(d) The benefits allowable under the law of the jurisdiction under which theCompany exists at the time Expenses are incurred by the Indemnitee;  (e) The benefits available under liability insurance obtained by the Company;  (f) The benefits which would have been available to the Indemnitee under theDirectors and Officers Liability Insurance and Reimbursement for Directors and OfficersLiability Policy issued by Harbor Insurance Company on April 8, 1985 which expired onMarch 30, 1986 and which is designated as policy number HI 211839 had such policycontinued in effect and unamended at the time Expenses are incurred by the Indemnitee;and  (g) Such other benefits as are or may be otherwise available to Indemnitee.Combination of two or more of the benefits provided by (a) through (g) shall be available tothe extent that the Applicable Document, as hereafter defined, does not require that thebenefits provided therein be exclusive of other benefits. The document or law providing forthe benefits listed in items (a) through (g) above is called the “Applicable Document” inthis Agreement. The Company hereby undertakes to use its best efforts to assist Indemnitee,in all proper and legal ways, to obtain the benefits selected by Indemnitee under items (a)through (g) above.For purposes of this Agreement, references to “other enterprises” shall include employeebenefit plans for employees of the Company or of any affiliated entity without regard toownership of such plans; references to “fines” shall include any excise taxes assessed onthe Indemnitee with respect to any employee benefit plan; references to “serving on behalfof the Company” shall include any service as a director, officer, employee or agent of theCompany which imposes duties on, or involves services by, the Indemnitee with respect to anemployee benefit plan, its participants or beneficiaries; references to the masculine shallinclude the feminine; references to the singular shall include the plural and viceversa; and if the Indemnitee acted in good faith and in a manner he reasonablybelieved to be in the interest of the participants and beneficiaries of an employee benefitplan he shall be deemed to have acted in a manner consistent with the standards required forindemnification by the Company under the Applicable Documents.2. INSURANCEThe Company shall maintain directors’ and officers’ liability insurance for so long asIndemnitee’s services are covered hereunder, provided and only to the extent that suchinsurance is available in amounts and on terms and conditions determined by the Company tobe acceptable. However, the Company agrees that the provisions hereof shall remain ineffect regardless of whether liability or other insurance coverage is at any time obtainedor retained by the Company; except that any payments in fact made to Indemnitee under aninsurance policy obtained or retained by the Company shall reduce the obligation of theCompany to make payments hereunder by the amount of the payments made under any suchinsurance policy.3. PAYMENT OF EXPENSESAt Indemnitee’s request, the Company shall pay the Expenses as and when incurred byIndemnitee, after receipt of written notice pursuant to Section 6 hereof and an undertakingin the form of Exhibit I attached hereto by or on behalf of Indemnitee (i) to repay suchamounts so paid on Indemnitee’s behalf if it shall ultimately be determined under theApplicable Document that Indemnitee is required to repay such amounts and (ii) to reasonablycooperate with the Company concerning such Proceeding. That portion of Expenses which
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represents attorneys’ fees and other costs incurred in defending any Proceeding shall bepaid by the Company within thirty (30) days of its receipt of such request, together withreasonable documentation (consistent, in the case of attorneys’ fees, with Company practicein payment of legal fees for outside counsel generally) evidencing the amount and nature ofsuch Expenses, subject to its also having received such a notice and undertaking.4. ESCROWThe Company shall dedicate an aggregate of TWO AND ONE-HALF MILLION DOLLARS ($2,500,000) ascollateral security for the funding of its obligations hereunder and under similar andpredecessor agreements with other directors, officers and representatives by depositingassets or bank letters of credit in escrow or reserving lines of credit that may be drawndown by an escrow agent in the dedicated amount (the “Escrow Reserve”). Attached hereto asExhibit II is the form of escrow agreement relating to the establishment and operation ofthe Escrow Reserve. The Company shall have the rights of substitution with respect to thefunding in escrow of its obligations hereunder, as provided in such Exhibit II. The Companyshall, upon request, promptly provide to Indemnitee such additional documentation orinformation with respect to the escrow as Indemnitee may from time to time reasonablyrequest. The