EX-10.26



 





Exhibit 10.26




INDEMNIFICATION AGREEMENT




     This Agreement made this ___th day of ___, ___, between The Lubrizol
Corporation, an Ohio corporation (the “Company”) and ___, a director, officer, employee or
representative (as hereinafter defined) of the Company (the “Indemnitee”);



     WHEREAS, the Company and the Indemnitee are each aware of the exposure to litigation of
directors, officers, employees and representatives of the Company as such persons exercise their
duties to the Company;



     WHEREAS, the Company and the Indemnitee are also aware of conditions in the insurance industry
that have affected and may continue to affect the Company’s ability to obtain appropriate liability
insurance on an economically acceptable basis;



     WHEREAS, the Company desires to continue to benefit from the services of highly qualified,
experienced and otherwise competent persons such as the Indemnitee;



     WHEREAS, the Indemnitee desires to serve or to continue to serve the Company as a director,
officer, employee and/or as a director, officer, trustee or other fiduciary of another corporation,
joint venture, trust or other enterprise in which the Company has a direct or indirect ownership
interest, for so long as the Company continues to provide on an acceptable basis adequate and
reliable indemnification against certain liabilities and expenses which may be incurred by the
Indemnitee.



     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, the parties hereto agree as follows:



1. Indemnification




     The Company shall indemnify the Indemnitee with respect to his activities as a director,
officer or employee of the Company and/or as a person who is serving or has served on behalf of the
Company (“representative”) as a director, officer, trustee or other fiduciary of another
corporation, joint venture, trust or other enterprise, domestic or foreign, in which the Company
has a direct or indirect ownership interest (an “affiliated entity”) against expenses (including,
without limitation, attorneys’ fees, judgments, fines, and amounts paid in settlement) actually and
reasonably incurred by him (“Expenses”) in connection with any claim against Indemnitee which is
the subject of any threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, investigative or otherwise and whether formal or informal (a
“Proceeding”), to which Indemnitee was, is, or is threatened to be made a party by reason of facts
which include Indemnitee’s being or having been such a director, officer, employee or
representative, to the extent of the highest and most advantageous to the Indemnitee, as determined
by the Indemnitee, of one or any combination of the following:




	(a)	 	The benefits provided by the Company’s Code of Regulations in effect on the date hereof, a
copy of the relevant portions of which are attached hereto as Exhibit I;




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	(b)	 	The benefits provided by the Articles of Incorporation, Code of Regulations, or By-laws or
their equivalent of the Company in effect at the time Expenses are incurred by Indemnitee;
	 
	(c)	 	The benefits allowable under Ohio law in effect at the date hereof;
	 
	(d)	 	The benefits allowable under the law of the jurisdiction under which the Company exists at
the time Expenses are incurred by the Indemnitee;
	 
	(e)	 	The benefits available under liability insurance obtained by the Company; and
	 
	(f)	 	Such other benefits as are or may be otherwise available to Indemnitee.





     Combination of two or more of the benefits provided by (a) through (f) shall be available to
the extent that the Applicable Document, as hereafter defined, does not require that the benefits
provided therein be exclusive of other benefits. The document or law providing for the benefits
listed in items (a) through (f) above is called the “Applicable Document” in this Agreement.
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 (f) above. For purposes
of this Agreement, references to “other enterprises” shall include employee benefit plans for
employees of the Company or of any affiliated entity without regard to ownership of such plans;
references to “fines” shall include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; references to “serving or has served on behalf of the Company” shall include
any service as a director, officer, employee or agent of the Company which imposes duties on, or
involves services by, the Indemnitee with respect to an employee benefit plan, its participants or
beneficiaries; references to the masculine shall include the feminine; references to the singular
shall include the plural and vice versa; and if the Indemnitee acted in good faith
and in a manner he reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan he shall be deemed to have acted in a manner consistent with the
standards required for indemnification by the Company under the Applicable Documents.



