exhibit1017.htm


    EXHIBIT
10.17

    
 

    AMENDED
AND RESTATED

    ASHLAND
INC. INCENTIVE PLAN

    (As
amended July 15, 2004)

    


    SECTION
1.  PURPOSE

    


    The purpose of the Ashland Inc.
Incentive Plan is to promote the interests of Ashland Inc. and its shareholders
by providing incentives to its directors, officers and
employees.  Accordingly, the Company may grant to selected officers
and employees Option Awards, Stock Appreciation Rights Awards, Restricted Stock
Awards, Incentive Awards, Performance Unit Awards and Merit Awards in an effort
to attract and retain in its employ qualified individuals and to provide such
individuals with incentives to continue service with the Company, devote their
best efforts to the Company and improve the Company’s economic performance, thus
enhancing the value of the Company for the benefit of
shareholders.  This Plan also provides an incentive for qualified
persons, who are not officers or employees of the Company, to serve on the Board
of Directors of the Company and to continue to work for the best interests of
the Company by rewarding such persons with an automatic Restricted Stock Award
and with discretionary Option Awards.

    


    SECTION
2.  DEFINITIONS

    


    (A) “Agreement” shall mean a written
agreement setting forth the terms of an Award, to be entered into at the
Company’s discretion.

    


    (B) “Attestation” means the delivery to
the Company of a completed attestation form prescribed by the Company setting
forth the whole shares of Common Stock owned by the Recipient which the
Recipient wishes to utilize to pay the Exercise Price. The Common Stock listed
on the attestation form must have been owned by the Recipient six months or
longer, and not have been used to effect an Option exercise within the preceding
six months, unless the Committees specifically provide otherwise.

    


    (C) “Award” shall mean an Option Award,
a Stock Appreciation Right Award, an Incentive Award, a Performance Unit Award,
a Restricted Stock Award or a Merit Award, in each case granted under this
Plan.

    


    (D) “Beneficiary” shall mean the
person, persons, trust or trusts designated by a Recipient or if no designation
has been made, the person, persons, trust, or trusts entitled by will or the
laws of descent and distribution to receive the benefits specified under this
Plan in the event of a Recipient's death.

    


    (E) “Board” shall mean the Board of
Directors of the Company or its designee.

    


    (F) “Cashless Exercise” shall mean the
procedure by which a broker provides the funds to a Recipient to effect an
Option exercise.  At the direction of the Recipient, the broker will
either: (i) sell all of the shares received when the Option is exercised and pay
the Recipient the proceeds of the sale (minus the Exercise Price, withholding
taxes and any fees due to the broker); or (ii) sell enough of the shares
received upon exercise of the Option to cover the Exercise Price, withholding
taxes and any fees due the broker and deliver to the Recipient (either directly
or through the Company) a stock certificate for the remaining
shares.

    


    (G) “Change in Control” shall be deemed
to occur (1) upon approval of the shareholders of the Company (or if such
approval is not required, upon the approval of the Board) of (A) any
consolidation or merger of the Company, other than a consolidation or merger of
the Company into or with a direct or indirect wholly-owned subsidiary, in which
the Company is not the continuing or surviving corporation or pursuant to which
shares of Common Stock would be converted into cash, securities or other
property other than a merger in which the holders of Common Stock immediately
prior to the merger will have the same proportionate ownership of common stock
of the surviving corporation immediately after the merger, (B) any sale,
lease, exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company, provided,
however, that no sale, lease, exchange or other transfer of all or substantially
all the assets of the Company shall be deemed to occur unless assets
constituting 80% of the total assets of the Company are transferred pursuant to
such sale, lease, exchange or other transfer, or (C) adoption of any plan
or proposal for the liquidation or dissolution of the Company, (2) when any
person (as defined in Section 3(a)(9) or 13(d) of the Exchange Act), other
than the

     

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    Company
or any Subsidiary or employee benefit plan or trust maintained by the Company,
shall become the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than 15% of the Company’s Common Stock
outstanding at the time, without the approval of the Board, or (3) at any
time during a period of two consecutive years, individuals who at the beginning
of such period constituted the Board shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for election by
the Company’s shareholders of each new director during such two-year period was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such two-year period. Notwithstanding the
foregoing, any transaction, or series of transactions, that shall result in the
disposition of Ashland’s interest in Marathon Ashland Petroleum LLC, including
without limitation any transaction arising out of that certain Put/Call,
Registration Rights and Standstill Agreement dated January 1, 1998 among
Marathon Oil Company, USX Corporation, the Company and Marathon Ashland
Petroleum LLC, as amended from time to time, shall not be deemed to constitute a
Change in Control.

