Document:

EX-10.16

EXHIBIT 10.16

2003 LONG-TERM INCENTIVE COMPENSATION PLAN

     1. Purpose. The purpose of this 2003 Long-Term Incentive Compensation Plan (this “Plan”) is to
promote the long-term financial interests and growth of Ferro Corporation (“Ferro”) and its
subsidiary and affiliated companies by:

     (a) Attracting and retaining high-quality executive personnel and Directors;

     (b) Further motivating such executive personnel and Directors to achieve Ferro’s long-range
performance goals and objectives and thus act in the best interests of Ferro and its shareholders
generally; and

     (c) Aligning the interests of Ferro’s executive personnel and Directors with those of
Ferro’s shareholders by encouraging increased ownership of Ferro Common Stock, par value $1.00
per share (“Common Stock”), by such executive personnel and Directors.

     2. Plan Administration. The Compensation & Organization Committee (the “Committee”) of the
Board of Directors (the “Board”) (or such other committee as the Board may from time to time
designate) will administer this Plan. Subject to any limitations established by the Board, in
administering this Plan the Committee will have conclusive authority:

     (a) To administer this Plan in accordance with its provisions in such a way as to give
effect to economic and competitive conditions, individual situations, and the evaluation of
individual performance and the economic potential and business plans of various units of Ferro;

     (b) To determine the terms and conditions, not inconsistent with the provisions of this
Plan, of any Award granted under this Plan and prescribe the form of any agreement or document
applicable to any such Award;

     (c) To construe and interpret the provisions of this Plan and all Awards granted under this
Plan; and

     (d) To establish, amend, and rescind rules and regulations for the administration of this
Plan.

The Committee will also have such additional authority as the Board may from time to time determine
to be necessary or desirable in order to further the purposes of this Plan.

     3. Awards to Executive Personnel. The Committee will select the executive personnel
(“Participants”) who will participate in this Plan and determine the type(s) and number of award(s)
(“Awards”) to be made to each such Participant. The Committee will determine the terms, conditions
and limitations applicable to each Award. The Committee may, if it so chooses, delegate to Ferro’s
Chief Executive Officer authority to select certain of the Participants (other than officers of
Ferro) and to determine Awards to be granted to such Participants on such terms as the Committee
may specify. Awards may be made singly, in combination, or in exchange for a previously granted
Award and also may be made in combination or in replacement of, or as alternatives to, grants or
rights under any other employee plan of the Company, including the plan of any acquired entity.

     4. Types of Awards to Executive Personnel. Under this Plan, the Committee will have the
authority to grant the following types of Awards to executive personnel of Ferro and its
subsidiaries and affiliates:

     (a) Stock Options. The Committee may grant Awards in the form of Stock Options. Such Stock
Options may be either incentive stock options (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”)) or nonstatutory stock options (not intended to
qualify under Section 422 of the Code). However, incentive stock options may be granted only to
employees of Ferro and subsidiary corporations that are at least 50% owned, directly or
indirectly, by Ferro. The option price of a Stock Option may be not less than the per share fair
market value of the Common Stock on the date of the grant, as determined by the Committee. Once a
Stock Option has been granted, the option price may not be adjusted or amended, whether directly
or indirectly, by amendment, cancellation, replacement grants or any other means. Such Stock
Options will be exercisable in whole or in such installments and at such times and upon such
terms as the Committee may specify. No stock option, however, may be exercisable more than ten
years after its date of grant. A Participant will be permitted to pay the exercise price of a
Stock Option in cash, with shares of

 

 

Common Stock (including by attestation of Common Stock owned) or by a combination of cash and
Common Stock. The aggregate fair market value (determined at the time the option is granted) of
 shares of Common Stock as to which incentive stock options are exercisable for the first time by
a Participant during any calendar year (under this Plan and any other plan of Ferro) may not
exceed $100,000 (or such other limit as may be fixed by the Code from time to time).

