<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
Commission file number 1-5263
THE LUBRIZOL CORPORATION
29400 Lakeland Boulevard
Wickliffe, Ohio 44092-2298
(Name of registrant and address of principal executive offices)
OHIO 34-0367600
(State of incorporation) (I.R.S. Employer Identification No.)
Registrant's telephone number, including area code: (216) 943-4200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------------------- -----------------------
Common Shares without par value New York Stock Exchange
Common Share purchase rights New York Stock Exchange
Preferred Share purchase rights New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No______
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value (on basis of closing sale price) of voting
stock held by non-affiliates as of March 4, 1994: $2,433,762,869
Number of the registrant's Common Shares, without par value,
outstanding as of March 4, 1994: 66,554,659
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1993 Annual Report to its shareholders
(Incorporated into Part I and II of this Form 10-K)
Portions of the registrant's Proxy Statement dated March 16, 1994
(Incorporated into Part III of this Form 10-K)
<PAGE> 2
PART I
ITEM 1. BUSINESS
Lubrizol was organized under the laws of Ohio in 1928. The
company began business as a compounder of special-purpose lubricants, and in
the early 1930's was among the first to commence research in the field of
lubricant additives. Today, the company is a full service supplier of
performance chemicals to diverse markets worldwide. These specialty chemical
products are created through the application of advanced chemical, mechanical
and biological technologies to enhance the performance and quality of the
customer products in which they are used. The company develops, produces and
sells chemical additives for transportation and industrial lubricants and
functional fluids, fuel additives and diversified specialty chemical products.
Prior to December 1, 1992, the company also had a separately
reportable Agribusiness segment. That segment included traditional operations
which develop, produce and market planting seeds and specialty vegetable oils,
and also included strategic biotechnology research and development. As
described in Note 16 to the Financial Statements (included in the company's
1993 Annual Report to its shareholders and incorporated herein by reference) on
December 1, 1992, the company transferred substantially all of its Agribusiness
segment, other than the specialty vegetable oil operations, to Mycogen
Corporation and a joint venture partnership formed with Mycogen. The
transferred assets were related to the seed business activities of the
company's former Agrigenetics Division. The Agribusiness assets and operations
retained by the company are not reportable as a separate industry segment after
1992.
Financial information for the industry segments, prior to
December 1, 1992, is contained in Note 14 to the Financial Statements and in
the table of Operating Results by Business Segment contained in Management's
Discussion and Analysis on page 29 of the 1993 Annual Report to shareholders
which are incorporated herein by reference.
Specialty Chemicals
PRINCIPAL PRODUCTS. The company's principal products are
additive systems for gasoline and diesel engine oils, automatic transmission
fluids, gear oils, industrial fluids, metalworking compounds and fuels. The
company also offers other specialty chemical products. Additives for engine
oils accounted for 50% of consolidated revenues in 1993, 48% in 1992, and 45%
in 1991. Additives for driveline oils accounted for 19%, 18% and 19% of
consolidated revenues for these respective periods.
Additives improve the lubricants and fuels used in cars, trucks,
buses, off-highway equipment, marine engines and industrial applications. In
lubricants, additives enable oil to withstand a broader range of temperatures,
limit the buildup of sludge and varnish deposits, reduce wear, inhibit the
formation of foam, rust and corrosion, and retard oxidation. In fuels,
additives help maintain efficient operation of the fuel delivery system, help
control deposits and corrosion, improve combustion and assist in preventing
decomposition during storage.
<PAGE> 3
Due to the variety in the properties and applications of oils, a
number of different chemicals are used to formulate Lubrizol's products. Each
additive combination is designed to fit the characteristics of the customer's
base oil and the level of performance specified. Engine oils for passenger
cars contain a combination of chemical additives which usually includes one or
more detergents, dispersants, oxidation inhibitors and wear inhibitors, pour
point depressants and viscosity improvers. Other chemical combinations are
used in heavy duty engine oils for trucks and off-highway equipment and in
formulations for gear oils, automatic transmission fluids, industrial oils,
metalworking fluids, and gasoline, diesel and residual fuels.
COMPETITION. The chemical additive field is highly competitive
in terms of price, product performance and customer service. The company's
principal competitors, both in the United States and overseas, are four major
petroleum companies and one chemical company. The petroleum companies produce
lubricant and fuel additives for their own use, and also sell additives to
others. These competing companies are also customers of Lubrizol. Excluding
viscosity improvers, management believes, based on volume sold, that it is the
largest supplier to the petroleum industry of performance chemicals for
lubricants.
CUSTOMERS. In the United States, Lubrizol markets its additive
products through its own sales organization. The company's additive customers
consist primarily of oil refiners and independent oil blenders and are located
in more than 100 countries. Approximately 60% of the company's sales are made
to customers outside of North America. The company's ten largest customers,
most of which are international oil companies and a number of which are groups
of affiliated entities, accounted for approximately 44% of consolidated sales
in 1993. Although the loss of any one of these customers could have a material
adverse effect on the company's business, each is made up of a number of
separate business units that the company believes make independent purchasing
decisions with respect to chemical additives. Sales to Royal Dutch Petroleum
Company (Shell) and its affiliates accounted for 9% of consolidated sales in
1993.
RAW MATERIALS. Lubrizol utilizes a broad variety of chemical raw
materials in the manufacture of its additives and uses oil in processing and
blending additives. These materials are obtainable from several sources, and
for the most part are derived from petroleum. Historically, the unstable
conditions in the Middle East have caused the cost of raw materials to
fluctuate significantly; however, it has not significantly affected the
availability of raw materials to the company. The company expects raw
materials to be available in adequate amounts in 1994.
RESEARCH, TESTING AND DEVELOPMENT. Lubrizol has historically
emphasized research and has developed a large percentage of the additives it
manufactures and sells. Technological developments in the design of engines
and other automotive equipment, combined with rising demands for environmental
protection and fuel economy, require increasingly sophisticated chemical
additives.
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<PAGE> 4
Research and development expenditures were $88.5 million in 1993,
$76.2 million for 1992 and $63.7 million for 1991. These amounts were
equivalent to 5.8%, 5.3% and 4.7% of the respective revenues for such years.
These amounts include expenditures for the performance evaluation of additive
developments in engines and other types of mechanical equipment as well as
expenditures for the development of specialty chemicals for industrial
applications. In addition, $83.0 million, $63.6 million and $64.0 million was
spent in 1993, 1992 and 1991, respectively, for technical service activities,
principally for evaluation in mechanical equipment of specific lubricant
formulations designed for the needs of petroleum industry customers throughout
the world.
The company has two research facilities at Wickliffe, Ohio, one
of which is principally for lubricant additive research and the other for
research in the field of other specialty chemicals. The company also maintains
a mechanical testing laboratory at Wickliffe, equipped with a variety of
gasoline and diesel engines and other mechanical equipment to evaluate the
performance of additives for lubricants and fuels. Lubrizol has similar
mechanical testing laboratories in England and Japan and, in addition, makes
extensive use of independent contract research firms. Extensive field testing
is also conducted through various arrangements with fleet operators and others.
Liaison offices in Detroit, Michigan; Hazelwood, England;
Hamburg, Germany; Tokyo, Japan; and Paris, France maintain close contact with
the principal automotive and equipment manufacturers of the world and keep the
company abreast of the performance requirements for Lubrizol products in the
face of changing technologies. These liaison activities also serve as contacts
for cooperative development and evaluation of products for future applications.
Contacts with the automotive and equipment industry are important so the
company may have the necessary direction and lead time to develop products for
use in engines, transmissions, gear sets, and other areas of equipment that
require lubricants of advanced design.
PATENTS. Lubrizol owns certain United States patents relating to
lubricant and fuel additives, lubricants, chemical compositions and processes,
and protective coating materials and processes. It also owns similar patents
in foreign countries. While such domestic and foreign patents expire from time
to time, Lubrizol continues to apply for and obtain patent protection on an
ongoing basis. Although the company believes that, in the aggregate, its
patents constitute an important asset, it does not regard its business as being
materially dependent upon any single patent or any group of related patents.
The company has filed claims against Exxon Corporation and its
affiliates ("Exxon") alleging infringements by Exxon of certain of the
company's patents. These suits are pending in the United States and in Canada,
France and the United Kingdom, and are at various stages. The international
suits allege infringement of patents that correspond to a United States patent
admitted as valid by Exxon in a settlement in 1988. In the suit in Canada, a
determination of liability has been made by the courts against Exxon and in
favor of the company, and the case has been returned to the trial court for an
assessment of damages. In another patent infringement suit, instituted by
Exxon in the United States, liability and
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damages determinations have been made (which are subject to appeal) against the
company and in favor of Exxon. For further information regarding these cases,
refer to Note 18 to the Financial Statements included in the company's 1993
Annual Report to its shareholders.
ENVIRONMENTAL MATTERS. The company is subject to federal, state
and local laws and regulations designed to protect the environment and limit
manufacturing wastes and emissions. The company believes that as a general
matter its policies, practices and procedures are properly designed to prevent
unreasonable risk of environmental damage and the consequent financial
liability to the company. Compliance with the environmental laws and
regulations requires continuing management effort and expenditures by the
company. Capital expenditures for environmental projects are anticipated to be
$20 million in 1994, which is approximately the same as 1993. Management
believes that the cost of complying with environmental laws and regulations
will not have a material affect on the earnings, liquidity or competitive
position of the company.
The company is engaged in the handling, manufacture, use,
transportation and disposal of substances that are classified as hazardous or
toxic by one or more regulatory agencies. The company believes that its
handling, manufacture, use, transportation and disposal of such substances
generally have been in accord with environmental laws and regulations.
Among other environmental laws, the company is subject to the
federal "Superfund" law, under which the company has been designated as a
"potentially responsible party" that may be liable for cleanup costs associated
with various waste sites, some of which are on the U.S. Environmental
Protection Agency Superfund priority list. The company's experience,
consistent with what it believes to be the experience of others in similar
cases, is that Superfund site liability tends to be apportioned among parties
based upon contribution of materials to the Superfund site. Accordingly, the
company measures its liability and carries out its financial reporting
responsibilities with respect to Superfund sites based upon this standard, even
though Superfund site liability is technically joint and several in nature.
The company views the expense of remedial clean-up as a part of its product
cost, and accrues for estimated environmental liabilities with regular charges
to cost of sales. Management considers its environmental accrual to be
adequate to provide for its portion of costs for all known environmental
matters, including Superfund sites. Based upon consideration of currently
available information, management does not believe liabilities for
environmental matters will have a material adverse effect on the company's
financial position, operating results or liquidity.
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<TABLE>
EXHIBIT 12
THE LUBRIZOL CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(all amounts except ratios are shown in thousands)
<CAPTION>
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Pretax income $119,651 $177,144 $178,140 $271,212 $137,746
Deduct earnings of less
than 50% owned affiliates
(net of distributed
earnings) included in
pretax income (2,355) 9 (3,796) (3,401) (43)
Add losses of less than 50%
owned affiliates included
in pretax income 21,063 2,769 53 -0- 972
Add fixed charges net of
capitalized interest 4,154 3,615 7,738 6,049 5,438
Add previously capitalized
interest amortized during
period 272 162 96 6
------- ------- ------- ------- -------
"Earnings" $142,785 $183,699 $182,231 $273,866 $144,113
======= ======= ======= ======= =======
Gross interest expense
including capitalized
interest ("Fixed Charges") $ 6,292 $ 4,981 $ 9,049 $ 7,070 $ 5,438
Ratio of earnings to
fixed charges 22.7 36.9 20.1 38.7 26.5
Special adjustments:
- -------------------
"Earnings" $142,785 $273,866
Plus special charges 86,303
Less Genentech gain (42,443) (101,921)
Plus Agribusiness write-off 9,734
------- -------
Adjusted "Earnings" $186,645 $181,679
======= =======
Ratio of adjusted earnings
to fixed charges 29.7 25.7
</TABLE>
<PAGE> 7
AGRIBUSINESS
As discussed in Note 16 to the Financial Statements, on December
1, 1992, the company transferred substantially all of the Agribusiness segment,
other than the specialty vegetable oil operations, to Mycogen Corporation and a
joint venture partnership (Agrigenetics, L.P.) formed with Mycogen. The
company's 1993 consolidated revenues, costs and expenses include specialty
vegetable oil operations, but do not include amounts related to the transferred
assets. As also discussed in Note 16 to the Financial Statements, on December
31, 1993, the company exchanged another portion of its investment in the
partnership for additional Mycogen common stock and cash. The company's
investment in Mycogen, which includes Agrigenetics, Inc. (formerly
Agrigenetics, L.P.), is accounted for by the equity method, under which the
company recognizes its share of the earnings or losses of such entities.
The specialty vegetable oil operation retained by the company
sells specialty vegetable oils and operates an oilseed crushing and refining
facility. Specialty vegetable oil sales consist primarily of high oleic
sunflower oil in either crude or refined forms and safflower oil. Pursuant to
contractual arrangements, the company has agreed to purchase planting seed for
specialty vegetable oils from Agrigenetics, Inc., which in turn is to supervise
production of oilseed for crushing. The company's ability to acquire high
oleic oil seed is subject to governmental, agricultural and export policies as
well as the weather. The discussion below is presented only for historical
purposes except for any references to specialty vegetable oils.
The transferred portion of the Agribusiness operations produced
and marketed planting seeds for agricultural crops. The principal seed
products were hybrid seed corn, hybrid sorghum, soybeans, hybrid sunflowers,
alfalfa, and cotton. Revenues from planting seeds contributed approximately
75% of the Agribusiness sales in 1992 and 68% in 1991.
Substantially all of the company's planting seed, and oilseed for
crushing, was produced by an established network of growers under specified
planting conditions on a short-term contract basis. The company furnished
parental seed to its growers, primarily from stock developed, multiplied and
maintained by the company. Company personnel supervised planting, growing and
harvesting.
The seed products were marketed through three regional groups
representing eight Agrigenetics seed brands and through an international
marketing group and three overseas subsidiaries, all of which sold planting
seeds. The products were marketed primarily to dealers and distributors, most
of whom were farmers with long-term relationships with the company. The
company sold its seeds primarily in the major farm production areas in the
United States. The company markets specialty vegetable oil through its own
sales organization and commissioned agents. Sales to date have been
principally to food processors.
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<PAGE> 8
The United States seed industry is highly competitive and
fragmented. Based on revenue figures from industry sources, management
believes the transferred Agribusiness operations were the sixth largest seed
company in the United States. The market for vegetable oils is very large and
very competitive. The company's TRISUN(R) sunflower oil sells for a premium
over regular sunflower oil. TRISUN(R) oil is very high in monounsaturates, and
therefore more stable and resistant to oxidation than other vegetable oils.
Agribusiness revenues from the sale of planting seeds were earned
principally during the first half of the calendar year, and losses from these
operations were incurred in the last half as a result of continuing operating
expenses with low sales. Working capital needs were also seasonal.
Expenditures for inventories were made during the last half of the year, while
substantial collections on sales were not received until the second and third
quarters of the following year.
Strategic Agribusiness activities consisted principally of
internal biotechnology research and development directed toward developing new
products for the agriculture, food and chemical industries. Agribusiness'
research and development consisted of traditional plant breeding and strategic
research in advanced plant science. Plant breeding attempts to create
desirable plants by crossing selected parent plants. The genetic combinations
of the crosses are then tested under field conditions to determine if desired
characteristics appear. Traditional research expense of the Agribusiness
segment was $7.2 million in 1992 and $7.8 million in 1991.
A major portion of Agribusiness' strategic research and
development was conducted at the research laboratory in Madison, Wisconsin.
Strategic research was focused on specialty chemicals and food products derived
from oil seed crops and on genetic improvement of specific attributes of hybrid
plant varieties. Total Agribusiness strategic research expense was $7.7
million in 1992 and $8.6 million in 1991.
The company has United States utility patents covering its high
oleic sunflower oil and seeds. The high oleic patents are being re-examined by
the U.S. Patent and Trademark Office, and such re-examination has not been
resolved. If the re-examination results in the cancellation of the patents,
management believes that its business will not be materially affected.
GENERAL
EMPLOYEES. At December 31, 1993, the company and its
wholly-owned subsidiaries had 4,613 employees of which approximately 60% were
in the U.S.
INTERNATIONAL OPERATIONS. Financial information with respect to
domestic and foreign operations is contained in Note 12 to the Financial
Statements that is included in the company's 1993 Annual Report to its
shareholders and is incorporated herein by reference.
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The company supplies its additive customers abroad from overseas
manufacturing plants and through export from the United States. Sales and
technical service offices are maintained in more than 30 countries outside the
United States. As a result, the company is subject to business risks inherent
in non-U.S. activities, including political uncertainty, import and export
limitations, exchange controls and currency fluctuations. The company believes
risks related to its foreign operations are mitigated due to the political and
economic stability of the countries in which its largest foreign operations are
located.
While changes in the dollar value of foreign currencies will
affect earnings from time to time, the longer term economic effect of these
changes should not be significant given the company's net asset exposure,
currency mix and pricing flexibility. Generally, the income statement effect
of changes in the dollar value of foreign currencies is partially or wholly
offset by the company's ability to make corresponding price changes in local
currency. The company's consolidated net income will generally benefit
(decline) as foreign currencies increase (decrease) in value compared to the
U.S. dollar. In 1993, European currencies weakened and the Japanese yen
strengthened resulting in insignificant net earnings effect.
ITEM 2. PROPERTIES
The general offices of the company are located in Wickliffe,
Ohio. The company has various leases for general office space primarily
located in Eastlake, Ohio; Houston, Texas; and London, England. The company
owns three additive manufacturing plants in the United States; one located in
the Cleveland, Ohio area, at Painesville, and two near Houston, Texas, at Deer
Park and Bayport. Outside the United States, the company owns additive
manufacturing plants in Australia, Brazil, Canada, England, France (three
locations), Japan, South Africa and Singapore. All of these plants, other than
Singapore, are owned in fee. In Singapore, Lubrizol owns the plant but leases
the land on which the plant is located. The company owns in fee mechanical
testing facilities in Wickliffe, Ohio; Hazelwood, England; and Atsugi, Japan.
The company also owns an oilseed crushing and refining plant located in
Culbertson, Montana. Finally, the company owns in fee a manufacturing plant in
Germany that manufactures performance chemical additives for the coatings
industry.
Additive manufacturing plants in India, Mexico, Saudi Arabia and
Venezuela are owned and operated by joint venture companies licensed by
Lubrizol. Lubrizol's ownership of each of these companies ranges from 40% to
49%.
Lubrizol has entered into long-term contracts for its exclusive
use of major marine terminal facilities at the Port of Houston, Texas. In
addition, Lubrizol has leases for storage facilities in Australia, Chile,
Ecuador, Finland, France, Holland, Singapore, Spain, South Africa, Sweden, and
Turkey; East Liverpool, Ohio; Los Angeles, California; St. Paul, Minnesota;
Bayonne, New Jersey; and Tacoma, Washington. In some cases, the ownership or
leasing of such facilities is through certain of its subsidiaries or
affiliates.
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<PAGE> 10
The company initiated a manufacturing rationalization plan during
the third quarter of 1993. The plan will be implemented over the next several
years and, through consolidation, is expected to result in a one-third
reduction in the number of units used to produce intermediate products. See
Note 17 to the Financial Statements included in the company's Annual Report to
its shareholders.
Although the company continues to maintain a capital expenditure
program to support its operations, management of the company believes that its
facilities are adequate for its present operations and for the foreseeable
future.
ITEM 3. LEGAL PROCEEDINGS
The company is a party in a case brought by Exxon Corporation and
its affiliates, Exxon Chemical Patents, Inc. and Exxon Research & Engineering
Company, in the Southern District of Texas, Houston Division on September 19,
1989. In December 1992, the trial jury rendered a verdict that the company
willfully infringed an Exxon patent pertaining to an oil soluble copper
additive component. In early 1993, the court prohibited the company from
making or selling any additive packages in the United States that contained
this component and awarded Exxon $18.1 million for attorneys' fees. On
November 18, 1993, another jury in the same case awarded Exxon $48 million in
damages. The findings of infringement and validity of the Exxon patent as well
as the $18.1 million attorneys' fee award are on appeal to the United States
Court of Appeals for the Federal Circuit in Washington, D.C., which has
jurisdiction over all patent cases. Oral argument in this appeal was heard on
December 6, 1993, and a decision may be forthcoming in 1994. On February 18,
1994, acting on a request from Exxon that the damages amount be tripled, the
trial court judge doubled the damages amount and awarded prejudgment interest,
court costs and additional attorneys' fees to Exxon. The total amount of the
judgment, including the previously awarded attorneys' fees, is $129 million.
The company has the right to appeal the February 1994 damages award to the same
court in Washington, D.C., as is considering the appeal of the original
verdict.
The company's management continues to believe that it has not
infringed the Exxon patent and that the patent is invalid. Based on the advice
of legal counsel, management believes that the December 1992 trial court
judgment will not be upheld on appeal.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the vote of the security holders
during the three months ended December 31, 1993.
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<PAGE> 11
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the name, age, recent business experience and
certain other information relative to each person who is an executive officer
of Lubrizol as of March 1, 1994.
<TABLE>
<CAPTION>
Name Business Experience
---- -------------------
<S> <C>
L. E. Coleman Dr. Coleman, age 63, has been Chairman of the Board since 1982. He has been Chief
Executive Officer since 1978.
W. G. Bares Mr. Bares, age 52, was elected President in 1982 and Chief Operating Officer in 1987.
J. R. Ahern Mr. Ahern, age 47, became Controller in June 1990. From August 1987 to June 1990, he
served as Vice President of Finance for Agrigenetics Company.
R. A. Andreas Mr. Andreas, age 49, has been Vice President and Chief Financial Officer since June
1990. From 1983 to 1990 he was Corporate Controller.
J. W. Bauer Mr. Bauer, age 40, became Vice President and General Counsel in April 1992, after
serving as General Counsel from August 1991. From 1989 to 1991, he was Corporate
Counsel - Litigation.
J. G. Bulger Mr. Bulger, age 58, holds the position of Vice President - Sales and was named Vice
President in September 1993. From 1989 to 1993, he was Senior Vice President - Sales
for Lubrizol Petroleum Chemicals Company.
S. A. Di Biase Dr. Di Biase, age 41, is Vice President - Research and Development and has been Vice
President since September 1993. From 1990 to September 1993, he was Director of
Strategic Research. During 1989 through 1990, he was Manager of Industrial Technology.
G. R. Hill Dr. Hill, age 52, became Senior Vice President - Business Development in October 1993
and was named Senior Vice President in 1988.
</TABLE>
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<PAGE> 12
<TABLE>
<CAPTION>
Name Business Experience
---- -------------------
<S> <C>
J. E. Hodge Mr. Hodge, age 51, is Vice President - Operations and was named Vice President in
September 1993. During 1989 through 1993, he was General Manager - Deer Park/Bayport
Plants.
K. H. Hopping Mr. Hopping, age 47, became Vice President and Secretary of the Corporation in April
1991 after serving as Senior Vice President - Marketing and Product Development for
Lubrizol Petroleum Chemicals Company from 1988 to 1991.
R. Y. K. Hsu Dr. Hsu, age 66, was named Counselor to the Chairman in 1992, upon reaching the
mandatory retirement age for elected officers. From 1982 to 1992, he was Senior Vice
President.
W. R. Jones Mr. Jones, age 51, has been Treasurer since 1980.
S. F. Kirk Mr. Kirk, age 44, holds the position of Vice President - Segment Management and was
named Vice President in September 1993. From January 1991 to 1993, he was Senior Vice
President - Marketing and Technology for Lubrizol Petroleum Chemicals Company. During
1989 through January 1991, Mr. Kirk was General Manager - North American Sales for
Lubrizol Petroleum Chemicals Company.
Y. Le Couedic Mr. Le Couedic, age 46, is Vice President - Management Information Systems and became
Vice President in September 1993. From 1991 to 1993, he was Division Head - Corporate
R&D - Administrative Services. From September 1989 to August 1991 he was Administrative
Manager for the Hazelwood, U.K. Laboratory.
W. D. Manning Mr. Manning, age 59, was named Assistant to the President in August 1993 and has been
Senior Vice President since 1987. From 1987 to 1993, he was President of Lubrizol
Petroleum Chemicals Company.
</TABLE>
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<TABLE>
<CAPTION>
Name Business Experience
---- -------------------
<S> <C>
M. W. Meister Mr. Meister, age 39, is Vice President - Human Resources and was named Vice President in
April 1993. From November 1992 to April 1993, he was General Manager - Human Resources.
During 1989 to 1992, he was Director - Human Resources for Agrigenetics Company.
D. A. Muskat Mr. Muskat, age 54, was named Operations Manager in August 1993. From September 1989 to
August 1993 he was Vice President - Operations for Lubrizol Petroleum Chemicals Company.
From 1987 to 1989, he was Division Head - USA Operations.
R. J. Senz Mr. Senz, age 52, was named Senior Vice President - Corporate Planning and Development
in August 1993 and has been Senior Vice President since 1992. From 1989 to 1992, he
served as Vice President. He was President of Lubrizol Performance Products Company
from 1985 to 1993. Mr. Senz is the brother-in-law of Mr. Bares.
<FN>
All executive officers serve at the pleasure of the Board.
</TABLE>
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<PAGE> 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Common Shares of The Lubrizol Corporation are listed on the
New York Stock Exchange under the symbol LZ. The number of shareholders of
record of Common Shares was 6,576 as of February 10, 1994.
<TABLE>
Information relating to the recent price and dividend history
of the company's Common Shares follows:
<CAPTION>
Common Share Price History
------------------------------------------- Dividends
1993 1992 Per Common Share
---------------------------------------------------------------------
High Low High Low 1993 1992
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st quarter $31 1/4 $26 5/8 $34 $27 7/8 $ .21 $ .20
2nd quarter 34 1/2 28 7/8 34 7/8 31 .21 .20
3rd quarter 36 29 34 7/8 27 3/8 .21 .20
4th quarter 36 3/8 30 3/4 28 3/4 24 5/8 .22 .21
-------------------
$ .85 $ .81
===================
</TABLE>
All share and per share data have been restated to reflect the
2-for-1 stock split effected on August 31, 1992.
ITEM 6. SELECTED FINANCIAL DATA.
The summary of selected financial data for each of the last five
years included in the Historical Summary contained on pages 44 and 45 of
Lubrizol's 1993 Annual Report to its shareholders is incorporated herein by
reference. Other income for 1993 includes $42.4 million for the gain on sale
of Genentech (see Note 7) and a special charge of $86.3 million (see Note 17).
Included in other income for 1990 is $101.9 million for the gain on sale of
Genentech.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Management's Discussion and Analysis of Financial Condition
and Results of Operations contained on pages 25 through 29, inclusive, of
Lubrizol's 1993 Annual Report to its shareholders is incorporated herein by
reference.
-12-
<PAGE> 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of Lubrizol and its
subsidiaries, together with the independent auditors' report relating thereto,
contained on pages 30 through 42, inclusive, of Lubrizol's 1993 Annual Report
to its shareholders, and the Quarterly Financial Data (Unaudited) contained on
page 43 of such 1993 Annual Report are incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to directors of Lubrizol contained under
the heading "Election of Directors" on pages 1 to 5, inclusive, of Lubrizol's
Proxy Statement dated March 16, 1994, is incorporated herein by reference.
Information relative to executive officers of Lubrizol is contained under Part
I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information relating to executive compensation contained under
the headings "Committees and Compensation of the Board of Directors" on page 6,
"Executive Compensation" on pages 8 through 11, inclusive, and under "Employee
and Executive Officer Benefit Plans - Pension Plans" and "- Executive
Agreements" on pages 15, 16, and 17 of Lubrizol's Proxy Statement dated March
16, 1994, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information relating to security ownership set forth under the
heading "Security Ownership of Directors and Management" on page 7 of
Lubrizol's Proxy Statement dated March 16, 1994, is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
-13-
<PAGE> 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this Annual Report:
1. The following consolidated financial statements of The
Lubrizol Corporation and its subsidiaries, together
with the independent auditors' report relating thereto,
contained on pages 30 through 43, inclusive, of
Lubrizol's 1993 Annual Report to its shareholders and
incorporated herein by reference:
Consolidated Statements of Income for the years ended
December 31, 1993, 1992 and 1991
Consolidated Balance Sheets at December 31, 1993 and
1992
Consolidated Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1993, 1992 and 1991
Notes to Financial Statements
Independent Auditors' Report
Quarterly Financial Data (Unaudited)
2. Schedules
I Other Investments
V Property, Plant and Equipment
VI Accumulated Depreciation of Property, Plant
and Equipment
IX Short-Term Borrowings
X Supplementary Income Statement Information
Schedules other than those listed above are omitted
because of the absence of conditions under which they
are required or because the required information is
included in the financial statements and notes thereto.
3. Exhibits
(3)(a) Amended Articles of Incorporation of The Lubrizol
Corporation, as adopted September 23, 1991.
-14-
<PAGE> 17
(3)(b) Regulations of The Lubrizol Corporation, as
amended effective April 27, 1992.
(4)(a) Article Fourth of Amended Articles of
Incorporation.
(4)(b) The company agrees, upon request, to furnish to
the Securities and Exchange Commission copies of
financial documents evidencing long-term debt,
which debt does not exceed 10% of the total
assets of the company and its subsidiaries on a
consolidated basis.
(4)(c) Rights Agreement between The Lubrizol Corporation
and National City Bank dated October 6, 1987.
(4)(d) Amendment to Rights Agreement dated October 6,
1987, between The Lubrizol Corporation and
National City Bank, effective October 24, 1988.
(4)(e) Special Rights Agreement between The Lubrizol
Corporation and National City Bank dated October
31, 1988.
(4)(f) Amendment No. 2 to Rights Agreement dated October
6, 1987, as amended, between The Lubrizol
Corporation and National City Bank, effective
October 28, 1991.
(4)(g) Amendment No. 1 to Special Rights Agreement dated
October 31, 1988, between The Lubrizol Corporation
and National City Bank, effective October 28,
1991.
(10)(a)* The Lubrizol Corporation 1975 Employee Stock
Option Plan, as amended.
(10)(b)* The Lubrizol Corporation 1985 Employee Stock
Option Plan, as amended.
(10)(c)* The Lubrizol Corporation 1981 Key Employee
Incentive Stock Option Plan.
(10)(d)* The Lubrizol Corporation Deferred Compensation
Plan for Directors.
(10)(e)* Form of Employment Agreement between The Lubrizol
Corporation and certain of its senior executive
officers.
-15-
<PAGE> 18
(10)(f)* The Lubrizol Corporation Excess Defined Benefit
Plan, as amended.
(10)(g)* The Lubrizol Corporation Excess Defined
Contribution Plan, as amended.
(10)(h)* The Lubrizol Corporation Variable Award Plan.
(10)(i)* The Lubrizol Corporation Executive Death Benefit
Plan, as amended.
(10)(j)* Amendment No. 1 to the Amended and Restated
Severance Agreement between The Lubrizol
Corporation and Dr. R.Y.K. Hsu. (Reference is
made to Exhibit (10)(k) to The Lubrizol
Corporation's Annual Report on Form 10-K for the
year ended December 31, 1990, which Exhibit is
incorporated herein by reference.)
(10)(k)* Employment and Consulting Agreement dated
February 23, 1987, between The Lubrizol
Corporation and Dr. R.Y.K. Hsu with Amendment
dated December 28, 1989. (Reference is made to
Exhibit (10)(l) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year ended
December 31, 1990, which Exhibit is incorporated
herein by reference.)
(10)(l)* The Lubrizol Corporation 1991 Stock Incentive
Plan, as amended.
(10)(m)* The Lubrizol Corporation Deferred Stock
Compensation Plan for Outside Directors.
(10)(n)* Amendment to Employment and Consulting Agreement
dated October 1, 1992, between The Lubrizol
Corporation and Dr. R.Y.K. Hsu. (Reference is
made to Exhibit (10)(q) to The Lubrizol
Corporation's Annual Report on Form 10-K for the
year ended December 31, 1992, which Exhibit is
incorporated herein by reference.)
(10)(o)* Early Retirement and General Release Agreement
dated April 14, 1993, between The Lubrizol
Corporation and William D. Manning.
(10)(p)* The Lubrizol Corporation Officers' Supplemental
Retirement Plan
(11) Statement setting forth computation of per share
earnings.
-16-
<PAGE> 19
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) The following portions of The Lubrizol
Corporation 1993 Annual Report to its
shareholders:
Pages 25-29 Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Page 30 Consolidated Statements of Income
for the years ended December 31,
1993, 1992 and 1991
Page 31 Consolidated Balance Sheets at
December 31, 1993 and 1992
Page 32 Consolidated Statements of Cash
Flows for the years ended December
31, 1993, 1992 and 1991
Page 33 Consolidated Statements of
Shareholders' Equity for the years
ended December 31, 1993, 1992 and
1991
Pages 34-41 Notes to Financial Statements
Page 42 Independent Auditors' Report
Page 43 Quarterly Financial Data
(Unaudited)
Pages 44-45 Historical Summary
(21) List of Subsidiaries of The Lubrizol Corporation.
(23) Consent of Independent Auditors.
*Indicates management contract or compensatory plan or arrangement.
(b) The Lubrizol Corporation filed a Current Report on Form 8-K,
reporting under "Item 5 - Other Events," a damage award
granted to Exxon Corporation on November 18, 1993, against
the company.
-17-
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on March 28, 1994, on its behalf by the undersigned, thereunto duly authorized.
THE LUBRIZOL CORPORATION
BY /s/L. E. Coleman
---------------------------------
L. E. Coleman, Chairman of the
Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below on March 28, 1994, by the following
persons on behalf of the Registrant and in the capacities indicated.
/s/L. E. Coleman Chairman of the Board and Chief
- ------------------------------- Executive Officer and Director
L. E. Coleman (Principal Executive Officer)
/s/R. A. Andreas Vice President and Chief Financial
- ------------------------------- Officer (Principal Financial Officer)
R. A. Andreas
/s/G. P. Lieb Controller, Accounting and Financial
- ------------------------------- Reporting (Principal Accounting
G. P. Lieb Officer)
/s/W. G. Bares President, Chief Operating Officer
- ------------------------------- and Director
W. G. Bares
/s/Edward F. Bell Director
- -------------------------------
Edward F. Bell
/s/Peggy G. Elliott Director
- -------------------------------
Peggy G. Elliott
/s/David H. Hoag Director
- ------------------------------
David H. Hoag
/s/Thomas C. MacAvoy Director
- -------------------------------
Thomas C. MacAvoy
/s/William P. Madar Director
- -------------------------------
William P. Madar
/s/Richard A. Miller Director
- -------------------------------
Richard A. Miller
/s/Ronald A. Mitsch Director
- -------------------------------
Ronald A. Mitsch
/s/Renold D. Thompson Director
- -------------------------------
Renold D. Thompson
/s/Karl E. Ware Director
- -------------------------------
Karl E. Ware
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
The Lubrizol Corporation:
We have audited the consolidated financial statements of The
Lubrizol Corporation as of December 31, 1993 and 1992 and for each of the three
years in the period ended December 31, 1993, and have issued our report thereon
dated February 18, 1994; such consolidated financial statements and report are
included in your 1993 Annual Report to shareholders and are incorporated herein
by reference. Our audits also included the financial statement schedules of
The Lubrizol Corporation, listed in Item 14. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/Deloitte & Touche
- ----------------------------
DELOITTE & TOUCHE
Cleveland, Ohio
February 18, 1994
S-1
<PAGE> 22
SCHEDULE I
<TABLE>
THE LUBRIZOL CORPORATION AND SUBSIDIARIES
OTHER INVESTMENTS
December 31, 1993
(In Thousands)
<CAPTION>
Balance at
Number of Market End of
Company Shares(A) Cost(A) Value(A) Period
- ------------------------------ --------- ------- -------- ----------
<S> <C> <C> <C> <C>
Investments at Equity:
Mycogen Corporation
(common stock) 6,134 $32,241 $ 62,874 $32,241
Lubrizol India, Ltd. 9,874
Agrigenetics, Inc. 9,092
Other 8,702
-------
Total $59,909
=======
Investments at Cost:
Mycogen Corporation
(preferred stock) $28,540
Catalytica, Inc. 2,341 $8,979 $ 18,144 8,979
Genentech, Inc.
(common stock) 2,000 $4,094 $101,000 4,094
Other 1,724
-------
Total $43,337
=======
<FN>
NOTE: (A) Where number of shares, cost and market value are not shown,
companies (or in the case of Mycogen Corporation, shares of its
preferred stock) were not publicly traded.
</TABLE>
S-2
<PAGE> 23
SCHEDULE V
<TABLE>
THE LUBRIZOL CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
(In Thousands of Dollars)
<CAPTION>
Balance at Balance at
Beginning Additions Retire- Other End of
of Period at Cost ments Changes Period
---------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Land & improvements $ 75,997 $ 5,772 $ 176 $ (924) $ 80,669
Buildings & improvements 153,232 18,860 1,071 10,597 181,618
Machinery & equipment 659,574 73,250 12,011 6,596 727,409
Construction in progress 69,889 29,973 (452) 99,410
-------- -------- ------- -------- ----------
Total $958,692 $127,855 $13,258 $ 15,817(A) $1,089,106
======== ======== ======= ======== ==========
Year Ended December 31, 1992
Land & improvements $ 75,348 $ 5,102 $ 22 $ (4,431) $ 75,997
Buildings & improvements 168,186 14,908 734 (29,128) 153,232
Machinery & equipment 658,966 63,337 10,216 (52,513) 659,574
Construction in progress 59,761 12,467 303 (2,036) 69,889
-------- -------- ------- -------- ----------
Total $962,261 $ 95,814 $11,275 $(88,108)(B) $ 958,692
======== ======== ======= ======== ==========
Year Ended December 31, 1991
Land & improvements $ 70,799 $ 4,628 $ 671 $ 592 $ 75,348
Buildings & improvements 158,451 8,680 835 1,890 168,186
Machinery & equipment 604,929 61,443 8,322 916 658,966
Construction in progress 52,817 7,647 (703) 59,761
-------- -------- ------- -------- ----------
Total $886,996 $ 82,398 $ 9,828 $ 2,695(B) $ 962,261
======== ======== ======= ======== ==========
<FN>
NOTE: (A) Translation adjustment; $1.0 million land and improvements,
$9.7 buildings and improvements, and $12.9 machinery and equipment
from purchase of Langer & Company G.m.b.H.; $(1.4) land and
improvements as a result of the special charge (see Note 17 to the
Financial Statements).
(B) Translation adjustment and in 1992, $(3.1) million land and
improvements, $(25.5) buildings and improvements, $(34.5)
machinery and equipment and $(1.0) construction in progress from
transfer of certain Agribusiness assets.
</TABLE>
S-3
<PAGE> 24
SCHEDULE VI
<TABLE>
THE LUBRIZOL CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (Note A)
(In Thousands of Dollars)
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Cost and Retire- Other End of
of Period Expenses ments Changes Period
--------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Land & improvements $ 35,508 $ 2,768 $ 92 $ (244) $ 37,940
Buildings & improvements 70,889 6,635 955 773 77,342
Machinery & equipment 476,708 50,192 11,796 21,085 536,189
-------- ------- ------- ------- --------
Total $583,105 $59,595 $12,843 $21,614 (B) $651,471
======== ======= ======= ======= ========
Year Ended December 31, 1992
Land & improvements $ 33,804 $ 2,484 $ 5 $ (775) $ 35,508
Buildings & improvements 77,143 6,686 533 (12,407) 70,889
Machinery & equipment 471,284 49,265 9,288 (34,553) 476,708
-------- ------- ------- -------- --------
Total $582,231 $58,435 $ 9,826 $(47,735)(C) $583,105
======== ======= ======= ======== ========
Year Ended December 31, 1991
Land & improvements $ 31,695 $ 2,327 $ 149 $ (69) $ 33,804
Buildings & improvements 70,278 6,457 779 1,187 77,143
Machinery & equipment 431,472 45,830 7,689 1,671 471,284
-------- ------- ------- -------- --------
Total $533,445 $54,614 $ 8,617 $ 2,789(C) $582,231
======== ======= ======= ======== ========
<FN>
NOTES: (A) Depreciation is computed using the straight-line, sum-of-the-years
digits, and declining balance methods, at rates based on the
estimated useful lives of the assets. A general range of the
estimated useful lives follows:
Land improvements. . . . . . . . . . 8 to 25 years
Buildings and improvements . . . . . 5 to 65 years
Machinery and equipment. . . . . . . 3 to 20 years
(B) Translation adjustment and $25.3 million machinery and equipment
as a result of the special charge (see Note 17 to the Financial
Statements).
(C) Translation adjustment and in 1992, $(0.3) million land and
improvements, $(11.2) buildings and improvements and $(24.1)
machinery and equipment from transfer of certain Agribusiness
assets.
</TABLE>
S-4
<PAGE> 25
SCHEDULE IX
<TABLE>
THE LUBRIZOL CORPORATION AND SUBSIDIARIES
SHORT-TERM BORROWINGS
Years Ended December 31, 1993, 1992 and 1991
(In Thousands of Dollars)
<CAPTION>
Weighted Maximum Weighted
Category of Average Amount Average
Aggregate Interest Outstanding Average Interest
Short-Term Balance at Rate at at Any Daily Rate for
Borrowings End of Year End of Year Month-End Balance the Year (A)
- ---------------- ----------- ----------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C>
1993
Commercial Paper $ 4,400 3.3% $28,500 $15,277 3.2%
Bank Borrowings 10,190 6.1% $32,300 $16,862 5.4%
-------
$14,590
=======
1992
Bank Borrowings $25,140 6.9% $27,071 $11,465 8.1%
-------
$25,140
=======
1991
Bank Borrowings $32,801 8.7% $54,298 $30,310 8.6%
-------
$32,801
=======
<FN>
NOTE: (A) The weighted average interest rates were computed by relating
interest expense for the year to average daily balances.
</TABLE>
S-5
<PAGE> 26
SCHEDULE X
<TABLE>
THE LUBRIZOL CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In Thousands of Dollars)
<CAPTION>
Charged to Cost
Item(A) and Expenses
- ----------------------------- ---------------------------------------------
For the Year Ended December 31
---------------------------------------------
1993 1992 1991
------- ------ ------
<S> <C> <C> <C>
Maintenance and repairs $57,170 $54,712 $51,969
======= ======= =======
Depreciation and amortization
of intangible assets $61,674 $62,013 $59,473
======= ======= =======
Taxes, other than payroll and
income taxes $19,281 $18,352 $16,186
======= ======= =======
<FN>
NOTE: (A) Amounts for royalties and advertising costs are not presented as
such amounts are less than 1% of revenues.
</TABLE>
S-6
<PAGE> 27
EXHIBIT INDEX
(3)(a) Amended Articles of Incorporation of The Lubrizol
Corporation, as adopted September 23, 1991.
(3)(b) Regulations of The Lubrizol Corporation, as amended
effective April 27, 1992.
(4)(a) Article Fourth of Amended Articles of Incorporation.
(4)(b) The company agrees, upon request, to furnish to the
Securities and Exchange Commission copies of financial
documents evidencing long-term debt, which debt does not
exceed 10% of the total assets of the company and its
subsidiaries on a consolidated basis.
(4)(c) Rights Agreement between The Lubrizol Corporation and
National City Bank dated October 6, 1987.
(4)(d) Amendment to Rights Agreement dated October 6, 1987,
between The Lubrizol Corporation and National City Bank,
effective October 24, 1988.
(4)(e) Special Rights Agreement between The Lubrizol Corporation
and National City Bank dated October 31, 1988.
(4)(f) Amendment No. 2 to Rights Agreement dated October 6, 1987,
as amended, between The Lubrizol Corporation and National
City Bank, effective October 28, 1991.
(4)(g) Amendment No. 1 to Special Rights Agreement dated October
31, 1988, between The Lubrizol Corporation and National
City Bank, effective October 28, 1991.
(10)(a) The Lubrizol Corporation 1975 Employee Stock Option Plan,
as amended.
(10)(b) The Lubrizol Corporation 1985 Employee Stock Option Plan,
as amended.
(10)(c) The Lubrizol Corporation 1981 Key Employee Incentive Stock
Option Plan.
(10)(d) The Lubrizol Corporation Deferred Compensation Plan for
Directors.
(10)(e) Form of Employment Agreement between The Lubrizol
Corporation and certain of its senior executive officers.
(10)(f) The Lubrizol Corporation Excess Defined Benefit Plan, as
amended.
(10)(g) The Lubrizol Corporation Excess Defined Contribution Plan,
as amended.
(10)(h) The Lubrizol Corporation Variable Award Plan.
(10)(i) The Lubrizol Corporation Executive Death Benefit Plan, as
amended.
(10)(j) Amendment No. 1 to the Amended and Restated Severance
Agreement between The Lubrizol Corporation and Dr. R.Y.K.
Hsu. (Reference is made to Exhibit (10)(k) to The
Lubrizol Corporation's Annual Report on Form 10-K for the
year ended December 31, 1990, which Exhibit is
incorporated herein by reference.)
<PAGE> 28
(10)(k) Employment and Consulting Agreement dated February 23,
1987, between The Lubrizol Corporation and Dr. R.Y.K. Hsu
with Amendment dated December 28, 1989. (Reference is
made to Exhibit (10)(l) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year ended December 31,
1990, which Exhibit is incorporated herein by reference.)
(10)(l) The Lubrizol Corporation 1991 Stock Incentive Plan, as
amended.
(10)(m) The Lubrizol Corporation Deferred Stock Compensation Plan
for Outside Directors.
(10)(n) Amendment to Employment and Consulting Agreement dated
October 1, 1992, between The Lubrizol Corporation and Dr.
R.Y.K. Hsu. (Reference is made to Exhibit (10)(q) to The
Lubrizol Corporation's Annual Report on Form 10-K for the
year ended December 31, 1992, which Exhibit is
incorporated herein by reference.)
(10)(o) Early Retirement and General Release Agreement dated April
14, 1993, between The Lubrizol Corporation and William D.
Manning.
(10)(p) The Lubrizol Corporation Officers' Supplemental Retirement
Plan.
(11) Statement setting forth computation of per share earnings.
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) The following portions of The Lubrizol Corporation 1993
Annual Report to its shareholders:
Pages 25-29 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 30 Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991
Page 31 Consolidated Balance Sheets at December 31,
1993 and 1992
Page 32 Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991
Page 33 Consolidated Statements of Shareholders'
Equity for the years ended December 31, 1993,
1992 and 1991
Pages 34-41 Notes to Financial Statements
Page 42 Independent Auditors' Report
Page 43 Quarterly Financial Data (Unaudited)
Pages 44-45 Historical Summary
(21) List of Subsidiaries of The Lubrizol Corporation.
(23) Consent of Independent Auditors.
<PAGE> 1
EXHIBIT (3)(a)
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
THE LUBRIZOL CORPORATION
L.E. Coleman, Chairman of the Board of Directors, and
K.H. Hopping, Vice President and Secretary, of The Lubrizol
Corporation, an Ohio corporation (the "Corporation") with its
principal place of business located in Wickliffe, Ohio, do
hereby certify that a meeting of the Board of Directors of the
Corporation was duly called and held on September 23, 1991, at
which meeting a quorum of the directors of the Corporation was
present, and that by the affirmative vote of the majority of
such directors the following resolution was adopted for the
purpose of consolidating the existing Amended Articles of
Incorporation and the amendments to the existing Amended
Articles of Incorporation that previously have been adopted by
the shareholders of the Corporation and filed with the
Secretary of State of Ohio (such consolidation being permitted
by Section 1701.72(B) of the Ohio Revised Code):
RESOLVED, that the Amended Articles of Incorporation
attached hereto as Exhibit A be, and they hereby are,
adopted to supersede the existing Amended Articles of
Incorporation of the Corporation.
IN WITNESS WHEREOF, L.E. Coleman, Chairman of the
Board of Directors, and K.H. Hopping, Vice President and
Secretary, of The Lubrizol Corporation, acting for and on
behalf of the Corporation, have hereunto subscribed their names
this 23rd day of September, 1991.
/s/ [L.E. Coleman]
L.E. Coleman
Chairman of the Board
/s/ [K.H. Hopping]
K.H. Hopping
Vice President and Secretary
<PAGE> 2
3380P Exhibit A
AMENDED ARTICLES OF INCORPORATION
OF
THE LUBRIZOL CORPORATION
FIRST: The name of the Corporation is The Lubrizol
Corporation.
SECOND: The place in the State of Ohio where its
principal office is located is Wickliffe, Lake County.
THIRD: The purposes of the Corporation are as follows:
To manufacture, produce, process, buy, sell,
develop, acquire, distribute and otherwise deal in
chemicals, chemical products and compositions,
including lubricants, fuels and additives for
lubricants and fuels, and to do all things necessary
or incidental thereto.
To invest in high technology companies and in
companies with substantial growth possibilities and to
acquire such companies.
To engage in any other lawful act or activity for
which corporations may be formed under Section 1701.01
to 1701.98, inclusive, of the Revised Code of Ohio, as
now in effect or hereafter amended.
FOURTH: The authorized number of shares of the
Corporation is 147,000,000, consisting of 2,000,000 shares of
serial preferred stock without par value designated Serial
Preferred Stock ("Serial Preferred Stock"); 25,000,000 shares
of serial preferred stock without par value designated Serial
Preference Shares ("Serial Preference Shares"); and 120,000,000
common shares without par value ("Common Shares").
No holder of any class of shares of the Corporation
shall, as such holder, have any preemptive or preferential
right to purchase or subscribe to any shares of any class of
stock of the Corporation, whether now or hereafter authorized,
whether unissued or in treasury, or to purchase any obligations
convertible into shares of any class of stock of the
Corporation, which at any time may be proposed to be issued by
the Corporation or subjected to rights or options to purchase
granted by the Corporation.
No holder of shares of the Corporation shall be
entitled to vote cumulatively in the election of Directors of
the Corporation.
<PAGE> 3
2
The shares of such classes shall have the following
express terms:
DIVISION A
EXPRESS TERMS OF THE SERIAL PREFERRED STOCK
Section 1. The Serial Preferred Stock may be issued
from time to time in one or more series. All shares of Serial
Preferred Stock shall be of equal rank and shall be identical,
except in respect of the matters that may be fixed by the Board
of Directors as hereinafter provided, and each share of each
series shall be identical with all other shares of such series,
except as to the date from which dividends are cumulative.
Subject to the provisions of Sections 2 to 8, both inclusive,
of this Division, which provisions shall apply to all Serial
Preferred Stock, the Board of Directors hereby is authorized to
cause such shares to be issued in one or more series and with
respect to each such series prior to the issuance thereof to
fix:
(a) The designation of the series, which may be
by distinguishing number, letter or title;
(b) The number of shares of the series, which
number the Board of Directors may (except where
otherwise provided in the creation of the series)
increase or decrease (but not below the number of
shares thereof then outstanding);
(c) The annual dividend rate of the series;
(d) The dates at which dividends, if declared,
shall be payable, and the dates from which dividends
shall be cumulative;
(e) The redemption rights and price or prices,
if any, for shares of the series;
(f) The terms and amount of any sinking fund
provided for the purchase or redemption of shares of
the series;
(g) The amounts payable on shares of the series
in the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the affairs
of the Corporation;
(h) Whether the shares of the series shall be
convertible into Common Shares, and, if so, the
conversion price or prices, any adjustments thereof,
and all other terms and conditions upon which such
conversion may be made; and
<PAGE> 4
3
(i) Restrictions (in addition to those set forth
in Sections 6(b) and 6(c) of this Division) on the
issuance of shares of the same series or of any other
class or series;
provided, however, that the aggregate amount which the holders
of Serial Preferred Stock at any time outstanding shall be
entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation shall
not exceed $50,000,000, plus accrued and unpaid dividends.
The Board of Directors is authorized to adopt from
time to time amendments to the Articles of Incorporation
fixing, with respect to each such series, the matters described
in clauses (a) to (i), both inclusive, of this Section 1.
Section 2. The holders of Serial Preferred Stock of
each series, in preference to the holders of Common Shares and
of any other class of shares ranking junior to the Serial
Preferred Stock, shall be entitled to receive out of any funds
legally available and when and as declared by the Board of
Directors, dividends in cash at the rate for such series fixed
in accordance with the provisions of Section 1 of this
Division, and no more, payable quarterly on the dates fixed for
such series. Such dividends shall be cumulative, in the case
of shares of each particular series, from and after the date or
dates fixed with respect to such series. No dividends may be
paid upon or declared or set apart for any of the Serial
Preferred Stock for any quarterly dividend period unless at the
same time a like proportionate dividend for the same quarterly
dividend period, ratably in proportion to the respective annual
dividend rates fixed therefor, shall be paid upon or declared
or set apart for all Serial Preferred Stock of all series then
issued and outstanding and entitled to receive such dividend.
Section 3. In no event so long as any Serial
Preferred Stock shall be outstanding shall any dividends,
except a dividend payable in Common Shares or other shares
ranking junior to the Serial Preferred Stock, be paid or
declared or any distribution be made except as aforesaid on the
Common Shares or any other shares ranking junior to the Serial
Preferred Stock, nor shall any Common Shares or any other
shares ranking junior to the Serial Preferred Stock be
purchased, retired or otherwise acquired by the Corporation
(except out of the proceeds of the sale of Common Shares or
other shares ranking junior to the Serial Preferred Stock
received by the Corporation subsequent to January 1, 1969):
(a) Unless all accrued and unpaid dividends on
Serial Preferred Stock, including the full dividends
for the current quarterly dividend period, shall have
<PAGE> 5
4
been declared and paid or a sum sufficient for payment
thereof set apart; and
(b) Unless there shall be no arrearages with
respect to the redemption of Serial Preferred Stock of
any series from any sinking fund provided for shares
of such series in accordance with the provisions of
Section 1 of this Division.
Section 4.
(a) Subject to the express terms of each series
and to the provisions of Section 6(b)(iii) of this
Division A, the Corporation may from time to time
redeem all or any part of the Serial Preferred Stock
of any series at the time outstanding, (i) at the
option of the Board of Directors at the applicable
redemption price for such series fixed in accordance
with the provisions of Section 1 of this Division, or
(ii) in fulfillment of the requirements of any sinking
fund provided for shares of such series at the
applicable sinking fund redemption price, fixed in
accordance with the provisions of Section 1 of this
Division, together in each case with accrued and
unpaid dividends to the redemption date.
(b) Notice of every such redemption shall be
mailed, postage prepaid, to the holders of record of
the Serial Preferred Stock to be redeemed at their
respective addresses then appearing on the books of
the Corporation, not less than thirty (30) days nor
more than sixty (60) days prior to the date fixed for
such redemption. At any time after notice has been
given as above provided, the Corporation may deposit
the aggregate redemption price of the shares of Serial
Preferred Stock to be redeemed with any bank or trust
company in Cleveland, Ohio, or New York, New York,
having capital and surplus of not less than
Twenty-Five Million Dollars ($25,000,000), named in
such notice, directed to be paid to the respective
holders of the shares of Serial Preferred Stock so to
be redeemed in amounts equal to the redemption price
of all shares of Serial Preferred Stock so to be
redeemed, on surrender of the stock certificate or
certificates held by such holders, and upon the making
of such deposit such holders shall cease to be
shareholders with respect to such shares, and after
such notice shall have been given and such deposit
shall have been made such holders shall have no
interest in or claim against the Corporation with
respect to such shares except only to receive such
<PAGE> 6
5
money from such bank or trust company without interest
or the right to exercise, before the redemption date,
any unexpired privileges of conversion. In case less
than all of the outstanding shares of Serial Preferred
Stock are to be redeemed, the Corporation shall select
by lot the shares so to be redeemed in such manner as
shall be prescribed by its Board of Directors.
If the holders of shares of Serial Preferred
Stock which have been called for redemption shall not
within ten years after such deposit, claim the amount
deposited for the redemption thereof, any such bank or
trust company shall, upon demand, pay over to the
Corporation such unclaimed amounts and thereupon such
bank or trust company and the Corporation shall be
relieved of all responsibility in respect thereof and
to such holders.
(c) Any shares of Serial Preferred Stock which
are redeemed by the Corporation pursuant to the
provisions of this Section 4 and any shares of Serial
Preferred Stock which are purchased and delivered in
satisfaction of any sinking fund requirements provided
for shares of such series and any shares of Serial
Preferred Stock which are converted in accordance with
the express terms thereof, shall be cancelled, and not
reissued. Any shares of Serial Preferred Stock
otherwise acquired by the Corporation shall resume the
status of authorized and unissued shares of Serial
Preferred Stock without serial designation.
Section 5.
(a) The holders of Serial Preferred Stock of any
series shall, in case of voluntary or involuntary
liquidation, dissolution or winding up of the affairs
of the Corporation, be entitled to receive in full out
of the assets of the Corporation, including its
capital, before any amount shall be paid or
distributed among the holders of the Common Shares or
any other shares ranking junior to the Serial
Preferred Stock, the amounts fixed with respect to
shares of such series in accordance with Section 1 of
this Division plus an amount equal to all dividends
accrued and unpaid thereon to the date of payment of
the amount due pursuant to such liquidation,
dissolution or winding up of the affairs of the
Corporation. In case the net assets of the
Corporation legally available therefor are
insufficient to permit the payment upon all
outstanding shares of Serial Preferred Stock of the
<PAGE> 7
6
full preferential amount to which they are
respectively entitled, then such net assets shall be
distributed ratably upon outstanding shares of Serial
Preferred Stock in proportion to the full preferential
amount to which each such share is entitled.
After payment to holders of Serial Preferred
Stock of the full preferential amounts as aforesaid,
holders of Serial Preferred Stock as such shall have
no right or claim to any of the remaining assets of
the Corporation.
(b) The merger or consolidation of the
Corporation into or with any other corporation, or the
merger of any other corporation into it, or the sale,
lease or conveyance of all or substantially all the
property or business of the Corporation, shall not be
deemed to be a dissolution, liquidation or winding up
for the purposes of this Section 5.
Section 6.
(a) The holders of Serial Preferred Stock shall
be entitled to one vote for each share of such stock
upon all matters presented to the shareholders; and,
except as otherwise provided herein or required by
law, the holders of Serial Preferred Stock and the
holders of Common Shares shall vote together as one
class on all matters.
If, and so often as, the Corporation shall be in
default in the payment of six (6) full quarterly
dividends (whether or not consecutive) on any series
of Serial Preferred Stock at the time outstanding,
whether or not earned or declared, the holders of
Serial Preferred Stock of all series, voting
separately as a class and in addition to all other
rights to vote for directors, shall be entitled to
elect as herein provided, two members of the Board of
Directors of the Corporation; provided, however, that
the holders of shares of Serial Preferred Stock shall
not have or exercise such special class voting rights
except at meetings of the shareholders for the
election of directors at which the holders of not less
than thirty-five percent (35%) of the outstanding
shares of Serial Preferred Stock of all series then
outstanding are present in person or by proxy; and
provided further that the special class voting rights
provided for herein when the same shall have become
vested shall remain so vested until all accrued and
unpaid dividends on the Serial Preferred Stock of all
<PAGE> 8
7
series then outstanding shall have been paid,
whereupon the holders of Serial Preferred Stock shall
be divested of their special class voting rights in
respect of subsequent elections of directors, subject
to the revesting of such special class voting rights
in the event hereinabove specified in this paragraph.
In the event of default entitling the holders of
Serial Preferred Stock to elect two directors as above
specified, a special meeting of the shareholders for
the purpose of electing such directors shall be called
by the Secretary of the Corporation upon written
request of, or may be called by, the holders of record
of at least ten percent (10%) of the shares of Serial
Preferred Stock of all series at the time outstanding,
and notice thereof shall be given in the same manner
as that required for the annual meeting of
shareholders; provided, however, that the Corporation
shall not be required to call such special meeting if
the annual meeting of shareholders shall be held
within one hundred twenty (120) days after the date of
receipt of the foregoing written request from the
holders of Serial Preferred Stock. At any meeting at
which the holders of Serial Preferred Stock shall be
entitled to elect directors, the holders of
thirty-five percent (35%) of the then outstanding
shares of Serial Preferred Stock of all series present
in person or by proxy, shall be sufficient to
constitute a quorum, and the vote of the holders of a
majority of such shares so present at any such meeting
at which there shall be such a quorum shall be
sufficient to elect the members of the Board of
Directors which the holders of Serial Preferred Stock
are entitled to elect as hereinabove provided. The
two directors who may be elected by the holders of
Serial Preferred Stock pursuant to the foregoing
provisions shall be in addition to any other directors
then in office or proposed to be elected otherwise
then pursuant to such provisions, and nothing in such
provisions shall prevent any change otherwise
permitted in the total number of directors of the
Corporation or require the resignation of any director
elected otherwise than pursuant to such provisions.
Notwithstanding any classification of the other
directors of the Corporation, the two directors
elected by the holders of Serial Preferred Stock shall
be elected annually for terms expiring at the next
succeeding annual meeting of shareholders.
(b) The affirmative vote of the holders of at
least two-thirds of the shares of Serial Preferred
<PAGE> 9
8
Stock at the time outstanding, given in person or by
proxy at a meeting called for the purpose at which the
holders of Serial Preferred Stock shall vote
separately as a class shall be necessary to effect any
one or more of the following (but so far as the
holders of Serial Preferred Stock are concerned, such
action may be effected with such vote):
(i) Any amendment, alteration or repeal of
any of the provisions of the Articles of
Incorporation or of the Regulations of the
Corporation which affects adversely the voting
powers, rights or preferences of the holders of
Serial Preferred Stock; provided, however, that,
for the purpose of this clause (i) only, neither
the amendment of the Articles of Incorporation so
as to authorize or create, or to increase the
authorized or outstanding amount of Serial
Preferred Stock or of any shares of any class
ranking on a parity with or junior to the Serial
Preferred Stock, nor the amendment of the
provisions of the Regulations so as to increase
the number of directors of the Corporation shall
be deemed to affect adversely the voting powers,
rights or preferences of the holders of Serial
Preferred Stock; and provided further, that if
such amendment, alteration or repeal affects
adversely the rights or preferences of one or
more but not all series of Serial Preferred Stock
at the time outstanding only the affirmative vote
of the holders of at least two-thirds of the
number of the shares at the time outstanding of
the series so affected shall be required;
(ii) The authorization or creation of, or the
increase in the authorized amount of, any shares
of any class, or any security convertible into
shares of any class, ranking prior to the Serial
Preferred Stock; or
(iii) The purchase or redemption (for sinking
fund purposes or otherwise) of less than all of
the Serial Preferred Stock then outstanding
except in accordance with a stock purchase offer
made to all holders of record of Serial Preferred
Stock, unless all dividends upon all Serial
Preferred Stock then outstanding for all previous
quarterly dividend periods shall have been
declared and paid or funds therefor set apart and
all accrued sinking fund obligations applicable
thereto shall have been complied with.
<PAGE> 10
9
(c) The affirmative vote of the holders of at
least a majority of the shares of Serial Preferred
Stock at the time outstanding, given in person or by
proxy at a meeting called for the purpose at which the
holders of Serial Preferred Stock shall vote
separately as a class, shall be necessary to effect
any one or more of the following (but so far as the
holders of Serial Preferred Stock are concerned, such
action may be effected with such vote):
(i) The sale, lease or conveyance by the
Corporation of all or substantially all of its
property or business, or its consolidation with
or merger into any other corporation unless the
corporation resulting from such consolidation or
merger will have after such consolidation or
merger no class of shares either authorized or
outstanding ranking prior to or on a parity with
the Serial Preferred Stock except the same number
of shares ranking prior to or on a parity with
the Serial Preferred Stock and having the same
rights and preferences as the shares of the
Corporation authorized and outstanding
immediately preceding such consolidation or
merger, and each holder of Serial Preferred Stock
immediately preceding such consolidation or
merger shall receive the same number of shares,
with the same rights and preferences, of the
resulting corporation; or
(ii) The authorization of any shares ranking
on a parity with the Serial Preferred Stock or an
increase in the authorized number of shares of
Serial Preferred Stock.
