repurchase obligations for underlying securities of
     the types described in clauses (2) and (4) above entered into with any
     financial institution meeting the qualifications specified in clause (4)
     above; (6) commercial paper having the highest rating obtainable from
     Moody's or S&P and in each case maturing within one year from the date of
     creation thereof; and (7) money market funds at least 95% of the assets of
     which constitute Cash Equivalents of the kinds described in clauses (1)
     through (6) of this definition or that has a rating of at least AAA from
     S&P or at least Aaa from Moody's.

                    "CHANGE OF CONTROL" means the occurrence of any of the
     following: (1) OI Inc. or OI Group becomes aware of (by way of a report or
     any other filing pursuant to Section 13(d) of the Exchange Act, proxy,
     vote, written notice or otherwise) the acquisition by any Person or group
     (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange
     Act, or any successor provision), including any group acting for the
     purpose of acquiring, holding or disposing of securities (within the
     meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the
     Principals and their Related Parties, in a single transaction or in a
     related series of transactions, by way of merger, consolidation or other
     business combination or purchase of beneficial ownership (within the
     meaning of Rule 13d-3 under the Exchange Act, or any successor provision)
     of 35% or more of the total voting power of the Voting Stock of OI Inc.; or
     (2) the first day on which a majority of the members of the Board of
     Directors of OI Inc. are not Continuing Directors; or (3) the Company
     consolidates with, or merges with or into, any Person, or any Person
     consolidates with, or merges with or into the Company, in any such event
     pursuant to a transaction in which any of the outstanding Voting Stock of
     the Company or such other Person is converted into or exchanged for cash,
     securities or other property, other than any such transaction where (A) the
     Voting Stock of the Company outstanding immediately prior to such
     transaction is converted into or exchanged for Voting Stock (other than
     Disqualified Stock) of the surviving or transferee Person constituting a
     majority of the

                                        3


     outstanding shares of such Voting Stock of such surviving or transferee
     Person (immediately after giving effect to such issuance) and (B)
     immediately after such transaction, no "person" or "group" (as such terms
     are used in Section 13(d) and 14(d) of the Exchange Act), other than the
     Principals and their Related Parties, becomes, directly or indirectly, the
     beneficial owner (as defined above) of 35% or more of the voting power of
     all classes of Voting Stock of the Company; or (4) the first day on which
     OI Inc. fails to own 100% of the issued and outstanding Equity Interests of
     OI Group.

                    "COLLATERAL DOCUMENTS" means, collectively, the
     Intercreditor Agreement, the Pledge Agreement and the Security Agreement,
     each as in effect on the Issue Date and as amended, amended and restated,
     modified, renewed, replaced or restructured from time to time and the
     Mortgages each as in effect on the Issue Date and any additional Mortgages
     created from time to time, and as amended, amended and restated, modified,
     renewed or replaced from time to time.

                    "CONSOLIDATED CASH FLOW" means, with respect to any
     specified Person for any period, the Consolidated Net Income of such Person
     for such period PLUS: (1) an amount equal to any extraordinary loss
     realized by such Person or any of its Restricted Subsidiaries in connection
     with any sale or other disposition of assets, to the extent such losses
     were deducted in computing such Consolidated Net Income; PLUS (2) provision
     for taxes based on income or profits of such Person and its Restricted
     Subsidiaries for such period, to the extent that such provision for taxes
     was deducted in computing such Consolidated Net Income; PLUS (3)
     consolidated interest expense of such Person and its Restricted
     Subsidiaries for such period, whether paid or accrued and whether or not
     capitalized (including without limitation amortization of debt issuance
     costs and original issue discount, non-cash interest payments, the interest
     component of any deferred payment obligations, the interest component of
     all payments associated with Capital Lease Obligations, commissions,
     discounts and other fees and charges incurred in respect of letter of
     credit or bankers' acceptance financings, and net of the effect of all
     payments made or received pursuant to Hedging Obligations), to the extent
     that any such expense was deducted in computing such Consolidated Net
     Income; PLUS (4) depreciation, amortization (including amortization of
     goodwill and other intangibles but excluding amortization of prepaid cash
     expenses that were paid in a prior period) and other non-cash charges and
     expenses (excluding any amortization of a prepaid cash expense that was
     paid in a prior period) of such Person and its Restricted Subsidiaries for
     such period to the extent that such depreciation, amortization and other
     non-cash charges and expenses were deducted in computing such Consolidated
     Net Income; MINUS (5) an amount equal to any extraordinary gain realized by
     such Person or any of its Restricted Subsidiaries in connection with any
     sale or other disposition of assets, to the extent such gains were included
     in computing such Consolidated Net Income; MINUS (6) pension expenses,
     retiree medical expenses and any other material non-cash items increasing
     Consolidated Net Income for such period that are disclosed in such Person's
     financial statements, other than accrual of revenue in the ordinary course
     of business, in each case without duplication, on a consolidated basis and
     determined in accordance with GAAP; MINUS (7) net cash payments to OI Inc.
     by OI Group for (i) claims of persons for exposure to asbestos containing
     products and expenses related thereto and (ii) dividends on any outstanding
     preferred stock of OI Inc., in each case without duplication, on a
     consolidated basis and determined in accordance with GAAP.

                                        4


                    Notwithstanding the preceding, the provision for taxes based
     on the income or profits of, and the depreciation, amortization and other
     non-cash charges and expenses of, a Restricted Subsidiary of OI Group shall
     be added to Consolidated Net Income to compute Consolidated Cash Flow of OI
     Group only to the extent that a corresponding amount would be permitted at
     the date of determination to be dividended to OI Group by such Restricted
     Subsidiary without prior governmental approval (that has not been
     obtained), and would not be prohibited, directly or indirectly, by the
     operation of the terms of its charter and all agreements, instruments,
     judgments, decrees, orders, statutes, rules and governmental regulations
     applicable to that Restricted Subsidiary or its stockholders, other than
     agreements, instruments, judgments, decrees, orders, statutes, rules and
     government regulations existing on January 24, 2002.

                    "CONSOLIDATED NET INCOME" means, with respect to any
     specified Person for any period, the aggregate of the Net Income of such
     Person and its Restricted Subsidiaries for such period, on a consolidated
     basis, determined in accordance with GAAP; PROVIDED that: (1) the Net
     Income (but not loss) of any Person that is not a Restricted Subsidiary or
     that is accounted for by the equity method of accounting shall be included
     only to the extent of the amount of dividends or distributions paid in cash
     to the specified Person or a Wholly Owned Restricted Subsidiary of the
     specified Person; (2) the Net Income of any Restricted Subsidiary shall be
     excluded to the extent that the declaration or payment of dividends or
     similar distributions by that Restricted Subsidiary of that Net Income is
     not at the date of determination permitted without any prior governmental
     approval (that has not been obtained) or, is prohibited, directly or
     indirectly, by operation of the terms of its charter or any agreement,
     instrument, judgment, decree, order, statute, rule or governmental
     regulation applicable to that Restricted Subsidiary or its stockholders,
     other than agreements, instruments, judgments, decrees, orders, statutes,
     rules and government regulations existing on January 24, 2002; (3) the Net
     Income of any Person acquired in a pooling of interests transaction for any
     period prior to the date of such acquisition shall be excluded; (4) the
     cumulative effect of a change in accounting principles under GAAP shall be
     excluded; (5) all extraordinary, unusual or nonrecurring gains and losses
     (including without limitation any one-time costs incurred in connection
     with acquisitions) (together with any related provision for taxes) shall be
     excluded; (6) any gain or loss (together with any related provision for
     taxes) realized upon the sale or other disposition of any property, plant
     or equipment of the specified Person or its Restricted Subsidiaries
     (including pursuant to any sale and leaseback arrangement) which is not
     sold or otherwise disposed of in the ordinary course of business and any
     gain or loss (together with any related provision for taxes) realized upon
     the sale or other disposition by the specified Person or any Restricted
     Subsidiary of the specified Person of any Capital Stock of any Person or
     any Asset Sale shall be excluded to the extent that any such gain or loss
     exceeds $5.0 million with respect to any one occurrence or $15.0 million in
     the aggregate with respect to gains or losses during any twelve-month
     period; (7) the Net Income of any Unrestricted Subsidiary shall be
     excluded, whether or not distributed to the specified Person or one of its
     Subsidiaries; and (8) any deduction for minority owners' interest in
     earnings of Subsidiaries shall be excluded.

                    "CONTINUING DIRECTORS" means, as of any date of
     determination, any member of the Board of Directors of OI Inc., who: (1)
     was a member of such Board of

                                        5


     Directors on the Issue Date; or (2) was nominated for election or elected
     to such Board of Directors with the approval of a majority of the
     Continuing Directors who were members of such Board at the time of such
     nomination or election.

                    "CREDIT AGREEMENT" means that certain Secured Credit
     Agreement, dated as of April 23, 2001, by and among the Borrowers named
     therein, OI Group and Owens-Illinois General, Inc., as Borrower's Agent,
     Deutsche Bank Securities Inc., formerly Deutsche Banc Alex. Brown, and Banc
     of America Securities, LLC, as Joint Lead Arrangers and Joint Book
     Managers, Deutsche Bank AG, London Branch, as UK Administrative Agent,
     Deutsche Bank Trust Company Americas, formerly Bankers Trust Company, as
     Administrative Agent, and the other Agents and the other Lenders named
     therein, including any related notes, guarantees, collateral documents,
     instruments and agreements executed in connection therewith, and in each
     case as amended, amended and restated, modified, renewed, refunded,
     replaced, substituted or refinanced or otherwise restructured (including
     but not limited to, the inclusion of additional borrowers thereunder) from
     time to time.

                    "CREDIT AGREEMENT DOMESTIC BORROWERS" means the Company, OI
     General FTS Inc. and OI Plastic Products FTS Inc., to the extent at the
     time of determination such entity is a borrower under the Credit Agreement
     and any other Domestic Subsidiary of OI Group that is, at the relevant
     time, a borrower under the Credit Agreement.

                    "CREDIT FACILITIES" means (1) one or more debt facilities
     (including, without limitation, the Credit Agreement) or commercial paper
     facilities, in each case with banks or other lenders providing for
     revolving credit loans, term loans, bankers acceptances, receivables
     financing (including through the sale of receivables to such lenders or to
     special purpose entities formed to borrow from such lenders against such
     receivables) or letters of credit, in each case, as amended, restated,
     modified, renewed, refunded, replaced, refinanced or otherwise restructured
     in whole or in part from time to time (collectively, "BANK FACILITIES");
     and (2) notes, debentures or other financing instruments or any combination
     thereof incurred after the Issue Date ("Non-Bank Refinancing"), including
     any refinancing thereof, to the extent such Non-Bank Refinancing replaces,
     refinances or otherwise restructures Indebtedness under Credit Facilities.

                    "DESIGNATED NONCASH CONSIDERATION" means the noncash
     consideration received by OI Group or one of its Restricted Subsidiaries in
     connection with an Asset Sale that is so designated as Designated Noncash
     Consideration pursuant to an Officers' Certificate setting forth the basis
     of such valuation, executed by an officer of OI Group or the Company, less
     the amount of cash or Cash Equivalents received in connection with a
     subsequent sale of such Designated Noncash Consideration.

                    "DISQUALIFIED STOCK" means any Capital Stock that, by its
     terms (or by the terms of any security into which it is convertible, or for
     which it is exchangeable, in each case at the option of the Holder
     thereof), or upon the happening of any event, matures or is mandatorily
     redeemable (other than as a result of a change of control or asset sale),
     pursuant to a sinking fund obligation or otherwise, or redeemable at the
     option of the Holder thereof (other than as a result of a change of control
     or asset sale), in whole or in

                                        6


     part, on or prior to the date that is 91 days after the date on which the
     Notes mature or are no longer outstanding. Notwithstanding the preceding
     sentence, any Capital Stock that would constitute Disqualified Stock solely
     because the Holders thereof have the right to require OI Group or the
     Company to repurchase such Capital Stock upon the occurrence of a change of
     control or an asset sale shall not constitute Disqualified Stock if the
     terms of such Capital Stock provide that OI Group or the Company may not
     repurchase or redeem any such Capital Stock pursuant to such provisions
     unless such repurchase or redemption complies with Section 4.12.

                    "EQUITY OFFERING" means any public or private sale of common
     stock (other than Disqualified Stock) of OI Inc. (other than public
     offerings with respect to common stock registered on Form S-8 or otherwise
     relating to equity securities issuable under any employee benefit plan of
     OI Inc.).

                    "EXISTING INDEBTEDNESS" means the aggregate principal or
     commitment amount of Indebtedness of OI Group and its Subsidiaries (other
     than Indebtedness under the Credit Agreement) in existence on the Issue
     Date, until such amounts are repaid or terminated.

                    "EXISTING IRBs" means the Holmes County Ohio 5.85%
     Industrial Revenue Bonds due 2007, the Kansas City, Missouri Industrial
     Development Revenue Bonds due 2008 and the City of Mentor, Ohio Industrial
     Development Bonds due 2004, and any extensions, renewals or refinancings
     thereof to the extent that such extensions, renewals and refinancings
     thereof do not result in an increase in the aggregate principal amount of
     such Existing IRBs.

                    "EXISTING SENIOR NOTES" means the Company's 8 7/8% Senior
     Secured Notes due 2009 issued under the Indenture, as supplemented by the
     first supplemental indenture dated as of January 24, 2002 and the second
     supplemental indenture dated as of August 5, 2002, among the Company, the
     Guarantors and U.S. Bank National Association, as Trustee.

                    "FIXED CHARGE COVERAGE RATIO" means with respect to any
     specified Person and its Restricted Subsidiaries for any period, the ratio
     of the Consolidated Cash Flow of such Person and its Restricted
     Subsidiaries for such period to the Fixed Charges of such Person and its
     Restricted Subsidiaries for such period. In the event that the specified
     Person or any of its Restricted Subsidiaries incurs, assumes, guarantees,
     repays, repurchases or redeems any Indebtedness or issues, repurchases or
     redeems preferred stock subsequent to the commencement of the period for
     which the Fixed Charge Coverage Ratio is being calculated and on or prior
     to the date on which the event for which the calculation of the Fixed
     Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
     Charge Coverage Ratio shall be calculated giving pro forma effect to such
     incurrence, assumption, Guarantee, repayment, repurchase or redemption of
     Indebtedness, or such issuance, repurchase or redemption of preferred
     stock, and the use of the proceeds therefrom as if the same had occurred at
     the beginning of the applicable four-quarter reference period. In addition,
     for purposes of calculating the Fixed Charge Coverage Ratio: (1)
     acquisitions and dispositions that have been made by the specified

                                        7


     Person or any of its Restricted Subsidiaries, including through mergers or
     consolidations and including any related financing transactions, during the
     four-quarter reference period or subsequent to such reference period and on
     or prior to the Calculation Date shall be given pro forma effect as if they
     had occurred on the first day of the four-quarter reference period and
     Consolidated Cash Flow for such reference period shall be calculated on a
     pro forma basis in accordance with Regulation S-X under the Securities Act;
     (2) the Consolidated Cash Flow attributable to discontinued operations, as
     determined in accordance with GAAP, and operations or businesses disposed
     of prior to the Calculation Date, shall be excluded; (3) the Fixed Charges
     attributable to discontinued operations, as determined in accordance with
     GAAP, and operations or businesses disposed of prior to the Calculation
     Date, shall be excluded, but only to the extent that the obligations giving
     rise to such Fixed Charges will not be obligations of the specified Person
     or any of its Subsidiaries following the Calculation Date; (4) the
     consolidated interest expense attributable to interest on any Indebtedness
     computed on a pro forma basis and (a) bearing a floating interest rate
     shall be computed as if the rate in effect on the date of computation had
     been the applicable rate for the entire period and (b) that was not
     outstanding during the period for which the computation is being made but
     which bears, at the option of such Person, a fixed or floating rate of
     interest, shall be computed by applying at the option of such Person either
     the fixed or floating rate; and (5) the consolidated interest expense
     attributable to interest on any working capital borrowings under a
     revolving credit facility computed on a pro forma basis shall be computed
     based upon the average daily balance of such working capital borrowings
     during the applicable period.

                    "FIXED CHARGES" means, with respect to any specified Person
     and its Restricted Subsidiaries for any period, the sum, without
     duplication, of: (1) the consolidated interest expense of such Person and
     its Restricted Subsidiaries for such period, whether paid or accrued,
     including, without limitation, amortization of debt issuance costs and
     original issue discount, non-cash interest payments, the interest component
     of any deferred payment obligations, the interest component of all payments
     associated with Capital Lease Obligations, imputed interest with respect to
     attributable debt, commissions, discounts and other fees and charges
     incurred in respect of letter of credit or bankers' acceptance financings,
     and net of the effect of all payments made or received pursuant to Hedging
     Obligations; PLUS (2) the consolidated interest of such Person and its
     Restricted Subsidiaries that was capitalized during such period; PLUS (3)
     interest actually paid by the Company or any such Restricted Subsidiary
     under any Guarantee of Indebtedness or other obligation of any other
     Person; PLUS (4) the product of (a) all dividends, whether paid or accrued
     and whether or not in cash, on any series of Disqualified Stock or
     preferred stock of such Person or any of its Restricted Subsidiaries, other
     than dividends on Equity Interests payable solely in Equity Interests of OI
     Group (other than Disqualified Stock) or to OI Group or a Restricted
     Subsidiary of OI Group, times (b) a fraction, the numerator of which is one
     and the denominator of which is one minus the then current combined
     federal, state and local statutory tax rate of such Person, expressed as a
     decimal, in each case, on a consolidated basis and in accordance with GAAP.

                    "GLOBAL NOTE" means a Note issued to evidence all or a part
     of the Notes that is executed by the Company and authenticated and
     delivered by the Trustee to a Depositary or pursuant to such Depositary's
     instructions, all in accordance with this

                                        8


     Indenture and pursuant to Sections 2.01, 2.06(b)(iv), 2.06(d)(ii) or
     2.06(f), which shall be registered as to principal and interest in the name
     of such Depositary or its nominee.

                    "GUARANTORS" means: (1) OI Group; (2) each direct or
     indirect Domestic Subsidiary of OI Group (other than the Company) that
     guarantees the Credit Agreement as of the Issue Date; and (3) each future
     direct or indirect Domestic Subsidiary of OI Group that guarantees the
     Credit Agreement and executes a Guarantee of the Notes in accordance with
     the provisions of this Indenture and the Third Supplemental Indenture; and
     their respective successors and assigns.

                    "INTERCREDITOR AGREEMENT" means the intercreditor agreement,
     dated as of April 23, 2001, by and among Deutsche Bank Trust Company
     Americas, formerly Bankers Trust Company, as administrative agent for the
     lenders party to the Credit Agreement, Deutsche Bank Trust Company
     Americas, formerly Bankers Trust Company, as Collateral Agent and any other
     parties thereto, as amended, amended and restated or otherwise modified
     from time to time.

                    "INVESTMENT GRADE PERMITTED LIENS" means: (1) Liens arising
     under the Collateral Documents other than Liens securing the OI Inc. Senior
     Notes on the Issue Date; (2) Liens incurred after the Issue Date on the
     assets (including shares of Capital Stock and Indebtedness) of OI Group or
     any Domestic Subsidiary of OI Group; PROVIDED, HOWEVER, that the aggregate
     amount of Indebtedness and other obligations at any time outstanding
     secured by such Liens pursuant to clause (1) above and this clause (2)
     shall not exceed the sum of $5.5 billion plus 50% of Tangible Assets
     acquired by the Company or any Domestic Subsidiary after January 24, 2002;
     (3) Liens in favor of OI Group or any Domestic Subsidiary of OI Group; (4)
     Liens on property or shares of capital stock of a Person existing at the
     time such Person is merged with or into or consolidated with OI Group or
     any Domestic Subsidiary of OI Group; PROVIDED that such Liens were not
     incurred in connection with or in contemplation of such merger or
     consolidation and do not extend to any assets other than those of the
     Person merged into or consolidated with OI Group or the Domestic
     Subsidiary; (5) Liens on property or shares of capital stock existing at
     the time of acquisition thereof by OI Group or any Domestic Subsidiary of
     OI Group, PROVIDED that such Liens were not incurred in connection with or
     in contemplation of such acquisition and do not extend to any property
     other than the property so acquired by OI Group or the Domestic Subsidiary;
     (6) Liens (including extensions and renewals thereof) upon real or personal
     (whether tangible or intangible) property acquired after the Issue Date,
     PROVIDED that: (a) such Lien is created solely for the purpose of securing
     Indebtedness incurred to finance all or any part of the purchase price or
     cost of construction or improvement of property, plant or equipment subject
     thereto and such Lien is created prior to, at the time of or within 12
     months after the later of the acquisition, the completion of construction
     or the commencement of full operation of such property, plant or equipment
     or to refinance any such Indebtedness previously so secured; (b) the
     principal amount of the Indebtedness secured by such Lien does not exceed
     100% of such cost; and (c) any such Lien shall not extend to or cover any
     property or assets other than such item of property or assets and any
     improvements on such item; (7) Liens to secure any Capital Lease Obligation
     or operating lease; (8) Liens encumbering customary initial deposits and
     margin deposits; (9) Liens securing Indebtedness under Hedging Obligations;
     (10) Liens

                                        9


     arising out of conditional sale, title retention, consignment or similar
     arrangements for the sale of goods entered into by OI Group or any of its
     Domestic Subsidiaries in the ordinary course of business of OI Group and
     its Domestic Subsidiaries; (11) Liens on or sales of receivables and
     customary cash reserves established in connection therewith; (12) Liens
     securing OI Group's or any of its Domestic Subsidiary's obligations in
     respect of bankers' acceptances issued or created to facilitate the
     purchase, shipment or storage of inventory or other goods; and (13) Liens
     for taxes, assessments or governmental charges or claims that are not yet
     delinquent or that are being contested in good faith by appropriate
     proceedings promptly instituted and diligently concluded, PROVIDED that any
     reserve or other appropriate provision as shall be required in conformity
     with GAAP shall have been made therefor.

                    "INVESTMENT GRADE RATINGS" means a debt rating of the Notes
     of BBB- or higher by S&P and Baa3 or higher by Moody's or the equivalent of
     such ratings by S&P or Moody's or in the event S&P or Moody's shall cease
     rating the Notes and the Company shall select any other Rating Agency, the
     equivalent of such ratings by such other Rating Agency.

                    "INVESTMENTS" means, with respect to any Person, all direct
     or indirect investments by such Person in other Persons in the forms of
     loans (including Guarantees thereof), advances or capital contributions
     (excluding commission, travel and similar advances to officers and
     employees made in the ordinary course of business), purchases or other
     acquisitions for consideration of Indebtedness, Equity Interests or other
     securities, together with all items that are or would be classified as
     investments on a balance sheet prepared in accordance with GAAP. If OI
     Group or any Restricted Subsidiary of OI Group sells or otherwise disposes
     of any Equity Interests of any direct or indirect Restricted Subsidiary of
     OI Group such that, after giving effect to any such sale or disposition,
     such Person is no longer a Restricted Subsidiary of OI Group, OI Group
     shall be deemed to have made an Investment on the date of any such sale or
     disposition equal to the Fair Market Value of the Equity Interests of such
     Restricted Subsidiary not sold or disposed of in an amount determined as
     provided in the final paragraph of Section 4.12. The acquisition by OI
     Group or any Restricted Subsidiary of OI Group of a Person that holds an
     Investment in a third Person shall be deemed to be an Investment by OI
     Group or such Restricted Subsidiary in such third Person in an amount equal
     to the Fair Market Value of the Investment held by the acquired Person in
     such third Person in an amount determined as provided in the final
     paragraph of Section 4.12.

                    "ISSUE DATE" means the date on which the Notes are
     originally issued.

                    "KKR" means Kohlberg Kravis Roberts & Co., L.P., a Delaware
     limited partnership.

                    "LIQUIDATED DAMAGES" means the payment of liquidated damages
     as set forth in the Registration Rights Agreement.

                    "MOODY'S" means Moody's Investors Service, Inc. or any
     successor rating agency.

                                       10


                    "NET INCOME" means, with respect to any specified Person,
     the net income (loss) of such Person, determined in accordance with GAAP
     and before any reduction in respect of preferred stock dividends.

                    "NET PROCEEDS" means the aggregate cash proceeds received by
     OI Group or any of its Restricted Subsidiaries in respect of any Asset Sale
     (including, without limitation, any cash received upon the sale or other
     disposition of any non-cash consideration received in any Asset Sale), net
     of any bona fide direct costs relating to such Asset Sale, including,
     without limitation, reasonable legal, accounting and investment banking
     fees, reasonable sales commissions, any reasonable relocation expenses
     incurred as a result thereof, taxes paid or payable as a result thereof, in
     each case, after taking into account any available tax credits or
     deductions and any tax sharing arrangements, and amounts required to be
     applied to the repayment of Indebtedness that is paid with the proceeds of
     such Asset Sale and any reasonable reserve for adjustment in respect of the
     sale price of such asset or assets established in accordance with GAAP and
     for the after-tax cost of any indemnification payments (fixed and
     contingent) attributable to sellers' indemnities to the purchaser.

                    "NOTES" shall have the meaning specified in the second
     recital of the Third Supplemental Indenture.

                    "OFFSHORE COLLATERAL DOCUMENTS" means the Offshore Security
     Agreements and mortgages (as defined in the Credit Agreement) securing real
     property outside of the United States of America.

                    "OFFSHORE SECURITY AGREEMENTS" has the meaning assigned to
     such term in the Credit Agreement.

                    "OI INC. ORDINARY COURSE PAYMENTS" means dividends or other
     distributions by, or payments of Intercompany Indebtedness from, OI Group
     to OI Inc. necessary to permit OI Inc. to pay any of the following items
     which are then due and payable: (i) Permitted OI Inc. Debt Obligations;
     (ii) claims of persons for exposure to asbestos-containing products and
     expenses related thereto; (iii) consolidated tax liabilities of OI Inc. and
     its Subsidiaries; and (iv) general administrative costs and other on-going
     expenses of OI Inc. in the ordinary course of business consistent with past
     practices.

                    "OI INC. SENIOR NOTES" means the Indebtedness of OI Inc.
     outstanding as of any date pursuant to its $300.0 million aggregate
     principal amount of 7.85% Senior Notes due 2004, $350.0 million aggregate
     principal amount of 7.15% Senior Notes due 2005, $300.0 million aggregate
     principal amount of 8.10% Senior Notes due 2007, $250.0 million aggregate
     principal amount of 7.35% Senior Notes due 2008, $250.0 million aggregate
     principal amount of 7.50% Senior Debentures due 2010, and $250.0 million
     aggregate principal amount of 7.80% Senior Debentures due 2018.

                    "PERMITTED BUSINESS" means any business conducted or
     proposed to be conducted (as described in the offering memorandum) by OI
     Group and its Restricted

                                       11


     Subsidiaries on the Issue Date and other businesses reasonably related or
     ancillary thereto.

                    "PERMITTED INVESTMENTS" means: (1) any Investment in the
     Company, OI Group or in a Restricted Subsidiary of OI Group; (2) any
     Investment in cash or Cash Equivalents and, with respect to Foreign
     Subsidiaries, short term Investments similar to Cash Equivalents
     customarily used in the countries in which such Foreign Subsidiaries are
     located; (3) any Investment by OI Group or any Restricted Subsidiary of OI
     Group in a Person, if as a result of such Investment: (a) such Person
     becomes a Restricted Subsidiary of OI Group; or (b) such Person is merged,
     consolidated or amalgamated with or into, or transfers or conveys
     substantially all of its assets to, or is liquidated into, OI Group or a
     Restricted Subsidiary of OI Group; (4) any Investment made as a result of
     the receipt of non-cash consideration from an Asset Sale that was made
     pursuant to and in compliance with Section 4.11; (5) any acquisition of
     assets solely in exchange for the issuance of Equity Interests (other than
     Disqualified Stock) of OI Inc., the Company or OI Group; (6) Hedging
     Obligations; (7) advances to employees, officers and directors not in
     excess of $2.0 million outstanding at any one time, in the aggregate; (8)
     obligations of employees, officers and directors, not in excess of $2.0
     million outstanding at any one time, in the aggregate, in connection with
     such employees', officers' or directors' acquisition of shares of OI Inc.
     common stock, so long as no cash is actually advanced to such employees,
     officers or directors in connection with the acquisition of any such
     shares; (9) any Investment existing on the Issue Date; and (10) other
     Investments in any Person having an aggregate Fair Market Value (measured
     on the date each such Investment was made and without giving effect to
     subsequent changes in value), when taken together with all other such
     Investments outstanding at any such time, not to exceed $150.0 million.

                    "PERMITTED LIENS" means: (1) Liens arising under the
     Collateral Documents other than Liens securing the OI Inc. Senior Notes on
     the Issue Date; (2) Liens incurred after the Issue Date on the assets
     (including shares of Capital Stock and Indebtedness) of OI Group or any
     Restricted Subsidiary of OI Group; PROVIDED, HOWEVER, that the aggregate
     amount of Indebtedness and other obligations at any time outstanding
     secured by such Liens pursuant to clause (1) above and this clause (2)
     shall not exceed the sum of $5.5 billion plus 50% of Tangible Assets
     acquired by the Company or any Guarantor or that are owned by any
     Restricted Subsidiary that becomes a Guarantor after January 24, 2002; (3)
     Liens in favor of OI Group or any Restricted Subsidiary of OI Group; (4)
     Liens on property or shares of capital stock of a Person existing at the
     time such Person is merged with or into or consolidated with OI Group or
     any Restricted Subsidiary of OI Group; PROVIDED that such Liens were not
     incurred in connection with or in contemplation of such merger or
     consolidation and do not extend to any assets other than those of the
     Person merged into or consolidated with OI Group or the Restricted
     Subsidiary; (5) Liens on property or shares of capital stock existing at
     the time of acquisition thereof by OI Group or any Restricted Subsidiary of
     OI Group, PROVIDED that such Liens were not incurred in connection with or
     in contemplation of such acquisition and do not extend to any property
     other than the property so acquired by OI Group or the Restricted
     Subsidiary; (6) Liens on property or shares of capital stock of any Foreign
     Subsidiary, including shares of capital stock of any Foreign Subsidiary
     owned by a Domestic Subsidiary, to secure Indebtedness of a Foreign
     Subsidiary permitted to be incurred under this Indenture; (7)

                                       12


     Liens (including extensions and renewals thereof) upon real or personal
     (whether tangible or intangible) property acquired after the Issue Date,
     PROVIDED that: (a) such Lien is created solely for the purpose of securing
     Indebtedness incurred to finance all or any part of the purchase price or
     cost of construction or improvement of property, plant or equipment subject
     thereto and such Lien is created prior to, at the time of or within 12
     months after the later of the acquisition, the completion of construction
     or the commencement of full operation of such property, plant or equipment
     or to refinance any such Indebtedness previously so secured; (b) the
     principal amount of the Indebtedness secured by such Lien does not exceed
     100% of such cost; and (c) any such Lien shall not extend to or cover any
     property or assets other than such item of property or assets and any
     improvements on such item; (8) Liens to secure any Capital Lease Obligation
     or operating lease; (9) Liens encumbering customary initial deposits and
     margin deposits; (10) Liens securing Indebtedness under Hedging
     Obligations; (11) Liens arising out of conditional sale, title retention,
     consignment or similar arrangements for the sale of goods entered into by
     OI Group or any of its Restricted Subsidiaries in the ordinary course of
     business of OI Group and its Restricted Subsidiaries; (12) Liens on or
     sales of receivables and customary cash reserves established in connection
     therewith; (13) Liens securing OI Group's or any of its Restricted
     Subsidiaries' obligations in respect of bankers' acceptances issued or
     created to facilitate the purchase, shipment or storage of inventory or
     other goods; and (14) Liens for taxes, assessments or governmental charges
     or claims that are not yet delinquent or that are being contested in good
     faith by appropriate proceedings promptly instituted and diligently
     concluded, PROVIDED that any reserve or other appropriate provision as
     shall be required in conformity with GAAP shall have been made therefor.

                    "PERMITTED OI INC. DEBT OBLIGATIONS" means Obligations with
     respect to the OI Inc. Senior Notes and any refinancings of the $300.0
     million aggregate principal amount of 7.85% Senior Notes due 2004, the
     $350.0 million aggregate principal amount of 7.15% Senior Notes due 2005 of
     OI Inc., the $300.0 million aggregate principal amount of 8.10% Senior
     Notes due 2007, the $250.0 million aggregate principal amount of 7.35%
     Senior Notes due 2008 and the $250.0 million aggregate principal amount of
     7.50% Senior Debentures due 2010, and the Existing IRBs and up to an
     additional $50.0 million of IRB financing.

                    "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness
     of OI Group or any of its Restricted Subsidiaries issued in exchange for,
     or the net proceeds of which are used to extend, refinance, renew, replace,
     defease or refund such other Indebtedness of OI Group or any of its
     Restricted Subsidiaries (other than Intercompany Indebtedness); PROVIDED
     that: (1) the principal amount (or accreted value, if applicable) of such
     Permitted Refinancing Indebtedness does not exceed for more than 60 days
     the principal or commitment amount (or accreted value, if applicable) of
     the Indebtedness so extended, refinanced, renewed, replaced,

                                       13


     defeased or refunded (plus all accrued interest thereon and the amount of
     any premiums necessary to accomplish such refinancing and such expenses
     incurred in connection therewith); (2) such Permitted Refinancing
     Indebtedness has a final maturity date later than the final maturity date
     of, and has a Weighted Average Life to Maturity equal to or greater than
     the Weighted Average Life to Maturity of, the Indebtedness being extended,
     refinanced, renewed, replaced, defeased or refunded; and (3) if the
     Indebtedness being extended, refinanced, renewed, replaced, defeased or
     refunded is subordinated in right of payment to the Notes, such Permitted
     Refinancing Indebtedness has a final maturity date later than the final
     maturity date of, and is subordinated in right of payment to, the Notes on
     terms at least as favorable to the Holders of Notes as those contained in
     the documentation governing the Indebtedness being extended, refinanced,
     renewed, replaced, defeased or refunded.

                    "PLEDGE AGREEMENT" means the Pledge Agreement, dated as of
     April 23, 2001, by and among OI Group, OI Packaging, and Deutsche Bank
     Trust Company Americas, formerly Bankers Trust Company, as Collateral
     Agent, as amended, amended and restated or otherwise modified from time to
     time.

                    "PRINCIPALS" means KKR and its Affiliates.

                    "RATING AGENCY" means any of: (1) S&P; (2) Moody's; or (3)
     if S&P or Moody's or both shall not make a rating of the Notes publicly
     available, a security rating agency or agencies, as the case may be,
     nationally recognized in the United States, selected by the Company, which
     shall be substituted for S&P or Moody's or both, as the case may be, and,
     in each case, any successors thereto.

                    "REGISTRATION RIGHTS AGREEMENT" means the Registration
     Rights Agreement, dated as of November 13, 2002, between the Company, the
     Guarantors named therein and the Initial Purchasers (as defined therein).

                    "REGULATION S TEMPORARY GLOBAL SECURITY" means a temporary
     Global Security in the form of Exhibit D-2 bearing the Global Security
     Legend, the Private Placement Legend and the Regulation S Temporary Global
     Security Legend and deposited with or on behalf of and registered in the
     name of the Depositary or its nominee, issued in a denomination equal to
     the outstanding principal amount of the Notes initially sold in reliance on
     Rule 903 of Regulation S.

                    "RELATED PARTY" means: (1) any controlling stockholder,
     partner, member, 80% (or more) owned Subsidiary, or immediate family member
     (in the case of an individual) of any of the Principals; or (2) any trust,
     corporation, partnership or other entity, the beneficiaries, stockholders,
     partners, owners or Persons beneficially holding an 80% or more controlling
     interest of which consist of any one or more Principals and/or such other
     Persons referred to in the immediately preceding clause (1).

                    "RESTRICTED INVESTMENT" means an Investment other than a
     Permitted Investment.

                    "S&P" means Standard & Poor's Ratings Services, a division
     of McGraw Hill Inc., a New York corporation, or any successor rating
     agency.

                    "SECURITY AGREEMENT" means the Security Agreement, dated as
     of April 23, 2001, entered into by and among OI Group, each of the direct
     and indirect subsidiaries of OI Group signatory thereto, each additional
     grantor that may become a party thereto, and Deutsche Bank Trust Company
     Americas, formerly Bankers Trust

                                       14


     Company, as Collateral Agent, as amended, amended and restated, or
     otherwise modified from time to time.

                    "SHELF REGISTRATION STATEMENT" means the shelf registration
     statement as defined in the Registration Rights Agreement.

                    "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary of
     OI Group that would be a "significant subsidiary" as defined in Article I,
     Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act, as
     such Regulation is in effect as of January 24, 2002.

                    "TANGIBLE ASSETS" means the total consolidated assets, LESS
     goodwill and intangibles, of OI Group and its Restricted Subsidiaries, as
     shown on the most recent balance sheet of OI Group.

                    "UNRESTRICTED SUBSIDIARY" means any Subsidiary of OI Group
     that is designated by the Board of Directors as an Unrestricted Subsidiary
     pursuant to a Board Resolution, but only to the extent that such
     Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) is
     not party to any agreement, contract, arrangement or understanding with OI
     Group or any Restricted Subsidiary of OI Group unless the terms of any such
     agreement, contract, arrangement or understanding are no less favorable to
     OI Group or such Restricted Subsidiary than those that might be obtained at
     the time from Persons who are not Affiliates of OI Group; (3) is a Person
     with respect to which neither OI Group nor any of its Restricted
     Subsidiaries has any direct or indirect obligation (a) to subscribe for
     additional Equity Interests or (b) to maintain or preserve such Person's
     financial condition or to cause such Person to achieve any specified levels
     of operating results; (4) has not guaranteed or otherwise directly or
     indirectly provided credit support for any Indebtedness of OI Group or any
     of its Restricted Subsidiaries; and (5) has at least one director on its
     Board of Directors that is not a director or executive officer of OI Group
     or any of its Restricted Subsidiaries and has at least one executive
     officer that is not a director or executive officer of OI Group or any of
     its Restricted Subsidiaries. Any designation of a Restricted Subsidiary of
     OI Group as an Unrestricted Subsidiary shall be evidenced to the Trustee by
     filing with the Trustee a certified copy of the Board Resolution giving
     effect to such designation and an Officers' Certificate certifying that
     such designation complied with the preceding conditions and was permitted
     by Section 4.12. If, at any time, any Unrestricted Subsidiary would fail to
     meet the preceding requirements as an Unrestricted Subsidiary, it shall
     thereafter cease to be an Unrestricted Subsidiary for purposes of this
     Indenture and any Indebtedness of such Subsidiary shall be deemed to be
     incurred by a Restricted Subsidiary of OI Group as of such date and, if
     such Indebtedness is not permitted to be incurred as of such date under
     Section 4.13, OI Group shall be in default of such covenant.

                    "VOTING STOCK" of any Person as of any date means the
     Capital Stock of such Person that is at the time entitled to vote in the
     election of the Board of Directors of such Person.

                                       15


                    "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to
     any Indebtedness at any date, the number of years obtained by dividing: (1)
     the sum of the products obtained by multiplying (a) the amount of each then
     remaining installment, sinking fund, serial maturity or other required
     payments of principal, including payment at final maturity, in respect
     thereof, by (b) the number of years (calculated to the nearest one-twelfth)
     that will elapse between such date and the making of such payment; by (2)
     the then outstanding principal amount of such Indebtedness.

                    "WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified Person
     means a Restricted Subsidiary of such Person all of the outstanding Capital
     Stock or other ownership interests of which (other than directors'
     qualifying shares) shall at the time be owned by such Person and/or by one
     or more Wholly Owned Restricted Subsidiaries of such Person.

