10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number 1-5263

THE LUBRIZOL CORPORATION

(Exact name of registrant as specified in its charter)

OHIO	34-0367600
(State of incorporation)	(I.R.S. Employer Identification No.)

29400 Lakeland Boulevard

Wickliffe, Ohio 44092-2298

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (440) 943-4200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares without par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act of 1933. Yes  þ   No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes  ¨   No  þ

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 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  þ   No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  þ   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.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer: þ		Accelerated filer: ¨
Non-accelerated filer: ¨	(Do not check if a smaller reporting company)	Smaller reporting company: ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨   No  þ

Aggregate market value (on basis of closing sale price) of voting stock held by nonaffiliates as of June 30, 2010: $5,400,037,840.

Number of the registrant’s Common Shares, without par value, outstanding as of February 11, 2011: 64,076,941.

Documents Incorporated by Reference

Portions of the proxy statement for the 2011 Annual Meeting of Shareholders (Incorporated into Part III of this Form 10-K)

TABLE OF CONTENTS

	PART I
Item 1.	Business	1
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	12
Item 2.	Properties	12
Item 3.	Legal Proceedings	12
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13
Item 6.	Selected Financial Data	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations .	15
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 8.	Financial Statements and Supplementary Data	35
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	71
Item 9A.	Controls and Procedures	71
Item 9B.	Other Information	72
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	73
Item 11.	Executive Compensation	74
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	74
Item 13.	Certain Relationships and Related Transactions, and Director Independence	74
Item 14.	Principal Accounting Fees and Services	74
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	75
	Signatures	79

PART I

ITEM 1. BUSINESS

References to “Lubrizol,” the “company,” “we,” “us” or “our” refer to The Lubrizol Corporation and its subsidiaries, except where the context makes clear that the reference is to The Lubrizol Corporation itself and not to its subsidiaries.

OVERVIEW

The Lubrizol Corporation was founded in 1928. We are an innovative specialty chemical company with consolidated revenue of $5,417.8 million for the year ended December 31, 2010. We supply technologies and produce additives, ingredients, resins and compounds that improve the quality, value and performance, and minimize the environmental impact of our customers’ products in the global transportation, industrial and consumer markets. Our business is founded on technological leadership; innovation provides opportunities for us in growth markets as well as advantages over our competitors. From a base of approximately 1,600 patents, we use our product development and formulation expertise to sustain our leading market positions and fuel our future growth.

Our products are used in a broad range of applications and are sold into relatively stable markets such as those for engine oils, specialty driveline lubricants and metalworking fluids, as well as higher-growth markets such as those for personal care and over-the-counter pharmaceutical products, performance coatings, medical products and compressor lubricants. Our specialty chemical products also are used in a variety of industries, including the construction, sporting goods, medical products and automotive industries.

We are organized into two operating and reportable segments called Lubrizol Additives and Lubrizol Advanced Materials, and we are an industry leader in many of the markets in which our product lines compete. We produce products with well-recognized brand names, such as Anglamol^® (gear oil additives), Carbopol^® (acrylic thickeners for personal care products), Estane^® (thermoplastic polyurethane) and TempRite^® (resins and compounds used in plumbing, industrial and fire sprinkler systems).

We are diverse geographically, with an extensive global manufacturing, supply chain, technical and commercial infrastructure. We believe that our customers recognize and value our ability to provide customized, high quality, cost-effective performance formulations and solutions worldwide, and that our customers highly value our global supply chain capabilities. At December 31, 2010, through the efforts of approximately 6,900 employees, we operated facilities in 27 countries, including production facilities in 17 countries and laboratories in 14 countries, in key regions around the world. We sell our products in more than 100 countries and derived our 2010 consolidated revenues from each geographic region as follows:

	% of Revenues
North America		35%
Europe		29%
Asia-Pacific / Middle East		28%
Latin America		8%

Our principal executive offices are located at 29400 Lakeland Boulevard, Wickliffe, Ohio 44092-2298. Our telephone number is 440-943-4200. Our web address is www.lubrizol.com. Information contained on our website does not constitute part of this annual report on Form 10-K. As soon as reasonably practicable after we electronically file or furnish the material with the Securities and Exchange Commission (SEC), we make available free of charge on our website our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K as well as any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

ACQUISITIONS

On January 21, 2011, we acquired the Performance Products Group of Nalco Company, a supplier of value-added specialty polymers and formulation additives marketed to the global personal care and household care industries, for approximately $164.2 million in cash. The agreement includes all Nalco personal care dedicated technology, know-how, trade names and customer lists, as well as royalty-free access to the use of technology and intellectual property currently shared with other Nalco businesses.

On December 31, 2008, we completed the acquisition of the commercial, production and research and development assets of the thermoplastic polyurethane business of The Dow Chemical Company for approximately $59.9 million. The assets acquired included technology, trade names, customer lists and manufacturing know-how. We also acquired a manufacturing facility, including equipment and inventory, in La Porte, Texas.

On October 10, 2008, we completed the acquisition of the thermoplastic polyurethane business of SK Chemicals Co., Ltd. for approximately $5.0 million, of which $2.5 million was paid in 2010. The assets acquired included equipment, technology, customer lists and manufacturing know-how.

THE LUBRIZOL CORPORATION     1

BUSINESS SEGMENTS

The Lubrizol Additives segment represented approximately 72% of our 2010 consolidated revenues and is comprised of two product lines: (i) engine additives and (ii) driveline and industrial additives. The Lubrizol Advanced Materials segment represented approximately 28% of our 2010 consolidated revenues and is comprised of three product lines: (i) engineered polymers, (ii) Noveon^® consumer specialties and (iii) performance coatings. Additional financial information about our segments is contained in Note 3 to our consolidated financial statements. The following table shows the product lines and products within each of our business segments.

Lubrizol Additives Segment

Engine Additives

•Passenger Car Motor Oils

•Heavy-duty Diesel Engine Oils

•Marine Diesel Engine Oils

•Viscosity Modifiers

•Fuel, Refinery and Oilfield Products

•Stationary Natural Gas Engine Oils

•Motorcycle Engine Oils

•Power Tool Engine Oils

•Recreational Equipment Engine Oils

Driveline and Industrial Additives

•Automatic Transmission Fluids

•Gear Oils

•Farm Tractor Fluids

•Hydraulic Fluids

•Grease Additives

•Metalworking Fluids

•Compressor Lubricants

•Industrial Gear Oils

•Viscosity Modifiers

•AMPS^® Monomers

•ADEX™ Emulsifiers for Explosives

Lubrizol Advanced Materials Segment

Engineered Polymers

•Estane Engineered Polymers

•TempRite Engineered Polymers

Noveon Consumer Specialties

•Personal and Home Care

•Pharmaceuticals and Food Additives

Performance Coatings

•Graphic Arts

•Paints, Coatings and Adhesives

•Engineered Substrates

Lubrizol Additives Segment

The Lubrizol Additives segment pioneered the development of lubricant additives more than 80 years ago and is the leading global supplier of additives for transportation and industrial lubricants. For the year ended December 31, 2010, the Lubrizol Additives segment generated revenues of $3,884.3 million and segment operating income of $971.2 million.

We are recognized by our customers for innovative technology, broad product offerings and high-quality products. Our customers rely upon our products to improve the performance and lifespan of critical components, such as engines, transmissions and gear drives for cars, motorcycles, trucks, buses, off-highway equipment, marine engines and industrial applications.

Our products provide value to our customers and are designed to increase cost-effectiveness by reducing friction and heat, resisting oxidation, minimizing deposit formation and preventing corrosion and wear. Through our internal research, development and testing programs, we have the capability to invent and develop a broad range of proprietary chemical components. We formulate proprietary additive packages by combining these different components to create unique products targeting specific customer problems. Key elements of our additive packages include:

• antioxidants that retard oil thickening;

• anti-wear agents that prevent metal-to-metal contact of surfaces;

• corrosion inhibitors that prevent rust;

• detergents that prevent deposit build-up;

• dispersants that protect equipment by suspending contaminant particles;

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• friction modifiers that control friction at surfaces;

• polymer-based viscosity modifiers that allow lubricants to operate over broad temperature ranges; and

• pour point depressants that control low temperature fluid thickening.

Our products are essential to the performance of the finished lubricant, yet represent a relatively small portion of its volume. The majority of our products are designed to meet an industry standard or customer specification. For example, we work with customers to develop additive packages that, in combination with the customers’ proprietary base oil, meet performance standards and the customers’ marketing objectives to differentiate its lubricant. Extensive testing is conducted in our world-class laboratories, global mechanical testing facilities and in the field to determine additive performance under actual operating conditions. With this testing, we provide proof of performance, which enables our customers to label and certify the lubricant as meeting the exact performance specifications required by the industry.

Engine Additives  Our engine additives hold a leading global position for a wide range of additives for lubricating engine oils, such as for gasoline, diesel, marine and stationary gas engines, and in 2010, generated total revenues of $2,496.6 million. Our engine additives provide performance properties to lubricants that enhance fuel economy, extend equipment life and lower vehicle emissions. We also produce additives for fuels, refinery and oilfield chemicals to eliminate deposits and provide fuel system cleanliness, prevent wear and corrosion, enhance fuel economy, improve combustion properties of fuel and improve flow characteristics for crudes and refined products. In addition, this product line sells additive components and viscosity modifiers and provides outsourcing services for supply chain and knowledge center management. Our customers, which include major global and regional oil companies, refineries and specialized lubricant producers and marketers, blend our additive products with their base oil and distribute the finished lubricant to end-users via retail, commercial or vehicle original equipment manufacturer (OEM) channels.

Driveline and Industrial Additives  We are a global supplier of driveline and industrial additive products for use in driveline and industrial applications. This product line also sells viscosity modifiers and provides outsourcing services for supply chain and knowledge center management. In 2010, our driveline and industrial additives products generated total revenues of $1,387.7 million.

Driveline Additives  Our driveline additives primarily are used in driveline oils, such as automatic transmission fluids, gear oils and farm tractor lubricants. They provide multiple and complex performance properties to reduce friction in order to prevent wear of gears, transmissions and farm tractor components. Relative to engine additives, specialty driveline additives are more complex formulations that enhance formulation value and have longer product life cycles. We sell our products to major global and regional oil companies, specialized lubricant producers and marketers. Our customers use our products to blend with their lubricant fluids and distribute the finished lubricant to end-users via retail, commercial or vehicle OEM channels. The driveline additives industry is characterized by well-established product offerings that meet OEM specifications and carry OEM approvals.

Industrial Additives  Our industrial additives primarily are used in hydraulic lubricants, metalworking fluids, industrial gear oils and greases, as well as in compressor lubricants that meet the lubricant performance requirements of the industrial equipment in which they are used. We sell our products to major global and regional oil companies, compressor manufacturers, specialized lubricant producers and marketers. Our customers blend our additives with their fluid products and distribute the finished lubricant to end-users via retail, commercial or OEM channels. Included in this product line are ADEX emulsifiers that are designed to combine water and oil for use in producing civil explosives, and AMPS monomers, which are designed to manufacture high performance water soluble polymers. The primary applications of these high performance polymers are flocculants in water treatment applications and lubricity aids in oil well drilling. Because our industrial additives are sold to industrial end-markets, they are exposed to economic cycles more than other products within the Lubrizol Additives segment.

Lubrizol Advanced Materials Segment

The Lubrizol Advanced Materials segment represents a diverse portfolio of performance chemicals used in specialty plastics and industrial applications, consumer goods, such as ingredients for personal care and pharmaceutical products, and emulsions and additives for coatings and inks. For the year ended December 31, 2010, the Lubrizol Advanced Materials segment generated revenues of $1,533.5 million and segment operating income of $227.5 million.

Engineered Polymers  We are a leading global supplier of engineered polymer resins and compounds sold under several trademarks, including Estane and TempRite engineered polymers. In 2010, the engineered polymers product line generated total revenues of $628.6 million.

Estane Engineered Polymers  The Estane engineered polymers business develops and markets thermoplastic elastomer resins, engineered polymer compounds, sheet and tubing for attractive end-uses that require high performance functionality such as abrasion

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resistance, clarity, breathability, barrier capability, low-temperature flexibility, biocompatibility, elasticity, electrical conductivity and weather resistance. The Estane business has developed and markets the broadest range of high performance thermoplastic polyurethane (TPU) products and offers alternatives to competitive materials from flexible rubber to metal. The Estane brands include Pellethane^®, Tecoflex^® and Carbothane^® specifically used in the health care industry for implantables, medical devices, surgical instruments and drug delivery. The unique characteristics of these materials offer performance for the designer/manufacturer, precision for the surgeon and comfort for the patient. Estane polymer is a highly versatile thermoplastic that is attractive for a broad range of end-uses, including film and sheet for various coating processes, wire and cable jacketing, sports and recreation, pneumatic tubing, molded parts and adhesives. The Estane business has developed highly versatile materials that can be processed into non-wovens and fibers that offer very distinct and appealing feel to performance apparel. Reinforced products marketed under Isoplast^® and Estaloc^® offer functional properties of traditional TPU, yet are reinforced for higher stiffness to provide the strength, dimensional stability and impact resistance required to withstand a variety of tough applications and harsh environments at seven times lighter weight than steel. Applications include automotive trim, sporting goods, agricultural equipment, and medical products along with general industrial and mechanical applications. We also market Stat-Rite^® conductive polymers that are static dissipative materials, which are used in a variety of applications such as packaging for sensitive electronic components and various clean room applications.

TempRite Engineered Polymers  TempRite is a technologically advanced heat, fire and chemical resistant polymer that we developed to serve technically demanding applications not well served by traditional polyvinyl chloride (PVC) and other commodity plastics. TempRite polymer is sold to customers who produce plastic piping for residential and commercial plumbing, fire sprinkler systems and industrial piping applications. TempRite piping has inherent advantages over copper and other metals due to its heat and corrosion resistance, increased insulation properties, mold resistance, ease of installation and lower installed cost. We market our branded TempRite polymer products for specific applications, including: FlowGuard^® and FlowGuard Gold^® for residential and commercial plumbing, FlowGuard^® Bendable for water service and solar heating, BlazeMaster^® for fire sprinkler systems, and Corzan^® for industrial and commercial piping. We market these products directly to builders, contractors, plumbers, architects, engineers and building owners.

Noveon Consumer Specialties  Noveon consumer specialties is the leading supplier of synthetic rheology modifiers used in personal care, home care and pharmaceutical applications. The consumer specialties portfolio includes a variety of innovative technologies designed to improve product functionality as well as the physical and tactile appeal of products in the personal care, home care and pharmaceutical industries. These specialty ingredients are used in consumer goods such as shampoos, body washes, liquid hand soaps and hand sanitizers, skin care creams and lotions, hair conditioners and styling treatments and in-home care products for surface and fabric care. In the pharmaceutical segment, these technologies are used in dental care and topical applications and in prescription and over-the-counter medications in liquid suspension and solid dose forms. In 2010, products in Noveon consumer specialties generated total revenues of $456.0 million.

The consumer specialties product line is comprised of Carbopol polymers, which improve product flow, appearance, tactile appeal and shelf stability in a wide variety of consumer applications; Fixate^® polymers, which provide humidity-resistant holding power in styling products; Schercemol™ emollient esters, which enhance the elegance and sensory appeal of skin color cosmetic products; and naturally derived Glucamate^® thickeners and emulsifiers, which enhance the mildness and appeal of skin cleansing and baby care products. The portfolio also contains other naturally-derived technologies such as cassia gum, a natural hydrocolloid, which improves product texture and yield in food applications, and cationic cassia derivatives, which are designed to improve the condition and appearance of hair.

Performance Coatings  The performance coatings product line is a leading supplier of specialty resins, polymers and additives for coatings and related industries. We offer a wide range of products including high-performance polymers and additives for specialty paper, inks and graphic arts, and paint and textile coating applications, and we are able to formulate and compound polymer emulsions to create customized solutions to meet the specific needs of our customers. In 2010, our performance coatings products generated total revenues of $448.9 million.

Specialty Resins and Polymers  Our water-based polymer emulsions and dispersions, including resins and auxiliaries, are used in the production of high-end paint and coatings for wood, paper, metal, concrete, plastic, textiles and other surfaces. These are environmentally attractive substitutes for solvent-based and hydrocarbon products and are valued for the superior gloss and durability properties they provide. These products are sold under the Hycar^®, Sancure^®, Algan^®, Performax^®, Vycar^®, Stycar^®, and Myflam^® trade names. In addition, our polymers are used as ink vehicles, overprint varnishes and functional coatings for specialty paper, printing and packaging applications. We supply technology used to improve the appearance, texture, durability and flame retardance of high-end specialty textiles sold to the home furnishings and technical fabrics industries. In addition to water-based polymers, we specialize in unique, non-aqueous acrylic and other proprietary polymer resins for the paint and coatings, printing ink, laminating, adhesives and sealants markets. These value-added Doresco^® specialty resins not only function as carriers for pigment, but also provide surface protection and adhesion properties. We work closely with our customers to develop solutions that address their specific needs.

4     THE LUBRIZOL CORPORATION

Coating Additives  Our additives for coatings and inks are used to enhance the appearance and durability of coatings in architectural and industrial uses, as well as to improve their processing and application characteristics. Additives such as pigment dispersants enhance the processing and performance of printing ink, while also maximizing color strength and stability in coatings and plastics. We are a leading global supplier of surface modifiers that improve the abrasion resistance properties, gloss, leveling and film characteristics of printing ink and coatings. Our products include:

• High-performance hyperdispersants for coatings, inks, thermoplastics and thermoset composites. We are a world leader in polymeric hyperdispersant technology, sold under the Solsperse^® and Solplus^® trade names. Hyperdispersants improve the dispersion of almost any solid particulate (including pigments, fillers, flame retardants and fibers) into almost any liquid medium (water, solvents and resins). They primarily are used to achieve even color saturation. They enrich and strengthen color, while reducing production costs and solvent emissions. We also produce Ircosperse^® pigment dispersants for coatings and COLORBURST™ pigment dispersants for printing inks.

• Surface modifiers improve the performance of industrial, architectural, can, coil, wood and powder coatings by enhancing and protecting surfaces. Lanco^®, Lanco^® Glidd, Lanco^® Matt and Aquaslip™ surface modifiers impart a variety of properties to a coating, including enhanced slip, abrasion and scratch resistance, matting, texturing and a silky, soft feel.

• Rheology control additives improve the performance of coatings by providing thickening, sag and flow control, pigment anti-settling and improved surface appearance. Rheology control additives are sold under the brand names Ircothix^®, Lancoflow^®, Ircogel^® and Solthix^®.

• Specialized additives for inks improve processing, performance and rub resistance properties and film characteristics that are sold under the brand names Duotron^®, Liquitron^®, Pinnacle^® and Fluotron^®.

• Highly specialized additives for coating applications that promote adhesion and inhibit corrosion that are sold under the brand name Lubrizol^® Specialty Additives.

COMPETITION

We believe that our Lubrizol Additives segment is the leading supplier of performance additives for lubricants to the petroleum industry based on volume sold. Our Lubrizol Additives segment is highly competitive in terms of technology development, product performance, customer service and price. Our principal competitors, both in the United States (U.S.) and overseas, are: Infineum, a joint venture of ExxonMobil Corporation and Shell Oil Company; Chevron Oronite Company, a subsidiary of Chevron Corporation; and Afton Chemical Corporation, a subsidiary of NewMarket Corporation. Infineum and Chevron Oronite Company produce lubricant and fuel additives for use by their parent companies and also sell additives to other third parties.

Our Lubrizol Advanced Materials segment faces a variety of competitors in each of its product lines. The advanced materials industry is highly fragmented. Individual products or service offerings compete on a global, regional and local level due to the nature of the businesses and products, as well as the applications and customers served. The following table sets forth the principal competitors of the Lubrizol Advanced Materials segment by product line:

Product Line	Principal Competitors
Engineered polymers	Arkema, BASF, Bayer, COIM, Georgia Gulf, Huntsman, Kaneka, Merquinsa, Sekisui Chemical, Yantai Wanhua
Noveon consumer specialties	BASF, Croda, Dow Chemical, Evonik (Degussa Goldschmidt), ISP, NK Chemicals, Rhodia, SNF, Stepan, Sumitomo Seika, 3V Sigma, Vinati
Performance coatings	BASF, Bayer, Byk, Clariant, Cytec, Dow Chemical, DSM, Eastman, Hexion, Michelman, Micro Powders, OMNOVA, Parachem, Reichhold, Tego

SALES AND MARKETING

We primarily market lubricant and fuel additives products worldwide through our direct sales organization. In addition, we use sales agents and distributors where necessary. Our additives customers principally consist of major global and regional oil companies and are located in more than 100 countries. Some of our largest customers also may be suppliers to us. Our 10 largest customers, most of which are global oil companies, accounted for approximately 39% of our consolidated revenues in 2010. In 2010, no single customer accounted for more than 10% of consolidated revenues.

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In order to maximize our understanding of customer needs as well as emerging trends, our sales and marketing activities for our advanced materials products are organized by end-use applications. Each team includes representatives from sales, marketing and research and development. The sales and marketing staff for both of our segments are oriented technically and work closely with customers to develop products and formulations that deliver the desired product attributes. Some of our laboratories are equipped with small-scale equipment that replicates our customers’ processing capabilities, ensuring that our solutions are implemented easily and efficiently at our customers’ facilities.

PATENTS AND TRADEMARKS

We own approximately 1,600 patents worldwide relating to our products and manufacturing processes. Although these domestic and foreign patents expire from time to time, we apply for and obtain patent protection for new products on an ongoing basis. We also have a substantial number of trademarks and trademark registrations in the U.S. and in other countries. We believe that our patents and trademarks are important assets for both of our business segments. However, we do not regard our business as being dependent materially upon any single, or group of related, patent(s) or trademark(s).

RESEARCH, DEVELOPMENT AND TECHNOLOGY

Technology leadership in design and formulation of additives and specialty chemicals drives our business, and we emphasize consistent investment in research. We have developed internally a large percentage of the products we manufacture and sell. Our internal technical resources encompass chemical synthesis, world-class physical and analytical science, statistical and computer modeling expertise and extensive applications technology and testing laboratories. We balance centralized research facilities with testing laboratories and applications technology centers that are tied closely to their counterparts in the commercial organizations. Our technical facilities are located all over the world and provide tools and processes for knowledge sharing and for leveraging our technology globally and across product lines.

Our research and development staff works with our sales force and customers to use our wide spectrum of technology platforms and processing capabilities to enhance our product offerings in the specialty chemicals industry. We have developed many of our products in cooperation with our customers, often as a result of their specific needs, resulting in long-standing customer relationships.

Lubrizol Additives  In our Lubrizol Additives segment, the majority of the additives we manufacture and sell are developed by our internal research group. Technological advances in materials and in the design of engines and other automotive equipment, combined with rising demands for engine durability, environmental protection and fuel economy, require increasingly sophisticated research capabilities to meet industry performance standards.

Our principal technical facilities for lubricant additives research are located in Hazelwood, United Kingdom and Wickliffe, Ohio. These mechanical testing laboratories serve the needs of our customers throughout the world and are equipped with a variety of gasoline and diesel engines and driveline and other mechanical equipment to evaluate the performance of additives for lubricants and fuels. In addition, we make extensive use of independent research firms. Global field testing is conducted through various arrangements with fleet operators and others. We also conduct corporate research designed to leverage technology across our product lines.

We maintain offices in Hamburg, Germany; Hazelwood, United Kingdom; Mumbai, India; Paris, France; Seoul, Korea; Shanghai, China; Tokyo, Japan; and Wickliffe, Ohio to maintain close contact with the principal global automotive OEMs and to keep abreast of the performance requirements for our products. These liaison activities also serve as contacts for cooperative development and evaluation of products for future applications.

Lubrizol Advanced Materials  Our Lubrizol Advanced Materials segment has a long history as an industry innovator, creating proprietary, high-performance materials for our customers, including ingredients for personal care products, the invention of Carbopol acrylic thickener, additives for coatings and the commercial development of Estane and TempRite engineered polymers. Through acquisitions and our own application technology expertise, we have leveraged our core surface activity chemistry into new specialty chemical products and markets. Our specialty chemical products are derived from a broad range of technology platforms developed either internally or externally through licensing, acquisition or joint technological alliances with global suppliers and customers.

Our primary research facility for the Lubrizol Advanced Materials segment is located in Brecksville, Ohio, where we develop new technologies and products and conduct application development and technical services for our customers. We have other technical facilities located in Blackley, United Kingdom; Cuautitlan Izcalli, Mexico; Hong Kong, China; Louvain-la-Neuve, Belgium; Piscataway, New Jersey; Ritterhude, Germany; Sao Paulo, Brazil; and Shanghai, China.

Research, Testing and Development Expenditures  Our consolidated research and development expenditures were $155.3 million in 2010, $147.7 million in 2009 and $149.6 million in 2008. These amounts were equivalent to 2.9%, 3.2% and 3.0% of the respective

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consolidated revenues for those years. In addition, we spent $70.5 million, $64.4 million and $71.3 million in 2010, 2009 and 2008, respectively, for technical service (testing) activities, principally for evaluation in mechanical equipment of specific lubricant formulations designed for the needs of petroleum industry customers and for product support to our customers in numerous markets.

RAW MATERIALS

We use a broad variety of specialty and commodity chemical raw materials in our manufacturing processes and use base oil in processing and blending additives. For the most part, our raw materials are feedstocks derived from petroleum and petrochemicals and generally are obtainable from several sources. The materials that we choose to purchase from a single source typically are subject to long-term supply contracts to guarantee supply reliability.

For the Lubrizol Additives segment, raw materials derived from petrochemicals represent approximately 85% of our raw material purchases. Lubricant base oil is our single largest purchased raw material, representing approximately 30% of our purchases by weight. Other major types of raw materials purchased by the Lubrizol Additives segment include olefins and esters (approximately 25% of purchases) and inorganic acids, bases and oxides (approximately 10% of purchases). For our Lubrizol Advanced Materials segment, no single raw material represents more than 10% of purchases, and the top 10 raw materials total approximately 40% of raw materials purchases. Principal raw materials for the Lubrizol Advanced Materials segment include acrylates, glycols and polyols, isocyanates and polyvinylchloride.

BACKLOG

We had no material backlog of orders in either business segment at December 31, 2010, and December 31, 2009. All unfilled orders that were placed by December 31, 2010, are expected to be filled during 2011.

REGULATORY

Our business and our customers are subject to significant new regulations under the European Commission’s Registration, Evaluation and Authorization of Chemicals (REACH) law. REACH became effective on June 1, 2007, and is being phased in over an 11-year period. This program imposes obligations on European Union (EU) manufacturers and importers of chemicals to file comprehensive reports on chemical substances and to perform chemical safety assessments. The regulations impose significant additional burdens on chemical producers, importers, and, to a lesser extent, downstream users of chemical substances and preparations. The registration, evaluation and authorization phase of the program will require significant expenditures and resource commitments in order to develop information technology tools, generate data, prepare and submit dossiers for substance registration, participate in consortia and reformulate products if necessary. We have developed a cross-functional management team that is working closely with our businesses to manage the implementation of REACH. Although the long-term costs for REACH compliance are not estimable at this time, we do not anticipate that REACH compliance costs will have a material adverse effect on our financial condition or results of operations.

ENVIRONMENTAL MATTERS

We are subject to foreign, federal, state and local laws and regulations designed to protect the environment and limit manufacturing wastes and emissions. We believe that our policies, practices and procedures are designed properly to prevent unreasonable risk of environmental damage and consequent financial liability. Compliance with environmental laws and regulations requires continuing management effort and expenditures. We have incurred, and will continue to incur, costs and capital expenditures to comply with these laws and regulations and to obtain and maintain all necessary permits. We believe that the cost of complying with environmental laws and regulations will not have a material adverse effect on our financial condition or results of operations.

Among other environmental laws, we are subject to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (commonly known as Superfund), under which we may be designated as a “potentially responsible party” (PRP) with respect to cleanup costs associated with sites on the U.S. Environmental Protection Agency National Priority List. Our experience is that Superfund site liability tends to be apportioned among parties based upon their contribution of materials to the Superfund site. Accordingly, we measure our liability and carry out our financial reporting responsibilities with respect to Superfund sites based upon this standard, even though Superfund site liability is technically joint and several in nature. We believe that our environmental accruals are adequate to provide for our portion of the environmental remediation expenses at the sites where we have been designated a PRP, to the extent that those expenses are probable and reasonably estimable based upon current law and existing technologies. These accruals are adjusted as further information develops or circumstances change. We do not believe that liabilities for these environmental matters will have a material adverse effect on our financial condition or results of operations.

Lubrizol Advanced Materials International, Inc. is the beneficiary of various agreements with Goodrich Corporation (Goodrich) regarding indemnification against certain environmental liabilities and costs. The indemnity related to facilities of the former Performance Materials Division of Goodrich expires in February 2011.

THE LUBRIZOL CORPORATION     7

We believe that our business, operations and facilities are being operated in compliance, in all material respects, with applicable environmental laws and regulations, many of which provide for substantial fines, penalties and criminal sanctions for violations. In addition to the existing laws and regulations, we may be required to comply with evolving environmental laws, regulations or requirements that may be adopted or imposed in the future, such as laws and regulations related to climate change or greenhouse gas emissions, or to address newly discovered contamination or other conditions or information that require a response on our part. The operation of manufacturing plants entails environmental risks, and we may incur material costs or liabilities in the future that could affect us adversely.

EMPLOYEES

At December 31, 2010, we had approximately 6,900 employees of which approximately 52% were in the U.S. About 4% of our U.S. employees are represented by unions with collective bargaining agreements. In addition, we have employees outside of the U.S. who are represented by unions and by non-unionized industry-wide collective agreements and works councils. Some of the collective agreements expire at various times over the next four years, while some others outside of the U.S. have no expiration date. We believe that our relationship with our employees is good, and that we will be able to enter into new collective agreements when they expire.

EXECUTIVE OFFICERS OF THE REGISTRANT

The information contained in Part III, Item 10 regarding executive officers of the company is incorporated herein by reference.

GEOGRAPHIC AREA INFORMATION

Financial information with respect to our domestic and foreign operations is contained in Note 3 to our consolidated financial statements. In 2010, we derived 67% of our consolidated revenues and maintained 39% of our property and equipment outside of the United States.

We supply our customers abroad through exports from the U.S. and from overseas manufacturing plants. We believe the political and economic risks related to our foreign operations are mitigated due to the stability of the countries in which our largest foreign operations are located.

MANUFACTURING AND PROPERTIES

We have global manufacturing, laboratory and sales and technical service facilities that enable us to provide customers with worldwide service and a reliable supply of products. Our corporate headquarters is located in Wickliffe, Ohio. We own or lease manufacturing facilities and laboratories at 21 sites in the U.S. and 34 sites in 18 other countries. In addition, we have entered into manufacturing tolling arrangements for several of our products. We also have entered into long-term contracts for the exclusive use of major marine terminal facilities at various ports and leases for storage facilities. We maintain a capital expenditure program to support our operations and believe our facilities are adequate for our present operations and for the foreseeable future.

On January 19, 2010, we announced our decision to proceed with a 10-year phased investment in the Lubrizol Additives segment to increase global capacity and upgrade operations at existing facilities. On October 15, 2010, we announced the groundbreaking of our new manufacturing facility in southern China, within the Zhuhai Gaolan Port Economic Zone. The new facility will complement our existing joint venture, Lanzhou Lubrizol Lanlian Additive Co., Ltd., and is being developed and phased in to respond to lubricant growth in Asia and to better match our manufacturing for global demand patterns. We expect to commence operations in the first half of 2013, beginning with the manufacture of select additive components, and eventually include the manufacture and blending of driveline, industrial and fuel additive products. We estimate that the first phase of the new facility will require an investment over the next three years in excess of $250 million.

8     THE LUBRIZOL CORPORATION

ITEM 1A. RISK FACTORS

If any of the events described below were to occur, our business, results of operations and financial condition could be affected adversely.

Volatility in raw material prices could reduce our profitability, and reductions in the availability of raw material supplies could disrupt our operations.

Most of the raw materials that we use are feedstocks derived from petroleum and petrochemicals, such as crude oil and natural gas, which have been subject to historical periods of rapid and significant movements in price. These fluctuations in price could be influenced by political instability, terrorist attacks or other hostilities in oil-producing countries or elsewhere in the world. Prices also could be affected by supply and demand factors, such as OPEC production quotas, global demand for petroleum-based products or shutdown of production facilities. We also use natural gas as fuel at our facilities, and increases in the price of natural gas may reduce our profitability. In addition, the implementation of climate change legislation could increase the cost of raw materials. Any significant increases in the cost of our specialty and commodity materials or energy may affect negatively our business, financial condition or results of operations. A reduction in, or lack of availability of, raw materials or interruptions in the supply chain also could impact our profitability to the extent that we are required to pay higher prices for, or are unable to secure adequate supplies of, the necessary raw materials. We typically do not enter into hedging arrangements with respect to raw materials or energy, other than for natural gas. In response to price changes of raw materials, we change prices to our customers from time to time to manage our margins. However, we may not be able to raise prices in response to higher raw material costs.

We use significant quantities of a variety of specialty and commodity chemicals in our manufacturing processes, such as lubricant base oils (a derivative of crude oil); C4 feedstreams; acrylates; PVC; inorganic acids, bases and oxides; alcohols, glycols and polyols; olefins and esters; sulfonates; phenates; alkylates; sulfonic acids; and amines. These raw materials generally are available from numerous independent suppliers; however, some of our raw material needs are met by a sole supplier or only a few suppliers. If any supplier that we rely on for raw materials ceases or limits production, we may incur significant additional costs, including capital costs, in order to find alternate, reliable raw material suppliers. We also may experience significant production delays while locating new supply sources. All of these events could affect negatively our business and results of operations.

As a majority of our revenues are concentrated in the Lubrizol Additives segment, material changes in economic conditions in the markets served by our customers could affect adversely our results of operations.

Approximately 72% of our consolidated revenues are related to the transportation and industrial lubricant business. This concentration of business affects our overall risk as our customers will be affected similarly by changes in economic conditions. A sudden or protracted downturn in these industries could affect adversely our results of operations.

We face competition from other chemical companies.

We actively compete with companies producing the same or similar products and, in some instances, with companies producing different products designed for the same uses. Depending on the product involved, we encounter competition in product innovation, delivery, quality, service, performance, price, technical support and product recognition. For some of our products, we face competition from larger companies that have greater financial resources. As a result, these competitors may be better able to withstand a change in conditions within the markets in which we operate, a change in the prices of raw materials or a change in the economy as a whole.

We expect our competitors to continue to develop and introduce new and enhanced products, and these products could cause a reduction in the market acceptance of our products. Current and future consolidation among our competitors and customers also may cause a loss of market share as well as put downward pressure on pricing. Our competitors could cause a reduction in the prices for some of our products through intensified price competition. Additionally, a number of our niche product applications are customized or sold for highly specialized uses. We generated approximately 39% of our consolidated revenues in 2010 from our 10 largest customers. If we lose business from our major customers due to competitive factors, our business, results of operations and financial condition could be affected adversely.

The markets for some of our products are cyclical and demand weakens during economic downturns.

We believe that less than 50% of our product sales are attributable to products that are cyclical and sensitive to changes in supply and demand and general economic conditions. These sales primarily consist of end-use applications in industrial, vehicle production and construction markets. The demand for these products depends, in part, on the general economic conditions of the industries served by our customers. It is not possible to predict accurately the factors that will affect demand for these products in the future. While we experienced strengthening global customer demand for our products during 2010 and continuing volume recovery since the global recession, if the recovery stalls or the economic environment declines, we may experience the negative effects of increased competitive

THE LUBRIZOL CORPORATION     9

pricing pressure and customer turnover. Economic weakness in the United States, Europe and other regions has resulted and may continue to result in a reduction of sales by our customers and us, which has and may continue to have an adverse effect on our business, financial condition and results of operations.

Failure to make continued improvements in our technology and productivity to respond to the changing needs of our customers could hurt our competitive position.

We believe that we must continue to enhance our existing products and to develop and manufacture new products with improved performance capabilities and with specifications that meet the changing needs of our customers in order to continue to be a market leader. We also believe that we must continue to make improvements in our technology and productivity in order to maintain our competitive position. We devote a substantial amount of our resources to develop new and highly formulated products, and to invest in new technologies, processes and production facilities. We face risks related to our ability to continue to meet changing product performance standards and related to delays, cost over-runs and unanticipated technical difficulties that could occur in the development of new products and in the construction of new facilities, such as our new plant in southern China. Failure to anticipate, respond to or utilize changing technologies could have a material adverse effect on our business or our results of operations.

Our and our suppliers’ production facilities are subject to operating risks.

We depend on the continued safe operation of our and our suppliers’ production facilities. These production facilities are subject to hazards associated with the manufacture, handling, storage and transportation of a variety of reactive, explosive and flammable materials and products, including leaks and ruptures, explosions, fires, inclement weather and natural disasters, unscheduled downtime and environmental hazards. Incidents such as these at our or our suppliers’ production facilities could shut down temporarily or otherwise disrupt our manufacturing operations, causing production delays and, with respect to our facilities, resulting in liability for workplace injuries and fatalities. In addition, some of our and our suppliers’ production facilities are highly specialized, which limits our ability to shift production or sourcing to other facilities in the event of an incident at our or a supplier’s facility. Further, our ability to operate facilities in the U.S. Gulf Coast has been affected by major hurricanes in recent years. If a production facility, or a critical portion of a production facility, were shut down temporarily, we likely would incur higher costs for alternate means of production, sources of supply for our products and production delays, which could have a material adverse effect on our business, results of operations and financial condition.

Excess capacity within the lubricant additives industry could impact us negatively.

We are building a new additives manufacturing facility in southern China, which we will phase in over the next several years to meet lubricant demand growth in Asia. If our competitors or new entrants add large-scale capacity, the balance of supply relative to demand within the lubricant additives industry may be impacted significantly. This may disrupt industry balances and result in downward pressure on prices, which could impact negatively our business, results of operations and financial condition.

If we are unable to protect our intellectual property rights or to resolve successfully claims of infringement brought against us, our product sales and business could be affected adversely.

Our business depends in part on our ability to establish, protect, safeguard and enforce our intellectual property and contractual rights and to defend against any claims of infringement, both of which involve complex legal, scientific and factual uncertainties. We rely on a combination of patent, trade secret, copyright and trademark law and security measures to protect our intellectual property, but effective intellectual property protection may not be available in all places that we sell our products or services. In addition, we use nondisclosure and confidentiality agreements with our employees and third parties to protect our proprietary technology and know-how. If these agreements are breached or our intellectual property is otherwise misappropriated, we may have to rely on litigation to enforce our intellectual property rights. If any of these measures are unsuccessful in protecting our intellectual property, our business may be affected adversely.

In addition, we may face claims of infringement that could interfere with our ability to use technology or other intellectual property rights that are material to our business operations. In the event a claim of infringement against us is successful, we may be required to pay royalties or license fees to continue to use technology or other intellectual property rights that we have been using or we may be unable to obtain necessary licenses from third parties at a reasonable cost or within a reasonable time. If we are unable to obtain licenses on reasonable terms, we may be forced to cease selling or using the products that incorporate the challenged intellectual property, or to redesign or, in the case of trademark claims, rename our products to avoid infringing the intellectual property rights of third parties, which may not be possible and may be time-consuming if possible. Any litigation of this type, whether successful or unsuccessful, could result in substantial costs to us and affect adversely our business and financial condition.

International social, political and economic conditions could affect us adversely.

Our international operations are subject to the risk of labor unrest, regional economic uncertainty, political instability, terrorism, expropriation of property, restrictions on the transfer of funds into or out of a country, trade restrictions, export duties, taxes and quotas, domestic

10     THE LUBRIZOL CORPORATION

and foreign customs and tariffs and current and changing regulatory environments. Any of these events could have an adverse effect on our operations in the future by reducing the demand for our products, making our products less competitive by increasing the prices at which we can sell our products or otherwise having an adverse effect on our operating performance.

We may not be able to complete or successfully integrate future acquisitions into our business.

As part of our growth strategy, we intend to pursue acquisitions and joint venture opportunities. Our ability to accomplish this objective may be limited by the availability of, and competition for, suitable acquisition candidates and by our financial resources, including available cash and borrowing capacity. Acquisitions involve numerous risks, including difficulty determining appropriate valuation, difficulty integrating operations, technologies, services and products of the acquired lines or businesses, personnel turnover, the diversion of management’s attention from other business matters and the possibility of increased leverage and the consequential difficulty in repaying that indebtedness. In addition, we may be unable to achieve anticipated benefits from acquisitions in the timeframe that we expect, if at all, which could affect adversely our business or results of operations.

Our production facilities could be targets for terrorism, and any attack could disrupt our operations and cause us to incur significant costs and liabilities.

The potential or actual occurrence of terrorist attacks could affect our operations in unpredictable ways. Our chemical production facilities could become direct targets, or indirect casualties, of terrorist attacks. Although our production facilities are under a heightened level of security, this level of security may not prevent a terrorist attack. The resulting damage could be severe and could include loss of life and property damage. In addition, some of our production and other facilities are located at sites near other chemical plants that could be potential targets of terrorist attacks. The resulting collateral damage could be significant and substantial. Available insurance coverage could be insufficient to cover all of the damage incurred or could be prohibitively expensive, and losses from these events could affect negatively our business, results of operations and financial condition.

We could incur costs and liabilities as a result of the numerous environmental laws applicable to our operations that are greater than we anticipate.

We are subject to extensive federal, state, local and foreign environmental, safety and health laws and regulations concerning, among other things, emissions to the air, discharges to land and water and the generation, handling, treatment and disposal of hazardous materials. We also are required to maintain various environmental permits and licenses, many of which require periodic modification and renewal. Due to the volume and complexity of the laws and regulations that apply to our operations and the challenges of implementing effective compliance programs, we risk violating those laws and regulations and thereby incurring cleanup costs, substantial fines and criminal sanctions. We also may be required to make significant operational modifications at substantial cost. These requirements and their enforcement may become more stringent in the future. In addition, future developments also could restrict or prohibit the use of or require us to make modifications to our products.

At any given time, we are involved in claims, litigation, administrative proceedings and investigations of various types in a number of jurisdictions involving potential environmental liabilities, including cleanup costs associated with hazardous waste disposal sites, natural resource damage, property damage and personal injury. Liability under environmental laws relating to contaminated sites can be imposed retroactively and on a joint and several basis. Under certain environmental laws, we can be held strictly liable for all costs associated with hazardous substance contamination of any real property we have ever owned, operated or used as a disposal site or for natural resource damages associated with such contamination. We could incur significant costs, including cleanup costs, natural resources damages, civil or criminal fines and sanctions and liability for third-party claims, as a result of liabilities under various environmental laws, which could have a significant negative impact on our business, results of operations and financial condition.

We could be affected adversely if our debt is downgraded.

Downgrades of our credit rating could affect adversely our access to debt and capital markets, making it more difficult to complete offerings of debt securities on satisfactory terms in the future. In addition, a downgrade in our credit rating by either Standard & Poor’s or by Moody’s Investors Service could result in increased future borrowing costs under our credit facilities, thus negatively affecting our business, results of operations and financial condition.

The limits imposed by the restrictive covenants contained in our credit facilities could prevent us from making acquisitions or capital improvements or cause us to lose access to these facilities, and if we are unable to obtain necessary waivers and our debt is accelerated, our financial condition could be affected adversely.

Our existing credit facilities contain restrictive covenants that limit our ability to, among other things:

• borrow money or guarantee the debts of others;

• use assets as security in other transactions;

THE LUBRIZOL CORPORATION     11

• materially change the nature of our business; and

• sell assets or merge with or into other companies.

In addition, our credit facilities require us to meet financial ratios, including debt to consolidated earnings before interest, income taxes, depreciation and amortization, extraordinary, unusual or non-recurring non-cash gains or losses, including the sale of property and equipment and goodwill impairments, and non-cash gains and losses from less than wholly owned subsidiaries and investments (Consolidated EBITDA) (as defined in the credit agreements) and Consolidated EBITDA to interest expense. These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs and otherwise could restrict our financing activities.

Our ability to comply with the covenants and other terms of our credit facilities will depend on our future operating performance. If we fail to comply with such covenants and terms, we will be in default, and the maturity of the related debt could be accelerated and become due and payable immediately. We may be required to obtain waivers from our lenders in order to maintain compliance under our credit facilities, including waivers with respect to our compliance with certain financial covenants. If we are unable to obtain any necessary waivers and the debt under our credit facilities is accelerated, our financial condition would be affected adversely.

We face risks relating to exchange rate fluctuations, exchange controls and currency devaluations.

In 2010, approximately 40% of our consolidated revenues, 30% of consolidated cost of sales and 30% of selling, technical, administrative and research (STAR) expenses were generated in currencies other than the U.S. dollar, which is our reporting currency. We recognize foreign currency gains and losses arising from our operations in the period incurred. As a result, currency fluctuations between the U.S. dollar and the currencies in which we do business have caused and may continue to cause fluctuations in our reported results of operations. We cannot predict the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposures and the potential volatility of exchange rates.

We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation and, if they occur or continue for significant periods, could affect adversely our cash flow or results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

At this time, we have no unresolved SEC staff comments.

ITEM 2. PROPERTIES

Our corporate headquarters and the commercial center for Lubrizol Additives are located in Wickliffe, Ohio. The commercial center for Lubrizol Advanced Materials is located in Brecksville, Ohio. We operate 43 manufacturing facilities in 17 countries, 29 laboratories in 14 countries and maintain sales offices and distribution centers within the U.S. and in many foreign countries. Our corporate headquarters and most of our manufacturing facilities are located in buildings that we own, while other operations generally are in buildings that we lease. We have entered into long-term contracts for our exclusive use of major marine terminal facilities at the Port of Houston, Texas.

Lubrizol Additives has principal manufacturing facilities in Bayport, Texas; Deer Park, Texas; Le Havre, France; Painesville, Ohio; and Rouen, France. Lubrizol Advanced Materials has principal manufacturing facilities in Antwerp, Belgium; Avon Lake, Ohio; Calvert City, Kentucky; Louisville, Kentucky; and Oevel, Belgium. Including these principal manufacturing facilities, we have manufacturing facilities in the following geographic regions:

Geographic Region	Number of Manufacturing Facilities
North America	18 facilities in 10 U.S. states
Europe	13 facilities in 7 countries
Asia-Pacific / Middle East	11 facilities in 8 countries
Latin America	1 facility in 1 country

Four manufacturing facilities in the Asia-Pacific / Middle East region are owned and operated by joint venture companies.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are involved in a variety of claims, suits, investigations and proceedings arising from the ordinary course of our business. We are not involved currently in any legal proceedings that we expect, either individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

12     THE LUBRIZOL CORPORATION

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common shares are listed on the New York Stock Exchange under the symbol LZ. The number of shareholders of record of Lubrizol common shares was 2,530 as of February 11, 2011.