Section 7. The holders of Serial Preferred Stock
shall have no preemptive right to purchase or have offered to
them for purchase any shares or other securities of the
Corporation, whether now or hereafter authorized.
Section 8. For the purpose of this Division A:
Whenever reference is made to shares "ranking prior to
the Serial Preferred Stock" or "on a parity with the Serial
Preferred Stock," such reference shall mean and include all
shares of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, are given preference over, or rank on an equality
with (as the case may be) the rights of the holders of Serial
<PAGE> 11
10
Preferred Stock; and whenever reference is made to shares
"ranking junior to the Serial Preferred Stock," such reference
shall mean and include all shares of the Corporation in respect
of which the rights of holders thereof as to payment of
dividends and as to distributions in the event of a voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, are junior and subordinate to the
rights of the holders of Serial Preferred Stock.
DIVISION B
EXPRESS TERMS OF THE COMMON SHARES
The Common Shares shall be subject to the express
terms of (i) the Serial Preferred Stock and any series thereof
and (ii) the Serial Preference Shares and any series thereof.
Each Common Share shall be equal to every other Common Share
and the holders thereof shall be entitled to one vote for each
share of such stock on all questions presented to the
shareholders.
DIVISION C
EXPRESS TERMS OF THE SERIAL PREFERRED STOCK, SERIES A
Section 1. Designation and Amount. The shares of
such series shall be designated as "Serial Preferred Stock,
Series A" ("Series A Stock") and the number of shares
constituting such series shall be 2,000,000. No shares of
Series A Stock may be issued except upon the exercise of a
Right, as defined in, and pursuant to the terms of, the Special
Rights Agreement, dated as of October 31, 1988 (as from time to
time amended or supplemented in accordance with the terms
thereof, the "Rights Agreement"), between the Corporation and
National City Bank.
Section 2. Dividends and Distributions.
(A) Except as provided in this Section 2, the holders
of shares of Series A Stock shall not be entitled to receive
dividends or other distributions with respect to any shares of
Series A Stock.
(B) From and after the date on which shares of
Series A Stock are issued and outstanding (the "Dividend
Accrual Commencement Date"), the holders of issued and
outstanding shares of Series A Stock, in preference to the
holders of Common Shares and of any other capital stock of the
Corporation which ranks junior to the Serial Preferred Stock in
respect of dividends or distributions of assets on liquidation
of the Corporation (all of which classes, other than the Serial
Preferred Stock, are hereinafter embraced in the term "Junior
Stock"), shall be entitled to receive as and when declared by
<PAGE> 12
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the Directors out of the assets of the Corporation which are by
law available for the payment of dividends, cumulative cash
dividends, payable quarterly on the last days of March, June,
September and December, and accruing from the applicable
Dividend Accrual Commencement Date, at, but not exceeding, the
rate per share per annum equal to the Dividend Rate (as
hereinafter defined). For purposes of this Division C, the
"Dividend Rate" shall be equal to 8% of the Cash Redemption
Amount (as defined in Section 5(A) of this Division C) as of
the last day of the calendar month immediately preceding the
applicable dividend payment date.
Section 3. Redemption.
(A) From and after (but not before) the Earliest
Redemption Date (as defined in Section 5(C) of this
Division C), the Series A Stock may be redeemed in whole or in
part, at any time or from time to time, at the option of the
Corporation, for a cash redemption price per share equal to the
sum of (x) the then-applicable Cash Redemption Amount plus
$1.00 and (y) an amount equal to the sum of all dividends
accrued to the date fixed for redemption and remaining unpaid,
whether or not declared, together with any applicable Deferred
Payment Entitlement (as defined in Section 5(D) of this
Division C).
(B) So long as any shares of Series A Stock shall be
outstanding, but subject to Section 3(E) of this Division C,
the Corporation shall, as a sinking fund applicable to the
Series A Stock, commencing on the date two years after the
first date on which any shares of Series A Stock are issued,
and annually thereafter, redeem, for a cash redemption price
per share equal to the sum of (x) the then-applicable Cash
Redemption Amount plus $1.00 and (y) an amount equal to the sum
of all dividends accrued to such date and remaining unpaid,
whether or not declared, together with any applicable Deferred
Payment Entitlement, a number of shares of Series A Stock equal
to 25% of the greatest number of shares of Series A Stock at
any time outstanding. The Corporation shall be permitted to
satisfy in whole or in part the requirements of this
Section 3(B) with respect to any year by applying in whole or
in part as a credit in reduction of the obligation of the
Corporation to make redemptions for the sinking fund in such
year shares of Series A Stock purchased by the Corporation and
shares of Series A Stock redeemed otherwise than for the
sinking fund. Shares purchased by the Corporation for
application as a credit as provided above may be purchased in
such manner as the Directors may determine from time to time,
subject to the restrictions on such purchases set forth
elsewhere herein or arising under applicable law.
<PAGE> 13
12
(C) On the date five years after the first date on
which any shares of Series A Stock are issued, but subject to
Section 3(E) of this Division C, the Corporation shall redeem
all shares of Series A Stock remaining outstanding for a cash
redemption price per share equal to the sum of (x) the
then-applicable Cash Redemption Amount plus $1.00 and (y) an
amount equal to the sum of all dividends accrued to such date
and remaining unpaid, whether or not declared, together with
any applicable Deferred Payment Entitlement.
(D) Notwithstanding anything contained in this
Division C to the contrary, but subject to Section 3(E) of this
Division C, at the option of any holder of Series A Stock, upon
written notice given by such holder at any time during the
30-calendar day period following the date on which the last
notice was mailed pursuant to the next sentence of this
Section 3(D) the Corporation shall, prior to the filing of a
certificate of dissolution or such other instrument as may then
be prescribed by applicable law to effect the dissolution of
the Corporation, redeem all shares of Series A Stock
outstanding as to which such holder shall have made such
election for a cash redemption price per share equal to the sum
of (x) the then-applicable Cash Redemption Amount plus $1.00
and (y) an amount equal to the sum of all dividends accrued to
such date and remaining unpaid, whether or not declared,
together with any applicable Deferred Payment Entitlement. The
Corporation shall give notice to all holders of Series A Stock
no fewer than 45-calendar days prior to making any filing
referred to in the immediately preceding sentence, which notice
will be so given by first class United States mail and
publication in The Wall Street Journal and any other nationally
recognized publication the Corporation may elect, accompanied
by an appropriate form of election and such other information
as may be required to permit an informed election.
(E) In addition to the limitations that may apply
under applicable Ohio law, the Corporation shall be required to
redeem any shares of Series A Stock under Sections 3(B), 3(C)
or 3(D) of this Division C only to the extent that, after
giving effect to such redemption, the consolidated retained
earnings of the Corporation and the corporations with which it
is consolidated for financial reporting purposes are greater
than zero. For purposes of the foregoing sentence,
consolidated retained earnings shall mean the sum of (1) the
consolidated retained earnings as of September 30, 1988 of the
Corporation and the corporations with which it was then
consolidated for financial reporting purposes and (2) the
consolidated retained earnings accumulated subsequent to
September 30, 1988 of the Corporation and the corporations with
which it is consolidated for financial reporting purposes
determined in accordance with generally accepted accounting
<PAGE> 14
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principles as in effect as of such date (except as otherwise
provided in this sentence) and after giving effect to dividends
or other distributions on, and redemptions and other purchases
of, Serial Preferred Stock, but without giving effect to
dividends or other distributions on, or redemptions or other
purchases of, any Junior Stock, or to any transfers from
retained earnings to additional capital or capital stock
accounts, and including as a credit to retained earnings, in
all events (and notwithstanding any contrary treatment for
financial reporting purposes or otherwise), the amount of the
Recovery then collected. If the Corporation is not required to
redeem shares of Series A Stock in the manner otherwise
provided herein by virtue of the first sentence of this Section
3(E), or if a legal or contractual restriction prevents the
Corporation form effecting the redemption of any shares of
Series A Stock then outstanding in the manner otherwise
provided herein, then (x) to the extent required and not
restricted, payment of redemption amounts shall be made daily
on a pro rata basis or in such other manner as the Directors of
the Corporation may determine in good faith to be fair to the
holders of Series A Stock, (y) in the case of any such legal or
contractual restriction, the Corporation shall use its best
efforts to remove such restriction as soon as possible, and (z)
the Corporation shall give notice to each holder of shares of
Series A Stock of any such restriction and the efforts by the
Corporation to remove it. Postponement of payment of
redemption amounts shall not in any way diminish or restrict
the right or the holders of shares of Series A Stock to have
their shares redeemed as provided in this Section 3. If
amounts payable to retire shares of Serial Preferred Stock are
not paid in full in the case of all series for which a sinking
fund has been fixed, the number of shares to be retired for the
sinking fund of each such series shall be in proportion to the
respective amounts that would be payable if all such amounts
were paid in full.
Section 4. Liquidation Rights.
(A) The provisions of Section 7(F) of this Division C
will apply to any voluntary to involuntary dissolution,
liquidation or winding up of the affairs of the Corporation and
will not be limited or otherwise affected by this Section 4.
(B) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation (all of which are hereinafter embraced in the word
"liquidation") occurring on or after the Earliest Redemption
Date, the holders of Series A Stock who do not exercise their
rights pursuant to Section 3(D) of this Division C, shall be
entitled to receive, subject to the limitations, if any, then
applicable in such event pursuant to Division A, from the
<PAGE> 15
14
assets of the Corporation available for distribution to the
shareholders, all amounts (including without limitation any
Deferred Payment Entitlement) which they would be entitled to
receive if on the date of such liquidation the shares of
Series A Stock held by them had been redeemed at the option of
the Corporation in accordance with the provisions of
Section 3(A) of this Division C. In the event of any
liquidation occurring prior to the Earliest Redemption Date,
all rights of the Corporation in respect of the Covered Cases
and any portion of the Recovery (as defined in Section 5(A) of
this Division C) theretofore collected by the Corporation, and
such additional funds or assets as may be required, shall be
placed in trust for the benefit of the holders of the Series A
Stock (and the holders of any other class of capital stock of
the Corporation to the extent hereinafter provided) upon such
terms so that (1) the holders of Series A Stock shall be
entitled to receive, from the assets of the Corporation
available for distribution to shareholders, units of beneficial
interest in such trust which shall as nearly as practicable
entitle them to receive, per share of Series A Stock held, a
fractional undivided interest in the proceeds of the Recovery
equal to the Per Share Allocation Factor, plus $1.00, and (2)
the holders of the other classes of capital stock of the
Corporation shall be entitled to receive out of such assets
available for distribution units of beneficial interest in such
trust which shall as nearly as practicable entitle them to
receive any balance of the proceeds of the Recovery in
accordance with their respective rights upon liquidation. In
the event of any liquidation, the holders of the Serial
Preferred Stock of the respective series shall be entitled to
be paid in full the respective amounts fixed for such series
before any distribution or payment or setting apart for payment
shall be made to or for the holders of the Common Shares or any
other Junior Stock. After such payments shall have been in
full to the holders of the Serial Preferred Stock, the
remaining assets and funds of the Corporation shall be
distributed among the holders of the Junior Stock of the
Corporation according to their respective rights. In the event
that the assets of the Corporation are not sufficient to make
the payments required to be made to the holders of the Serial
Preferred Stock in full, such assets shall be distributed to
the holders of the Serial Preferred Stock of the respective
series pro rata in proportion to the respective amounts fixed
for such series.
Section 5. Amount Payable on Redemption or
Liquidation.
(A) For purposes of this Division C, the following
terms shall have the meanings indicated:
<PAGE> 16
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(1) "Adjusted Value" of any "Assigned Value
Assets" shall mean, initially, the value assigned
thereto as provided in Section 5(B) of this
Division C, and, in the event any such Assigned Value
Assets shall be sold for cash within two years of the
Corporation's receipt thereof, shall mean, thereafter
and in lieu of the value initially assigned, the cash
proceeds of the sale, increased by the amount of any
revenues derived by the Corporation from, and
decreased by any costs and expenses incurred by the
Corporation after receipt of such Assigned Value
Assets in respect of, such Assigned Value Assets
during the period prior to such sale.
(2) "Assigned Value Assets" shall mean any
assets collected as a part of the Recovery to which a
value has been assigned as provided in Section 5(B) of
this Division C and shall also include the proceeds of
any sale or other disposition thereof.
(3) "Cash Redemption Amount" shall mean, at any
time of determination on or after the Dividend Accrual
Commencement Date, the product obtained by multiplying
(a) the sum of (i) the amount of the Recovery which
shall have been collected in the form of cash and (ii)
the Adjusted Value of any Assigned Value Assets, less
(iii) all amounts which shall have been paid by the
Corporation as dividends on, in redemption of, or for
the repurchase (in accordance with the provisions of
Section 3(B) of this Division C) of, shares of
Series A Stock, and all dividends which shall have
accrued but not been paid (whether or not declared),
on shares of Series A Stock by (b) the Per Share
Allocation Factor.
(4) "Covered Cases" shall mean, collectively,
the civil actions captioned The Lubrizol Corporation,
an Ohio corporation vs. Exxon Corporation, a New
Jersey corporation, in the United States District
Court for the Southern District of Texas (Civil Action
Nos. H-84-1627 and H-85-2450), and in the United
States District Court for the Northern District of
Ohio (Civil Action Nos. C84-1064 and C85-3135), and
all civil actions, whether in or before a state,
federal or foreign court or other authority,
designated either specifically or generically, as
Covered Cases by majority vote of the Directors of the
Corporation prior to the first date on which shares of
Series A Stock are issued, and all the right, title
and interest of the Corporation in and under all such
actions, and in and under all actions, suits or
<PAGE> 17
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proceedings determined by majority vote of the
Directors of the Corporation, prior to the first date
on which shares of Series A Stock are issued, to be
directly related thereto or to have arisen therefrom,
and to all claims asserted therein (whether asserted
in such actions or any action to enforce any judgment
or order therein or otherwise).
(5) "Deferred Payment Entitlement" shall have
the meaning referred to in Section 5(D) of this
Division C.
(6) "Recovery" shall mean the collective total
amount which the Corporation (or its successors and
assigns to the extent permitted hereby) shall collect,
whether in cash or other assets and whether collected
in one of more payments or transactions, on account of
favorable judgments in the Covered Cases or settlement
in respect thereof, less the sum of (a) an amount
equal the product of (i) such collective total amount
and (ii) the Corporation's effective income tax rate
disclosed by the Corporation in the notes to the
financial statements of the Corporation last published
and furnished to shareholders immediately prior to the
first issuance of any shares of Series A Stock and (b)
any amount which the Corporation (or its successors
and assigns to the extent permitted hereby) shall
collect in respect of any interest assigned by the
Corporation as a Deferred Payment Entitlement.
(7) "Per Share Allocation Factor" shall mean, at
any time of determination, the fraction which results
from dividing 1 by the sum of (a) the total number of
shares of Series A Stock then outstanding and (b) the
total number of shares of Series A Stock then subject
to issuance upon the proper exercise of outstanding
Rights.
(B) If and whenever the Corporation shall receive any
proceeds of the Recovery in a form other than cash, there shall
be assigned to such assets an amount equal to the fair market
value thereof as determined in good faith by the Directors,
unless the Directors of the Corporation shall determine that it
is not possible to assign a fair market value to such assets
with a reasonable level of confidence. The Directors of the
Corporation shall make such determination at the time such
assets are collected or, if it is determined as aforesaid that
it is not possible to assign a fair market value thereto with a
reasonable level of confidence, at the first opportunity
thereafter when it is possible to make such a determination in
good faith. The assets to which a value has been assigned in
<PAGE> 18
17
accordance with this Section 5(B) are referred to therein as
"Assigned Value Assets" and the value so assigned shall be the
initial Adjusted Value of such assets. If a fair market value
cannot reasonably be assigned to any assets, the Corporation
shall use its best efforts to dispose of such assets as
promptly as practicable, subject to the judgment of the
Directors as to the best interests of the holders of Series A
Stock. Pending such disposition the Corporation shall keep
accurate records relating to such assets.
(C) The "Earliest Redemption Date" shall mean the
first date on which the Corporation shall have collected, in
respect of any of the Covered Cases, in the form of cash and/or
assets constituting Assigned Value Assets, aggregate proceeds
of the Recovery having a value (based on the amount of cash to
received together with the Adjusted Value of any Assigned Value
Assets) in excess of $50,000,000.
(D) Whenever the Corporation shall redeem any shares
of Series A Stock when either (1) the prospect remains that
additional amounts will be collected in respect of the Covered
Cases or (2) any portion of the Recovery then collected
consists of assets other than cash or Assigned Value Assets,
the Corporation shall, in connection with such redemption,
assign to the holder of each share of Series A Stock then being
redeemed an undivided fractional interest equal to the Per
Share Allocation Factor then in effect in all the Corporation's
right, title and interest in (x) such additional amounts as may
be collected in respect of the Covered Cases as provided in the
foregoing clause (1) and/or the proceeds thereof and (y) the
proceeds of the sale or other disposition of any assets other
than cash or Assigned Value Assets plus the revenues derived by
the Corporation therefrom. The form and manner of assignment
shall be as determined by the Directors of the Corporation so
as to best convey to the holders of the shares of Series A
Stock being redeemed the benefits contemplated hereby;
provided, however, that such holders shall not by reason of the
assignment of the Corporation's interest in the foregoing
proceeds have any right to control the prosecution of the
Covered Cases, the collection of any amounts recoverable
thereunder of the operation or disposition of the aforesaid
assets, and provided, further, that the Corporation may provide
that the interests as assigned shall be non-transferable. The
interest assigned in accordance with this Section 5(D) in
respect of any share of Series A Stock being redeemed is
referred to herein as a "Deferred Payment Entitlement" in
respect of such share.
Section 6. Voting Rights. The voting rights relating
to the Serial Preferred Stock set forth in Section 6 of
Division A of Article Fourth are applicable to the Series A
<PAGE> 19
18
Stock. Except as so provided, and except as required by
applicable law, the holders of shares of Series A Stock shall
have no voting rights with respect to any action by the
Corporation or its shareholders by virtue of being a holder of
shares of Series A Stock.
Section 7. Limitations.
(A) So long as any shares of Series A Stock are
outstanding, no shares of any series of Serial Preferred Stock
or other capital stock of the Corporation other than Common
Shares having the express terms applicable to Common Shares on
the Share Acquisition Date (as defined in Section 8(B) of this
Division C) or the Series A Stock, and no shares of Series A
Stock not issuable pursuant to and in accordance with the
Rights Agreement, may be issued by the Corporation.
(B) So long as any shares of Series A Stock are
outstanding, the Corporation shall not invest any portion of
the proceeds of the Recovery (other than any non-cash assets
collected as a part thereof) in other than "Permitted
Investments." For purposes of this Section 7(C), "Permitted
Investments" shall include the following obligations and
securities:
(a) United States Treasury bonds, notes and
bills;
(b) certificates of deposit issued by major
commercial banks;
(c) Eurodollar time deposits placed with major
commercial banks;
(d) corporate bonds, debentures and notes (none
of which shall be convertible into any equity
security) rated A or better by Moody's Investors
Services and by Standard & Poor's Corporation;
(e) non-convertible preferred stock rated A or
better by Moody's Investors Services and by Standard &
Poor's Corporation; and
(f) commercial paper rated Prime-2 or better by
Moody's Investors Services and A-1 or better by
Standard & Poor's Corporation.
In no event shall any portion of the proceeds of the Recovery
be invested in any obligation or other security of a Prohibited
Transferee.
<PAGE> 20
19
(C) So long as any shares of Series A Stock are
outstanding, the Corporation shall not settle or otherwise
compromise the Covered Cases, direct counsel to make any change
in the strategy for conducting the Covered Cases, fail to pay
any costs or expenses of conducting the Covered Cases which
might diminish the likelihood of a favorable result therein or
otherwise adversely affect the conduct of the Covered Cases,
except, in each case, with the approval of the Directors of the
Corporation.
(D) So long as any shares of Series A Stock are
outstanding, the Corporation shall not sell, assign or
otherwise transfer the Covered Cases or any interest therein
unless the Directors of the Corporation shall have previously
determined in good faith that the proceeds to be realized
thereby are fair to the holders of the Series A Stock.
(E) So long as any shares of Series A Stock are
outstanding, the Corporation shall not (i) consolidate with,
(ii) merge with or into, (iii) sell or transfer to, in one or
more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
subsidiaries, taken as a whole, any Prohibited Transferee or
any Affiliate or Associate thereof (as such terms are defined
in Section 8(B) of this Division C), or (iv) liquidate,
dissolve or otherwise wind-up the affairs of the Corporation,
if at the time of, after or as a result of such consolidation,
merger, sale, liquidation, dissolution or winding up there
would be any charter or regulation provisions, including
without limitation any provisions of the Corporation's Amended
Articles of Incorporation or Regulations, as from time to time
amended, of any rights, options, warrants or other instruments
or securities outstanding or agreements in effect or any other
actions taken, which would eliminate or otherwise diminish the
benefits intended to be afforded by the Rights of the Series A
Stock, without proper provision being made for the redemption
of the Series A Stock in accordance with Section 7(E) of this
Division C.
Section 8. Contributions and Transfer.
(A) The Series A Stock shall not be transferable to
or by a Prohibited Transferee and any attempt to transfer
shares of Series A Stock to or by a Prohibited Transferee shall
be null and void. The Corporation reserves the right to
require (or to cause any transfer agent of the Corporation to
require) any Person who submits a share of Series A Stock for
transfer on the transfer books of the Corporation or for
redemption pursuant to Section 3 hereof to establish to the
satisfaction of the Corporation that such Person did not
<PAGE> 21
20
acquire such shares of Series A Stock while or from a
Prohibited Transferee.
(B) As used in this Division C, the term "Prohibited
Transferee" shall mean, at the time any determination is to be
made, (1) any Person other than the Corporation or any Related
Person (as such terms are hereinafter defined), who or which,
together with all Affiliates and Associates (as such terms are
defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, and in
effect on the date of first issuance of any shares of Series a
Stock (the "Exchange Act")) of such Person, shall be the
beneficial owner of 20% or more of the Common Shares then
outstanding or (2) any Person (other than the Corporation or
any Related Person) who or which, together with all Affiliates
or Associates of such Person (A) commences or announces its
intention to commence a tender or exchange offer the
consummation of which would result in beneficial ownership by
such Person of 20% or more of the Common Shares then
outstanding, or announces its intention otherwise to purchase
or acquire (b) 20% or more of the Common Shares then
outstanding. The term "Person" shall mean any individual,
firm, corporation, partnership or other entity, and shall
include any successor (by merger or otherwise) of such entity.
The term "Related Person" shall mean (x) any subsidiary of the
Corporation, (y) any employee benefit or stock ownership plan
of the Corporation or any entity holding Common Shares for or
pursuant to the terms of any such plan, or (z) any Person who
acquires Common Shares from the Corporation or any other
Related Person in one or a series of related transactions, each
of which is approved by a majority of the Directors of the
Corporation; provided, however, that if any Person who becomes
a Related Person solely by virtue of subsection (z) above, or
any Affiliate or Associate of such Person, subsequently becomes
the beneficial owner of any additional Common Shares in a
transaction or transactions not approved by a majority of the
Directors of the Corporation, such Person shall no longer be
deemed a "Related Person" with respect to all Common Shares of
which it, or any of its Affiliates or Associates, is the
beneficial owner. The term "Distribution Date" shall mean the
close of business on the fifteenth calendar day (or such other
date as any be specified by a majority vote of the Directors
then in office) after the Share Acquisition Date. The term
"Share Acquisition Date" shall mean the first date of public
announcement by the Corporation or a Prohibited Transferee (by
press release, filing made with the Securities and Exchange
Commission or otherwise) that a Prohibited Transferee has
become such. For the purposes of this Division C, a Person
shall be deemed the "Beneficial Owner" of and shall be deemed
"beneficially to own" any securities: (i) which such Person or
any of such Person's Affiliates or Associates, directly or
<PAGE> 22
21
indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time or
the occurrence or nonoccurrence of an event) pursuant to any
agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, other rights (other than the Other Rights), warrants,
options or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or beneficially to own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (ii) which such Person or
any of such Person's Affiliates or Associates, directly or
indirectly, has the right or power to vote or dispose of, or to
direct the vote or disposition of, including pursuant to any
agreement, arrangement or understanding (whether or not in
writing); or (iii) which any other Person is the beneficial
Owner if such other Person or any of the Affiliates or
Associates of such other Person has any agreement, arrangement
or understanding (whether or not in writing) with the first
Person or the Affiliates or Associates of the first Person with
respect to acquiring, holding, voting or disposing of any
securities of the Company; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or beneficially to
own, any security (A) if such Personal has a right to vote such
security pursuant to an agreement, arrangement or understanding
(whether or not in writing) which (i) arises solely from a
revocable proxy given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report), or (B) if such beneficial ownership arises solely as a
result of such Person's status as a "clearing agency," as
defined in Section 3(a)(23) of the Exchange Act; and provided,
further, however, that nothing in this paragraph shall cause a
Person engaged in business as an underwriter of securities to
be the Beneficial Owner of any securities acquired through such
Person's participation in good faith in an underwriting
syndicate pursuant to an agreement to which the Company is a
party until the expiration of 40-calendar days after the date
of such acquisition. The term "Rights" shall mean the rights
to purchase shares of Series A Stock issued pursuant to the
terms of the Rights Agreement. The term "Other Rights" shall
mean the rights to purchase Common Shares of the Corporation
issued pursuant to the terms of the Rights Agreement, dated
October 6, 1987, as from time to time amended or supplemented,
between the Corporation and National City Bank.
<PAGE> 23
22
DIVISION D
EXPRESS TERMS OF THE SERIAL PREFERENCE SHARES
Section 1. Serial Preference Shares may be issued
from time to time in one or more series. Subject to the
provisions of this Division D, which apply to all Serial
Preference Shares, the Directors are hereby authorized to adopt
amendments to the Articles of Incorporation in respect of any
unissued or treasury Serial Preference Shares and thereby fix
or change any or all of the express terms of such Serial
Preference Shares as from time to time may be permitted or
required by law, including without limitation the following:
(i) The division of such shares into series and the
designation and authorized number of shares of each series;
(ii) The dividend or distribution rate;
(iii) The dates of payment of dividends or
distributions and the dates from which they are cumulative;
(iv) Liquidation price;
(v) Redemption rights and price;
(vi) Sinking fund requirements;
(vii) Conversion rights; and
(viii) Restrictions on the issuance of shares of any
class or series.
Section 2. The holders of Serial Preference Shares
shall be entitled to one vote for each Serial Preference Share
held by them upon all matters presented to the shareholders
and, except as required by law, the holders of Serial
Preference Shares and the holders of Common Shares (and the
holders of all other shares of voting stock of the Corporation
that vote together as a class with the holders of Common
Shares) shall vote together as one class on all matters.
Section 3. (a) The holders of Serial Preference
Shares shall be entitled to receive dividends, when and as
declared by the Directors, out of the assets of the Corporation
which are by law available for the payment of dividends at the
rate per share per annum as shall have been fixed by the
Directors pursuant to Section 1 of this Division D.
(b) No dividends (other than a dividend payable in
Common Shares) or other distributions shall be paid or declared
on any Common Shares or any other shares ranking junior to the
<PAGE> 24
23
Serial Preference Shares (such Common Shares and other shares
ranking junior to the Serial Preference Shares being
hereinafter referred to as "Junior Shares"), nor shall any
Junior Shares be purchased, retired or otherwise acquired by
the Corporation, unless:
(i) all accrued and unpaid dividends on all series
of Serial Preference Shares, including the full dividends
for the current period, shall have been declared and paid
or provision shall have been made for such payment; and
(ii) there shall be no arrearages with respect to the
redemption or sinking fund obligations, if any, of the
Corporation for any series of Serial Preference Shares.
Section 4. In the event of a voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation, before any payment shall be made to the holders of
Junior Shares, the holders of the Serial Preference Shares
shall be entitled to be paid from the assets available therefor
the liquidation price fixed by the Directors pursuant to
Section 1 of this Division D and all accrued and unpaid
dividends on the Serial Preference Shares.
Section 5. All Serial Preference Shares shall be
shares "ranking junior to the Serial Preferred Stock" as such
phrase is defined in Division A, Section 8 of the Articles of
Incorporation.
FIFTH: Except as otherwise provided in these Articles
of Incorporation or in the Regulations, the holders of a
majority of the outstanding shares are authorized to take any
action which, but for this provision, would require the vote or
other action of the holders of more than a majority of such
shares.
SIXTH: Except as otherwise provided in these Articles
of Incorporation, the Corporation, by its Board of Directors,
may purchase issued shares, to the extent permitted by law.
SEVENTH:
Section 1. In addition to any affirmative vote
required by law or these Articles of Incorporation, any Related
Party Transaction shall require the affirmative vote of not
less than both a majority of the Corporation's outstanding
Voting Stock and a majority of the portion of the Corporation's
outstanding Voting Stock excluding the Voting Stock owned by
the Related Party involved in the Related Party Transaction.
<PAGE> 25
24
Section 2. The provisions of Section 1 of this
Article Seventh shall not be applicable to Related Party
Transactions in which (a) the aggregate amount of the cash and
the fair market value of consideration other than cash received
per share by holders of shares of each class or series of
Voting Stock of the Corporation who receive cash or other
consideration in the Related Party Transaction is not less than
the highest per share price (with appropriate adjustments for
recapitalizations and for stock splits, stock dividends, and
like distributions) paid by the Related Party in acquiring any
of its holdings of each class of series of such Voting Stock,
and (b) the form of consideration received by holders of shares
of each class or series of such Voting Stock is cash or the
same form used by the Related Party to acquire the largest
percentage of each class or series of such Voting Stock owned
by the Related Party.
Section 3. The provisions of Section 1 of this
Article Seventh shall not be applicable if the Continuing
Directors of the Corporation by a majority vote have expressly
approved the Related Party Transaction.
Section 4. For the purpose of this Article Seventh:
(a) The term "Related Party Transaction" shall
mean (i) any merger or consolidation of the
Corporation or a Subsidiary with a Related Party,
irrespective of which party, if either, is the
surviving party, (ii) any sale, purchase, lease,
exchange, transfer, or other transaction (or series of
transactions) between the Corporation or a Subsidiary
and a Related Party involving the acquisition or
disposition of assets for consideration of $10,000,000
or more in value (except for transactions in the
ordinary course of business), (iii) the issuance or
transfer of any securities of the Corporation or of a
Subsidiary to a Related Party (other than an issuance
or transfer of securities which is effected on a pro
rata basis to all shareholders of the Corporation),
(iv) any reclassification of securities of the
Corporation (including any reverse stock split) or any
recapitalization or other transaction involving the
Corporation or its Subsidiaries that would have the
effect of increasing the voting power of a Related
Party, except for any mandatory redemption required by
the terms of outstanding securities, and (v) the
adoption of any plan or proposal for the liquidation
or dissolution of the Corporation in favor of which a
Related Party votes its Voting Stock.
<PAGE> 26
25
(b) The term "Related Party" shall mean (i) any
individual, corporation, partnership, or other person,
group or entity which, together with its Affiliates
and Associates, is the beneficial owner of ten percent
(10%) or more but less than ninety percent (90%) of
the Voting Stock of the Corporation or (ii) any such
Affiliate or Associate.
(c) A person shall be a "beneficial owner" of
any shares of Voting Stock:
(i) Which such person or any of its
Affiliates or Associates beneficially owns,
directly or indirectly; or
(ii) Which such person or any of its
Affiliates or Associates has (a) the right to
acquire (whether such right is exercisable
immediately or only after the passage of time)
pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote pursuant to
any agreement, arrangement or understanding; or
(iii) Which are beneficially owned, directly
or indirectly, by any other person with which
such person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring,
holding, voting or disposing of any shares of
Voting Stock.
(d) The terms "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under
the Securities Act of 1934, as in effect on January 1,
1985 (or any subsequent provisions replacing such Act,
Rules or Regulations).
(e) The term "consideration other than cash" as
used in Section 2(a) of this Article Seventh shall
include, without limitation, Voting Stock of the
Corporation retained by its existing shareholders in
the event of a merger or consolidation with a Related
Party in which the Corporation is the surviving
corporation.
(f) The term "Subsidiary" shall mean any
Affiliate of the Corporation more than fifty percent
(50%) of the outstanding securities of which
<PAGE> 27
26
representing the right, other than as affected by
events of default, to vote for the election of
directors is owned by the Corporation or by another
Subsidiary (or both).
(g) The term "Voting Stock" shall mean all
securities of the Corporation entitled to vote
generally in the election of directors.
(h) The term "Continuing Director" shall mean a
director who either (i) was a member of the Board of
Directors of the Corporation immediately prior to the
time that the Related Party involved in a Related
Party Transaction became a Related Party, or (ii) was
designated (before his or her initial election as a
director) as a Continuing Director by a majority of
the then Continuing Directors.
Section 5. A majority of the Continuing Directors
shall have the power and duty to determine conclusively for the
purposes of this Article Seventh, on the basis of information
known to them, (a) whether a person is a Related Party, (b)
whether a person is an Affiliate or Associate of another, (c)
whether a transaction between the Corporation or a Subsidiary
and a Related Party involves the acquisition or disposition of
assets for consideration of $10,000,000 or more in value, (d)
the fair market value of consideration other than cash received
by holders of Voting Stock in a Related Party Transaction, and
(e) such other matters with respect to which a determination or
interpretation is required under this Article Seventh.
Section 6. Nothing contained in this Article Seventh
shall be construed to relieve any related Party from any
fiduciary obligation imposed by law.
Section 7. Notwithstanding any other provisions of
these Articles of Incorporation or the Regulations of the
Corporation or any provision of law which might otherwise
permit a lesser vote, but in addition to any affirmative vote
of the holders of any particular class or series of stock
required by law or these Articles of Incorporation, the
affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Corporation's Voting Stock,
voting as a single class, shall be required to alter, amend or
adopt any provision inconsistent with or repeal this Article
Seventh.
EIGHTH:
Section 1. Any direct or indirect purchase or other
acquisition by the Corporation of any shares of Voting Stock
<PAGE> 28
27
from any Selling Shareholder who has beneficially owned any of
such shares of Voting Stock for less than two years prior to
the date of such purchase or other acquisition, or any
agreement in respect thereof, shall, except as expressly
provided in Section 2 of this Article Eighth, require the
affirmative vote of the holders of not less than a majority of
the shares of Voting Stock represented in person or by proxy at
a meeting at which a quorum is present, excluding Voting Stock
beneficially owned by such Selling Shareholder, voting together
as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that
a lesser percentage may be specified by law, or in any
agreement with any national securities exchange or otherwise.
Section 2. The provisions of Section 1 of this
Article Eighth shall not be applicable (a) to any purchase or
other acquisition by the Corporation from a Selling Shareholder
of shares of Voting Stock owned by said Selling Shareholder
which purchase or acquisition is made as part of a tender or
exchange offer by the Corporation to purchase Voting Stock of
the same class or series made on the same terms to all holders
of such Voting Stock and complying with the applicable
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations), or (b) to the
purchase from any Selling Shareholder of shares of Voting Stock
by the Corporation at a price not in excess of the Fair Value
thereof, and any such purchase or acquisition shall require
only such affirmative vote, if any, as is required by law and
any other provisions of these Articles of Incorporation or
otherwise.
Section 3. For the purpose of this Article Eighth:
(a) "Selling Shareholder" shall mean any
individual, firm, partnership, corporation or other
person, group or entity (other than the Corporation or
any corporation of which a majority of its voting
stock is owned, directly or indirectly, by the
Corporation) who or which:
(i) is the beneficial owner of more than
five percent (5%) of the class or series of
Voting Stock to be acquired; or
(ii) is an Affiliate of the Corporation and
at any time within the two-year period
immediately prior to the date in question was the
beneficial owner of more than five percent (5%)
of the class or series of Voting Stock to be
acquired; or
<PAGE> 29
28
(iii) is an assignee or has otherwise
succeeded to any shares of the class or series of
Voting Stock to be acquired which were at any
time within the two-year period immediately prior
to the date in question beneficially owned by a
Selling Shareholder, if such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not
involving a public offering within the meaning
of the Securities Act of 1933.
(b) "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the
Securities Act of 1934, as in effect on January 1,
1985 (or any subsequent provisions replacing such Act,
Rules or Regulations).
(c) A person shall be a "beneficial owner" of
any shares of Voting Stock:
(i) Which such person or any of its
Affiliates or Associates beneficially owns,
directly or indirectly; or
(ii) Which such person or any of its
Affiliates or Associates has (a) the right to
acquire (whether such right is exercisable
immediately or only after the passage of time)
pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote pursuant to
any agreement, arrangement or understanding; or
(iii) Which are beneficially owned, directly
or indirectly, by any other person with which
such person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring,
holding, voting or disposing of any shares of
Voting Stock.
(d) For the purpose of determining whether a
person is a Selling Shareholder pursuant to paragraph
(a) of this Section 3, the number of shares of Voting
Stock deemed to be outstanding shall include shares
deemed owned through application of paragraph (c) of
this Section 3, but shall not include any other shares
of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon
<PAGE> 30
29
exercise of conversion rights, warrants or options, or
otherwise.
(e) "Voting Stock" shall mean all securities of
the Corporation entitled to vote generally in the
election of directors.
(f) "Fair Value" shall mean the highest closing
sale price of such Voting Stock during the thirty-day
period immediately preceding the date in question, on
the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such Voting Stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if
such Voting Stock is not listed on such Exchange, on
the principal United States securities exchange
registered under the Securities Exchange Act of 1934
on which such Voting Stock is listed, or, if such
Voting Stock is not listed on any such exchange, the
highest closing bid quotation with respect to such
Voting Stock, during the thirty-day period immediately
preceding the date in question, on the National
Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no
such quotations are available, the Fair Value on the
date in question of such Voting Stock shall be as
determined by a majority of the Board of Directors of
the Corporation in good faith.
Section 4. A majority of the Board of Directors shall
have the power and duty to determine conclusively for the
purposes of this Article Eighth, on the basis of information
known to them, (a) whether a person is a Selling Shareholder,
(b) the Fair Value of Voting Stock owned by a Selling
Shareholder, and (c) such other matters with respect to which a
determination or interpretation is required under this Article
Eighth.
NINTH: No person shall make a Control Share
Acquisition without first obtaining the prior authorization of
the Corporation's shareholders at a special meeting of
shareholders called by the Board of Directors in accordance
with this Article Ninth.
Section 1. PROCEDURE. Any Person who proposes to
make a Control Share Acquisition shall deliver a notice
("Notice") to the Corporation at its principal place of
business that sets forth all of the following information:
(A) The identity of the Person who is giving the
Notice;
<PAGE> 31
30
(B) A Statement that the Notice is given
pursuant to this Article Ninth.
(C) The number and class of shares of the
Corporation owned, directly or indirectly, by the
Person who gives the Notice;
(D) The range of voting power (as specified in
Section 6(B)(1)) under which the proposed Control
Share Acquisition would, if consummated, fall;
(E) A description in reasonable detail of the
terms of the proposed Control Share Acquisition; and
(F) Representatives, supported by reasonable
information, that the proposed Control Share
Acquisition would be consummated if shareholder
approval is obtained and, if consummated, would not be
contrary to law and that the Person who is giving the
Notice has the financial capacity to make the proposed
Control Share Acquisition.
Section 2. CALL OF SPECIAL MEETING OF SHAREHOLDERS.
The Board of Directors of the Corporation shall, within ten
(10) days after receipt by the Corporation of a Notice that
complies with Section 1, call a special meeting of shareholders
to be held not later than fifty (50) days after receipt of the
Notice by the Corporation, unless the Person who delivered the
Notice agrees to a later date, to consider the proposed Control
Share Acquisition; provided that the Board of Directors shall
have no obligation to call such a meeting if they make a
determination with ten (10) days after receipt of the Notice
that the proposed Control Share Acquisition could not be
consummated for financial or legal reasons.
The Board of Directors may adjourn such special
meeting of shareholders if prior to such meeting the
Corporation has received a Notice from any other Person and the
Board of Directors has determined that the Control Share
Acquisition proposed by such other Person, or a merger,
consolidation or sale of assets of the Corporation, should be
presented to shareholders at an adjourned meeting or at a
special meeting held at a later date.
For purposes of making a determination that a special
meeting of shareholders should not be allowed pursuant to this
Section 2, no such determination shall be deemed void or
voidable with respect to the Corporation merely because one or
more of its directors or officers who participated in
deliberations regarding such determination may be deemed to be
other than disinterested, if in any such case the material
<PAGE> 32
31
facts of the relationship giving rise to a basis for
self-interest are known to the directors and the directors, in
good faith reasonably justified by the facts, make such
determination by the affirmative vote of a majority of the
disinterested directors, even though the disinterested
directors constitute less than a quorum. For purposes of this
paragraph, "disinterested directors" shall mean directors whose
material contacts with the Corporation are limited principally
to activities as a director or shareholder. Persons who have
substantial, recurring business or professional contacts with
the Corporation shall not be deemed to be "disinterested
directors" for purposes of this provision. A director shall
not be deemed to be other than a "disinterested director"
merely because he would no longer be a director if the proposed
Control Share Acquisition were approved and consummated.
Section 3. NOTICE OF SPECIAL MEETING. The
Corporation shall, as promptly as practicable, give notice of
the special meeting of shareholders called pursuant to
Section 2 to all shareholders of record as of the record date
set for such meeting. Such notice shall include or be
accompanied by a copy of the Notice and by a statement of the
Corporation, authorized by the Board of Directors, of its
position or recommendation, or that it is taking no position or
making no recommendation, with respect to the proposed Control
Share Acquisition.
Section 4. REQUIREMENTS FOR APPROVAL. The Person who
delivered the Notice may make the proposed Control Share
Acquisition if both of the following occur:
(A) The Shareholders of the Corporation
authorize such acquisition at the special meeting of
shareholders called pursuant to Section 2, at which
meeting a quorum is present, by the affirmative vote
of a majority of the Voting Stock represented at such
meeting in person or by proxy and by a majority of the
portion of such Voting Stock represented at such
meeting in person or by proxy excluding the votes of
Interested Shares. A quorum shall be deemed to be
present at such special meeting if at least a majority
of the issued and outstanding Voting Stock, and a
majority of such Voting Stock excluding Interested
Shares, are represented at such meeting in person or
by proxy.
(B) Such acquisition is consummated, in
accordance with the terms so authorized, not later
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32
than three hundred sixty (360) days following
shareholder authorization of the Control Share
Acquisition.
Section 5. VIOLATIONS OF RESTRICTION. Any Voting
Stock issued or transferred to any Person in violation of this
Article Ninth shall hereinafter be called "Excess Shares." In
the event that any Person acquires Excess Shares, then, in
addition to any other remedies which the Corporation may have
at law or in equity as a result of such acquisition, the
Corporation shall have the right to redeem, or to deny voting
rights or other shareholder rights appurtenant to such Excess
Shares. The Corporation additionally shall have the right to
regard the Person who holds Excess Shares as having acted as an
agent on behalf of the Corporation in acquiring the Excess
Shares and to hold such Excess Shares on behalf of the
Corporation. As the equivalent of treasury securities for such
purposes, the Excess Shares shall not be entitled to any voting
rights, shall not be considered to be outstanding for quorum or
voting purposes, and the Person who holds Excess Shares shall
not be entitled to receive dividends, interest or any other
distribution with respect to the Excess Shares. Any Person who
receives dividends, interest or any other distribution with
respect to Excess Shares shall hold the same as agent for the
Corporation and, following a permitted transfer, for the
transferee thereof. Notwithstanding the foregoing, any Person
who holds Excess Shares may transfer the same (together with
any distributions thereon) to any Person who, following such
transfer, would not own shares in violation of this Article
Ninth. Upon such permitted transfer, the Corporation shall pay
or distribute to the transferee any distributions on the Excess
Shares not previously paid or distributed.
Section 6. DEFINITIONS. As used in this Article
Ninth:
(A) "Person" includes, without limitation, an
individual, a corporation (whether nonprofit or for
profit), a partnership, an unincorporated society or
association, and two or more persons having a joint or
common interest.
(B)(1) "Control Share Acquisition" means the
acquisition, directly or indirectly, by any Person, of
shares of the Corporation that, when added to all
other shares of the Corporation in respect of which
such Person, directly or indirectly, may exercise or
direct the exercise of voting power as provided in
this Section 6(B)(1), would entitle such Person,
immediately after such acquisition, directly or
indirectly, to exercise or direct the exercise of
<PAGE> 34
33
voting power of the Corporation in the election of
directors within any of the following ranges of such
voting power:
(a) One-fifth or more but less than
one-third of such voting power;
(b) One-third or more but less than a
majority of such voting power; or
(c) A majority or more of such voting power.
A bank, broker, nominee, trustee, or other Person
who acquires shares in the ordinary course of business
for the benefit of others in good faith and not for
the purpose of circumventing this Article Ninth shall,
however, be deemed to have voting power only of shares
in respect of which such Person would be able to
exercise or direct the exercise of votes at a special
meeting of shareholders called pursuant to Section 2
of this Article Ninth without further instruction from
others. For purposes of this Article Ninth, the
acquisition of securities immediately convertible into
shares of the Corporation with voting power in the
election of directors shall be treated as an
acquisition of such shares.
(2) The acquisition of any shares of the
Corporation does not constitute a Control Share
Acquisition for the purposes of this Article Ninth if
the acquisition is consummated in any of the following
circumstances:
(a) By underwriters in good faith and not
for the purpose of circumventing this Article
Ninth in connection with an offering to the
public of securities of the Corporation;
(b) By bequest or inheritance, by operation
of law upon the death of any individual, or by
any other transfer without valuable
consideration, including a gift that is made in
good faith and not for the purpose of
circumventing this Article Ninth;
(c) Pursuant to the satisfaction of a
pledge or other security interest created in good
faith and not for the purpose of circumventing
this Article Ninth;
<PAGE> 35
34
(d) Pursuant to a merger, consolidation,
combination or majority share acquisition adopted
or authorized by shareholder vote in compliance
with the provisions of Article Seventh of these
Articles of Incorporation and Section 1701.78 or
1701.83 of the Ohio Revised Code if the
Corporation is the surviving or new corporation
in the merger or consolidation or is the
acquiring corporation in the combination or
majority share acquisition;
(e) Under such circumstances that the
acquisition does not result in the Person
acquiring shares of the Corporation being
entitled, immediately thereafter and for the
first time, directly or indirectly, to exercise
or direct the exercise of voting power of the
Corporation in the election of directors within
the range of one-fifth or more but less than
one-third of such voting power, or within any of
the ranges of voting power specified in Section
6(B)(1)(a), (b) or (c) which is higher than the
range of voting power applicable to such Person
immediately prior to such acquisition;
(f) Prior to [date of the Merger]; or
(g) Pursuant to a contract existing prior
to [date of the Merger].
The acquisition by any Person of shares of the
Corporation in a manner described under this Section
6(B)(2) shall be deemed to be a Control Share
Acquisition authorized pursuant to this Article Ninth
within the range of voting power specified in Section
6(B)(1)(a), (b) or (c) that such Person is entitled to
exercise after such acquisition, provided that, in the
case of an acquisition in a manner described under
Section 6(B)(2)(b) or (c), the transferor of shares to
such Person had previously obtained any authorization
of shareholders required under this Article Ninth in
connection with such transferor's acquisition of
shares of the Corporation.
(3) The acquisition of shares of the Corporation
in good faith and not for the purpose of circumventing
this Article Ninth from any Person whose Control Share
Acquisition had previously been authorized by
shareholders in compliance with this Article Ninth, or
from any Person whose previous acquisition of shares
would have constituted a Control Share Acquisition but
for Section 6(B)(2), does not constitute a Control
<PAGE> 36
35
Share Acquisition for the purpose of this Article
Ninth unless such acquisition entitles any Person,
directly or indirectly, alone or with others, to
exercise or direct the exercise of voting power of the
Corporation in the election of directors in excess of
the range of such voting power authorized pursuant to
this Article Ninth, or deemed to be so authorized
under Section 6(B)(2).
(C) "Interested Shares" means Voting Stock with
respect to which any of the following persons may
exercise or direct the exercise of the voting power:
(1) any Person whose Notice prompted the
calling of a special meeting of shareholders
pursuant to Section 2;
(2) any officer of the Corporation elected
or appointed by the directors of the Corporation;
and
(3) any employee of the Corporation who is
also a director of the Corporation.
(D) "Voting Stock" means all securities of the
Corporation entitled to vote generally in the election
of directors, and, for purposes of Section 5 of this
Article Ninth, shall mean securities of the
Corporation immediately convertible into securities
entitled to vote generally in the election of
directors.
Section 7. PROXIES. No proxy appointed for or in
connection with the Shareholder authorization of a Control
Share Acquisition pursuant to this Article Ninth is valid if it
provides that it is irrevocable. No such proxy is valid unless
it is sought, appointed, and received both:
(A) In accordance with all applicable
requirements of law; and
(B) Separate and apart from the sale or
purchase, contract or tender for sale or purchase, or
request or invitation for tender for sale or purchase,
of shares of the Corporation.
Section 8. REVOCABILITY OF PROXIES. Proxies
appointed for or in connection with the shareholder
authorization of a Control Share Acquisition pursuant to this
Article Ninth shall be revocable at all times prior to the
<PAGE> 37
36
obtaining of such shareholder authorization, whether or not
coupled with an interest.
Section 9. AMENDMENTS. Notwithstanding any other
provisions of these Articles of Incorporation or the
Regulations of the Corporation or any provision of law that
might otherwise permit a lesser vote, but in addition to any
affirmative vote of the holders of any particular class or
series of stock required by law, the Articles of Incorporation
or the Regulations of the Corporation, the affirmative vote of
the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the Voting Stock, voting as a single class, shall
be required to alter, amend or repeal this Article Ninth or
adopt any provisions in the Articles of Incorporation or
Regulations of the Corporation which are inconsistent with the
provisions of this Article Ninth.
Section 10. LEGEND ON SHARE CERTIFICATES. Each
certificate representing shares of the Corporation's capital
stock shall contain the following legend:
Transfer of the shares represented by this
Certificate is subject to the provisions of Article
Ninth of the Corporation's Articles of Incorporation
as the same may be in effect from time to time. Upon
written request delivered to the Secretary of the
Corporation at its principal place of business, the
Corporation will mail to the holder of this
Certificate a copy of such provisions without charge
within five (5) days after receipt of written request
therefor. By accepting this Certificate the holder
hereof acknowledges that it is accepting same subject
to the provisions of said Article Ninth as the same
may be in effect from time to time and covenants with
the Corporation and each shareholder thereof from time
to time to comply with the provisions of said Article
Ninth as the same may be in effect from time to time.
TENTH: The provisions of Section 1701.831 of the Ohio
Revised Code, as amended from time to time, or any successor
provision or provisions to said Section, shall not apply with
respect to any particular Control Share Acquisition, as such is
defined in said Section, regarding this Corporation so long as
Article Ninth of these Articles of Incorporation, as such
Articles of Incorporation may be amended from time to time,
remains an Article of these Articles of Incorporation and
remains substantially in full force and effect, disregarding
any renumbering of such Article Ninth resulting from any
amendment of these Articles of Incorporation.
<PAGE> 38
37
ELEVENTH: These Amended Articles of Incorporation
supersede the existing Amended Articles of Incorporation of the
Corporation.
<PAGE> 1
EXHIBIT (3)(b)
REGULATIONS
OF
THE LUBRIZOL CORPORATION
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting.
The annual meeting of the shareholders of the Company shall be held at the
principal office of the Company, or at such other place within or without the
State of Ohio as the directors may determine, on the fourth Monday of April of
each year, if not a legal holiday, or, if a legal holiday, then on the next
succeeding business day. The directors shall be elected thereat and such other
business transacted as may be specified in the notice of the meeting.
Section 2. Special Meetings.
Special meetings of the shareholders may be called at any time by the
Chairman of the Board, the Vice Chairman of the Board, the President, or by a
majority of the directors acting with or without a meeting, or by shareholders
holding fifty percent (50%) or more of the outstanding shares entitled to vote
thereat. Such meetings may be held within or without the State of Ohio at such
time and place as may be specified in the notice thereof.
Section 3. Notice of Meetings.
Written or printed notice of every annual or special meeting of the
shareholders stating the time and place and the purposes thereof shall be given
to each shareholder entitled to vote thereat and to each shareholder entitled
to
notice as provided by law, by mailing the same to his last address appearing on
the records of the Company at least seven days before any such meeting. Any
shareholder may waive any notice required to be given by law or under these
Regulations, and by attendance at any meeting, shall be deemed to have waived
notice thereof.
Section 4. Persons Becoming Entitled by Operation of Law of Transfer.
Every person who, by operation of law transfer, or any other means
whatsoever, shall become entitled to any shares, shall be bound by every notice
in respect of such share or shares which previously to the entering of his name
and address on the records of the Company shall have been duly given to the
person from whom he derives his title to such shares.
<PAGE> 2
Section 5. Quorum and Adjournments.
Except as may be otherwise required by law or by the Articles of
Incorporation, the holders of shares entitling them to exercise a majority of
the voting power of the Company shall constitute a quorum to hold a
shareholders meeting; provided, however, that at any meeting, whether a quorum
is present or otherwise, the holders of a majority of the voting shares
represented thereat may adjourn from time to time without notice other than by
announcement at such meeting.
Section 6. Business to be Conducted at Meetings.
At any meeting of shareholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly brought
before a meeting of shareholders, business must be specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the
Directors, otherwise properly brought before the meeting by or at the direction
of the directors or otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before a meeting of
shareholders by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Company. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than sixty (60) days nor
more than ninety (90) days prior to the meeting; provided, however, that in the
event that less than seventy-five (75) days' notice or prior public disclosure
of the date of the meeting is given or made to the shareholders, notice by the
shareholder to be timely must be so received not later than the close of
business on the fifteenth (15th) day following the earlier of the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. A shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the meeting (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting; (ii) the name and record
address of the shareholder proposing such business; (iii) the class and number
of shares of the Company which are beneficially owned by such shareholder; and
(iv) any material interest of such shareholder in such business.
Notwithstanding anything in the Regulations of the Company to the contrary,
no business shall be conducted at a meeting of shareholders except in
accordance with the procedures set forth in this Section 6.
The Chairman of the meeting of shareholders may, if the facts warrant
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 6, and if
he should so determine, any such business shall not be transacted.
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<PAGE> 3
DIRECTORS
Section 7. Number.
The number of directors may be determined by the vote of the holders of a
majority of the shares of the Company entitled to vote for the election of
directors that are represented at any annual meeting or special meeting called
for the purpose of electing directors or by resolution adopted by affirmative
vote of a majority of the directors then in office, provided that the number of
directors shall in no event be fewer than nine (9) nor more than thirteen (13).
When so fixed, such number shall continue to be the authorized number of
directors until changed by the shareholders or directors by vote as aforesaid.
Section 8. Nominations.
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as directors. Nominations of persons for
election as directors of the Company may be made at a meeting of shareholders
by or at the direction of the directors, by any nominating committee or person
appointed by the directors, or by any shareholder of the Company entitled to
vote for the election of directors who complies with the notice procedures set
forth in this Section 8. Nominations by shareholders shall be made pursuant to
timely notice in writing to the Secretary of the Company. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Company not less than sixty (60) days nor
more than ninety (90) days prior to the meeting; provided, however, that in the
event that less than seventy-five (75) days' notice or prior public disclosure
of the date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than the close of
business on the fifteenth (15th) day following the earlier of the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. Such shareholder's notice shall set forth: (a) as to each person who is
not an incumbent director whom the shareholder proposes to nominate for
election as a director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Company which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934 (or any comparable successor rule or regulation under such Act);
and (b) as to the shareholder giving the notice (i) the name and record address
of such shareholder, and (ii) the class and number of shares of the Company
which are beneficially owned by such shareholder. Such notice shall be
accompanied by the written consent of each proposed nominee to serve as a
director of the Company, if elected. No person shall be eligible for election
as a director of the Company unless nominated in accordance with the procedures
set forth in this Section 8.
The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
provisions of this Section 8, and if he should so determine the defective
nomination shall be disregarded.
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<PAGE> 4
Section 9. Classification, Election and Term of Office of Directors.
The directors shall be divided into three classes, as nearly equal in
number as possible. At the 1985 Annual Meeting of Shareholders, one class of
directors shall be elected for a one-year term, one class for a two-year term
and one class for a three-year term. At each succeeding annual meeting of
shareholders, successors to the class of directors whose term expires in that
year will be elected for a three-year term. At such time as the shareholders or
directors fix or change the total number of directors comprising the Board of
directors, they shall also fix, or determine the adjustment to be made to, the
number of directors comprising the three classes of directors, provided,
however, that no reduction in the number of directors shall of itself result in
the removal of or shorten the term of any incumbent director. In the case of
any increase in the number of directors of any class, any additional directors
elected to such class shall hold office for a term which shall coincide with
the term of such class. A director shall hold office until the annual meeting
for the year in which his term expires and until his successor shall be elected
and shall qualify, subject, however, to prior death, resignation, or removal
from office. Election of directors shall be by ballot whenever requested by
any person entitled to vote at the meeting, but unless so requested, such
election may be conducted in any way approved at such meeting.
Section 10. Removal.
Except as otherwise provided by law, all the directors, or all the
directors of a particular class, or any individual director, may be removed
from office without assigning any cause, by the affirmative vote of at least
sixty-six and two-thirds percent (66-2/3%) of the shares of the Company
present in person or represented by proxy and entitled to vote in respect
thereof, at an annual meeting or at any special meeting duly called for such
purpose.
Section 11. Vacancies.
Whenever any vacancy shall occur among the directors, the remaining
directors shall constitute the directors of the Company until such vacancy is
filled or until the number of directors is changed as above provided. The
remaining directors; though less than a majority of the whole authorized number
of directors, may, by a vote of a majority of their number, fill any vacancy
for a term ending with the next annual meeting or until a successor is elected
and qualified.
Section 12. Quorum.
A majority of the directors in office at the time shall constitute a
quorum - provided that any meeting duly called, whether a quorum be present or
otherwise, may, by note of a majority of the directors present adjourn from
time to time and place to place within or without the State of Ohio without
notice other than by announcement at the meeting. At any meeting of the
directors at which a quorum is present, all questions and business shall be
determined by the affirmative vote of not less than a majority of the
directors present.
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<PAGE> 5
Section 13. Organization Meeting.
Immediately after each annual meeting of the shareholders at which
directors are elected, or each special meeting held in lieu thereof, the newly
elected directors, if a quorum thereof be present, shall hold an organization
meeting at the same place or at such other time and place as may be fixed by
the shareholders at such meeting, for the purpose of electing officers and
transacting any other business. Notice of such meeting need not be given. If
for any reason such organization meeting is not held at such time, a special
meeting for such purpose shall be held as soon thereafter as practicable.
Section 14. Regular Meetings.
Regular meetings of the directors may be held at such times and places
within or without the State of Ohio as may be provided for in by-laws or
resolutions adopted by the directors and upon such notice, if any, shall be so
provided for.
Section 15. Special Meetings.
Special meetings of the directors may be held at any time within or
without the State of Ohio upon call by the Chairman of the Board, the Vice
Chairman of the Board, the President, or any two directors. Notice of each
such meeting shall be given to each director by letter or telegram or in person
not less than forty-eight (48) hours prior to such meeting; provided, however,
that such notice shall be deemed to have been waived by the directors attending
such meeting, and may be waived in writing or by telegram by any director
either before or after such meeting. Unless otherwise indicated in the notice
thereof, any business may be transacted at any organization, regular or special
meeting.
Section 16. Compensation.
The directors are authorized to fix a reasonable salary for directors or a
reasonable fee for attendance at any meeting of the directors, the Executive
Committee, or other committees elected under Section 18 hereof, or any
combination of salary and attendance fee, provided that no compensation as
director shall be paid to any director who is a full-time employee of the
Company. In addition to such compensation provided for directors, they shall
be reimbursed for any expenses incurred by them in traveling to and from such
meetings.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 17. Membership and Organization.
(a) The directors, at any time, may elect from their number an Executive
Committee which shall consist of not less than three members, each of whom
shall hold office during the pleasure of the directors and may be removed at
any time, with or without cause by note thereof.
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<PAGE> 6
(b) Vacancies occurring in the Committee may be filled by the directors.
(c) The Committee shall appoint one of its own number as Chairman who shall
preside at all meetings and may also appoint a Secretary (who need not be a
member of the Committee) who shall keep its records and who shall hold office
during the pleasure of the Committee.
Section 18. Meetings.
(a) Meeting of the Committee may be held upon notice of the time and place
thereof at any place within or without the State of Ohio and until otherwise
ordered by the Committee shall be held at any time and place at the call of the
Chairman or any two members thereof.
(b) A majority of the members of the Committee shall be necessary for the
transaction of any business and at any meeting the Committee may exercise any
or all of its powers and any business which shall come before any meeting may
be transacted thereat, provided a majority of the Committee is present, but in
every case the affirmative vote of a majority of all of the members of the
Committee shall be necessary to any action by it taken.
Section 19. Powers.
Except as its powers, duties and functions may be limited or prescribed by
the directors, during the intervals between the meetings of the directors, the
Committee shall possess and may exercise all the powers of the directors in the
management and control of the business of the Company; provided that the
Committee shall not be empowered to declare-dividends, elect officers, nor to
fill vacancies among the directors of Executive Committee. All actions of the
Committee shall be reported to the directors at their meeting next succeeding
such action and shall be subject to revision or alteration by the directors
provided that no rights of any third person shall be affected thereby.
Section 20. Other Committees.
The directors may elect other committees from among the directors in
addition to or in lieu of an Executive Committee and give to them any of the
powers which under the foregoing provisions could be vested in an Executive
Committee. Sections 15 and 16 shall be applicable to such other committees.
OFFICERS
Section 21. Officers Designated.
The directors at their organization meeting or at a special meeting held in
lieu thereof, shall elect a President, a Secretary, a Treasurer and, in their
discretion, a Chairman of the Board, a Vice Chairman of the Board, one or more
Vice Presidents, an Assistant Secretary or Secretaries, an Assistant Treasurer
or Treasurers, and such other officers as the directors may see fit. The
President, the Chairman of the Board and the Vice Chairman of the Board shall
be,
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<PAGE> 7
but the other officers may, but need not be, chosen from among the directors.
Any two or more of such offices other than that of President and Vice
President, or Secretary and Assistant Secretary or Treasurer and Assistant
Treasurer, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity.
Section 22. Tenure of Office.
The officers of the Company shall hold office until the next organization
meeting of the directors and until their successors are chosen and qualified,
except in case of resignation, death or removal. The directors may remove any
officer at any time with or without cause by a majority vote of the directors
in office at the time. A vacancy, however created, in any office may be
filled by election by the directors.
Section 23. Chairman of the Board and President.
The Chairman of the Board shall preside at meetings of shareholders and at
meetings of directors. The President shall, in the absence of the Chairman of
the Board, preside at meetings of the shareholders and in the absence of the
Chairman of the Board and of the Vice Chairman of the Board shall also preside
at meetings of the directors. The directors shall designate either the
Chairman of the Board or the President as chief executive officer of the
Company. The chief executive officer of the Company shall have general
supervision over its property, business and affairs, and perform all the duties
usually incident to such office, subject to the directions of the directors.
He may execute all authorized deeds, mortgages, bonds, contracts and other
obligations, in the name of the Company, and shall have such other powers and
duties as may be prescribed by the directors. During such time as the
President or Chairman of the Board, as the case may be, is not the chief
executive officer, he shall have such authority and perform such duties as the
directors may determine. In case of the absence or disability of the chief
executive officer or when circumstances prevent the chief executive officer
from acting, the President (if the Chairman of the Board is the chief executive
officer) or the Chairman of the Board (if the President is the chief executive
officer) shall perform the duties of the chief executive officer.