SECTION 2.02.  AMENDMENTS TO ARTICLE 2.

               (a)  Section 2.06 of the Indenture is hereby amended by adding,
immediately following the final paragraph of such Section 2.06:

               Notes issued in global form shall be substantially in the form
     of Exhibits D-1 or D-2 attached hereto (including the Global Security
     Legend thereon and the "Schedule of Exchanges of Interests in the Global
     Security" attached thereto). Notes issued in definitive form shall be
     substantially in the form of Exhibit D-1 attached hereto (but without the
     Global Security Legend thereon and without the "Schedule of Exchanges of
     Interests in the Global Note" attached thereto).

               (b)  Section 2.08 of the Indenture is hereby amended by deleting
such Section 2.08 in its entirety and replacing it with the following Section
2.08:

     SECTION 2.08   OUTSTANDING SECURITIES.

                    The Securities of any series outstanding at any time are all
     the Securities of that series authenticated by the Trustee, except for
     those cancelled by it, those delivered to it for cancellation, and those
     described in this Section 2.08 as not outstanding. Except as set forth in
     the final paragraph of this Section 2.08, a Security does not cease to be
     outstanding because the Company or an Affiliate of the Company holds the
     Security.

                    If a Security is replaced pursuant to Section 2.07, it
     ceases to be outstanding unless the Trustee receives proof satisfactory to
     it that the replaced Security is held by a bona fide purchaser.

                    If Securities are considered paid under Section 4.01, they
     cease to be outstanding and interest on them ceases to accrue.

                    For each series of Original Issue Discount Securities, the
     principal amount of such Securities that shall be deemed to be outstanding
     and used to determine whether the necessary Holders have given any request,
     demand, authorization, direction, notice,

                                       16


     consent or waiver shall be the principal amount of such Securities that
     could be declared to be due and payable upon acceleration upon an Event of
     Default as of the date of such determination. When requested by the
     Trustee, the Company shall advise the Trustee of such amount, showing its
     computations in reasonable detail.

                    In determining whether the Holders of the required principal
     amount of Securities of any series have concurred in any direction, waiver
     or consent, Securities owned by the Company, or by any Person directly or
     indirectly controlling or controlled by or under direct or indirect common
     control with the Company, shall be considered as though not outstanding,
     except that for the purposes of determining whether the Trustee shall be
     protected in relying on any such direction, waiver or consent, only
     Securities as to which a Trust Officer of the Trustee has actual knowledge
     are so owned shall be so disregarded. Securities owned by the Company, or
     by any Person directly or indirectly controlling or controlled by or under
     direct or indirect common control with the Company shall not be deemed to
     be outstanding for purposes of Section 3.07.

SECTION 2.03.  AMENDMENTS TO ARTICLE 3.

               Article 3 of the Indenture is hereby amended by adding,
immediately following Section 3.06 thereof, the following new Sections 3.07 and
3.08:

     SECTION 3.07.  OPTIONAL REDEMPTION.

                    Except as described in this Section 3.07, the Notes shall
     not be redeemable at the Company's option prior to November 15, 2007.

                    (a)  On or after November 15, 2007, the Company may redeem
     all or a part of the Notes upon not less than 30 nor more than 60 days
     notice, at the redemption prices (expressed as percentages of Principal
     amount) set forth below plus accrued and unpaid interest and Liquidated
     Damages, if any, thereon, to the applicable redemption date, if redeemed
     during the twelve-month period beginning on November 15 of the years
     indicated below:



             YEAR                                           PERCENTAGE
             ----                                           ----------
                                                          
             2007....................................        104.375%
             2008....................................        102.917%
             2009....................................        101.458%
             2010 and thereafter.....................        100.000%


                    (b)  At any time prior to November 15, 2005, the
     Company may redeem on any one or more occasions up to 35% of the aggregate
     principal amount of Notes (calculated after giving effect to any issuance
     of Additional Securities) issued under this Indenture at a redemption price
     of 108.750% of the principal amount thereof, plus accrued and unpaid
     interest and Liquidated Damages, if any, to the redemption date, with the
     net cash proceeds of one or more Equity Offerings by OI Inc. to the extent
     the net cash proceeds thereof are contributed to the Company or used to
     purchase from the Company Capital Stock (other than Disqualified Stock) of
     the Company; PROVIDED that:

                                       17


               (1)  at least 65% of the aggregate principal amount of Notes
                    (calculated after giving effect to any issuance of
                    Additional Securities) issued under this Indenture remains
                    outstanding immediately after the occurrence of such
                    redemption (excluding Notes held by OI Inc. and its
                    Subsidiaries); and

               (2)  the redemption must occur within 60 days of the date of the
                    closing of such Equity Offering.

                    (c)  At any time prior to November 15, 2007, the Notes may
     be redeemed, in whole but not in part, at the option of the Company upon
     the occurrence of a Change of Control, upon not less than 30 nor more than
     60 days prior notice (but in no event more than 90 days after the
     occurrence of such Change of Control) mailed by first-class mail to each
     Holder's registered address, at a redemption price equal to 100% of the
     principal amount of Notes redeemed plus the Applicable Premium as of, and
     accrued and unpaid interest and Liquidated Damages, if any, to, the date of
     redemption (subject to the right of Holders of record on the relevant
     record date to receive interest due on the Notes on the relevant Interest
     Payment Date).

                    "APPLICABLE PREMIUM" means, with respect to any Note on any
     redemption date, the greater of:

                    (1)  1.0% of the principal amount of such Note; or

                    (2)  the excess of:

                         (a)  the present value at such redemption date of (1)
                              the redemption price of such Note at November 15,
                              2007 (such redemption price being set forth in the
                              table above) plus (2) all required interest
                              payments due on such Note through November 15,
                              2007, (including accrued but unpaid interest)
                              computed using a discount rate equal to the
                              Treasury Rate on such redemption date plus 50
                              basis points; over

                         (b)  the principal amount of such Note.

                    "TREASURY RATE" means, as of any redemption date, the yield
     to maturity as of such redemption date of United States Treasury securities
     with a constant maturity (as compiled and published in the most recent
     Federal Reserve Statistical Release H.15(519) that has become publicly
     available at least two Business Days prior to the redemption date (or, if
     such statistical release is no longer published, any publicly available
     source of similar market data)) most nearly equal to the period from the
     redemption date to November 15, 2007; PROVIDED, HOWEVER, that if the period
     from the redemption date to November 15, 2007 is less than one year, the
     weekly average yield on actually traded United States Treasury securities
     adjusted to a constant maturity of one year shall be used.

                                       18


     SECTION 3.08   MANDATORY REDEMPTION.

                    The Company shall not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.

SECTION 2.04.  AMENDMENTS TO ARTICLE 4.

                    Section 4 of the Indenture is hereby amended by adding,
immediately following Section 4.08 thereof, the following new Sections 4.09
through 4.21 for the benefit of the Notes:

     SECTION 4.09.  FALL-AWAY EVENT.

                    If at any time the Notes have achieved the Investment Grade
     Ratings, OI Group and the Restricted Subsidiaries of OI Group shall
     thereafter no longer be subject to the covenants under Sections 4.10, 4.11,
     4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18 and 10.08 (collectively, the
     "EXTINGUISHED COVENANTS"), PROVIDED that if upon the receipt by the Notes
     of the Investment Grade Ratings, a Default or Event of Default has occurred
     and is continuing under this Indenture, the Company shall continue to be
     subject to the Extinguished Covenants until such time as no Default or
     Event of Default is continuing.

                    Notwithstanding the foregoing, at the time OI Group and the
     Restricted Subsidiaries are no longer subject to the Extinguished
     Covenants, the following covenant shall apply to OI Group and its Domestic
     Subsidiaries:

                    Neither OI Group nor any of its Domestic Subsidiaries shall
     create, incur, or permit to exist, any Lien on any of their respective
     assets, whether now owned or hereafter acquired, in order to secure any
     Indebtedness of either of OI Group or any of its Domestic Subsidiaries,
     without effectively providing that the Notes shall be equally and ratably
     secured until such time as such Indebtedness is no longer secured by such
     Lien, except: (i) Liens on cash and Cash Equivalents securing obligations
     in respect of letters of credit in accordance with the terms of the Credit
     Agreement; (ii) Liens existing on the Issue Date; (iii) Liens granted after
     the Issue Date on any assets of OI Group or any of its Domestic
     Subsidiaries securing Indebtedness of OI Group or any of its Domestic
     Subsidiaries created in favor of the Holders of the Notes; (iv) Liens
     securing Indebtedness which is incurred to extend, renew or refinance
     Indebtedness which is secured by Liens permitted to be incurred under this
     Indenture; PROVIDED that such Liens do not extend to or cover any assets of
     OI Group or any of its Domestic Subsidiaries other than the assets securing
     the Indebtedness being extended, renewed or refinanced and that the
     principal or commitment amount of such Indebtedness does not exceed the
     principal or commitment amount of the Indebtedness being extended, renewed
     or refinanced at the time of such extension, renewal or refinancing, or at
     the time the Lien was issued, created or assumed or otherwise permitted;
     (v) Investment Grade Permitted Liens; or (vi) Liens created in substitution
     of or as replacement for any Liens permitted by the preceding clauses (i)
     through (v) or this clause (vi), PROVIDED that, based on a good faith
     determination of an officer of the Company, the assets encumbered under any
     such substitute or replacement Lien is substantially similar in value to
     the assets encumbered by the otherwise permitted Lien which is being
     replaced. Upon the assignment of the

                                       19


     Company's obligations under this Indenture to OI Inc. as described in
     Section 5.03 of this Indenture, the limitations described in this paragraph
     shall apply to Liens securing Indebtedness of OI Inc. and its Domestic
     Subsidiaries in lieu of Liens securing Indebtedness of OI Group and its
     Domestic Subsidiaries and references to OI Group or the Company in the
     definition of "Investment Grade Permitted Liens" shall become references to
     OI Inc., unless the context otherwise requires.

                    For purposes of this Indenture, the Notes and the Guarantees
     of the Notes, so long as the Credit Agreement is in effect, the Notes shall
     be considered equally and ratably secured if they are secured pursuant to
     terms and provisions, including any exclusions or exceptions described
     therein, no less favorable to the holders of Notes than those set forth in,
     or contemplated by, the Credit Agreement.

     SECTION 4.10   OFFER TO REPURCHASE UPON A CHANGE OF CONTROL.

                    If a Change of Control occurs, unless the Company has
     exercised its right to redeem the Notes under Section 3.07, each Holder of
     Notes shall have the right to require the Company to repurchase all or any
     part (equal to $1,000 or an integral multiple thereof) of that Holder's
     Notes pursuant to a change of control offer on the terms set forth in this
     Indenture (a "CHANGE OF CONTROL OFFER"). In the Change of Control Offer,
     the Company shall offer a payment in cash equal to 101% of the aggregate
     principal amount of Notes repurchased plus accrued and unpaid interest and
     Liquidated Damages, if any, thereon, to the date of purchase (the "CHANGE
     OF CONTROL PAYMENT"). Within 30 days following any Change of Control, the
     Company shall mail a notice to each Holder at its registered address. The
     notice shall contain all instructions and materials necessary to enable
     such Holder to tender Notes pursuant to the Change of Control Offer. Any
     Change of Control Offer shall be made to all Holders. The notice, which
     shall govern the terms of the Change of Control Offer, shall state: (1)
     that the Change of Control Offer is being made pursuant to this Section
     4.10; (2) the Change of Control Payment and the date on which Notes
     tendered and accepted for payment shall be purchased, which date shall be
     at least 30 days and no later than 60 days from the date such notice is
     mailed (the "CHANGE OF CONTROL PAYMENT DATE"); (3) that any Note not
     tendered or accepted for payment shall continue to accrete or accrue
     interest; (4) that, unless the Company defaults in making such payment, any
     Note accepted for payment pursuant to the Change of Control Offer shall
     cease to accrete or accrue interest after the Change of Control Payment
     Date; (5) that Holders electing to have a Note purchased pursuant to any
     Change of Control Offer shall be required to surrender the Note, with the
     form entitled "Option of Holder to Elect Purchase" on the reverse of the
     Note completed, or transfer by book-entry transfer, to the Company, a
     depositary, if appointed by the Company, or the Paying Agent at the address
     specified in the notice at least three days before the Change of Control
     Payment Date; (6) that Holders shall be entitled to withdraw their election
     if the Company, the depositary or the Paying Agent, as the case may be,
     receives, not later than the Change of Control Payment Date, a notice
     setting forth the name of the Holder, the principal amount of the Note the
     Holder delivered for purchase and a statement that such Holder is
     withdrawing his election to have such Note purchased; (7) that Notes and
     portions of Notes purchased shall be in amounts of $1,000 or whole
     multiples of $1,000, except that if all of the Notes of a Holder are to be

                                       20


     purchased, the entire outstanding amount of Notes held by such Holder, even
     if not a multiple of $1,000, shall be purchased; and (8) that Holders whose
     Notes were purchased only in part shall be issued new Notes equal in
     principal amount to the unpurchased portion of the Notes surrendered (or
     transferred by book-entry transfer), which unpurchased portion must be
     equal to $1,000 in principal amount or an integral multiple thereof. The
     Company shall comply with the requirements of Rule 14e-1 under the Exchange
     Act and any other securities laws and regulations thereunder to the extent
     such laws and regulations are applicable in connection with the repurchase
     of the Notes as a result of a Change of Control. To the extent that the
     provisions of any securities laws or regulations conflict with the Change
     of Control provisions of this Indenture, the Company shall comply with the
     applicable securities laws and regulations and shall not be deemed to have
     breached its obligations under the Change of Control provisions of this
     Indenture by virtue of such conflict.

                    On the Change of Control Payment Date, the Company shall, to
     the extent lawful:

               (1)  accept for payment all Notes or portions thereof properly
                    tendered pursuant to the Change of Control Offer;

               (2)  deposit with the Paying Agent an amount equal to the Change
                    of Control Payment in respect of all Notes or portions
                    thereof so tendered; and

               (3)  deliver or cause to be delivered to the Trustee the Notes so
                    accepted together with an Officers' Certificate stating the
                    aggregate principal amount of Notes or portions thereof
                    being purchased by the Company.

                    The Paying Agent shall promptly mail to each Holder of Notes
     so tendered the Change of Control Payment for such Notes, and the Trustee
     shall promptly authenticate and mail (or cause to be transferred by book
     entry) to each Holder a new Note equal in principal amount to any
     unpurchased portion of the Notes surrendered, if any; PROVIDED that each
     such new Note shall be in a principal amount of $1,000 or an integral
     multiple thereof.

                    The Company shall publicly announce the results of the
     Change of Control Offer on or as soon as practicable after the Change of
     Control Payment Date.

                    The provisions set forth above that require the Company to
     make a Change of Control Offer following a Change of Control shall be
     applicable regardless of whether or not any other provisions of this
     Indenture are applicable.

                    Notwithstanding anything to the contrary in this Section
     4.10, the Company shall not be required to make a Change of Control Offer
     upon a Change of Control if a third party makes the Change of Control Offer
     in the manner, at the times and otherwise in compliance with the
     requirements set forth in this Section 4.10 and purchases all Notes validly
     tendered and not withdrawn under such Change of Control Offer.

                                       21


     SECTION 4.11   ASSET SALES.

                    OI Group shall not, and shall not permit any of its
     Restricted Subsidiaries to, consummate an Asset Sale unless:

               (1)  OI Group (or the Restricted Subsidiary, as the case may be)
                    receives consideration at the time of such Asset Sale at
                    least equal to the Fair Market Value of the assets or Equity
                    Interests issued or sold or otherwise disposed of;

               (2)  such Fair Market Value is determined in good faith by OI
                    Group and a certification to that effect is set forth in an
                    Officers' Certificate delivered to the Trustee; and

               (3)  at least 75% of the consideration therefor received by OI
                    Group or such Restricted Subsidiary is in the form of cash.
                    For purposes of this provision, each of the following shall
                    be deemed to be cash:

                    (a)  any liabilities (as shown on OI Group's or such
                         Restricted Subsidiary's most recent balance sheet) of
                         OI Group or any Restricted Subsidiary of OI Group
                         (other than liabilities that are by their terms
                         subordinated to the Notes or any Guarantee of the
                         Notes) that are assumed by the transferee of any such
                         assets which assumption releases OI Group or such
                         Restricted Subsidiary from further liability;

                    (b)  any securities, notes or other obligations received by
                         OI Group or any such Restricted Subsidiary from such
                         transferee that are converted within 180 days by OI
                         Group or such Restricted Subsidiary into cash (to the
                         extent of the cash received in that conversion); and

                    (c)  any Designated Noncash Consideration received by OI
                         Group or any Restricted Subsidiary of OI Group in such
                         Asset Sale having an aggregate Fair Market Value, taken
                         together with all other Designated Noncash
                         Consideration received pursuant to this clause (c) that
                         is at that time outstanding, not to exceed 5.0% of
                         Tangible Assets at the time of the receipt of such
                         Designated Noncash Consideration (with the Fair Market
                         Value of each item of Designated Noncash Consideration
                         being measured at the time received and without giving
                         effect to subsequent changes in value);

     PROVIDED, that the 75% limitation referred to in clause (3) above shall not
     apply to any Asset Sale in which the cash portion of such consideration
     received therefore on an after-tax basis, determined in accordance with
     clause (3) above, is equal to or greater than what the after-tax net
     proceeds would have been had such transaction complied with such 75%
     limitation.

                                       22


                    Within 360 days after the receipt of any Net Proceeds from
     an Asset Sale, OI Group or such Restricted Subsidiary may apply such Net
     Proceeds at its option:

               (1)  to repay senior Indebtedness of the Company or any Guarantor
                    and, if the senior Indebtedness of the Company or any
                    Guarantor repaid is revolving credit Indebtedness, to
                    correspondingly reduce commitments with respect thereto, if
                    the terms of such revolving credit Indebtedness would
                    require such a commitment reduction; PROVIDED, HOWEVER, that
                    a non-Guarantor Restricted Subsidiary may use the Net
                    Proceeds from an Asset Sale to repay senior Indebtedness of
                    OI Group or any Restricted Subsidiary of OI Group;

               (2)  to make payments required to be made with respect to the
                    outstanding OI Inc. Senior Notes;

               (3)  to acquire all or substantially all of the assets of, or a
                    majority of the Voting Stock of, a Permitted Business;

               (4)  to make a capital expenditure in or that is used or useful
                    in a Permitted Business;

               (5)  to acquire other long-term assets in or that are used or
                    useful in a Permitted Business; or

               (6)  to make an Investment in any one or more businesses
                    (PROVIDED that such Investment in any business may be in the
                    form of the acquisition of Capital Stock so long as it
                    results in OI Group or a Restricted Subsidiary of OI Group,
                    as the case may be, owning a majority of the Capital Stock
                    of such business), properties or assets that replace the
                    businesses, properties and assets that are the subject of
                    such Asset Sale; PROVIDED, HOWEVER, that any such business,
                    properties and assets of OI Group or a Guarantor that are
                    the subject of an Asset Sale are invested in one or more
                    businesses, properties or assets that constitute or are
                    owned or shall be owned by a Guarantor or a Restricted
                    Subsidiary that becomes a Guarantor.

     Notwithstanding the foregoing, with respect to any Asset Sale by the
     Company or any Guarantor, such Net Proceeds may only be applied pursuant to
     items (1) or (6) above and, to the extent such Net Proceeds are applied to,
     or with respect to, the Company, a Guarantor or a Person or a Restricted
     Subsidiary that becomes a Guarantor, items (3), (4) or (5) above. Pending
     the final application of any such Net Proceeds, OI Group or the applicable
     Restricted Subsidiary may temporarily reduce revolving credit borrowings or
     otherwise invest such Net Proceeds in any manner that is not prohibited by
     this Indenture.

                    Any Net Proceeds from Asset Sales that are not applied or
     invested as provided in the preceding paragraph shall constitute "EXCESS
     PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $25.0
     million, the Company shall make an

                                       23


     offer (an "ASSET SALE OFFER") to all Holders of Notes and all Holders of
     other Indebtedness that is PARI PASSU with the Notes containing provisions
     similar to those set forth in this Indenture with respect to offers to
     purchase or redeem with the proceeds of sales of assets to purchase the
     maximum principal amount of Notes and such other PARI PASSU Indebtedness
     that may be purchased out of the Excess Proceeds. The offer price in any
     Asset Sale Offer shall be equal to 100% of principal amount plus accrued
     and unpaid interest and Liquidated Damages, if any, to the date of
     purchase, and shall be payable in cash. If any Excess Proceeds remain after
     consummation of an Asset Sale Offer, the Company may use such Excess
     Proceeds for any purpose not otherwise prohibited by this Indenture. If the
     aggregate principal amount of Notes and such other PARI PASSU Indebtedness
     tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds,
     the Trustee shall select the Notes and such other PARI PASSU Indebtedness
     to be purchased on a pro rata basis based on the principal amount of Notes
     and such other PARI PASSU Indebtedness tendered. Upon completion of each
     Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

                    The Company shall comply with the requirements of Rule 14e-1
     under the Exchange Act and any other securities laws and regulations
     thereunder to the extent such laws and regulations are applicable in
     connection with each repurchase of Notes pursuant to an Asset Sale Offer.
     To the extent that the provisions of any securities laws or regulations
     conflict with the Asset Sales provisions of this Indenture, the Company
     shall comply with the applicable securities laws and regulations and shall
     not be deemed to have breached its obligations under the Asset Sale
     provisions of this Indenture by virtue of such conflict.

     SECTION 4.12.  RESTRICTED PAYMENTS.

                    OI Group shall not, and shall not permit any of its
     Restricted Subsidiaries to, directly or indirectly:

               (1)  declare or pay any dividend or make any other distribution
                    on account of OI Group's or any of its Restricted
                    Subsidiaries' Equity Interests (including, without
                    limitation, any payment in connection with any merger or
                    consolidation involving OI Group or any of its Restricted
                    Subsidiaries) or to the direct or indirect holders of OI
                    Group's or any of its Restricted Subsidiaries' Equity
                    Interests in their capacity as such (other than dividends or
                    distributions payable in Equity Interests (other than
                    Disqualified Stock) of OI Group or such Restricted
                    Subsidiaries); PROVIDED that the foregoing shall not limit
                    or preclude: (a) the declaration or payment of dividends or
                    distributions to OI Group, the Company or any Guarantor; (b)
                    the declaration or payment of dividends or distributions to
                    holders of Equity Interests of a Guarantor (other than OI
                    Group or a Subsidiary of OI Group) on a pro rata basis with
                    all other holders; or (c) the declaration or payment of
                    dividends or distributions by non-Guarantor Restricted
                    Subsidiaries to the holders of their Equity Interests on a
                    pro rata basis;

                                       24


               (2)  purchase, redeem or otherwise acquire or retire for value
                    (including, without limitation, in connection with any
                    merger or consolidation involving OI Group or any of its
                    Restricted Subsidiaries) any Equity Interests of OI Group or
                    any direct or indirect parent of OI Group;

               (3)  purchase, redeem, defease or otherwise acquire or retire for
                    value any Indebtedness that is subordinated to the Notes or
                    the Guarantees of the Notes, except for (a) payments of or
                    related to Intercompany Indebtedness (other than
                    Intercompany Indebtedness owing to OI Inc. by OI Group), (b)
                    a payment of interest or Principal at the Stated Maturity
                    thereof (other than Intercompany Indebtedness owing to OI
                    Inc. by OI Group) or (c) the purchase, repurchase,
                    defeasance, acquisition or retirement for value of
                    Indebtedness of a Foreign Subsidiary by a Foreign
                    Subsidiary; or

               (4)  make any Restricted Investment (all such payments and other
                    actions set forth in clauses (1) through (4) above being
                    collectively referred to as "RESTRICTED PAYMENTS"),

     unless, at the time of and after giving effect to such Restricted Payment:

               (1)  no Default or Event of Default shall have occurred and be
                    continuing or would occur as a consequence thereof; and

               (2)  OI Group would, at the time of such Restricted Payment and
                    after giving pro forma effect thereto as if such Restricted
                    Payment had been made at the beginning of the applicable
                    four-quarter period, have been permitted to incur at least
                    $1.00 of additional Indebtedness pursuant to the Fixed
                    Charge Coverage Ratio test set forth in the first paragraph
                    of Section 4.13; and

               (3)  such Restricted Payment, together with the aggregate amount
                    of all other Restricted Payments made by OI Group and its
                    Restricted Subsidiaries after January 24, 2002 (excluding
                    Restricted Payments permitted by clauses (2), (3), (4), (6)
                    and (7) of the next succeeding paragraph), is less than the
                    sum, without duplication, of:

                    (a)  50% of the Consolidated Net Income of OI Group for the
                         period (taken as one accounting period) from April 1,
                         2002 to the end of OI Group's most recently ended
                         fiscal quarter for which internal financial statements
                         are available at the time of such Restricted Payment
                         (or, if such Consolidated Net Income for such period is
                         a deficit, less 100% of such deficit), PLUS

                    (b)  100% of the aggregate net cash proceeds and the Fair
                         Market Value of marketable securities received by OI
                         Group since January 24, 2002 as a contribution to its
                         common equity capital or from the issue or sale of
                         Equity Interests of OI Group (other than Disqualified
                         Stock) or from the issue or sale of convertible or

                                       25


                         exchangeable Disqualified Stock or convertible or
                         exchangeable debt securities of OI Group that have been
                         converted into or exchanged for such Equity Interests
                         (other than Equity Interests (or Disqualified Stock or
                         debt securities) sold to a Subsidiary of OI Group);
                         PLUS

                    (c)  to the extent that any Restricted Investment that was
                         made after January 24, 2002 is sold or otherwise
                         liquidated, the cash plus the Fair Market Value of any
                         marketable securities received upon the sale or
                         liquidation of such Restricted Investment (less the
                         cost of disposition, if any); PLUS

                    (d)  $15.0 million.

                    So long as (solely with respect to clauses (2), (3), (5) and
     (7) below) no Event of Default has occurred and is continuing or would be
     caused thereby, the preceding provisions shall not prohibit:

               (1)  the payment of any dividend within 60 days after the date of
                    declaration thereof, if at said date of declaration such
                    payment would have complied with the provisions of this
                    Indenture;

               (2)  the redemption, repurchase, retirement, defeasance or other
                    acquisition of any Indebtedness of OI Group or any
                    Restricted Subsidiary of OI Group or of any Equity Interests
                    of OI Group in exchange for, or out of the net cash proceeds
                    of the substantially concurrent sale (other than to a
                    Subsidiary of OI Group) of, Equity Interests of OI Group
                    (other than Disqualified Stock); PROVIDED that the amount of
                    any such net cash proceeds that are utilized for any such
                    redemption, repurchase, retirement, defeasance or other
                    acquisition shall be excluded from clause (3)(b) of the
                    preceding paragraph;

               (3)  the defeasance, redemption, repurchase or other acquisition
                    of the OI Inc. Senior Notes;

               (4)  the defeasance, redemption, repurchase or other acquisition
                    of subordinated Indebtedness of OI Group (other than the OI
                    Inc. Senior Notes) or any Restricted Subsidiary of OI Group
                    with the net cash proceeds from an incurrence of Permitted
                    Refinancing Indebtedness;

               (5)  the repurchase, redemption or other acquisition or
                    retirement (or dividends or distributions to OI Inc. or
                    payments of Intercompany Indebtedness, in each case, to
                    finance such repurchase, retirement or other acquisition)
                    for value of any Equity Interests of OI Inc., OI Group or
                    any Restricted Subsidiary of OI Group held by any member of
                    OI Inc.'s, OI Group's or any Restricted Subsidiary of OI
                    Group's management; PROVIDED that the aggregate price paid
                    for all such repurchased, redeemed, acquired or

                                       26


                    retired Equity Interests shall not exceed $5.0 million in
                    any twelve-month period;

               (6)  any OI Inc. Ordinary Course Payment; and

               (7)  dividends or distributions to OI Inc. or payments of
                    Intercompany Indebtedness to allow OI Inc. to pay cash
                    dividends on any shares of preferred stock of OI Inc.
                    outstanding on January 24, 2002, plus dividends on any
                    subsequently issued shares of preferred stock of OI Inc. in
                    an amount not to exceed $25.0 million in any twelve-month
                    period.

                    The amount of all Restricted Payments (other than cash)
     shall be the Fair Market Value on the date of the Restricted Payment of the
     asset(s) or securities proposed to be transferred or issued to or by OI
     Group or such Restricted Subsidiary, as the case may be, pursuant to the
     Restricted Payment. The Fair Market Value of any assets or securities that
     are required to be valued by this Section 4.12 shall be determined in good
     faith by OI Group.

     SECTION 4.13.  INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.

                    OI Group shall not, and shall not permit any of its
     Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
     assume, guarantee or otherwise become directly or indirectly liable,
     contingently or otherwise, with respect to (collectively, "incur") any
     Indebtedness (including Acquired Debt), and OI Group shall not issue any
     Disqualified Stock and OI Group shall not permit any of its Restricted
     Subsidiaries to issue any Disqualified Stock or preferred stock; PROVIDED,
     HOWEVER, that OI Group and any of its Restricted Subsidiaries may incur
     Indebtedness (including Acquired Debt) and may issue preferred stock, if
     the Fixed Charge Coverage Ratio for OI Group's most recently ended four
     full fiscal quarters for which internal financial statements are available
     immediately preceding the date on which such additional Indebtedness is
     incurred would have been at least 2.00 to 1.00, determined on a pro forma
     basis (including a pro forma application of the net proceeds therefrom), as
     if the additional Indebtedness had been incurred at the beginning of such
     four-quarter period.

                    The first paragraph of this Section 4.13 shall not prohibit
     the incurrence of any of the following items of Indebtedness (collectively,
     "PERMITTED DEBT"):

               (1)  the incurrence by OI Group or its Restricted Subsidiaries of
                    Indebtedness under Credit Facilities (and the incurrence of
                    Guarantees thereof) in an aggregate principal amount at any
                    one time outstanding (with letters of credit being deemed to
                    have a principal amount equal to the maximum potential
                    liability of the Company and its Restricted Subsidiaries
                    thereunder) not to exceed $4.5 billion (of which not more
                    than $1.41 billion of such Indebtedness shall be incurred by
                    Restricted Subsidiaries that are not Guarantors);

               (2)  the incurrence by OI Group and any Restricted Subsidiary of
                    OI Group of the Existing Indebtedness;

                                       27


               (3)  the incurrence by OI Group, the Company and the Guarantors
                    of Indebtedness represented by the Notes and the related
                    Guarantees to be issued on the Issue Date and the Exchange
                    Notes to be issued pursuant to the Registration Rights
                    Agreement;

               (4)  the incurrence by OI Group or any of its Restricted
                    Subsidiaries of Indebtedness represented by Capital Lease
                    Obligations, in an aggregate principal amount at any time
                    outstanding, including all Permitted Refinancing
                    Indebtedness incurred to refund, refinance or replace any
                    Indebtedness incurred pursuant to this clause (4), not to
                    exceed 3.0% of Tangible Assets;

               (5)  the incurrence by OI Group or any of its Restricted
                    Subsidiaries of Indebtedness incurred to finance all or any
                    part of the purchase price or cost of construction or
                    improvement of property, plant or equipment used in the
                    business of OI Group or such Restricted Subsidiary, in an
                    aggregate principal amount at any time outstanding,
                    including all Permitted Refinancing Indebtedness incurred to
                    refund, refinance or replace any Indebtedness incurred
                    pursuant to this clause (5), not to exceed 5.0% of Tangible
                    Assets, as measured after giving effect to such transaction;

               (6)  PROVIDED that so long as no Default shall have occurred or
                    be continuing or would be caused thereby, the incurrence by
                    OI Group or any of its Restricted Subsidiaries of
                    Indebtedness in exchange for, or the proceeds of which are
                    or shall be used to refund, refinance or replace the $300.0
                    million aggregate principal amount of 7.85% Senior Notes due
                    2004, the $350.0 million aggregate principal amount of 7.15%
                    Senior Notes due 2005, the $300.0 million aggregate
                    principal amount of 8.10% Senior Notes due 2007, the $250.0
                    million aggregate principal amount of 7.35% Senior Notes due
                    2008 and the $250.0 million aggregate principal amount of
                    7.50% Senior Debentures due 2010, in each case of OI Inc.;

               (7)  the incurrence by OI Group or any of its Restricted
                    Subsidiaries of Permitted Refinancing Indebtedness in
                    exchange for, or the net proceeds of which are or shall be
                    used to refund, refinance or replace Indebtedness (other
                    than Intercompany Indebtedness) that was permitted to be
                    incurred under the first paragraph of this Section 4.13 or
                    clauses (2), (3), (6) or (7) of this paragraph;

               (8)  the incurrence by OI Group or any of its Restricted
                    Subsidiaries of Intercompany Indebtedness between or among
                    OI Group and any of its Restricted Subsidiaries and with
                    respect to OI Group only, between OI Group and OI Inc.;
                    PROVIDED, HOWEVER, that:

                    (a)  if OI Group, the Company or any Guarantor is the
                         obligor on such Indebtedness, such Indebtedness must be
                         expressly subordinated to the prior payment

                                       28


                         in full in cash of all Obligations with respect to the
                         Notes, in the case of the Company, or the Guarantees of
                         the Notes, in the case of OI Group or a Guarantor;

                    (b)  any incurrence by OI Group of Intercompany Indebtedness
                         to OI Inc. after the Issue Date shall be in exchange
                         for cash loans or advances from OI Inc. in the ordinary
                         course of business consistent with past practices; and

                    (c)  (i) any subsequent issuance or transfer of Equity
                         Interests that results in any such Indebtedness being
                         held by a Person other than OI Group or a Restricted
                         Subsidiary thereof and (ii) any sale or other transfer
                         of any such Indebtedness to a Person that is not either
                         OI Group or a Restricted Subsidiary thereof, shall be
                         deemed, in each case, to constitute an incurrence of
                         such Indebtedness by OI Group or such Restricted
                         Subsidiary, as the case may be, that was not permitted
                         by this clause (8);

               (9)  the incurrence by OI Group or any of its Restricted
                    Subsidiaries of Hedging Obligations;

               (10) PROVIDED that so long as no Default shall have occurred or
                    be continuing or would be caused thereby, the incurrence by
                    any Foreign Subsidiary of OI Group of Indebtedness in an
                    aggregate principal amount (or accreted value, as
                    applicable) at any time outstanding, not to exceed $300.0
                    million, in addition to the $1.41 billion of Indebtedness
                    that may be incurred under clause (1) of this paragraph;

               (11) (i) the Guarantee by the Company or any of the Guarantors of
                    Indebtedness of OI Group or any Restricted Subsidiary of OI
                    Group and (ii) the Guarantee by any Foreign Subsidiary of
                    Indebtedness of OI Group or any Restricted Subsidiary of OI
                    Group, in each case, that was permitted to be incurred by
                    another provision of this Section 4.13;

               (12) the accrual of interest, the accretion or amortization of
                    original issue discount, the payment of interest on any
                    Indebtedness in the form of additional Indebtedness with the
                    same terms and the payment of dividends on Disqualified
                    Stock in the form of additional shares of the same class of
                    Disqualified Stock shall not be deemed to be an incurrence
                    of Indebtedness for purposes of this Section 4.13 or an
                    issuance of Disqualified Stock; PROVIDED, in each such case,
                    that the amount thereof is included in Fixed Charges of OI
                    Group as accrued;

                                       29


               (13) the incurrence by OI Group or any of its Restricted
                    Subsidiaries of additional Indebtedness in an aggregate
                    principal amount (or accreted value, as applicable) at any
                    time outstanding, including all Permitted Refinancing
                    Indebtedness incurred to refund, refinance or replace any
                    Indebtedness incurred pursuant to this clause (13), not to
                    exceed $300.0 million;

               (14) Indebtedness arising from agreements of OI Group or a
                    Restricted Subsidiary of OI Group providing for
                    indemnification, adjustment of purchase price or similar
                    obligations, in each case, incurred or assumed in connection
                    with the disposition of any business, assets or a
                    Subsidiary, other than Guarantees of Indebtedness incurred
                    by any Person acquiring all or any portion of such business,
                    assets or a Subsidiary for the purpose of financing such
                    acquisition; PROVIDED, HOWEVER, that (i) such Indebtedness
                    is not reflected on the balance sheet of OI Group or any
                    such Restricted Subsidiary of OI Group (contingent
                    obligations referred to in a footnote to financial
                    statements and not otherwise reflected on the balance sheet
                    shall not be deemed to be reflected on such balance sheet
                    for purposes of this clause (i)) and (ii) the maximum
                    assumable liability in respect of all such Indebtedness that
                    is permitted to be incurred pursuant to this clause (14)
                    shall at no time exceed the gross proceeds including noncash
                    proceeds (the Fair Market Value of such noncash proceeds
                    being measured at the time received and without giving
                    effect to any subsequent changes in value) actually received
                    by OI Group and its Restricted Subsidiaries in connection
                    with such disposition;

               (15) the incurrence by OI Group or any of its Restricted
                    Subsidiaries of Indebtedness incurred or deemed incurred or
                    cash consideration received from the sale of accounts
                    receivable by OI Group or any of its Restricted Subsidiaries
                    or a special purpose vehicle established by any of them to
                    purchase and sell such receivables;

               (15) obligations in respect of performance and surety bonds and
                    completion guarantees provided by OI Group or any of its
                    Restricted Subsidiaries in the ordinary course of business;

               (16) Indebtedness incurred by OI Group or any of its Restricted
                    Subsidiaries constituting reimbursement obligations with
                    respect to letters of credit issued in the ordinary course
                    of business, including without limitation letters of credit
                    in respect of workers' compensation claims, or other
                    Indebtedness with respect to reimbursement type obligations
                    regarding workers' compensation claims; PROVIDED, HOWEVER,
                    that upon the drawing of such letters of credit or the
                    incurrence of such Indebtedness, such obligations are
                    reimbursed within 30 days following such drawing or
                    incurrence; and

                                       30


               (18) the incurrence by OI Group or any of its Restricted
                    Subsidiaries of Acquired Debt, in an aggregate principal
                    amount at any time outstanding, including all Permitted
                    Refinancing Indebtedness incurred to refund, refinance or
                    replace any Indebtedness incurred pursuant to this clause
                    (18), not to exceed 5.0% of Tangible Assets, as measured
                    after giving effect to the transaction for which the
                    Acquired Debt was incurred.

                    The Company shall not incur any Indebtedness (including
     Permitted Debt) after the Issue Date that is contractually subordinated in
     right of payment to any other Indebtedness of the Company unless such
     Indebtedness is also contractually subordinated in right of payment to the
     Notes on substantially similar terms; PROVIDED, HOWEVER, that no
     Indebtedness of the Company shall be deemed to be contractually
     subordinated in right of payment to any other Indebtedness of the Company
     solely by virtue of being unsecured.

                    OI Group shall not, and shall not permit any Guarantor to,
     incur any Indebtedness (including Permitted Debt) after the date of this
     Indenture that is contractually subordinated in right of payment to any
     other Indebtedness of OI Group or the Guarantors, as the case may be,
     unless such Indebtedness is also contractually subordinated in right of
     payment to the obligations under the Notes or Guarantees of the Notes on
     substantially similar terms; PROVIDED, HOWEVER, that no Indebtedness of OI
     Group or the Guarantors shall be deemed to be contractually subordinated in
     right of payment to any other Indebtedness of OI Group or the Guarantors
     solely by virtue of being unsecured.

                    For purposes of determining compliance with this
     Section 4.13, in the event that any proposed Indebtedness meets the
     criteria of more than one of the categories of Permitted Debt described in
     clauses (1) through (18) above, or is entitled to be incurred pursuant to
     the first paragraph of this Section 4.13, the Company shall be permitted to
     classify such item of Indebtedness on the date of its incurrence in any
     manner that complies with this Section 4.13, or later reclassify all or a
     portion of such item of Indebtedness. Indebtedness under Credit Facilities
     outstanding on the date on which Notes are first issued and authenticated
     under this Indenture shall be deemed to have been incurred on such date in
     reliance on the exception provided by clauses (1) or (2) of the definition
     of Permitted Debt above.

