Document:

exv10w10

 

Exhibit 10.10

Cash Bonus Plan

     The following is a description of our cash bonus plan for 2006, as adopted by our
board of directors. Our cash bonus plan is intended to provide an incentive for business
performance, reward contributions towards goals consistent with our business strategy and
enable us to attract and retain highly qualified executive officers and key employees. The
cash bonus plan provides for the payment of cash bonuses to employees who are considered
management level, including the named executive officers, and certain other employees. The
cash bonus plan is administered by the board of directors, which has full authority to
select participants, set bonus amounts and fix performance targets. The board receives
recommendations from the compensation committee with input from our chief executive officer
with respect to officers other than himself.

     Bonuses under the cash bonus plan are paid to participants based upon achievement of
performance objectives established with respect to each fiscal year. The performance
objectives for 2006 are based upon achievement of revenue and Adjusted EBITDA targets and
on execution of other key corporate goals. During 2006, each of our named executive
officers are eligible to receive a bonus under the cash bonus plan, with Mr. Boyle eligible
to receive a bonus of 30% of his base salary if performance objectives are met and each
other named executive officer eligible to receive a bonus of 20% of their base salary if
performance objectives are met. The board of directors may increase these amounts if
revenue and Adjusted EBITDA exceed the plan performance targets.

     In addition to the named executive officers, other employees are eligible for the
award of bonuses under the cash bonus plan for exceptional performance, as determined by
the board of directors.

     Following the completion of this offering, the cash bonus plan will be administered by
our compensation committee, whose determination on all matters relating to the cash bonus
plan will be final and binding. At the beginning of each year, the compensation committee
will select the eligible participants in our cash bonus plan, establish the performance
goals for that year, and determine target incentive bonuses for the participants. At the
end of each performance period, the compensation committee will certify that the
performance goals have been met with respect to the given year. The compensation committee
may amend, suspend or terminate the cash bonus plan at any time in its sole discretion.Exhibit 10.19

 

Exhibit 10.19

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of      , by and
between The Lubrizol Corporation, an Ohio corporation (the
“Company”), and     (the
“Executive”);

WITNESSETH:

     WHEREAS, the Executive is a senior executive of the Company and has made and is expected to
continue to make major contributions to the profitability, growth and financial strength of the
Company;

     WHEREAS, the Company recognizes that, as is the case for most publicly held companies, the
possibility of a Change in Control (as that term is hereafter defined) exists;

     WHEREAS, the Company desires to assure itself of both present and future continuity of
management in the event of a Change in Control and desires to establish certain minimum
compensation rights of its key senior executive officers, including the Executive, applicable in
the event of a Change in Control;

     WHEREAS, the Company wishes to ensure that it’s senior executives are not practically
disabled from discharging their duties upon a Change in Control;

     WHEREAS, this Agreement is not intended to alter materially the compensation and benefits
which the Executive could reasonably expect to receive from the Company absent a Change in Control
and, accordingly, although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change in Control; and

     WHEREAS, the Executive is willing to render services to the Company on the terms and subject
to the conditions set forth in this Agreement;

     NOW, THEREFORE, the Company and the Executive agree as follows:

1. Operation of Agreement

(a) This Agreement shall be effective and binding immediately upon its execution, but, anything in
this Agreement to the contrary notwithstanding, this Agreement shall not be operative unless and
until there shall have occurred a Change in Control. For purposes of this Agreement, a “Change in
Control” shall have occurred if at any time during the Term (as that term is hereafter defined)
any of the following events shall occur:

(i) The Company is merged, consolidated or reorganized into or with another corporation or
other legal person, and immediately after such merger, consolidation or reorganization less
than a majority of the combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the aggregate by the
holders of Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;

(ii) The Company sells all or substantially all of its assets to any other corporation or
other legal person, less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such sale are
held in the aggregate by the holders of Voting Stock of the Company immediately prior to
such sale;

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(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), disclosing that any person (as the term “person” is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner
(as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 20% or more of
the combined voting power of the then-outstanding securities entitled to vote generally in
the election of directors of the Company (“Voting Stock”);

(iv) The Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) 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

(v) If during any period of 2 consecutive years, 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, provided, however, that for purposes of this clause (v), each
Director who is first elected, or first nominated for election by the Company’s
stockholders by a vote of at least two-thirds of the Directors of the Company (or a
committee thereof) then still in office who were Directors of the Company at the beginning
of any such period will be deemed to have been a Director of the Company at the beginning
of such period.