Section 24. Vice Chairman of the Board.
The Vice Chairman of the Board, if any, shall, in the absence of the
Chairman of the Board, preside at meetings of the directors and shall have such
other powers and duties as may be prescribed by the directors.
Section 25. Vice Presidents.
The Vice Presidents shall have such powers and duties as may be prescribed
by the directors or as may be delegated by the chief executive officer. In
case of the absence or disability of the Chairman of the Board and the
President or when circumstances prevent them from acting, the Vice Presidents,
in the order
- 7 -
<PAGE> 8
designated by the directors, shall perform the duties of the chief executive
officer, and in such case, the power of the Vice Presidents to execute all
authorized deeds, mortgages, bonds, contracts and other obligations, in the
name of the Company shall be coordinate with like powers of the chief executive
officer and any such instrument so executed by such Vice Presidents shall be as
valid and binding as though executed by the chief executive officer. In case
the chief executive officer and such Vice Presidents are absent or unable to
perform their duties, the directors may appoint a President pro tempore.
Section 26. Secretary.
The Secretary shall keep the minutes of all meetings of the shareholders and
the directors. He shall keep such records as may be required by the directors,
shall have charge of the seal of the Company and shall give all notices of
shareholders and directors meetings required by law or by these Regulations, or
otherwise, and shall have such other powers and duties as may be prescribed by
the directors.
Section 27. Treasurer.
The Treasurer shall receive and have in charge all money, bills, notes,
bonds, stocks in other corporations and similar property belonging to the
Company, and shall do with the same as shall be ordered by the directors. He
shall keep accurate financial accounts, and hold the same open for inspection
and examination of the directors. On the expiration of this term of office, he
shall turn over to his successor, or the directors, all property, books, papers
and money of the Company in his hands. He shall have such other powers and
duties as may be prescribed by the directors.
Section 28. Other Officers.
The Assistant Secretaries, Assistant Treasurers, if any, and any other
officers that the directors may elect, shall have such powers and duties as the
directors may prescribe.
Section 29. Delegation of Duties.
The directors are authorized to delegate the duties of any officers to any
other officer and generally to control the action of the officers and to
require the performance of duties in addition to those mentioned herein.
Section 30. Compensation.
The directors are authorized to determine or to provide the method of
determining the compensation of all officers.
- 8 -
<PAGE> 9
Section 31. Bond.
Any officer or employee, if required by the directors, shall give bond in
such sum and with such security as the directors may require for the faithful
performance of his duties.
Section 32. Signing Checks and Other Instruments.
The directors are authorized to determine or provide the method of
determining how checks, notes, bills of exchange and similar instruments shall
be signed, countersigned or endorsed.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
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 his
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 his 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.
CORPORATE SEAL
Section 34.
The corporate seal of this Company shall be circular in form and contain the
name of the Company.
- 9 -
<PAGE> 10
PROVISIONS IN ARTICLES OF INCORPORATION
Section 35.
These Regulations are at all times subject to the provisions of the Articles
of Incorporation of the Company (including in such term whenever used in these
Regulations all amendments to the Articles of Incorporation in force at the
time) and in case of any conflict, the provisions in the Articles of
Incorporation shall govern.
AMENDMENTS
Section 36. Amendments.
(a) These Regulations may be altered, changed or amended in any respect or
superseded by new Regulations, in whole or in part, by the affirmative vote of
the holders of a majority of the shares of the Company present in person or by
proxy and entitled to vote thereon, at an annual or special meeting duly called
for such purpose.
(b) Notwithstanding the provisions of Section 36(a) hereof and
notwithstanding the fact that a lesser percentage may be specified by law or in
any agreement with any national securities exchange or any other provision of
these Regulations, the amendment, alteration, change or repeal of, or adoption
of any provisions inconsistent with, Sections 7, 9 or 10 of these Regulations
shall require the affirmative vote, at an annual or special meeting duly called
for such purpose, of the holders of shares representing at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of the Company, unless such
amendment, alteration, change, repeal or adoption has been recommended by at
least two-thirds of the Board of Directors of the Company then in office, in
which event the provisions of Section 36(a) hereof shall apply.
- 10 -
<PAGE> 1
EXHIBIT (4)(a)
CERTIFICATE OF AMENDMENT TO
AMENDED ARTICLES OF INCORPORATION
of
THE LUBRIZOL CORPORATION
L. E. Coleman, Chairman and Chief Executive Officer and K. H.
Hopping, Secretary, of The Lubrizol Corporation, an Ohio
corporation (the "Corporation"), DO HEREBY CERTIFY THAT:
Pursuant to the authority conferred upon the Directors by the
Amended Articles of Incorporation of the Corporation, the
Directors at a meeting duly called and held on October 28, 1991,
at which a quorum was present and acting throughout, adopted the
following resolution to amend the Amended Articles of
Incorporation of the Corporation pursuant to Section 1701.70(B)(1)
of the Ohio Revised Code to amend the terms of a series of the
Corporation's Serial Preferred Stock designated as Serial
Preferred Stock, Series A:
RESOLVED, that in accordance with the Special Rights
Plan Amendment and pursuant to the authority vested in
the Directors of this Corporation in accordance with
the provisions of its Amended Articles of
Incorporation (the "Articles"), Section 7(A) of
Division C of Article Fourth of the Articles be and
hereby is amended to read in its entirety as follows:
(A) So long as any shares of Series A Stock are
outstanding, no shares of any series of Serial
Preferred Stock or other capital stock of the
Corporation may be issued by the Corporation except
for (i) Common Shares having the express terms
applicable to Common Shares on the Share Acquisition
Date (as defined in Section 8(B) of this Division C),
(ii) shares of capital stock which are Junior Stock
(as that term is defined in Section 2(B) of this
Division C), and (iii) shares of Series A Stock
issuable pursuant to and in accordance with the Rights
Agreement.
IN WITNESS WHEREOF L. E. Coleman, Chairman and Chief Executive Officer,
and K. H. Hopping, Secretary, of The Lubrizol Corporation, acting
for and on behalf of the Corporation, have hereunto subscribed
their names this 28th day of October, 1991.
L. E. Coleman, Chairman & CEO K. H. Hopping, Secretary
<PAGE> 1
EXHIBIT (4)(c)
THE LUBRIZOL CORPORATION
and
NATIONAL CITY BANK
RIGHTS AGREEMENT
Dated as of October 6, 1987
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
RECITALS 1
Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 8
Section 4. Form of Right Certificates 12
Section 5. Countersignature and Registration 13
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates 14
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 15
Section 8. Cancellation and Destruction of
Right Certificates 18
Section 9. Reservation and Availability of
Common Shares 18
Section 10. Common Shares Record Date 20
Section 11. Adjustment of Purchase Price, Number
and Type of Shares or Number of Rights 21
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares 44
Section 13. Notice of Adjusted Purchase Price
or Number or Type of Shares to
Holders of Rights 44
Section 14. Fractional Rights and Fractional
Shares 44
Section 15. Rights of Action 47
Section 16. Agreement of Rights Holders 47
Section 17. Right Certificate Holder Not Deemed
a Shareholder 48
</TABLE>
- i -
<PAGE> 3
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 18. Concerning the Rights Agent 49
Section 19. Merger or Consolidation or Change
of Name of Rights Agent 50
Section 20. Duties of Rights Agent 52
Section 21. Change of Rights Agent 56
Section 22. Issuance of New Right Certificates 58
Section 23. Redemption 59
Section 24. Notice of Certain Events 62
Section 25. Notices 63
Section 26. Supplements and Amendments 64
Section 27. Successors 65
Section 28. Benefits of this Agreement 66
Section 29. Action by Directors 66
Section 30. Severability 66
Section 31. Governing Law 67
Section 32. Counterparts 67
Section 33. Descriptive Headings 67
Exhibit A A-1
Exhibit B B-1
</TABLE>
- ii -
<PAGE> 4
5277J
Rights Agreement, dated as of October 6, 1987
("Agreement"), between The Lubrizol Corporation, an Ohio
corporation (the "Company"), and National City Bank, a national
banking association headquartered in Cleveland, Ohio (the
"Rights Agent").
RECITALS
The Directors of the Company have authorized and
declared a dividend consisting of one right ("Right") for each
Common Share, without par value, of the Company ("Common
Share") outstanding as of the close of business on October 13,
1987 (the "Record Date"), each Right representing an option to
purchase one-half of one Common Share, and have authorized the
issuance of one Right with respect to each Common Share issued
after the Record Date but prior to the earlier of (i) the
Distribution Date (in the case of Common Shares issued upon
conversion of the Company's convertible securities or upon
exercise of employee stock options, prior to the thirtieth day
after the Distribution Date), (ii) the date on which the Rights
are redeemed as provided in Section 23 hereof (the "Expiration
Date"), or (iii) October 12, 1997 (the "Final Expiration
Date"), including, without limitation, Common Shares issued
upon conversion of the Company's convertible securities and
upon exercise of employee stock options and Common Shares which
are treasury shares as of the Record Date and subsequently
become outstanding.
<PAGE> 5
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 20% or
more of the Common Shares then outstanding, but shall
not include the Company, any Subsidiary or any employee
benefit or stock ownership plan of the Company or an
entity holding Common Shares for or pursuant to the
terms of any such plan, or any Person who or which,
together with all Affiliates and Associates of such
Person, effects one or more Control Share Acquisitions,
in each case, after obtaining the prior authorization of
the Company's shareholders required for each such
Control Share Acquisition by Article NINTH.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.
-2-
<PAGE> 6
(c) "Article NINTH" shall mean Article NINTH of
the Company's Amended Articles of Incorporation, and any
successor or replacement Article thereto, if any.
(d) A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any
securities:
(i) which such person or any of such
Person's Affiliates or Associates beneficially
owns, directly or indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the
right to acquire (whether such right is
exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates
-3-
<PAGE> 7
until such tendered securities are accepted for
purchase or payment; or (B) the right to vote or
dispose of pursuant to any agreement, arrangement
or understanding; or
(iii) which are beneficially owned,
directly or indirectly, by any other Person with
which such Person or any of such Person's
Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any
securities of the Company;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if such Person has the right to vote such
security pursuant to an agreement, arrangement or
understanding which (1) arises solely from a revocable
proxy given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of
the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable
or successor report).
-4-
<PAGE> 8
(e) "Business Day" shall mean any day other than
a Saturday, Sunday, or a day on which banking
institutions in the States of Ohio and New York are
authorized or obligated by law or executive order to
close.
(f) "Close of business" on any given date shall
mean 5:00 P.M., Cleveland, Ohio time, on such date;
provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Cleveland, Ohio time, on
the next succeeding Business Day.
(g) "Common Shares" when used with reference to
the Company shall mean the Common Shares, without par
value, of the Company; provided that, if the Company is
the continuing or surviving corporation in a transaction
described in Section 11(d)(ii) hereof, "Common Shares"
when used with reference to the Company shall mean the
capital stock with the greatest aggregate voting power
of the Company, or, if the Company is a subsidiary of
another corporation or business trust, the corporation
or business trust which ultimately controls the
Company. "Common Shares" when used with reference to
any corporation or business trust, other than the
Company, shall mean the capital stock with the greatest
-5-
<PAGE> 9
aggregate voting power of such corporation or business
trust, or, if such corporation or business Crust is a
subsidiary of another corporation or business trust, the
corporation or business trust which ultimately controls
such first-mentioned corporation or business trust.
(h) "Control Share Acquisition" shall have the
meaning defined in Article NINTH.
(i) "Permitted Transaction" shall mean any
Related Party Transaction (as defined in Article SEVENTH
of the Company's Amended Articles of Incorporation, or
in any successor or replacement Article thereto, if any)
which has received the affirmative vote required in such
Article SEVENTH, or which is specifically exempted from
the provisions of such Article SEVENTH by the terms
thereof, provided, that, the Related Party (as defined
in such Article SEVENTH) involved in such Related Party
Transaction has not acquired any Common Shares in
contravention of Article NINTH within the five years
preceding the date of such Related Party Transaction.
(j) "Person" shall mean any individual, firm,
corporation or other entity, and shall include any
successor (by merger or otherwise) of such entity.
-6-
<PAGE> 10
(k) "Share Acquisition Date" shall mean the
first date of public announcement by the Company or an
Acquiring Person (by press release, filing made with the
Securities and Exchange Commission or otherwise) that an
Acquiring Person has become such.
(l) "Subsidiary" shall mean any corporation or
other entity of which a majority of the voting power of
the voting equity securities or equity interests is
owned, directly or indirectly, by the Company.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall also be, prior to the Distribution
Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby
accepts such appointment and hereby certifies that it complies
with the requirements of the New York Stock Exchange governing
transfer agents and registrars. The Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or
desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any
such Co-Rights Agent.
-7-
<PAGE> 11
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the fifteenth calendar day after the Share
Acquisition Date or (ii) the fifteenth calendar day after the
date of the commencement of a tender or exchange offer (as
determined by reference to Rule 14d-2(a) under the Exchange
Act) by any Person (other than the Company or any employee
benefit plan of the Company) for 20% or more (including any and
all) of the outstanding Common Shares (including any such date
which is after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), the Rights will be
evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Shares registered in
the names of the record holders thereof (which certificates for
Common Shares shall also be deemed to be Right Certificates)
and not by separate Right Certificates, and the right to
receive Right Certificates will be transferable only in
connection with the transfer of Common Shares in the stock
transfer books of the Company maintained by the Company or its
appointed transfer agent. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class,
insured, postage prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company,
a Right Certificate, in substantially the form of Exhibit A
-8-
<PAGE> 12
hereto, evidencing one Right for each Common Share so held,
subject to adjustment, together with a notice setting forth the
Purchase Price (as defined in Section 4 hereof) as in effect on
the Distribution Date. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
Any Right Certificate issued pursuant to this Section 3
that represents Rights beneficially owned by an Acquiring
Person or any Associate or Affiliate thereof and any Right
Certificate issued at any time upon the transfer of any Rights
to an Acquiring Person or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or
Affiliate, and any Right Certificate issued pursuant to
Sections 6 or 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this
sentence, shall be subject to and contain the following legend
or such similar legend as the Company may deem appropriate and
as is not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule
or regulation of any stock exchange on which the Rights may
from time to time be listed, or to conform to usage:
The Rights represented by this Right Certificate
were issued to or acquired by a Person who was an
Acquiring Person or an Affiliate or an Associate
of an Acquiring Person (as such terms are defined
in the Rights Agreement). This Right Certificate
and the Rights represented hereby may become null
-9-
<PAGE> 13
and void in the circumstances specified in
Section 11(a)(ii) or Section 11(d) of the Rights
Agreement.
(b) On the Record Date or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights
to Purchase Common Shares, in substantially the form attached
hereto as Exhibit B (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of
such holder shown on the records of the Company as of such
date. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for Common
Shares registered in the names of the holders thereof together
with a copy of the Summary of Rights. Until the Distribution
Date (or the earlier of the Expiration Date or the Final
Expiration Date), the surrender for transfer of any certificate
for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
(c) Certificates for Common Shares issued
(including, without limitation, any certificates for Common
Shares issued upon conversion of the Company's convertible
securities or upon exercise of employee stock options) or
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<PAGE> 14
surrendered for transfer or exchange after the Record Date but
prior to the earlier of the Distribution Date, the Expiration
Date or the Final Expiration Date, shall have stamped on,
impressed on, printed on, written on or otherwise affixed to
them the following legend or such similar legend as the Company
may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Shares or the Rights may from time
to time be listed, or to conform to usage:
This Certificate also evidences and entitles
the holder hereof to certain Rights as set
forth in a Rights Agreement between The
Lubrizol Corporation and National City Bank,
dated as of October 6, 1987 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of
which is on file at the principal executive
offices of The Lubrizol Corporation. Under
certain circumstances, as set forth in the
Rights Agreement, such Rights will be
evidenced by separate certificates and will no
longer be evidenced by this Certificate. The
Lubrizol Corporation will mail to the holder
of this Certificate a copy of the Rights
Agreement without charge within five business
days after receipt of a written request
therefor. Under certain circumstances, Rights
beneficially owned by an Acquiring Person or
any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and
any subsequent holder of such Rights may
become null and void.
With respect to certificates containing the legend described
above, until the Distribution Date, the Rights associated with
-11-
<PAGE> 15
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common
Shares represented thereby.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase shares and
of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto with such changes,
marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed,
or to conform to usage. Subject to the provisions of
Sections 11 and 22 hereof, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and on their face
shall entitle the holders thereof to purchase such number of
Common Shares as shall be set forth therein at the price per
whole share set forth therein (the "Purchase Price"), but the
number of such shares and the Purchase Price shall be subject
to adjustment as provided herein.
-12-
<PAGE> 16
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed
thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the
same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer
of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person
was not such an officer.
-13-
<PAGE> 17
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices in New York,
New York, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates. Subject to the provisions of Section 14
hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on
the earlier of the Expiration Date or the Final Expiration
Date, any Right Certificate or Certificates may be transferred,
split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to
purchase a like number of Common Shares as the Right
Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged
-14-
<PAGE> 18
at the principal office of the Rights Agent in New York, New
York or in Cleveland, Ohio. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange
of Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expense
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) The registered holder of any
Right Certificate may exercise the Rights evidenced thereby
-15-
<PAGE> 19
(except as otherwise provided herein) in whole or in part at
any time after the Distribution Date and at or prior to the
close of business on the earlier of the Expiration Date or the
Final Expiration Date, upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent in New York, New York, or Cleveland,
Ohio, together with payment for each Right exercised of an
amount equal to the product of the then-current Purchase Price
multiplied by the number of Common Shares then issuable upon
exercise of a Right.
(b) The Purchase Price shall initially be $150
(equivalent to $75 for each one-half of a Common Share), and
shall be subject to adjustment from time to time as provided in
Section 11 hereof and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the Purchase
Price for the shares to be purchased and an amount equal to any
applicable transfer tax in cash, or by certified check or bank
draft payable to the order of the Rights Agent, the Rights
Agent shall thereupon promptly (i) requisition from any
-16-
<PAGE> 20
transfer agent of the Common Shares (or make available, if the
Rights Agent is the transfer agent) certificates for the number
of whole Common Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all
such requests, (ii) when appropriate, requisition from the
Company the amount of cash to be paid or depositary receipts to
be issued in lieu of the issuance of fractional shares in
accordance with Section 14 hereof or the amount of cash to be
paid in lieu of the issuance of Common Shares in accordance
with Sections 11(a)(iii) or 11(d) hereof, (iii) promptly after
receipt of such certificates (or depositary receipts, when
appropriate), cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt promptly
deliver such cash to or upon the order of the registered holder
of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
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Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the
purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof
to the Company.
Section 9. Reservation and Availability of Common
Shares. The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and
unissued Common Shares or any authorized and issued Common
Shares held in its treasury, the number of Common Shares that
will be sufficient to permit the exercise pursuant to Section 7
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<PAGE> 22
hereof of all outstanding Rights; such number of Common Shares
reserved and kept available shall be adjusted from time to
time, if and to the extent required, upon the occurrence of any
of the events described in Section 11 hereof.
So long as the Company's Common Shares are listed on a
national securities exchange, the Company shall endeavor to
cause, from and after such time as the Rights become
exercisable, all Common Shares reserved for issuance upon
exercise of the Rights to be listed on such exchange upon
official notice of issuance.
The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Common
Shares delivered upon exercise of Rights shall be, at the time
of delivery of the certificates for such shares (subject to
payment of the Purchase Price), duly and validly authorized and
issued, fully paid, nonassessable and freely tradeable shares,
free and clear of any liens, encumbrances and other adverse
claims and not subject to any rights of call or first refusal.
The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Common
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<PAGE> 23
Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or
delivery of certificates for the Common Shares in a name other
than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise, or to issue or
deliver any certificates for Common Shares upon the exercise of
any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in
whose name any certificate for Common Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if
the date of such surrender and payment is a date upon which the
Common Shares transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next
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<PAGE> 24
succeeding Business Day on which the Common Shares transfer
books of the Company are open. Prior to the exercise pursuant
to Section 7 hereof of the Rights evidenced thereby, the holder
of a Right Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and
Type of Shares or Number of Rights. The Purchase Price, the
number and type of shares covered by each Right and the number
of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
(a)(i) In the event that the Company shall at any
time after the date of this Agreement (A) declare a dividend on
the Common Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of shares or (D) issue any shares
of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
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<PAGE> 25
or surviving corporation), except as otherwise provided in this
Section 11(a) or in Section 11(d) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or
reclassification, and/or the number and/or kind of shares of
capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind
of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
Common Shares transfer books of the Company were open, he would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof or Section 11(d) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) or Section 11(d) hereof.
(ii) In the event that
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the
date of this Agreement, directly or indirectly, shall
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<PAGE> 26
(1) merge into or consolidate with the Company or
otherwise combine with the Company and the Company shall
be the continuing or surviving corporation of such
merger, consolidation or combination, other than in a
transaction subject to Section 11(d)(ii) hereof, (2)
merge, consolidate or otherwise combine with any
Subsidiary, (3) in one or more transactions, transfer
any assets to the Company or any Subsidiary in exchange
(in whole or in part) for shares of any class of capital
stock of the Company or any Subsidiary or for securities
exercisable for or convertible into shares of any class
of capital stock of the Company or any Subsidiary, or
otherwise obtain from the Company or any Subsidiary,
with or without consideration, any additional shares of
any class of capital stock of the Company or any
Subsidiary or securities exercisable for or convertible
into shares of any class of capital stock of the Company
or any Subsidiary (other than as part of a pro rata
distribution to all holders of such shares of any class
of capital stock of the Company or any Subsidiary),
(4) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose (in one or more
transactions), to, from or with, as the case may be, the
Company or any Subsidiary, other than in a transaction
subject to Section 11(d) hereof, assets on terms and
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<PAGE> 27
conditions less favorable to the Company than the
Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (5)
receive any compensation from the Company or any
Subsidiary other than compensation for full-time
employment as a regular employee at rates in accordance
with the Company's (or its Subsidiaries') past
practices, or (6) receive the benefit, directly or
indirectly (except proportionately as a shareholder), of
any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax
advantage provided by the Company or any Subsidiaries, or
(B) during such time as there is an Acquiring
Person, there shall be any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any Subsidiary or any
other transaction or series of transactions (whether or
not with or into or otherwise involving an Acquiring
Person), other than a transaction subject to Section
11(d) hereof, which has the effect, directly or
indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any
class of equity securities or of securities exercisable
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<PAGE> 28
for or convertible into equity securities of the Company
or any Subsidiary which is directly or indirectly
beneficially owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, or
(C) any Person (other than the Company or any
Subsidiary or any employee benefit or stock ownership
plan of the Company or an entity holding or acquiring
Common Shares for or pursuant to the terms of any such
plan) who or which, together with all Affiliates and
Associates of such Person, shall become the Beneficial
Owner of 20% or more of the Common Shares then
outstanding without obtaining any one or more of the
prior authorizations of the Company's shareholders
required by Article NINTH,
then, and in each such case, except as otherwise provided
herein, proper provision shall be made so that each holder of a
Right, except as provided below, shall thereafter have a right
to receive, upon exercise thereof in accordance with the terms
of this Agreement at an exercise price per Right equal to the
product of two (2) times the then-current Purchase Price
multiplied by the then number of Common Shares for which a
Right is then exercisable, such number of Common Shares as
shall equal the result obtained by (x) multiplying the product
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<PAGE> 29
of two (2) times the then-current Purchase Price by the then
number of Common Shares for which a Right is then exercisable
and dividing that product by (y) 50% of the current per share
market price of the Common Shares (determined pursuant to
Section 11(e) hereof) on the date of the occurrence of any one
of the events listed above in this subparagraph (ii).
Notwithstanding the foregoing, upon the occurrence of any of
the events listed above in this subparagraph (ii), any Rights
that are or were at any time beneficially owned by any
Acquiring Person or any Associate or Affiliate of such
Acquiring Person (which Acquiring Person, Associate or
Affiliate is engaging in one or more of the transactions set
forth in subparagraph (ii)(A) above, or realizing the benefit
set forth in subparagraph (ii)(B) above, or owning the Common
Shares described in subparagraph (ii)(C) above, as the case may
be) after the date upon which such Acquiring Person became such
shall become void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any
provision of this Agreement. Notwithstanding anything to the
contrary set forth herein, the provisions of this Section
11(a)(ii) shall not apply to any Permitted Transaction.
(iii) In the event that there shall not be
sufficient authorized but unissued Common Shares or authorized
and issued Common Shares held in Treasury to permit the
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<PAGE> 30
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as
may be necessary to authorize additional Common Shares for
issuance upon exercise of the Rights; provided, however, if the
Company is unable to cause the authorization of additional
Common Shares then, notwithstanding any other provision of this
Agreement, in lieu of issuing such additional Common Shares and
requiring payment therefor, upon exercise of the Rights, the
Company shall pay, with respect to each Right, to the extent
permitted by applicable law and any agreements or instruments
in effect on the Share Acquisition Date to which the Company is
a party, cash at a rate per Right equal to the product of two
(2) times the Purchase Price in effect at the time of exercise
multiplied by the number of Common Shares for which a Right was
exercisable immediately prior to the first occurrence of any of
the events specified in the foregoing subparagraph (ii). To
the extent that any legal or contractual restrictions prevent
the Company from paying the full amount of cash payable in
accordance with the foregoing sentence, the Company shall pay
to holders of the Rights as to which such payments are being
made all amounts which are not then restricted on a pro rata
basis. The Company shall continue to make payments on a pro
rata basis as funds become available until such payments have
been paid in full.
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<PAGE> 31
(b) In the event that the Company shall fix a
record date for the issuance of rights, options or warrants to
all holders of Common Shares entitling them (for a period
expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or shares having the
same rights, privileges and preferences as the Common Shares
("equivalent common shares")) or securities convertible into
Common Shares or equivalent common shares at a price per Common
Share or equivalent common share (or having a conversion price
per share, if a security convertible into Common Shares or
equivalent common shares) less than the current per share
market price of the Common Shares (as determined pursuant to
Section 11(e) hereof) on such record date, the Purchase Price
to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the number of Common Shares outstanding on such record date
plus the number of Common Shares which the aggregate offering
price of the total number of Common Shares and/or equivalent
common shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be
offered) would purchase at such current market price and the
denominator of which shall be the number of Common Shares
outstanding on such record date plus the number of additional
Common Shares and/or equivalent common shares to be offered for
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<PAGE> 32
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In
case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good
faith by the Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. Common Shares owned
by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In the event that the Company shall fix a
record date for the making of a distribution to all holders of
the Common Shares (including any such distribution made in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend
at a rate not in excess of 125% of the rate of the last cash
dividend theretofore paid), assets, stock (other than a
dividend payable in Common Shares) or subscription rights,
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<PAGE> 33
options or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current per share
market price of the Common Shares (as determined pursuant to
Section 11(e) hereof) on such record date, less the fair market
value (as determined in good faith by the Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes) of the portion of the cash, assets, stock or
evidences of indebtedness so to be distributed (in the case of
regular periodic cash dividends at a rate in excess of 125% of
the rate of the last cash dividend theretofore paid, only that
portion in excess of 125% of such rate) or of such subscription
rights, options or warrants applicable to one Common Share, and
the denominator of which shall be such current per share market
price of the Common Shares. Such adjustments shall be made
successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(d) In the event that, directly or indirectly,
(i) the Company shall consolidate with, or merge with or into,
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<PAGE> 34
any Acquiring Person or any Associate or Affiliate of any
Acquiring Person and the Company shall not be the continuing or
surviving corporation of such merger or consolidation, (ii) any
Acquiring Person or any Associate or Affiliate of any Acquiring
Person shall consolidate with the Company, or merge with or
into the Company and the Company shall be the continuing or
surviving corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or part of
the Common Shares shall be changed into or exchanged for stock
or other securities of such other Person or cash or any other
property, or (iii) the Company shall sell or otherwise transfer
(or one or more Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any
Acquiring Person or any Associate or Affiliate of any Acquiring
Person, then, and in each such case, except as otherwise
provided herein, proper provision shall be made so that (A)
except as provided below, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof
in accordance with the terms of this Agreement at an exercise
price per Right equal to the product of two (2) times the
then-current Purchase Price multiplied by the then number of
Common Shares for which a Right is then exercisable, such
number of validly authorized and issued, fully paid,
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<PAGE> 35
nonassessable and freely tradeable Common Shares of such
surviving, resulting or acquiring Person (including the Company
as the continuing or surviving corporation of a transaction
described in clause (ii) above), as the case may be, free and
clear of any liens, encumbrances and other adverse claims and
not subject to any rights of call or first refusal, as shall be
equal to the result obtained by (x) multiplying the product of
two (2) times the then-current Purchase Price by the number of
Common Shares for which a Right is then exercisable and
dividing that product by (y) 50% of the current per share
market price of the Common Shares of such Person (determined
pursuant to Section 11(e) hereof) immediately prior to the
consummation of such consolidation, merger, sale or transfer;
(B) the issuer of such Common Shares shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such issuer; and (D) such
issuer shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be possible, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights. Notwithstanding
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<PAGE> 36
the foregoing, if the surviving, resulting or acquiring Person
in any of the events listed above in subparagraphs (i) through
(iii), inclusive, is not a corporation or business trust, then,
and in each such case, if such surviving, resulting or
acquiring Person is directly or indirectly wholly owned by a
corporation or business trust, then all references to Common
Shares of such surviving, resulting or acquiring Person in this
Section 11(d) shall be deemed to be references to the Common
Shares of the corporation or business trust which ultimately
controls such Person, and if there is no such corporation or
business trust, (Y) proper provision shall be made so that such
surviving, resulting or acquiring Person shall create or
otherwise make available for purposes of the exercise of the
Rights in accordance with the terms of this Agreement, a type
or types of security or securities having a fair market value
at least equal to the economic value of the Common Shares which
each holder of a Right would have been entitled to receive if
such surviving, resulting or acquiring Person had been a
corporation or a business trust; and (Z) all other provisions
of this Section 11(d) shall apply to the issuer of such
securities as if such securities were Common Shares. The
Company shall not consummate any of the transactions listed
above in subparagraphs (i) through (iii), inclusive, unless
prior thereto the Company and the issuer of the Common Shares
or other securities, as the case may be, shall have executed
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<PAGE> 37
and delivered to the Rights Agent an agreement providing for
the foregoing. Notwithstanding the foregoing, upon the
occurrence of any of the events listed above in subparagraphs
(i) through (iii), inclusive, any Rights that are or were at
any time beneficially owned by any Acquiring Person or any
Associate or Affiliate of such Acquiring Person (which
Acquiring Person, Associate or Affiliate is engaging in one or
more of the transactions set forth in subparagraphs (i) through
(iii), inclusive, above) after the date upon which such
Acquiring Person became such shall become void and any holder
of such Rights shall thereafter have no right to exercise such
Rights under any provision of this Agreement. The provisions
of this Section 11(d) shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Notwithstanding anything to the contrary set forth herein, the
provisions of this Section (d) shall not apply to any Permitted
Transactions.
In the event that the Company shall be the continuing or
surviving corporation in a merger or combination referred to in
subparagraph (ii) above and Common Shares of the Company are
required to be issued upon exercise of the Rights following
such merger or consolidation, and if there shall not be
sufficient authorized but unissued Common Shares or authorized
and issued Common Shares held in Treasury to permit the
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<PAGE> 38
exercise in full of the Rights in accordance with the
foregoing, the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance
upon exercise of the Rights; provided, however, if the Company
is unable to cause the authorization of additional Common
Shares then, notwithstanding any other provision of this
Agreement, in lieu of issuing such additional Common Shares and
requiring payment therefor, upon exercise of the Rights, the
Company shall pay, with respect to each Right, to the extent
permitted by applicable law and any agreements or instruments
in effect on the Share Acquisition Date to which the Company is
a party, cash at a rate per Right equal to the product of two
(2) times the Purchase Price in effect at the time of exercise
multiplied by the number of Common Shares for which a Right was
exercisable immediately prior to the occurrence of the merger
or combination referred to in subparagraph (ii) above. To the
extent that any legal or contractual restrictions prevent the
Company from paying the full amount of cash payable in
accordance with the foregoing sentence, the Company shall pay
to holders of the Rights as to which such payments are being
made all amounts which are not then restricted on a pro rata
basis. The Company shall continue to make payments on a pro
rata basis as funds become available until such payments have
been paid in full.
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<PAGE> 39
(e) For the purpose of any computation
hereunder, the "current per share market price" of Common
Shares on any date shall be deemed to be the average of the
daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common
Shares is determined during a period following the announcement
by the issuer of such Common Shares (i) of a dividend or
distribution on such Common Shares payable in such Common
Shares or securities convertible into such Common Shares or
(ii) any subdivision, combination or reclassification of such
Common Shares, and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution or
the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current
market price" shall be appropriately adjusted to take into
account ex-dividend trading or to reflect the current market
price per Common Share equivalent. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Common Shares are not listed or
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<PAGE> 40
admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") or such other system
then in use, or, if on any such date the Common Shares are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Directors
of the Company. The term "Trading Day" shall mean any day on
which the principal national securities exchange on which the
Common Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a
Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions in the State of New York are not authorized or
obligated by law or executive order to close. If the Common
Shares are not publicly held or not so listed or traded, or not
the subject of available bid and asked quotes, "current per
share market price" shall mean the fair value per share as
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<PAGE> 41
determined in good faith by the Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(f) Except as set forth below, no adjustment in
the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason
of this Section 11(f) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest thousandth of a
share, as the case may be. Notwithstanding the first sentence
of this Section 11(f), any adjustment required by this Section
11 shall be made no later than the earlier of (i) three years
from the date of the transaction which requires such adjustment
or (ii) the date of the expiration of the right to exercise any
Rights.
(g) If as a result of an adjustment made
pursuant to Section 11(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Common
Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to
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<PAGE> 42
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
shares contained in this Section 11 and the provisions of
Sections 7, 9, 10 and 14 hereof with respect to the Common
Shares shall apply on like terms to any such other shares. In
the event that the Rights become exercisable under both Section
11(a)(ii) and Section 11(d) hereof, a holder may, at his or her
option, elect to exercise Rights under either provision, but
each Right may be exercised only once.
(h) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of Common Shares purchasable from
time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(i) Unless the Company shall have exercised its
election as provided in Section 11(j) hereof, upon each
adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of shares (calculated to
the nearest thousandth) obtained by (i) multiplying (x) the
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<PAGE> 43
number of shares covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(j) The Company may elect, on or after the date
of any adjustment of the Purchase Price, to adjust the number
of Rights in substitution for any adjustment in the number of
Common Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of Common Shares
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights
(calculated to the nearest thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make
a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates
have been issued, shall be at least 10 calendar days later than
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the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(j), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record
date specified in the public announcement.
(k) Irrespective of any adjustment or change in
the Purchase Price or the number or type of shares issuable
upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the
Purchase Price per whole share and the number of shares which
were expressed in the initial Right Certificate issued
hereunder.
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(l) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par
value, if any, of the Common Shares issuable upon exercise of
the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Purchase Price.
(m) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event
the issuing to the holder of any Right exercised after such
record date the Common Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
over and above the Common Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such
adjustment.
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(n) Anything in Sections 11 (a) through (m),
inclusive, hereof to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Shares, issuance
wholly for cash of any of the Common Shares at less than the
current market price, issuance wholly for cash of Common Shares
or securities which by their terms are convertible into or
exchangeable for Common Shares, stock dividends or issuance of
rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its
Common Shares shall not be taxable to such shareholders.
(o) Notwithstanding any other provision of this
Agreement, no adjustment to the Purchase Price (other than
pursuant to Section 11(n)), the number of shares of Common
Stock (or fractions of a share) for which a Right is
exercisable or the number or Rights outstanding shall be made
or be effective if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights
would have had absent such adjustment, including, without
limitation, the benefits under Sections 11(a)(ii) and 11(d)
hereof, unless the terms of this Agreement are amended so as to
preserve such benefits.
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Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided
in Section 11 hereof, the Company shall promptly prepare a
certificate setting forth such adjustment, (including a
description of any Rights which have become void as a result
thereof), and a brief statement of the facts accounting for
such adjustment and promptly file with the Rights Agent and
with each transfer agent for the Common Shares a copy of such
certificate.
Section 13. Notice of Adjusted Purchase Price or Number
or Type of Shares to Holders of Rights. Whenever an adjustment
is made as provided in Section 11 hereof after the Distribution
Date, the Company shall mail a brief summary of such adjustment
to each holder of a Right Certificate in accordance with
Section 25 hereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid as promptly as practicable to the registered
holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of
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a whole Right. For the purposes of this Section 14(a), the
current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights
selected by the Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair
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value of the Rights on such date as determined in good faith by
the Directors of the Company shall be used and shall be
conclusive for all purposes.
(b) The Company shall not be required to issue
fractions of shares upon exercise of the Rights or to
distribute certificates which evidence fractional shares.
Fractions of Common Shares may, at the election of the Company,
be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as beneficial owners
of Common Shares. In lieu of fractional shares, the Company
may pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of
one Common Share. For purposes of this Section 14(b), the
current market value of a Common Share shall be the closing
price of a Common Share (as determined pursuant to the second
sentence of Section 11(e) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of
the Rights expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right.
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Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective
registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common
Shares); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach
of this Agreement and will be entitled to specific performance
of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder
of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
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(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
the Common Shares;
(b) after the Distribution Date, the Right
Certificates will be transferable only on the registry books of
the Rights Agent if surrendered at the principal office of the
Rights Agent in New York, New York, or Cleveland, Ohio, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or, prior
to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated
Common Share certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the Common Shares or any other
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securities of the Company which may at any time be issuable
upon exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate,
as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders
(except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Right Certificate shall have been
exercised in accordance with Section 7 hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, suit, action, proceeding
or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done
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or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of
liability. If the Rights Agent asserts or intends to assert a
right of indemnification under this Section 18 in connection
with a suit, action or proceeding, the Company shall have the
right, but not the obligation, to assume the responsibility for
the defense of any such suit, action or proceeding.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
for Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or
persons.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it
may be consolidated, or any corporation resulting from any
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merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and
in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
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adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name;
and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary
or desirable that any fact or matter be proved or established
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by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or
by reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to verify
the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution and
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delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in
this Agreement or in any Right Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11 hereof (including any adjustment which results in
Rights becoming void) or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment
or voidance); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Common
Shares will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
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(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer, or the Secretary of the Company, and
to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend money
to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
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such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof. The Rights Agent shall not be
under any duty or responsibility to insure compliance with any
applicable federal or state securities laws in connection with
the issuance, transfer or exchange of Right Certificates.
(j) The Rights Agent shall promptly remit to the
Company any funds paid to it upon exercise of the Rights
pursuant to Section 7 hereof.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Shares by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the
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Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of
30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United
States or of the States of Ohio or New York (or of any other
state of the United States so long as such corporation is
authorized to do business as a banking institution in the
States of Ohio or New York), in good standing, having a
principal office in the States of Ohio or New York, which is
authorized under such laws to exercise corporate trust powers
and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50
million and which shall otherwise meet any requirements imposed
by the New York Stock Exchange on transfer agents and
registrars. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
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responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date
of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the case
may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form as
may be approved by its Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of
this Agreement.
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Section 23. Redemption. (a) The Directors of the
Company may, at their option, at any time prior to the Close of
Business, on the earlier of (i) the later of (A) the calendar
day next preceding the Distribution Date and (B) the Share
Acquisition Date, or (ii) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at a
redemption price of $.05 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price").
(b) In addition, if at any time the Company shall
merge with or into, or consolidate with, any Person in a
transaction which is not covered by either Section 11(a)(ii) or
Section 11(d) hereof (and which will not, in connection with
any other related transactions, result in any material assets
of the Company coming under the direct or indirect ownership or
control of any Person who at any time has been an Acquiring
Person or an Associate or an Affiliate of an Acquiring Person),
and as a result of such transaction either (i) the Company is
not the continuing or surviving corporation of such merger or
consolidation, or (ii) all of the Company's outstanding Common
Shares become owned by another Person (or such Person together
with its Affiliates and Associates), then in connection with
the consummation of such merger or consolidation, the Directors
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of the Company may, at their option, redeem (at any time,
including without limitation, after the Distribution Date) all
but not less than all of the then outstanding Rights at the
Redemption Price.
(c) In addition, if at any time (including,
without limitation, after the Distribution Date), a Person
shall obtain the prior authorization of the Company's
shareholders required pursuant to Article NINTH in connection
with a Control Share Acquisition involving a majority of the
voting power of the Company in the election of directors, then,
in connection with the consummation of such Control Share
Acquisition, the Directors of the Company shall redeem all, but
not less than all, of the Rights at the Redemption Price.
(d) Immediately upon the action of the Directors
of the Company ordering the redemption of the Rights, and
without any further action and without any notice, the right to
exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of the Directors
ordering the redemption of the Rights, the Company shall
publicly announce such action. Within 10 calendar days after
ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then
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outstanding Rights by mailing such notice to all such holders
at their last addresses as they appear upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares.
Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
(e) At any time following the Share Acquisition
Date, the Directors of the Company may relinquish their rights
to redeem the Rights under paragraphs (a) or (b) above, or
both, by duly adopting a resolution to that effect.
Immediately upon adoption of such resolution, the rights of the
Directors under the portions of this Section 23 specified in
such resolution shall terminate without further action and
without any notice.
(f) Notwithstanding anything in this Section 23
to the contrary, all rights of, and requirements for,
redemption set forth above shall terminate immediately and
automatically upon the occurrence of any one or more of the
events set forth in Sections 11(a)(ii)(A) or (B) or Sections
11(d)(i), (ii) or (iii), hereof, unless such event is a
Permitted Transaction.
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Section 24. Notice of Certain Events. In case, after
the Distribution Date, the Company shall propose (a) to pay any
dividend payable in stock of any class to the holders of Common
Shares or to make any other distribution to the holders of
Common Shares (other than a regular periodic cash dividend at a
rate not in excess of 125% of the rate of the last cash
dividend theretofore paid) or (b) to offer to the holders of
Common Shares rights, options or warrants to subscribe for or
to purchase any additional Common Shares or shares of stock of
any class or any other securities, rights or options, or (c) to
effect any reclassification of its Common Shares (other than a
reclassification involving only the subdivision of outstanding
Common Shares), or (d) to effect any consolidation or merger,
or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 25 hereof, a
notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution or
offering of rights, options or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer,
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liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the Common
Shares, if any such date is to be fixed, and such notice shall
be so given, in the case of any action covered by clause (a) or
(b) above, at least 20 calendar days prior to the record date
for determining holders of the Common Shares for purposes of
such action, and, in the case of any such other action, at
least 20 calendar days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of the Common Shares, whichever shall be the earlier.
In case any of the events set forth in Section
11(a)(ii) or Section 11(d) hereof shall occur, then, in any
such case, the Company shall as soon as practicable thereafter
give to the Rights Agent and each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of
the occurrence of such event, which shall specify the event and
the consequences of the event to holders of Rights.
Section 25. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by
the holder of any Right Certificate to or on the Company shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Lubrizol Corporation
29400 Lakeland Boulevard
Wickliffe, Ohio 44092
Attention: Secretary
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Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of
the Rights Agent.
Section 26. Supplements and Amendments. Prior to the
Distribution Date, the Company may, and the Rights Agent shall,
if the Company so directs, supplement or amend any provision of
this Agreement without the approval of any holders of
certificates representing Common Shares, except for a
supplement or amendment which would change the Redemption Price
or the Final Expiration Date or reduce the number of Common
Shares for which a Right is then exercisable. From and after
the Distribution Date, the Company and the Rights Agent may at
any time and from time to time supplement or amend this
-64-
<PAGE> 68
Agreement without the approval of any holders of Rights in
order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any
other provisions in regard to matters or questions arising
hereunder which the Company and the Rights Agent may deem
necessary or desirable and which shall not adversely affect the
interests of the holders of Rights, as such.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder. The
Company covenants and agrees that it shall not (i) consolidate
with, (ii) merge with or into, or (iii) sell or transfer to, in
one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and
its Subsidiaries, taken as a whole, any Acquiring Person or its
Affiliates or Associates if at the time of or after such
consolidation, merger or sale there would be any charter or
by-law provisions or any rights, options, warrants or other
instruments or securities outstanding or agreements in effect
or any other actions taken which would eliminate or otherwise
diminish the benefits intended to be afforded by the Rights
without the affirmative vote of the holders of at least 80% of
-65-
<PAGE> 69
the then outstanding Rights beneficially owned by Persons other
than the Acquiring Person or its Affiliates or Associates. The
Company shall not consummate any such consolidation, merger or
sale unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent an
agreement evidencing compliance with this Section.
Section 28. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date,
the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates.
Section 29. Action by Directors. Whenever any action
hereunder or in connection with the Rights is required or
permitted to be taken by the Directors of the Company, such
action may be taken by the Executive Committee of the Directors
or by any other duly authorized committee thereof.
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void
-66-
<PAGE> 70
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired
or invalidated.
Section 31. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Ohio and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
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<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and their respective
corporate seals to be hereunto affixed and attested, this 6th
day of October, 1987.
THE LUBRIZOL CORPORATION
Attest:
By By
Secretary
Attest: NATIONAL CITY BANK
By By
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<PAGE> 72
Exhibit A
[Form of Right Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER October 12, 1997 OR
EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.05 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS CERTIFICATE WERE ISSUED
TO OR ACQUIRED BY A PERSON WHO WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OR SECTION 11(d) OF THE RIGHTS
AGREEMENT.*]
Right Certificate
THE LUBRIZOL CORPORATION
This certifies that , or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject
to the terms, provisions and conditions of the Rights
Agreement dated as of October 6, 1987 (the "Rights Agreement")
between The Lubrizol Corporation, an Ohio corporation (the
"Company"), and National City Bank, a national banking
association (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M.
* The portion of the legend in brackets shall be inserted
only if applicable.
A-1
<PAGE> 73
(Cleveland, Ohio time) on October 12, 1997 at the principal
office of the Rights Agent, or its successors as Rights Agent,
in New York, New York or Cleveland, Ohio, one-half of one
fully paid nonassessable Common Share, without par value (a
"Common Share") of the Company, at a purchase price of $150
per whole Common Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price set forth above, are the number
and Purchase Price as of October 13, 1987, based on the Common
Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price
and the number of Common Shares which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which
terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of
A-2
<PAGE> 74
the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights
Agreement are on file at the above-mentioned office of the
Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent in New York, New York or Cleveland, Ohio, may be
exchanged for another Right Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of Common Shares as the
Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at a redemption price of $.05 per Right.
No fractional Common Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
A-3
<PAGE> 75
fractions which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of the Common Shares or of any other securities of the
Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement
or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or, to receive
notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
A-4
<PAGE> 76
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of October
13, 1987.
ATTEST: THE LUBRIZOL CORPORATION
By
Secretary Title:
Countersigned:
By
Authorized Signature
A-5
<PAGE> 77
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 19
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must
correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or
enlargement or any change whatsoever.
A-6
<PAGE> 78
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To The Lubrizol Corporation:
The undersigned hereby irrevocably elects to
exercise Rights represented by this
Right Certificate to purchase the Common Shares issuable upon
the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: , 19
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate)
Signature Guaranteed:
A-7
<PAGE> 79
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On September 28, 1987, the Directors of The Lubrizol
Corporation (the "Company") declared a dividend distribution
of one right (a "Right") for each outstanding Common Share,
without par value (the "Common Shares"), of the Company. The
distribution is payable on October 13, 1987 (the "Record
Date") to the shareholders of record as of the close of
business on the Record Date. Each Right entitles the
registered holder to purchase from the Company one-half of one
Common Share at a price of $150 per whole share, subject to
adjustment (the "Purchase Price"). The description and terms
of the Rights are set forth in a Rights Agreement dated as of
October 6, 1987 (the "Rights Agreement") between the Company
and National City Bank, as Rights Agent (the "Rights Agent").
Until the earlier of (i) 15 days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Shares (unless previously
authorized by the Company's shareholders), or (ii) 15 days
following the commencement of a tender offer or exchange offer
for 20% or more of such outstanding Common Shares (the earlier
of such dates being hereinafter called the "Distribution
Date"), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate with a copy of this
Summary of Rights attached thereto. The Rights Agreement
provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record
Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares outstanding as of the
Record Date, even without a copy of this Summary of Rights
attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the
Distribution Date (as defined above), separate certificates
evidencing the Rights (the "Right Certificates") will be
mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
B-1
<PAGE> 80
The Rights are not exercisable until the Distribution
Date. The Rights will expire on October 12, 1997, unless
earlier redeemed by the Company as described below.
The Purchase Price payable, and the number of Common
Shares or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of
certain rights, options or warrants to subscribe for Common
Shares or convertible securities at less than the current
market price of the Common Shares, or (iii) upon the
distribution to holders of the Common Shares of evidences of
indebtedness, cash (excluding regular periodic cash dividends
at a rate not in excess of 125% of the rate of the last cash
dividend theretofore paid) assets, stock (other than dividends
payable in Common Shares) or of subscription rights, options
or warrants (other than those referred to above).
In the event that an Acquiring Person merges into the
Company and the Company's Common Shares are not changed or
exchanged, or an Acquiring Person engages in one of a number
of self-dealing transactions (other than certain transactions
approved by the Company's shareholders) specified in the
Rights Agreement, or a person or group of affiliated or
associated persons become the beneficial owner of 20% or more
of the Company's Common Shares without shareholder consent,
proper provision shall be made so that each holder of a Right,
other than Rights that are or were beneficially owned by the
Acquiring Person after the date upon which the Acquiring
Person became such (which will thereafter be void), will
thereafter have the right to receive upon exercise thereof at
the then current Purchase Price, that number of Common Shares
having a market value of two times the Purchase Price (or,
under certain circumstances, an amount of cash equal to the
Purchase Price). In the event that the Company is acquired by
an Acquiring Person in a merger or other business combination
transaction or 50% or more of its assets or earning power are
sold to an Acquiring Person (other than in a transaction
approved by the Company's shareholders), proper provision
shall be made so that each holder of a Right, other than
Rights that are or were beneficially owned by the Acquiring
Person after the date upon which the Acquiring Person became
such (which will thereafter be void), shall thereafter have
the right to receive, upon the exercise thereof at the then
current Purchase Price, that number of shares of common stock
(or, under certain circumstances, an economically equivalent
security or securities) of the surviving, resulting or
acquiring person which at the time of such transaction would
have a market value of two times the Purchase Price (or, under
certain circumstances, an amount of cash equal to the Purchase).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
B-2
<PAGE> 81
adjustment of at least 1% in such Purchase Price. No
fractional shares will be issued (other than fractions which
may, at the election of the Company, be evidenced by
depositary receipts), and in lieu thereof, a payment in cash
will be made based on the market price of the Common Shares on
the last trading day prior to the date of exercise.
The Company may redeem the Rights in whole, but not in
part, at a price of $.05 per Right (the "Redemption Price") at
any time prior to the later of (i) the Distribution Date and
(ii) a public announcement that a person or group of
affiliated or associated persons has acquired beneficial
ownership of 20% or more of the outstanding Common Shares (or
such later date as the Directors may specify), and, under
certain circumstances, upon a merger or consolidation of the
Company with or into a corporation which is not an Acquiring
Person. In addition, the Company shall be required to redeem
the Rights in whole at the Redemption Price in connection with
certain transactions authorized by the Company's
shareholders. Immediately upon the action of the Directors of
the Company authorizing redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The Company will give notice of such redemption to the holders
of the then outstanding Rights by mailing such notice to all
such holders at their last addresses as they appear on the
Registry Books of the Rights Agent.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
Prior to the Distribution Date, the Rights Agreement
may be amended or supplemented by the Company and the Rights
Agent, without the approval of any holders of Rights, in any
manner, except for an amendment or supplement which would
change the Redemption Price or the Final Expiration Date, or
reduce the number of Common Shares for which a Right is then
exercisable. After the Distribution Date, the Rights
Agreement may be so amended or supplemented to cure ambiguity,
correct or supplement defective or inconsistent provisions or
otherwise as the Company and the Rights Agent may deem
necessary or desirable and shall not adversely affect the
interests of the Rights holders.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated September 30, 1987.
A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby
incorporated herein by reference.
B-3
<PAGE> 1
EXHIBIT (4)(d)
THE LUBRIZOL CORPORATION
29400 Lakeland Boulevard
Wickliffe, Ohio 44092
October 24, 1988
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
Attn: Corporate Trust Department
Re: Amendment to Rights Agreement
Gentlemen:
Pursuant to Section 26 of the Rights Agreement (the "Rights
Agreement"), dated as of October 6, 1987, by and between The
Lubrizol Corporation (the "Company") and National City Bank (the
"Rights Agent"), the Company, by resolution adopted by the unanimous
vote of its Directors, hereby amends, and directs the Rights Agent
to amend, the Rights Agreement as follows:
1. Section 1(a) is amended to read in its entirety as follows:
"(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 20% or more of the Common
Shares then outstanding, but shall not include (i) the
Company, any Subsidiary or any employee benefit or stock
ownership plan of the Company or an entity holding Common
Shares for or pursuant to the terms of any such plan or
(ii) any Person who or which, together with all Affiliates
and Associates of such Person, effects one or more Control
Share Acquisitions, in each case, after first obtaining the
authorization of the Company's shareholders for each such
Control Share Acquisition by the action of the Company's
shareholders under Article NINTH; provided, however, that
solely for purposes of Section 11(a)(ii)(A) hereof, and
notwithstanding anything contained in this Section 1(a) to
the contrary, the term "Acquiring Person" shall include any
Person obtaining authorization of the Company's
shareholders in accordance with clause (ii) of this
Section 1(a)."
<PAGE> 2
National City Bank
October 24, 1988
Page 2
2. Section 1(i) is amended to read in its entirety as follows:
"(i) "Permitted Transaction" shall mean any Related Party
Transaction (as defined in Article SEVENTH of the Company's
Amended Articles of Incorporation, or in any successor or
replacement Article thereto, if any) which has received the
affirmative vote required in such Article SEVENTH, or which
is specifically exempted from the provisions of such
Article SEVENTH by the terms thereof; provided, however,
that the Related Party (as defined in such Article SEVENTH)
involved in such Related Party Transaction has not effected
one or more Control Share Acquisitions without, in each
case, obtaining prior authorization of the Company's
shareholders for each such Control Share Acquisition by
action of the Company's shareholders under Article NINTH."
3. Subparagraph (C) of Section 11(a)(ii) (which begins with
the language, "In the event that . . .") is amended to read
in its entirety as follows:
"(C) any Person (other than the Company or any Subsidiary
of any employee benefit or stock ownership plan of the
Company or an entity holder or acquiring Common Shares for
or pursuant to the terms of any such plan) who or which,
together with all Affiliates and Associates of such Person,
shall become the Beneficial Owner of 20% or more of the
Common Shares then outstanding, unless the transaction by
which such Person, its Affiliates and Associates, become
the beneficial owner of 20% or more of the Common Shares
then outstanding and each subsequent transaction, if any,
by which the number of Common Shares so held is increased
have received prior authorization of the Company's
shareholders by action of the Company's shareholders under
Article NINTH."
4. Section 23(c) is amended to read in its entirety as follows:
"(c) In addition, if at any time (including, without
limitation, after the Distribution Date), a Person shall
obtain prior authorization of the Company's shareholders by
action of the Company's shareholders under Article NINTH in
connection with a Control Share Acquisition involving a
majority of the voting power of the Company in the election
of directors, then, in connection with the consummation of
such Control Share Acquisition, the Directors of the
Company shall redeem all, but not less than all, of the
Rights at the Redemption Price."
<PAGE> 3
National City Bank
October 24, 1988
Page 3
This amendment is effective as of the date first above written
(the "Effective Date"), and all references to the Rights Agreement
shall, as of and after such date, be deemed to be references to the
Rights Agreement as amended hereby.
A copy of the Rights Agreement as amended to date is enclosed
herewith for your information.
Very truly yours,
THE LUBRIZOL CORPORATION
By
Name: W. T. Beargie
Title: Sr. Vice President - Finance
Accepted and agreed to as
of the Effective Date:
NATIONAL CITY BANK
By
Name: Lisa B. Brady
Title: Assistant Vice President
<PAGE> 1
EXHIBIT (4)(e)
THE LUBRIZOL CORPORATION
and
NATIONAL CITY BANK
SPECIAL RIGHTS AGREEMENT
Dated as of October 31, 1988
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RECITALS 1
Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 9
Section 3. Issue of Right Certificates 10
Section 4. Form of Right Certificates 14
Section 5. Countersignature and Registration 14
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates 16
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 17
Section 8. Cancellation and Destruction of
Right Certificates 21
Section 9. Company Covenants Concerning Shares
and Rights 21
Section 10. Record Date 24
Section 11. Adjustment of Number of Rights 25
Section 12. Certain Prohibitions 26
Section 13. Fractional Right Certificates and
Fractional Shares 26
Section 14. Rights of Action 30
Section 15. Agreement of Rights Holders 31
Section 16. Right Holder Not Deemed a Shareholder 33
Section 17. Concerning the Rights Agent 33
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 18. Merger or Consolidation or Change
of Name of Rights Agent 34
Section 19. Duties of Rights Agent 36
Section 20. Change of Rights Agent 40
Section 21. Redemption 43
Section 22. Notices 44
Section 23. Supplements and Amendments 45
Section 24. Successors 47
Section 25. Benefits of this Agreement 48
Section 26. Action by Directors 48
Section 27. Severability 49
Section 28. Governing Law 49
Section 29. Counterparts 49
Section 30. Descriptive Headings 49
Exhibit A Description of the Rights and Preferences
of the Preferred Shares A-1
Exhibit B Form of Right Certificate B-1
Exhibit C Summary of Rights to Purchase
Preferred Stock C-1
</TABLE>
9828g
-ii-
<PAGE> 4
SPECIAL RIGHTS AGREEMENT
This Special Rights Agreement, dated as of October 31, 1988
(this "Agreement"), is made and entered into by and between The
Lubrizol Corporation, an Ohio corporation (the "Company"), and
National City Bank, a national banking association
headquartered in Cleveland, Ohio (the "Rights Agent").
RECITALS
WHEREAS, on October 31, 1988, the Directors of the Company
authorized and declared a dividend distribution of one right
("Right") for each Common Share, without par value, of the
Company (a "Common Share") outstanding as of the close of
business on November 10, 1988 (the "Record Date"), each Right
representing the right to purchase one twenty-fifth of a
Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and further
authorized and directed the issuance of, subject to adjustment,
one Right with respect to each Common Share issued or delivered
by the Company (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the
Distribution Date (as hereinafter defined);
NOW THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
<PAGE> 5
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms (in addition to terms defined
elsewhere in this Agreement) shall have the meanings indicated
when used herein with initial capital letters:
(a) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement.
(b) A Person shall be deemed the "Beneficial Owner"
of and shall be deemed "beneficially to own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has
the right to acquire (whether such right is
exercisable immediately or only after the passage of
time or the occurrence or nonoccurrence of an event)
pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, other
rights (other than the Rights or the Other Rights),
warrants, options or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner
of, or beneficially to own, securities tendered
pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's
-2-
<PAGE> 6
Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has
the right or power to vote or dispose of, or to direct
the vote or disposition of, including pursuant to any
agreement, arrangement or understanding (whether or
not in writing); or
(iii) which any other Person is the Beneficial
Owner if such other Person or any of the Affiliates or
Associates of such other Person has any agreement,
arrangement or understanding (whether or not in
writing) with the first Person or the Affiliates or
Associates of the first Person with respect to
acquiring, holding, voting or disposing of any
securities of the Company;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or beneficially to own, any security
(A) if such Person has a right to vote such security
pursuant to an agreement, arrangement or understanding
(whether or not in writing) which (1) arises solely from a
revocable proxy given to such Person in response to a
public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations of
-3-
<PAGE> 7
the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report), or (B) if such beneficial ownership
arises solely as a result of such Person's status as a
"clearing agency," as defined in Section 3(a)(23) of the
Exchange Act; and provided, further, however, that nothing
in this paragraph shall cause a Person engaged in business
as an underwriter of securities to be the Beneficial Owner
of any securities acquired through such Person's
participation in good faith in an underwriting syndicate
pursuant to an agreement to which the Company is a party
until the expiration of 40 calendar days after the date of
such acquisition.
(c) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in
the State of Ohio (or such other state in which the
principal office of the Rights Agent may be located) are
authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean
5:00 p.m., Cleveland, Ohio time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 p.m., Cleveland, Ohio time, on the next
succeeding Business Day.
-4-
<PAGE> 8
(e) "Common Shares" shall mean the Common Shares,
without par value, of the Company.
(f) "Company" shall mean The Lubrizol Corporation, an
Ohio corporation.
(g) "Distribution Date" shall mean the Close of
Business on the fifteenth calendar day after the Share
Acquisition Date or, unless the Distribution Date shall
have previously occurred, such other date on or prior to
the Exercisability Date as may be specified by a majority
vote of the Directors of the Company.
(h) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(i) "Exercisability Date" shall mean the earlier of
(i) the sixteenth calendar day following the Share
Acquisition Date or such other date as the Directors of the
Company may from time to time specify by majority vote for
the expiration of their right to cause the Rights to be
redeemed (except that any such specification of a later
date by the Directors of the Company as aforesaid, but not
such later date, must be made by the Directors of the
Company not later than the later of (A) the Close of
Business on the fifteenth calendar day following the Share
Acquisition Date and (B) the Close of Business on the last
day previously specified as the Distribution Date by the
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<PAGE> 9
Directors of the Company) and (ii) the date and time
specified in a resolution adopted by majority vote of the
Directors of the Company irrevocably relinquishing their
right to authorize the Company to redeem the Rights as
provided in Section 21(c) hereof as the effective date and
time of such relinquishment.
(j) "Expiration Date" shall mean the earlier of (i)
the Close of Business on the Final Expiration Date and (ii)
the time at which the Rights are redeemed as provided in
Section 21 hereof.
(k) "Final Expiration Date" shall mean November 8,
1991.
(l) "Other Rights" shall mean the rights outstanding
under the Rights Agreement, dated October 6, 1987, as from
time to time amended, between the Company and the Rights
Agent.
(m) "Person" shall mean any individual, firm,
corporation, partnership or other legal entity, and shall
include any successor (by merger or otherwise) of such
entity.
(n) "Preferred Shares" shall mean shares of Serial
Preferred Stock, Series A, without par value, of the
Company having the rights and preferences set forth in
Exhibit A hereto.
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<PAGE> 10
(o) "Prohibited Transferee" shall mean, at the time
any determination is to be made (i) any Person (other than
the Company or any Related Person) who or which, together
with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 20% or more of the Common Shares
then outstanding; provided, however, that a Person shall
not be deemed to have become a Prohibited Transferee solely
as a result of a reduction in the number of Common Shares
outstanding, unless subsequent to such reduction such
Person or any Affiliate or Associate of such Person shall
become the Beneficial Owner of any additional Common Shares
other than as a result of a stock dividend, stock split or
similar transaction effected by the Company in which all
shareholders are treated equally and (ii) any Person (other
than the Company or any Related Person) who or which,
together with all Affiliates or Associates of such Person
(A) commences or announces its intention to commence a
tender or exchange offer (as determined by reference to
Rule 14d-2(a) under the Exchange Act) the consummation of
which would result in beneficial ownership by such Person
of 20% or more of the Common Shares then outstanding or (B)
announces its intention otherwise to purchase or acquire
20% or more of the Common Shares then outstanding.
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<PAGE> 11
(p) "Purchase Price" shall mean $1.00 for each whole
Preferred Share purchased pursuant to the exercise of a
Right (equivalent to $0.04 for each one twenty-fifth of a
Preferred Share), payable in lawful money of the United
States of America.