     (b) Stock Appreciation Rights. The Committee may grant Awards in the form of Stock
Appreciation Rights. Stock Appreciation Rights will entitle a Participant to receive a payment,
in cash or Common Stock, equal to the appreciation in market value of a stated number of shares
of Common Stock from the price stated in the Award Agreement to the fair market value on the date
of exercise or surrender, on such terms, conditions and restrictions as the Committee deems
appropriate. Once a stock appreciation right has been granted, the initial share value may not be
adjusted or amended, whether directly or indirectly, by amendment, cancellation, replacement
grants or any other means, so as to increase the value of such Stock Appreciation Right. Stock
Appreciation Rights may be granted either separately or in conjunction with other Awards granted
under this Plan. Any Stock Appreciation Right related to a Stock Option, however, will be
exercisable only to the extent the related Stock Option is exercisable. Similarly, upon exercise
of a Stock Appreciation Right as to some or all of the shares of Common Stock covered by a
related Stock Option, the related Stock Option will be canceled automatically to the extent of
the Stock Appreciation Right exercised, and such shares of Common Stock shall not be eligible for
subsequent grant. Any Stock Appreciation Right related to a nonstatutory stock option may be
granted at the same time such stock option is granted or at any subsequent time before exercise
or expiration of such stock option. Any Stock Appreciation Right related to an incentive stock
option must be granted at the same time such incentive stock option is granted.

     (c) Restricted Shares. The Committee may grant Awards in the form of Restricted Shares. Such
Awards may be in such numbers of shares of Common Stock and at such times as the Committee
determines. Such Awards will have such periods of vesting and forfeiture restrictions as the
Committee may determine at the time of grant, except that no restriction period applicable to
Restricted Shares may be less than 12 months.

     (d) Performance Shares. The Committee may grant Awards in the form of Performance Shares.
Performance Shares will be (i) represented by forfeitable shares of Common Stock issued at the
time of grant of a Performance Share Award or (ii) phantom Performance Shares. Such Performance
Shares will be earned upon satisfaction of Performance Targets relating to Performance Periods
established by the Committee at the time of a grant. At the end of the applicable Performance
Period, based upon the level of achievement of the Performance Targets, Performance Shares will
be converted into Common Stock, cash, or a combination of Common Stock and cash, or forfeited. If
Performance Shares initially were represented by forfeitable Common Stock, such Common Stock will
become nonforfeitable or be repurchased by Ferro at the end of the applicable Performance Period.
During the period any Performance Shares are subject to forfeiture restrictions, the Committee
may, in its discretion, grant to the Participant to whom phantom Performance Shares have been
awarded the right to receive dividend equivalents with respect to such Performance Shares.

     The Committee may establish Performance Targets in terms of any or all of the following:
sales; sales growth; gross margins; operating income; net earnings; earnings growth; cash flows;
market share; total shareholder returns; returns on equity, net assets, assets employed, or
capital employed; accomplishment of acquisitions, divestitures, or joint ventures (or the success
of an acquisition or joint venture, measured in terms of any of the preceding), or the attainment
of levels of performance of Ferro under one or more of the measures described above relative to
the performance of other businesses, or various combinations of the foregoing, or changes in any
of the foregoing. Performance Targets applicable to Performance Shares may vary from Award to
Award and from Participant to Participant.

     When determining whether Performance Targets have been attained, the Committee will have the
discretion to make adjustments to take into account extraordinary or nonrecurring items or
events, or unusual nonrecurring gains or losses identified in Ferro’s financial statements,
provided such adjustments are made in a manner consistent with Section 162(m) of the Code (to the
extent applicable). Awards of Performance Shares made to Participants subject to Section 162(m)
of the Code are intended to qualify under Section 162(m) and the Committee will interpret the
terms of such Awards in a manner consistent with that intent to the extent appropriate. (The
foregoing provisions of this Section 4(d) will also apply to Awards of Restricted Shares made
under Section 4(c) to the extent such Awards of Restricted Shares are subject to the financial
performance of Ferro.)

 

 

     (e) Common Stock Awards. The Committee may grant Awards in the form of Common Stock or on a
basis valued in whole or in part by reference to, or otherwise based upon, Common Stock. Common
Stock Awards will be subject to conditions established by the Committee and set forth in the
applicable Award Agreement.

