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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
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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
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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
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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.
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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
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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.
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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