(q) "Related Person" shall mean (i) any Subsidiary of
the Company, (ii) any employee benefit or stock ownership
plan of the Company or any entity holding Common Shares for
or pursuant to the terms of any such plan, or (iii) any
Person who acquires voting stock from the Company or any
other Related Person in one or a series of related
transactions, each of which is approved by a majority of
the Directors of the Company prior to the Exercisability
Date; provided, however, that if any Person who becomes a
Related Person solely by virtue of subsection (iii) above,
or any Affiliate or Associate of such Person, subsequently
becomes the Beneficial Owner of any additional Common
Shares in a transaction or transactions not so approved by
the Directors of the Company (other than upon exercise of
the Other Rights), such Person shall no longer be deemed a
"Related Person" with respect to all Common Shares of which
it, or any of its Affiliates or Associates, is the
Beneficial Owner.
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<PAGE> 12
(r) "Right" shall have the meaning set forth in the
Recitals to this Agreement.
(s) "Right Certificates" shall mean certificates
evidencing the Rights, in substantially the form of
Exhibit B attached hereto, or such other form as may be
adopted in accordance with Section 4 hereof.
(t) "Rights Agent" shall mean National City Bank and
its successors and assigns.
(u) "Securities Act" shall mean the Securities Act of
1933, as amended.
(v) "Share Acquisition Date" shall mean the first
date of public announcement by the Company or a Prohibited
Transferee (by press release, filing made with the
Securities and Exchange Commission or otherwise) that a
Prohibited Transferee has become such.
(w) "Subsidiary" of any Person shall mean any
corporation or other legal entity of which a majority of
the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such Person.
(x) "Summary of Rights" shall mean the Summary of
Rights to Purchase Preferred Shares in substantially the
form attached hereto as Exhibit C.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the
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<PAGE> 13
Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall also be, prior to the Distribution
Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby
accepts such appointment and hereby certifies that it complies
with the requirements of the New York Stock Exchange governing
transfer agents and registrars. The Company may from time to
time act as Co-Rights Agent or appoint such Co-Rights Agents as
it may deem necessary or desirable. Any actions which may be
taken by the Rights Agent pursuant to the terms of this
Agreement may be taken by any such Co-Rights Agent.
Section 3. Issue of Right Certificates. (a) Until the
Distribution Date or, if earlier, the Expiration Date, (i) the
Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates representing Common
Shares registered in the names of the record holders thereof
(which certificates representing Common Shares shall also be
deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the Rights will be transferable only in
connection with the transfer of the underlying Common Shares,
and (iii) the transfer of any certificates evidencing Common
Shares in respect of which Rights have been issued, with or
without a copy of the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the
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<PAGE> 14
Common Shares evidenced by such certificates. As soon as
practicable after the Distribution Date, the Rights Agent shall
send, by first-class, insured, postage prepaid mail, to each
record holder of Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate, evidencing
(subject to adjustment as herein provided) one Right for each
Common Share so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by such Right Certificates.
(b) Notwithstanding anything contained in this Section 3
to the contrary, any Right beneficially owned by a Prohibited
Transferee, and any Right Certificate issued at any time upon
the transfer of beneficial ownership of any Right to such
Prohibited Transferee or to any nominee of such Prohibited
Transferee, and any Right Certificate issued pursuant to
Sections 6 or 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this
sentence, shall be null and void and each such Right
Certificate, if submitted to the Company or the Rights Agent,
will be subject to and contain the following legend or such
similar legend as the Company may deem appropriate and as is
not inconsistent with this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any
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<PAGE> 15
stock exchange or transaction reporting system on which the
Rights may from time to time be listed or quoted, or to conform
to usage:
The Rights represented by this Right
Certificate were issued or transferred to a
Person who was a Prohibited Transferee (as
such term is defined in the Rights
Agreement). This Right Certificate and the
Rights represented hereby are null and void.
(c) Neither the Rights Agent nor the Company shall, nor be
obligated to, take any action whatsoever with respect to the
transfer of any Right Certificate surrendered for transfer by
any Person until the registered holder shall have completed and
signed the certificate contained in the form of assignment on
the reverse side of such Right Certificate to the effect that
such Person is not a Prohibited Transferee and shall have
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall
request relating to such matter.
(d) On the Record Date or as soon as practicable
thereafter, the Company will send a copy of the Summary of
Rights, by first-class, postage prepaid mail, to each record
holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records
of the Company as of such date. With respect to certificates
representing Common Shares outstanding as of the Record Date,
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<PAGE> 16
until the Distribution Date, the Rights will be evidenced by
such certificates for Common Shares registered in the names of
the holders thereof together with a copy of the Summary of
Rights.
(e) Certificates for Common Shares issued (including
without limitation any certificates for Common Shares issued
upon conversion of any convertible securities or upon exercise
of stock options) or surrendered for transfer or exchange after
the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date, shall bear the following legend
or such similar legend as the Company may deem appropriate and
as is not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule
or regulation of any stock exchange or transaction reporting
system on which the Common Shares or the Rights may from time
to time be listed or quoted, or to conform to usage:
This Certificate also evidences and entitles
the holder hereof to certain Rights as set
forth in the Special Rights Agreement
between The Lubrizol Corporation and
National City Bank, dated as of October 31,
1988 (as from time to time amended or
supplemented, the "Rights Agreement"), the
terms of which are incorporated herein by
this reference and a copy of which is on
file at the principal executive offices of
The Lubrizol Corporation. Under certain
circumstances, as set forth in the Rights
Agreement, such Rights may be evidenced by
separate certificates and no longer be
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<PAGE> 17
evidenced by this Certificate. The Lubrizol
Corporation will mail to the holder of this
Certificate a copy of the Rights Agreement
without charge within five business days
after receipt of a written request
therefor. Rights beneficially owned by a
Prohibited Transferee (as such term is
defined in the Rights Agreement), and any
subsequent holder of such Rights, are null
and void.
Section 4. Form of Right Certificates. The Right
Certificates (including the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth as Exhibit B hereto with
such changes, marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any
stock exchange or transaction reporting system on which the
Rights may from time to time be listed or quoted, or to conform
to usage. The Right Certificates shall be dated as of the
Distribution Date, and on their face shall entitle the holders
thereof to purchase such number of Preferred Shares as shall be
set forth therein.
Section 5. Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President,
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<PAGE> 18
either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which
shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the
same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer
of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent
shall keep, or cause to be kept, at the principal office of the
Rights Agent designated for such purpose and at such other
offices as may be required to comply with any applicable law or
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<PAGE> 19
with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or any transaction
reporting system on which the Rights may from time to time be
listed or quoted, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on the face of
each of the Right Certificates and the date of each of the
Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. (a) Subject to Sections 3(b), 12 and 13 hereof,
at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the Business
Day immediately preceding the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a
like number of Preferred Shares as the Right Certificate or
Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the
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<PAGE> 20
Right Certificate or Right Certificates to be transferred,
split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon, the
Rights Agent shall countersign and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
(b) Subject to Sections 3(b) and 12 hereof, upon receipt
by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the
Right Certificate if mutilated, the Company will execute and
deliver a new Right Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner
in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. (a) The registered holder of any Right
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<PAGE> 21
Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein) in whole or in part at any time
from and after the Exercisability Date and prior to the Close
of Business on the Business Day immediately preceding the
Expiration Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at an office of the Rights
Agent designated for such purpose, together with payment of the
Purchase Price for each Preferred Share as to which such
surrendered Rights are exercised and an amount in cash equal to
any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9(d)
hereof. The Purchase Price shall be payable in lawful money of
the United States of America by certified check or bank draft
payable to the order of the Company.
(b) Subject to Sections 3(b), 7(d), 7(e), 12 and 13
hereof, upon receipt of a Right Certificate and payment as
described above, the Rights Agent shall promptly (i)
requisition from any transfer agent of the Preferred Shares (or
make available, if the Rights Agent is the transfer agent)
certificates representing the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or, if the
Company shall have elected to deposit the total number of
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<PAGE> 22
Preferred Shares issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent
depositary receipts representing the number of Preferred Shares
as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and
the Company shall direct the depositary agent to comply with
such request, (ii) promptly after receipt of such certificates
(or depositary receipts, as the case may be), cause the same to
be delivered to, or upon the order of, the registered holder of
such Right Certificate, registered in such name or names as may
be designated by such holder, (iii) if appropriate, requisition
from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 13
hereof, and (iv) if appropriate, after receipt, promptly cause
such cash to be delivered, or upon the order of, the registered
holder of such Right Certificate.
(c) If the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a
new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to Sections 9(d) or
15 hereof.
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<PAGE> 23
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to any purported
transfer of any Rights Certificate pursuant to Section 6 hereof
or exercise of a Right Certificate as set forth in this
Section 7 unless the registered holder of such Right
Certificate shall have (i) completed and signed the certificate
following the form of assignment or election to purchase set
forth on the reverse side of the Right Certificate surrendered
for such transfer or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
(e) Notwithstanding anything in this Agreement to the
contrary, the Rights shall not be exercisable in any
jurisdiction if, in the opinion of counsel to the Company
appointed by majority vote of the Directors of the Company
prior to the Exercisability Date, the requisite qualification
or registration in such jurisdiction shall not have been
effected or the exercise of the Rights shall not be permitted
under applicable law. Neither the Company nor any of its
Directors, officers, employees, agents or such counsel nor any
of the Affiliates or Associates of any of the foregoing will
have any liability or obligation to any holder of any Right
-20-
<PAGE> 24
relating to any claimed loss, damage, cost or expense incurred
by such holder relating to any such period during which Rights
are not exercisable under this Section 7(e) or Section 9(e)
hereof.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the
purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as
expressly permitted by this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such
cancelled Right Certificates and deliver a certificate of
destruction thereof to the Company.
Section 9. Company Covenants Concerning Shares and
Rights. The Company covenants and agrees that:
(a) It will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred
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<PAGE> 25
Shares held in its treasury the number of Preferred Shares that
shall be sufficient to permit the exercise pursuant to
Section 7 hereof of all outstanding Rights not beneficially
owned by a Prohibited Transferee; such number of Preferred
Shares reserved and kept available shall be adjusted from time
to time, if and to the extent required, upon the occurrence of
any of the events described in Section 11 hereof and pursuant
to Section 23(a) hereof.
(b) So long as the Preferred Shares issuable and
deliverable upon the exercise of the Rights may be listed on a
national securities exchange, it will endeavor to cause, from
and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange
upon official notice of issuance.
(c) It will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of
Rights, at the time of delivery of the certificates for such
shares, shall be (subject to payment of the Purchase Price)
duly and validly authorized and issued, fully paid and
nonassessable shares, free and clear of any liens, encumbrances
or other adverse claims and not subject to any rights of call
or first refusal.
(d) It will pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in
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<PAGE> 26
respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights;
provided, however, it will not be required to pay any transfer
tax or charge which may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or
the issuance or delivery of certificates or depositary receipts
representing Preferred Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any
certificates for Preferred Shares upon the exercise of any
Rights until any such tax or charge shall have been paid (any
such tax or charge being payable by the holder of such Right
Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is
due.
(e) It will use its best efforts to (i) file on an
appropriate form, as soon as is required by law following the
Distribution Date, a registration statement under the
Securities Act with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement
to become effective as soon as practicable after such filing,
and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) at all times at which any Rights are
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<PAGE> 27
outstanding and exercisable pursuant to the provisions of this
Agreement. The Company will also use its best efforts to
ensure compliance with the securities or "blue sky" laws of the
various states in connection with the exercisability of the
Rights; provided, however, that the Company may, in accordance
with Section 7(e) hereof, suspend the exercisability of the
Rights in order to prepare and file such registration statement
and permit it to become effective and, upon any such
suspension, the Company will issue a public announcement
stating that the exercisability of the Rights has been
suspended, as well as a public announcement at such time as the
suspension is no longer in effect.
(f) Following the Exercisability Date, the Directors of
the Company will have, in addition to such other duties as they
otherwise would have, fiduciary obligations to all holders of
Preferred Shares equivalent to their fiduciary duties to
holders of Common Shares.
Section 10. Record Date. Upon the proper exercise of
Rights, each Person in whose name any certificate representing
Preferred Shares is issued shall for all purposes be deemed to
have become the holder of record of the Preferred Shares
represented thereby as of, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price
-24-
<PAGE> 28
(and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a
date upon which the Preferred Share transfer books of the
Company are closed, such Person shall be deemed to have become
the record holder of such securities on, and such certificate
shall be dated, the next succeeding Business Day on which the
Preferred Share or Common Share transfer books of the Company
are open or, if there shall be no such succeeding Business Day,
the date specified by such Person. Prior to the exercise of
the Rights evidenced thereby in accordance with the Right
Certificate, the holder of a Right Certificate shall not be
entitled to any rights of a shareholder of the Company with
respect to securities for which the Rights shall be
exercisable, including without limitation the right to vote,
receive dividends or other distributions and shall not be
entitled to receive any notice of any proceedings of the
Company, except as provided in this Agreement.
Section 11. Adjustment of Number of Rights.
Notwithstanding anything in this Agreement to the contrary, in
the event that the Company shall at any time after the date of
this Agreement and prior to the Distribution Date (i) declare a
dividend on the outstanding Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares into a
greater number of shares, (iii) combine the outstanding Common
-25-
<PAGE> 29
Shares into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common
Shares, the number of Rights associated with each Common Share
then outstanding, or issued or delivered thereafter but prior
to the Distribution Date, shall be proportionately adjusted so
that the number of Rights thereafter associated with each
Common Share following any such event shall equal the result
obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction
the numerator of which shall be the total number of Common
Shares outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of
Common Shares outstanding immediately following the occurrence
of such event.
Section 12. Certain Prohibitions. Without limiting the
generality or effect of Section 3(b) hereof, the Rights shall
not be exercisable by a Prohibited Transferee, and any Rights
beneficially owned by a Prohibited Transferee shall be null and
void. Accordingly, any such Rights shall not be transferable
to or exercisable by any Person, including without limitation
any purported subsequent holder thereof.
Section 13. Fractional Right Certificates and Fractional
Shares. (a) The Company shall not be required to issue or to
distribute Right Certificates which evidence fractional
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<PAGE> 30
Rights. In lieu of such fractional Rights, the Company shall
pay as promptly as practicable to the registered holders of the
Right Certificates with regard to which such fractional Rights
would otherwise be issuable on or after the Exercisability
Date, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this
Section 13(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day (as such
term is hereinafter defined) immediately prior to the date on
which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
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<PAGE> 31
asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in
the Rights selected by the Directors of the Company. If on any
such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined
in good faith by majority vote of the Directors of the Company
shall be used and shall be conclusive for all purposes. The
term "Trading Day" shall mean any day on which the principal
national securities exchange on which the Common Shares are
listed or admitted to trading is open for the transaction of
business or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in
the State of Ohio (or such other state in which the principal
office of the Rights Agent may be located) are not authorized
or obligated by law or executive order to close.
(b) The Company shall not be required to issue fractions
of Preferred Shares upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred
Shares. In lieu of fractional Preferred Shares, the Company
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<PAGE> 32
shall either (i) make arrangements for the Rights Agent to sell
Preferred Shares attributable to fractional shares otherwise
issuable on account of exercised Rights and remit the net
proceeds of such sales to the holders entitled thereto or (ii)
pay to each registered holder of a Right on or as soon as
practicable after such holder exercises any Right an amount in
cash equal to the same fraction of the current market value of
a whole Preferred Share. For purposes of the foregoing clause
(ii) of this Section 13(b), the current market value of a whole
Preferred Share shall be the closing price of the Preferred
Shares for the Trading Day immediately prior to the date on
which such fractional Preferred Shares would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Preferred Shares are not listed
or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Preferred Shares are
listed or admitted to trading or, if the Preferred Shares are
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not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Preferred Shares
are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the Preferred Shares selected
by the Directors of the Company. If on any such date no such
market maker is making a market in the Preferred Shares, the
fair value of the Preferred Shares on such date as determined
in good faith by majority vote of the Directors of the Company
shall be used and shall be conclusive for all purposes.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or
any fractional Preferred Shares, except as otherwise provided
by this Section 13.
Section 14. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 17 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares), other than a Prohibited Transferee; and any
registered holder of any Right Certificate (or, prior to the
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<PAGE> 34
Distribution Date, any Common Shares), other than a Prohibited
Transferee, without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may in his own behalf
and for his own benefit enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce,
or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate or his rights under
the express terms of the Preferred Shares. Without limiting
the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of
Rights, other than a Prohibited Transferee, would not have an
adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations
under this Agreement, and injunctive relief against actual or
threatened violations of the obligations of any Person subject
to this Agreement.
Section 15. Agreement of Rights Holders. Every holder of
a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) Prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the
Common Shares;
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<PAGE> 35
(b) After the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office of
the Rights Agent designated for such purpose, duly endorsed
or accompanied by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate
or the associated Common Share certificate made by anyone
other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, none of the Company, the Rights Agent or their
respective directors, officers, employees or agents, shall
have any liability to any holder of a Right or other Person
as a result of their inability to perform any of their
obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or
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commission which in any such case prohibits or otherwise
restrains performance of such obligation; provided,
however, the Company shall use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 16. Right Holder Not Deemed a Shareholder. No
holder of any Right, as such, shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of
the Preferred Shares or any other securities of the Company
which may at any time be issuable upon the exercise of the
Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the
holder of any Right, as such, any of the rights of a
shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders, or to receive
dividends or subscription rights, or otherwise, until such
holder shall have exercised such Right in accordance with the
provisions of this Agreement.
Section 17. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time,
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on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, suit, action, proceeding
or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
evidencing Preferred Shares or other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document reasonably
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person.
Section 18. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any corporation into which the Rights Agent
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or any successor Rights Agent may be merged or with which it
may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 20 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and
in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this
Agreement.
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<PAGE> 39
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name;
and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this
Agreement.
Section 19. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
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desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board,
the President or any Vice President of the Company and
delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right
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<PAGE> 41
Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11
hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right
Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any shares of stock or other securities to
be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of stock or other
securities will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
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(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the
Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and
freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or
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<PAGE> 43
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the
selection and continued employment thereof. The Rights
Agent shall not be under any duty or responsibility to
insure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer
or exchange of Right Certificates.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) The Rights Agent shall promptly remit to the
Company any funds paid to it upon exercise of each Right
pursuant to Section 7 hereof.
Section 20. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 calendar days' notice
in writing mailed to the Company and to each transfer agent of
the Common Shares and Preferred Shares by registered or
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certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 30 calendar days' notice in
writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common
Shares and Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of 30 calendar days after
giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of
the States of Ohio or New York (or of any other state of the
United States so long as such corporation is authorized to do
business as a banking institution in the States of Ohio or New
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York), in good standing, having a principal office in the
States of Ohio or New York, which is authorized under such laws
to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million and which
shall otherwise meet any requirements imposed by the New York
Stock Exchange on transfer agents and registrars. After
appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it
had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common
Shares and Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 20,
however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the case
may be.
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Section 21. Redemption. (a) Subject to Section 21(c)
hereof, the Directors of the Company, by majority vote, may, at
their option, at any time prior to 5:00 p.m., Cleveland, Ohio
time on the earlier of (i) the calendar day immediately
preceding the Exercisability Date and (ii) the Final Expiration
Date, authorize the Company to redeem all but not less than all
of the then-outstanding Rights at a redemption price of $0.05
per Right (the "Redemption Price").
(b) Immediately upon the action of the Directors of the
Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
Promptly after the action of the Directors ordering the
redemption of the Rights, the Company shall publicly announce
such action, and within 10 calendar days thereafter, the
Company shall give notice of such redemption to the holders of
the then-outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent
for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption
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<PAGE> 47
will state the method by which the payment of the Redemption
Price will be made.
(c) A majority of the Directors of the Company may
irrevocably relinquish the right to authorize the Company to
redeem the Rights under Section 21(a) hereof by duly adopting a
resolution to that effect. Promptly after adoption of such a
resolution, the Company shall publicly announce such action.
Upon adoption of such resolution, the rights of the Company to
redeem the Rights under the portions of Section 21(a) hereof
specified in such resolution shall irrevocably terminate
without further action and without any notice.
Section 22. Notices. (a) Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by
the holder of any Right Certificate to or on the Company shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Lubrizol Corporation
29400 Lakeland Boulevard
Wickliffe, Ohio 44092
Attention: Secretary
(b) Subject to the provisions of Section 20 hereof, any
notice or demand authorized by this Agreement to be given or
made by the Company or by the holder of any Right Certificate
to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until
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another address is filed in writing with the Company) as
follows:
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Corporate Trust Department
(c) Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to or on the
holder of any Right Certificate shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to
such holder at the address of such holder as shown on the
registry books of the Rights Agent.
Section 23. Supplements and Amendments. Prior to the
Exercisability Date, if the Company so directs, the Company,
upon approval by a majority of the Directors of the Company,
and the Rights Agent shall supplement or amend any provision of
this Agreement in any manner which the Company may deem
desirable without the approval of any holders of Rights or
Common Shares, including without limitation any amendment which
increases the number of Rights required to purchase one whole
Preferred Share in the event that the number of Common Shares
(excluding Common Shares beneficially owned by any Prohibited
Transferee) outstanding shall at any time exceed 50,000,000.
From and after the Exercisability Date, if the Company so
directs, the Company, upon approval by a majority of the
Directors of the Company, and the Rights Agent shall supplement
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or amend this Agreement without the approval of any holders of
Right Certificates or certificates representing Common Shares
and Rights in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or
(iii) to change or supplement the provisions hereunder in any
manner which the Company, upon such approval, may deem
desirable, which change, amendment or supplement shall not
adversely affect the interests of the holders of Rights or
Preferred Shares (other than a Prohibited Transferee). Upon
the delivery of a notice executed by an officer of the Company
which states that the proposed supplement or amendment has been
adopted under this Section 23, the Rights Agent shall execute
such supplement or amendment; provided, however, that,
notwithstanding any other provision of this Agreement, the
failure or refusal of the Rights Agent to execute such
supplement or amendment will not affect the validity or
effective date of any supplement or amendment authorized by the
Directors pursuant to this Section 23. Notwithstanding
anything in this Agreement to the contrary, no supplement or
amendment shall be made which decreases the Redemption Price or
makes unexercisable or redeemable Rights which have previously
become exercisable or nonredeemable by reason of the prior
occurrence of the Exercisability Date.
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Section 24. Successors. (a) All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
(b) The Company covenants and agrees that it shall not (i)
consolidate with, (ii) merge with or into, (iii) sell or
transfer to, in one or more transactions, assets or earning
power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries, taken as a whole, to any
Prohibited Transferee or any Affiliate or Associate thereof, or
(iv) liquidate, dissolve or otherwise wind up the affairs of
the Company, if at the time of, after or as a result of such
consolidation, merger, sale, liquidation, dissolution or
winding up there would be any charter or regulation provisions,
including without limitation any provisions of the Company's
Amended Articles of Incorporation or Regulations, as from time
to time amended, or any rights, options, warrants or other
instruments or securities outstanding or agreements in effect
or any other actions taken, which would eliminate or otherwise
diminish the benefits intended to be afforded by the Rights or
the payments to be made upon redemption of the Preferred Shares
in accordance with Section 3 of Exhibit A hereto, without
proper provision being made for the redemption of the Preferred
Shares in accordance with Section 3 of Exhibit A hereto. The
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Company shall not consummate any such consolidation, merger,
sale, liquidation, dissolution or winding up unless prior
thereto the Company and such other Person shall have executed
and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 24.
Section 25. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than
the Company, the Rights Agent, the registered holders of the
Right Certificates and, prior to the Distribution Date, the
Common Shares (other than any Prohibited Transferee) any legal
or equitable right, remedy or claim under this Agreement; this
Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent, the registered holders of the Right
Certificates and, prior to the Distribution Date, the Common
Shares (other than any Prohibited Transferee).
Section 26. Action by Directors. Whenever any action
hereunder or in connection with the Rights is required or
permitted to be taken by the Directors of the Company, prior to
the Exercisability Date such action may be taken by the
Executive Committee of the Directors or by any other duly
authorized committee thereof a majority of the members of which
are not employees of the Company or any Subsidiary of the
Company.
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Section 27. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired
or invalidated.
Section 28. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract
made under the internal substantive laws of the State of Ohio
and for all purposes shall be governed by and construed in
accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely
within such State.
Section 29. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the
same instrument.
Section 30. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day
and year first above written.
[SEAL] THE LUBRIZOL CORPORATION
Attest:
By /s/ J. I. Rue By /s/ W. T. Beargie
Title: Secretary Title: Senior Vice
President/Finance
and Chief Financial
Officer
[SEAL] NATIONAL CITY BANK
Attest:
By /s/ John G. White By /s/ Lisa B. Brady
Title: Trust Officer Title: Assistant Vice
President
9827g/5890G/1016f
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Exhibit A
DESCRIPTION OF THE RIGHTS AND
PREFERENCES OF THE PREFERRED SHARES
of
THE LUBRIZOL CORPORATION
DIVISION C
EXPRESS TERMS OF THE SERIAL PREFERRED STOCK, SERIES A
Section 1. Designation and Amount. The shares of
such series shall be designated as "Serial Preferred Stock,
Series A" ("Series A Stock") and the number of shares
constituting such series shall be 2,000,000. No shares of
Series A Stock may be issued except upon the exercise of a
Right, as defined in, and pursuant to the terms of, the Special
Rights Agreement, dated as of October 31, 1988 (as from time to
time amended or supplemented in accordance with the terms
thereof, the "Rights Agreement"), between the Corporation and
National City Bank.
Section 2. Dividends and Distributions.
(A) Except as provided in this Section 2, the holders
of shares of Series A Stock shall not be entitled to receive
dividends or other distributions with respect to any shares of
Series A Stock.
(B) From and after the date on which shares of
Series A Stock are issued and outstanding (the "Dividend
Accrual Commencement Date"), the holders of issued and
outstanding shares of Series A Stock, in preference to the
holders of Common Shares and of any other capital stock of the
Corporation which ranks junior to the Serial Preferred Stock in
respect of dividends or distributions of assets on liquidation
of the Corporation (all of which classes, other than the Serial
Preferred Stock, are hereinafter embraced in the term "Junior
Stock"), shall be entitled to receive as and when declared by
the Directors out of the assets of the Corporation which are by
law available for the payment of dividends, cumulative cash
dividends, payable quarterly on the last days of March, June,
September and December, and accruing from the applicable
Dividend Accrual Commencement Date, at, but not exceeding, the
rate per share per annum equal to the Dividend Rate (as
hereinafter defined). For purposes of this Division C, the
A-1
<PAGE> 55
"Dividend Rate" shall be equal to 8% of the Cash Redemption
Amount (as defined in Section 5(A) of this Division C) as of
the last day of the calendar month immediately preceding the
applicable dividend payment date.
Section 3. Redemption.
(A) From and after (but not before) the Earliest
Redemption Date (as defined in Section 5(C) of this
Division C), the Series A Stock may be redeemed in whole or in
part, at any time or from time to time, at the option of the
Corporation, for a cash redemption price per share equal to the
sum of (x) the then-applicable Cash Redemption Amount plus
$1.00 and (y) an amount equal to the sum of all dividends
accrued to the date fixed for redemption and remaining unpaid,
whether or not declared, together with any applicable Deferred
Payment Entitlement (as defined in Section 5(D) of this
Division C).
(B) So long as any shares of Series A Stock shall be
outstanding, but subject to Section 3(E) of this Division C,
the Corporation shall, as a sinking fund applicable to the
Series A Stock, commencing on the date two years after the
first date on which any shares of Series A Stock are issued,
and annually thereafter, redeem, for a cash redemption price
per share equal to the sum of (x) the then-applicable Cash
Redemption Amount plus $1.00 and (y) an amount equal to the sum
of all dividends accrued to such date and remaining unpaid,
whether or not declared, together with any applicable Deferred
Payment Entitlement, a number of shares of Series A Stock equal
to 25% of the greatest number of shares of Series A Stock at
any time outstanding. The Corporation shall be permitted to
satisfy in whole or in part the requirements of this
Section 3(B) with respect to any year by applying in whole or
in part as a credit in reduction of the obligation of the
Corporation to make redemptions for the sinking fund in such
year shares of Series A Stock purchased by the Corporation and
shares of Series A Stock redeemed otherwise than for the
sinking fund. Shares purchased by the Corporation for
application as a credit as provided above may be purchased in
such manner as the Directors may determine from time to time,
subject to the restrictions on such purchases set forth
elsewhere herein or arising under applicable law.
(C) On the date five years after the first date on
which any shares of Series A Stock are issued, but subject to
Section 3(E) of this Division C, the Corporation shall redeem
all shares of Series A Stock remaining outstanding for a cash
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redemption price per share equal to the sum of (x) the
then-applicable Cash Redemption Amount plus $1.00 and (y) an
amount equal to the sum of all dividends accrued to such date
and remaining unpaid, whether or not declared, together with
any applicable Deferred Payment Entitlement.
(D) Notwithstanding anything contained in this
Division C to the contrary, but subject to Section 3(E) of this
Division C, at the option of any holder of Series A Stock upon
written notice given by such holder at any time during the
30-calendar day period following the date on which the last
notice was mailed pursuant to the next sentence of this
Section 3(D), the Corporation shall, prior to the filing of a
certificate of dissolution or such other instrument as may then
be prescribed by applicable law to effect the dissolution of
the Corporation, redeem all shares of Series A Stock
outstanding as to which such holder shall have made such
election for a cash redemption price per share equal to the sum
of (x) the then-applicable Cash Redemption Amount plus $1.00
and (y) an amount equal to the sum of all dividends accrued to
such date and remaining unpaid, whether or not declared,
together with any applicable Deferred Payment Entitlement. The
Corporation shall give notice to all holders of Series A Stock
no fewer than 45 calendar days prior to making any filing
referred to in the immediately preceding sentence, which notice
will be so given by first class United States mail and
publication in The Wall Street Journal and any other nationally
recognized publication the Corporation may elect, accompanied
by an appropriate form of election and such other information
as may be required to permit an informed election.
(E) In addition to the limitations that may apply
under applicable Ohio law, the Corporation shall be required to
redeem any shares of Series A Stock under Sections 3(B), 3(C)
or 3(D) of this Division C only to the extent that, after
giving effect to such redemption, the consolidated retained
earnings of the Corporation and the corporations with which it
is consolidated for financial reporting purposes are greater
than zero. For purposes of the foregoing sentence,
consolidated retained earnings shall mean the sum of (1) the
consolidated retained earnings as of September 30, 1988 of the
Corporation and the corporations with which it was then
consolidated for financial reporting purposes and (2) the
consolidated retained earnings accumulated subsequent to
September 30, 1988 of the Corporation and the corporations with
which it is consolidated for financial reporting purposes
determined in accordance with generally accepted accounting
principles as in effect as of such date (except as otherwise
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provided in this sentence) and after giving effect to dividends
or other distributions on, and redemptions and other purchases
of, Serial Preferred Stock, but without giving effect to
dividends or other distributions on, or redemptions or other
purchases of, any Junior Stock, or to any transfers from
retained earnings to additional capital or capital stock
accounts, and including as a credit to retained earnings, in
all events (and notwithstanding any contrary treatment for
financial reporting purposes or otherwise), the amount of the
Recovery then collected. If the Corporation is not required to
redeem shares of Series A Stock in the manner otherwise
provided herein by virtue of the first sentence of this Section
3(E), or if a legal or contractual restriction prevents the
Corporation from effecting the redemption of any shares of
Series A Stock then outstanding in the manner otherwise
provided herein, then (x) to the extent required and not
restricted, payment of redemption amounts shall be made daily
on a pro rata basis or in such other manner as the Directors of
the Corporation may determine in good faith to be fair to the
holders of Series A Stock, (y) in the case of any such legal or
contractual restriction, the Corporation shall use its best
efforts to remove such restriction as soon as possible, and (z)
the Corporation shall give notice to each holder of shares of
Series A Stock of any such restriction and the efforts by the
Corporation to remove it. Postponement of payment of
redemption amounts shall not in any way diminish or restrict
the right of the holders of shares of Series A Stock to have
the right of the holders of shares of Series A Stock to have
their shares redeemed as provided in this Section 3. If
amounts payable to retire shares of Serial Preferred Stock are
not paid in full in the case of all series for which a sinking
fund has been fixed, the number of shares to be retired for the
sinking fund of each such series shall be in proportion to the
respective amounts that would be payable if all such amounts
were paid in full.
Section 4. Liquidation Rights.
(A) The provisions of Section 7(F) of this Division C
will apply to any voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation and
will not be limited or otherwise affected by this Section 4.
(B) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation (all of which are hereinafter embraced in the word
"liquidation") occurring on or after the Earliest Redemption
Date, the holders of Series A Stock who do not exercise their
rights pursuant to Section 3(D) of this Division C, shall be
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entitled to receive, subject to the limitations, if any, then
applicable in such event pursuant to Division A, from the
assets of the Corporation available for distribution to the
shareholders, all amounts (including without limitation any
Deferred Payment Entitlement) which they would be entitled to
receive if on the date of such liquidation the shares of
Series A Stock held by them had been redeemed at the option of
the Corporation in accordance with the provisions of Section
3(A) of this Division C. In the event of any liquidation
occurring prior to the Earliest Redemption Date, all rights of
the Corporation in respect of the Covered Cases and any portion
of the Recovery (as defined in Section 5(A) of this Division C)
theretofore collected by the Corporation, and such additional
funds or assets as may be required, shall be placed in trust
for the benefit of the holders of the Series A Stock (and the
holders of any other class of capital stock of the Corporation
to the extent hereinafter provided) upon such terms so that (1)
the holders of Series A Stock shall be entitled to receive,
from the assets of the Corporation available for distribution
to shareholders, units of beneficial interest in such trust
which shall as nearly as practicable entitle them to receive,
per share of Series A Stock held, a fractional undivided
interest in the proceeds of the Recovery equal to the Per Share
Allocation Factor, plus $1.00, and (2) the holders of the other
classes of capital stock of the Corporation shall be entitled
to receive out of such assets available for distribution units
of beneficial interest in such trust which shall as nearly as
practicable entitle them to receive any balance of the proceeds
of the Recovery in accordance with their respective rights upon
liquidation. In the event of any liquidation, the holders of
the Serial Preferred Stock of the respective series shall be
entitled to be paid in full the respective amounts fixed for
such series before any distribution or payment or setting apart
for payment shall be made to or for the holders of the Common
Shares or any other Junior Stock. After such payments shall
have been in full to the holders of the Serial Preferred Stock,
the remaining assets and funds of the Corporation shall be
distributed among the holders of the Junior Stock of the
Corporation according to their respective rights. In the event
that the assets of the Corporation are not sufficient to make
the payments required to be made to the holders of the Serial
Preferred Stock in full, such assets shall be distributed to
the holders of the Serial Preferred Stock of the respective
series pro rata in proportion to the respective amounts fixed
for such series.
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Section 5. Amount Payable on Redemption or
Liquidation.
(A) For purposes of this Division C, the following
terms shall have the meanings indicated:
(1) "Adjusted Value" of any "Assigned Value
Assets" shall mean, initially, the value assigned
thereto as provided in Section 5(B) of this
Division C, and, in the event any such Assigned Value
Assets shall be sold for cash within two years of the
Corporation's receipt thereof, shall mean, thereafter
and in lieu of the value initially assigned, the cash
proceeds of the sale, increased by the amount of any
revenues derived by the Corporation from, and
decreased by any costs and expenses incurred by the
Corporation after receipt of such Assigned Value
Assets in respect of, such Assigned Value Assets
during the period prior to such sale.
(2) "Assigned Value Assets" shall mean any
assets collected as a part of the Recovery to which a
value has been assigned as provided in Section 5(B) of
this Division C and shall also include the proceeds of
any sale or other disposition thereof.
(3) "Cash Redemption Amount" shall mean, at any
time of determination on or after the Dividend Accrual
Commencement Date, the product obtained by multiplying
(a) the sum of (i) the amount of the Recovery which
shall have been collected in the form of cash and (ii)
the Adjusted Value of any Assigned Value Assets, less
(iii) all amounts which shall have been paid by the
Corporation as dividends on, in redemption of, or for
the repurchase (in accordance with the provisions of
Section 3(B) of this Division C) of, shares of
Series A Stock, and all dividends which shall have
accrued but not been paid (whether or not declared),
on shares of Series A Stock by (b) the Per Share
Allocation Factor.
(4) "Covered Cases" shall mean, collectively,
the civil actions captioned The Lubrizol Corporation,
an Ohio corporation vs. Exxon Corporation, a New
Jersey corporation, in the United States District
Court for the Southern District of Texas (Civil Action
Nos. H-84-1627 and H-85-2450), and in the United
States District Court for the Northern District of
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Ohio (Civil Action Nos. C84-1064 and C85-3135), and
all civil actions, whether in or before a state,
federal or foreign court or other authority,
designated, either specifically or generically, as
Covered Cases by majority vote of the Directors of the
Corporation prior to the first date on which shares of
Series A Stock are issued, and all the right, title
and interest of the Corporation in and under all such
actions, and in and under all actions, suits or
proceedings determined by majority vote of the
Directors of the Corporation, prior to the first date
on which shares of Series A Stock are issued, to be
directly related thereto or to have arisen therefrom,
and to all claims asserted therein (whether asserted
in such actions or any action to enforce any judgment
or order therein or otherwise).
(5) "Deferred Payment Entitlement" shall have
the meaning referred to in Section 5(D) of this
Division C.
(6) "Recovery" shall mean the collective total
amount which the Corporation (or its successors and
assigns to the extent permitted hereby) shall collect,
whether in cash or other assets and whether collected
in one or more payments or transactions, on account of
favorable judgments in the Covered Cases or settlement
in respect thereof, less the sum of (a) an amount
equal the product of (i) such collective total amount
and (ii) the Corporation's effective income tax rate
disclosed by the Corporation in the notes to the
financial statements of the Corporation last published
and furnished to shareholders immediately prior to the
first issuance of any shares of Series A Stock and (b)
any amount which the Corporation (or its successors
and assigns to the extent permitted hereby) shall
collect in respect of any interest assigned by the
Corporation as a Deferred Payment Entitlement.
(7) "Per Share Allocation Factor" shall mean, at
any time of determination, the fraction which results
from dividing 1 by the sum of (a) the total number of
shares of Series A Stock then outstanding and (b) the
total number of shares of Series A Stock then subject
to issuance upon the proper exercise of outstanding
Rights.
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(B) If and whenever the Corporation shall receive any
proceeds of the Recovery in a form other than cash, there shall
be assigned to such assets an amount equal to the fair market
value thereof as determined in good faith by the Directors,
unless the Directors of the Corporation shall determine that it
is not possible to assign a fair market value to such assets
with a reasonable level of confidence. The Directors of the
Corporation shall make such determination at the time such
assets are collected or, if it is determined as aforesaid that
it is not possible to assign a fair market value thereto with a
reasonable level of confidence, at the first opportunity
thereafter when it is possible to make such a determination in
good faith. The assets to which a value has been assigned in
accordance with this Section 5(B) are referred to herein as
"Assigned Value Assets" and the value so assigned shall be the
initial Adjusted Value of such assets. If a fair market value
cannot reasonably be assigned to any assets, the Corporation
shall use its best efforts to dispose of such assets as
promptly as practicable, subject to the judgment of the
Directors as to the best interests of the holders of Series A
Stock. Pending such disposition the Corporation shall keep
accurate records relating to such assets.
(C) The "Earliest Redemption Date" shall mean the
first date on which the Corporation shall have collected, in
respect of any of the Covered Cases, in the form of cash and/or
assets constituting Assigned Value Assets, aggregate proceeds
of the Recovery having a value (based on the amount of cash so
received together with the Adjusted Value of any Assigned Value
Assets) in excess of $50,000,000.
(D) Whenever the Corporation shall redeem any shares
of Series A Stock when either (1) the prospect remains that
additional amounts will be collected in respect of the Covered
Cases or (2) any portion of the Recovery then collected
consists of assets other than cash or Assigned Value Assets,
the Corporation shall, in connection with such redemption,
assign to the holder of each share of Series A Stock then being
redeemed an undivided fractional interest equal to the Per
Share Allocation Factor then in effect in all the Corporation's
right, title and interest in (x) such additional amounts as may
be collected in respect of the Covered Cases as provided in the
foregoing clause (1) and/or the proceeds thereof and (y) the
proceeds of the sale or other disposition of any assets other
than cash or Assigned Value Assets plus the revenues derived by
the Corporation therefrom. The form and manner of assignment
shall be as determined by the Directors of the Corporation so
as to best convey to the holders of the shares of Series A
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Stock being redeemed the benefits contemplated hereby;
provided, however, that such holders shall not by reason of the
assignment of the Corporation's interest in the foregoing
proceeds have any right to control the prosecution of the
Covered Cases, the collection of any amounts recoverable
thereunder or the operation or disposition of the aforesaid
assets; and provided, further, that the Corporation may provide
that the interests so assigned shall be non-transferable. The
interest assigned in accordance with this Section 5(D) in
respect of any share of Series A Stock being redeemed is
referred to herein as a "Deferred Payment Entitlement" in
respect of such share.
Section 6. Voting Rights. The voting rights relating
to the Serial Preferred Stock set forth in Section 6 of
Division A of Article FOURTH are applicable to the Series A
Stock. Except as so provided, and except as required by
applicable law, the holders of shares of Series A Stock shall
have no voting rights with respect to any action by the
Corporation or its shareholders by virtue of being a holder of
shares of Series A Stock.
Section 7. Limitations.
(A) So long as any shares of Series A Stock are
outstanding, no shares of any series of Serial Preferred Stock
or other capital stock of the Corporation other than Common
Shares having the express terms applicable to Common Shares on
the Share Acquisition Date (as defined in Section 8(B) of this
Division C) or the Series A Stock, and no shares of Series A
Stock not issuable pursuant to and in accordance with the
Rights Agreement, may be issued by the Corporation.
(B) So long as any shares of Series A Stock are
outstanding, the Corporation shall not invest any portion of
the proceeds of the Recovery (other than any non-cash assets
collected as a part thereof) in other than "Permitted
Investments". For purposes of this Section 7(C), "Permitted
Investments" shall include the following obligations and
securities:
(a) United States Treasury bonds, notes and
bills;
(b) certificates of deposit issued by major
commercial banks;
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(c) Eurodollar time deposits placed with major
commercial banks;
(d) corporate bonds, debentures and notes (none
of which shall be convertible into any equity
security) rated A or better by Moody's Investors
Services and by Standard & Poor's Corporation;
(e) non-convertible preferred stock rated A or
better by Moody's Investors Services and by Standard &
Poor's Corporation; and
(f) commercial paper rated Prime-2 or better by
Moody's Investors Services and A-1 or better by
Standard & Poor's Corporation.
In no event shall any portion of the proceeds of the Recovery
be invested in any obligation or other security of a Prohibited
Transferee.
(C) So long as any shares of Series A Stock are
outstanding, the Corporation shall not settle or otherwise
compromise the Covered Cases, direct counsel to make any change
in the strategy for conducting the Covered Cases, fail to pay
any costs or expenses of conducting the Covered Cases which
might diminish the likelihood of a favorable result therein or
otherwise adversely affect the conduct of the Covered Cases,
except, in each case, with the approval of the Directors of the
Corporation.
(E) So long as any shares of Series A Stock are
outstanding, the Corporation shall not sell, assign or
otherwise transfer the Covered Cases or any interest therein
unless the Directors of the Corporation shall have previously
determined in good faith that the proceeds to be realized
thereby are fair to the holders of the Series A Stock.
(F) So long as any shares of Series A Stock are
outstanding, the Corporation shall not (i) consolidate with,
(ii) merge with or into, (iii) sell or transfer to, in one or
more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
subsidiaries, taken as a whole, any Prohibited Transferee or
any Affiliate or Associate thereof (as such terms are defined
in Section 8(B) of this Division C), or (iv) liquidate,
dissolve or otherwise wind up the affairs of the Corporation,
if at the time of, after or as a result of such consolidation,
merger, sale, liquidation, dissolution or winding up there
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would be any charter or regulation provisions, including
without limitation any provisions of the Corporation's Amended
Articles of Incorporation or Regulations, as from time to time
amended, or any rights, options, warrants or other instruments
or securities outstanding or agreements in effect or any other
actions taken, which would eliminate or otherwise diminish the
benefits intended to be afforded by the Rights or the Series A
Stock, without proper provision being made for the redemption
of the Series A Stock in accordance with Section 3 of this
Division C.
Section 8. Prohibitions on Transfer.
(A) The Series A Stock shall not be transferable to
or by a Prohibited Transferee and any attempt to transfer
shares of Series A Stock to or by a Prohibited Transferee shall
be null and void. The Corporation reserves the right to
require (or to cause any transfer agent of the Corporation to
require) any Person who submits a share of Series A Stock for
transfer on the transfer books of the Corporation or for
redemption pursuant to Section 3 hereof to establish to the
satisfaction of the Corporation that such Person did not
acquire such shares of Series A Stock while or from a
Prohibited Transferee.
(B) As used in this Division C, the term "Prohibited
Transferee" shall mean, at the time any determination is to be
Made, (1) any Person other than the Corporation or any Related
Person (as such terms are hereinafter defined), who or which,
together with all Affiliates and Associates (as such terms are
defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, and in
effect on the date of first issuance of any shares of Series A
Stock (the "Exchange Act")) of such Person, shall be the
beneficial owner of 20% or more of the Common Shares then
outstanding or (2) any Person (other than the Corporation or
any Related Person) who or which, together with all Affiliates
or Associates of such Person (A) commences or announces its
intention to commence a tender or exchange offer the
consummation of which would result in beneficial ownership by
such Person of 20% or more of the Common Shares then
outstanding, or announces its intention otherwise to purchase
or acquire (B) 20% or more of the Common Shares then
outstanding. The term "Person" shall mean any individual,
firm, corporation, partnership or other entity, and shall
include any successor (by merger or otherwise) of such entity.
The term "Related Person" shall mean (x) any subsidiary of the
Corporation, (y) any employee benefit or stock ownership plan
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of the Corporation or any entity holding Common Shares for or
pursuant to the terms of any such plan, or (z) any Person who
acquires Common Shares from the Corporation or any other
Related Person in one or a series of related transactions, each
of which is approved by a majority of the Directors of the
Corporation; provided, however, that if any Person who becomes
a Related Person solely by virtue of subsection (z) above, or
any Affiliate or Associate of such Person, subsequently becomes
the beneficial owner of any additional Common Shares in a
transaction or transactions not approved by a majority of the
Directors of the Corporation, such Person shall no longer be
deemed a "Related Person" with respect to all Common Shares of
which it, or any of its Affiliates or Associates, is the
beneficial owner. The term "Distribution Date" shall mean the
close of business on the fifteenth calendar day (or such other
date as any be specified by a majority vote of the Directors
then in office) after the Share Acquisition Date. The term
"Share Acquisition Date" shall mean the first date of public
announcement by the Corporation or a Prohibited Transferee (by
press release, filing made with the Securities and Exchange
Commission or otherwise) that a Prohibited Transferee has
become such. For the purposes of this Division C, a Person
shall be deemed the "Beneficial Owner" of and shall be deemed
"beneficially to own" any securities: (i) which such Person or
any of such Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time or
the occurrence or nonoccurrence of an event) pursuant to any
agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, other rights (other than the Other Rights), warrants,
options or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or beneficially to own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (ii) which such Person or
any of such Person's Affiliates or Associates, directly or
indirectly, has the right or power to vote or dispose of, or to
direct the vote or disposition of, including pursuant to any
agreement, arrangement or understanding (whether or not in
writing); or (iii) which any other Person is the Beneficial
Owner if such other Person or any of the Affiliates or
Associates of such other Person has any agreement, arrangement
or understanding (whether or not in writing) with the first
Person or the Affiliates or Associates of the first Person with
respect to acquiring, holding, voting or disposing of any
securities of the Company; provided, however, that a Person
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shall not be deemed the Beneficial Owner of, or beneficially to
own, any security (A) if such Person has a right to vote such
security pursuant to an agreement, arrangement or understanding
(whether or not in writing) which (1) arises solely from a
revocable proxy given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report), or (B) if such beneficial ownership arises solely as a
result of such Person's status as a "clearing agency," as
defined in Section 3(a)(23) of the Exchange Act; and provided,
further, however, that nothing in this paragraph shall cause a
Person engaged in business as an underwriter of securities to
be the Beneficial Owner of any securities acquired through such
Person's participation in good faith in an underwriting
syndicate pursuant to an agreement to which the Company is a
party until the expiration of 40 calendar days after the date
of such acquisition. The term "Rights" shall mean the rights
to purchase shares of Series A Stock issued pursuant to the
terms of the Rights Agreement. The term "Other Rights" shall
mean the rights to purchase Common Shares of the Corporation
issued pursuant to the terms of the Rights Agreement, dated
October 6, 1987, as from time to time amended or supplemented,
between the Corporation and National City Bank.
1017f
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Exhibit B
[Form of Right Certificate]
Certificate No. SR- Rights
[DISTRIBUTION DATE]
THE RIGHTS EVIDENCED BY THIS CERTIFICATE ARE NOT
EXERCISABLE AFTER 5:00 P.M., CLEVELAND, OHIO TIME, ON
NOVEMBER 8, 1991, OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.05 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS CERTIFICATE WERE ISSUED OR
TRANSFERRED TO A PERSON WHO WAS A PROHIBITED TRANSFEREE (AS
SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE NULL AND
VOID.]*
Right Certificate
This certifies that , or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject
to the terms, provisions and conditions of the Special Rights
Agreement, dated as of October 31, 1988 (as from time to time
amended or supplemented, the "Rights Agreement"), between The
Lubrizol Corporation, an Ohio corporation (the "Company"), and
National City Bank, a national banking association
headquartered in Cleveland, Ohio (the "Rights Agent"), to
* The portion of the legend in brackets shall be inserted
only if applicable.
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purchase from the Company at any time after the Exercisability
Date (as such term is defined in the Rights Agreement) and
prior to 5:00 p.m., Cleveland, Ohio time, on November 8, 1991,
at the principal office of the Rights Agent or at its office
designated for such purpose, or at the office of its successors
as Rights Agent, one twenty-fifth of a fully paid nonassessable
share of Serial Preferred Stock, Series A, without par value
(the "Series A Stock"), of the Company, at a purchase price of
$1.00 per whole share of Series A Stock (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with
the Form of Election to Purchase duly executed. No Right is
exercisable at any time prior to the Exercisability Date.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates. Copies of the Rights Agreement are on
file at the above-mentioned offices of the Rights Agent.
Subject to the terms of the Rights Agreement, this Right
Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent or such
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other office designated for that purpose, may be exchanged for
another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a
like aggregate number of shares of Series A Stock as the Rights
evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase.
Subject to the terms of the Rights Agreement, if this Right
Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the terms of the Rights Agreement, (i) the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $0.05 per Right
and (ii) the Rights Agreement, and thereby the Rights, may be
amended or supplemented, in either case without the vote,
consent or approval of the holders of the Rights.
The Company is not obligated to issue fractional shares of
Series A Stock, and, in lieu thereof, upon the exercise of any
Right, may either make a payment in cash to the holder thereof
based on the market price of the Series A Stock on the last
trading day prior to the date of such exercise or arrange for
the Rights Agent to sell shares of Series A Stock attributable
to Rights otherwise exercisable for fractional shares and to
remit the net proceeds thereof to the holders entitled thereto.
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No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of the shares of Series A Stock, nor shall
anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised
as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of ,
19 .
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THE LUBRIZOL CORPORATION
ATTEST:
By
Secretary Title:
Countersigned:
NATIONAL CITY BANK
By
Authorized Signature
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 19
Signature
Signature Guaranteed:
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CERTIFICATE
The undersigned hereby certifies that the Rights evidenced
by this Rights Certificate are not being sold, assigned or
transferred by or on behalf of a Person who is or was a
Prohibited Transferee or an Affiliate or Associate of any such
Prohibited Transferee (as such terms are defined pursuant to
the Rights Agreement).
Dated: , 19
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond
to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any
change whatsoever.
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<PAGE> 74
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To The Lubrizol Corporation:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right
Certificate to purchase the Preferred Shares issuable upon the
exercise of such Rights and requests that certificates for such
shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: , 19
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of this Right
Certificate)
Signature Guaranteed:
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<PAGE> 75
CERTIFICATE
The undersigned hereby certifies that (i) the Rights
evidenced by this Rights Certificate are not being exercised by
or on behalf of a Person who is or was a Prohibited Transferee
or an Affiliate or Associate of any such Prohibited Transferee
(as such terms are defined pursuant to the Rights Agreement),
(ii) the undersigned will furnish such information as the
Company or the Rights Agreement may request, whether before or
after the issuance of shares of Series A Stock to the
undersigned, relating to the foregoing, and (iii) the
undersigned, on behalf of himself and his Affiliates and
Associates (as such terms are defined in the Rights Agreement)
agrees that the issuance of certificates representing Series A
Stock will not limit or otherwise affect the provisions of
Sections 3 or 12 of the Rights Agreement or Section 8 of
Division C of the Company's Amended and Restated Articles of
Incorporation.
Dated: , 19
Signature
Signature Guaranteed:
1018f
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<PAGE> 76
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the
face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
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<PAGE> 77
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Rights
On October 31, 1988, the Directors of The Lubrizol
Corporation (the "Company") declared a distribution of one
Right (a "Right") for each outstanding share of Common Stock,
without par value (the "Common Shares"), of the Company. The
distribution is payable to shareholders of record as of the
close of business on November 10, 1988 (the "Record Date").
Each Right entitles the registered holder to purchase from the
Company one twenty-fifth of a share of Serial Preferred Stock,
Series A, without par value, of the Company (the "Series A
Stock") at a price of $1.00 per whole share ($0.04 per one
twenty-fifth of a share) (the "Purchase Price"). The
description and terms of the Rights are set forth in the
Special Rights Agreement, dated as of October 31, 1988 (as from
time to time amended or supplemented in accordance with the
terms thereof, the "Rights Agreement"), between the Company and
National City Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of the close of business on the
fifteenth calendar day (or such later day as may be specified
in certain circumstances by a majority of the Directors of the
Company) following a public announcement that a person or group
of affiliated or associated persons (a "Prohibited Transferee")
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(i) has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Common Shares or
(ii) has commenced or intends to commence a tender or exchange
offer the consummation of which would result in beneficial
ownership by such person or group of persons of 20% or more of
the Common Shares, or otherwise intends to acquire 20% or more
of the Common Shares (the earlier of such dates being
hereinafter called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share
certificates with a copy of this Summary of Rights attached
thereto.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new certificates
issued after the Record Date upon transfer of Common Shares
will contain a notation incorporating the Rights Agreement by
reference, and the surrender for transfer of any certificates
for Common Shares outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution
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Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution
Date. As of and after the Distribution Date, the Rights will
be evidenced solely by the separate Rights Certificates.
No Right is exercisable until the earlier of (i) the
sixteenth calendar day following the date of the first public
announcement by the Company or a Prohibited Transferee that a
Prohibited Transferee has become such (the "Share Acquisition
Date") or such other date as the Directors of the Company may,
in certain circumstances, from time to time specify for the
expiration of their right to redeem the Rights or (ii) the date
and time specified in a resolution adopted by a majority vote
of the Directors of the Company relinquishing their right to
authorize the Company to redeem the Rights (the earlier of such
dates being hereinafter called the "Exercisability Date"). The
Company may, however, suspend the exercisability of the Rights
in order to make all necessary filings with the Securities and
Exchange Commission and state securities agencies and to ensure
compliance with applicable securities laws.
The Rights will expire as of 5:00 p.m., Cleveland, Ohio
time, on November 8, 1991, unless earlier redeemed by the
Company as described below. Until a Right is exercised, the
holder thereof, as such, will have no rights as a shareholder
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of the Company, including without limitation the right to vote
or to receive dividends.
Any Rights beneficially owned by a Prohibited Transferee
shall be null and void and of no force or effect and as a
result will not be exercisable or transferable by the
Prohibited Transferee or any purported subsequent holder of
such Rights.
Prior to the Exercisability Date, if the Company so
directs, the Company, upon approval of a majority of the
Directors then in office, may amend or supplement the Rights
Agreement in any manner without the approval of any holders of
Rights, except for an amendment or supplement which would
decrease the Redemption Price (as defined below) and certain
other amendments or supplements. After the Exercisability
Date, if the Company so directs, the Company, upon approval of
a majority of the Directors then in office, may amend or
supplement the Rights Agreement to cure any ambiguity, to
correct or supplement defective or inconsistent provisions or
otherwise as the Company may deem desirable and which shall not
adversely affect the interests of the Rights holders.
The Rights are redeemable, at a redemption price of $0.05
per Right (the "Redemption Price"), at any time prior to the
Exercisability Date. Immediately upon the action of the
Directors of the Company ordering the redemption of the Rights,
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the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights will be to receive
the Redemption Price.
The Series A Stock
The terms of the Series A Stock have been structured,
generally, so that the after-tax amounts realizable from the
patent litigation against Exxon Corporation and related actions
specified by majority vote of the Company's Directors
(collectively, the "Covered Cases") are for the benefit of the
Company and its shareholders, other than any Prohibited
Transferee.
From the date of issuance, holders of Series A Stock will
be entitled to receive, as and when declared, cumulative cash
dividends payable quarterly. The dividend rate on the Series A
Stock is 8% per annum of the Cash Redemption Amount (defined,
generally, as the per share after-tax amount of cash and the
value of any other assets which as of a particular date have
been collected as a result of the Covered Cases).
Subject to certain restrictions set forth in the terms of
the Series A Stock, the Series A Stock is redeemable in whole
or in part, at the option of the Company, at any time after the
proceeds of the Covered Cases exceed $50 million.
The Company is not obligated to issue fractional shares of
Series A Stock, and, in lieu thereof, upon exercise of a Right,
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may either make a payment in cash to the holder thereof based
on the market price of the Series A Stock on the last trading
day prior to the date of such exercise or arrange for the
Rights Agent to sell shares of Series A Stock attributable to
Rights otherwise exercisable for fractional shares and to remit
the net proceeds thereof to the holders entitled thereto.
Starting with the second anniversary date of the first
issuance of shares of Series A Stock, and annually thereafter
until fully redeemed, the Company will redeem 25% of the
greatest number of shares of Series A Stock at any time
outstanding. All remaining shares of Series A Stock, if any,
will be redeemed by the Company on the fifth anniversary date
of the first issuance of shares of Series A Stock. In
addition, the Company will redeem shares of Series A Stock, at
the option of the holders thereof, during a specified period
preceding the adoption of any resolution for the dissolution
of the Company.
In each case, the redemption price for the Series A Stock
will be, generally, equal to the proportionate interest in the
Cash Redemption Amount plus $1.00 and any accrued but unpaid
dividends. In addition, any holders of shares of Series A
Stock which are redeemed prior to the final adjudication or
settlement of the Covered Cases will receive the right to
receive their proportionate interest in any additional amounts
collected.
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General
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A, dated November 7, 1988. A
copy of the Rights Agreement is available free of charge to
shareholders from the Company upon written request therefor.
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the
Rights Agreement, including the Description of the Rights and
Preferences of the Series A Stock set forth in Exhibit A
thereto, which Rights Agreement and Exhibit A are hereby
incorporated herein by this reference.
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EXHIBIT (4)(f)
THE LUBRIZOL CORPORATION
29400 Lakeland Boulevard
Wickliffe, Ohio 44092
October 28, 1991
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Corporate Trust Department
Re: Amendment No. 2 to Rights Agreement
Gentlemen:
Pursuant to Section 26 of the Rights Agreement, dated
as of October 6, 1987, between The Lubrizol Corporation, an
Ohio corporation (the "Company"), and National City Bank (the
"Rights Agent"), as amended by an Amendment to Rights
Agreement, dated October 24, 1988, between the Company and the
Rights Agent (as amended, the "Rights Agreement"), the Company,
by resolutions adopted by the unanimous vote of its Board of
Directors, hereby amends the Rights Agreement as follows (this
Amendment No. 2 to Rights Agreement is hereinafter referred to
as "this Amendment"):
1. To amend clause (ii) of the Recitals to read in its
entirety as follows:
"(ii) the Expiration Date, or"
2. To amend Section 1(a) to add the following at the end of
Section 1(a):
"; and provided, further, that a Person shall not be deemed to
have become an Acquiring Person solely as a result of a
reduction in the number of Common Shares outstanding unless and
until (i) such time as such Person or any Affiliate or
Associate of such Person shall thereafter become the Beneficial
Owner of any additional Common Shares, other than as a result
of a stock dividend, stock split or similar transaction
effected by the Company in which all holders of Common Shares
are treated equally, or (ii) any other Person who is the
<PAGE> 2
2
Beneficial Owner of any Common Shares shall thereafter become
an Affiliate or Associate of such Person."
3. To renumber Sections 1(i) and 1(j) as Sections 1(m) and
1(n), respectively, to reflect the addition of Sections l(i),
1(j), 1(k), 1(l) and 1(o) pursuant to item 5 of this Amendment.
4. To renumber Sections 1(k) and 1(1) as Sections 1(p) and
1(q), respectively, to reflect the addition of Section 1(o)
pursuant to item 5 of this Amendment.
5. To add new Sections 1(i), 1(j), 1(k), 1(l), 1(o) and 1(r)
to read in their entirety as follows:
"(i) "Distribution Date" shall have the meaning ascribed to
such term in Section 3 hereof.
(j) "Expiration Date" shall mean the earlier of (i) the
date on which the Rights are redeemed as provided in Section 23
hereof or (ii) the time at which all exercisable Rights are
exchanged as provided in Section 11(p) hereof.
(k) "Flip-In Event" shall mean any event described in
clauses (A), (B) or (C) of Section 11(a)(ii) hereof.
(l) "Flip-Over Event" shall mean any event described in
clauses (i), (ii) or (iii) of Section 11(d) hereof.
(o) "Redemption Price" shall mean $.05 per Right,
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof.
(r) "Triggering Event" shall mean any Flip-In Event or
Flip-Over Event.
6. To amend the first sentence of Section 3(a) to read in its
entirety as follows:
"Until the earliest of (i) the Close of business on the
tenth Business Day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by the
Directors of the Company) after the Share Acquisition Date,
(ii) the Close of business on the tenth Business Day (or,
unless the Distribution Date shall have previously occurred,
such later date as may be specified by the Directors of the
Company) after the date of the commencement of a tender or
exchange offer by any Person (other than the Company or any
Subsidiary or any employee benefit or stock ownership plan of
the Company or of any Subsidiary or any entity holding Common
Shares for or pursuant to the terms of any such plan), if upon
the consummation thereof such Person would be the Beneficial
Owner of 20% or more of the outstanding Common Shares, and
<PAGE> 3
3
(iii) the Close of business on the tenth Business Day after the
first date of public announcement by the Company or an
Acquiring Person (by press release, filing made with the
Securities and Exchange Commission or otherwise) of the first
occurrence of a Triggering Event (the earliest of such dates
being herein referred to as the "Distribution Date"), the
Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for Common
Shares registered in the names of the record holders thereof
(which certificates for Common Shares shall also be deemed to
be Right Certificates) and not by separate Right Certificates,
and the right to receive Right Certificates will be
transferable only in connection with the transfer of Common
Shares in the stock transfer books of the Company maintained by
the Company or its appointed transfer agent."