     5. Award Agreements. All Awards to executive personnel under this Plan will be evidenced by a
written agreement (an “Award Agreement”) between Ferro and the Participant containing such terms
not inconsistent with this Plan as the Committee may determine, including such restrictions,
conditions, and requirements as to transferability, continued employment, individual performance or
financial performance of Ferro or a subsidiary or affiliate as the Committee deems appropriate.
Each such Award Agreement will, however, provide that the Award will be forfeitable if, in the
opinion of the Committee, the Participant, without the written consent of Ferro:

     (a) Directly or indirectly, engages in, or assists or has a material ownership interest in,
or acts as agent, advisor or consultant of, for, or to any person, firm, partnership, corporation
or other entity that is engaged in the manufacture or sale of any products manufactured or sold
by Ferro, or any subsidiary or affiliate, or any products that are logical extensions, on a
manufacturing or technological basis, of such products;

     (b) Discloses to any person any proprietary or confidential business information concerning
Ferro, its subsidiaries, or affiliates or any of the officers, Directors, employees, agents, or
representatives of Ferro, its subsidiaries or affiliates, which the Participant obtained or which
came to his or her attention during the course of his or her employment with Ferro;

     (c) Takes any action likely to disparage or have an adverse effect on Ferro, its
subsidiaries, or affiliates or any of the officers, Directors, employees, agents, or
representatives of Ferro, its subsidiaries, or affiliates;

     (d) Induces or attempts to induce any employee of Ferro or any of its subsidiaries or
affiliates to leave the employ of Ferro or such subsidiary or affiliate or otherwise interferes
with the relationship between Ferro or any of its subsidiaries or affiliates and any of their
respective employees, or hires or assists in the hiring of any person who was an employee of
Ferro or any of its subsidiaries or affiliates, or solicits, diverts or otherwise attempts to
take away any customers, suppliers, or co-venturers of Ferro, any subsidiary or any affiliate,
either on the Participant’s own behalf or on behalf of any other person or entity; or

     (e) Otherwise performs any act or engages in any activity which in the opinion of the
Committee is inimical to the best interests of Ferro.

     6. Stock Options for Directors. Each year under this Plan, Ferro may grant Directors who are
not employees of Ferro or any of its subsidiaries and affiliates options to purchase such number of
shares of Common Stock as is recommended by the Committee and approved by the Board. Such Director
Stock Options will be granted on such date as the Committee or the Board determines. If an
individual is elected or appointed Director at least six months before the expected annual grant
date, then his or her first Director Stock Option will granted as of the date he or she is elected
or appointed. No Director Stock Option will be granted to a Director if his or her normal
retirement under a plan or policy of Ferro will occur within six months after the date a Director
Stock Option otherwise would have been granted. The option exercise price of Director Stock Options
will be the per share fair market value of the Common Stock on the date of the grant, as determined
by the Committee. The terms and conditions of each Director Stock Option will be contained in a
written option agreement, signed on behalf of Ferro by the Chief Executive Officer, setting forth
the number of shares of Common Stock subject to the option, the option price to be paid upon
exercise, the manner in which the option may be exercised and the option price may be paid, the
term of the option and such other provisions not inconsistent with this Plan as the Committee may
specify.

     7. Shares Subject to this Plan. The shares of Common Stock to be issued under this Plan may be
either authorized but unissued shares or previously issued shares reacquired by Ferro and held as
treasury shares, as the Committee may from time to time determine. Subject to adjustment as
provided in Section 8 below, the number of shares of Common Stock reserved for Awards under this
Plan will equal 3,250,000 shares of Common Stock.