     SECTION 4.14.  LIENS.

                    Neither OI Group nor any Restricted Subsidiary of OI Group
     shall create, incur, or permit to exist, any Lien on any of their
     respective assets, whether now owned or hereafter acquired, in order to
     secure any Indebtedness of either of OI Group or any Restricted Subsidiary
     of OI Group, without effectively providing that the Notes shall be equally
     and ratably secured until such time as such Indebtedness is no longer
     secured by such Lien, except:

               (1)  Liens on cash and Cash Equivalents securing obligations in
                    respect of letters of credit in accordance with the terms of
                    the Credit Agreement;

                                       31


               (2)  Liens existing on the Issue Date;

               (3)  Liens granted after the Issue Date on any assets of OI Group
                    or any of its Restricted Subsidiaries securing Indebtedness
                    of OI Group or any of its Restricted Subsidiaries created in
                    favor of the Holders of the Notes;

               (4)  Liens securing Indebtedness of OI Group or any Restricted
                    Subsidiary of OI Group which is incurred to extend, renew or
                    refinance Indebtedness which is secured by Liens permitted
                    to be incurred under this Indenture; PROVIDED that such
                    Liens do not extend to or cover any assets of OI Group or
                    any Restricted Subsidiary of OI Group other than the assets
                    securing the Indebtedness being extended, renewed or
                    refinanced and that the principal or commitment amount of
                    such Indebtedness does not exceed the principal or
                    commitment amount of the Indebtedness being extended,
                    renewed or refinanced at the time of such extension, renewal
                    or refinancing, or at the time the Lien was issued, created
                    or assumed or otherwise permitted;

               (5)  Permitted Liens; and

               (6)  Liens created in substitution of or as replacements for any
                    Liens permitted by the preceding clauses (1) through (5) or
                    this clause (6), PROVIDED that, based on a good faith
                    determination of an officer of the Company, the assets
                    encumbered under any such substitute or replacement Lien is
                    substantially similar in value to the assets encumbered by
                    the otherwise permitted Lien which is being replaced.

     For purposes of this Indenture, the Notes and the Guarantees of the Notes,
     so long as the Credit Agreement is in effect, the Notes shall be considered
     equally and ratably secured if they are secured pursuant to terms and
     provisions, including any exclusions or exceptions described therein, no
     less favorable to the holders of Notes than those set forth in, or
     contemplated by, the Credit Agreement.

     SECTION 4.15. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
     SUBSIDIARIES.

                    OI Group shall not, and shall not permit any of its
     Restricted Subsidiaries to, directly or indirectly, create or permit to
     exist or become effective any consensual encumbrance or restriction on the
     ability of any such Restricted Subsidiary to:

               (1)  pay dividends or make any other distributions on its Capital
                    Stock to OI Group or any of its Restricted Subsidiaries, or
                    with respect to any other interest or participation in, or
                    measured by, its profits, or pay any indebtedness owed to OI
                    Group or any of its Restricted Subsidiaries;

               (2)  make loans or advances to OI Group or any of its Restricted
                    Subsidiaries; or

                                       32


               (3)  transfer any of its properties or assets to OI Group or any
                    of its Restricted Subsidiaries.

                    However, the preceding restrictions shall not apply to
     encumbrances or restrictions existing under or by reason of:

               (1)  agreements governing Existing Indebtedness, Credit
                    Facilities, charter documents and shareholder agreements as
                    in effect on the Issue Date, and any amendments,
                    modifications, restatements, renewals, increases,
                    supplements, refundings, replacements or refinancings
                    thereof, PROVIDED that such amendments, modifications,
                    restatements, renewals, increases, supplements, refundings,
                    replacements or refinancings are no more restrictive, taken
                    as a whole, with respect to such dividend and other payment
                    restrictions than those contained in such Existing
                    Indebtedness, Credit Facilities, charter documents and
                    shareholders agreements as in effect on the Issue Date;

               (2)  this Indenture, the Notes, the Collateral Documents, the
                    Offshore Collateral Documents and the Guarantees of the
                    Notes;

               (3)  applicable law;

               (4)  any instrument governing Indebtedness or Capital Stock of a
                    Person acquired by OI Group or any of its Restricted
                    Subsidiaries as in effect at the time of such acquisition
                    (except to the extent such Indebtedness was incurred in
                    connection with or in contemplation of such acquisition),
                    which encumbrance or restriction is not applicable to any
                    Person, or the properties or assets of any Person, other
                    than the Person, or the property or assets of the Person, so
                    acquired, PROVIDED that, in the case of Indebtedness, such
                    Indebtedness was permitted by the terms of this Indenture to
                    be incurred;

               (5)  customary non-assignment provisions in leases entered into
                    in the ordinary course of business and consistent with past
                    practices;

               (6)  purchase money obligations, including Capital Lease
                    Obligations and obligations under mortgages, for property
                    acquired in the ordinary course of business that impose
                    restrictions on the property so acquired of the nature
                    described in clause (3) of the first paragraph of this
                    Section 4.15;

               (7)  any agreement for the sale or other disposition of a
                    Restricted Subsidiary of OI Group that restricts any of the
                    foregoing by that Restricted Subsidiary pending its sale or
                    other disposition;

               (8)  Permitted Refinancing Indebtedness, PROVIDED that the
                    restrictions contained in the agreements governing such
                    Permitted Refinancing Indebtedness are no more restrictive,
                    taken as a whole, than those

                                       33


                    contained in the agreements governing the Indebtedness being
                    refinanced; and

               (9)  Permitted Liens or Investment Grade Permitted Liens securing
                    Indebtedness that limit the right of the debtor to dispose
                    of the assets subject to such Lien.

                    Nothing contained in this Section 4.15 shall prevent OI
     Group or a Restricted Subsidiary of OI Group from entering into any
     agreement (x) permitting or providing for the incurrence of Liens otherwise
     permitted by Section 4.14 or (y) restricting the sale or other disposition
     of property securing Indebtedness.

     SECTION 4.16.  TRANSACTIONS WITH AFFILIATES.

                    OI Group shall not, and shall not permit any of its
     Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
     or otherwise dispose of any of its properties or assets to, or purchase any
     property or assets from, or enter into or make or amend any transaction,
     contract, agreement, understanding, loan, advance or guarantee with, or for
     the benefit of, any Affiliate (each, an "AFFILIATE TRANSACTION") involving
     aggregate payments in consideration in excess of $5.0 million, unless:

               (1)  such Affiliate Transaction is on terms that are no less
                    favorable to OI Group or the relevant Restricted Subsidiary
                    than those that would have been obtained in a comparable
                    transaction by OI Group or such Restricted Subsidiary with
                    an unrelated Person; and

               (2)  OI Group delivers to the Trustee with respect to any
                    Affiliate Transaction or series of related Affiliate
                    Transactions involving aggregate consideration in excess of
                    $5.0 million, a resolution of the Board of Directors set
                    forth in an Officers' Certificate certifying that such
                    Affiliate Transaction complies with this Section 4.16 and
                    that such Affiliate Transaction has been approved by a
                    majority of the disinterested members of the Board of
                    Directors.

                    The following items shall not be deemed to be Affiliate
     Transactions and, therefore, shall not be subject to the provisions of the
     prior paragraph:

               (1)  transactions between or among OI Group and/or its Restricted
                    Subsidiaries;

               (2)  transactions between OI Group and/or its Restricted
                    Subsidiaries on the one hand, and OI Inc. on the other, that
                    are in the ordinary course of business consistent with past
                    practices;

               (3)  payment of reasonable directors' fees;

               (4)  Restricted Payments that are permitted by Section 4.12;

                                       34


               (5)  the payment of customary annual management, consulting,
                    monitoring and advisory fees and related expenses to KKR and
                    its Affiliates;

               (6)  the payment of reasonable and customary fees paid to, and
                    indemnity provided on behalf of, officers, directors,
                    employees or consultants of OI Group, any of its direct or
                    indirect parent corporations or any Restricted Subsidiary of
                    OI Group;

               (7)  payments by OI Group or any of its Restricted Subsidiaries
                    to KKR and its Affiliates for any financial advisory,
                    financing, underwriting or placement services or in respect
                    of other investment banking activities, including, without
                    limitation, in connection with acquisitions or divestitures
                    which payments are approved by a majority of the Board of
                    Directors of OI Group in good faith;

               (8)  transactions in which OI Group or any of its Restricted
                    Subsidiaries, as the case may be, delivers to the Trustee a
                    letter from an investment banking firm of nationally
                    recognized standing stating that such transaction is fair to
                    OI Group or such Restricted Subsidiary from a financial
                    point of view or meets the requirements of clause (1) of the
                    preceding paragraph;

               (9)  in addition to any payments referred to in (6) above,
                    payments or loans to officers, directors and employees of OI
                    Group, any of its direct or indirect parent corporations or
                    any Restricted Subsidiary of OI Group for business or
                    personal purposes and other loans and advances, in
                    accordance with any policy of OI Group which shall have been
                    approved by the Board of Directors of OI Group in good faith
                    from time to time, to such officers, directors and employees
                    for travel, entertainment, moving and other relocation
                    expenses made in the ordinary course of business of OI
                    Group, any of its direct or indirect parent corporations or
                    any Restricted Subsidiary of OI Group;

               (10) any agreement in effect as of the Issue Date or any
                    amendment thereto (so long as such amendment is not
                    disadvantageous to the Holders in any material respect) or
                    any transaction contemplated thereby;

               (11) transactions with customers, clients, suppliers or
                    purchasers or sellers of goods or services, in each case in
                    the ordinary course of business which are fair to OI Group
                    or its Restricted Subsidiaries, in the reasonable
                    determination of the Board of Directors of OI Group or the
                    senior management thereof;

               (12) the issuance of Equity Interests (other than Disqualified
                    Stock) of OI Group or the Company to any of the Principals;
                    and

               (13) transactions involving the sale of accounts receivables by
                    OI Group or any of its Restricted Subsidiaries or a special
                    purpose vehicle established by any of them to purchase and
                    sell receivables.

                                       35


     SECTION 4.17.  ADDITIONAL PLEDGES.

                    If on or after the Issue Date, any Domestic Subsidiary of
     OI Group pledges any property or assets to secure obligations under the
     Credit Agreement (other than pursuant to the Collateral Documents or as
     contemplated by the Credit Agreement), then such property or assets shall
     also secure the Notes.

     SECTION 4.18.  PAYMENTS FOR CONSENT.

                    OI Group shall not, and shall not permit any of its
     Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid
     any consideration to or for the benefit of any Holder of Notes for or as an
     inducement to any consent, waiver or amendment of any of the terms or
     provisions of this Indenture, the Notes or the Guarantees unless such
     consideration is offered to be paid and is paid to all Holders of the Notes
     that consent, waive or agree to amend in the time frame set forth in the
     solicitation documents relating to such consent, waiver or agreement.

     SECTION 4.19.  DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.

                    The Board of Directors of OI Group may designate any
     Restricted Subsidiary to be an Unrestricted Subsidiary if that designation
     would not cause a Default; PROVIDED that in no event shall the business
     currently operated by the Company be transferred to or held by an
     Unrestricted Subsidiary. If a Restricted Subsidiary is designated as an
     Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding
     Investments owned by OI Group and its Restricted Subsidiaries in the
     Subsidiary so designated shall be deemed to be a Restricted Investment made
     as of the time of such designation and that designation shall only be
     permitted if such Investment would be permitted at that time and if such
     Restricted Subsidiary otherwise meets the definition of an Unrestricted
     Subsidiary. The Board of Directors of OI Group may at any time designate
     any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that
     such designation shall be deemed to be an incurrence of Indebtedness by a
     Restricted Subsidiary of OI Group of any outstanding Indebtedness of such
     Unrestricted Subsidiary and such designation shall only be permitted if (1)
     such Indebtedness is permitted pursuant to Section 4.13, calculated on a
     pro forma basis as if such designation had occurred at the beginning of the
     four-quarter reference period; and (2) no Default or Event of Default shall
     be in existence following such designation.

     SECTION 4.20.  NEGATIVE PLEDGE.

                    Except as contemplated by and permitted by the Credit
     Agreement and the Collateral Documents, OI Group shall not permit any of
     the issued and outstanding shares of any class of Capital Stock of OI
     General FTS or any part of the Intercompany Indebtedness owed by OI General
     FTS to OI Group to be pledged, in each of the foregoing cases as security
     or otherwise unless the Notes and Guarantees of the Notes are secured by
     this collateral on a PARI PASSU basis with the applicable Indebtedness.

                                       36


     SECTION 4.21.  LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.

                    OI Group shall not permit any of its Domestic Subsidiaries,
     directly or indirectly, to guarantee the payment of any other Indebtedness
     of the Company or OI Group unless such Domestic Subsidiary simultaneously
     executes and delivers a supplemental indenture providing for the guarantee
     of the payment of the Notes by such Domestic Subsidiary, which Guarantee
     shall be senior to or PARI PASSU with such Subsidiary's Guarantee of such
     other Indebtedness.

SECTION 2.05.  AMENDMENTS TO ARTICLE 5.

               Article 5 of the Indenture is hereby amended by deleting
Section 5.01 and Section 5.02 in their entirety and replacing them with the
following Section 5.01, Section 5.02 and Section 5.03:

     SECTION 5.01.  WHEN OI GROUP MAY MERGE, ETC.

                    OI Group shall not, in any transaction or series of
     transactions, merge or consolidate with or into, or, directly or
     indirectly, sell, assign, convey, transfer, lease or otherwise dispose of
     all or substantially all of its properties and assets to, any Person or
     Persons, and OI Group shall not permit any of its Restricted Subsidiaries
     to enter into any such transaction or series of transactions if such
     transaction or series of transactions, in the aggregate, would result in a
     sale, assignment, conveyance, transfer, lease or other disposition of all
     or substantially all of the properties and assets of OI Group and its
     Restricted Subsidiaries, on a consolidated basis, to any other Person or
     Persons, unless at the time and after giving effect thereto:

               (1)  either: (a) OI Group or such Restricted Subsidiary, as the
                    case may be, is the surviving corporation; or (b) the Person
                    formed by or surviving any such consolidation or merger (if
                    other than OI Group or such Restricted Subsidiary) (the
                    "SUCCESSOR COMPANY") or to which such sale, assignment,
                    transfer, conveyance or other disposition shall have been
                    made is a corporation organized or existing under the laws
                    of the United States, any state thereof or the District of
                    Columbia;

               (2)  the Successor Company (if other than OI Group or such
                    Restricted Subsidiary) or the Person to which such sale,
                    assignment, transfer, conveyance or other disposition shall
                    have been made assumes all the obligations of OI Group or
                    such Restricted Subsidiary (if such Restricted Subsidiary is
                    a Guarantor), as the case may be, under the Notes, this
                    Indenture, the Collateral Documents and the Registration
                    Rights Agreement pursuant to agreements reasonably
                    satisfactory to the Trustee;

               (3)  immediately after such transaction no Default or Event of
                    Default exists; and

               (4)  OI Group or the Successor Company formed by or surviving any
                    such consolidation or merger (if other than OI Group), or
                    the Person to which

                                       37


                    such sale, assignment, transfer, conveyance or other
                    disposition shall have been made, shall have, immediately
                    after such transaction, a Fixed Charge Coverage Ratio equal
                    to or greater than such ratio for OI Group immediately prior
                    to such transaction.

                    This Section 5.01 shall not apply to (i) a merger or
     consolidation of OI Group, the Company or any of the Guarantors with or
     into any other of the Company, OI Group or any of the Guarantors or the
     sale, assignment, conveyance, transfer, lease or other disposition of
     assets between or among the Company, OI Group and any of the Guarantors and
     (ii) a merger or consolidation of any Foreign Subsidiary with or into OI
     Group or any of its Restricted Subsidiaries or the sale, assignment,
     conveyance, transfer, lease or other disposition of assets from any Foreign
     Subsidiary to OI Group or any of its Restricted Subsidiaries.

     SECTION 5.02.  SUCCESSOR CORPORATION SUBSTITUTED.

                    Upon any consolidation or merger, or any transfer by OI
     Group or its Restricted Subsidiaries (other than by lease) of all or
     substantially all of the assets of OI Group in accordance with Section
     5.01, the Successor Company or the Person to which such transfer is made
     shall succeed to, and be substituted for, and may exercise every right and
     power of the Company and OI Group under this Indenture with the same effect
     as if such Successor Company or Person had been named as the Company and OI
     Group herein. In the event of any such transfer, Company and OI Group shall
     be released and discharged from all liabilities and obligations in respect
     of the Notes and this Indenture, and Company and OI Group may be dissolved,
     wound up or liquidated at any time thereafter.

     SECTION 5.03.  ASSIGNMENT OF OBLIGATIONS.

                    On and after July 2, 2003, the Company may assign its
     obligations under the Notes and this Indenture to OI Inc., and the Company
     and each Guarantor, in its capacity as a Guarantor, will thereafter be
     released from its obligations under the Notes, the Guarantees of the Notes
     and this Indenture PROVIDED that (1) OI Inc. assumes all of the obligations
     under the Notes and this Indenture, and (2) the obligations of each Credit
     Agreement Domestic Borrower under the Credit Agreement have been or will be
     concurrently assumed by OI Inc. in accordance with the terms of the Credit
     Agreement. In the event of any such assignment, OI Inc. shall succeed to,
     and be substituted for, and may exercise every right and power of, the
     Company under the Indenture with the same effect as if OI Inc. had been
     named the Company herein, and restrictions imposed on and obligations of OI
     Group in this Indenture shall become restrictions imposed on and
     obligations of OI Inc., unless the context otherwise requires.

SECTION 2.06.  AMENDMENTS TO ARTICLE 6.

               Article 6 of the Indenture is hereby amended by deleting
Section 6.01 in its entirety and replacing it with the following Section 6.01:

                                       38


SECTION 6.01   EVENTS OF DEFAULT.

               An "EVENT OF DEFAULT" occurs with respect to the Notes if:

               (1)  the Company defaults in the payment of interest on, or
                    Liquidated Damages, if any, with respect to, the Notes when
                    the same becomes due and payable and the default continues
                    for a period of 30 days;

               (2)  the Company defaults in the payment of the Principal of the
                    Notes when the same becomes due and payable at maturity,
                    upon redemption or otherwise;

               (3)  failure by OI Group or any of its Restricted Subsidiaries
                    for 60 days after notice to comply with any of the other
                    agreements in this Indenture, the Notes, the Guarantees of
                    the Notes (with respect to any Guarantor) and the Collateral
                    Documents (with respect to any Restricted Subsidiary which
                    has pledged assets or property to secure its obligations
                    under this Indenture and the Notes);

               (4)  default under any mortgage, indenture or instrument under
                    which there may be issued or by which there may be secured
                    or evidenced any Indebtedness for money borrowed by OI Group
                    or any Restricted Subsidiary (or the payment of which is
                    guaranteed by OI Group or any of its Restricted
                    Subsidiaries) whether such Indebtedness or Guarantee now
                    exists, or is created after the Issue Date, if that default:

                    (a)  is caused by a failure to pay principal of, or interest
                         or premium, if any, on such Indebtedness prior to the
                         expiration of the grace period provided in such
                         Indebtedness on the date of such default (a "PAYMENT
                         DEFAULT"); or

                    (b)  results in the acceleration of such Indebtedness prior
                         to its express maturity; PROVIDED, that an Event of
                         Default shall not be deemed to occur with respect to
                         any such accelerated Indebtedness which is repaid or
                         prepaid within 20 Business Days after such declaration;

                    and, in any individual case, the principal amount of any
                    such Indebtedness is equal to or in excess of $50.0 million,
                    or such Indebtedness together with the principal amount of
                    any other such Indebtedness under which there has been a
                    Payment Default or the maturity of which has been so
                    accelerated, aggregates $100.0 million or more;

               (5)  any final judgment or order for payment of money in excess
                    of $50.0 million in any individual case and $100.0 million
                    in the aggregate at any time shall be rendered against OI
                    Group or any of its Restricted Subsidiaries and such
                    judgment shall not have been paid, discharged or stayed for
                    a period of 60 days;

                                       39


               (6)  except as permitted by this Indenture or the Collateral
                    Documents, any Guarantee of the Notes shall be held in any
                    judicial proceeding to be unenforceable or invalid or shall
                    cease for any reason to be in full force and effect or any
                    Guarantor, or any Person acting on behalf of any Guarantor,
                    shall deny or disaffirm its obligations under its Guarantee
                    of the Notes;

               (7)  the Company, OI Group or any Significant Subsidiary of OI
                    Group pursuant to or within the meaning of any Bankruptcy
                    Law:

                    (a)  commences a voluntary case;

                    (b)  consents to the entry of an order for relief against it
                         in an involuntary case;

                    (c)  consents to the appointment of a Custodian of it or for
                         all or substantially all of its property;

                    (d)  makes a general assignment for the benefit of its
                         creditors; or

                    (e)  admits in writing its inability generally to pay its
                         debts as the same become due;

               (8)  a court of competent jurisdiction enters an order or decree
                    under any Bankruptcy Law that:

                    (a)  is for relief against the Company, OI Group or any
                         Significant Subsidiary of OI Group in an involuntary
                         case;

                    (b)  appoints a Custodian of the Company, OI Group or any
                         Significant Subsidiary of OI Group or for all or
                         substantially all of such entity's property; or

                    (c)  orders the liquidation of the Company, OI Group or any
                         Significant Subsidiary of OI Group;

               and the order or decree remains unstayed and in effect for 60
               days;

               (9)  except as permitted by the Collateral Documents, any
                    amendments thereto and the provisions of the Indenture, any
                    of the Collateral Documents ceases to be in full force and
                    effect or ceases to be effective, in all material respects,
                    to create the Lien purported to be created in the Collateral
                    in favor of the holders of the Notes for 60 days after
                    notice; and

               (10) failure by OI Group or any of its Restricted Subsidiaries to
                    comply with the provisions of Sections 4.10 or 4.11 or
                    Article 5.

                                       40


               The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

               Pursuant to Section 4.04 of the Indenture, forthwith upon
becoming aware of any Default or Event of Default, the Company shall deliver to
the Trustee an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto

SECTION 2.07.  AMENDMENTS TO ARTICLE 8.

               (a)  Section 8.03 of the Indenture is hereby amended by deleting
the words "date of execution of this Indenture" in clause (d)(2)(b) and adding
the words "Issue Date" in replacement thereof.

SECTION 2.08.  AMENDMENTS TO ARTICLE 9.

               Section 9.02 of the Indenture is hereby amended by deleting the
word "or" at the end of clause (11) and adding, immediately following clause
(12), the following new clauses (13) and (14):

               (13) amend, change or modify the obligation of the Company to
                    make and consummate an Asset Sale Offer with respect to any
                    Asset Sale in accordance with Section 4.11 or the obligation
                    of the Company to make and consummate a Change of Control
                    Offer in the event of a Change of Control in accordance with
                    Section 4.10, including, in each case, amending, changing or
                    modifying any definition relating thereto; or

               (14) except as otherwise permitted under Article 5 or Section
                    10.11, consent to the assignment or transfer by OI Group,
                    the Company or any Guarantor of any of their rights or
                    obligations under this Indenture.

SECTION 2.09.  AMENDMENTS TO ARTICLE 10.

               (a)  Section 10.10 of the Indenture is hereby amended by deleting
such Section 10.10 in its entirety and replacing it with the following Section
10.10:

     SECTION 10.10  RELEASE OF GUARANTOR.

               (a)  A Guarantor shall be automatically released without any
     action on the part of the Trustee of the Holders from its obligations under
     this Indenture and Guarantee if:

               (1)  OI Group properly designates any Restricted Subsidiary that
                    is a Guarantor as an Unrestricted Subsidiary;

               (2)  upon any sale or other disposition of all or substantially
                    all of the assets of that Guarantor (including by way of
                    merger or

                                       41


                    consolidation) to a Person that is not (either before or
                    after giving effect to such transaction) a Restricted
                    Subsidiary of OI Group, if the sale or other disposition of
                    all or substantially all of the assets of that Guarantor
                    complies with the Section 4.11 and Section 10.11; or

               (3)  upon any sale of all of the Capital Stock of a Guarantor to
                    a Person that is not (either before or after giving effect
                    to such transaction) a Restricted Subsidiary of OI Group, if
                    the sale of all such Capital Stock of that Guarantor
                    complies with Section 4.11 and Section 10.11.

     The Trustee shall receive written notice of the release of any Guarantor if
     such release is effected other than under Section 10.11.

               (b)  Upon the release of a Guarantee by a Domestic Subsidiary
     under the Credit Agreement, the Guarantee of such Domestic Subsidiary under
     this Indenture will be released and discharged at such time and the Trustee
     shall execute an appropriate instrument evidencing such release. If any
     such Domestic Subsidiary thereafter guarantees obligations under the Credit
     Agreement (or any released Guarantee under the Credit Agreement is
     reinstated or renewed), then such Domestic Subsidiary will guarantee the
     Securities in accordance with this Article 10.

               (c)  A Guarantor shall be released from its obligations under
     this Indenture in accordance with an assignment of obligations to OI Inc.
     pursuant to Section 5.03 or in connection with the merger or consolidation
     of the Company or any of the Guarantors with or into any other of the
     Company, OI Group or any of the Guarantors or the sale, assignment,
     conveyance, transfer, lease or other disposition of assets between or among
     the Company, OI Group and any of the Guarantors, so long as such
     transaction complies with Section 4.11.

               (b)  Section 10.11 of the Indenture is hereby amended by deleting
such Section 10.11 in its entirety and replacing it with the following Section
10.11:

     SECTION 10.11  MERGER, CONSOLIDATION AND SALE OF ASSETS OF A GUARANTOR.

               A Guarantor may not sell or otherwise dispose of all or
     substantially of its assets to, or consolidate with or merge with or into
     (whether or not such Guarantor is the surviving Person), another Person,
     other than the Company or another Guarantor, unless:

               (1)  immediately after giving effect to that transaction, no
                    Event of Default shall have occurred and be continuing; and

               (2)  either (a) the Person acquiring the property in any such
                    sale or disposition or the Person formed by or surviving any
                    such consolidation or merger is organized or existing under
                    the laws of the United States, any state thereof or the
                    District of Columbia and assumes all the obligations of that
                    Guarantor under this Indenture, its Guarantee, the
                    Collateral Documents and

                                       42


                    the Registration Rights Agreement pursuant to a supplemental
                    indenture satisfactory to the Trustee; or (b) such sale or
                    other disposition complies with Section 4.11, including the
                    application of the Net Proceeds therefrom; and

               (3)  the Company shall have delivered to the Trustee an Officers'
                    Certificate and an Opinion of Counsel, each stating that
                    such consolidation, sale, lease or merger complies with the
                    foregoing clauses (1) and (2).

     Notwithstanding the foregoing, each Guarantor may consolidate with or merge
     into or sell its assets to the Company or another Guarantor.

SECTION 2.10.  AMENDMENT TO ARTICLE 11.

               Section 11.03 of the Indenture is hereby amended by deleting the
first sentence of the final paragraph of such Section 11.03.

SECTION 2.11.  OTHER PROVISIONS UNCHANGED.

               All provisions of the Indenture, other than as set forth in
Sections 2.01 to 2.10, inclusive, of this Third Supplemental Indenture shall be
unchanged by this Third Supplemental Indenture and shall remain in full force
and effect. The Indenture, as supplemented and amended by this Third
Supplemental Indenture, is in all respects ratified and confirmed, and the
Indenture and this Third Supplemental Indenture shall be read, taken and
construed as one and the same instrument.

                                   ARTICLE 3.

                                  MISCELLANEOUS

SECTION 3.01.  DEFINED TERMS.

               Unless otherwise provided in this Third Supplemental Indenture,
all defined terms used in this Third Supplemental Indenture shall have the
meanings assigned to them in the Indenture.

SECTION 3.02.  CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST INDENTURE ACT
OF 1939.

               If and to the extent that any provision of this Third
Supplemental Indenture limits, qualifies or conflicts with another provision
included in this Third Supplemental Indenture or in the Indenture which is
required to be included herein or therein by any of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such required provision shall
control.

SECTION 3.03.  NEW YORK LAW TO GOVERN.

               THIS THIRD SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                                       43


SECTION 3.04.  COUNTERPARTS.

               This Third Supplemental Indenture may be executed in any number
of counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.

SECTION 3.05.  EFFECT OF HEADINGS.

               The Article and Section headings herein are for convenience only
and shall not affect the construction hereof.

SECTION 3.06.  SEVERABILITY OF PROVISIONS.

               In case any provision in this Third Supplemental Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

SECTION 3.07.  SUCCESSORS AND ASSIGNS.

               All covenants and agreements in this Third Supplemental Indenture
by the parties hereto shall bind their respective successors and assigns and
inure to the benefit of their respective successors and assigns, whether so
expressed or not.

SECTION 3.08.  BENEFIT OF SUPPLEMENTAL INDENTURE.

               Nothing in this Third Supplemental Indenture, express or implied,
shall give to any Person, other than the parties hereto, any Registrar, any
Paying Agent and their successors hereunder, and the Holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under this Third
Supplemental Indenture.

                                       44


               IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, all as of the date first above
written.


                                        OWENS-BROCKWAY GLASS CONTAINER INC.


                                        By: /s/ James W. Baehren
                                           -------------------------------------
                                           Name:  James W. Baehren
                                           Title: Vice President


                                        On behalf of each entity named on the
                                        attached ANNEX A, in the capacity set
                                        forth for such entity on such ANNEX A


                                        By: /s/ James W. Baehren
                                           -------------------------------------
                                           Name:  James W. Baehren


                                        U.S. Bank National Association, as
                                          Trustee


                                        By: /s/ Frank P. Leslie III
                                           -------------------------------------
                                        Name:  Frank P. Leslie III
                                        Title: Vice President



                                                                         ANNEX A



                                                        TITLE OF OFFICER EXECUTING
       NAME OF ENTITY                                    ON BEHALF OF SUCH ENTITY
       --------------                                 -----------------------------
                                                    
ACI America Holdings Inc.                              Vice President and Secretary

Anamed International, Inc.                             Vice President and Secretary

BriGam Medical, Inc.                                   Vice President and Secretary

BriGam Ventures, Inc.                                  Vice President and Secretary

BriGam, Inc.                                           Vice President and Secretary

Brockway Realty Corporation                            Vice President and Secretary

Brockway Research, Inc.                                Vice President and Secretary

Continental PET Technologies, Inc.                     Vice President and Secretary

MARC Industries, Inc.                                  Vice President and Secretary

Martell Medical Products, Incorporated                 Vice President and Secretary

NHW Auburn, LLC                                        Vice President and Secretary
                                                       of its sole member

OB Cal South Inc.                                      Vice President and Secretary

OI AID STS Inc.                                        Vice President and Secretary

OI Auburn Inc.                                         Vice President and Secretary

OI Australia Inc.                                      Vice President and Secretary

OI Brazil Closure Inc.                                 Vice President and Secretary

OI California Containers Inc.                          Vice President and Secretary

OI Castalia STS Inc.                                   Vice President and Secretary

OI Consol STS Inc.                                     Vice President and Secretary

OI Ecuador STS Inc.                                    Vice President and Secretary

OI Europe & Asia Inc.                                  Vice President and Secretary


                                    ANNEX A-1




                                                        TITLE OF OFFICER EXECUTING
       NAME OF ENTITY                                    ON BEHALF OF SUCH ENTITY
       --------------                                 -----------------------------
                                                    
OI General Finance Inc.                                Vice President and Secretary

OI General FTS Inc.                                    Vice President and Secretary

O-I Health Care Holding Corp.                          Vice President and Secretary

O-I Holding Company, Inc.                              Vice President and Secretary

OI Hungary Inc.                                        Vice President and Secretary

OI International Holdings Inc.                         Vice President and Secretary

OI Levis Park STS Inc.                                 Vice President and Secretary

OI Medical Holdings Inc.                               Vice President and Secretary

OI Medical Inc.                                        Vice President and Secretary

OI Peru STS Inc.                                       Vice President and Secretary

OI Plastic Products FTS Inc.                           Vice President and Secretary

OI Poland Inc.                                         Vice President and Secretary

OI Puerto Rico STS Inc.                                Vice President and Secretary

OI Regioplast STS Inc.                                 Vice President and Secretary

OI Venezuela Plastic Products Inc.                     Vice President and Secretary

OIB Produvisa Inc.                                     Vice President and Secretary

Overseas Finance Company                               Vice President and Secretary

Owens-BriGam Medical Company                           Vice President and Secretary
                                                       of each general partner

Owens-Brockway Glass Container Trading
Company                                                Vice President and Secretary

Owens-Brockway Packaging, Inc.                         Vice President and Secretary

Owens-Brockway Plastic Products Inc.                   Vice President and Secretary

Owens-Illinois Closure Inc.                            Vice President and Secretary


                                    ANNEX A-2




                                                        TITLE OF OFFICER EXECUTING
       NAME OF ENTITY                                    ON BEHALF OF SUCH ENTITY
       --------------                                 -----------------------------
                                                    
Owens-Illinois General Inc.                            Vice President and Secretary

Owens-Illinois Group, Inc.                             Vice President, Director of
                                                       Finance and Secretary

Owens-Illinois Prescription Products Inc.              Vice President and Secretary

Owens-Illinois Specialty Products Puerto Rico, Inc.    Vice President and Secretary

Product Design & Engineering, Inc.                     Vice President and Secretary

Seagate, Inc.                                          Vice President and Secretary

Seagate II, Inc.                                       Vice President and Secretary

Seagate III, Inc.                                      Vice President and Secretary

Specialty Packaging Licensing Company                  Vice President and Secretary

Universal Materials, Inc.                              Vice President and Secretary


                                    ANNEX A-3


                                   EXHIBIT D-1
                                 [FORM OF NOTE]

[INSERT THE GLOBAL SECURITY LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF
THE INDENTURE]

[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]


                       OWENS-BROCKWAY GLASS CONTAINER INC.

                      8 3/4% SENIOR SECURED NOTES DUE 2012


Number:                       CUSIP No. ___________                    $________


               OWENS-BROCKWAY GLASS CONTAINER INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to Cede & Co., as nominee
of The Depository Trust Company, or registered assigns, the principal sum of
___________________________________________________________________ DOLLARS
($_________) on November 15, 2012.

               Interest Payment Dates: May 15 and November 15, commencing May
15, 2003.

               Record Dates: May 1 and November 1.

               Additional provisions of this Note are set forth below following
the signatures of the authorized officers of the Company.

                                      D1-1


               IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.


                                        OWENS-BROCKWAY GLASS CONTAINER INC.


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


Dated: November 13, 2002


TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within-mentioned Indenture.


U.S. Bank National Association, as Trustee


By:
    ---------------------------------
    Authorized Signatory

                                      D1-2


                       OWENS-BROCKWAY GLASS CONTAINER INC.

                      8 3/4% SENIOR SECURED NOTES DUE 2012

               Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.

1.   INTEREST

               OWENS-BROCKWAY GLASS CONTAINER INC., a Delaware corporation (such
entity, and its successors and assigns under the Indenture hereinafter referred
to, being herein called the "COMPANY"), promises to pay interest on the
principal amount of this Note at the rate per annum shown above and shall pay
the Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement. Interest on this Note shall accrue from November 13, 2002 or from the
most recent interest payment date to which interest has been paid or provided
for, as the case may be; interest and Liquidated Damages on this Note shall be
payable semi-annually on May 15 and November 15 of each year until maturity, or,
if such day is not a Business Day, on the next succeeding Business Day (each, an
"INTEREST PAYMENT DATE"), commencing on May 15, 2003; and interest on this Note
shall be payable to holders of record on the May 1 or November 1 immediately
preceding the applicable Interest Payment Date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay defaulted
interest on overdue interest, plus (to the extent lawful) any interest payable
on the defaulted interest, as provided in Section 2.11 of the Indenture.

2.   METHOD OF PAYMENT

               The Company will pay interest and Liquidated Damages on this Note
(except defaulted interest) to the Persons who are holders ("HOLDERS") of record
in the note register of the Company (the "REGISTER") of this Note at the close
of business on the May 1 or November 1 (each, a "RECORD DATE") next preceding
the Interest Payment Date, in each case even if the Note is cancelled solely by
virtue of registration of transfer or registration of exchange after such Record
Date. The Company will pay Principal, interest and Liquidated Damages in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. Principal of and interest and Liquidated Damages, if
any, on this Note will be payable, and this Note may be exchanged or
transferred, at the office or agency of the Company in the Borough of Manhattan,
the City of New York (which initially will be a Corporate Trust Office of the
Trustee); PROVIDED that, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the address of each
Holder as such address appears in the Note Register; PROVIDED further that
payment by wire transfer of immediately available funds will be required with
respect to Principal of and interest, and Liquidated Damages, if any, on, all
Global Notes and all other Notes the Holders of which will have provided wire
transfer instructions to the Company or the Paying Agent. Such payment will be
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.

                                      D1-3


3.   PAYING AGENT AND REGISTRAR

               Initially, U.S. Bank National Association, a national banking
association (the "TRUSTEE"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-Registrar without
notice to any Holder. The Company or any of its Affiliates may act as Paying
Agent, Registrar or co-Registrar.

4.   INDENTURE

               The Company issued this Note under an Indenture dated as of
January 24, 2002 among the Company, the Guarantors and the Trustee, the terms of
which have been established in the Third Supplemental Indenture among the
Company, the Guarantors and the Trustee, dated as of November 13, 2002
(collectively, the "INDENTURE"), pursuant to Section 2.01 of the Indenture. This
Note is a series designated as the "8 3/4% Senior Secured Notes due 2012" of the
Company. The Company may issue additional Notes of this series after this Note
has been issued. This Note and any additional Notes of this series subsequently
issued under the Indenture shall be treated as a single series for all purposes
under the Indenture, including without limitation, waivers, amendments,
redemptions and offers to purchase. The terms of this Note include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended (the "TIA").
This Note is subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of those terms. Any conflict between the
terms of this Note and the Indenture will be governed by the Indenture.

               This Note is secured to the extent set forth in the Collateral
Documents and Article 11 of the Indenture.

5.   OPTIONAL REDEMPTION

               Except as described below, this Note shall not be redeemable at
the Company's option prior to November 15, 2007.

               On or after November 15, 2007, the Company may redeem all or a
part of this Note upon not less than 30 nor more than 60 days notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on November 15 of the years indicated below:



             YEAR                                      PERCENTAGE
             ----                                      ----------
                                                     
             2007...................................    104.375%
             2008...................................    102.917%
             2009...................................    101.458%
             2010 and thereafter....................    100.000%


               At any time prior to November 15, 2005, the Company may redeem on
any one or more occasions up to 35% of the aggregate principal amount of Notes
(calculated after giving

                                      D1-4


effect to any issuance of Additional Securities) issued under the Indenture at a
redemption price of 108.750% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to the redemption date, with the
net cash proceeds of one or more Equity Offerings by OI Inc. to the extent the
net cash proceeds thereof are contributed to the Company or used to purchase
from the Company Capital Stock (other than Disqualified Stock) of the Company;
PROVIDED that: (1) at least 65% of the aggregate principal amount of Notes
(calculated after giving effect to any issuance of Additional Securities) issued
under the Indenture remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by OI Inc. and its Subsidiaries); and (2) the
redemption must occur within 60 days of the date of the closing of such Equity
Offering.

