Employment Transition Agreement

Employment Transition Agreement

This document is an Employment Transition Agreement (this “Employment Transition Agreement”) and is between Ferro Corporation (“Ferro”) and Xxxxxx X. Xxxxxx (“Xx. Xxxxxx”).

For good and valuable consideration, and intending to be legally bound, Ferro and Xx. Xxxxxx hereby agree as follows:

1. Background

Xx. Xxxxxx has been employed by Ferro since May 12, 2003.

As of May 12, 2003, Xx. Xxxxxx and Xxxxx signed a confidentiality agreement (the “Confidentiality Agreement”) with Ferro.

As of May 16, 2003, Ferro and Xx. Xxxxxx signed a Change in Control Agreement (the “Change in Control Agreement”), which provides certain benefits in the event of a cessation of employment following a change in control as defined therein (a “Change in Control”).

Xx. Xxxxxx currently serves as Ferro’s Vice President and Chief Financial Officer.

Xx. Xxxxxx has career aspirations beyond his current role as Chief Financial Officer.

Xxxxx and Xx. Xxxxxx have mutually decided to allow Xx. Xxxxxx to explore over time alternative opportunities within Ferro or, failing identifying a suitable alternative for Xx. Xxxxxx within Ferro, to terminate Xx. Xxxxxx’x employment with Ferro on the terms and conditions set forth in this Agreement.

2. Transition

Xx. Xxxxxx will remain Ferro’s Chief Financial Officer through January 1, 2007, and will remain entitled to his current pay and benefits through January 2, 2007.

Beginning today, however, Xx. Xxxxxx will seek to identify and evaluate alternative opportunities within Ferro that might take full advantage of Xx. Xxxxxx’x unique skills and experience and be consistent with Xx. Xxxxxx’x own personal career aspirations, which opportunities will be reviewed in good faith by Ferro, it being acknowledged that Ferro will be under no obligation to hire Xx. Xxxxxx into any other such position.

If, despite such efforts, Ferro and Xx. Xxxxxx are unable mutually to agree on a suitable alternative opportunity for Xx. Xxxxxx by January 1, 2007, then (unless a Change in Control has occurred on or before that date) Xx. Xxxxxx’x employment will terminate on January 3, 2007 (the “Qualifying Termination”) and he will thereupon become entitled to the severance package (the “Standby Severance Package”) described in paragraph 3 below and the other benefits provided under this Agreement.

Between today and January 2, 2007, Xx. Xxxxxx will make himself available during normal working hours to assist Ferro in achieving its organizational goal of accomplishing an orderly transfer of leadership of its financial organization by providing Xx. Xxxxxx’x successor assistance in his or her transition into the role of Ferro’s Chief Financial Officer. If in the judgment of Ferro’s Chief Executive Officer, Xx. Xxxxxx has failed to make himself available to provide such assistance satisfactorily, then Xx. Xxxxxx will not be entitled to the Standby Severance Package or any other benefits under this Agreement.

3. Standby Severance Package

If Xx. Xxxxxx becomes entitled to receive the Standby Severance Package, then the Standby Severance Package would consist of the following:

Xxxxxxxxx Period

The “Severance Period” would be the period beginning January 3, 2007, and ending December 31, 2007.

Xxxxxxxxx Payments

Ferro would pay Xx. Xxxxxx as xxxxxxxxx -

(1)

The amount of $15,208.33 each twice-monthly pay period for payroll periods from January 3, 2007 through the earlier of December 31, 2007 or the date of Xx. Xxxxxx’x death; and

(2)

A lump sum amount equal to $182,500 on or before December 31, 2007.

Xxxxxxxxx Benefits

Ferro would pay the employer’s portion of Xx. Xxxxxx’x premium costs under Ferro’s group health (i.e., medical, dental, and vision) plans in accordance with his current elections, through January 2, 2007, and Ferro would reimburse Xx. Xxxxxx for premiums paid by him for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) up to the amount of Ferro’s current employer contributions for his group health coverage throughout the Severance Period and for the first six months following the end of the Severance Period.