     Any shares of Common Stock issued by Ferro through the assumption or substitution of
outstanding grants previously made by an acquired corporation or entity shall not reduce the number
of shares available for Awards under this Plan. If any shares of Common Stock subject to any Award
granted under this Plan are forfeited or if such Award otherwise terminates without the issuance of
such shares or payment of other consideration in lieu of such shares, the shares subject to such

 

 

Award, to the extent of any such forfeiture or nonissuance, shall again be available for grant
under this Plan as if such shares had not been subject to an Award. As regards Performance Share
Awards, each Performance Share will be considered as a share of Common Stock counted against the
maximum number of shares of Common Stock reserved for Awards under this Plan, whether represented
by forfeitable Common Stock or by phantom Performance Shares, and no shares of Common Stock shall
again be available for grant under this Plan as a result of any repurchase by Ferro of forfeitable
Common Stock or any cash payment in settlement of Performance Shares.

     Subject to adjustment as provided in Section 8 below:

     (a) A cumulative maximum of 200,000 shares of Common Stock will be available for issuance
with respect to incentive stock options granted under this Plan;

     (b) A cumulative maximum of 500,000 shares of Common Stock will be available for issuance
with respect to Restricted Shares, Performance Shares, and Common Stock Awards granted under this
Plan;

     (c) A maximum of 300,000 shares of Common Stock will be the subject of Stock Options
(including related Stock Appreciation Rights) granted under this Plan to any single Participant
during any 12-month period;

     (d) The maximum payout to any single Participant under a Performance Share Award granted
during any 12-month period under this Plan will be 100,000 shares of Common Stock; and

     (e)Awards, other than the grant of Stock Options or Performance Shares, made under this Plan
to any single Participant during any 12-month period may not exceed a maximum of 100,000 shares
of Common Stock.

     8. Adjustments Upon Changes in Capitalization. If the outstanding shares of Common Stock are
changed by reason of any reorganization, recapitalization, stock split, stock dividend, combination
or exchange of shares, merger, consolidation or any change in the corporate structure or Common
Stock of Ferro, then the maximum aggregate number and class of shares of Common Stock as to which
Awards may be granted under this Plan, the maximums described in Section 7 above, the shares of
Common Stock issuable pursuant to then outstanding Awards, and the option price of outstanding
stock options and any related Stock Appreciation Rights shall be appropriately adjusted by the
Committee. If Ferro makes an extraordinary distribution in respect of Common Stock or effects a pro
rata repurchase of Common Stock, the Committee will 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. For purposes of this Section 8,

     (a) The term “extraordinary distribution” means a dividend or other distribution of (i)
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 that is in excess of the
fair market value of the Common Stock repurchased during such 12-month period), exceeds ten
percent 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 (ii) any shares of capital stock of Ferro (other than shares of Common Stock), other
securities of Ferro, evidences of indebtedness of Ferro or any other person, or any other
property (including shares of any subsidiary of Ferro), or any combination thereof; and

     (b) The term “pro rata repurchase” means a purchase of shares of Common Stock by Ferro or
any of its subsidiaries or affiliates, pursuant to any tender offer or exchange offer subject to
section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any
successor provision of law, or pursuant to any other offer available to substantially all holders
of Common Stock other than a purchase of shares of Ferro made in an open market transaction.

     The determinations of the Committee under this Section 8 shall be final and binding upon all
Participants, in the absence of revision by the Board.

     9. Assignment and Transfer. No Award of a Stock Option or a related Stock Appreciation Right
shall be transferable by a Participant or Director except by will or the laws of descent and
distribution, and Stock Options and Stock Appreciation Rights may be exercised during a
Participant’s or Director’s lifetime only by the Participant or Director or the Participant’s or

 

 

Director’s guardian or legal representative. Notwithstanding the foregoing, the Committee may, in
its discretion, authorize the transfer of all or a portion of a Stock Option and related Stock
Appreciation Right (other than an incentive stock option) to:

     (a) A Participant’s or Director’s spouse, children, grandchildren, parents, siblings and
other family members approved by the Committee (collectively, “Family Members”);

     (b) Trust(s) for the exclusive benefit of such Participant, Director, or Family Members; or

     (c) Partnerships or limited liability companies in which such Participant, Director, or
Family Members are at all times the only partners or members.