               In addition, at any time prior to November 15, 2007, this Note
may also be redeemed, in whole but not in part, at the option of the Company
upon the occurrence of a Change of Control, upon not less than 30 nor more than
60 days prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount of this
Note plus the Applicable Premium as of, and accrued and unpaid interest and
Liquidated Damages, if any, to, the date of redemption (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
Note on the relevant Interest Payment Date).

6.   MANDATORY REDEMPTION

               The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to this Note.

7.   REPURCHASE AT THE OPTION OF HOLDER

               If a Change of Control occurs, unless the Company has exercised
its right to redeem the Notes pursuant to the terms of the Indenture, each
Holder of this Note will have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of that Holder's
Notes pursuant to a Change of Control Offer on the terms set forth in the
Indenture. If OI Group or a Restricted Subsidiary consummates any Asset Sales,
when the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company
will be required to make an offer (an "ASSET SALE OFFER") to all Holders of this
Note and all Holders of other Indebtedness that is PARI PASSU with this Note
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets to purchase
the maximum principal amount of this Note and such other PARI PASSU Indebtedness
that may be purchased out of the Excess Proceeds on the terms, in accordance
with the procedures and subject to the limitations set forth in the Indenture
and such other PARI PASSU Indebtedness.

8.   NOTICE OF REDEMPTION

               Notice of redemption shall be mailed by first class mail at least
30 days but not more than 60 days before the redemption date to each Holder of
this Note to be redeemed. Notices of redemption shall not be conditional.
Denominations of this Note larger than $1,000 may be redeemed in part. If this
Note is to be redeemed in part only, the notice of redemption that

                                      D1-5


relates to that portion to be redeemed shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion of the original Note shall be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date, interest ceases to accrue on the Note or portions thereof
called for redemption.

9.   DENOMINATIONS; TRANSFER; EXCHANGE

               The Note is in registered form, without coupons, in denominations
of $1,000 of principal amount and any integral multiple thereof. A Holder may
transfer or exchange the Note in accordance with the Indenture. No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require the payment of a sum sufficient to cover any transfer
tax or other similar governmental charge payable in connection therewith,
subject to and as permitted by the Indenture.

10.  PERSONS DEEMED OWNERS

               The registered Holder of this Note may be treated as the owner of
it for all purposes.

11.  REPAYMENT TO COMPANY

               The Trustee and the Paying Agent shall pay to the Company upon
the Company's request any money held by them for the payment of Principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Holders entitled to
the money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person.

12.  DISCHARGE AND DEFEASANCE

               Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under this Note and the Indenture if
the Company deposits with the Trustee money and/or Government Securities for the
payment of Principal and interest on this Note to Maturity.

13.  DEFAULTS AND REMEDIES

               Under the Indenture, Events of Default include: (1) defaults in
the payment of interest on, or Liquidated Damages, if any, with respect to the
Notes when the same becomes due and payable and the default continues for a
period of 30 days; (2) defaults in the payment of the Principal of the Notes
when the same becomes due and payable at maturity, upon redemption or otherwise;
(3) failure by OI Group or any of its Restricted Subsidiaries for 60 days after
notice to comply with any of the other agreements in the Indenture, the Notes,
the Guarantees of the Notes (with respect to any Guarantor) and the Collateral
Documents (with respect to any Restricted Subsidiary which has pledged assets or
property to secure its obligations under the Indenture and the Notes); (4)
default under any mortgage, indenture or instrument under which there may be

                                      D1-6


issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by OI Group or any Restricted Subsidiary (or the payment of which is
guaranteed by OI Group or any of its Restricted Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the Issue Date, if
that default: (a) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "PAYMENT
DEFAULT"); or (b) results in the acceleration of such Indebtedness prior to its
express maturity; PROVIDED, that an Event of Default shall not be deemed to
occur with respect to any such accelerated Indebtedness which is repaid or
prepaid within 20 Business Days after such declaration; and, in any individual
case, the principal amount of any such Indebtedness is equal to or in excess of
$50.0 million, or such Indebtedness together with the principal amount of any
other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $100.0 million or more;
(5) any final judgment or order for payment of money in excess of $50.0 million
in any individual case and $100.0 million in the aggregate at any time shall be
rendered against OI Group or any of its Restricted Subsidiaries and such
judgment shall not have been paid, discharged or stayed for a period of 60 days;
(6) except as permitted by the Indenture or the Collateral Documents, any
Guarantee of the Notes shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Guarantee of the Notes; (7) the
Company, OI Group or any Significant Subsidiary of OI Group pursuant to or
within the meaning of any Bankruptcy Law: (a) commences a voluntary case; (b)
consents to the entry of an order for relief against it in an involuntary case;
(c) consents to the appointment of a Custodian of it or for all or substantially
all of its property; (d) makes a general assignment for the benefit of its
creditors; or (e) admits in writing its inability generally to pay its debts as
the same become due; (8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (a) is for relief against the Company, OI
Group or any Significant Subsidiary of OI Group in an involuntary case; (b)
appoints a Custodian of the Company, OI Group or any Significant Subsidiary of
OI Group or for all or substantially all of such entity's property; or (c)
orders the liquidation of the Company, OI Group or any Significant Subsidiary of
OI Group; and, with respect to (a), (b) and (c), the order or decree remains
unstayed and in effect for 60 days; (9) except as permitted by the Collateral
Documents, any amendments thereto and the provisions of the Indenture, any of
the Collateral Documents ceases to be in full force and effect or ceases to be
effective, in all material respects, to create the Lien purported to be created
in the Collateral in favor of the Holders of the Notes for 60 days after notice;
and (10) failure by OI Group or any of its Restricted Subsidiaries to comply
with the provisions of Sections 4.10 or 4.11 or Article 5 of the Indenture.

               If an Event of Default other than an Event or Default specified
in clauses (7) and (8) of the preceding paragraph occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by notice to the Company and the Trustee,
as provided in the Indenture, may declare the unpaid Principal of and any
accrued and unpaid interest on the Notes to be due and payable immediately. Upon
such declaration the Principal (or such lesser amount) and interest shall be due
and payable immediately. At any time after a declaration of acceleration with
respect to the Notes has been made, the Holders of a majority in principal
amount of the then outstanding Notes may, under certain circumstances, rescind
such acceleration and its consequences if the rescission would not

                                      D1-7


conflict with any judgment or decree and if all existing Events of Default with
respect to the Notes have been cured or waived except nonpayment of Principal or
interest that has become due solely because of the acceleration.

               Subject to the duty of the Trustee during an Event of Default to
act with the required standard of care, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of this Note, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense. Subject to certain provisions, including those requiring security or
indemnification of the Trustee, the Holders of a majority in principal amount of
the outstanding Note have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
with respect to this Note.

14.  SUPPLEMENTS, AMENDMENTS AND WAIVERS

               Subject to certain exceptions, the Indenture, the Notes or the
Guarantees of the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture, the Notes or the Guarantees of
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes). The Company and the Trustee may amend or supplement the
Indenture, the Notes and the Guarantees of the Notes without notice to or the
consent of any holder of Notes in certain circumstances described in the
Indenture. Amendments to the Collateral Documents shall be made in accordance
with their terms.

15.  TRUSTEE DEALINGS WITH THE COMPANY

               The Trustee, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates, with the same rights as if it were not the Trustee; however, if
it acquires any conflicting interest as defined in the TIA it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.

16.  NO RECOURSE AGAINST OTHERS

               A past, present or future director, officer, employee,
incorporator or stockholder, as such, of the Company or any Guarantor, if any,
or any successor corporation shall not have any liability for any obligations of
the Company or any Guarantor under the Notes, the Indenture, the Guarantees of
the Notes, the Registration Rights Agreement, the Collateral Documents or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

17.  GUARANTEES

                                      D1-8


               This Note will be entitled to the benefits of certain Guarantees
made for the benefit of the Holders. Reference is hereby made to the Indenture
for a statement of the respective rights, limitations of rights, duties and
obligations thereunder of the Guarantors, the Trustee and the Holders.

18.  GOVERNING LAW

               THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

19.  AUTHENTICATION

               This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication hereon.

20.  ABBREVIATIONS

               Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

21.  ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
     DEFINITIVE NOTES.

               In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes
shall have all the rights set forth in the Registration Rights Agreement.

22.  CUSIP NUMBERS

               Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Company has caused CUSIP numbers to
be printed on the Notes, and the Trustee may use CUSIP numbers in notices as a
convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice and
reliance may be placed only on the other identification numbers placed thereon.

               The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture and the Registration Rights
Agreement. Such requests may be addressed to:

                              Owens-Brockway Glass Container Inc.
                              One SeaGate
                              Toledo, Ohio 43666
                              Attention: Investor Relations

                                      D1-9


                        --------------------------------

                                      D1-10


                                 ASSIGNMENT FORM


               TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW:


               I or we assign and transfer this Note to:

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
              [PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE]

- --------------------------------------------------------------------------------
                  [INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.]

and irrevocably appoint

- --------------------------------------------------------------------------------
                          [PRINT OR TYPE AGENT'S NAME]

agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

- --------------------------------------------------------------------------------


Date:
     -----------------


                         Your Signature:
                                         ---------------------------------------
                                         (SIGN EXACTLY AS YOUR NAME APPEARS ON
                                          THE FACE OF THIS NOTE)
SIGNATURE GUARANTEE


- -----------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program

                                      D1-11


                       OPTION OF HOLDER TO ELECT PURCHASE

               If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.11 of the Indenture, check the box below:

               / / Section 4.10         / / Section 4.11

               If you want to elect to have only part of the Note purchased by
the Company pursuant to Section 4.10 or Section 4.11 of the Indenture, state the
amount you elect to have purchased: $_______________

Date:                         Your Signature:
      ------------------                     -----------------------------------
                                             (Sign exactly as your name appears
                                              on the face of this Note)


                                     Tax Identification No:_____________________


SIGNATURE GUARANTEE


- ----------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program

                                      D1-12


             SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

               The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:


                                                          Principal Amount
                  Amount of decrease  Amount of increase      of this           Signature
                          in                  in            Global Note       of authorized
                      Principal           Principal        following such      signatory of
                      Amount of           Amount of         decrease (or       Trustee or
Date of Exchange   this Global Note    this Global Note      increase)          Custodian
- ----------------  ------------------  ------------------  ----------------    -------------
                                                                  





* THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.

                                      D1-13


                                   EXHIBIT D-2
                  [FORM OF REGULATION S TEMPORARY GLOBAL NOTE]

[INSERT THE GLOBAL SECURITY LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF
THE INDENTURE]

[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]

[INSERT THE REGULATION S TEMPORARY GLOBAL SECURITY LEGEND]


                       OWENS-BROCKWAY GLASS CONTAINER INC.

                      8 3/4% SENIOR SECURED NOTES DUE 2012


Number:                         CUSIP No. ___________                  $________


               OWENS-BROCKWAY GLASS CONTAINER INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to Cede & Co., as nominee
of The Depository Trust Company, or registered assigns, the principal sum of
___________________________________________________________________ DOLLARS
($_________) on November 15, 2012.

               Interest Payment Dates:  May 15 and November 15, commencing
               May 15, 2003.

               Record Dates: May 1 and November 1.

               Additional provisions of this Note are set forth below following
the signatures of the authorized officers of the Company.

                                      D2-1


               IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.


                                        OWENS-BROCKWAY GLASS CONTAINER INC.


                                        By:
                                           -------------------------------
                                           Name:
                                           Title:


                                        By:
                                           -------------------------------
                                           Name:
                                           Title:


Dated: November 13, 2002


TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within-mentioned Indenture.


U.S. Bank National Association, as Trustee


By:
    --------------------------------
    Authorized Signatory

                                      D2-2


                       OWENS-BROCKWAY GLASS CONTAINER INC.

                      8 3/4% SENIOR SECURED NOTES DUE 2012

               Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.

1.   INTEREST

               OWENS-BROCKWAY GLASS CONTAINER INC., a Delaware corporation (such
entity, and its successors and assigns under the Indenture hereinafter referred
to, being herein called the "COMPANY"), promises to pay interest on the
principal amount of this Note at the rate per annum shown above and shall pay
the Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement. Interest on this Note shall accrue from November 13, 2002 or from the
most recent interest payment date to which interest has been paid or provided
for, as the case may be; interest and Liquidated Damages on this Note shall be
payable semi-annually on May 15 and November 15 of each year until maturity, or,
if such day is not a Business Day, on the next succeeding Business Day (each, an
"INTEREST PAYMENT DATE"), commencing on May 15, 2003; and interest on this Note
shall be payable to holders of record on the May 1 or November 1 immediately
preceding the applicable Interest Payment Date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay defaulted
interest on overdue interest, plus (to the extent lawful) any interest payable
on the defaulted interest, as provided in Section 2.11 of the Indenture.

               Until this Regulation S Temporary Global Note is exchanged for
one or more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.

2.   METHOD OF PAYMENT

               The Company will pay interest and Liquidated Damages on this Note
(except defaulted interest) to the Persons who are holders ("HOLDERS") of record
in the note register of the Company (the "REGISTER") of this Note at the close
of business on the May 1 or November 1 (each, a "RECORD DATE") next preceding
the Interest Payment Date, in each case even if the Note is cancelled solely by
virtue of registration of transfer or registration of exchange after such Record
Date. The Company will pay Principal, interest and Liquidated Damages in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. Principal of and interest and Liquidated Damages, if
any, on this Note will be payable, and this Note may be exchanged or
transferred, at the office or agency of the Company in the Borough of Manhattan,
the City of New York (which initially will be a Corporate Trust Office of the
Trustee); PROVIDED that, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the address of each
Holder as such address

                                      D1-3


appears in the Note Register; PROVIDED further that payment by wire transfer of
immediately available funds will be required with respect to Principal of and
interest, and Liquidated Damages, if any, on, all Global Notes and all other
Notes the Holders of which will have provided wire transfer instructions to the
Company or the Paying Agent. Such payment will be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

3.   PAYING AGENT AND REGISTRAR

               Initially, U.S. Bank National Association, a national banking
association (the "TRUSTEE"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-Registrar without
notice to any Holder. The Company or any of its Affiliates may act as Paying
Agent, Registrar or co-Registrar.

4.   INDENTURE

               The Company issued this Note under an Indenture dated as of
January 24, 2002 among the Company, the Guarantors and the Trustee, the terms of
which have been established in the Third Supplemental Indenture among the
Company, the Guarantors and the Trustee, dated as of November 13, 2002
(collectively, the "INDENTURE"), pursuant to Section 2.01 of the Indenture. This
Note is a series designated as the "8 3/4% Senior Secured Notes due 2012" of the
Company. The Company may issue additional Notes of this series after this Note
has been issued. This Note and any additional Notes of this series subsequently
issued under the Indenture shall be treated as a single series for all purposes
under the Indenture, including without limitation, waivers, amendments,
redemptions and offers to purchase. The terms of this Note include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended (the "TIA").
This Note is subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of those terms. Any conflict between the
terms of this Note and the Indenture will be governed by the Indenture.

               This Note is secured to the extent set forth in the Collateral
Documents and Article 11 of the Indenture.

5.   OPTIONAL REDEMPTION

               Except as described below, this Note shall not be redeemable at
the Company's option prior to November 15, 2007.

               On or after November 15, 2007, the Company may redeem all or a
part of this Note upon not less than 30 nor more than 60 days notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on November 15 of the years indicated below:



             YEAR                                             PERCENTAGE
             ----                                             ----------
                                                            
             2007..........................................    104.375%
             2008..........................................    102.917%
             2009..........................................    101.458%
             2010 and thereafter...........................    100.000%


                                      D2-4



               At any time prior to November 15, 2005, the Company may redeem on
any one or more occasions up to 35% of the aggregate principal amount of Notes
(calculated after giving effect to any issuance of Additional Securities) issued
under the Indenture at a redemption price of 108.875% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings by
OI Inc. to the extent the net cash proceeds thereof are contributed to the
Company or used to purchase from the Company Capital Stock (other than
Disqualified Stock) of the Company; PROVIDED that: (1) at least 65% of the
aggregate principal amount of Notes (calculated after giving effect to any
issuance of Additional Securities) issued under the Indenture remains
outstanding immediately after the occurrence of such redemption (excluding Notes
held by OI Inc. and its Subsidiaries); and (2) the redemption must occur within
60 days of the date of the closing of such Equity Offering.

               In addition, at any time prior to November 15, 2007, this Note
may also be redeemed, in whole but not in part, at the option of the Company
upon the occurrence of a Change of Control, upon not less than 30 nor more than
60 days prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount of this
Note plus the Applicable Premium as of, and accrued and unpaid interest and
Liquidated Damages, if any, to, the date of redemption (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
Note on the relevant Interest Payment Date).

6.   MANDATORY REDEMPTION

               The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to this Note.

7.   REPURCHASE AT THE OPTION OF HOLDER

               If a Change of Control occurs, unless the Company has exercised
its right to redeem the Notes pursuant to the terms of the Indenture, each
Holder of this Note will have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of that Holder's
Notes pursuant to a Change of Control Offer on the terms set forth in the
Indenture. If OI Group or a Restricted Subsidiary consummates any Asset Sales,
when the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company
will be required to make an offer (an "ASSET SALE OFFER") to all Holders of this
Note and all Holders of other Indebtedness that is PARI PASSU with this Note
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets to purchase
the maximum principal amount of this Note and such other PARI PASSU Indebtedness
that may be purchased out of the Excess Proceeds on the terms, in accordance
with the procedures and subject to the limitations set forth in the Indenture
and such other PARI PASSU Indebtedness.

                                      D2-5


8.   NOTICE OF REDEMPTION

               Notice of redemption shall be mailed by first class mail at least
30 days but not more than 60 days before the redemption date to each Holder of
this Note to be redeemed. Notices of redemption shall not be conditional.
Denominations of this Note larger than $1,000 may be redeemed in part. If this
Note is to be redeemed in part only, the notice of redemption that relates to
that portion to be redeemed shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion of the original Note shall be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest ceases to accrue on the Note or portions thereof called for redemption.

9.   DENOMINATIONS; TRANSFER; EXCHANGE

               The Note is in registered form, without coupons, in denominations
of $1,000 of principal amount and any integral multiple thereof. A Holder may
transfer or exchange the Note in accordance with the Indenture. No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require the payment of a sum sufficient to cover any transfer
tax or other similar governmental charge payable in connection therewith,
subject to and as permitted by the Indenture.

               This Regulation S Temporary Global Note is exchangeable in whole
or in part for one or more Global Notes only (i) on or after the termination of
the 40-day restricted period (as defined in Regulation S) and (ii) upon
presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article 2 of the Indenture. Upon exchange of this
Regulation S Temporary Global Note for one or more Global Notes, the Trustee
shall cancel this Regulation S Temporary Global Note.

10.  PERSONS DEEMED OWNERS

               The registered Holder of this Note may be treated as the owner of
it for all purposes.

11.  REPAYMENT TO COMPANY

               The Trustee and the Paying Agent shall pay to the Company upon
the Company's request any money held by them for the payment of Principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Holders entitled to
the money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person.

12.  DISCHARGE AND DEFEASANCE

               Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under this Note and the Indenture if
the Company deposits with the Trustee

                                      D2-6


money and/or Government Securities for the payment of Principal and interest on
this Note to Maturity.

13.  DEFAULTS AND REMEDIES

               Under the Indenture, Events of Default include: (1) defaults in
the payment of interest on, or Liquidated Damages, if any, with respect to the
Notes when the same becomes due and payable and the default continues for a
period of 30 days; (2) defaults in the payment of the Principal of the Notes
when the same becomes due and payable at maturity, upon redemption or otherwise;
(3) failure by OI Group or any of its Restricted Subsidiaries for 60 days after
notice to comply with any of the other agreements in the Indenture, the Notes,
the Guarantees of the Notes (with respect to any Guarantor) and the Collateral
Documents (with respect to any Restricted Subsidiary which has pledged assets or
property to secure its obligations under the Indenture and the Notes); (4)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by OI Group or any Restricted Subsidiary (or the payment of which is
guaranteed by OI Group or any of its Restricted Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the Issue Date, if
that default: (a) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "PAYMENT
DEFAULT"); or (b) results in the acceleration of such Indebtedness prior to its
express maturity; PROVIDED, that an Event of Default shall not be deemed to
occur with respect to any such accelerated Indebtedness which is repaid or
prepaid within 20 Business Days after such declaration; and, in any individual
case, the principal amount of any such Indebtedness is equal to or in excess of
$50.0 million, or such Indebtedness together with the principal amount of any
other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $100.0 million or more;
(5) any final judgment or order for payment of money in excess of $50.0 million
in any individual case and $100.0 million in the aggregate at any time shall be
rendered against OI Group or any of its Restricted Subsidiaries and such
judgment shall not have been paid, discharged or stayed for a period of 60 days;
(6) except as permitted by the Indenture or the Collateral Documents, any
Guarantee of the Notes shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Guarantee of the Notes; (7) the
Company, OI Group or any Significant Subsidiary of OI Group pursuant to or
within the meaning of any Bankruptcy Law: (a) commences a voluntary case; (b)
consents to the entry of an order for relief against it in an involuntary case;
(c) consents to the appointment of a Custodian of it or for all or substantially
all of its property; (d) makes a general assignment for the benefit of its
creditors; or (e) admits in writing its inability generally to pay its debts as
the same become due; (8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (a) is for relief against the Company, OI
Group or any Significant Subsidiary of OI Group in an involuntary case; (b)
appoints a Custodian of the Company, OI Group or any Significant Subsidiary of
OI Group or for all or substantially all of such entity's property; or (c)
orders the liquidation of the Company, OI Group or any Significant Subsidiary of
OI Group; and, with respect to (a), (b) and (c), the order or decree remains
unstayed and in effect for 60 days; (9) except as permitted by the Collateral
Documents, any amendments thereto and the provisions of the Indenture, any of
the

                                      D2-7


Collateral Documents ceases to be in full force and effect or ceases to be
effective, in all material respects, to create the Lien purported to be created
in the Collateral in favor of the Holders of the Notes for 60 days after notice;
and (10) failure by OI Group or any of its Restricted Subsidiaries to comply
with the provisions of Sections 4.10 or 4.11 or Article 5 of the Indenture.

               If an Event of Default other than an Event or Default specified
in clauses (7) and (8) of the preceding paragraph occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by notice to the Company and the Trustee,
as provided in the Indenture, may declare the unpaid Principal of and any
accrued and unpaid interest on the Notes to be due and payable immediately. Upon
such declaration the Principal (or such lesser amount) and interest shall be due
and payable immediately. At any time after a declaration of acceleration with
respect to the Notes has been made, the Holders of a majority in principal
amount of the then outstanding Notes may, under certain circumstances, rescind
such acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default with respect to the
Notes have been cured or waived except nonpayment of Principal or interest that
has become due solely because of the acceleration.

               Subject to the duty of the Trustee during an Event of Default to
act with the required standard of care, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of this Note, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense. Subject to certain provisions, including those requiring security or
indemnification of the Trustee, the Holders of a majority in principal amount of
the outstanding Note have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
with respect to this Note.

14.  SUPPLEMENTS, AMENDMENTS AND WAIVERS

               Subject to certain exceptions, the Indenture, the Notes or the
Guarantees of the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture, the Notes or the Guarantees of
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes). The Company and the Trustee may amend or supplement the
Indenture, the Notes and the Guarantees of the Notes without notice to or the
consent of any holder of Notes in certain circumstances described in the
Indenture. Amendments to the Collateral Documents shall be made in accordance
with their terms.

15.  TRUSTEE DEALINGS WITH THE COMPANY

               The Trustee, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates, with the same rights as if it were not the Trustee; however, if
it acquires any conflicting interest as defined in the

                                      D2-8


TIA it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.

16.  NO RECOURSE AGAINST OTHERS

               A past, present or future director, officer, employee,
incorporator or stockholder, as such, of the Company or any Guarantor, if any,
or any successor corporation shall not have any liability for any obligations of
the Company or any Guarantor under the Notes, the Indenture, the Guarantees of
the Notes, the Registration Rights Agreement, the Collateral Documents or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

17.  GUARANTEES

               This Note will be entitled to the benefits of certain Guarantees
made for the benefit of the Holders. Reference is hereby made to the Indenture
for a statement of the respective rights, limitations of rights, duties and
obligations thereunder of the Guarantors, the Trustee and the Holders.

18.  GOVERNING LAW

               THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

19.  AUTHENTICATION

               This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication hereon.

20.  ABBREVIATIONS

               Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

21.  ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
     DEFINITIVE NOTES.

                  In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement.

                                      D2-9


22.  CUSIP NUMBERS

               Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Company has caused CUSIP numbers to
be printed on the Notes, and the Trustee may use CUSIP numbers in notices as a
convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice and
reliance may be placed only on the other identification numbers placed thereon.

               The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture and the Registration Rights
Agreement. Such requests may be addressed to:

                                     Owens-Brockway Glass Container Inc.
                                     One SeaGate
                                     Toledo, Ohio 43666
                                     Attention: Investor Relations

                        ---------------------------------

                                     D2-10


                                 ASSIGNMENT FORM


               TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW:


               I or we assign and transfer this Note to:

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
              [PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE]

- --------------------------------------------------------------------------------
                  [INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.]

and irrevocably appoint

- --------------------------------------------------------------------------------
                          [PRINT OR TYPE AGENT'S NAME]

agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

- --------------------------------------------------------------------------------


Date:
     ----------------


                         Your Signature:
                                         ---------------------------------------
                                            (SIGN EXACTLY AS YOUR NAME APPEARS
                                             ON THE FACE OF THIS NOTE)
SIGNATURE GUARANTEE


- ---------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program

                                      D2-11


                       OPTION OF HOLDER TO ELECT PURCHASE

               If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.11 of the Indenture, check the box below:

               / / Section 4.10          / / Section 4.11

               If you want to elect to have only part of the Note purchased by
the Company pursuant to Section 4.10 or Section 4.11 of the Indenture, state the
amount you elect to have purchased: $_______________

Date: _____________      Your Signature:
                                         ---------------------------------------
                                         (Sign exactly as your name appears on
                                          the face of this Note)


                         Tax Identification No:_________________________________


SIGNATURE GUARANTEE


- ----------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program

                                      D2-12


             SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

               The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:



                                                           Principal Amount
                  Amount of decrease  Amount of increase       of this          Signature
                          in                  in             Global Note      of authorized
                      Principal            Principal        following such     signatory of
                      Amount of            Amount of        decrease (or        Trustee or
Date of Exchange   this Global Note    this Global Note       increase)         Custodian
- ----------------  ------------------  ------------------   ----------------   -------------
                                                                  





* THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.

                                     D2-13

EX-4.5

                                                                     Exhibit 4.5

                                                                  EXECUTION COPY

                       ADDITIONAL SUPPLEMENTAL INDENTURE

     ADDITIONAL SUPPLEMENTAL INDENTURE (this "ADDITIONAL SUPPLEMENTAL
INDENTURE"), dated as of December 18, 2002, among Owens-Brockway Glass Container
Inc., a Delaware corporation (the "COMPANY"), the Guarantors (as defined in the
Indenture) and U.S. Bank National Association, a national banking association,
as trustee (the "TRUSTEE").

                              W I T N E S S E T H

     WHEREAS, the Company has executed and delivered to the Trustee the Third
Supplemental Indenture (the "ORIGINAL SUPPLEMENTAL INDENTURE"), dated as of
November 13, 2002, a supplement to an indenture (the "INDENTURE"), dated as of
January 24, 2002, among the Company, the Guarantors and the Trustee, pursuant to
which the Company issued $450,000,000 aggregate principal amount of its 8 3/4%
Senior Secured Notes due 2012 (the "INITIAL NOTES");

     WHEREAS, Section 2.01 of the Indenture provides for the future issuance,
from time to time, by the Company of Additional Securities (the "ADDITIONAL
NOTES") as part of the same series as the Initial Notes and the Original
Supplemental Indenture provides for an unlimited aggregate principal amount of
Initial Notes which may be authenticated and delivered as provided in the
Indenture;

     WHEREAS, the Company now desires to issue Additional Notes in an aggregate
principal amount of $175,000,000 (the "NEW NOTES");

     WHEREAS, Section 9.01 of the Indenture provides that a supplemental
indenture may be entered into by the Company, the Guarantors and the Trustee
without the consent of any holder of any Securities to, INTER ALIA, establish
the terms of any Securities as permitted by Section 2.01 of the Indenture,
PROVIDED certain conditions are met;

     WHEREAS, the conditions set forth in the Indenture for the execution and
delivery of this Additional Supplemental Indenture have been satisfied; and

     WHEREAS, all things necessary to make this Additional Supplemental
Indenture a valid agreement of the Company, the Guarantors and the Trustee, in
accordance with its terms, and a valid amendment of, and supplement to, the
Original Supplemental Indenture and the Indenture have been done.

     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Company
and the Guarantors mutually covenant and agree with the Trustee, for the equal
and proportionate benefit of all holders of the New Notes, that the Indenture
and the Original Supplemental Indenture are supplemented and amended, to the
extent and for the purposes expressed herein, as follows:

     1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Original Supplemental Indenture.

     2. ISSUANCE OF ADDITIONAL NOTES. (a) The issuance under the Original
Supplemental Indenture of the New Notes is hereby authorized. The New Notes (i)
shall constitute Additional Notes for all purposes of the Indenture, as
supplemented by the Original Supplemental Indenture, (ii) shall have the



same terms as the Initial Notes and (iii) shall be substantially in the form of
Exhibits D-1 or D-2 attached as exhibits to the Original Supplemental Indenture.

     (b) Such New Notes may, upon execution of this Additional Supplemental
Indenture, be executed by the Company and delivered to the Trustee for
authentication as provided in Section 2.02 of the Indenture.

     3. CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST INDENTURE ACT. If and
to the extent that any provision of this Additional Supplemental Indenture
limits, qualifies or conflicts with another provision included in this
Additional Supplemental Indenture or in the Indenture or Original Supplemental
Indenture which is required to be included herein or therein by any of Sections
310 to 317, inclusive, of the Trust Indenture Act of 1939, such required
provision shall control.

     4. NEW YORK LAW TO GOVERN. THIS ADDITIONAL SUPPLEMENTAL INDENTURE AND THE
NEW NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

     5. COUNTERPARTS. This Additional Supplemental Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

     6. EFFECT OF HEADINGS. The section headings herein are for convenience only
and shall not affect the construction hereof.

     7. SEVERABILITY OF PROVISIONS. In case any provision of this Additional
Supplemental Indenture or in the New Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

     8. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Additional
Supplemental Indenture by the parties hereto shall bind their respective
successors and assigns and inure to the benefit of their respective successors
and assigns, whether so expressed or not.

     9. BENEFITS OF SUPPLEMENTAL INDENTURE. Nothing in this Additional
Supplemental Indenture, express or implied, shall give to any Person, other than
the parties hereto, any Registrar, any Paying Agent and their successors
hereunder, and the Holders of the New Notes, any benefit or any legal or
equitable right, remedy or claim under this Additional Supplemental Indenture.

     10. ONE INSTRUMENT. The Indenture, the Original Supplemental Indenture and
this Additional Supplemental Indenture shall be read, taken and construed as one
and the same instrument.

                                       2



     IN WITNESS WHEREOF, the parties hereto have caused this Additional
Supplemental Indenture to be duly executed, all as of the date first above
written.

                                      OWENS-BROCKWAY GLASS CONTAINER INC.



                                      By: /s/ James W. Baehren
                                         --------------------------------------
                                         Name: James W. Baehren
                                         Title: Vice President



                                      On behalf of each entity named on the
                                      attached ANNEX A, in the capacity set
                                      forth for such entity on such ANNEX A



                                      By: /s/ James W. Baehren
                                         --------------------------------------
                                         Name: James W. Baehren



                                      U.S. BANK NATIONAL ASSOCIATION, as Trustee



                                      By: /s/ Frank P. Leslie III
                                         --------------------------------------
                                         Name: Frank P. Leslie III
                                         Title: Vice President

                                       3


                                                                         ANNEX A



                                                     TITLE OF OFFICER EXECUTING ON
NAME OF ENTITY                                          BEHALF OF SUCH ENTITY
- --------------                                           ---------------------

                                                
ACI America Holdings Inc.                             Vice President and Secretary
Anamed International, Inc.                            Vice President and Secretary
BriGam Medical, Inc.                                  Vice President and Secretary
BriGam Ventures, Inc.                                 Vice President and Secretary
BriGam, Inc.                                          Vice President and Secretary
Brockway Realty Corporation                           Vice President and Secretary
Brockway Research, Inc.                               Vice President and Secretary
Continental PET Technologies, Inc.                    Vice President and Secretary
MARC Industries, Inc.                                 Vice President and Secretary
Martell Medical Products, Incorporated                Vice President and Secretary
NHW Auburn, LLC                                       Vice President and Secretary
                                                      of its sole member
OB Cal South Inc.                                     Vice President and Secretary
OI AID STS Inc.                                       Vice President and Secretary
OI Auburn Inc.                                        Vice President and Secretary
OI Australia Inc.                                     Vice President and Secretary
OI Brazil Closure Inc.                                Vice President and Secretary
OI California Containers Inc.                         Vice President and Secretary
OI Castalia STS Inc.                                  Vice President and Secretary
OI Consol STS Inc.                                    Vice President and Secretary
OI Ecuador STS Inc.                                   Vice President and Secretary
OI Europe & Asia Inc.                                 Vice President and Secretary
OI General Finance Inc.                               Vice President and Secretary

                                   ANNEX A-1



OI General FTS Inc.                                   Vice President and Secretary
O-I Health Care Holding Corp.                         Vice President and Secretary
O-I Holding Company, Inc.                             Vice President and Secretary
OI Hungary Inc.                                       Vice President and Secretary
OI International Holdings Inc.                        Vice President and Secretary
OI Levis Park STS Inc.                                Vice President and Secretary
OI Medical Holdings Inc.                              Vice President and Secretary
OI Medical Inc.                                       Vice President and Secretary
OI Peru STS Inc.                                      Vice President and Secretary
OI Plastic Products FTS Inc.                          Vice President and Secretary
OI Poland Inc.                                        Vice President and Secretary
OI Puerto Rico STS Inc.                               Vice President and Secretary
OI Regioplast STS Inc.                                Vice President and Secretary
OI Venezuela Plastic Products Inc.                    Vice President and Secretary
OIB Produvisa Inc.                                    Vice President and Secretary
Overseas Finance Company                              Vice President and Secretary
Owens-BriGam Medical Company                          Vice President and Secretary
                                                      of each general partner
Owens-Brockway Glass Container Trading Company        Vice President and Secretary
Owens-Brockway Packaging, Inc.                        Vice President and Secretary
Owens-Brockway Plastic Products Inc.                  Vice President and Secretary
Owens-Illinois Closure Inc.                           Vice President and Secretary
Owens-Illinois General Inc.                           Vice President and Secretary
Owens-Illinois Group, Inc.                            Vice President, Director of
                                                      Finance and Secretary

                                   ANNEX A-2



Owens-Illinois Prescription Products Inc.             Vice President and Secretary
Owens-Illinois Specialty Products Puerto Rico, Inc.   Vice President and Secretary
Product Design & Engineering, Inc.                    Vice President and Secretary
Seagate, Inc.                                         Vice President and Secretary
Seagate II, Inc.                                      Vice President and Secretary
Seagate III, Inc.                                     Vice President and Secretary
Specialty Packaging Licensing Company                 Vice President and Secretary
Universal Materials, Inc.                             Vice President and Secretary




                                   ANNEX A-3

EX-4.26

                                                                    EXHIBIT 4.26

                                                                  EXECUTION COPY

                       OWENS-BROCKWAY GLASS CONTAINER INC.

                      8 3/4% SENIOR SECURED NOTES DUE 2012

                          REGISTRATION RIGHTS AGREEMENT

                                                              New York, New York
                                                               November 13, 2002

Salomon Smith Barney Inc.
Banc of America Securities LLC
Deutsche Bank Securities Inc.
Banc One Capital Markets, Inc.
Scotia Capital (USA) Inc.
Goldman, Sachs & Co.
Barclays Capital Inc.
BNP Paribas Securities Corp.
Credit Lyonnais Securities (USA) Inc.
Fleet Securities, Inc.
McDonald Investments Inc.
SG Cowen Securities Corporation
BNY Capital Markets, Inc.
TD Securities (USA) Inc.
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

          Owens-Brockway Glass Container Inc., a corporation organized under the
laws of Delaware (the "COMPANY"), proposes to issue and sell to certain
purchasers (the "INITIAL PURCHASERS"), upon the terms set forth in a purchase
agreement dated November 5, 2002 (the "PURCHASE AGREEMENT"), its 8 3/4% Senior
Secured Notes due 2012 (the "NOTES") guaranteed by the Guarantors (the
"GUARANTEES" and, together with the Notes, the "SECURITIES") relating to the
initial placement of the Securities (the "INITIAL PLACEMENT"). To induce the
Initial Purchasers to enter into the Purchase Agreement and to satisfy a
condition of your obligations thereunder, each of the Company and the Guarantors
agree, as follows:

          1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:

          "ACT" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.



          "AFFILIATE" of any specified Person shall mean any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified Person. For purposes of this definition, "control"
of a Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise, and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.

          "ADVICE" shall have the meaning set forth in Section 6 hereof.

          "BROKER-DEALER" shall mean any broker or dealer registered as such
under the Exchange Act.

          "BROKER-DEALER TRANSFER RESTRICTED SECURITIES" shall mean New
Securities that are acquired by a Broker-Dealer in the Exchange Offer in
exchange for Securities that such Broker-Dealer acquired for its own account as
a result of market-making activities or other trading activities (other than
Securities acquired directly from the Company or any of its Affiliates).

          "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City or in the city of the
corporate trust office of the Trustee.

          "CLOSING DATE" shall mean the date of this Agreement.

          "COMMISSION" shall mean the Securities and Exchange Commission.

          "CONSUMMATE" an Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Securities to be issued in the Exchange Offer, (ii) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the
minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery
by the Company to the Registrar under the Indenture of New Securities in the
same aggregate principal amount as the aggregate principal amount of Securities
that were tendered by Holders thereof pursuant to the Exchange Offer.

          "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

          "EXCHANGE OFFER" shall mean the registration by the Company and the
Guarantors under the Act of the New Securities pursuant to a Registration
Statement pursuant to which the Company offers the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities held by such Holders for New Securities in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.

          "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean a registration
statement of the Company and the Guarantors on an appropriate form under the Act
with respect to the Exchange Offer, all amendments and supplements to such
registration statement, including post-

                                        2


effective amendments thereto, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.

          "FINAL MEMORANDUM" shall have the meaning set forth in the Purchase
Agreement.

          "GUARANTORS" shall mean the guarantors listed on the signature pages
hereof (each individually, a "GUARANTOR" and collectively, the "GUARANTORS").

          "HOLDER" shall have the meaning set forth in Section 2(b) hereof.

          "INDEMNIFIED PARTY" shall have the meaning set forth in Section 8(c)
hereof.

          "INDEMNIFYING PARTY" shall have the meaning set forth in Section 8(c)
hereof.

          "INDENTURE" shall mean the Indenture, dated as of January 24, 2002,
among the Company, the Guarantors and U.S. Bank, N.A., as trustee (the
"Trustee"), as supplemented by the Third Supplemental Indenture, dated as of
November 13, 2002, among the Company, the Guarantors and the Trustee, pursuant
to which the Securities and the New Securities are to be issued as such
Indenture and Third Supplemental Indenture may be amended or supplemented from
time to time in accordance with the terms thereof.

          "INITIAL PLACEMENT" shall have the meaning set forth in the preamble
hereto.

          "INITIAL PURCHASER" shall have the meaning set forth in the preamble
hereto.

          "INTEREST PAYMENT DATE" shall have the meaning set forth in the
Indenture and the Notes.

          "LIQUIDATED DAMAGES" shall have the meaning set forth in Section 5
hereof.