    


    (H) “Code” shall mean the Internal
Revenue Code of 1986, as amended from time to time.

    


    (I) “Committees” shall refer to the
P&C Committee as it relates to Awards to Participants and to the G&N
Committee as it relates to Awards to Outside Directors.

    


    (J) “Common Stock” shall mean the
Common Stock of the Company ($1.00 par value), subject to adjustment pursuant to
Section 15 hereof.

    


    (K) “Company” shall mean, collectively,
Ashland Inc. and its Subsidiaries.

    


    (L) “Disability” shall mean, (i) in the
case of a Participant, he or she becomes unable to perform the functions
required by his or her regular job due to physical or mental illness and, in
connection with the grant of an Incentive Stock Option shall be disabled if he
or she falls within the meaning of that term as provided in Section 22(e)(3) of
the Code and (ii) in the case of an Outside Director, when he or she is unable
to attend to his or her duties and responsibilities as a member of the Board
because of incapacity due to physical or mental illness.

    


    (M) “Exercise Price” shall mean, with
respect to each share of Common Stock subject to an Option, the price fixed by
the Committees at which such share may be purchased from the Company pursuant to
the exercise of such Option, which price at no time may be less than 100% of the
Fair Market Value of the Common Stock on the date the Option is
granted.

    


    (N) “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.

    


    (O) “Fair Market Value” shall mean the
price of the Common Stock as reported on the Composite Tape of the New York
Stock Exchange on the date and at the time selected by the Committees or as
otherwise provided in this Plan.

    


    (P) “G&N Committee” shall mean the
Governance and Nominating Committee of the Board, as from time to time
constituted, or any successor committee of the Board with similar functions, or
its designee.

    


    (Q) “Incentive Award” shall mean an
Award made pursuant to Section 7 hereof, the payment of which is contingent upon
the achievement of the Performance Goals for the particular Performance
Period.

    


    (R) “Incentive Stock Option” or “ISO”
shall mean an Option that is intended by the Committees to meet the requirements
of Section 422 of the Code or any successor provision.

    


    (S) “ISO Award” shall mean an Award of
an Incentive Stock Option pursuant to Section 10 hereof.

    


    (T) “Merit Award” shall mean an Award
of Common Stock issued pursuant to Section 9 hereof.

    


    (U) “Non-Employee Director” shall mean
a non-employee director within the meaning of applicable regulatory
requirements, including those promulgated under Section 16 of the Exchange
Act.

     

     

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    (V) “Nonqualified Stock Option” or
“NQSO” shall mean an Option granted pursuant to this Plan which does not qualify
as an Incentive Stock Option.

    


    (W) “Notice of Grant” shall mean a
written notice setting forth the terms of an Option or SAR Award, to be entered
into at the Company’s discretion.

    


    (X) “Option” shall mean the right to
purchase Common Stock at a price to be specified and upon terms to be designated
by the Committees or otherwise determined pursuant to this Plan.  The
Committees  shall designate an Option as a Nonqualified Stock Option
or an Incentive Stock Option.

    


    (Y) “Option Award” shall mean an Award
of an Option pursuant to Section 10 hereof.

    


    (Z) “Outside Director” shall mean a
director of the Company who is not also an employee of the Company as selected
by the G&N Committee to receive an Award under this Plan.

    


    (AA) “P&C Committee” shall mean the
Personnel and Compensation Committee of the Board, as from time to time
constituted, or any successor committee of the Board with similar functions,
which shall consist of three or more members, each of whom shall be a
Non-Employee Director and an outside director as defined in the regulations
issued under Section 162(m) of the Code, or its designee.

