EX-10.1



 








EXHIBIT
10.1




FERRO CORPORATION




EMPLOYEE STOCK OPTION PLAN





     1. Purpose of Plan. The purpose of this Plan is to advance the interests of Ferro Corporation
(hereinafter called the “Corporation”) and its shareholders by providing a means whereby officers,
non-employee directors and key employees of the Corporation and its subsidiaries may be given an
opportunity to purchase Common Stock, $1.00 par value (hereinafter called “shares”) of the
Corporation under options and stock appreciation rights granted under the Plan, to the end that the
Corporation may retain present personnel upon whose judgment, initiative and efforts the successful
conduct of the business of the Corporation largely depends, and may attract new personnel. Some of
the options granted under this Plan may be options which are intended to qualify as “incentive
stock options” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or
any successor provision and are hereinafter sometimes called “incentive stock options.”



     2. Shares Subject to the Plan. The aggregate number of shares of the Corporation for which
options may be granted under this Plan shall be that number of shares remaining available for grant
under the Plan on the close of business on the date immediately prior to the 2000 Annual Meeting of
Shareholders plus 1,500,000; provided, however, that whatever number of said shares shall remain
reserved for issuance pursuant to this Plan at the time of any stock split, stock dividend or other
change in the Corporation’s capitalization shall be appropriately adjusted to reflect such stock
dividend, stock split or other change in capitalization. Shares issued pursuant to the exercise of
options granted hereunder shall be made available from authorized but unissued shares of the
Corporation or shares held by the Corporation as treasury shares. Any shares for which an option is
granted hereunder that are released from such option for any reason other than the exercise of
stock appreciation rights granted hereunder shall become available for other options to be granted
under this Plan.



     3. Administration of the Plan. Except to the extent the Board of Directors reserves to itself
the authority with respect thereto, this Plan shall be administered under the supervision of a
committee (hereinafter called the “Committee”) composed of not less than three directors of the
Corporation appointed by the Board of Directors. The members of the Committee shall not, pursuant
to the exercise of discretion, be eligible, and shall not have been so eligible for a period of at
least one year prior to their appointment, to participate in this Plan or to have been selected to
participate in any other plan of the Corporation or any affiliate (as defined under the Securities
Exchange Act of 1934) of the Corporation entitling the participants herein to acquire stock, stock
options or stock appreciation rights of the Corporation or any affiliate of the Corporation.
Members of the Committee shall serve at the pleasure of the Board of Directors, and may resign by
written notice filed with the Chairman of the Board or the Secretary of the Corporation. A vacancy
in the membership of the Committee shall be filled by the appointment of a successor member by the
Board of Directors. Until such vacancy is filled, the remaining members shall constitute a quorum
and the action at any meeting of a majority of the entire Committee, or an action unanimously
approved in writing, shall constitute action of the Committee. Subject to the express provisions of
this Plan, the Committee shall have conclusive authority to construe and interpret the Plan, any
stock option agreement entered into hereunder, and any stock appreciation right granted hereunder,
to adopt and amend forms of Option Agreements and Grants of Stock Appreciation Rights and to
establish, amend, and rescind rules and regulations for the administration of this Plan and shall
have such additional authority as the Board of Directors may from time to time determine to be
necessary or desirable.



     In addition, with respect to Key Employees who are foreign nationals or employed outside the
United States, or both, there may be adopted in the manner provided herein such rules and
regulations, policies, subplans or the like as are necessary or advisable in order to effectuate
the purposes of the Plan.