Information relating to the quarterly price and dividend history of our common shares for 2010 and 2009 follows:

	Common Share Sale Price History								Dividends
	2010				2009				Per Common Share
	High		Low		High		Low		2010		2009
1st quarter	$	95.23	$	68.86	$	40.00	$	23.57	$	.31	$	.31
2nd quarter		97.80		77.65		48.21		32.98		.36		.31
3rd quarter		107.45		77.85		72.95		45.73		.36		.31
4th quarter		116.26		99.61		76.52		66.05		.36		.31
									$	1.39	$	1.24

Other than the customary affirmative covenants in our bank credit agreements, we have no restrictions on the payment of dividends on Lubrizol common shares.

On December 1, 2010, we issued 675 common shares, exempt from registration under Regulation S of the Securities Act of 1933, as amended, pursuant to various employee benefit plans sponsored by a wholly owned foreign subsidiary.

The following table provides information regarding our purchases of Lubrizol common shares, on a settlement date basis, during the quarter.

Period	Total Number of Shares (or Units) Purchased1		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs2		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
Month #1 (Oct. 1, 2010 through Oct. 31, 2010)		2,644	$	107.23		–		5,075,918
Month #2 (Nov. 1, 2010 through Nov. 30, 2010)		1,582,600	$	106.83		1,582,600		3,493,318
Month #3 (Dec. 1, 2010 through Dec. 31, 2010)		49,400	$	105.84		49,400		3,443,918
Total		1,634,644				1,632,000		3,443,918

¹ This column includes common shares that we purchased pursuant to our stock incentive plan (2,644 in October) whereby participants sell already owned shares to us to pay for the exercise price of a stock option.

² This column reflects common shares that we purchased pursuant to a share repurchase program authorized by our board of directors and announced on April 27, 2007, under which we were permitted to repurchase up to 5.0 million of our common shares. This program expired in November 2010 with the completion of share repurchases authorized. On June 29, 2010, our board of directors authorized an additional share repurchase program to permit us to repurchase another 5.0 million of our common shares in the open market or through negotiated transactions. This program will expire when all authorized shares have been repurchased.

THE LUBRIZOL CORPORATION     13

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data set forth below for the five-year period ended December 31, 2010, was derived from our audited consolidated financial statements. The data should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8. “Financial Statements and Supplementary Data” included elsewhere in this report.

(In Millions Except Per Share Data, Ratios and Employees)	2010		2009		2008			2007		2006
OPERATING RESULTS:
Revenues	$	5,417.8	$	4,586.3	$	5,027.8		$	4,499.0	$	4,040.8
Cost of sales		3,626.8		3,071.0		3,906.5			3,378.1		3,045.2
Gross profit		1,791.0		1,515.3		1,121.3			1,120.9		995.6
Selling, testing, administrative and research expenses		677.9		647.3		638.6			641.1		587.2
Amortization of intangible assets		24.9		25.2		27.0			24.3		23.7
Write-off of acquired in-process research and development		—		—		1.6			—		—
Restructuring and impairment charges		11.7		30.4		394.0			1.5		51.9
Net interest expense and other income		72.2		86.6		43.1			48.6		66.7
Income from continuing operations before income taxes		1,004.3		725.8		17.0			405.4		266.1
Provision for income taxes		255.6		211.6		75.9			115.6		82.2
Income (loss) from continuing operations		748.7		514.2		(58.9	)		289.8		183.9
Loss from discontinued operations - net of tax		—		—		—			—		(76.2	)
Net income (loss)		748.7		514.2		(58.9	)		289.8		107.7
Net income attributable to noncontrolling interests		16.5		13.4		7.2			6.4		4.1
Net income (loss) attributable to The Lubrizol Corporation	$	732.2	$	500.8	$	(66.1)		$	283.4	$	103.6
Diluted earnings (loss) per share attributable to The Lubrizol Corporation from:
Continuing operations	$	10.64	$	7.26	$	(0.97)		$	4.05	$	2.59
Discontinued operations		—		—		—			—		(1.10	)
Net income (loss)	$	10.64	$	7.26	$	(0.97)		$	4.05	$	1.49
FINANCIAL RATIOS:
Gross profit percentage		33.1		33.0		22.3			24.9		24.6
Percent of revenues:
Selling and administrative expenses		8.3		9.5		8.3			9.4		9.4
Research and testing expenses		4.2		4.6		4.4			4.9		5.1
Return on average Lubrizol Corporation shareholders’ equity (%)		34.4		27.9		(3.8	)		15.6		6.4
Debt to capitalization (%)		37.2		39.4		46.9			42.2		47.8
Current ratio		3.5		3.7		1.7			2.1		2.9
OTHER INFORMATION:
Dividends paid per share	$	1.39	$	1.24	$	1.23		$	1.16	$	1.04
Average common shares outstanding:
Basic		67.3		68.1		68.1			69.2		68.7
Diluted		68.8		69.0		68.1			70.0		69.3
Capital expenditures - continuing operations	$	175.9	$	139.9	$	202.6		$	182.8	$	125.7
Depreciation expense - continuing operations	$	144.1	$	145.1	$	144.9		$	137.1	$	133.3
At Year End:
Total assets	$	4,967.0	$	4,770.0	$	4,150.5		$	4,643.8	$	4,390.9
Long-term debt	$	1,351.6	$	1,390.3	$	954.6		$	1,223.9	$	1,538.0
Total debt	$	1,352.0	$	1,390.6	$	1,345.8		$	1,428.8	$	1,541.7
Total of The Lubrizol Corporation shareholders’ equity	$	2,193.5	$	2,060.8	$	1,523.7		$	1,951.3	$	1,683.1
The Lubrizol Corporation shareholders’ equity per basic share	$	34.25	$	30.11	$	22.65		$	28.53	$	24.39
Price per common share	$	106.88	$	72.95	$	36.39		$	54.16	$	50.13
Number of employees		6,896		6,727		6,967			6,921		6,746

14     THE LUBRIZOL CORPORATION

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements, the notes thereto and the selected financial data appearing elsewhere in this annual report. Historical results set forth in the consolidated financial statements, including trends and percentage relationships that might appear, should not be taken as indicative of future operations. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including those described under the section “Cautionary Statements for Safe Harbor Purposes” included elsewhere in this annual report.

OVERVIEW

General

We are organized into two operating and reportable segments called Lubrizol Additives and Lubrizol Advanced Materials, and we are an industry leader in many of the markets in which our product lines compete. Lubrizol Additives consists of two product lines: (i) engine additives and (ii) driveline and industrial additives. Engine additives is comprised of additives for lubricating engine oils, such as for gasoline, diesel, marine and stationary gas engines, and additives for fuels, refinery and oil field chemicals. Driveline and industrial additives is comprised of additives for driveline oils, such as automatic transmission fluids, gear oils and tractor lubricants, and industrial additives, such as additives for hydraulic, grease and metalworking fluids, as well as compressor lubricants. Both product lines sell viscosity modifiers, as well as provide services for supply chain and knowledge center management.

The Lubrizol Advanced Materials segment consists of three product lines: (i) engineered polymers, (ii) Noveon^® consumer specialties and (iii) performance coatings. The engineered polymers product line includes products such as Estane^® thermoplastic polyurethane and TempRite^® engineered polymers used within the construction, automotive, telecommunications, electronics and recreation industries. The Noveon consumer specialties product line includes acrylic thickeners, film formers, fixatives, emollients, silicones, specialty surfactants, methyl glucoside, lanolin derivatives and cassia hydrocolloids used within cosmetics, personal care and household products. The performance coatings product line includes high-performance polymers and additives for specialty paper, graphic arts, paints, textiles and coatings applications that are sold to customers worldwide.

Lubrizol Additives Segment

We believe we are the market leader in lubricant additives, and we intend to remain the leader by continuing to invest in this business. Our Lubrizol Additives segment’s growth strategy is to continue to optimize our product mix while closely aligning production capacity with product demand. Challenging market forces and conditions continue to influence the Lubrizol Additives segment. A key factor is the low long-term global growth rate for this market, which we believe is in the range of approximately 1% to 2% per year. Additional characteristics of this market are:

• Frequent product specification changes primarily driven by original equipment manufacturers (OEMs) and the impact of environmental and fuel economy regulations on the OEMs. The specification changes require us to incur product development and testing costs, but also enable us to apply our technology know-how to create products and solve problems. We believe our technology and expertise in applying it are key strengths.

• Improved engine design, which can result in longer lubricant drain intervals. Longer drain intervals reduce demand for finished lubricants.

• New vehicle production levels, which affect our driveline fluids in particular because the initial factory fill is an important market factor in that product line.

• Dependence on raw material feedstocks derived from petroleum and petrochemicals, the costs of which can be highly volatile.

Our Lubrizol Additives segment represented approximately 72% of consolidated revenues in 2010.

Lubrizol Advanced Materials Segment

Our Lubrizol Advanced Materials segment’s growth strategy involves a combination of internal growth and acquisitions. Our internal growth strategy is to use our strengths, including our technology, formulating skills and broad geographic infrastructure, to develop and invest in new performance technologies in higher-growth industrial and consumer markets. In addition to internal growth, we intend to pursue bolt-on acquisitions, which we expect to provide cost synergies, new technology and the opportunity to take existing products into new geographies. Key factors to our success continue to be the introduction of new products, development of new applications for existing products, ability to manage margins, geographic expansion and integration of future acquisitions. Our Lubrizol Advanced Materials segment represented approximately 28% of consolidated revenues in 2010.

THE LUBRIZOL CORPORATION     15

Primary Factors Affecting 2010 Results

The following factors most affected our consolidated 2010 results:

• Strengthening global customer demand across all geographic zones and product lines led to a 12% increase in volume.

• Our ability to increase selling prices throughout 2010 allowed us to recover higher raw material costs. Our average raw material cost increased 10% compared with 2009, and has increased steadily since the second half of 2009 primarily due to tight supply conditions for some of our raw materials.

• Improved product mix, primarily as a result of a 27% increase in volume within our driveline and industrial additives product line, and greater utilization of our manufacturing facilities enabled us to sustain our gross profit margins. Our production levels significantly increased mainly as a result of the improvement in sales volume. As a result, we incurred only $20.0 million of unabsorbed manufacturing costs compared with $74.9 million of unabsorbed manufacturing costs in 2009 due to lower than normal production levels.

• A discrete tax benefit of $38.6 million, or $0.56 per diluted share, related to our ability to utilize U.S. foreign tax credits and the recognition of fourth quarter tax benefits of $19.1 million, or $0.28 per diluted share, due to the settlement of audits and the expiration of statutes of limitations decreased our effective tax rate to 25.4%.

• Repurchases of 5.3 million of our common shares used $500.3 million of cash.

This Management’s Discussion and Analysis contains a presentation of earnings as adjusted, a non-GAAP financial measure. Earnings as adjusted is a measure of income that differs from earnings measured in accordance with U.S. generally accepted accounting principles (GAAP). Earnings as adjusted may not be comparable with similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of income in accordance with GAAP, as non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations. We believe that earnings as adjusted for the exclusion of restructuring and impairment charges and the write-off of acquired in-process research and development assists the investor in evaluating the results of our core operating activities and provides greater comparability with historical results where such charges may be materially different. We use earnings as adjusted to measure and evaluate performance and to determine, in part, incentive compensation. We believe that the presentation of both GAAP and non-GAAP measures may assist investors in comparing our performance with that of peer companies presenting similar non-GAAP measures.

RESULTS OF OPERATIONS

2010 Compared With 2009

	Year Ended December 31,
(In Millions of Dollars Except Per Share Data)	2010			2009			$ Change			% Change
Revenues	$	5,417.8		$	4,586.3		$	831.5			18%
Cost of sales		3,626.8			3,071.0			555.8			18%
Gross profit		1,791.0			1,515.3			275.7			18%
Selling and administrative expenses		452.1			435.2			16.9			4%
Research, testing and development expenses		225.8			212.1			13.7			6%
Amortization of intangible assets		24.9			25.2			(0.3	)		(1%	)
Restructuring and impairment charges		11.7			30.4			(18.7	)		*
Other income - net		(21.8	)		(16.4	)		5.4			33%
Interest expense - net		94.0			103.0			(9.0	)		(9%	)
Income before income taxes		1,004.3			725.8			278.5			38%
Provision for income taxes		255.6			211.6			44.0			21%
Net income		748.7			514.2			234.5			46%
Net income attributable to noncontrolling interests		16.5			13.4			3.1			23%
Net income attributable to The Lubrizol Corporation	$	732.2		$	500.8		$	231.4			46%
Basic earnings per share attributable to The Lubrizol Corporation	$	10.88		$	7.36		$	3.52			48%
Diluted earnings per share attributable to The Lubrizol Corporation	$	10.64		$	7.26		$	3.38			47%

* Calculation not meaningful

16     THE LUBRIZOL CORPORATION

Revenues The increase in revenues compared with 2009 was due to a 12% increase in volume and a 7% improvement in the combination of price and product mix, partially offset by a 1% unfavorable currency impact. The improvement in the combination of price and product mix primarily was due to improved product mix, largely within our driveline and industrial additives product line in the Lubrizol Additives segment, along with the implementation of price increases in both segments.

The following table shows the geographic mix of our volume as well as the percentage changes compared with 2009:

	2010 Volume		2010 vs. 2009 % Change
North America		39%		10%
Europe		27%		14%
Asia-Pacific / Middle East		27%		14%
Latin America		7%		8%
Total		100%		12%

Segment volume variances by geographic zone, as well as the factors explaining the changes in segment revenues compared with 2009, are contained within the “Segment Analysis” section.

Cost of Sales The increase in cost of sales compared with 2009 primarily was due to increased volume and a 10% increase in average raw material cost, partially offset by a favorable currency impact of $27.8 million. Our average raw material cost has increased steadily beginning in the second half of 2009 primarily due to tight supply conditions for some of our raw materials, and we anticipate that costs will continue to rise in 2011. In response to the rise in raw material costs, we implemented price increases in both segments throughout 2010. Total manufacturing expenses increased 4% compared with 2009 primarily due to the significant increase in production levels mainly resulting from the improvement in sales volume. The increase in manufacturing expenses included a $35.4 million increase in production supplies and services, a $17.1 million increase in salaries and wages attributable to annual merit increases and increased overtime levels and a $14.5 million increase in maintenance costs, largely offset by improved utilization of our manufacturing facilities. We incurred only $20.0 million of unabsorbed manufacturing costs compared with $74.9 million of unabsorbed manufacturing costs in 2009 due to lower than normal production levels.

Gross Profit Gross profit increased $275.7 million, or 18%, compared with 2009 primarily due to higher volume, improved price and product mix and increased utilization of our manufacturing facilities, partially offset by higher raw material costs. Our gross profit percentage of 33.1% remained comparable with our gross profit percentage of 33.0% in 2009.

Selling and Administrative Expenses Selling and administrative expenses increased $16.9 million, or 4%, compared with 2009 primarily due to increased salaries and wages of $8.4 million and travel expenses of $6.5 million.

Research, Testing and Development Expenses The timing and amount of research, testing and development expenses largely are affected by lubricant additives product standards, which change periodically to meet new emissions, efficiency, durability and other performance factors as OEMs improve engine and transmission designs. Research, testing and development expenses increased $13.7 million, or 6%, compared with 2009 primarily due to increased outside testing of $4.9 million to meet new lubricant additives product standards, salaries and wages of $1.4 million and travel expenses of $1.3 million.

Restructuring and Impairment Charges The components of the 2010 restructuring and impairment charges are detailed as follows:

	Year Ended December 31, 2010
(In Millions of Dollars)	Asset Write-offs and Impairments		Other Plant Exit Costs		Severance and Benefits			Total
Lubrizol Additives plant closure and workforce reductions	$	(0.1)	$	—	$	7.0		$	6.9
Lubrizol Advanced Materials 2009 plant closures and workforce reductions		4.0		0.3		(0.4	)		3.9
Lubrizol Advanced Materials 2010 workforce reductions and product line discontinuations		—		0.2		0.6			0.8
Corporate organizational restructuring		—		—		0.1			0.1
Total restructuring and impairment charges	$	3.9	$	0.5	$	7.3		$	11.7

Restructuring charges of $7.0 million related to the settlement of the pension obligation to employees at the closed Lubrizol Additives blending, packaging and warehouse facility in Ontario, Canada.

THE LUBRIZOL CORPORATION     17

Asset write-offs of $4.0 million primarily related to the abandonment of machinery and equipment within the TempRite business in the engineered polymers product line as part of our long-term strategy of right-sizing capacity and optimizing our overall manufacturing footprint.

Severance and benefits of $0.6 million primarily related to the restructuring of the sales and marketing organization within the TempRite business during 2010.

The remaining charges related to the discontinuation of a tolling arrangement to manufacture products within the performance coatings product line of the Lubrizol Advanced Materials segment and the closure of production facilities from previously announced programs.

Other Income – Net Other income-net was $21.8 million compared with $16.4 million in 2009. The increase in other income-net primarily was due to higher foreign currency gains of $7.1 million, partially offset by the non-recurrence of a $4.1 million gain on the sale of an equity affiliate.

Interest Expense – Net The decrease in interest expense-net compared with 2009 was due to lower interest expense of $9.5 million associated with our reduced debt balances and the non-recurrence of $1.3 million in expenses associated with our repurchase of the 4.625% notes in 2009. The decrease in interest expense-net partially was offset by lower interest income of $1.8 million as a result of reduced investment returns.

Provision for Income Taxes Our effective tax rate of 25.4% decreased from 29.2% in 2009 primarily due to a discrete tax benefit of $38.6 million relating to our ability to utilize U.S. foreign tax credits mainly as a result of our higher, sustained level of earnings, particularly in the U.S., and $19.1 million of fourth quarter tax benefits due to the settlement of audits and the expiration of statutes of limitations. Collectively, these tax benefits improved our earnings by $0.84 per diluted share in 2010.

Net Income Attributable to The Lubrizol Corporation Primarily as a result of the above factors, net income attributable to The Lubrizol Corporation increased to $732.2 million ($10.64 per diluted share) compared with $500.8 million ($7.26 per diluted share) in 2009. Excluding the effect of restructuring and impairment charges from both years, earnings as adjusted increased to $739.9 million ($10.75 per diluted share) compared with $520.6 million ($7.55 per diluted share) in 2009. The following table provides a reconciliation of earnings to earnings as adjusted:

	Year Ended December 31, 2010						Year Ended December 31, 2009
(In Millions of Dollars Except Per Share Data)	Income Before Income Taxes		Net Income Attributable to Lubrizol		Diluted EPS		Income Before Income Taxes		Net Income Attributable to Lubrizol		Diluted EPS
Earnings	$	1,004.3	$	732.2	$	10.64	$	725.8	$	500.8	$	7.26
Adjustments:
Restructuring and impairment charges		11.7		7.7		0.11		30.4		19.8		0.29
Earnings as adjusted (non-GAAP)	$	1,016.0	$	739.9	$	10.75	$	756.2	$	520.6	$	7.55

18     THE LUBRIZOL CORPORATION

2009 Compared With 2008

	Year Ended December 31,
(In Millions of Dollars Except Per Share Data)	2009			2008			$ Change			% Change
Revenues	$	4,586.3		$	5,027.8		$	(441.5	)		(9	%)
Cost of sales		3,071.0			3,906.5			(835.5	)		(21	%)
Gross profit		1,515.3			1,121.3			394.0			35	%
Selling and administrative expenses		435.2			417.7			17.5			4	%
Research, testing and development expenses		212.1			220.9			(8.8	)		(4	%)
Amortization of intangible assets		25.2			27.0			(1.8	)		(7	%)
Write-off of acquired in-process research and development		—			1.6			(1.6	)			*
Restructuring and impairment charges		30.4			394.0			(363.6	)			*
Other income - net		(16.4	)		(22.6	)		(6.2	)		(27	%)
Interest expense - net		103.0			65.7			37.3			57	%
Income before income taxes		725.8			17.0			708.8				*
Provision for income taxes		211.6			75.9			135.7				*
Net income (loss)		514.2			(58.9	)		573.1				*
Net income attributable to noncontrolling interests		13.4			7.2			6.2			86	%
Net income (loss) attributable to The Lubrizol Corporation	$	500.8		$	(66.1	)	$	566.9				*
Basic earnings (loss) per share attributable to The Lubrizol Corporation	$	7.36		$	(0.97	)	$	8.33				*
Diluted earnings (loss) per share attributable to The Lubrizol Corporation	$	7.26		$	(0.97	)	$	8.23				*

* Calculation not meaningful

Revenues The decrease in revenues compared with 2008 was due to a 12% decrease in volume and a 2% unfavorable currency impact, partially offset by a 5% improvement in the combination of price and product mix. Included in these factors were incremental revenues from the thermoplastic polyurethane businesses acquired from Dow and SK, which contributed 2% to revenues for the year.

The following table shows the geographic mix of our volume as well as the percentage changes compared with 2008:

	2009 Volume		2009 vs. 2008 % Change			Excluding the Impact of Acquisitions % Change
North America		40%		(18%	)		(19%	)
Europe		27%		(14%	)		(14%	)
Asia-Pacific / Middle East		26%		–			(2%	)
Latin America		7%		(13%	)		(13%	)
Total		100%		(12%	)		(13%	)

Segment volume variances by geographic zone, as well as the factors explaining the changes in segment revenues compared with 2008, are contained within the “Segment Analysis” section.

Cost of Sales The decrease in cost of sales compared with 2008 primarily was due to lower volume and a 17% decline in average raw material cost. Total manufacturing expenses were level compared with 2008 as lower utility costs, a favorable currency impact, reductions in spending on production supplies and services, and lower salaries and benefits were offset by increased incentive compensation expense and incremental costs from acquisitions. In response to the lower sales volume, we reduced production in order to reduce inventories and, as a result, we incurred $74.9 million of unabsorbed manufacturing costs due to lower than normal production levels. Manufacturing costs in 2008 included $19.4 million of unabsorbed costs associated with the temporary shutdown of our two Houston-area manufacturing facilities due to Hurricane Ike and the temporary shutdown of production lines in the fourth quarter to reduce inventories.

THE LUBRIZOL CORPORATION     19

Gross Profit Gross profit increased $394.0 million, or 35%, compared with 2008 primarily due to lower raw material costs and an improvement in the combination of price and product mix, which more than offset lower volume and an unfavorable currency impact. Our gross profit percentage increased to 33.0% compared with 22.3% in 2008 as a result of lower average raw material cost and price increases initiated in 2008.

Selling and Administrative Expenses Selling and administrative expenses increased $17.5 million, or 4%, compared with 2008 primarily due to higher incentive compensation expense of $34.7 million, deferred compensation expense of $18.1 million and $7.5 million of charitable contributions to The Lubrizol Foundation, partially offset by our cost reduction initiatives that included lower expenses for information technology and travel, and a favorable currency impact.

Research, Testing and Development Expenses Research, testing and development expenses decreased $8.8 million, or 4%, compared with 2008 primarily due to our cost reduction initiatives that included lower expenses for supplies, services and travel, along with a favorable currency impact, partially offset by increased incentive compensation.

Restructuring and Impairment Charges The components of the 2009 restructuring and impairment charges are detailed as follows:

	Year Ended December 31, 2009
(In Millions of Dollars)	Asset Impairments		Other Plant Exit Costs		Severance and Benefits			Total
Corporate organizational restructuring	$	–	$	–	$	15.4		$	15.4
Long-lived asset impairments		7.9		–		–			7.9
Lubrizol Advanced Materials 2009 plant closures and workforce reductions		3.9		–		1.0			4.9
Lubrizol Additives plant closure and workforce reductions		1.3		0.3		0.7			2.3
Performance coatings 2008 business improvement initiatives		–		–		(0.1	)		(0.1	)
Total restructuring and impairment charges	$	13.1	$	0.3	$	17.0		$	30.4

Restructuring charges of $15.4 million related to our organizational restructuring initiated during 2009, which increased operating efficiencies and improved profitability.

Long-lived asset impairments of $7.9 million primarily related to the write-off of preliminary process engineering design work associated with our plan, announced in March 2008, to build a lubricant additives plant in China. Due to lower expected demand caused by the global recession, significant uncertainty arose regarding the timing of the China project and resulted in revisions to the scope and location of the plant. As a result, the recoverability of the asset for preliminary process engineering design work performed was affected adversely and the associated asset was impaired.

Restructuring charges of $4.9 million related to our decision to cease manufacturing at two U.S. facilities to improve profitability within the performance coatings and engineered polymers product lines of the Lubrizol Advanced Materials segment. Manufacturing of engineered polymers products at one of the closed facilities was transferred to other facilities to improve the utilization of existing assets. The long-lived asset impairment charges represent the excess of the carrying value of the asset groups over their fair value.

Restructuring charges of $2.3 million related to our decision in the third quarter of 2008 to close a Lubrizol Additives blending, packaging and warehouse facility in Ontario, Canada. Manufacturing at this facility ceased during the second quarter of 2009. We recorded asset impairment charges of $1.3 million as a result of the decline in fair value of the assets held for sale at this location.

The components of the 2008 restructuring and impairment charges are detailed as follows:

	Year Ended December 31, 2008
(In Millions of Dollars)	Asset Impairments		Other Plant Exit Costs		Severance and Benefits		Total
Goodwill impairment charges	$	363.0	$	—	$	—	$	363.0
Performance coatings 2008 business improvement initiatives		14.7		0.4		4.7		19.8
Lubrizol Advanced Materials plant closures, production line impairments and workforce reductions		5.3		—		0.3		5.6
Lubrizol Additives plant closure and workforce reductions		—		—		5.6		5.6
Total restructuring and impairment charges	$	383.0	$	0.4	$	10.6	$	394.0

20     THE LUBRIZOL CORPORATION

After performing our annual goodwill impairment test as of October 1, 2008, we determined that $363.0 million of goodwill associated with our Estane, TempRite and performance coatings reporting units was impaired as the carrying value of goodwill within these reporting units exceeded its fair value. We use a discounted cash flow analysis to determine the fair value of each reporting unit, which considers forecasted cash flows discounted at an estimated weighted average cost of capital. The impairment charge included the partial impairment of the goodwill of the Estane and TempRite reporting units and the full impairment of the goodwill of the performance coatings reporting unit. The impairment charge for the Estane reporting unit was driven mainly by the increase in our cost of capital in the fourth quarter of 2008. The impairment charge for the TempRite reporting unit was driven mainly by the increase in our cost of capital in the fourth quarter of 2008 and, to a lesser extent, a reduction in the reporting unit’s near-term earnings outlook. The impairment charge for the performance coatings reporting unit was driven mainly by the reporting unit’s weak performance and outlook in light of economic conditions.

Restructuring and impairment charges of $25.4 million related to business improvement initiatives and impairments of long-lived assets primarily within the performance coatings product line of the Lubrizol Advanced Materials segment. We completed the disposition of a textile compounding plant and recognized an asset impairment for a textile coatings production line in the first quarter of 2008. In the second quarter of 2008, we announced additional steps to improve the profitability of our U.S. performance coatings business. Manufacturing of select products at various locations ceased or was transferred to more efficient production facilities in order to align manufacturing with its end-use markets. In addition, we restructured the sales, marketing and research and development organizations within our performance coatings product line. In the fourth quarter of 2008, we recorded an impairment charge associated with long-lived assets in our performance coatings product line as a result of declining demand in our textile applications. The long-lived asset impairment charges represent the excess of carrying value of the asset groups over their fair value.

Restructuring charges of $5.6 million related to our decision in the third quarter of 2008 to close a Lubrizol Additives blending, packaging and warehouse facility in Ontario, Canada.

Other Income – Net Other income-net was $16.4 million in 2009 compared with $22.6 million in 2008. The decrease in other income-net primarily was due to foreign currency losses as compared to foreign currency gains in 2008, partially offset by a $4.1 million gain recognized on the sale of an equity affiliate.

Interest Expense – Net The increase in interest expense-net compared with 2008 primarily was due to the incremental interest expense associated with the issuance of 8.875% notes due 2019, borrowings under the $150.0 million term loan in 2009 and lower interest income as a result of reduced investment returns.

Provision for Income Taxes Our effective tax rate of 29.2% decreased from over 100.0% in 2008 primarily as a result of the non-recurrence of goodwill impairment charges along with non-taxable foreign currency translation gains associated with international subsidiaries whose functional currency is the U.S. dollar as compared to non-deductible foreign currency translation losses in 2008. Excluding the impact of restructuring and impairment charges, our effective tax rate would have been 30.3% in 2008.

Net Income (Loss) Attributable to The Lubrizol Corporation Primarily as a result of the non-recurrence of goodwill impairment charges along with the other factors discussed above, net income attributable to The Lubrizol Corporation increased to $500.8 million ($7.26 per diluted share) compared with a net loss of $66.1 million ($0.97 per diluted share) in 2008. Excluding the effect of restructuring and impairment charges and the write-off of acquired in-process research and development from both years, earnings as adjusted increased to $520.6 million ($7.55 per diluted share) compared with $280.8 million ($4.09 per diluted share) in 2008. The following table provides a reconciliation of earnings to earnings as adjusted:

	Year Ended December 31, 2009						Year Ended December 31, 2008
(In Millions of Dollars Except Per Share Data)	Income Before Income Taxes		Net Income Attributable to Lubrizol		Diluted EPS		Income Before Income Taxes		Net Income (Loss) Attributable to Lubrizol			Diluted EPS
Earnings (loss)	$	725.8	$	500.8	$	7.26	$	17.0	$	(66.1	)	$	(0.97	)
Adjustments:
Restructuring and impairment charges		30.4		19.8		0.29		394.0		345.9			5.04
Write-off of IPR&D		–		–		–		1.6		1.0			0.01
Pro forma effect of dilution on earnings as adjusted*													0.01
Earnings as adjusted (non-GAAP)	$	756.2	$	520.6	$	7.55	$	412.6	$	280.8		$	4.09

* Our 2008 loss per share for GAAP does not allow for the inclusion of the dilutive effect of shares in the denominator of our per share calculation since this effect would be anti-dilutive. The earnings per share impact of each adjustment is reflected as if the dilutive shares were used in the denominator of the calculation. The pro forma effect of dilution on earnings as adjusted is included in the reconciliation of our non-GAAP measure so that earnings as adjusted reflects the impact of any applicable dilutive shares.

THE LUBRIZOL CORPORATION     21

SEGMENT ANALYSIS

We primarily evaluate performance and allocate resources based on segment operating income as well as projected future performance. Segment operating income is defined as revenues less expenses identifiable to the product lines included within each segment. Segment operating income will reconcile to consolidated income before income taxes by deducting corporate expenses and other income that are not attributable to the segments, the write-off of acquired in-process research and development, restructuring and impairment charges and net interest expense.

The proportion of consolidated revenues and segment operating income attributed to each segment was as follows:

	2010			2009			2008
Revenues:
Lubrizol Additives		72	%		72	%		70	%
Lubrizol Advanced Materials		28	%		28	%		30	%
Segment Operating Income:
Lubrizol Additives		81	%		82	%		83	%
Lubrizol Advanced Materials		19	%		18	%		17	%

Lubrizol Additives Segment

							2010 vs. 2009					2009 vs. 2008
(In Millions of Dollars)	2010		2009		2008		$ Change		% Change			$ Change			% Change
Revenues	$	3,884.3	$	3,283.9	$	3,541.5	$	600.4		18	%	$	(257.6	)		(7	%)
Gross profit		1,301.0		1,088.3		749.3		212.7		20	%		339.0			45	%
STAR expenses		335.8		309.2		313.1		26.6		9	%		(3.9	)		(1	%)
Segment operating income		971.2		787.8		434.5		183.4		23	%		353.3			81	%

2010 Compared With 2009

Revenues The increase in revenues compared with 2009 was due to a 10% increase in volume and a 9% improvement in the combination of price and product mix, partially offset by a 1% unfavorable currency impact. The improvement in the combination of price and product mix was driven by the recovery in our driveline and industrial additives product line and the implementation of several price increases during the year.

The following table shows the geographic mix of our volume as well as the percentage changes compared with 2009:

	2010 Volume		2010 vs. 2009 % Change
North America		31%		9%
Europe		32%		14%
Asia-Pacific / Middle East		29%		10%
Latin America		8%		8%
Total		100%		10%

Volume increased across all geographic zones and product lines in comparison with 2009, the first half of which was impacted severely by the global recession and destocking of customers’ inventories. Volume increased 27% in our driveline and industrial additives product line and 6% in our engine additives product line compared with 2009. The volume improvement was more pronounced in our driveline and industrial additives product line as it was affected more severely during 2009 than our engine additives product line.

Gross Profit Gross profit increased $212.7 million, or 20%, compared with 2009 primarily due to higher volume, improved price and product mix and increased utilization of our manufacturing facilities, partially offset by higher raw material and manufacturing costs and an unfavorable currency impact. Average raw material cost increased 11% compared with 2009. Our average raw material cost has increased steadily beginning in the second half of 2009 primarily due to tight supply conditions for some of our raw materials, and we anticipate that costs will continue to rise during 2011. Total manufacturing costs increased 4% compared with 2009 primarily due to increased production supplies and services, salaries and wages attributable to annual merit increases and maintenance costs, along with the non-recurrence of a $6.2 million insurance recovery in 2009 for previously incurred environmental remediation costs. These increases were offset partially by improved utilization of our manufacturing facilities and a favorable currency impact. We incurred only $8.1 million

22     THE LUBRIZOL CORPORATION

of unabsorbed manufacturing costs compared with $50.6 million of unabsorbed manufacturing costs in 2009 due to lower than normal production levels. Accordingly, our gross profit percentage increased to 33.5% from 33.1% in 2009.

Selling, Testing, Administrative and Research Expenses STAR expenses increased $26.6 million, or 9%, compared with 2009 primarily as a result of increased salaries and benefits attributable to annual merit increases and higher outside and internal testing, travel and REACH product registration costs in Europe.

Other Income – Net Other income-net was $11.8 million compared with $14.6 million in 2009. The decrease between years primarily was due to the non-recurrence of a $4.1 million gain recognized on the sale of an equity affiliate in 2009.

Segment Operating Income Segment operating income increased 23% compared with 2009 primarily due to the factors discussed above.

2009 Compared With 2008

Revenues The decrease in revenues compared with 2008 was due to a 9% decrease in volume and a 2% unfavorable currency impact, partially offset by a 4% increase in the combination of price and product mix.

The following table shows the geographic mix of our volume as well as the percentage changes compared with 2008:

	2009 Volume		2009 vs. 2008 % Change
North America		32%		(12%	)
Europe		31%		(12%	)
Asia-Pacific / Middle East		29%		(2%	)
Latin America		8%		(13%	)
Total		100%		(9%	)

Volume decreased across all geographic markets as a result of weak demand caused by the global recession and destocking of customers’ inventories predominately in the first half of 2009. The decline in our Asia-Pacific / Middle East market was less severe than our other markets due to the higher proportion of engine additives in the product mix, which primarily is a service fill business, and favorable customer order patterns particularly in China. Volume declined in both of our product lines; however, our driveline and industrial additives product line was affected more severely than our engine additives product line. Worldwide demand recovered significantly in the second half of 2009 influenced by customers replenishing their inventories. Volume for 2008 benefited from strong customer demand in our international zones and emerging market growth.

Gross Profit Gross profit increased $339.0 million, or 45%, compared with 2008 primarily due to lower raw material costs and improvements in the combination of price and product mix, which more than offset lower volume and an unfavorable currency impact. Average raw material cost decreased 20% compared with 2008. Total manufacturing costs increased 2% compared with 2008 primarily due to higher incentive compensation expense, partially offset by lower utility and other variable production costs, a favorable currency impact and cost reduction initiatives. In addition, manufacturing costs also benefited from a $6.2 million insurance recovery for previously incurred environmental remediation costs. In response to the lower sales volume, we reduced production in order to reduce inventories, and, as a result, we incurred $50.6 million of unabsorbed manufacturing costs due to lower than normal production levels. Manufacturing costs in 2008 included unabsorbed manufacturing costs of $9.5 million associated with the temporary shutdown of our two Houston-area manufacturing facilities due to Hurricane Ike and the temporary shutdown of production lines in the fourth quarter to reduce inventories. Our gross profit percentage increased to 33.1% from 21.2% in 2008 as a result of lower average raw material cost and price increases initiated in 2008.

Selling, Testing, Administrative and Research Expenses STAR expenses decreased $3.9 million, or 1%, compared with 2008 primarily due to a favorable currency impact and cost reduction initiatives taken during 2009, including decreases in travel, partially offset by higher incentive compensation expense.

Other Income – Net Other income-net was $14.6 million in 2009 compared with other income-net of $6.0 million in 2008. The change between years primarily was due to a $4.1 million gain recognized on the sale of an equity affiliate.

Segment Operating Income Segment operating income increased 81% compared with 2008 primarily due to the factors discussed above.

THE LUBRIZOL CORPORATION     23

Lubrizol Advanced Materials Segment

							2010 vs. 2009					2009 vs. 2008
(In Millions of Dollars)	2010		2009		2008		$ Change		% Change			$ Change			% Change
Revenues	$	1,533.5	$	1,302.4	$	1,486.3	$	231.1		18	%	$	(183.9	)		(12	%)
Gross profit		490.0		427.0		372.0		63.0		15	%		55.0			15	%
STAR Expenses		247.2		242.5		264.8		4.7		2	%		(22.3	)		(8	%)
Segment operating income		227.5		168.7		88.8		58.8		35	%		79.9			90	%

2010 Compared With 2009

Revenues The increase in revenues compared with 2009 was due to a 15% increase in volume and a 4% improvement in the combination of price and product mix, partially offset by a 1% unfavorable currency impact. The improvement in the combination of price and product mix was due to the implementation of multiple price increases across all businesses during the year, partially offset by unfavorable product mix largely within our Noveon consumer specialties product line.

The following table shows the geographic mix of our volume as well as the percentage changes compared with 2009:

	2010 Volume		2010 vs. 2009 % Change
North America		60%		12%
Europe		15%		13%
Asia-Pacific / Middle East		22%		31%
Latin America		3%		5%
Total		100%		15%

Volume increased in all geographic zones in comparison with 2009, the first half of which was impacted severely by the global recession. The increase in our Asia-Pacific / Middle East market was due to strong customer demand in our engineered polymers product line, particularly in India and the Middle East. Excluding a low-margin contract manufacturing arrangement that we exited at the end of 2009 in our Noveon consumer specialties product line, volume in Latin America increased 23%. Volume increased 27% in our engineered polymers product line, 11% in our performance coatings product line and 9% in our Noveon consumer specialties product line compared with 2009. Excluding the exited business in Latin America, volume in our Noveon consumer specialties product line increased 11%.

Gross Profit Gross profit increased $63.0 million, or 15%, compared with 2009 primarily due to higher volume, partially offset by higher raw material and manufacturing costs. Average raw material cost increased 10% compared with 2009. Our average raw material cost has increased steadily beginning in the second half of 2009 primarily due to tight supply conditions, and we anticipate that costs will continue to rise in 2011. Total manufacturing costs increased 4% compared with 2009 primarily due to increased production supplies and services and salaries and wages. As a result of improved utilization of our manufacturing facilities, we incurred only $11.9 million of unabsorbed manufacturing costs compared with $24.3 million of unabsorbed manufacturing costs in 2009 due to lower than normal production levels. Our gross profit percentage decreased to 32.0% compared with 32.8% in 2009 primarily as a result of raw material cost increases that exceeded our selling price increases, along with an unfavorable product mix in our Noveon consumer specialties product line.

Selling, Testing, Administrative and Research Expenses STAR expenses increased $4.7 million, or 2%, compared with 2009 primarily as a result of increased salaries and benefits attributable to annual merit increases.

Segment Operating Income Segment operating income increased 35% compared with 2009 primarily due to the factors discussed above.

2009 Compared With 2008

Revenues The decrease in revenues compared with 2008 was due to a 20% decrease in volume and a 1% unfavorable currency impact, partially offset by a 9% increase in the combination of price and product mix. Included in these factors were incremental revenues from the thermoplastic polyurethane businesses acquired from Dow and SK, which contributed 6% to revenues for the year.

24     THE LUBRIZOL CORPORATION

The following table shows the geographic mix of our volume as well as the percentage changes compared with 2008:

	2009 Volume			2009 vs. 2008 % Change			Excluding the Impact of Acquisitions % Change
North America		62	%		(25	%)		(27	%)
Europe		16	%		(24	%)		(24	%)
Asia-Pacific / Middle East		19	%		5	%		(5	%)
Latin America		3	%		(14	%)		(14	%)
Total		100	%		(20	%)		(23	%)

Excluding the impact of acquisitions, volume decreased in all of our geographic markets and product lines primarily as a result of the global recession. Our performance coatings and engineered polymers product lines were affected more severely than our Noveon consumer specialties product line.

Gross Profit Gross profit increased $55.0 million, or 15%, compared with 2008 primarily due to improvements in the combination of price and product mix, particularly in our Noveon consumer specialties product line, and lower raw material and manufacturing costs, partially offset by lower volume. Average raw material cost decreased 9% compared with 2008. Total manufacturing costs decreased 4% compared with 2008 primarily due to cost reduction initiatives, a favorable currency impact and previously announced restructurings and product discontinuations. In response to the lower sales volume, we reduced production in order to reduce inventories, and, as a result, we incurred $24.3 million of unabsorbed manufacturing costs due to lower than normal production levels. Manufacturing costs in 2008 included unabsorbed manufacturing costs of $9.9 million associated with the temporary shutdown of production lines in the fourth quarter to reduce inventories. Our gross profit percentage increased to 32.8% compared with 25.0% in 2008 as a result of lower average raw material cost and improvements in the combination of price and product mix.

Selling, Testing, Administrative and Research Expenses STAR expenses decreased $22.3 million, or 8%, compared with 2008 primarily due to the benefits from previously announced restructuring programs and other cost reduction initiatives, a favorable currency impact and lower project costs associated with the implementation of a common information systems platform, partially offset by an increase in incentive compensation expense.

Segment Operating Income Segment operating income increased 90% compared with 2008 primarily due to the factors discussed above.

WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES

Selected Measures of Liquidity and Capital Resources

The following table summarizes our financial indicators of liquidity:

	2010		2009
Cash and cash equivalents (in millions of dollars)	$	896.2	$	991.0
Working capital (in millions of dollars)	$	1,829.2	$	1,709.4
Current ratio		3.5		3.7
Debt as a % of capitalization		37%		39%
Net debt as a % of capitalization		16%		16%

Summary of Cash Flows

The following table summarizes the major components of cash flows:

(In Millions of Dollars)	2010			2009			2008
Cash provided by (used for):
Operating activities	$	688.9		$	951.1		$	223.3
Investing activities		(177.7	)		(129.0	)		(273.7	)
Financing activities		(598.4	)		(22.7	)		(245.2	)
Effect of exchange-rate changes on cash		(7.6	)		5.4			(20.5	)
Net (decrease) increase in cash and cash equivalents	$	(94.8	)	$	804.8		$	(316.1	)

THE LUBRIZOL CORPORATION     25

Operating Activities

Cash provided by operating activities decreased $262.2 million compared with 2009. The decrease in cash provided by operating activities primarily was attributable to higher working capital and a $29.2 million lump-sum payment made to secure land-use rights for our new additives facility in China, partially offset by the improvement in our earnings. Cash flow from inventories decreased by $374.3 million due to higher raw material costs in 2010 and our strategic decision to increase safety stocks to ensure greater security of supply. Cash flow from receivables decreased by $120.8 million due to an increase in sales in 2010 as compared with 2009 and the recognition of an income tax receivable associated with utilizing foreign tax credits. Cash flow from accounts payable and other current liabilities increased by $54.0 million primarily due to the increased level of inventory purchases.

Cash provided by operating activities increased $727.8 million in 2009 compared with 2008. The increase in cash provided by operating activities primarily was attributable to the improvement in our earnings and a significant decrease in our inventories. Cash flow from inventories improved by $410.4 million due to our efforts to reduce excess inventories as well as lower raw material costs in 2009. Cash flow from receivables decreased by $18.7 million due to an increase in fourth quarter sales in 2009 as compared to 2008. Cash flow from accounts payable and other current liabilities improved by $72.9 million primarily due to the increase in incentive compensation liabilities.

We manage inventories and receivables on the basis of average days sales in inventory and average days sales in receivables. Our average days sales in receivables were 46.3 days, 47.9 days and 49.1 days for the years ended December 31, 2010, 2009 and 2008, respectively. Our average days sales in inventory were 81.6 days, 87.0 days and 77.1 days for the years ended December 31, 2010, 2009 and 2008, respectively.

Investing Activities

Our capital expenditures in 2010 were $175.9 million as compared with $139.9 million and $202.6 million in 2009 and 2008, respectively. In 2010, capital expenditures for Lubrizol Additives primarily were made to maintain existing manufacturing capacity and plant infrastructure. Approximately 35% of the capital expenditures in the Lubrizol Advanced Materials segment related to increasing capacity. In 2011, we estimate that annual capital expenditures will increase to between $300.0 million and $320.0 million primarily due to our plans to construct a new additives facility in China, expand our Carbopol^® production capabilities in the U.S. and resume infrastructure spending that was deferred during the recession.

In 2009, capital expenditures for the Lubrizol Additives segment primarily were made to maintain existing manufacturing capacity and plant infrastructure. The majority of the capital expenditures in the Lubrizol Advanced Materials segment primarily related to increasing our capacity, mainly in China.

In 2008, capital expenditures for the Lubrizol Additives segment primarily were made to maintain existing manufacturing capacity and plant infrastructure. Capital expenditures in our Lubrizol Advanced Materials segment increased production capacity in China and continued our project to bring both segments onto a common information systems platform. Approximately 35% of the capital expenditures in the Lubrizol Advanced Materials segment related to increasing capacity.

On December 31, 2008, we used $59.9 million to acquire the thermoplastic polyurethane business from Dow.

In 2008, we recorded a cash outflow of $50.0 million associated with an investment held in a money market mutual fund that no longer was considered a cash equivalent. Subsequently, we received proceeds totaling $49.5 million from this money market mutual fund.

Financing Activities

Cash used for financing activities of $598.4 million in 2010 primarily consisted of $500.3 million to repurchase approximately 5.3 million of our common shares, $93.5 million to pay dividends and $46.0 million to repay the balance outstanding under the euro revolving credit facility. Cash used for financing activities partially was offset by a $20.0 million grant received from the Chinese government to be used exclusively for the construction and development of our new additives facility in China.

Cash used for financing activities of $22.7 million in 2009 primarily consisted of $490.9 million to repay the 4.625% notes and balances under the revolving credit facilities and $84.0 million to pay dividends, partially offset by $543.6 million of net proceeds received from the issuance of 8.875% notes due 2019 and proceeds from the exercise of stock options. In addition, we entered into a $150.0 million term loan in the first quarter that we repaid in full without penalty in the fourth quarter.

Cash used for financing activities of $245.2 million in 2008 primarily consisted of the repayment of the 5.875% notes, the repurchase of common shares and the payment of dividends, partially offset by proceeds from the revolving credit facilities. The proceeds from the revolving credit facilities were used to purchase the thermoplastic polyurethane business from Dow and for general corporate purposes.

26     THE LUBRIZOL CORPORATION

Capitalization, Liquidity and Credit Facilities

At December 31, 2010, our total debt outstanding of $1,352.0 million consisted of 85% fixed-rate debt and 15% variable-rate debt that includes $200.0 million of fixed-rate debt swapped for a variable rate. Our weighted-average interest rate at December 31, 2010, was approximately 7.0%.