2. Insurance




     The Company shall maintain directors’ and officers’ or other similar liability insurance for
so long as Indemnitee’s services are covered hereunder, provided and to the extent that such
insurance is available on a basis acceptable to the Company. However, the Company agrees that the
provisions hereof shall remain in effect regardless of whether liability or other insurance
coverage is at any time obtained or retained by the Company; except that any payments in fact made
to Indemnitee under an insurance policy obtained or retained by the Company shall reduce the
obligation of the Company to make payments hereunder by the amount of the payments made under any
such insurance policy.



3. Payment of Expenses




     At Indemnitee’s request, after receipt of written notice pursuant to Section 6 hereof and an
undertaking in the form of Exhibit II attached hereto by or on behalf of Indemnitee to repay such



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amounts so paid on Indemnitee’s behalf if it shall ultimately be determined under the Applicable
Document that Indemnitee is not entitled to be indemnified by the Company for such Expenses, the
Company shall pay the Expenses as and when incurred by Indemnitee. That portion of Expenses which
represents attorneys’ fees and other costs incurred in defending any Proceeding shall be paid by
the Company within thirty (30) days of its receipt of such request, together with reasonable
documentation (consistent, in the case of attorneys’ fees, with Company practice in payment of
legal fees prior to a Change in Control, as hereafter defined) evidencing the amount and nature of
such Expenses, subject to its also having received such a notice and undertaking.




4. Escrow




     The Company shall dedicate up to an aggregate of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($7,500,000) as collateral security for the initial funding of its obligations hereunder and under
similar agreements with other directors, officers, employees and representatives by depositing
assets or bank letters of credit in escrow or reserving lines of credit that may be drawn down by
an escrow agent in the dedicated amount (the “Escrow Reserve”); provided, however, that the terms
of any such Escrow reserve may provide that the cash, securities or letter or line of credit
available therefor shall only be utilized for the indemnification or advancement of expenses
provided for herein in the event that there shall have occurred within the preceding five (5) years
a Change in Control of the Company, as defined below. The Company shall promptly provide Indemnitee
with a true and complete copy of the agreement relating to the establishment and operation of the
Escrow Reserve, together with such additional documentation or information with respect to the
escrow as Indemnitee may from time to time reasonably request. The Company shall promptly deliver
an executed copy of the Agreement to the escrow agent for the Escrow Reserve to evidence to that
agent that Indemnitee is a beneficiary of that Escrow Reserve and shall deliver to Indemnitee the
escrow agent’s signed receipt evidencing that delivery. For purposes of this Agreement, a “Change
in Control” of the Company shall have occurred if at any time during the Term (as hereafter
defined) any of the following events shall occur:




	(a)	 	The Company is merged or consolidated with another corporation and as a result of such merger
or consolidation less than 80% of the outstanding voting securities of the surviving or
resulting corporation are owned in the aggregate by the shareholders of the Company,
immediately prior to such merger or consolidation;
	 
	(b)	 	There is a report filed on Scheduled 13D or Schedule 14D-l (or any successor schedule, form,
or report) each as promulgated pursuant to the Securities Exchange Act of 1934, as amended
(“Exchange Act”) disclosing the acquisition of 20% or more of the voting stock of the Company
in a transaction or series of transactions by any person (as the term “person” is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act);
	 
	(c)	 	The Company shall file a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to Item 1 of Form 8-K
thereunder or Item 5(f) of Schedule 14A thereunder (or any similar item of a successor
schedule, form or report) that a Change in Control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing contract or transaction; or




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	(d)	 	During any period of twenty-four (24) consecutive months, individuals who at the beginning of
any such period constitute the directors of the Company cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by the Company’s
shareholders, of each new director of the Company was approved by a vote of at least
two-thirds of the directors of the Company then still in office who were directors of the
Company at the beginning of any such period.





5. Additional Rights




     The indemnification provided in this Agreement shall not be exclusive of any other
indemnification or right to which Indemnitee may be entitled and shall continue after Indemnitee
has ceased to occupy a position as an officer, director, employee or representative as described in
Paragraph 1 above with respect to Proceedings relating to or arising out of Indemnitee’s acts or
omissions during his service in such position.



6. Notice to Company




     Indemnitee shall provide to the Company prompt written notice of any Proceeding brought,
threatened, asserted or commenced against Indemnitee with respect to which Indemnitee may assert a
right to indemnification hereunder; provided that failure to provide such notice shall not in any
way limit Indemnitee’s rights under this Agreement.