Notwithstanding the foregoing provisions of Section 1(a)(iii) or 1(a)(iv) hereof, unless otherwise
determined in a specific case by majority vote of the Board of Directors of the Company (the
“Board”), a “Change in Control” shall not be deemed to have occurred for purposes of this
Agreement solely because (i) the Company, (ii) an entity in which the Company directly or
indirectly beneficially owns 50% or more of the voting securities (a “Subsidiary”), or (iii) any
Company-sponsored employee stock ownership plan or any other employee benefit plan of the Company,
either files or becomes obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) under the Exchange Act, disclosing beneficial ownership by it of shares of Voting
Stock, whether in excess of 20% or otherwise, or because the Company reports that a change in
control of the Company has or may have occurred or will or may occur in the future by reason of
such beneficial ownership.

(b) Upon the occurrence of a Change in Control at any time during the Term, this Agreement shall
become immediately operative.

(c) The period during which this Agreement shall be in effect (the “Term”) shall commence as of
the date hereof and shall expire as of the later of (i) the
close of business on December 31, 20__
and (ii) the expiration of the Period of Employment (as that term is hereinafter defined);
provided, however, that (A) commencing on January 1, 20__ and each January 1 thereafter, the term
of this Agreement shall automatically be extended for an additional year unless, not later than
September 30 of the immediately preceding year, the Company or the Executive shall have given
notice that it or he, as the case may be, does not wish to have the Term extended and (B) subject
to Section 10 hereof, if, prior to a Change in Control, the Executive ceases for any reason to be
an employee of the Company and any Subsidiary, thereupon the Term shall be deemed to have expired
and this Agreement shall immediately terminate and be of no further effect.

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2. Employment; Period of Employment

(a) Subject to the terms and conditions of this Agreement, upon the occurrence of a Change in
Control, the Company shall continue the Executive in its employ and the Executive shall remain in
the employ of the Company and/or a Subsidiary, as the case may be, for the period set forth in
Section 2(b) hereof (the “Period of Employment”), in the position and with substantially the same
duties and responsibilities that he had immediately prior to the Change in Control, or to which
the Company and the Executive may hereafter mutually agree in writing. Throughout the Period of
Employment, the Executive shall devote substantially all of his time during normal business hours
(subject to vacations, sick leave and other absences in accordance with the policies of the
Company as in effect for senior executives immediately prior to the Change in Control) to the
business and affairs of the Company, but nothing in this Agreement shall preclude the Executive
from devoting reasonable periods of time during normal business hours to (i) serving as a
director, trustee or member of or participant in any organization or business so long as such
activity would not constitute Competitive Activity (as that term is hereafter defined) if
conducted by the Executive after the Executive’s Termination Date (as that term is hereafter
defined), (ii) engaging in charitable and community activities, or (iii) managing his personal
investments.

(b) The Period of Employment shall commence on the date of an occurrence of a Change in Control
and, subject only to the provisions of Section 4 hereof, shall continue until the earliest of (i)
the expiration of the third anniversary of the occurrence of the Change in Control, (ii) the
Executive’s death, (iii) by reason of the Executive’s disability and the actual receipt of
disability benefits in accordance with Section 4(a)(ii), or (iv) the Executive’s attainment of age
65; provided, however, that commencing on each anniversary of the Change of Control, the Period of
Employment shall automatically be extended for an additional year unless, not later than 90
calendar days prior to such anniversary date, either the Company or the Executive shall have given
written notice to the other that the Period of Employment shall not be so extended.