Company shall promptly deliver an executed copy of this Agreement to theescrow agent for the Escrow Reserve to evidence to that agent that Indemnitee is abeneficiary of that Escrow Reserve and shall deliver to Indemnitee the escrow agent’s signedreceipt evidencing that delivery.5. ADDITIONAL RIGHTSThe indemnification provided in this Agreement shall not be exclusive of any otherindemnification or right to which Indemnitee may be entitled and shall continue afterIndemnitee has ceased to occupy a position as an officer, director or representative asdescribed in Paragraph 1 above with respect to Proceedings relating to or arising out ofIndemnitee’s acts or omissions during his/her service in such position.6. NOTICE TO COMPANYIndemnitee shall provide to the Company prompt written notice of any Proceeding brought,threatened, asserted or commenced against Indemnitee with respect to which Indemnitee mayassert a right to indemnification hereunder; provided that failure to provide such noticeshall not in any way limit Indemnitee’s rights under this Agreement.7. COOPERATION IN DEFENSE AND SETTLEMENTIndemnitee shall not make any admission or effect any settlement of any Proceeding withoutthe Company’s written consent unless Indemnitee shall have determined to undertake his/herown defense in such matter and has waived the benefits of this Agreement. The Company shallnot settle any Proceeding to which Indemnitee is a party in any manner which would imposeany Expense on Indemnitee without his/her written consent. Neither Indemnitee nor theCompany will unreasonably withhold consent to any proposed settlement. Indemnitee and theCompany shall cooperate to the extent reasonably possible with each other and with theCompany’s insurers, in attempts to defend and/or settle such Proceeding.8. ASSUMPTION OF DEFENSEExcept as otherwise provided below, to the extent that it may wish, the Company jointly withany other indemnifying party similarly notified will be entitled to assume Indemnitee’sdefense in any Proceeding, with
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counsel mutually satisfactory to Indemnitee and the Company. After notice from the Companyto Indemnitee of the Company’s election so to assume such defense, the Company will not beliable to Indemnitee under this Agreement for Expenses subsequently incurred by Indemniteein connection with the defense thereof other than reasonable costs of investigation or asotherwise provided below. Indemnitee shall have the right to employ counsel in suchProceeding, but the fees and expenses of such counsel incurred after notice from the Companyof its assumption of the defense thereof shall be at Indemnitee’s expense unless: (a) The employment of counsel by Indemnitee has been authorized by the Company;  (b) Counsel employed by the Company initially is unacceptable or later becomesunacceptable to Indemnitee and such unacceptability is reasonable under then existingcircumstances;  (c) Indemnitee shall have reasonably concluded that there may be a conflict ofinterest between Indemnitee and the Company in the conduct of the defense of suchProceeding; or  (d) The Company shall not have employed counsel promptly to assume the defense ofsuch Proceeding,in each of which cases the fees and expenses of counsel shall be at the expense of theCompany and subject to payment pursuant to this Agreement. The Company shall not beentitled to assume the defense of Indemnitee in any Proceeding brought by or on behalf ofthe Company or as to which Indemnitee shall have made either of the conclusions provided forin clauses (b) or (c) above.9. ENFORCEMENTIn the event that any dispute or controversy shall arise under this Agreement betweenIndemnitee and the Company with respect to whether the Indemnitee is entitled toindemnification in connection with any Proceeding or with respect to the amount of Expensesincurred, then with respect to each such dispute or controversy Indemnitee may seek toenforce the Agreement through legal action or, at Indemnitee’s sole option and writtenrequest, through arbitration. If arbitration is requested, such dispute or controversyshall be submitted by the parties to binding arbitration in the City of Cleveland, State ofOhio, before a single arbitrator agreeable to both parties. If the parties cannot agree ona designated arbitrator within 15 days after arbitration is requested in writing byIndemnitee, the arbitration shall proceed in the City of Cleveland, State of Ohio, before anarbitrator appointed by the American Arbitration Association. In either case, thearbitration proceeding shall commence promptly under the rules then in effect of thatAssociation and the arbitrator agreed to by the parties or appointed by that Associationshall be an attorney other than an attorney who has, or is associated with a firm havingassociated with it an attorney which has, been retained by or performed services for theCompany or Indemnitee at any time