7. Cooperation in Defense and Settlement




     Indemnitee shall not make any admission or effect any settlement without the Company’s written
consent unless Indemnitee shall have determined to undertake her own defense in such manner and has
waived the benefits of this Agreement. The Company shall not settle any Proceeding to which
Indemnitee is a party in any manner which would impose any Expense on Indemnitee without his
written consent. Neither Indemnitee nor the Company will unreasonably withhold consent to any
proposed settlement. Indemnitee and the Company shall cooperate to the extent reasonably possible
with each other and with the Company’s insurers, in attempts to defend and/or settle such
Proceeding.



8. Assumption of Defense




     Except as otherwise provided below, to the extent that it may wish, the Company jointly with
any other indemnifying party similarly notified will be entitled to assume Indemnitee’s defense in
any Proceeding, with counsel mutually satisfactory to Indemnitee and the Company. After notice
from the Company to Indemnitee of the Company’s election so to assume such defense, the Company
will not be liable to Indemnitee under this Agreement for Expenses subsequently incurred by
Indemnitee in connection with the defense thereof other than reasonable costs of investigation or
as otherwise provided below. Indemnitee shall have the right to employ counsel in such Proceeding,
but the fees and expenses of such counsel incurred after notice from the Company of 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;




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	(b)	 	Counsel employed by the Company initially is unacceptable or later becomes unacceptable to
Indemnitee and such unacceptability is reasonable under then existing circumstances;
	 
	(c)	 	Indemnitee shall have reasonably concluded that there may be a conflict of interest between
Indemnitee and the Company in the conduct of the defense of such Proceeding; or
	 
	(d)	 	The Company shall not have employed counsel promptly to assume the defense of such
Proceeding, in each of which cases the fees and expenses of counsel shall be at the expense of
the Company and subject to payment pursuant to this Agreement. The Company shall not be
entitled to assume the defense of Indemnitee in any Proceeding brought by or on behalf of the
Company or as to which Indemnitee shall have made either of the conclusions provided for in
clauses (b) or (c) above.





9. Enforcement




     In the event that any dispute or controversy shall arise under this Agreement between
Indemnitee and the Company with respect to whether the Indemnitee is entitled to indemnification in
connection with any Proceeding or with respect to the amount of Expenses incurred, then with
respect to each such dispute or controversy Indemnitee may seek to enforce the Agreement through
legal action or, at Indemnitee’s sole option and request, through arbitration. If arbitration is
requested, such dispute or controversy shall be submitted by the parties to binding arbitration in
the City of Cleveland, State of Ohio, before a single arbitrator agreeable to both parties;
provided that indemnification in respect of any claim, issue or matter in a Proceeding brought
against Indemnitee by or in the right of the Company and as to which Indemnitee shall have been
adjudged to be liable for negligence or misconduct in the performance of her duty to the Company
shall be submitted to arbitration only to the extent permitted under the Company’s Code of
Regulations and applicable law then in effect. If the parties cannot agree on a designated
arbitrator within 15 days after arbitration is requested in writing by either of them, the
arbitration shall proceed in the City of Cleveland, State of Ohio, before an arbitrator appointed
by the American Arbitration Association. In either case, the Arbitration proceeding shall commence
promptly under the rules then in effect of that Association and the arbitrator agreed to by the
parties or appointed by that Association shall be an attorney other than an attorney who has, or is
associated with a firm having associated with it an attorney which has been retained by or
performed services for the Company or Indemnitee at any time during the five years preceding the
commencement of arbitration. The award shall be rendered in such form that judgment may be entered
thereon in any court having jurisdiction thereof. The prevailing party shall be entitled to prompt
reimbursement of any costs and expenses (including, without limitation, reasonable attorneys’ fees)
incurred in connection with such legal action or arbitration; provided that Indemnitee shall not be
obligated to reimburse the Company unless the arbitrator or court which resolves the dispute
determines that Indemnitee acted in bad faith in bringing such action or arbitration.