     4. Granting of Options. The Committee from time to time shall designate from among the
full-time employees of the Corporation and its subsidiaries and any corporation at least 20% of the
voting securities
of which is owned by the Corporation or a subsidiary of the Corporation to whom options to
purchase



 









 





shares shall be granted under this Plan, the type of option to be granted and the number
of shares which shall be subject to each option so granted; provided however, that incentive stock
options may only be granted to full-time employees of the Corporation and its subsidiaries, as such
term is defined in this Plan. Except to the extent the Board of Directors reserves to itself the
authority with respect thereto, all actions of the Committee under this Paragraph shall be
conclusive; provided, however, that the aggregate fair market value (determined as of the date the
option is granted) of shares for which incentive stock options are exercisable for the first time
by any individual during any calendar year (under this Plan or any other plan of the Corporation
which provides for the granting of incentive stock options) may not exceed $100,000. Any incentive
stock option that is granted to any employee who is, at the time the option is granted, deemed for
purposes of Section 422 of the Code, or any successor provision, to own shares of the Corporation
possessing more than ten percent (10%) of the total combined voting power of all classes of shares
of the Corporation or of a parent or subsidiary of the Corporation, shall have an option price that
is at least 110 percent (110%) of the fair market value of the shares and shall not be exercisable
after the expiration of 5 years from the date it is granted. The maximum number of options granted
to any single executive during any period of eleven consecutive months shall not exceed options for
100,000 shares, subject to adjustment in accordance with Section 2 of the Plan.



     5. Granting of Stock Appreciation Rights. Except to the extent the Board of Directors reserves
to itself the authority with respect thereto, the Committee shall have the discretion to grant to
optionees stock appreciation rights in connection with options to purchase shares on such terms and
conditions as it deems appropriate. A stock appreciation right will allow an optionee to surrender
an option or portion thereof and to receive payment from the Corporation in an amount equal to the
excess of the aggregate fair market value of the shares with respect to which options are
surrendered over the aggregate option price of such shares. A stock appreciation right shall be
exercisable no sooner than six months after it is granted and thereafter at any time prior to its
stated expiration date, but only to the extent the related stock option right may be exercised.
Payment shall be made in shares, cash or a combination of shares and cash, as provided in the Grant
of Stock Appreciation Rights. Shares as to which any option is so surrendered shall not be
available for future option grants hereunder. The Committee may grant stock appreciation rights
concurrently with the grant of an option or, in the case of an option which is not an incentive
stock option, with respect to an outstanding option.



     6. Option Period. No option granted under this Plan may be exercised later than ten years from
the date of grant.



     7. Option Price. The option price shall be set forth in the Option Agreement, which price in
no case shall be less than the per share fair market value of the outstanding shares of the
Corporation on the date that the option is granted. The option price may be fixed in terms of a
formula and one or more officers of the Corporation may be authorized to compute the price in
accordance with that formula. Payment of the option price may be made in cash, shares, or a
combination of cash and shares, as provided in the Option Agreement in effect from time to time.
The date on which the granting of an option is approved shall be deemed the date on which the
option is granted.



     8. Option Agreement. The Option Agreement pursuant to which option rights are granted to an
employee shall be in the applicable form (consistent with this Plan) from time to time approved in
the manner provided herein and shall be signed on behalf of the Corporation by the Chief Executive
Officer or any Vice President of the Corporation, other than the employee who is a party thereto.
The Option Agreement shall set forth the number of shares which are subject to the option to
purchase, the type of option granted, the option price to be paid upon exercise, the manner in
which the option is to be exercised and the option price is to be paid, and the option period, and
may include such other terms not inconsistent with this Plan as are from time to time approved in
the manner provided herein.



     9. Grant of Stock Appreciation Rights. The Grant of Stock Appreciation Rights pursuant to
which stock appreciation rights are granted shall be in the applicable form (consistent with this
Plan) from time to time approved in the manner provided herein and shall be signed on behalf of the
Corporation by the Chief Executive Officer or any Vice President of the Corporation, other than the
employee to whom the grant is
made. The Grant of Stock Appreciation Rights shall set forth the option or options to which
the grant



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relates, the manner in which the stock appreciation rights are exercisable, and may
include such other terms not inconsistent with this Plan as are from time to time approved in the
manner provided herein.