during the five years preceding the commencement ofarbitration. The award shall be rendered in such form that judgment may be entered thereonin any court having jurisdiction thereof. The prevailing party shall be entitled to promptreimbursement of any costs and expenses (including, without limitation, reasonableattorneys’ fees) incurred in connection with such legal action or arbitration; provided thatIndemnitee shall not be obligated to reimburse the Company unless the arbitrator or courtwhich resolves the dispute determines that Indemnitee acted in bad faith in bringing suchaction or arbitration.10. EXCLUSIONSNotwithstanding the scope of indemnification which may be available to Indemnitee from timeto time under any Applicable Document, no indemnification, reimbursement or payment shall berequired of the Company hereunder with respect to:
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 (a) Any claim or any part thereof as to which Indemnitee shall have been determinedby a court of competent jurisdiction from which no appeal is or can be taken, by clearand convincing evidence, to have acted or failed to act with deliberate intent to causeinjury to the Company or with reckless disregard for the best interests of the Company;  (b) Any claim or any part thereof arising under Section 16(b) of the SecuritiesExchange Act of 1934 pursuant to which Indemnitee shall be obligated to pay anypenalty, fine, settlement or judgment;  (c) Any obligation of Indemnitee based upon or attributable to the Indemniteegaining in fact any personal gain, profit or advantage to which he was not entitled; or  (d) Any Proceeding initiated by Indemnitee without the consent or authorization ofthe Board of Directors of the Company, provided that this exclusion shall not applywith respect to any claims brought by Indemnitee (i) to enforce his/her rights underthis Agreement or (ii) in any Proceeding initiated by another person or entity whetheror not such claims were brought by Indemnitee against a person or entity who wasotherwise a party to such Proceeding.Nothing in this Section 10 shall eliminate or diminish Company’s obligations to advance thatportion of Indemnitee’s Expenses which represent attorneys’ fees and other costs incurred indefending any Proceeding pursuant to Section 3 of this Agreement.11. EXTRAORDINARY TRANSACTIONSThe Company covenants and agrees that, in the event of any merger, consolidation orreorganization in which the Company is not the surviving entity, any sale of all orsubstantially all of the assets of the Company or any liquidation of the Company (each suchevent is hereinafter referred to as an “extraordinary transaction”), the Company shall: (a) Have the obligations of the Company under this Agreement expressly assumed bythe survivor, purchaser or successor, as the case may be, in such extraordinarytransaction; or  (b) Otherwise adequately provide for the satisfaction of the Company’s obligationsunder this Agreement, in a manner acceptable to Indemnitee.12. NO PERSONAL LIABILITYIndemnitee agrees that neither the directors nor any officer, employee, representative oragent of the Company shall be personally liable for the satisfaction of the Company’sobligations under this Agreement, and Indemnitee shall look solely to the assets of theCompany, proceeds of insurance and the escrow referred to in Section 4 hereof forsatisfaction of any claims hereunder.13. SEVERABILITYIf any provision, phrase, or other portion of this Agreement should be determined by anycourt of competent jurisdiction to be invalid, illegal or unenforceable, in whole or inpart, and such determination should become final, such provision, phrase or other portionshall be deemed to be severed or limited, but only to the extent required to render theremaining provisions and portions of the Agreement enforceable, and the Agreement as thusamended shall be enforced to give effect to the intention of the parties insofar as that ispossible.
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14. SUBROGATIONIn the event of any payment under this Agreement, the Company shall be subrogated to theextent thereof to all rights to indemnification or reimbursement against any insurer orother entity or person vested in the Indemnitee, who shall execute all instruments and takeall other actions as shall be reasonably necessary for the Company to enforce such rights.15. GOVERNING LAWThe parties hereto agree that this Agreement shall be construed and enforced in accordancewith and governed by the laws of the State of Ohio.16. NOTICESAll notices, requests, demands and other communications hereunder shall be in writing andshall be considered to have been duly given if delivered by hand and receipted for by theparty to whom the notice, request, demand or other communication shall have been directed,or mailed by certified mail, return receipt requested, with postage prepaid:(a) If to the Company, to: FERRO CORPORATION1000 Lakeside Avenue