    


    (BB) “Participant” shall mean a
regular, full-time or part-time employee of the Company as selected by the
P&C Committee to receive an Award under this Plan.

    


    (CC) “Performance Goals” shall mean
performance goals as may be established in writing by the P&C Committee
which may be based on earnings, stock price, return on equity, return on
investment, total return to shareholders, economic profit, debt rating or
achievement of business, financial or operational goals.  Such goals
may be absolute in their terms or measured against or in relation to other
companies comparably or otherwise situated.  Such performance goals
may be particular to a Participant or the division or other unit in which the
Participant works and/or may be based on the performance of the Company
generally.

    


    (DD) “Performance Period” shall mean
the period designated by the P&C Committee during which the performance
objectives shall be measured.

    


    (EE) “Performance Unit Award” shall
mean an Award made pursuant to Section 8 hereof, the payment of which is
contingent upon the achievement of the Performance Goals for the particular
Performance Period.

    


    (FF) “Personal Representative” shall
mean the person or persons who, upon the Disability or incompetence of a
Recipient, shall have acquired on behalf of the Recipient by legal proceeding or
otherwise the right to receive the benefits specified in this Plan.

    


    (GG) “Plan” shall mean this Ashland
Inc. Incentive Plan, as amended and restated.

    


    (HH) “Recipients” shall mean a
Participant or an Outside Director, as appropriate.

    


    (II) “Restricted Period” shall mean the
period designated during which Restricted Stock may not be sold, assigned,
transferred, pledged, or otherwise encumbered, which period in the case of
Participants shall not be less than one year from the date of grant (unless
otherwise directed by the P&C Committee), and in the case of Outside
Directors is the period set forth in Section 6(B) hereof.

    


    (JJ) “Restricted Stock” shall mean
those shares of Common Stock issued pursuant to a Restricted Stock Award which
are subject to the restrictions, terms, and conditions set forth in the related
Agreement, if any.

    


    (KK) “Restricted Stock Award” shall
mean an Award of Restricted Stock pursuant to Section 6
hereof.

    


    (LL) “Retained Distributions” shall
mean any securities or other property (other than regular cash
dividends) distributed by the Company in respect of Restricted Stock during
any Restricted Period.

     

     

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    (MM) “Retirement” shall mean, (a) in
the case of a Participant, retirement from the employ of the Company at any time
as described in the Ashland Inc. and Affiliates Pension Plan or in any successor
pension plan, as from time to time in effect, and (b) in the case of an Outside
Director, retirement from the Board at age 72 or at any other age as the Board
may from time to time determine.

    


    (NN) “Stock Appreciation Right” or
“SAR” shall mean the right of the holder to receive the appreciation in the Fair
Market Value of shares of Common Stock upon terms to be designated by the
Committees or otherwise determined pursuant to this Plan.  The holder
of an exercisable SAR may elect to surrender the SAR and receive in exchange
therefore an amount equal to the excess of the Fair Market Value of the Common
Stock on the date the election to surrender is received by the Company over the
Exercise Price specified in such SAR multiplied by the number of shares of
Common Stock covered by such SAR, or portion thereof, which is so surrendered. A
SAR may be granted either singly or concurrently with the grant of an Option. A
SAR shall be exercisable upon any additional terms and conditions (including,
without limitation, the issuance of Restricted Stock and the imposition of
restrictions upon the timing of exercise) which may be determined as provided in
this Plan.

    


    (OO) “Stock Appreciation Right Award”
or “SAR Award” shall mean an Award of a Stock Appreciation Right pursuant to
Section 11 hereof.

    


    (PP) “Subsidiary” shall mean any
present or future subsidiary corporations, as defined in Section 424 of the
Code, of the Company.

    


    (QQ) “Tax Date” shall mean the date the
withholding tax obligation arises with respect to an Award.