          "NASD" shall mean the National Association of Securities Dealers, Inc.

          "NEW SECURITIES" shall mean debt securities of the Company, including
guarantees thereon, identical in all material respects to the Securities (except
that the cash interest, interest rate step-up provisions and transfer
restrictions shall be modified or eliminated, as appropriate) to be issued under
the Indenture in exchange for Transfer Restricted Securities.

          "NOTES" shall have the meaning set forth in the preamble hereto.

          "PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

          "PROSPECTUS" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to an Exchange Offer or
a Shelf Registration, and all amendments and supplements thereto and all
material incorporated by reference therein.

                                        3


          "PURCHASE AGREEMENT" shall have the meaning set forth in the preamble
hereto.

          "REGISTRATION DEFAULT" shall have the meaning set forth in Section 5
hereof.

          "REGISTRATION STATEMENT" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, any amendments
and supplements to such registration statement, including post-effective
amendments (in each case including the Prospectus contained therein), all
exhibits thereto and all material incorporated by reference therein.

          "Securities" shall have the meaning set forth in the preamble hereto.

          "SHELF FILING DEADLINE" shall have the meaning set forth in Section
4(a) hereof.

          "SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 4 hereof.

          "SHELF REGISTRATION STATEMENT" shall have the meaning set forth in
Section 4(a) hereof.

          "TRANSFER RESTRICTED SECURITIES" shall mean each Security, until the
earliest to occur of (a) the date on which such Security has been exchanged by a
Person other than a broker-dealer for a New Security in the Exchange Offer, (b)
following the exchange by a broker-dealer in the Exchange Offer of a Security
for a New Security, the date on which such New Security is sold to a purchaser
who receives from such broker-dealer on or prior to the date of such sale a copy
of the Prospectus contained in the Exchange Offer Registration Statement, (c)
the date on which such Security has been effectively registered under the Act
and disposed of in accordance with the Shelf Registration Statement, or (d) the
date on which such Security is distributed to the public pursuant to Rule 144
under the Act.

          "TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, as
amended.

          "TRUSTEE" shall mean the trustee with respect to the Securities under
the Indenture.

          "UNDERWRITER" shall mean any underwriter of Securities in connection
with an offering thereof under a Shelf Registration Statement.

          "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

          2. SECURITIES SUBJECT TO THIS AGREEMENT.

          (a)  TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.

          (b)  HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such
Person owns Transfer Restricted Securities.

                                        4


          3. REGISTERED EXCHANGE OFFER.

          (a)  Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Company and the Guarantors shall (i)
use their best efforts to cause to be filed with the Commission on or prior to
120 days after the Closing Date, the Exchange Offer Registration Statement under
the Act relating to the New Securities and the Exchange Offer, (ii) use their
commercially reasonable efforts to cause such Exchange Offer Registration
Statement to become effective on or prior to 200 days after the Closing Date,
(iii) in connection with the foregoing, file (A) all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
such Exchange Offer Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings in connection with the registration and qualification of the New
Securities to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the New Securities to be offered in exchange for the Transfer
Restricted Securities and to permit resales of Broker-Dealer Transfer Restricted
Securities by Broker-Dealers as contemplated by Section 3(c) below.

          (b)  The Company and the Guarantors shall cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
PROVIDED, HOWEVER, that in no event shall such period be less than 20 Business
Days. The Company and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the New Securities shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their commercially
reasonable efforts to cause the Exchange Offer to be Consummated within 40 days
after the Exchange Offer Registration Statement has become effective.

          (c)  The Company shall indicate in a "PLAN OF DISTRIBUTION" section
contained in the Prospectus forming a part of the Exchange Offer Registration
Statement that any Broker-Dealer who holds Securities that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company or one of its
Affiliates), may exchange such Securities pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with any resales of the New Securities
received by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the
Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of
Distribution" section shall also contain all other information with respect to
such resales by Broker-Dealers that the Commission may require in order to
permit such resales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Securities held by any
such Broker-Dealer except to the extent required by the Commission as a result
of a change in policy after the date of this Agreement.

                                        5


          The  Company and the Guarantors shall use their commercially
reasonable efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Section 6(c) below to the extent necessary to ensure that it is available for
resales of Broker-Dealer Transfer Restricted Securities acquired by
Broker-Dealers, and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period ending on the earlier of (i) 90 days
from the date on which the Exchange Offer Registration Statement is declared
effective and (ii) the date on which a Broker-Dealer is no longer required to
deliver a prospectus in connection with market-making or other trading
activities.

          The  Company shall provide sufficient copies of the latest version of
such Prospectus to such Broker-Dealers promptly upon request at any time during
such 90-day (or shorter as provided in the foregoing sentence) period in order
to facilitate such resales.

          4. SHELF REGISTRATION.

          (a)  SHELF REGISTRATION. If (i) the Company and the Guarantors are not
permitted to Consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a) below have been complied with), or (ii) any Holder of Transfer
Restricted Securities shall notify the Company on or prior to the 20th day
following the Consummation of the Exchange Offer that (A) such Holder is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer, (B) such Holder may not resell the New Securities acquired by it
in the Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder, or (C) such Holder is
a Broker-Dealer and owns Securities acquired directly from the Company or an
Affiliate of the Company, then, the Company and the Guarantors shall:

          (x) use their best efforts to cause to be filed a shelf registration
     statement pursuant to Rule 415 under the Act, which may be an amendment to
     the Exchange Offer Registration Statement (in either event, the "SHELF
     REGISTRATION STATEMENT") on or prior to 60 days after such filing
     obligation arises pursuant to this paragraph 4(a), (such date being the
     "SHELF FILING DEADLINE"), which Shelf Registration Statement shall provide
     for resales of all Transfer Restricted Securities the Holders of which
     shall have provided the information required pursuant to Section 4(b)
     hereof; and

          (y) use their commercially reasonable efforts to cause such Shelf
     Registration Statement to be declared effective by the Commission on or
     prior to 120 days after such filing obligation arises pursuant to paragraph
     4(a) above.

The Company and the Guarantors shall use their commercially reasonable efforts
to keep such Shelf Registration Statement continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a

                                        6


period of at least two years following the effective date of such Shelf
Registration Statement (or shorter period that will terminate when all the
Securities covered by such Shelf Registration Statement have been sold pursuant
to such Shelf Registration Statement).

          (b)  PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.

          5. LIQUIDATED DAMAGES.

          If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement, (iii) the Exchange Offer has not been
Consummated within 40 days after the Exchange Offer Registration Statement is
declared effective or (iv) any Registration Statement required by this Agreement
is filed and declared effective but shall thereafter cease to be effective or
fail to be usable for its intended purpose without being succeeded immediately
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company
and the Guarantors hereby agree to pay liquidated damages to each Holder of
outstanding Securities ("LIQUIDATED DAMAGES") during the period of one or more
Registration Defaults, with respect to the first 90-day period immediately
following the occurrence of the first Registration Default in an amount equal to
0.25% per annum (which amount will be increased by an additional 0.25% per annum
for each subsequent 90-day period that any Liquidated Damages continue to
accrue; provided that the amounts at which Liquidated Damages accrue may in no
event exceed 1.0% per annum) in respect of the Transfer Restricted Securities
held by such Holder until the applicable Registration Statement is filed, the
Exchange Offer Registration Statement is declared effective and the Exchange
Offer is Consummated or the Shelf Registration Statement is declared effective
or again becomes effective, as the case may be. All accrued Liquidated Damages
will be paid by the Company and the Guarantors on each Interest Payment Date to
Holders of global Securities by wire transfer of immediately available funds or
by federal funds check and to holders of certificated Securities by wire
transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified. Following the cure
of all Registration Defaults, the accrual of Liquidated Damages will cease;
PROVIDED, HOWEVER, that, if after the cessation of the accrual of Liquidated
Damages, a different Registration Default occurs, Liquidated Damages shall again
accrue pursuant to the foregoing provisions.

          All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such

                                        7


security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such Security shall have been
satisfied in full.

          6. REGISTRATION PROCEDURES.

          (a)  EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with the applicable
provisions of Section 6(c) below, shall use their commercially reasonable
efforts to effect such exchange to permit the sale of Broker-Dealer Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (which shall be in a manner consistent with the
terms of this Agreement), and shall comply with all of the following provisions:

               (i)     If in the reasonable opinion of counsel to the Company
     there is a question as to whether the Exchange Offer is permitted by
     applicable law, the Company and the Guarantors hereby agree to seek a
     no-action letter or other favorable decision from the Commission allowing
     the Company and the Guarantors to Consummate an Exchange Offer for such
     Securities. The Company and the Guarantors each hereby agree to pursue the
     issuance of such a decision to the Commission staff level but shall not be
     required to take commercially unreasonable action to effect a change of
     Commission policy. The Company and the Guarantors each hereby agree,
     however, to (A) participate in telephonic conferences with the staff of
     Commission, (B) deliver to the Commission staff an analysis prepared by
     counsel to the Company setting forth the legal bases, if any, upon which
     such counsel has concluded that such an Exchange Offer should be permitted
     and (C) use commercially reasonable efforts to diligently pursue a
     favorable resolution by the Commission staff of such submission.

               (ii)    As a condition to its participation in the Exchange Offer
     pursuant to the terms of this Agreement, each Holder of Transfer Restricted
     Securities shall furnish, upon the request of the Company, prior to the
     Consummation thereof, a written representation to the Company (which may be
     contained in the letter of transmittal contemplated by the Exchange Offer
     Registration Statement) to the effect that (A) it is not an Affiliate of
     the Company, (B) it is not engaged in, and does not intend to engage in,
     and has no arrangement or understanding with any person to participate in,
     a distribution of the New Securities to be issued in the Exchange Offer and
     (C) it is acquiring the New Securities in its ordinary course of business.
     In addition, all such Holders of Transfer Restricted Securities shall
     otherwise cooperate in the Company's and the Guarantor's preparations for
     the Exchange Offer. Each Holder hereby acknowledges and agrees that any
     Broker-Dealer and any such Holder using the Exchange Offer to participate
     in a distribution of the securities to be acquired in the Exchange Offer
     (1) could not under Commission policy as in effect on the date of this
     Agreement rely on the position of the Commission enunciated in MORGAN
     STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS
     CORPORATION (available May 13, 1988), as interpreted in the Commission's
     letter to Shearman & Sterling dated July 2, 1993, and similar no-action
     letters (which may include any no-action letter obtained pursuant to clause
     (i) above), and (2) must comply with the registration and prospectus
     delivery requirements of the Act in connection with a secondary resale
     transaction and that such a secondary resale transaction should be covered
     by an effective registration statement containing the selling security
     holder information required by Item 507 or 508, as

                                        8


     applicable, of Regulation S-K under the Act if the resales are of New
     Securities obtained by such Holder in exchange for Securities acquired by
     such Holder directly from the Company or one of its Affiliates.

               (iii)   Prior to effectiveness of the Exchange Offer Registration
     Statement, the Company and the Guarantors shall provide a supplemental
     letter to the Commission (A) stating that the Company and the Guarantors
     are registering the Exchange Offer in reliance on the position of the
     Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May
     13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) and, if
     applicable, any no-action letter obtained pursuant to clause (i) above, (B)
     including a representation that neither the Company nor any Guarantor has
     entered into any arrangement or understanding with any Person to distribute
     the New Securities to be received in the Exchange Offer and that, to the
     best of the Company's information and belief, each Holder participating in
     the Exchange Offer is acquiring the New Securities in its ordinary course
     of business and has no arrangement or understanding with any Person to
     participate in the distribution of the New Securities received in the
     Exchange Offer and (C) any other undertaking or representation required by
     the Commission as set forth in any no-action letter obtained pursuant to
     clause (i) above.

          (b)  SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their commercially reasonable
efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company and the
Guarantors will as expeditiously as possible prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.

          (c)  GENERAL PROVISIONS. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Broker-Dealer
Transfer Restricted Securities by Broker-Dealers), the Company and the
Guarantors shall:

               (i)     use their commercially reasonable efforts to keep such
     Registration Statement continuously effective and provide all requisite
     financial statements (including, if required by the Act or any regulation
     thereunder, financial statements of the Guarantors) for the period
     specified in Section 3 or 4 of this Agreement, as applicable; upon the
     occurrence of any event that would cause any such Registration Statement or
     the Prospectus contained therein (A) to contain a material misstatement or
     omission or (B) not to be effective and usable for resale of Transfer
     Restricted Securities during the period required by this Agreement, the
     Company and the Guarantors shall file promptly an appropriate amendment to
     such Registration Statement, in the case of clause (A), correcting any such
     misstatement or omission, and, in the case of either clause (A) or (B), use
     their commercially reasonable efforts to cause such amendment to be
     declared

                                        9


     effective and such Registration Statement and the related Prospectus to
     become usable for their intended purpose(s) as soon as practicable
     thereafter;

               (ii)    use commercially reasonable efforts to prepare and file
     with the Commission such amendments and post-effective amendments to the
     Registration Statement as may be necessary to keep the Registration
     Statement effective for the applicable period set forth in Section 3 or 4
     hereof, as applicable, or such shorter period as will terminate when all
     Transfer Restricted Securities covered by such Registration Statement have
     been sold; cause the Prospectus to be supplemented by any required
     Prospectus supplement, and as so supplemented to be filed pursuant to Rule
     424 under the Act, and to comply fully with the applicable provisions of
     Rules 424 and 430A under the Act in a timely manner; and comply with the
     provisions of the Act with respect to the disposition of all securities
     covered by such Registration Statement during the applicable period in
     accordance with the intended method or methods of distribution by the
     sellers thereof set forth in such Registration Statement or supplement to
     the Prospectus;

               (iii)   advise the underwriter(s), if any, and selling Holders
     promptly and, if requested by such Persons, to confirm such advice in
     writing, (A) when the Prospectus or any Prospectus supplement or
     post-effective amendment has been filed, and, with respect to any
     Registration Statement or any post-effective amendment thereto, when the
     same has become effective, (B) of any request by the Commission for
     amendments to the Registration Statement or amendments or supplements to
     the Prospectus or for additional information relating thereto, (C) of the
     issuance by the Commission of any stop order suspending the effectiveness
     of the Registration Statement under the Act or of the suspension by any
     state securities commission of the qualification of the Transfer Restricted
     Securities for offering or sale in any jurisdiction, or the initiation of
     any proceeding for any of the preceding purposes, (D) of the existence of
     any fact or the happening of any event that makes any statement of a
     material fact made in the Registration Statement, the Prospectus, any
     amendment or supplement thereto, or any document incorporated by reference
     therein untrue, or that requires the making of any additions to or changes
     in the Registration Statement or the Prospectus in order to make the
     statements therein not misleading. If at any time the Commission shall
     issue any stop order suspending the effectiveness of the Registration
     Statement, or any state securities commission or other regulatory authority
     shall issue an order suspending the qualification or exemption from
     qualification of the Transfer Restricted Securities under state securities
     or Blue Sky laws, the Company and the Guarantors shall use their
     commercially reasonable efforts to obtain the withdrawal or lifting of such
     order at the earliest possible time;

               (iv)    in the case of a Shelf Registration Statement, furnish
     without charge to each of the Initial Purchasers, each selling Holder named
     in any Registration Statement, and each of the underwriter(s), if any,
     before filing with the Commission, copies of any Registration Statement or
     any Prospectus included therein or any amendments or supplements to any
     such Registration Statement or Prospectus (including all documents
     incorporated by reference after the initial filing of such Registration
     Statement), which documents will be subject to the review of such Holders
     and underwriter(s) in connection with such sale, if any, for a period of at
     least three Business Days, and neither the Company nor the Guarantors will
     file any such Registration

                                       10


     Statement or Prospectus or any amendment or supplement to any such
     Registration Statement or Prospectus (including all such documents
     incorporated by reference) to which an Initial Purchaser or the
     underwriter(s), if any, shall reasonably object in writing within five
     Business Days after the receipt thereof (such objection to be deemed timely
     made upon confirmation of telecopy transmission within such period). The
     objection of an Initial Purchaser or underwriter, if any, shall be deemed
     to be reasonable if such Registration Statement, amendment, Prospectus or
     supplement, as applicable, as proposed to be filed, contains a material
     misstatement or omission;

               (v)     in connection with any underwritten offering pursuant to
     a Shelf Registration Statement, promptly prior to the filing of any
     document that is to be incorporated by reference into a Shelf Registration
     Statement or Prospectus, provide copies of such document to the Initial
     Purchasers, each selling Holder named in any Shelf Registration Statement,
     and to the underwriter(s), if any, make the Company's representatives and
     representatives of the Guarantors available for discussion of such document
     and other customary due diligence matters, and include such information in
     such document prior to the filing thereof as such selling Holders or
     underwriter(s), if any, reasonably may request;

               (vi)    in connection with any underwritten offering pursuant to
     a Shelf Registration Statement, make available at reasonable times during
     normal business hours for inspection by the Initial Purchasers, any
     managing underwriter participating in any disposition pursuant to such
     Registration Statement and any attorney or accountant retained by such
     Initial Purchasers or any of the underwriter(s), all financial and other
     records, pertinent corporate documents and properties of the Company and
     the Guarantors and cause the Company's and the Guarantors' officers,
     directors and employees to supply all information reasonably requested by
     any such Holder, underwriter, attorney or accountant in connection with
     such Registration Statement subsequent to the filing thereof and prior to
     its effectiveness;

               (vii)   if requested by any selling Holders or the
     underwriter(s), if any, promptly incorporate in any Registration Statement
     or Prospectus, pursuant to a supplement or post-effective amendment if
     necessary, such information as such selling Holders and underwriter(s), if
     any, may reasonably request to have included therein, including, without
     limitation, information relating to the "Plan of Distribution" of the
     Transfer Restricted Securities, information with respect to the principal
     amount of Transfer Restricted Securities being sold to such underwriter(s),
     the purchase price being paid therefor and any other terms of the offering
     of the Transfer Restricted Securities to be sold in such offering; and make
     all required filings of such Prospectus supplement or post-effective
     amendment as soon as practicable after the Company or a Guarantor is
     notified of the matters to be incorporated in such Prospectus supplement or
     post-effective amendment;

               (viii)  furnish to each selling Holder and each of the
     underwriter(s), if any, without charge, at least one copy of the
     Registration Statement, as first filed with the Commission, and of each
     amendment thereto, including financial statements and schedules, all
     documents incorporated by reference therein and all exhibits (including
     exhibits incorporated therein by reference);

                                       11


               (ix)    deliver to each selling Holder and each of the
     underwriter(s), if any, without charge, as many copies of the Prospectus
     (including each preliminary Prospectus) and any amendment or supplement
     thereto as such Persons reasonably may request; the Company and the
     Guarantors hereby consent to the use of the Prospectus and any amendment or
     supplement thereto by each of the selling Holders and each of the
     underwriter(s), if any, in connection with the offering and the sale of the
     Transfer Restricted Securities covered by the Prospectus or any amendment
     or supplement thereto;

               (x)     in connection with any underwritten offering of Transfer
     Restricted Securities pursuant to a Shelf Registration Statement, enter
     into, and cause the Guarantors to enter into, such agreements (including an
     underwriting agreement), and make, and cause the Guarantors to make, such
     representations and warranties, and take all such other actions in
     connection therewith reasonably necessary to expedite or facilitate the
     disposition of the Transfer Restricted Securities, all to such extent as
     may be reasonably requested by any Holder of Transfer Restricted Securities
     or underwriter in connection with any sale or resale pursuant to
     underwritten offerings of Transfer Restricted Securities pursuant to a
     Shelf Registration Statement contemplated by this Agreement and shall:

                       (A)  furnish to each Initial Purchaser, each selling
          Holder and each underwriter, if any, in such substance and scope as
          they may reasonably request and as are customarily made by issuers to
          underwriters in primary underwritten offerings, upon the date of the
          Consummation of the Exchange Offer and, if applicable, the
          effectiveness of the Shelf Registration Statement:

                            (1)  a certificate, dated the date of effectiveness
               of the Shelf Registration Statement, signed by (y) the Chairman
               of the Board, the Chief Executive Officer, President, any
               Executive Vice President or any Vice President and (z) a
               principal financial or accounting officer of each of the Company
               and Owens-Illinois Group, Inc., confirming, as of the date
               thereof, the matters set forth in paragraphs (i) and (ii) of
               Section 6(c) of the Purchase Agreement or such other matters as
               such parties may reasonably request;

                            (2)  opinions, dated the date of effectiveness of
               the Shelf Registration Statement of counsel for the Company and
               the Guarantors, covering the matters set forth in paragraph (a)
               of Section 6 of the Purchase Agreement and Exhibits B and C
               referred to therein and such other matters as such parties may
               reasonably request; and

                            (3)  a customary comfort letter, dated as of the
               date of effectiveness of the Shelf Registration Statement from
               the Company's independent accountants, in the customary form and
               covering matters of the type customarily covered in comfort
               letters by underwriters in connection with primary underwritten
               offerings, and affirming the matters set forth in the comfort
               letter delivered pursuant to Section 6(e) of the Purchase
               Agreement;

                                       12


                       (B)  set forth in full or incorporate by reference in the
          underwriting agreement, if any, indemnification provisions and
          procedures of Section 8 hereof with respect to all parties to be
          indemnified pursuant to said Section (or such other provisions or
          procedures acceptable to selling Holders representing a majority in
          aggregate principal amount of Transfer Restricted Securities covered
          by such Shelf Registration Statement and the underwriters, if any);
          and

                       (C)  deliver such other documents and certificates as may
          be reasonably requested by such parties to evidence compliance with
          clause (A) above and with any customary conditions contained in the
          underwriting agreement or other agreement entered into by the Company
          or the Guarantors pursuant to this clause (x), if any.

          If at any time the representations and warranties of the Company and
the Guarantors contemplated in clause (A)(1) above cease to be true and correct
in all material respects, the Company or the Guarantors shall so advise the
Initial Purchasers and the underwriter(s), if any, and each selling Holder
promptly and, if requested by such Persons, shall confirm such advice in
writing;

               (xi)    prior to any public offering of Transfer Restricted
     Securities, cooperate with the selling Holders, the underwriter(s), if any,
     and their respective counsel in connection with the registration and
     qualification of the Transfer Restricted Securities under the securities or
     Blue Sky laws of such jurisdictions as the selling Holders or
     underwriter(s) may request and do any and all other acts or things
     necessary or advisable to enable the disposition in such jurisdictions of
     the Transfer Restricted Securities covered by the Shelf Registration
     Statement; PROVIDED, HOWEVER, that neither the Company nor the Guarantors
     shall be required to register or qualify as a foreign corporation where it
     is not then so qualified or to take any action that would subject it to the
     service of process in suits or to taxation, other than as to matters and
     transactions relating to any Registration Statement, in any jurisdiction
     where it is not then so subject;

               (xii)   shall issue, upon the request of any Holder of Securities
     covered by the Shelf Registration Statement, New Securities, having an
     aggregate principal amount equal to the aggregate principal amount of
     Securities surrendered to the Company by such Holder in exchange therefor
     or being sold by such Holder; such New Securities to be registered in the
     name of such Holder or in the name of the purchaser(s) of such New
     Securities, as the case may be; in return, the Securities held by such
     Holder shall be surrendered to the Company for cancellation;

               (xiii)  cooperate with the selling Holders and the
     underwriter(s), if any, to facilitate the timely preparation and delivery
     of certificates representing Transfer Restricted Securities to be sold and
     not bearing any restrictive legends; and enable such Transfer Restricted
     Securities to be in such denominations and registered in such names as the
     Holders or the underwriter(s), if any, may request at least two Business
     Days prior to any sale of Transfer Restricted Securities made by such
     underwriter(s);

                                       13


               (xiv)   use their commercially reasonable efforts to cause the
     Transfer Restricted Securities covered by the Registration Statement to be
     registered with or approved by such other governmental agencies or
     authorities as may be necessary to enable the seller or sellers thereof or
     the underwriter(s), if any, to consummate the disposition of such Transfer
     Restricted Securities, subject to the proviso contained in clause (xi)
     above;

               (xv)    if any fact or event contemplated by clause 6(c)(iii)(D)
     above shall exist or have occurred, prepare a supplement or post-effective
     amendment to the Registration Statement or related Prospectus or any
     document incorporated therein by reference or file any other required
     document so that, as thereafter delivered to the purchasers of Transfer
     Restricted Securities, the Prospectus will not contain an untrue statement
     of a material fact or omit to state any material fact necessary to make the
     statements therein not misleading;

               (xvi)   provide a CUSIP number for all Transfer Restricted
     Securities not later than the effective date of the Registration Statement
     and provide the Trustee under the Indenture with printed certificates for
     the Transfer Restricted Securities which are in a form eligible for deposit
     with the Depositary Trust Company;

               (xvii)  cooperate and assist in any filings required to be made
     with the NASD and in the performance of any due diligence investigation by
     any underwriter (including any "qualified independent underwriter") that is
     required to be retained in accordance with the rules and regulations of the
     NASD, and use their commercially reasonable efforts to cause such
     Registration Statement to become effective and approved by such
     governmental agencies or authorities as may be necessary to enable the
     Holders selling Transfer Restricted Securities to consummate the
     disposition of such Transfer Restricted Securities;

               (xviii) otherwise use their commercially reasonable efforts to
     comply with all applicable rules and regulations of the Commission, and
     make generally available to the Company's security holders, as soon as
     practicable, a consolidated earnings statement meeting the requirements of
     Rule 158 under the Act (which need not be audited) for the twelve-month
     period (A) commencing at the end of any fiscal quarter in which Transfer
     Restricted Securities are sold to underwriters in a firm or best efforts
     Underwritten Offering or (B) if not sold to underwriters in such an
     offering, beginning with the first month of the Company's first fiscal
     quarter commencing after the effective date of the Registration Statement;

               (xix)   cause the Indenture to be qualified under the Trust
     Indenture Act not later than the effective date of the first Registration
     Statement required by this Agreement, and, in connection therewith,
     cooperate, and cause the Guarantors to cooperate with, with the Trustee and
     the Holders of Notes to effect such changes to the Indenture as may be
     required for such Indenture to be so qualified in accordance with the terms
     of the Trust Indenture Act; and to execute, and use their commercially
     reasonable efforts to cause the Trustee to execute, all documents that may
     be required to effect such changes and all other forms and documents
     required to be filed with the Commission to enable such Indenture to be so
     qualified in a timely manner; and

                                       14


               (xx)    provide promptly to each Holder upon request each
     document filed with the Commission pursuant to the requirements of Section
     13 or Section 15 of the Exchange Act or provide each such requesting Holder
     the location where such Holder can obtain such information without charge.

          Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company or any Guarantor of the
existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the applicable Registration Statement until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof, or until it is advised in writing (the "ADVICE") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such notice. In
the event the Company or any Guarantor shall give any such notice, the time
period regarding the effectiveness of such Registration Statement set forth in
Section 3 or 4 hereof, as applicable, shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 6(c)(iii)(D) hereof to and including the date when each
selling Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof or shall have received the Advice; HOWEVER, no such extension
shall be taken into account in determining whether Liquidated Damages are due
pursuant to Section 5 hereof or the amount of such Liquidated Damages, it being
agreed that the Company's and the Guarantor's option to suspend use of a
Registration Statement pursuant to this paragraph shall be treated as a
Registration Default for purposes of Section 5.

          7. REGISTRATION EXPENSES.

          (a)  All expenses incident to the Company's or the Guarantors'
performance of or compliance with this Agreement will be borne by the Company or
the Guarantors, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any Initial Purchaser or Holder with the
NASD (and, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the New Securities to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company, the Guarantors and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the New
Securities on a national securities exchange or automated quotation system
pursuant to the requirements thereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company and the Guarantors
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

                                       15


          The Company and the Guarantors will, in any event, bear their internal
expenses (including, without limitation, all salaries and expenses of their
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.

          (b)  In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Simpson Thacher & Bartlett or such other counsel as may be chosen by the Holders
of a majority in principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.

          8. INDEMNIFICATION.

          (a)  INDEMNIFICATION OF THE HOLDERS. The Company and each Guarantor,
jointly and severally, agree to indemnify and hold harmless each Holder, its
directors, officers and employees, and each person, if any, who controls any
Holder within the meaning of the Act and the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such Holder or such
controlling person may become subject, under the Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company or Owens-Illinois Group, Inc.), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or Prospectus, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Holders expressly for use in any
Registration Statement or Prospectus; PROVIDED, FURTHER, that the foregoing
indemnity agreement shall not inure to the benefit of any Holder, its directors,
officers and employees, and each person, if any, who controls such Holder within
the meaning of the Act and the Exchange Act, who, in contravention of a
requirement of applicable law, failed to deliver, or otherwise convey the
information contained in, any Prospectus (as then amended or supplemented) to
the person asserting any losses, claims, damages, liabilities or expenses,
caused by any untrue statement or alleged untrue statement of a material fact
contained in any preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Prospectus (as then amended or supplemented) and such Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person and the Prospectus and any amendment or supplement thereto was
provided by the Company to the Holder in the requisite quantity and on a timely
basis to permit proper

                                       16


delivery on or prior to the closing of such sale by such Holder. The indemnity
agreement set forth in this Section 8 shall be in addition to any liabilities
that the Company or any of the Guarantors may otherwise have.

          (b)  INDEMNIFICATION OF THE COMPANY, THE GUARANTORS AND THEIR
DIRECTORS AND OFFICERS. Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors and each of their
respective directors, and each person, if any, who controls the Company or the
Guarantors, as the case may be, within the meaning of the Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as incurred, to
which the Company or such Guarantor or any such director, or controlling person
may become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Holder), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or Prospectus, or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Registration Statement or Prospectus, in reliance upon
and in conformity with written information furnished to the Company by the
Holders expressly for use therein; and to reimburse the Company and the
Guarantors, or any such director or controlling person for any legal and other
expenses reasonably incurred by the Company and the Guarantors, or any such
director or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The indemnity agreement set forth in this Section 8 shall be
in addition to any liabilities that each Holder may otherwise have. In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of proceeds received by such Holder upon the sale of the
Securities giving rise to such indemnification obligation.

          (c)  NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly
after receipt by any person in respect of which indemnity may be sought pursuant
to Section 8(a) or 8(b) (the "INDEMNIFIED PARTY") of notice of the commencement
of any action, such indemnified party shall, if a claim in respect thereof is to
be made against any person against whom indemnity may be sought pursuant to
Section 8(a) or 8(b) (the "INDEMNIFYING PARTY"), notify the indemnifying party
in writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 8 or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party shall be entitled to
participate in and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded, based on the advice
of legal counsel, that a conflict may

                                       17


arise between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party shall not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party, representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.

          (d)  SETTLEMENTS. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by this
Section 8, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.

          (e)  CONTRIBUTION. If the indemnification provided for in this Section
8 is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party under Section 8(a) or Section 8(b) hereof (other
than by reason of exceptions provided in those Sections) in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party, as incurred, as a result of any losses, claims, damages,
liabilities or expenses referred to therein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from the
Initial Placement (which, in the case of the Company and the Guarantors shall be

                                       18


deemed to be equal to the total gross proceeds from the Initial Placement as set
forth on the cover page to the Final Memorandum), the amount of Liquidated
Damages which did not become payable as a result of the filing of the
Registration Statement resulting in such losses, claims, damages, liabilities,
judgments actions or expenses, and such Registration Statement, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors, on the one hand, and the Holders, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other, with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from Initial Placement (before deducting expenses) received by the Company and
the Guarantors, on the one hand, and the total net proceeds received by such
Holder upon its resale of Notes less the amount paid by such Holder for such
Notes, on the other hand, bear to the total sum of such amounts. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantors or such Holder, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. For the purposes of the preceding two sentences, the net
proceeds deemed to be received by the Company shall be deemed to be also for the
benefit of the Guarantors and the information supplied by the Company shall also
be deemed to have been supplied by the Guarantors.

          The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(a), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in this
Section 8 with respect to notice of commencement of any action shall apply if a
claim for contribution is to be made under this Section 8(e); PROVIDED, HOWEVER,
that no additional notice shall be required with respect to any action for which
notice has been given under this Section 8 for purposes of indemnification.

          The Company, the Guarantors and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 8(e) were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 8(e). Notwithstanding the
provisions of this Section 8(e), no Holder shall be required to contribute any
amount in excess of the amount by which the total net proceeds received by such
Holder upon its resale of Notes exceeds the sum of the amount paid by such
Holder for such Notes (or, if such Notes have not been sold by such Holder, the
total discount received by such Holder with respect to such Notes) and the
amount of any damages which such Holder has otherwise paid or become liable to
pay by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11 of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 8(e) are several, and not joint, in
proportion to the respective principal amount of Notes held by each of the
Holders hereunder. For purposes of this Section 8(e), each director,

                                       19


officer and employee of an Holder and each person, if any, who controls an
Holder within the meaning of the Act and the Exchange Act shall have the same
rights to contribution as such Holder, and each director of the Company and the
Guarantors, and each person, if any, who controls the Company with the meaning
of the Act and the Exchange Act shall have the same rights to contribution as
the Company and the Guarantors.

          (f)  The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.

          9. RULE 144A.

          The Company and the Guarantors each hereby agree with each Holder, for
so long as any Transfer Restricted Securities remain outstanding, to make
available to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.

          10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.

          No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.

          11. SELECTION OF UNDERWRITERS.

          The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering shall be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; PROVIDED, that such investment bankers and managers must be
reasonably satisfactory to the Company.

          12. MISCELLANEOUS.

          (a)  REMEDIES. The Company and the Guarantors each hereby agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agree to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

          (b)  NO INCONSISTENT AGREEMENTS. The Company shall not, and shall
cause the Guarantors not to, on or after the date of this Agreement enter into
any agreement with respect to the Company's securities that would prevent the
Company or any Guarantor from satisfying its

                                       20


obligations hereunder or that would otherwise conflict with the provisions
hereof. Other than the Registration Rights Agreement dated as of January 24,
2002 with respect to the Company's 8 7/8% Senior Secured Notes due 2009, neither
the Company nor any of the Guarantors has entered into any agreement granting
any registration rights with respect to the Company's securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's
securities under any agreement in effect on the date hereof.

          (c)  ADJUSTMENTS AFFECTING THE SECURITIES. Neither the Company nor the
Guarantors shall take any action, or permit any change to occur, with respect to
the Securities that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer.

          (d)  AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered; PROVIDED THAT, with
respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of
each such Initial Purchaser with respect to which such amendment, qualification,
supplement, waiver, consent or departure is to be effective.

          (e)  NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:

               (i)     if to a Holder, at the address set forth on the records
     of the Registrar under the Indenture, with a copy to the Registrar under
     the Indenture; and

               (ii)    if to the Company:

                               Owens-Brockway Glass Container Inc.
                               One SeaGate
                               Toledo, OH 43666
                               Telecopier No.: 419-247-1218
                               Attention: Treasurer

                       With a copy to:

                               Latham & Watkins
                               505 Montgomery Street, Suite 1900
                               San Francisco, CA 94111

                                       21


                               Telecopier No.: 415-395-8095
                               Attention: Tracy K. Edmonson, Esq.

          All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.

          Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

          (f)  SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; PROVIDED, HOWEVER, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.

          (g)  COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          (h)  HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          (i)  SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

          (j)  ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company and the
Guarantors with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

          (k)  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

          (l)  SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Company or its

                                       22


Affiliates (other than subsequent Holders of Securities or New Securities if
such subsequent Holders are deemed to be Affiliates solely by reason of their
holdings of such Securities or New Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.

                                       23


          If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a building agreement among the
Company, each of the Guarantors and the several Initial Purchasers.

                                      Very truly yours,

                                      OWENS-BROCKWAY GLASS CONTAINER INC.


                                      By: /s/ James W. Baehren
                                          ---------------------------
                                          Name:  James W. Baehren
                                          Title: Vice President


                                      On behalf of each entity named on the
                                      attached EXHIBIT A, in the capacity set
                                      forth for such entity on such EXHIBIT A


                                      By: /s/ James W. Baehren
                                          ---------------------------
                                          Name:  James W. Baehren


The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.

SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
GOLDMAN, SACHS & CO.
BARCLAYS CAPITAL INC.
BNP PARIBAS SECURITIES CORP.
CREDIT LYONNAIS SECURITIES (USA) INC.
FLEET SECURITIES, INC.
MCDONALD INVESTMENTS INC.
SG COWEN SECURITIES CORPORATION
BNY CAPITAL MARKETS, INC.
TD SECURITIES (USA) INC.


By:  SALOMON SMITH BARNEY INC.

By: /s/ Scott W. Baird
    ------------------------
    Name: Scott W. Baird
    Title: Managing Director and Global Co-Head of Basic Industries



                                                                       EXHIBIT A



                                             TITLE OF OFFICER EXECUTING
          NAME OF ENTITY                      ON BEHALF OF SUCH ENTITY
          --------------                     --------------------------
                                        
ACI America Holdings Inc.                  Vice President and Secretary

Anamed International, Inc.                 Vice President and Secretary

BriGam Medical, Inc.                       Vice President and Secretary

BriGam Ventures, Inc.                      Vice President and Secretary

BriGam, Inc.                               Vice President and Secretary

Brockway Realty Corporation                Vice President and Secretary

Brockway Research, Inc.                    Vice President and Secretary

Continental PET Technologies, Inc.         Vice President and Secretary

Marc Industries, Inc.                      Vice President and Secretary

Martell Medical Products, Incorporated     Vice President and Secretary

NHW Auburn, LLC                            Vice President and Secretary of its
                                           sole member

OB Cal South Inc.                          Vice President and Secretary

OI AID STS Inc.                            Vice President and Secretary

OI Auburn Inc.                             Vice President and Secretary

OI Australia Inc.                          Vice President and Secretary

OI Brazil Closure Inc.                     Vice President and Secretary

OI California Containers Inc.              Vice President and Secretary

OI Castalia STS Inc.                       Vice President and Secretary

OI Consol STS Inc.                         Vice President and Secretary

OI Ecuador STS Inc.                        Vice President and Secretary

OI Europe & Asia Inc.                      Vice President and Secretary

OI General Finance Inc.                    Vice President and Secretary

OI General FTS Inc.                        Vice President and Secretary






                                             TITLE OF OFFICER EXECUTING
          NAME OF ENTITY                      ON BEHALF OF SUCH ENTITY
          --------------                     --------------------------
                                        
O-I Health Care Holding Corp.              Vice President and Secretary

O-I Holding Company, Inc.                  Vice President and Secretary

OI Hungary Inc.                            Vice President and Secretary

OI International Holdings Inc.             Vice President and Secretary

OI Levis Park STS Inc.                     Vice President and Secretary

OI Medical Holdings Inc.                   Vice President and Secretary

OI Medical Inc.                            Vice President and Secretary

OI Peru STS Inc.                           Vice President and Secretary

OI Plastic Products FTS Inc.               Vice President and Secretary

OI Poland Inc.                             Vice President and Secretary

OI Puerto Rico STS Inc.                    Vice President and Secretary

OI Regioplast STS Inc.                     Vice President and Secretary

OI Venezuela Plastic Products Inc.         Vice President and Secretary

OIB Produvisa Inc.                         Vice President and Secretary

Overseas Finance Company                   Vice President and Secretary

Owens-BriGam Medical Company               Vice President and Secretary of each
                                           general partner

Owens-Brockway Glass Container Trading     Vice President and Secretary
Company

Owens-Brockway Packaging, Inc.             Vice President and Secretary

Owens-Brockway Plastic Products Inc.       Vice President and Secretary

Owens-Illinois Closure Inc.                Vice President and Secretary

Owens-Illinois General Inc.                Vice President and Secretary

Owens-Illinois Group, Inc.                 Vice President, Director of Finance
                                           and Secretary


                                        2




                                             TITLE OF OFFICER EXECUTING
          NAME OF ENTITY                      ON BEHALF OF SUCH ENTITY
          --------------                     --------------------------
                                        
                                           Secretary

Owens-Illinois Prescription Products Inc.  Vice President and Secretary

Owens-Illinois Specialty Products Puerto   Vice President and Secretary
Rico, Inc.