7. To amend the last sentence of Section 3(a) to delete the
following clause:
"Section 11(a)(ii) or Section 11(d)"
8. To amend the second sentence of Section 4 to delete the
following clause:
"shall be dated as of the Record Date, and"
9. To amend Section 7(a) to read in its entirety as follows:
"(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the
Distribution Date and at or prior to the Close of business on
the earlier of the Expiration Date or the Final Expiration Date
upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed,
to the Rights Agent at an office of the Rights Agent designated
for such purpose, together with an amount in cash, in lawful
money of the United States of America, by certified check or
bank draft payable to the order of the Company, equal to the
Purchase Price for each Common Share as to which such
surrendered Rights are exercised, or, if applicable, the
exercise price per Right specified in Sections 11(a)(ii) or
11(d) hereof, as the case may be, together with an amount equal
to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9
hereof; provided, however, that after the later of the first
occurrence of a Triggering Event and the Distribution Date, in
lieu of the cash payment payable to the Company referred to in
this sentence, the registered holder of a Right Certificate
evidencing exercisable Rights (which shall not include Rights
that have become void pursuant to Section 11(a)(ii) hereof)
may, at its option, exercise the Rights evidenced thereby in
whole or in part in accordance with this Section 7(a) upon
<PAGE> 4
4
surrender of the Right Certificate as described above, together
with the election to exercise such Rights without payment of
cash on the reverse side thereof duly completed. With respect
to any Rights as to which such an election to exercise without
payment of cash is made, the holder shall receive, upon
exercise, a number of Common Shares or other securities, as the
case may be, having a current per share market price
(determined pursuant to Section 11(e) hereof as of the date of
the first occurrence of any Triggering Event) equal to the
excess of (i) the aggregate current per share market price of
the Common Shares or other securities (determined pursuant to
Section 11(e) hereof as of the date of the first occurrence of
any Triggering Event) that would have been issuable upon
payment of the cash amount as described above over (ii) the
amount of cash that would have been payable to the Company upon
exercise absent such election."
10. To amend Section 7(b) to read in its entirety as follows:
"(b) The Purchase Price for each Common Share pursuant to
exercise of a Right shall initially be $150 (equivalent to $75
for each one-half of a Common Share), and shall be subject to
adjustment from time to time as provided in Section 11 hereof."
11. To amend Section 7(c) to read in its entirety as follows:
"(c) Subject to Sections 7(d), 11(a)(ii), and 11(d) hereof,
upon receipt of a Right Certificate representing exercisable
Rights with the form of election to purchase duly executed,
accompanied by either payment as described above or a duly
completed election to exercise without payment of cash, the
Rights Agent shall promptly (i) requisition from any transfer
agent of the Common Shares (or make available, if the Rights
Agent is the transfer agent) certificates representing the
number of whole Common Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with
all such requests, (ii) promptly after receipt of such
certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder, (iii) if appropriate, requisition from the Company the
amount of cash to be paid or depository receipts to be issued
in lieu of the issuance of fractional shares in accordance with
Section 14 hereof or in lieu of the issuance of Common Shares
in accordance with Section 11(a)(iii) or 11(d) hereof, and (iv)
if appropriate, after receipt, promptly deliver such cash (or
depository receipts, when appropriate) to or upon the order of
the registered holder of such Right Certificate."
12. To add new Section 7(e) to read in its entirety as follows:
"(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
<PAGE> 5
5
obligated to undertake any action with respect to any purported
transfer, split up, combination or exchange of any Right
Certificate pursuant to Section 6 hereof or exercise of a Right
Certificate as set forth in this Section 7 unless the
registered holder of such Right Certificate shall have
(i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable,
set forth on the reverse side of the Right Certificate
surrendered for such transfer, split up, combination, exchange
or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall have
reasonably requested."
13. To amend paragraph 3 of Section 9 to add at the end of the
parenthetical that reads "subject to payment of the Purchase
Price" the following:
"if required"
14. To amend Section 9 to add the following at the end of
Section 9:
"The Company further consents and agrees to use its best
efforts to (i) file on an appropriate form, as soon as
practicable following the later to occur of a Triggering Event
or the Distribution Date, a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities issuable upon exercise of the Rights,
(ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act)
until the earliest of (A) the date as of which the Rights are
no longer exercisable for such securities, (B) the Expiration
Date, and (C) the Final Expiration Date. The Company will also
take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the
Rights. The Company may temporarily suspend the exercisability
of the Rights in order to prepare and file such registration
statement and permit it to become effective and upon any such
suspension, the Company will issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. Notwithstanding
anything in this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite
registration or qualification in such jurisdiction shall not
have been effected or the exercise of the Rights shall not be
permitted under applicable law.
Notwithstanding anything in this Agreement to the contrary,
the Company covenants and agrees that, after the Distribution
<PAGE> 6
6
Date, it will not, except as permitted by Section 23 or Section
26 hereof, take any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights.
In the event that the Company is obligated to pay cash
and/or distribute other property pursuant to Sections 11, 13,
and 14 hereof, it will make all arrangements necessary so that
such cash and/or property are available for distribution by the
Rights Agent, if and when appropriate."
15. To amend the first sentence of Section 10 to add at the end
of the clause that reads "payment of the Purchase Price" the
following:
"if required"
16. To amend clause (C) of Section 11(a)(ii) to add at the end
of clause C of Section 11(a)(ii) the following:
"; provided, however, that a Person shall not be deemed to have
become the Beneficial Owner of 20% or more of the Common Shares
then outstanding for the purposes of this Section 11(a)(ii)(C)
solely as a result of a reduction in the number of Common
Shares outstanding unless and until such time as (1) such
Person or any Affiliate or Associate of such Person shall
thereafter become the Beneficial Owner of any additional Common
Shares other than as a result of a stock dividend, stock split
or similar transaction effected by the Company in which all
holders of Common Shares are treated equally, or (2) any other
Person who is the Beneficial Owner of any Common Shares shall
thereafter become an Affiliate or Associate of such Person,"
17. To amend Section 11(a)(ii) by deleting the language
following Section 11(a)(ii) (C) (as amended pursuant to item 16
of this Amendment) in its entirety and replacing such language
with the following:
"then, and in each such case, the Company shall make
adjustments in the terms of the Rights so that each holder of a
Right, except as provided below, shall thereafter have a right
to receive, upon exercise thereof in accordance with the terms
of this Agreement, at an exercise price per Right equal to the
product of two times the then-current Purchase Price multiplied
by the number of Common Shares for which a Right was
exercisable immediately prior to the first occurrence of a
Triggering Event, such number of Common Shares as shall equal
the result obtained by (x) multiplying the product of two times
the then-current Purchase Price by the number of Common Shares
for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event and dividing that
product by (y) 50% of the current per share market price of the
<PAGE> 7
7
Common Shares (determined pursuant to Section 11(e) hereof) on
the date of the first occurrence of a Triggering Event.
Notwithstanding anything in this Agreement to the contrary,
from and after the later of the Distribution Date and the first
occurrence of a Flip-In Event, (1) any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any
Affiliate or Associate of such Acquiring Person) shall be void
and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement,
(2) no Right Certificate shall be issued pursuant to this
Agreement that represents Rights that are beneficially owned by
an Acquiring Person or any Affiliate or Associate thereof,
(3) no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person or any Affiliate
or Associate thereof or to any nominee of such Acquiring Person
or Affiliate or Associate thereof, and (4) any Right
Certificate delivered to the Rights Agent for transfer to an
Acquiring Person or any Affiliate or Associate thereof shall be
cancelled. Notwithstanding anything to the contrary set forth
herein, the provisions of this Section 11(a)(ii) shall not
apply to any Permitted Transaction."
18. To amend Section 11(a)(iii) to read in its entirety as
follows:
"(iii) Upon the occurrence of a Flip-In Event, if
there shall not be sufficient authorized but unissued
Common Shares or authorized and issued Common Shares held
in treasury to permit the exercise in full of the Rights in
accordance with the foregoing subsection (ii), the
Directors of the Company shall use their best efforts
promptly to authorize and, subject to the provisions of
Section 9 hereof, make available for issuance additional
Common Shares; provided, however, that if at any time after
90 calendar days after the first occurrence of a Flip-In
Event, there shall not be sufficient Common Shares
available for issuance upon the exercise of a Right, then
the Company shall deliver, upon the surrender of such Right
and without requiring payment of the Purchase Price, Common
Shares (to the extent available), and then cash (to the
extent permitted by applicable law and any agreements or
instruments to which the Company is a party in effect
immediately prior to the first occurrence of any Flip-In
Event), which Common Shares and cash shall have an
aggregate value equal to the excess of (x) the aggregate
current per share market price (determined pursuant to
Section 11(e) hereof) of all the Common Shares issuable in
accordance with subsection (ii) of this Section 11(a) upon
the exercise of a Right over (y) the product of the
then-current Purchase Price multiplied by the number of
Common Shares for which a Right was exercisable immediately
prior to the first occurrence of a Triggering Event. To
the extent that any legal or contractual restrictions
<PAGE> 8
8
prevent the Company from paying the full amount of cash
payable in accordance with the foregoing sentence, the
Company shall pay to holders of the Rights as to which such
payments are being made all amounts which are not then
restricted on a pro rata basis. The Company shall continue
to make payments on a pro rata basis as funds become
available until such payments have been paid in full."
19. To amend Section 11(d) to read in its entirety as follows:
"(d) In the event that, following the Share
Acquisition Date, directly or indirectly:
(i) the Company shall consolidate with, or merge
with or into, any other Person and the Company shall
not be the continuing or surviving corporation of such
merger or consolidation; or
(ii) any Person shall consolidate with the
Company, or merge with or into the Company and the
Company shall be the continuing or surviving
corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or
part of the Common Shares shall be changed into or
exchanged for stock or other securities of any other
Person or cash or any other property; or
(iii) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions,
assets or earning power (including, without
limitation, securities creating any obligation on the
part of the Company and/or any of its Subsidiaries)
representing in the aggregate more than 50% of the
assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or
Persons;
then, and in each such case, proper provision shall be made
so that (A) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to
receive, upon the exercise thereof in accordance with the
terms of this Agreement at an exercise price per Right
equal to the product of two (2) times the then-current
Purchase Price multiplied by the number of Common Shares
for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event, such number of
validly authorized and issued, fully paid, nonassessable
and freely tradeable Common Shares of the Issuer (as such
term is hereinafter defined), free and clear of any liens,
encumbrances and other adverse claims and not subject to
any rights of call or first refusal, as shall be equal to
the result obtained by (x) multiplying the product of two
<PAGE> 9
9
(2) times the then-current Purchase Price by the number of
Common Shares for which a Right is exercisable immediately
prior to the first occurrence of a Triggering Event and
dividing that product by (y) 50% of the current per share
market price of the Common Shares of the Issuer (determined
pursuant to Section 11(e) hereof), on the date of
consummation of such Flip-Over Event; (B) the Issuer shall
thereafter be liable for, and shall assume, by virtue of
the consummation of such Flip-Over Event, all the
obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" shall thereafter be
deemed to refer to the Issuer; and (D) the Issuer shall
take such steps (including, without limitation, the
reservation of a sufficient number of its Common Shares to
permit the exercise of all outstanding Rights) in
connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be possible, in
relation to its Common Shares thereafter deliverable upon
the exercise of the Rights. For purposes of this
Section 11(d), "Issuer" shall mean (A) in the case of any
Flip-Over Event described in Sections 11(d)(i) or (ii)
above, the Person that is the continuing, surviving,
resulting or acquiring Person (including the Company as the
continuing or surviving corporation of a transaction
described in Section 11(d)(ii) above), and (B) in the case
of any Flip-Over Event described in Section 11(d)(iii)
above, the Person that is the party receiving the greatest
portion of the assets or earning power (including, without
limitation, securities creating any obligation on the part
of the Company and/or any of its Subsidiaries) transferred
pursuant to such transaction or transactions; provided,
however, that, in any such case, (x) if (1) no class of
equity security of such Person is, at the time of such
merger, consolidation or transaction and has been
continuously over the preceding 12-month period, registered
pursuant to Section 12 of the Exchange Act, and (2) such
Person is a Subsidiary, directly or indirectly, of another
Person, a class of equity security of which is and has been
so registered, the term "Issuer" shall mean such other
Person; and (y) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, a class of
equity security of two or more of which are and have been
so registered, the term "Issuer" shall mean whichever of
such Persons is the issuer of the equity security having
the greatest aggregate market value. Notwithstanding the
foregoing, if the Issuer in any of the Flip-Over Events
listed above is not a corporation or other legal entity
having outstanding equity securities, then, and in each
such case, (A) if the Issuer is directly or indirectly
wholly owned by a corporation or other legal entity having
outstanding equity securities, then all references to
Common Shares of the Issuer shall be deemed to be
<PAGE> 10
10
references to the Common Shares of the corporation or other
legal entity having outstanding equity securities which
ultimately controls the Issuer, and (B) if there is no such
corporation or other legal entity having outstanding equity
securities, (1) proper provision shall be made so that the
Issuer shall create or otherwise make available for
purposes of the exercise of the Rights in accordance with
the terms of this Agreement, a kind or kinds of security or
securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a
Right would have been entitled to receive if the Issuer had
been a corporation or other legal entity having outstanding
equity securities; and (2) all other provisions of this
Agreement shall apply to the issuer of such securities as
if such securities were Common Shares. The Company shall
not consummate any Flip-Over Event unless the Issuer shall
have a sufficient number of authorized Common Shares (or
other securities as contemplated above) which have not been
issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 11(d),
and unless prior to such consummation the Company and the
Issuer shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set
forth in Section 11(d) and further providing that as
promptly as practicable after the consummation of any
Flip-Over Event, the Issuer shall:
(A) prepare and file a registration statement
under the Securities Act, with respect to the Rights
and the securities issuable upon exercise of the
Rights on an appropriate form, and shall use its best
efforts to cause such registration statement to
(1) become effective as soon as practicable after such
filing and (2) remain effective (with a prospectus at
all times meeting the requirements of the Securities
Act) until the earlier of the Expiration Date and the
Final Expiration Date;
(B) take all such action as may be appropriate
under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection
with the exercisability of the Rights; and
(C) deliver to holders of the Rights historical
financial statements for the Issuer and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
The provisions of this Section 11(d) shall similarly apply
to successive mergers or consolidations or sales or other
transfers. In the event that a Flip-Over Event occurs at
any time after the occurrence of a Flip-In Event, the
<PAGE> 11
11
Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in
this Section 11(d).
In the event that the Company shall be the continuing
or surviving corporation in a merger or consolidation
referred to in subparagraph (ii) above and Common Shares of
the Company are required to be issued upon exercise of the
Rights following such merger or consolidation, and if there
shall not be sufficient authorized but unissued Common
Shares or authorized and issued Common Shares held in
treasury to permit the exercise in full of the Rights in
accordance with the foregoing, the Directors of the Company
shall use their best efforts promptly to authorize and,
subject to the provisions of Section 9 hereof, make
available for issuance additional Common Shares; provided,
however, that if at any time after 90 calendar days after
the first occurrence of a Flip-In Event, there shall not be
sufficient Common Shares available for issuance upon the
exercise of a Right, then the Company shall deliver, upon
the surrender of such Right and without requiring payment
of the Purchase Price, Common Shares (to the extent
available), and then cash (to the extent permitted by
applicable law and any agreements or instruments to which
the Company is a party in effect immediately prior to the
first occurrence of any Flip-In Event), which Common Shares
and cash shall have an aggregate value equal to the excess
of (x) the aggregate current per share market price
(determined pursuant to Section 11(e) hereof) of all the
Common Shares issuable in accordance with this Section
11(d) upon the exercise of a Right over (y) the product of
the then-current Purchase Price multiplied by the number of
Common Shares for which a Right was exercisable immediately
prior to the occurrence of the merger or consolidation
referred to in subparagraph (ii) above. To the extent that
any legal or contractual restrictions prevent the Company
from paying the full amount of cash payable in accordance
with the foregoing sentence, the Company shall pay to
holders of the Rights as to which such payments are being
made all amounts which are not then restricted on a pro
rata basis. The Company shall continue to make payments on
a pro rata basis as funds become available until such
payments have been paid in full."
20. To amend Section 11(o) to replace the clause "shares of
Common Stock" with the following:
"Common Shares"
21. To add new Section 11(p) to read in its entirety as follows:.
"(p) Notwithstanding the provisions of Sections 11(a)
(ii) and 11(d) hereof, the Directors of the Company may, at
<PAGE> 12
12
their option, at any time after the later of the
Distribution Date and the first occurrence of a Triggering
Event, exchange all or part of the then-outstanding and
exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for Common Shares at an exchange
ratio of one Common Share per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Directors of
the Company shall not be empowered to effect such exchange
at any time after any Person (other than the Company or any
Subsidiary or any employee benefit plan of the Company or
of any Subsidiary or any entity holding Common Shares for
or pursuant to the terms of any such plan) together with
all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then
outstanding. Immediately upon the action of the Directors
of the Company ordering the exchange of any Rights pursuant
to this Section 11(p), and without any further action and
without any notice, the right to exercise such Rights shall
terminate and the only right with respect to such Rights
thereafter of the holder of such Rights shall be to receive
that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange
Ratio. Promptly after the action of the Directors of the
Company ordering the exchange of any Rights pursuant to
this Section 11(p), the Company shall publicly announce
such action, and within 10 calendar days thereafter shall
give notice of any such exchange to all of the holders of
such Rights at their last addresses as they appear upon the
registry books of the Rights Agent; provided, however, that
the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. Any notice which
is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each
such notice of exchange shall state the method by which the
exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall
be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the
provisions of Section 11(a)(ii)) held by each holder of
Rights. In any exchange pursuant to this Section 11(p),
the Company, at its option, may substitute for any Common
Share exchangeable for a Right, (i) cash, (ii) debt
securities of the Company, (iii) other assets, or (iv) any
combination of the foregoing, in any event having an
aggregate value which the Directors of the Company shall
have determined in good faith to be equal to the current
per share market price of one Common Share (determined
pursuant to Section 11(e) hereof) on the Trading Day
<PAGE> 13
13
immediately preceding the date of exchange pursuant to this
Section 11(p). The Company shall not be required to issue
fractions of Common Shares or to distribute certificates
which evidence fractional Common Shares upon the exchange
of a Right. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current per share market price
of a whole Common Share (determined pursuant to Section
11(e) hereof) on the Trading Day immediately preceding the
date of exchange pursuant to this Section 11(p)."
22. To amend Section 17 to add at the end of the first sentence
thereof the following:
"or exchanged pursuant to the provisions of Section 11(p)
hereof"
23. To amend Section 23(a) to read in its entirety as follows:
"(a) Prior to the earlier of the Expiration Date and
the Final Expiration Date, the Directors of the Company
may, at their option, redeem all but not less than all of
the then-outstanding Rights at the Redemption Price at any
time prior to the Close of business on the later of (i) the
Distribution Date and (ii) the Share Acquisition Date."
24. To delete Sections 23(b) and 23(f) in their entirety, and
to renumber Sections 23(c), 23(d) and 23(e) as Sections 23(b),
23(c) and 23(d), respectively.
25. To delete the last two sentences of Section 23(c) (as
renumbered by item 24 of this Amendment) and to add at the end
of Section 23(c) the following:
"; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of
the redemption of the Rights. Any notice which is mailed
in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. The notice
of redemption mailed to the holders of Rights shall state
the method by which the payment of the Redemption Price
will be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the
current per share market price of the Common Shares
(determined pursuant to Section 11(e) hereof) at the time
of redemption) or any other form of consideration deemed
appropriate by the Directors of the Company (based upon the
fair market value of such other consideration, determined
by the Directors of the Company in good faith) or any
combination thereof."
<PAGE> 14
14
26. To amend Section 23(d) (as renumbered by item 24 of this
Amendment) to replace the clause "paragraphs (a) or (b) above,
or both," with the following:
"paragraph (a) above"
27. The form of Right Certificate attached as Exhibit A to the
Rights Agreement and the form of Summary of Rights attached as
Exhibit B to the Rights Agreement are hereby amended to reflect
the provisions of this Amendment.
28. This Amendment is effective as of October 28, 1991, and all
references to the Rights Agreement shall, as of such date, be
deemed to be references to the Rights Agreement, as amended by
this Amendment.
Very truly yours,
THE LUBRIZOL CORPORATION
By:
Name: L. E. Coleman
Title: Chairman & CEO
Agreed to and Accepted:
NATIONAL CITY BANK
By:
Name:
Title:
<PAGE> 1
EXHIBIT (4)(g)
THE LUBRIZOL CORPORATION
29400 Lakeland Boulevard
Wickliffe, Ohio 44092
October 28, 1991
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Corporate Trust Department
Re: Amendment No. 1 to Special Rights Agreement
Gentlemen:
Pursuant to Section 23 of the Special Rights Agreement, dated
as of October 31, 1988 ("Special Rights Agreement"), between The
Lubrizol Corporation (the "Company") and National City Bank (the
"Rights Agent"), the Company, by resolution adopted by unanimous
vote of its Directors, hereby amends the Special Rights Agreement
as follows (this Amendment No. 1 to the Special Rights Agreement
is hereinafter referred to as "this Amendment").
1. To amend Section 1(k) of the Special Rights Agreement to
read in its entirety as follows:
"(k) "Final Expiration Date" shall mean November 8,
1996."
2. To amend Section 7(A) of Exhibit A to the Special Rights
Agreement to read in its entirety as follows:
"(A) So long as any shares of Series A Stock are
outstanding, no shares of any series of Serial
Preferred Stock or other capital stock of the
Corporation may be issued by the Corporation except
for (i) Common Shares having the express terms
applicable to Common Shares on the Share Acquisition
Date (as defined in Section 8(B) of this Division C),
(ii) shares of capital stock which are Junior Stock
(as that term is defined in Section 2(B) of this
Division C), and (iii) shares of Series A Stock
issuable pursuant to and in accordance with the Rights
Agreement."
<PAGE> 2
2
3. The form of Right Certificate attached as Exhibit A to
the Special Rights Agreement and the form of Summary of Rights
attached as Exhibit B to the Special Rights Agreement are hereby
amended to reflect the provisions of this Amendment.
4. This Amendment is effective as of October 28, 1991, and
all references to the Special Rights Agreement shall, as of such
date, be deemed to be references to the Rights Agreement, as
amended by this Amendment.
Very truly yours,
THE LUBRIZOL CORPORATION
By:
Name: L. E. Coleman
Title: Chairman & CEO
Agreed to and Accepted:
NATIONAL CITY BANK
By
Name:
Title:
-2-
<PAGE> 1
EXHIBIT (10)(a)
THE LUBRIZOL CORPORATION
1975 EMPLOYEE STOCK OPTION PLAN
1. Purpose of Plan. The purpose of this Plan is to advance the interest of
The Lubrizol Corporation (hereinafter called the "Corporation") and its share-
holders by providing a means whereby employees of the Corporation and its sub-
sidiaries may be given an opportunity to purchase Common Shares (hereinafter
called "shares") of the Corporation under options granted under the Plan which
may be (i) options which are intended to qualify as "qualified stock options"
under Section 422 of the Internal Revenue Code of 1954, as amended,
(hereinafter called a "qualified stock option"), and (ii) options which are not
intended so to qualify under the Internal Revenue Code (hereinafter called a
"nonstatutory stock option"), to the end that the Corporation may retain
present personnel upon whose judg- ment, initiative and efforts the successful
conduct of the business of the Corporation largely depends, and may attract new
personnel.
2. Shares Subject to the Plan. The aggregate number of shares of the Corpo-
ration for which options may be granted under this Plan shall be 300,000;
provided, however, that whatever number of said shares shall not have been
issued pursuant to the exercise of options at the time of any stock split,
stock dividend or other change in the Corporation's capitalization shall be
appropriately and proportionately adjusted to reflect such stock dividend,
stock split or other change in capitalization. Such shares shall be made
available from authorized but unissued or reacquired shares of the Corporation.
If an option shall expire or terminate for any reason without being exercised
in full, the unpurchased shares shall become available for other options to be
granted under this Plan.
3. Stock Option Committee. This Plan shall be administered under the
supervision of a Stock Option Committee (hereinafter called the "Committee"),
composed of not less than three directors of the Corporation appointed by the
Board of Directors. The members of the Committee shall not be eligible, and
shall not have been eligible for a period of at least one year prior to their
appointment, to participate in this Plan or any other plan of the Corporation
or of any affiliate (as defined under the Securities Exchange Act of 1934) of
the Corporation- entitling
1
<PAGE> 2
the participants therein to acquire stock or qualified, restricted or employee
stock purchase plan options (as respectively defined in Sections 422, 423 and
424 of the Internal Revenue Code) of the Corporation or any affiliate of the
Corporation. Members of the Committee shall serve at the pleasure of the Board
of Directors, and may resign by written notice filed with the Chairman of the
Board or the Secretary of the Corporation. A vacancy in the membership of the
Committee shall be filled by the appointment of a successor member by the Board
of Directors. Until such vacancy is filled, the remaining members shall
constitute a quorum and the action at any meeting of a majority of the entire
Committee, or an action unanimously approved in writing, shall constitute
action of the Committee. Subject to the express provisions of this Plan. the
Committee shall have conclusive authority to construe and interpret the Plan
and any stock option agreement entered into there- under and to establish,
amend, and rescind rules and regulations for its administra- tion and shall
have such additional authority as the Board of Directors may from time to time
determine to be necessary or desirable.
4. Granting of Options. The Committee from time to time shall designate
from among the full-time key employees of the Corporation and its subsidiaries
those employees to whom qualified and nonstatutory stock options to purchase
shares shall be granted under this Plan and the number of shares which shall be
subject to each option so granted. The Committee shall direct an appropriate
officer of the Corporation to execute and deliver option agreements to
employees reflecting the grant of options. All actions of the Committee under
this Paragraph shall be conclusive; provided, however, that the aggregate
number of shares for which an option or options may be granted to any one
employee under this Plan shall not exceed 15,000 (subject to appropriate and
proportionate adjustment in accord- ance with Paragraph 2 hereof) and no
qualified stock option shall be granted to any employee if, after the granting
of such option, the aggregate of the shares specified by such option together
with the shares then owned by the employee, would constitute more than five
percent (5%) of the total combined voting power or value of all classes of
shares of the Corporation or of a parent or subsidiary of the Corporation. For
the purpose of the preceding sentence, an employee shall be deemed to own all
shares which are attributable to him under Sections 422(c) (3) and 425(d) of
the Internal Revenue Code (including, without limiting the generality of the
foregoing, shares which are owned by his brothers, sisters, spouse, ancestors
and lineal descendants).
2
<PAGE> 3
5. Option Period. The option rights granted under this Plan to any employee
shall expire on a date not later than five years in the case of a qualified
stock option and not later than ten years in the case of a nonstatutory stock
option after the date on which the option rights are so granted to him.
6. Option Price. The option price shall be fixed by the Committee and set
forth in the Option Agreement, which price in no case shall be less than the
per share fair market value of the outstanding shares of the Corporation at the
time that the option is granted, as determined by the Committee. The Committee
may fix such option price in terms of a formula and authorize one or more
officers of the Corporation to compute the price in accordance with that
formula. The date on which the Committee approves the granting of an option
shall be deemed the date on which the option is granted.
7. Option Agreement. The Option Agreement in which option rights are
granted to an employee shall be in the applicable form (consistent with this
Plan) from time to time approved by the Committee and shall be signed on behalf
of the Corporation by the Chairman of the Board, the President or any Vice
President of the Corporation, other than the employee who is a party thereto,
and shall be dated as of the date of the granting of the option, as determined
in Paragraph 6 hereof.
8. Amendment and Termination of the Plan. The Corporation, by action of its
Board of Directors, reserves the right to amend, modify or terminate at any
time this Plan, or, by action of the Committee with the consent of the
optionee, to amend, modify or terminate any outstanding option agreement,
except that the Corporation may not, without further shareholder approval,
increase the total number of shares as to which options may be granted under
the Plan (except increases attributable to the adjustments authorized in
Paragraph 2 hereof) or change the employees or class of employees eligible to
receive options, and no action shall be taken by the Corporation which will
impair the validity of any option then outstanding or which, with regard to
qualified stock options, will prevent such options issued or to be issued under
this Plan from being "qualified stock options" under Section 422 of the
Internal Revenue Code, or subsequent comparable statute, or prevent such
options issued pursuant to this Plan from meeting the requirements for
exemption from Section 16(b) of the Securities Exchange Act of 1934, or sub-
3
<PAGE> 4
sequent comparable statute, as set forth in Rule 16b-3 under said Act or
subsequent comparable rule.
9. Subsidiary. The term "subsidiary" as used herein shall mean any corpora-
tion in an unbroken chain of corporations beginning with the Corporation and
ending with the employer corporation if, at the time of the granting of the
option, each of the corporations other than the employer corporation owns stock
possessing 50 percent or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
10. Effective Date of Plan. The Plan shall be effective upon adoption of
the Plan by the Board of Directors of the Corporation. The Plan shall be
submitted to the shareholders of the Corporation for approval within one year
after its adoption by the Board of Directors, and if the Plan shall not be
approved by the shareholders within said period, the Plan shall be void and
of no effect. Any options granted under the Plan prior to the date of approval
by the shareholders shall be void if such shareholders' approval is not
obtained.
11. Expiration of Plan. Options may be granted under this Plan at any time
prior to January 26, 1985, on which date the Plan shall expire but without
affecting any options then outstanding.
4
<PAGE> 5
RESOLUTIONS OF
THE ORGANIZATION AND COMPENSATION COMMITTEE OF
THE LUBRIZOL CORPORATION BOARD OF DIRECTORS
June 19, 1989
WHEREAS, The Lubrizol Corporation 1975 Employee Stock Option Plan ("the
plan") was adopted by the Board of Directors of the Corporation on January 27,
1975 and approved by the shareholders of the Corporation on April 28, 1975;
WHEREAS, Nonstatutory options have been granted under the Plan pursuant to
a Nonstatutory Stock Option Agreement in a form previously approved by this
Committee;
WHEREAS, The Plan provides that it shall be administered under the
supervision of a committee (the "Committee") composed of not less than three
directors of the Corporation appointed by the Board of Directors;
WHEREAS, The current form of Nonstatutory Stock Option Agreement provides
for the payment by cash or check upon exercise of an option;
WHEREAS, The current form of Nonstatutory Stock Option Agreement provides
for the payment of applicable withholding taxes due on account of the exercise
of an option by remittance of cash to the Corporation and/or withholding of
salary by the Corporation;
WHEREAS, The Committee desires to allow for payment of applicable with-
holding taxes through retention by the Corporation of Lubrizol Common Shares
which would otherwise be received by an optionee upon exercise of an option;
The following resolutions are hereby adopted:
RESOLVED, Pursuant to the authority granted to this Committee in
Paragraph 8 of the Plan, that the form of Nonstatutory Stock Option
Agreement for the Plan be amended by deleting Section 12 in its
entirety and substituting therefor a new Section 12 in the form
attached hereto;
RESOLVED, That all elections that may be made by optionees who
are officers of the Corporation to use Lubrizol Common Shares to
satisfy their tax withholding obligations arising from the exercise
of options granted under the plan are hereby approved, subject to the
right of this Committee to disapprove any particular election or
revoke this advance approval; and
RESOLVED, That the Chairman of the Board, the President, any
Vice President, and any one of them is authorized to execute
amendments to outstanding Nonstatutory Stock Option Agreements, to
modify the form of Exercise of Option, and to take such other actions
as they deem necessary or appropriate, in order to effectuate the
modification described in, and carry out the intent and purpose of,
the foregoing resolutions.
<PAGE> 6
Section 12. Subject to the terms and conditions hereof, this option may
be exercised by delivering to Lubrizol at the office of its Chief Financial
Officer a written notice, signed by the person entitled to exercise the
option, of the election to exercise in whole or in part such option and
stating the number of Shares to be purchased. Such notice shall, as an
essential part thereof, be accompanied by the payment of the full purchase
price of the Shares then to be purchased. Optionee shall also pay, within the
time period specified by the Corporation, the amount, if any, required to be
withheld for Federal, state and local tax purposes on account of the exercise
of the option. Such payment may be made in cash (which may include
withholding from the optionee's next salary payment), in Lubrizol Common
Shares, or in any combination of cash and Lubrizol Common Shares, at the
election of the optionee; provided, however, that if any officer of the
Corporation desires to use Lubrizol Common Shares for payment of any portion
of this withholding tax, such officer may not make an election to do so within
six (6) months after the option is granted and must make any such election
either (i) during the period beginning on the third business day following the
release of the Corporation's quarterly or annual financial statements and
ending on the twelfth business day following such date, or (ii) no less than
six (6) months prior to the date such withholding tax must be determined (the
"Tax Date"). The Tax Date for an officer who exercises an option will be six
(6) months after the date of exercise of the option, unless he elects,
pursuant to Section 83 of the Internal Revenue Code, to have his Tax Date be
the date of exercise of the option. All elections must be made in writing and
be submitted to the Corporation's Chief Financial Officer. All such elections
by officers are irrevocable and are subject to the approval of the Committee.
If an optionee who is not an officer of the Corporation elects to satisfy his
withholding tax obligation with Lubrizol Common Shares, or if an optionee who
is an officer so elects and has a Tax Date that is the date of exercise of the
option, then such optionee may request that the Corporation withhold such
number of Shares from those Shares otherwise issuable upon his exercise of the
option. In the case of in optionee who is an officer with a Tax Date six (6)
<PAGE> 7
months after the date of exercise of the option, then such officer shall
receive the full number of Shares otherwise due upon exercise of the option,
but shall be unconditionally obligated to surrender to the Corporation, within
the time specified by the Corporation, such number of Lubrizol Common Shares
as is necessary to satisfy the withholding tax obligation when it is
determined. For purposes of determining the number of Lubrizol Common Shares
that are required to be withheld or surrendered to satisfy the withholding tax
obligation, Lubrizol Common Shares shall be valued at the average of the high
and low trading prices on the New York Stock Exchange on the date of exercise
of the option, or in the case of an officer, on the applicable Tax Date. If
the determination of the withholding tax would require the withholding or
surrender of a fractional Lubrizol Common Share, an electing optionee shall
remit cash in lieu of such fractional Share. Upon payment of any required tax
withholding, as described above, the option shall be deemed exercised as of
the date the Corporation received the notice of the election to exercise the
option. Payment of the full purchase price may be made, at the election of
the Optionee, (a) in cash, (b) in Lubrizol Common Shares, or (c) in any
combination of cash and Lubrizol Common Shares. Lubrizol Common Shares used
in payment of the purchase price shall be valued at the average of the high
and low trading prices on the New York Stock Exchange on the date of
exercise. Upon the proper exercise of the option, Lubrizol shall issue in the
name of the person exercising such option, and deliver to him a certificate or
certificates for the Shares purchased. The Optionee agrees that as holder of
the option he shall have no rights as a shareholder or otherwise in respect of
any of the Shares as to which this option shall not have been effectively
exercised as herein provided.
- 2 -
<PAGE> 1
EXHIBIT (10)(b)
THE LUBRIZOL CORPORATION
1985 EMPLOYEE STOCK OPTION PLAN
1. Purpose of Plan. The purpose of this Plan is to advance the
interests of The Lubrizol Corporation (hereinafter called the "Corporation")
and its shareholders by providing a means whereby employees of the Corporation
and its subsidiaries may be given an opportunity to purchase Common Shares
(hereinafter called "shares") of the Corporation under options and stock
appreciation rights granted under the Plan, to the end that the Corporation
may retain present personnel upon whose judgment, initiative and efforts the
successful conduct of the business of the Corporation largely depends, and may
attract new personnel. Some of the options granted under this Plan may be
options which are intended to qualify as "incentive stock options" under
Section 422A of the Internal Revenue Code of 1954, as amended (the "Code"), or
any successor provision and are hereinafter sometimes called "incentive stock
options."
2. Shares Subject to the Plan. The aggregate number of shares of
the Corporation for which options may be granted under this Plan shall be
1,500,000; provided, however, that whatever number of said shares shall remain
reserved for issuance pursuant to this Plan at the time of any stock split,
stock dividend or other change in the Corporation's capitalization shall be
appropriately and proportionately adjusted to reflect such stock dividend,
stock split or other change in capitalization. Shares issued pursuant to the
exercise of options granted hereunder shall be made available from authorized
but unissued shares of the Corporation or shares held by the Corporation as
treasury shares. Any shares for which an option is granted hereunder that are
released from such option for any reason other than the exercise of stock
appreciation rights granted hereunder shall become available for other options
to be granted under this Plan.
3. Administration of the Plan. This Plan shall be administered
under the supervision of a committee (hereinafter called the "Committee")
composed of not less than three directors of the Corporation appointed by the
Board of Directors. The members of the Committee shall not be eligible, and
shall not have been eligible for a period of at least one year prior to their
appointment, to participate in this Plan or any other plan of the Corporation
or any affiliate (as defined under the Securities Exchange Act of 1934) of the
Corporation entitling the participants therein to acquire stock, stock options
or stock appreciation rights of the Corporation or any affiliate of the
Corporation. Members of the Committee shall serve at the pleasure of the
Board of Directors, and may resign by written notice filed with the Chairman
of the Board or the Secretary of the Corporation. A vacancy in the membership
of the Committee shall be filled by the appointment of a successor member by
the Board of Directors. Until such vacancy is filled, the remaining members
shall constitute a quorum and the action at any meeting of a majority of the
entire Committee, or an action unanimously approved in writing, shall
constitute action of the Committee. Subject to the express provisions of this
Plan, the Committee shall have conclusive authority to construe and interpret
the Plan, any stock option agreement entered into hereunder, and any stock
<PAGE> 2
appreciation right granted hereunder and to establish, amend, and rescind
rules and regulations for the administration of this Plan and shall have such
additional authority as the Board of Directors may from time to time determine
to be necessary or desirable.
4. Granting of Options. The Committee from time to time shall
designate from among the full-time employees of the Corporation and its
subsidiaries those employees to whom options to purchase shares shall be
granted under this Plan, the type of option to be granted and the number of
shares which shall be subject to each option so granted. The Committee shall
direct an appropriate officer of the Corporation to execute and deliver Option
Agreements to employees reflecting the grant of options. All actions of the
Committee under this Paragraph shall be conclusive; provided, however, that
the aggregate fair market value (determined as of the date the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by any individual during any calendar year
(under this Plan or any other plan of the Corporation or any of its sub-
sidiaries) may not exceed $100,000. Any incentive stock option that is
granted to any employee who is, at the time the option is granted, deemed for
purposes of Section 422A of the Code, or any successor provision, to own
shares of the Corporation possessing more than ten percent (10%) of the
total combined voting power of all classes of shares of the Corporation or of
a parent or subsidiary of the Corporation, shall have an option price that
is at least 110 percent (110%) of the fair market value of the shares and
shall not be exercisable after the expiration of 5 years from the date it
is granted.
5. Granting of Stock Appreciation Rights. The Committee shall have
the discretion to grant to optionees stock appreciation rights in connection
with options to purchase shares on such terms and conditions as it deems
appropriate. The Committee shall direct an appropriate officer of the
Corporation to execute and deliver a Grant of Stock Appreciation Rights to
optionees reflecting the grant of stock appreciation rights. A stock
appreciation right will allow an optionee to surrender an option or portion
thereof and to receive payment from the Corporation in an amount equal to the
excess of the aggregate fair market value of the shares with respect to which
options are surrendered over the aggregate option price of such shares. A
stock appreciation right shall be exercisable no sooner than six months after
it is granted and thereafter at any time prior to its stated expiration date,
but only to the extent the related stock option right may be exercised.
Payment shall be made in shares, cash or a combination of shares and cash, as
provided in the Grant of Stock Appreciation Rights. Shares as to which any
option is so surrendered shall not be available for future option grants
hereunder. The Committee may grant stock appreciation rights concurrently
with the grant of an option or, in the case of an option which is not an
incentive stock option, with respect to an outstanding option.
6. Option Period. No option granted under this Plan may be
exercised later than ten years from the date of grant.
7. Option Price. The option price shall be fixed by the Committee
and set forth in the Option Agreement, which price in no case shall be less
than the per share fair market value of the outstanding shares of the
- 2 -
<PAGE> 3
Corporation on the date that the option is granted, as determined by the
Committee. The Committee may fix such option price in terms of a formula and
authorize one or more officers of the Corporation to compute the price in
accordance with that formula. Payment of the option price may be made in
cash, shares, or a combination of cash and shares, as provided in the Option
Agreement in effect from time to time. The date on which the Committee
approves the granting of an option shall be deemed the date on which the
option is granted.
8. Option Agreement. The Option Agreement pursuant to which option
rights are granted to an employee shall be in the applicable form (consistent
with this Plan) from time to time approved by the Committee and shall be
signed on behalf of the Corporation by the Chairman of the Board, the
President or any Vice President of the Corporation, other than the employee
who is a party thereto. The Option Agreement shall set forth the number of
shares which are subject to the option to purchase, the type of option
granted, the option price to be paid upon exercise, the manner in which the
option is to be exercised and the option price is to be paid, and the option
period, and may include such other terms not inconsistent with this Plan as
are from time to time approved by the Committee.
9. Grant of Stock Appreciation Rights. The Grant of Stock
Appreciation Rights pursuant to which stock appreciation rights are granted
shall be in the applicable form (consistent with this Plan) from time to time
approved by the Committee and shall be signed on behalf of the Corporation by
the Chairman of the Board, the President or any Vice President of the
Corporation, other than the employee to whom the grant is made. The Grant of
Stock Appreciation Rights shall set forth the option or options to which the
grant relates, the manner in which exercise and payment shall be made and the
period during which the stock appreciation rights are exercisable, and may
include such other terms not inconsistent with this Plan as are from time to
time approved by the Committee.
10. Transferability. No option or stock appreciation right shall be
transferable by the optionee except by will or the laws of descent and
distribution, and options and stock appreciation rights may be exercised
during the employee's lifetime only by him or his guardian or legal
representative.
11. Amendment and Termination of the Plan. The Corporation, by
action of its Board of Directors, reserves the right to amend, modify or
terminate at any time this Plan, or, by action of the Committee with the
consent of the optionee, to amend, modify or terminate any outstanding Option
Agreement or Grant of Stock Appreciation Rights, except that the Corporation
may not, without further shareholder approval, increase the total number of
shares as to which options may be granted under this Plan (except increases
attributable to the adjustments authorized in Paragraph 2 hereof), change the
employees or class of employees eligible to receive options or materially
increase the benefits accruing to participants under this Plan. Moreover, no
action shall be taken by the Corporation which will impair the validity of any
option or stock appreciation right then outstanding, or which will prevent the
options issued and stock appreciation rights granted pursuant to this Plan
from meeting the requirements for exemption from Section 16(b) of the
Securities Exchange Act of 1934, or subsequent comparable statute, as set
- 3 -
<PAGE> 4
forth in Rule 16b-3 under said Act or subsequent comparable rule, or which
will prevent any incentive stock option issued or to be issued under this Plan
from being an "incentive stock option" under Section 422A of the Code, or any
successor provision.
12. Subsidiary. The term "subsidiary" as used herein shall mean any
corporation in an unbroken chain of corporations beginning with the Corpora-
tion and ending with the employer corporation if, at the time of the granting
of the option, each of the corporations other than the employer corporation
owns stock possessing 50 percent or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
13. Effective Date of Plan. The Plan shall be effective upon
adoption of the Plan by the Board of Directors of the Corporation. The Plan
shall be submitted to the shareholders of the Corporation for approval within
one year after its adoption by the Board of Directors, and if the Plan shall
not be approved by the shareholders within said period, the Plan shall be void
and of no effect. Any options granted under the Plan prior to the date of
approval by the shareholders shall be void if such shareholders' approval is
not obtained.
14. Expiration of Plan. Options may be granted under this Plan at
any time prior to January 27, 1995, on which date the Plan shall expire but
without affecting any options then outstanding.
-4-
<PAGE> 5
FIRST AMENDMENT
TO
THE LUBRIZOL CORPORATION 1985
EMPLOYEE STOCK OPTION PLAN
WHEREAS, The Lubrizol Corporation 1985 Employee Stock Option Plan ("the
Stock Option Plan") was adopted on January 28, 1985; and
WHEREAS, the Stock Option Plan permits the Corporation to grant options
to purchase stock which are intended to qualify as "Incentive stock options"
under Section 422A of the Internal Revenue Code; and
WHEREAS, Section 422A of the Internal Revenue Code was amended by the
Tax Reform Act of 1986 and the Corporation desires to amend the Stock Option
Plan to conform to the changes made to Section 422A of the Internal Revenue
Code;
NOW, THEREFORE, pursuant to the provisions of Section 11 of the Stock
Option Plan and pursuant to the authority duly granted to the Board of
Directors, effective on the date hereof the Stock Option Plan shall be amended
in the following respect:
Section 4 is hereby amended and restated to read in its entirety as
follows:
4. Granting of Options. The Committee from time to time
<PAGE> 6
shall designate from among the full-time employees of the
Corporation and its subsidiaries those employees to whom
options to purchase shares shall be granted under this
Plan, the type of option to be granted and the number of
shares which shall be subject to each option so granted.
The Committee shall direct an appropriate officer of the
Corporation to execute and deliver Option Agreements to
employees reflecting the grant of options. All actions of
the Committee under this Paragraph shall be conclusive;
provided, however, that the aggregate fair market value
(determined as of the date the option is granted) of the
stock with respect to which incentive stock options are
exercisable for the first time by any individual during any
calendar year (under this Plan or any other plan of the
Corporation or any of its subsidiaries) may not exceed
$100,000. Any incentive stock option that is granted to
any employee who is, at the time the option is granted,
deemed for purposes of Section 422A of the Code, or any
successor provision, to own shares of the Corporation
possessing more than ten percent (10%) of the total
combined voting Power of all classes of shares of the
Corporation or of a parent or subsidiary of the
Corporation, shall have an option price that is at least
110 percent (110%) of the fair market value of the shares
and shall not be exercisable after the expiration of 5
years from the date it is granted.
<PAGE> 7
Pursuant to a Resolution of its Board of Directors dated June 22, 1987, The
Lubrizol Corporation hereby amends the Stock Option Plan this 22nd day of
June, 1987.
The Lubrizol Corporation
By:
J. I. Rue
Secretary
<PAGE> 1
EXHIBIT (10)(c)
THE LUBRIZOL CORPORATION
1981 KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
1. Purpose of Plan. The Purpose of this Plan is to advance the interest
of The Lubrizol Corporation (hereinafter called the "Corporation") and its
shareholders by providing a means whereby employees of the Corporation and its
subsidiaries may be given an opportunity to purchase Common Shares
(hereinafter called "shares") of the Corporation under options and stock
appreciation rights granted under the Plan, to the end that the Corporation
may retain present personnel upon whose judgment, initiative and efforts the
successful conduct of the business of the Corporation largely depends, and may
attract new personnel. The options granted under the Plan shall be options
which are intended to qualify as "incentive stock options" under Section 422A
of the Internal Revenue Code of 1954, as amended (the "Code"), or any
successor provision, and are hereinafter sometimes called "incentive stock
options".
2. Shares Subject to the Plan. The aggregate number of shares of the
Corporation for which options may be granted under this Plan shall be 400,000;
provided, however, that whatever number of shares shall remain reserved for
issuance pursuant to the Plan at the time of any stock split, stock dividend
or other change in the Corporation's capitalization shall be appropriately and
proportionately adjusted to reflect such stock dividend, stock split or other
change in capitalization. Such shares shall be made available from autho-
rized but unissued or reacquired shares of the Corporation. Any shares for
which an option is granted hereunder that are released from such option for any
reason other than the exercise of stock appreciation rights granted hereunder
shall become available for other options to be granted under this Plan.
3. Administration of the Plan. This Plan shall be administered under the
supervision of an Officer Nomination and Compensation Committee (hereinafter
called the "Committee"), composed of not less than three directors of the
Corporation appointed by the Board of Directors. The members of the Committee
shall not be eligible, and shall not have been eligible for a period of at
least one year prior to their appointment, to participate in this Plan or
any other plan of the Corporation or of any affiliate (as defined under the
Securities Exchange Act of 1934) of the Corporation entitling the participants
therein to acquire stock, stock options or stock appreciation rights of the
Corporation or an affiliate of the Corporation. Members of the Committee shall
serve at the pleasure
<PAGE> 2
of the Board of Directors and may resign by written notice filed with the
Chairman of the Board or the Secretary of the Corporation. A vacancy in the
membership of the Committee shall be filled by the appointment of a successor
member of the Board of Directors. Until such vacancy is filled, the remaining
members shall constitute a quorum and the action at any meeting of a majority
of the entire Committee, or an action unanimously approved in writing, shall
constitute action of the Committee. Subject to the express provisions of this
Plan, the Committee shall have conclusive authority to construe and interpret
the Plan, any stock option agreement entered into thereunder, and any stock
appreciation right granted thereunder and to establish, amend, and rescind
rules and regulations for its administration and shall have such additional
authority as the Board of Directors may from time to time determine to be
necessary or desirable.
4. Granting of Options. The Committee from time to time shall designate
from among the full-time key employees of the Corporation and its subsidiaries
those employees to whom incentive stock options to purchase shares shall be
granted under this Plan and the number of shares which shall be subject to
each option so granted. The Committee shall direct an appropriate officer of
the Corporation to execute and deliver option agreements to employees
reflecting the grant of options. All actions of the Committee under this
Paragraph shall be conclusive; provided, however, the aggregate fair market
value (determined as of the date the option is granted) of shares for which
incentive stock options are granted to an employee in any calendar year (under
this Plan or any other plan of the Corporation which provides for the granting
of incentive stock options) may not exceed $100,000 plus any unused limit
carryover to such year permitted by Section 422A of the Code, or any successor
provision, and provided further that no incentive stock option shall be
granted to any employee who is, at the time the option is granted, deemed for
purposes of Section 422A of the Code, or any successor provision, to own
shares of the Corporation possessing more than ten percent (10%) of the total
combined voting power of all classes of shares of the Corporation or of a
parent or subsidiary of the Corporation.
5. Granting of Stock Appreciation Rights. The Committee shall have the
discretion to grant to optionees, concurrently with the grant of an option,
stock appreciation rights in connection with incentive stock options on such
terms and conditions as it deems appropriate. The Committee shall direct an
appropriate officer of the Corporation to execute and deliver stock
appreciation right grants to optionees reflecting the grant of stock
appreciation rights. A stock appreciation right will allow an optionee to
surrender an option or portion thereof and to receive payment from the
Corporation in an amount equal to the excess of the aggregate fair market
value of the optioned shares that are
<PAGE> 3
surrendered over the aggregate option price of such shares. Payment may be
made in shares, cash or a combination of shares and cash, as provided in the
grant. Shares as to which any option is so surrendered shall not be available
for future options. The Committee may select employees to whom stock
appreciation rights will be granted and determine the number of stock
appreciation rights to be granted to each such employee.
6. Option Period. No option granted under this Plan may be exercised later
than ten years from the date of grant.
7. Option Price. The option price shall be fixed by the Committee and set
forth in the Option Agreement, which price in no case shall be less than the
per share fair market value of the outstanding shares of the Corporation on
the date that the option is granted, as determined by the Committee. The
Committee may fix such option price and authorize one or more officers of the
Corporation to compute the price. The date on which the Committee approves the
granting of an option shall be deemed the date on which the option is granted.
8. Option Agreement. The Option Agreement in which option rights are
granted to an employee shall be in the applicable form (consistent with this
Plan) from time to time approved by the Committee and shall be signed on
behalf of the Corporation by the Chairman of the Board, the President or any
Vice President of the Corporation, other than the employee who is a party
thereto, and shall be dated as of the date of the granting of the option, as
determined in Paragraph 7 hereof.
9. Exercise of Stock Appreciation Rights. A stock appreciation right shall
be exercisable no sooner than six months after it is granted and thereafter
at any time prior to its stated expiration date; but only to the extent the
related stock option right may be exercised. No option or stock appreciation
right shall be transferable by the optionee except by will or the laws of
descent and distribution, and the options and stock appreciation rights may
be exercised during the employee's lifetime only by him or his guardian or
legal representative.
10. Amendment and Termination of the Plan. The Corporation, by action of
its Board of Directors, reserves the right to amend, modify or terminate at
any time this Plan, or, by action of the Committee with the consent of the
optionee, to amend, modify or terminate any outstanding option agreement or
grant of stock appreciation rights, except that the Corporation may not,
without further shareholder approval, increase the total number of shares as
to which options may be granted under the Plan (except increases
<PAGE> 4
attributable to the adjustments authorized in Paragraph 2 hereof), change the
employees or class of employees eligible to receive options or materially
increase the benefits accruing to participants under the Plan. Moreover, no
action may be taken by the Corporation which will impair the validity of any
option or stock appreciation right then outstanding or which will prevent the
options issued or to be issued under this Plan from being "incentive stock
options" under Section 422A of the Code, or any successor provision, or
prevent options issued and stock appreciation rights granted pursuant to this
Plan from meeting the requirements for exemption from Section 16(b) of the
Securities Exchange Act of 1934, or subsequent comparable statute, as set forth
in Rule 16b-3 under said Act or subsequent comparable rule.
11. Subsidiary. The term "subsidiary" as used herein shall mean any
corporation in any unbroken chain of corporations beginning with the
Corporation and ending with the employer corporation if, at the time of the
granting of the option, each of the corporations other than the employer
corporation owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
12. Effective Date of Plan. The Plan shall be effective upon adoption of
the Plan by the Board of Directors of the Corporation. The Plan shall be
submitted to the shareholders of the Corporation for approval within one year
after its adoption by the Board of Directors and, if the Plan shall not be
approved by the shareholders within said period, the Plan shall be void and of
no effect. Any options granted under the Plan prior to the date of approval by
the shareholders shall be void if such shareholders' approval is not obtained.
13. Expiration of Plan. Options may be granted under this Plan at any time
prior to September 28, 1991, on which date the Plan shall expire but without
affecting any options then outstanding.
<PAGE> 1
EXHIBIT (10)(d)
THE LUBRIZOL CORPORATION
AMENDED DEFERRED COMPENSATION PLAN FOR DIRECTORS
1. Purpose. The purpose of this Amended Deferred
Compensation Plan For Directors (the "Plan") is to permit any
member of the Board of Directors (the "Participant") of The
Lubrizol Corporation (the "Company") to defer all or a portion of
the compensation to be received as a director until after the
Participant ceases to be a director, all as provided in this Plan.
2. Administration. The Plan shall be administered by
the Organization and Compensation Committee of the Board of
Directors of the Company (the "Committee"). The Committee's
interpretation and construction of all provisions of this Plan
shall be binding and conclusive. In the event that a Participant
is a member of the Committee, such Participant shall not
participate in any decision of the Committee relating to that
Participant's participation in this Plan.
3. Right to Defer Compensation. Any director of the
Company may, at any time, elect to defer under this Plan all, or
such portion as the director may designate, of (i) that director's
annual retainer fee and/or (ii) the attendance fees for attending
directors' meetings or committees thereof. The annual retainer
fee, for this purpose, shall be deemed to be earned equally and
ratably on a calendar quarterly basis during the calendar year.
Attendance fees are deemed to be earned when the director attends
the meeting for which the attendance fee is paid. The election
under this paragraph 3 shall take effect on the first day of the
calendar quarter following the month in which the election is made.
Such election under this Plan shall be made by written notice
delivered to the Chief Financial Officer of the Company specifying
(i) the length of time, not less than one year, during which the
election shall apply, (ii) the portion of the retainer fee and/or
the attendance fee to be deferred for such year or years, and (iii)
the periodic payment schedule selected subject to the installment
period limitation and the computation of each installment payment
to the Participant pursuant to, and in accordance with, paragraph
5. A director may designate that the election shall remain in
effect until the director, on a prospective basis, withdraws the
election or changes the amount to be deferred; provided that, if
the director changes only the amount to be deferred, the periodic
payment schedule selected under clause (iii) of the preceding
sentence shall continue to apply. Any notice of withdrawal of the
election or change in the amount to be deferred shall be effective
on the first day of the calendar quarter following the month in
which such notice is given to the Company's Chief Financial
Officer.
4. Deferred Compensation Accounts. On the last day of
each calendar month in which compensation deferred under this Plan
<PAGE> 2
would have been payable to a Participant in the absence of an
election under this Plan to defer payment thereof, the amount of
such deferred compensation shall be credited to a Deferred
Compensation Account (the "Participant's Account") which shall be
established and maintained for such Participant as a special ledger
account on the Company's books. Interest shall accrue during each
calendar quarter on the month-end balance in each Participant's
Account at the Federal Reserve 90-Day Composite Rate in effect for
the previous calendar quarter and such interest amount so
determined shall be credited monthly to such Participant's Account.
5. Payment of Deferred Compensation. The total amount
credited to a Participant's Account shall be payable to the
Participant, either in a lump sum or in periodic installments, over
such period, not exceeding ten years, as the Participant shall have
selected pursuant to clause (iii) of paragraph 3. Such periodic
payments shall begin or the lump sum payment shall be made, as the
case may be, at such time, not more than twelve (12) months after
the Participant ceased to be a director of the Company, as the
Participant may have selected pursuant to paragraph 3 at the time
of entering the Plan. The amount of any installment payable to a
Participant shall be determined by dividing the balance of such
Participant's Account by the number of periodic installments
(including the current installment) remaining to be paid. Until a
Participant's Account has been completely distributed, the balance
thereof shall bear interest calculated as provided in paragraph 4
above. In the event a Participant dies prior to receiving payment
of the entire amount of that Participant's Account, the unpaid
balance shall be paid to such beneficiary as the Participant may
have designated in writing to the Chief Financial Officer of the
Company as the beneficiary to receive any such post-death
distribution under this Plan or, in the absence of such written
designation, to the Participant's legal representative or
beneficiary designated in the Participant's last will to receive
such distributions. Distributions subsequent to the death of a
Participant may be made either in a lump sum or in periodic
installments in such amounts and over such period, not exceeding
ten years from the date of death, as the Committee may direct and
the amount of each installment shall be computed as provided in the
third sentence of this paragraph 5.
6. Acceleration of Payments. The Committee may
accelerate the distribution of a Participant's Account for reasons
of severe financial hardship. For purposes of this Plan, severe
financial hardship shall be deemed to exist in the event the
Committee determines that a Participant needs a distribution to
meet immediate and heavy financial needs resulting from a sudden or
unexpected illness or accident of the Participant or a member of
his/her family, loss of the Participant's property due to casualty,
or other similar extraordinary and unforeseeable circumstance
arising as a result of events beyond the control of the
-2-
<PAGE> 3
Participant. A distribution based on financial hardship shall not
exceed the amount required to meet the immediate financial need
created by the hardship.
7. Non-assignability. None of the rights or interests
in the Participant's Account shall, prior to actual payment or
distribution pursuant to this Plan, be assignable or transferable
in whole or in part, either voluntarily or by operation of law or
otherwise, and shall not be subject to payment of debts by
execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner; provided that, upon the occurrence of any such
assignment or transfer or attempted assignment or transfer, all
payments under paragraph 5 shall be payable in the sole and
unrestricted judgment and discretion of the Committee, as to time
and amount, and shall be distributable to the person who would have
received the payment but for this paragraph 7 only at such time or
times and in such amounts as the Committee, from time to time,
shall determine.
8. Plan to be Unfunded. The Company shall be under no
obligation to segregate or reserve any funds or other assets for
purposes relating to this Plan and no Participant shall have any
rights whatsoever in or with respect to any funds or other assets
held by the Company for purposes of this Plan or otherwise.
Participants' Accounts maintained for purposes of this Plan shall
merely constitute bookkeeping entries on records of the Company and
shall not constitute any allocation whatsoever of any assets of the
Company or be deemed to create any trust or special deposit with
respect to any of the Company's assets.
9. Amendment. The Board of Directors of the Company
may, from time to time, amend or terminate this Plan, provided that
no such amendment or termination of the Plan shall adversely affect
the Participant's Account as it existed immediately before such
amendment or termination or the manner of distribution thereof,
unless such Participant shall have consented thereto in writing.
-END-
-3-
<PAGE> 1
EXHIBIT (10)(e)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement"), originally entered into as of July 27, 1987 and
as amended and restated effective as of July 24, 1989, 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 its 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
<PAGE> 2
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;
(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
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<PAGE> 3
(v) If during any period of two 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 l(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, 1994 and (ii) the expiration of the Period of
Employment (as that term is hereinafter defined); provided,
however, that (A) commencing on January 1, 1990 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
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<PAGE> 4
(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.
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, or (iii) 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
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<PAGE> 5
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 (ii) an annual 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
three 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
one 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 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
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
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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) "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;
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<PAGE> 7
(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;
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)(iii) 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
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<PAGE> 8
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
three 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
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
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<PAGE> 9
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.
(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)(ii) 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.
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<PAGE> 10
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 five 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):
(i) 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 the present value (using a discount rate
required to be utilized for purposes of computations
under 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 (the "Discount Rate")) of the sum of
(A) the aggregate Base Pay (at the highest rate in
effect for any period prior to the Termination Date)
for each remaining year or partial year of the Period
of Employment which the Executive would have received
had such termination or breach not occurred, plus (B)
the aggregate Incentive Pay (determined in accordance
with the standards set forth in Section 3(a)(ii)
hereof), which the Executive would have received
pursuant to this Agreement or any agreement, policy,
plan, program or arrangement referred to therein
during the remainder of the Period of Employment had
his employment continued for the remainder of the
Period of Employment (in which event the Executive
will no longer be entitled to Incentive Pay under any
such agreement, policy, plan, program or arrangement
except for Incentive Pay to which he was entitled for
service prior to the Termination Date).
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(ii) For the remainder of the Period of
Employment, 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 such period
following the Executive's Termination Date, and any
such benefits actually received by the Executive shall
be reported by the Executive to the Company.
Notwithstanding the foregoing, the remainder of the
Period of Employment 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)(i) hereof paid to him on a quarterly or monthly
basis during the remainder of the Period of Employment.
(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)(ii) hereof.
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<PAGE> 12
(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.
(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")
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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 five 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 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 five 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
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<PAGE> 14
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 five 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 income tax, including interest and
penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without
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<PAGE> 15
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.
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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)(ii) hereof.
8. Competitive Activity: During a period ending one
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
-16-
<PAGE> 17
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 two years thereafter
and if, notwithstanding the Company's complete discharge of
such obligations, such Letter of Credit shall be terminated or
-17-
<PAGE> 18
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.
-18-
<PAGE> 19
(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.
(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
five 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
-19-
<PAGE> 20
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.
18. Prior Agreement: This Agreement amends and
restates the Agreement, dated as of July 27, 1987 (the "Prior
Agreement"), between the Company and the Executive, which Prior
Agreement shall, without further action, be superseded as of
the date hereof.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered as of the date
first above written.
THE LUBRIZOL CORPORATION
By
-20-
<PAGE> 1
EXHIBIT (10)(f)
THE LUBRIZOL CORPORATION
EXCESS DEFINED BENEFIT PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Additional Definitions 2
ARTICLE II
SUPPLEMENTAL PENSION BENEFIT 2
2.1 Eligibility 2
2.2 Amount 2
2.3 Payment 2
ARTICLE III
PAYMENT OF BENEFITS 3
3.1 Payment to Participant 3
3.2 Payment in the Event of Death Prior to
Commencement of Distribution 3
ARTICLE IV
ADMINISTRATION 3
ARTICLE V
AMENDMENT AND TERMINATION 4
ARTICLE VI
MISCELLANEOUS 4
6.1 Non-Alienation of Retirement Rights or Benefits 4
6.2 Plan Non-Contractual 5
6.3 Trust 5
6.4 Interest of a Participant 5
6.5 Controlling Status 6
6.6 Claims of Other Persons 6
6.7 Severability 6
6.8 Governing Law 6
</TABLE>
<PAGE> 3
THE LUBRIZOL CORPORATION
EXCESS DEFINED BENEFIT PLAN
The Lubrizol Corporation hereby establishes, effective as of
January 1, 1986, The Lubrizol Corporation Excess Defined Benefit Plan (the
"Plan") for the purpose of providing supplemental benefits to certain
employees, as permitted by Section 3(36) of the Employee Retirement Income
Security Act of 1974.