Any transfer to or for the benefit of Family Members permitted under this Plan 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. Subject to the terms of the Award, a
transferee-Family Member may exercise a Stock Option and/or related Stock Appreciation Right during
or after the Participant’s or Director’s lifetime.

     The rights and interests of a Participant or Director with respect to any Award made under
this Plan other than Stock Options and related Stock Appreciation Rights may not be assigned,
encumbered or transferred except, in the event of the death of a Participant or Director, by will
or the laws of descent and distribution; PROVIDED, HOWEVER, that the Board is specifically
authorized to permit assignment, encumbrance, and transfer of any such other Award if and to the
extent it, in its sole discretion, determines that such assignment, encumbrance or transfer would
not produce adverse consequences under tax or securities laws.

     10. Change of Control. Except as the Board may expressly provide otherwise, in the event of a
Change of Control:

     (a) All Stock Options (including Director Stock Options) and Stock Appreciation Rights then
outstanding shall become fully exercisable as of the date of the Change of Control;

     (b) All restrictions and conditions with respect to all Awards of Restricted Shares then
outstanding shall be deemed fully released or satisfied as of the date of the Change of Control,
except as set forth in paragraph (d) below;

     (c) All previously established Performance Targets necessary to achieve 100% of a
Participant’s specified award level for Performance Shares shall be deemed to have been met as of
the date of the Change of Control; and

     (d) If the Change of Control occurs during a restriction period applicable to an Award of
Restricted Shares or during a Performance Period applicable to a Performance Share Award, then
Participants will be entitled to receive a prorata proportion of the Award that would have been
distributed to them at the end of the applicable restriction period or Performance Period, based
upon the portion of the applicable restriction period or Performance Period during which the
Participant’s employment continued.

In lieu of distributing shares of Common Stock in settlement of an Award of Restricted Shares or
Performance Shares in connection with a Change of Control, Ferro may make payment to Participants
in cash based on the fair market value of the Common Stock that would have been issued under the
applicable Award, which fair market value for this purpose shall be the higher of (i) the closing
price on the New York Stock Exchange for the Common Stock on the date of such Change of Control or
(ii) the highest price per share of Common Stock actually paid in connection with such Change of
Control.

     For purposes of this Section 10, the term “Change of Control” means a change of control of
Ferro of a nature that would be required to be reported (assuming such event has not been
previously reported) in response to Item 6 (e) of Schedule 14A of Regulation 14A (or any successor
provision) promulgated under the Exchange Act; provided that, without limitation, a Change of
Control shall be deemed to have occurred at such time as (i) any “person” (within the meaning of
section 14(d) of the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of Ferro representing 50% or more of the combined voting power of Ferro’s then
outstanding securities, (ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board cease for any reason to constitute at least a
majority of the Board unless the election, or the nomination for election, by Ferro’s shareholders
of each new Director was approved by a vote of at least two-thirds of the Directors then still in
office who were Directors at the beginning of the period (iii) a merger or consolidation of Ferro
occurs, other than a merger or consolidation that would result in Ferro’s shareholders holding

 

 

securities that represent immediately after the merger or consolidation more than fifty percent
(50%) of the voting securities of either Ferro or the other entity that survives such merger or
consolidation (or the parent of such entity) or (iv) Ferro sells or otherwise disposes of all or
substantially all of Ferro’s assets to an entity that is not controlled by Ferro or its
shareholders; provided, however, that no Change of Control shall be deemed to occur solely as a
result of the acquisition of any securities of Ferro by a trust exempt from tax under Section
501(a) of the Code that is formed for the purpose of providing retirement or other benefits to
employees of Ferro, any subsidiary or any affiliate.

     11. Employee Rights Under this Plan. No employee or other person shall have any claim or right
to be granted any Award under this Plan. Neither this Plan nor any action taken under this Plan
shall be construed as giving any employee any right to be retained in the employ of Ferro or any
subsidiary or affiliate.