Product Design & Engineering, Inc.         Vice President and Secretary

SeaGate II, Inc.                           Vice President and Secretary

SeaGate III, Inc.                          Vice President and Secretary

SeaGate, Inc.                              Vice President and Secretary

Specialty Packaging Licensing Company      Vice President and Secretary

Universal Materials, Inc.                  Vice President and Secretary


                                        3

EX-4.27

                                                                    EXHIBIT 4.27

                                                                  EXECUTION COPY

                       OWENS-BROCKWAY GLASS CONTAINER INC.

                      8 3/4% SENIOR SECURED NOTES DUE 2012

                          REGISTRATION RIGHTS AGREEMENT

                                                              New York, New York
                                                               December 18, 2002

Salomon Smith Barney Inc.
Banc of America Securities LLC
Deutsche Bank Securities Inc.
Banc One Capital Markets, Inc.
Scotia Capital (USA) Inc.
Goldman, Sachs & Co.
Barclays Capital Inc.
BNP Paribas Securities Corp.
Credit Lyonnais Securities (USA) Inc.
Fleet Securities, Inc.
McDonald Investments Inc.
SG Cowen Securities Corporation
BNY Capital Markets, Inc.
TD Securities (USA) Inc.
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

          Owens-Brockway Glass Container Inc., a corporation organized under the
laws of Delaware (the "COMPANY"), proposes to issue and sell to certain
purchasers (the "INITIAL PURCHASERS"), upon the terms set forth in a purchase
agreement dated December 11, 2002 (the "PURCHASE AGREEMENT"), its 8 3/4% Senior
Secured Notes due 2012 (the "NOTES") guaranteed by the Guarantors (the
"GUARANTEES" and, together with the Notes, the "SECURITIES") relating to the
initial placement of the Securities (the "INITIAL PLACEMENT"). To induce the
Initial Purchasers to enter into the Purchase Agreement and to satisfy a
condition of your obligations thereunder, each of the Company and the Guarantors
agree, as follows:

          1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:

          "ACT" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.

          "ADDITIONAL SECURITIES" shall have the meaning set forth in the
Indenture.



          "ADVICE" shall have the meaning set forth in Section 6 hereof.

          "AFFILIATE" of any specified Person shall mean any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified Person. For purposes of this definition, "control"
of a Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise, and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.

          "BROKER-DEALER" shall mean any broker or dealer registered as such
under the Exchange Act.

          "BROKER-DEALER TRANSFER RESTRICTED SECURITIES" shall mean New
Securities that are acquired by a Broker-Dealer in the Exchange Offer in
exchange for Securities that such Broker-Dealer acquired for its own account as
a result of market-making activities or other trading activities (other than
Securities acquired directly from the Company or any of its Affiliates).

          "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City or in the city of the
corporate trust office of the Trustee.

          "CLOSING DATE" shall mean the date of this Agreement.

          "COMMISSION" shall mean the Securities and Exchange Commission.

          "CONSUMMATE" an Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Securities to be issued in the Exchange Offer, (ii) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the
minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery
by the Company to the Registrar under the Indenture of New Securities in the
same aggregate principal amount as the aggregate principal amount of Securities
that were tendered by Holders thereof pursuant to the Exchange Offer.

          "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

          "EXCHANGE OFFER" shall mean the registration by the Company and the
Guarantors under the Act of the New Securities pursuant to a Registration
Statement pursuant to which the Company offers the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities held by such Holders for New Securities in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.

          "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean a registration
statement of the Company and the Guarantors on an appropriate form under the Act
with respect to the Exchange Offer, all amendments and supplements to such
registration statement, including post-

                                        2


effective amendments thereto, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.

          "FINAL MEMORANDUM" shall have the meaning set forth in the Purchase
Agreement.

          "GUARANTORS" shall mean the guarantors listed on the signature pages
hereof (each individually, a "GUARANTOR" and collectively, the "GUARANTORS").

          "HOLDER" shall have the meaning set forth in Section 2(b) hereof.

          "INDEMNIFIED PARTY" shall have the meaning set forth in Section 8(c)
hereof.

          "INDEMNIFYING PARTY" shall have the meaning set forth in Section 8(c)
hereof.

          "INDENTURE" shall mean the Indenture, dated as of January 24, 2002,
among the Company, the Guarantors and U.S. Bank, N.A., as trustee (the
"Trustee"), as supplemented by the Third Supplemental Indenture, dated as of
November 13, 2002, among the Company, the Guarantors and the Trustee and the
Additional Supplemental Indenture, dated as of December 18, 2002, among the
Company, the Guarantors and the Trustee, pursuant to which the Securities and
the New Securities are to be issued as such Indenture, Third Supplemental
Indenture and Additional Supplemental Indenture may be amended or supplemented
from time to time in accordance with the terms thereof.

          "INITIAL PLACEMENT" shall have the meaning set forth in the preamble
hereto.

          "INITIAL PURCHASER" shall have the meaning set forth in the preamble
hereto.

          "INTEREST PAYMENT DATE" shall have the meaning set forth in the
Indenture and the Notes.

          "LIQUIDATED DAMAGES" shall have the meaning set forth in Section 5
hereof.

          "NASD" shall mean the National Association of Securities Dealers, Inc.

          "NEW SECURITIES" shall mean debt securities of the Company, including
guarantees thereon, identical in all material respects to the Securities and any
Additional Securities (except that the cash interest, interest rate step-up
provisions and transfer restrictions shall be modified or eliminated, as
appropriate) to be issued under the Indenture in exchange for Transfer
Restricted Securities.

          "NOTES" shall have the meaning set forth in the preamble hereto.

          "PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

          "PROSPECTUS" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a

                                        3


prospectus filed as part of an effective Registration Statement in reliance upon
Rule 430A under the Act), as amended or supplemented by any prospectus
supplement, with respect to an Exchange Offer or a Shelf Registration, and all
amendments and supplements thereto and all material incorporated by reference
therein.

          "PURCHASE AGREEMENT" shall have the meaning set forth in the preamble
hereto.

          "REGISTRATION DEFAULT" shall have the meaning set forth in Section 5
hereof.

          "REGISTRATION STATEMENT" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, any amendments
and supplements to such registration statement, including post-effective
amendments (in each case including the Prospectus contained therein), all
exhibits thereto and all material incorporated by reference therein.

          "SECURITIES" shall have the meaning set forth in the preamble hereto.

          "SHELF FILING DEADLINE" shall have the meaning set forth in Section
4(a) hereof.

          "SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 4 hereof.

          "SHELF REGISTRATION STATEMENT" shall have the meaning set forth in
Section 4(a) hereof.

          "TRANSFER RESTRICTED SECURITIES" shall mean each Security, until the
earliest to occur of (a) the date on which such Security has been exchanged by a
Person other than a broker-dealer for a New Security in the Exchange Offer, (b)
following the exchange by a broker-dealer in the Exchange Offer of a Security
for a New Security, the date on which such New Security is sold to a purchaser
who receives from such broker-dealer on or prior to the date of such sale a copy
of the Prospectus contained in the Exchange Offer Registration Statement, (c)
the date on which such Security has been effectively registered under the Act
and disposed of in accordance with the Shelf Registration Statement, or (d) the
date on which such Security is distributed to the public pursuant to Rule 144
under the Act.

          "TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, as
amended.

          "TRUSTEE" shall mean the trustee with respect to the Securities under
the Indenture.

          "UNDERWRITER" shall mean any underwriter of Securities in connection
with an offering thereof under a Shelf Registration Statement.

          "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

                                        4


          2. SECURITIES SUBJECT TO THIS AGREEMENT.

          (a)  TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.

          (b)  HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such
Person owns Transfer Restricted Securities.

          3. REGISTERED EXCHANGE OFFER.

          (a)  Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Company and the Guarantors shall (i)
use their best efforts to cause to be filed with the Commission on or prior to
March 13, 2003, the Exchange Offer Registration Statement under the Act relating
to the New Securities and the Exchange Offer, (ii) use their commercially
reasonable efforts to cause such Exchange Offer Registration Statement to become
effective on or prior to June 1, 2003, (iii) in connection with the foregoing,
file (A) all pre-effective amendments to such Exchange Offer Registration
Statement as may be necessary in order to cause such Exchange Offer Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings in connection with the registration and
qualification of the New Securities to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence the Exchange Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the New Securities to be offered in exchange for the
Transfer Restricted Securities and to permit resales of Broker-Dealer Transfer
Restricted Securities by Broker-Dealers as contemplated by Section 3(c) below.

          (b)  The Company and the Guarantors shall cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
PROVIDED, HOWEVER, that in no event shall such period be less than 20 Business
Days. The Company and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the New Securities shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their commercially
reasonable efforts to cause the Exchange Offer to be Consummated within 40 days
after the Exchange Offer Registration Statement has become effective.

          (c)  The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus forming a part of the Exchange Offer Registration
Statement that any Broker-Dealer who holds Securities that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company or one of its
Affiliates), may exchange such Securities pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a

                                        5


prospectus meeting the requirements of the Act in connection with any resales of
the New Securities received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such resales by Broker-Dealers that the Commission
may require in order to permit such resales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Securities held by any such Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.

          The Company and the Guarantors shall use their commercially reasonable
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for resales of
Broker-Dealer Transfer Restricted Securities acquired by Broker-Dealers, and to
ensure that it conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period ending on the earlier of (i) 90 days from the date on which
the Exchange Offer Registration Statement is declared effective and (ii) the
date on which a Broker-Dealer is no longer required to deliver a prospectus in
connection with market-making or other trading activities.

          The Company shall provide sufficient copies of the latest version of
such Prospectus to such Broker-Dealers promptly upon request at any time during
such 90-day (or shorter as provided in the foregoing sentence) period in order
to facilitate such resales.

          4. SHELF REGISTRATION.

          (a)  SHELF REGISTRATION. If (i) the Company and the Guarantors are not
permitted to Consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a) below have been complied with), or (ii) any Holder of Transfer
Restricted Securities shall notify the Company on or prior to the 20th day
following the Consummation of the Exchange Offer that (A) such Holder is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer, (B) such Holder may not resell the New Securities acquired by it
in the Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder, or (C) such Holder is
a Broker-Dealer and owns Securities acquired directly from the Company or an
Affiliate of the Company, then, the Company and the Guarantors shall:

          (x) use their best efforts to cause to be filed a shelf registration
     statement pursuant to Rule 415 under the Act, which may be an amendment to
     the Exchange Offer Registration Statement (in either event, the "SHELF
     REGISTRATION STATEMENT") on or prior to 60 days after such filing
     obligation arises pursuant to this paragraph 4(a), (such date being the
     "SHELF FILING DEADLINE"), which Shelf Registration Statement shall provide
     for resales of all Transfer Restricted Securities the Holders of which
     shall have provided the information required pursuant to Section 4(b)
     hereof; and

                                        6


          (y) use their commercially reasonable efforts to cause such Shelf
     Registration Statement to be declared effective by the Commission on or
     prior to 120 days after such filing obligation arises pursuant to paragraph
     4(a) above.

The Company and the Guarantors shall use their commercially reasonable efforts
to keep such Shelf Registration Statement continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years following the
effective date of such Shelf Registration Statement (or shorter period that will
terminate when all the Securities covered by such Shelf Registration Statement
have been sold pursuant to such Shelf Registration Statement).

          (b)  PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.

          5. LIQUIDATED DAMAGES.

          If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement, (iii) the Exchange Offer has not been
Consummated within 40 days after the Exchange Offer Registration Statement is
declared effective or (iv) any Registration Statement required by this Agreement
is filed and declared effective but shall thereafter cease to be effective or
fail to be usable for its intended purpose without being succeeded immediately
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company
and the Guarantors hereby agree to pay liquidated damages to each Holder of
outstanding Securities ("LIQUIDATED DAMAGES") during the period of one or more
Registration Defaults, with respect to the first 90-day period immediately
following the occurrence of the first Registration Default in an amount equal to
0.25% per annum (which amount will be increased by an additional 0.25% per annum
for each subsequent 90-day period that any Liquidated Damages continue to
accrue; provided that the amounts at which Liquidated Damages accrue may in no
event exceed 1.0% per annum) in respect of the Transfer Restricted Securities
held by such Holder until the applicable Registration Statement is filed, the
Exchange Offer Registration Statement is declared effective and the Exchange
Offer is Consummated or the Shelf Registration Statement is declared effective
or again becomes effective, as the case may be. All accrued Liquidated

                                        7


Damages will be paid by the Company and the Guarantors on each Interest Payment
Date to Holders of global Securities by wire transfer of immediately available
funds or by federal funds check and to holders of certificated Securities by
wire transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified. Following the cure
of all Registration Defaults, the accrual of Liquidated Damages will cease;
PROVIDED, HOWEVER, that, if after the cessation of the accrual of Liquidated
Damages, a different Registration Default occurs, Liquidated Damages shall again
accrue pursuant to the foregoing provisions.

          All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full.

          6. REGISTRATION PROCEDURES.

          (a)  EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with the applicable
provisions of Section 6(c) below, shall use their commercially reasonable
efforts to effect such exchange to permit the sale of Broker-Dealer Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (which shall be in a manner consistent with the
terms of this Agreement), and shall comply with all of the following provisions:

               (i)     If in the reasonable opinion of counsel to the Company
     there is a question as to whether the Exchange Offer is permitted by
     applicable law, the Company and the Guarantors hereby agree to seek a
     no-action letter or other favorable decision from the Commission allowing
     the Company and the Guarantors to Consummate an Exchange Offer for such
     Securities. The Company and the Guarantors each hereby agree to pursue the
     issuance of such a decision to the Commission staff level but shall not be
     required to take commercially unreasonable action to effect a change of
     Commission policy. The Company and the Guarantors each hereby agree,
     however, to (A) participate in telephonic conferences with the staff of
     Commission, (B) deliver to the Commission staff an analysis prepared by
     counsel to the Company setting forth the legal bases, if any, upon which
     such counsel has concluded that such an Exchange Offer should be permitted
     and (C) use commercially reasonable efforts to diligently pursue a
     favorable resolution by the Commission staff of such submission.

               (ii)    As a condition to its participation in the Exchange Offer
     pursuant to the terms of this Agreement, each Holder of Transfer Restricted
     Securities shall furnish, upon the request of the Company, prior to the
     Consummation thereof, a written representation to the Company (which may be
     contained in the letter of transmittal contemplated by the Exchange Offer
     Registration Statement) to the effect that (A) it is not an Affiliate of
     the Company, (B) it is not engaged in, and does not intend to engage in,
     and has no arrangement or understanding with any person to participate in,
     a distribution of the New Securities to be issued in the Exchange Offer and
     (C) it is acquiring the New Securities in its ordinary course of business.
     In addition, all such Holders of Transfer Restricted Securities shall
     otherwise cooperate in the Company's and

                                        8


     the Guarantor's preparations for the Exchange Offer. Each Holder hereby
     acknowledges and agrees that any Broker-Dealer and any such Holder using
     the Exchange Offer to participate in a distribution of the securities to be
     acquired in the Exchange Offer (1) could not under Commission policy as in
     effect on the date of this Agreement rely on the position of the Commission
     enunciated in MORGAN STANLEY AND CO., INC. (available June 5, 1991) and
     EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as interpreted
     in the Commission's letter to Shearman & Sterling dated July 2, 1993, and
     similar no-action letters (which may include any no-action letter obtained
     pursuant to clause (i) above), and (2) must comply with the registration
     and prospectus delivery requirements of the Act in connection with a
     secondary resale transaction and that such a secondary resale transaction
     should be covered by an effective registration statement containing the
     selling security holder information required by Item 507 or 508, as
     applicable, of Regulation S-K under the Act if the resales are of New
     Securities obtained by such Holder in exchange for Securities acquired by
     such Holder directly from the Company or one of its Affiliates.

               (iii)   Prior to effectiveness of the Exchange Offer Registration
     Statement, the Company and the Guarantors shall provide a supplemental
     letter to the Commission (A) stating that the Company and the Guarantors
     are registering the Exchange Offer in reliance on the position of the
     Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May
     13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) and, if
     applicable, any no-action letter obtained pursuant to clause (i) above, (B)
     including a representation that neither the Company nor any Guarantor has
     entered into any arrangement or understanding with any Person to distribute
     the New Securities to be received in the Exchange Offer and that, to the
     best of the Company's information and belief, each Holder participating in
     the Exchange Offer is acquiring the New Securities in its ordinary course
     of business and has no arrangement or understanding with any Person to
     participate in the distribution of the New Securities received in the
     Exchange Offer and (C) any other undertaking or representation required by
     the Commission as set forth in any no-action letter obtained pursuant to
     clause (i) above.

          (b)  SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their commercially reasonable
efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company and the
Guarantors will as expeditiously as possible prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.

          (c)  GENERAL PROVISIONS. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Broker-Dealer
Transfer Restricted Securities by Broker-Dealers), the Company and the
Guarantors shall:

                                        9


               (i)     use their commercially reasonable efforts to keep such
     Registration Statement continuously effective and provide all requisite
     financial statements (including, if required by the Act or any regulation
     thereunder, financial statements of the Guarantors) for the period
     specified in Section 3 or 4 of this Agreement, as applicable; upon the
     occurrence of any event that would cause any such Registration Statement or
     the Prospectus contained therein (A) to contain a material misstatement or
     omission or (B) not to be effective and usable for resale of Transfer
     Restricted Securities during the period required by this Agreement, the
     Company and the Guarantors shall file promptly an appropriate amendment to
     such Registration Statement, in the case of clause (A), correcting any such
     misstatement or omission, and, in the case of either clause (A) or (B), use
     their commercially reasonable efforts to cause such amendment to be
     declared effective and such Registration Statement and the related
     Prospectus to become usable for their intended purpose(s) as soon as
     practicable thereafter;

               (ii)    use commercially reasonable efforts to prepare and file
     with the Commission such amendments and post-effective amendments to the
     Registration Statement as may be necessary to keep the Registration
     Statement effective for the applicable period set forth in Section 3 or 4
     hereof, as applicable, or such shorter period as will terminate when all
     Transfer Restricted Securities covered by such Registration Statement have
     been sold; cause the Prospectus to be supplemented by any required
     Prospectus supplement, and as so supplemented to be filed pursuant to Rule
     424 under the Act, and to comply fully with the applicable provisions of
     Rules 424 and 430A under the Act in a timely manner; and comply with the
     provisions of the Act with respect to the disposition of all securities
     covered by such Registration Statement during the applicable period in
     accordance with the intended method or methods of distribution by the
     sellers thereof set forth in such Registration Statement or supplement to
     the Prospectus;

               (iii)   advise the underwriter(s), if any, and selling Holders
     promptly and, if requested by such Persons, to confirm such advice in
     writing, (A) when the Prospectus or any Prospectus supplement or
     post-effective amendment has been filed, and, with respect to any
     Registration Statement or any post-effective amendment thereto, when the
     same has become effective, (B) of any request by the Commission for
     amendments to the Registration Statement or amendments or supplements to
     the Prospectus or for additional information relating thereto, (C) of the
     issuance by the Commission of any stop order suspending the effectiveness
     of the Registration Statement under the Act or of the suspension by any
     state securities commission of the qualification of the Transfer Restricted
     Securities for offering or sale in any jurisdiction, or the initiation of
     any proceeding for any of the preceding purposes, (D) of the existence of
     any fact or the happening of any event that makes any statement of a
     material fact made in the Registration Statement, the Prospectus, any
     amendment or supplement thereto, or any document incorporated by reference
     therein untrue, or that requires the making of any additions to or changes
     in the Registration Statement or the Prospectus in order to make the
     statements therein not misleading. If at any time the Commission shall
     issue any stop order suspending the effectiveness of the Registration
     Statement, or any state securities commission or other regulatory authority
     shall issue an order suspending the qualification or exemption from
     qualification of the Transfer Restricted Securities under state securities
     or Blue Sky laws, the Company and the Guarantors shall use their

                                       10


     commercially reasonable efforts to obtain the withdrawal or lifting of such
     order at the earliest possible time;

               (iv)    in the case of a Shelf Registration Statement, furnish
     without charge to each of the Initial Purchasers, each selling Holder named
     in any Registration Statement, and each of the underwriter(s), if any,
     before filing with the Commission, copies of any Registration Statement or
     any Prospectus included therein or any amendments or supplements to any
     such Registration Statement or Prospectus (including all documents
     incorporated by reference after the initial filing of such Registration
     Statement), which documents will be subject to the review of such Holders
     and underwriter(s) in connection with such sale, if any, for a period of at
     least three Business Days, and neither the Company nor the Guarantors will
     file any such Registration Statement or Prospectus or any amendment or
     supplement to any such Registration Statement or Prospectus (including all
     such documents incorporated by reference) to which an Initial Purchaser or
     the underwriter(s), if any, shall reasonably object in writing within five
     Business Days after the receipt thereof (such objection to be deemed timely
     made upon confirmation of telecopy transmission within such period). The
     objection of an Initial Purchaser or underwriter, if any, shall be deemed
     to be reasonable if such Registration Statement, amendment, Prospectus or
     supplement, as applicable, as proposed to be filed, contains a material
     misstatement or omission;

               (v)     in connection with any underwritten offering pursuant to
     a Shelf Registration Statement, promptly prior to the filing of any
     document that is to be incorporated by reference into a Shelf Registration
     Statement or Prospectus, provide copies of such document to the Initial
     Purchasers, each selling Holder named in any Shelf Registration Statement,
     and to the underwriter(s), if any, make the Company's representatives and
     representatives of the Guarantors available for discussion of such document
     and other customary due diligence matters, and include such information in
     such document prior to the filing thereof as such selling Holders or
     underwriter(s), if any, reasonably may request;

               (vi)    in connection with any underwritten offering pursuant to
     a Shelf Registration Statement, make available at reasonable times during
     normal business hours for inspection by the Initial Purchasers, any
     managing underwriter participating in any disposition pursuant to such
     Registration Statement and any attorney or accountant retained by such
     Initial Purchasers or any of the underwriter(s), all financial and other
     records, pertinent corporate documents and properties of the Company and
     the Guarantors and cause the Company's and the Guarantors' officers,
     directors and employees to supply all information reasonably requested by
     any such Holder, underwriter, attorney or accountant in connection with
     such Registration Statement subsequent to the filing thereof and prior to
     its effectiveness;

               (vii)   if requested by any selling Holders or the
     underwriter(s), if any, promptly incorporate in any Registration Statement
     or Prospectus, pursuant to a supplement or post-effective amendment if
     necessary, such information as such selling Holders and underwriter(s), if
     any, may reasonably request to have included therein, including, without
     limitation, information relating to the "Plan of Distribution" of the

                                       11


     Transfer Restricted Securities, information with respect to the principal
     amount of Transfer Restricted Securities being sold to such underwriter(s),
     the purchase price being paid therefor and any other terms of the offering
     of the Transfer Restricted Securities to be sold in such offering; and make
     all required filings of such Prospectus supplement or post-effective
     amendment as soon as practicable after the Company or a Guarantor is
     notified of the matters to be incorporated in such Prospectus supplement or
     post-effective amendment;

               (viii)  furnish to each selling Holder and each of the
     underwriter(s), if any, without charge, at least one copy of the
     Registration Statement, as first filed with the Commission, and of each
     amendment thereto, including financial statements and schedules, all
     documents incorporated by reference therein and all exhibits (including
     exhibits incorporated therein by reference);

               (ix)    deliver to each selling Holder and each of the
     underwriter(s), if any, without charge, as many copies of the Prospectus
     (including each preliminary Prospectus) and any amendment or supplement
     thereto as such Persons reasonably may request; the Company and the
     Guarantors hereby consent to the use of the Prospectus and any amendment or
     supplement thereto by each of the selling Holders and each of the
     underwriter(s), if any, in connection with the offering and the sale of the
     Transfer Restricted Securities covered by the Prospectus or any amendment
     or supplement thereto;

               (x)     in connection with any underwritten offering of Transfer
     Restricted Securities pursuant to a Shelf Registration Statement, enter
     into, and cause the Guarantors to enter into, such agreements (including an
     underwriting agreement), and make, and cause the Guarantors to make, such
     representations and warranties, and take all such other actions in
     connection therewith reasonably necessary to expedite or facilitate the
     disposition of the Transfer Restricted Securities, all to such extent as
     may be reasonably requested by any Holder of Transfer Restricted Securities
     or underwriter in connection with any sale or resale pursuant to
     underwritten offerings of Transfer Restricted Securities pursuant to a
     Shelf Registration Statement contemplated by this Agreement and shall:

                       (A)  furnish to each Initial Purchaser, each selling
          Holder and each underwriter, if any, in such substance and scope as
          they may reasonably request and as are customarily made by issuers to
          underwriters in primary underwritten offerings, upon the date of the
          Consummation of the Exchange Offer and, if applicable, the
          effectiveness of the Shelf Registration Statement:

                            (1)  a certificate, dated the date of effectiveness
               of the Shelf Registration Statement, signed by (y) the Chairman
               of the Board, the Chief Executive Officer, President, any
               Executive Vice President or any Vice President and (z) a
               principal financial or accounting officer of each of the Company
               and Owens-Illinois Group, Inc., confirming, as of the date
               thereof, the matters set forth in paragraphs (i) and (ii) of
               Section 6(c) of the Purchase Agreement or such other matters as
               such parties may reasonably request;

                                       12


                            (2)  opinions, dated the date of effectiveness of
               the Shelf Registration Statement of counsel for the Company and
               the Guarantors, covering the matters set forth in paragraph (a)
               of Section 6 of the Purchase Agreement and Exhibits B and C
               referred to therein and such other matters as such parties may
               reasonably request; and

                            (3)  a customary comfort letter, dated as of the
               date of effectiveness of the Shelf Registration Statement from
               the Company's independent accountants, in the customary form and
               covering matters of the type customarily covered in comfort
               letters by underwriters in connection with primary underwritten
               offerings, and affirming the matters set forth in the comfort
               letter delivered pursuant to Section 6(e) of the Purchase
               Agreement;

                       (B)  set forth in full or incorporate by reference in the
          underwriting agreement, if any, indemnification provisions and
          procedures of Section 8 hereof with respect to all parties to be
          indemnified pursuant to said Section (or such other provisions or
          procedures acceptable to selling Holders representing a majority in
          aggregate principal amount of Transfer Restricted Securities covered
          by such Shelf Registration Statement and the underwriters, if any);
          and

                       (C)  deliver such other documents and certificates as may
          be reasonably requested by such parties to evidence compliance with
          clause (A) above and with any customary conditions contained in the
          underwriting agreement or other agreement entered into by the Company
          or the Guarantors pursuant to this clause (x), if any.

          If at any time the representations and warranties of the Company and
the Guarantors contemplated in clause (A)(1) above cease to be true and correct
in all material respects, the Company or the Guarantors shall so advise the
Initial Purchasers and the underwriter(s), if any, and each selling Holder
promptly and, if requested by such Persons, shall confirm such advice in
writing;

               (xi)    prior to any public offering of Transfer Restricted
     Securities, cooperate with the selling Holders, the underwriter(s), if any,
     and their respective counsel in connection with the registration and
     qualification of the Transfer Restricted Securities under the securities or
     Blue Sky laws of such jurisdictions as the selling Holders or
     underwriter(s) may request and do any and all other acts or things
     necessary or advisable to enable the disposition in such jurisdictions of
     the Transfer Restricted Securities covered by the Shelf Registration
     Statement; PROVIDED, HOWEVER, that neither the Company nor the Guarantors
     shall be required to register or qualify as a foreign corporation where it
     is not then so qualified or to take any action that would subject it to the
     service of process in suits or to taxation, other than as to matters and
     transactions relating to any Registration Statement, in any jurisdiction
     where it is not then so subject;

                                       13


               (xii)   shall issue, upon the request of any Holder of Securities
     covered by the Shelf Registration Statement, New Securities, having an
     aggregate principal amount equal to the aggregate principal amount of
     Securities surrendered to the Company by such Holder in exchange therefor
     or being sold by such Holder; such New Securities to be registered in the
     name of such Holder or in the name of the purchaser(s) of such New
     Securities, as the case may be; in return, the Securities held by such
     Holder shall be surrendered to the Company for cancellation;

               (xiii)  cooperate with the selling Holders and the
     underwriter(s), if any, to facilitate the timely preparation and delivery
     of certificates representing Transfer Restricted Securities to be sold and
     not bearing any restrictive legends; and enable such Transfer Restricted
     Securities to be in such denominations and registered in such names as the
     Holders or the underwriter(s), if any, may request at least two Business
     Days prior to any sale of Transfer Restricted Securities made by such
     underwriter(s);

               (xiv)   use their commercially reasonable efforts to cause the
     Transfer Restricted Securities covered by the Registration Statement to be
     registered with or approved by such other governmental agencies or
     authorities as may be necessary to enable the seller or sellers thereof or
     the underwriter(s), if any, to consummate the disposition of such Transfer
     Restricted Securities, subject to the proviso contained in clause (xi)
     above;

               (xv)    if any fact or event contemplated by clause 6(c)(iii)(D)
     above shall exist or have occurred, prepare a supplement or post-effective
     amendment to the Registration Statement or related Prospectus or any
     document incorporated therein by reference or file any other required
     document so that, as thereafter delivered to the purchasers of Transfer
     Restricted Securities, the Prospectus will not contain an untrue statement
     of a material fact or omit to state any material fact necessary to make the
     statements therein not misleading;

               (xvi)   provide a CUSIP number for all Transfer Restricted
     Securities not later than the effective date of the Registration Statement
     and provide the Trustee under the Indenture with printed certificates for
     the Transfer Restricted Securities which are in a form eligible for deposit
     with the Depositary Trust Company;

               (xvii)  cooperate and assist in any filings required to be made
     with the NASD and in the performance of any due diligence investigation by
     any underwriter (including any "qualified independent underwriter") that is
     required to be retained in accordance with the rules and regulations of the
     NASD, and use their commercially reasonable efforts to cause such
     Registration Statement to become effective and approved by such
     governmental agencies or authorities as may be necessary to enable the
     Holders selling Transfer Restricted Securities to consummate the
     disposition of such Transfer Restricted Securities;

               (xviii) otherwise use their commercially reasonable efforts to
     comply with all applicable rules and regulations of the Commission, and
     make generally available to the Company's security holders, as soon as
     practicable, a consolidated earnings statement

                                       14


     meeting the requirements of Rule 158 under the Act (which need not be
     audited) for the twelve-month period (A) commencing at the end of any
     fiscal quarter in which Transfer Restricted Securities are sold to
     underwriters in a firm or best efforts Underwritten Offering or (B) if not
     sold to underwriters in such an offering, beginning with the first month of
     the Company's first fiscal quarter commencing after the effective date of
     the Registration Statement;

               (xix)   cause the Indenture to be qualified under the Trust
     Indenture Act not later than the effective date of the first Registration
     Statement required by this Agreement, and, in connection therewith,
     cooperate, and cause the Guarantors to cooperate with, with the Trustee and
     the Holders of Notes to effect such changes to the Indenture as may be
     required for such Indenture to be so qualified in accordance with the terms
     of the Trust Indenture Act; and to execute, and use their commercially
     reasonable efforts to cause the Trustee to execute, all documents that may
     be required to effect such changes and all other forms and documents
     required to be filed with the Commission to enable such Indenture to be so
     qualified in a timely manner; and

               (xx)    provide promptly to each Holder upon request each
     document filed with the Commission pursuant to the requirements of Section
     13 or Section 15 of the Exchange Act or provide each such requesting Holder
     the location where such Holder can obtain such information without charge.

          Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company or any Guarantor of the
existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the applicable Registration Statement until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof, or until it is advised in writing (the "ADVICE") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such notice. In
the event the Company or any Guarantor shall give any such notice, the time
period regarding the effectiveness of such Registration Statement set forth in
Section 3 or 4 hereof, as applicable, shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 6(c)(iii)(D) hereof to and including the date when each
selling Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof or shall have received the Advice; HOWEVER, no such extension
shall be taken into account in determining whether Liquidated Damages are due
pursuant to Section 5 hereof or the amount of such Liquidated Damages, it being
agreed that the Company's and the Guarantor's option to suspend use of a
Registration Statement pursuant to this paragraph shall be treated as a
Registration Default for purposes of Section 5.

                                       15


          7. REGISTRATION EXPENSES.

          (a)  All expenses incident to the Company's or the Guarantors'
performance of or compliance with this Agreement will be borne by the Company or
the Guarantors, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any Initial Purchaser or Holder with the
NASD (and, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the New Securities to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company, the Guarantors and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the New
Securities on a national securities exchange or automated quotation system
pursuant to the requirements thereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company and the Guarantors
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

          The Company and the Guarantors will, in any event, bear their internal
expenses (including, without limitation, all salaries and expenses of their
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.

          (b)  In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Simpson Thacher & Bartlett or such other counsel as may be chosen by the Holders
of a majority in principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.

          8. INDEMNIFICATION.

          (a)  INDEMNIFICATION OF THE HOLDERS. The Company and each Guarantor,
jointly and severally, agree to indemnify and hold harmless each Holder, its
directors, officers and employees, and each person, if any, who controls any
Holder within the meaning of the Act and the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such Holder or such
controlling person may become subject, under the Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company or Owens-Illinois Group, Inc.), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration

                                       16


Statement or Prospectus, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Holders expressly for use in any
Registration Statement or Prospectus; PROVIDED, FURTHER, that the foregoing
indemnity agreement shall not inure to the benefit of any Holder, its directors,
officers and employees, and each person, if any, who controls such Holder within
the meaning of the Act and the Exchange Act, who, in contravention of a
requirement of applicable law, failed to deliver, or otherwise convey the
information contained in, any Prospectus (as then amended or supplemented) to
the person asserting any losses, claims, damages, liabilities or expenses,
caused by any untrue statement or alleged untrue statement of a material fact
contained in any preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Prospectus (as then amended or supplemented) and such Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person and the Prospectus and any amendment or supplement thereto was
provided by the Company to the Holder in the requisite quantity and on a timely
basis to permit proper delivery on or prior to the closing of such sale by such
Holder. The indemnity agreement set forth in this Section 8 shall be in addition
to any liabilities that the Company or any of the Guarantors may otherwise have.

          (b)  INDEMNIFICATION OF THE COMPANY, THE GUARANTORS AND THEIR
DIRECTORS AND OFFICERS. Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors and each of their
respective directors, and each person, if any, who controls the Company or the
Guarantors, as the case may be, within the meaning of the Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as incurred, to
which the Company or such Guarantor or any such director, or controlling person
may become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Holder), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or Prospectus, or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Registration Statement or Prospectus, in reliance upon
and in conformity with written information furnished to the Company by the
Holders expressly for use therein; and to reimburse the Company and the
Guarantors, or any such director or controlling person for any legal and other
expenses reasonably incurred by the Company and the Guarantors, or any such
director or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The indemnity agreement set forth in this Section 8 shall be
in addition to any liabilities that each Holder may otherwise have. In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of

                                       17


proceeds received by such Holder upon the sale of the Securities giving rise to
such indemnification obligation.

          (c)  NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly
after receipt by any person in respect of which indemnity may be sought pursuant
to Section 8(a) or 8(b) (the "INDEMNIFIED PARTY") of notice of the commencement
of any action, such indemnified party shall, if a claim in respect thereof is to
be made against any person against whom indemnity may be sought pursuant to
Section 8(a) or 8(b) (the "INDEMNIFYING PARTY"), notify the indemnifying party
in writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 8 or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party shall be entitled to
participate in and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded, based on the advice
of legal counsel, that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
shall not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party, representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.

          (d)  SETTLEMENTS. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by this
Section 8, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written

                                       18


consent if (i) such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.

          (e)  CONTRIBUTION. If the indemnification provided for in this Section
8 is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party under Section 8(a) or Section 8(b) hereof (other
than by reason of exceptions provided in those Sections) in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party, as incurred, as a result of any losses, claims, damages,
liabilities or expenses referred to therein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from the
Initial Placement (which, in the case of the Company and the Guarantors shall be
deemed to be equal to the total gross proceeds from the Initial Placement as set
forth on the cover page to the Final Memorandum), the amount of Liquidated
Damages which did not become payable as a result of the filing of the
Registration Statement resulting in such losses, claims, damages, liabilities,
judgments actions or expenses, and such Registration Statement, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors, on the one hand, and the Holders, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other, with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from Initial Placement (before deducting expenses) received by the Company and
the Guarantors, on the one hand, and the total net proceeds received by such
Holder upon its resale of Notes less the amount paid by such Holder for such
Notes, on the other hand, bear to the total sum of such amounts. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantors or such Holder, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. For the purposes of the preceding two sentences, the net
proceeds deemed to be received by the Company shall be deemed to be also for the
benefit of the Guarantors and the information supplied by the Company shall also
be deemed to have been supplied by the Guarantors.

          The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(a), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in this

                                       19


Section 8 with respect to notice of commencement of any action shall apply if a
claim for contribution is to be made under this Section 8(e); PROVIDED, HOWEVER,
that no additional notice shall be required with respect to any action for which
notice has been given under this Section 8 for purposes of indemnification.

          The Company, the Guarantors and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 8(e) were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 8(e). Notwithstanding the
provisions of this Section 8(e), no Holder shall be required to contribute any
amount in excess of the amount by which the total net proceeds received by such
Holder upon its resale of Notes exceeds the sum of the amount paid by such
Holder for such Notes (or, if such Notes have not been sold by such Holder, the
total discount received by such Holder with respect to such Notes) and the
amount of any damages which such Holder has otherwise paid or become liable to
pay by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11 of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 8(e) are several, and not joint, in
proportion to the respective principal amount of Notes held by each of the
Holders hereunder. For purposes of this Section 8(e), each director, officer and
employee of an Holder and each person, if any, who controls an Holder within the
meaning of the Act and the Exchange Act shall have the same rights to
contribution as such Holder, and each director of the Company and the
Guarantors, and each person, if any, who controls the Company with the meaning
of the Act and the Exchange Act shall have the same rights to contribution as
the Company and the Guarantors.

          (f)  The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.

          9. RULE 144A.

          The Company and the Guarantors each hereby agree with each Holder, for
so long as any Transfer Restricted Securities remain outstanding, to make
available to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.

          10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.

          No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.

                                       20


          11. SELECTION OF UNDERWRITERS.

          The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering shall be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; PROVIDED, that such investment bankers and managers must be
reasonably satisfactory to the Company.

          12. MISCELLANEOUS.

          (a)  REMEDIES. The Company and the Guarantors each hereby agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agree to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

          (b)  NO INCONSISTENT AGREEMENTS. The Company shall not, and shall
cause the Guarantors not to, on or after the date of this Agreement enter into
any agreement with respect to the Company's securities that would prevent the
Company or any Guarantor from satisfying its obligations hereunder or that would
otherwise conflict with the provisions hereof. Other than the Registration
Rights Agreement dated as of January 24, 2002 with respect to the Company's
8 7/8% Senior Secured Notes due 2009 and the Registration Rights Agreement dated
as of November 13, 2002 with respect to the Company's outstanding 8 3/4% Senior
Secured Notes due 2012, neither the Company nor any of the Guarantors has
entered into any agreement granting any registration rights with respect to the
Company's securities to any Person. The rights granted to the Holders hereunder
do not in any way conflict with and are not inconsistent with the rights granted
to the holders of the Company's securities under any agreement in effect on the
date hereof.

          (c)  ADJUSTMENTS AFFECTING THE SECURITIES. Neither the Company nor the
Guarantors shall take any action, or permit any change to occur, with respect to
the Securities that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer.