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. For the purposes hereof, the following words
and phrases shall have the meanings indicated, unless a different meaning is
plainly required by the context:.
(a) Code. The term "Code" shall mean the Internal Revenue Code
as amended from time to time. Reference to a section of the Code shall
include such section and any comparable section or sections of any future
legislation that amends, supplements, or supersedes such section.
(b) Company. The term "Company" shall mean The Lubrizol
Corporation, an Ohio corporation, its corporate successors and the surviv-
ing corporation resulting from any merger of The Lubrizol Corporation with
any other corporation or corporations.
(c) Lubrizol Pension Plan. The term "Lubrizol Pension Plan"
shall mean The Lubrizol Corporation Revised Pension Plan as the same shall
be in effect on the date of a Participant's retirement, death, or other
termination of employment.
(d) Participant. The term "Participant" shall mean any person
employed by the Company who is designated by the Board of Directors of the
Company to participate in the Plan and who has not waived participation in
the Plan.
(e) Plan. The term "Plan" shall mean the excess defined benefit
pension plan as set forth herein, together with all amendments hereto,
which Plan shall be called "The Lubrizol Corporation Excess Defined
Benefit Plan."
<PAGE> 4
(f) Trust. The term "Trust" shall mean The Lubrizol
Corporation Excess Defined Benefit Plan Trust established pursuant to the
Trust Agreement.
(g) Trust Agreement. The term "Trust Agreement" shall mean The
Lubrizol Corporation Excess Defined Benefit Plan Trust Agreement.
1.2. Additional Definitions. All other words and phrases used
herein shall have the meanings given them in the Lubrizol Pension Plan, unless
a different meaning is clearly required by the context.
ARTICLE II
SUPPLEMENTAL PENSION BENEFIT
2.1 Eligibility. A Participant who retires, dies, or otherwise
terminates his employment with the Company under conditions which make such
Participant eligible for a benefit under the Lubrizol Pension Plan and whose
benefits under the Lubrizol Pension Plan are limited by Section 415 of the
Code, shall be eligible for a supplemental pension benefit determined in
accordance with the provisions of Section 2.2.
2.2 Amount. Subject to the provisions of Article III, the
monthly supplemental pension benefit payable to an eligible Participant shall
be such an amount which when added to the monthly pension payable (before any
reduction applicable to an optional method of payment) to such Participant
under the Lubrizol Pension Plan, equals the monthly pension benefit which
would have been payable (before any reduction applicable to an optional method
of payment) under the Lubrizol Pension Plan to the Participant, if the limita-
tions of Section 415 of the Code were not in effect.
2.3 Payment. The terms of payment of the supplemental pension
benefit shall be identical to those specified in the Lubrizol Pension Plan for
the type of benefit the Participant receives under the Lubrizol Pension Plan.
- 2 -
<PAGE> 5
ARTICLE III
PAYMENT OF BENEFITS
3.1 Payment to Participant. Payment of a supplemental pension
benefit under the Plan to a Participant shall be made in the same manner and
form applicable to the benefit payable to him under the Lubrizol Pension Plan.
The amount of the supplemental pension benefit payable to a Participant shall
be adjusted to reflect the method of payment, pursuant to the assumptions then
in use under the Lubrizol Pension Plan.
3.2 Payment in the Event of Death Prior to Commencement of
Distribution. If a Participant dies prior to commencement of benefits under
the Plan, his surviving spouse, if any, shall be eligible for a survivor bene-
fit which is equal to one-half of the reduced monthly benefit the Participant
would have received under the Plan if the Participant had retired on the day
before his death and had elected to receive his benefit under the Lubrizol
Pension Plan in a 50 percent joint and survivor annuity form. In making the
determinations and reductions required in this Section 3.2, the Company shall
apply the assumptions then in use under the Lubrizol Pension Plan. For pur-
poses hereof, a surviving spouse shall only be eligible for a benefit under
this Section 3.2, if such spouse had been married to the deceased Participant
for at least one year as of the date of the Participant's death.
ARTICLE IV
ADMINISTRATION
The Company shall be responsible for the general administration
of the Plan, for carrying out the provisions hereof, and for making, or
- 3 -
<PAGE> 6
causing the Trust to make, any required supplemental benefit payments. The
Company shall have all such powers as may be necessary to carry out the provi-
sions of the Plan, including the power to determine all questions relating to
eligibility for and the amount of any supplemental pension benefit and all
questions pertaining to claims for benefits and procedures for claim review;
to resolve all other questions arising under the Plan, including any questions
of construction; and to take such further action as the Company shall deem
advisable in the administration of the Plan. The Company may delegate any of
its powers, authorities, or responsibilities for the operation and administra-
tion of the Plan to any person or committee so designated in writing by it and
may employ such attorneys, agents, and accountants as it may deem necessary or
advisable to assist it in carrying out its duties hereunder. The actions
taken and the decisions made by the Company hereunder shall be final and bind-
ing upon all interested parties.
ARTICLE V
AMENDMENT AND TERMINATION
The Company reserves the right to amend or terminate the Plan at
any time by action of its Board of Directors or its representative or deleg-
ate; provided, however, that no such action shall adversely affect any Parti-
cipant who is receiving supplemental pension benefits under the Plan, unless
an equivalent benefit is provided under the Lubrizol Pension Plan or another
plan sponsored by the Company.
ARTICLE VI
MISCELLANEOUS
6.1 Non-Alienation of Retirement Rights or Benefits. No Par-
ticipant shall encumber or dispose of his right to receive any payments
- 4 -
<PAGE> 7
hereunder, which payments or the right thereto are expressly declared to be
non-assignable and non-transferable. If a Participant attempts to assign,
transfer, alienate or encumber his right to receive any payment hereunder or
permits the same to be subject to alienation, garnishment, attachment, execu-
tion, or levy of any kind, then thereafter during the life of such Partici-
pant, and also during any period in which any Participant is incapable in the
judgment of the Company of attending to his financial affairs, any payments
which the Company is required to make hereunder may be made, in the discretion
of the Company, directly to such Participant or to any other person for his
use or benefit or that of his dependents, if any, including any person fur-
nishing goods or services to or for his use or benefit or the use or benefit
of his dependents, if any. Each such payment may be made without the inter-
vention of a guardian, the receipt of the payee shall constitute a complete
acquittance to the Company with respect thereto, and the Company shall have no
responsibility for the proper allocation thereof.
6.2 Plan Non-Contractual. Nothing herein contained shall be
construed as a commitment or agreement on the part of any person employed by
the Company to continue his employment with the Company, and nothing herein
contained shall be construed as a commitment on the part of the Company to
continue the employment or the annual rate of compensation of any such person
for any period, and all Participants shall remain subject to discharge to the
same extent as if the Plan had never been established.
6.3 Trust. In order to provide a source of payment for its
obligations under the Plan, the Company has established the Trust, the terms
of which are governed by the Trust Agreement.
6.4 Interest of a Participant. Subject to the provisions of
the Trust Agreement, the obligation of the Company under the Plan to provide a
- 5 -
<PAGE> 8
Participant with a supplemental pension benefit constitutes the unsecured
promise of the Company to make payments as provided herein, and no person
shall have any interest in, or a lien or prior claim upon, any property of the
Company.
6.5 Controlling Status. No Participant shall be eligible for a
benefit under the Plan unless such Participant is a Participant on the date of
his retirement, death, or other termination of employment.
6.6 Claims of Other Persons. The provisions of the Plan shall
in no event be construed as giving any person, firm or corporation any legal
or equitable right as against the Company, its officers, employees, or direc-
tors, except any such rights as are specifically provided for in the Plan or
are hereafter created in accordance with the terms and provisions of the Plan.
6.7 Severability. The invalidity or unenforceability of any
particular provision of the Plan shall not affect any other provision hereof,
and the Plan shall be construed in all respects as if such invalid or unen-
forceable provision were omitted herefrom.
6.8 Governing Law. The provisions of the Plan shall be
governed and construed in accordance with the laws of the State of Ohio.
* * *
EXECUTED at Wickliffe, Ohio, this 4th day of December , 1986.
THE LUBRIZOL CORPORATION
By
Title: President
And
Title: Secretary
- 6 -
<PAGE> 9
FIRST AMENDMENT
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED BENEFIT PLAN
WHEREAS, the Lubrizol Corporation Excess Defined Benefit Plan
(hereinafter referred to as the "Plan") was established effective as of
January 1, 1986, by The Lubrizol Corporation (hereinafter referred to as
the "Company") for the benefit of certain eligible employees of the Company
whose benefits under The Lubrizol Corporation Pension Plan (hereinafter
referred to as the "Lubrizol Pension Plan") were limited by law; and
WHEREAS, the Company desires to amend the Plan to reflect further
limits on benefits under the Lubrizol Pension Plan imposed by the Tax
Reform Act of 1986, as amended;
NOW, THEREFORE, effective as of January 1, 1989, the Plan is
hereby amended in the respects hereinafter set forth.
1. Paragraph (d) of Section 1.1 of the Plan is hereby amended to
provide as follows:
(d) Participant. The term "Participant" shall
mean any person employed by the Company who is
listed on Appendix A attached hereto or who is
designated by the Board of Directors of the Company
to participate in the Plan, and who has not waived
participation in the Plan.
2. Section 2.1 of the Plan is hereby amended to provide as
follows:
2.1 Eligibility. A Participant who retires,
dies, or otherwise terminates his employment with
the Company and its subsidiaries and
(i) whose benefits under the Lubrizol Pension
Plan are limited by the provisions of
Section 401(a)(17) or 415 of the Code, or
(ii) who either was a Participant on January
1, 1989 or had attained age 55 on January
1, 1989 and thereafter became a Partici-
pant, and whose benefits under the
Lubrizol Pension Plan are curtailed due
to the revision of the pension benefit
formula, effective as of January 1, 1989,
to comply with the requirements of the
Tax Reform Act of 1986, as amended, shall
be eligible for a supplemental pension
benefit determined in accordance with the
provisions of Section 2.2.
<PAGE> 10
3. Section 2.2 of the Plan is hereby amended to provide as
follows:
2.2 Amount. Subject to the provisions of
Article III, the monthly supplemental pension
benefit payable to an eligible Participant shall be
an amount which when added to the monthly pension
payable to such Participant under the Lubrizol
Pension Plan (prior to any reduction applicable to
an optional method of payment) equals the monthly
pension benefit which would have been payable under
the Lubrizol Pension Plan (prior to any reduction
applicable to an optional method of payment and
adjusted for any amount payable under The Lubrizol
Corporation Excess Defined Contribution Plan which
is attributable to The Lubrizol Corporation
Employees' Profit-Sharing Plan and which would have
affected the benefit that the Participant would
have received under the Lubrizol Pension Plan had
it been payable from The Lubrizol Corporation
Employees' Profit-Sharing Plan) if the limitations
of Sections 401(a)(17) and 415 of the Code were not
in effect and if he is a Participant described in
Section 2.1 (ii)), and his benefit had not been
curtailed due to the revision of the Lubrizol
Pension Plan effective as of January 1989, to
comply with the provisions of the Tax Reform Act of
1986, as amended.
4. Section 3.1 of the Plan is hereby amended to provide as
follows:
3.1 Payment to Participant. Payment of a
supplemental pension benefit under the Plan to a
Participant shall be made in the same manner and
form applicable to the benefit payable to him under
the Lubrizol Pension Plan. The amount of the
supplemental pension benefit payable to a
Participant shall be adjusted to reflect the method
of payment, pursuant to the assumptions then in use
under the Lubrizol Pension Plan; provided, however,
that in the event that a Participant's supplemental
pension benefit is to be distributed as a single
sum amount, the interest rate used to discount the
liability of such benefit shall be the arithmetic
average of the 7-day compound yield rates for the
six full calendar months prior to the month as of
which the benefit is payable as published in
Donoghue's Tax-Free MONEY FUND AVERAGE which is
reported weekly in Barron's. The rate with respect
to any month shall be the rate reported in the
first issue of Barron's published during such
month.
- 2 -
<PAGE> 11
5. The Plan is hereby amended by adding Appendix A attached
hereto at the end thereof.
EXECUTED at Wickliffe, Ohio, this 27th day of February , 1991.
THE LUBRIZOL CORPORATION
Title: CEO AND CHAIRMAN OF THE BOARD
And
Title:
<PAGE> 12
APPENDIX A
Officers of the Company who are Participants in the Plan.
<TABLE>
<S> <C> <C>
1. L. E. Coleman 7. W. R. Jones
2. W. G. Bares 8. J. R. Cooper
3. W. D. Manning 9. R. A. Andreas
4. R. Y. K. Hsu 10. J. R. Senz
5. G. R. Hill 11. J. R. Ahern
6. R. W. Scher 12. K. H. Hopping
</TABLE>
<PAGE> 13
SECOND AMENDMENT
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED BENEFIT PLAN
WHEREAS, The Lubrizol Corporation Excess Defined Benefit Plan
(the "Plan") was established effective as of January 1, 1986, by
The Lubrizol Corporation (the "Company") for the benefit of certain
eligible employees of the Company whose benefits under The Lubrizol
Corporation Pension Plan (the "Pension Plan") were limited by law;
and
WHEREAS, The Company desires to amend the Plan to expand the
definition of Participant.
NOW, THEREFORE, the Plan is hereby amended in the respects
hereinafter set forth.
1. Effective June 22, 1992, paragraph (d) of Section 1.1 of
the Plan is hereby amended to provide as follows:
(d) Participant. The term "Participant" shall
mean any person employed by the Company who is listed on
Appendix A attached hereto, or who is designated by the
Board of Directors as an officer for the purposes of
Section 16 of the Securities Exchange Act of 1934, or
whose benefits under the Lubrizol Pension Plan are
limited by the application of Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended.
2. Effective as of the date of execution of this Amendment
Appendix A is replaced by the Appendix A attached hereto.
EXECUTED at Wickliffe, Ohio, this 28th day of June , 1993.
THE LUBRIZOL CORPORATION
Title:Chairman and Chief
Executive Officer
And By:
Title: Vice President and
Chief Financial Officer
<PAGE> 14
APPENDIX A
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED BENEFIT PLAN
<TABLE>
<CAPTION>
Participant Effective Date
<S> <C>
1. L. E. Coleman December 31, 1986
2. W. G. Bares December 31, 1986
3. P. L. Krug (R) December 31, 1986
4. W. T. Beargie (R) December 31, 1986
5. W. D. Manning December 31, 1986
6. R. Y. K. Hsu December 31, 1986
7. G. R. Hill December 31, 1986
8. R. W. Scher December 31, 1986
9. J. P Arzul (D) December 31, 1986
10. W. R. Jones December 31, 1986
11. R. A. Andreas December 31, 1986
12. J. R. Cooper (R) December 31, 1986
13. J. I. Rue (R) December 31, 1986
14. R. J. Senz April 1, 1989
15. J. R. Ahern April 1, 1990
16. K. H. Hopping April 21, 1991
17. J. W. Bauer April 27, 1992
18. D. A. Muskat April 27, 1992
19. V. E. Luoma June 22, 1992
20. J. G. Bulger June 22, 1992
21. S. F. Kirk April 26, 1993
22. Y. Le Couedic April 26, 1993
23. J. E. Hodge April 26, 1993
24. M. W. Meister April 26, 1993
25. S. A. DiBiase April 26, 1993
<FN>
R = Retired
D = Deceased
</TABLE>
<PAGE> 15
THIRD AMENDMENT
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED BENEFIT PLAN
WHEREAS, The Lubrizol Corporation Excess Defined Benefit Plan
(the "Plan") was established effective as of January 1, 1986, by
The Lubrizol Corporation (the "Company") for the benefit of certain
eligible employees of the Company whose benefits under The Lubrizol
Corporation Pension Plan (the "Pension Plan") were limited by law;
and
WHEREAS, The Company desires to add provisions to the Plan
which clarify the vesting under the Plan.
NOW, THEREFORE, Article II of the Plan is hereby amended
effective January 1, 1986, by adding at the end thereto a new
Section 2.4 which shall read as follows:
2.4 Vesting. Each Participant as of December 31, 1993,
shall be 100 percent vested in his supplemental pension
benefit determined in accordance with the provisions of
Section 2.2. Each new Participant after December 31,
1993, shall be vested in his supplemental pension benefit
under this Plan as determined in accordance with the
vesting provisions of the Lubrizol Pension Plan.
EXECUTED at Wickliffe, Ohio, this day of ,
1993.
THE LUBRIZOL CORPORATION
By:
Title:
By:
Title:
<PAGE> 1
EXHIBIT (10)(g)
THE LUBRIZOL CORPORATION
EXCESS DEFINED CONTRIBUTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE
DEFINITIONS 1
1.1 Definitions 1
1.2 Additional Definitions 2
ARTICLE II
SUPPLEMENTAL CONTRIBUTIONS 2
2.1 Eligibility 2
2.2 Supplemental Company Contributions 3
2.3 Deposit of Contributions 3
2.4 Allocation of Contributions 3
2.5 Separate Accounts 3
ARTICLE III
DISTRIBUTION 4
3.1 Vesting 4
3.2 Distribution 4
3.3 Distribution in the Event of Death 4
ARTICLE IV
ADMINISTRATION 5
ARTICLE V
AMENDMENT AND TERMINATION 6
ARTICLE VI
MISCELLANEOUS 6
6.1 Non-Alienation of Retirement Rights
or Benefits 6
6.2 Plan Non-Contractual 7
6.3 Trust 7
6.4 Interest of a Participant 7
6.5 Controlling Status 7
6.6 Claims of Other Persons 7
6.7 Severability 8
6.8 Governing Law 8
</TABLE>
<PAGE> 3
THE LUBRIZOL CORPORATION
EXCESS DEFINED CONTRIBUTION PLAN
The Lubrizol Corporation hereby establishes, effective as of
December 31, 1986, The Lubrizol Corporation Excess Defined Contribution
Plan (the "Plan") for the purpose of supplementing the benefits of certain
employees, as permitted by Section 3(36) of the Employee Retirement Income
Security Act of 1974.
ARTICLE
DEFINITIONS
1.1 Definitions. For the purposes hereof, the following
words and phrases shall have the meanings indicated, unless a different
meaning is plainly required by the context:
(a) Beneficiary. The term "Beneficiary" shall mean the
person or persons who shall be designated by a Participant to receive
distribution of such Participant's interest under the Plan in the event
such Participant dies before full distribution of his interest.
(b) Code. The term "code" shall mean the Internal Revenue
Code as amended from time to time. Reference to a section of the Code
shall include such section and any comparable section or sections of
any future legislation that amends, supplements, or supersedes such
section.
(c) Company. The term "company" shall mean The Lubrizol
Corporation, an Ohio corporation, Its corporate successors and the
surviving corporation resulting from any merger of The Lubrizol Corpor-
ation with any other corporation or corporations.
(d) Fund. The term "Fund" shall mean each separate Invest-
ment fund established and maintained under the Trust Agreement.
(e) Lubrizol Profit-Sharing Plan. The term "Lubrizol
Profit-Sharing Plan" shall mean The Lubrizol Corporation Employees'
Profit-Sharing Plan as the same shall be in effect on the date of a
Participant's retirement, death, or other termination of employment.
(f) Participant. The term "Participant" shall mean any
person employed by the Company who is designated by the Board of
Directors of the Company to participate in the Plan and who has not
waived participation in the Plan.
<PAGE> 4
(g) Plan. The term "Plan" shall mean the excess defined
contribution retirement plan as set forth herein, together with all
amendments hereto, which Plan shall be called "The Lubrizol Corporation
Excess Defined Contribution Plan."
(h) Plan Year. The term "Plan Year" shall mean the calendar
year.
(i) Supplemental Company Contributions. The term "Supple-
mental Company Contributions" shall mean the contribution made by the
Company in accordance with the provisions of Section 2.2.
(j) Trust Agreement. The term "Trust Agreement" shall mean
The Lubrizol Corporation Excess Defined Contribution Plan Trust Agree-
ment.
(k) Trust Assets. The term "Trust Assets" shall mean all
Property held by the Trustee pursuant to the Trust Agreement.
(l) Trustee. The term "Trustee" shall mean the trustee of
The Lubrizol Corporation Excess Defined Contribution Trust.
(m) Valuation Date. The term "Valuation Date" shall mean
the last day of each Plan Year and any other date as may be agreed upon
by the Company and the Trustee.
1.2 Additional Definitions. All other words and phrases
used herein shall have the meanings given them in the Lubrizol Profit-
Sharing Plan, unless a different meaning is clearly required by the
context.
ARTICLE
SUPPLEMENTAL CONTRIBUTIONS
2.1 Eligibility. A Participant whose benefits under the the
Lubrizol Profit-Sharing Plan have been limited by Section 415 of the Code,
shall be eligible to have contributions made with respect to him under the
Plan in accordance with the provisions of this Article II.
- 2 -
<PAGE> 5
2.2 Supplemental Company Contributions. In the event
Company contributions under the Lubrizol Profit-Sharing Plan with respect
to a Participant are limited due to the provisions of Section 415 of the
Code, the amounts by which such contributions are limited shall be contri-
buted to the Plan by the Company and shall be designated as Supplemental
Company Contributions.
2.3 Deposit of Contributions. The Company shall cause any
Supplemental Company Contributions under the Plan to be delivered to the
Trustee not less frequently than annually.
2.4 Allocation of Contributions. The Supplemental Company
Contributions deposited with the Trustee shall be allocated among the
Separate Accounts of the Participants on whose behalf such contributions
are made.
2.5 Separate Accounts. Each Participant shall have estab-
lished in his a name Separate Account to which Supplemental Company
Contributions shall be allocated in accordance with the provisions of
Section 2.4. Such Separate Accounts shall be adjusted as of each Valuation
Date to reflect any increase or decrease in the value of the Fund in which
such Separate Account is invested in the following manner:
(a) The Trustee shall value all of the Trust
Assets at fair market value.
(b) The Company shall then, on the basis of the
valuation provided under paragraph (a) above, and
after making appropriate adjustments for any dis-
tributions, withdrawals, disbursements, as well as
one-half of any contributions made since the
immediately preceding Valuation Date, ascertain the
net increase or decrease in the value of the Trust
Assets in each Fund since the immediately preceding
Valuation Date.
- 3 -
<PAGE> 6
(c) The Company shall then allocate the net
increase or decrease in the net worth of each fund
to the Separate Accounts of Participants in the
ratio that the balance of each Separate Account on
the day immediately preceding such Valuation Date
bears to the aggregate of the balances of all such
accounts on the day immediately preceding such
Valuation Date and shall credit or charge, as the
case may be, each such Separate Account with the
amount of its allocated share.
(d) The Company shall then credit each Separate
Account with the Supplemental Company Contributions
allocated Pursuant to Section 2.4.
ARTICLE III
DISTRIBUTION
3.1 Vesting . Each Participant shall be 100 percent vested
in the value of his Separate Accounts.
3.2 Distribution. Each Participant who terminates employ-
ment with the Company and its related corporations shall receive the
balance in his Separate Account as soon as reasonably practicable in the
same manner and time Period as his interest in the Lubrizol Profit-Sharing
Plan is distributed.
3.3 Distribution in the Event of Death. In the event of the
death of a Participant Prior to distribution in full of his interest under
the Plan, his Beneficiary shall receive distribution of such interest.
Such Beneficiary shall be the Person designated as the Participant's bene-
ficiary under the Lubrizol Profit-Sharing Plan. If no Beneficiary survives
such Participant or if no Beneficiary has been designated by such Partici-
Pant, the estate of such Participant shall be the Beneficiary and receive
distribution thereof. If any Beneficiary dies after becoming entitled to
receive distribution hereunder and before such distribution is made in
- 4 -
<PAGE> 7
full, and if no other person or persons have been designated to receive the
balance of such distribution upon the happening of such contingency, the
estate of such deceased Beneficiary shall become the Beneficiary as to such
balance. Distribution under this Section 3.3 shall be made in the same
manner and time Period as the deceased Participant's interest in the
Lubrizol Profit-Sharing Plan is distributed.
ARTICLE IV
ADMINISTRATION
The Company shall be responsible for the general administra-
tion of the Plan, for carrying out the provisions hereof, and for making
any required supplemental benefit payments. The Company shall have all
such powers as may be necessary to carry out the provisions of the Plan,
including the power to determine all questions relating to eligibility for
and the amount of any supplemental retirement benefits and all questions
pertaining to claims for benefits and procedures for claim review; to
resolve all other questions arising under the Plan, including any questions
of construction; and to take such further action as the Company shall deem
advisable in the administration of the Plan. The Company may delegate any
of its powers, authorities, or responsibilities for the operation and
administration of the Plan to any person or committee so designated in
writing by it and may employ such attorneys, agents, and accountants as it
may deem necessary or advisable to assist it in carrying out its duties
hereunder. The actions taken and the decisions made by the Company here-
under shall be final and binding upon all interested parties.
- 5 -
<PAGE> 8
ARTICLE V
AMENDMENT AND TERMINATION
The Company reserves the right to amend or terminate the Plan
at any time by action of its Board of Directors or its representative or
delegate; provided, however, that no such action shall adversely affect any
Participant or Beneficiary who is receiving supplemental benefits under the
Plan, unless an equivalent benefit is provided under another plan or
program sponsored by the Company.
ARTICLE VI
MISCELLANEOUS
6.1 Non-Alienation of Retirement Rights or Benefits. No
Participant shall encumber or dispose of his right to receive any payments
hereunder, which payments or the right thereto are expressly declared to be
non-assignable and non-transferable. If a Participant or Beneficiary
attempts to assign, transfer, alienate or encumber his right to receive any
payment under the Plan or permits the same to be subject to alienation,
garnishment, attachment, execution, or levy of any kind, then thereafter
during the life of such Participant or Beneficiary and also during any
period in which any Participant or Beneficiary is incapable in the judgment
of the Company of attending to his financial affairs, any payments which
the Company is required to make hereunder may be made, in the discretion of
the Company, directly to such Participant or Beneficiary or to any other
person for his use or benefit or that of his dependents, if any, including
any person furnishing goods or services to or for his use or benefit or the
use or benefit of his dependents, if any. Each such payment may be made
- 6 -
<PAGE> 9
without the intervention of a guardian, the receipt of the payee shall
constitute a complete acquittance to the Company with respect thereto, and
the Company shall have no responsibility for the proper allocation thereof.
6.2 Plan Non-Contractual. Nothing herein contained shall be
construed as a commitment or agreement on the part of any person employed
by the Company to continue his employment with the Company, and nothing
herein contained shall be construed as a commitment on the part of the
Company to continue the employment or the annual rate of compensation of
any such person for any period, and all Participants shall remain subject
to discharge to the same extent as if the Plan had never been established.
6.3 Trust. In order to provide a source of payment for its
obligations under the Plan, the Company has established The Lubrizol
Corporation Excess Defined Contribution Plan Trust.
6.4 Interest of a Participant. Subject to the provisions of
the Trust Agreement, the obligation of the Company under the Plan to
provide a Participant or Beneficiary with supplemental retirement benefits
merely constitutes the unsecured promise of the Company to make payments as
provided herein, and no person shall have any interest in, or a lien or
prior claim upon, any property of the Company.
6.5 Controlling Status. No Participant shall be eligible
for a benefit under the Plan unless such Participant is a Participant on
the date of his retirement, death, or other termination of employment.
6.6 Claims of Other Persons. The provisions of the Plan
shall in no event be construed as giving any person, firm or corporation
any legal or equitable right as against the Company, its officers,
- 7 -
<PAGE> 10
employees, or directors, except any such rights as are specifically
provided for in the Plan or are hereafter created in accordance with the
terms and provisions of the Plan.
6.7 Severability. The invalidity or unenforceability of any
particular provision of the Plan shall not affect any other provision
hereof, and the Plan shall be construed in all respects as if such invalid
or unenforceable provision were omitted herefrom.
6.8 Governing Law. The provisions of the Plan shall be
governed and construed in accordance with the laws of the State of Ohio.
EXECUTED at Wickliffe, Ohio this 4th day of December
, 1986.
THE LUBRIZOL CORPORATION
Title: President
And
Title: Secretary
-8-
<PAGE> 11
FIRST AMENDMENT
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED CONTRIBUTION PLAN
WHEREAS, the Lubrizol Corporation Excess Defined Contribution Plan
(hereinafter referred to as the "Plan") was established effective as of
December 31, 1986, by The Lubrizol Corporation (hereinafter referred to as
the "Company") for the benefit of certain eligible employees of the Company
whose benefits under The Lubrizol Corporation Employees' Profit-Sharing
Plan (hereinafter referred to as the "Lubrizol Profit-Sharing Plan") were
limited by law; and
WHEREAS, the Company desires to amend the Plan to reflect further
limits on benefits under the Lubrizol Profit-Sharing Plan imposed by the
Tax Reform Act of 1986, as amended, as well as limits imposed by law on
benefits under The Lubrizol Corporation Employees' Stock Purchase and
Savings Plan;
NOW, THEREFORE, effective as of January 1, 1989, the Plan is
hereby amended in the respects hereinafter set forth.
1. Paragraph (f) of Section 1.1 of the Plan is hereby amended to
provide as follows:
(f) Participant. The term "Participant"
shall mean any person employed by the Company who
is listed on Appendix A attached hereto or who is
designated by the Board of Directors of the Company
to participate in the Plan and who has not waived
participation in the Plan.
2. Paragraph (i) of Section 1.1 of the Plan is hereby amended to
provide as follows:
(i) Supplemental Company Contributions. The
term "Supplemental Company Contributions" shall
mean the the Supplemental Matching Contributions
and the Supplemental Profit-Sharing Contributions
made by the Company under the Plan in accordance
with the provisions of Section 2.2.
3. Section 1.1 of the Plan is hereby amended by the addition of
Paragraphs (n), (o), (p), and (q) to provide as follows:
(n) Lubrizol EMP/ACT. The term "Lubrizol
EMP/ACT" shall mean The Lubrizol Corporation
Employees' Stock Purchase and Savings Plan is the
same shall be in effect on the date of a
Participant's retirement, death or other
termination of employment.
(o) Separate Accounts. The term "Separate
Accounts" shall mean each account established on
<PAGE> 12
behalf of a Participant under the Plan and credited
with Supplemental Profit-Sharing Contributions,
Supplemental Matching Contributions, or
Supplemental Tax Contributions.
(p) Supplemental Matching Contributions. The
term "Supplemental Matching Contributions" shall
mean the Supplemental Contributions made by the
Company for a Participant whose benefits under the
Lubrizol EMP/ACT are limited with respect to any
Plan Year by the provisions of Section 401(a)(17)
or 415 of the Code.
(q) Supplemental Profit-Sharing
Contributions. The term "Supplemental Profit-
Sharing Contributions" shall mean the Supplemental
Contribution made by the Company for a Participant
whose benefits under the Lubrizol Profit-Sharing
Plan are limited with respect to any Plan Year by
the provisions of Section 401(a)(17) or 415 of the
Code.
4. Section 1.2 of the Plan is hereby amended to provide as
follows:
1.2 Additional Definitions. All other words
and phrases used herein shall have the meanings
given them in the Lubrizol Profit-Sharing Plan and
the Lubrizol EMP/ACT, unless a different meaning is
clearly required by the context.
5. Section 2.1 of the Plan is hereby amended to provide as
follows:
2.1 Eligibility. A Participant whose
benefits under the Lubrizol Profit-Sharing Plan or
the Lubrizol EMP/ACT are limited with respect to
any Plan Year by Section 401(a)(17) or 415 of the
Code, shall be eligible to have contributions made
with respect to him under the Plan in accordance
with the provisions of this Article II.
6. Section 2.2 of the Plan is hereby amended to provide as
follows:
2.2 Supplemental Company Contributions. In
the event that Company contributions under the
Lubrizol Profit-Sharing Plan and/or Matching
Contributions under the Lubrizol EMP/ACT with
respect to a Participant are limited for any Plan
Year due to the provisions of Section 401(a)(17) or
415 of the Code, the amounts by which such
contributions are limited shall be credited under
the Plan by the Company and shall be designated as
- 2 -
<PAGE> 13
Supplemental Profit-Sharing Contributions, and
Supplemental Matching Contributions, respectively;
provided, however, that for purposes of determining
the amount of Supplemental Matching Contributions
for any Participant it shall be deemed that such
Participant made CODA Contributions under the
Lubrizol EMP/ACT at the Matched Percentage level
with respect to his Compensation irrespective of
the limitations under Sections 401(a)(17) and 415
of the Code. Supplemental Matching Contributions
shall be credited to a Participant's Supplemental
Matching Account and Supplemental Profit-Sharing
Contributions shall be credited to a Participant's
Supplemental Profit-Sharing Account.
7. Section 2.3 of the Plan is hereby amended to provide as
follows:
2.3 Allocation of Contributions.
Supplemental Profit-Sharing Contributions shall be
allocated to a Participant's Supplemental Profit
Sharing Account and Supplemental Matching
Contributions shall be allocated to a Participant's
Supplemental Matching Account.
8. Section 2.4 of the Plan is hereby amended to provide as
follows:
2.4 Administration of Separate Accounts.
Each Supplemental Profit-Sharing Account and each
Supplemental Matching Account to which
contributions under Sections 2.2 and 2.3 are
credited and allocated shall be credited monthly
with the net monthly increase experienced by the
General Fund of the Lubrizol Profit-Sharing Plan.
9. Section 2.5 of the Plan is hereby deleted.
10. Section 3.2 of the Plan is hereby amended to provide as
follows:
3.2 Distribution. Each Participant who
terminates employment with the Company and its
related corporations shall receive the balance in
his Supplemental Profit-Sharing Account as soon as
reasonably practicable in the same manner and time
period as his interest in the Lubrizol Profit-
Sharing Plan is distributed and shall receive the
balance in his Supplemental Matching Account as
soon as reasonably practicable in the same manner
and time period as his interest in the Lubrizol
EMP/ACT is distributed.
- 3 -
<PAGE> 14
11. Section 3.3 of the Plan is hereby amended to provide as
follows:
3.3 Distribution in the Event of Death. In
the event of the death of a Participant prior to
distribution in full of his interest under the
Plan, his Beneficiary or Beneficiaries shall
receive distribution of such Participant's
remaining interest. The Beneficiary of his
interest in his Supplemental Profit-Sharing Account
shall be the person designated as beneficiary under
the Lubrizol Profit-Sharing Plan and the
Beneficiary of his interest in his Supplemental
Matching Account shall be the person designated as
his beneficiary under the Lubrizol EMP/ACT. If no
Beneficiary survives such Participant or if no
Beneficiary has been designated by such
Participant, the estate of such Participant shall
be the Beneficiary and receive distribution
thereof. If any Beneficiary dies after becoming
entitled to receive distribution hereunder and
before such distribution is made in full, and if no
other person or persons have been designated to
receive the balance of such distribution upon the
happening of such contingency, the estate of such
deceased Beneficiary shall become the Beneficiary
as to such balance. Distribution under this
Section 3.3 of a deceased Participant's
Supplemental Profit-Sharing Account shall be made
in the same manner and time period as the deceased
Participant's interest in the Lubrizol Profit-
Sharing Plan is distributed and distribution under
this Section 3.3 of a deceased Participant's
Supplemental Matching Account shall be made in the
same manner and time period as the deceased
Participant's interest in the Lubrizol EMP/ACT is
distributed.
12. The Plan is hereby amended by adding Appendix A attached
hereto at the end thereof.
EXECUTED at Wickliffe, Ohio, this 27th day of February , 1991.
THE LUBRIZOL CORPORATION
By:
Title: CEO AND CHAIRMAN OF THE BOARD
And
Title:
- 4 -
<PAGE> 15
APPENDIX A
Officers of the Company who are Participants in the Plan.
<TABLE>
<S> <C> <C> <C>
1. L. E. Coleman 7. W. R. Jones
2. W. G. Bares 8. J. R. Cooper
3. W. D. Manning 9. R. A. Andreas
4. R. Y. K. Hsu 10. J. R. Senz
5. G. R. Hill 11. J. R. Ahern
6. R. W. Scher 12. K. H. Hopping
</TABLE>
<PAGE> 16
SECOND AMENDMENT
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED CONTRIBUTION PLAN
WHEREAS, The Lubrizol Corporation Excess Defined Contribution
Plan (the "Plan") was established effective as of December 31,
1986, by The Lubrizol Corporation (the "Company") for the benefit
of certain eligible employees of the Company whose benefits under
The Lubrizol Corporation Employees' Profit-Sharing Plan (the
"Profit-Sharing Plan") and, effective January 1, 1989, The Lubrizol
Corporation Employees' Stock Purchase and Savings Plan ("EMP/ACT"),
were limited by law; and
WHEREAS, The Company desires to amend the Plan to expand the
definition of Participant.
NOW, THEREFORE, the Plan is hereby amended in the respects
hereinafter set forth.
1. Effective June 22, 1992, paragraph (f) of Section 1.1 of
the Plan is hereby amended to provide as follows:.
(f) Participant. The term "Participant" shall
mean any person employed by the Company who is listed on
Appendix A attached hereto, or who is designated by the
Board of Directors as an officer for the purposes of
Section 16 of the Securities Exchange Act of 1934, or
whose benefits under the Profit-Sharing Plan or EMP/ACT
are limited by the application of Section 401(a)(17) of
the Internal Revenue Code of 1986, as amended.
2. Effective as of the date of execution of this Amendment
Appendix A is replaced by the Appendix A attached hereto.
EXECUTED at Wickliffe, Ohio, this 28th day of June 1993.
THE LUBRIZOL CORPORATION
By:
Title:Chairman and Chief
Executive Officer
And By:
Title:Vice President and
Chief Financial Officer
<PAGE> 17
APPENDIX A
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED CONTRIBUTION PLAN
<TABLE>
<CAPTION>
Participant Effective Date
<S> <C>
1. L. E. Coleman December 31, 1986
2. W. G. Bares December 31, 1986
3. P. L. Krug (R) December 31, 1986
4. W. T. Beargie (R) December 31, 1986
5. W. D. Manning December 31, 1986
6. R. Y. K. Hsu December 31, 1986
7. G. R. Hill December 31, 1986
8. R. W. Scher December 31, 1986
9. J. P Arzul (D) December 31, 1986
10. W. R. Jones December 31, 1986
11. R. A. Andreas December 31, 1986
12. J. R. Cooper (R) December 31, 1986
13. J. I. Rue (R) December 31, 1986
14. R. J. Senz April 1, 1989
15. J. R. Ahern April 1, 1990
16. K. H. Hopping April 21, 1991
17. J. W. Bauer April 27, 1992
18. D. A. Muskat April 27, 1992
19. V. E. Luoma June 22, 1992
20. J. G. Bulger June 22, 1992
21. S. F. Kirk April 26, 1993
22. Y. Le Couedic April 26, 1993
23. J. E. Hodge April 26, 1993
24. M. W. Meister April 26, 1993
25. S. A. DiBiase April 26, 1993
</TABLE>
R = Retired
D = Deceased
<PAGE> 18
THIRD AMENDMENT
TO
THE LUBRIZOL CORPORATION
EXCESS DEFINED CONTRIBUTION PLAN
WHEREAS, The Lubrizol Corporation Excess Defined Contribution
Plan (the "Plan") was established effective as of December 31,
1986, by The Lubrizol Corporation (the "Company") for the benefit
of certain eligible employees of the Company whose benefits under
The Lubrizol Corporation Employees' Profit-Sharing Plan (the
"Profit-Sharing Plan") and, effective January 1, 1989, The Lubrizol
Corporation Employees, Stock Purchase and Savings Plan ("EMP/ACT")
were limited by law; and
WHEREAS, The Company desires to amend the vesting provisions
of the Plan to more closely align this Plan with The Lubrizol
Corporation Excess Defined Benefit Plan.
NOW, THEREFORE, Effective January 1, 1993, Section 3.1 of the
Plan is hereby amended in its entirety to read as follows:
3.1 Vesting. Each Participant as of December 31, 1993,
shall be 100 percent vested in the value of his Separate
Accounts. Each new Participant after December 31, 1993,
shall be vested in the value of his Separate Accounts
under this Plan as determined in accordance with the
vesting provisions of the underlying qualified plans.
EXECUTED at Wickliffe, Ohio, this day of ,
1993.
THE LUBRIZOL CORPORATION
By:
Title:
By:
Title:
<PAGE> 1
EXHIBIT (10)(h)
THE LUBRIZOL CORPORATION
VARIABLE AWARD PLAN
<PAGE> 2
2
INTRODUCTION
The Lubrizol Corporation (hereinafter referred to as the
"Corporation") hereby establishes, effective as of January 1,
1990, The Lubrizol Corporation Variable Award Plan (hereinafter
referred to as the "Plan") in order to provide an award for
employees which reflects the pursuit of superior performance,
increased customer satisfaction and enhancement of shareholder
value. Awards for participating employees under the Plan shall
depend upon corporate performance in terms of net income for the
Plan Year.
Except as otherwise provided, the Plan shall be administered
by the Organization and Compensation Committee (hereinafter
referred to as the "Committee") of the Board of Directors of the
Corporation. The Committee shall have conclusive authority to
construe and interpret the Plan and any agreements entered into
under the Plan and to establish, amend, and rescind rules and
regulations for its administration. The Committee shall also
have any additional authority as the Board may from time to time
determine to be necessary or desirable.
<PAGE> 3
3
ARTICLE I
DEFINITIONS
1.01 Definitions. The following terms shall have the
indicated meanings for purposes of the Plan:
a. "Base Pay" shall mean a Participant's current bi-weekly
salary multiplied by 26.
b. "Board" shall mean the board of Directors of the
Corporation.
c. "Chief Executive Officer" shall mean the chief
executive officer of the Corporation.
d. "Committee" shall mean the Organization and
Compensation Committee of the Board, consisting of
persons who are not Employees.
e. "Corporation" shall mean The Lubrizol Corporation, a
corporation organized under the laws of the State of
Ohio.
f. "Director" shall mean a director of the Corporation.
g. "Employee" shall mean any person who is employed by the
Corporation or a domestic Subsidiary with the
exception of persons employed by the Agrigenetics
division. However, any Officer of the Corporation who
is employed by the Agrigenetics division shall be
<PAGE> 4
4
deemed to be an Employee within the meaning of this
definition.
h. "Individual Award" shall mean the amount paid to a
Participant by the Corporation pursuant to the Plan.
i. "Individual Performance Shares" shall have the
definition set forth in Section 3.02 herein.
j. "Officer" shall mean a chief executive officer,
president, vice president, secretary, treasurer or
principal financial officer, controller or principal
accounting officer and any other person designated as
an officer of the Corporation by the Board.
k. "Participant" shall mean Officers, and any Employee who
has been selected by the Committee pursuant to Article
II of the Plan, and who has not for any reason become
ineligible to participate in the Plan.
l. "Plan" shall mean The Lubrizol Corporation Variable
Award Plan, effective January 1, 1990 as herein set
forth.
m. "Plan Year" shall mean the twelve-month period
commencing each January 1 and ending each subsequent
December 31.
n. "President" shall mean the president of the
Corporation.
o. "Subsidiary" shall mean any other domestic company
wholly or partially owned by the Corporation.
<PAGE> 5
5
1.02 Construction. Where necessary or appropriate to the
meaning of a word, the singular shall be deemed to include the
plural, the plural to include the singular, the masculine to
include the feminine, and the feminine to include the masculine.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility. All Employees shall be eligible to
participate in the Plan.
2.02 Participation. The Committee shall determine which
Employees shall participate in the Plan for each Plan Year. The
Committee's selection of Participants shall be made after
considering recommendations presented to it by the Chief
Executive Officer.
ARTICLE III
INDIVIDUAL PERFORMANCE SHARES
3.01 In General. At the time the Committee selects
Participants for any Plan Year, the Committee shall, after
consideration of the recommendations of the Chief Executive
Officer, establish for each Plan Year Individual Performance
Shares for each Participant.
3.02 Calculation of Individual Performance Shares.
Individual Performance Shares shall be calculated in the
following manner:
<PAGE> 6
6
(a) The Base Pay of each eligible Participant shall be
multiplied by a designated percentage which shall take into
account the Participant's position in the Corporation. Such
percentage shall be determined by the Committee.
(b) The amount produced for each Participant pursuant
to the calculation in (a) above shall be divided by the sum
of all such amounts produced for all Participants calculated
in accordance with (a) above in order to produce a second
percentage.
(c) The percentage for each Participant derived in the
manner set forth in paragraph (b) above shall be multiplied
by 100 and rounded to the highest whole number to produce
the number of each Participant's Individual Performance
Shares.
Individual Performance Shares may be adjusted, either
increased or decreased, for any Participant at the discretion of
the Chief Executive Officer and the President in order to reflect
individual contribution not taken into account under the formulae
described above.
ARTICLE IV
DETERMINATION OF FUND
4.01 Fund. A fund will be accrued for each Plan Year equal
to a percentage of the Corporation's consolidated net income for
such Plan Year (the "Fund"). Such accruals shall be made on a
monthly basis and the accrual percentage shall be determined for
each Plan Year by the Chief Executive Officer of the Corporation.
<PAGE> 7
7
The Fund shall consist of bookkeeping accruals and no cash or
other property shall be set aside by the Corporation for these
purposes. The Committee may, in its discretion, increase or
decrease the Fund.
ARTICLE V
INDIVIDUAL AWARDS
5.01 Allocation. Each Participant's Individual Award for a
Plan Year shall be an amount calculated by multiplying the amount
of the Fund by a fraction, the numerator of which shall be the
number of the Participant's Individual Performance Shares and the
denominator of which shall be the total number of all
Participants' Individual Performance Shares. The maximum amount
of any Participant's Individual Award shall be at the discretion
of the Committee. No Participant shall have any vested interest
in or be entitled to any Individual Award until or unless such
payment is made by the Committee. Any amounts remaining in the
Fund after Individual Awards are made for any Plan Year shall be
returned to earnings and not carried over to any subsequent Plan
Year.
5.02 Time and Method of Payment of Individual Awards. In
the event the Committee determines that a Participant is entitled
to an Individual Award, the Corporation shall pay such Individual
Award to that Participant (in cash with appropriate tax
withholding) as soon after the close of the Plan Year as may be
feasible, but in no event later than 30 days after the public
announcement of the Corporation's earnings for such Plan Year. A
Participant who leaves the Corporation's employ prior to the
issuance of Individual Award checks, except in the case of
retirement under the provisions of a qualified defined benefit
<PAGE> 8
8
plan maintained by the Corporation, disability or death, will not
be eligible for any payment under this Plan. However, an
Individual Award may be made in those instances where
recommendation for such a payment has been made by the Chief
Executive Officer and approved by the Committee.
In the event a Participant dies prior to the payment of any
Individual Award with respect to any Plan Year, any Individual
Award determined to be payable by the Committee shall be paid by
the Corporation to the Participant's estate.
5.03 Conditions. Notwithstanding anything contained herein
to the contrary, the payment of Individual Awards to Participants
with respect to any Plan Year is conditioned upon the
availability of adequate corporate profits for the Corporation's
fiscal year coinciding with any Plan Year. The determination of
whether adequate corporate profits exist shall be made solely by
the Board and such determination shall be conclusive and binding.
ARTICLE VI
CHANGE OF CONTROL
6.01 For all purposes of the Plan, a "Change in Control of
the Corporation" shall have occurred if any of the following
events shall occur:
a. The Corporation is merged, consolidated or reorganized
into or with another corporation or other legal person, and
as a result of 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
<PAGE> 9
9
by the holders of Voting Stock (as hereinafter defined) of
the Corporation immediately prior to such transaction;
b. The Corporation 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 Corporation immediately prior
to such sale;
c. 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
13(d)(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 Corporation ("Voting Stock");
d. The Corporation 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 Corporation has or
may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction; or
e. If during any period of two consecutive years,
individuals who at the beginning of any such period
<PAGE> 10
10
constitute the Directors of the Corporation cease for any
reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the
Corporation's stockholders, of each Director of the
Corporation first elected during such period was approved by
a vote of at least two-thirds of the Directors of the
Corporation then still in office who were Directors of the
Corporation at the beginning of any such period.
Notwithstanding the foregoing provisions, a "Change in
Control" shall not be deemed to have occurred for purposes of the
Plan solely because (i) the Corporation, (ii) an entity in which
the Corporation directly or indirectly beneficially owns 50% or
more of the voting securities or (iii) any Corporation-sponsored
employee stock ownership plan or any other employee benefit plan
of the Corporation, 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 Corporation
reports that a change in control of the Corporation has or may
have occurred or will or may occur in the future by reason of
such beneficial ownership.
6.02 Effect of Change in Control. In the event a Change in
Control of the Corporation occurs prior to final determination by
the Committee of the amounts of Individual Awards to be paid
under the Plan with respect to any Plan Year, the Committee shall
calculate such Individual Awards as soon as practicable after
such Change in Control. The Fund from which Individual Awards
are to be made shall be based upon accruals by the Corporation up
to the time of such Change in Control and Individual Awards shall
be calculated in accordance with Section 3.02 herein. Payment of
<PAGE> 11
11
such Individual Awards shall be made within thirty (30) days of
the date on which the determination is made to compute the
payments according to the terms of this provision.
ARTICLE VII
ADMINISTRATION
7.01 Plan Administrator. The Committee shall be the Plan
administrator.
7.02 Duties of Plan Administrator.
a. The Committee shall administer the Plan in
accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan including,
but not limited to, the following:
(1) Determination of Employees of the Corporation
who are eligible for Plan participation;
(2) Determination of the amount of the Fund to be
distributed to Participants for each Plan Year; and
(3) Determination of Officer's actual Individual
Awards.
b. The Committee shall interpret the Plan and shall
resolve all questions arising in the administration,
interpretation, and application of the Plan. Any such
determination of the Committee shall be conclusive and
binding on all persons.
<PAGE> 12
12
c. The Committee shall establish such procedures and
keep such records or other data as the Committee in its
discretion determines necessary or proper for the
administration of the Plan.
d. The Committee may delegate administrative
responsibilities to such person or persons as the Committee
deems necessary or desirable in connection with the
administration of the Plan.
ARTICLE VIII
MISCELLANEOUS
8.01 Unfunded Plan. The Corporation shall be under no
obligation to segregate or reserve any funds or other assets for
purposes relating to this Plan and no Participant shall have any
rights whatsoever in or with respect to any funds or assets of
the Corporation.
8.02 Non-Alienation. Since a Participant does not have any
rights to any Individual Award under the Plan until payment of
such Individual Award is made, no anticipated payment of any
Individual Award shall be subject in any manner to alienation,
sale, transfer, assignment, pledge, attachment, garnishment or
encumbrance of any kind. If a Participant attempts to alienate,
sell, transfer, assign, pledge or otherwise encumber any such
anticipated Individual Award, or if he has filed or will be
filing for bankruptcy, the Committee in its discretion may cause
such amounts as would otherwise become payable to such
Participant at such time or times to be paid to or applied for
the benefit of such one or more of the following as the Committee
<PAGE> 13
in its discretion may designate: the Participant, his spouse,
child or children, or other dependents.
8.03 Unclaimed Payments. Should the whereabouts of any
Participant entitled to receive any Individual Award be unknown
to the Corporation, and unascertainable after reasonable inquiry
by the Corporation, for a period of two years, the right of such
person to receive payments hereunder shall be terminated, and the
amounts which would otherwise have been payable to such person
shall be forfeited.
8.04 Actions or Decisions with Respect to the Plan. Any
decision or action of the Corporation, the Board, or the
Committee, arising out of or in connection with the
administration and operation of this Plan, may be made or taken
in their absolute discretion, and such decision or action shall
be conclusive and binding upon all Participants.
8.05 No Employment Rights. Nothing herein contained shall
be construed as a commitment or agreement upon the part of any
Participant or Employee hereunder to continue his employment with
the Corporation or a Subsidiary, and nothing herein contained
shall be construed as a commitment on the part of the Corporation
or a Subsidiary to continue the employment or rate of
compensation of any Participant hereunder or any Employee for any
period.
8.06 Amendment of the Plan. The Corporation reserves the
right, to be exercised by instruction from the Committee, to
modify or amend this Plan at any time.
8.07 Duration and Termination of the Plan. The Corporation
also reserves the right, to be exercised by action of the Board,
<PAGE> 14
14
to discontinue or terminate the Plan. Any such termination shall
not be retroactive.
IN WITNESS WHEREOF, the Corporation has executed the Plan as
of the day and year first above written.
THE LUBRIZOL CORPORATION
By:
Title:
By:
Title:
<PAGE> 1
EXHIBIT (10)(i)
THE LUBRIZOL CORPORATION
EXECUTIVE DEATH BENEFIT PLAN
The Lubrizol Executive Death Benefit Plan (hereinafter
referred to as the "Plan") shall provide death benefits to the
designated beneficiaries of certain executives of The Lubrizol
Corporation (hereinafter referred to as the "Corporation") in
accordance with the provisions hereinafter set forth.
Section 1. Eligibility. Participation in the Plan shall be
limited to those executives of the Corporation who are designated
by the Organization and Compensation Committee of the Board of
Directors of the Corporation (hereinafter referred to as the
"Committee") to participate in the Plan; who complete a physical
examination to the satisfaction of the Corporation as soon as
reasonably possible after being so designated; and who waive
participation and benefits in The Lubrizol Corporation Term Life
Insurance Program in a form satisfactory to the Corporation. Any
executive so designated shall hereinafter be referred to as a
"Participant".
Section 2. Benefits. Upon the death of a Participant, a
death benefit shall be made to the Participant's Beneficiary (as
defined in Section 5) equal to a percentage of the Participant's
bi-weekly salary multiplied by 26, plus quarterly pay, at the time
that the Participant is designated by the Committee to participate
in the Plan (hereinafter referred to as "Covered Pay"). Covered
Pay for the Participants designated by the Board to participate in
the Plan as of June 1, 1990 shall mean 1990 Covered Pay. The
Committee will periodically review the Plan and may, at its
discretion, change the level of Covered Pay for any Participant.
A death benefit shall be calculated in accordance with Paragraph
(a) or (b) below, whichever is applicable.
(a) The amount of the death benefit payable with respect to
a Participant, who at the time of his death, (i) is
employed by the Corporation, or (ii) has retired under
the normal retirement provisions of a qualified defined-
benefit plan maintained by the Corporation, shall be as
follows:
<PAGE> 2
Age of Participant
at Death Death Benefit
Less than age 70 250% of Covered Pay
At least age 70, but
less than age 75 150% of Covered Pay
Age 75 and over 100% of Covered Pay
(b) The amount of the death benefit payable with respect to
a Participant who (i) has retired under the early
retirement provisions of a qualified defined benefit plan
maintained by the Corporation, or (ii) has voluntarily
terminated his employment with the Corporation but has
not obtained competitive employment with another
employer, shall be as follows:
Years after
Early Retirement or
Voluntary Termination Death Benefit
0 through 5 250% of Covered Pay
6 through 10 150% of Covered Pay
11 or more 100% of Covered Pay
Section 3. Funding. The obligation of the Corporation to pay
benefits provided hereunder shall be satisfied by the Corporation
out of its general funds. In order to provide a source of payment
for its obligations under the Plan, the Corporation will cause a
trust fund to be maintained and/or arrange for insurance contracts.
Subject to the provisions of the trust agreement governing any such
trust fund or the insurance contract, the obligation of the
Corporation under the Plan to provide a benefit shall nonetheless
constitute the unsecured promise of the Corporation to make
payments as provided herein, and no person shall have any interest
in, or a lien or prior claim upon, any property of the Corporation.
Section 4. Payment of Benefits. Payment of any death benefit
under the Plan shall be made to the deceased Participant's
2
<PAGE> 3
beneficiary in a single lump sum as soon as practicable after the
Participant's death.
Section 5. Beneficiaries. A Participant may designate any
person or persons as a beneficiary (hereinafter referred to as a
"Beneficiary") to receive payment of the death benefit provided
under the Plan. Such designation shall be made in writing in the
form prescribed by the plan administrator and shall become
effective only when filed by the Participant with the Corporation.
A Participant may change or revoke his Beneficiary designation at
any time by completing and filing with the Corporation a new
Beneficiary designation. If at the time of the Participant's death
there is no Beneficiary designation on file with the Corporation,
or the beneficiary does not survive to the date of distribution,
the death benefit provided hereunder shall be paid to the
Participant's estate.
Section 6. Plan Administrator. The Corporation shall be the
administrator of the Plan. The plan administrator shall perform
all ministerial functions with respect to the Plan. The plan
administrator shall employ such advisors or agents as it may deem
necessary or advisable to assist it in carrying out its duties
hereunder. The plan administrator shall have full power and
authority to interpret and construe the Plan and shall determine
all questions arising in the administration, interpretation, and
application of the Plan. Any such determination shall be
conclusive and binding on all persons.
Section 7. Reduction or Termination of Benefits. The
Committee reserves the right to reduce or eliminate the benefit of
any Participant who is dismissed for cause, or who voluntarily
terminates employment to obtain competitive employment.
For Plan purposes, "Cause" means (i) willful violation of a
Corporation policy, or (ii) willful misconduct or gross negligence
in the performance of duties, as determined by the Corporation in
good faith consistently, if applicable, with its existing personnel
practices.
For Plan purposes, "Competitive employment" shall include
employment with any employer (firm, business, or individual)
3
<PAGE> 4
engaged in selling or furnishing any product similar to that
available from the Corporation at the time of termination of
employment with the Corporation.
Section 8. Employment. This Plan shall not constitute a
contract of employment.
Section 9. Severability. In the event any provision of the
Plan is deemed invalid, such provision shall be deemed to be
severed from the Plan, and the remainder of the Plan shall continue
to be in full force and effect.
Section 10. Governing Law. The provisions of the Plan shall
be construed and enforced in accordance with the laws of the State
of Ohio.
Section 11. Effective Date. The Plan is effective as of
June 1, 1990.
Executed at Wickliffe, Ohio, this day of , 1991.
THE LUBRIZOL CORPORATION
By:
Title:
4
<PAGE> 5
FIRST AMENDMENT TO
THE LUBRIZOL CORPORATION
EXECUTIVE DEATH BENEFIT PLAN
WHEREAS, The Lubrizol Corporation Executive Death Benefit Plan
(hereinafter referred to as the "Plan") was established effective
as of June 1, 1990, by The Lubrizol Corporation (hereinafter
referred to as the "Corporation") for the benefit of certain
executives of The Lubrizol Corporation; and
WHEREAS, The Corporation desires to amend the Plan to clarify
the eligibility requirements;
NOW, THEREFORE, Effective as of June 1, 1990, the Plan is
hereby amended in the respect hereinafter set forth.
1. Section 1 of the Plan is hereby amended in its entirety to
read as follows:
Section 1. Eligibility. Participation in the Plan
shall be limited to those executives of the
Corporation who are designated by the Organization
and Compensation Committee of the Board of
Directors of the Corporation (hereinafter referred
to as the "Committee") to participate in the Plan;
who complete a physical examination to the
satisfaction of the Corporation as soon as
reasonably possible after being so designated; and
who waive participation and benefits in the basic
term-life insurance coverage sponsored by the
Corporation or any of its affiliates, in a form
satisfactory to the Corporation. Any executive so
designated shall hereinafter be referred to as a
"Participant".
EXECUTED at Wickliffe Ohio this day of ,
1992.
THE LUBRIZOL CORPORATION
By:
L. E. Coleman
Title: Chief Executive Officer
<PAGE> 6
SECOND AMENDMENT TO
THE LUBRIZOL CORPORATION
EXECUTIVE DEATH BENEFIT PLAN
WHEREAS, effective June 1, 1990, The Lubrizol Corporation (the
"Company") established The Lubrizol Corporation Executive Death
Benefit Plan (the "Plan") for the benefit of certain executives of
the Company; and
WHEREAS, The Corporation desires to amend the Plan to update
the definition of Covered Pay and to provide for an Appendix A to
the Plan which shall list the current Participants in the Plan from
time to time.
NOW, THEREFORE, Effective as of January 1, 1993, the Plan is
hereby amended in the respects hereinafter set forth.
1. Section 1 of the Plan is hereby amended by changing the last
sentence to read as follows:
Any executive so designated shall be listed in Appendix
A attached hereto, and shall hereinafter be referred to
as a "Participant".
2. Section 2 of the Plan is hereby amended by changing the first
paragraph to read as follows:
Upon the death of a Participant, a death benefit shall be
made to the Participant's Beneficiary (as defined in
Section 5) equal to a percentage of the Participant's bi-
weekly salary multiplied by 26, plus quarterly
(hereinafter referred to as "Covered Pay") rounded to the
nearest $1,000.00. Covered Pay for the Participants
designated by the Board to participate in the Plan shall
have the meaning as described in Appendix A, attached
hereto. The Committee will periodically review the plan
and may, at its discretion, change the level of Covered
Pay for any Participant. A death benefit shall be
calculated in accordance with Paragraph (a) or (b) below,
whichever is applicable.
EXECUTED at Wickliffe, Ohio this day of ,
1993.
THE LUBRIZOL CORPORATION
By:
L. E. Coleman
Title: Chief Executive Officer
<PAGE> 7
THE LUBRIZOL CORPORATION
EXECUTIVE DEATH BENEFIT PLAN
APPENDIX A
January 1, 1993
PARTICIPANT COVERED PAY
1 R. A. Andreas January 1, 1993 Covered Pay
2. W. G. Bares January 1, 1993 Covered Pay
3. L. E. Coleman January 1, 1993 Covered Pay
4. G. R. Hill January 1, 1993 Covered Pay
5. R. Y. K. Hsu January 1, 1993 Covered Pay
6. W. D. Manning January 1, 1993 Covered Pay
7 R J Senz January 1 1993 Covered Pay
8. W. T. Beargie June 1, 1990 Covered Pay
9. P. L. Krug June 1, 1990 Covered Pay
10. J. A. Studebaker June 1, 1990 Covered Pay
<PAGE> 1
EXHIBIT (10)(l)
THE LUBRIZOL CORPORATION 1991 STOCK INCENTIVE PLAN
(As Amended April 27, 1992)
SECTION 1. PURPOSE.
The purposes of The Lubrizol Corporation 1991 Stock Incentive Plan are to
encourage selected employees of The Lubrizol Corporation and its Subsidiaries
and directors of the Company to acquire a proprietary and vested interest in
the growth and performance of the Company, to generate an increased incentive
to contribute to the Company's future success and prosperity, thus enhancing
the value of the Company for the benefit of shareholders, and to enhance the
ability of the Company and its Subsidiaries to attract and retain individuals
of exceptional talent upon whom, in large measure, the sustained progress,
growth and profitability of the Company depends.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Award" means any Option, Stock Appreciation Right, Restricted Stock
Award, or Stock Award granted pursuant to the provisions of the Plan.
(b) "Award Agreement" means a written agreement evidencing any Award granted
hereunder and signed by both the Company and the Participant or by both the
Company and an Outside Director.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(e) "Committee" means a committee of not less than three (3) Outside
Directors of the Board, each of whom shall be a "disinterested person" within
the meaning of Rule 16b-3(d)(3) promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor rule or statute.
(f) "Company" means The Lubrizol Corporation.
(g) "Employee" means any employee of the Company or of any Subsidiary.
(h) "Fair Market Value" means the average of the high and low price of a
Share on the New York Stock Exchange on the Grant Date (in the case of a
Grant), or any other relevant date.
<PAGE> 2
(i) "Grant Date" means the date on which the Board approves the grant of an
Option, Stock Appreciation Right, Restricted Stock Award, or Stock Award,
and, with respect to an Option granted to an Outside Director pursuant to
Section 10, the date of the Shareholders' Meeting on which such Option is
granted.
(j) "Incentive Stock Option" means an Option that is intended to meet the
requirements of Section 422A of the Code or any successor provision thereto.
(k) "Non-Statutory Stock Option" means an Option that is not intended to be
an Incentive Stock Option.