     12. Settlement by Subsidiaries and Affiliates. Settlement of Awards held by employees of
subsidiaries or affiliates shall be made by and at the expense of such subsidiary or affiliate.
Ferro either will sell or contribute, in its sole discretion, to the subsidiary or affiliate, the
number of shares needed to settle any Award that is granted under this Plan. In addition, with
respect to Participants who are foreign nationals or employed outside the United States, or both,
the Committee may cause Ferro or a subsidiary or affiliate to adopt such rules and regulations,
policies, sub-plans or the like as may, in the judgment of the Committee, be necessary or advisable
in order to effectuate the purposes of this Plan.

     13. Amendment or Termination. Ferro, by action of its Board, reserves the right to amend,
modify or terminate this Plan at any time and, by action of the Committee with the consent of the
Participant or Director, to amend, modify or terminate any outstanding Award Agreement, except to
the extent, if any, that further shareholder approval is required pursuant to any applicable law,
regulation or rule, including any rule relating to the listing on a national securities exchange of
Ferro Common Stock, and except with respect to any adjustment or amendment affecting the value of a
Stock Option or Stock Appreciation Right not permitted under paragraph 4(a) or 4(b) above.

     14. Effective Date and Term of Plan. This Plan is adopted by the Board as of January 1, 2003,
subject to approval by Ferro shareholders at the 2003 annual meeting of shareholders. No Awards
shall be made under this Plan after December 31, 2012, provided that any Awards outstanding on such
date shall not be affected and shall continue in accordance with their terms.

     15. Status of Grants Under Prior Plans. Following approval of this Plan by the shareholders of
Ferro, no further grants of stock options or stock appreciation rights shall be made under Ferro’s
Employee Stock Option Plan and no further grants of performance shares shall be made under Ferro’s
1997 Performance Share Plan, provided that any outstanding stock options, stock appreciation
rights, and performance shares under such prior plans shall not be affected by shareholder approval
of this Plan and shall continue in accordance with their terms.EX-10.17

EXHIBIT 10.17

TERMS OF INCENTIVE STOCK OPTION GRANTS

	1.	 	Generally. This document sets forth the terms and conditions under which incentive stock
options (the “ISO Options”) are granted under paragraph 4(a) of the 2003 Long-Term Incentive
Compensation Plan (the “Plan”), which was approved by Ferro Corporation shareholders on April
25, 2003. The ISO Option grants to which these terms apply are intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended.
(The recipient of an ISO Option grant is called the “ISO Optionee” below. The term “Ferro”
below includes Ferro Corporation and its subsidiary and affiliated companies.)
	 
	2.	 	Precedence of the Plan. The terms of this document are in all events subject to the terms
and conditions of the Plan. If there is any inconsistency between this document and the Plan,
then the Plan, and not this document, will govern. The Compensation & Organization Committee
of the Board of Directors (or such other committee as the Board may from time to time
designate) (the “Committee”) administers awards under the Plan and has the authority to
determine the terms and conditions, not inconsistent with the provisions of the Plan, of any
Award granted under this Plan. In this capacity, the Committee also has the authority to
construe and interpret the provisions of the Plan and all awards under the Plan and to
establish, amend, and rescind rules and regulations for the administration of the Plan, all of
which will be binding on the ISO Optionee.
	 
	3.	 	Basic Option Terms. The name of the ISO Optionee, the date of the ISO Option grant, the
aggregate number of shares of Ferro Common Stock that may be purchased under the ISO Option,
the option exercise price, and the expiration date of the ISO Option (i.e., last date on which
such ISO Option may be exercised) are set forth separately in a grant letter from Ferro to the
ISO Optionee which refers expressly to this document.
	 
	4.	 	Normal Exercise. Except as otherwise provided below, ISO Options will become exercisable
only if and after the ISO Optionee has remained employed by Ferro for one year from the date
of the ISO Option grant, whereupon such rights shall become exercisable to the extent of 25%
of the aggregate number of shares granted, which percentage shall increase to 50% after two
years, 75% after three years and to 100% after four years of employment.
	 