          (d)  AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered; PROVIDED THAT, with
respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of

                                       21


each such Initial Purchaser with respect to which such amendment, qualification,
supplement, waiver, consent or departure is to be effective.

          (e)  NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:

               (i)     if to a Holder, at the address set forth on the records
     of the Registrar under the Indenture, with a copy to the Registrar under
     the Indenture; and

               (ii)    if to the Company:

                               Owens-Brockway Glass Container Inc.
                               One SeaGate
                               Toledo, OH 43666
                               Telecopier No.: 419-247-1218
                               Attention: Treasurer

                       With a copy to:

                                Latham & Watkins
                                505 Montgomery Street, Suite 1900
                                San Francisco, CA 94111
                                Telecopier No.: 415-395-8095
                                Attention: Tracy K. Edmonson, Esq.

          All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.

          Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

          (f)  SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; PROVIDED, HOWEVER, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.

          (g)  COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                                       22


          (h)  HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          (i)  SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

          (j)  ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company and the
Guarantors with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

          (k)  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

          (l)  SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Company or its Affiliates (other than subsequent Holders
of Securities or New Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or New
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.

                                       23


          If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a building agreement among the
Company, each of the Guarantors and the several Initial Purchasers.

                                             Very truly yours,

                                             OWENS-BROCKWAY GLASS CONTAINER INC.


                                             By: /s/ James W. Baehren
                                                 ---------------------------
                                                 Name: James W. Baehren
                                                 Title: Vice President


                                             On behalf of each entity named
                                             on the attached EXHIBIT A, in
                                             the capacity set forth for such
                                             entity on such EXHIBIT A

                                             By: /s/ James W. Baehren
                                                 ---------------------------
                                                 Name: James W. Baehren

The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.

SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
GOLDMAN, SACHS & CO.
BARCLAYS CAPITAL INC.
BNP PARIBAS SECURITIES CORP.
CREDIT LYONNAIS SECURITIES (USA) INC.
FLEET SECURITIES, INC.
MCDONALD INVESTMENTS INC.
SG COWEN SECURITIES CORPORATION
BNY CAPITAL MARKETS, INC.
TD SECURITIES (USA) INC.


By:  SALOMON SMITH BARNEY INC.

By:
   -------------------------
   Name:
   Title:



          If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a building agreement among the
Company, each of the Guarantors and the several Initial Purchasers.

                                             Very truly yours,

                                             OWENS-BROCKWAY GLASS CONTAINER INC.


                                             By:
                                                 ---------------------------
                                                 Name: James W. Baehren
                                                 Title: Vice President


                                             On behalf of each entity named
                                             on the attached EXHIBIT A, in
                                             the capacity set forth for such
                                             entity on such EXHIBIT A

                                             By:
                                                 ---------------------------
                                                 Name: James W. Baehren

The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.

SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
GOLDMAN, SACHS & CO.
BARCLAYS CAPITAL INC.
BNP PARIBAS SECURITIES CORP.
CREDIT LYONNAIS SECURITIES (USA) INC.
FLEET SECURITIES, INC.
MCDONALD INVESTMENTS INC.
SG COWEN SECURITIES CORPORATION
BNY CAPITAL MARKETS, INC.
TD SECURITIES (USA) INC.


By:  SALOMON SMITH BARNEY INC.

By: /s/ Whitner Marshall
    -------------------------
    Name: Whitner Marshall
    Title: Vice President



                                                                       EXHIBIT A



                                            TITLE OF OFFICER EXECUTING
        NAME OF ENTITY                       ON BEHALF OF SUCH ENTITY
        --------------                      --------------------------
                                        
ACI America Holdings Inc.                  Vice President and Secretary

Anamed International, Inc.                 Vice President and Secretary

BriGam Medical, Inc.                       Vice President and Secretary

BriGam Ventures, Inc.                      Vice President and Secretary

BriGam, Inc.                               Vice President and Secretary

Brockway Realty Corporation                Vice President and Secretary

Brockway Research, Inc.                    Vice President and Secretary

Continental PET Technologies, Inc.         Vice President and Secretary

Marc Industries, Inc.                      Vice President and Secretary

Martell Medical Products, Incorporated     Vice President and Secretary

NHW Auburn, LLC                            Vice President and Secretary of its
                                           sole member

OB Cal South Inc.                          Vice President and Secretary

OI AID STS Inc.                            Vice President and Secretary

OI Auburn Inc.                             Vice President and Secretary

OI Australia Inc.                          Vice President and Secretary

OI Brazil Closure Inc.                     Vice President and Secretary

OI California Containers Inc.              Vice President and Secretary

OI Castalia STS Inc.                       Vice President and Secretary

OI Consol STS Inc.                         Vice President and Secretary

OI Ecuador STS Inc.                        Vice President and Secretary

OI Europe & Asia Inc.                      Vice President and Secretary

OI General Finance Inc.                    Vice President and Secretary

OI General FTS Inc.                        Vice President and Secretary






                                            TITLE OF OFFICER EXECUTING
        NAME OF ENTITY                       ON BEHALF OF SUCH ENTITY
        --------------                      --------------------------
                                        
O-I Health Care Holding Corp.              Vice President and Secretary

O-I Holding Company, Inc.                  Vice President and Secretary

OI Hungary Inc.                            Vice President and Secretary

OI International Holdings Inc.             Vice President and Secretary

OI Levis Park STS Inc.                     Vice President and Secretary

OI Medical Holdings Inc.                   Vice President and Secretary

OI Medical Inc.                            Vice President and Secretary

OI Peru STS Inc.                           Vice President and Secretary

OI Plastic Products FTS Inc.               Vice President and Secretary

OI Poland Inc.                             Vice President and Secretary

OI Puerto Rico STS Inc.                    Vice President and Secretary

OI Regioplast STS Inc.                     Vice President and Secretary

OI Venezuela Plastic Products Inc.         Vice President and Secretary

OIB Produvisa Inc.                         Vice President and Secretary

Overseas Finance Company                   Vice President and Secretary

Owens-BriGam Medical Company               Vice President and Secretary of each
                                           general partner

Owens-Brockway Glass Container Trading     Vice President and Secretary
Company

Owens-Brockway Packaging, Inc.             Vice President and Secretary

Owens-Brockway Plastic Products Inc.       Vice President and Secretary

Owens-Illinois Closure Inc.                Vice President and Secretary

Owens-Illinois General Inc.                Vice President and Secretary

Owens-Illinois Group, Inc.                 Vice President, Director of Finance
                                           and Secretary


                                        2




                                            TITLE OF OFFICER EXECUTING
        NAME OF ENTITY                       ON BEHALF OF SUCH ENTITY
        --------------                      --------------------------
                                        
Owens-Illinois Prescription Products Inc.  Vice President and Secretary

Owens-Illinois Specialty Products Puerto   Vice President and Secretary
Rico, Inc.

Product Design & Engineering, Inc.         Vice President and Secretary

SeaGate II, Inc.                           Vice President and Secretary

SeaGate III, Inc.                          Vice President and Secretary

SeaGate, Inc.                              Vice President and Secretary

Specialty Packaging Licensing Company      Vice President and Secretary

Universal Materials, Inc.                  Vice President and Secretary


                                        3

EX-5.1

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EXHIBIT 5.1

[LETTERHEAD OF LATHAM & WATKINS LLP]

February 14, 2003

Owens-Brockway Glass Container Inc.
One SeaGate
Toledo, Ohio 43666

Re:

$625,000,000 Aggregate Principal Amount of
8³/4% Senior Secured Notes due 2012

Ladies and Gentlemen:

        In connection with the registration of $625,000,000 aggregate principal amount of 8³/4% Senior Secured Notes due 2012 (the "Securities") by Owens-Brockway Glass Container Inc., a Delaware corporation (the "Company"), and the guarantees of the Securities (the "Guarantees") by Owens-Illinois Group, Inc. ("Group") and the domestic subsidiaries of Group listed on Schedule A hereto (collectively, and together with Group, the "Guarantors"), under the Securities Act of 1933, as amended, on Form S-4 filed with the Securities and Exchange Commission on February 14, 2003, as amended to date (the "Registration Statement"), you have requested our opinion with respect to the matters set forth below. The Securities and the Guarantees will be issued pursuant to an indenture dated as of January 24, 2002, as supplemented by the Third Supplemental Indenture dated as of November 13, 2002, and an Additional Supplemental Indenture dated as of December 18, 2002 (as supplemented, the "Indenture") by and among the Company, the Guarantors and U.S. Bank National Association, as trustee (the "Trustee"). The Securities and the Guarantees will be issued in exchange for the Company's outstanding 8³/4% Senior Secured Notes due 2012 (the "Outstanding Notes") on the terms set forth in the prospectus contained in the Registration Statement and the Letter of Transmittal filed as an exhibit thereto. The Indenture, the Securities and the Guarantees are sometimes referred to herein collectively as the "Operative Documents." Capitalized terms used herein without definition have the meanings assigned to them in the Indenture.

        In our capacity as your special counsel in connection with such registration, we are familiar with the proceedings taken and proposed to be taken by the Company and the Guarantors in connection with the authorization and issuance of the Securities and the Guarantees, respectively. In addition, we have made such legal and factual examinations and inquiries, including an examination of originals or copies certified or otherwise identified to our satisfaction of such documents, corporate records and instruments, as we have deemed necessary or appropriate for purposes of this opinion.

        In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all documents submitted to us as copies.

        We are opining herein as to the effect on the subject transaction only of the internal laws of the State of New York and the Delaware General Corporation Law (the "DGCL"), and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction, or in the case of Delaware, any other laws, or as to any matters of municipal law or the laws of any local agencies within any state. James W. Baehren has separately provided to you an opinion with respect to the organization, valid existence and good standing of the Guarantors, the due authorization of the Securities and the Guarantees and the authorization, execution and delivery of the Indenture by the Guarantors. With your permission and the permission of Mr. Baehren, we have assumed such opinion is correct, and in giving the opinions with respect to the Guarantees in paragraph 5 below, we are relying on this opinion.

        Subject to the foregoing and the other matters set forth herein, it is our opinion that as of the date hereof:

        1.    The Company is a corporation, and is validly existing and in good standing under the laws of the State of Delaware with corporate power and authority to perform its obligations under the Operative Documents.

        2.    The Indenture has been duly authorized, executed and delivered by the Company.

        3.    The Securities have been duly authorized by the Company.

        4.    The Securities, when executed, authenticated and delivered by or on behalf of the Company against the due tender and delivery to the Trustee of the Outstanding Notes in an aggregate principal amount equal to the aggregate principal amount of the Securities, will be the legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

        5.    Each of the Guarantees, when executed in accordance with the terms of the Indenture and upon due execution, authentication and delivery of the Securities against the due tender and delivery to the Trustee of the Outstanding Notes in an aggregate principal amount equal to the aggregate principal amount of the Securities, will be the legally valid and binding obligation of the respective Guarantor, enforceable against such Guarantor in accordance with its terms.

        The opinions rendered in paragraphs 4 and 5 above relating to the enforceability of the Securities and the Guarantees are subject to the following exceptions, limitations and qualifications: (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights or remedies of creditors; (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law, and the discretion of the court before which any proceeding therefor may be brought; (iii) the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of or contribution to a party with respect to a liability where such indemnification or contribution is contrary to public policy; (iv) the unenforceability of any provision requiring the payment of attorney's fees, except to the extent that a court determines such fees to be reasonable; and (v) we express no opinion concerning the unenforceability of the waiver of rights and defenses contained in Section 4.06 of the Indenture.

        We have not been requested to express, and with your knowledge and consent, do not render any opinion as to the applicability to the obligations of the Company under the Indenture and the Securities or the Guarantors under the Indenture or the Guarantees of Sections 547 and 548 of the United States Bankruptcy Code or applicable state law (including, without limitation, Article 10 of the New York Debtor and Creditor Law) relating to preferences and fraudulent transfers and obligations.

        To the extent that the obligations of the Company and the Guarantors under the Operative Documents to which each is a party may be dependent upon such matters, we have assumed for purposes of this opinion that: (i) the Trustee (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (b) has the requisite organizational and legal power and authority to perform its obligations under each Operative Document to which it is a party, and (c) has duly authorized, executed and delivered the Indenture; (ii) the Indenture constitutes the legally valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms; (iii) the Trustee is duly qualified to engage in the activities contemplated by the Indenture; and (iv) the Trustee is in compliance, generally and with respect to acting as a trustee under the Indenture, with all applicable laws and regulations.

        We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm contained under the heading "Legal Matters" in the prospectus contained therein.

Very truly yours,

/s/  LATHAM & WATKINS LLP Latham & Watkins LLP

2

SCHEDULE A

ACI America Holdings Inc.
Brockway Realty Corporation
Brockway Research, Inc.
Continental PET Technologies, Inc.
Martell Medical Products, Incorporated
NHW Auburn, LLC
OB Cal South Inc.
OI AID STS Inc.
OI Auburn Inc.
OI Australia Inc.
OI Brazil Closure Inc.
OI California Containers Inc.
OI Castalia STS Inc.
OI Consol STS Inc.
OI Ecuador STS Inc.
OI Europe & Asia Inc.
OI General Finance Inc.
OI General FTS Inc.
O-I Health Care Holding Corp.
O-I Holding Company, Inc.
OI Hungary Inc.
OI International Holdings Inc.
OI Levis Park STS Inc.
OI Medical Inc.
OI Peru STS Inc.
OI Plastic Products FTS Inc.
OI Poland Inc.
OI Puerto Rico STS Inc.
OI Regioplast STS Inc.
OI Venezuela Plastic Products Inc.
OIB Produvisa Inc.
Overseas Finance Company
Owens-Brockway Glass Container Trading Company
Owens-Brockway Packaging, Inc.
Owens-Brockway Plastic Products Inc.
Owens-Illinois Closure Inc.
Owens-Illinois General Inc.
Owens-Illinois Prescription Products Inc.
Owens-Illinois Specialty Products Puerto Rico, Inc.
Product Design & Engineering, Inc.
SeaGate II, Inc.
SeaGate III, Inc.
SeaGate, Inc.
Specialty Packaging Licensing Company
Universal Materials, Inc.

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[LETTERHEAD OF LATHAM & WATKINS LLP]
SCHEDULE A

EX-5.2

EXHIBIT 5.2

[Owens-Brockway Glass Container Inc. Letterhead]

February 14, 2003

Owens-Brockway Glass Container Inc.
One SeaGate
Toledo, Ohio 43666

Re: $625,000,000 Aggregate Principal Amount of
8³/4% Senior Secured Notes due 2012

Ladies and Gentlemen:

        I am Vice President and Secretary to Owens-Brockway Glass Container Inc., a Delaware corporation (the "Company"), and have acted as counsel to the Company in connection with the registration of $625,000,000 aggregate principal amount of the Company's 8³/4% Senior Secured Notes due 2012 (the "Securities") and the guarantees of the Securities (the "Guarantees") by Owens-Illinois Group, Inc. ("Group") and the domestic subsidiaries of Group listed on Schedule A hereto (collectively, and together with Group, the "Guarantors"), under the Securities Act of 1933, as amended, on Form S-4 filed with the Securities and Exchange Commission on February 14, 2003, as amended to date (the "Registration Statement"). You have requested my opinion with respect to the matters set forth below. The Securities and the Guarantees will be issued pursuant to an indenture dated as of January 24, 2002, as supplemented by the Third Supplemental Indenture dated as of November 13, 2002, and an Additional Supplemental Indenture dated as of December 18, 2002 (as supplemented, the "Indenture") by and among the Company, the Guarantors and U.S. Bank National Association, as trustee (the "Trustee"). The Securities and the Guarantees will be issued in exchange for the Company's outstanding 8³/4% Senior Secured Notes due 2012 on the terms set forth in the prospectus contained in the Registration Statement and the Letter of Transmittal filed as an exhibit thereto. Capitalized terms used herein without definition have the meanings assigned to them in the Indenture.

        In my capacity as such counsel in connection with such registration, I am familiar with the proceedings taken and proposed to be taken by the Company and the Guarantors in connection with the authorization and issuance of the Securities and the Guarantees, respectively. In addition, I have made such legal and factual examinations and inquiries, including an examination of originals or copies certified or otherwise identified to my satisfaction of such documents, corporate records and instruments, as I have deemed necessary for purposes of this opinion.

        In my examination, I have assumed the genuineness of all signatures, the authenticity of all documents submitted to me as originals, and the conformity to authentic original documents of all documents submitted to me as copies.

        I am opining herein as to the effect on the subject transaction only of the federal laws of the United States, the internal laws of the State of Ohio and the Delaware General Corporation Law (the "DGCL"), and I express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction or, in the case of Delaware, any other laws, or as to any matters of municipal law or the laws of any local agencies within any state.

        Subject to the foregoing and the other matters set forth herein, it is my opinion that as of the date hereof:

1.

Each of the Guarantors is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization with the requisite power and authority to perform its obligations under the Indenture and the applicable Guarantee.



2.

The Securities have been duly authorized by all necessary corporate action of the Company.



3.

Each of the Guarantees has been duly authorized by all necessary corporate, limited liability company or partnership action of the respective Guarantor.



4.

The Indenture has been duly authorized, executed and delivered by each of the Guarantors.

        I consent to your filing this opinion as an exhibit to the above mentioned Registration Statement, and Latham & Watkins LLP may rely on this opinion in connection with the opinion it is delivering to you on this date.

Very truly yours,

/s/ James W. Baehren

SCHEDULE A

ACI America Holdings Inc.
Brockway Realty Corporation
Brockway Research, Inc.
Continental PET Technologies, Inc.
Martell Medical Products, Incorporated
NHW Auburn, LLC
OB Cal South Inc.
OI AID STS Inc.
OI Auburn Inc.
OI Australia Inc.
OI Brazil Closure Inc.
OI California Containers Inc.
OI Castalia STS Inc.
OI Consol STS Inc.
OI Ecuador STS Inc.
OI Europe & Asia Inc.
OI General Finance Inc.
OI General FTS Inc.
O-I Health Care Holding Corp.
O-I Holding Company, Inc.
OI Hungary Inc.
OI International Holdings Inc.
OI Levis Park STS Inc.
OI Medical Inc.
OI Peru STS Inc.
OI Plastic Products FTS Inc.
OI Poland Inc.
OI Puerto Rico STS Inc.
OI Regioplast STS Inc.
OI Venezuela Plastic Products Inc.
OIB Produvisa Inc.
Overseas Finance Company
Owens-Brockway Glass Container Trading Company
Owens-Brockway Packaging, Inc.
Owens-Brockway Plastic Products Inc.
Owens-Illinois Closure Inc.
Owens-Illinois General Inc.
Owens-Illinois Prescription Products Inc.
Owens-Illinois Specialty Products Puerto Rico, Inc.
Product Design & Engineering, Inc.
SeaGate II, Inc.
SeaGate III, Inc.
SeaGate, Inc.
Specialty Packaging Licensing Company
Universal Materials, Inc.

EX-12.1

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EXHIBIT 12.1

OWENS-ILLINOIS GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of dollars, except ratios)

		Nine months ended September 30,
		2002			2001
Earnings before income taxes, and minority share owners' interests		$	410.1		$	646.6
Less:	Equity earnings		(19.8	)		(13.7	)
Add:	Total fixed charges deducted from earnings		323.4			345.2
	Proportional share of pre-tax earnings (loss) of 50% owned associates		10.6			8.3
	Dividends received from less than 50% owned associates		7.8			7.5
	Earnings available for payment of fixed charges	$	732.1		$	993.9
Fixed charges (including the Company's proportional share of 50% owned associates):
	Interest expense	$	297.3		$	322.4
	Portion of operating lease rental deemed to be interest		9.4			9.6
	Amortization of deferred financing costs and debt discount expense		16.7			13.2
	Total fixed charges deducted from earnings and fixed charges	$	323.4		$	345.2
Ratio of earnings to fixed charges			2.3			2.9

OWENS-ILLINOIS GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of dollars, except ratios)

		Year ended December 31,
		2001			2000			1999			1998			1997
Earnings before income taxes, minority share owners' interests, and extraordinary items		$	667.2		$	158.4		$	497.8		$	459.0		$	452.3
Less:	Equity earnings		(19.4	)		(19.8	)		(22.3	)		(16.0	)		(17.9	)
Add:	Total fixed charges deducted from earnings		448.4			499.2			452.4			404.8			324.1
	Proportional share of pre-tax earnings of 50% owned associates		10.4			11.0			10.6			7.2			2.8
	Dividends received from less than 50% owned associates		9.9			14.5			9.8			6.6			4.8
	Earnings available for payment of fixed charges	$	1,116.5		$	663.3		$	948.3		$	861.1		$	766.1
Fixed charges (including the Company's proportional share of 50% owned associates):
	Interest expense	$	414.2		$	476.6		$	417.0		$	372.6		$	298.7
	Portion of operating lease rental deemed to be interest		14.3			12.5			26.5			24.8			21.3
	Amortization of deferred financing costs and debt discount expense		19.9			10.1			8.9			7.4			4.1
	Total fixed charges deducted from earnings and fixed charges	$	448.4		$	499.2		$	452.4		$	404.8		$	324.1
Ratio of earnings to fixed charges			2.5			1.3			2.1			2.1			2.4

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OWENS-ILLINOIS GROUP, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of dollars, except ratios)
OWENS-ILLINOIS GROUP, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of dollars, except ratios)

EX-21.1

                                                                    EXHIBIT 21.1
                           OWENS-ILLINOIS GROUP, INC.
                       OWENS-BROCKWAY GLASS CONTAINER INC.
                         SUBSIDIARIES OF THE REGISTRANTS

         Owens-Illinois Group, Inc. had the following subsidiaries (including
Owens-Brockway Glass Container Inc.) at January 31, 2003. Subsidiaries are
indented following their respective parent companies:






INCORPORATION                                                                             STATE/COUNTRY OF
NAME                                                                                      OR ORGANIZATION
- ----                                                                                      ---------------
                                                                                       

   OI Health Care Holding Corp.........................................................   Delaware
   OI General Finance Inc..............................................................   Delaware
   OI Plastic Products FTS Inc.........................................................   Delaware
      Specialty Packaging Licensing Company Limited....................................   Delaware
      Owens-Illinois Closure Inc.......................................................   Delaware
        Product Design & Engineering, Inc..............................................   Minnesota
        O-I Brazil Closure Inc.........................................................   Delaware
      Owens-Illinois Prescription Products Inc.........................................   Delaware
        OI Medical Inc.................................................................   Delaware
              Specialty Packaging Products de Mexico, S.A. de C.V......................   Mexico
                Owens-BriGam de Mexico.................................................   Mexico
              Martell Medical Products, Incorporated...................................   California
      Owens-Brockway Plastic Products, Inc.............................................   Delaware
        Owens-Illinois Specialty Products Puerto Rico, Inc.............................   New Jersey
        OI Regioplast STS Inc..........................................................   Delaware
           Regioplast S.A. de C.V......................................................   Mexico
        OI Australia Inc...............................................................   Delaware
           Owens-Illinois Plastics Ltd.................................................   Australia
              ACI America Holdings Inc.................................................   Delaware
                Continental PET Technologies Inc.......................................   Delaware
                   Continental PET Technologies de Mexico, S.A. de C. V................   Mexico
                   Continental PET Technologies Magyaoroszag Kft.......................   Hungary
                   Continental PET do Brasil Ltda......................................   Brazil
   OI Venezuela Plastic Products Inc...................................................   Delaware
      OI Plasticos de Venezuela C.A....................................................   Venezuela
      OI General FTS Inc...............................................................   Delaware
        OI Castalia STS Inc............................................................   Delaware
        OI Levis Park STS Inc..........................................................   Delaware
        OI AID STS Inc.................................................................   Delaware
        Owens-Illinois General Inc.....................................................   Delaware
           Owens Insurance, Ltd........................................................   Bermuda
           OI Holding Company, Inc.....................................................   Ohio
           Owens-Illinois Foreign Sales Corp...........................................   Virgin Islands
           Universal Materials, Inc....................................................   Ohio
      Owens-Brockway Packaging, Inc....................................................   Delaware
        Owens-Brockway Glass Container, Inc............................................   Delaware
           Brockway Realty Inc.........................................................   Pennsylvania
           Brockway Research Inc.......................................................   Delaware
           NHW Auburn LLC..............................................................   Delaware
           OI Auburn Inc...............................................................   Delaware
           Seagate, Inc................................................................   Ohio
           OIB Produvisa Inc...........................................................   Delaware
           OI Consol STS Inc...........................................................   Delaware
           OI California Containers Inc................................................   Delaware
           OI Puerto Rico STS Inc......................................................   Delaware
              Owens-Illinois de Puerto Rico............................................   Ohio
           OI Eduador STS Inc..........................................................   Delaware
              Cristaleria del Ecuador, S. A............................................   Ecuador
           OI Peru STS Inc.............................................................   Delaware
              Vidrios Industriales S. A................................................   Peru
                Compania Manufactura De Vidrio Del Peru................................   Peru
           OI Poland, Inc..............................................................   Delaware
              Huta Szkla Jaroslaw S. A.................................................   Poland
              Huta Szkla Antoninek Sp.zo.o.............................................   Poland
           OI Hungary Inc..............................................................   Delaware
              United Hungarian Glass Containers Kft....................................   Hungary
           OI Thailand Inc.............................................................   Delaware
              OI Pacific (Machinery and Distribution) Limited..........................   Thailand
           OI International Holdings Inc...............................................   Delaware
              OI Global C.V............................................................   Netherlands
                Owens-Illinois (Australia) Pty. Ltd....................................   Australia
                   ACI Packaging Services Pty. Ltd.....................................   Australia
                      ACI Operations Pty. Ltd..........................................   Australia
                   ACI Plastics Packaging (Thailand) Ltd...............................   Thailand
                      ACI International ltd............................................   Australia
                        OI Andover Group Inc...........................................   Delaware
                          The Andover Group Inc........................................   Delaware
                        Breadalbane Shipping PTE Ltd...................................   Singapore
                        PT Kangar Consolidated Industries..............................   Indonesia
                        ACI India LLC..................................................   Delaware
                          Owens-Brockway (India) Limited...............................   India
                        Owens-Illinois (NZ) Ltd........................................   New Zealand
                          ACI Operations New Zealand Ltd...............................   New Zealand
                        OI China LLC...................................................   Delaware
                          Wuhan Owens Glass Container Company Ltd......................   China
                        Owens-Illinois (HK) Ltd........................................   Hong Kong
                          ACI Guangdong Ltd............................................   Hong Kong
                            ACI Guangdong Glass Company Ltd............................   China



                          ACI Shanghai Ltd.............................................   Hong King
                            ACI Shanghai Glass Company Ltd.............................   China
                          ACI Tianjin Ltd..............................................   Hong Kong
                            ACI Tianjin Mould Company Ltd..............................   China
                OI European Group B.V..................................................   Netherlands
                   OI Europe (Machinery and Distribution) Limited......................   United Kingdom
                   Closure & Packaging Services, Ltd...................................   Guernsey
                      Closure & Packaging Services (U.K.) Ltd..........................   United Kingdom
                      Closure & Packaging Services (Antilles) N.V......................   Netherlands Antilles
                        Closure & Packaging Services (Netherlands) B.V.................   Netherlands
                   UGG Holdings Ltd....................................................   United Kingdom
                      OI Overseas Management Company LLC...............................   Delaware
                        United Glass Group Ltd.........................................   United Kingdom
                          United Glass, Limited........................................   United Kingdom
                   OI Glass Holdings B.V...............................................   Netherlands
                      Owens-Illinois International Management & Trading Kft............   Hungary
                      OI Italia S.r.l..................................................   Italy
                        AVIR S.p.A.....................................................   Italy
                          Avirunion, a.s...............................................   Czech Republic
                          Sonator Investments B.V......................................   Netherlands
                          Vetrerie Medid...............................................   Italy
                          San Domenico Vetraria S.r.l..................................   Italy
                          Nord Vetri S.p.A.............................................   Italy
                          Sicilvetro S.p.A.............................................   Italy
                            Vidrieria Rovira, S. A.....................................   Spain
                   Owens-Illinois International B. V...................................   Netherlands
                      PET Technologies Limited.........................................   United Kingdom
                      Owens-Illinois Canadian Holdings B.V.............................   Netherlands
                        O-I Canada Corp................................................   Canada
                      Centro Vidriero de Venezuela, C.A................................   Venezuela
                      Manufacturera de Vidrios Planos, C.A.............................   Venezuela
                      OIV Holding, C.A.................................................   Venezuela
                        Owens-Illinois de Venezuela, C. A..............................   Venezuela
                          Fabrica de Vidrio Los Andes, C. A. ..........................   Venezuela
                      Cristaleria Peldar, S.A..........................................   Colombia
                      Compania Nacional De Vidrios S.A.................................   Colombia
                      Cristar S.A......................................................   Colombia
                        Vidrieria Fenicia..............................................   Colombia
                      Industria de Materias Primas Limitiada...........................   Colombia
                      Sao Raimundo Administracao, Participacoes e Representacoes,
                        Limitada.......................................................   Brazil
                        Companhia Industrial Sao Paulo e Rio...........................   Brazil
                      OI Finnish Holdings Oy...........................................   Finland
                        Ryttylan Muovi Oy..............................................   Finland
                        Karhulan Lasi Oy...............................................   Finland
                        A/S Jarvakandi Klaas...........................................   Estonia
                      PET Technologies B. V............................................   Netherlands

EX-23.3

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EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

        We consent to the reference to our firm under the caption "Experts" and to the use of the reports dated January 24, 2002 with respect to the consolidated financial statements and schedule of Owens-Illinois Group, Inc. and with respect to the consolidated financial statements of Owens-Brockway Packaging, Inc., Owens-Brockway Glass Container Inc., and OI Plastic Products FTS Inc., all of which are included in this Registration Statement on Form S-4 and related prospectus of Owens-Brockway Glass Container Inc. for the registration of $625.0 million of 8³/4% Senior Secured Notes due 2012.

/s/ ERNST & YOUNG LLP

Toledo, Ohio
February 14, 2003

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CONSENT OF INDEPENDENT AUDITORS

EX-24.1

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EXHIBIT 24.1

POWER OF ATTORNEY
OWENS-BROCKWAY GLASS CONTAINER INC.

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation and post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

SIGNATURE	TITLE	DATE
/s/  THOMAS L. YOUNG Thomas L. Young	President, Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer); Director	February 14, 2003
/s/  JAMES W. BAEHREN James W. Baehren	Vice President and Secretary; Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Controller and Chief Accounting Officer (Principal Accounting Officer); Director	February 14, 2003

POWER OF ATTORNEY
OWENS-ILLINOIS GROUP, INC.

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint James W. Baehren, Jeffrey A. Denker, or either of them, individually, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement and any and all amendments thereto (including without limitation and post-effective amendments thereto and any registration statement pursuant to Rule 462(b)), and to file each of the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, and every act and thing necessary or desirable to be done, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

SIGNATURE	TITLE	DATE
/s/  JOSEPH H. LEMIEUX Joseph H. Lemieux	Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer); Director	February 14, 2003
/s/  THOMAS L. YOUNG Thomas L. Young	Executive Vice President, Administration and General Counsel; Director	February 14, 2003
/s/  GARY F. COLTER Gary F. Colter	Director	February 14, 2003
/s/  ROBERT J. DINEEN Robert J. Dineen	Director	February 14, 2003
/s/  EDWARD A. GILHULY Edward A. Gilhuly	Director	February 14, 2003
/s/  JAMES H. GREENE, JR. James H. Greene, Jr.	Director	February 14, 2003
/s/  ANASTASIA D. KELLY Anastasia D. Kelly	Director	February 14, 2003
/s/  JOHN J. MCMACKIN, JR. John J. McMackin, Jr.	Director	February 14, 2003
/s/  MICHAEL W. MICHELSON Michael W. Michelson	Director	February 14, 2003

/s/  GEORGE R. ROBERTS George R. Roberts	Director	February 14, 2003
/s/  JEFFREY A. DENKER Jeffrey A. Denker	Treasurer (Principal Financial Officer)	February 14, 2003
/s/  EDWARD C. WHITE Edward C. White	Vice President and Comptroller (Principal Accounting Officer)	February 14, 2003

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POWER OF ATTORNEY OWENS-BROCKWAY GLASS CONTAINER INC.
POWER OF ATTORNEY OWENS-ILLINOIS GROUP, INC.

EX-25.1

                                                                  Exhibit 25.1

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              ---------------------

                                    FORM T-1

                         STATEMENT OF ELIGIBILITY UNDER
                      THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE
               Check if an Application to Determine Eligibility of
                     a Trustee Pursuant to Section 305(b)(2)
             -------------------------------------------------------

                         U.S. BANK NATIONAL ASSOCIATION
               (Exact name of Trustee as specified in its charter)

                                   31-0841368
                       I.R.S. Employer Identification No.

- --------------------------------------- ---------------------------------------
      180 East Fifth Street
       St. Paul, Minnesota                                55101
- --------------------------------------- ---------------------------------------
(Address of principal executive offices)                (Zip Code)
- --------------------------------------- ---------------------------------------

                                  Frank Leslie
                         U.S. Bank National Association
                              180 East Fifth Street
                               St. Paul, MN 55101
                                 (651) 244-8677
            (Name, address and telephone number of agent for service)

                          OWENS-BROCKWAY GLASS CONTAINER INC.
               (Exact name of obligor as specified in its charter)

- --------------------------------------- ---------------------------------------
        Delaware                                        34-1559348
 -------------------------------------- ---------------------------------------

 -------------------------------------- ---------------------------------------
  (State or other jurisdiction
of incorporation or organization)         (I.R.S. Employer Identification No.)
 -------------------------------------- ---------------------------------------


- --------------------------------------- ---------------------------------------
       One SeaGate                                       43666
      Toledo, Ohio

- --------------------------------------- ---------------------------------------
     Address of Principal Executive Offices)             (Zip Code)
- --------------------------------------- ---------------------------------------


                      8 3/4% SENIOR SECURED NOTES DUE 2012
                       (TITLE OF THE INDENTURE SECURITIES)

================================================================================



ITEM 1.  GENERAL  INFORMATION. Furnish the following information as to the
         Trustee.

         a)       NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
                  WHICH IT IS SUBJECT.
                      Comptroller of the Currency
                      Washington, D.C.

         b)       WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
                      Yes

ITEM 2.  AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
         TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
             None

ITEMS 3-15   ITEMS 3-15 ARE NOT APPLICABLE BECAUSE TO THE BEST OF THE
             TRUSTEE'S KNOWLEDGE, THE OBLIGOR IS NOT IN DEFAULT UNDER ANY
             INDENTURE FOR WHICH THE TRUSTEE ACTS AS TRUSTEE.

ITEM 16. LIST OF EXHIBITS: LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
         STATEMENT OF ELIGIBILITY AND QUALIFICATION.

         1.       A copy of the Articles of Association of the Trustee.*

         2.       A copy of the certificate of authority of the Trustee to
                  commence business.*

         3.       A copy of the certificate of authority of the Trustee to
                  exercise corporate trust powers.*

         4.       A copy of the existing bylaws of the Trustee.*

         5.       A copy of each Indenture referred to in Item 4. Not
                  applicable.

         6.       The consent of the Trustee required by Section 321(b) of the
                  Trust Indenture Act of 1939, attached as Exhibit 6.

         7.       Report of Condition of the Trustee as of December 31, 2002,
                  published pursuant to law or the requirements of its
                  supervising or examining authority, attached as Exhibit 7.



       * Incorporated by reference to Registration Number 333-67188.

                                        2


                                      NOTE

         The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.



                                    SIGNATURE

         Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility and qualification to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of St. Paul, State of Minnesota on the 11th day of February, 2003.


                                    U.S. BANK NATIONAL ASSOCIATION

                                    By:    /s/ Frank P. Leslie III
                                           ---------------------------
                                           Frank P. Leslie III
                                           Vice President




By:      /s/ Lori-Anne Rosenberg
         -----------------------------------
         Lori-Anne Rosenberg
         Assistant Vice President

                                        3


                                    EXHIBIT 6

                                     CONSENT


         In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.


Dated:  February 11, 2003


                            U.S. BANK NATIONAL ASSOCIATION


                            By:      /s/ Frank P. Leslie III
                                     ---------------------------
                                     Frank P. Leslie III
                                     Vice President



By:      /s/ Lori-Anne Rosenberg
         -----------------------------------
         Lori-Anne Rosenberg
         Assistant Vice President

                                        4





                                    EXHIBIT 7
                         U.S. BANK NATIONAL ASSOCIATION
                        STATEMENT OF FINANCIAL CONDITION
                                AS OF 12/31/2002

                                    ($000'S)

                                                                         12/31/2002
                                                                        ------------
                                                                     

ASSETS
     Cash and Due From Depository Institutions                           $10,868,204
     Federal Reserve Stock                                                         0
     Securities                                                           28,139,801
     Federal Funds                                                           873,395
     Loans & Lease Financing Receivables                                 116,078,132
     Fixed Assets                                                          1,389,233
     Intangible Assets                                                     9,218,064
     Other Assets                                                          9,482,963
                                                                        ------------
         TOTAL ASSETS                                                   $176,049,792

LIABILITIES
     Deposits                                                           $121,684,914
     Fed Funds                                                             5,858,510
     Treasury Demand Notes                                                         0
     Trading Liabilities                                                     402,464
     Other Borrowed Money                                                 17,397,658
     Acceptances                                                             148,979
     Subordinated Notes and Debentures                                     5,696,532
     Other Liabilities                                                     5,200,399
                                                                        ------------
     TOTAL LIABILITIES                                                  $156,389,456

EQUITY
     Minority Interest in Subsidiaries                                      $992,867
     Common and Preferred Stock                                               18,200
     Surplus                                                              11,314,669
     Undivided Profits                                                     7,334,600
                                                                        ------------
         TOTAL EQUITY CAPITAL                                            $19,660,336

TOTAL LIABILITIES AND EQUITY CAPITAL                                    $176,049,792

- --------------------------------------------------------------------------------
To the best of the undersigned's determination, as of the date hereof, the above
financial information is true and correct.

U.S. BANK NATIONAL ASSOCIATION

By:      /s/ Frank P. Leslie III
         ----------------------------------
          Vice President

Date:  February 11, 2003

EX-99.1

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Letter of Transmittal
To Tender for Exchange
8³/4% Senior Secured Notes Due 2012
of

OWENS-BROCKWAY GLASS CONTAINER INC.

Pursuant to the Prospectus dated February     , 2003

        THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH     , 2003, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR THE EXPIRATION DATE.

The Exchange Agent is:
U.S. BANK NATIONAL ASSOCIATION

By Registered or Certified Mail:	By Hand Delivery:
U.S. Bank National Association 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Corporate Trust Administration Telephone: (651) 244-8677 Facsimile: (651) 244-0711	U.S. Bank National Association 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Corporate Trust Administration Telephone: (651) 244-8677 Facsimile: (651) 244-0711
By Overnight Delivery:	By Facsimile:
U.S. Bank National Association 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Corporate Trust Administration Telephone: (651) 244-8677 Facsimile: (651) 244-0711	(651) 244-0711 Attn: Corporate Trust Administration Confirm by Telephone: (651) 244-8677

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

        The undersigned acknowledges receipt of the Prospectus dated February     , 2003 (the "Prospectus"), of Owens-Brockway Glass Container Inc., a Delaware corporation (the "Company"), and this Letter of Transmittal (the "Letter of Transmittal"), which together with the Prospectus constitutes the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of its 8³/4% Senior Secured Notes due 2012 (the "Exchange Notes") for each $1,000 principal amount of its outstanding 8³/4% Senior Secured Notes due 2012 (the "Private Notes"). Recipients of the Prospectus should read the requirements described in such Prospectus with respect to eligibility to participate in the Exchange Offer. Capitalized terms used but not defined herein have the meaning given to them in the Prospectus.