    


    SECTION
3.  STOCK SUBJECT TO THIS PLAN

    


    There will be reserved for issuance
under this Plan an aggregate of 4,000,000 shares of Common Stock, par value
$1.00 per share; provided, however, that of such shares only 1,000,000 shares in
the aggregate shall be available for Restricted Stock Awards, Merit Awards, ISO
Awards and Performance Unit Awards.  Such shares shall be authorized
but unissued shares of Common Stock.  If any Award under this Plan
shall expire or terminate for any reason without having been earned or vested in
full, or if any Award shall be forfeited or deferred, the shares subject to the
unearned, forfeited or deferred portion of such Award shall again be available
for the purposes of this Plan. No Participant shall be granted more than a total
of 250,000 Option or SAR Awards annually and no Outside Director shall be
granted more than a total of 10,000 Option or SAR Awards annually.

    


    SECTION
4.  ADMINISTRATION

    


    The P&C Committee shall have the
exclusive authority to administer this Plan for Participants.  The
G&N Committee shall have the exclusive authority to administer this Plan for
Outside Directors.

    


    In addition to any implied powers and
duties that may be needed to carry out the provisions hereof, the Committees,
acting individually, shall have all the powers vested in them by the terms
hereof, including exclusive authority to select the Recipients, to determine the
type, size and terms of the Awards to be made to each Recipient, to determine
the time when Awards will be granted, and to prescribe the form of the Agreement
or Notice of Grant embodying Awards made under this Plan.  The
Committees shall be authorized to interpret this Plan and the Awards granted
under this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan, to make any other determinations which they believe
necessary or advisable for the administration hereof, and to correct any defect
or supply any omission or reconcile any inconsistency in this Plan or in any
Award in the manner and to the extent the Committees deem desirable to carry it
into effect.  Any decision of the Committees in the administration of
this Plan, as described herein, shall be final and conclusive.

    


    SECTION
5.  ELIGIBILITY

    


    Awards may only be granted (i) to
regular full-time or part-time employees of the Company, or (ii) as
expressly provided in Sections 6(B), 10 and 11 hereof, to Outside Directors of
the Company.

     

     

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    SECTION
6.  RESTRICTED STOCK AWARDS

    


    (A)  Awards
to Employees

    


    The P&C Committee may make a
Restricted Stock Award to selected Participants, which Restricted Stock Awards
may, at the Company’s discretion and as directed by the P&C Committee, be
evidenced by an Agreement which shall contain such terms and conditions as the
P&C Committee, in its sole discretion, may determine.  The amount
of each Restricted Stock Award and the respective terms and conditions of such
Award (which terms and conditions need not be the same in each case) shall be
determined by the P&C Committee in its sole discretion.  As a
condition to any Restricted Stock Award hereunder, the P&C Committee may
require a Participant to pay to the Company a non-refundable amount equal to, or
in excess of, the par value of the shares of the Restricted Stock
Award.  Subject to the terms and conditions of each Restricted Stock
Award, the Participant, as the owner of the Common Stock issued as Restricted
Stock, shall have all rights of a shareholder including, but not limited to,
voting rights as to such Common Stock and the right to receive dividends thereon
when, as and if paid.

    


    Unless otherwise determined and
directed by the P&C Committee, in the event that a Restricted Stock Award
has been made to a Participant whose employment or service is subsequently
terminated for any reason prior to the lapse of all restrictions thereon, such
Restricted Stock will be forfeited in its entirety by such
Participant.

    


    (B)  Awards
to Outside Directors

    


    During the term of this Plan, each
person who is hereafter duly appointed or elected as an Outside Director shall
be granted, effective on the date of his or her appointment or election to the
Board, a Restricted Stock Award of 1,000 shares.  All Awards under
this subsection (B) are subject to the limitation on the number of
shares of Common Stock available pursuant to Section 3 hereof and to the
terms and conditions set forth in this subsection (B) and
subsection (C) below.