3. Compensation During Period of Employment

(a) Upon the occurrence of a Change in Control, the Executive shall receive during the Period of
Employment (i) annual base salary at a rate not less than the Executive’s annual fixed or base
compensation (payable monthly or otherwise as in effect for senior executives of the Company
immediately prior to the occurrence of a Change in Control) or such higher rate as may be
determined from time to time by the Board or the Compensation Committee thereof (which base salary
at such rate is herein referred to as “Base Pay,” and 1 year’s worth of such Base Pay is herein
referred to as the “Annual Base Pay Amount”) and (ii) an annual amount (the “Annual Incentive Pay
Amount”) equal to not less than the highest aggregate annual bonus, incentive or other payments of
cash compensation in addition to the amounts referred to in clause (i) above made or to be made in
regard to services rendered in any calendar year during the 3 calendar years immediately preceding
the year in which the Change in Control occurred pursuant to any bonus, incentive, profit-sharing,
performance, discretionary pay or similar agreement, policy, plan, program or arrangement (whether
or not funded) of the Company or any successor thereto providing benefits at least as great as the
benefits payable thereunder prior to a Change in Control (“Incentive Pay”); provided, however,
that (A) with the prior written consent of the Executive, nothing herein shall preclude a change
in the mix between Base Pay and Incentive Pay so long as that the aggregate cash compensation
received by the Executive in any 1 calendar year is not reduced in connection therewith or as a
result thereof, (B) in no event shall any increase in the Executive’s aggregate cash compensation
or any portion thereof in any way diminish any other obligation of the Company under this
Agreement, and (C) no duplicate payment hereunder will be made in respect of any

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amount actually paid to the Executive pursuant to any such agreement, policy, plan, program or
arrangement.

(b) For his service pursuant to Section 2(a) hereof during the Period of Employment the Executive
shall be a full participant in, and shall be entitled to the perquisites, benefits and service
credit for benefits as provided under, any and all employee retirement income and welfare benefit
policies, plans, programs or arrangements in which senior executives of the Company participate,
including without limitation any stock option, stock purchase, stock appreciation, savings,
pension, supplemental executive retirement or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group and/or executive life, health, medical/ hospital or
other insurance (whether funded by actual insurance or self-insured by the Company), disability,
salary continuation, expense reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans, programs or
arrangements that may be adopted hereafter by the Company providing perquisites, benefits and
service credit for benefits at least as great as are payable thereunder prior to a Change in
Control (collectively, “Employee Benefits”); provided, however, that except as expressly provided
in, and subject to the terms of, Section 3(a) hereof, the Executive’s rights thereunder shall be
governed by the terms thereof and shall not be enlarged hereunder or otherwise affected hereby.
If and to the extent such perquisites, benefits or service credit for benefits are not payable or
provided under any such policy, plan, program or arrangement as a result of the amendment or
termination thereof, then the Company shall itself pay or provide therefor. Nothing in this
Agreement shall preclude improvement or enhancement of any such Employee Benefits, provided that
no such improvement shall in any way diminish any other obligation of the Company under this
Agreement.

4. Termination Following a Change in Control

(a) In the event of the occurrence of a Change in Control, the Executive’s employment may be
terminated by the Company during the Period of Employment and the Executive shall not be entitled
to the benefits provided by Sections 5 and 6 hereof only upon the occurrence of one or more of the
following events:

(i) The Executive’s death;

(ii) If the Executive shall become permanently disabled within the meaning of, and begins
actually to receive disability benefits pursuant to, the long-term disability plan in
effect for senior executives of the Company immediately prior to the Change in Control; or

(iii) The Executive’s attainment of age 65;

(iv) “Cause”, which for purposes of this Agreement shall mean that, prior to any
termination pursuant to Section 4(b) hereof, the Executive shall have committed:

(A) an intentional act of fraud, embezzlement or theft in connection with his
duties or in the course of his employment with the Company and/or any Subsidiary;

(B) intentional wrongful damage to property of the Company and/or any Subsidiary;

(C) intentional wrongful disclosure of secret processes or confidential information
of the Company and/or any Subsidiary; or

(D) intentional wrongful engagement in any Competitive Activity;

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and any such act shall have been materially harmful to the Company. For purposes of this
Agreement, no act, or failure to act, on the part of the Executive shall be deemed
“intentional” if it was due primarily to an error in judgment or negligence, but shall be
deemed “intentional” only if done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for “Cause” hereunder unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the Board then in office at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding that, in the
good faith opinion of the Board, the Executive had committed an act set forth above in
Section 4(a)(iv) and specifying the particulars thereof in detail. Nothing herein shall
limit the right of the Executive or his beneficiaries to contest the validity or propriety
of any such determination.

(b) In the event of the occurrence of a Change in Control, this Agreement may be terminated by the
Executive during the Period of Employment with the right to severance compensation as provided in
Sections 5 and 6 hereof upon the occurrence of one or more of the following events (regardless of
whether any other reason, other than Cause as hereinabove provided, for such termination exists or
has occurred, including without limitation other employment):

(i) Any termination by the Company of the employment of the Executive prior to the date
upon which the Executive shall have attained age 65, which termination shall be for any
reason other than for Cause or as a result of the death of the Executive or by reason of
the Executive’s disability and the actual receipt of disability benefits in accordance with
Section 4(a)(ii) hereof; or

(ii) Termination by the Executive of his employment with the Company and any Subsidiary
within 3 years after the Change in Control upon the occurrence of any of the following
events:

(A) Failure to elect or reelect or otherwise to maintain the Executive in the
office or the position, or a substantially equivalent office or position, of or
with the Company and/or a Subsidiary, as the case may be, which the Executive held
immediately prior to a Change in Control, or the removal of the Executive as a
Director of the Company (or any successor thereto) if the Executive shall have been
a Director of the Company immediately prior to the Change in Control;

(B) A significant adverse change in the nature or scope of the authorities, powers,
functions, responsibilities or duties attached to the position with the Company and
any Subsidiary which the Executive held immediately prior to the Change in Control,
a reduction in the aggregate of the Executive’s Base Pay and Incentive Pay received
from the Company and any Subsidiary, or the termination or denial of the
Executive’s rights to Employee Benefits as herein provided, any of which is not
remedied within 10 calendar days after receipt by the Company of written notice
from the Executive of such change, reduction or termination, as the case may be;

(C) A determination by the Executive made in good faith that as a result of a
Change in Control and a change in circumstances thereafter significantly affecting
his position, including without limitation a change in the scope of the

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business or other activities for which he was responsible immediately prior to a
Change in Control, he has been rendered substantially unable to carry out, has been
substantially hindered in the performance of, or has suffered a substantial
reduction in, any of the authorities, powers, functions, responsibilities or duties
attached to the position held by the Executive immediately prior to the Change in
Control, which situation is not remedied within 10 calendar days after written
notice to the Company from the Executive of such determination;

(D) The liquidation, dissolution, merger, consolidation or reorganization of the
Company or transfer of all or a significant portion of its business and/or assets,
unless the successor or successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a significant portion of its business
and/or assets have been transferred (directly or by operation of law) shall have
assumed all duties and obligations of the Company under this Agreement pursuant to
Section 12 hereof;

(E) The Company shall relocate its principal executive offices, or require the
Executive to have his principal location of work changed, to any location which is
in excess of 25 miles from the location thereof immediately prior to the Change of
Control or to travel away from his office in the course of discharging his
responsibilities or duties hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar year) than was required of him
prior to the Change of Control without, in either case, his prior written consent;
or

(F) Without limiting the generality or effect of the foregoing, any material breach
of this Agreement by the Company or any successor thereto.