        The undersigned hereby tenders the Private Notes described in the box entitled "Description of Private Notes" below pursuant to the terms and conditions described in the Prospectus and this Letter of Transmittal. The undersigned is the registered holder of all the Private Notes (the "Holder") and the undersigned represents that it has received from each beneficial owner of Private Notes (the "Beneficial Owners") a duly completed and executed form of "Instruction to Registered Holder from Beneficial Owner" accompanying this Letter of Transmittal, instructing the undersigned to take the action described in this Letter of Transmittal.

PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL BEFORE CAREFULLY COMPLETING ANY BOX BELOW.

        This Letter of Transmittal is to be used by a Holder if (i) certificates representing Private Notes are to be forwarded herewith and (ii) a tender is made pursuant to the guaranteed delivery procedures in the section of the Prospectus entitled "The Exchange Offer—Guaranteed Delivery Procedures."

        Holders that are tendering by book-entry transfer to the Exchange Agent's account at DTC can execute the tender through ATOP for which the Exchange Offer will be eligible. DTC participants that are accepting the Exchange Offer must transmit their acceptance to DTC which will verify the acceptance and execute a book-entry delivery to the Exchange Agent's account at DTC. DTC will then send an agent's message forming part of a book-entry transfer in which the participant agrees to be bound by the terms of the Letter of Transmittal (an "Agent's Message") to the Exchange Agent for its acceptance. Transmission of the Agent's Message by DTC will satisfy the terms of the Exchange Offer as to execution and delivery of a Letter of Transmittal by the participant identified in the Agent's Message.

        Any Beneficial Owner whose Private Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such Holder promptly and instruct such Holder to tender on behalf of the Beneficial Owner. If such Beneficial Owner wishes to tender on its own behalf, such Beneficial Owner must, prior to completing and executing this Letter of Transmittal and delivering its Private Notes, either make appropriate arrangements to register ownership of the Private Notes in such Beneficial Owner's name or obtain a properly completed bond power from the Holder. The transfer of record ownership may take considerable time.

        In order to properly complete this Letter of Transmittal, a Holder must (i) complete the box entitled "Description of Private Notes," (ii) if appropriate, check and complete the boxes relating to book-entry transfer, guaranteed delivery, Special Issuance Instructions and Special Delivery Instructions, (iii) sign the Letter of Transmittal by completing the box entitled "Sign Here To Tender Your Private Notes" and (iv) complete the Substitute Form W-9. Each Holder should carefully read the detailed instructions below prior to completing the Letter of Transmittal.

        Holders of Private Notes who desire to tender their Private Notes for exchange and (i) whose Private Notes are not immediately available or (ii) who cannot deliver their Private Notes, this Letter of Transmittal and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date, must tender the Private Notes pursuant to the guaranteed delivery procedures set forth in the section of the Prospectus entitled "The Exchange Offer—Guaranteed Delivery Procedures." See Instruction 2.

        Holders of Private Notes who wish to tender their Private Notes for exchange must complete columns (1) through (3) in the box below entitled "Description of Private Notes," and sign the box below entitled "Sign Here To Tender Your Private Notes." If only those columns are completed, such Holder will have tendered for exchange all Private Notes listed in column (3) below. If the Holder wishes to tender for exchange less than all of such Private Notes, column (4) must be completed in full. In such case, such Holder should refer to Instruction 5.

        The Exchange Offer may be extended, terminated or amended, as provided in the Prospectus. During any such extension of the Exchange Offer, all Private Notes previously tendered and not withdrawn pursuant to the Exchange Offer will remain subject to such Exchange Offer.

        The undersigned hereby tenders for exchange the Private Notes described in the box entitled "Description of Private Notes" below pursuant to the terms and conditions described in the Prospectus and this Letter of Transmittal.

2

DESCRIPTION OF PRIVATE NOTES
(1)		(2)	(3)	(4)
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank)		Certificate Number(s)	Aggregate Principal Amount Represented by Certificate(s)(A)	Principal Amount Tendered For Exchange(B)
		Total Principal Amount Tendered
	(A)    Unless indicated in this column, any tendering Holder will be deemed to have tendered the entire aggregate principal amount represented by the Private Notes indicated in the column labeled "Aggregate Principal Amount Represented by Certificate(s)." See Instruction 5.
	(B)    The minimum permitted tender is $1,000 in principal amount of Private Notes. All other tenders must be in integral multiples of $1,000.

3

/

/    CHECK HERE IF TENDERED PRIVATE NOTES ARE ENCLOSED HEREWITH.

/

/    CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):

        Name(s) of Registered Holder(s): 

        Date of Execution of Notice of Guaranteed Delivery: 

        Window Ticket Number (if any): 

        Name of Institution that Guaranteed Delivery: 

        Only Holders are entitled to tender their Private Notes for exchange in the Exchange Offer. Any financial institution that is a participant in DTC's system and whose name appears on a security position listing as the record owner of the Private Notes and who wishes to make book-entry delivery of Private Notes as described above must complete and execute a participant's letter (which will be distributed to participants by DTC) instructing DTC's nominee to tender such Private Notes for exchange. Persons who are Beneficial Owners of Private Notes but are not Holders and who seek to tender Private Notes should (i) contact the Holder and instruct such Holder to tender on his or her behalf, (ii) obtain and include with this Letter of Transmittal, Private Notes properly endorsed for transfer by the Holder or accompanied by a properly completed bond power from the Holder, with signatures on the endorsement or bond power guaranteed by a firm that is an eligible guarantor institution within the meaning of Rule 17Ad-5 under the Exchange Act, including a firm that is a member of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., a commercial bank or trading company having an office in the United States or certain other eligible guarantors (each, an "Eligible Institution"), or (iii) effect a record transfer of such Private Notes from the Holder to such Beneficial Owner and comply with the requirements applicable to Holders for tendering Private Notes prior to the Expiration Date. See the section of the Prospectus entitled "The Exchange Offer—Procedures for Tendering."

SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

4

SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)

        To be completed ONLY (i) if the Exchange Notes issued in exchange for the Private Notes, certificates for Private Notes in a principal amount not exchanged for Exchange Notes, or Private Notes (if any) not tendered for exchange, are to be issued in the name of someone other than the undersigned or (ii) if Private Notes tendered by book-entry transfer which are not exchanged are to be returned by credit to an account maintained at DTC.

Issue to:

Name 

(Please Type or Print)

Address 

(Include Zip Code)

(Tax Identification or Social Security No.)

        Credit Private Notes not exchanged and delivered by book-entry transfer to DTC account set forth below:

(Account Number)

SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)

        To be completed ONLY (i) if the Exchange Notes issued in exchange for Private Notes, certificates for Private Notes in a principal amount not exchanged for Exchange Notes, or Private Notes (if any) not tendered for exchange, are to be mailed or delivered (i) to someone other than the undersigned or (ii) to the undersigned at an address other than the address shown below the undersigned's signature.

Mail or deliver to:

Name 

(Please Type or Print)

Address 

(Include Zip Code)

(Tax Identification or Social Security No.)

5

Ladies and Gentlemen:

        Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company for exchange the Private Notes indicated above. Subject to, and effective upon, acceptance for exchange of the Private Notes tendered for exchange herewith, the undersigned will have irrevocably sold, assigned, transferred and exchanged, to the Company, all right, title and interest in, to and under all of the Private Notes tendered for exchange hereby, and hereby will have appointed the Exchange Agent as the true and lawful agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as agent of the Company) of such Holder with respect to such Private Notes, with full power of substitution to (i) deliver certificates representing such Private Notes, or transfer ownership of such Private Notes on the account books maintained by DTC (together, in any such case, with all accompanying evidences of transfer and authenticity), to the Company, (ii) present and deliver such Private Notes for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights and incidents of beneficial ownership with respect to such Private Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest.

        The undersigned hereby represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Private Notes; and that when such Private Notes are accepted for exchange by the Company, the Company will acquire good and marketable title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned further warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the Private Notes tendered for exchange hereby. The undersigned further agrees that acceptance of any and all validly tendered Private Notes by the Company and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Registration Rights Agreement.

        By tendering, the undersigned hereby further represents to the Company that (i) the Exchange Notes to be acquired by the undersigned in exchange for the Private Notes tendered hereby and any Beneficial Owner(s) of such Private Notes in connection with the Exchange Offer will be acquired by the undersigned and such Beneficial Owner(s) in the ordinary course of their respective businesses, (ii) the undersigned is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes, (iii) the undersigned and each Beneficial Owner acknowledge and agree that any person who is a broker-dealer registered under the Exchange Act or is participating in the Exchange Offer for the purpose of distributing the Exchange Notes must comply with the registration and prospectus delivery requirements of Section 10 of the Securities Act in connection with a secondary resale transaction of the Exchange Notes acquired by such person and cannot rely on the position of the staff of the Commission set forth in certain no-action letters, (iv) the undersigned and each Beneficial Owner understand that a secondary resale transaction described in clause (iii) above and any resales of Exchange Notes obtained by the undersigned in exchange for the Private Notes acquired by the undersigned directly from the Company should be covered by an effective registration statement containing the selling securityholder information required by Item 507 or Item 508, as applicable, of Regulation S-K of the Commission and (v) neither the undersigned nor any Beneficial Owner is an "affiliate," as defined under Rule 405 under the Securities Act, of the Company.

        If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Private Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of Section 10 of the Securities Act in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering such prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. A broker-dealer may not participate in the

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Exchange Offer with respect to the Private Notes acquired other than as a result of market-making activities or other trading activities.

        For purposes of the Exchange Offer, the Company will be deemed to have accepted for exchange, and to have exchanged, validly tendered Private Notes, if, as and when the Company gives oral or written notice thereof to the Exchange Agent. Tenders of Private Notes for exchange may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange Offer—Withdrawal of Tenders" in the Prospectus. Any Private Notes tendered by the undersigned and not accepted for exchange will be returned to the undersigned at the address set forth above unless otherwise indicated in the box above entitled "Special Delivery Instructions" as promptly as practicable after the Expiration Date.

        The undersigned acknowledges that the Company's acceptance of Private Notes validly tendered for exchange pursuant to any one of the procedures described in the section of the Prospectus entitled "The Exchange Offer" and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer.

        Unless otherwise indicated in the box entitled "Special Issuance Instructions," please return any Private Notes not tendered for exchange in the name(s) of the undersigned. Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail any certificates for Private Notes not tendered or exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Notes issued in exchange for the Private Notes accepted for exchange in the name(s) of, and return any Private Notes not tendered for exchange or not exchanged to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Private Notes from the name of the Holder(s) thereof if the Company does not accept for exchange any of the Private Notes so tendered for exchange or if such transfer would not be in compliance with any transfer restrictions applicable to such Private Note(s).

In order to validly tender Private Notes for exchange, Holders must complete, execute, and deliver this Letter of Transmittal.

        Except as stated in the Prospectus, all authority herein conferred or agreed to be conferred shall survive the death, incapacity or dissolution of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as otherwise stated in the Prospectus, this tender for exchange of Private Notes is irrevocable.

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SIGN HERE TO TENDER YOUR PRIVATE NOTES

x 

x 

Signature(s) of Owner(s)

Dated:  , 2003                                                                                            

        Must be signed by the Holder(s) exactly as name(s) appear(s) on certificate(s) representing the Private Notes or on a security position listing or by person(s) authorized to become registered Private Note holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information. (See Instruction 6.)

Name(s) 

(Please Type or Print)

Capacity (full title): 

Address: 

(Include Zip Code)

Principal place of business (if different from address listed above): 

Area Code and Telephone No.: (        ): 

Tax Identification or Social Security Nos.: 

GUARANTEE OF SIGNATURE(S)
(Signature(s) must be guaranteed if required by Instruction 1)

Authorized Signature: 

Name and Title: 

(Please Type or Print)

Name of Firm: 

Address: 

Area Code and Telephone No.: 

Dated: 

IMPORTANT: COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 IN
THIS LETTER OF TRANSMITTAL.

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INSTRUCTIONS

Forming Part of the Terms and Conditions of the Exchange Offer

1.    Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by an institution which is (1) a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., (2) a commercial bank or trust company having an office or correspondent in the United States, or (3) an Eligible Institution that is a member of one of the following recognized Signature Guarantee Programs:

(a)

The Securities Transfer Agents Medallion Program (STAMP);



(b)

The New York Stock Exchange Medallion Signature Program (MSP); or



(c)

The Stock Exchange Medallion Program (SEMP).

        Signatures on this Letter of Transmittal need not be guaranteed (i) if this Letter of Transmittal is signed by the Holder(s) of the Private Notes tendered herewith and such Holder(s) have not completed the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (ii) if such Private Notes are tendered for the account of an Eligible Institution. In all other cases, all signatures must be guaranteed by an Eligible Institution.

2.    Delivery of this Letter of Transmittal and Private Notes; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by Holders if certificates representing Private Notes are to be forwarded herewith. All physically delivered Private Notes, as well as a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) and any other required documents, must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date or the tendering holder must comply with the guaranteed delivery procedures set forth below. Delivery of the documents to DTC does not constitute delivery to the Exchange Agent.

        The method of delivery of Private Notes, this Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the Holder. Except as otherwise provided below, the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. Instead of delivery by mail, it is recommended that Holders use an overnight or hand delivery service, properly insured. In all cases, sufficient time should be allowed to assure delivery to the Exchange Agent before the Expiration Date. Neither this Letter of Transmittal nor any Private Notes should be sent to the Company. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect the above transactions for such Holders.

        Holders of Private Notes who elect to tender Private Notes and (i) whose Private Notes are not immediately available or (ii) who cannot deliver the Private Notes, this Letter of Transmittal or other required documents to the Exchange Agent prior the Expiration Date must tender their Private Notes according to the guaranteed delivery procedures set forth in the Prospectus. Holders may have such tender effected if:

(a)

such tender is made through an Eligible Institution;



(b)

prior to 5:00 p.m., New York City time, on the Expiration Date, the Exchange Agent has received from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery, setting forth the name and address of the Holder, the certificate number(s) of such Private Notes and the principal amount of Private Notes tendered for exchange, stating that tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, this Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing such Private Notes (or a Book-Entry Confirmation), in proper form for transfer, and any other documents required by

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this Letter of Transmittal, will be deposited by such Eligible Institution with the Exchange Agent; and

(c)

a properly executed Letter of Transmittal (or facsimile thereof), as well as the certificate(s) for all tendered Private Notes in proper form for transfer or a Book-Entry Confirmation, together with any other documents required by this Letter of Transmittal, are received by the Exchange Agent within five New York Stock Exchange trading days after the Expiration Date.

        No alternative, conditional or contingent tenders will be accepted. All tendering Holders, by execution of this Letter of Transmittal (or facsimile thereof), waive any right to receive notice of the acceptance of their Private Notes for exchange.

3.    Inadequate Space. If the space provided in the box entitled "Description of Private Notes" above is inadequate, the certificate numbers and principal amounts of the Private Notes being tendered should be listed on a separate signed schedule affixed hereto.

4.    Withdrawals. A tender of Private Notes may be withdrawn at any time prior to the Expiration Date by delivery of written notice of withdrawal (or facsimile thereof) to the Exchange Agent at the address set forth on the cover of this Letter of Transmittal. To be effective, a notice of withdrawal of Private Notes must (i) specify the name of the person who tendered the Private Notes to be withdrawn (the "Depositor"), (ii) identify the Private Notes to be withdrawn (including the certificate number(s) and aggregate principal amount of such Private Notes), and (iii) be signed by the Holder in the same manner as the original signature on the Letter of Transmittal by which such Private Notes were tendered (including any required signature guarantees). All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company in its sole discretion, whose determination shall be final and binding on all parties. Any Private Notes so withdrawn will thereafter be deemed not validly tendered for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Private Notes so withdrawn are validly retendered. Properly withdrawn Private Notes may be retendered by following one of the procedures described in the section of the Prospectus entitled "The Exchange Offer—Procedures for Tendering" at any time prior to the Expiration Date.

5.    Partial Tenders. Tenders of Private Notes will be accepted only in integral multiples of $1,000 principal amount. If a tender for exchange is to be made with respect to less than the entire principal amount of any Private Notes, fill in the principal amount of Private Notes which are tendered for exchange in column (4) of the box entitled "Description of Private Notes," as more fully described in the footnotes thereto. In the case of a partial tender for exchange, a new certificate, in fully registered form, for the remainder of the principal amount of the Private Notes, will be sent to the Holders unless otherwise indicated in the appropriate box on this Letter of Transmittal as promptly as practicable after the expiration or termination of the Exchange Offer.

6.    Signatures on this Letter of Transmittal, Powers of Attorney and Endorsements.

(a)

The signature(s) of the Holder on this Letter of Transmittal must correspond with the name(s) as written on the face of the Private Notes without alternation, enlargement or any change whatsoever.



(b)

If tendered Private Notes are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.



(c)

If any tendered Private Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal and any necessary or required documents as there are different registrations or certificates.

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(d)

When this Letter of Transmittal is signed by the Holder listed and transmitted hereby, no endorsements of Private Notes or bond powers are required. If, however, Private Notes not tendered or not accepted, are to be issued or returned in the name of a person other than the Holder, then the Private Notes transmitted hereby must be endorsed or accompanied by a properly completed bond power, in a form satisfactory to the Company, in either case signed exactly as the name(s) of the Holder(s) appear(s) on the Private Notes. Signatures on such Private Notes or bond powers must be guaranteed by an Eligible Institution (unless signed by an Eligible Institution). See Instruction 1.



(e)

If this Letter of Transmittal or Private Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, evidence satisfactory to the Company of their authority to so act must be submitted with this Letter of Transmittal.



(f)

If this Letter of Transmittal is signed by a person other than the Holder listed, the Private Notes must be endorsed or accompanied by a properly completed bond power, in either case signed by such Holder exactly as the name(s) of the Holder appear(s) on the certificates. Signatures on such Private Notes or bond powers must be guaranteed by an Eligible Institution (unless signed by an Eligible Institution).

7.    Transfer Taxes. Except as set forth in this Instruction 7, the Company will pay all transfer taxes, if any, applicable to the exchange of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the exchange of Private Notes pursuant to the Exchange Offer, then the amount of such transfer taxes (whether imposed on the Holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemptions therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder.

8.    Special Issuance and Delivery Instructions. If the Exchange Notes are to be issued, or if any Private Notes not tendered for exchange are to be issued or sent to someone other than the Holder or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Holders of Private Notes tendering Private Notes by book-entry transfer may request that Private Notes not accepted be credited to such account maintained at DTC as such Holder may designate.

9.    Irregularities. All questions as to the validity, form, eligibility (including time of receipt), compliance with conditions, acceptance and withdrawal of tendered Private Notes will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all Private Notes not properly tendered or any Private Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Private Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Private Notes must be cured within such time as the Company shall determine. Although the Company intends to notify Holders of defects or irregularities with respect to tenders of Private Notes, neither the Company, the Exchange Agent nor any other person shall incur any liability for failure to give such notification. Tenders of Private Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Private Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date.

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10.    Waiver of Conditions. The Company reserves the absolute right to waive, amend or modify certain of the specified conditions as described under "The Exchange Offer—Conditions to the Exchange Offer" in the Prospectus in the case of any Private Notes tendered (except as otherwise provided in the Prospectus).

11.    Mutilated, Lost, Stolen or Destroyed Private Notes. Any tendering Holder whose Private Notes have been mutilated, lost, stolen or destroyed, should contact the Exchange Agent at the address indicated herein for further instructions.

12.    Requests for Information or Additional Copies. Requests for information, questions related to the procedures for tendering or for additional copies of the Prospectus and this Letter of Transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover of this Letter of Transmittal.

IMPORTANT: This Letter of Transmittal (or a facsimile thereof) together with certificates, or confirmation of book-entry or the Notice of Guaranteed Delivery, and all other required documents must be received by the Exchange Agent prior the Expiration Date.

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IMPORTANT INFORMATION

        Under current federal income tax law, a Holder whose tendered Private Notes are accepted for exchange may be subject to backup withholding unless the Holder provides the Company (as payor), through the Exchange Agent, with either (i) such Holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN provided on Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and that (A) the Holder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of a failure to report all interest or dividends or (B) the Internal Revenue Service has notified the Holder that he or she is no longer subject to backup withholding; or (ii) an adequate basis for exemption from backup withholding. If such Holder is an individual, the TIN is such Holder's social security number. If the Exchange Agent is not provided with the correct taxpayer identification number, the Holder may be subject to certain penalties imposed by the Internal Revenue Service.

        Certain Holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. Exempt Holders should indicate their exempt status on Substitute Form W-9. A foreign individual may qualify as an exempt recipient by submitting to the Exchange Agent a properly completed Internal Revenue Service Form W-8BEN (which the Exchange Agent will provide upon request) signed under penalty of perjury, attesting to the Holder's exempt status. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (the "Guidelines") for additional instructions.

        If backup withholding applies, the Company is required to withhold 30% of any payment made to the Holder or other payee. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service.

        The Holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the record owner of the Private Notes. If the Private Notes are held in more than one name or are not held in the name of the actual owner, consult the enclosed Guidelines for additional guidance regarding which number to report.

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PAYOR'S NAME: U.S. Bank NAtional Association

SUBSTITUTE FORM W-9 Department of the Treasury Internal Revenue Service	Part 1—PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW	Social Security Number OR  Employer Identification Number
Payer's Request for Taxpayer Identification Number (TIN) and Certification	Part 2—Certification Under Penalties of Perjury, I certify that: (1)  The number shown on this form is my current taxpayer identification number (or I am waiting for a number to be issued to me) and (2)  I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding.	Part 3— Awaiting TIN    / /
	Certification instructions—You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding you receive another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2).
	Signature   Date
	Name
	Address
	City   State   Zip Code

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9

PAYOR'S NAME: U.S. BANK NATIONAL ASSOCIATION
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 30% of all reportable payments made to me thereafter will be withheld until I provide such a number.
Signature	Date

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

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INSTRUCTIONS Forming Part of the Terms and Conditions of the Exchange Offer
IMPORTANT INFORMATION
PAYOR'S NAME: U.S. Bank NAtional Association

EX-99.2

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Notice of Guaranteed Delivery
With Respect to Tender of
Any and All Outstanding 8³/4% Senior Secured Notes due 2012
In Exchange For
8³/4% Senior Secured Notes due 2012
of
OWENS-BROCKWAY GLASS CONTAINER INC.

Pursuant to the Prospectus dated February     , 2003

        THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH     , 2003, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.

The Exchange Agent is:
U.S. BANK NATIONAL ASSOCIATION

By Registered or Certified Mail:	By Hand Delivery:
U.S. Bank National Association 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Corporate Trust Administration Telephone: (651) 244-8677 Facsimile: (651) 244-0711	U.S. Bank National Association 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Corporate Trust Administration Telephone: (651) 244-8677 Facsimile: (651) 244-0711
By Overnight Delivery:	By Facsimile:
U.S. Bank National Association 180 East Fifth Street St. Paul, Minnesota 55101 Attention: Corporate Trust Administration Telephone: (651) 244-8677 Facsimile: (651) 244-0711	(651) 244-0711 Attn: Corporate Trust Administration Confirm by Telephone: (651) 244-8677

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

        As set forth in the prospectus (the "Prospectus") dated February     , 2003 of Owens-Brockway Glass Container Inc. (the "Company") and in the accompanying Letter of Transmittal and instructions thereto (the "Letter of Transmittal"), this form or one substantially equivalent thereto must be used to accept the Company's offer (the "Exchange Offer") to exchange new 8³/4% Senior Secured Notes due 2012 (the "Exchange Notes") that have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for all of its outstanding 8³/4% Senior Secured Notes due 2012 (the "Private Notes") if the Letter of Transmittal or any other documents required thereby cannot be delivered to the Exchange Agent, or Private Notes cannot be delivered or if the procedures for book-entry transfer cannot be completed prior to the Expiration Date. This form may be delivered by an Eligible Institution (as defined in the Prospectus) by mail or hand delivery or transmitted via facsimile to the Exchange Agent as set forth above. Capitalized terms used but not defined herein shall have the meaning given to them in the Prospectus.

        This form is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the Letter of Transmittal.

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

        The undersigned hereby tenders to the Company upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Private Notes specified below pursuant to the guaranteed delivery procedures set forth in the section of the Prospectus entitled "The Exchange Offer—Guaranteed Delivery Procedures." By so tendering, the undersigned does hereby make, at and as of the date hereof, the representations and warranties of a tendering Holder of Private Notes set forth in the Letter of Transmittal.

        The undersigned understands that tenders of Private Notes may be withdrawn if the Exchange Agent receives at one of its addresses specified on the cover of this Notice of Guaranteed Delivery, prior to the Expiration Date, a facsimile transmission or letter which specifies the name of the person who deposited the Private Notes to be withdrawn and the aggregate principal amount of Private Notes delivered for exchange, including the certificate number(s) (if any) of the Private Notes, and which is signed in the same manner as the original signature on the Letter of Transmittal by which the Private Notes were tendered, including any signature guarantees, all in accordance with the procedures set forth in the Prospectus.

        All authority herein conferred or agreed to be conferred shall survive the death, incapacity, or dissolution of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

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        The undersigned hereby tenders the Private Notes listed below:

PLEASE SIGN AND COMPLETE

Certificate Numbers of Private Notes
(if Available)
Principal Amount of Private Notes Tendered

Signature(s) of registered holder(s) or Authorized Signatory

Name(s) 

(Please Type or Print)

Title 

Address 

Area Code and Telephone No. 

Date 

If Private Notes will be tendered by book-entry transfer, check the trust company below:

o The Depository Trust Company

Depository Account No.: 

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GUARANTEE

        (Not To Be Used For Signature Guarantee)

        The undersigned, a participant in a recognized Signature Guarantee Medallion Program, guarantees deposit with the Exchange Agent of the Letter of Transmittal (or facsimile thereof), together with the Private Notes tendered hereby in proper form for transfer, or confirmation of the book-entry transfer of such Private Notes into the Exchange Agent's account at The Depository Trust Company, pursuant to the procedure for book-entry transfer set forth in the Prospectus, and any other required documents, all by 5:00 p.m., New York City time, on the third New York Stock Exchange trading day following the Expiration Date (as defined in the Prospectus).

SIGN HERE

Name of Firm: 

Authorized Signature: 

Name (please type or print): 

Address: 

Area Code and Telephone No.: 

Date: 

DO NOT SEND CERTIFICATES FOR PRIVATE NOTES WITH THIS FORM. ACTUAL SURRENDER OF CERTIFICATES FOR PRIVATE NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A COPY OF THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.

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INSTRUCTIONS

1.    Delivery of this Notice of Guaranteed Delivery.    A properly completed and duly executed copy of this Notice of Guaranteed Delivery and any other documents required by this Notice of Guaranteed Delivery must be received by the Exchange Agent at one of its addresses set forth on the cover hereof prior to the Expiration Date. The method of delivery of this Notice of Guaranteed Delivery and all other required documents to the Exchange Agent is at the election and risk of the Holder but, except as otherwise provided below, the delivery will be deemed made only when actually received by the Exchange Agent. Instead of delivery by mail, it is recommended that Holders use an overnight or hand delivery service, properly insured. If such delivery is by mail, it is recommended that the Holder use properly insured, registered mail with return receipt requested. For a full description of the guaranteed delivery procedures, see the Prospectus under the caption "The Exchange Offer—Guaranteed Delivery Procedures." In all cases, sufficient time should be allowed to assure timely delivery. No Notice of Guaranteed Delivery should be sent to the Company.

2.    Signature on this Notice of Guaranteed Delivery; Guarantee of Signatures.    If this Notice of Guaranteed Delivery is signed by the Holder(s) referred to herein, then the signature must correspond with the name(s) as written on the face of the Private Notes without alteration, enlargement or any change whatsoever. If this Notice of Guaranteed Delivery is signed by a person other than the Holder(s) listed, this Notice of Guaranteed Delivery must be accompanied by a properly completed bond power signed as the name of the Holder(s) appear(s) on the face of the Private Notes without alteration, enlargement or any change whatsoever. If this Notice of Guaranteed Delivery is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Notice of Guaranteed Delivery.

3.    Requests for Assistance or Additional Copies.    Questions relating to the Exchange Offer or the procedure for consenting and tendering as well as requests for assistance or for additional copies of the Prospectus, the Letter of Transmittal and this Notice of Guaranteed Delivery, may be directed to the Exchange Agent at the address set forth on the cover hereof or to your broker, dealer, commercial bank or trust company.

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PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
PLEASE SIGN AND COMPLETE
INSTRUCTIONS

EX-99.3

Letter to DTC Participants Regarding the Offer to Exchange
Any and All Outstanding 8³/4% Senior Secured Notes due 2012
for
8³/4% Senior Secured Notes due 2012
of
OWENS-BROCKWAY GLASS CONTAINER INC.

Pursuant to the Prospectus dated February     , 2003

        THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH     , 2003, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.

        February     , 2003

To Securities Dealers, Commercial Banks
    Trust Companies and Other Nominees:

        Enclosed for your consideration is a Prospectus dated February     , 2003 (the "Prospectus") and a Letter of Transmittal (the "Letter of Transmittal") that together constitute the offer (the "Exchange Offer") by Owens-Brockway Glass Container Inc., a Delaware corporation (the "Company"), to exchange up to $625,000,000 in principal amount of its 8³/4% Senior Secured Notes due 2012 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for any and all outstanding 8³/4% Senior Secured Notes due 2012, issued and sold in a transaction exempt from registration under the Securities Act (the "Private Notes"), upon the terms and conditions set forth in the Prospectus. The Prospectus and Letter of Transmittal more fully describe the Exchange Offer. Capitalized terms used but not defined herein have the meanings given to them in the Prospectus.

        We are asking you to contact your clients for whom you hold Private Notes registered in your name or in the name of your nominee. In addition, we ask you to contact your clients who, to your knowledge, hold Private Notes registered in their own name.

        Enclosed are copies of the following documents:

1.

The Prospectus;



2.

The Letter of Transmittal for your use in connection with the tender of Private Notes and for the information of your clients;



3.

The Notice of Guaranteed Delivery to be used to accept the Exchange Offer if the Private Notes and all other required documents cannot be delivered to the Exchange Agent prior to the Expiration Date;



4.

A form of letter that may be sent to your clients for whose accounts you hold Private Notes registered in your name or the name of your nominee, with space provided for obtaining the clients' instructions with regard to the Exchange Offer; and



5.

Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.

        DTC participants will be able to execute tenders through the DTC Automated Tender Offer Program.

Please note that the Exchange Offer will expire at 5:00 p.m., New York City time, on March     , 2003, unless extended by the Company. We urge you to contact your clients as promptly as possible.

        You will be reimbursed by the Company for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients.

        Additional copies of the enclosed material may be obtained from the Exchange Agent, at the address and telephone numbers set forth below.

Very truly yours,

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration
(651) 244-8677

Nothing herein or in the enclosed documents shall constitute you or any person as an agent of the Company or the Exchange Agent, or authorize you or any other person to make any statements on behalf of either of them with respect to the Exchange Offer, except for statements expressly made in the Prospectus and the Letter of Transmittal.

2

EX-99.4

Letter to Beneficial Holders Regarding the Offer to Exchange

Any and All Outstanding 8³/4% Senior Secured Notes due 2012
for
8³/4% Senior Secured Notes due 2012
of
OWENS-BROCKWAY GLASS CONTAINER INC.

Pursuant to the Prospectus dated February     , 2003

        THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH     , 2003, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.

February     , 2003

To Our Clients:

        Enclosed for your consideration is a Prospectus dated February     , 2003 (the "Prospectus") and a Letter of Transmittal (the "Letter of Transmittal") that together constitute the offer (the "Exchange Offer") by Owens-Brockway Glass Container Inc., a Delaware corporation (the "Company"), to exchange up to $625,000,000 in principal amount of its 8³/4% Senior Secured Notes due 2012 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for any and all outstanding 8³/4% Senior Secured Notes due 2012, issued and sold in a transaction exempt from registration under the Securities Act (the "Private Notes"), upon the terms and conditions set forth in the Prospectus. The Prospectus and Letter of Transmittal more fully describe the Exchange Offer. Capitalized terms used but not defined herein have the meanings given to them in the Prospectus.

        These materials are being forwarded to you as the beneficial owner of Private Notes carried by us for your account or benefit but not registered in your name. A tender of any Private Notes may be made only by us as the registered holder and pursuant to your instructions. Therefore, the Company urges beneficial owners of Private Notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee to contact such registered holder promptly if they wish to tender Private Notes in the Exchange Offer.

        Accordingly, we request instructions as to whether you wish us to tender any or all of your Private Notes, pursuant to the terms and conditions set forth in the Prospectus and Letter of Transmittal. We urge you to read carefully the Prospectus and Letter of Transmittal before instructing us to tender your Private Notes.

        Your instructions to us should be forwarded as promptly as possible in order to permit us to tender Private Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New York City time, on March     , 2003. Private Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to the procedures described in the Prospectus, at any time prior to the Expiration Date.

        If you wish to have us tender any or all of your Private Notes held by us for your account or benefit, please so instruct us by completing, executing and returning to us the instruction form that appears below. The accompanying Letter of Transmittal is furnished to you for informational purposes only and may not be used by you to tender Private Notes held by us and registered in our name for your account or benefit.

INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF 8³/4% SENIOR SECURED NOTES DUE 2012
OF OWENS-BROCKWAY GLASS CONTAINER INC.

        The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the Exchange Offer of the Company. Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus.

        This will instruct you to tender the principal amount of Private Notes indicated below held by you for the account or benefit of the undersigned, pursuant to the terms of and conditions set forth in the Prospectus and the Letter of Transmittal.

        The aggregate face amount of the Private Notes held by you for the account of the undersigned is (fill in amount):

        $                        of the Private Notes.

        With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box):

        o To TENDER the following Private Notes held by you for the account of the undersigned (insert principal amount of Private Notes to be tendered, if any):

        $                        of the Private Notes.

        o NOT to TENDER any Private Notes held by you for the account of the undersigned.

        If the undersigned instructs you to tender the Private Notes held by you for the account of the undersigned, it is understood that you are authorized (a) to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner of the Private Notes, including but not limited to the representations that (i) the undersigned's principal residence is in the state of (fill in state)                         , (ii) the undersigned is acquiring the Exchange Notes in the ordinary course of business of the undersigned, (iii) the undersigned has no arrangement or understanding with any person to participate in the distribution of Exchange Notes, (iv) the undersigned acknowledges that any person who is a broker-dealer registered under the Exchange Act or is participating in the Exchange Offer for the purpose of distributing the Exchange Notes must comply with the registration and prospectus delivery requirements of Section 10 of the Securities Act in connection with a secondary resale transaction of the Exchange Notes acquired by such person and cannot rely on the position of the Staff of the Securities and Exchange Commission set forth in certain no action letters (See the section of the Prospectus entitled "The Exchange Offer—Resale of the Exchange Notes"), (v) the undersigned understands that a secondary resale transaction described in clause (iv) above and any resales of Exchange Notes obtained by the undersigned in exchange for the Private Notes acquired by the undersigned directly from the Company should be covered by an effective registration statement containing the selling securityholder information required by Item 507 or Item 508, if applicable, of Regulation S-K of the Commission, (vi) the undersigned is not an "affiliate," as defined in Rule 405 under the Securities Act, of the Company, and (vii) if the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Private Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of Section 10 of the Securities Act in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering such prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act; (b) to agree, on behalf of the undersigned, as set forth in the Letter of Transmittal; and (c) to take such other action as necessary under the Prospectus or the Letter of Transmittal to effect the valid tender of Private Notes.

2

        The purchaser status of the undersigned is (check the box that applies):

o

A "Qualified Institutional Buyer" (as defined in Rule 144A under the Securities Act)



o

An "Institutional Accredited Investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act)



o

A non "U.S. person" (as defined in Regulation S under the Securities Act) that purchased the Private Notes outside the United States in accordance with Rule 904 under the Securities Act



o

Other (describe)

SIGN HERE

Name of Beneficial Owner(s): 

Signature(s): 

Name(s) (please print): 

Address: 

Principal place of business (if different from address listed above): 

Telephone Number(s): 

Taxpayer Identification or Social Security Number(s): 

Date: 

3

EX-99.5

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payer—Social Security Numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.

For this type of account:		Give the SOCIAL SECURITY number of —	For this type of account:		Give the EMPLOYER IDENTIFICATION number of —
1.	An individual's account	The individual	8.	Sole proprietorship account	The owner(4)
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, any one of the individuals(1)	9.	A valid trust, estate or pension trust	The legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title)(5)
3.	Husband and wife (joint account)	The actual owner of the account or, if joint funds, either person(1)	10.	Corporate account	The corporation
4.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)	11.	Religious, charitable, or educational organization account	The organization
5.	Adult and minor (joint account)	The adult or, if the minor is the only contributor, the minor(1)	12.	Partnership account held in the name of the business	The partnership
6.	Account in the name of guardian or committee for a designated ward, minor, or incompetent person	The ward, minor, or incompetent person(3)	13.	Association, club, or other tax-exempt organization	The organization
7.	a. The usual revocable saving trust account (grantor is also trustee)	The grantor-trustee(1)	14.	A broker or registered nominee	The broker or nominee
	b. So-called trust account that is not a legal or valid trust under State law	The actual owner(1)	15.	Account with the Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments	The public entity

(1)

List first and circle the name of the person whose number you furnish.

(2)

Circle the minor's name and furnish the minor's social security number.

(3)

Circle the ward's, minor's or incompetent person's name and furnish such person's social security number.

(4)

You must show your individual name, but you may also enter your business or "doing business" name. You may use either your Social Security Number or Employer Identification Number.

(5)

List first and circle the name of the legal trust, estate, or pension trust.

Note:

If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Page 2

Obtaining a Number

        If you do not have a taxpayer identification number or if you do not know your number, obtain Form SS-5, Application for Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service (the "IRS") and apply for a number.

Payees specifically exempted from backup withholding on ALL payments by brokers include the following:

•

A corporation.



•

A financial institution.



•

An organization exempt from a tax under Section 501(a), or an individual retirement plan or a custodial account under Section 403(b)(7) if the account satisfies the requirements of Section 401(F)(2).



•

The United States or any agency or instrumentality thereof.



•

A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof.



•

A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof.



•

An international organization or any agency or instrumentality thereof.



•

A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S.



•

A real estate investment trust.



•

A common trust fund operated by a bank under Section 584(a).



•

An entity registered at all times under the Investment Company Act of 1940.



•

A foreign central bank of issue.



•

A futures commission merchant registered with the Commodity Futures Trading Commission.



•

A person registered under the Investment Advisors Act of 1940 who regularly acts as a broker.

Payments of dividends and patronage dividends not generally subject to backup withholding include the following:

•

Payments to nonresident aliens subject to withholding under Section 1441.



•

Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner.



•

Payments of patronage dividends where the amount received is not paid in money.



•

Payments made by certain foreign organizations.



•

Payments made to a nominee.

Payments of interest not generally subject to backup withholding include the following:

•

Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer.



•

Payments of tax-exempt interest (including exempt-interest dividends under Section 852).



•

Payments described in Section 6049(b)(5) to nonresident aliens.



•

Payments on tax-free covenant bonds under Section 1451.



•

Payments made by certain foreign corporations.



•

Payments made to a nominee.

Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, CHECK "EXEMPT" IN PART II OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.

Certain payments other than interest, dividends, and patronage dividends, which are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Section 6041, 6041(A)(a), 6045, and 6050A.

Privacy Act Notice.—Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1993, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.

Penalties

(1)  Penalty for Failure to Furnish Taxpayer Identification Number.—If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2)  Failure to Report Certain Dividend and Interest Payments.—If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary.

(3)  Civil Penalty for False Information With Respect to Withholding.—If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(4)  Criminal Penalty for Falsifying Information.—Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

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