Total debt as a percent of capitalization was 37% at December 31, 2010. Our net debt as a percent of capitalization at December 31, 2010, was 16%. Net debt represents total short-term and long-term debt, excluding unrealized gains and losses on derivative instruments designated as fair value hedges of fixed-rate debt, reduced by cash and cash equivalents. Capitalization is calculated as total equity plus net debt.

In July 2010, we entered into a five-year, unsecured $500.0 million revolving credit facility expiring in July 2015. In conjunction with this facility, we terminated the $350.0 million revolving credit facility that would have expired in September 2011. The facility permits us to borrow at variable rates based upon LIBOR or the lenders’ base rate, as defined in the credit agreement, plus a specified spread. The spread is dependent on our long-term unsecured senior debt rating from Standard and Poor’s and Moody’s Investors Service. We may request an increase of $25.0 million or more to the facility amount once each year, up to an aggregate maximum of $750.0 million, subject to approval by the lenders. We had no borrowings outstanding under this facility at December 31, 2010, or at any other time during 2010.

The €150.0 million revolving credit facility, which expires in July 2012, allows us to borrow at variable rates based on EURIBOR for euro borrowings or LIBOR for dollar or pound sterling borrowings plus a specified credit spread. We may elect to increase the euro facility amount once each year in increments of €10.0 million, up to an aggregate maximum of €200.0 million, subject to approval by the lenders. We had no borrowings outstanding under this facility at December 31, 2010, or at any other time after January 2010.

Under the U.S. and euro bank credit agreements, we are required to comply with financial ratios of debt to Consolidated EBITDA and Consolidated EBITDA to interest expense. As defined in the credit agreements, Consolidated EBITDA represents consolidated earnings before interest, income taxes, depreciation and amortization, extraordinary, unusual or non-recurring non-cash gains or losses, including the sale of property and equipment and goodwill impairments, and non-cash gains or losses from less than wholly owned subsidiaries and investments. The credit agreements require that the ratio of debt to Consolidated EBITDA be less than 3.5:1 and the ratio of Consolidated EBITDA to interest expense be greater than 3.5:1. At December 31, 2010, we maintained a ratio of debt to Consolidated EBITDA of 1.1:1 and a ratio of Consolidated EBITDA to interest expense of 12.5:1.

On January 19, 2010, we announced our decision to proceed with a 10-year phased investment in the Lubrizol Additives segment to increase global capacity and upgrade operations at existing facilities. On October 15, 2010, we announced the groundbreaking of our new manufacturing facility in southern China, within the Zhuhai Gaolan Port Economic Zone. The new facility will complement our existing joint venture, Lanzhou Lubrizol Lanlian Additive Co., Ltd., and is being developed and phased in to respond to lubricant growth in Asia and to better match our manufacturing for global demand patterns. We expect to commence operations in the first half of 2013, beginning with the manufacture of select additive components, and eventually include the manufacture and blending of driveline, industrial and fuel additive products. We estimate that the first phase of the new facility will require an investment over the next three years in excess of $250 million.

On January 21, 2011, we acquired the Performance Products Group of Nalco Company, a supplier of value-added specialty polymers and formulation additives marketed to the global personal care and household care industries, for approximately $164.2 million in cash. The agreement includes all Nalco personal care dedicated technology, know-how, trade names and customer lists, as well as royalty-free access to the use of technology and intellectual property currently shared with other Nalco businesses.

Our board of directors has authorized a share repurchase program that permits us to repurchase our common shares either in the open market or through private transactions. At December 31, 2010, there were approximately 3.4 million remaining shares available for repurchase under this program. The repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time.

We believe that our cash flow from operations, borrowing capacity under the credit facilities and our current cash and cash equivalents provide sufficient liquidity to maintain our current operations and capital expenditure requirements, pay dividends, repurchase shares, pursue acquisitions and service our debt.

THE LUBRIZOL CORPORATION     27

Contractual Cash Obligations

The following table shows our contractual cash obligations under debt agreements, leases, non-cancelable purchase commitments and other long-term liabilities at December 31, 2010:

	Payments Due by Period
(In Millions of Dollars)	Total		2011		2012 - 2013		2014 - 2015		2016 and After
Total debt (1)	$	1,351.8	$	0.4	$	0.6	$	450.5	$	900.3
Interest (2)		1,071.6		95.9		191.8		167.0		616.9
Operating leases		102.8		25.2		35.0		20.2		22.4
Non-cancelable purchase commitments (3)		246.3		62.2		97.9		79.6		6.6
Other long-term liabilities (4)(5)		280.8		75.5		143.8		7.5		54.0
Total contractual cash obligations	$	3,053.3	$	259.2	$	469.1	$	724.8	$	1,600.2

(1) Total debt includes both the current and long-term portions of debt as reported in Note 8 to the consolidated financial statements, excluding original issue discounts and unrealized gains on derivative instruments designated as fair-value hedges of fixed-rate debt.

(2) Represents estimated contractual interest payments for fixed-rate debt only. We are not able to estimate reasonably the cash payments for interest associated with variable-rate debt due to the significant estimation required relating to both market interest rates as well as projected principal payments.

(3) Non-cancelable purchase commitments primarily include raw materials purchased under take-or-pay contracts, drumming and service contracts, utility purchase agreements and toll processing arrangements.

(4) We are required to make minimum contributions to our U.S. qualified defined benefit pension plans pursuant to the minimum funding requirements of the Internal Revenue Code of 1986, as amended, and the Employee Retirement Income Security Act of 1974, as amended. Funding requirements for plans outside the United States are subject to applicable local regulations. We have included expected contributions of $70.5 million in 2011 and $130.5 million in 2012 – 2013 to our defined benefit pension and non-pension postretirement plans in the above table. The expected payments associated with these plans represent an actuarial estimate of future assumed payments based upon retirement and payment patterns. Due to uncertainties regarding the assumptions involved in estimating future required contributions to our pension and non-pension postretirement benefit plans, including: (i) interest rate levels, (ii) the amount and timing of asset returns, and (iii) what, if any, changes may occur in pension funding legislation, the estimates in the table may differ materially from actual future payments. We cannot reasonably estimate payments beyond 2013.

(5) Other long-term liabilities disclosed in the table represent long-term liabilities reported in our consolidated balance sheet at December 31, 2010, under “noncurrent liabilities,” excluding postemployment, environmental and other non-contractual liabilities. At December 31, 2010, we had gross unrecognized tax benefits of $38.5 million relating to uncertain tax positions. Due to the high degree of uncertainty regarding the timing of future cash outflows associated with these tax positions, we are unable to estimate when cash settlement may occur.

Our debt level will require us to dedicate a portion of our cash flow to make interest and principal payments, thereby reducing the availability of our cash for acquisitions or other purposes. Nevertheless, we believe our future operating cash flow will be sufficient to cover debt service, capital expenditures, dividends, share repurchases and other obligations, and we have untapped borrowing capacity that can provide us with additional financial resources. We currently have a shelf registration statement filed with the SEC pursuant to which debt securities, preferred or common shares, or warrants may be issued. In addition, at December 31, 2010, we maintained cash and cash equivalent balances of $896.2 million and had $500.0 million available under the U.S. revolving credit facility and €150.0 million ($200.5 million) available under the euro revolving credit facility.

Off-Balance Sheet Arrangements

We have no special purpose entities or off-balance sheet debt, other than operating leases in the ordinary course of business that are disclosed in Note 18 to the consolidated financial statements.

At December 31, 2010, we had $31.6 million of contingent obligations under standby letters of credit issued in the ordinary course of business to financial institutions, customers and insurance companies to secure short-term support for a variety of commercial transactions, insurance and benefit programs.

TRANSACTIONS WITH RELATED PARTIES

We enter into a number of business arrangements with related parties, principally with the noncontrolling interests in consolidated companies and our equity affiliates. These arrangements primarily include the sale of lubricant additives and the purchase of raw materials. Refer to Note 19 to the consolidated financial statements for further discussion.

28     THE LUBRIZOL CORPORATION

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in accordance with U.S. generally accepted accounting principles requires us to make judgments, assumptions and estimates at a specific point in time that affect the amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, we have utilized available information including our past history, industry standards and the current economic environment, among other factors, in forming our estimates and judgments of certain amounts included in the consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by management in formulating our estimates inherent in these financial statements may not materialize. Application of the critical accounting policies described below involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to similar businesses.

Income Taxes – We are subject to income tax laws in numerous federal, state and foreign jurisdictions that require us to use a significant amount of judgment in forming assumptions and estimates to determine our provision for income taxes and deferred tax assets and liabilities. Our provision for income taxes is based upon the tax positions taken, which are based on our research and interpretations of the income tax laws and rulings in each jurisdiction. We only recognize the economic benefit associated with a tax position if it is more likely than not that we ultimately will sustain the position. After this threshold is met, we report an income tax position at the largest amount of benefit that is more likely than not ultimately to be sustained. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws between those jurisdictions and difficulty in estimating the final resolution of complex tax audit matters, our estimates of income tax liabilities could differ from these estimates. Further, our provision for income taxes also is based, in part, upon our assessment of whether the earnings of our foreign subsidiaries will be indefinitely reinvested and thus not subject to tax in the U.S. The amount of earnings considered to be indefinitely reinvested, for which no U.S. income tax has been provided, was approximately $1,279.1 million at December 31, 2010.

Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates in effect for the years in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Inventory – Our inventories are stated at the lower of cost or market, which includes expenditures directly or indirectly incurred in bringing inventory to its finished state and location. We capitalize variable production overhead to each unit of production on the basis of the actual use of our production facilities. We capitalize fixed production overhead based on the normal capacity of our production facilities. Normal capacity represents a range of production levels expected to be achieved over a number of periods under normal operating conditions. The determination of normal capacity requires a significant amount of management judgment. Our range of normal capacity is based on our historical production levels, taking into consideration any changes in production capabilities at our facilities. In periods of abnormally low production, fixed production overhead that exceeds normal levels is expensed in the current period. In periods of abnormally high production, the amount of fixed overhead capitalized to each unit of production is decreased so that inventories are not measured above cost. We incurred $20.0 million and $74.9 million of unabsorbed manufacturing costs in 2010 and 2009, respectively, due to lower than normal production levels. In 2008, manufacturing costs included $19.4 million of unabsorbed costs associated with the temporary shutdown of our two Houston-area manufacturing facilities due to Hurricane Ike and the temporary shutdown of production lines in the fourth quarter to reduce inventories. Inventories are reduced to their net realizable value by an allowance for slow-moving or obsolete inventories. We estimate the allowance based on our review of inventory on-hand, considering the quality, estimated future usage and sales forecasts for the respective items.

Determination of Net Periodic Pension Cost – Each year we review with our actuaries the assumptions used in the determination of net periodic pension cost. The two most critical assumptions are the discount rate and the expected return on plan assets, which are influenced significantly by conditions within the debt and equity markets. Other assumptions include the rate of compensation increase and demographic factors such as retirement age, mortality and turnover.

We are required to select a discount rate, which represents our best estimate of the cost in the marketplace to settle all pension obligations through annuity purchases, to determine the value of future pension plan obligations. We determine the discount rate based upon current market indicators, including yields from bond portfolios that provide for a matching of bond maturities with the projected benefit cash flows from our plans. The bond portfolios consist of non-callable corporate bonds that are at least AA- quality. Volatility in the corporate debt markets directly impacts our assumed discount rate. In determining net periodic pension cost for the year ended December 31, 2010, we set our weighted-average discount rates for the U.S. pension plans and non-U.S. pension plans at 5.88% and

THE LUBRIZOL CORPORATION     29

5.55% (5.76% on a weighted-average basis for all plans), respectively. A change in the discount rate of 100 basis points would have had the following effects on 2010 net periodic pension cost:

	100 Basis Point
(In Millions of Dollars)	Increase			Decrease
U.S. pension plans	$	(8.0	)	$	8.6
International pension plans		(3.5	)		4.3
All pension plans	$	(11.5	)	$	12.9

In developing our assumption for the expected long-term rate of return on plan assets, we considered historical returns as well as the future expectations for returns for each asset class based on the target asset allocation of the pension portfolio. A sustained depression in the returns of debt and equity securities could cause a reduction in our assumed return on plan assets. At December 31, 2010, our U.S. pension plans’ assets had an investment mix that approximated 70% in equity securities and 30% in fixed income and other securities, while our non-U.S. pension plans’ assets had an investment mix that approximated 46% in equity securities and 54% in fixed income and other securities. In determining net periodic pension cost for the year ended December 31, 2010, we set our weighted-average expected long-term rate of return on plan assets for the U.S. pension plans and non-U.S. pension plans at 8.25% and 6.75% (7.58% on a weighted-average basis for all plans), respectively, based on our investment mix and projected market returns. We believe our expected long-term rates of return represent reasonable returns that could be achieved over the long term using our current asset allocations and investment strategies. A change in the rate of return of 100 basis points would have had the following effects on 2010 net periodic pension cost:

	100 Basis Point
(In Millions of Dollars)	Increase			Decrease
U.S. pension plans	$	(3.0	)	$	3.0
International pension plans		(2.1	)		2.1
All pension plans	$	(5.1	)	$	5.1

We expect our 2011 pension expense to be approximately $46.5 million. For the year ended December 31, 2011, our weighted-average discount rate assumptions for net periodic pension cost for the U.S. pension plans and non-U.S. pension plans are 5.38% and 5.42% (5.39% on a weighted-average basis for all plans), respectively. Our weighted-average expected long-term rate of return on plan assets for the U.S. pension plans and non-U.S. pension plans are 8.25% and 6.83% (7.68% on a weighted-average basis for all plans), respectively. The expected increase in pension expense in 2011, excluding settlement charges, primarily is due to an increase in the amortization of actuarial losses.

Impairment of Goodwill and Intangible Assets – Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. We assign goodwill arising from businesses acquired to the reporting units that are expected to benefit from the synergies of the acquisition. Our reporting units are either at the operating segment level or a component one level below our operating segments that constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. We have determined that our Lubrizol Additives operating segment constitutes a reporting unit, and that our Estane engineered polymers business, TempRite engineered polymers business, Noveon consumer specialties product line and performance coatings product line within our Lubrizol Advanced Materials operating segment constitute separate reporting units. We assign assets and liabilities, including deferred income taxes, to our reporting units if the asset or liability relates to the operations of a reporting unit and is considered in determining the fair value of the reporting unit. Cash and debt obligations are excluded from the carrying value of our reporting units. Goodwill is tested annually each October 1, and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. At December 31, 2010, the remaining value of goodwill associated with our Lubrizol Additives, Estane, TempRite and Noveon consumer specialties reporting units totaled $183.4 million, $60.2 million, $68.3 million and $453.7 million, respectively. No goodwill remains within our performance coatings reporting unit at December 31, 2010.

We use a two-step process to test goodwill for impairment. In the first step, we use a discounted cash flow analysis to determine the fair value of each reporting unit, which considers forecasted cash flows discounted at an estimated weighted average cost of capital. The annual goodwill impairment test requires us to make a number of assumptions and estimates concerning future levels of after-tax earnings, foreign currency exchange rates, expected capital expenditures and working capital requirements, which are based upon our long-range plan. Our long-range plan is updated each fall as part of our annual planning process and is reviewed and approved by management and our board of directors. A growth rate is used to calculate the terminal value of the reporting unit, and is added to the present value of the forecasted cash flows. The growth rate is the rate at which a reporting unit’s cash flow is expected to grow beyond

30     THE LUBRIZOL CORPORATION

the period covered by the long-range plan. Lastly, we develop a weighted average cost of capital to discount the expected future cash flows and terminal value. The weighted average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market participants of a business enterprise, with the weighting of returns based on the capitalization of comparable companies. The sum of the calculated fair values of the reporting units is then reconciled to our total market capitalization, which includes an estimated control premium based on levels being paid currently within our industry. We include a control premium as the quoted market price of a single share of our common stock does not reflect the value that would be derived from owning a controlling interest in our individual reporting units. We corroborate our estimated control premium by comparing it to those paid in recent acquisitions within the chemical industry. If the discounted cash flow analysis yields a fair value estimate less than the reporting unit’s carrying value, we would proceed to step two of the impairment test. In the second step, the implied fair value of the reporting unit’s goodwill is determined by allocating the reporting unit’s fair value to all of its assets and liabilities other than goodwill in a manner similar to a purchase price allocation. In performing this allocation of fair value to the assets and liabilities of the reporting unit, we obtain appraisals of long-lived assets and identifiable intangible assets from third-party valuation firms to support the fair values allocated. The resulting implied fair value of the goodwill that results from the application of this second step is then compared to the carrying amount of the goodwill and, if the carrying amount exceeds the implied fair value, an impairment charge is recorded for the difference. We use the best available information to prepare our cash flow and weighted average cost of capital assumptions; however, actual future cash flows or market conditions could differ significantly.

No impairment of goodwill was identified in connection with the 2010 or 2009 annual impairment test. Key assumptions used to determine the fair value of our reporting units at October 1, 2010, were the expected after-tax cash flows for the period of 2011 to 2020, terminal growth rates of 1.0% to 3.0% and weighted average costs of capital of 10.75% to 15.0%. The fair value of our Estane, Noveon consumer specialties and Lubrizol Additives reporting units would have to decline by over 25%, 50% and 75%, respectively, to indicate the potential for an impairment of their goodwill. Therefore, we believe that the estimated fair values of these reporting units substantially exceed their carrying values at December 31, 2010. The fair value of our TempRite reporting unit would have to decline by over 15% to indicate the potential for an impairment of its goodwill. Our TempRite reporting unit serves customers who produce plastic piping for residential and commercial plumbing, fire sprinkler systems and industrial piping applications, and is thus subject to cyclical demand patterns within these markets. Our after-tax cash flows for the TempRite reporting unit assume a recovery within the U.S. residential and commercial construction markets beginning in 2011 along with continued growth in emerging markets, primarily in India. To the extent the weakness in the U.S. residential and commercial markets persists longer than expected, emerging market growth does not come to fruition or the capital markets deteriorate, our TempRite reporting unit may experience a decline in fair value that could result in an impairment.

After performing our annual goodwill impairment test as of October 1, 2008, we determined $363.0 million of goodwill associated with our Estane, TempRite and performance coatings reporting units was impaired as the carrying value of goodwill within these reporting units exceeded its fair value. Key assumptions used to determine the fair value of our Estane, TempRite and performance coatings reporting units at October 1, 2008, were the expected after-tax cash flows for the period of 2009 to 2018, a terminal growth rate of 3.0% and a weighted average cost of capital of 10.0%, representing an increase from the weighted average cost of capital of 8.5% used in 2007. The impairment charge included the partial impairment of the goodwill of the Estane and TempRite reporting units and the full impairment of the goodwill of the performance coatings reporting unit. The impairment charge for the Estane reporting unit was driven mainly by the increase in our cost of capital in the fourth quarter of 2008. The impairment charge for the TempRite reporting unit was driven mainly by the increase in our cost of capital in the fourth quarter of 2008 and, to a lesser extent, a reduction in the reporting unit’s near-term earnings outlook. The increase in our cost of capital accounted for the entire decline in fair value of our Estane reporting unit and approximately 94% of the decline in fair value of our TempRite reporting unit from the prior year. The impairment charge for the performance coatings reporting unit was driven mainly by the reporting unit’s weak performance and outlook in light of economic conditions. The table below presents the impact a change in the following significant assumptions would have had on our impairment charge recognized at October 1, 2008, assuming all other assumptions and factors remained constant:

				Approximate Increase /(Decrease) to Impairment Charge
(In Millions of Dollars)	Change			Estane			TempRite			Performance Coatings
Weighted average cost of capital		+10	%	$	34.0		$	31.0		$	—
Weighted average cost of capital		-10	%		(45.0	)		(42.0	)		—
After-tax cash flows		+10	%		(26.0	)		(24.0	)		—
After-tax cash flows		-10	%		26.0			24.0			—

THE LUBRIZOL CORPORATION     31

The major components of the company’s other intangible assets resulting from business acquisitions are customer lists, technology, trademarks and patents. Finite-lived intangible assets are amortized using the straight-line method over their useful lives that range between 3 and 20 years. Intangible assets determined to have indefinite lives are not amortized, but are tested for impairment at least annually. We have elected October 1 as the annual evaluation date to test for potential impairment of indefinite-lived intangible assets. A relief-from-royalty model is used to determine whether the fair value of an indefinite-lived trademark exceeds its carrying amount. The relief-from-royalty calculations require us to make a number of assumptions and estimates concerning future levels of revenues related to the trademark, market royalty rates for intellectual property, future tax rates and amortization related tax benefits, and discount rates. As of October 1, 2010, we assumed market royalty rates ranging from 0.5% to 2.0% of future levels of revenues and discount rates ranging from 13.25% to 20.0%.

Impairment of Long-Lived Assets – We review the carrying value of our long-lived assets, including property and equipment, whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. An impairment loss exists when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable, independent, cash flows are available. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying amount of the assets. Fair value generally is determined based upon a discounted cash flow analysis.

The determination of both undiscounted and discounted cash flows requires us to make significant estimates and consider the expected course of action at the balance sheet date. Subsequent changes in estimated undiscounted and discounted cash flows arising from changes in anticipated actions could impact the determination of whether an impairment exists and the amount of the impairment charge recorded.

For the year ended December 31, 2009, we recorded long-lived asset impairment charges of $12.8 million primarily related to the write-off of preliminary process engineering design work associated with our plans, announced in March 2008, to build a lubricant additives plant in China and our decision to cease manufacturing at two U.S. facilities within the Lubrizol Advanced Materials segment. The impairment charges represent the excess of carrying value of the asset groups over their fair value. The fair value of the asset groups was determined by discounting the expected future cash flows attributable to the asset groups over their remaining useful lives.

Sales Discounts, Allowances and Rebates – We offer sales discounts and rebates to certain customers to promote customer loyalty and to encourage greater product sales. These rebate programs provide that upon the attainment of pre-established volume or revenue milestones for a specified period, the customer receives credits against purchases. We estimate the provision for rebates based upon the specific terms in each agreement at the time of shipment and an estimate of the customer’s achievement of the respective milestones. We accrue customer claims, returns and allowances and discounts based upon our history of claims and sales returns and allowances. The estimated provisions significantly could be affected if future occurrences and claims differ from these assumptions and historical trends.

Legal and Environmental Contingencies – We are involved in a variety of claims, suits, investigations and administrative proceedings with respect to commercial, premises liability, product liability, employment and environmental matters arising from the ordinary course of business. We accrue reserves for legal and environmental exposures, on an undiscounted basis, when it is probable that we have incurred a liability and we can reasonably estimate an amount. When a single amount cannot be reasonably estimated, but the cost can be estimated within a range, we accrue the minimum amount in the range. Based upon facts and information currently available, we believe the amounts reserved are adequate for such pending matters. We monitor the development of legal proceedings and environmental matters on a regular basis and will adjust our reserves when, and to the extent, additional information becomes available.

Business Combinations – We allocate the purchase price of business combinations to assets acquired and liabilities assumed based on their fair value at the date of acquisition. In estimating the fair value of the tangible and intangible assets and liabilities acquired, we consider information obtained during our due diligence process and utilize various valuation methods including market prices, where available, appraisals, comparisons to transactions for similar assets and liabilities and present value of estimated future cash flows. We are required to make subjective estimates in connection with these valuations and allocations.

Asset Retirement Obligations – We recognize the fair value of a liability for an asset retirement obligation (ARO) at the time it is identified and when a reasonable estimate of fair value can be made. We have recognized liabilities for AROs related to asbestos remediation activities and lease imposed obligations. In addition, we have identified additional AROs for asbestos remediation activities that may be required in the future. However, due to the long-term, productive nature of our manufacturing operations, absent plans or expectation of plans to initiate asset retirement activities, we are unable to reasonably estimate the fair value of such asbestos remediation liabilities since the potential settlement dates cannot be determined at this time.

32     THE LUBRIZOL CORPORATION

NEW ACCOUNTING STANDARDS

Refer to Note 2 to the consolidated financial statements for a discussion of accounting standards we recently adopted or will be required to adopt.

CAUTIONARY STATEMENTS FOR SAFE HARBOR PURPOSES

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. Although they reflect our current expectations, these statements involve a number of risks, uncertainties, and assumptions relating to our operations and business environment that are difficult to predict and may be beyond our control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements, although we believe our expectations reflected in those forward-looking statements are based upon reasonable assumptions. For this purpose, any statements contained herein that are not statements of historical fact should be deemed to be forward-looking statements.

We believe that the following factors, among others, could affect our future performance and cause our actual results to differ materially from those expressed or implied by forward-looking statements made in this annual report:

• The cost, availability and quality of raw materials, especially feedstocks derived from petroleum and petrochemicals, and the cost and availability of energy, especially natural gas and electricity, and our ability to sustain profitability through our pricing in a competitive market.

• The demand for our products as influenced by such factors as the global economy and the development of replacement technology.

• Our success in retaining and growing the business that we have with our largest customers.

• Our success at continuing to develop, safeguard and benefit from, proprietary technology to meet or exceed new industry performance standards and to create new products to meet changing customer expectations.

• The potential disruption or interruption of our or our suppliers’ production facilities due to accidents, terrorism, political events, civil unrest, or weather-related disruptions to facilities located near the U.S. Gulf Coast.

• Our ability to execute effectively our capacity expansion plans, including the construction of our new facility in southern China.

• Our ability to continue to maximize efficiencies in our procurement and manufacturing processes and manage our cost structure.

• The extent to which we are successful in expanding our business in new and existing markets and identifying, understanding and managing the risks inherent in those markets.

• The risks of conducting business in various countries, including general economic conditions, inflation and foreign currency exchange rates, foreign investment and repatriation restrictions, legal, environmental and other regulatory constraints and other social and political factors.

• Our ability to identify, finance, complete and integrate acquisitions for profitable growth and operating efficiencies.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We operate manufacturing and blending facilities, laboratories and offices around the world and utilize fixed-rate and variable-rate debt to finance our global operations. As a result, we are subject to business risks inherent in non-U.S. activities, including political and economic uncertainties, import and export limitations, and market risks related to changes in interest rates and foreign currency exchange rates. We believe the political and economic risks related to our foreign operations are mitigated due to the relative stability of the countries in which our largest foreign operations are located.

In the normal course of business, we use derivative financial instruments including interest rate and commodity hedges and forward foreign currency exchange contracts to manage our market risks. Our objective in managing our exposure to changes in interest rates is to limit the impact of such changes on our earnings and cash flow. Our objective in managing the exposure to changes in foreign currency exchange rates is to reduce volatility on our earnings and cash flow associated with such changes. Our primary currency exposures are the euro, the pound sterling, the Japanese yen, the Chinese yuan and the Brazilian real. Our objective in managing our exposure to changes in commodity prices is to reduce the volatility of utility expense on earnings. We do not hold derivatives for trading purposes.

We measure our market risk related to our holdings of financial instruments based on changes in interest rates, foreign currency rates and commodity prices utilizing a sensitivity analysis. The sensitivity analysis measures the potential loss in fair value, cash flow and earnings based on a hypothetical 10% change (increase and decrease) in interest, currency exchange rates and commodity prices. We use current market rates on our debt and derivative portfolios to perform the sensitivity analysis. Certain items such as insurance contracts and obligations for pension and other postretirement benefits are not included in the analysis.

THE LUBRIZOL CORPORATION     33

Our primary interest rate exposures relate to our cash and cash equivalents, fixed-rate and variable-rate debt and interest rate swaps. The calculation of potential loss in fair value is based on an immediate change in the net present values of our interest rate-sensitive exposures resulting from a 10% change in interest rates. The potential loss in cash flow and income before tax is based on the change in the net interest income/expense over a one-year period due to an immediate 10% change in rates. A hypothetical 10% increase or decrease in interest rates would have had a respective favorable or unfavorable impact on fair values of $52.8 million and $60.7 million at December 31, 2010 and 2009, respectively. In addition, a hypothetical 10% increase or decrease in interest rates would have had a respective unfavorable or favorable impact on annualized cash flows and income before tax of $0.3 million and $0.4 million in 2010 and 2009, respectively.

Our primary currency exchange rate exposures are to intercompany debt, cash and cash equivalents, forward foreign currency exchange contracts and foreign currency-denominated debt. The calculation of potential loss in fair value is based on an immediate change in the U.S. dollar equivalent balances of our currency exposures due to a 10% shift in exchange rates. The potential loss in cash flow and income before tax is based on the change in cash flow and income before tax over a one-year period resulting from an immediate 10% change in currency exchange rates. A hypothetical 10% increase or decrease in currency exchange rates would have had a respective unfavorable or favorable impact on fair values of $42.2 million and $32.4 million at December 31, 2010 and 2009, respectively. In addition, a hypothetical 10% increase or decrease in currency exchange rates would have had a respective unfavorable or favorable impact on annualized cash flows of $50.9 million and $42.1 million and on annualized income before tax of $8.1 million and $4.4 million in 2010 and 2009, respectively.

Our primary commodity hedge exposure relates to natural gas expense. The calculation of potential loss in fair value is based on an immediate change in the U.S. dollar equivalent balances of our commodity exposure due to a 10% shift in the underlying commodity prices. The potential loss in cash flow and income before tax is based on the change in cash flow and income before tax over a one-year period resulting from an immediate 10% change in commodity prices. A hypothetical 10% increase or decrease in commodity prices would have had a respective favorable or unfavorable impact on fair values, annualized cash flows and income before tax of $0.5 million and $1.3 million at December 31, 2010 and 2009, respectively.

34     THE LUBRIZOL CORPORATION

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

The Lubrizol Corporation

We have audited the accompanying consolidated balance sheets of The Lubrizol Corporation and subsidiaries (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2011 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Cleveland, Ohio

February 25, 2011

THE LUBRIZOL CORPORATION     35

THE LUBRIZOL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
	Year Ended December 31,
(In Millions of Dollars Except Per Share Data)	2010			2009			2008
Revenues	$	5,417.8		$	4,586.3		$	5,027.8
Cost of sales		3,626.8			3,071.0			3,906.5
Gross profit		1,791.0			1,515.3			1,121.3
Selling and administrative expenses		452.1			435.2			417.7
Research, testing and development expenses		225.8			212.1			220.9
Amortization of intangible assets		24.9			25.2			27.0
Write-off of acquired in-process research and development		–			–			1.6
Restructuring and impairment charges		11.7			30.4			394.0
Other income - net		(21.8	)		(16.4	)		(22.6	)
Interest income		(5.7	)		(7.5	)		(12.4	)
Interest expense		99.7			110.5			78.1
Income before income taxes		1,004.3			725.8			17.0
Provision for income taxes		255.6			211.6			75.9
Net income (loss)		748.7			514.2			(58.9	)
Net income attributable to noncontrolling interests		16.5			13.4			7.2
Net income (loss) attributable to The Lubrizol Corporation	$	732.2		$	500.8		$	(66.1	)
Net income (loss) per share attributable to The Lubrizol Corporation, basic	$	10.88		$	7.36		$	(0.97	)
Net income (loss) per share attributable to The Lubrizol Corporation, diluted	$	10.64		$	7.26		$	(0.97	)
Dividends paid per share	$	1.39		$	1.24		$	1.23

The accompanying notes are an integral part of these consolidated financial statements.

36     THE LUBRIZOL CORPORATION

THE LUBRIZOL CORPORATION CONSOLIDATED BALANCE SHEETS
	December 31,
(In Millions of Dollars Except Share Data)	2010			2009
ASSETS
Cash and cash equivalents	$	896.2		$	991.0
Receivables		723.5			615.1
Inventories		821.8			630.5
Deferred income taxes		81.5			77.8
Other current assets		27.1			32.2
Total current assets		2,550.1			2,346.6
Property and equipment - at cost		2,981.6			2,960.7
Less accumulated depreciation		1,798.1			1,773.1
Property and equipment - net		1,183.5			1,187.6
Goodwill		765.6			790.7
Intangible assets - net		299.4			330.7
Other assets		168.4			114.4
TOTAL	$	4,967.0		$	4,770.0
LIABILITIES AND TOTAL EQUITY
Current portion of long-term debt	$	0.4		$	0.3
Accounts payable		369.2			299.5
Accrued expenses and other current liabilities		351.3			337.4
Total current liabilities		720.9			637.2
Long-term debt		1,351.6			1,390.3
Pension obligations		298.8			309.3
Other postretirement benefit obligations		93.3			92.7
Noncurrent liabilities		151.6			153.3
Deferred income taxes		70.1			57.4
Total liabilities		2,686.3			2,640.2
Contingencies and commitments
Redeemable stock-based awards		9.6			–
Preferred stock without par value - unissued		–			–
Common shares without par value:
Authorized - 120,000,000 shares
Outstanding - 64,034,811 shares at December 31, 2010, after deducting 22,161,083 treasury shares; 68,436,977 shares at December 31, 2009, after deducting 17,758,917 treasury shares		813.6			826.4
Retained earnings		1,517.4			1,322.4
Accumulated other comprehensive loss		(137.5	)		(88.0	)
Total of The Lubrizol Corporation shareholders’ equity		2,193.5			2,060.8
Noncontrolling interests		77.6			69.0
Total equity		2,271.1			2,129.8
TOTAL	$	4,967.0		$	4,770.0

The accompanying notes are an integral part of these consolidated financial statements.

THE LUBRIZOL CORPORATION     37

THE LUBRIZOL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
	Year Ended December 31,
(In Millions of Dollars)	2010			2009			2008
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net income (loss)	$	748.7		$	514.2		$	(58.9	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization		169.0			170.3			173.5
Deferred income taxes		18.3			15.7			(31.6	)
Stock-based compensation		19.3			21.4			11.3
Restructuring and impairment charges		3.9			13.1			383.4
(Gain) loss from sales of assets		(1.1	)		(4.0	)		0.5
Change in current assets and liabilities, net of acquisitions:
Receivables		(117.0	)		3.8			22.5
Inventories		(187.9	)		186.4			(224.0	)
Accounts payable, accrued expenses and other current liabilities		81.6			27.6			(45.3	)
Other current assets		6.1			(7.4	)		(0.3	)
		(217.2	)		210.4			(247.1	)
Payment for land-use rights		(29.2	)		–			–
Other items - net		(22.8	)		10.0			(7.8	)
Total operating activities		688.9			951.1			223.3
INVESTING ACTIVITIES
Capital expenditures		(175.9	)		(139.9	)		(202.6	)
Acquisitions		(2.5	)		(1.0	)		(60.5	)
Purchase of investments		–			–			(50.0	)
Proceeds from investments		3.6			6.5			39.4
Other items - net		(2.9	)		5.4			—
Total investing activities		(177.7	)		(129.0	)		(273.7	)
FINANCING ACTIVITIES
Changes in short-term debt - net		–			(4.8	)		4.8
Repayments of long-term debt		(46.0	)		(640.9	)		(200.3	)
Proceeds from the issuance of long-term debt		–			693.6			108.2
Proceeds from government grant		20.0			–			–
Payment of Treasury rate lock upon settlement		–			(16.7	)		–
Payment of debt issuance costs		(2.9	)		(7.2	)		–
Dividends to Lubrizol shareholders		(93.5	)		(84.0	)		(83.5	)
Dividends to noncontrolling interests		(10.6	)		(6.6	)		(5.3	)
Common shares purchased		(500.3	)		–			(75.1	)
Proceeds from the exercise of stock options		19.7			32.9			3.8
Excess tax benefit from the exercise of stock options and awards		15.2			11.0			2.2
Total financing activities		(598.4	)		(22.7	)		(245.2	)
Effect of exchange rate changes on cash		(7.6	)		5.4			(20.5	)
Net (decrease) increase in cash and cash equivalents		(94.8	)		804.8			(316.1	)
Cash and cash equivalents at the beginning of year		991.0			186.2			502.3
Cash and cash equivalents at the end of year	$	896.2		$	991.0		$	186.2

The accompanying notes are an integral part of these consolidated financial statements.

38     THE LUBRIZOL CORPORATION

THE LUBRIZOL CORPORATION CONSOLIDATED STATEMENTS OF EQUITY
(In Millions)	Number of Shares Outstanding			Common Shares			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Noncontrolling Interests			Total
BALANCE, DECEMBER 31, 2007		68.4		$	763.6		$	1,128.7		$	59.0		$	62.4		$	2,013.7
Comprehensive loss:
Net (loss) income					–			(66.1	)		–			7.2			(58.9	)
Other comprehensive loss					–			–			(206.3	)		(3.4	)		(209.7	)
Total comprehensive loss																	(268.6	)
Dividends declared					–			(83.9	)		–			(5.3	)		(89.2	)
Stock-based compensation					11.3			–			–			–			11.3
Reclassification of stock-based liability awards					(10.6	)		–			–			–			(10.6	)
Common shares purchased		(1.4	)		(2.7	)		(72.4	)		–			–			(75.1	)
Shares issued upon exercise of stock options and awards		0.3			3.8			–			–			–			3.8
Tax benefit from stock compensation					2.2			–			–			–			2.2
Other - net					(2.9	)		–			–			–			(2.9	)
BALANCE, DECEMBER 31, 2008		67.3			764.7			906.3			(147.3	)		60.9			1,584.6
Comprehensive income:
Net income					–			500.8			–			13.4			514.2
Other comprehensive income					–			–			59.3			1.3			60.6
Total comprehensive income																	574.8
Dividends declared					–			(84.7	)		–			(6.6	)		(91.3	)
Stock-based compensation					21.4			–			–			–			21.4
Reclassification of stock-based liability awards					(1.9	)		–			–			–			(1.9	)
Shares issued upon exercise of stock options and awards		1.1			32.9			–			–			–			32.9
Tax benefit from stock compensation					10.1			–			–			–			10.1
Other - net					(0.8	)		–			–			–			(0.8	)
BALANCE, DECEMBER 31, 2009		68.4			826.4			1,322.4			(88.0	)		69.0			2,129.8
Comprehensive income:
Net income					–			732.2			–			16.5			748.7
Other comprehensive (loss) income					–			–			(49.5	)		2.7			(46.8	)
Total comprehensive income																	701.9
Dividends declared					–			(95.7	)		–			(10.6	)		(106.3	)
Stock-based compensation					17.5			–			–			–			17.5
Adjustment to redeemable stock-based awards					(2.3	)		(6.2	)		–			–			(8.5	)
Common shares purchased		(5.3	)		(65.0	)		(435.3	)		–			–			(500.3	)
Shares issued upon exercise of stock options and awards		0.9			19.7			–			–			–			19.7
Tax benefit from stock compensation					15.2			–			–			–			15.2
Other - net					2.1			–			–			–			2.1
BALANCE, DECEMBER 31, 2010		64.0		$	813.6		$	1,517.4		$	(137.5)		$	77.6		$	2,271.1

The accompanying notes are an integral part of these consolidated financial statements.

THE LUBRIZOL CORPORATION     39

THE LUBRIZOL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

Note 1 – NATURE OF OPERATIONS

The Lubrizol Corporation (the company) is an innovative specialty chemical company that produces and supplies technologies that improve the quality, value and performance of its customers’ products in the global transportation, industrial and consumer markets. These technologies include lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as additives for gasoline and diesel fuel. In addition, the company makes engineered polymers, including plastics technology; ingredients and additives for personal care products and pharmaceuticals; and performance coatings in the form of specialty resins and additives.

The company is organized into two operating and reportable segments: Lubrizol Additives and Lubrizol Advanced Materials. Refer to Note 3 for a further description of the nature of the company’s operations, the product lines within each of the operating segments, segment operating income and related financial disclosures for the reportable segments.

Note 2 – SIGNIFICANT ACCOUNTING POLICIES

Consolidation – The consolidated financial statements include the accounts of the company and all its majority-owned subsidiaries and joint ventures where the company has effective management control. All intercompany transactions and balances among subsidiaries are eliminated in consolidation. The equity method of accounting is applied to non-consolidated entities in which the company can exercise significant influence over the entity with respect to its operations and major decisions. The book value of investments carried on the equity method and cost method were immaterial at December 31, 2010 and 2009.

Use of Estimates – The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents – The company invests its excess cash in short-term investments with various banks and financial institutions. Cash equivalents are comprised of investments having maturities of three months or less when purchased.

Receivables – Receivables are net of allowance for doubtful accounts of $4.3 million and $5.4 million at December 31, 2010 and 2009, respectively. The allowance for doubtful accounts is based on review of the overall condition of accounts receivable balances and review of significant past due accounts. Account balances are charged off against the allowance for doubtful accounts after collection efforts have been exhausted and the potential for recovery is considered remote.

Inventories – Inventories are stated at the lower of cost or market value. Cost of inventories is determined by either the first-in, first-out (FIFO) method or the moving-average method, except in the United States for chemical inventories, which are valued using the last-in, first-out (LIFO) method. Abnormal amounts of idle facility expense, freight, handling costs and wasted material are recognized as an expense in the period incurred.

The company accrues volume discounts on purchases from vendors where it is probable, based on projected purchases over the purchase agreement period, the required volume will be attained and the amount can be reasonably estimated. The company records the discount as a reduction in the cost of the purchased materials.

Property and Equipment – Property and equipment are carried at cost. Repair and maintenance costs are charged against income while renewals and betterments are capitalized as additions to the related assets. Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities and expensed immediately for preliminary project activities or post-implementation activities. Accelerated depreciation methods are used in computing depreciation on certain machinery and equipment for approximately 1% and 3% of the depreciable assets at December 31, 2010 and 2009, respectively. The remaining assets are depreciated using the straight-line method. The estimated useful lives range from 10 to 40 years for buildings and building and land improvements, 5 to 20 years for machinery and equipment and 5 to 7 years for software.

Impairment or Disposal of Long-Lived Assets – The company reviews the carrying value of its long-lived assets, including property and equipment, whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. An impairment loss exists when estimated undiscounted future cash flows expected to result from the use of the

40     THE LUBRIZOL CORPORATION

assets, including disposition, are less than the carrying value of the assets. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying amounts of the assets. Fair value generally is determined by discounting the expected future cash flows attributable to the asset groups over their remaining useful lives.

Goodwill and Intangible Assets – Goodwill is tested for impairment annually and between annual tests if an event occurs or circumstances change that indicate the carrying amount may be impaired. The company has elected to perform its annual tests for potential impairment of goodwill as of October 1 of each year. Impairment testing is performed at the reporting unit level. An impairment loss generally would be recognized when the estimated fair value of the reporting unit is less than the carrying amount of the reporting unit’s net assets. The estimated fair value of a reporting unit is determined through a discounted cash flow analysis. Refer to Note 7 for a discussion of the goodwill impairment charge recognized during 2008.

The major components of the company’s identifiable intangible assets are customer lists, technology, trademarks and patents. Finite-lived intangible assets are amortized using the straight-line method over their useful lives that range between 3 and 20 years. The company’s indefinite-lived intangible assets include certain trademarks that are tested for impairment each year as of October 1 or more frequently if impairment indicators arise.

Deferred Financing Costs – Costs incurred with the issuance of debt and credit facilities are capitalized and amortized over the life of the associated debt as a component of interest expense using the effective interest method of amortization. Net deferred financing costs were $14.7 million and $14.2 million at December 31, 2010 and 2009, respectively. Amortization expense from deferred financing costs was $2.2 million, $3.3 million and $2.8 million during 2010, 2009 and 2008, respectively.

Guarantees – The company recognizes a liability for the fair value of any guarantees entered into or modified. The company did not have any material guarantees at December 31, 2010 or 2009.

Environmental Liabilities – The company accrues for expenses associated with environmental remediation obligations when such expenses are probable and reasonably estimable, based upon current law and existing technologies. These accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value.

Asset Retirement Obligations – The company recognizes the fair value of a liability for an asset retirement obligation (ARO) at the time it is identified and when a reasonable estimate of fair value can be made. The company has recognized liabilities for AROs related to asbestos remediation activities and lease imposed obligations. In addition, the company has identified additional AROs for asbestos remediation activities that may be required in the future. However, due to the long-term, productive nature of the company’s manufacturing operations, absent plans or expectation of plans to initiate asset retirement activities, the company is unable to reasonably estimate the fair value of such asbestos remediation liabilities since the potential settlement dates cannot be determined at this time.

Accounting For Derivative Instruments – Derivative financial instruments are recognized on the balance sheet as either assets or liabilities and are measured at fair value. For derivative instruments that are not designated as hedges, the gain or loss on the derivative is recognized in current earnings. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gains or losses on the derivatives, along with any gains and losses upon termination of the derivatives, are reported as a component within accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Redeemable Stock-Based Awards – Redeemable stock-based awards provide the employee the right to require the company to settle the underlying shares in cash, but only after the employee has borne the risks and rewards of owning the vested shares for a period of at least six months. Redeemable stock-based awards are measured at fair value, considering the proportion of services rendered by the employee under the terms of the award. Compensation cost associated with these awards is based on their grant-date fair value and recognized on a straight-line basis over the requisite service period of the entire award.

Share Repurchases – The company uses the par-value method of accounting for its treasury shares. Under this method, the cost to reacquire shares in excess of the weighted-average proceeds received upon original issuance of the shares is charged against retained earnings.

THE LUBRIZOL CORPORATION     41

Foreign Currency Translation – The assets and liabilities of the company’s international subsidiaries whose functional currency is their local currency are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenues and expenses are translated at weighted-average exchange rates in effect during the period. Unrealized translation adjustments are recorded as a component of accumulated other comprehensive loss. For subsidiaries whose functional currency is other than their local currency, adjustments to remeasure transactions denominated in the local currency to the functional currency are recognized in income. Gains or losses that arise from exchange rate changes on transactions denominated in a currency other than the functional currency, except those transactions that function as a hedge of an identifiable foreign currency commitment or as a hedge of a foreign currency investment, are included in income as incurred.

Revenue Recognition – Revenues are recognized when persuasive evidence of an arrangement exists, the selling price is fixed or determinable, collection is reasonably assured and title and risk of loss has passed to the customer, which generally occurs at the time of shipment of products. All amounts in a sales transaction billed to a customer related to shipping and handling are reported as revenues. The company collects sales, use and value added taxes that are imposed by governmental authorities on and concurrent with sales to the company’s customers. Revenues are presented net of these taxes as the obligation is included in accrued expenses and other current liabilities until the taxes are remitted to the appropriate taxing authorities.

Provisions for rebates, discounts, claims, returns and allowances to customers are recorded as a deduction to revenue in the same period the related sales are recorded. Rebate programs provide that upon the attainment of pre-established volume or revenue milestones for a specified period, the customer receives credits against purchases. The company estimates the provision for rebates based on the specific terms in each agreement at the time of shipment and an estimate of the customer’s achievement of the respective milestones. The company accrues sales discounts, claims, returns and allowances based upon historical experience.

Components of Cost of Sales – Cost of sales is comprised of raw material costs including freight and duty, inbound handling costs associated with the receipt of raw materials, direct production, maintenance, utility costs, depreciation, plant and engineering overhead, terminals and warehousing costs and outbound shipping and handling costs.

Research, Testing and Development – Research, testing and development costs are expensed as incurred. Research and development costs, excluding testing, were $155.3 million, $147.7 million and $149.6 million during 2010, 2009 and 2008, respectively. Costs to acquire in-process research and development (IPR&D) projects that have no alternative future use and that have not yet reached technological feasibility at the date of acquisition have been expensed for acquisitions completed prior to January 1, 2009.