     10. Transferability. No option or stock appreciation right shall be transferable by the
optionee except by will or the laws of descent and distribution, and options and stock appreciation
rights may be exercised during the employee’s lifetime only by him or his guardian or legal
representative. Notwithstanding the foregoing, the Committee may, in its discretion, authorize the
transfer of all or a portion of options granted to an optionee (a) to the optionee’s spouse,
children, grandchildren, parents, siblings and to other family members approved by the Committee
(“Family Members”); (b) to trust(s) for the exclusive benefit of such Family Members; or (c) to
partnerships in which such Family Members are at all times the only partners. Any transfer to or
for the benefit of Family Members permitted hereunder may be made subject to such conditions or
limitations as the Committee may establish to ensure compliance under the federal securities laws,
or for other purposes. Options transferred to or for the benefit of Family Members may be exercised
by the transferee during or after the employee’s lifetime.



     11. Extraordinary Distributions and Pro-Rata Repurchases. In the event the Corporation shall
at any time when a stock option is outstanding make an Extraordinary Distribution (as hereinafter
defined) in respect of Common Stock or effect a Pro-Rata Repurchase of Common Stock (as hereinafter
defined), the Committee shall consider the economic impact of the Extraordinary Distribution or
Pro-Rata Repurchase on Participants and make such adjustments as it deems equitable under the
circumstances. The determination of the Committee shall, subject to revision by the Board of
Directors, be final and binding upon all Participants.



     As used herein, the term “Extraordinary Distribution” means any dividend or other distribution
of:



(a) cash, where the aggregate amount of such cash dividend or distribution
together with the amount of all cash dividends and distributions made during the
preceding twelve months, when combined with the aggregate amount of all Pro-Rata
Repurchases (for this purpose, including only that portion of the aggregate
purchase price of such Pro Rata Repurchases which is in excess of the Fair Market
Value of the Common Stock repurchased during such twelve month period), exceeds
ten percent (10%) of the aggregate Fair Market Value of all shares of Common Stock
outstanding on the record date for determining the shareholders entitled to
receive such Extraordinary Distribution, or



(b) any shares of capital stock of the Corporation (other than shares of
Common Stock), other securities of the Corporation, evidences of indebtedness of
the Corporation or any other person or any other property (including shares of any
subsidiary of the Corporation), or any combination thereof.



     As used herein “Pro Rata Repurchase” means any purchase of shares of Common Stock by the
Corporation or any subsidiary thereof, pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act or any successor provision of law, or pursuant to any other offer
available to substantially all holders of Common Stock; provided, however, that no purchase of
shares of the Corporation or a subsidiary thereof made in open market transactions shall be deemed
a Pro Rata Repurchase.



     12. Amendment and Termination of the Plan. The Corporation, by action of its Board of
Directors, reserves the right to amend, modify or terminate at any time this Plan, or, by action of
the Committee with the consent of the optionee, to amend, modify or terminate any outstanding
Option Agreement or Grant of Stock Appreciation Rights, except that the Corporation may not,
without further shareholder approval, increase the total number of shares as to which options may
be granted under this Plan (except increases attributable to the adjustments authorized in
Paragraph 2 hereof), change the employees or class of employees eligible to receive options, adjust
or amend the exercise price of options or stock appreciation rights previously granted to any
optionee, whether through amendment, cancellation, replacement grants or
any other means, or materially increase the benefits accruing to participants under this Plan.



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Notwithstanding the foregoing, the provisions of Section 17 shall not be amended more than once
every six months other than to comport with changes in the Code or the Employee Retirement Income
Security Act or the rules and regulations thereunder. Moreover, no action shall be taken by the
Corporation which will impair the validity of any option or stock appreciation right then
outstanding, or which will prevent the options issued and stock appreciation rights granted
pursuant to this Plan from meeting the requirements for exemption from Section 16(b) of the
Securities Exchange Act of 1934, or subsequent comparable statute, as set forth in Rule 16b-3 under
said Act or subsequent comparable rule, or which will prevent any incentive stock option issued or
to be issued under this Plan from being an “incentive stock option” under Section 422 of the Code,
or any successor provision.



     13. Subsidiary. The term “subsidiary” as used herein shall mean any corporation in an unbroken
chain of corporations beginning with the Corporation and ending with the employer corporation if,
at the time of the granting of the option, each of the corporations other than the employer
corporation owns stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.