Company Automobile

On or before January 31, 2007, Xx. Xxxxxx will be entitled to purchase his company automobile in accordance with normal Ferro policy. Xx. Xxxxxx will be entitled to the use of such automobile (together with gasoline, normal maintenance, and insurance) until such date.

Cellular Telephone

Xx. Xxxxxx will be entitled to the continued use of his company cellular telephone until January 3, 2007. Ferro will cooperate with Xx. Xxxxxx in transferring his company cellular telephone number to a personal cellular telephone service of Xx. Xxxxxx’x choosing.

4. Annual Incentive Plan

Xx. Xxxxxx is a participant in the Ferro annual incentive plan and will be eligible for a bonus payment as provided under such plan for the year 2006.

Pursuant to the foregoing and the terms of the annual incentive plan, if Xx. Xxxxxx’x employment terminates on January 3, 2007, then Ferro will determine the amount of Xx. Xxxxxx’x bonus (if any) in good faith and in the ordinary course. If Xx. Xxxxxx is entitled to a bonus payment for 2006, then Ferro will pay Xx. Xxxxxx the bonus when payments are made to other participants.

If Xx. Xxxxxx’x employment terminates on or before January 3, 2007, then Xx. Xxxxxx will not be eligible for a bonus payment for the year 2007.

The terms under which Xx. Xxxxxx participates in the annual incentive plan are not modified by this Agreement.

5. Stock Options

Xx. Xxxxxx has been awarded as-yet-unexercised stock options under Ferro’s 2003 Long-Term Incentive Compensation Plan.

If Xx. Xxxxxx’x employment terminates on January 3, 2007, and subject to any trading blackouts that may from time to time be in effect, Xx. Xxxxxx will be entitled to exercise any of the foregoing options that have vested as of the date of his employment with Ferro terminates provided Xx. Xxxxxx carries out such exercise no later than 90 days after Ferro has filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2006, with the Securities and Exchange Commission. After such 90-day period has ended, however, Xx. Xxxxxx will not be entitled to exercise any further Ferro stock options.

If Xx. Xxxxxx’x employment terminates on or before January 3, 2007, then Ferro will make no further awards of stock options to Xx. Xxxxxx.

6. Performance Share Awards

Xxxxx has made as-yet-unmatured awards of Performance Shares to Xx. Xxxxxx under Xxxxx’x 2003 Long-Term Incentive Compensation Plan.

If Xx. Xxxxxx’x employment terminates on January 3, 2007, then Ferro will in good faith and in the ordinary course determine the amount (if any) of Xx. Xxxxxx’x entitlement to a payment and distribution in respect of his Performance Share award for the 2004-2006 performance period. If Xx. Xxxxxx is entitled to a payment and distribution for the 2004-2006 performance period, then Ferro will pay Xx. Xxxxxx such amount when payments are made to other participants.

Xxxxx has also made the following as-yet-unmatured awards of Performance Shares to Xx. Xxxxxx under Xxxxx’x 1997 Performance share Plan and/or Ferro’s 2003 Long-Term Incentive Compensation Plan:

(1)

8500 Performance Shares for the performance period January 1, 2005, through December 31, 2007, and

(2)

13,400 Performance Shares for the performance period January 1, 2006, through December 31, 2008,

Ferro will make no further awards to Xx. Xxxxxx under the Performance Share Plan and Xx. Xxxxxx will be eligible for no further distributions or payments with respect to such as-yet-unmatured Performance Shares.

The terms under which Xx. Xxxxxx participates in the 2003 Long Term Incentive Compensation Plan are not modified by this Agreement.

7. Non-Competition and Confidentiality

Xx. Xxxxxx will not disclose this Employment Transition Agreement or its terms to anyone other than his spouse or his personal tax advisor, financial advisor, or attorney, who will similarly maintain it in confidence.

In addition, in consideration of the Severance Package, if Xx. Xxxxxx incurs a Qualifying Termination on January 3, 2007 Xx. Xxxxxx promises that:

During the Severance Period and for a period of one year thereafter, Xx. Xxxxxx will not, without Ferro’s prior written approval, directly or indirectly, engage in, or assist or have an ownership interest in, or act 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 products that compete with Ferro’s products or any products which are logical extensions, on a manufacturing or technological basis, of such products.