Stock-Based Compensation – For stock-based awards granted to employees classified as equity, compensation expense is based on the grant-date fair value of the award. For stock-based awards classified as a liability, compensation expense is based on the fair value of the award at each reporting date. The company recognizes these compensation costs, net of a forfeiture rate, on a straight-line basis over the requisite service period of the entire award, such that compensation cost recognized is at least equal to the cost attributable to awards that are vested. The company estimates the forfeiture rate based on its historical experience during the preceding 10 years.

Costs Associated with Exit or Disposal Activities – Liabilities for costs associated with exit or disposal activities are recognized and measured initially at fair value when the liability is incurred.

Income Taxes – The company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of the assets and liabilities. A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized.

The economic benefit associated with a tax position taken or expected to be taken in a tax return will be recognized only if it is more likely than not that a tax position will be ultimately sustained. After this threshold is met, a tax position is reported at the largest amount of benefit that is more likely than not to be ultimately sustained. The company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

42     THE LUBRIZOL CORPORATION

Net Income (Loss) per Share Attributable to The Lubrizol Corporation – Net income (loss) per share attributable to The Lubrizol Corporation is computed by dividing net income (loss) attributable to The Lubrizol Corporation by the weighted-average common shares of The Lubrizol Corporation outstanding during the period, including contingently issuable shares. Net income (loss) per diluted share attributable to The Lubrizol Corporation includes the dilutive impact resulting from outstanding stock options and awards. No dilutive impact is reflected in periods when a net loss is reported. Per share amounts are computed as follows:

	2010		2009		2008
Numerator (in millions):
Net income (loss) attributable to The Lubrizol Corporation	$	732.2	$	500.8	$	(66.1	)
Denominator (in millions of shares):
Weighted-average common shares outstanding		67.3		68.1		68.1
Dilutive effect of stock options and awards		1.5		0.9		–
Denominator for net income per share, diluted		68.8		69.0		68.1
Net income (loss) per share attributable to
The Lubrizol Corporation, basic	$	10.88	$	7.36	$	(0.97	)
Net income (loss) per share attributable to
The Lubrizol Corporation, diluted	$	10.64	$	7.26	$	(0.97	)

Options to purchase 0.7 million and 0.6 million shares were excluded from the diluted earnings per share calculations because they were anti-dilutive for the years ended December 31, 2009 and 2008, respectively.

Reclassifications – Certain prior year amounts have been reclassified to conform to the current year presentation.

New Accounting Standards

Accounting Standards Adopted in 2010

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-6, “Improving Disclosures about Fair Value Measurements.” This update requires additional disclosure within the roll forward of activity for assets and liabilities measured at fair value on a recurring basis, including transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy and the separate presentation of purchases, sales, issuances and settlements of assets and liabilities within Level 3 of the fair value hierarchy. In addition, the update requires enhanced disclosures of the valuation techniques and inputs used in the fair value measurements within Levels 2 and 3. The new disclosure requirements are effective for interim and annual periods beginning after December 15, 2009, except for the disclosure of purchases, sales, issuances and settlements of Level 3 measurements, which are effective for fiscal years beginning after December 15, 2010. The company adopted the required provisions of ASU 2010-6 on January 1, 2010. Refer to Note 12 for further discussion. The company does not expect the adoption of the remaining provisions of this update to have a material effect on its consolidated financial statements.

In December 2009, the FASB issued ASU 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” This update eliminates the exception to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. This update also contains a new requirement that any term, transaction or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in determining whether a company is the primary beneficiary of a variable interest entity. The adoption of this update on January 1, 2010, did not have an effect on the company’s consolidated financial statements.

In December 2009, the FASB issued ASU 2009-16, “Accounting for Transfers of Financial Assets.” This update eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria and changes the initial measurement of a transferor’s interest in transferred financial assets. The adoption of this update on January 1, 2010, did not have an effect on the company’s consolidated financial statements.

THE LUBRIZOL CORPORATION     43

Accounting Standards Not Yet Adopted

In October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue Arrangements, a Consensus of the FASB Emerging Issues Task Force.” ASU 2009-13 allows companies to allocate consideration in multiple deliverable arrangements based on the company’s best estimate of selling price when vendor specific objective evidence or vendor objective evidence of the fair value of deliverables is not available. In addition, the residual method of allocating consideration to delivered items is no longer permitted. This update is effective for fiscal years beginning on or after June 15, 2010, with early application permitted. The company is evaluating the impact of this update on its consolidated financial statements.

Note 3 – SEGMENT AND GEOGRAPHIC INFORMATION

The company is organized into two operating and reportable segments: Lubrizol Additives and Lubrizol Advanced Materials. Lubrizol Additives consists of two product lines: (i) engine additives and (ii) driveline and industrial additives. Engine additives is comprised of additives for lubricating engine oils, such as for gasoline, diesel, marine and stationary gas engines, and additives for fuels, refinery and oil field chemicals. Driveline and industrial additives is comprised of additives for driveline oils, such as automatic transmission fluids, gear oils and tractor lubricants, and industrial additives, such as additives for hydraulic, grease and metalworking fluids, as well as compressor lubricants. Both product lines sell viscosity modifiers, as well as provide services for supply chain and knowledge center management.

The Lubrizol Advanced Materials segment consists of three product lines: (i) engineered polymers, (ii) Noveon^® consumer specialties and (iii) performance coatings. The engineered polymers product line includes products such as Estane^® thermoplastic polyurethane and TempRite^® engineered polymers. Engineered polymers products are sold to a diverse customer base comprised of major manufacturers in the construction, automotive, telecommunications, electronics and recreation industries. The Noveon consumer specialties product line includes acrylic thickeners, film formers, fixatives, emollients, silicones, specialty surfactants, methyl glucoside, lanolin derivatives and cassia hydrocolloids. The company markets products in the Noveon consumer specialties product line to major manufacturers of cosmetics, personal care and household products. The performance coatings product line includes high-performance polymers and additives for specialty paper, graphic arts, paints, textiles and coatings applications.

The company primarily evaluates performance and allocates resources based on segment operating income as well as projected future performance. Segment operating income is defined as revenues less expenses identifiable to the product lines included within each segment. Segment operating income reconciles to consolidated income before income taxes by deducting corporate expenses and other income that are not attributed to the segments, the write-off of acquired IPR&D, restructuring and impairment charges and net interest expense.

44     THE LUBRIZOL CORPORATION

The following table summarizes the results of the company’s reportable segments for the years ended December 31, 2010, 2009 and 2008:

(In Millions of Dollars)	2010			2009			2008
Lubrizol Additives:
Revenues from external customers	$	3,884.3		$	3,283.9		$	3,541.5
Equity earnings and gain on sale of nonconsolidated companies		5.2			9.0			2.3
Depreciation		79.4			80.5			77.4
Amortization of intangibles		5.8			5.9			7.8
Operating income		971.2			787.8			434.5
Total assets		1,998.7			1,751.7			1,853.8
Capital expenditures		118.6			83.5			95.5
Lubrizol Advanced Materials:
Revenues from external customers	$	1,533.5		$	1,302.4		$	1,486.3
Depreciation		62.9			63.1			66.0
Amortization of intangibles		19.1			19.3			19.2
Operating income		227.5			168.7			88.8
Total assets		1,802.7			1,802.6			1,843.2
Capital expenditures		49.9			47.2			90.7
Corporate:
Depreciation	$	1.8		$	1.5		$	1.5
Total assets		1,165.6			1,215.7			453.5
Capital expenditures		7.4			9.2			16.4
Reconciliation to income before income taxes:
Segment operating income	$	1,198.7		$	956.5		$	523.3
Corporate expenses		(94.9	)		(95.6	)		(60.7	)
Corporate other income (expense) – net		6.2			(1.7	)		15.7
Write-off of acquired IPR&D		—			—			(1.6	)
Restructuring and impairment charges		(11.7	)		(30.4	)		(394.0	)
Interest expense – net		(94.0	)		(103.0	)		(65.7	)
Income before income taxes	$	1,004.3		$	725.8		$	17.0

Segment assets include receivables, inventories and long-lived assets including goodwill and intangible assets. Corporate assets include cash and cash equivalents and other current and noncurrent assets.

Revenues from external customers by product line are as follows:

(In Millions of Dollars)	2010		2009		2008
Engine additives	$	2,496.6	$	2,221.7	$	2,258.7
Driveline and industrial additives		1,387.7		1,062.2		1,282.8
Total Lubrizol Additives		3,884.3		3,283.9		3,541.5
Engineered polymers		628.6		498.1		567.4
Noveon consumer specialties		456.0		417.7		408.3
Performance coatings		448.9		386.6		510.6
Total Lubrizol Advanced Materials		1,533.5		1,302.4		1,486.3
Total revenues from external customers	$	5,417.8	$	4,586.3	$	5,027.8

The company’s sales and receivables are concentrated in the oil and chemical industries. Lubrizol Additives’ customers consist primarily of oil refiners and independent oil blenders located in more than 100 countries. The company’s 10 largest customers, most of which are multinational oil companies, comprised approximately 39%, 39% and 38% of consolidated revenues in 2010, 2009 and 2008, respectively. In 2010, 2009 and 2008, no single customer accounted for more than 10% of consolidated revenues.

THE LUBRIZOL CORPORATION     45

Revenues are attributable to countries based on the location of the customer. The United States is the only country where sales to external customers comprise in excess of 10% of the company’s consolidated revenues. Revenues from external customers by geographic zone are as follows:

(In Millions of Dollars)	2010		2009		2008
United States	$	1,761.9	$	1,528.6	$	1,710.1
Canada		156.9		150.8		184.8
Europe		1,565.2		1,332.4		1,576.7
Asia-Pacific / Middle East		1,529.0		1,227.3		1,176.8
Latin America		404.8		347.2		379.4
Total revenues from external customers	$	5,417.8	$	4,586.3	$	5,027.8

The company’s property and equipment are located primarily in the following countries at December 31:

(In Millions of Dollars)	2010		2009
United States	$	719.0	$	719.2
France		136.9		133.9
China		97.8		92.3
Belgium		73.8		84.7
United Kingdom		41.8		42.2
India		27.7		26.4
Other		86.5		88.9
Total property and equipment - net	$	1,183.5	$	1,187.6

Note 4 – ACQUISITIONS

On December 31, 2008, the company completed the acquisition of the thermoplastic polyurethane business of The Dow Chemical Company for approximately $59.9 million. The acquisition included technology, trade names, customer lists and manufacturing know-how. As part of the transaction, the company also acquired a manufacturing facility in La Porte, Texas, which included equipment and inventory. The purchase price allocation for this acquisition included goodwill of $2.4 million and intangible assets of $19.4 million, which included $1.6 million of in-process research and development.

On October 10, 2008, the company completed the acquisition of the thermoplastic polyurethane business of SK Chemicals Co., Ltd. for approximately $5.0 million, of which $2.5 million was paid in 2010. The acquisition included equipment, technology, customer lists and manufacturing know-how. The purchase price allocation for this acquisition included goodwill of $0.3 million and intangible assets of $0.6 million.

The pro forma impacts of acquisitions in 2008 were immaterial to the company’s consolidated financial statements.

Note 5 – INVENTORIES

(In Millions of Dollars)	2010		2009
Finished products	$	462.4	$	369.9
Products in process		168.5		111.3
Raw materials		151.6		113.4
Supplies		39.3		35.9
	$	821.8	$	630.5

Inventories valued using the LIFO method were 36% and 37% of consolidated inventories at December 31, 2010 and 2009, respectively. The current replacement cost of these inventories exceeded the LIFO cost by $169.4 million and $137.1 million at December 31, 2010 and 2009, respectively. During the year ended December 31, 2009, a reduction in inventory resulted in the liquidation of LIFO inventory quantities carried at higher costs and increased cost of sales by $6.0 million.

46     THE LUBRIZOL CORPORATION

Note 6 – PROPERTY AND EQUIPMENT – AT COST

(In Millions of Dollars)	2010		2009
Land and improvements	$	180.1	$	178.8
Buildings and improvements		507.2		508.5
Machinery and equipment		2,105.1		2,106.6
Software		69.7		68.1
Construction in progress		119.5		98.7
	$	2,981.6	$	2,960.7

Depreciation expense of property and equipment was $144.1 million, $145.1 million and $144.9 million during 2010, 2009 and 2008, respectively.

Note 7 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill arising from businesses acquired is assigned to the reporting units that are expected to benefit from the synergies of the acquisition. A reporting unit is either at the operating segment level or a component one level below an operating segment that constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The company has determined that the Lubrizol Additives operating segment constitutes a reporting unit, and that the Estane engineered polymers business, TempRite engineered polymers business, Noveon consumer specialties product line, and performance coatings product line within the Lubrizol Advanced Materials operating segment constitute separate reporting units. Assets and liabilities, including deferred income taxes, are assigned to reporting units if the asset or liability relates to the operations of a reporting unit and is considered in determining the fair value of the reporting unit. Cash and debt obligations are excluded from the carrying value of reporting units. Goodwill is tested annually and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The company has elected October 1 as the annual evaluation date to test for potential goodwill impairment.

The company uses a discounted cash flow analysis to determine the fair value of each reporting unit, which considers forecasted cash flows discounted at an estimated weighted average cost of capital. The weighted average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market participants of a business enterprise, with the weighting of returns based on the capitalization of comparable companies.

No impairment of goodwill was identified in connection with the 2010 or 2009 annual impairment tests. After performing the annual goodwill impairment test as of October 1, 2008, the company determined that $363.0 million of goodwill was impaired as the carrying values of goodwill within the Estane, TempRite and performance coatings reporting units exceeded their fair values. The impairment charge included the partial impairment of the goodwill of the Estane and TempRite reporting units and the full impairment of the goodwill of the performance coatings reporting unit. The impairment charge for the Estane reporting unit was driven mainly by the increase in the cost of capital in the fourth quarter of 2008. The impairment charge for the TempRite reporting unit was driven mainly by the increase in the cost of capital in the fourth quarter of 2008 and, to a lesser extent, a reduction in the reporting unit’s near-term earnings outlook. The impairment charge for the performance coatings reporting unit was driven mainly by the reporting unit’s weak performance and outlook in light of economic conditions. The goodwill impairment charge was recorded within the restructuring and impairment charges caption in the consolidated statements of operations.

THE LUBRIZOL CORPORATION     47

The carrying amount of goodwill by reporting segment follows:

(In Millions of Dollars)	Lubrizol Advanced Materials			Lubrizol Additives			Total
Balance, December 31, 2008
Goodwill	$	962.0		$	183.1		$	1,145.1
Accumulated impairment losses		(363.0	)		—			(363.0	)
		599.0			183.1			782.1
Purchase adjustments		(0.3	)		—			(0.3	)
Translation adjustments		7.0			1.9			8.9
Balance, December 31, 2009
Goodwill		968.7			185.0			1,153.7
Accumulated impairment losses		(363.0	)		—			(363.0	)
		605.7			185.0			790.7
Goodwill related to sale of a business		(4.6	)		—			(4.6	)
Translation adjustments		(18.9	)		(1.6	)		(20.5	)
Balance, December 31, 2010
Goodwill		945.2			183.4			1,128.6
Accumulated impairment losses		(363.0	)		—			(363.0	)
	$	582.2		$	183.4		$	765.6

Intangible Assets

The company’s indefinite-lived intangible assets include certain trademarks that are tested for impairment each year as of October 1 or more frequently if impairment indicators arise. No impairment of indefinite-lived trademarks was identified in connection with the 2010 or 2008 annual impairment tests. An impairment charge of $0.3 million was recorded in 2009 as a result of the decline in fair value of an indefinite-lived trademark in the performance coatings product line. The impairment charge was recorded within the restructuring and impairment charges caption in the consolidated statements of operations.

The following table shows the components of identifiable intangible assets at December 31, 2010 and 2009:

			2010				2009
(In Millions of Dollars)	Weighted Average Useful Life		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists		17 years	$	189.5	$	68.1	$	193.4	$	57.5
Technology		15 years		133.8		58.2		134.0		48.5
Trademarks		16 years		29.7		11.6		31.1		10.3
Patents		11 years		10.8		6.9		11.2		6.1
Other		8 years		1.2		0.5		1.2		0.3
Total amortized intangible assets				365.0		145.3		370.9		122.7
Non-amortized trademarks				79.7		–		82.5		–
Total			$	444.7	$	145.3	$	453.4	$	122.7

Annual intangible amortization expense associated with these intangible assets for the next five years will approximate $24.4 million in 2011, $24.0 million in 2012, $23.8 million in 2013, $22.8 million in 2014 and $22.6 million in 2015.

48     THE LUBRIZOL CORPORATION

Note 8 – DEBT

The company’s debt is comprised of the following at December 31, 2010 and 2009:

(In Millions of Dollars)	2010		2009
5.5% notes, due 2014, net of original issue discount of $1.3 and $1.6 at December 31, 2010 and 2009, respectively, and fair value adjustments for unrealized gains on derivative instruments of $9.3 and $3.3 at December 31, 2010 and 2009, respectively	$	458.0	$	451.7
8.875% notes, due 2019, net of original issue discount of $3.3 and $3.5 at December 31, 2010 and 2009, respectively		496.7		496.5
7.25% debentures, due 2025		100.0		100.0
6.5% debentures, due 2034, net of original issue discount of $4.5 and $4.6 at December 31, 2010 and 2009, respectively		295.5		295.4
Debt supported by banking arrangements:
Euro revolving credit borrowing, at EURIBOR plus 3.00% (3.625% at December 31, 2009)		–		45.8
Other		1.8		1.2
		1,352.0		1,390.6
Less: Current portion of long-term debt		0.4		0.3
Total long-term debt	$	1,351.6	$	1,390.3

The scheduled principal payments for all outstanding debt are $0.4 million in 2011, $0.4 million in 2012, $0.2 million in 2013, $450.2 million in 2014, $0.3 million in 2015 and $900.3 million thereafter.

In July 2010, the company entered into a five-year, unsecured $500.0 million revolving credit facility expiring in July 2015. In conjunction with this facility, the company terminated the $350.0 million revolving credit facility that would have expired in September 2011. The facility permits the company to borrow at variable rates based upon LIBOR or the lenders’ base rate, as defined in the credit agreement, plus a specified spread. The spread is dependent on the company’s long-term unsecured senior debt rating from Standard and Poor’s and Moody’s Investors Service. The company may request an increase of $25.0 million or more to the facility amount once each year, up to an aggregate maximum of $750.0 million, subject to approval by the lenders. At December 31, 2010, the company had $500.0 million available under the revolving credit facility.

In July 2009, the company entered into a three-year, unsecured €150.0 million revolving credit facility expiring in July 2012. The facility permits the company to borrow at variable rates based on EURIBOR for euro borrowings or LIBOR for dollar or pound sterling borrowings plus a specified credit spread. The company may elect to increase the facility amount once each year in increments of €10.0 million, up to an aggregate maximum of €200.0 million, subject to approval by the lenders. At December 31, 2010, the company had €150.0 million ($200.5 million) available under the revolving credit facility.

In March 2009, the company repurchased $177.0 million of the 4.625% notes due October 1, 2009, at a purchase price of 100.5% per note, resulting in a loss on retirement of $1.3 million. This loss on retirement was included in interest expense in the consolidated statements of operations.

In February 2009, the company entered into a $150.0 million term loan that it subsequently repaid in full in December 2009. The term loan was an unsecured, senior obligation of the company that bore interest based upon LIBOR plus a specified credit spread. The term loan was prepaid without penalty.

In January 2009, the company issued senior unsecured notes having an aggregate principal amount of $500.0 million at a price of 99.256%. The notes mature in February 2019 and bear interest at 8.875% per annum, payable semi-annually on February 1 and August 1 of each year. Including debt issuance costs, original issue discounts and losses on Treasury rate lock agreements, the notes have an effective annualized interest rate of approximately 9.2%. The notes include a step-up in interest payable in the event of certain ratings downgrades by credit rating agencies. Upon the occurrence of a change of control triggering event, as defined in the indenture, the company would be required to make an offer to repurchase the notes at 101% of their principal amount.

In September 2004, the company issued senior unsecured notes and debentures having an aggregate principal amount of $1,150.0 million including: $400.0 million 4.625% notes due October 1, 2009; $450.0 million 5.5% notes due October 1, 2014; and $300.0 million 6.5% debentures due October 1, 2034. The price to the public was 99.911% per 2009 note, 99.339% per 2014 note and 98.341% per 2034 debenture. The resulting original issue discount from the issuance of these notes and debentures of $8.3 million was recorded as a

THE LUBRIZOL CORPORATION     49

reduction of the underlying debt issuances and is being amortized over the life of the debt using the effective interest method. Interest is payable semi-annually on April 1 and October 1 of each year. The notes and debentures have no sinking fund requirements. Including debt issuance costs, original issue discounts and losses on Treasury rate lock agreements, the 2009 notes, 2014 notes and 2034 debentures have effective annualized interest rates of approximately 5.3%, 6.3% and 6.7%, respectively, with a weighted-average interest rate for the aggregate issuances of approximately 6.1%.

In June 1995, the company issued debentures in an aggregate principal amount of $100.0 million. These debentures are unsecured, senior obligations of the company that mature on June 15, 2025, and bear interest at an annualized rate of 7.25%, payable semi-annually on June 15 and December 15 of each year. The debentures are not redeemable prior to maturity and are not subject to any sinking fund requirements.

The U.S. and euro bank credit agreements contain customary affirmative covenants including, among others, compliance with laws, payment of taxes, maintenance of insurance, conduct of business, keeping of books and records, maintenance of properties and ensuring the credit facilities receive the same rights and privileges as any future senior unsecured debt. The agreements also contain customary negative covenants including, among others, restrictions on: liens and encumbrances, sale of assets and affiliate transactions. Additionally, the company is required to comply with financial ratios of debt to consolidated earnings before interest, income taxes, depreciation and amortization, extraordinary, unusual or non-recurring non-cash gains or losses, including the sale of property and equipment and goodwill impairments, and non-cash gains or losses from less than wholly owned subsidiaries and investments (Consolidated EBITDA), as defined in the credit agreements, and Consolidated EBITDA to interest expense. At December 31, 2010, the credit agreements required that the ratio of debt to Consolidated EBITDA be less than 3.5:1 and the ratio of Consolidated EBITDA to interest expense be greater than 3.5:1. At December 31, 2010, the company maintained a ratio of debt to Consolidated EBITDA of 1.1:1 and a ratio of Consolidated EBITDA to interest expense of 12.5:1.

The bank credit agreements also contain customary events of default including, among others, failure to make payment when due, materially incorrect representations and warranties, breach of covenants, events of bankruptcy, the occurrence of one or more unstayed judgments in excess of $25.0 million (under the euro bank credit agreement) or $50.0 million (under the U.S. bank credit agreement) that is not covered by an acceptable policy of insurance, a party obtaining a beneficial ownership in excess of 20% of the company’s voting stock, or the incurrence of $25.0 million of liabilities related to violations of employee benefit plan regulations or the withdrawal or termination of a multiemployer benefit plan. At December 31, 2010, the company was in compliance with all of its covenants and had not committed any acts of default.

The estimated fair value of the company’s debt instruments at December 31, 2010 and 2009, was $1,549.6 million and $1,561.8 million, respectively. The fair value of the company’s debt instruments was estimated using prevailing market interest rates on long-term debt with similar creditworthiness, terms and maturities.

At both December 31, 2010 and 2009, the company had $31.6 million of contingent obligations under standby letters of credit issued in the ordinary course of business to financial institutions, customers and insurance companies to secure short-term support for a variety of commercial transactions, insurance and benefit programs.

Interest paid, net of amounts capitalized, was $92.0 million, $84.5 million and $71.4 million during 2010, 2009 and 2008, respectively. The amount of interest capitalized was $1.7 million, $2.5 million and $4.1 million during 2010, 2009 and 2008, respectively.

Note 9 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, the company uses derivative financial instruments, including interest rate swap agreements, Treasury rate lock agreements, commodity purchase contracts and foreign currency forward contracts, to manage its risks. The company’s objective in managing its exposure to changes in interest rates is to limit the impact of such changes on the fair value of its debt. The company manages its interest rate risk using a mix of fixed-rate and variable-rate debt. To achieve this mix, the company may enter into interest rate swap agreements whereby the company agrees to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. The company also is exposed to interest rate risk on forecasted debt issuances. To manage this risk, the company may use Treasury rate lock agreements to fix the rate used to determine the interest payments related to all or a portion of the forecasted debt issuance. The company’s objective in managing its exposure to changes in commodity prices is to reduce the volatility of utility expense on earnings through the use of commodity purchase contracts. The company’s objective in managing its exposure to changes in foreign currency exchange rates is to reduce the volatility on earnings and cash flow of such changes through the use of foreign currency forward contracts. The company does not hold derivatives for trading purposes.

50     THE LUBRIZOL CORPORATION

The company designated its interest rate swap agreements as fair value hedges of fixed-rate borrowings, commodity purchase contracts as cash flow hedges of forecasted purchases of natural gas and Treasury rate lock agreements as cash flow hedges of the semi-annual interest payments associated with forecasted debt issuances. Foreign currency forward contracts are not designated as hedging instruments. The company’s derivative instruments do not contain any credit-risk-related contingent features.

The following table shows the location and fair value of derivative instruments reported in the consolidated balance sheets at December 31, 2010 and 2009 (in millions of dollars):

Asset Derivatives
	Balance Sheet Location		2010		2009
Derivatives designated as hedging instruments:
Commodity purchase contracts		Other current assets	$	–	$	0.1
Interest rate swap agreements		Other assets		9.6		3.3
			$	9.6	$	3.4
Liability Derivatives
	Balance Sheet Location		2010		2009
Derivatives designated as hedging instruments:
Commodity purchase contracts		Accrued expenses and other current liabilities	$	2.2	$	2.6
Interest rate swap agreements		Noncurrent liabilities		0.3		–
			$	2.5	$	2.6
Derivatives not designated as hedging instruments:
Foreign currency forward contracts		Accrued expenses and other current liabilities	$	–	$	0.7

Fair Value Hedges

In December 2010, the company entered into an interest rate swap agreement with a notional amount of $50.0 million that effectively converted the interest on $50.0 million of outstanding 5.5% notes due 2014 to a variable rate of six-month LIBOR plus 343 basis points. In May and June 2009, the company entered into three interest rate swap agreements, each with a notional amount of $50.0 million, that effectively converted the interest on $150.0 million of outstanding 5.5% notes due 2014 to a variable rate of six-month LIBOR plus 159 basis points. In November 2004, the company entered into four interest rate swap agreements, each with a notional amount of $50.0 million, that effectively converted the interest on $200.0 million of outstanding 4.625% notes due 2009 to a variable rate of six-month LIBOR plus 40 basis points. In June 2004, the company entered into two interest rate swap agreements, each with a notional amount of $100.0 million, that effectively converted the interest on $200.0 million of then outstanding 5.875% notes due 2008 to a variable rate of six-month LIBOR plus 111 basis points. These swaps are designated as fair value hedges of the underlying fixed-rate debt obligations.

The effective portions of gains and losses on interest rate swap agreements designated as fair value hedges and the offsetting losses or gains on the hedged liabilities recognized in current earnings during 2010, 2009 and 2008 were as follows (in millions of dollars):

Derivative	Location of Gain (Loss) Recognized in Earnings	2010		2009			2008
Interest rate swap agreements	Interest expense		$   6.0	$	(1.0	)	$	4.2
Hedged Item	Location of Gain (Loss) Recognized in Earnings	2010		2009			2008
Long-term debt	Interest expense		$ (6.0)	$	1.0		$	(4.2	)

Cash Flow Hedges

The company uses commodity purchase contracts to manage its exposure to changes in the price for natural gas. At December 31, 2010 and 2009, the notional amounts of open contracts totaled $7.5 million and $15.9 million, respectively. Contract maturities are less than 24 months.

THE LUBRIZOL CORPORATION     51

In November 2008, the company entered into several Treasury rate lock agreements with an aggregate notional principal amount of $200.0 million, all maturing on March 31, 2009, whereby the company had locked in Treasury rates relating to a portion of the then anticipated debt issuance in the first quarter of 2009. These Treasury rate lock agreements were designated as cash flow hedges of the semi-annual interest payments associated with the forecasted debt issuance. In January 2009, the company incurred a pre-tax loss of $16.7 million on the termination of these agreements in conjunction with the issuance of the 8.875% notes.

In June 2004, the company entered into several Treasury rate lock agreements with an aggregate notional principal amount of $900.0 million, all maturing on September 30, 2004, whereby the company had locked in Treasury rates relating to a portion of the then anticipated debt issuance. These Treasury rate lock agreements were designated as cash flow hedges of the semi-annual interest payments associated with the forecasted debt issuance. In September 2004, the company incurred a pre-tax loss of $73.9 million on the termination of these agreements.

Losses upon termination of Treasury rate lock agreements are reported as a component within accumulated other comprehensive loss (AOCL) and reclassified into earnings over the term of the associated debt issuance. The unamortized balance of the Treasury rate lock agreements recorded in AOCL, net of tax, was $38.6 million and $41.6 million at December 31, 2010 and 2009, respectively.

The effective portions of gains and (losses) on derivative instruments designated as cash flow hedges recognized in other comprehensive income, net of tax, during 2010, 2009 and 2008 were as follows (in millions of dollars):

Derivative	2010			2009			2008
Commodity purchase contracts	$	(2.7	)	$	(2.9	)	$	(3.7	)
Treasury rate lock agreements		–			2.1			(12.8	)
	$	(2.7	)	$	(0.8	)	$	(16.5	)

The effective portions of pre-tax gains and (losses) on derivative instruments designated as cash flow hedges reclassified from AOCL into earnings during 2010, 2009 and 2008 were as follows (in millions of dollars):

Derivative	Location of Gain (Loss) Reclassified from AOCL into Earnings		2010		2009		2008
Commodity purchase contracts		Cost of sales	$	(4.7)	$	(8.9)	$	0.5
Treasury rate lock agreements		Interest expense		(4.8)		(5.8)		(5.4)
			$	(9.5)	$	(14.7)	$	(4.9)

The company estimates that it will reclassify into earnings during the next twelve months losses of approximately $5.3 million ($3.4 million net of tax) and $2.2 million ($1.4 million net of tax) from the amounts recorded in AOCL for Treasury rate lock agreements and commodity purchase contracts, respectively.

Derivative Instruments Not Designated as Hedges

The company selectively uses foreign currency forward contracts, in addition to working capital management, pricing and sourcing, to minimize the potential effect of currency changes on its earnings. The company’s principal currency exposures are the euro, the pound sterling, the Japanese yen, the Chinese yuan and the Brazilian real. The company does not designate these foreign currency forward contracts as hedges, as the objective for entering into these contracts is to minimize the amount of transaction gains or losses that are included in current earnings arising from exchange rate changes. The maximum amount of foreign currency forward contracts outstanding at any one time was $23.5 million, $33.3 million and $27.5 million during 2010, 2009 and 2008, respectively. At December 31, 2010 and 2009, the notional amounts of open short-term forward contracts to buy or sell currencies were $4.9 million and $10.2 million, respectively. The company recognized (losses) gains on foreign currency forward contracts of $(0.7) million, $(2.1) million and $2.1 million during 2010, 2009 and 2008, respectively.

52     THE LUBRIZOL CORPORATION

Note 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

(In Millions of Dollars)	2010		2009
Employee compensation	$	150.4	$	142.8
Taxes other than income		34.2		36.8
Interest		29.8		30.2
Income taxes		38.7		29.9
Sales allowances and rebates		23.1		22.3
Dividends payable		23.1		21.2
Other		52.0		54.2
	$	351.3	$	337.4

Note 11 – EQUITY

The company has 147.0 million authorized shares consisting of 2.0 million shares of serial preferred stock, 25.0 million shares of serial preference shares and 120.0 million common shares, each of which is without par value. Accumulated other comprehensive loss shown in the consolidated statements of equity at December 31, 2010 and 2009, is comprised of the following:

(In Millions of Dollars)	Foreign Currency Translation Adjustment			Cash Flow Hedges			Unrecognized Pension Plan and Other Postretirement Benefit Costs			Accumulated Other Comprehensive (Loss) Income
Balance, December 31, 2007	$	138.5		$	(38.7	)	$	(40.8	)	$	59.0
Other comprehensive loss:
Pretax		(86.5	)		(21.2	)		(166.2	)		(273.9	)
Tax benefit		–			7.9			56.3			64.2
Total		(86.5	)		(13.3	)		(109.9	)		(209.7	)
Less: Amounts attributable to noncontrolling interests		(3.3	)		–			(0.1	)		(3.4	)
Balance, December 31, 2008		55.3			(52.0	)		(150.6	)		(147.3	)
Other comprehensive income:
Pretax		39.2			13.6			18.3			71.1
Tax provision		–			(4.8	)		(5.7	)		(10.5	)
Total		39.2			8.8			12.6			60.6
Less: Amounts attributable to noncontrolling interests		1.4			–			(0.1	)		1.3
Balance, December 31, 2009		93.1			(43.2	)		(137.9	)		(88.0	)
Other comprehensive (loss) income:
Pretax		(49.5	)		5.2			(4.4	)		(48.7	)
Tax (provision) benefit		–			(2.0	)		3.9			1.9
Total		(49.5	)		3.2			(0.5	)		(46.8	)
Less: Amounts attributable to noncontrolling interests		2.8			–			(0.1	)		2.7
Balance, December 31, 2010	$	40.8		$	(40.0	)	$	(138.3	)	$	(137.5	)

Note 12 – FAIR VALUE MEASUREMENTS

The company estimates the fair value of financial instruments using available market information and generally accepted valuation methodologies. Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are classified into three levels: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

THE LUBRIZOL CORPORATION     53

The following table shows the company’s financial assets and liabilities accounted for at fair value on a recurring basis at December 31, 2010:

(In Millions of Dollars)	December 31, 2010		Level 1		Level 2		Level 3
Assets:
Money market mutual funds (1)	$	681.2	$	681.2	$	–	$	–
Interest rate swaps (2)		9.6		–		9.6		–
	$	690.8	$	681.2	$	9.6	$	–
Liabilities:
Commodity purchase contracts (3)	$	2.2	$	–	$	2.2	$	–
Interest rate swaps (2)		0.3		–		0.3		–
	$	2.5	$	–	$	2.5	$	–

The following table shows the company’s financial assets and liabilities accounted for at fair value on a recurring basis at December 31, 2009:

(In Millions of Dollars)	December 31, 2009		Level 1		Level 2		Level 3
Assets:
Money market mutual funds (1)	$	700.7	$	697.5	$	3.2	$	–
Interest rate swaps (2)		3.3		–		3.3		–
Commodity purchase contracts (3)		0.1		–		0.1		–
	$	704.1	$	697.5	$	6.6	$	–
Liabilities:
Commodity purchase contracts (3)	$	2.6	$	–	$	2.6	$	–
Foreign currency forward contracts (4)		0.7		–		0.7		–
	$	3.3	$	–	$	3.3	$	–

(1) The company records the fair value of money market mutual funds within cash and cash equivalents and other assets. The fair value of money market mutual funds using quoted prices reported on various U.S. and international stock exchanges is classified as Level 1. The fair value of money market mutual funds held in inactive markets is corroborated through quoted prices in active markets for the fund’s underlying holdings, considering nonperformance and liquidity risks, and is classified as Level 2.

(2) The fair value of interest rate swaps is calculated using models that discount the cash flows at each coupon adjustment date using the then-applicable forward interest rates.

(3) The fair value of commodity purchase contracts is based on market forward rates and reflects the present value of the amount that the company would pay or receive for contracts involving the same notional amounts and maturity dates.

(4) The fair value of foreign currency forward contracts is based on the difference between the contract prices and market forward rates.

The following table presents assets accounted for at fair value on a nonrecurring basis at December 31, 2009:

(In Millions of Dollars)	December 31, 2009		Level 1		Level 2		Level 3
Assets:
Long-lived assets	$	3.8	$	–	$	–	$	3.8
Assets held for sale		0.9		–		–		0.9
Indefinite-lived intangible assets		0.2		–		–		0.2
	$	4.9	$	–	$	–	$	4.9

During 2009, long-lived assets with a carrying value of $15.3 million were written down to their fair value of $3.8 million, resulting in an impairment loss of $11.5 million. The fair value of long-lived assets was determined by discounting the expected future cash flows attributable to the asset groups over their remaining useful lives. During 2009, assets held for sale with a carrying value of $2.2 million were written down to their fair value of $0.9 million, resulting in an impairment loss of $1.3 million. Assets held for sale include land and buildings and are valued using the company’s expected selling price, which is based on current market conditions and independent broker opinions, less costs to market and sell the assets. Refer to Note 15 for a further discussion of these impairment charges. During 2009, an indefinite-lived trademark with a carrying value of $0.5 million was written down to its fair value of $0.2 million, resulting in an impairment loss of $0.3 million.

54     THE LUBRIZOL CORPORATION

Note 13 – BENEFIT PLANS

Pension Benefits

The company has noncontributory defined benefit pension plans covering most employees. Pension benefits under these plans are based on years of service and compensation.

During 2009, the company amended its non-union defined benefit pension plan in the United States to close the plan to new participants effective January 1, 2010. As part of this change, the company adopted a new defined contribution plan in the United States for the benefit of non-union employees hired after January 1, 2010.

The change in the projected benefit obligation and plan assets for 2010 and 2009 and the amounts recognized in the consolidated balance sheets at December 31 for the company’s defined benefit pension plans are as follows:

(In Millions of Dollars)	2010									2009
	U.S. Plans			Non- U.S. Plans			Total			U.S. Plans			Non- U.S. Plans			Total
Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$	496.5		$	284.8		$	781.3		$	482.4		$	237.8		$	720.2
Service cost		20.4			8.7			29.1			21.5			8.2			29.7
Interest cost		27.9			15.0			42.9			27.7			14.4			42.1
Plan participants’ contributions		–			0.8			0.8			–			0.6			0.6
Actuarial loss		35.0			12.7			47.7			0.8			16.2			17.0
Currency exchange rate change		–			(5.3	)		(5.3	)		–			22.7			22.7
Plan amendments		–			1.0			1.0			0.7			0.1			0.8
Special termination benefits		–			–			–			–			0.3			0.3
Benefits paid		(11.2	)		(30.5	)		(41.7	)		(36.6	)		(15.5	)		(52.1	)
Projected benefit obligation at end of year		568.6			287.2			855.8			496.5			284.8			781.3
Change in Plan Assets:
Fair value of plan assets at beginning of year		260.4			211.0			471.4			221.9			157.1			379.0
Actual return on plan assets		46.2			21.8			68.0			45.7			27.1			72.8
Employer contributions		36.4			24.6			61.0			29.4			23.8			53.2
Plan participants' contributions		–			0.8			0.8			–			0.6			0.6
Currency exchange rate change		–			(3.8	)		(3.8	)		–			17.9			17.9
Benefits paid		(11.2	)		(30.5	)		(41.7	)		(36.6	)		(15.5	)		(52.1	)
Fair value of plan assets at end of year		331.8			223.9			555.7			260.4			211.0			471.4
Funded Status	$	(236.8	)	$	(63.3	)	$	(300.1	)	$	(236.1	)	$	(73.8	)	$	(309.9	)
Amounts recognized in the consolidated balance sheets:
Other assets	$	–		$	1.4		$	1.4		$	–		$	2.3		$	2.3
Accrued expenses and other current liabilities		(1.7	)		(1.0	)		(2.7	)		(2.3	)		(0.6	)		(2.9	)
Pension obligations		(235.1	)		(63.7	)		(298.8	)		(233.8	)		(75.5	)		(309.3	)
Funded Status	$	(236.8	)	$	(63.3	)	$	(300.1	)	$	(236.1	)	$	(73.8	)	$	(309.9	)

The projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $839.7 million and $538.2 million, respectively, at December 31, 2010, and $770.1 million and $457.9 million, respectively, at December 31, 2009.

The accumulated benefit obligation for all defined benefit pension plans was $689.9 million and $621.1 million at December 31, 2010 and 2009, respectively. The accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $504.4 million and $348.5 million, respectively, at December 31, 2010, and $601.8 million and $445.3 million, respectively, at December 31, 2009.

THE LUBRIZOL CORPORATION     55

Net periodic pension cost of the company’s defined benefit pension plans consists of:

(In Millions of Dollars)	2010
	U.S. Plans			Non- U.S. Plans			Total
Service cost	$	20.4		$	8.7		$	29.1
Interest cost on projected benefit obligation		27.9			15.0			42.9
Expected return on plan assets		(24.3	)		(14.5	)		(38.8	)
Amortization of prior service costs		2.4			0.5			2.9
Recognized net actuarial loss		4.7			1.8			6.5
Settlement / curtailment loss		–			7.8			7.8
Net periodic pension cost	$	31.1		$	19.3		$	50.4

	2009
(In Millions of Dollars)	U.S. Plans			Non- U.S. Plans			Total
Service cost	$	21.5		$	8.2		$	29.7
Interest cost on projected benefit obligation		27.7			14.4			42.1
Expected return on plan assets		(23.7	)		(12.7	)		(36.4	)
Amortization of prior service costs		2.4			0.4			2.8
Amortization of initial net obligation		–			0.1			0.1
Recognized net actuarial loss		4.6			1.2			5.8
Settlement / curtailment loss		–			0.4			0.4
Net periodic pension cost	$	32.5		$	12.0		$	44.5

	2008
(In Millions of Dollars)	U.S. Plans			Non- U.S. Plans			Total
Service cost	$	18.6		$	11.9		$	30.5
Interest cost on projected benefit obligation		25.7			17.4			43.1
Expected return on plan assets		(22.6	)		(14.6	)		(37.2	)
Amortization of prior service costs		2.2			0.8			3.0
Amortization of initial net obligation		–			0.1			0.1
Recognized net actuarial loss		0.9			2.0			2.9
Settlement / curtailment loss		–			5.8			5.8
Net periodic pension cost	$	24.8		$	23.4		$	48.2

The company’s weighted-average actuarial assumptions used to determine pension benefit obligations for its U.S. and non-U.S. defined benefit pension plans are as follows:

	December 31, 2010									December 31, 2009
	U.S. Plans			Non- U.S. Plans			Combined			U.S. Plans			Non- U.S. Plans			Combined
Discount rate		5.38	%		5.42	%		5.39	%		5.88	%		5.55	%		5.76	%
Rate of compensation increase		4.27	%		3.92	%		4.15	%		4.26	%		3.98	%		4.16	%

56     THE LUBRIZOL CORPORATION

The company’s weighted-average assumptions used to determine net periodic pension cost are as follows:

	2010									2009									2008
	U.S. Plans			Non- U.S. Plans			Combined			U.S. Plans			Non- U.S. Plans			Combined			U.S. Plans			Non- U.S. Plans			Combined
Discount rate		5.88	%		5.55	%		5.76	%		5.96	%		5.90	%		5.94	%		6.67	%		5.61	%		6.19	%
Expected long-term return on plan assets		8.25	%		6.75	%		7.58	%		8.25	%		6.71	%		7.61	%		8.25	%		6.86	%		7.64	%
Rate of compensation increase		4.26	%		3.98	%		4.16	%		4.27	%		4.00	%		4.18	%		4.29	%		3.97	%		4.15	%

The investment objective of the funded pension plans is to assure the timely payment of promised benefits at a minimum cost consistent with prudent standards of investment, given the adequacy of each plan’s funding and the age of each entity’s work force. The plans utilize diversified investment portfolios and seek to earn returns consistent with a reasonable level of risk. The long-term expected return on plan assets used to determine the net periodic pension cost is based upon each plan’s investment allocation and anticipated returns for specific investment classes.

As long-term asset allocation is recognized as the primary determinant of performance, the company follows an asset allocation target of 25% large-cap equity securities, 25% mid/small-cap equity securities, 20% international equity securities and 30% fixed income securities for its U.S. plans. The company employs a liability driven investment strategy for its U.S. fixed income securities that attempts to match investment cash flows with future benefit payments, thereby reducing volatility in the plans’ funded status due to interest rate changes. The weighted-average asset allocation target for non-U.S. plans is 49% equity securities and 51% fixed income securities. Fixed income securities include government and corporate debt securities and insurance contracts. Allocations are reviewed regularly and investments are rebalanced as necessary to remain within an acceptable range of the allocation targets. Approved pension plan investments include equities, fixed-income securities, real estate, cash and cash equivalent instruments and such other instruments as the company may approve. Investments in tax-exempt securities, commodities and options (other than covered calls), and the use of leverage are prohibited. Plan investment managers may use foreign currency forward contracts to hedge currency risks and interest rate swaptions to achieve the overall desired interest rate duration and positions. Any other use of derivative instruments must be approved by the company.

The market values of pension plan assets periodically are compared to the value of plan benefit obligations. The future value of assets, as calculated based on the expected long-term rate of return, also are compared to expected future plan benefit distributions and contributions to determine the sufficiency of expected plan funding levels. Investment asset allocation targets are revised as appropriate.

The following table shows the major categories of U.S. pension plan assets at December 31, 2010, accounted for at fair value:

(In Millions of Dollars)	December 31, 2010			Level 1		Level 2			Level 3
Equity securities (1):
Large cap	$	82.5		$	82.5	$	–		$	–
Mid/small cap		90.1			59.3		30.8			–
International		66.4			20.3		46.1			–
Fixed-income securities (2):
Government debt securities		27.3			–		27.3			–
Corporate debt securities		44.6			–		44.6			–
International corporate debt securities		11.6			–		11.6			–
Derivatives:
Foreign exchange contracts–assets (5)		16.7			–		16.7			–
Foreign exchange contracts–liabilities (5)		(16.6	)		–		(16.6	)		–
Cash and cash equivalents		9.2			9.2		–			–
	$	331.8		$	171.3	$	160.5		$	–

THE LUBRIZOL CORPORATION     57

The following table shows the major categories of U.S. pension plan assets at December 31, 2009, accounted for at fair value:

(In Millions of Dollars)	December 31, 2009			Level 1		Level 2			Level 3
Equity securities (1):
Large cap	$	60.7		$	60.7	$	–		$	–
Mid/small cap		64.5			42.6		21.9			–
International		51.7			12.2		39.5			–
Fixed-income securities (2):
Government debt securities		27.2			–		27.2			–
Corporate debt securities		43.4			–		43.4			–
International corporate debt securities		7.1			–		7.1			–
Derivatives:
Foreign exchange contracts–assets (5)		3.7			–		3.7			–
Foreign exchange contracts–liabilities (5)		(3.7	)		–		(3.7	)		–
Interest rate swaptions–liabilities (3)		(0.1	)		–		(0.1	)		–
Cash and cash equivalents		5.9			5.9		–			–
	$	260.4		$	121.4	$	139.0		$	–

The following table shows the major categories of non-U.S. pension plan assets at December 31, 2010, accounted for at fair value:

(In Millions of Dollars)	December 31, 2010			Level 1		Level 2			Level 3
Equity securities (1)	$	116.1		$	12.6	$	103.5		$	–
Fixed-income securities:
Government debt securities (2)		25.6			–		25.6			–
Corporate debt securities (2)		36.9			–		36.9			–
Guaranteed insurance contracts (4)		29.0			–		29.0			–
Derivatives:
Foreign exchange contracts–liabilities (5)		(0.1	)		–		(0.1	)		–
Precious metals mutual funds (1)		2.3			2.3		–			–
Real property collective funds (6)		3.3			–		–			3.3
Cash and cash equivalents		10.8			10.8		–			–
	$	223.9		$	25.7	$	194.9		$	3.3

The following table shows the major categories of non-U.S. pension plan assets at December 31, 2009, accounted for at fair value:

(In Millions of Dollars)	December 31, 2009			Level 1		Level 2			Level 3
Equity securities (1)	$	110.2		$	10.2	$	100.0		$	–
Fixed-income securities:
Government debt securities (2)		24.5			–		24.5			–
Corporate debt securities (2)		37.3			–		37.3			–
Guaranteed insurance contracts (4)		25.0			–		25.0			–
Derivatives:
Foreign exchange contracts–assets (5)		2.2			–		2.2			–
Foreign exchange contracts–liabilities (5)		(2.1	)		–		(2.1	)		–
Precious metals mutual funds (1)		1.4			1.4		–			–
Cash and cash equivalents		12.5			12.5		–			–
	$	211.0		$	24.1	$	186.9		$	–

(1) The fair value of equity securities and mutual funds using quoted prices reported on various U.S. and international stock exchanges is classified as Level 1. The fair value of common / collective equity funds determined based on the quoted prices of the underlying investments is classified as Level 2.