(iii) Termination by the Executive of his employment with the Company and any Subsidiary,
for any reason or for no reason, at any time during the 90 day period commencing on the
first anniversary of the Change in Control, provided that the Executive remains employed by
the Company up to the date of that termination by the Executive.

(c) A termination by the Company pursuant to Section 4(a) hereof or by the Executive pursuant to
Section 4(b) hereof shall not affect any rights which the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of the Company providing Employee Benefits (except
as provided in Section 5(a)(v) hereof), which rights shall be governed by the terms thereof. If
this Agreement or the employment of the Executive is terminated under circumstances in which the
Executive is not entitled to any payments under Sections 3, 5 or 6 hereof, the Executive shall
have no further obligation or liability to the Company hereunder with respect to his prior or any
future employment by the Company.

5. Severance Compensation

(a) If, following the occurrence of a Change in Control, the Company shall terminate the
Executive’s employment during the Period of Employment other than pursuant to Section 4(a) hereof,
or if the Executive shall terminate his employment pursuant to Section 4(b) hereof, the Company
shall continue to provide the following benefits and shall further pay to the Executive the
following amounts within 5 business days after the date (the “Termination Date”) that the
Executive’s employment is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if the termination is
pursuant to Section 4(b) hereof):

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(i) Base Pay through the Termination Date, to the extent not previously paid to the
Executive.

(ii) Incentive Pay for any calendar year ended before the Termination Date in the same
amount that would have been payable to the Executive with respect to that calendar year if
the Executive had remained in the employ of the Company through the end of the Period of
Employment, to the extent not previously paid to the Executive.

(iii) An amount constituting a pro rata Incentive Pay award for the partial year ending on
the Termination Date and equal to (A) the greater of (I) the Annual Incentive Pay Amount or
(II) the aggregate Incentive Pay to which the Executive would have been entitled pursuant
to this Agreement or any agreement, policy, plan, program or arrangement referred to
therein had he remained in the employ of the Company through the end of the calendar year
in which his employment is terminated, multiplied by (B) a fraction, the numerator of which
is the number of days from January 1 of the calendar year in which the Termination Date
occurs to the Termination Date, inclusive, and the denominator of which is 365.

(iv) In lieu of any further payments to the Executive for periods subsequent to the
Termination Date, but without affecting the rights of the Executive referred to in Section
5(b) hereof, a lump sum payment (the “Severance Payment”) in an amount equal to 3 times the
sum of (A) the Annual Base Pay Amount (at the highest rate in effect for any period prior
to the Termination Date), plus (B) the Annual Incentive Pay Amount.

(v) For the period commencing on the Termination Date and ending on the third anniversary
of the Termination Date (the “Benefit Continuation Period”), the Company shall arrange to
provide the Executive with Employee Benefits that are welfare benefits, but not stock
option, stock purchase, stock appreciation, or similar compensatory benefits, substantially
similar to those which the Executive was receiving or entitled to receive immediately prior
to the Termination Date (and if and to the extent that such benefits shall not or cannot be
paid or provided under any policy, plan, program or arrangement of the Company or any
Subsidiary, as the case may be, then the Company shall itself pay or provide for the
payment to the Executive, his dependents and beneficiaries, such Employee Benefits).
Without otherwise limiting the purposes or effect of Section 7 hereof, Employee Benefits
otherwise receivable by the Executive pursuant to the first sentence of this Section
5(a)(ii) shall be reduced to the extent comparable welfare benefits are actually received
by the Executive from another employer during the Benefit Continuation Period, and any such
benefits actually received by the Executive shall be reported by the Executive to the
Company. Notwithstanding the foregoing, the Benefit Continuation Period shall be
considered service with the Company for the purpose of determining service credits and
benefits due and payable to the Executive under the Company’s retirement income,
supplemental executive retirement and other benefit plans of the Company applicable to the
Executive or his beneficiaries immediately prior to the Termination Date.