     Settlement of stock options or stock appreciation rights exercised by employees of
subsidiaries shall be made by and at the expense of such subsidiary. Except as prohibited by law,
the Corporation shall sell and transfer to the subsidiary, and the subsidiary shall purchase, the
number of shares necessary to settle any stock option that is exercised.



     14. Noncompetition Provision. Unless the Option Agreement specifies otherwise, an optionee
shall forfeit all unexercised stock options and stock appreciation rights if, (i) in the opinion of
the Committee, such optionee, without the written consent of the Corporation, engages directly or
indirectly in any manner or capacity as principal, agent, partner, officer, director, employee, or
otherwise, in any business or activity competitive with the business conducted by the Corporation
or any subsidiary; or (ii) the optionee performs any act or engages in any activity which in the
opinion of the Committee is inimical to the best interests of the Corporation.



     15. Effective Date of Plan. The Amended and Restated Plan shall be effective upon approval by
the shareholders at the 1991 annual meeting.



     16. Expiration of Plan. Options may be granted under this Plan at any time prior to April 26,
2010, on which date the Plan shall expire but without affecting any options then outstanding.



     17. Directors’ Stock Options.



     (a) Grants. Stock options may be granted to non-employee Directors only in accordance with the
requirements of this Section 17. During each year of service on the Board of Directors, there shall
automatically be granted to each non-employee Director an option to purchase 2,500 shares of Common
Stock on such date as the Committee or the Board shall determine; provided, however that in the
case of a newly appointed or elected director such director shall be granted his or her initial
option on the date of appointment or election if such date is at least six months prior to the
annual grant date determined by the Committee or the Board. Notwithstanding the foregoing, no stock
options shall be granted to a director whose normal retirement under a plan or policy of the
Corporation would occur prior to six months from the date of granting such option.



     (b) Option Price. The option exercise price shall be the per share fair market value of the
outstanding shares of the Common Stock on the date such options are granted. The Committee shall be
authorized to determine such price per share. Payment of the option price may be made in cash or in
shares of Common Stock or any combination of cash and Common Stock.



     (c) Administration. Subject to the express provisions of this Section 17, the Committee shall
have conclusive authority to construe and interpret any stock option granted under this Section 17
and to adopt administrative policies with respect thereto; provided, however, that no action shall
be taken which would
prevent the options granted under this Section 17 from meeting the requirements for exemption
from



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Section 16(b) of the Exchange Act, or subsequent comparable statute, as set forth in Rule
16(b)-3 of the Exchange Act or any subsequent comparable rule.



     (d) Option Agreement. The options granted hereunder shall be evidenced by an option agreement,
dated as of the date of the grant, which agreement shall be in such form, consistent with the terms
and requirements of this Section 17, as shall be approved by the Committee from time to time and
executed on behalf of the Corporation by the Chief Executive Officer.



     (e) Option Period. Options granted under this Section 17 shall not be exercisable later than
10 years from the date of grant.



     (f) Transferability. No option shall be transferable by the non-employee Director except by
will or the laws of descent and distribution and, during the Director’s lifetime, options may be
exercised only by such director or his or her guardian or legal representative.



     (g) Limitations on Exercise. Directors’ stock options shall become exercisable to the extent
of 25% of the optioned shares after the first anniversary of the date of grant, 50% after the
second anniversary, 75% after the third anniversary and 100% after the fourth anniversary of the
date of grant. To the extent an option is not otherwise exercisable at the date of the Director’s
retirement under a retirement plan or policy of the Corporation, it shall become fully exercisable
upon such retirement; provided, however, that Director stock options shall not become exercisable
under this sentence prior to the expiration of six months from the date of grant. Options not
otherwise exercisable at the time of the death of a Director during continued service with the
Corporation shall become fully exercisable upon his death. Upon the death of a Director, such
options shall remain exercisable for a period of one year after the date of death. To the extent an
option is exercisable on the date a Director ceases to be a Director (other than by reason of death
or retirement as described above), the option shall continue to be exercisable (subject to the
original term of the option) for a period of ninety (90) days thereafter.



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