58     THE LUBRIZOL CORPORATION

(2) The fair value of government debt securities is determined through models that consider various assumptions, including time value, yield curves, credit ratings and current market prices. Corporate, state and political debt securities are valued using a matrix pricing in which securities are benchmarked against the treasury rate based on credit ratings.

(3) Swaptions are financial instruments that provide the option to enter into an interest rate swap contract before the start date of the swap. The fair value of interest rate swaptions is based on Black-Scholes models that incorporate the applicable forward interest rates and volatilities.

(4) The guaranteed insurance contracts invest in high quality government and corporate bonds. The fair value of guaranteed insurance contracts is determined by discounting the cash flows of the underlying investments based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer.

(5) The fair value of foreign currency forward contracts is based on the difference between the contract prices and market forward rates.

(6) The fair value of real estate collective funds is estimated using the net asset value published by the fund manager. In determining the net asset value, the fair value of each individual property owned by the fund has been estimated by an independent appraiser following established valuation procedures. Following is a reconciliation of this investment for the year ended December 31, 2010:

(In Millions of Dollars)	2010
Balance at January 1, 2010	$	–
Purchases		3.0
Actual return on assets		0.2
Currency exchange rate change		0.1
Balance at December 31, 2010	$	3.3

Postretirement Benefits

The company also provides certain non-pension postretirement benefits, primarily health care and life insurance benefits, for retired employees. The company’s defined benefit non-pension postretirement plan liabilities predominately relate to plans in the United States. Most of the employees in the United States become eligible for health care benefits upon retirement, provided service requirements are met. Employees in the United States who retired between January 1, 1992, and December 31, 2002, also are eligible for life insurance benefits. Participants contribute a portion of the cost of these benefits. The company’s non-pension postretirement benefit plans are not funded.

The change in the projected benefit obligation and plan assets for 2010 and 2009 and the amounts recognized in the consolidated balance sheets at December 31 for the company’s defined benefit non-pension postretirement plans are as follows:

(In Millions of Dollars)	Non-Pension Postretirement Plans
	2010			2009
Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$	98.1		$	87.9
Service cost		1.6			1.4
Interest cost		5.6			5.6
Plan participants’ contributions		5.7			4.3
Actuarial loss		1.2			5.0
Currency exchange rate change		0.4			2.0
Plan amendments		(2.3	)		–
Benefits paid		(11.8	)		(8.1	)
Projected benefit obligation at end of year		98.5			98.1
Change in Plan Assets:
Fair value of plan assets at beginning of year		–			–
Employer contributions		6.1			3.8
Plan participants’ contributions		5.7			4.3
Benefits paid		(11.8	)		(8.1	)
Fair value of plan assets at end of year		–			–
Funded Status	$	(98.5	)	$	(98.1	)
Net amounts recognized in the consolidated balance sheets:
Accrued expenses and other current liabilities		(5.2	)		(5.4	)
Other postretirement benefit obligations		(93.3	)		(92.7	)
Funded Status	$	(98.5	)	$	(98.1	)

THE LUBRIZOL CORPORATION     59

Net periodic non-pension postretirement benefit cost consists of:

(In Millions of Dollars)	2010			2009			2008
Service cost	$	1.6		$	1.4		$	1.8
Interest cost on projected benefit obligation		5.6			5.6			5.9
Amortization of prior service credits		(5.6	)		(7.0	)		(6.8	)
Amortization of initial net obligation		0.4			0.4			0.4
Recognized net actuarial loss		0.7			0.3			0.8
Settlement / curtailment gain		–			–			(0.6	)
Net periodic non-pension postretirement benefit cost	$	2.7		$	0.7		$	1.5

The weighted-average discount rates used to determine net periodic non-pension postretirement benefit cost were 5.89%, 6.56% and 6.45% for the years ended December 31, 2010, 2009 and 2008, respectively. The weighted-average discount rates used to determine the company’s other postretirement benefit obligations were 5.45% and 5.89% at December 31, 2010 and 2009, respectively. The weighted-average of the assumed health care cost trend rates used to determine the company’s other postretirement benefit obligations were 6.87% and 7.30% at December 31, 2010 and 2009, respectively, with subsequent annual decrements to an ultimate trend rate of 5.20% by 2015. The assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in the assumed health care cost trend rate would have the following effects as of and for the year ended December 31, 2010:

	One-Percentage-Point
(In Millions of Dollars)	Increase		Decrease
Effect on postretirement benefit obligation	$	9.7	$	(8.3	)
Effect on total service and interest cost components		0.9		(0.8	)

The amount of net loss, prior service cost and transition obligation recognized in accumulated other comprehensive loss related to the company’s defined benefit pension and other postretirement benefit plans is comprised of the following:

	Pension Plans									Non-Pension Postretirement Plans
(In Millions of Dollars)	Actuarial Net Loss			Prior Service Cost			Transition Obligation			Actuarial Net Loss			Prior Service Cost			Transition Obligation			Total
Balance at December 31, 2008	$	(145.7	)	$	(16.5	)	$	(0.1	)	$	(8.8	)	$	21.9		$	(1.4	)	$	(150.6	)
Reclassification adjustments:
Pretax		5.8			2.8			0.1			0.3			(7.0	)		0.4			2.4
Tax (provision) benefit		(2.0	)		(1.0	)		–			(0.1	)		2.5			(0.1	)		(0.7	)
Total		3.8			1.8			0.1			0.2			(4.5	)		0.3			1.7
Adjustment to recognize changes in actuarial assumptions:
Pretax		21.5			(0.7	)		–			(4.8	)		–			–			16.0
Tax (provision) benefit		(7.1	)		0.3			–			1.8			–			–			(5.0	)
Total		14.4			(0.4	)		–			(3.0	)		–			–			11.0
Balance at December 31, 2009		(127.5	)		(15.1	)		–			(11.6	)		17.4			(1.1	)		(137.9	)
Reclassification adjustments:
Pretax		14.3			2.9			–			0.7			(5.6	)		0.4			12.7
Tax (provision) benefit		(4.6	)		(1.0	)		–			(0.3	)		2.0			(0.1	)		(4.0	)
Total		9.7			1.9			–			0.4			(3.6	)		0.3			8.7
Adjustment to recognize changes in actuarial assumptions:
Pretax		(17.0	)		(1.0	)		–			(1.2	)		2.3			–			(16.9	)
Tax (provision) benefit		5.6			0.3			–			2.8			(0.9	)		–			7.8
Total		(11.4	)		(0.7	)		–			1.6			1.4			–			(9.1	)
Balance at December 31, 2010	$	(129.2	)	$	(13.9	)	$	–		$	(9.6	)	$	15.2		$	(0.8	)	$	(138.3	)

60     THE LUBRIZOL CORPORATION

The company amortizes gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over the average remaining service period of participating employees expected to receive benefits under the plans. The amount of net loss and prior service cost that is expected to be recognized as a component of net periodic pension cost in 2011 is $11.0 million and $2.6 million, respectively. The amount of net loss, prior service credit and transition obligation that is expected to be recognized as a component of net periodic non-pension postretirement benefit cost in 2011 is $0.7 million, $(5.9) million and $0.4 million, respectively.

The company’s funding policy in the United States is to contribute amounts to satisfy the funding standards of the Internal Revenue Code of 1986, as amended, and the Employee Retirement Income Security Act of 1974, as amended. Outside of the United States, the company’s policy is to fund amounts in accordance with local regulations. Several of the company’s smaller defined benefit plans are not funded. The company expects to contribute $65.0 million to its defined benefit pension plans and $5.5 million to its defined benefit non-pension postretirement plans in 2011. The expected contributions to these plans represent an actuarial estimate of future assumed payments based on historic retirement and payment patterns. Actual amounts paid could differ from this estimate.

The following table shows the benefits expected to be paid in each of the next five years and the aggregate benefits expected to be paid for the subsequent five years:

(In Millions of Dollars)	Pension Benefits		Other Benefits		Total Benefits
2011	$	32.5	$	5.4	$	37.9
2012		39.4		5.5		44.9
2013		39.0		5.9		44.9
2014		42.9		6.2		49.1
2015		45.4		6.5		51.9
2016 – 2020		269.1		37.2		306.3

The other benefits in the above table are presented net of expected Medicare Part D subsidy payments of $0.7 million in 2011, $0.8 million in 2012, $0.9 million in 2013, $0.9 million in 2014, $1.0 million in 2015 and $4.9 million in 2016–2020.

Profit Sharing Plans

The company also has defined contribution plans, principally involving profit sharing plans and 401(k) savings plans, covering most employees in the United States and at certain non-U.S. subsidiaries. Expense for all defined contribution retirement plans was $17.2 million, $15.1 million and $15.6 million during 2010, 2009 and 2008, respectively.

Deferred Compensation Plans

The company provides non-qualified deferred compensation plans to its key employees and directors into which participants may defer a portion of their compensation, including salary, bonuses, performance-based and restricted share units and directors’ fees. The deferred compensation plans are not funded formally, but participants may elect to allocate their deferrals in accounts that mirror the investment funds and returns within the company’s 401(k) savings plan. Changes in value of undistributed deferred compensation from credited investment returns or losses are recognized in current earnings. Participants elect to receive payment at a specified date, or between 6 and 12 months after separation from service. All distributions are made in cash, except for deferrals allocated in the Lubrizol common shares account that are settled in stock, in the form of a single lump sum or periodically over a period of up to 20 years. Undistributed deferred compensation totaled $42.9 million and $31.1 million at December 31, 2010 and 2009, respectively, of which $1.9 million and $1.3 million were included in accrued expenses and other current liabilities at December 31, 2010 and 2009, respectively. The company maintains company-owned life insurance policies as a mechanism to fund informally its deferred compensation plans. The cash surrender value of these policies totaled $43.2 million and $28.0 million at December 31, 2010 and 2009, respectively, and was recorded within other assets.

Note 14 – STOCK-BASED COMPENSATION

On April 27, 2010, shareholders of the company approved the 2010 Stock Incentive Plan (2010 Plan) to provide equity awards to key employees and directors. The 2010 Plan provides for the granting of up to 3,000,000 common shares in the form of stock appreciation rights, restricted and unrestricted shares and share units (collectively referred to as “full-value awards”), and options to buy common shares, of which no more than 1,500,000 can be settled as full-value awards. After the 1,500,000 limit has been reached, full-value awards are counted in a 3-to-1 ratio against the 3,000,000 limit. Options become exercisable 50% one year after date of grant, 75% after two years, 100% after three years and expire 10 years after grant. The 2010 Plan terminates with respect to new grants by its own terms on April 1, 2015.

THE LUBRIZOL CORPORATION     61

Previously, the company utilized the 2005 Stock Incentive Plan (2005 Plan) to provide equity awards to key employees and directors. The 2005 Plan provided for the granting of up to 4,000,000 common shares in the form of full-value awards and options to buy common shares. Options became exercisable 50% one year after date of grant, 75% after two years, 100% after three years and expire 10 years after grant. The 2005 Plan terminated with respect to new grants by its own terms on April 1, 2010.

The 2010 Plan and 2005 Plan each provide for nonemployee directors of the company to receive an automatic annual grant of restricted share units worth approximately $0.1 million based on the fair market value of the company’s common shares on the date of each annual meeting of shareholders. A pro-rata number of restricted share units are granted to directors appointed between annual meetings of shareholders. All of these restricted share units vest on the date of the next annual meeting of shareholders. The fair value of restricted share units is based on the closing price of the company’s common shares on the date of grant. The company granted 7,425, 15,439 and 10,152 restricted share units under the 2010 Plan and 2005 Plan during 2010, 2009 and 2008, respectively.

Under the company’s long-term incentive program, dollar-based target awards for three-year performance periods are determined by the organization and compensation committee of the board of directors. The target awards correspond to pre-determined three-year cumulative earnings per share growth rates. The dollar-based target awards are converted into a combination of stock options and performance-based share units based on the fair value of the respective awards on the date of grant.

Options outstanding as of December 31, 2010, and changes during the year ended December 31, 2010, were as follows:

	Shares Underlying Options			Weighted- Average Exercise Price
Outstanding, January 1, 2010		2,160,852		$	37.23
Granted		91,800		$	78.18
Exercised		(745,011	)	$	36.38
Expired		(1,000	)	$	28.13
Outstanding, December 31, 2010		1,506,641		$	40.16
Options exercisable, December 31, 2010		1,155,041		$	38.55

The aggregate intrinsic value of options outstanding at December 31, 2010, based on the company’s closing stock price on the last trading day of 2010, which would have been received by the option holders had all options been exercised on that date, was $100.5 million. The aggregate intrinsic value of options exercisable at December 31, 2010, based on the company’s closing stock price on the last trading day of 2010, which would have been received by the option holders had all exercisable options been exercised on that date, was $78.9 million. The total intrinsic value of stock options exercised was $39.5 million, $28.1 million and $3.2 million during 2010, 2009 and 2008, respectively. Intrinsic value is the amount by which the company’s closing share price exceeds the exercise price of the options multiplied by the number of in-the-money options.

The following table summarizes information about stock options outstanding at December 31, 2010:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$ 20 – $ 30		346,100		8.2 years	$	27.77		138,050	$	27.77
$ 30 – $ 40		641,466		2.5 years	$	33.88		641,466	$	33.88
$ 40 – $ 50		153,100		5.0 years	$	43.07		153,100	$	43.07
$ 50 – $ 60		274,175		6.7 years	$	56.12		222,425	$	55.58
$ 70 – $ 80		91,800		9.2 years	$	78.18		–	$	–
		1,506,641						1,155,041

The weighted-average remaining contractual term of options outstanding and exercisable at December 31, 2010, was 5.3 years and 4.3 years, respectively.

62     THE LUBRIZOL CORPORATION

The fair value of stock options are estimated using the Black-Scholes option pricing model. There were 91,800, 438,600 and 253,100 stock options granted during 2010, 2009 and 2008, respectively. Options under the 2005 Plan have been granted to employees at fair market value at the date of grant. The weighted-average assumptions used to value the stock options granted during 2010, 2009 and 2008 were as follows:

	2010		2009		2008
Risk-free interest rate		3.3%		2.8%		3.5%
Dividend yield		1.6%		4.5%		2.1%
Expected volatility		30.3%		27.9%		20.0%
Expected life (years)		6.5		6.5		6.5
Weighted-average fair value of options granted during the year	$	23.84	$	5.03	$	12.27

The fair value of performance-based share units is based on the closing price of the company’s common shares on the date of grant. The company granted 106,500, 290,520 and 116,990 performance-based share units during 2010, 2009 and 2008, respectively. There are no voting or dividend rights associated with the performance-based share units until the end of the performance period and a distribution of shares, if any, is made. Nonvested performance-based share units at December 31, 2010, and changes during the year ended December 31, 2010, were as follows:

	Share Units			Weighted- Average Grant Date Fair Value
Nonvested at January 1, 2010		774,578		$	36.15
Granted		106,500		$	78.18
Performance increase		106,500		$	78.18
Vested		(127,760	)	$	58.45
Forfeited		(4,684	)	$	42.14
Nonvested at December 31, 2010		855,134		$	43.25

The following table identifies the number of performance-based share units expected to be issued based on current expectations of performance at December 31, 2010:

Performance Period	Expected Number of Units to be Issued		Weighted- Average Grant Date Fair Value
2008 – 2010		211,240	$	58.45
2009 – 2011		559,814	$	27.77
2010 – 2012		211,840	$	78.18

The company is using previously purchased treasury shares for all net shares issued for option exercises and performance-based and restricted share units. During the year ended December 31, 2010, the award for the 2007-2009 performance period was distributed resulting in the issuance of 213,960 shares and the deferral of 20,576 shares into a deferred compensation plan. During the year ended December 31, 2009, the award for the 2006-2008 performance period was distributed resulting in the issuance of 172,381 common shares and the deferral of 112,411 common shares into a deferred compensation plan. During the year ended December 31, 2008, the award for the 2005-2007 performance period was distributed resulting in the issuance of 134,578 shares and the deferral of 96,969 shares into a deferred compensation plan.

The terms of the performance-based share units granted to international employees state that payment will be in cash at the end of the performance period. As such, liability accounting is used for these awards and compensation expense is calculated based on the company’s common share price. In addition, some international employees received stock-based awards in prior years that are similar to stock appreciation rights. The value of these awards is based on the company’s common share price and is paid in cash upon exercise. A portion of these awards has expiration dates through 2014, while the remainder expires upon retirement. At December 31, 2010, the unexercised portion of these fully vested awards was accounted for as a liability. Compensation expense (credits) recognized in the consolidated statements of operations related to these stock-based liability awards was $6.5 million, $10.4 million and $(3.7) million during 2010, 2009 and 2008, respectively.

THE LUBRIZOL CORPORATION     63

Total stock-based compensation expense recognized in the consolidated statements of operations was $25.8 million, $31.8 million and $7.6 million during 2010, 2009 and 2008, respectively. The related tax benefit was $9.0 million, $11.1 million and $2.6 million during 2010, 2009 and 2008, respectively. Based on the grant date fair value of the awards and the company’s common share price at December 31, 2010, there was $21.6 million of total pre-tax unrecognized compensation cost related to all stock-based awards that were not vested. That cost is expected to be recognized over a weighted-average period of 1.6 years.

Note 15 – RESTRUCTURING AND IMPAIRMENT CHARGES

2010 Activities

During the year ended December 31, 2010, the company recorded aggregate restructuring and impairment charges of $11.7 million. Restructuring charges of $7.0 million related to the settlement of the pension obligation to employees at the closed Lubrizol Additives blending, packaging and warehouse facility in Ontario, Canada. Asset write-offs of $4.0 million primarily related to the abandonment of machinery and equipment within the TempRite business in the engineered polymers product line as part of our long-term strategy of right sizing capacity and optimizing our overall manufacturing footprint. Severance and benefits of $0.6 million primarily related to the restructuring of the sales and marketing organization within the TempRite business during 2010. The remaining charges related to the discontinuation of a tolling arrangement to manufacture products within the performance coatings product line of the Lubrizol Advanced Materials segment and the closure of production facilities from previously announced programs.

The components of the restructuring and impairment charges for the year ended December 31, 2010, are as follows:

(In Millions of Dollars)	Asset Write-offs and Impairments			Other Plant Exit Costs		Severance and Benefits			Total
Lubrizol Additives plant closure and workforce reductions	$	(0.1	)	$	–	$	7.0		$	6.9
Lubrizol Advanced Materials 2009 plant closures and workforce reductions		4.0			0.3		(0.4	)		3.9
Lubrizol Advanced Materials 2010 workforce reductions and product line discontinuations		–			0.2		0.6			0.8
Corporate organizational restructuring		–			–		0.1			0.1
Total restructuring and impairment charges	$	3.9		$	0.5	$	7.3		$	11.7

2009 Activities

During the year ended December 31, 2009, the company recorded aggregate restructuring and impairment charges of $30.4 million primarily related to severance and benefits associated with organizational restructuring decisions, which increased operating efficiencies and improved profitability. Additionally, the company recorded long-lived asset impairment charges primarily related to the write-off of preliminary process engineering design work associated with its plans, announced in March 2008, to build a lubricant additives plant in China. Due to lower expected demand caused by the global recession, significant uncertainty arose regarding the timing of the China project and resulted in revisions to the scope and location of the plant. As a result, the recoverability of the asset for preliminary process engineering design work performed was affected adversely and the associated asset was impaired. Further, the company recorded long-lived asset impairment and severance and benefit charges related to its decision to cease manufacturing at two U.S. facilities within the performance coatings and engineered polymers product lines of the Lubrizol Advanced Materials segment. Manufacturing of engineered polymers products at one of the closed facilities was transferred to other facilities to improve the utilization of existing assets. The remaining charges primarily related to the closing of a Lubrizol Additives blending, packaging and warehouse facility in Ontario, Canada that was announced in 2008. The company recorded an impairment charge associated with this facility closure as a result of the decline in fair value of the assets held for sale.

The components of the restructuring and impairment charges for the year ended December 31, 2009, are as follows:

(In Millions of Dollars)	Asset Impairments		Other Plant Exit Costs		Severance and Benefits			Total
Corporate organizational restructuring	$	–	$	–	$	15.4		$	15.4
Long-lived asset impairments		7.9		–		–			7.9
Lubrizol Advanced Materials 2009 plant closures and workforce reductions		3.9		–		1.0			4.9
Lubrizol Additives plant closure and workforce reductions		1.3		0.3		0.7			2.3
Performance coatings 2008 business improvement initiatives		–		–		(0.1	)		(0.1	)
Total restructuring and impairment charges	$	13.1	$	0.3	$	17.0		$	30.4

64     THE LUBRIZOL CORPORATION

2008 Activities

In 2008, restructuring and impairment charges included $363.0 million related to a goodwill impairment charge associated with the company’s engineered polymers and performance coatings product lines. Refer to Note 7 for further discussion of this impairment charge.

During the year ended December 31, 2008, the company recorded restructuring and impairment charges of $25.4 million related to business improvement initiatives and impairments of long-lived assets primarily within the performance coatings product line of the Lubrizol Advanced Materials segment. The company completed the disposition of a textile compounding plant and recognized an asset impairment for a textile coatings production line in the first quarter of 2008. In the second quarter of 2008, the company announced additional steps to improve the profitability of its U.S. performance coatings business. Manufacturing of certain products at various locations ceased or was transferred to more efficient production facilities in order to align manufacturing with its end-use markets. In addition, the company restructured the sales, marketing and research and development organizations within the performance coatings product line. In the fourth quarter of 2008, the company recorded an impairment charge associated with long-lived assets in the performance coatings product line as a result of declining demand in its textile applications.

In the third quarter of 2008, the company decided to close a Lubrizol Additives blending, packaging and warehouse facility in Ontario, Canada that resulted in charges of $5.6 million. Operations at the facility ended in June 2009.

The components of the restructuring and impairment charges for the year ended December 31, 2008, are as follows:

(In Millions of Dollars)	Asset Impairments		Other Plant Exit Costs		Severance and Benefits		Total
Goodwill impairment charges	$	363.0	$	–	$	–	$	363.0
Performance coatings 2008 business improvement initiatives		14.7		0.4		4.7		19.8
Lubrizol Advanced Materials plant closures, production line impairments and workforce reductions		5.3		–		0.3		5.6
Lubrizol Additives plant closure and workforce reductions		–		–		5.6		5.6
Total restructuring and impairment charges	$	383.0	$	0.4	$	10.6	$	394.0

The following tables show the activity of the restructuring liability beginning from January 1, 2008, to December 31, 2010, by major restructuring activity:

(In Millions of Dollars)	Liability January 1, 2010		Restructuring and Impairment Charges		Cash Paid			Non-cash Adjustments			Liability December 31, 2010
Corporate organizational restructuring	$	1.9	$	0.1	$	(1.6	)	$	–		$	0.4
Lubrizol Advanced Materials 2010 workforce reductions and product line discontinuations		–		0.8		(0.8	)		–			–
Lubrizol Advanced Materials 2009 plant closures and workforce reductions		1.0		3.9		(0.9	)		(4.0	)		–
Performance coatings 2008 business improvement initiatives		0.1		–		–			–			0.1
Lubrizol Additives plant closure and workforce reductions		–		6.9		–			(6.9	)		–
	$	3.0	$	11.7	$	(3.3	)	$	(10.9	)	$	0.5
For the year ended December 31, 2010, $7.0 million of restructuring charges associated with the Lubrizol Additives plant closure and workforce reductions have been reflected as a non-cash adjustment within the table above as the resulting liability was reclassified to pension obligations.

THE LUBRIZOL CORPORATION     65

(In Millions of Dollars)	Liability January 1, 2009		Restructuring and Impairment Charges			Cash Paid			Non-cash Adjustments			Liability December 31, 2009
Corporate organizational restructuring	$	–	$	15.4		$	(13.5	)	$	–		$	1.9
Long-lived asset impairments		–		7.9			–			(7.9	)		–
Lubrizol Advanced Materials 2009 plant closures and workforce reductions		–		4.9			–			(3.9	)		1.0
Performance coatings 2008 business improvement initiatives		0.9		(0.1	)		(0.7	)		–			0.1
Lubrizol Additives plant closure and workforce reductions		0.7		2.3			(1.7	)		(1.3	)		–
Noveon International, Inc. restructuring liabilities assumed		0.5		–			(0.5	)		–			–
	$	2.1	$	30.4		$	(16.4	)	$	(13.1	)	$	3.0
(In Millions of Dollars)	Liability January 1, 2008		Restructuring and Impairment Charges			Cash Paid			Non-cash Adjustments			Liability December 31, 2008
Performance coatings 2008 business improvement initiatives	$	–	$	19.8		$	(4.1	)	$	(14.8	)	$	0.9
Lubrizol Advanced Materials plant closures, production line impairments and workforce reductions		0.4		5.6			(0.7	)		(5.3	)		–
Lubrizol Additives plant closure and workforce reductions		–		5.6			(0.2	)		(4.7	)		0.7
Bromborough, U.K. plant closure and sale		0.1		–			–			(0.1	)		–
Noveon International, Inc. restructuring liabilities assumed		0.5		–			–			–			0.5
	$	1.0	$	31.0		$	(5.0	)	$	(24.9	)	$	2.1

For the year ended December 31, 2008, $4.5 million of restructuring charges associated with the Lubrizol Additives plant closure and workforce reductions have been reflected as a non-cash adjustment within the table above as the resulting liability was reclassified to pension obligations at December 31, 2008.

Note 16 – OTHER INCOME – NET

(In Millions of Dollars)	2010		2009			2008
Currency gains (losses)	$	5.7	$	(1.4	)	$	16.4
Equity earnings of non-consolidated companies		5.2		4.9			2.3
Royalties and other fees		3.6		4.2			1.9
Gain on sale of non-consolidated companies		0.8		4.1			–
Other – net		6.5		4.6			2.0
	$	21.8	$	16.4		$	22.6

Dividends received from non-consolidated companies were $6.0 million, $4.7 million and $1.4 million during 2010, 2009 and 2008, respectively.

Note 17 – INCOME TAXES

Income (loss) before income taxes consists of the following:

(In Millions of Dollars)	2010		2009		2008
United States	$	470.0	$	300.5	$	(180.0	)
Foreign		534.3		425.3		197.0
	$	1,004.3	$	725.8	$	17.0

66     THE LUBRIZOL CORPORATION

The provision for income taxes consists of the following:

(In Millions of Dollars)	2010		2009			2008
Current:
United States:
Federal	$	96.9	$	98.8		$	32.9
State		9.0		9.4			2.8
Foreign		131.4		87.7			71.8
		237.3		195.9			107.5
Deferred:
United States:
Federal		12.9		13.0			(15.7	)
State		2.3		(0.4	)		(2.1	)
Foreign		3.1		3.1			(13.8	)
		18.3		15.7			(31.6	)
	$	255.6	$	211.6		$	75.9

The differences between the provision for income taxes at the U.S. statutory rate and the tax shown in the consolidated statements of operations are summarized as follows:

(In Millions of Dollars)	2010			2009			2008
Tax at statutory rate of 35%	$	351.5		$	254.0		$	5.9
Goodwill impairment		–			–			86.4
State and local income taxes		7.4			5.8			0.5
Impact of foreign operations		(48.6	)		(43.1	)		(32.7	)
U.S. tax cost of foreign dividends		(23.5	)		14.7			10.3
Uncertain tax positions		(13.7	)		0.7			(3.6	)
U.S. manufacturing deduction		(12.8	)		(6.4	)		(0.7	)
Impact of currency (gains) losses		(3.8	)		(10.5	)		11.3
Other - net		(0.9	)		(3.6	)		(1.5	)
	$	255.6		$	211.6		$	75.9

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31 are as follows:

(In Millions of Dollars)	2010			2009
Deferred tax assets:
Pension and other postretirement benefits	$	130.5		$	142.5
Accrued compensation and benefits		55.7			48.6
Inventory		44.5			29.4
Cash flow hedges		21.6			23.5
Net operating losses and tax credits carried forward		6.7			16.6
Other		23.0			29.7
Total gross deferred tax assets		282.0			290.3
Less: valuation allowance		(7.7	)		(10.5	)
Net deferred tax assets		274.3			279.8
Deferred tax liabilities:
Depreciation and other basis differences		225.0			213.6
Foreign subsidiary and affiliate undistributed earnings		4.9			8.9
Other		13.0			13.3
Total deferred tax liabilities		242.9			235.8
Net deferred tax assets	$	31.4		$	44.0

THE LUBRIZOL CORPORATION     67

At December 31, 2010, the company had state and foreign net operating loss carryforwards (NOLs). The company had $0.7 million of state tax benefits from NOLs that expire in 2011 through 2027. Foreign NOLs totaled $19.8 million, of which $18.0 million expire in 2011 through 2024 and $1.8 million have an indefinite life. Additionally, the company has incurred losses in a foreign jurisdiction where realization of the future economic benefit is so remote that the benefit is not reflected as a deferred tax asset.

U.S. income taxes and 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 these earnings was approximately $1,279.1 million at December 31, 2010. Determination of the net amount of unrecognized taxes with respect to these earnings is not practicable.

Income taxes paid were $257.9 million, $180.3 million and $88.1 million during 2010, 2009 and 2008, respectively.

The company only recognizes the economic benefit associated with a tax position taken or expected to be taken if it is more likely than not that a tax position ultimately will be sustained. After this threshold is met, a tax position is measured at the largest amount of benefit that is more likely than not to be ultimately sustained. Following is a reconciliation of unrecognized tax benefits for the years ended December 31, 2010, 2009 and 2008:

(In Millions of Dollars)	2010			2009			2008
Balance at January 1	$	51.7		$	50.0		$	59.3
Additions:
Current year tax positions		6.0			5.6			6.9
Prior year tax positions		2.9			1.6			2.2
Reductions for prior year tax positions		(0.7	)		(0.5	)		(9.3	)
Expirations of statutes of limitations		(20.4	)		(6.1	)		(6.5	)
Settlements		(1.0	)		(0.4	)		(0.4	)
Currency exchange rate change		–			1.5			(2.2	)
Balance at December 31	$	38.5		$	51.7		$	50.0

At December 31, 2010, the company had gross unrecognized tax benefits of $38.5 million, of which $32.1 million, if recognized, would have affected the effective tax rate. The company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. Gross interest expense totaled $4.0 million, $3.7 million and $3.4 million during 2010, 2009 and 2008, respectively. Gross interest income totaled $6.4 million, $2.9 million and $3.2 million during 2010, 2009 and 2008, respectively. At December 31, 2010 and 2009, the company accrued $5.9 million and $8.5 million, respectively, for the potential payment of interest and penalties.

The majority of the company’s unrecognized tax benefits are classified as noncurrent liabilities because payment of cash is not expected within one year. The company does not anticipate that the total unrecognized tax benefits will change significantly due to the settlement of audits and the expiration of statute of limitations within one year of December 31, 2010.

The company operates in numerous taxing jurisdictions and is subject to regular examinations by various U.S. federal, state and foreign jurisdictions. The company’s income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which the company does business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws between those jurisdictions and the difficulty in estimating the final resolution of complex tax audit matters, the company’s estimates of income tax liabilities may differ from actual payments or assessments. The company no longer is subject to U.S. federal, state and local or foreign tax examinations for years before 2001.

Note 18 – CONTINGENCIES AND COMMITMENTS

General

There are pending or threatened claims, lawsuits and administrative proceedings against the company with respect to commercial, premises liability, product liability, employment and environmental matters arising from the ordinary course of business. Environmental matters and liabilities are addressed specifically below. The company believes that any liability that finally may be determined with respect to these claims should not have a material adverse effect on the company’s consolidated financial position, results of operations or cash flows. From time to time, the company also is involved in legal proceedings as a claimant involving contract, patent protection and other matters. Gain contingencies, if any, are recognized when they are realized.

68     THE LUBRIZOL CORPORATION

Environmental

The company’s environmental engineers and consultants review and monitor environmental issues at operating facilities. Where appropriate, the company initiates corrective and/or preventive environmental projects to ensure safe and lawful operational activities. The company also conducts compliance and management systems audits.

The company is a generator of both hazardous and non-hazardous wastes, the treatment, storage, transportation and disposal of which are governed by various laws and governmental regulations. These laws and regulations generally impose liability for costs to investigate and remediate contamination without regard to fault. Under certain circumstances, liability may be joint and several resulting in one party being held responsible for the entire obligation. Liability also may be imposed for damages to natural resources.

Although the company believes past operations were in substantial compliance with the then-applicable regulations, either the company or the predecessor of Lubrizol Advanced Materials International, Inc. (LZAM International), the Performance Materials Segment of Goodrich Corporation (Goodrich), has been designated under a country’s laws and/or regulations as a potentially responsible party (PRP) in connection with several sites. The company participates in the remediation process for current operating facilities and for third-party sites at which the company has been identified as a PRP. This process includes investigation, remedial action selection and implementation, as well as discussions and negotiations with other parties, such as other PRPs, past owners and operators and governmental agencies. The estimates of environmental liabilities are based on the results of this process. Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability and remediation standards and evolving technologies for managing investigations and remediation. The company revises its estimates as events in this process occur and additional information is obtained.

The company’s environmental reserves, measured on an undiscounted basis, totaled $7.5 million and $9.4 million at December 31, 2010 and 2009, respectively. Of these amounts, $4.8 million and $5.8 million were included in accrued expenses and other current liabilities at December 31, 2010 and 2009, respectively. Goodrich provided LZAM International with an indemnity for various environmental liabilities that extends through February 2011. Pursuant to this indemnity, Goodrich currently is indemnifying LZAM International for the costs of several environmental remediation projects. The company estimates Goodrich’s share of such currently identified liabilities to be approximately $0.1 million at December 31, 2010, which is included in receivables. Goodrich’s share of all of these liabilities may increase to the extent third parties fail to honor their obligations through February 2011.

The company believes that its environmental accruals are adequate based on currently available information. However, it is reasonably possible that as a result of new information, newly discovered conditions, changes in remediation standards or technologies or a change in the law, approximately $0.6 million in additional costs may be incurred beyond the amounts accrued. Additionally, as the indemnification from Goodrich extends only through February 2011, the timing of the incurrence of remediation costs may result in additional expenses to the company.

Leases

The company has commitments under operating leases primarily for office space, terminal facilities, land, railcars and various computer and office equipment. Rental expense was $30.3 million, $30.1 million and $34.2 million during 2010, 2009 and 2008, respectively. Future minimum rental commitments under operating leases having initial or remaining non-cancelable lease terms exceeding one year are $25.2 million in 2011, $20.5 million in 2012, $14.5 million in 2013, $11.8 million in 2014, $8.4 million in 2015 and $22.4 million thereafter.

Commitments

The company has numerous purchase commitments for materials, supplies and energy in the ordinary course of business. Non-cancelable purchase commitments primarily include raw materials purchased under take-or-pay contracts, drumming and service contracts, utility purchase agreements and toll processing arrangements. Future non-cancelable purchase commitments are $62.2 million in 2011, $52.2 million in 2012, $45.7 million in 2013, $40.5 million in 2014, $39.1 million in 2015 and $6.6 million thereafter. The company also has numerous sales commitments for product supply contracts in the ordinary course of business.

THE LUBRIZOL CORPORATION     69

Note 19 – RELATED PARTY TRANSACTIONS

Significant transactions with related parties were:

(In Millions of Dollars)	2010		2009		2008
Revenues (1)	$	92.3	$	79.4	$	103.9
Cost of sales (2)		58.4		38.5		58.1
Selling and administrative expenses (3)		5.0		7.5		–
Other income – net (4)		0.9		0.6		0.6

(1) The company sells finished lubricant additives to noncontrolling interests in its consolidated companies and equity affiliates.

(2) The company purchases base oils, electricity and other production materials for use in the manufacturing of its lubricant additives from noncontrolling interests in its consolidated companies and equity affiliates.

(3) The company made contributions to The Lubrizol Foundation, an organization that complements and supports the interests, values and vision of the company by awarding financial support to educational institutions and charitable organizations in communities primarily within the United States where the company operates major facilities.

(4) The company charges its equity affiliates a support fee for providing technical services. In addition, the company is charged technical and other support fees by noncontrolling interests in its consolidated companies.

Receivables on the consolidated balance sheets includes $12.5 million and $17.5 million due from related parties at December 31, 2010 and 2009, respectively. Accounts payable includes $3.0 million and $0.6 million due to related parties at December 31, 2010 and 2009, respectively. Accrued expenses and other current liabilities includes $2.5 million due to related parties at December 31, 2009.

Note 20 – SUBSEQUENT EVENT

On January 21, 2011, the company acquired the Performance Products Group of Nalco Company, a supplier of value-added specialty polymers and formulation additives marketed to the global personal care and household care industries, for approximately $164.2 million in cash. The agreement includes all Nalco personal care dedicated technology, know-how, trade names and customer lists, as well as royalty-free access to the use of technology and intellectual property currently shared with other Nalco businesses.

Note 21 – QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables set forth the quarterly results of operations for the years ended December 31, 2010 and 2009:

	2010
	First		Second		Third			Fourth		Full Year
Revenues	$	1,315.5	$	1,401.2	$	1,383.8		$	1,317.3	$	5,417.8
Gross profit		450.7		473.6		454.5			412.2		1,791.0
Restructuring and impairment charges (credits)		0.9		0.5		(0.4	)		10.7		11.7
Net income		167.0		206.6		214.3			160.8		748.7
Net income attributable to The Lubrizol Corporation		162.3		201.4		211.8			156.7		732.2
Net income per common share attributable to The Lubrizol Corporation:
Basic	$	2.37	$	2.95	$	3.15		$	2.41	$	10.88
Diluted		2.32		2.88		3.08			2.35		10.64

	2009
	First		Second		Third		Fourth		Full Year
Revenues	$	1,012.4	$	1,111.0	$	1,274.6	$	1,188.3	$	4,586.3
Gross profit		273.9		393.8		460.6		387.0		1,515.3
Restructuring and impairment charges		11.4		10.1		5.8		3.1		30.4
Net income		65.2		135.9		174.7		138.4		514.2
Net income attributable to The Lubrizol Corporation		64.2		131.9		170.5		134.2		500.8
Net income per common share attributable to The Lubrizol Corporation:
Basic	$	0.95	$	1.95	$	2.50	$	1.95	$	7.36
Diluted		0.95		1.92		2.46		1.92		7.26

70     THE LUBRIZOL CORPORATION

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

At the end of the period covered by this annual report (December 31, 2010), we carried out an evaluation, under the supervision and with the participation of the company’s management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation, our chief executive officer and chief financial officer concluded that as of the end of such period, our disclosure controls and procedures were effective and designed to ensure that information required to be disclosed by the company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

In the fourth quarter of 2010, we implemented a common information systems platform in the Asia-Pacific operations of our Lubrizol Advanced Materials segment. This implementation is part of our company-wide initiative, which we anticipate completing in 2011, to extend our current information systems platform to the entire organization so that our core business processes are integrated globally. Upon completion, we expect that the implementation of this common information systems platform will enhance our internal controls over financial reporting. We currently are not aware of any material adverse impacts on our internal controls over financial reporting as a result of this change.

There were no other changes in our internal control over financial reporting identified in the evaluation described in the preceding paragraphs that occurred during the fourth quarter of 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of The Lubrizol Corporation and its subsidiaries (the company) is responsible for establishing and maintaining adequate internal control over financial reporting. The Lubrizol Corporation’s internal control system was designed to provide reasonable assurance to the company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Lubrizol Corporation’s management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this assessment, management believes that, as of December 31, 2010, the company’s internal control over financial reporting is effective based on those criteria.

The effectiveness of the company’s internal control over financial reporting as of December 31, 2010, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, which expressed an unqualified opinion as stated in their report, a copy of which is included below.

THE LUBRIZOL CORPORATION     71

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of The Lubrizol Corporation

We have audited the internal control over financial reporting of The Lubrizol Corporation and subsidiaries (the “Company”) as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2010, of the Company and our report dated February 25, 2011, expressed an unqualified opinion on those financial statements and financial statement schedule.

Cleveland, Ohio

February 25, 2011

ITEM 9B. OTHER INFORMATION

Not applicable.

72     THE LUBRIZOL CORPORATION

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following information from our proxy statement for the 2011 Annual Meeting of Shareholders is incorporated herein by reference: the information contained in Part One: Items to be Voted on at the 2011 Annual Meeting under the subheadings “Nominees for Election” and “Continuing Directors”; the information contained in Part Two: Corporate Governance regarding the identity of members of, and financial experts on, the company’s audit committee under the headings “Audit Committee” and “Board Committees”; and the information contained in Part Four: Security Ownership and Reporting; Equity Compensation Plan Information under the heading “Section 16(a) Beneficial Ownership Reporting Compliance.”

Executive Officers

Following are the names, ages and positions of the executive officers of the company as of February 25, 2011. Unless otherwise noted, all positions indicated are or were held with The Lubrizol Corporation.

Name	Age		Positions Held
James L. Hambrick		56	Chairman of the Board (2005-present); Chief Executive Officer (2004-present); and President (2003-present)
Charles P. Cooley		55	Senior Vice President (2004-present); Chief Financial Officer (1998-present); and Treasurer (1998-2001 and 2006-Apr. 2009)
Suzanne F. Day		41	Corporate Vice President and General Counsel (2011-present); Deputy General Counsel (2007-2010); and Counsel (1998-2007)
W. Scott Emerick		46	Corporate Controller (2004-present); Noveon, Inc.: Director of Finance - TempRite products (2003-2004) and Director of Accounting and External Financial Reporting (2001-2003)
Robert T. Graf		52	Vice President, Research and Development (Sep. 2008-present); Lubrizol Additives: Vice President of Research and Development (2004-Sep. 2008), and division head of North American research and development (2001-2004)
Stephen F. Kirk		61	Chief Operating Officer (Sep. 2008-present); Senior Vice President (2004-present); President, Lubrizol Additives (2004-Sep. 2008); and Vice President, Sales (1999-2004)
Gregory R. Lewis		52	Vice President, Global Risk Management and Chief Ethics Officer (Sep. 2008-present); Vice President and General Counsel, Lubrizol Advanced Materials (2004-Sep. 2008); Deputy General Counsel (Jun. 2007-Sep. 2008); Vice President, Asia Pacific (2003-2004); Assistant Secretary (2001-2003); and Assistant to the General Counsel (1997-2003)
C. Larry Miller		53	Vice President, Human Resources (Jul. 2009-present); General Manager, Corporate Human Resources (Sep. 2008-Jul. 2009); a number of other positions in Human Resources of varying responsibility (1988–1999); and Vice President, Global Human Resources of Tremco Incorporated, an RPM Company (2004-May 2009)
Larry D. Norwood		60	Vice President, Operations (Sep. 2008-present); Vice President, Operations, Lubrizol Additives (2004-Sep. 2008) and General Manager, Lubrizol Additives’ Texas operations (1998-2003)
Leslie M. Reynolds		50	Corporate Secretary (2001-present); Counsel (1991-present); and Assistant Secretary (1997-2001)
Patrick H. Saunier		55	Vice President, Information Systems (2004-present) and leader of the European shared services organization (1999-2004)
Eric R. Schnur		44	Vice President and President, Lubrizol Advanced Materials (Sep. 2008-present); Vice President and General Manager, Performance Coatings product line (2007-Sep. 2008); and Vice President, Lubrizol Additives specialties business (2004-2007)
Daniel L. Sheets		53	Vice President and President, Lubrizol Additives (Sep. 2008-present); and a number of leadership roles in Lubrizol Additives, including Vice President, Sales (2005-Sep. 2008) and Vice President, Engine Additives product line (2003-2005)
Gregory D. Taylor		52	Vice President, Corporate Planning, Development and Communications (2007-present); Managing Director, Corporate Planning and Development (2003-2007)
Brian A. Valentine		41	Treasurer (Apr. 2009-present); Assistant Treasurer (2008-Apr. 2009); Director, Treasury Finance (2004-2008); and a number of other positions in Treasury and Finance of varying responsibility (1998-2004)
Jeffrey A. Vavruska		50	Chief Tax Officer (2004-present)

All executive officers serve at the pleasure of the Board. There are no arrangements or understandings between any executive officer and any other person pursuant to which an executive officer was selected to be an officer of the company.

We have a code of ethics, entitled the Ethical and Legal Conduct Guidelines, which applies to our directors and all employees, including our chief executive officer, chief financial officer and controller. The Ethical and Legal Conduct Guidelines are posted at the company overview area of our website, www.lubrizol.com.

THE LUBRIZOL CORPORATION     73

ITEM 11. EXECUTIVE COMPENSATION

The following information from our proxy statement for the 2011 Annual Meeting of Shareholders is incorporated herein by reference: the information contained in Part Two: Corporate Governance under the headings “Compensation Committee Report,” “Director Compensation” and “Compensation Practices and Risk Management Procedures”; and the information contained in Part Three: Executive Compensation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following information from our proxy statement for the 2011 Annual Meeting of Shareholders is incorporated herein by reference: the information contained in Part Four: Security Ownership and Reporting; Equity Compensation Plan Information under the heading “Security Ownership of Directors, Executive Officers and Large Beneficial Owners” and under the heading “Equity Compensation Plan Information.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The following information from our proxy statement for the 2011 Annual Meeting of Shareholders is incorporated herein by reference: the information contained in Part Two: Corporate Governance relating to certain relationships, related transactions and director independence under the headings “Director Independence” and “Related Person Transactions.”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following information from our proxy statement for the 2011 Annual Meeting of Shareholders is incorporated herein by reference: the information contained in Part One: Items to be Voted on at the 2011 Annual Meeting under the heading “Item 2: Confirmation of the Appointment of Independent Registered Public Accountant — Independent Registered Public Accountant Fees.”