(l) "Option" means an option to purchase Shares granted hereunder.
(m) "Option Price" means the purchase price of each Share under an Option.
(n) "Outside Director" means a member of the Board who is not an employee of
the Company or of any Subsidiary.
(o) "Participant" means an Employee who is selected by the Committee to
receive an Award under the Plan.
(p) "Plan" means The Lubrizol Corporation 1991 Stock Incentive Plan.
(q) "Restricted Stock Award" means an award of restricted Shares under
Section 8 hereof.
(r) "Restriction Period" means the period of time specified in an Award
Agreement during which the following conditions remain in effect: (i) certain
restrictions on the sale or other disposition of Shares awarded under the
Plan, (ii) subject to the terms of the applicable Award Agreement, the
continued employment of the Participant, and ( iii ) such other conditions as
may be set forth in the applicable Award Agreement.
(s) "Shareholders' Meeting" means the annual meeting of shareholders of the
Company in each year.
(t) "Shares" means common shares without par value of the Company.
(u) "Stock Appreciation Right" means the right to receive a payment in cash
or in Shares, or in any combination thereof, from the Company equal to the
excess of the Fair Market Value of a stated number of Shares at the exercise
date over a fixed price for such Shares.
2
<PAGE> 3
(v) "Stock Award" means the grant of unrestricted Shares under the Plan.
(w) "Subsidiary" means a corporation which is at least 80% owned, directly
or indirectly, by the Company.
(x) "Voting Stock" means the then-outstanding securities entitled to vote
generally in the election of directors of the Company.
SECTION 3. ADMINISTRATION.
The Plan shall be administered by the Committee. Members of the Committee
shall be appointed by and serve at the pleasure of the Board, and may resign by
written notice filed with the Chairman of the Board or the Secretary of the
Company. A vacancy on the Committee shall be filled by the appointment of a
successor member by the Board. Subject to the express provisions of this Plan,
the Committee shall have conclusive authority to select Employees to be
Participants for Awards and determine the type and number of Awards to be
granted, to construe and interpret the Plan, any Award granted hereunder, and
any Award Agreement entered into hereunder, and to establish, amend, and
rescind rules and regulations for the administration of this Plan and shall
have such additional authority as the Board may from time to time determine to
be necessary or desirable. Notwithstanding the foregoing, the Committee shall
not have discretion with respect to Options granted to Outside Directors
pursuant to Section 10 such as to prevent any Award granted under this Plan
from meeting the requirements for exemption from Section 16(b) of the Exchange
Act, as set forth in Rule 16b-3 thereunder or any successor rule or statute.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in the Plan, the total number of Shares
available under the Plan in each calendar year shall be one percent (1%) of the
total outstanding Shares as of the first day of any year for which the Plan is
in effect; provided that such number shall be increased in any year by the
number of Shares available for grant hereunder in previous years but not
covered by Awards granted hereunder in such previous years; and provided
further, that a total of no more than two million (2,000,000) Shares shall be
available for the grant of Incentive Stock Options Under the Plan. Settlement
of an Award, whether by the issuance of Shares or the payment of cash, shall
not be deemed to be the grant of an Award hereunder. In addition, any Shares
issued by the Company through the assumption or substitution of outstanding
grants from an acquired company shall not reduce the Shares available for
grants under the Plan. Any Shares issued hereunder may consist, in whole or in
part, of authorized and unissued Shares or treasury shares. If any Shares
subject to any Award granted hereunder are forfeited or if such Award otherwise
3
<PAGE> 4
terminates without the issuance of such Shares or payment of other
consideration in lieu of such Shares, the Shares subject to such Award, to the
extent of any such forfeiture or termination, shall again be available for
grant under the Plan as if such Shares had not been subject to an Award.
(b) The number of Shares which remain available for grant pursuant to this
Plan, together with Shares subject to outstanding Awards, at the time of any
change in the Company's capitalization, including stock splits, stock
dividends, mergers, reorganizations, consolidations, recapitalizations, or
other changes in corporate structure, shall be appropriately and
proportionately adjusted to reflect such change in capitalization.
SECTION 5. ELIGIBILITY.
Any Employee shall be eligible to be selected as a Participant.
SECTION 6. STOCK OPTIONS.
Non-Statutory Stock Options and Incentive Stock Options may be granted
hereunder to Participants either separately or in conjunction with other Awards
granted under the Plan. Any Option granted to a Participant under the Plan
shall be evidenced by an Award Agreement in such form as the Committee may from
time to time approve. Any such Option shall be subject to the following terms
and conditions and to such additional terms and conditions, not inconsistent
with the provisions of the Plan, as the Committee shall deem desirable.
(a) OPTION PRICE. The purchase price per Share under an Option shall be one
hundred percent (100%) of the Fair Market Value of the Share on the Grant Date
of the Option. Payment of the Option Price may be made in cash, Shares, or a
combination of cash and Shares, as provided in the Award Agreement relating
thereto.
(b) OPTION PERIOD. The term of each Option shall be fixed by the Committee in
its sole discretion; provided that no Incentive Stock Option shall be
exercisable after the expiration of ten years from the Grant Date.
(c) EXERCISE OF OPTION. Options shall be exercisable to the extent of fifty
percent (50%) of the Shares subject thereto after one year from the Grant Date,
seventy-five percent (75%) of such Shares after two years from the Grant Date,
and one hundred percent (100%) of such Shares after three years from the Grant
Date, subject to any provisions respecting the exercisability of Options that
may be contained in an Award Agreement.
(d) INCENTIVE STOCK OPTIONS. The aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options held by
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<PAGE> 5
any Participant which are exercisable for the first time by such Participant
during any calendar year under the Plan (and under any other benefit plans of
the Company, of any parent corporation, or Subsidiary) shall not exceed
$100,000 or, if different, the maximum limitation in effect at the Grant Date
under Section 422A of the Code, or any successor provision, and any regulations
promulgated thereunder. The terms of any Incentive Stock Option granted
hereunder shall comply in all respects with the provisions of Section 422A of
the Code, or any successor provision, and any regulations promulgated
thereunder.
(e) RELOAD. In the event that a Participant or an Outside Director exercises
an Option and pays some or all of the Option Price with Shares, such
Participant or Outside Director shall be granted a reload Option to purchase
the number of Shares equal to the number of Shares used as payment of the
Option Price, such reload Option to be granted at the time and subject to the
limitation described below. The Grant Date for the reload Option shall be the
next date on which the Committee otherwise grants Options under this Plan to
employees generally, whether or not during the same calendar year in which the
original Option is exercised. Options granted to Participants pursuant to this
Section 6(e) shall have terms and conditions as described in this Section 6 and
Options granted to Outside Directors pursuant to this Section 6(e) shall have
terms and conditions as described in Section 10. Options granted pursuant to
this Section 6(e) shall be of the same character (i.e., Non- Statutory Stock
Options or Incentive Stock Options) as the Option that is exercised to give
rise to the grant of the reload Option, provided that if an Incentive Stock
Option cannot be granted under this Section 6(e) in compliance with Section
422A of the Code, then a Non-Statutory Stock Option shall be granted in lieu
thereof. Options shall be granted pursuant to this Section 6(e) only to the
extent that the number of Shares covered by such Option grants does not, when
added to the number of Shares covered by Awards previously granted during such
calendar year, exceed the limitation set forth in Section 4(a). If such
limitation would otherwise be exceeded by the operation of this Section 6(e),
each Participant or Outside Director entitled to receive an Option under this
Section 6(e) shall have the number of Shares subject to such Option reduced
appropriately and proportionately (i.e., by the same percentage) so that the
limitation set forth in Section 4(a) will not be exceeded.
Shares received upon the exercise of an Option granted pursuant to this
Section 6(e) may not be sold or otherwise transferred (i) by a Participant
until such Participant ceases to be employed by the Company or a Subsidiary, or
(ii) by an Outside Director until such Outside Director ceases to be an Outside
Director, provided, however, that a Participant or Outside Director may use
such Shares as payment of the Option Price of Options granted under this Plan
to the extent permitted by the applicable Award Agreement, in which case a
number of the Shares (equal to the
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<PAGE> 6
number of Shares used for such payment) purchased by the exercise of such
Options also shall be subject to the same restrictions upon transferability.
Certificates for such Shares with a transferability restriction shall bear a
legend referencing such restriction.
SECTION 7. STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights may be granted hereunder to Participants either
separately or in conjunction with other Awards granted under the Plan and may,
but need not, relate to a specific Option granted under Section 6. The
provisions of Stock Appreciation Rights need not be the same with respect to
each Participant. Any Stock Appreciation Right related to a Non-Statutory Stock
Option may be granted at the same time such Option is granted or at any time
thereafter before exercise or expiration of such Option. Any Stock Appreciation
Right related to an Incentive Stock Option must be granted at the same time
such Option is granted. Any Stock Appreciation Right related to an Option shall
be exercisable only to the extent the related Option is exercisable. In the
case of any Stock Appreciation Right related to any Option, the Stock
Appreciation Right or applicable portion thereof shall terminate and no longer
be exercisable upon the termination or exercise of the related Option.
Similarly, upon exercise of a Stock Appreciation Right as to some or all of the
Shares covered by a related Option, the related Option shall be canceled
automatically to the extent of the Stock Appreciation Rights exercised, and
such Shares shall not thereafter be eligible for grant under Section 4(a). The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it shall deem appropriate.
SECTION 8. RESTRICTED STOCK AWARDS.
(a) ISSUANCE. Restricted Stock Awards may be issued hereunder to
Participants, either separately or in conjunction with other Awards granted
under the Plan. Each Award under this Section 8 shall be evidenced by an Award
Agreement between the Participant and the Company which shall specify the
vesting schedule, any rights of acceleration and such other terms and
conditions as the Board shall determine, which need not be the same with
respect to each Participant.
(b) REGISTRATION. Shares issued under this Section 8 shall be evidenced by
issuance of a stock certificate or certificates registered in the name of the
Participant bearing the following legend and any other legend required by, or
deemed appropriate under, any federal or state securities laws:
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<PAGE> 7
The sale or other transfer of the common shares represented by this
certificate is subject to certain restrictions set forth in the Award
Agreement between (the
registered owner) and The Lubrizol Corporation dated , under
The Lubrizol Corporation 1991 Stock Incentive Plan. A copy of the Plan and
Award Agreement may be obtained from the Secretary of The Lubrizol
Corporation.
Unless otherwise provided in the Award Agreement between the Participant and
the Company, such certificates shall be retained by the Company until the
expiration of the Restriction Period. Upon the expiration of the Restriction
Period, the Company shall (i) cause the removal of the legend from the
certificates for such Shares as to which a Participant is entitled in
accordance with the Award Agreement between the Participant and the Company and
(ii) release such Shares to the custody of the Participant.
(c) FORFEITURE. Except as otherwise determined by the Committee at the Grant
Date, upon termination of employment of the Participant for any reason during
the Restriction Period, all Shares still subject to restriction shall be
forfeited by the Participant and retained by the Company; provided that in the
event of a Participant's retirement, permanent disability, death, or in cases
of special circumstances, the Committee may, in its sole discretion, when it
finds that a waiver would be in the best interests of the Company, waive in
whole or in part any or all remaining restrictions with respect to such
Participant's Shares. In such case, unrestricted Shares shall be issued to the
Participant at such time as the Committee determines.
(d) RIGHTS AS SHAREHOLDERS. At all times during the Restriction Period,
Participants shall be entitled to full voting rights with respect to all Shares
awarded under this Section 8 and shall be entitled to dividends with respect to
such Shares.
SECTION 9. STOCK AWARDS.
(a) Awards of Shares may be granted hereunder to Participants, either
separately or in conjunction with other Awards granted under the Plan. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine (i) the Employees to whom such Awards shall be granted,
(ii) the time or times at which such Awards shall be granted, (iii) the number
of Shares to be granted pursuant to such Awards, and (iv) all other conditions
of the Awards. The provisions of stock awards need not be the same with respect
to each Participant.
SECTION 10. OUTSIDE DIRECTORS' OPTIONS.
On the close of business on the date of the 1991 Shareholders' Meeting, each
Outside Director shall automatically be granted an
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<PAGE> 8
Option to purchase 1,000 Shares, and on the close of business on the date of
each subsequent Shareholders' Meeting, each Outside Director shall
automatically be granted an Option to purchase 1,000 Shares. All such Options
shall be Non-Statutory Stock Options and shall be subject to the following
terms and conditions and to such additional terms and conditions, not
inconsistent with the provisions of the Plan, as are contained in the
applicable Award Agreement.
(a) OPTION PRICE. The purchase price per Share shall be one hundred percent
(100%) of the Fair Market Value of the Share on the Grant Date. Payment of the
Option Price may be made in cash, Shares, or a combination of cash and Shares,
as provided in the Award Agreement in effect from time to time.
(b) OPTION PERIOD. The term during which Options granted under this Section
10 shall be exercisable shall be ten (10) years from the Grant Date.
(c) EXERCISE OF OPTIONS. Subject to the provisions of this Section 10(c),
Options shall be exercisable to the extent of fifty percent (50%) of the Shares
subject thereto after one year from the Grant Date, seventy-five percent (75%)
of such Shares after two years from the Grant Date, and one hundred percent
(100%) of such Shares after three years from the Grant Date. Options may be
exercised by an Outside Director during the period that the Outside Director
remains a member of the Board and under the circumstances described below.
If an Outside Director retires under a retirement plan or policy of the
Company, then Options held by such Outside Director may be exercised for a
period of thirty-six (36) months following retirement, to the extent of 100% of
the Shares covered by such Options (notwithstanding the extent to which the
Outside Director otherwise would have been entitled to exercise such Options at
the date of retirement), provided that in no event shall an Option be
exercisable more than ten ( 10) years after the Grant Date.
In the event of the death of an Outside Director, Options held by such
Outside Director may be exercised for a period of twelve ( 12) months following
the date of death, (i) to the extent of 100% of the Shares covered by such
Options (notwithstanding the extent to which the Outside Director otherwise
would have been entitled to exercise the Option at the date of death), and (ii)
only by the executor or administrator of the Outside Director's estate or by
the person or persons to whom the Outside Director's rights under the Options
shall pass by the Outside Director's will or the laws of descent and
distribution, provided that in no event shall an Option be exercisable more
than ten (10) years after the Grant Date.
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<PAGE> 9
If an Outside Director shall cease to be a director for any reason other than
retirement under a retirement plan or policy of the Company or death, Options
held by such Outside Director may be exercised for a period of three (3) months
following such cessation, to the extent of 100% of the Shares covered by such
Options (notwithstanding the extent to which the Outside Director otherwise
would have been entitled to exercise such Options at the date of such
cessation), provided that in no event shall an Option be exercisable more than
ten (10) years after the Grant Date.
SECTION 11. CHANGE IN CONTROL.
Notwithstanding the provisions of Sections 6(c) and 10(c), Options shall
become exercisable with respect to 100% of the Shares upon the occurrence of
any Change in Control (as hereafter defined) of the Company; except that no
Options shall be exercised prior to the end of six months from the Grant Date.
Notwithstanding the provisions of Section 8 and the applicable Award
Agreement, any restricted Shares shall be 100% vested and without any
restrictions upon the occurrence of any Change in Control of the Company.
For all purposes of the Plan, a "Change in Control" shall have occurred if
any of the following events shall occur:
(a) 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 of the Company immediately prior to such transaction;
(b) The Company sells all or substantially all of its assets to any other
corporation or other legal person, and 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;
(c) There is a report filed on Schedule 13D or Schedule 14D-l (or any
successor schedule, form or report), each as promulgated pursuant to 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
13(d)(3) or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 20% or more of the Voting Stock;
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<PAGE> 10
(d) 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
(e) If during any period of two 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 Section 11 (e), 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 11(c) or 11(d) hereof,
unless otherwise determined in a specific case by majority vote of the Board, a
"Change in Control" shall not be deemed to have occurred for purposes of the
Plan solely because (i) the Company, (ii) an entity in which the Company
directly or indirectly beneficially owns 50% or more of the voting securities,
or (iii) any employee stock ownership plan or any other employee benefit plan
sponsored by the Company, either files or becomes obligated to file a report or
a proxy statement under or in response to Schedule 13D, Schedule 14D-l, 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.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may, at any time, amend, alter or terminate the Plan, but no
amendment, alteration, or termination shall be made that would impair the
rights of an Outside Director or Participant under an Award theretofore
granted, without the Outside Director's or Participant's consent, or that
without the approval of the shareholders would:
(a) except as is provided in Sections 4(b) and 13(c) of the Plan, increase
the total number of Shares which may be issued under the Plan;
(b) change the class of employees eligible to participate in the Plan; or
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<PAGE> 11
(c) materially increase the benefits accruing to Participants under the
Plan;
so long as such approval is required by law or regulation.
The Committee may amend the terms of any Award heretofore granted (except,
with respect to Options granted pursuant to Section 10 hereof, only to the
extent not inconsistent with Rule 16b-3 under the Exchange Act or any successor
rule or statute), prospectively or retroactively, but no such amendment shall
impair the rights of any Participant or Outside Director without his consent.
SECTION 13. GENERAL PROVISIONS.
(a) No Option, Stock Appreciation Right, or Restricted Stock Award shall be
assignable or transferable by a Participant or an Outside Director otherwise
than by will or the laws of descent and distribution, and Options and Stock
Appreciation Rights may be exercised during the Participant's or Outside
Director's lifetime only by the Participant or the Outside Director or, if
permissible under applicable law, by the guardian or legal representative of
the Participant or Outside Director.
(b) The term of each Award shall be for such period of months or years from
its Grant Date as may be determined by the Committee or as set forth in the
Plan; provided that in no event shall the term of any Incentive Stock Option or
any Stock Appreciation Right related to any Incentive Stock Option exceed a
period of ten (10) years from the Grant Date.
(c) In the event of a merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure such
that Shares are changed into or become exchangeable for a larger or smaller
number of Shares, thereafter the number of Shares subject to outstanding Awards
granted to Participants and to any Shares subject to Awards to be granted to
Participants pursuant to this Plan shall be increased or decreased, as the case
may be, in direct proportion to the increase or decrease in the number of
Shares by reason of such change in corporate structure; provided, however, that
the number of Shares shall always be a whole number, and the purchase price per
Share of any outstanding Options shall, in the case of an increase in the
number of Shares, be proportionately reduced, and, in the case of a decrease in
the number of Shares, shall be proportionately increased. The above adjustment
shall also apply to any Shares subject to Options granted to Outside Directors
pursuant to the provisions of Section 10.
(d) No Employee shall have any claim to be granted any Award under the Plan
and there is no obligation for uniformity of treatment of Employees or
Participants under the Plan.
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<PAGE> 12
(e) The prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless such recipient shall have
executed an Award agreement, and otherwise complied with the then applicable
terms and conditions.
(f) All certificates for Shares delivered under the Plan pursuant to any
Award shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
(g) Except as otherwise required in any applicable Award Agreement or by the
terms of the Plan, Participants shall not be required, under the Plan, to make
any payment other than the rendering of services.
(h) The Company shall be authorized to withhold from any payment under the
Plan, whether such payment is in Shares or cash, all withholding taxes due in
respect of such payment hereunder and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.
(i) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(j) Nothing in the Plan shall interfere with or limit in any way the right of
the Company or any Subsidiary to terminate any Participant's employment at any
time, nor shall the Plan confer upon any Participant any right to continued
employment with the Company or any Subsidiary.
SECTION 14. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall be effective as of April 22, 1991, and shall continue in
effect until terminated by the Board.
12
<PAGE> 1
EXHIBIT (10)(m)
THE LUBRIZOL CORPORATION
DEFERRED STOCK COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
September 17, 1991
PURPOSE
1. The Lubrizol Corporation (the "Company") hereby establishes
its Deferred Stock Compensation Plan for Outside Directors
(the "Plan") in order to promote the interests of the Company
and its shareholders by having a portion of the total
compensation payable to its outside directors be deferred and
paid in the form of common shares of the Company, thereby
increasing each Director's beneficial ownership of Company
common shares as well as each Director's proprietary interest
in the Company.
EFFECTIVE DATE
2. The effective date of the plan is October 1, 1991.
COMMON SHARE UNITS
3. In addition to the cash compensation otherwise payable to each
outside director of the Company, the Company shall establish
and maintain a Deferred Stock Account for and in the name of
each outside director. Subject to the provisions of Section
10, on the first day of October in each calendar year, the
Company shall credit 100 common share units ("Units") to the
Deferred Stock Account of each person who is an outside
director of the Company on said date.
DIVIDEND EQUIVALENTS
4. As of each dividend record date declared with respect to the
Company's common shares, the Company shall credit the Deferred
Stock Account of each director with an additional number of
Units equal to:
(a) the product of (i) the dividend per common share of
the Company which is payable with respect to such
dividend record date, multiplied by (ii) the number
of Units credited to the director's Deferred Stock
Account as of such dividend record date;
divided by
(b) the closing price of a common share of the Company
on the dividend record date (or if such stock was
not traded on that date, on the next preceding date
on which such common shares were traded), as
<PAGE> 2
reported by the New York Stock Exchange - Composite
Transactions Reporting System.
DISTRIBUTION OF COMMON SHARES
5. (a) Each director, or, in the event of death, his/her
beneficiary, shall be entitled to receive one
common share of the Company (a "Share" or "Shares")
for each Unit credited to his Deferred Stock
Account, payable at such time or times as
hereinafter provided. Once a Share has been
distributed with respect to a Unit, that Unit shall
be canceled.
(b) Unless otherwise elected by the director in
accordance with the provisions of Section 5(c), all
Shares shall be distributed to the director or
beneficiary, as the case may be, on the first day
of the month following the date on which the
director ceases to be a director for any reason.
(c) At any time prior to the first time that the
Company credits Units to the director's Deferred
Stock Account, the director may irrevocably elect
to have all Shares to which the director will be
entitled under this Plan distributed to him/her (or
in the event of his/her death, the director's
designated beneficiary) in ten or fewer annual
installments commencing on the first day of the
month following the date on which such director
ceases to be a director of the Company for any
reason. The number of Shares to be distributed
with each installment shall be equal to the nearer
whole number obtained by dividing the number of
Units then credited to the director's Deferred
Stock Account by the number of unpaid installments.
(d) Units with respect to which no distribution of
Shares has yet occurred shall continue to be held
in the director's Deferred Stock Account and
credited with dividend equivalents in accordance
with Section 4.
BENEFICIARY DESIGNATION
6. (a) Each director may, from time to time, by writing
filed with the Company, designate any legal or
natural person or persons (who may be designated
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<PAGE> 3
contingently or successively) to whom Shares
attributable to the director's Units are to be
distributed if the director dies prior to having
received all of such Shares to which he/she is
entitled under Section 5. A beneficiary
designation will be effective only if the signed
form is filed with the Company while the director
is alive and will cancel all beneficiary
designation forms filed earlier.
(b) To the extent that a director fails to designate a
beneficiary or beneficiaries as provided in this
Section 6, or if all designated beneficiaries die
before the director or before the distribution of
all Shares attributable to the director's Units,
all remaining Shares attributable to such Units
shall be distributed to the estate of the director
as soon as practicable after such death.
ACCELERATION OF SHARE DISTRIBUTIONS
7. The Company may accelerate the distribution of Shares with
respect to Units credited to the Deferred Stock Account of any
director for reasons of severe financial hardship. For
purposes of this Plan, severe financial hardship shall be
deemed to exist in the event the Company determines that a
director needs a distribution to meet immediate and heavy
financial needs resulting from a sudden or unexpected illness
or accident of the director or a member of his/her family,
loss of the director's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the director. A
distribution based on financial hardship shall not exceed the
amount required to meet the immediate financial need created
by the hardship.
TRANSFERABILITY
8. The interests of any director or beneficiary under the Plan
are not subject to the claims of the director's creditors and
may not otherwise be voluntarily or involuntarily assigned,
alienated or encumbered.
SHAREHOLDER STATUS
9. Prior to the date that Shares are distributed to a director
(or beneficiary), the director (or beneficiary) shall have no
rights of a shareholder with respect to the Units. The
director's rights under this Plan are solely that of an
unsecured creditor of the Company and the Company shall not be
obligated to hold any Shares in trust or as a segregated fund.
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<PAGE> 4
CHANGES IN SHARES
10. In the event of any change in the number of outstanding Shares
by reason of any stock dividend, stock split up,
recapitalization, merger, consolidation, exchange of shares or
other similar corporate change, the number of Units to be
credited in accordance with Section 3, the number of Units
held in the director's Deferred Stock Account and the Shares
to be distributed in accordance with this Plan shall be
appropriately adjusted to take into account any such event.
SUCCESSORS
11. This Plan shall be binding upon any assignee or successor in
interest to the Company whether by merger, consolidation or
sale of all or substantially all of the Company's assets.
AMENDMENT AND TERMINATION
12. The Board of Directors of the Company may, from time to time,
amend or terminate the Plan; provided, however, that no such
amendment or termination shall adversely affect the rights of
any director or beneficiary without his/her consent with
respect to Units credited prior to such amendment or
termination.
-ooOoo-
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<PAGE> 5
FIRST AMENDMENT TO
THE LUBRIZOL CORPORATION
DEFERRED STOCK COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
RECITALS
A. On September 23, 1991, by action of its Board of Directors,
The Lubrizol Corporation (the "Company") established its
Deferred Stock Compensation Plan for Outside Directors (the
"Plan").
B. The Plan became effective on October 1, 1991.
C. Effective August 10, 1992, the annual award of 100 common
share units ("Units") under the Plan to each outside director
became 200 Units, to reflect the effect of the 100% stock
dividend declared on the Common Shares of the Company
effective August 10, 1992.
D. It is appropriate, at this time, to amend the Plan, pursuant
to Section 12 of the Plan, increasing the number of Units
awarded on the first day of October in each calendar year to
300 Units; accordingly:
AMENDMENT
1. Section 3 of the Plan is hereby amended by changing the last
sentence thereof to read as follows:
"Subject to the provisions of Section 10, on the first
day of October in each calendar year, the Company shall
credit 300 common share units ("Units") to the Deferred
Stock Account of each person who is an outside director
of the Company on said date."
2. In all other respects, all provisions of the Plan shall remain
in full force and effect.
-ooOoo-
<PAGE> 1
EXHIBIT (10)(n)
THE LUBRIZOL CORPORATION
29400 LAKELAND BOULEVARD
WICKLIFFE OHIO 440922298
TELEPHONE 216/943-4200
October 1, 1992
Dr. R.Y.K. Hsu
The Lubrizol Corporation
29400 Lakeland Boulevard
Wickliffe, Ohio 44092
Dear Dr. Hsu:
This letter will set forth our amendment (the
"Amendment") to the agreement (the "Agreement") of February 23,
1987, as amended December 28, 1989, concerning your employment
by and consulting arrangement with The Lubrizol Corporation
("Corporation") and your acceptance of that employment. This
Amendment is being entered into in order to secure to the
Corporation the benefits of your services as an employee or
consultant during the remainder of your expected business
career. The Corporation desires that you remain an active
employee or consultant of the Corporation until age 70,
notwithstanding that you stepped down as an officer of the
Corporation in April of 1992 because of the Corporation's
mandatory policy that senior corporate officers relinquish
their elected positions at age 65. The Corporation recognizes
that this Agreement will require you to forego your goals of
continuing in the practice of law and of consulting in
international business development and operations subsequent to
your retirement from, and completion of any period of
consulting with, the Corporation.
<PAGE> 2
Dr. R.Y.K. Hsu
October 1, 1992
Page 2
The Corporation recognizes that you are accommodating
your future career goals to its needs, and are prepared to
continue to forego certain opportunities which are very
attractive to you, both financially and professionally. In
addition, you have further accommodated your personal desires
to the needs of the Corporation by deferring your retirement as
an employee. Accordingly, in consideration of the premises and
the receipt of $1.00 and other valuable consideration, the
sufficiency of which is acknowledged, the Corporation is
pleased to set forth the following amended terms relating to
your continued employment by and consulting agreement with it,
by amending the Agreement as follows:
1. Paragraph 2(b) of the Agreement shall be amended
to read as follows:
(b) Notwithstanding the provisions of
Paragraph 2(a) above, you may, by 60 days prior
written notice to the Corporation, elect to end
the Employment Term on or after December 31, 1992
and commence the Consulting Period at the end of
the Employment Term.
2. Paragraph 3 of the Agreement shall be amended to
read as follows:
Your principal duties and authority during the
Employment Term after April 27, 1992 will be to
serve in the position of Counselor to the
<PAGE> 3
Dr. R.Y.K. Hsu
October 1, 1992
Page 3
Chairman of the Corporation, as Chairman,
Lubrizol International, Inc., and as a member of
the management committee of the Corporation as if
a senior corporate officer. You will continue to
be a corporate representative on various other
boards of affiliates of the Corporation. Your
duties and responsibilities will not require you
to relocate outside the greater Cleveland area
without your consent, and will give appropriate
consideration to your age, health and skills, and
will be commensurate with your status and stature
with the Corporation.
3. Paragraph 4 of the Agreement shall be amended by
adding the words "and grants of stock options" to the last
sentence thereof after the words "merit raises."
4. Paragraph 5(a)(i) of the Agreement shall be
amended to read as follows:
(i) a "quarterly amount," payable on the first
day of the Consulting Period (prorated for the
balance of the calendar quarter) and on the first
day of each subsequent calendar quarter in
advance, equal to the product of 400 times the
"hourly rate." The initial hourly rate shall be
<PAGE> 4
Dr. R.Y.K. Hsu
October 1, 1992
Page 4
one one thousand eight hundredth (1/1800th) of
the annualized economic value to you (without
considering the impact of federal, state or local
income or other taxes) of the compensation and
benefits provided to you by the Corporation for
the calendar year in which the Employment Term
ends, as determined in this paragraph 5(a)(i),
but in no event less than the value of such
compensation and benefits for the calendar year
1992. The initial hourly rate shall be increased
or decreased on each January 1 commencing in the
year after the year in which the Employment Term
ends by the "inflation adjustment." The
inflation adjustment shall mean an adjustment as
of such January 1 to reflect, on a cumulative
basis, the increase or decrease, in the Gross
National Product Price Deflator published by the
Bureau of Economic Analysis of the U.S.
Department of Commerce as of the September 30
immediately preceding each such January 1
compared to the amount so published as of
September 30 in the year prior to the year in
which the Employment Term ends; provided that the
hourly rate shall never be less than that set
forth in the second preceding sentence. Should
<PAGE> 5
Dr. R.Y.K. Hsu
October 1, 1992
Page 5
publication of such index cease, there shall be
substituted such alternative index as you, with
our concurrence, determine most closely
approximates the Gross National Product Price
Deflator. The determination of the economic
value to you of your compensation and benefits
for the calendar year in which the Employment
Term ends shall equal the economic value of such
compensation and benefits for the calendar year
1992, which value has been agreed upon by the
Corporation and you, increased on a compound
annual basis by the percentage increase in your
base compensation from the Corporation for each
calendar year subsequent to 1992 to and including
the calendar year in which the Employment Term
ends.
5. Paragraph 5(b)(ii) of the Agreement shall be
amended to read as follows:
(ii) Notwithstanding Paragraph 5(b)(i), (A)
you may by giving not less than 60 days prior
written notice to the Corporation, reduce the
number of days you will make yourself available
<PAGE> 6
Dr. R.Y.K. Hsu
October 1, 1992
Page 6
for advice and counsel during the remaining
calendar quarters of the Consulting Period to the
equivalent of thirty-seven and one-half (37-1/2)
eight hour days per calendar quarter, and (B) if
in your judgment the mental or physical health of
you or your wife necessitates the reduction
described in this clause (B) of this sentence,
you may by giving not less than 60 days prior
written notice to the Corporation (which notice
may be given in conjunction with a notice under
clause (A) of this sentence), reduce the number
of days you will make yourself available for
advice and counsel during the remaining calendar
quarters of the Consulting Period to the
equivalent of twenty-five (25) eight hour days
per calendar quarter. If the Corporation
challenges your determination of health
necessity, the determination shall be made by a
physician or physicians selected by you and
acceptable to the Corporation. Any such
reduction or reductions shall commence with the
calendar quarter next following the giving of
such notice, and the quarterly amount for such
quarter and all subsequent calendar quarters
shall be reduced as provided in Paragraph
5(a)(ii).
<PAGE> 7
Dr. R.Y.K. Hsu
October 1, 1992
Page 7
6. Paragraph 5(c) of the Agreement shall be amended
to read as follows:
(c) During the Consulting Period the
Corporation shall reimburse you monthly for
travel and other expenses in connection with your
services as a consultant, such reimbursement to
be in accordance with its standard reimbursement
practices. In addition, the Corporation shall
reimburse you monthly for your reasonable
expenses in establishing an office (or, if the
Corporation and you so agree, the Corporation
shall provide an office for your use suitable to
your status and responsibilities), including
rent, utilities, furniture and equipment and the
services of one employee; provided, however, that
if you perform consulting services for any person
or entity other than the Corporation or any of
its affiliates, you shall prorate your expenses
based on the number of hours you perform
consulting services for such other person or
entity and for the Corporation.
7. Paragraph 7 of the Agreement shall be amended to
read:
During the Employment Term, you will receive all
perquisites (financial and social) called for by
<PAGE> 8
Dr. R.Y.K. Hsu
October 1, 1992
Page 7
our prevailing policy for officers of the
Corporation in effect from time to time, as if
you were then a senior corporate officer.
8. The last sentence of Paragraph 8 is amended by
inserting the word "and" between the word "compensation" and
the word "benefits."
9. Paragraph 11 of the Agreement is amended to read
as follows:
This Agreement supplements the Amended and
Restated Severance Agreement between the
Corporation and you, dated July 24, 1989, as
amended December 28, 1989.
If this letter accurately reflects your understanding
of the Amendment to our Agreement, please so indicate by
signing and dating the original of this letter and returning it
to me.
Sincerely,
THE LUBRIZOL CORPORATION
By:
L. E. Coleman, Chairman
The terms of the foregoing Amendment to the Agreement
are agreed to this day of October, 1992.
Dr. R.Y.K Hsu
<PAGE> 1
EXHIBIT (10)(o)
EARLY RETIREMENT AGREEMENT
and
GENERAL RELEASE
1. The Parties to this Early Retirement Agreement and General
Release are The Lubrizol Corporation ("Lubrizol") and William D. Manning
("WDM"). This General Release will also be binding on WDM's heirs, successors,
and assigns. This General Release releases Lubrizol as well as its successors,
assigns, divisions, related or affiliated companies, officers, directors,
shareholders, members, employees, agents and counsel, including without
limitation any and all management and supervisory employees (hereinafter
collectively termed the "Released Parties").
2. Lubrizol advises WDM to consult with an attorney prior to
executing this General Release. WDM agrees that he has had the opportunity to
consult counsel, if he chose to do so and, that he has had adequate time to
read and consider this General Release before executing it (at least 45 days,
if needed). WDM acknowledges that he is responsible for any costs and fees
resulting from his attorney reviewing this General Release. WDM agrees that he
has carefully read this General Release and knows its contents, and that he
signs this General Release voluntarily, with a full understanding of its
significance, and intending to be bound by its terms.
3. As consideration for the promises in this Early Retirement
Agreement and General Release, and for the purpose of securing the release of
any and all claims against the Released Parties (including personal injury
claims), it is agreed:
A. WDM will continue to serve, subject to removal for cause, as
an officer of the corporation until the election of officers
following the annual meeting of shareholders in April, 1994.
He will retire at that time.
B. WDM will hold his current title until the President of the
corporation determines that the transition into the
reorganized corporate management structure has been
essentially completed, at which time WDM will assume the new
title of Senior Vice President and Assistant to the President
until his retirement in April, 1994.
C. Management will recommend that WDM be granted stock options
during the normal process for option grant consideration in
1993 and 1994, and will recommend to the Organization and
Compensation Committee of the Board of Directors that it
accelerate the vesting of any outstanding options granted to
WDM by the date of his retirement in April, 1994.
D. Management will recommend that WDM be included for
participation in the company's variable compensation award
plan applicable to fiscal year 1993.
<PAGE> 2
E. Management will recommend that WDM be awarded a financial
planning grant in May, 1993 under the standard terms of the
plan applicable to such grants.
F. Management will recommend that WDM's participation in the
executive death benefit program be continued following his
retirement, under the terms of the plan.
G. In addition to any benefits payable under the company's
various retirement plans at the date of his actual retirement,
the company will pay to WDM on or about the date of his actual
retirement a lump sum equal to the estimated present day value
of the difference between the benefits then payable and the
amount which would be payable to him at age 65, assuming
continuous employment until that age and certain compensation
and interest rate assumptions. It is agreed that this lump
sum payment shall be in the amount of $349,000. Additionally,
the company will provide to WDM on or about his actual
retirement date the lump sum of $19,600, which the parties
agree reflects an amount equal to the estimated monthly social
security benefits he would receive at age 62 for the period
between his actual retirement and his attaining age 62.
H. WDM will be able to participate in all other post-retirement
benefits which are available to retirees, pursuant to their
plan terms and insofar as they are maintained by the company,
including the Health Care Plan.
I. For a period of three (3) years following his actual
retirement, WDM will provide exclusive consulting services to
Lubrizol and will not provide services to or be employed,
directly or indirectly, including as a consultant, by any
other company which is or may become a competitor of Lubrizol.
As compensation for the promise contained in this paragraph,
WDM will be paid $100,000 for each of the three years, payable
May 1, 1994; May 1, 1995; and May 1, 1996. For services under
the consulting arrangement, to be set forth with more
particularity in a separate consulting services agreement, WDM
will be paid an additional $50,000 for each of the three
years.
4. WDM agrees to release and discharge forever Lubrizol from all
causes of action, claims, demands, costs and expenses for damages which he now
has, whether known or unknown, on account of his employment with Lubrizol
and/or his termination of employment with Lubrizol. This release includes, but
is not limited to, any claim of discrimination on any basis, including race,
color, national origin, religion, sex, age or handicap arising under any
federal, state, or local statute, ordinance, order or law, including the Age
Discrimination in Employment Act; and any claim that the Released Parties,
jointly or severally, breached any contract or promise, express or implied, or
any term or condition of WDM's employment; and any claim for promissory
estoppel arising out of WDM's employment with Lubrizol; and any other issue
arising out of his employment with Lubrizol.
5. WDM agrees that he will return all Lubrizol property in his
possession at or about the time of his actual retirement.
<PAGE> 3
6. WDM acknowledges that the payment of the consideration
enumerated in Paragraph 3 of this Early Retirement Agreement and General
Release is solely in exchange for the promises in this Early Retirement
Agreement and General Release. WDM further acknowledges that such payment does
not constitute an admission by the Released Parties of liability or of
violation of any applicable law or regulation.
7. WDM agrees that all provisions, terms and conditions of this
General Release are and shall remain CONFIDENTIAL (except his attorney and
immediate family) and shall not be disclosed to any person not a party hereto
under any circumstances, except as required by law.
8. WDM acknowledges that by reason of his position with Lubrizol,
he has had access to confidential materials and information concerning
Lubrizol's business affairs. WDM represents that he has held all such
materials and information CONFIDENTIAL and will continue to do so.
9. WDM agrees that in the event that he breaches any of the terms
of this agreement, he will forfeit the settlement amount plus pay any expenses
or damages incurred as a result of the breach.
10. WDM agrees that no promises or agreements have been made to
him except those contained in this Early Retirement Agreement and General
Release.
11. WDM may revoke and cancel this General Release by providing
written notice of such revocation to Lubrizol to the attention of Mark W.
Meister. Such written notice must be received by Lubrizol within seven (7)
days after WDM's execution of this General Release. If he does so revoke, this
General Release will be null and void and Lubrizol shall have no obligation to
make the payments provided in Paragraph 3. This General Release shall not
become effective and enforceable until after the expiration of this 7-day
revocation period; after such time, if there has been no revocation, the
General Release shall be fully effective and enforceable.
12. If any provision of this Early Retirement Agreement and
General Release is declared invalid or unenforceable, the remaining portions
shall not be affected thereby and shall be enforced.
13. This Early Retirement Agreement and General Release shall be
governed under the Laws of the State of Ohio.
The Lubrizol Corporation /s/ William D. Manning
-----------------------------
William D. Manning
By: /s/ Mark W. Meister Date: 4-12-93
------------------------- ------------------------
Mark W. Meister
Date: 4-14-93
-----------------------
<PAGE> 1
Exhibit (10)(p)
THE LUBRIZOL CORPORATION
OFFICERS' SUPPLEMENTAL
RETIREMENT PLAN
The Lubrizol Corporation hereby establishes, effective as of January 1,
1993, The Lubrizol Corporation Officers' Supplemental Retirement Plan (the
"Plan") for the purpose of providing deferred compensation benefits to a select
group of management or highly compensated employees.
SECTION 1. DEFINITIONS. For the purposes hereof, the following words and
phrases shall have the meanings indicated, unless a different meaning is
plainly required by the context:
A. BENEFICIARY. The term "Beneficiary" shall mean a person who is
designated by a Participant to receive benefits payable upon his death pursuant
to the provisions of Section 7.
B. CODE. The term "Code" shall mean the Internal Revenue Code as amended
from time to time. Reference to a section of the Code shall include such
section and any comparable section or sections of any future legislation that
amends, supplements, or supersedes such section.
C. COMPANY. The term "Company" shall mean The Lubrizol Corporation, an
Ohio corporation, its corporate successors and the surviving corporation
resulting from any merger of The Lubrizol Corporation with any other
corporation or corporations.
D. CREDITED SERVICE. The term "Credited Service" shall mean a
Participant's years of service with the Company equal to the number of full and
fractional years of service (to the nearest twelfth of a year) beginning on the
date the Participant first performed an hour of service for the Company and
ending on the date he is no longer employed by the Company.
E. FINAL AVERAGE PAY. The term "Final Average Pay" shall mean the
aggregate amount of Basic Compensation (as that term is defined in the Lubrizol
Pension Plan) received by the Participant during the three consecutive calendar
years during which such Participant received the greatest aggregate amount of
Basic Compensation within the most recent ten years of employment, divided by
36.
F. LUBRIZOL PENSION PLAN. The term "Lubrizol Pension Plan" shall mean
The Lubrizol Corporation Pension Plan as the same shall
<PAGE> 2
be in effect on the date of a Participant's retirement, death, or other
termination of employment.
G. NORMAL RETIREMENT DATE. The term "Normal Retirement Date" shall mean
the first day of the month following the date on which a Participant attains
age sixty-five (65).
H. PARTICIPANT. The term "Participant" shall mean the Chief Executive
Officer, the Chief Operating Officer and any other officer of the Company who
is designated by the Board of Directors of the Company and the Chief Executive
Officer to participate in the Plan, and who has not waived participation in the
Plan.
I. PLAN. The term "Plan" shall mean a deferred compensation plan set
forth herein, together with all amendments hereto, which Plan shall be called
"The Lubrizol Corporation Officers' Supplemental Retirement Plan."
SECTION 2. VESTING. The Participant shall be 100 percent vested in his
accrued supplemental retirement benefit hereunder.
SECTION 3. NORMAL RETIREMENT BENEFIT. Each Participant who retires from
employment with the Company on or after his Normal Retirement Date shall
receive, subject to the provisions of Sections 6, 7 and 8, a monthly
supplemental retirement benefit which shall be equal to two percent (2%) of his
Final Average Pay multiplied by his Credited Service (up to 30 years) offset by
the following amounts:
a. Benefits payable to the Participant under the Lubrizol Pension Plan;
b. Benefits payable to the Participant under The Lubrizol Corporation
Employees' Stock Purchase and Savings Plan, including benefits
attributable to Matching Contributions, but excluding benefits
attributable to CODA Contributions, Supplemental Contributions,
Rollover Contributions or Transferred Contributions, as defined
thereunder;
c. Benefits payable to the Participant under The Lubrizol Corporation
Employees' Profit-Sharing Plan;
d. Benefits payable to the Participant under The Lubrizol Corporation
Excess Defined Contribution Plan;
e. Benefits payable to the Participant under The Lubrizol Corporation
Excess Defined Benefit Plan;
f. The Participant's Social Security benefits;
<PAGE> 3
g. Any other employer-provided benefits not specifically excluded herein
which are payable to the Participant pursuant to any qualified or
nonqualified retirement plan maintained by the Company.
Such offsets shall be determined using the actuarial factors provided in
the Lubrizol Pension Plan.
SECTION 4. EARLY RETIREMENT ELIGIBILITY AND DETERMINATION OF BENEFIT.
Each Participant who retires from employment with the Company at or after age
55, but prior to his Normal Retirement Date, shall receive a percentage of his
supplemental retirement benefit determined under Section 3, in accordance with
the early retirement schedule provided in the Lubrizol Pension Plan.
SECTION 5. TERMINATION OF EMPLOYMENT. If a Participant terminates
employment prior to age 55, he shall receive the actuarial equivalent of his
supplemental retirement benefit determined under Section 3 in a single lump-sum
payment; such actuarial equivalent of which shall be calculated using the same
actuarial factors and interest rates used in the Lubrizol Pension Plan as in
effect on the date the Participant terminates employment in accordance with
this Section 5.
SECTION 6. STANDARD FORM OF BENEFIT. The Participant shall be paid his
supplemental retirement benefit under this Plan in the form of a monthly
retirement benefit payable to such Participant for his lifetime following his
retirement under Sections 3 or 4, with the continuance to his Beneficiary of
such amount after his death for the remainder, if any, of the 120-month term
commencing with the date as of which the first payment of such monthly benefit
is made, and with any such monthly benefits remaining unpaid upon the death of
the survivor of the Participant and his Beneficiary to be made to the estate of
such survivor.
SECTION 7. OPTIONAL FORMS OF BENEFIT. Upon becoming eligible to receive
a supplemental retirement benefit under this Plan, the Participant may elect to
receive the actuarial equivalent of the standard form of benefit provided in
Section 6, in accordance with any one of the following options:
a. a single lump-sum payment;
b. a reduced monthly retirement benefit payable to a Participant for his
lifetime following his retirement under Sections 3 or 4, with the
continuance of a monthly benefit equal to fifty percent (50%) of such
reduced amount after his death to his Beneficiary, provided that such
Beneficiary is living at the time of such Participant's retirement or
termination and survives him;
<PAGE> 4
c. a reduced monthly retirement benefit payable to such Participant for
his lifetime following his retirement under Sections 3 or 4, with the
continuance of a monthly benefit equal to one hundred percent (100%)
of suchreduced amount after his death to his Beneficiary during the
lifetime of the Beneficiary, provided such Beneficiary is alive at
the time of such Participant's retirement or termination and survives
him; or
d. annual installments of up to ten payments, the first of which shall
be paid within 30 days of the Participant's retirement under Sections
3 or 4, or termination under Section 5, and subsequent installments
of which shall be paid on the anniversary date of the payment of the
first installment. Such installments shall be determined by dividing
the commuted lump-sum equivalent of the supplemental retirement
benefit (determined in the same manner as under the Lubrizol Pension
Plan) by the number of installments to be paid and adjusting for
interest based on the interest rate used to determine the commuted
lump-sum payment. Installments after the first installment shall
include such interest which accrues during the 12-month period
occurring since the date the prior installment was paid.
SECTION 8. PAYMENT IN THE EVENT OF DEATH PRIOR TO COMMENCEMENT OF
DISTRIBUTION. If a Participant dies prior to commencement of benefits under
the Plan, his surviving spouse, if any, shall be eligible for a survivor
benefit which is equal to one-half of the reduced monthly benefit the
Participant would have received under the Plan if the Participant had
terminated employment on the day before his death and had elected to receive
his benefit hereunder in the form of a 50 percent joint and survivor annuity.
In making the determinations and reductions required in this Section 8, the
Company shall apply the assumptions then in use under the Lubrizol Pension
Plan. For purposes hereof, a surviving spouse shall only be eligible for a
benefit under this Section 8, if such spouse had been married to the deceased
Participant for at least one year as of the date of the Participant's death.
SECTION 9. ACTUARIAL FACTORS. All actuarial assumptions and factors used
in this Plan shall be the same as those used in the Lubrizol Pension Plan.
SECTION 10. FUNDING. The obligation of the Company to pay benefits
provided hereunder shall be unfunded and unsecured and such benefits shall be
paid by the Company out of its general funds. In order to provide a source of
payment for its obligations under the Plan, the Company may cause a trust fund
to be maintained and/or arrange for insurance contracts. Subject to the
provisions of the trust agreement governing any such trust fund or the
<PAGE> 5
insurance contract, the obligation of the Company under the Plan to provide a
Participant with a benefit shall nonetheless constitute the unsecured promise
of the Company to make payments as provided herein, and no person shall have
any interest in, or a lien or prior claim upon, any property of the Company.
SECTION 11. PLAN ADMINISTRATOR. The Company shall be the plan
administrator of the Plan. The plan administrator shall perform all
ministerial functions with respect to the Plan. Further, the plan
administrator shall have full power and authority to interpret and construe the
Plan and shall determine all questions arising in the administration,
interpretation, and application of the Plan. Any such determination shall be
conclusive and binding on all persons. The plan administrator shall employ
such advisors or agents as it may deem necessary or advisable to assist it in
carrying out its duties hereunder.
SECTION 12. NOT A CONTRACT OF CONTINUING EMPLOYMENT. Nothing herein
contained shall be construed as a commitment or agreement on the part of the
Participant to continue his employment with the Company, and nothing herein
contained shall be construed as a commitment or agreement on the part of the
Company to continue the employment or the annual rate of compensation of the
Participant for any period, and the Participant shall remain subject to
discharge to the same extent as if this Plan had never been put into effect.
SECTION 13. RIGHT OF AMENDMENT AND TERMINATION. The Company reserves the
right to amend or to terminate the Plan in whole or in part at any time and to
suspend operation of the Plan, in whole or in part, at any time.
SECTION 14. TERMINATION AND DISTRIBUTION OF ACCRUED BENEFITS. The Plan
may be terminated at any time by the Company, and in that event the amount of
the accrued benefits as of the date of such termination shall remain an
obligation of the Company and shall be payable as if the Plan had not been
terminated.
SECTION 15. CONSTRUCTION. Where necessary or appropriate to the meaning
hereof, the singular shall be deemed to include the plural, the plural to
include the singular, the masculine to include the feminine, and the feminine
to include the masculine.
SECTION 16. SEVERABILITY. In the event any provision of the Plan is
deemed invalid, such provision shall be deemed to be severed from the Plan, and
the remainder of the Plan shall continue to be in full force and effect.
<PAGE> 6
SECTION 17. GOVERNING LAW. Except as otherwise provided, the provisions
of the Plan shall be construed and enforced in accordance with the laws of the
State of Ohio.
EXECUTED at Wickliffe, Ohio, this ____ day of ______________, 1993.
THE LUBRIZOL CORPORATION
By:
----------------------
Title:
-------------------
And By:
-------------------
Title:
--------------------
<PAGE> 1
EXHIBIT 11
<TABLE>
THE LUBRIZOL CORPORATION
Computation of Per Share Earnings (Note A)
(In Thousands, Except Per Share Data)
The computation of primary earnings per share and fully diluted earnings per
share is as follows:
<CAPTION>
For the Year Ended December 31
---------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Average shares outstanding
for computation of primary
earnings per share 67,706 68,966 69,260
Add adjustment to treat
shares for options exercised
as if such shares were out-
standing during the entire
year 257 234 124
Add equivalent shares for
unexercised options at end
of year (B) 550 626 587
------ ------ ------
Average shares outstanding
for computation of fully
diluted earnings per share 68,513 69,826 69,971
====== ====== ======
Primary earnings per share $ .67 $ 1.81 $ 1.79
====== ====== ======
Fully diluted earnings per
share (C) $ .67 $ 1.79 $ 1.77
====== ====== ======
<FN>
NOTES: (A) Share and per share data have been restated to reflect 2-for-1
stock split effected on August 31, 1992.
(B) Computed under the "Treasury Stock Method" using the higher of
quoted ending or average market price.
(C) Fully diluted earnings per share have not been presented in the
consolidated statements of income because the dilutive effect is
less than 3%.
</TABLE>
<PAGE> 1
Exhibit 13
THE LUBRIZOL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Lubrizol Corporation is a full service supplier of performance chemicals to
diverse markets worldwide. These specialty chemical products are created
through the application of advanced chemical, mechanical and biological
technologies to enhance the performance and quality of the customer products in
which they are used. The company develops, produces and sells chemical
additives for transportation and industrial lubricants and functional fluids,
fuel additives and diversified specialty chemical products.
Prior to December 1, 1992, the company had a separately reportable Agribusiness
segment. That segment included traditional operations which develop, produce
and market planting seeds and specialty vegetable oils, and also included
strategic biotechnology research and development. As described in Note 16 to the
financial statements, on December 1, 1992, the company transferred
substantially all of its Agribusiness segment, other than the specialty
vegetable oil operations, to Mycogen Corporation and a joint venture
partnership formed with Mycogen. The transferred assets were related to the
seed business activities of the company's former Agrigenetics division and are
referred to in the following discussion as "Agrigenetics." The agribusiness
assets and operations retained by the company are not reportable as a separate
industry segment after 1992.
1993 RESULTS OF OPERATIONS
In 1993, consolidated revenues were $1.53 billion. Consolidated revenues for
1992 were $1.55 billion which included $88.6 million of revenues from
Agrigenetics. Excluding the Agrigenetics revenues from 1992, consolidated
revenues increased $61.9 million or 4% in 1993. Higher selling prices of 4% and
favorable product mix of 1% were partially offset by unfavorable currency
effects of 2% and volume decreases of 1%. Revenues of Langer & Company, which
was acquired in January 1993, accounted for the remaining 2% revenue increase.
<TABLE>
<CAPTION> 1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Revenues by Segment(millions)
<S> <C> <C> <C> <C> <C>
Specialty Chemicals $1,124.4 $1,335.5 $1,348.8 $1,433.4 $1,525.5
Agribusiness $103.5 $117.2 $127.5 $118.9 -
</TABLE>
The increase in 1993 selling prices resulted from price increases which were
implemented in the fourth quarter of 1992 and from the introduction late in
1993 of higher performing products to meet new passenger car motor oil
standards in the U.S. market. The company is implementing additional price
increases of 3.5% to 6% on a worldwide basis in the first quarter of 1994 to
more fully recover the costs of its product technology as well as the costs
resulting from increased environmental regulations at its facilities.
North American volume decreased 9% in 1993 from the record levels of volume in
1992 as a result of a decrease in market share. The revenue impact of this
volume decrease was offset by an increase in sales of more profitable products.
International volume increased 6% over 1992 and accounts for approximately
60% of revenues.
<TABLE>
<CAPTION> 1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Gross Profit by Segment(millions)
<S> <C> <C> <C> <C> <C>
Specialty Chemicals $320.8 $398.2 $429.9 $451.0 $485.4
Agribusiness $35.0 $40.2 $45.7 $39.3 -
</TABLE>
Gross profit (sales less cost of sales) was $485.4 million in 1993 compared to
$490.3 million in 1992. Excluding the impact of Agrigenetics ($35.3 million in
1992), gross profit increased by $30.4 million or 7% primarily as a result of
higher average selling prices. Gross profit as a percentage of sales was 32.0%
in 1993 compared to 31.2% (excluding Agrigenetics) in 1992.
Selling and administrative expenses decreased $22.8 million to $158.5 million.
Excluding Agrigenetics ($29.1 million in 1992), selling and administrative
expenses increased $6.3 million or 4%. This increase primarily resulted from
the inclusion of Langer's expenses in 1993.
<TABLE>
<CAPTION> 1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Research Testing and
Development by Segment (millions)
<S> <C> <C> <C> <C> <C>
Specialty Chemicals $94.1 $107.4 $127.7 $139.8 $171.5
Agribusiness $18.3 $16.6 $16.3 $15.0 -
</TABLE>
Research, testing and development (technology) expenses increased $16.8 million
to $171.5 million. Excluding Agrigenetics ($13.5 million in 1992), technology
expenses increased $30.3 million or 21%. This increase is a result of higher
testing costs associated with customer test programs to meet new industry
performance standards for passenger car and diesel engine oils and automatic
transmission fluids. These standards change periodically as engine and
transmission designs are improved by the equipment manufacturers to meet new
requirements for fuel economy, emissions, efficiency, durability and other
performance factors. The frequency of these performance upgrades is compressing
the time cycles for new product development and has been increasing the
company's technology expenses. This high level of technology expense is likely
to continue in the first half of 1994 before beginning to ease as customer test
programs are completed and new products are introduced into the market.
As a result of the above factors and increased royalties, after excluding
Agrigenetics from 1992, total cost and expenses increased $5.9 million more
than revenues in 1993.
As discussed in Note 17 to the financial statements, the company recorded a
special pretax charge of $86.3 million in the third quarter of 1993 in
connection with manufacturing rationalization and organizational realignment
initiatives. These initiatives were developed, formalized and presented by
management to the Board of Directors during the third quarter. The plans will
be implemented over the next several years and through consolidation
25
<PAGE> 2
THE LUBRIZOL CORPORATION
are expected to result in savings from a reduced number of employees, lower
operating costs and a one third reduction in the number of manufacturing units
used to produce intermediate products. When the plans are fully implemented,
annual expense savings are estimated to be approximately $50 million.
During the last half of the year, the company sold approximately one million
shares of Genentech common stock resulting in a pretax gain of $42.4 million.
The net proceeds of these sales were used to repurchase common shares of the
company as described under Working Capital, Liquidity and Capital Resources
below.
Other income-net was $.5 million in 1993 compared to $11.9 million in 1992.
Other income includes the company's share of equity losses in Mycogen and the
agribusiness joint venture. Mycogen recorded restructuring charges and incurred
weather-related problems in the Midwest which adversely affected agribusiness
results. The reduction in other income was attributable to increased equity
losses of $18.3 million in Mycogen and the agribusiness joint venture,
partially offset by increased gains on the sale of investments, excluding
Genentech, of $6.7 million.
The equity losses related to Mycogen and the agribusiness joint venture, net of
preferred stock dividends and a gain on the sale of investment, were $4.1
million less in 1993 than the Agrigenetics operating loss and equity losses
recorded in 1992.
The company conducts a significant amount of its business and has a number of
operating facilities in countries outside the United States. As a result, the
company is subject to business risks inherent in non-U.S. activities, including
political uncertainty, import and export limitations, exchange controls and
currency fluctuations. The company believes risks related to its foreign
operations are mitigated due to the political and economic stability of the
countries in which its largest foreign operations are located.
While changes in the dollar value of foreign currencies will affect earnings
from time to time, the longer term economic effect of these changes should not
be significant given the company's net asset exposure, currency mix and pricing
flexibility.
Generally, the income statement effect of changes in the dollar value of
foreign currencies is partially or wholly offset by the company's ability to
make corresponding price changes in local currency. The company's consolidated
net income will generally benefit (decline) as foreign currencies increase
(decrease) in value compared to the U.S. dollar. In 1993, European currencies
weakened and the Japanese yen strengthened resulting in an insignificant net
earnings effect.
Interest income decreased $3.2 million due to lower average balances of cash
and short-term investments. An increase in borrowings resulted in slightly
higher interest expense in 1993.
As a result of the above factors, income before income taxes was $119.7 million
in 1993, a decrease of $57.5 million from 1992. Net income in 1993, excluding
the special charge, Genentech gain and the accounting changes discussed below,
decreased 9% to $113.5 million or $1.67 per share, from $124.6 million or $1.81
per share in 1992.
ACCOUNTING CHANGES
As described in Note 10 to the financial statements, effective January 1, 1993,
the company adopted SFAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The company recorded the cumulative effect of
this accounting change of $79.9 million before taxes ($51.5 million or $.76 per
common share after taxes) in the first quarter of 1993. As a result of this
accounting change, postretirement health care and life insurance costs
increased $8.1 million ($.08 per share after taxes) in 1993. This expense is
allocated among the various cost and expense categories in the consolidated
statements of income. SFAS 106 has no effect on cash flows since the company
continues to pay claims as incurred.
As described in Note 8 to the financial statements, effective January 1, 1993,
the company also adopted SFAS 109, "Accounting for Income Taxes." The
cumulative effect of this accounting change reduced net deferred tax
liabilities and increased net income in 1993 by $12.1 million or $.18 per
share. The positive effect of adopting SFAS 109 was primarily attributable to
more favorable treatment of the deferred income taxes on intercompany profit in
inventory. SFAS 109 has no effect on cash flows.
RETURN ON AVERAGE SHAREHOLDERS' EQUITY was 6% in 1993 (14% excluding the
special charge, the Genentech gain and accounting changes), 15% in 1992 and 16%
in 1991.
1992 AND 1991 RESULTS OF OPERATIONS
<TABLE>
<CAPTION> 1989 1990* 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Return on Equity(percent) 14% 27% 16% 15% 6%
<FN>
* Return on equity is 18% before Genentech gain.
</TABLE>
Following is a discussion of the results of operations for 1992 and 1991, first
on a summary consolidated basis and then as the company historically reported
its business segments.
IN 1992, consolidated revenues increased $75.9 million or 5% compared to 1991
primarily as a result of record volume in the Specialty Chemicals segment. The
increased revenues were partially offset by increased manufacturing costs in
Specialty Chemicals, and higher specialty vegetable oil production costs, with
the result that gross profit increased $14.7 million or 3%. Gross profit as a
percentage of sales was 31.7% in 1992, compared to 32.4% in 1991. Selling,
administrative and technology expenses increased $19.7 million or 6% (all in
the Specialty Chemicals segment), more than offsetting the higher gross profit.
As a result of these factors and reduced royalties, total cost and expenses
increased $5.8 million more than revenues.
Other income-net increased $2.4 million in 1992, primarily as a result of a
gain on sales of investments of $6.5 million, partially offset by the company's
share of losses related to the agribusiness joint venture formed in December
1992, and expenses related to closing facilities in the mining chemicals
market. Accordingly, combined segment income
26
<PAGE> 3
THE LUBRIZOL CORPORATION
was $3.4 million lower in 1992 than in 1991. As explained in the segment
discussions, this consisted of a $6.0 million increase in Specialty Chemicals
and a $9.4 million decrease in Agribusiness. Net interest income increased $2.4
million primarily as a result of the repayment of debt early in the year.
As a result of the above factors, income before income taxes was $1 million or
1% lower than 1991. However, the company had a lower income tax rate in 1992
than in 1991, due principally to increased tax benefits from foreign dividends,
and net income in 1992 increased $1.0 million or 1% over 1991.
IN 1991, consolidated revenues increased $23.6 million or 2% compared to 1990
with both of the company's business segments achieving record revenues. Gross
profit increased $37.2 million or 8% over 1990 primarily due to higher average
selling prices in Specialty Chemicals. Selling, administrative and technology
expenses, predominantly in the Specialty Chemicals segment, increased $34.4
million or 12% in 1991 and largely offset the higher gross profit.
Other income-net increased $9 million in 1991 primarily because the prior year
included an asset write-off of $9.7 million in the Agribusiness segment. Net
interest income decreased by $3.5 million in 1991 due to lower interest rates
and lower average investment balances during the year.
Income before income taxes increased $3.7 million or 2% in 1991, after
excluding a $101.9 million gain in 1990 on the exchange of Genentech stock as a
result of the merger between Genentech and Roche Holdings, Inc., net of $5.1
million of related expenses. However, the company had a higher effective income
tax rate in 1991 compared to 1990 because of benefits in 1990 from settlements
of tax audits. As a result, net income in 1991 decreased $3.4 million or 3%
from 1990, after excluding the effects of the Genentech transaction.
SPECIALTY CHEMICALS SEGMENT
IN 1992, the Specialty Chemicals segment accounted for 92% of consolidated
revenues. The segment's revenues increased $84.6 million or 6% in 1992 as a
volume increase of 8% and favorable currency effects of 2% were partially
offset by unfavorable product and geographic mix of 4%. Volume was at a record
level for the year. North American volume was up 21% for the year as a result
of market share gains and a comparatively weak first half of 1991.