	5.	 	Retirement. If an ISO Optionee retires from his or her employment with Ferro under a Ferro
retirement plan or policy (including early retirement) before an ISO Option has been exercised
or expired, then the ISO Option will become 100% exercisable when the ISO Optionee retires and
the ISO Optionee will then be entitled to exercise the ISO Option at any time on or before
such ISO Option expires.
	 
	6.	 	Death. If an ISO Optionee dies before an ISO Option has been exercised or expired, then the
person who is entitled by will or the applicable laws of descent and distribution may exercise
the option rights (a) in full in the case of an ISO Optionee who was employed by Ferro at the
time of his or her death or (b) in the case of an ISO Optionee not so employed, to the extent
that the ISO Optionee was entitled to exercise the same immediately before his or her death.
	 
	7.	 	Change of Control. If a “Change of Control” occurs before an ISO Option has been exercised
or expired, then the ISO Option will become 100% exercisable immediately upon the “Change of
Control” provided that the ISO Optionee is then employed by Ferro. (For purposes of this
document, the term “Change of Control” has the meaning given to that term in paragraph 10 of
the Plan.)
	 
	8.	 	Other Termination of Employment. If the ISO Optionee’s employment with Ferro terminates
before an ISO Option has been exercised or expired for any reason other than those stated in
clauses 5-7 above, the ISO Optionee may exercise the option rights at any time within the
three-month period after his or her termination of employment (but before the expiration of
the ISO Option) to the extent he or she was entitled to exercise the same immediately before
the termination of employment.

 

 

	9.	 	Liquidation, Dissolution and Merger. If at any time before an ISO Option is exercised or
expires Ferro is liquidated or dissolved, or becomes a party to a plan of merger or
consolidation with respect to which Ferro is not the surviving corporation, then the following
will apply:

	 	A.	 	Ferro will give the ISO Optionee at least 30 days’ prior written notice that
such event will occur.
	 
	 	B.	 	If the ISO Optionee is then employed by Ferro, then the ISO Option will
immediately become 100% exercisable provided that the ISO Optionee exercises the ISO
Option before it expires and within 30 days after the notice.
	 
	 	C.	 	If the ISO Optionee is not then employed by Ferro, then the ISO Option will be
exercisable to the extent it was exercisable on the date of such notice provided that
the ISO Optionee exercises the ISO Option before it expires and within 30 days after
the notice.

	 	 	If an ISO Option has not been exercised on or before the effective date of any such
liquidation, dissolution, merger or consolidation, then notwithstanding the provisions of
clauses 4-7 above, the ISO Option will terminate on such date, unless another corporation
assumes the ISO Option.

	10.	 	Exercise. An ISO Option may be exercised by delivering to Ferro at the office of its
Treasurer a written notice signed by the person entitled to exercise the option, of the
election to exercise the option and stating the number of shares to be purchased, together
will full payment of the option exercise price of the shares then to be purchased. Payment of
the option exercise price may be made, at the election of the ISO Optionee, (a) in cash, (b)
in Ferro Common Stock, or (c) in any combination of cash and Ferro Common Stock. Shares of
Ferro Common Stock used in payment of the purchase price will be valued at their closing price
on the New York Stock Exchange on the trading day immediately preceding the date of exercise.
Upon the proper exercise of an ISO Option, Ferro will issue the appropriate number of shares
of Ferro Common Stock in the name of the person exercising the ISO Option and deliver to him
or her a certificate or certificates for the shares purchased. The ISO Optionee will either
pay in cash, within the time period specified by Ferro, the amount (if any) required to be
withheld for Federal, state or local tax purposes on account of the exercise of an ISO Option
or to make arrangements to satisfy such withholding requirements in a manner satisfactory to
Ferro.
	 