74     THE LUBRIZOL CORPORATION

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

(a)(1) The following consolidated financial statements of The Lubrizol Corporation are included in Item 8:

Consolidated Statements of Operations – Years ended December 31, 2010, 2009 and 2008

Consolidated Balance Sheets – December 31, 2010 and 2009

Consolidated Statements of Cash Flows – Years ended December 31, 2010, 2009 and 2008

Consolidated Statements of Equity – Years ended December 31, 2010, 2009 and 2008

Notes to Consolidated Financial Statements

(a)(2) Schedule II is included below. All other schedules have been omitted because they are not applicable.

SCHEDULE II – Valuation and Qualifying Accounts

For the years ended December 31, 2010, 2009 and 2008

(In Millions of Dollars)

Description	Balance at Beginning of Year		Charged/ (Credited) to Expenses			Charged/ (Credited) to Other Accounts			Deductions		Balance at End of Year
Year ended December 31, 2010:
Allowance for uncollectible accounts	$	5.4	$	0.1		$	–		$	1.2	$	4.3
Inventory reserves		34.1		1.8			–			2.2		33.7
Deferred tax asset valuation allowance		10.5		(4.7	)		1.9			–		7.7
Year ended December 31, 2009:
Allowance for uncollectible accounts		6.7		1.6			–			2.9		5.4
Inventory reserves		24.7		11.0			–			1.6		34.1
Deferred tax asset valuation allowance		10.4		(0.2	)		0.3			–		10.5
Year ended December 31, 2008:
Allowance for uncollectible accounts		6.3		2.1			–			1.7		6.7
Inventory reserves		15.0		8.4			2.5			1.2		24.7
Deferred tax asset valuation allowance		18.7		(6.7	)		(1.6	)		–		10.4

(a)(3) Exhibits

Exhibit Number	Description
3.1	Second Amended and Restated Articles of Incorporation of The Lubrizol Corporation, effective as of May 6, 2009 (incorporated by reference to Exhibit 3.1 to the company’s quarterly report on Form 10-Q filed with the SEC on May 8, 2009).
3.2	Second Amended and Restated Regulations of The Lubrizol Corporation, effective as of June 23, 2009 (incorporated by reference to Exhibit 3.1 to the company’s current report on Form 8-K filed with the SEC on June 24, 2009).
4.1	Indenture, dated as of January 27, 2009, by and between The Lubrizol Corporation and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the company’s current report on Form 8-K filed with the SEC on January 27, 2009).
4.2	First Supplemental Indenture to the Indenture dated as of January 27, 2009, by and between The Lubrizol Corporation and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the company’s current report on Form 8-K filed with the SEC on January 27, 2009).
4.3	Form of $500,000,000 8.875% Notes due 2019 (incorporated by reference to Exhibit 4.3 to the company’s current report on Form 8-K filed with the SEC on January 27, 2009).
4.4	Amended and Restated Indenture dated September 28, 2004 (originally dated June 1, 1995) by and among The Lubrizol Corporation, all of The Lubrizol Corporation’s wholly owned direct and indirect domestic subsidiaries, as guarantors, and Wells Fargo Bank, National Association, as successor trustee (incorporated by reference to Exhibit 4.4 to the company’s annual report on Form 10-K for the year ended December 31, 2009).

THE LUBRIZOL CORPORATION     75

Exhibit Number	Description
4.5	Form of $100,000,000 7.25% Notes due 2025 (incorporated by reference to Exhibit (4)(b) to the company’s registration statement on Form S-3 (SEC File No. 33-68246) filed with the SEC on September 1, 1993).
4.6	Form of Indenture for Debt Securities of The Lubrizol Corporation (incorporated by reference to Exhibit 4.2 of Amendment No. 2 to the company’s registration statement on Form S-3 (SEC File No. 333.115662) filed with the SEC on August 24, 2004).
4.7	Form of $450,000,000 5.5% Notes due 2014 (incorporated by reference to Exhibit 4.7 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
4.8	Form of $300,000,000 6.5% Debentures due 2034 (incorporated by reference to Exhibit 4.8 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.1	Credit Agreement, dated as of July 19, 2010, among The Lubrizol Corporation, the Initial Lenders named therein, Citicorp Global Markets Inc. and KeyBank National Association, as co-lead arrangers and co-bookrunners, KeyBank National Association and The Royal Bank of Scotland plc, as co-syndication agents, Deutsche Bank AG New York Branch and JPMorgan Chase Bank, N.A., as co-documentation agents, and Citibank, N.A., as agent (incorporated by reference to Exhibit 10.1 to the company’s current report on Form 8-K filed with the SEC on July 22, 2010).
10.2	Three Year Credit Agreement dated July 21, 2009, among Lubrizol Holdings France SAS, Lubrizol Advanced Materials Europe BVBA, Lubrizol (Gibraltar) Limited and Lubrizol Coordination Center BVBA as borrowers, The Lubrizol Corporation as guarantor, the initial lenders named therein, and The Royal Bank of Scotland plc as administrative agent (incorporated by reference to Exhibit 10.1 to the company’s quarterly report on Form 10-Q for the period ended March 31, 2010).
10.3*	The Lubrizol Corporation 2010 Stock Incentive Plan, as amended November 9, 2010.
10.4*	Form of Performance Share Unit Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan.
10.5*	Form of Nonstatutory Stock Option Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan (incorporated by reference to and included with Exhibit 99.1 to the company’s current report on Form 8-K filed with the SEC on April 28, 2010).
10.6*	Form of Outside Director Restricted Stock Unit Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan (incorporated by reference to and included within Exhibit 99.1 to the company’s current report on Form 8-K filed with the SEC on April 28, 2010).
10.7*	Form of Restricted Stock Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan (incorporated by reference to and included within Exhibit 99.1 to the company’s current report on Form 8-K filed with the SEC on April 28, 2010).
10.8*	The Lubrizol Corporation 2005 Officers’ Supplemental Retirement Plan, as amended November 9, 2010.
10.9*	Form of Employment Agreement between The Lubrizol Corporation and certain of its senior executive officers for new agreements executed on or after September 22, 2009, as amended November 9, 2010.
10.10*	The Lubrizol Corporation 2005 Excess Defined Contribution Plan, as amended November 9, 2010.
10.11*	The Lubrizol Corporation 2005 Excess Defined Benefit Plan, as amended November 9, 2010.
10.12*	The Lubrizol Corporation 2005 Deferred Compensation Plan for Directors, as amended November 9, 2010.
10.13*	The Lubrizol Corporation Senior Management Deferred Compensation Plan, as amended November 9, 2010.
10.14*	The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan, as amended November 9, 2010.
10.15*	Form of Employment Agreement between The Lubrizol Corporation and certain of its senior executive officers, as amended November 9, 2010.
10.16*	The Lubrizol Corporation Financial Planning Program, as amended November 9, 2010.
10.17*	Form of Indemnification Agreement between The Lubrizol Corporation and certain of its senior executive officers and directors (incorporated by reference to Exhibit 10.1 to the company’s current report on Form 8-K filed with the SEC on June 30, 2010).

76     THE LUBRIZOL CORPORATION

Exhibit Number	Description
10.18*	The Lubrizol Corporation Annual Incentive Pay Plan, as amended February 22, 2010 (incorporated herein by reference to Exhibit 10.1 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.19*	Form of Annual Incentive Pay Plan Award Letter under The Lubrizol Corporation Annual Incentive Pay Plan (incorporated by reference to Exhibit 10.9 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.20*	The Lubrizol Corporation 2005 Stock Incentive Plan, as amended and restated February 22, 2010 (incorporated by reference to Exhibit 10.2 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.21*	Form of Performance Share Unit Award Agreement under The Lubrizol Corporation 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.22*	Form of Nonstatutory Stock Option Award Agreement under The Lubrizol Corporation 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.23*	Form of Outside Director Restricted Stock Unit Award under The Lubrizol Corporation 2005 Stock Incentive Plan (incorporated by reference to and included within Exhibit 10.2 to the company’s annual report on Form 10-K for the year ended December 31, 2008).
10.24*	The Lubrizol Corporation Executive Death Benefit Plan, as amended June 23, 2009 (incorporated by reference to Exhibit 10.1 to the company’s quarterly report on Form 10-Q for the quarter ended June 30, 2009).
10.25*	The Lubrizol Corporation Excess Defined Benefit Plan, as amended December 13, 2004 (incorporated by reference to Exhibit 10.27 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.26*	The Lubrizol Corporation Excess Defined Contribution Plan, as amended December 13, 2004 (incorporated by reference to Exhibit 10.28 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.27*	The Lubrizol Corporation Officers’ Supplemental Retirement Plan, as amended December 13, 2004 (incorporated by reference to Exhibit 10.29 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.28*	The Lubrizol Corporation 1991 Stock Incentive Plan, as amended November 15, 2004 (incorporated by reference to Exhibit 10.30 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.29*	The Lubrizol Corporation Deferred Compensation Plan for Officers, as amended November 15, 2004 (incorporated by reference to Exhibit 10.32 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.30*	The Lubrizol Corporation Executive Council Deferred Compensation Plan, as amended November 15, 2004 (incorporated by reference to Exhibit 10.33 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.31*	The Lubrizol Corporation Deferred Stock Compensation Plan for Outside Directors, as amended December 15, 2003 (incorporated by reference to Exhibit 10.34 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
12.1	Computation of Ratio of Earnings to Fixed Charges.
21.1	List of Significant Subsidiaries of The Lubrizol Corporation.
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Rule 13a-14(a) Certification of the Chief Executive Officer, as created by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer, as created by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer of The Lubrizol Corporation pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase

THE LUBRIZOL CORPORATION     77

Exhibit Number	Description
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

* Indicates management contract or compensatory plan or arrangement.

** In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

78     THE LUBRIZOL CORPORATION

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report on Form 10-K to be signed on February 25, 2011, on its behalf by the undersigned, thereunto duly authorized.

THE LUBRIZOL CORPORATION
BY	/s/ James L. Hambrick
	James L. Hambrick, Chairman of the Board,
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on February 22, 2011, by the following persons on behalf of the Registrant and in the capacities indicated.

/s/ James L. Hambrick James L. Hambrick	Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
/s/ Charles P. Cooley Charles P. Cooley	Senior Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ W. Scott Emerick W. Scott Emerick	Corporate Controller (Principal Accounting Officer)
/s/ Robert E. Abernathy Robert E. Abernathy	Director
/s/ Edward P. Campbell Edward P. Campbell	Director
/s/ Forest J. Farmer, Sr. Forest J. Farmer, Sr.	Director
/s/ Michael J. Graff Michael J. Graff	Director
/s/ Gordon D. Harnett Gordon D. Harnett	Director
/s/ Dominic J. Pileggi Dominic J. Pileggi	Director
/s/ James E. Sweetnam James E. Sweetnam	Director
/s/ Harriett Tee Taggart Harriett Tee Taggart	Director
/s/ Phillip C. Widman Phillip C. Widman	Director

THE LUBRIZOL CORPORATION     79

EXHIBIT INDEX

Exhibit Number	Description
3.1	Second Amended and Restated Articles of Incorporation of The Lubrizol Corporation, effective as of May 6, 2009 (incorporated by reference to Exhibit 3.1 to the company’s quarterly report on Form 10-Q filed with the SEC on May 8, 2009).
3.2	Second Amended and Restated Regulations of The Lubrizol Corporation, effective as of June 23, 2009 (incorporated by reference to Exhibit 3.1 to the company’s current report on Form 8-K filed with the SEC on June 24, 2009).
4.1	Indenture, dated as of January 27, 2009, by and between The Lubrizol Corporation and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the company’s current report on Form 8-K filed with the SEC on January 27, 2009).
4.2	First Supplemental Indenture to the Indenture dated as of January 27, 2009, by and between The Lubrizol Corporation and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the company’s current report on Form 8-K filed with the SEC on January 27, 2009).
4.3	Form of $500,000,000 8.875% Notes due 2019 (incorporated by reference to Exhibit 4.3 to the company’s current report on Form 8-K filed with the SEC on January 27, 2009).
4.4	Amended and Restated Indenture dated September 28, 2004 (originally dated June 1, 1995) by and among The Lubrizol Corporation, all of The Lubrizol Corporation’s wholly owned direct and indirect domestic subsidiaries, as guarantors, and Wells Fargo Bank, National Association, as successor trustee (incorporated by reference to Exhibit 4.4 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
4.5	Form of $100,000,000 7.25% Notes due 2025 (incorporated by reference to Exhibit (4)(b) to the company’s registration statement on Form S-3 (SEC File No. 33-68246) filed with the SEC on September 1, 1993).
4.6	Form of Indenture for Debt Securities of The Lubrizol Corporation (incorporated by reference to Exhibit 4.2 of Amendment No. 2 to the company’s registration statement on Form S-3 (SEC File No. 333.115662) filed with the SEC on August 24, 2004).
4.7	Form of $450,000,000 5.5% Notes due 2014 (incorporated by reference to Exhibit 4.7 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
4.8	Form of $300,000,000 6.5% Debentures due 2034 (incorporated by reference to Exhibit 4.8 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.1	Credit Agreement, dated as of July 19, 2010, among The Lubrizol Corporation, the Initial Lenders named therein, Citicorp Global Markets Inc. and KeyBank National Association, as co-lead arrangers and co-bookrunners, KeyBank National Association and The Royal Bank of Scotland plc, as co-syndication agents, Deutsche Bank AG New York Branch and JPMorgan Chase Bank, N.A., as co-documentation agents, and Citibank, N.A., as agent (incorporated by reference to Exhibit 10.1 to the company’s current report on Form 8-K filed with the SEC on July 22, 2010).
10.2	Three Year Credit Agreement dated July 21, 2009, among Lubrizol Holdings France SAS, Lubrizol Advanced Materials Europe BVBA, Lubrizol (Gibraltar) Limited and Lubrizol Coordination Center BVBA as borrowers, The Lubrizol Corporation as guarantor, the initial lenders named therein, and The Royal Bank of Scotland plc as administrative agent (incorporated by reference to Exhibit 10.1 to the company’s quarterly report on Form 10-Q for the period ended March 31, 2010).
10.3*	The Lubrizol Corporation 2010 Stock Incentive Plan, as amended November 9, 2010.
10.4*	Form of Performance Share Unit Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan.
10.5*	Form of Nonstatutory Stock Option Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan (incorporated by reference to and included with Exhibit 99.1 to the company’s current report on Form 8-K filed with the SEC on April 28, 2010).
10.6*	Form of Outside Director Restricted Stock Unit Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan (incorporated by reference to and included within Exhibit 99.1 to the company’s current report on Form 8-K filed with the SEC on April 28, 2010).
10.7*	Form of Restricted Stock Award Agreement under The Lubrizol Corporation 2010 Stock Incentive Plan (incorporated by reference to and included within Exhibit 99.1 to the company’s current report on Form 8-K filed with the SEC on April 28, 2010).

80     THE LUBRIZOL CORPORATION

Exhibit Number	Description
10.8*	The Lubrizol Corporation 2005 Officers’ Supplemental Retirement Plan, as amended November 9, 2010.
10.9*	Form of Employment Agreement between The Lubrizol Corporation and certain of its senior executive officers for new agreements executed on or after September 22, 2009, as amended November 9, 2010.
10.10*	The Lubrizol Corporation 2005 Excess Defined Contribution Plan, as amended November 9, 2010.
10.11*	The Lubrizol Corporation 2005 Excess Defined Benefit Plan, as amended November 9, 2010.
10.12*	The Lubrizol Corporation 2005 Deferred Compensation Plan for Directors, as amended November 9, 2010.
10.13*	The Lubrizol Corporation Senior Management Deferred Compensation Plan, as amended November 9, 2010.
10.14*	The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan, as amended November 9, 2010.
10.15*	Form of Employment Agreement between The Lubrizol Corporation and certain of its senior executive officers, as amended November 9, 2010.
10.16*	The Lubrizol Corporation Financial Planning Program, as amended November 9, 2010.
10.17*	Form of Indemnification Agreement between The Lubrizol Corporation and certain of its senior executive officers and directors (incorporated by reference to Exhibit 10.1 to the company’s current report on Form 8-K filed with the SEC on June 30, 2010).
10.18*	The Lubrizol Corporation Annual Incentive Pay Plan, as amended February 22, 2010 (incorporated herein by reference to Exhibit 10.1 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.19*	Form of Annual Incentive Pay Plan Award Letter under The Lubrizol Corporation Annual Incentive Pay Plan (incorporated by reference to Exhibit 10.9 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.20*	The Lubrizol Corporation 2005 Stock Incentive Plan, as amended and restated February 22, 2010 (incorporated by reference to Exhibit 10.2 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.21*	Form of Performance Share Unit Award Agreement under The Lubrizol Corporation 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.22*	Form of Nonstatutory Stock Option Award Agreement under The Lubrizol Corporation 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the company’s current report on Form 8-K filed with the SEC on February 24, 2010).
10.23*	Form of Outside Director Restricted Stock Unit Award under The Lubrizol Corporation 2005 Stock Incentive Plan (incorporated by reference to and included within Exhibit 10.2 to the company’s annual report on Form 10-K for the year ended December 31, 2008).
10.24*	The Lubrizol Corporation Executive Death Benefit Plan, as amended June 23, 2009 (incorporated by reference to Exhibit 10.1 to the company’s quarterly report on Form 10-Q for the quarter ended June 30, 2009).
10.25*	The Lubrizol Corporation Excess Defined Benefit Plan, as amended December 13, 2004 (incorporated by reference to Exhibit 10.27 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.26*	The Lubrizol Corporation Excess Defined Contribution Plan, as amended December 13, 2004 (incorporated by reference to Exhibit 10.28 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.27*	The Lubrizol Corporation Officers’ Supplemental Retirement Plan, as amended December 13, 2004 (incorporated by reference to Exhibit 10.29 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.28*	The Lubrizol Corporation 1991 Stock Incentive Plan, as amended November 15, 2004 (incorporated by reference to Exhibit 10.30 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.29*	The Lubrizol Corporation Deferred Compensation Plan for Officers, as amended November 15, 2004 (incorporated by reference to Exhibit 10.32 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
10.30*	The Lubrizol Corporation Executive Council Deferred Compensation Plan, as amended November 15, 2004 (incorporated by reference to Exhibit 10.33 to the company’s annual report on Form 10-K for the year ended December 31, 2009).

THE LUBRIZOL CORPORATION     81

Exhibit Number	Description
10.31*	The Lubrizol Corporation Deferred Stock Compensation Plan for Outside Directors, as amended December 15, 2003 (incorporated by reference to Exhibit 10.34 to the company’s annual report on Form 10-K for the year ended December 31, 2009).
12.1	Computation of Ratio of Earnings to Fixed Charges.
21.1	List of Significant Subsidiaries of The Lubrizol Corporation.
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Rule 13a-14(a) Certification of the Chief Executive Officer, as created by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer, as created by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer of The Lubrizol Corporation pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

* Indicates management contract or compensatory plan or arrangement.

** In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

82     THE LUBRIZOL CORPORATION

EX-10.3

Exhibit 10.3

THE LUBRIZOL CORPORATION 2010 STOCK INCENTIVE PLAN

(As Amended, November 9, 2010)

Section 1. Purpose.

The purposes of The Lubrizol Corporation 2010 Stock Incentive Plan are to encourage selected employees of The Lubrizol Corporation and its Subsidiaries and Outside 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 have the meanings set forth below:

(a) “Award” means any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Share Unit Award or Stock Award granted pursuant to the provisions of the Plan.

(b) “Award Agreement” means a written document evidencing any Award granted hereunder, signed by the Company and the Participant, or signed by the Company and delivered to an Outside Director, as the case may be.

(c) “Base Price” means the Grant Date price of a Share underlying a Stock Appreciation Right.

(d) “Board” means the Board of Directors of the Company.

(e) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(f) “Committee” means a committee of not less than three Outside Directors of the Board, each of whom must: (i) be a “non-employee director” within the meaning of Rule 16b-3(b)(i) 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, (ii) be an “outside director” within the meaning of Section 1.162-27(e)(3) promulgated by the Treasury Department under the Code, and (iii) meet the independence tests under Section 303A.02 of the New York Stock Exchange Listed Company Manual; provided, however, that with respect to Awards granted to non-Section 16 officers, “Committee” may mean the Chair of the Organization and Compensation Committee of the Board of Directors and at least one other member of the Organization and Compensation Committee.

(g) “Company” means The Lubrizol Corporation.

(h) “Employee” means any employee of the Company or of any Subsidiary.

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2010 STOCK INCENTIVE PLAN

(i) “Fair Market Value” means the closing 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; provided, however, if the Grant Date or any other relevant date is on a day when the New York Stock Exchange is closed, then Fair Market Value means the closing price of a Share on the New York Stock Exchange on the next following date when the New York Stock Exchange is open.

(j) “Full-value Awards” means Awards that result in the Company transferring the full value of any underlying Share issued in the transaction. Full-value Awards will include all Restricted Stock, Restricted Stock Unit, Performance Share Unit and certain other stock based Awards.

(k) “Grant Date” means the date on which the Board or Committee approves the grant of an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Share Unit Award or Stock Award, and, with respect to a Restricted Stock Unit Award granted to an Outside Director, the date specified pursuant to Section 11 on which such Award is granted.

(l) “Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422A of the Code or any successor provision thereto.

(m) “Non-Statutory Stock Option” means an Option that is not intended to be an Incentive Stock Option.

(n) “Option” means an option to purchase Shares granted hereunder.

(o) “Option Price” means the purchase price of each Share under an Option.

(p) “Outside Director” means a member of the Board who is not an employee of the Company or of any Subsidiary.

(q) “Participant” means an Employee who is selected by the Committee to receive an Award under the Plan.

(r) “Performance Share Unit Award” means an award of Share units based on target performance measures under Section 10 hereof.

(s) “Plan” means The Lubrizol Corporation 2010 Stock Incentive Plan.

(t) “Restricted Stock Award” means an award of restricted Shares under Section 8 hereof.

(u) “Restricted Stock Unit Award” means an award of restricted Share units under Section 11 hereof.

(v) “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) other conditions set forth in the applicable Award Agreement.

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(w) “Shareholders’ Meeting” means the annual meeting of shareholders of the Company in each calendar year.

(x) “Shares” means common shares without par value of the Company.

(y) “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 the Base Price for such Shares.

(z) “Stock Award” means the grant of Shares under the Plan.

(aa) “Subsidiary” means a corporation which is at least 50% owned, directly or indirectly, by the Company.

(bb) “Voting Stock” means the then-outstanding securities entitled to vote generally in the election of directors of the Company.

Section 3. Administration.

The Plan is administered by the Committee. Members of the Committee are 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 will be filled by the appointment of a successor member by the Board. Subject to the express provisions of this Plan, the Committee has (i) conclusive authority to: (A) select Employees to be Participants for Awards, (B) determine the type and number of Awards to be granted, (C) construe and interpret the Plan, any Award granted hereunder and any Award Agreement entered into hereunder and (D) establish, amend and rescind rules and regulations for the administration of this Plan, and (ii) any additional authority as the Board may from time to time determine to be necessary or desirable.

Section 4. Shares Subject to the Plan.

(a) Subject to adjustment as provided in the Plan, the maximum number of shares as to which Awards may be granted under this Plan is 3,000,000 Shares, of which no more than 1,500,000 Shares can be settled as Full-value Awards; provided, however, that no more than 500,000 Shares will be available for grant to any Participant or Outside Director during a calendar year. In addition to the stated maximums described above, this Plan provides the Committee with the flexibility to convert the Shares reserved solely for Options into Full-value Awards (e.g., Restricted Stock, Restricted Stock Units, Performance Share Units, etc.). Specifically:

(i) For every Option or Stock Appreciation Right granted, the number of Shares available for grant shall be reduced by one Share for every one Share granted; provided, however, that any Stock Appreciation Right that may be settled only in cash shall not reduce the number of Shares available for grant;

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(ii) For each of the first 1,500,000 Shares granted as Full-value Awards, the number of Shares available for grant shall be reduced by one Share for every one Share granted;

(iii) For any Full-value Awards granted in excess of the 1,500,000 Share limit, the number of Shares available for grant shall be reduced by three Shares for every one Share granted.

For example, if we issue 1,500,000 Shares as Restricted Stock prior to exhausting our pool of shares for Options, the Committee has the flexibility to convert a portion of the remaining Options into other Full-value Awards, but it must be consistent with the 3-to1 ratio described above.

The Company believes this provision provides for the maximum equity plan design flexibility while continuing to protect the long-term interests of shareholders.

(b) Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued Shares or treasury shares. Shares: (i) used to pay the Option Price of an Option or the Base Price of a Stock Appreciation Right; or (ii) withheld from issuance to pay withholding taxes on Options or Stock Appreciation Rights settled in Shares, to the extent of any such consideration or withholding, will not again be available for issuance under the Plan. Shares that only can be settled in cash will not reduce the number of Shares available for issuance under the Plan. Shares: (i) subject to any Award that is forfeited; or (ii) subject to any Award that otherwise terminates without issuance of the Shares will be added to the reserve and will again be available for issuance under the Plan.

(c) The number of Shares that remain available for issuance pursuant to this Plan, the number of Shares subject to outstanding Awards and the individual and Full-value Award limits imposed by the Plan, as well as the Option Price per Share of any outstanding Options and the Base Price per Share of any outstanding Stock Appreciation Rights, 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, will be adjusted in the manner the Committee deems equitable; provided, however, that the number of Shares will always be a whole number.

(d) Shares underlying Awards assumed by the Company in a merger will not reduce the Share reserve specified in Section 4(a).

Section 5. Eligibility.

Any Employee is eligible to be selected as a Participant, and any Outside Director is eligible to participate in the Plan.

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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 will be evidenced by an Award Agreement in the form as the Committee may from time to time approve. Any Option will be subject to the following terms and conditions and to any additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee deems desirable.

(a) Option Price. The purchase price per Share under an Option will be fixed by the Committee in its sole discretion; provided that the purchase price will not be less than 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 will be fixed by the Committee in its sole discretion; provided that no Non-Statutory Stock Option or Incentive Stock Option may be exercisable after the expiration of 10 years from the Grant Date.

(c) Exercise of Option. Options may 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 any Participant that 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) will 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; provided however, that any such Incentive Stock Option above the limitation automatically will be converted into a Non-Statutory Stock Option. The terms of any Incentive Stock Option will comply in all respects with the provisions of Section 422A of the Code, or any successor provision, and any regulations promulgated thereunder.

Section 7. Stock Appreciation Rights.

(a) 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 will 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

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or applicable portion thereof terminates and is no longer 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 will be canceled automatically to the extent of the Stock Appreciation Rights exercised, and such Shares will not thereafter be eligible for grant under Section 4(a). The Committee may impose any conditions or restrictions on the exercise of any Stock Appreciation Right as it deems appropriate.

(b) Any Stock Appreciation Right not granted in conjunction with another Award will be subject to the following terms and conditions and to any additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee deems desirable.

(i) Base Price. The Base Price per Share under a Stock Appreciation Right will be fixed by the Committee in its sole discretion; provided that the Base Price will not be less than one hundred percent (100%) of the Fair Market Value of the Share on the Grant Date of the Stock Appreciation Right.

(ii) Stock Appreciation Right Period. The term of each Stock Appreciation Right will be fixed by the Committee in its sole discretion; provided that no Stock Appreciation Right may be exercisable after the expiration of 10 years from the Grant Date.

(iii) Exercise of Stock Appreciation Right. Each Stock Appreciation Right may be exercisable to the extent of fifty percent (50%) of the Rights subject thereto after one year from the Grant Date, seventy-five percent (75%) of such Rights after two years from the Grant Date, and one hundred percent (100%) of such Rights after three years from the Grant Date, subject to any provisions respecting the exercisability of Stock Appreciation Rights that may be contained in an Award Agreement.

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 will be evidenced by an Award document from the Company that will specify the vesting schedule, any rights of acceleration and such other terms and conditions as the Committee determines, which need not be the same with respect to each Participant; provided, however, that any performance-based Restricted Stock Award may not have a vesting period shorter than one year and any service-based Restricted Stock Award may not vest over a period shorter than three years.

(b) Registration. Shares issued under this Section 8 may be issued in book entry form or 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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The sale or other transfer of the common shares represented by this certificate is subject to certain restrictions set forth in the Award document granted to                                  (the registered owner) by The Lubrizol Corporation dated                                 , under The Lubrizol Corporation 2010 Stock Incentive Plan. A copy of the Plan and Award document may be obtained from the Secretary of The Lubrizol Corporation.

Unless otherwise provided in the Award document from the Company, the certificates will be retained by the Company until the expiration of the Restriction Period. Upon the expiration of the Restriction Period, the Company will (i) have the legend removed from the certificates for the Shares to which a Participant is entitled in accordance with the Award document from the Company and (ii) release the Shares to the custody of the Participant.

(c) Forfeiture. Except as otherwise determined by the Committee at the Grant Date, upon separation of service of the Participant for any reason during the Restriction Period, all Shares still subject to restriction will 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 the Participant’s Shares. In such case, unrestricted Shares will be issued to the Participant at the time determined by the Committee.

(d) Rights as Shareholders. At all times during the Restriction Period, Participants will be entitled to full voting rights with respect to all Shares awarded under this Section 8. The Committee in its discretion at the time of grant of the Restricted Stock Award, may determine to allow dividends with respect to the Shares to be paid to the Participant at the time dividends are paid on Shares, or to hold the dividends until the lapse of the applicable vesting schedule of the corresponding Restricted Stock.

Section 9. Stock Awards.

Awards of Shares or other stock-based awards 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 has the sole and complete authority to determine (i) the Employees to whom Awards will be granted, (ii) the time or times at which the Awards will be granted, (iii) the number of Shares to be granted pursuant to the Awards and (iv) all other conditions of the Awards. Conditions may include issuance of Shares at the time that the Award is granted or issuance of Shares at a time or times subsequent to the time the Award is granted, which subsequent times specifically may be established by the Committee and/or may be determined by reference to the satisfaction of one or more performance measures specified by the Committee. The provisions of Stock Awards need not be the same with respect to each Participant.

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Section 10. Performance Share Unit Awards.

Performance Share Unit Awards 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 has the sole and complete authority to determine (i) the Employees to whom Performance Share Unit Awards will be granted, (ii) the time or times at which Performance Share Unit Awards will be granted, (iii) the number of Performance Share Units to be granted pursuant to the Awards and (iv) all other conditions of the Awards. Any payment of Performance Share Unit Awards will be made in the number of Shares equal to the number of Performance Share Units payable under the Award, unless otherwise specifically stated in the Award document that it will be paid in cash. Performance Share Unit Awards and performance-based Restricted Stock Awards granted to any executive officer of the Company will have one or more of the following performance-based measures: revenues, cost reductions, operating income, income before taxes, net income, adjusted net income, earnings per share, adjusted earnings per share, operating margins, working capital measures, earnings before income taxes and depreciation, return on assets, return on equity, return on invested capital, cash flow measures, market share, shareholder return and/or economic value added, of the Company or any of its subsidiaries, affiliates, segments, divisions or businesses for or within which the Participant is employed. Performance goals may be based on the achievement of specified levels of Company performance (or performance of an applicable subsidiary, affiliate, segment, division or business) under one or more of the measures described above relative to the performance of other corporations or comparable businesses.

Section 11. Outside Directors’ Restricted Stock Unit Awards.

(a) On the close of business on the date of each Annual Meeting of Shareholders, each Outside Director automatically will be granted a number of Restricted Stock Units equal to an amount calculated by dividing $100,000 by the Fair Market Value of a Share on the Grant Date, which will be subject to the following terms and conditions and to any additional terms and conditions, not inconsistent with the provisions of the Plan, as are contained in the applicable Award Agreement. For Outside Directors who are appointed to the Board of Directors on a date other than an Annual Meeting of Shareholders, there automatically will be granted a number of Restricted Stock Units equal to an amount calculated by dividing $100,000 by 12 and multiplying the result by the number of remaining full months until the next Annual Meeting of Shareholders and then dividing that result by the Fair Market Value of a Share on the date the Outside Director is appointed to the Board of Directors.

(b) Vesting. Restricted Stock Unit Awards granted pursuant to this Section 11 will vest upon the earliest to occur of the following dates:

(i) the next Annual Meeting of Shareholders;

(ii) separation from service under a retirement plan or policy of the Company;

(iii) death while serving as a director; or

(iv) Change in Control of the Company, as defined in Section 12(b).

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Section 12. Change in Control.

(a) Notwithstanding any provision in this Plan to the contrary, in the event of an occurrence of a Change in Control of the Company (as defined in paragraph (b)), the portion of outstanding Performance Share Unit Awards and performance-based Restricted Stock Awards that may be paid to a Participant will be determined based on performance as of the date of the Change in Control, subject to the terms of the Award Agreement, and outstanding Options and Stock Appreciation Rights will become 100% exercisable, and any other outstanding Awards (other than Restricted Stock Unit Awards, Performance Share Unit Awards and performance-based Restricted Stock Awards) will become fully vested without any restrictions, upon the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause (as defined below), for such separation from service exists or has occurred, including without limitation other employment):

(i) Any separation from service of the Participant by the Company within three years following the Change in Control of the Company, which separation from service is for any reason other than for Cause, or is as a result of the death of the Participant, or is by reason of the Participant’s disability and the actual receipt of disability benefits pursuant to the long-term disability plan in effect for Employees immediately prior to the Change in Control of the Company; or

(ii) Separation from service by the Participant of his employment with the Company and any Subsidiary within three years after the Change in Control of the Company upon the occurrence of any of the following events:

(A) Failure to elect or reelect or otherwise to maintain the Participant 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 Participant held immediately prior to a Change in Control of the Company;

(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 that the Participant held immediately prior to the Change in Control of the Company, a reduction in the aggregate of the Participant’s base and incentive pay opportunities, any of which is not remedied within 10 calendar days after receipt by the Company of written notice from the Participant of the change or reduction, as the case may be;

(C) A determination by the Participant made in good faith that as a result of a Change in Control of the Company 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 of the Company, 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 Participant immediately prior to the Change in Control of the Company, which situation is not remedied within 10 calendar days after written notice to the Company from the Participant of such determination;

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(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) assumes all the duties and obligations of the Company under this Agreement; or

(E) The Company relocates its principal executive offices, or requires the Participant 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 in Control of the Company 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 in Control of the Company without, in either case, his prior written consent.

(b) For purposes of this Plan, a “Change in Control of the Company” means the occurrence of any of the following events:

(i) The date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company.

(ii) The date any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30 percent or more of the total voting power of the stock of the Company.

(iii) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

(iv) The date that any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately before the acquisition or acquisitions.

For purposes of this Section 12(b) of the Plan, the terms “person” and “group” have the same meaning as provided in Section 13(d)(3) or 14(d)(2) of the Exchange Act.

(c) For purposes of this Section 12 of the Plan, “Cause” means that, prior to any separation from service pursuant to Section 12(a) hereof, the Participant committed:

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(i) 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;

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

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

(iv) intentional wrongful engagement in any Competitive Activity (as defined below);

and any such act materially is harmful to the Company. For purposes of this Agreement, no act, or failure to act, on the part of the Participant will be deemed “intentional” if it was due primarily to an error in judgment or negligence, but will be deemed “intentional” only if done, or omitted to be done, by the Participant 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 Participant will not be deemed to have been separated from service for “Cause” hereunder unless and until there is delivered to the Participant 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 Participant and an opportunity for the Participant, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Participant had committed an act set forth above in this Section 12(c) and specifying the particulars thereof in detail. Nothing herein will limit the right of the Participant or his beneficiaries to contest the validity or propriety of any such determination.

(d) For purposes of this Section 12 of the Plan, the term “Competitive Activity” means the Participant’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” does 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.

Section 13. Amendments and Termination.

The Board may, at any time, amend, alter or terminate the Plan, but no amendment, alteration, or termination may be made that would impair the rights of an Outside Director or Participant under an Award previously granted, without the Outside Director’s or Participant’s consent, or that without the approval of the shareholders would:

(a) result in the repricing or exchange of outstanding Options or Stock Appreciation Rights;

(b) except as is provided in Sections 4(c) of the Plan, increase the total number of Shares which may be issued under the Plan;

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THE LUBRIZOL CORPORATION

2010 STOCK INCENTIVE PLAN

(c) materially increase the benefits accruing to Participants or Outside Directors under the Plan.

The Committee may amend the terms of any Award heretofore granted, prospectively or retroactively, but no such amendment may impair the rights of any Participant or Outside Director without his consent.

Section 14. Claw-back and Forfeiture Policy

The Committee may cause to be forfeited any outstanding Award and may seek to recoup any economic gains from any Participant who engages in conduct that was not in good faith and that disrupts, damages, impairs or interferes with the business, reputation or employees of the Company or its Subsidiaries, including but not limited to, conduct that leads to a restatement of the Company’s financial statements.

Section 15. General Provisions.

(a) No Option or other Award may 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 lifetime only by the Participant, or, if permissible under applicable law, by the guardian or legal representative of the Participant.

(b) The term of each Award will be for a period of months or years from its Grant Date as may be determined by the Committee or as set forth in the Plan.

(c) No Employee may 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.

(d) The prospective recipient of any Award under the Plan will not, with respect to the Award, be deemed to have become a Participant, or to have any rights with respect to the Award, until and unless the recipient complies with the then applicable terms and conditions.

(e) All certificates for Shares delivered under the Plan pursuant to any Award will be subject to any stock-transfer orders and other restrictions as the Committee deems 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.

(f) Except as otherwise required in any applicable Award document or by the terms of the Plan, Participants will not be required, under the Plan, to make any payment other than the rendering of services.

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THE LUBRIZOL CORPORATION

2010 STOCK INCENTIVE PLAN

(g) The Company is authorized to withhold from any payment under the Plan, whether the payment is in Shares or cash, withholding taxes due in respect of the payment hereunder, but in no event more than the statutory minimum for tax withholding, to the extent required to avoid adverse accounting treatment, 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.

(h) Nothing contained in this Plan prevents 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.

(i) Nothing in the Plan interferes with or limits in any way the right of the Company or any Subsidiary to terminate any Participant’s employment at any time, nor does the Plan confer upon any Participant any right to continued employment with the Company or any Subsidiary.

(j) Awards granted under this Plan are intended to comply with Section 409A of the Code, or an exemption thereto.

Section 16. Effective Date of the Plan.

The Plan will be effective upon adoption of the Plan by the Board of the Company. The Plan will be submitted to the shareholders of the Company for approval within one year after its adoption by the Board, and if the Plan is not approved by the shareholders, the Plan will be void and of no effect. Any Awards granted under the Plan prior to the date the Plan is submitted for approval by the shareholders will be void if the shareholders do not approve the Plan.

Section 17. Expiration of the Plan.

Awards may be granted under this Plan at any time prior to April 1, 2015, on which date the Plan will expire but without affecting any outstanding awards.

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EX-10.4

Exhibit 10.4

THE LUBRIZOL CORPORATION

2010 STOCK INCENTIVE PLAN

PERFORMANCE SHARE UNIT AWARD AGREEMENT

THIS PERFORMANCE SHARE UNIT AWARD AGREEMENT, dated this                  day of                     , 2        , (the “Grant Date”) by The Lubrizol Corporation (the “Company”) to                                                      , an employee of the Company and/or a Subsidiary (as defined in the Plan).

The following terms and provisions apply to this Performance Share Unit Award:

1.    The Company hereby grants to you, under the provisions of Section 10 of the Company’s 2010 Stock Incentive Plan, as amended (the “Plan”), the number of Performance Share Units, in accordance with the three-year performance target approved by the Organization and Compensation Committee. The Performance Share Units granted hereunder are referred to herein as the “Units”.

2.    Any Performance Share Units that are payable to you, will be paid to you in                      [cash, shares] between the January 1 and March 15 of the year following the end of the three-year cycle based on actual performance at the end of the performance period.

3.    If there is a Change in Control, as defined in Section 12(b) of the Plan, the portion of this Award that may be paid to you will be based on performance as of the date of the Change in Control as determined by Exhibit A. Thereafter, (a) if you separate from service for Good Reason or if you are separated from service by Lubrizol for other than Cause (as defined in Section 12 of the Plan) prior to the end of the performance period, or (b) if you do not separate from service prior to the end of the performance period, you will receive payout of the portion of the Award determined by application of Exhibit A at the time specified in Section 2 of this Agreement.

4.    If you separate from service due to retirement (either normal or early retirement) or die prior to the end of the performance period you or your beneficiary will receive a pro-rata number of Performance Share Units at the time specified in Section 2 of this Agreement based on actual performance at the end of the performance period and on the number of full months which have elapsed since the beginning of the performance period at the time of your separation from service or death. If the Company does not have a beneficiary election on file at the time of your death, the Performance Share Units will be issued to your spouse, or if your spouse is not living at the time of issuance, your children who are living, or if you have no living children at the time of issuance, your estate.

If you separate from service (voluntarily or involuntarily) for any other reason prior to the end of the performance period you will forfeit any Performance Share Units under this Award, unless otherwise specifically approved by the Committee, upon the recommendation of the Chief Executive Officer, in which case, payment with respect to such Performance Share Units will be made at the time specified in Section 2 of this Agreement.

Notwithstanding the foregoing, if prior to separation from service due to retirement or death, you go on a company-approved long-term disability leave of absence prior to the end of the performance period you will receive a pro-rata number of Shares at the time specified in Section 2 of this Agreement, based on actual performance at the end of the performance period and on the number of full months that you were considered an active employee during the three-year performance cycle.

5.    The Award is not transferable by you during your life.

6.    Prior to the issuance of Performance Share Units to you, you will not be a shareholder of the Company and you will have no rights under the Award as a shareholder of the Company. No dividends or other amount will be allocated or paid to you with respect to the Award.

7.    The number of Performance Share Units subject to this Award outstanding 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, will be adjusted in the manner the Committee deems equitable; provided, however, that the number of Shares will always be a whole number.

8.    Performance Share Units will not be distributed as Shares under this Award if the issuance of the Performance Share Units would violate:

(a) any applicable state securities law;

(b) any applicable registration or other requirements under the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended, or the listing requirements of any stock exchange on which the Company’s common shares are listed; or

(c) any similar legal requirement of any governmental authority regulating the issuance of shares by the Company.

Further, if a Registration Statement with respect to the Performance Share Units to be issued is not in effect or if counsel for the Company deems it necessary or desirable in order to avoid possible violation of the Securities Act, the Company may require, as a condition to its issuance and delivery of certificates for the Shares, that you deliver to the Company a statement in writing that you understand the Shares may be “restricted securities” as defined in Rule 144 of the Securities and Exchange Commission and that any resale, transfer or other disposition of the Shares will be accomplished only in compliance with Rule 144, the Securities Act, or other or subsequent applicable Rules and Regulations thereunder. Further still, the Company may place on the certificates evidencing the Shares an appropriate legend under Rule 144.

9. (a)    When the Common Shares are distributable to you may be subject to income and other taxes on the value of the Shares on the date of distribution. The Company is authorized to withhold from any payment under this Award, withholding taxes due in respect of the payment hereunder, but in no event more than the statutory minimum for tax withholding, to the extent required to avoid adverse accounting treatment, 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

(b)    For purposes of determining the number of Common Shares that are to be withheld to provide for the tax withholding pursuant to Section 8(a), Common Shares will be valued at the closing price of a Common Share on the New York Stock Exchange on the date Shares are distributable to you. If the determination of the tax withholding requires the withholding of a fractional Share, the Company shall withhold the nearest whole number of Shares needed to pay the tax withholding, rounded up, and remit to you in cash the amount of the excess after the withholding taxes have been satisfied.

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10.    Notwithstanding any other provision of this Agreement, the Committee may cause any outstanding Award to be forfeited and may seek to recoup from you any economic gains pursuant to this Award if you engage in conduct that is not in good faith and that disrupts, damages, impairs or interferes with the business, reputation or employees of the Company or its Subsidiaries, including but not limited to, conduct that leads to a restatement of the Company’s financial statements.

11.    Prior to the distribution of Shares the Committee has the right in its sole discretion to reduce the amount of this Award.

12.    The Committee has conclusive authority, subject to the express provisions of the Plan, as in effect from time to time, and this Award, to interpret this Award and the Plan, and to establish, amend and rescind rules and regulations for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Award in the manner and to the extent it deems expedient to carry the Plan into effect, and it is the sole and final judge of such expediency. The Board of Directors of the Company may from time to time grant to the Committee such further powers and authority as the Board determines to be necessary or desirable.

13.    You must hold any Shares that are distributed to you under this Award at least until you have met your Share ownership guideline.

14.    Notwithstanding any other provision of this Award, your Award will be subject to all of the provisions of the Plan in force from time to time.

15.    The terms of this Award will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

THE LUBRIZOL CORPORATION	EMPLOYEE
By
James L. Hambrick Chairman, President and CEO

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EXHIBIT A

Determination of Number of Service-Based Share Units

Upon a Change in Control Under Section 3

Pursuant to the terms of Section 3, upon a Change in Control the portion of a performance-based Award that may be paid to you will be determined as follows:

1.    Zero if 12 months has not elapsed since the beginning of the performance period.

2.    If more than 12 months has elapsed since the beginning of the performance period:

(a)    Determine the measurement growth rate for each full year that has elapsed in the 3-year period as of the date of the Change in Control,

(b)    The 3-year cumulative measurement growth will be imputed as either the 1-year measurement growth (if the Change in Controls occurs during the second year) or the 2-year cumulative measurement growth (if the Change in Control occurs during the third year).

(c)    The portion of this Award that may be paid to you is the number of Units that would have been payable had the 3-year performance been as determined in (b) above.

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EX-10.8

Exhibit 10.8

THE LUBRIZOL CORPORATION

2005 OFFICERS’ SUPPLEMENTAL

RETIREMENT PLAN

(As Amended, November 9, 2010)

The Lubrizol Corporation hereby establishes, effective as of January 1, 2005 as amended, The Lubrizol Corporation 2005 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 6.

(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 aggregated amount of Basic Compensation (as that term is defined in the Lubrizol Pension Plan modified to add cash (but not shares), if any, which the Participant has elected to defer under The Lubrizol Corporation 2005 Deferred Compensation Plan for Officers or under The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan or, effective January 1, 2006, under The Lubrizol Corporation Senior Management Deferred Compensation Plan, received by the Participant during the three consecutive calendar years during which such Participant received the greatest aggregate amount of Basic Compensation, as defined above, 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 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 2005 Officers’ Supplemental Retirement Plan.”

(j) Change in Control. The term “Change in Control” shall mean the occurrence of any of the following events:

(i) The date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company.

(ii) The date any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company.

(iii) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

(iv) The date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before the acquisition or acquisitions.

Section 2. Vesting. Each Participant shall become 100 percent vested in his supplemental pension benefit under this Plan upon the earliest of the following events: his completing five years of service, his reaching age 55; his death; his becoming disabled and receiving benefits pursuant to the Company’s long-term disability plan; or a Change in Control.

Section 3. Normal Retirement Benefit. Each Participant who separates from service with the Company on or after his Normal Retirement Date shall receive, subject to the provisions of Sections 6 and 7, 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’ Profit Sharing and Savings Plan, excluding benefits attributable to Matching Contributions, CODA Contributions, Supplemental Contributions, Rollover Contributions, Transferred Contributions, Catch-up Contributions or Other Company Contributions, as defined thereunder;

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(c) Benefits payable to the Participant under The Lubrizol Corporation Age-Weighted Defined Contribution Plan;

(d) Benefits payable to the Participant under The Lubrizol Corporation 2005 Excess Defined Contribution Plan;

(e) Benefits payable to the Participant under The Lubrizol Corporation 2005 Excess Defined Benefit Plan;

(f) The Participant’s Social Security benefits;

(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 separates from service with the Company at or after age 55, but prior to his Normal Retirement Date, shall receive a percentage of his vested supplemental retirement benefit determined under Section 3, in accordance with the early retirement schedule provided in the Lubrizol Pension Plan at the time and in the form specified under Section 6.