During the Severance Period and thereafter, Xx. Xxxxxx will not disclose to any persons any proprietary or confidential business information concerning Ferro, any of its affiliated companies, obtained or which came to Xx. Xxxxxx’x attention during the course of his employment with Ferro, except as may otherwise be required by law or by a court of competent jurisdiction.

During the Severance Period and thereafter, Xx. Xxxxxx will not make any statements or disclose any information concerning Ferro, its directors, officers, management, staff, employees, representatives, or agents (collectively, “Ferro and its management”) which are likely to disparage Ferro or its management, which are likely to damage the reputation or business prospects of Ferro or its management, or which are likely to interfere in any way with the business relations Ferro has with its customers (including potential customers), suppliers, alliance partners, employees, investors, or shareholders.

In addition, Xx. Xxxxxx hereby reaffirms the commitments he made to Ferro in paragraphs 1-4 of his Confidentiality Agreement.

Ferro will cause its senior management to refrain from making any statements or disclosing any information concerning Xx. Xxxxxx which is likely to disparage Xx. Xxxxxx or which is likely to damage his reputation or employment prospects, unless required to do so by law or a court of competent jurisdiction.

8. Waiver

Xx. Xxxxxx acknowledges that the benefits provided under this Employment Transition Agreement will be paid only if he provides Ferro, as soon as administratively practicable following his Qualifying Termination on January 3, 2007:

A written waiver of any and all rights Xx. Xxxxxx otherwise might have to any other severance benefits offered to Ferro employees or other right or benefit under any agreement, understanding, or promise, whether written or oral, between Xx. Xxxxxx and Xxxxx, except for benefits, if any, to which Xx. Xxxxxx may be entitled under Ferro qualified retirement plans or COBRA or HIPAA, or under the annual incentive plan, stock option awards, Stock Option Plan, Performance Share Plan or Long-Term Incentive Compensation Plan as identified, and only to the extent provided, in paragraphs 4 through 6 of this Employment Transition Agreement, and

A release in substantially the same form as contained in paragraphs 9 and 10 of this Employment Transition Agreement.

9. Release

In consideration of the rights provided under this Agreement, Xx. Xxxxxx releases Ferro, as well as all employees, officers, directors, parents, subsidiaries, affiliates, agents, representatives, successors, and assigns of Ferro, from any and all claims, demands, actions, causes of action, suits, damages, losses, costs, attorneys’ fees, and or expenses, known or unknown, which Xx. Xxxxxx has or may claim to have against any of the foregoing arising from his employment or as a result of his termination of employment with Ferro, except as specifically provided for under this Agreement. Ferro, in turn, hereby releases Xx. Xxxxxx from any and all claims, demands, actions, causes of action, suits, damages, losses, costs, attorneys’ fees, and or expenses, known or unknown, which Ferro has or may claim to have against Xx. Xxxxxx arising from Xx. Xxxxxx’x employment with Ferro, except with respect to intentional wrongdoing or illegal conduct by Xx. Xxxxxx in connection with his employment with Ferro.

Xx. Xxxxxx covenants to Ferro that, in consideration of the rights provided under this Agreement, he will not assert any such claims, demands, actions, or causes of action.

Xx. Xxxxxx acknowledges that the foregoing release includes (but is not limited to) claims arising under Federal, state, or local law in the United States prohibiting employment discrimination, such as the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Employee Retirement Income Security Act, the Equal Pay Act, 42 U.S.C. §1981, Section 1981 of the Civil Rights Act of 1866, the Vietnam Era Veterans Readjustment Assistance Act, the Rehabilitation Act of 1973, the Americans with Disabilities Act, the Family and Medical Leave Act, and all claims under any other Federal or state laws, local ordinances or common law and other laws restricting an employer’s right to terminate the employment relationship. Xx. Xxxxxx further acknowledges that such release includes (but is not limited to) any claims Xx. Xxxxxx may have for unemployment compensation or may have under any internal grievance procedure at Ferro.