(b) Upon written notice given by the Executive to the Company prior to the occurrence of a Change
in Control, the Executive, at his sole option, without reduction to reflect the present value of
such amounts as aforesaid, may elect to have all or any of the Severance Payment payable pursuant
to Section 5(a) hereof paid to him on a quarterly or monthly basis during the Benefit Continuation
Period.

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(c) There shall be no right of set-off or counterclaim in respect of any claim, debt or obligation
against any payment to or benefit for the Executive provided for in this Agreement, except as
expressly provided in Section 5(a)(v) hereof.

(d) Without limiting the rights of the Executive at law or in equity, if the Company fails to make
any payment required to be made hereunder on a timely basis, the Company shall pay interest on the
amount thereof at an annualized rate of interest equal to the then-applicable discount rate
required to be utilized for purposes of Section 280G of the Code or any successor provision
thereto, or if no such rate is so required to be used, a rate equal to the then applicable
interest rate prescribed by the Pension Benefit Guarantee Corporation for benefit valuations in
connection with non-multiemployer pension plan terminations assuming the immediate commencement of
benefit payments.

(e) Notwithstanding any other provision hereof, the parties’ respective rights and obligations
under this Section 5 will survive any termination or expiration of this Agreement or the
termination of the Executive’s employment for any reason whatsoever.

6. Certain Additional Payments by the Company

(a) Anything in this Agreement to the contrary notwithstanding, in the event that this Agreement
shall become operative and it shall be determined (as hereafter provided) that any payment or
distribution by the Company or any of its affiliates to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of any of the
foregoing (individually and collectively a “Payment”), would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision thereto) by reason of being considered
“contingent on a change in ownership or control” of the Company, within the meaning of Section
280G of the Code (or any successor provision thereto), or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and penalties, being
hereafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment or payments (individually and collectively, a “Gross-Up Payment”).
The Gross-Up Payment shall be in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.

(b) Subject to the provisions of Section 6(e) hereof, all determinations required to be made under
this Section 6, including whether an Excise Tax is payable by the Executive and the amount of such
Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to the Executive
and the amount of such Gross-Up Payment, if any, shall be made by a nationally recognized
accounting firm (the “Accounting Firm”) selected by the Executive in his sole discretion. The
Executive shall direct the Accounting Firm to submit its determination and detailed supporting
calculations to both the Company and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by the Executive, the
Company shall pay the required Gross-Up Payment to the Executive within 5 business days after
receipt of such determination and calculations with respect to any Payment to the Executive. The
federal tax returns filed by the Executive shall be prepared and filed on a consistent basis with
the determination of the Accounting Firm with respect to the Excise Tax payable by the Executive.
If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such

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determination, furnish the Company and the Executive an opinion that the Executive has substantial
authority not to report any Excise Tax on his federal income tax return. As a result of the
uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at
the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an “Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 6(e) hereof and the Executive
thereafter is required to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the Company to, or for the
benefit of, the Executive within 5 business days after receipt of such determination and
calculations.

(c) The Company and the Executive shall each provide the Accounting Firm access to and copies of
any books, records and documents in the possession of the Company or the Executive, as the case
may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and calculations
contemplated by Section 6(b) hereof.

(d) The fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by Section 6(b) hereof shall be borne by the Company.
If such fees and expenses are initially paid by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within 5 business days after receipt from the
Executive of a statement therefor and reasonable evidence of his payment thereof.