Section 5. Payment to Participant.

(a) Each Participant who separates from service with the Company and its related corporations shall receive payment of his supplemental pension benefit in the standard form of payment of a single lump-sum payment payable within 60 days following the later of six months following the separation from service or the beginning of the calendar year following the calendar year in which Participant separated from service.

(b) Payments hereunder shall be less any applicable withholding taxes. The form of payment described shall be calculated using the same actuarial factors and interest rates used under The Lubrizol Corporation Pension Plan (or its successor) as in effect on the date of separation from service.

Section 6. 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 was 100 percent vested in his accrued supplemental retirement benefit, 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 6, 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 6, if such spouse had been married to the deceased Participant for at least one year as of the date of the Participant’s death. Benefits hereunder shall commence within 60 days after the death of the Participant and shall be paid monthly in substantially equal payments for the life of the surviving spouse.

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Section 7. Actuarial Factors. All actuarial assumptions and factors used in this Plan shall be the same as those used in the Lubrizol Pension Plan.

Section 8. 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 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 9. 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 10. 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 11. Right of Amendment and Termination. The Company reserves the right to amend or 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, by resolution or written action of its Board of Directors or by action of a committee to which such authority has been delegated by the Board of Directors; provided, however, that no amendment shall result in the forfeiture or reduction of the interest of any Participant or person claiming under or through any one or more of them pursuant to the Plan. Any amendment of the Plan shall be in writing and signed by authorized individuals.

Section 12. 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 13. 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 14. 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.

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Section 15. 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.

Section 16. Section 409A. The terms of this Plan will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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EX-10.9

Exhibit 10.9

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”), effective                         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 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 date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company.

(ii) The date any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or person) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company.

(iii) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

(iv) The date that any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before the acquisition or acquisitions.

(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,         or (ii) if there has been a Change in Control, the expiration of the Period of Employment (as that term is hereinafter defined); provided, however, that (A) commencing on January 1,             and each January 1 thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than September 30 of the immediately preceding year, the Company or the Executive shall have given notice that it or he, as the case may be, does not wish to have the Term extended and (B) subject to Section 19 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, (iii) the cessation of active employment by reason of the Executive’s disability and the actual receipt of disability benefits in accordance with Section 4(a)(ii), or (iv) the Executive’s attainment of age 65; provided, however, that commencing on each anniversary

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of the Change of Control, the Period of Employment shall automatically be extended for an additional year unless, not later than 90 calendar days prior to such anniversary date, either the Company or the Executive shall have given written notice to the other that the Period of Employment shall not be so extended.

3.     Compensation During Period of Employment

(a) Upon the occurrence of a Change in Control, the Executive shall receive during the Period of Employment (i) annual base salary at a rate not less than the Executive’s annual fixed or base compensation (payable monthly or otherwise as in effect for senior executives of the Company immediately prior to the occurrence of a Change in Control) or such higher rate as may be determined from time to time by the Board or the Compensation Committee thereof (which base salary at such rate is herein referred to as “Base Pay,” and one year’s worth of such Base Pay is herein referred to as the “Annual Base Pay Amount”) and (ii) an annual amount (the “Annual Incentive Pay Amount”) equal to not less than the highest aggregate annual bonus, incentive or other payments of cash compensation in addition to the amounts referred to in clause (i) above made or to be made in regard to services rendered in any calendar year during the three calendar years immediately preceding the year in which the Change in Control occurred pursuant to any annual 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”) payable in accordance with the terms of any such program; 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 retirement or other retirement income or welfare benefit, deferred compensation, incentive compensation, group and/or executive life, health, medical/ hospital or other insurance (whether funded by actual insurance or self-insured by the Company), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter by the Company providing perquisites, benefits and service credit for benefits at least as great as are payable thereunder prior to a Change in Control (collectively, “Employee Benefits”); provided, however, that except as expressly provided in, and subject to the terms of, Section 3(a) hereof, the Executive’s rights thereunder shall be governed by the terms thereof and shall not be enlarged hereunder or otherwise affected hereby. If and to the extent such perquisites, benefits or service credit for benefits are not payable or provided under any such policy, plan, program or arrangement as a result of the amendment or termination thereof, then the Company shall itself pay or provide therefor. Nothing in this Agreement shall preclude improvement or enhancement of any such Employee Benefits, provided that no such improvement shall in any way diminish any other obligation of the Company under this Agreement.

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4.    Separation From Service Following a Change in Control

(a) In the event of the occurrence of a Change in Control, the Executive may be separated from service by the Company during the Period of Employment and the Executive shall not be entitled to the benefits provided by Section 5 hereof only upon the occurrence of one or more of the following events:

(i) The Executive’s death;

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

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

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

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

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

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

(D) intentional wrongful engagement in any Competitive Activity;

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 separated from service for “Cause” hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive had committed an act set forth above in Section 4(a)(iv) and specifying the particulars thereof in detail. Nothing herein shall limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination.

(b) In the event of the occurrence of a Change in Control, this Agreement may be terminated by the Executive during the Period of Employment with the right to severance compensation as provided in Section 5 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):

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

(ii) Separation from service 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 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 11 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

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

5.    Severance Compensation

(a) If, following the occurrence of a Change in Control, the Executive is separated from service by the Company during the Period of Employment other than pursuant to Section 4(a) hereof, or if the Executive shall separate from service pursuant to Section 4(b) hereof (“Termination Date”), the Company shall continue to provide the following benefits:

(i) Base Pay through the Termination Date, to the extent not previously paid to the Executive, payable in the next normal bi-weekly pay.

(ii) Incentive Pay for any calendar year ended before the Termination Date in the same amount that would have been payable to the Executive with respect to that calendar year if the Executive had remained in the employ of the Company through the end of the Period of Employment, to the extent not previously paid to the Executive, payable in a lump sum in accordance with the terms of the program, or if later, within 60 days after the six-month anniversary of the Termination Date.

(iii) An amount constituting a pro rata Incentive Pay award for the partial year ending on the Termination Date and equal to (A) the greater of (I) the Annual Incentive Pay Amount or (II) the aggregate Incentive Pay to which the Executive would have been entitled pursuant to this Agreement or any agreement, policy, plan, program or arrangement referred to therein had he remained in the employ of the Company through the end of the calendar year in which his employment is terminated, multiplied by (B) a fraction, the numerator of which is the number of days from January 1 of the calendar year in which the Termination Date occurs to the Termination Date, inclusive, and the denominator of which is 365. This amount will be paid in a lump sum within 60 days after the six-month anniversary of the Termination Date.

(iv) In lieu of any further payments to the Executive for periods subsequent to the Termination Date, but without affecting the rights of the Executive referred to in Section 5(b) hereof, a lump sum payment (the “Severance Payment”) in an amount equal to 3 times the sum of (A) the Annual Base Pay Amount (at the highest rate in effect for any period prior to the Termination Date), plus (B) the Annual Incentive Pay Amount. This amount will be paid within 60 days after the six-month anniversary of the Termination Date.

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(v) For the period commencing on the Termination Date and ending on the third anniversary of the Termination Date (the “Benefit Continuation Period”), the Company shall arrange to provide the Executive with Employee Benefits that are welfare benefits, but not stock option, stock purchase, stock appreciation, or similar compensatory benefits, substantially similar to those which the Executive was receiving or entitled to receive immediately prior to the Termination Date (and if and to the extent that such benefits shall not or cannot be paid or provided under any policy, plan, program or arrangement of the Company or any Subsidiary, as the case may be, then the Company shall itself pay or provide for the payment to the Executive, his dependents and beneficiaries, such Employee Benefits). Without otherwise limiting the purposes or effect of Section 6 hereof, Employee Benefits otherwise receivable by the Executive pursuant to the first sentence of this Section 5(a)(v) shall be reduced to the extent comparable welfare benefits are actually received by the Executive from another employer during the Benefit Continuation Period, and any such benefits actually received by the Executive shall be reported by the Executive to the Company.

(vi) An amount equal to the sum of (A) excess of (I) the actuarial equivalent of the benefit under the Company’s qualified defined benefit retirement plan (the “Retirement Plan”) (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Retirement Plan immediately prior to the Change in Control) and any excess or supplemental defined benefit retirement plan in which the Executive participates (collectively, the “SERP”) that the Executive would receive if the Executive’s employment continued for three years after the Termination Date, assuming for this purpose that (a) all accrued benefits are fully vested, (b) the Executive’s age is increased by the number of years that the Executive is deemed to be so employed, and (c) the Executive’s compensation in each of the three years is that required by Section 5(a)(v), over (II) the actuarial equivalent of the Executive’s actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Termination Date and (B) an amount equal to the sum of the Company matching and profit sharing contributions under the Company’s qualified defined contribution plans and any excess or supplemental defined contributions plans in which the Executive participates that the Executive would receive if the Executive’s employment continued for three years after the Termination Date, assuming for this purpose that (w) the Company’s matching and profit sharing contributions under the Company’s qualified defined contribution plan are equal to the most recent such contributions made by the Company prior to the Change in Control, (x) the Executive’s benefits under such plans are fully vested and (y) a 7% annual interest rate is applied to the first and second year’s worth of such contributions. This amount will be paid in a lump sum within 60 days after the six-month anniversary of the Termination Date.

The amount of in-kind benefits provided during the Executive’s taxable year does not affect the in-kind benefits provided in any other taxable year. The right to in-kind benefits is not subject to liquidation or exchange for another benefit.

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

(c) 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 include with such late payment interest on the amount thereof at an annualized rate of interest equal to the then-applicable discount rate required to be utilized for purposes of Section 280G

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of the Code or any successor provision thereto, or if no such rate is so required to be used, a rate equal to the then applicable interest rate prescribed by the Pension Benefit Guarantee Corporation for benefit valuations in connection with non-multiemployer pension plan terminations assuming the immediate commencement of benefit payments.

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

6.    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 7 hereof will further limit the employment opportunities for the Executive. In addition, the Company acknowledges that its severance pay plans applicable in general to its salaried employees do not provide for mitigation, offset or reduction of any severance payment received thereunder. Accordingly, the parties hereto expressly agree that the payment of the severance compensation by the company to the Executive in accordance with the terms of this Agreement will be liquidated damages, and that the Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise, except as expressly provided in Section 5(a)(v) hereof.

7.    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, 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.

8.    Legal Fees and Expenses

(a) It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the enforcement or defense of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the

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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. The amount of expenses eligible for reimbursement or in-kind benefits provided during the Executive’s taxable year will not affect the expenses eligible for reimbursement or in-kind benefits to be provided, in any other taxable year. The right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(b) Without limiting the generality or effect of Section 8(a) hereof, in order to ensure the benefits intended to be provided to the Executive under Section 8(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 8 shall be paid, or reimbursed to the Executive if paid by the Executive, on a regular, periodic basis upon presentation by the Executive to the Bank of a statement or statements prepared by such counsel in accordance with its customary practices. The Company shall pay all amounts and take all action necessary to maintain the Letter of Credit during the Period of Employment and for 2 years thereafter and if, notwithstanding the Company’s complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, the Company shall obtain a replacement irrevocable clean letter of credit drawn upon a commercial bank selected by the Company and reasonably acceptable to the Executive, upon substantially the same terms and conditions as contained in the Letter of Credit, or any similar arrangement which, in any case, assures the Executive the benefits of this Agreement without incurring any cost or expense in connection therewith.

(c) Notwithstanding any other provision hereof, the parties’ respective rights and obligations under this Section 8 will survive any termination or expiration of this Agreement or the termination of the Executive’s employment for any reason whatsoever.

9.    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.

10.    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.

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11.    Successors and Binding Agreement

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

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

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 11(a) and 11(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 11(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.

12.    Notice

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

13.    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.

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14.    Validity

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

15.    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.

16.    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.

17.    Section 409A

The terms of this Agreement will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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

EXECUTIVE	THE LUBRIZOL CORPORATION
	By:
	Chairman, President and
	Chief Executive Officer

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EX-10.10

Exhibit 10.10

THE LUBRIZOL CORPORATION

2005 EXCESS DEFINED CONTRIBUTION PLAN

(As Amended November 9, 2010)

The Lubrizol Corporation hereby establishes, effective as of January 1, 2005 and amended and restated as of January 1, 2008, The Lubrizol Corporation 2005 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 and providing deferred compensation benefits to a select group of management and highly compensated employees.

ARTICLE I

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 Corporation with any other corporation or corporations, and any subsidiaries of The Lubrizol Corporation which adopt the Plan.

(d) Executive Council Deferred Compensation Plan. The term “Executive Council Deferred Compensation Plan” shall mean The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan, as shall be in effect on the date of the Participant’s retirement, death, or other termination of employment.

(e) Fund. The term “Fund” shall mean each separate investment fund established and maintained under the Trust Agreement.

(f) Lubrizol Deferred Compensation Plan. The term “Lubrizol Deferred Compensation Plan” shall mean The Lubrizol Corporation 2005 Deferred Compensation Plan for Officers or, effective January 1, 2006, The Lubrizol Corporation Senior Management Deferred Compensation Plan, as shall be in effect on the date of the Participant’s retirement, death, or other termination of employment.

(g) Participant. The term “Participant” shall mean any person employed by the Company 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 effective January 1, 2010, Age-Weighted Plan are limited by the application of Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, or, effective January 1, 2006, who participates in the Lubrizol Deferred Compensation Plan.

(h) 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.”

(i) Plan Year. The term “Plan Year” shall mean the calendar year.

(j) Profit-Sharing Plan. The term “Profit-Sharing Plan” shall mean The Lubrizol Corporation Employees’ Profit-Sharing Plan and Savings Plan as the same shall be in effect on the date of a Participant’s retirement, death, or other termination of employment.

(k) Supplemental Company Contributions. The term “Supplemental Company Contributions” shall mean the contributions made by the Company under the Plan in accordance with the provisions of Section 2.2.

(l) Trust Agreement. The term “Trust Agreement” shall mean The Lubrizol Corporation Excess Defined Contribution Plan Trust Agreement.

(m) Trust Assets. The term “Trust Assets” shall mean all property held by the Trustee pursuant to the Trust Agreement.

(n) Trustee. The term “Trustee” shall mean the trustee of The Lubrizol Corporation Excess Defined Contribution Trust.

(o) 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.

(p) Separate Accounts. The term “Separate Accounts” shall mean each account established on behalf of a Participant under the Plan and credited with Supplemental Company Contributions in accordance with the provisions of Section 2.3.

(q) Supplemental Matching Contributions. The term “Supplemental Matching Contributions” shall mean the contributions made by the Company under the Plan in accordance with the provisions of Section 2.3.

(r) Change in Control. The term “Change in Control” shall mean the occurrence of any of the following events:

(i) The date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company.

(ii) The date any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company.

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(iii) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

(iv) The date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before the acquisition or acquisitions.

(s) Age-Weighted Plan. Effective January 1, 2010, the term “Age-Weighted Plan” shall mean The Lubrizol Corporation Age-Weighted Defined Contribution Plan as the same shall be in effect on the date of a Participant’s retirement, death or other termination of employment.

1.2 Additional Definitions. All other words and phrases used herein shall have the meanings given them in the Profit-Sharing Plan, unless a different meaning is clearly required by the context.

ARTICLE II

SUPPLEMENTAL CONTRIBUTIONS

2.1 Eligibility. A Participant whose benefits under the Profit-Sharing Plan, or, effective January 1, 2010, the Age-Weighted Plan are limited with respect to any Plan Year by Section 401(a)(17) or 415 of the Code, or who participated in the Lubrizol Deferred Compensation Plan or the Executive Council Deferred Compensation Plan, shall be eligible to have contributions made with respect to him under the Plan in accordance with the provisions of this Article II.

2.2 Supplemental Company Contributions. In the event that the Company’s profit sharing contributions under the Profit-Sharing Plan or, effective January 1, 2010, the Age-Weighted Plan 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, or due to the Participant’s participation in the Lubrizol Deferred Compensation Plan or the Executive Council Deferred Compensation Plan, the amounts by which such contributions are limited shall be credited under the Plan by the Company and shall be designated as Supplemental Company Contributions.

2.3 Supplemental Matching Contributions. In the event that Company Matching Contributions under the Profit-Sharing Plan are limited for any Plan Year due to the Participant’s participation in the Lubrizol Corporation Deferred Compensation Plan or the Executive Council Deferred Compensation Plan, the amounts by which such contributions are limited shall be credited under the Plan by the Company and shall be designated as Supplemental Matching Contributions; provided, however that the total amount of Supplemental Matching Contributions hereunder for a Plan Year plus Company Matching Contributions under the Profit-Sharing Plan for the Plan Year shall not exceed 50 percent of six percent of the combination of the Participant’s Compensation under the Profit-Sharing Plan plus the amount of the Participant’s deferrals under the Lubrizol Deferred Compensation Plan and the Executive Council Deferred Compensation Plan; provided further, that for purposes of determining the amount of Supplemental Matching Contributions that may be made hereunder for a Plan Year, the total amount of the Participant’s Compensation under the Profit-Sharing Plan for a Plan

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Year plus the Participant’s deferrals under the Lubrizol Deferred Compensation Plan and the Executive Council Deferred Compensation Plan for the Plan Year is limited to the maximum amount of Compensation that may be taken into account under the Profit-Sharing Plan for the Plan Year; provided further that Supplemental Matching Contributions will be made hereunder only if the total of the Participant’s CODA Contributions plus Supplemental Contributions under the Profit-Sharing Plan has met or exceeded the maximum allowed as CODA Contributions under the Profit-Sharing Plan for the Plan Year.

2.4 Allocation of Contributions. Supplemental Company Contributions and Supplemental Matching Contributions shall be allocated among the Separate Accounts of the Participants on whose behalf such contributions are made.

2.5 Administration of Separate Accounts. Each Separate Account to which contributions under Sections 2.2 and 2.3 are credited and allocated shall be credited monthly with the net monthly increase (decrease) experienced by the Participant selected investment funds of the Lubrizol Profit-Sharing Plan.

ARTICLE III

DISTRIBUTION

3.1 Vesting. Each Participant shall become 100 percent vested in the value of his Separate Accounts under this Plan upon the earliest of the following events: his completing five years of service, his reaching age 55; his death; his becoming disabled and receiving benefits pursuant to the Company’s long-term disability plan; or a Change in Control.

3.2 Distribution. Each Participant who separates from service with the Company and its related corporations shall receive payment of his Separate Account in the standard form of payment of a single lump-sum payment payable within 60 days following the later of six months following the separation from service or the beginning of the calendar year following the calendar year in which Participant separated from service.

3.3 Distribution in the Event of Death. In the event of the death of a Participant after commencement of benefits but prior to distribution in full of his interest under the Plan, his Beneficiary shall continue to receive distribution of such interest following Participant’s death in the same form and timing as Participant had been receiving at the time of his death. In the event of death of a Participant prior to making an election for benefits, such Beneficiary shall receive distribution of such interest in a lump sum payable within 60 days following Participant’s death. The Beneficiary under this Section 3.3 shall be the person designated as the Participant’s beneficiary under the Profit-Sharing Plan. 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. Notwithstanding the foregoing, if the Participant is entitled to a benefit under The Lubrizol Corporation 2005 Officers’ Supplemental Retirement Plan, the benefit paid under this Section 3.3 shall be paid at the same time and in the same form of payment as the benefit under The Lubrizol Corporation 2005 Officer’s Supplemental Retirement Plan.

3.4 Withholding for Taxes. Any payment made hereunder will be made less any applicable withholding taxes.

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ARTICLE IV

ADMINISTRATION

4.1 Authority of the Company. The Company shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making, or 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 provisions 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 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 hereunder shall be final and binding upon all interested parties.

4.2 Claims Review Procedure. The Company shall notify the person who files a claim for benefits (hereinafter referred to as the “Claimant”) of the Plan’s adverse benefit determination within a reasonable period of time, but not later than 90 days after the receipt of the claim by the Plan, unless the Company determines that special circumstances require an extension of time for processing the claim. If the Company determines that special circumstances require an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90-day period. In no event shall such extension exceed a period of 90 days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination. Whenever the Company decides for whatever reason to deny, whether in whole or in part, a claim for benefits filed by any Claimant, the Company shall transmit to the Claimant a written notice of the Company’s decision, which shall be written in a manner calculated to be understood by the Claimant and contain a statement of the specific reasons for the denial of the claim, reference to the specific Plan provisions on which the determination was based, a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary, a description of the Plan’s review procedures and the time limits applicable to such procedures, include a statement of the Claimant’s right to bring civil action under Section 502(a) ERISA following an adverse benefit determination on review. Within 60 days of the date on which the Claimant receives such notice, he or his authorized representative may request that the claim denial be reviewed by filing with the Company a written request therefor, which request shall contain the following information:

(a) the date on which the Claimant’s request was filed with the Company; provided, however, that the date on which the Claimant’s request for review was in fact filed with the Company shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (a);

(b) the specific portions of the denial of his claim which the Claimant requests the Company to review;

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(c) a statement by the Claimant setting forth the basis upon which he believes the Company should reverse the Company’s previous denial of his claim for benefits and accept his claim as made; and

(d) any written comments, documents, records and other information which the Claimant desires the Company to examine in its consideration of his position as stated pursuant to paragraph (c).

Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits. The review of the claim will take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. Within no later than 60 days of the date determined pursuant to paragraph (a) of this Section 4.2, the Company shall notify Claimant of the Plan’s benefit determination, unless the Company determines that special circumstances require an extension of time for processing the claim. If the Company determines that an extension of time for processing is required, written notice of the extension will be furnished to the Claimant prior to the termination of the initial 60-day period. In no event shall such extension exceed a period of 60 days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review. The Company shall provide the Claimant with a written notification of the Plan’s benefit determination on review, written in a manner calculated to be understood by the Claimant, including the reasons and Plan provisions upon which its decision was based, a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim for benefits, and a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA.

ARTICLE V

AMENDMENT AND TERMINATION

The Company reserves the right to amend or 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, by resolution or written action of its Board of Directors or by action of a committee to which such authority has been delegated by the Board of Directors; provided, however, that no amendment shall result in the forfeiture or reduction of the interest of any Participant or person claiming under or through any one or more of them pursuant to the Plan; provided, further that, effective January 1, 2006, notwithstanding Section 3.1, upon a termination of the Plan each Participant shall be fully vested in his supplemental pension benefit under this Plan. Any amendment of the Plan shall be in writing and signed by authorized individuals.

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

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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 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, 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.

6.9. Section 409A. The terms of this Plan will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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EX-10.11

Exhibit 10.11

THE LUBRIZOL CORPORATION

2005 EXCESS DEFINED BENEFIT PLAN

(As Amended, November 9, 2010)

The Lubrizol Corporation hereby establishes, effective January 1, 2005, and amended and restated as of January 1, 2008, The Lubrizol Corporation 2005 Excess Defined Benefit Plan (the “Plan”) for the purposes of providing supplemental benefits to certain employees, as permitted by Section 3(36) of the Employee Retirement Income Security Act of l974 and providing deferred compensation benefits to a select group of management and highly compensated employees.

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 surviving corporation resulting from any merger of The Lubrizol Corporation with any other corporation or corporations, and any subsidiaries of The Lubrizol Corporation which adopt the Plan.

(c) Lubrizol Pension Plan. The term “Lubrizol Pension Plan” shall mean The Lubrizol Corporation 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 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, or, effective January 1, 2005, who participates in The Lubrizol Corporation Senior Management Deferred Compensation 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 2005 Excess Defined Benefit Plan.”

(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.

(h) Change in Control. The term “Change in Control” shall mean the occurrence of any of the following events:

(i) The date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company.

(ii) The date any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company.

(iii) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

(iv) The date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before the acquisition or acquisitions.

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 separates from service with the Company and its subsidiaries and

(a) whose benefits under the Lubrizol Pension Plan are limited by the provisions of Section 401(a)(17) or 415 of the Code,

(b) who participated in The Lubrizol Corporation 2005 Deferred Compensation Plan for Officers,

(c) who participated in The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan, or

(d) effective January 1, 2006, who participated in The Lubrizol Corporation Senior Management Deferred Compensation Plan

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 equal to an amount which shall be determined in the normal form of payment under the Lubrizol Pension Plan, regardless of any election of optional method of payment by the Participant under the Lubrizol Pension Plan or this Plan, and shall be equal to the sum of (I) plus (II), where (I) is the result, but not less than zero, of (b) minus (a); and (II) is the result, but not less than zero, of (c) minus (b), where:

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(a) equals the monthly pension benefit payable to the Participant under the Lubrizol Pension Plan in the normal form of payment;

(b) equals the monthly pension benefit which would have been payable under the benefit formula in the Lubrizol Pension Plan as if:

(1) the limitation of Section 415 of the Code on total benefits that may be accrued under the Lubrizol Pension Plan was not in effect;

(2) any amount payable under The Lubrizol Corporation 2005 Excess Defined Contribution Plan attributable to participation in The Lubrizol Corporation Employees’ Profit Sharing Plan and Savings Plan did not and would not increase the compensation or otherwise affect the compensation or any other variable used in the benefit formula under the Lubrizol Pension Plan;

(3) any participation by the Participant in The Lubrizol Corporation 2005 Deferred Compensation Plan for Officers, The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan, or, effective January 1, 2006, in The Lubrizol Corporation Senior Management Deferred Compensation Plan did not decrease the compensation or otherwise affect the compensation or any other variable used in the benefit formula under the Lubrizol Pension Plan; and

(4) all years of service of the Participant with Lubrizol or Noveon are counted; and

(c) equals the monthly pension benefit which would have been payable under the benefit formula in the Lubrizol Pension Plan as if:

(1) the limitations of Section 401(a)(17) of the Code on compensation that may be taken into account in determining benefits under the Lubrizol Pension Plan was not in effect;

(2) the limitation of Section 415 of the Code on total benefits that may be accrued under the Lubrizol Pension Plan was not in effect;

(3) any amount payable under The Lubrizol Corporation 2005 Excess Defined Contribution Plan attributable to participation in The Lubrizol Corporation Employees’ Profit Sharing Plan and Savings Plan did not and would not increase the compensation or otherwise affect the compensation or any other variable used in the benefit formula under the Lubrizol Pension Plan;

(4) any participation by the Participant in The Lubrizol Corporation 2005 Deferred Compensation Plan for Officers, The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan, or, effective January 1, 2006, in The Lubrizol Corporation Senior Management Deferred Compensation Plan did not decrease the compensation or otherwise affect the compensation or any other variable used in the benefit formula under the Lubrizol Pension Plan; and

(5) all years of service of the Participant with Lubrizol are counted, excluding any service before January 1, 2006 for employees who were part of Noveon on December 31, 2005.

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2.3 Vesting. Each Participant shall become 100 percent vested in his supplemental pension benefit under this Plan upon the earliest of the following events: his completing five years of service, his reaching age 55; his death; his becoming disabled and receiving benefits pursuant to the Company’s long-term disability plan; or a Change in Control.

ARTICLE III

PAYMENT OF BENEFITS

3.1 Payment to Participant.

(a) Each Participant who separates from service with the Company and its related corporations shall receive payment of his supplemental pension benefit in the standard form of payment of a single lump-sum payment payable within 60 days following the later of six months following the separation from service or the beginning of the calendar year following the calendar year in which Participant separated from service.

(b) Payments hereunder shall be less any applicable withholding taxes. The form of payment described shall be calculated using the same actuarial factors and interest rates used under The Lubrizol Corporation Pension Plan (or its successor) as in effect on the date of separation from service.

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 benefit 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 purposes 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. Benefits hereunder shall commence within 60 days after the death of the Participant and shall be paid monthly in substantially equal payments for the life of the surviving spouse.

ARTICLE IV

ADMINISTRATION

4.1 Authority of the Company. The Company shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making, or 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 provisions 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 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 hereunder shall be final and binding upon all interested parties.

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4.2 Claims Review Procedure. The Company shall notify the person who files a claim for benefits (hereinafter referred to as the “Claimant”) of the Plan’s adverse benefit determination within a reasonable period of time, but not later than 90 days after the receipt of the claim by the Plan, unless the Company determines that special circumstances require an extension of time for processing the claim. If the Company determines that special circumstances require an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90-day period. In no event shall such extension exceed a period of 90 days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination. Whenever the Company decides for whatever reason to deny, whether in whole or in part, a claim for benefits filed by any Claimant, the Company shall transmit to the Claimant a written notice of the Company’s decision, which shall be written in a manner calculated to be understood by the Claimant and contain a statement of the specific reasons for the denial of the claim, reference to the specific Plan provisions on which the determination was based, a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary, a description of the Plan’s review procedures and the time limits applicable to such procedures, include a statement of the Claimant’s right to bring civil action under Section 502(a) ERISA following an adverse benefit determination on review. Within 60 days of the date on which the Claimant receives such notice, he or his authorized representative may request that the claim denial be reviewed by filing with the Company a written request therefor, which request shall contain the following information:

(a) the date on which the Claimant’s request was filed with the Company; provided, however, that the date on which the Claimant’s request for review was in fact filed with the Company shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (a);

(b) the specific portions of the denial of his claim which the Claimant requests the Company to review;

(c) a statement by the Claimant setting forth the basis upon which he believes the Company should reverse the Company’s previous denial of his claim for benefits and accept his claim as made; and

(d) any written comments, documents, records and other information which the Claimant desires the Company to examine in its consideration of his position as stated pursuant to paragraph (c).

Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits. The review of the claim will take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. Within no later than 60 days of the date determined pursuant to paragraph (a) of this Section 4.2, the Company shall notify Claimant of the Plan’s benefit determination, unless the Company determines that special circumstances require an extension of time for processing the claim. If the Company determines that an extension of time for processing is required, written notice of the extension will be furnished to the Claimant prior to the termination of the initial 60-day period. In no event shall such extension exceed a period of 60 days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the

5

date by which the Plan expects to render the determination on review. The Company shall provide the Claimant with a written notification of the Plan’s benefit determination on review, written in a manner calculated to be understood by the Claimant, including the reasons and Plan provisions upon which its decision was based, a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim for benefits, and a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA.

ARTICLE V

AMENDMENT AND TERMINATION

The Company reserves the right to amend or 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, by resolution or written action of its Board of Directors or by action of a committee to which such authority has been delegated by the Board of Directors; provided, however, that no amendment shall result in the forfeiture or reduction of the interest of any Participant or person claiming under or through any one or more of them pursuant to the Plan; provided, further that, effective January 1, 2006, notwithstanding Section 2.3, upon a termination of the Plan each Participant shall be fully vested in his supplemental pension benefit under this Plan. Any amendment of the Plan shall be in writing and signed by authorized individuals.

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 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. execution, or levy of any kind, then thereafter during the life of such Participant, 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 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 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 Trust, the terms of which are governed by the Trust Agreement.

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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 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 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.

6.9. Section 409A. The terms of this Plan will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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EX-10.12

Exhibit 10.12

THE LUBRIZOL CORPORATION

2005 Deferred Compensation Plan For Directors

(As Amended, November 9, 2010)

1. Purpose. The purpose of this 2005 Deferred Compensation Plan For Directors (the “Plan”) is to continue 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 earned as a director in calendar years beginning on or after January 1, 2005, until after the Participant separates from service as a director, all as provided in the 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.

(a) Any director of the Company may, at any time prior to January 1 of a given calendar year, elect to defer under this Plan all, or such portion as the director may designate, of (i) that director’s annual retainer fee, (ii) the attendance fees for attending directors’ meetings or committees thereof and/or (iii) stock compensation under The Lubrizol Corporation 2005 Stock Incentive Plan. All compensation deferred shall be deferred on the day that such compensation would otherwise have been paid to the director.

(b) The election described in paragraph (a) shall be made by written notice delivered to the Vice President, Human Resources, of the Company specifying (i) the portion of designated compensation to be deferred for such year, (ii) time of distribution, and (iii) if applicable, the payment option.

(c) The election under this Section 3 shall take effect on the first day of the calendar year following the year in which the election is made. A new election must be made for each calendar year.

(d) Notwithstanding paragraphs (a), (b) and (c), the first year a Participant becomes eligible to participate in the Plan, he may make an initial deferral election within 30 days after he becomes eligible to participate but only with respect to compensation paid for services performed after the election.

4. Deferral of Cash Compensation.

(a) On the date the cash compensation (and effective January 1, 2008, stock compensation) deferred under the Plan would have become payable to the Participant in the absence of an election under the Plan to defer payment thereof, the amount of such deferred compensation shall be credited to a Stock Deferral Account and/or any of the Cash Deferral Account investment portfolios designated as available by the Committee from time to time. All Deferral Accounts shall be established and maintained for each Participant in the Company’s accounting books and records and the Company shall be under no obligation to purchase any investments designated by the Participant.

(b) Participant’s Cash Deferral Accounts shall be credited with any gains or losses equal to those generated as if the Participant’s Cash Deferral Account balances had been invested in the applicable investment portfolio(s) selected by the Participant

(c) A Participant’s deferred cash compensation (and effective for deferrals after January 1, 2008, stock compensation) credited to a Participant’s Stock Deferral Account shall be used to determine the number of full and fractional units (“Units”) representing Company Common Shares (“Shares”) which the deferred amount would purchase at the closing price for the Shares on the New York Stock Exchange (“NYSE”) composite transactions reporting system on the date that the deferred amount is credited pursuant to paragraph (a) and if Shares were not traded on that date on the NYSE, then such computation shall be made as of the first preceding day on which Shares were so traded. The Company shall credit the Participant’s Stock Deferral Account with the number of full and fractional Units so determined. A Participant’s Stock Deferral Account shall be administered in accordance with Section 5(b) through (e).

(d) A Participant may elect pursuant to rules established by the Committee to transfer a portion or all of the balance of any Deferral Account established under this Section 4 to any other such Deferral Account; provided, however, that effective April 28, 2008, any stock compensation deferred into the Plan will be allocated to a Stock Fund Account where it must remain for more than six months after deferral.

5. Deferral of Stock Compensation.

(a) Prior to January 1, 2008, at the time that Shares are distributable to a Participant, who has elected to defer the receipt thereof under Section 3, in lieu of Shares being issued, there shall be credited to a separate Stock Deferral Account for the Participant, full stock equivalent units (“Units”) which shall be established and maintained on the Company’s records. One Unit shall be allocated to the Stock Deferral Account for each such Share. The balance of a Stock Deferral Account established under this Section 5(a) pursuant to deferrals under Section 3 may not be transferred to any other Deferral Account.

(b) As of each dividend payment date established by the Company for the payment of cash dividends with respect to its Shares, the Company shall credit each separate Stock Deferral Account of a Participant with an additional number of whole and/or fractional Units equal to:

(i) the product of (x) the dividend per Share which is payable with respect to such dividend payment date, multiplied by (y) the number of whole and fractional Units credited to the separate Stock Deferral Account of a Participant as of such payment date;

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divided by

(ii) The closing price of a Share on the dividend payment date (or if Shares were not traded on that date, on the next preceding day on which Shares were so traded), as reported on the NYSE-composite tape.

(c) At no time prior to actual delivery of Shares pursuant to the Plan, shall the Company be obligated to purchase or reserve Shares for delivery of a Participant and the Participant shall not be a shareholder nor have any of the rights of a shareholder with respect to the Units credited to the Participant’s Stock Deferral Accounts.

(d) 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 in each separate Stock Deferral Account of a Participant shall be appropriately adjusted to take into account any such event.

6. Payment of Deferred Compensation.

(a) In the event a Participant separates from service prior to commencing to receive scheduled withdrawal payments of the Participant’s Deferral Accounts, such scheduled withdrawal payments, if any, that have not commenced pursuant to Section 7, and the amount selected by Participant to be paid upon a separation from service, shall be to the Participant in: (i) a single lump sum; (ii) annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years; or (iii) a specified percentage in a lump sum followed by annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years, as the Participant shall have selected pursuant to Section 3(b). Such periodic payments shall begin or the lump sum payment shall be made, as the case may be, from the Participant’s Deferral Accounts, at such time, within 60 days after not less than six (6) months nor more than twelve (12) months after the Participant’s separation from service, as the Participant shall have selected pursuant to Section 3(b); provided, however, that if Participant has not selected a payment option with respect to payment upon a separation from service, such amounts shall be paid in a lump sum within 60 days after the six-month anniversary after Participant’s separation from service. Installment payments made after the first installment or lump sum payment, as the case may be, will be made on the annual, semi-annual or quarterly anniversary of the first installment or lump sum payment, as the case may be, as elected pursuant to Section 3(b). Notwithstanding the foregoing, a Participant may elect not less than twelve (12) months prior to the Participant’s separation from service, to change the time or form of distribution of the Participant’s Deferral Accounts upon a separation from service; provided, however that any such change shall be invalid if the effect of such change is to accelerate distribution; provided, further that upon any such change, the distribution shall be paid at least five (5) years after the date originally selected pursuant to Section 3(b).

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(b) The amount of each installment payable to a Participant from the Participant’s Cash Deferral Accounts shall be determined by dividing the aggregate balance of such Participant’s Cash Deferral Accounts by the number of periodic installments (including the current installment) remaining to be paid. Until a Participant’s Cash Deferral Accounts has been completely distributed, the balance thereof remaining, from time to time, shall be credited with gains and losses on a monthly basis as provided in Section 4(b).

(c) The amount of any installment payable to a Participant from the Participant’s Stock Deferral Accounts shall be determined by dividing the balance of the aggregate number of Units in the Participant’s Stock Deferral Accounts by the number of periodic installments (including the current installment) remaining to be paid and the quotient shall be the number of Shares that are payable. If the determination of the installment payable from the Participant’s Stock Deferral Accounts results in a fractional Share being payable, the installment payment shall exclude any such fractional Share payment except that, in the final installment payment, any such fractional Share shall be paid in cash in an amount as determined by the Committee. Until the Participant’s Stock Deferral Accounts have been completely distributed, the balance in the Stock Deferral Accounts shall continue to be credited with the dividend equivalents on such balances as provided in Section 5(b).

(d) In the event a Participant dies prior to receiving payment of the entire amount of the Participant’s Deferral Accounts, the unpaid balance shall be paid to such beneficiary as the Participant may have designated in writing to the Vice President, Human Resources, of the Company as the beneficiary to receive any such post-death distribution under the Plan or, in the absence of such written designation, to the Participant’s legal representative or to the beneficiary designated in the Participant’s last will as the one to receive such distributions. Distributions subsequent to the death of a Participant shall commence within 60 days after the death of the Participant in: (i) a single lump sum; (ii) annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years; or (iii) a specified percentage in a lump sum followed by annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years as elected by the Participant pursuant to Section 3(b) and the amount of each installment shall be computed as provided in Section 6(b), and (d) as the case may be; provided, however, that if Participant has not selected a payment option with respect to payment upon death, such amounts shall be paid to Participant’s beneficiary in a lump sum within 60 days after the death of the Participant. Installment payments made after the first installment or lump sum payment, as the case may be, will be made on the annual, semi-annual or quarterly anniversary of the first installment or lump sum payment, as the case may be, as elected pursuant to Section 3(b). Notwithstanding the foregoing, a Participant may elect not less than twelve (12) months prior to the Participant’s death, to change the time or form of distribution of the Participant’s Deferral Accounts; provided, however that any such change shall be invalid if the effect of such change is to accelerate distribution; provided, further that upon any such change, the distribution shall be paid at least five (5) years after the date originally selected pursuant to Section 3(b).

(e) Payments from the Cash Deferral Accounts shall be made in cash and payments from the Stock Deferral Accounts shall be made in Shares. The amount of any distribution pursuant to Sections 6 through 8 shall reduce the balance held in the Participant’s corresponding Deferral Accounts as of the date of such distribution. Installment payments shall be made pro-rata from a Participant’s Deferral Accounts.

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7. Scheduled Withdrawal Accounts. Pursuant to Section 3, a Participant may elect to receive part or all of the Participant’s deferrals in accordance with Participant’s elections pursuant to Section 3(a)(i) and (ii) (and for all deferrals on or after January 1, 2008) for up to three scheduled withdrawal accounts and with respect to Participant’s deferrals prior to January 1, 2007 pursuant to Section 3(a)(iii) a Participant may elect to receive part or all of Participant’s deferrals in accordance with Participant’s elections for up to three scheduled withdrawal accounts,, each of which shall commence within 60 days after the date elected by the Participant pursuant to Section 3(b) in: (i) a single lump sum; (ii) annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years; or (iii) a specified percentage in a lump sum followed by annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years and the amount of each installment shall be computed as provided in Section 6(b), and (c) as the case may be. Notwithstanding the foregoing, a Participant may elect not less than twelve (12) months prior to the Participant’s date of the scheduled withdrawal, to change the time or form of distribution of the Participant’s Deferral Accounts, provided, however that any such change shall be invalid if the effect of such change is to accelerate distribution; provided, further that upon any such change, the distribution shall be paid at least five (5) years after the date originally selected pursuant to Section 3(b).

8. Unforeseen Emergency. The Committee may accelerate the distribution of part or all of one or more of a Participant’s Deferral Accounts for reasons of an unforeseeable emergency that cannot be met using other resources, as determined by the Committee pursuant to the terms of this Section 8. For purposes of the Plan, an unforeseeable emergency is a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary or the Participant’s dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)); the loss of Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. A distribution based on severe financial hardship shall not exceed the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local or foreign income taxes or penalties reasonably anticipated from the distribution).

9. Non-assignability. None of the rights or interests in any of the Participant’s Deferral Accounts shall, at any time prior to actual payment or distribution pursuant to the Plan, be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, and such rights and interest shall not be subject to payment of debts by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner.

10. Interest of Participant. The Company shall be under no obligation to segregate or reserve any funds or other assets for purposes relating to the Plan and, except as set forth in this Plan, no Participant shall have any rights whatsoever in or with respect to any funds or other assets held by the Company for purposes of the Plan or otherwise. Each Participant’s accounts maintained for purposes of the Plan merely constitute bookkeeping entries on records of the Company, constitute the unsecured promise and obligation of the Company to make payments as provided herein, and shall not constitute any allocation whatsoever of any cash, shares or other assets of the Company or be deemed to create any trust or special deposit with respect to any of the Company’s assets. Notwithstanding the foregoing provisions, nothing in this Plan shall preclude the Company from setting aside Shares or funds in trust pursuant to one or

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more trust agreements between a trustee and the Company. However, no Participant shall have any secured interest or claim in any assets or property of the Company or any such trust and all Shares or funds contained in such trust shall remain subject to the claims of the Company’s general creditors.

11. Amendment. The Board of Directors of the Company, or the Organization and Compensation Committee may, from time to time, amend or terminate the Plan, provided that no such amendment or termination of the Plan shall adversely affect a Participant’s accounts as they existed immediately before such amendment or termination or the manner of distribution thereof, unless such Participant shall have consented thereto in writing. Notice of any amendment or termination of the Plan shall be given promptly to all Participants.

12. Plan Implementation. This Plan is adopted and effective for deferrals of compensation earned for calendar years beginning on or after January 1, 2005, and amended and restated January 1, 2008.

13. Section 409A Transition Elections. A Participant who prior to January 1, 2008 has made an initial deferral election under this Plan may change the form and/or time of payment with respect to any or all of such elections; provided however that (a) no such election may be made for amounts otherwise payable under this Plan during 2007, and (b) no payment pursuant to such election may be payable prior to May 1, 2008. A Participant who after January 1, 2008 but prior to January 1, 2009 has made an initial deferral election under this Plan may change the form and/or time of payment with respect to any or all of such elections; provided however that (a) no such election may be made for amounts otherwise payable under this Plan during 2008, and (b) no payment pursuant to such election may be payable prior to May 1, 2009.

14. Section 409A. The terms of this Plan will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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EX-10.13

Exhibit 10.13

THE LUBRIZOL CORPORATION

Senior Management Deferred Compensation Plan

(As Amended, November 9, 2010)

1. Purpose. The purpose of this Senior Management Deferred Compensation Plan (the “Plan”) is to permit an a person who is an officer (as identified by the Company for Section 16 purposes under the Securities Exchange Act of 1934) of The Lubrizol Corporation (the “Company”) or, for amounts earned in 2005, who was an officer of the Company during 2004, or effective January 1, 2006, who is selected to participate in the Plan by the Organization and Compensation Committee of the Board of Directors of the Company (“Committee”), (hereinafter referred to as the “Participant”), who wishes, to defer a portion of such Participant’s compensation earned in calendar years beginning on or after January 1, 2005, as provided in the Plan. Notwithstanding any provision to the contrary, prior to January 1, 2006, for purposes of this Plan, an “officer” or “Participant” does not include any employee of Noveon, Inc. or its affiliates.

2. Administration. The Plan shall be administered by the Committee. The Committee’s interpretation and construction of all provisions of the Plan shall be binding and conclusive upon all Participants and their heirs and/or successors.

3. Right to Defer Compensation.

(a) A Participant of the Company may, at any time prior to January 1 of a given calendar year, elect, for the calendar year, to defer under the Plan a pre-selected amount of such Participant’s compensation specified in paragraph (c) below, which such Participant may thereafter be entitled to receive for services performed during such elected calendar year. Notwithstanding the foregoing, if allowed by the Company, at any time up to six months prior to the payment of performance-based long-term incentive compensation, a Participant may elect to defer under the Plan a pre-selected amount of such compensation specified in (c)(iii) below, provided however, that any such election shall only be made in accordance with Section 409A of the Internal Revenue Code of 1986, as amended and the regulations thereunder.

(b) The election under Section 3(a) shall take effect on the first day of the calendar year following the date on which the election is made and such election shall be irrevocable for any elected calendar year after such elected calendar year shall have commenced.

(c) A Participant may elect to defer up to 90 percent of one or more of the following:

(i) Base salary;

(ii) Annual incentive pay, if any.

(iii) Stock compensation from the long term incentive plan, if any.

(iv) Stock compensation pursuant to an employment agreement dated as of January 1, 2003

provided, however, that the actual amount deferred will be the elected amount less any applicable withholding taxes.

(d) Notwithstanding paragraphs (a), (b) and (c), the first year a Participant becomes eligible to participate in the Plan, he may make an initial deferral election within 30 days after he becomes eligible to participate but only with respect to compensation paid for services performed after the election.

(e) At the time elections are made pursuant to paragraphs (a) or (d), and in addition to the provisions of paragraphs (a) through (d), a Participant may elect to defer that portion or all of the Participant’s cash and/or stock compensation (i) described in paragraph (c) and/or (ii) any other plan or program that provides for cash or stock compensation, to the extent that such amounts would otherwise be nondeductible by the Company pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended. For purposes of the preceding sentence, the amount to be deferred with respect to any compensation plans payable in Company shares shall be determined by taking into consideration any fixed cash compensation to be received subsequent to the date on which shares are distributable under such program. Notwithstanding any other provision of this Plan, deferrals under this paragraph (e) shall be distributable only six (6) months after the Participant separates from service in accordance with Section 6.