International volume, which accounts for approximately 60% of revenues, was
flat for the year. Average selling prices declined slightly during the first
three quarters. In the fourth quarter, the company announced price increases
which increased revenues for part of the period.
Gross profit increased $21.1 million or 5% compared to 1991. The increase in
gross profit resulting from higher revenues was partially offset by higher
manufacturing costs that reflected the effects of higher volume, increased
pension and health care costs, certain product recovery costs and environmental
costs. As a percentage of sales, gross profit decreased in 1992 to 31.6% from
32.1% in 1991.
Selling and administrative expenses increased $7.7 million or 6% primarily due
to higher international selling expenses and higher pension and health care
costs. Technology expenses increased $12.1 million or 10% as a result of
increased operating and staffing levels necessary to meet customer and product
development needs relating to new performance standards for gasoline engine oil
effective in July 1993, and diesel engine oils in 1994.
In 1992, the U.S. dollar weakened against other currencies, resulting in a net
favorable effect on the company when international transactions were translated
into U.S. dollars.
The increase in gross profit was greater than the increase in expenses, and
when combined with a $5.6 million increase in other income-net, Specialty
Chemicals segment income was $6 million or 3% higher than in 1991.
IN 1991, Specialty Chemicals revenues increased 1% as higher average selling
prices (net of mix and currency effects) of 4% were partially offset by volume
decreases of 3%. Selling prices were favorably affected by price increases
implemented during 1990 in response to higher raw material costs associated
with the Middle East crisis. The volume decreases were solely in international
markets as shipments in North America for 1991 were at the same level as 1990.
The worldwide recession weakened product demand and, during the first half of
the year, customers reduced inventory levels which had been built up in the
last half of 1990 during the Middle East crisis.
Gross profit increased $31.7 million or 8% because of higher selling prices,
lower cost of sales due to the volume decrease and a $5.0 million provision in
1990 for the closure of a manufacturing facility in Spain. As a percentage of
sales, gross profit improved to 32.1% in 1991 from 30.0% in 1990.
Selling and administrative expenses increased $12.7 million or 10% primarily
due to increases in personnel, higher international selling expenses and legal
expenses associated with protection of proprietary technology and potential
acquisitions. Technology expenses increased $20.2 million or 19%. This was a
result of increases in testing and new product development costs relating to
changing lubricant standards and testing procedures as well as customer
programs related to new business opportunities.
In 1991, foreign currencies weakened slightly against the U.S. dollar resulting
in a net unfavorable effect on the company due to decreased revenues and
expenses when international transactions were translated into U.S. dollars.
Increased gross profit was offset by the higher expenses discussed previously,
with the result that Specialty Chemicals segment income was approximately the
same as 1990.
AGRIBUSINESS SEGMENT
IN 1992, Agribusiness revenues decreased $8.6 million or 7% as a result of
lower specialty vegetable oil volume due to more competition in international
markets and a fire at a customer's plant in Asia. Gross profit decreased $6.4
million or 14% as a result of the lower sales, costs associated with inventory
market adjustments and higher storage costs, all of which related to specialty
vegetable oil operations. Gross profit as a percent of sales decreased in 1992
to 33.1% compared to 35.9% in 1991.
27
<PAGE> 4
THE LUBRIZOL CORPORATION
Selling, administrative and research expenses were approximately the same as
1991. Lower specialty vegetable oil selling expenses and lower research
expenses offset costs associated with the company's partnership with Mycogen.
Agribusiness segment loss increased $9.4 million due to the lower gross profit
and the company's share of losses in Mycogen and the agribusiness joint
venture.
IN 1991, Agribusiness revenues increased 9% to $128 million due to increased
specialty vegetable oil volume. Gross profit increased 14% to $45.7 million due
to higher revenues and improved margins. Gross profit as a percentage of sales
was 35.9% in 1991 compared to 34.3% in 1990. Higher gross profit was partially
offset by a 3% increase in expenses, primarily marketing.
Traditional operations in the Agribusiness segment contributed $7.5 million to
segment income in 1991. Strategic activities, mostly research, had net expense
of $9.5 million, resulting in an Agribusiness segment loss of $2.0 million
compared to a loss of $14.5 million in 1990. Included in 1990 was a $9.7
million write-off of receivables and inventory in the traditional operations
relating to the company's former affiliate in Italy which was unable to meet
its financial obligations to the company. Excluding this write-off,
Agribusiness improved $2.8 million in 1991 compared to 1990.
<TABLE>
<CAPTION> 1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash Provided from Operating
Activities (millions)
Cash Provided $124.9 $114.3 $192.1 $135.2 $162.5
</TABLE>
WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES
The company's cash flows for the years 1991 through 1993 are presented in the
consolidated statements of cash flows. Cash provided from operating activities
during 1993 was $162.5 million, an increase of $27.3 million compared to 1992
primarily due to increased cash flows from higher selling prices and the
exclusion of Agrigenetics, which generated negative cash flows from operations
in 1992.
The net investing activities increased from $88.2 million in 1992 to $106.8
million in 1993. Capital expenditures increased $32.0 million or 33% in 1993.
The increase in spending over 1992 was equally attributable to improvements and
additions at the company's Wickliffe facility, environmental projects and
increases in manufacturing expenditures. During 1993, the company expended
$40.3 million to acquire Langer and certain commercial and technology assets of
Great Lakes Chemical, S.A. Cash proceeds from the sale of Genentech common
stock and the sale of a portion of the company's interest in its agribusiness
joint venture were $44.5 million and $7.0 million, respectively. In addition,
the company received $10.0 million when Mycogen Preferred Stock was mandatorily
redeemed on December 1, 1993.
In 1993, the net proceeds from the sale of Genentech common stock as well as
cash generated from operations were used to repurchase common shares of the
company. The company repurchased 2,076,000, or 3%, of its common shares for
$67.1 million compared to the repurchase of 835,000 common shares for $23.0
million in 1992. At December 31, 1993, there was Board authorization remaining
for the repurchase of 3.0 million common shares. Other financing activities in
1993 included additional long-term borrowing related to the acquisition of
Langer and to finance a technical facility expansion in Japan.
As a result of the activities discussed above, cash and short-term investments
at December 31, 1993, decreased by $52.4 million compared to December 31, 1992.
The company has continued to sell Genentech stock during the first quarter of
1994 and expects sales to continue during the balance of the year. The company
held approximately 2.0 million shares of Genentech common stock as of December
31, 1993.
<TABLE>
<CAPTION> 1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Capitalization(millions)
Equity $663.3 $736.2 $794.5 $819.4 $732.2
Long-term Debt $53.2 $54.0 $35.0 $23.3 $55.3
</TABLE>
The company's financial position continues to be strong. The ratio of current
assets to current liabilities was 2.5:1 at December 31, 1993, compared to 2.9:1
at December 31, 1992. The decrease is primarily attributable to lower cash and
short-term investment balances. Aggregate debt as a percent of total
capitalization (shareholders' equity plus short-term and long-term debt) was
approximately 9% at the end of 1993 compared to 6% at the end of 1992. The
company's share repurchase program, which reduces shareholders' equity, is the
primary reason for this increase.
At December 31, 1993, the company had unused revolving credit agreements and
other credit lines aggregating $55 million. Under a currently effective shelf
registration statement, the company has the ability to offer to the public up
to $100 million of debt securities. Management believes the company's
internally generated funds as well as its credit facilities and shelf
registration will be sufficient to meet its cash requirements. Capital
expenditures, primarily to provide manufacturing, administrative and technical
support, are anticipated to approximate $140 million in 1994, including
approximately $20 million for environmental projects.
A special charge of $86.3 million recorded in the third quarter of 1993 (see
Note 17 to the financial statements) will involve cash outlays of approximately
$36 million over the next three years. Partially offsetting the cash outlays
will be cash savings which are expected to grow
28
<PAGE> 5
THE LUBRIZOL CORPORATION
to approximately $40 million annually when the plans are fully implemented. The
after-tax impact of the special charge on the balance sheet at December 31,
1993, was to reduce working capital by $6.7 million, reduce noncurrent assets
by $19.6 million and increase noncurrent liabilities by $25.4 million.
The Financial Accounting Standards Board has issued SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities," which is effective for
fiscal years beginning after December 15, 1993. Refer to Note 3 to the
financial statements for the effects on the company's consolidated financial
statements of adopting SFAS 115.
The company is involved in patent litigation with Exxon Corporation in various
countries. Determinations of liability against the company in the U.S., which
is subject to appeal, and against Exxon in Canada have been made by the courts.
Management is unable to predict the eventual outcomes of this litigation and,
therefore, their impact on future cash flows is not known. If Exxon prevails in
the U.S. case, management believes the company has sufficient financial
resources to meet any resulting obligation and, other than a potential one-time
charge against income, the litigation would not have a material adverse effect
on future results of operations. Refer to Note 18 for further information
regarding this litigation.
<TABLE>
OPERATING RESULTS BY BUSINESS SEGMENT *
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Specialty Chemicals $1,433,358 $1,348,804
Agribusiness 118,890 127,502
---------- ----------
Total $1,552,248 $1,476,306
========== ==========
Gross profit:
Specialty Chemicals $ 450,967 $ 429,902
Agribusiness 39,327 45,724
---------- ----------
Total $ 490,294 $ 475,626
========== ==========
Selling and administrative expenses:
Specialty Chemicals $ 147,653 $ 139,947
Agribusiness 33,673 32,471
---------- ----------
Total $ 181,326 $ 172,418
========== ==========
Research, testing and development expenses:
Specialty Chemicals $ 139,810 $ 127,675
Agribusiness 14,952 16,308
---------- ----------
Total $ 154,762 $ 143,983
========== ==========
Segment income (loss):
Specialty Chemicals $ 185,148 $ 179,160
Agribusiness (11,459) (2,030)
---------- ----------
Total $ 173,689 $ 177,130
========== ==========
Identifiable assets:
Specialty Chemicals $ 871,401 $ 862,235
Agribusiness 104,339 158,747
Corporate investments 151,380 150,701
---------- ----------
Total $1,127,120 $1,171,683
========== ==========
<FN>
* Agribusiness is no longer reportable as a separate industry segment after 1992.
Segment income is before interest and income taxes.
</TABLE>
29
<PAGE> 6
THE LUBRIZOL CORPORATION
<TABLE>
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E
<CAPTION>
Year Ended December 31
----------------------------------------------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,517,631 $1,544,670 $1,467,901
Royalties and other revenues 7,869 7,578 8,405
----------- ----------- -----------
Total revenues 1,525,500 1,552,248 1,476,306
Cost of sales 1,032,199 1,054,376 992,275
Selling and administrative expenses 158,506 181,326 172,418
Research, testing and development expenses 171,540 154,762 143,983
----------- ----------- -----------
Total cost and expenses 1,362,245 1,390,464 1,308,676
Special charge (86,303)
Gain on sale of Genentech 42,443
Other income - net 537 11,905 9,500
Interest income 3,873 7,070 8,748
Interest expense (4,154) (3,615) (7,738)
---------- ---------- ----------
Income before income taxes 119,651 177,144 178,140
Provision for income taxes 34,676 52,498 54,481
---------- ---------- ----------
Income before accounting changes 84,975 124,646 123,659
Cumulative effect of accounting changes (39,375)
---------- ---------- ----------
Net income $ 45,600 $ 124,646 $ 123,659
========== ========== ==========
Per Common Share:
Income before accounting changes $1.25 $1.81 $1.79
Cumulative effect of accounting changes (.58)
------ ----- -----
Net income per share $ .67 $1.81 $1.79
====== ===== =====
Dividends per share $ .85 $ .81 $ .77
====== ===== =====
<FN>
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
30
<PAGE> 7
THE LUBRIZOL CORPORATION
<TABLE>
C O N S O L I D A T E D B A L A N C E S H E E T S
<CAPTION>
December 31
--------------------------------
(IN THOUSANDS OF DOLLARS) 1993 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and short-term investments $ 24,220 $ 76,593
Receivables 225,603 221,094
Inventories 284,537 272,418
Other current assets 34,553 20,911
---------- ----------
Total current assets 568,913 591,016
---------- ----------
Property and equipment - at cost 1,089,106 958,692
Less accumulated depreciation 651,471 583,105
---------- ----------
Property and equipment - net 437,635 375,587
---------- ----------
Investments in nonconsolidated companies 103,246 139,660
Other assets 72,786 20,857
---------- ----------
TOTAL $1,182,580 $1,127,120
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt $ 14,590 $ 25,140
Accounts payable 116,775 105,237
Income taxes and other current liabilities 92,883 75,871
---------- ----------
Total current liabilities 224,248 206,248
---------- ----------
Long-term debt 55,298 23,258
Postretirement health care obligation 89,423
Noncurrent liabilities 70,022 41,217
Deferred income taxes 11,353 37,035
---------- ----------
Total liabilities 450,344 307,758
---------- ----------
Contingencies and commitments
Preferred stock without par value - unissued
Common shares without par value - Outstanding
66,590,028 shares in 1993
and 68,450,586 shares in 1992 80,830 80,274
Retained earnings 683,269 759,906
Accumulated translation adjustment (31,863) (20,818)
---------- ----------
Total shareholders' equity 732,236 819,362
---------- ----------
TOTAL $1,182,580 $1,127,120
========== ==========
<FN>
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
31
<PAGE> 8
THE LUBRIZOL CORPORATION
<TABLE>
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
<CAPTION>
Year Ended December 31
--------------------------------------------
(IN THOUSANDS OF DOLLARS) 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH PROVIDED FROM (USED FOR):
OPERATING ACTIVITIES:
Received from customers $1,509,270 $1,549,848 $1,480,776
Paid to suppliers and employees (1,293,189) (1,361,971) (1,265,058)
Income taxes paid (61,199) (62,576) (55,116)
Interest and dividends received 6,616 12,071 9,960
Interest paid (3,886) (5,245) (7,129)
Tax refund received, including interest 20,418
Other - net 4,899 3,036 8,266
------- ------- --------
Total operating activities 162,511 135,163 192,117
INVESTING ACTIVITIES:
Proceeds from sale or redemption of investments 61,494 8,512
Capital expenditures (127,855) (95,814) (82,398)
Acquisitions and investments in nonconsolidated companies (40,346) (2,402) (1,143)
Other - net (87) 1,541 3,589
------- ------- --------
Total investing activities (106,794) (88,163) (79,952)
FINANCING ACTIVITIES:
Short-term borrowing (repayment) 168 (3,837) 2,587
Long-term borrowing 36,048 3,690 18,400
Long-term repayment (23,146) (20,000) (18,660)
Dividends paid (57,608) (55,883) (53,322)
Common shares purchased, net of options exercised (64,073) (19,235) (10,327)
------- ------- --------
Total financing activities (108,611) (95,265) (61,322)
Effect of exchange rate changes on cash 521 (1,289) (796)
------- ------- --------
Net increase (decrease) in cash and short-term investments (52,373) (49,554) 50,047
Cash and short-term investments at the beginning of year 76,593 126,147 76,100
------- ------- --------
CASH AND SHORT-TERM INVESTMENTS AT THE END OF YEAR $24,220 $76,593 $126,147
======= ======= ========
<FN>
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
32
<PAGE> 9
THE LUBRIZOL CORPORATION
<TABLE>
C O N S O L I D A T E D S T A T E M E N T S O F S H A R E H O L D E R S ' E Q U I T Y
<CAPTION>
Shareholders' Equity
-------------------------------------
Number of Accumulated
Shares Common Retained Translation
Outstanding Shares Earnings Adjustment
- -----------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990 69,396,748 $75,651 $654,991 $ 5,569
Net income for 1991 123,659
Cash dividends (53,322)
Translation adjustment for 1991 (1,755)
Common shares - Treasury:
Shares purchased (570,000) (651) (12,099)
Shares issued upon exercise of stock options 204,716 2,423
---------- ------- -------- ---------
BALANCE, DECEMBER 31, 1991 69,031,464 77,423 713,229 3,814
Net income for 1992 124,646
Cash dividends (55,883)
Translation adjustment for 1992 (24,632)
Common shares - Treasury:
Shares purchased (835,200) (957) (22,086)
Shares issued upon exercise of stock options 254,322 3,808
---------- ------- -------- ---------
BALANCE, DECEMBER 31, 1992 68,450,586 80,274 759,906 (20,818)
Net income for 1993 45,600
Cash dividends (57,608)
Translation adjustment for 1993 (11,045)
Common shares - Treasury:
Shares purchased (2,075,645) (2,479) (64,629)
Shares issued upon exercise of stock options 215,087 3,035
---------- ------- -------- ---------
BALANCE, DECEMBER 31, 1993 66,590,028 $80,830 $683,269 $(31,863)
========== ======= ======== =========
<FN>
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
33
<PAGE> 10
THE LUBRIZOL CORPORATION
N O T E S T O F I N A N C I A L S T A T E M E N T S
(IN THOUSANDS OF DOLLARS UNLESS OTHERWISE INDICATED)
NOTE 1 -- ACCOUNTING POLICIES
CONSOLIDATION -- The consolidated financial statements include the accounts of
The Lubrizol Corporation and its majority-owned subsidiaries. For
nonconsolidated companies (affiliates), the equity method of accounting is used
when ownership exceeds 20% or when the company has the ability to exercise
significant influence over the policies of the investee. Other affiliates are
carried at cost. Refer to Note 16 regarding changes in Agribusiness.
ACCOUNTING CHANGES -- Effective January 1, 1993, the company changed its method
of accounting for postretirement benefits to conform with Statement of
Financial Accounting Standards (SFAS) 106 (see Note 10) and its method of
accounting for income taxes to conform with SFAS 109 (see Note 8). The
cumulative effect of these changes in accounting principles, net of tax, is
separately reported on the Consolidated Statements of Income.
INVENTORIES -- Inventories are stated at cost which is not in excess of market.
Cost of inventories is determined by the last-in, first-out (LIFO) method in
the United States and the first-in, first-out (FIFO) method elsewhere. The
average cost method is used for specialty vegetable oil and, prior to December
1, 1992, other agribusiness inventory.
DEPRECIATION AND AMORTIZATION -- Accelerated depreciation methods are used in
computing depreciation on approximately 69% of the depreciable assets. The
remaining assets are depreciated using the straight-line method. Effective
January 1, 1993, the company changed to the straight-line method for newly
acquired machinery and equipment in the United States. Management believes that
straight-line depreciation provides for a better matching of costs and revenues
over the lives of the newly acquired assets and conforms to predominant
industry practices. The new depreciation method did not have a material effect
on 1993 net income. Amortization of intangible and other assets is on a
straight-line method over periods ranging from 5 to 25 years. For income tax
purposes, different methods and rates are used in certain instances.
FOREIGN CURRENCY TRANSLATION -- The assets and liabilities of most non-U.S.
subsidiaries are translated into U.S. dollars at exchange rates in effect at
the balance sheet date. Operating results are translated at weighted average
exchange rates in effect during the period. Net unrealized translation
adjustments are recorded as a separate component of shareholders' equity.
PER SHARE AMOUNTS -- Net income per share has been computed by dividing net
income by the average number of common shares outstanding during the period.
Net income per share has not been adjusted for the effect of stock options as
the dilution effect would be less than 3% in any year. All share and per share
data have been restated to reflect the 2-for-1 stock split effective August 31,
1992.
RESEARCH, TESTING AND DEVELOPMENT -- Research, testing and development costs
are expensed when incurred. Research and development expenses, excluding
testing, were $88.5 million, $91.2 million and $80.0 million in 1993, 1992 and
1991, respectively.
NOTE 2 -- INVENTORIES
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Finished products $ 89,817 $ 97,221
Products in process 92,067 85,640
Raw materials and supplies 102,653 89,557
--------- ---------
$ 284,537 $ 272,418
========= =========
</TABLE>
Inventories on the LIFO method at December 31, 1993 and 1992 were 25% of
consolidated inventories. The current replacement cost of these inventories
exceeded the LIFO cost at December 31, 1993 and 1992 by $43.0 million and $46.3
million, respectively.
NOTE 3 -- INVESTMENTS IN NONCONSOLIDATED COMPANIES
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Investments carried at equity $ 59,909 $ 92,265
Investments carried at cost 43,337 47,395
--------- ---------
$ 103,246 $ 139,660
========= =========
</TABLE>
Investments carried at equity exceeded the company's equity in the underlying
book values by $8.9 million at December 31, 1992.
Included within investments in nonconsolidated companies are marketable equity
securities having a book carrying value of $45.3 million in 1993 and $31.2
million in 1992. The fair value of these securities based upon quoted market
prices exceeded the book carrying value by $136.7 million and $138.9 million at
December 31, 1993 and 1992, respectively.
The Financial Accounting Standards Board has issued SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities," which is effective for
1994. SFAS 115 requires that certain investments in debt and equity
securities be reported at fair value, rather than historical cost. When the
company adopts SFAS 115 on January 1, 1994, certain of its marketable equity
securities will be classified as available-for-sale. Unrealized gains and
losses will be excluded from earnings and reported net of tax as a separate
component of shareholders' equity until realized. If the company adopted SFAS
115 as of December 31, 1993, its available-for-sale securities would have a
fair value of $105.6 million, and gross unrealized gains of $99.2 million would
increase shareholders' equity, net of tax, by $64.5 million. There are no
unrealized losses.
34
<PAGE> 11
NOTE 4 -- SHORT-TERM AND LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt consists of:
1993 1992
------- -------
<S> <C> <C>
7.875% Industrial development revenue
bonds, due 2000 $ 1,000 $ 1,000
6.5% Marine terminal refunding revenue
bonds, due 2000 18,375 18,375
Term loans:
Yen denominated, at 3.8% to 5.8%,
due 1993-2002 24,210 19,516
Deutschmark denominated, at 6.78%,
due 1996 13,825
Other (various rates) 184 109
------- -------
57,594 39,000
------- -------
Less current portion (2,296) (15,742)
------- -------
$55,298 $23,258
======= =======
Short-term debt consists of:
1993 1992
------- -------
Current portion of long-term debt $2,296 $15,742
Loans with terms less than one year 12,294 9,398
------- -------
$14,590 $25,140
======= =======
</TABLE>
The Marine Terminal Refunding Revenue Bonds have a variable interest rate. The
company has entered into an interest rate swap agreement that effectively fixes
the interest rate at 6.5%. The bondholders may put the bonds back to the
company; however, the bonds are classified as noncurrent due to a remarketing
agreement and credit facilities which permit the company to refinance for a
period beyond one year.
Amounts due on long-term debt are $2.3 million in 1994, $2.3 million in 1995,
$16.1 million in 1996, $2.3 million in 1997, $10.7 million in 1998 and $23.9
million thereafter.
The company has available $55 million under revolving credit agreements and
other credit lines which would permit the company to borrow at or below the
U.S. prime rate. These facilities, which were unused at December 31, 1993, may
be used to support commercial paper borrowing.
The company filed a Form S-3 with the Securities and Exchange Commission which
permits the company to offer up to $100 million of debt securities in amounts,
at prices and on terms to be determined at the time of offering. The shelf
registration became effective January 12, 1994. The debt securities would be
unsecured senior securities ranking equal with all other unsecured senior
securities of the company.
NOTE 5 -- OTHER BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
Receivables: 1993 1992
-------- --------
<S> <C> <C>
Customers $200,218 $191,451
Affiliates 10,459 9,141
Other 14,926 20,502
-------- --------
$225,603 $221,094
======== ========
</TABLE>
Receivables are net of allowance for doubtful accounts of $2.1 million in 1993
and $2.8 million in 1992.
<TABLE>
<CAPTION>
Other Current Assets: 1993 1992
------- -------
<S> <C> <C>
Deferred income taxes $28,453 $ 7,228
Other 6,100 13,683
------- -------
$34,553 $20,911
======= =======
</TABLE>
<TABLE>
<CAPTION>
Property and Equipment: 1993 1992
---------- -----------
<S> <C> <C>
Land and improvements $ 80,669 $ 75,997
Buildings and improvements 181,618 153,232
Machinery and equipment 727,409 659,574
Construction in progress 99,410 69,889
---------- -----------
$1,089,106 $ 958,692
========== ===========
</TABLE>
Depreciation expense was $59.6 million in 1993, $58.4 million in 1992 and $54.6
million in 1991.
<TABLE>
<CAPTION>
Other Assets: 1993 1992
------- -------
<S> <C> <C>
Goodwill and other intangibles $36,609 $15,595
Deferred income taxes 25,821
Other 10,356 5,262
------- -------
$72,786 $20,857
======= =======
</TABLE>
Accumulated amortization of intangible and other assets was $14.3 million and
$10.2 million at December 31, 1993 and 1992, respectively.
<TABLE>
<CAPTION>
Accounts Payable: 1993 1992
-------- --------
<S> <C> <C>
Trade $106,005 $ 98,662
Affiliates 10,770 6,575
-------- --------
$116,775 $105,237
======== ========
</TABLE>
<TABLE>
<CAPTION>
Income Taxes and Other Current
Liabilities: 1993 1992
------- -------
<S> <C> <C>
Employee compensation $30,369 $28,524
Income taxes 25,714 19,184
Taxes other than income 9,793 8,893
Other 27,007 19,270
------- -------
$92,883 $75,871
======= =======
</TABLE>
<TABLE>
<CAPTION>
Noncurrent Liabilities: 1993 1992
------- -------
<S> <C> <C>
Employee benefits $35,070 $24,194
Other 34,952 17,023
------- -------
$70,022 $41,217
======= =======
</TABLE>
35
<PAGE> 12
NOTES CONTINUED
NOTE 6 -- SHAREHOLDERS' EQUITY
The company has 147 million authorized shares consisting of 2 million shares of
Serial Preferred Stock, 25 million shares of Serial Preference Shares and 120
million Common Shares, each of which is without par value. The outstanding
Common Shares shown on the balance sheets exclude Common Shares held in
treasury of 19,605,866 and 17,745,308 at December 31, 1993 and 1992,
respectively. The company effected a two-for-one stock split effective August
31, 1992.
The company has a shareholder rights plan under which one right to buy one-half
Common Share has been distributed for each Common Share held. The rights may
become exercisable under certain circumstances involving actual or potential
acquisitions of 20% or more of the Common Shares by a person or affiliated
persons who acquire such stock without complying with the requirements of the
company's articles of incorporation. The rights would entitle shareholders,
other than such person or affiliated persons, to purchase Common Shares of the
company or of certain acquiring persons at 50% of then current market value. At
the option of the directors, the rights may be exchanged for Common Shares, and
may be redeemed in cash, securities or other consideration. The rights will
expire in 1997 unless earlier redeemed.
Under another shareholder rights plan, each holder of Common Shares has one
right to buy shares of Serial Preferred Stock for each Common Share held. The
rights may become exercisable under certain circumstances involving actual or
potential acquisitions of 20% or more of the company's Common Shares by a
person or affiliated persons. The rights would entitle shareholders, other than
such person or affiliated persons, to purchase shares of Serial Preferred Stock
at the purchase price of $1 plus 25 rights per share. The dividend and
redemption value of the Serial Preferred Stock would be determined in relation
to after-tax amounts which have been or may be recovered by the company from
Exxon or its affiliates as a result of certain patent claims. The rights will
expire in November 1996 unless earlier redeemed.
NOTE 7 -- OTHER INCOME AND GENENTECH GAIN
During 1993, the company sold 1.0 million shares of Genentech, Inc. redeemable
common stock for cash. The gain realized on these transactions was $42.4
million and, after tax, contributed $.41 cents per share to net income. At
December 31, 1993, the company held 2.0 million shares of Genentech redeemable
common stock. Genentech, at its option, may redeem the common stock in whole,
but not in part, at various redemption prices per share ranging from $53.75 at
January 1, 1994, to $60 at June 30, 1995.
<TABLE>
<CAPTION>
Other income - net consists of the following:
1993 1992 1991
------- ------- ------
<S> <C> <C> <C>
Gain on sales of investments -
excluding Genentech $13,174 $6,484
Equity earnings (losses) of non-
consolidated companies (15,966) 1,798 $4,791
Other - net 3,329 3,623 4,709
------- ------- ------
$ 537 $11,905 $9,500
======= ======= ======
</TABLE>
Included in other income - net for 1993 are gains on sale of investments of
$13.2 million and equity losses of $21.0 million related to agribusiness
investments. See Note 16.
NOTE 8 -- INCOME TAXES
Effective January 1, 1993, the company adopted SFAS 109, which is an asset and
liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the company's financial statements and tax returns. In estimating
future tax consequences, SFAS 109 generally considers all expected future
events other than tax law or rate changes not yet enacted. Previously, the
company accounted for income taxes under SFAS 96, which gave no recognition to
future events other than the recovery of assets and settlement of liabilities
at their carrying value. As permitted under SFAS 109, the company elected not
to restate the financial statements of any prior years. The cumulative effect
of adopting SFAS 109 at January 1, 1993 increased net income by $12.1 million,
or $.18 per share. The effects of the change on both income before income taxes
and the effective tax rate for the year ended December 31, 1993, were not
material.
<TABLE>
<CAPTION>
Income before income taxes consists of the following:
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
United States $ 68,673 $ 80,248 $ 93,088
Foreign 50,978 96,896 85,052
-------- -------- --------
Total $119,651 $177,144 $178,140
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
The provision for income taxes consists of the following:
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Current:
United States $ 31,560 $ 13,981 $ 25,169
Foreign 34,774 37,791 31,755
------- ------- -------
66,334 51,772 56,924
------- ------- -------
Deferred:
United States (15,306) 1,603 (2,084)
Foreign (16,352) (877) (359)
------- ------- -------
(31,658) 726 (2,443)
------- ------- -------
Total $34,676 $52,498 $54,481
======= ======= =======
</TABLE>
Foreign taxes include withholding taxes. The United States tax provision
includes the U.S. tax on foreign income distributed to the company. U.S. and
foreign income tax rate changes occurring during 1993 did not have a material
effect on the company's provision for income taxes. The differences between the
provision for income taxes at the U.S. statutory rate (35% for 1993 and 34% for
1992 and 1991) and the tax shown in the consolidated statements of income are
summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Tax at statutory rate $41,878 $60,229 $60,568
Foreign sales corporation earnings (2,964) (3,702) (4,042)
Equity income (1,551) (1,955) (2,405)
Other - net (2,687) (2,074) 360
------- ------- -------
Provision for income taxes $34,676 $52,498 $54,481
======= ======= =======
</TABLE>
36
<PAGE> 13
<TABLE>
The components of deferred tax assets (liabilities) as of December 31
are as follows:
<CAPTION>
1993 1992 1991
------- -------- --------
<S> <C> <C> <C>
Accrued compensation and
benefits $ 42,425 $ 2,791 $ 4,424
Intercompany profit in
inventory 11,208 3,829 3,084
Equity investments 7,541 978 553
Net operating losses carried
forward 6,668
Depreciation and other basis
differences (28,238) (32,555) (33,126)
Partnership allocations (4,841) (4,615) (4,572)
Other - net 5,312 (1,593) (3,173)
------- -------- --------
Net deferred tax assets
(liabilities) $40,075 $(31,165) $(32,810)
======= ======== ========
</TABLE>
At December 31, 1993, certain foreign subsidiaries have net operating loss
carry forwards of $16 million for income tax purposes, of which $11 million
expires in years 1994 through 2002 and $5 million has no expiration. After
evaluating tax planning strategies and historical and projected profitability,
the tax benefit of these net operating loss carry forwards has been recognized
as a deferred tax asset.
U.S. income taxes or foreign withholding taxes are not provided on
undistributed earnings of foreign subsidiaries which are considered to be
indefinitely reinvested in the operations of such subsidiaries. The amount of
such earnings was approximately $248 million at December 31, 1993.
Determination of the net amount of unrecognized U.S. income tax with respect to
these earnings is not practicable. If such earnings were to be repatriated,
foreign withholding taxes of approximately $16 million would be incurred. A
portion or all of such withholding taxes may be offset by credits in the United
States.
NOTE 9 -- SUPPLEMENTAL CASH FLOW INFORMATION
The company generally invests its excess cash in short-term investments with
various banks and financial institutions. Short-term investments are cash
equivalents as they are part of the cash management activities of the company
and are comprised primarily of investments having maturities of less than three
months.
<TABLE>
<CAPTION>
The following is a reconciliation of net income to net cash provided by
(used for) operating activities:
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Net income $ 45,600 $ 124,646 $ 123,659
Depreciation and
amortization 61,674 62,013 59,473
Deferred income taxes (32,751) (37) (2,716)
Equity (earnings) losses,
net of distributions 18,138 2,792 (3,743)
Special charge 86,303
Gain on sale of
investments (55,617) (6,484)
Cumulative effect of
changes in accounting
principles 39,375
Change in current assets
and liabilities:
Receivables (16,066) (2,400) 4,470
Inventories (14,043) (30,807) (14,187)
Accounts payable
and accrued
expenses 16,056 (13,693) 1,780
Other current assets 7,359 (316) 15,304
Increase in noncurrent
liabilities 12,370 714 1,554
Other items - net (5,887) (1,265) 6,523
-------- -------- --------
Net cash provided by
operating activities $162,511 $135,163 $192,117
======== ======== ========
<FN>
See Note 16 which describes transactions with Mycogen involving an exchange of nonmonetary assets.
</TABLE>
NOTE 10 -- POSTRETIREMENT BENEFITS
The company has retirement plans, including non-contributory defined benefit
pension plans and a profit sharing plan, covering most full-time employees in
the United States and at non-U.S. subsidiaries. Pension benefits are based on
years of service and the employee's compensation. The company's funding policy
in the United States is to contribute amounts to satisfy the Internal Revenue
Service funding standards and elsewhere to fund amounts in accordance with
local regulations. Several defined benefit plans are unfunded. Plan assets are
invested principally in listed equity securities and fixed income instruments.
Expense for all retirement plans was $25.1 million in 1993, $20.0 million in
1992 and $13.3 million in 1991, including profit sharing contributions in the
U.S. of $3.8 million in 1993, $3.9 million in 1992 and $4.7 million in 1991.
37
<PAGE> 14
NOTES CONTINUED
<TABLE>
<CAPTION>
Net periodic pension cost of the U.S. and significant international
defined benefit plans consists of:
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Service cost -
benefits earned during period $ 10,107 $ 9,814 $ 7,820
Interest cost on projected
benefit obligation 16,115 14,787 11,480
Actual return on plan assets (24,830) (17,926) (28,630)
Net amortization and
deferral 16,363 5,779 15,830
-------- -------- --------
Net periodic pension cost $ 17,755 $ 12,454 $ 6,500
======== ======== ========
</TABLE>
The increase in net periodic pension cost for 1993 results largely from the
company's realignment and early retirement programs accounted for in the
special charge (see Note 17).
<TABLE>
<CAPTION>
The weighted average assumptions used at December 31 were:
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Assumed discount rate 7.2% 8.0% 8.1%
Assumed rate of compen-
sation increase 5.1% 5.8% 5.8%
Expected rate of return on
plan assets 8.5% 8.9% 8.9%
</TABLE>
<TABLE>
<CAPTION>
The funded status of such defined benefit pension plans and the
amounts recognized in the consolidated balance sheets at
December 31 are as follows:
1993 1992
----------------------- ------------------------
Assets Accum. Assets Accum.
Exceed Benefits Exceed Benefits
Accum. Exceed Accum. Exceed
Benefits Assets Benefits Assets
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Fair value of plan
assets $133,755 $ 48,142 $165,152 $ 4,229
Projected benefit
obligation (140,363) (79,541) (160,675) (26,914)
-------- -------- -------- --------
Plan assets in
excess of
(less than) pro-
jected benefit
obligation (6,608) (31,399) 4,477 (22,685)
Unrecognized net
transition obliga-
tion (asset) (12,794) 119 (19,297) 2,907
Unrecognized net
loss (gain) (446) 12,049 (2,728) 5,282
Unrecognized prior
service cost 17,566 3,179 20,205 2,126
Minimum liability
adjustment (3,177) (2,478)
-------- -------- -------- --------
Accrued pension
asset (liability) $ (2,282) $ (19,229) $2,657 $(14,848)
======== ======== ======== ========
Accumulated bene-
fit obligation $ 88,735 $ 70,608 $119,099 $ 17,600
======== ======== ======== ========
Vested benefits $ 83,543 $ 67,344 $115,239 $ 14,675
======== ======== ======== ========
</TABLE>
The company provides certain postretirement benefits other than pensions,
primarily health care, for retired employees. Currently, substantially all of
the company's full-time employees in the U.S. become eligible for these
benefits after five years of service and attainment of age 55 at retirement.
Participants currently contribute 25% to 50% of the cost of such benefits. The
company's postretirement health care plans are not funded.
Effective January 1, 1993, the company adopted SFAS 106 which requires the
company to accrue the estimated cost of retiree benefit payments during the
years the employee provides services. The company previously expensed the cost
of these benefits as claims were incurred. The company has elected to
immediately recognize the cumulative effect of this change in accounting
principle. The cumulative effect at January 1, 1993 of adopting SFAS 106 was to
record an increase in a noncurrent liability for the accumulated postretirement
benefit obligation of $79.9 million, an increase in deferred income tax assets
of $28.4 and a decrease in net income of $51.5 million after taxes ($.76 per
share).
<TABLE>
<CAPTION>
The status of the plans at December 31, 1993, is as follows:
<S> <C>
Accumulated postretirement benefit obligation:
Retirees $32,885
Fully eligible active plan participants 20,866
Other active plan participants 38,198
-------
91,949
Unrecognized net loss (2,526)
-------
Accrued postretirement health care costs $89,423
=======
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 11.25% in 1993, with subsequent annual
decrements of .75% to an ultimate trend rate of 6%. A one-percentage-point
increase in the assumed health care cost trend rate for each year would
increase the accumulated postretirement benefit obligation by approximately 19%
and net postretirement benefit costs by approximately 15%. The discount rate
used in determining the accumulated postretirement benefit obligation was 7.5%.
<TABLE>
<CAPTION>
Net postretirement health care cost for the year ended December 31,
1993, consisted of the following components:
<S> <C>
Service cost - benefits earned during the year $2,620
Interest cost on accumulated postretirement benefit obligation 6,724
------
Net postretirement health care cost $9,344
======
</TABLE>
The postretirement health care costs increased $8.1 million ($.08 per share
after taxes) as a result of adopting SFAS 106. Postretirement health care
expense on a pay-as-you-go basis was $1.8 million in 1992 and $1.5 million in
1991.
NOTE 11 -- LEASES
The company has commitments under operating leases primarily for office space,
terminal facilities, land and various office equipment. Rental expense was
$19.0 million in 1993, $18.3 million in 1992 and $16.5 million in 1991. Future
minimum rental commitments under operating leases having initial or remaining
non-cancelable lease terms exceeding one year are $14.3 million in 1994, $9.1
million in 1995, $5.6 million in 1996, $4.4 million in 1997, $2.9 million in
1998 and $21.2 million thereafter.
38
<PAGE> 15
NOTE 12 -- OPERATIONS IN GEOGRAPHIC AREAS
<TABLE>
<CAPTION>
Financial data by geographic area, based on the location of the
subsidiary which shipped and billed the product, is as follows:
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Revenues from customers:
United States $ 660,674 $ 734,273 $ 687,654
Europe 501,551 472,982 446,699
Far East 203,327 178,702 173,351
Other 159,948 166,291 168,602
---------- ---------- ----------
1,525,500 1,552,248 1,476,306
Intercompany transfers:
United States 290,487 258,673 273,037
Europe 22,276 20,657 10,004
Far East 496
Other 26,707 32,674 23,554
---------- ---------- ----------
339,966 312,004 306,595
---------- ---------- ----------
Gross revenues 1,865,466 1,864,252 1,782,901
Less: Intercompany
transfers (339,966) (312,004) (306,595)
---------- ---------- ----------
Consolidated
revenues $1,525,500 $1,552,248 $1,476,306
========== ========== ==========
Operating profit:
United States $ 105,591 $ 94,800 $ 123,058
Europe 58,781 63,141 67,630
Far East 14,374 9,493 7,927
Other 11,392 13,640 4,675
Eliminations (129) 6,500 (7,718)
---------- ---------- ----------
190,009 187,574 195,572
General corporate
expenses (26,754) (25,790) (27,942)
Special charge (86,303)
Gain on sale of
Genentech 42,443
Other income - net 537 11,905 9,500
Interest - net (281) 3,455 1,010
---------- ---------- ----------
Income before
income taxes $ 119,651 $ 177,144 $ 178,140
========== ========== ==========
Identifiable assets:
United States $ 637,919 $ 548,601 $ 650,410
Europe 289,649 248,723 283,526
Far East 143,542 124,132 132,038
Other 71,651 73,836 80,144
Eliminations (88,012) (88,619) (159,027)
---------- ---------- ----------
1,054,749 906,673 987,091
Corporate assets 127,831 220,447 184,592
---------- ---------- ----------
Total assets $1,182,580 $1,127,120 $1,171,683
========== ========== ==========
<FN>
NOTES:
A. Intercompany transfers are made at prices comparable to normal unaffiliated customer sales for similar products.
B. Affiliated companies are not allocated to geographic segments.
C. Corporate assets consist of short-term investments and investments in affiliated companies.
</TABLE>
Export sales from the United States to customers, primarily in Latin America,
the Middle East and Asia, were $119 million in 1993, $136 million in 1992 and
$161 million in 1991.
Net assets of non-U.S. subsidiaries at December 31, 1993 and 1992 were $326
million and $310 million, respectively. Net income of these subsidiaries was
$42 million in 1993, $59 million in 1992 and $50 million in 1991; and dividends
received from the subsidiaries were $34 million, $26 million and $12 million,
respectively.
NOTE 13 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The company has various financial instruments, including cash and short-term
investments, investments in nonconsolidated companies, forward exchange
contracts for currencies, interest rate swaps and short- and long-term debt.
The company has determined the estimated fair value of these financial
instruments by using available market information and appropriate valuation
methodologies which require judgment. Accordingly, the use of different market
assumptions or estimation methodologies could have a material effect on the
estimated fair value amounts. Except for investments in marketable equity
securities and investments in nonconsolidated companies as described in Note 3,
the company believes that the carrying values of financial instruments
approximate their fair values.
The company periodically enters into forward exchange contracts to manage
currency exposure. At December 31, 1993, the company had short-term forward
contracts to sell currencies at various dates during 1994 for $15.4 million.
The value of these contracts is adjusted monthly to reflect market value, and
the gains or losses are recognized immediately and offset the exchange
adjustment related to the exposed currency position.
NOTE 14 -- BUSINESS SEGMENT INFORMATION
As a result of the company's agribusiness transactions as discussed in Note 16,
the company's agribusiness activities are not reportable as an industry segment
after December 1, 1992.
A description of the company's segments and a summary of operating results and
identifiable assets by segment prior to December 1, 1992, are contained on
pages 25 and 29. Following is additional industry segment information:
<TABLE>
<CAPTION>
Capital Depreciation
Expenditures & Amortization
------------ --------------
<S> <C> <C>
1992
Specialty Chemicals $89,172 $55,024
Agribusiness 6,642 6,989
------- -------
$95,814 $62,013
======= =======
1991
Specialty Chemicals $76,547 $51,791
Agribusiness 5,851 7,682
------- -------
$82,398 $59,473
======= =======
</TABLE>
The company has a concentration of sales and receivables in the oil and
chemical industries. The ten largest customers, most of which are international
oil companies and a number of which are groups of affiliated entities,
accounted for approximately 44% of consolidated sales in 1993 and 1992, and 43%
in 1991. Although the largest single group accounted for 9% of sales in 1993,
10% in 1992 and 11% in 1991, this group is made up of a number of separate
entities that the company believes make independent purchasing decisions.
39
<PAGE> 16
NOTES CONTINUED
NOTE 15 -- STOCK OPTIONS
The 1991 Stock Incentive Plan provides for granting of options to buy Common
Shares intended either to qualify as "incentive stock options" under the
Internal Revenue Code or "non-statutory stock options" not intended to so
qualify, up to an amount equal to one percent of the outstanding Common Shares
at the beginning of any year, plus any unused amount from prior years. Under
the 1991 Plan, options generally become exercisable 50% one year after grant,
75% after two years, and 100% after three years, and expire up to ten years
after grant. The 1985 Employee Stock Option Plan and the 1991 Plan also provide
for "reload options," which are options to purchase additional shares if a
grantee uses already-owned shares to pay for an option exercise. The 1991 Plan
generally supersedes the 1985 Plan, which replaced the 1981 Incentive Stock
Option Plan. A 1975 Employee Stock Option Plan expired by its terms in 1985.
Options remain outstanding and exercisable under the 1975 Plan, the 1981 Plan
and the 1985 Plan. The option price under all plans is the fair market value of
the shares on the date of grant. All plans permit or permitted the granting of
stock appreciation rights in connection with the grant of options, and the 1991
Plan also permits the grant of restricted and unrestricted shares. In addition,
the 1991 Plan provides for an automatic annual grant to each outside director
of the company of an option to purchase 2,000 Common Shares, with terms
generally comparable to employee stock options.
<TABLE>
<CAPTION>
Information regarding these option plans is as follows:
Number of Shares
-----------------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Outstanding,
January 1 2,147,263 1,970,446 1,671,602
Granted at $28.13 to
$33.75 per share 624,546 596,290 620,380
Exercised at $10.97 to
$32.81 per share (394,178) (407,697) (313,796)
Surrendered at $16.66
to $33.34 per share (38,756) (11,776) (7,740)
--------- --------- ---------
Outstanding,
December 31 2,338,875 2,147,263 1,970,446
========= ========= =========
Exercisable,
December 31 1,341,767 1,210,767 1,014,556
========= ========= =========
Available for grant,
December 31 1,816,751 1,718,036 1,612,230
========= ========= =========
</TABLE>
Both the 1975 and 1981 Plan options expire through November 1994, with an
average option price of $11.06. The 1985 Plan options expire June 1995 to
November 2003, with an average option price of $23.09. The 1991 Plan options
expire April 2001 to April 2003, with an average option price of $31.05.
NOTE 16 -- TRANSACTIONS WITH MYCOGEN CORPORATION
In separate transactions, the company transferred on December 1, 1992, certain
of its Agribusiness assets to Mycogen Corporation in exchange for 2,294,590
shares of Mycogen Common Stock and $39.4 million par value of Mycogen Series A
Preferred Stock. The remainder of its Agribusiness assets, plus cash of $4.6
million, and exclusive of specialty vegetable oil operations, was transferred
to Agrigenetics, L.P., a partnership with Mycogen, in exchange for a 49%
partnership interest. There was no gain or loss resulting from the transaction.
The company's investment in the partnership was recorded at $40.8 million,
which represented 49% of the net assets transferred. The investment in
Preferred Stock was recorded at $39.4 million par value, which was its fair
value as agreed by the parties at the transaction date. The investment in
Mycogen Common Stock was recorded at $13.1 million which was equivalent to the
remaining book value of net assets transferred.
On December 31, 1993, the company sold 29.54% of Agrigenetics, L.P. to Mycogen
in exchange for cash of $7.0 million and 2,000,000 shares of Mycogen Common
Stock. The additional shares of Common Stock were valued at $20.5 million and
increased the company's ownership of the outstanding Mycogen Common Stock from
25% to 32%. Mycogen liquidated Agrigenetics, L.P. into a successor corporation
named Agrigenetics Inc. ("AGI") and issued to the company AGI common shares
representing a 19.46% ownership interest.
The company has the right to convert, at any time, some or all of its interest
in AGI into Mycogen Common Stock. In addition, on or after November 30, 2000,
the company may require Mycogen to purchase, and Mycogen may require the
company to sell, some or all of its then remaining interest in AGI for cash.
The company and Mycogen have agreed the value for the conversion or sale of the
company's interest in AGI will not be less than $21.4 million nor more than
$26.3 million.
On December 1, 1993, Mycogen mandatorily redeemed $10 million of the Preferred
Stock for cash. Effective December 31, 1993, the company transferred $3.0
million of Mycogen Preferred Stock to AGI to settle claims regarding the asset
values of the Agribusiness transferred assets.
On December 31, 1993, Mycogen Preferred Stock was amended to eliminate the
mandatory redemption feature, to change the preferential dividend rights and to
change the rights for conversion into Mycogen Common Stock. As a result, the
Preferred Stock held by the company pays cumulative dividends of 5% per year
through November 30, 1996; 8.5% from December 1, 1996 through November 30,
2000; and the higher of 10% or prime plus 3% per annum thereafter. At Mycogen's
option, dividends may be paid in cash or additional shares of Preferred Stock
through November 30, 1997 and, thereafter, are payable in cash. The company, at
its option, may convert the Preferred Stock into Mycogen Common Stock at the
lower of $17.96 per share or 125% of the market price.
40
<PAGE> 17
The company uses the equity method of accounting for its investment in the
Common Stock of Mycogen which includes AGI (formerly Agrigenetics, L.P.). In
1991, Mycogen was accounted for by the cost method. Other income - net
includes the following amounts related to these investments.
<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Equity losses $(20,997) $(2,708)
Preferred dividends 1,975 164
Gain on sale of investments 13,174
------- -------
$(5,848) $(2,544)
======= =======
</TABLE>
At December 31, 1993, the book carrying values of the company's investments
aggregated $41.3 million for Mycogen and AGI Common Stock and $28.5 million for
Mycogen Preferred Stock.
<TABLE>
<CAPTION>
The consolidated financial statements include the following summary
results of operations of the agribusiness transferred assets for 1992
(eleven months) and 1991:
1992 1991
------- -------
<S> <C> <C>
Total revenues $88,575 $87,616
Total cost and expenses (95,903) (95,435)
Other income (expense) - net (1,021) 1,025
------- -------
(8,349) (6,794)
Intercompany items 2,204 5,050
------- -------
Segment loss $(6,145) $(1,744)
======= =======
</TABLE>
The company has a Technology and Development Agreement with AGI whereby the
company has a commitment to provide a minimum of $9 million of funding over the
next four year period to support the development of plant varieties to produce
specialty oils. The company retains exclusive commercial rights with respect to
the resulting specialty oils.
NOTE 17 -- SPECIAL CHARGE
The company recorded a special charge of $86.3 million ($.83 per share after
tax) in the third quarter of 1993 in connection with manufacturing
rationalization and organizational realignment initiatives. The manufacturing
rationalization plan will be implemented over the next several years and
through consolidation is expected to result in cost savings from a reduced
number of employees, lower operating costs and fewer manufacturing units used
to produce intermediate products.
Approximately $56 million of the special charge is related to the manufacturing
rationalization of which $33 million relates to asset write-downs, including
$25 million for the shutdown of manufacturing units used to produce
intermediate products. The remainder of the manufacturing rationalization
portion of the special charge relates to expected employee reductions at
manufacturing locations through early retirements, equipment cleanup and
dismantling, employee relocation and other transitional costs.
The organizational realignment relates to the consolidation of the company's
nonmanufacturing activities. This portion of the special charge is
approximately $30 million and includes $15 million for employee relocation and
early retirement. The remainder of this portion of the special charge relates
to asset write-downs of $13 million, primarily in the company's agribusiness
investments, and accruals for transitional costs.
The special charge will involve outlays of cash of approximately $36 million,
primarily for the early retirements and employee relocation expenses of which
approximately $4 million was expended during 1993, and approximately $14
million will be expended in 1994.
NOTE 18 -- LITIGATION
On November 18, 1993, a federal court jury in Houston, Texas, awarded Exxon
Corporation $48 million in damages in a patent case brought, in 1989, against
the company. The damages award relates to a December 1992 verdict that the
company willfully infringed an Exxon patent pertaining to an oil soluble copper
additive component. On February 18, 1994, the trial court judge doubled the
damages amount and awarded prejudgment interest, court costs and additional
attorneys' fees to Exxon. The total amount of the judgment, including
previously awarded attorneys' fees, is $129 million. The company has obtained a
bond to stay enforcement of the judgment pending the company's appeal discussed
below.
The original December 1992 finding of willful infringement, as well as that
jury's determination that the patent is valid, remains on appeal to the United
States Court of Appeals for the Federal Circuit Court in Washington, D.C.,
which has jurisdiction over all patent cases. Oral arguments on this appeal
were held on December 6, 1993, and a decision may be forthcoming in 1994. This
decision could reverse or modify the judgment against the company. In addition,
the company has the right to appeal the February 1994 damages award to the same
court in Washington, D.C. The company's management continues to believe that it
has not infringed the Exxon patent and that the patent is invalid. Based on the
advice of legal counsel, management believes that the December 1992 trial court
judgment will not be upheld on appeal. Therefore, no amount related to the
judgment has been recorded in the company's financial statements.
The company has prevailed in a separate case brought in Canada against Exxon's
Canadian affiliate, Imperial Oil, Ltd., for infringement of the company's
patent pertaining to dispersant, the largest additive component used in motor
oils. A 1990 trial court verdict in favor of the company regarding the issue of
liability was upheld by the Federal Court of Appeals of Canada in December
1992, and in October 1993, the Supreme Court of Canada dismissed Imperial Oil's
appeal of the Court of Appeals decision. The case has returned to the trial
court for an assessment of damages, which management believes should take 9 to
12 months. A reasonable estimation of the company's potential recovery cannot
be made at this time.
41
<PAGE> 18
THE LUBRIZOL CORPORATION
Deloitte &
I N D E P E N D E N T A U D I T O R S ' R E P O R T Touche
------------
To the Shareholders and Board of Directors of
The Lubrizol Corporation
We have audited the accompanying consolidated balance sheets of The Lubrizol
Corporation and its subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The Lubrizol Corporation and its
subsidiaries at December 31, 1993 and 1992, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1993 in conformity with generally accepted accounting principles.
As discussed in Notes 8 and 10 to the financial statements, in 1993 the Company
changed its method of accounting for income taxes to conform with Statement of
Financial Accounting Standards ("SFAS") No. 109 and its method of accounting
for postretirement benefits to conform with SFAS No. 106.
/s/ Deloitte & Touche
Cleveland, Ohio
February 18, 1994
42
<PAGE> 19
THE LUBRIZOL CORPORATION
<TABLE>
<CAPTION>
Q U A R T E R L Y F I N A N C I A L D A T A ( U N A U D I T E D )
Three Months Ended
--------------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
--------------------------------------------------------
(In Thousands of Dollars Except Per Share Data)
<S> <C> <C> <C> <C>
1993
Net sales $365,580 $392,236 $390,819 $368,996
======== ======== ======== ========
Gross profit $118,168 $121,625 $129,225 $116,414
======== ======== ======== ========
Income before accounting changes $ 35,431 $ 31,342 $(15,905) $ 34,107
======== ======== ======== ========
Net income $ (3,944) $ 31,342 $(15,905) $ 34,107
======== ======== ======== ========
Net income per share:
Before accounting change $.52 $.46 $(.24) $.51
Net income $(.06) $.46 $(.24) $.51
1992
Net sales:
Specialty Chemicals $357,868 $369,932 $354,801 $343,179
Agribusiness 57,033 44,783 7,576 9,498
-------- -------- -------- --------
Total $414,901 $414,715 $362,377 $352,677
======== ======== ======== ========
Gross profit:
Specialty Chemicals $121,568 $123,824 $103,394 $102,181
Agribusiness 23,917 16,164 (468) (286)
-------- -------- -------- --------
Total $145,485 $139,988 $102,926 $101,895
======== ======== ======== ========
Net income $ 44,096 $ 44,806 $ 19,019 $ 16,725
======== ======== ======== ========
Net income per share $.64 $.65 $.28 $.24
<FN>
In the third quarter of 1993, the company recorded a special charge decreasing net income $56.1 million ($.83 per share).
In the third and fourth quarters of 1993, the company recorded Genentech gains increasing net income $13.1 million
($.19 per share) and $14.5 million ($.22 per share) respectively.
Most of the sales of the Agribusiness segment were made during the first half of the year, and operating losses were recorded in
the third and fourth quarters as a result of incurring operating expenses with low sales. Agribusiness' cost of sales includes
certain period costs and, therefore, may exceed sales in a quarter which has low volume.
All share and per share data have been restated to reflect the 2-for-1 stock split effected on August 31, 1992.
</TABLE>
43
<PAGE> 20
THE LUBRIZOL CORPORATION
<TABLE>
<CAPTION>
H I S T O R I C A L S U M M A R Y
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) 1993 1992
---------- ----------
<S> <C> <C>
Summary of Operations
Revenues $1,525,500 $1,552,248
Cost of sales 1,032,199 1,054,376
Selling, administrative, research, testing and development expenses 330,046 336,088
---------- ----------
Total cost and expenses 1,362,245 1,390,464
Other income (charges) (43,604) 15,360
---------- ----------
Income before income taxes 119,651 177,144
Provision for income taxes 34,676 52,498
Changes in accounting principles (39,375)
---------- ----------
Net income $45,600 $124,646
========== ==========
For the Year:
Net income per share $.67 $1.81
Dividends declared per share .85 .81
Average Common Shares outstanding (in thousands) 67,706 68,966
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Current assets $ 568,913 $ 591,016
Current liabilities 224,248 206,248
---------- ----------
Working capital 344,665 384,768
Property - net 437,635 375,587
Other assets 176,032 160,517
---------- ----------
Total 958,332 920,872
Less:
Long-term debt 55,298 23,258
Noncurrent liabilities 159,445 41,217
Deferred income taxes 11,353 37,035
---------- ----------
Net assets - Shareholders' equity $ 732,236 $ 819,362
========== ==========
OTHER DATA
Return on average shareholders' equity 6% 15%
Total assets $1,182,580 $1,127,120
Capital investments 168,201 98,216
Depreciation 59,595 58,435
At End of Year:
Number of employees 4,613 4,609
Number of shareholders 6,616 6,822
Common Shares outstanding (in thousands) 66,590 68,451
Shareholders' equity per share $ 11.00 $ 11.97
<FN>
All share and per share data have been restated to reflect the 2-for-1 stock split effected on August 31, 1992.
</TABLE>
44
<PAGE> 21
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987 1986 1985 1984 1983
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,476,306 $1,452,701 $1,227,910 $1,125,731 $1,022,277 $985,182 $913,351 $844,175 $800,303
992,275 1,006,341 864,576 783,113 713,152 695,068 659,130 627,378 588,266
316,401 282,050 245,132 226,776 203,236 180,650 158,358 114,501 113,363
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1,308,676 1,288,391 1,109,708 1,009,889 916,388 875,718 817,488 741,879 701,629
10,510 106,902 19,544 69,908 23,310 19,200 7,582 12,788 15,032
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
178,140 271,212 137,746 185,750 129,199 128,664 103,445 115,084 113,706
54,481 81,166 43,766 54,544 47,864 50,479 43,221 47,353 48,962
8,751
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 123,659 $ 190,046 $ 93,980 $ 139,957 $ 81,335 $ 78,185 $ 60,224 $ 67,731 $ 64,744
========== ========== ========== ========== ========== ========== ========== ========== ==========
$1.79 $2.67 $1.26 $1.81 $1.03 $.99 $.74 $.87 $.83
.77 .73 .69 .65 .61 .59 .58 .56 .54
69,260 71,121 74,665 77,391 79,117 79,356 80,817 78,276 78,390
$ 701,571 $ 668,810 $ 543,166 $ 573,002 $ 513,342 $ 462,982 $447,441 $376,050 $361,964
262,162 248,351 180,908 184,888 169,166 162,797 182,543 132,252 129,766
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
439,409 420,459 362,258 388,114 344,176 300,185 264,898 243,798 232,198
380,030 353,551 316,493 298,670 297,573 289,078 290,298 251,735 274,337
90,082 92,235 100,525 98,999 128,463 125,847 116,706 74,189 46,563
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
909,521 866,245 779,276 785,783 770,212 715,110 671,902 569,722 553,098
34,982 54,023 53,180 55,339 56,138 52,616 73,444 30,416 27,213
41,979 39,663 29,320 26,851 23,952 16,806 13,161 11,480 10,038
38,094 36,348 33,512 39,285 68,489 73,009 65,999 53,483 44,326
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 794,466 $ 736,211 $ 663,264 $ 664,308 $ 621,633 $ 572,679 $ 519,298 $ 474,343 $471,521
========== ========== ========== ========== ========== ========== ========== ========== ==========
16% 27% 14% 22% 14% 14% 12% 14% 14%
$1,171,683 $1,114,596 $ 960,184 $ 970,671 $ 939,378 $ 877,907 $ 854,445 $ 701,974 $ 682,864
83,541 92,231 82,720 71,891 56,460 52,986 103,990 49,001 27,961
54,614 53,960 48,682 46,598 47,229 42,591 44,605 38,723 37,038
5,299 5,169 5,030 4,781 4,817 4,802 5,205 4,176 4,165
6,767 6,692 7,370 7,782 8,335 9,240 10,803 10,804 11,277
69,031 69,397 74,016 76,020 77,922 79,382 79,321 78,221 78,390
$ 11.51 $ 10.61 $ 8.96 $ 8.74 $ 7.98 $ 7.21 $ 6.55 $ 6.06 $ 6.02
</TABLE>
45
<PAGE> 1
EXHIBIT 21
<TABLE>
THE LUBRIZOL CORPORATION
<CAPTION>
% OF STATE/COUNTRY
PRINCIPAL SUBSIDIARIES OWNERSHIP OF INCORPORATION
<S> <C> <C>
Lubrizol A.G. 100% Switzerland
Lubrizol do Brasil Aditivos, Ltda. 100% Brazil
Lubrizol Canada Limited 100% Canada
Lubrizol de Chile Limitada 100% Chile
Lubrizol Espanola, S.A. 100% Spain
Lubrizol France S.A. 99.992% France
Lubrizol Gesellschaft m.b.H. 100% Austria
Lubrizol G.m.b.H. 100% Germany
Lubrizol Great Britain Limited 100% United Kingdom
Lubrizol International Inc. 100% Cayman Islands
Lubrizol International Management
Corporation 100% Nevada
Lubrizol Italiana, S.p.A. 100% Italy
Lubrizol Japan, Limited 100% Japan
Lubrizol Limited 100% United Kingdom
Lubrizol de Mexico, S. de R.L. 100% Mexico
Lubrizol Overseas Trading Corporation 100% Delaware
Lubrizol Scandinavia AB 100% Sweden
Lubrizol Servicios Tecnicos S. de R.L. 100% Mexico
Lubrizol South Africa (Pty.) Limited 100% South Africa
Lubrizol Southeast Asia (Pte.) Ltd. 100% Singapore
Lubrizol de Venezuela C.A. 99.9% Venezuela
Gate City Equipment Company, Inc. 100% Delaware
Langer & Company G.m.b.H. 100% Germany
SVO Specialty Products, Inc. 100% Delaware
AFFILIATES
Lubrizol India Limited 40% India
Industrais Lubrizol S.A. de C.V. 40% Mexico
Lubrizol Transarabian Company Limited 49% Saudi Arabia
C.A. Lubricantes Quimicos L.Q. 49% Venezuela
Solub Product Application Laboratory 40% Russia
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
THE LUBRIZOL CORPORATION
We consent to the incorporation by reference in Post-Effective
Amendment No. 1 to Registration Statement No. 2-67385 on Form S-8, in
Registration Statement No. 2-78019 on Form S-8, in Registration Statement No.
2-95120 on Form S-8, in Registration Statement No. 2-99983 on Form S-8, in
Registration Statement No. 33-430 on Form S-8, in Registration Statement No.
33-2842 on Form S-8, in Registration Statement No. 33-29409 on Form S-8, in
Registration Statement No. 33-42211 on Form S-8 and in Registration Statement
No. 33-68246 on Form S-3 of our reports dated February 18, 1994, appearing and
incorporated by reference in this Annual Report on Form 10-K of The Lubrizol
Corporation for the year ended December 31, 1993.
/s/Deloitte & Touche
- ----------------------------------
DELOITTE & TOUCHE
Cleveland, Ohio
March 28, 1994