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10. Exclusions




     Notwithstanding the scope of indemnification which may be available to Indemnitees from time
to time under any Applicable Document, no indemnification, reimbursement or payment shall be
required of the Company hereunder with respect to:




	(a)	 	Any claim or any part thereof as to which Indemnitee shall have been adjudged by a court of
competent jurisdiction from which no appeal is or can be taken to have acted in willful
misfeasance, or willful disregard of his duties, except to the extent that such court shall
determine upon application that, despite the adjudication of liability, but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper;
	 
	(b)	 	Any claim or any part thereof arising under Section 16(b) of the Exchange Act pursuant to
which Indemnitee shall be obligated to pay any penalty, fine, settlement or judgment;
	 
	(c)	 	Any obligation of Indemnitee based upon or attributable to the Indemnitee gaining 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 of the Board of
Directors of the Company, provided that this exclusion shall not apply with respect to any
claims brought by Indemnitee to enforce his rights under this Agreement or in any Proceeding
initiated by another person or entity whether or not such claims were brought by Indemnitee
against a person or entity who was otherwise a party to such Proceeding.




Nothing in this Section 10 shall eliminate or diminish Company’s obligations to advance that
portion of Indemnitee’s Expenses which represent attorneys’ fees and other costs incurred in
defending any Proceeding pursuant to Section 3 of this Agreement.




11. Extraordinary Transactions




     The Company covenants and agrees that, in the event of any merger, consolidation or
reorganization in which the Company is not the surviving entity, any sale of all or substantially
all of the assets of the Company or any liquidation of the Company (each such event is hereinafter
referred to as an extraordinary transaction ), the Company shall:




	(a)	 	Have the obligations of the Company under this Agreement expressly assumed by the survivor,
purchaser or successor, as the case may be, in such extraordinary transaction; or
	 
	(b)	 	Otherwise adequately provide for the satisfaction of the Company’s obligations under this
Agreement, in a manner acceptable to Indemnitee.





12. No Personal Liability




     Indemnitee agrees that neither the Directors nor any officer, employee, representative or
agent of the Company shall be personally liable for the satisfaction of the Company’s obligations
under this Agreement, and Indemnitee shall look solely to the assets of the Company and the escrow
referred to in Section 4 hereof for satisfaction of any claims hereunder.



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13. Severability.




     If any provision, phrase, or other portion of this Agreement should be determined by any court
of competent jurisdiction to be invalid, illegal or unenforceable, in whole or in part, and such
determination should become final, such provision, phrase or other portion shall be deemed to be
severed or limited, but only to the extent required to render the remaining provisions and portions
of the Agreement enforceable, and the Agreement as thus amended shall be enforced to give effect to
the intention of the parties insofar as that is possible.



14. Subrogation




     In the event of any payment under this Agreement, the Company shall be subrogated to the
extent thereof to all rights to indemnification or reimbursement against any insurer or other
entity or person vested in the Indemnitee, who shall execute all instruments and take all other
actions as shall be reasonably necessary for the Company to enforce such rights.



15. Governing Law




     The parties hereto agree that this Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Ohio.



16. Notices




     All notices, requests, demands and other communications hereunder shall be in writing and
shall be considered to have been duly given if delivered by hand and receipted for by the party 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:
	 	THE LUBRIZOL CORPORATION

29400 Lakeland Boulevard

Wickliffe, Ohio 44092-2298

Attention: General Counsel	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	(b)

	 	If to Indemnitee, to:	 	 	 	 	 	 
	 
	 	 	 	 	 	 

	 

	 	 	 	29400 Lakeland Boulevard

Wickliffe, Ohio 44092-2298	 	 	 	 





or to such other or further address as shall be designated from time to time by the Indemnitee or
the Company to the other.




17. Termination




     This Agreement may be terminated by either party upon not less than sixty (60) days prior
written notice delivered to the other party, but such termination shall not in any way diminish the
obligations of Company hereunder (including the obligation to maintain the escrow referred to in
Section 4 hereof) with respect to Indemnitee’s activities prior to the effective date of
termination.