(e) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than 10 business days after
the Executive actually receives notice of such claim and the Executive shall further apprise the
Company of the nature of such claim and the date on which such claim is requested to be paid (in
each case, to the extent known by the Executive). The Executive shall not pay such claim prior to
the earlier of (i) the expiration of the 30-calendar-day period following the date on which he
gives such notice to the Company and (ii) the date that any payment of amount with respect to such
claim is due. If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

(i) provide the Company with any written records or documents in his possession relating to
such claim reasonably requested by the Company;

(ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without limitation accepting
legal representation with respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;

(iii) cooperate with the Company in good faith in order effectively to contest such claim;
and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
interest and penalties) incurred in connection with such contest and shall indemnify and hold
harmless the Executive on an after-tax basis, for and against any Excise Tax or

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income tax, including interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the foregoing provisions of
this Section 6(e), the Company shall control all proceedings taken in connection with the contest
of any claim contemplated by this Section 6(e) and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may participate therein at his own
cost and expense) and may, at its option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay the tax claimed and sue for a
refund, the Company shall advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise
Tax or income tax, including interest or penalties with respect thereto, imposed with respect to
such advance; and provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which the
contested amount is claimed to be due is limited solely to such contested amount. Furthermore,
the Company’s control of any such contested claim shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

(f) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(e) hereof, the Executive receives any refund with respect to such claim, the Executive
shall (subject to the Company’s complying with the requirements of Section 6(e) hereof) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after any taxes applicable thereto). If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 6(e) hereof, a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of any such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid by the Company to the Executive pursuant to this
Section 6.

7. No Mitigation Obligation

The Company hereby acknowledges that it will be difficult, and may be impossible, for the
Executive to find reasonably comparable employment following the Termination Date and that the
noncompetition covenant contained in Section 8 hereof will further limit the employment
opportunities for the Executive. In addition, the Company acknowledges that its severance pay
plans applicable in general to its salaried employees do not provide for mitigation, offset or
reduction of any severance payment received thereunder. Accordingly, the parties hereto expressly
agree that the payment of the severance compensation by the company to the Executive in accordance
with the terms of this Agreement will be liquidated damages, and that the Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in Section 5(a)(v) hereof.

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8. Competitive Activity

During a period ending 1 year following the Termination Date, if the Executive shall have received
or shall be receiving benefits under Section 5 hereof and, if applicable, Section 6 hereof, the
Executive shall not, without the prior written consent of the Company, which consent shall not be
unreasonably withheld, engage in any Competitive Activity. For purposes of this Agreement, the
term “Competitive Activity” shall mean the Executive’s participation, without the written consent
of an officer of the Company, in the management of any business enterprise if such enterprise
engages in substantial and direct competition with the Company and such enterprise’s sales of any
product or service competitive with any product or service of the Company amounted to 25% of such
enterprise’s net sales for its most recently completed fiscal year and if the Company’s net sales
of said product or service amounted to 25% of the Company’s net sales for its most recently
completed fiscal year. “Competitive Activity” shall not include (i) the mere ownership of
securities in any such enterprise and exercise of rights appurtenant thereto or (ii) participation
in management of any such enterprise other than in connection with the competitive operations of
such enterprise.

9. Legal Fees and Expenses

(a) It is the intent of the Company that the Executive not be required to incur legal fees and the
related expenses associated with the enforcement or defense of his rights under this Agreement by
litigation or other legal action because the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should
appear to the Executive that the Company has failed to comply with any of its obligations under
this Agreement or in the event that the Company or any other person takes or threatens to take any
action to declare this Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, the Executive the benefits provided or
intended to be provided to the Executive hereunder, the Company irrevocably authorizes the
Executive from time to time to retain counsel of his choice, at the expense of the Company as
hereafter provided, to represent the Executive in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any
existing or prior attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to the Executive’s entering into an attorney-client relationship with such
counsel, and in that connection the Company and the Executive agree that a confidential
relationship shall exist between the Executive and such counsel. Without respect to whether the
Executive prevails, in whole or in part, in connection with any of the foregoing, the Company
shall pay or cause to be paid and shall be solely responsible for any and all attorneys’ and
related fees and expenses incurred by the Executive in connection with any of the foregoing.