The foregoing release will not, however, apply to any claims, demands, actions, or causes of action arising after the date Xx. Xxxxxx executes this Agreement.

10. Voluntary Election

Xx. Xxxxxx acknowledges that:

The only consideration Xx. Xxxxxx has been given for signing this Employment Transition Agreement are the terms stated in this Employment Transition Agreement.

No other promises or agreements have been made to or with Xx. Xxxxxx by any person or entity to induce Xx. Xxxxxx to sign this Employment Transition Agreement.

Xx. Xxxxxx has been given at least 21 days to consider the effect of this Employment Transition Agreement, including the release contained above, before signing this Employment Transition Agreement.

Xx. Xxxxxx has been encouraged to discuss this Employment Transition Agreement and any matters related to the termination of his employment (including any rights Xx. Xxxxxx may have with respect to a claim of employment discrimination) with a legal advisor of Xx. Xxxxxx’x own choosing and Xx. Xxxxxx has had ample opportunity to do so.

Xx. Xxxxxx understands that he may revoke this Employment Transition Agreement in writing during the seven day period beginning the day Xx. Xxxxxx signs this Employment Transition Agreement and delivers it to Ferro and that this Employment Transition Agreement will be neither effective nor enforceable until Xx. Xxxxxx’x seven-day revocation period has expired.

11. Withholding

All payments under this Employment Transition Agreement will be subject to withholding, deductions and contributions as required by law. Ferro may withhold from any payment made by it under this Agreement amounts as may be required to comply with the tax withholding or other provisions of the Internal Revenue Code of 1986, as amended, or the Social Security Act or any state or local income or employment tax act or for purposes of paying any estate, inheritance or other tax attributable to any amounts payable under this Employment Transition Agreement.

12. Death

If Xx. Xxxxxx dies on or before January 3, 2007 while still employed at Ferro, then notwithstanding anything to the contrary provided in this Employment Transition Agreement, Ferro will pay Xx. Xxxxxx’x beneficiary (as designated by Xx. Xxxxxx in writing to Ferro) or, failing such designation, to Xx. Xxxxxx’x estate the lump sum severance payment described in paragraph 3.B(2) above and provide Xx. Xxxxxx’x family with the severance benefits described in paragraph 3.C above through December 31, 2007. In such case, Ferro will make the lump sum payment as soon as administratively practicable following the date of Xx. Xxxxxx’x death, and in any event shall be made no later than the 15^th day of the third calendar month following the close of the calendar year containing the date of death.

13. Change in Control Agreement

The Change in Control Agreement will terminate the earlier of January 3, 2007 or the date Xx. Xxxxxx begins employment with another employer or dies.

If a change in control occurs under the Change in Control Agreement before January 3, 2007, then notwithstanding anything to the contrary provided in this Employment Transition Agreement, Xx. Xxxxxx will not be entitled to receive the Standby Severance Package.

14. Not in Substitution

Xx. Xxxxxx and Xxxxx xxxxx certify that none of the benefits provided under this Agreement are in substitution for, or in replacement of, amounts to which Xx. Xxxxxx would otherwise be entitled to receive as deferred compensation.

15. Governing Law

This Employment Transition Agreement will be governed by the internal substantive laws of the State of Ohio, the state in which Xx. Xxxxxx was employed at the time his employment was terminated.

By signing this Employment Transition Agreement, Xx. Xxxxxx affirms that he
has read this Employment Transition Agreement carefully, that he knows and
understands its contents, that he is signing this Employment Transition
Agreement voluntarily, and that signing this Employment Transition Agreement
is his own free act and deed.

To evidence their agreement and intention to be bound legally by this document, Xxxxxx X. Xxxxxx and Xxxxx Corporation have signed and dated this Employment Transition Agreement.

Xxxxxx X. Xxxxxx

Ferro Corporation

/s/ Xxxxxx X. Xxxxxx

/s/ Xxxxx X. Xxxxxx

_______________________________

By: ____________________________

Xxxxx X. Xxxxxx

President &

Chief Executive Officer

Date:

October 25, 2006

Date:

October 25, 2006

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Employment Transition Agreement

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