1981 Key Employee Incentive Stock Option Plan

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


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 admini ...