INDEMNIFICATION
AGREEMENT
This Agreement made this ___th day of
___, ___, between The Lubrizol Corporation, an Ohio corporation
(the “Company”) and ___, a director, officer, employee
or representative (as hereinafter defined) of the Company (the
“Indemnitee”);
WHEREAS, the Company and the
Indemnitee are each aware of the exposure to litigation of
directors, officers, employees and representatives of the Company
as such persons exercise their duties to the Company;
WHEREAS, the Company and the
Indemnitee are also aware of conditions in the insurance industry
that have affected and may continue to affect the Company’s
ability to obtain appropriate liability insurance on an
economically acceptable basis;
WHEREAS, the Company desires to
continue to benefit from the services of highly qualified,
experienced and otherwise competent persons such as the
Indemnitee;
WHEREAS, the Indemnitee desires to
serve or to continue to serve the Company as a director, officer,
employee and/or as a director, officer, trustee or other fiduciary
of another corporation, joint venture, trust or other enterprise in
which the Company has a direct or indirect ownership interest, for
so long as the Company continues to provide on an acceptable basis
adequate and reliable indemnification against certain liabilities
and expenses which may be incurred by the Indemnitee.
NOW, THEREFORE, in consideration of
the foregoing premises and the mutual covenants herein contained,
the parties hereto agree as follows:
The Company shall indemnify the
Indemnitee with respect to his activities as a director, officer or
employee of the Company and/or as a person who is serving or has
served on behalf of the Company (“representative”) as a
director, officer, trustee or other fiduciary of another
corporation, joint venture, trust or other enterprise, domestic or
foreign, in which the Company has a direct or indirect ownership
interest (an “affiliated entity”) against expenses
(including, without limitation, attorneys’ fees, judgments,
fines, and amounts paid in settlement) actually and reasonably
incurred by him (“Expenses”) in connection with any
claim against Indemnitee which is the subject of any threatened,
pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, investigative or otherwise and whether
formal or informal (a “Proceeding”), to which
Indemnitee was, is, or is threatened to be made a party by reason
of facts which include Indemnitee’s being or having been such
a director, officer, employee or representative, to the extent of
the highest and most advantageous to the Indemnitee, as determined
by the Indemnitee, of one or any combination of the
following:
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(a)
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The
benefits provided by the Company’s Code of Regulations in
effect on the date hereof, a copy of the relevant portions of which
are attached hereto as Exhibit I;
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(b)
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The
benefits provided by the Articles of Incorporation, Code of
Regulations, or By-laws or their equivalent of the Company in
effect at the time Expenses are incurred by Indemnitee;
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(c)
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The
benefits allowable under Ohio law in effect at the date
hereof;
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(d)
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The
benefits allowable under the law of the jurisdiction under which
the Company exists at the time Expenses are incurred by the
Indemnitee;
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(e)
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The
benefits available under liability insurance obtained by the
Company; and
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(f)
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Such other benefits as are or may be
otherwise available to Indemnitee.
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Combination of two or more of the
benefits provided by (a) through (f) shall be available
to the extent that the Applicable Document, as hereafter defined,
does not require that the benefits provided therein be exclusive of
other benefits. The document or law providing for the benefits
listed in items (a) through (f) above is called the
“Applicable Document” in this Agreement. Company hereby
undertakes to use its best efforts to assist Indemnitee, in all
proper and legal ways, to obtain the benefits selected by
Indemnitee under items (a) through (f) above. For
purposes of this Agreement, references to “other
enterprises” shall include employee benefit plans for
employees of the Company or of any affiliated entity without regard
to ownership of such plans; references to “fines” shall
include any excise taxes assessed on the Indemnitee with respect to
any employee benefit plan; references to “serving or has
served on behalf of the Company” shall include any service as
a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, the Indemnitee with respect to
an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references
to the singular shall include the plural and vice
versa ; and if the Indemnitee acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan he shall
be deemed to have acted in a manner consistent with the standards
required for indemnification by the Company under the Applicable
Documents.