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18. Amendments




     This Agreement and the rights and duties of Indemnitee and the Company hereunder may not be
amended, modified or terminated except by written instrument signed and delivered by the parties
hereto. This Agreement is and shall be binding upon and shall inure to the benefits of the parties
thereto and their respective heirs, executors, administrators, successors and assigns.



     IN WITNESS WHEREOF, the undersigned have executed this Agreement in triplicate as of the date
first above written.



	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	INDEMNITEE	 	THE LUBRIZOL CORPORATION
	 
	 	 	 	 	 	 
	By

	 	 	 	By	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:	 	Title: Chief Executive Officer







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EXHIBIT I
LUBRIZOL’S CODE OF REGULATIONS




Section 33. Indemnification




     The Company shall indemnify any director or officer and any former director or officer of the
Company and any such director or officer who is or has served at the request of the Company as a
director, officer or trustee of another corporation, partnership, joint venture, trust or other
enterprise (and her heirs, executors and administrators) against expenses, including attorney’s
fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him by
reason of the fact that he is or was such director, officer or trustee in connection with any
threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative to the full extent permitted by applicable law. The indemnification
provided for herein shall not be deemed to restrict the right of the Company (i) to indemnify
employees, agents and others to the extent not prohibited by such law, (ii) to purchase and
maintain insurance or furnish similar protection on behalf of or for any person who is or was a
director, officer, employee or agent of the Company, or any person who is or was serving at the
request of the Company as a director, officer, trustee, employee or agent of another corporation,
joint venture, partnership, trust or other enterprise against any liability asserted against him or
incurred by him in any such capacity or arising out of her status as such, and (iii) to enter into
agreements with persons of the class identified in clause (ii) above indemnifying them against any
and all liabilities (or such lesser indemnification as may be provided in such agreements) asserted
against or incurred by them in such capacities.



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EXHIBIT II
FORM OF UNDERTAKING




     THIS UNDERTAKING has been entered into by ______ (hereinafter “Indemnitee”) pursuant to
an Indemnification Agreement dated _________ (the “Indemnification Agreement”) between The
Lubrizol Corporation (hereinafter “Company”), an Ohio corporation and Indemnitee.



W I T N E S S E T H:




     WHEREAS, pursuant to the Indemnification Agreement, Company agreed to pay Expenses (within the
meaning of the Indemnification Agreement) as and when incurred by Indemnitee in connection with any
claim against Indemnitee which is the subject of any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative, to which Indemnitee
was, is, or is threatened to be made a party by reason of facts which include Indemnitee’s being or
having been a director, officer or representative (within the meaning of the Indemnification
Agreement) of Company;



     WHEREAS, such a claim has arisen against Indemnitee and Indemnitee has notified Company
thereof in accordance with the terms of Section 6 of the Indemnification Agreement (hereinafter the
“Proceeding”);



     WHEREAS, Indemnitee believes that Indemnitee should prevail in this Proceeding and it is in
the interest of both Indemnitee and Company to defend against the claim against Indemnitee
thereunder;



     NOW, THEREFORE, Indemnitee hereby agrees that in consideration of Company’s advance payment of
Indemnitee’s Expenses incurred prior to a final disposition of the Proceeding, Indemnitee hereby
undertakes to reimburse Company for any and all Expenses paid by Company on behalf of Indemnitee
prior to a final disposition of the Proceeding in the event that Indemnitee is determined under the
Applicable Document (within the meaning of the Indemnification Agreement) not to be entitled to
indemnification for such Expenses pursuant to the Indemnification Agreement and applicable law,
provided that if Indemnitee is entitled under the Applicable Document to indemnification for some
or a portion of such Expenses, Indemnitee’s obligation to reimburse Company shall only be for those
Expenses for which Indemnitee is determined not to be entitled to indemnification. Such
reimbursement or arrangements for reimbursement by Indemnitee shall be consummated within ninety
(90) days after a determination that Indemnitee is not entitled to indemnification and
reimbursement pursuant to the Indemnification Agreement and applicable law.



     IN WITNESS WHEREOF, the undersigned has set his hand this ___day of ___, ___.



	 	 	 
	 

	 	INDEMNITEE
	 
	 	 
	 

	 	 






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