	11.	 	Legal Restrictions on Exercise. No ISO Option will be exercisable if and to the extent such
exercise would violate:

	 	A.	 	Any applicable state securities law;
	 
	 	B.	 	Any applicable registration or other requirements under the Securities Act of
1933, as amended (the “1933 Act”) the Securities Exchange Act of 1934, as amended, or
the listing requirements of any stock exchange; or
	 
	 	C.	 	Any applicable legal requirement of any other government authority.

	 	 	Ferro will make reasonable efforts to comply with the foregoing laws and requirements so as
to permit the exercise of ISO Options. Furthermore, if a Registration Statement with
respect to the shares to be issued upon the exercise of an ISO Option is not in effect or if
counsel for Ferro deems it necessary or desirable in order to avoid possible violation of
the 1933 Act, Ferro may require, as a condition to its issuance and delivery of certificates
for the shares, the delivery to Ferro of a commitment in writing by the person exercising
the option that at the time of such exercise it is his or her intention to acquire such
shares for his or her own account for investment only and not with a view to, or for resale
in connection with, the distribution thereof; that such person understands the shares may be
“restricted securities” as defined in Rule 144 of the Securities and Exchange Commission;
and that any resale, transfer or other disposition of said shares will be accomplished only
in compliance with Rule 144, the 1933 Act, or the other Rules and Regulations thereunder.
Ferro may place on the certificates evidencing such shares an appropriate legend reflecting
the aforesaid commitment and the Company may refuse to permit transfer of such certificates

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	 	 	until it has been furnished evidence satisfactory to it that no violation of the 1933 Act or
the Rules and Regulations thereunder would be involved in such transfer.
	 
	12.	 	Forfeiture. The ISO Optionee will forfeit the ISO Option if, from the date the ISO Option is
granted until the date the ISO Option has been fully exercised or expired, he or she—

	 	A.	 	Directly or indirectly, engages in, or assists or has a material ownership
interest in, or acts as agent, advisor or consultant of, for, or to any person, firm,
partnership, corporation or other entity that is engaged in the manufacture or sale of
any products manufactured or sold by Ferro or any products that are logical extensions,
on a manufacturing or technological basis, of such products;
	 
	 	B.	 	Discloses to any person any proprietary or confidential business information
concerning Ferro or any Ferro officers, Directors, employees, agents, or
representatives which the ISO Optionee obtained or which came to his or her attention
during the course of his or her employment with Ferro;
	 
	 	C.	 	Takes any action likely to disparage or have an adverse effect on Ferro, its
subsidiaries, or affiliates or any of Ferro’s officers, Directors, employees, agents,
or representatives;
	 
	 	D.	 	Induces or attempts to induce any Ferro employee to leave the employ of Ferro
or otherwise interferes with the relationship between Ferro and any of Ferro’s
employees, or hires or assists in the hiring of any person who was a Ferro employee, or
solicits, diverts or otherwise attempts to take away any customers, suppliers, or
co-venturers of Ferro, either on the ISO Optionee’s own behalf or on behalf of any
other person or entity; or
	 
	 	E.	 	Otherwise performs any act or engages in any activity which in the opinion of
the Committee is inimical to the best interests of Ferro.

	13.	 	Withholding. All amounts paid to or on behalf of the ISO Optionee in respect of an ISO
Option will be subject to withholding as required by law.
	 
	14.	 	Transferability. An ISO Option is not transferable by the ISO Optionee other than by will or
by the laws of descent and distribution. An ISO Option will be exercisable during the
lifetime of the ISO Optionee only by the ISO Optionee and/or his or her guardian or legal
representative.
	 
	15.	 	Adjustments on Changes in Capitalization. If at any time before an ISO Option is exercised
or expires, the shares of Ferro Common Stock are changed or Ferro makes an “extraordinary
distribution” or effects a “prorata repurchase” of Common Stock as described in paragraph 8 of
the Plan or takes any other action described in that paragraph, then the shares of Common
Stock issuable pursuant to such ISO Option will be appropriately adjusted as provided in such
paragraph.
	 
	16.	 	No Rights as a Shareholder. The ISO Optionee acknowledges that as holder of an ISO Option
the ISO Optionee has no rights as a shareholder or otherwise in respect of any of the shares
as to which the ISO Option has not been effectively exercised.
	 
	17.	 	Employment at Will. By countersigning and returning to Ferro a copy of the grant letter, the
ISO Optionee acknowledges and agrees that, as in the past, he or she is an employee at will of
Ferro.

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