The Company shall maintain
directors’ and officers’ or other similar liability
insurance for so long as Indemnitee’s services are covered
hereunder, provided and to the extent that such insurance is
available on a basis acceptable to the Company. However, the
Company agrees that the provisions hereof shall remain in effect
regardless of whether liability or other insurance coverage is at
any time obtained or retained by the Company; except that any
payments in fact made to Indemnitee under an insurance policy
obtained or retained by the Company shall reduce the obligation of
the Company to make payments hereunder by the amount of the
payments made under any such insurance policy.
At Indemnitee’s request, after
receipt of written notice pursuant to Section 6 hereof and an
undertaking in the form of Exhibit II attached hereto by or on
behalf of Indemnitee to repay such
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amounts so paid on Indemnitee’s behalf if it shall ultimately
be determined under the Applicable Document that Indemnitee is not
entitled to be indemnified by the Company for such Expenses, the
Company shall pay the Expenses as and when incurred by Indemnitee.
That portion of Expenses which represents attorneys’ fees and
other costs incurred in defending any Proceeding shall be paid by
the Company within thirty (30) days of its receipt of such
request, together with reasonable documentation (consistent, in the
case of attorneys’ fees, with Company practice in payment of
legal fees prior to a Change in Control, as hereafter defined)
evidencing the amount and nature of such Expenses, subject to its
also having received such a notice and undertaking.
The Company shall dedicate up to an
aggregate of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($7,500,000) as collateral security for the initial funding of its
obligations hereunder and under similar agreements with other
directors, officers, employees and representatives by depositing
assets or bank letters of credit in escrow or reserving lines of
credit that may be drawn down by an escrow agent in the dedicated
amount (the “Escrow Reserve”); provided, however, that
the terms of any such Escrow reserve may provide that the cash,
securities or letter or line of credit available therefor shall
only be utilized for the indemnification or advancement of expenses
provided for herein in the event that there shall have occurred
within the preceding five (5) years a Change in Control of the
Company, as defined below. The Company shall promptly provide
Indemnitee with a true and complete copy of the agreement relating
to the establishment and operation of the Escrow Reserve, together
with such additional documentation or information with respect to
the escrow as Indemnitee may from time to time reasonably request.
The Company shall promptly deliver an executed copy of the
Agreement to the escrow agent for the Escrow Reserve to evidence to
that agent that Indemnitee is a beneficiary of that Escrow Reserve
and shall deliver to Indemnitee the escrow agent’s signed
receipt evidencing that delivery. For purposes of this Agreement, a
“Change in Control” of the Company shall have occurred
if at any time during the Term (as hereafter defined) any of the
following events shall occur:
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(a)
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The
Company is merged or consolidated with another corporation and as a
result of such merger or consolidation less than 80% of the
outstanding voting securities of the surviving or resulting
corporation are owned in the aggregate by the shareholders of the
Company, immediately prior to such merger or
consolidation;
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(b)
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There is a report filed on Scheduled
13D or Schedule 14D-l (or any successor schedule, form, or
report) each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (“Exchange Act”) disclosing the
acquisition of 20% or more of the voting stock of the Company in a
transaction or series of transactions by any person (as the term
“person” is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act);
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(c)
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The
Company shall file a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Item 1 of Form 8-K thereunder or Item 5(f) of
Schedule 14A thereunder (or any similar item of a successor
schedule, form or report) that a Change in Control of the Company
has or may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction;
or
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(d)
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During any period of twenty-four
(24) consecutive months, individuals who at the beginning of
any such period constitute the directors of the Company cease for
any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company’s
shareholders, of each new director of the Company was approved by a
vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the beginning
of any such period.
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The indemnification provided in this
Agreement shall not be exclusive of any other indemnification or
right to which Inde
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