(f) All elections under this Plan shall be made by written notice delivered to the Vice President, Human Resources, of the Company specifying (i) the portion, if any, determined under paragraph (c), of each category of the Participant’s compensation to be deferred for a year, as described above, (ii), if applicable, the time of distribution, and (iii) the payment option as provided in Section 6 for distributions.

(g) Notwithstanding paragraph (f), any compensation earned after the end of the first month in which a Participant under this Plan no longer is a Participant, as defined in Section 1, but continues to be employed by the Company, shall not be deferred, provided however, the balance in the Participant’s Deferral Accounts shall continue to be held and administered pursuant to the Plan; provided further that the provisions of this paragraph (g) shall not apply for amounts earned in 2005.

4. Deferral of Cash Compensation.

(a) On the date the cash compensation (and effective January 1, 2008, stock compensation) deferred under the Plan would have become payable to the Participant in the absence of an election under the Plan to defer payment thereof, the amount of such deferred compensation shall be credited to a Stock Deferral Account and/or any of the Cash Deferral Account investment portfolios designated as available by the Committee from time to time. All Deferral Accounts shall be established and maintained for each Participant in the Company’s accounting books and records and the Company shall be under no obligation to purchase any investments designated by the Participant. To the extent that, at the time amounts are credited to a Participant’s Deferral Accounts, any federal, state or local payroll withholding tax applies (e.g., Medicare withholding tax), the Participant shall be responsible for the payment of such amount to the Company and the Company shall promptly remit such amount to the proper taxing authority.

(b) Participant’s Cash Deferral Accounts shall be credited with any gains or losses equal to those generated as if the Participant’s Cash Deferral Account balances had been invested in the applicable investment portfolio(s) selected by the Participant.

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(c) A Participant’s deferred cash compensation (and effective for deferrals after January 1, 2008, stock compensation) credited to a Participant’s Stock Deferral Account shall be used to determine the number of full and fractional units (“Units”) representing Company Common Shares (“Shares”) which the deferred amount would purchase at the closing price for the Shares on the New York Stock Exchange (“NYSE”) composite transactions reporting system on the date that the deferred amount is credited pursuant to paragraph (a) and if Shares were not traded on that date on the NYSE, then such computation shall be made as of the first preceding day on which Shares were so traded. The Company shall credit the Participant’s Stock Deferral Account with the number of full and fractional Units so determined. A Participant’s Stock Deferral Account shall be administered in accordance with Section 5(b) through (e).

(d) A Participant may elect pursuant to rules established by the Committee to transfer a portion or all of the balance of any Deferral Account established under this Section 4 to any other such Deferral Account; provided, however, that effective May 1, 2008, any stock compensation deferred into the Plan will be allocated to a Stock Fund Account where it must remain for more than six months after deferral.

(e) Notwithstanding the foregoing, a Participant may elect to have any portion or all of the Participant’s cash deferrals credited to any of the Deferral Accounts listed in paragraph (a) and may transfer balances in accordance with paragraph (d) provided that the Participant is considered, in the judgment of the Chief Executive Officer of the Company, to be on plan to meet the Participant’s Company Share ownership guideline. Otherwise, a Participant must elect that at least 50% of any cash compensation (and effective January 1, 2008, stock compensation) deferral hereunder be credited to a Stock Deferral Account and may not transfer any portion of the balance of the Stock Deferral Account to another Deferral Account.

(f) Effective January 1, 2011, the Company will match deferrals of a Participant, who is a non-bargained employee hired, transferred, re-hired or transferred to non-bargained status on and after January 1, 2010, in accordance with the following provisions:

i. Compensation: Total base and annual incentive cash compensation received or deferred in the calendar year less the amount of annual incentive compensation deferred into The Lubrizol Corporation Executive Council Deferred Compensation Plan during the calendar year.

ii. Deferrals Eligible for Match: The amount of cash base and annual incentive compensation deferred under Section 3(c)(i) and (ii), limited to the difference of Compensation as defined in subparagraph (i) and the limit in place from time to time under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended.

iii. Amount of Match: 50 percent of the first 6 percent of the Deferrals Eligible for Match as defined in subparagraph (ii).

iv. Match Vesting: 33 1/3 percent for each year of service after hire or rehire in accordance with the following schedule:

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Years of Service	Vested Percentage
Less than one	0
One but less than two	33-1/3%
Two but less than three	66-2/3%
Three or more	100%

v. Investment of Match: The amount of match contributed to the Plan under this paragraph (f) will be credited to a Stock Deferral Account and/or any of the Cash Deferral Account investment portfolios designated as available by the Committee from time from time, in accordance with the Participant’s election, and under the same terms and conditions as provided in paragraphs (a) through (e) of this Section 4.

vi. Payment of Match: Notwithstanding any other provision of this Plan, the Match will be paid in a single lump sum cash payment within sixty (60 days) after six months after Participant’s separation from service. If any of the Match is invested in a Stock Deferral Account at the time of payment, the amount paid with respect to the Stock Deferral Account will be in cash equal to the number of whole and fractional share units credited to the Match Stock Deferral Account of the Participant multiplied by the closing price for a share of Lubrizol common stock on the NYSE composite tape on the date the Match becomes payable.

The provisions of this paragraph (f) will govern the administration of the Match regardless of any conflicting provision in this Plan.

5. Deferral of Stock Compensation.

(a) Prior to January 1, 2008, at the time that Shares are distributable to a Participant, who has elected to defer the receipt thereof under Section 3(c) or (e), in lieu of Shares being issued, there shall be credited to a separate Stock Deferral Account for the Participant, full stock equivalent units (“Units”) which shall be established and maintained on the Company’s records. One Unit shall be allocated to the Stock Deferral Account for each such Share. The balance of a Stock Deferral Account established under this Section 5(a) pursuant to deferrals under Section 3(c)(iii) or (iv) may not be transferred to any other Deferral Account.

(b) As of each dividend payment date established by the Company for the payment of cash dividends with respect to its Shares, the Company shall credit each separate Stock Deferral Account of a Participant with an additional number of whole and/or fractional Units equal to:

(i) the product of (x) the dividend per Share which is payable with respect to such dividend payment date, multiplied by (y) the number of whole and fractional Units credited to the separate Stock Deferral Account of a Participant as of such payment date;

divided by

(ii) The closing price of a Share on the dividend payment date (or if Shares were not traded on that date, on the next preceding day on which Shares were so traded), as reported on the NYSE-composite tape.

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(c) At no time prior to actual delivery of Shares pursuant to the Plan, shall the Company be obligated to purchase or reserve Shares for delivery of a Participant and the Participant shall not be a shareholder nor have any of the rights of a shareholder with respect to the Units credited to the Participant’s Stock Deferral Accounts.

(d) To the extent that, at the time Units are credited to a Stock Deferral Account of a Participant, any federal, state or local payroll withholding tax applies (e.g., Medicare withholding tax), the Participant shall be responsible for the payment of such amount to the Company and the Company shall promptly remit such amount to the proper taxing authority.

(e) 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 in each separate Stock Deferral Account of a Participant shall be appropriately adjusted to take into account any such event.

6. Payment of Deferred Compensation.

(a) In the event a Participant separates from service prior to commencing to receive scheduled withdrawal payments of the Participant’s Deferral Accounts, such scheduled withdrawal payments, if any, that have not commenced pursuant to Section 7, and the amount selected by the Participant to be paid upon a separation from service, shall be paid to the Participant in: (i) a single lump sum; (ii) annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years; or (iii) a specific percentage in a lump sum followed by annual, semi-annual or quarterly substantially equal periodic installments over a period, not exceeding twenty (20) years, as the Participant shall have selected pursuant to Section 3(f). Such periodic payments shall begin or the lump sum payment shall be made, as the case may be, from the Participant’s Deferral Accounts, at such time, within 60 days after not less than six (6) nor more than twelve (12) months after the Participant’s separation from service, as the Participant shall have selected pursuant to Section 3(f); provided, however, that if Participant has not selected a payment option with respect to payment upon a separation from service, such amounts shall be paid in a lump sum within 60 days after the six-month anniversary after Participant’s separation from service. Installment payments made after the first installment or lump sum payment, as the case may be, will be made on the annual, semi-annual or quarterly anniversary of the first installment or lump sum payment, as the case may be, as elected pursuant to Section 3(f). Notwithstanding the foregoing, a Participant may elect not less than twelve (12) months prior to the Participant’s separation from service, to change the time or form of distribution of the Participant’s Deferral Accounts upon a separation from service; provided, however that any such change shall be invalid if the effect of such change is to accelerate distribution; provided, further that upon any such change, the distribution shall be paid at least five (5) years after the date originally selected pursuant to Section 3(f).

(b) The amount of each installment payable to a Participant from the Participant’s Cash Deferral Accounts shall be determined by dividing the aggregate

5

balance of such Participant’s Cash Deferral Accounts by the number of periodic installments (including the current installment) remaining to be paid. Until a Participant’s Cash Deferral Accounts has been completely distributed, the balance thereof remaining, from time to time, shall be credited with gains and losses on a monthly basis as provided in Section 4(b).

(c) The amount of any installment payable to a Participant from the Participant’s Stock Deferral Accounts shall be determined by dividing the balance of the aggregate number of Units in the Participant’s Stock Deferral Accounts by the number of periodic installments (including the current installment) remaining to be paid and the quotient shall be the number of Shares that are payable. If the determination of the installment payable from the Participant’s Stock Deferral Accounts results in a fractional Share being payable, the installment payment shall exclude any such fractional Share payment except that, in the final installment payment, any such fractional Share shall be paid in cash in an amount as determined by the Committee. Until the Participant’s Stock Deferral Accounts have been completely distributed, the balance in the Stock Deferral Accounts shall continue to be credited with the dividend equivalents on such balances as provided in Section 5(b).

(d) In the event a Participant dies prior to receiving payment of the entire amount of the Participant’s Deferral Accounts, the unpaid balance shall be paid to such beneficiary as the Participant may have designated in writing to the Vice President, Human Resources, of the Company as the beneficiary to receive any such post-death distribution under the Plan or, in the absence of such written designation, to the Participant’s legal representative or to the beneficiary designated in the Participant’s last will as the one to receive such distributions. Distributions upon the death of a Participant shall commence within 60 days after the death of the Participant in: (i) a single lump sum; (ii) annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years; or (iii) a specific percentage in a lump sum followed by annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years as elected by the Participant pursuant to Section 3(f) and the amount of each installment shall be computed as provided in Section 6(b), and (d) as the case may be; provided, however, that if Participant has not selected a payment option with respect to payment upon death, such amounts shall be paid to Participant’s beneficiary in a lump sum within 60 days after the death of the Participant. Installment payments made after the first installment or lump sum payment, as the case may be, will be made on the annual, semi-annual or quarterly anniversary of the first installment or lump sum payment, as the case may be, as elected pursuant to Section 3(f). Notwithstanding the foregoing, a Participant may elect not less than twelve (12) months prior to the Participant’s death, to change the time or form of distribution of the Participant’s Deferral Accounts; provided, however that any such change shall be invalid if the effect of such change is to accelerate distribution; provided, further that upon any such change, the distribution shall be paid at least five (5) years after the date originally selected pursuant to Section 3(f).

(e) In the event a Participant becomes disabled prior to the Participant’s separation from service or scheduled withdrawal date, the unpaid balance shall be paid to the Participant commencing within 60 days after the date of Participant’s disability in: (i) a single lump; (ii) annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years; or (iii) a specified percentage in a lump sum followed by annual, semi-annual or quarterly substantially installments over a period, not exceeding twenty (20) years as elected by the Participant pursuant to Section 3(f) and the amount of each installment shall be computed as provided in

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Section 6(b), and (d) as the case may be; provided, however, that if Participant has not selected a payment option with respect to payment upon disability, such amounts shall be paid to Participant in a single lump sum within 60 days after Participant’s disability. Installment payments made after the first installment or lump sum payment, as the case may be, will be made on the annual, semi-annual or quarterly anniversary of the first installment or lump sum payment, as the case may be, as elected pursuant to Section 3(f). Notwithstanding the foregoing, a Participant may elect not less than twelve (12) months prior to the Participant’s disability, to change the time or form of distribution of the Participant’s Deferral Accounts, provided, however that any such change shall be invalid if the effect of such change is to accelerate distribution; provided, further that upon any such change, the distribution shall be paid at least five (5) years after the date originally selected pursuant to Section 3(f). For purposes of this paragraph (e), the term “disabled” means (A) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (B) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

(f) Tax withholding for distributions under Sections 6 and 7 of Participant’s Stock Deferral Accounts shall be made from those Shares otherwise issuable and shall be such number of Shares that will provide for the federal, state and/or local income tax at the rates then applicable for supplemental wages, unless otherwise requested by the Participant, but in no event less than the statutory minimums for tax withholding.

(g) For purposes under paragraph (f) of determining the number of Shares that are to be withheld to provide for the tax withholding, Shares shall be valued at the closing price on the New York Stock Exchange of a Share on the date the Shares are distributable (or if the Shares were not traded on that date, on the next preceding day on which the Shares were so traded). If the determination of the tax withholding would require the withholding of a fractional Share, the Company shall withhold the nearest whole number of Shares needed to pay the tax withholding, rounded up, and remit to the Participant in cash the amount of the excess after the withholding taxes have been satisfied.

(h) Payments from the Cash Deferral Accounts shall be made in cash and payments from the Stock Deferral Accounts shall be made in Shares. The amount of any distribution pursuant to Sections 6 through 8 shall reduce the balance held in the Participant’s corresponding Deferral Accounts as of the date of such distribution. Installment payments shall be made pro-rata from a Participant’s Deferral Accounts.

7. Scheduled Withdrawal Accounts. Pursuant to Section 3 a Participant may elect to receive part or all of the Participant’s deferrals under Section 3(c)(i) and (ii) (and for all deferrals on or after January 1, 2008) in accordance with Participant’s elections for up to three scheduled withdrawal accounts, and with respect to Participant’s deferrals prior to January 1, 2008 pursuant to Section 3(c)(iii) and 3(e) a Participant may elect to receive part or all of Participant’s deferrals in accordance with Participant’s elections for up to three scheduled withdrawal accounts, each of which shall commence within 60 days after the date elected by the Participant pursuant to Section 3(f) in: (i) a single lump sum; (ii) annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years; or (iii) a specified percentage in a lump sum followed

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by annual, semi-annual or quarterly substantially equal installments over a period, not exceeding twenty (20) years and the amount of each installment shall be computed as provided in Section 6(b), and (c) as the case may be. Installment payments made after the first installment or lump sum payment, as the case may be, will be made on the annual, semi-annual or quarterly anniversary of the first installment or lump sum payment, as the case may be, as elected pursuant to Section 3(f). Notwithstanding the foregoing, a Participant may elect not less than twelve (12) months prior to the Participant’s date of the scheduled withdrawal, to change the time or form of distribution of the Participant’s Deferral Accounts, provided, however that any such change shall be invalid if the effect of such change is to accelerate distribution; provided, further that upon any such change, the distribution shall be paid at least five (5) years after the date originally selected pursuant to Section 3(f).

8. Unforeseeable Emergency. The Committee may accelerate the distribution of part or all of one or more of a Participant’s Deferral Accounts for reasons of an unforeseeable emergency that cannot be met using other resources, as determined by the Committee pursuant to the terms of this Section 8. For purposes of the Plan, an unforeseeable emergency is a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary or the Participant’s dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)); the loss of Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. A distribution based on severe financial hardship shall not exceed the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local or foreign income taxes or penalties reasonably anticipated from the distribution).

9. Non-assignability. None of the rights or interests in any of the Participant’s Deferral Accounts shall, at any time prior to actual payment or distribution pursuant to the Plan, be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, and such rights and interest shall not be subject to payment of debts by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner.

10. Interest of Participant. The Company shall be under no obligation to segregate or reserve any funds or other assets for purposes relating to the Plan and, except as set forth in this Plan, no Participant shall have any rights whatsoever in or with respect to any funds or other assets held by the Company for purposes of the Plan or otherwise. Each Participant’s accounts maintained for purposes of the Plan merely constitute bookkeeping entries on records of the Company, constitute the unsecured promise and obligation of the Company to make payments as provided herein, and shall not constitute any allocation whatsoever of any cash, shares or other assets of the Company or be deemed to create any trust or special deposit with respect to any of the Company’s assets. Notwithstanding the foregoing provisions, nothing in this Plan shall preclude the Company from setting aside Shares or funds in trust pursuant to one or more trust agreements between a trustee and the Company. However, no Participant shall have any secured interest or claim in any assets or property of the Company or any such trust and all Shares or funds contained in such trust shall remain subject to the claims of the Company’s general creditors.

11. Amendment. The Board of Directors of the Company, or the Organization and Compensation Committee may, from time to time, amend or terminate the Plan,

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provided that no such amendment or termination of the Plan shall adversely affect a Participant’s accounts as they existed immediately before such amendment or termination or the manner of distribution thereof, unless such Participant shall have consented thereto in writing. Notice of any amendment or termination of the Plan shall be given promptly to all Participants.

12. Plan Implementation. This Plan is adopted and effective for deferrals of compensation earned for calendar years beginning on or after January 1, 2005 and amended and restated January 1, 2008.

13. Section 409A Transition Elections. A Participant who prior to January 1, 2008 has made an initial deferral election under this Plan may change the form and/or time of payment with respect to any or all of such elections; provided however that (a) no such election may be made for amounts otherwise payable under this Plan during 2007, and (b) no payment pursuant to such election may be payable prior to May 1, 2008. A Participant who after January 1, 2008 but prior to January 1, 2009 has made an initial deferral election under this Plan may change the form and/or time of payment with respect to any or all of such elections; provided however that (a) no such election may be made for amounts otherwise payable under this Plan during 2008, and (b) no payment pursuant to such election may be payable prior to May 1, 2009.

14. Section 409A. The terms of this Plan will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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EX-10.14

Exhibit 10.14

THE LUBRIZOL CORPORATION

2005 EXECUTIVE COUNCIL

DEFERRED COMPENSATION PLAN

(As Amended, November 9, 2010)

1. Purpose. The purpose of this 2005 Executive Council Deferred Compensation Plan (the “Plan”) is to permit a person who is a member of the Executive Council (sometimes hereinafter referred to as the “Member” or as the “Participant”), and who is employed by The Lubrizol Corporation (the “Company”), to defer a portion of such Member’s compensation earned in calendar years beginning on or after January 1, 2005, 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 the Plan shall be binding and conclusive upon all Participants and their heirs and/or successors.

3. Right to Defer Compensation.

(a) A Member may, at any time prior to January 1 of a given calendar year, elect, for one the calendar year commencing with the calendar year immediately following the election (“Participation Year”), to defer under the Plan a pre-selected fixed dollar amount or percentage up to 90 percent of such Member’s annual variable compensation, if any (the “deferred compensation”), under the Company’s annual incentive plan (“Incentive Plan”), which such Participant may thereafter be entitled to receive for services performed during the Participation Year; provided, however that the actual amount deferred will be the elected amount less any applicable withholding taxes. Notwithstanding the foregoing, a Member may prior to March 15, 2005 make an election relating to deferred compensation with respect to services performed on or after January 1, 2005 and on or before December 31, 2005.

(b) The election under this Section 3 shall take effect on the first day of the elected Participation Year and such election shall be irrevocable for any elected Participation Year once such Participation Year shall have commenced.

(c) Notwithstanding paragraphs (a) and (b), the first year a Participant becomes eligible to participate in the Plan, he may make an initial deferral election within 30 days after he becomes eligible to participate but only with respect to compensation paid for services performed after the election.

(d) All elections under this Plan shall be made by written notice (on a form provided by the Company) specifying the deferred compensation, if any, determined under paragraph (a).

(e) A Participant must make an election for each Participation Year. Notwithstanding paragraph (b) and the first sentence of this paragraph (e), any variable compensation earned after the end of the first month in which a Participant under this Plan ceases to be a Member, as defined in Section 1, but continues to be employed by the Company, shall not be deferred, provided however, the balance in the Participant’s Stock Deferral Accounts shall continue to be held and administered pursuant to the Plan.

(f) All notices by a Participant under the Plan shall be in writing and shall be given to the Company’s Vice President, Human Resources.

(g) Once a Member has met the Member’s Lubrizol stock ownership guidelines, the Member is no longer eligible to make a deferral election under this Plan; provided however, the foregoing shall not apply to a Member who becomes subject to a higher stock ownership guideline due to a change in the stock ownership requirements or due to the Member’s promotion to a higher level of stock ownership requirement until the Member has met the new stock ownership guidelines.

4. Stock Deferral Accounts and Stock Matching Accounts.

(a) At the close of business of the day on which the Incentive Plan deferred compensation would have been payable to the Participant in the absence of the election under the Plan to defer payment thereof, there shall be credited to a separate Stock Deferral Account and Stock Matching Account for each Participant full and fractional stock equivalent units (“Units”) which shall be established as hereinafter provided and shall be maintained for each Participant on the Company’s records.

(b) The number of full and fractional Units that shall be credited to a separate Stock Deferral Account for a Participant shall be equal to an amount determined by dividing the Participant’s deferred compensation for the applicable Participation Year by the average of the closing price for Lubrizol Common Shares (“Shares”) on the New York Stock Exchange (“NYSE”) composite transactions reporting system (“composite tape”) for each of the ten (10) consecutive trading days commencing on the fourth business day following the release of earnings for such Participation Year.

(c) The number of full and fractional Units that shall be credited to a separate Stock Matching Account for a Participant shall be equal to an amount determined by multiplying the number of Units determined in paragraph (b) by .25.

(d) To the extent that, at the time Units are credited to a Stock Deferral Account Stock Matching Account of a Participant, any federal, state or local payroll withholding tax applies (e.g., Medicare withholding tax), the Participant shall be responsible for the payment of such amount to the Company and the Company shall promptly remit such amount to the proper taxing authority.

(e) The amount of deferred compensation used in the formulae set forth in paragraphs (b) and (c) shall not constitute sums due and owing to Participant. Such amounts shall be used solely as part of the formulae to determine the number of full and fractional Units.

(f) As of each dividend payment date established by the Company for the payment of cash dividends with respect to its Shares, the Company shall credit each separate Stock Deferral Account and Stock Matching Account of a Participant with an additional number of whole and/or fractional Units equal to:

(i) the product of (x) the dividend per Share which is payable with respect to such dividend payment date, multiplied by (y) the number of whole and fractional Units credited to the separate

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Stock Deferral Account and Stock Matching Account, respectively, of the Participant as of such payment date;

divided by

(ii) the closing price of a Share on the dividend payment date (or if Shares were not traded on that date, on the next preceding day on which Shares were so traded), as reported on the NYSE- composite tape.

(g) At no time prior to actual delivery of Shares pursuant to the Plan shall the Company be obligated to purchase or reserve Shares for delivery to any Participant and a Participant shall not be a shareholder or have any of the rights of a shareholder with respect to the Units credited to each separate Stock Deferral Account or Stock Matching Account of a Participant.

5. Payment of Deferred Compensation.

(a) All Units credited to a separate Stock Deferral Account and Stock Matching Account of Participant, including dividend equivalents thereon, shall be payable to the Participant in a lump sum within 60 days after the third anniversary from the first date Units were credited to such separate Stock Deferral Account and Stock Matching Account of the Participant under Section 4(a) for a particular Participation Year unless the Participant elects at the time of deferral under Section 3 to have the Units paid six (6) months after the Participant’s separation from service or upon another specified date; provided, however, that after the Participant makes the deferral election under Section 5, the Participant may elect once for any Participation Year of deferral, to change the date of distribution to another in-service year or six (6) months after the Participant has separated from service; provided further, that any such modification must be made in writing at least twelve (12) months prior to the original date of distribution; provided further, that the deferred distribution date must be at least five (5) years after the date originally selected. Amounts so further deferred will be paid within 60 days after the date selected.

(b) All distributions or payments of Units to a Participant in the Participant’s Stock Deferral Account shall be made in Shares equal to the number of whole Units credited to the separate Stock Deferral Account(s) of the Participant which become payable in accordance with Section 5(a). Any fractional number of Units shall be paid in cash in lieu of Shares based on the closing price for a Share on the NYSE composite tape on the date the Stock Deferral Account(s) become payable.

(c) All distributions or payments of Units to a Participant in the Participant’s Stock Matching Account shall be made in cash equal to the number of whole Units credited to the separate Stock Matching Account(s) of the Participant, which become payable in accordance with Section 5(a) multiplied by the closing price for a Share on the NYSE composite tape on the date the Stock Matching Account(s) become payable.

(d) To the extent that, at the time Shares are distributed to a Participant, any federal, state or local payroll withholding tax applies, tax withholding for distributions shall be made from those Shares that would provide for the federal, state and/or local income tax at the rates then applicable for supplemental wages, unless otherwise requested by the Participant, but in no event less than the statutory minimums for tax

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withholding. For purposes of determining the number of Shares that are to be withheld to provide for the tax withholding, Shares shall be valued at the closing price on the New York Stock Exchange of a Share on the date the Shares are distributable (or if the Shares were not traded on that date, on the next preceding day on which the Shares were so traded). If the determination of the tax withholding would require the withholding of a fractional Share, the Company shall withhold the nearest whole number of Shares needed to pay the tax withholding, rounded up, and remit to the Participant in cash the amount of the excess after the withholding taxes have been satisfied.

(e) In the event a Participant dies prior to receiving payment of the entire amount in each separate Stock Deferral Account and Stock Matching Account of the Participant, the unpaid balance shall be paid within 60 days after the date of death to such beneficiary as the Participant may have designated in writing to the Vice President, Human Resources, of the Company as the beneficiary to receive any such post-death distribution under the Plan or, in the absence of such written designation, to the Participant’s legal representative or to the beneficiary designated in the Participant’s last will as the one to receive such distributions.

(f) To the extent the Committee deems necessary, the Shares distributed to a Participant pursuant to Section 5(a) or 6 or to a beneficiary pursuant to Section 5(e) may contain such restrictions on the right of immediate transfer as the Committee may reasonably determine.

6. Unforeseeable Emergency. The Committee may accelerate the distribution of part or all of one or more of a Participant’s separate Stock Deferral Accounts and Stock Matching Account for reasons of an unforeseeable emergency that cannot be met using other resources, as determined by the Committee pursuant to the terms of this Section 8. For purposes of the Plan, an unforeseeable emergency is a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary or the Participant’s dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)); the loss of Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. A distribution based on severe financial hardship shall not exceed the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local or foreign income taxes or penalties reasonably anticipated from the distribution).

7. Non-assignability. None of the rights or interests in any of the Participant’s separate Stock Deferral Accounts and Stock Matching Accounts shall, at any time prior to actual payment or distribution pursuant to the Plan, be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, and such rights and interest shall not be subject to payment of debts by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner.

8. Interest of Participant. The Company shall be under no obligation to segregate or reserve any funds or other assets for purposes relating to the Plan and, except as set forth in this Plan, no Participant shall have any rights whatsoever in or with respect to any funds or other assets held by the Company for purposes of the Plan or otherwise. Each Participant’s separate Stock Deferral Accounts and Stock Matching Accounts

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maintained for purposes of the Plan merely constitutes a bookkeeping entry on records of the Company, constitutes the unsecured promise and obligation of the Company to make payments as provided herein, and shall not constitute any allocation whatsoever of any cash or other assets of the Company or be deemed to create any trust or special deposit with respect to any of the Company’s assets. Notwithstanding the foregoing provisions, nothing in this Plan shall preclude the Company from setting aside Shares or funds in trust pursuant to one or more trust agreements between a trustee and the Company. However, no Participant shall have any secured interest or claim in any assets or property of the Company or any such trust and all Shares or funds contained in such trust shall remain subject to the claims of the Company’s general creditors.

9. Miscellaneous. 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 credited to each separate Stock Deferral Account and Stock Matching Account of a Participant shall be appropriately adjusted to take into account any such event.

10. Amendment. The Board of Directors of the Company, or the Organization and Compensation Committee, may, from time to time, amend or terminate the Plan, provided that no such amendment or termination of the Plan shall adversely affect any Stock Deferral Account or Stock Matching Account of a Participant as it existed immediately before such amendment or termination or the manner of distribution thereof, unless such Participant shall have consented thereto in writing. Notice of any amendment or termination of the Plan shall be given promptly to all Participants.

11. Plan Implementation. This Plan is adopted and effective for deferrals of variable compensation earned for calendar years beginning on and after January 1, 2005, and amended and restated January 1, 2008.

12. Section 409A Transition Elections. A Participant who prior to January 1, 2008 has made an initial deferral election under this Plan may change the form and/or time of payment with respect to any or all of such elections provided however, that any election to change the time and/or form of payment shall be made prior to December 1, 2007; provided however that (a) no such election may be made for amounts otherwise payable under this Plan during 2007, and (b) no payment pursuant to such election may be payable prior May 1, 2008.

13. Section 409A. The terms of this Plan will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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EX-10.15

Exhibit 10.15

EMPLOYMENT AGREEMENT

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

WITNESSETH:

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

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

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

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

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

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

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

1.    Operation of Agreement

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

(i) The date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company.

(ii) The date any person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or person) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company.

(iii) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not

endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

(iv) The date that any person, or more than one person acting as a group, acquires ( or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before the acquisition or acquisitions.

(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, 2014 or (ii) if there has been a Change in Control, the expiration of the Period of Employment (as that term is hereinafter defined); provided, however, that (A) commencing on January 1, 2010 and each January 1 thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than September 30 of the immediately preceding year, the Company or the Executive shall have given notice that it or he, as the case may be, does not wish to have the Term extended and (B) subject to Section 10 hereof, if, prior to a Change in Control, the Executive ceases for any reason to be an employee of the Company and any Subsidiary, thereupon the Term shall be deemed to have expired and this Agreement shall immediately terminate and be of no further effect.

2.    Employment; Period of Employment

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

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

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Company or the Executive shall have given written notice to the other that the Period of Employment shall not be so extended.

3.    Compensation During Period of Employment

(a) Upon the occurrence of a Change in Control, the Executive shall receive during the Period of Employment (i) annual base salary at a rate not less than the Executive’s annual fixed or base compensation (payable monthly or otherwise as in effect for senior executives of the Company immediately prior to the occurrence of a Change in Control) or such higher rate as may be determined from time to time by the Board or the Compensation Committee thereof (which base salary at such rate is herein referred to as “Base Pay,” and one year’s worth of such Base Pay is herein referred to as the “Annual Base Pay Amount”) and (ii) an annual amount (the “Annual Incentive Pay Amount”) equal to not less than the highest aggregate annual bonus, incentive or other payments of cash compensation in addition to the amounts referred to in clause (i) above made or to be made in regard to services rendered in any calendar year during the three calendar years immediately preceding the year in which the Change in Control occurred pursuant to any annual 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”) payable in accordance with the terms of any such program; 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 retirement or other retirement income or welfare benefit, deferred compensation, incentive compensation, group and/or executive life, health, medical/ hospital or other insurance (whether funded by actual insurance or self-insured by the Company), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter by the Company providing perquisites, benefits and service credit for benefits at least as great as are payable thereunder prior to a Change in Control (collectively, “Employee Benefits”); provided, however, that except as expressly provided in, and subject to the terms of, Section 3(a) hereof, the Executive’s rights thereunder shall be governed by the terms thereof and shall not be enlarged hereunder or otherwise affected hereby. If and to the extent such perquisites, benefits or service credit for benefits are not payable or provided under any such policy, plan, program or arrangement as a result of the amendment or termination thereof, then the Company shall itself pay or provide therefor. Nothing in this Agreement shall preclude improvement or enhancement of any such Employee Benefits, provided that no such improvement shall in any way diminish any other obligation of the Company under this Agreement.

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4.    Separation From Service Following a Change in Control

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

(i) The Executive’s death;

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

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

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

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

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

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

(D) intentional wrongful engagement in any Competitive Activity;

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 separated from service for “Cause” hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive had committed an act set forth above in Section 4(a)(iv) and specifying the particulars thereof in detail. Nothing herein shall limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination.

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

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

(ii) Separation from service 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 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

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him prior to the Change of Control without, in either case, his prior written consent; or

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

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

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

5.    Severance Compensation

(a) If, following the occurrence of a Change in Control, the Executive is separated from service by the Company during the Period of Employment other than pursuant to Section 4(a) hereof, or if the Executive shall separate from service pursuant to Section 4(b) hereof (“Termination Date”), the Company shall continue to provide the following benefits:

(i) Base Pay through the Termination Date, to the extent not previously paid to the Executive, payable in the next normal bi-weekly pay.

(ii) Incentive Pay for any calendar year ended before the Termination Date in the same amount that would have been payable to the Executive with respect to that calendar year if the Executive had remained in the employ of the Company through the end of the Period of Employment, to the extent not previously paid to the Executive, payable in a lump sum in accordance with the terms of the program, or if later, within 60 days after the six-month anniversary of the Termination Date.

(iii) An amount constituting a pro rata Incentive Pay award for the partial year ending on the Termination Date and equal to (A) the greater of (I) the Annual Incentive Pay Amount or (II) the aggregate Incentive Pay to which the Executive would have been entitled pursuant to this Agreement or any agreement, policy, plan, program or arrangement referred to therein had he remained in the employ of the Company through the end of the calendar year in which his employment is terminated, multiplied by (B) a fraction, the numerator of which is the number of days from January 1 of the calendar year in which the Termination Date occurs to the Termination Date, inclusive, and the denominator of which is 365. This amount will be paid in a lump sum within 60 days after the six-month anniversary of the Termination Date.

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

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amount will be paid within 60 days after the six-month anniversary of the Termination Date.

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

(vi) An amount equal to the sum of (A) excess of (I) the actuarial equivalent of the benefit under the Company’s qualified defined benefit retirement plan (the “Retirement Plan”) (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Retirement Plan immediately prior to the Change in Control) and any excess or supplemental defined benefit retirement plan in which the Executive participates (collectively, the “SERP”) that the Executive would receive if the Executive’s employment continued for three years after the Termination Date, assuming for this purpose that (a) all accrued benefits are fully vested, (b) the Executive’s age is increased by the number of years that the Executive is deemed to be so employed, and (c) the Executive’s compensation in each of the three years is that required by Section 5(a)(v), over (II) the actuarial equivalent of the Executive’s actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Termination Date and (B) an amount equal to the sum of the Company matching and profit sharing contributions under the Company’s qualified defined contribution plans and any excess or supplemental defined contributions plans in which the Executive participates that the Executive would receive if the Executive’s employment continued for three years after the Termination Date, assuming for this purpose that (w) the Company’s matching and profit sharing contributions under the Company’s qualified defined contribution plan are equal to the most recent such contributions made by the Company prior to the Change in Control, (x) the Executive’s benefits under such plans are fully vested and (y) a 7 percent annual interest rate is applied to the first and second year’s worth of such contributions. This amount will be paid in a lump sum within 60 days after the six-month anniversary of the Termination Date.

The amount of in-kind benefits provided during the Executive’s taxable year does not affect the in-kind benefits provided in any other taxable year. The right to in-kind benefits is not subject to liquidation or exchange for another benefit.

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

(c) 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

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include with such late payment interest on the amount thereof at an annualized rate of interest equal to the then-applicable discount rate required to be utilized for purposes of Section 280G of the Code or any successor provision thereto, or if no such rate is so required to be used, a rate equal to the then applicable interest rate prescribed by the Pension Benefit Guarantee Corporation for benefit valuations in connection with non-multiemployer pension plan terminations assuming the immediate commencement of benefit payments.

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

6.    Certain Additional Payments by the Company

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

(b) Subject to the provisions of Section 6(e) hereof, all determinations required to be made under this Section 6, including whether an Excise Tax is payable by the Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to the Executive and the amount of such Gross-Up Payment, if any, shall be made by a nationally recognized accounting firm (the “Accounting Firm”) selected by the Executive in his sole discretion. The Executive shall direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and the Executive within 30 calendar days after the Termination Date, if applicable, and any such other time or times as may be requested by the Company or the Executive. If the Accounting Firm determines that any Excise Tax is payable by the Executive, the Company shall pay the required Gross-Up Payment to the Executive in a lump sum by the later of six months after the Termination Date or the end of Executive’s taxable year next following the Executive’s taxable year in which Executive remits the related taxes. 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

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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 in a lump sum to, or for the benefit of, the Executive by the end of Executive’s taxable year following the Executive’s taxable year in which the Executive remits the taxes.

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

(d) The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by Section 6(b) hereof shall be borne by the Company. If such fees and expenses are initially paid by the Executive, the Company shall reimburse the Executive the full amount of such fees and expenses within 5 business days after receipt from the Executive of a statement therefor and reasonable evidence of his payment thereof. The amount of expenses eligible for reimbursement or in-kind benefits provided during the Executive’s taxable year will not affect the expenses eligible for reimbursement or in-kind benefits to be provided, in any other taxable year. The right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(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

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representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 6(e), the Company shall control all proceedings taken in connection with the contest of any claim contemplated by this Section 6(e) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided, however, that the Executive may participate therein at his own cost and expense) and may, at its option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay the tax claimed and sue for a refund, the Company shall advance the amount of such payment to the Executive on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which the contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of any such contested claim shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. Payment hereunder will be made by the end of the Executive’s taxable year following the Executive’s taxable year in which taxes that are subject to audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, the end of the Executive’s taxable year following the Executive’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.

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

7.    No Mitigation Obligation

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

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other obligation on the part of the Executive hereunder or otherwise, except as expressly provided in Section 5(a)(v) 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 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. The amount of expenses eligible for reimbursement or in-kind benefits provided during the Executive’s taxable year will not affect the expenses eligible for reimbursement or in-kind benefits to be provided, in any other taxable year. The right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(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

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excess of $500 million (the “Bank”) for the benefit of the Executive and certain other of the officers of the Company and providing that the fees and expenses of counsel selected from time to time by the Executive pursuant to this Section 9 shall be paid, or reimbursed to the Executive if paid by the Executive, on a regular, periodic basis upon presentation by the Executive to the Bank of a statement or statements prepared by such counsel in accordance with its customary practices. The Company shall pay all amounts and take all action necessary to maintain the Letter of Credit during the Period of Employment and for 2 years thereafter and if, notwithstanding the Company’s complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, the Company shall obtain a replacement irrevocable clean letter of credit drawn upon a commercial bank selected by the Company and reasonably acceptable to the Executive, upon substantially the same terms and conditions as contained in the Letter of Credit, or any similar arrangement which, in any case, assures the Executive the benefits of this Agreement without incurring any cost or expense in connection therewith.

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

10.    Employment Rights

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

11.    Withholding of Taxes

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

12.    Successors and Binding Agreement

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

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

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 12(a) and 12(b) hereof. Without limiting

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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 5 business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of change of address shall be effective only upon receipt.

14.    Governing Law

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

15.    Validity

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

16.    Miscellaneous

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

17.    Counterparts

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

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18.    Section 409A

The terms of this Agreement will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

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

EXECUTIVE	THE LUBRIZOL CORPORATION
	By:
	Chairman, President and
	Chief Executive Officer

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EX-10.16

Exhibit 10.16

THE LUBRIZOL CORPORATION

FINANCIAL PLANNING PROGRAM

(As Amended, November 9, 2010)

Introduction

The Board of Directors (“the Board”) of The Lubrizol Corporation (“the Company”) wishes to assist certain key employees by alleviating the burden associated with personal financial, tax, and estate planning matters, as they focus on Lubrizol business. The Company will assist such employees by encouraging them to seek professional assistance for such matters. To further such purpose, The Lubrizol Corporation Financial Planning Program (“the Program”) has been designed to pay for such financial planning. Accordingly, the Program is hereby adopted by the Company as hereinafter set forth.

Applicability of the Program

Eligibility

The Organization and Compensation Committee of the Board (“the Committee”) may approve monetary sums as payments by the Company to firms selected to provide Covered Professional Services (“Preferred Providers”) to Key Employees (“Award”). “Key Employees” shall mean those employees of the Company, or its subsidiaries, so designated by the Committee. A Key Employee will be notified by letter from the Company of the approval of an Award.

Frequency and Amount of Awards

The Committee may approve Awards on an annual basis and at such levels as it deems appropriate.

Covered Professional Services

Covered Professional Services may include some or all of the following services:

• Professional services for financial planning, including retirement, estate and insurance planning (Services provided for the preparation of any will or trust are not included in any Award).

• Professional services for the management of assets, or for record keeping with respect to assets.

• Professional services for tax planning, including services for income, gift and estate planning, and audits. (Services provided in connection with the handling of tax controversies are not included in any Award.)

• Professional services for tax return preparation for the Key Employee, the Key Employee’s spouse, and for those dependent children of the Key Employee.

Termination of Employee

(a) An Award will lapse upon the Key Employee’s voluntary or involuntary separation from service prior to retirement.

(b) Upon the separation from service of a retirement-eligible Key Employee the Award will continue through the end of the year in which the separation from service occurred.

(c) Upon the Key Employee’s disability, the Key Employee shall receive an Award for the first year following the year in which the disability occurred. For purposes of this paragraph (c), the term “disability” means (A) the Key Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (B) the Key Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

(d) Upon the death of a Key Employee, the Key Employee’s spouse or personal representative may use an Award for the first year following the year in which the death occurred.

Miscellaneous

The Company may withhold from the Key Employee’s salary all federal, state, city or other taxes as shall be required pursuant to any law or government regulation or ruling.

Any Award under this Program during the Key Employee’s taxable year will not affect Awards that may be provided in any other taxable year. The right to an Award is not subject to liquidation or exchange for another benefit.

The Company has the sole power to interpret the terms of this program.

The amount of in-kind benefits provided during the Key Employee’s taxable year does not affect the in-kind benefits provided in any other taxable year. The right to in-kind benefits is not subject to liquidation or exchange for another benefit.

Amendment and Termination

The Program may be terminated or amended in any respect by the Company.

409A

The terms of this Plan will be interpreted as necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

2

EX-12.1

Exhibit 12.1

THE LUBRIZOL CORPORATION AND SUBSIDIARIES

Computation of Ratio of Earnings to Fixed Charges

(all amounts except ratios are shown in millions)

	2010			2009			2008			2007			2006
Pretax income from continuing operations	$	1,004.3		$	725.8		$	17.0		$	405.4		$	266.1
Add (deduct) earnings of less than 50% owned affiliates (net of distributed earnings) included in pretax income		0.8			(0.2	)		(0.9	)		(0.3	)		(0.8	)
Add fixed charges net of capitalized interest		109.8			120.5			89.5			101.4			108.5
Add previously capitalized interest amortized during period		1.2			1.5			0.9			0.7			1.0
Less the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges		(16.5	)		(13.4	)		(7.2	)		(6.4	)		(4.1	)
“Earnings”	$	1,099.6		$	834.2		$	99.3		$	500.7		$	370.7
Gross interest expense including capitalized interest	$	101.4		$	113.0		$	82.2		$	93.5		$	101.2
Interest portion of rental expense		10.1			10.0			11.4			9.6			8.8
“Fixed charges”	$	111.5		$	123.0		$	93.6		$	103.1		$	110.0
Ratio of earnings to fixed charges		9.86			6.78			1.06			4.86			3.37

EX-21.1

Exhibit 21.1

LIST OF SIGNIFICANT SUBSIDIARIES OF THE LUBRIZOL CORPORATION

The following are the significant subsidiaries⁽¹⁾ of The Lubrizol Corporation and their jurisdictions of organization as of December 31, 2010. Except where otherwise noted, all subsidiaries are either directly or indirectly wholly owned by the company.

NAME	COUNTRY OR STATE OF INCORPORATION
Lubrizol Advanced Materials, Inc.	USA – Delaware
Lubrizol Advanced Materials International, Inc.	USA – Delaware
Lubrizol Advanced Materials Gibraltar, Inc.	USA – Delaware
Lubrizol Overseas Trading Corporation	USA – Delaware
CPI Engineering Services, Inc.	USA – Michigan
Lubrizol International Management Corporation	USA – Nevada
Lubrizol Advanced Materials Europe BVBA	Belgium
Lubrizol Europe Coordination Center BVBA	Belgium
Lubrizol do Brasil Aditivos Ltda. (2 )	Brazil
Lubrizol International, Inc.	Cayman Islands
Lanzhou Lubrizol - Lanlian Additive Co. Ltd. (3 )	People’s Republic of China
Lubrizol Specialty Chemicals Manufacturing (Shanghai) Co., Ltd.	People’s Republic of China
Lubrizol France SAS	France
Lubrizol Holdings France SAS	France
Lubrizol Deutschland GmbH	Germany
Lubrizol (Gibraltar) Limited	Gibraltar
Lubrizol (Gibraltar) Minority Limited	Gibraltar
Lubrizol Advanced Materials Asia Pacific Limited	Hong Kong
Lubrizol Advanced Materials Hong Kong Limited	Hong Kong
Lubrizol India Private Limited (3 )	India
Lubrizol Japan Limited	Japan
Lubrizol (Gibraltar) Limited Luxembourg SCS	Luxembourg
Lubrizol Luxembourg S.à.r.l.	Luxembourg
Lubrizol Southeast Asia (Pte.) Ltd.	Singapore
Lubrizol South Africa (Pty) Limited	South Africa
Lubrizol Limited	United Kingdom

(1) The names of the company’s subsidiaries that, considered in the aggregate as a single subsidiary, would not constitute at the end of fiscal 2010 a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X have been excluded.

(2) The company owns all of the quotas of this subsidiary, with the exception of one quota that is held by an employee of the company.

(3) This entity is a joint venture and is majority owned by the company directly or indirectly through its wholly owned subsidiaries.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 33-61091, 33-42211, 333-42338, 333-124763, and 333-153652 on Form S-8 and 333-154209 on Form S-3 of our reports dated February 25, 2011, relating to the consolidated financial statements and financial statement schedule of The Lubrizol Corporation (the “Company”) and the effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended December 31, 2010.

/s/ Deloitte & Touche LLP

Cleveland, Ohio

February 25, 2011

EX-31.1

Exhibit 31.1

Certification

I, James L. Hambrick, certify that:

1. I have reviewed this annual report on Form 10-K of The Lubrizol Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

(d) disclosed in this report any change in registrant’s internal control over financial reporting that occurred during registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ James L. Hambrick

James L. Hambrick

Chief Executive Officer and President

February 25, 2011

EX-31.2

Exhibit 31.2

Certification

I, Charles P. Cooley, certify that:

1. I have reviewed this annual report on Form 10-K of The Lubrizol Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

(d) disclosed in this report any change in registrant’s internal control over financial reporting that occurred during registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Charles P. Cooley

Charles P. Cooley

Chief Financial Officer

February 25, 2011

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer of

The Lubrizol Corporation Pursuant to 18 U.S.C. Section 1350

I certify that, to the best of my knowledge and belief, the Annual Report on Form 10-K of The Lubrizol Corporation for the period ending December 31, 2010:

(1) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of The Lubrizol Corporation.

/s/ James L. Hambrick

James L. Hambrick

Chief Executive Officer and President

February 25, 2011

I certify that, to the best of my knowledge and belief, the Annual Report on Form 10-K of The Lubrizol Corporation for the period ending December 31, 2010:

(1) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of The Lubrizol Corporation.

/s/ Charles P. Cooley

Charles P. Cooley

Chief Financial Officer

February 25, 2011