(b) Without limiting the generality or effect of Section 9(a) hereof, in order to ensure the
benefits intended to be provided to the Executive under Section 9(a) hereof, the Company will
promptly use its best efforts to secure an irrevocable standby letter of credit (the “Letter of
Credit”), issued by National City Bank or another bank having combined capital and surplus in
excess of $500 million (the “Bank”) for the benefit of the Executive and certain other of the
officers of the Company and providing that the fees and expenses of counsel selected from time to
time by the Executive pursuant to this Section 9 shall be paid, or reimbursed to the Executive if
paid by the Executive, on a regular, periodic basis upon presentation by the Executive to the Bank
of a statement or statements prepared by such counsel in accordance with its customary practices.
The Company shall pay all amounts and take all action necessary to maintain the Letter of Credit
during the Period of Employment and for 2 years thereafter and

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if, notwithstanding the Company’s complete discharge of such obligations, such Letter of Credit
shall be terminated or not renewed, the Company shall obtain a replacement irrevocable clean
letter of credit drawn upon a commercial bank selected by the Company and reasonably acceptable to
the Executive, upon substantially the same terms and conditions as contained in the Letter of
Credit, or any similar arrangement which, in any case, assures the Executive the benefits of this
Agreement without incurring any cost or expense in connection therewith.

(c) Notwithstanding any other provision hereof, the parties’ respective rights and obligations
under this Section 9 will survive any termination or expiration of this Agreement or the
termination of the Executive’s employment for any reason whatsoever.

10. Employment Rights

Nothing expressed or implied in this Agreement shall create any right or duty on the part of the
Company or the Executive to have the Executive remain in the employment of the Company prior to
any Change in Control; provided, however, that any termination of employment of the Executive or
the removal of the Executive from his office or position in the Company or any Subsidiary
following the commencement of any discussion with a third person that ultimately results in a
Change in Control shall be deemed to be a termination or removal of the Executive after a Change
in Control for purposes of this Agreement.

11. Withholding of Taxes

The Company may withhold from any amounts payable under this Agreement all federal, state, city or
other taxes as shall be required pursuant to any law or government regulation or ruling.

12. Successors and Binding Agreement

(a) The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly
to assume and agree to perform this Agreement in the same manner and to the same extent the
Company would be required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or indirectly all or substantially all
of the business and/or assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the
purposes of this Agreement), but shall not otherwise be assignable, transferable or delegable by
the Company.

(b) This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or
legal representatives, executors, administrators, successors, heirs, distributees and/or legatees.

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the
consent of the other, assign, transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 12(a) and 12(b) hereof. Without limiting the
generality of the foregoing, the Executive’s right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by his will or by the laws of descent and distribution and, in
the event of any attempted assignment or transfer contrary to this Section 12(c), the Company
shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

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(d) The Company and the Executive recognize that each party will have no adequate remedy at law
for breach by the other of any of the agreements contained herein and, in the event of any such
breach, the Company and the Executive hereby agree and consent that the other shall be entitled to
a decree of specific performance, mandamus or other appropriate remedy to enforce performance of
this Agreement.

13. Notice

For all purposes of this Agreement, all communications including without limitation notices,
consents, requests or approvals, provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or 5 business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid, addressed to the Company
(to the attention of the Secretary of the Company) at its principal executive office and to the
Executive at his principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

14. Governing Law

The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of Ohio, without giving effect to the principles of conflict of laws of such
State.

15. Validity

If any provision of this Agreement or the application of any provision hereof to any person or
circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or circumstances shall not be affected,
and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to
the extent (and only to the extent) necessary to make it enforceable, valid and legal.

16. Miscellaneous

No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, expressed or implied with
respect to the subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.

17. Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same agreement.

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
as of the date first above written.

	 	 	 	 	 	 	 
	EXECUTIVE	 	 	 	THE LUBRIZOL CORPORATION
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 	 	 	 	Chairman and Chief
Executive Officer

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