    


    As a condition to any Restricted Stock
Award hereunder, the Outside Director may be required to pay to the Company a
non-refundable amount equal to the par value of the shares of the Restricted
Stock Award.  Upon the granting of the Restricted Stock Award, such
Outside Director shall be entitled to all rights incident to ownership of Common
Stock of the Company with respect to his or her Restricted Stock, including, but
not limited to, the right to vote such shares of Restricted Stock and to receive
dividends thereon when, as and if paid; provided, however, that subject to
subsection (C) hereof, in no case may any shares of Restricted Stock
granted to an Outside Director be sold, assigned, transferred, pledged, or
otherwise encumbered during the Restricted Period which shall not lapse until
the earlier to occur of the following: (i) Retirement, (ii) the death
or Disability of such Outside Director, (iii) a 50% change in the
beneficial ownership of the Company as defined in Rule 13d-3 under the Exchange
Act, or (iv) voluntary early retirement to take a position in governmental
service. Unless otherwise determined and directed by the G&N Committee, in
the case of voluntary resignation or other termination of service of an Outside
Director prior to the occurrence of any of the events described in the preceding
sentence, any Restricted Stock Award made pursuant to this subsection will be
forfeited by such Outside Director.

    


    (C)
Transferability

    


    Subject to Section 17(B) hereof,
Restricted Stock may not be sold, assigned, transferred, pledged, or otherwise
encumbered during a Restricted Period, which, in the case of Participants, shall
be determined by the P&C Committee and, unless otherwise determined by the
P&C Committee, shall not be less than one year from the date of the
Restricted Stock Award, and, in the case of Outside Directors, shall be
determined in accordance with subsection (B) of this
Section.  The P&C Committee may, at any time, reduce the
Restricted Period with respect to any outstanding shares of a Restricted Stock
Award, but, unless otherwise determined by the P&C Committee, such
Restricted Period shall not be less than one year.

    


    During the Restricted Period,
certificates representing the Restricted Stock and any Retained Distributions
shall be registered in the Recipient’s name and bear a restrictive legend to the
effect that ownership of such Restricted Stock (and any such Retained
Distributions), and the enjoyment of all rights appurtenant thereto are subject
to the restrictions, terms, and conditions provided in this Plan and the
applicable Agreement, if any.  Such certificates shall

     

     

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    be
deposited by the Recipient with the Company, together with stock powers or other
instruments of assignment, each endorsed in blank, which will permit transfer to
the Company of all or any portion of the Restricted Stock and any securities
constituting Retained Distributions which shall be forfeited in accordance with
this Plan and the applicable Agreement, if any.  Restricted Stock
shall constitute issued and outstanding shares of Common Stock for all corporate
purposes, with the exception that: (i) the Recipient will not be entitled
to delivery of the stock certificates representing such Restricted Stock until
the restrictions applicable thereto shall have expired; (ii) the Company
will retain custody of all Retained Distributions made or declared with respect
to the Restricted Stock (and such Retained Distributions will be subject to the
same restrictions, terms and conditions as are applicable to the Restricted
Stock) until such time, if ever, as the Restricted Stock with respect to which
such Retained Distributions shall have been made, paid, or declared shall have
become vested, and such Retained Distributions shall not bear interest or be
segregated in separate accounts; (iii) subject to Section 17(B)
hereof, the Recipient may not sell, assign, transfer, pledge, exchange,
encumber, or dispose of the Restricted Stock or any Retained Distributions
during the Restricted Period; and (iv) unless otherwise determined and
directed by the Committees, a breach of any restrictions, terms, or conditions
provided in this Plan or established by the Committees with respect to any
Restricted Stock or Retained Distributions will cause a forfeiture of such
Restricted Stock and any Retained Distributions with respect
thereto.

    


    SECTION
7.  INCENTIVE AWARDS

    


    (A)  Any Participant may
receive one or more Incentive Awards, as the P&C Committee shall from time
to time determine.

    


    (B)  No later than
120 days (90 days for those Participants subject to the limitations of Code
Section 162(m)) after the commencement of each Performance Period, the
P&C Committee shall establish in writing one or more Performance Goals that
must be reached by a Participant in order to receive an Incentive Award for such
Performance Period.  Except with respect to Participants subject to
the limitations of Code Section 162(m), the P&C Committee shall have
the discretion to later revise the Performance Goals and the amount to be paid
out upon the attainment of these goals for any reason including the reflection
of promotions, transfers or other changes in a Participant’s employment so long
as such changes are consistent with the Performance Goals established for other
Participants in the same or similar positions.  Performance Goals
established for Participants subject to Code Section 162(m) may only be
adjusted to reduce or eliminate the amount of compensation otherwise payable
upon attainment of the Performance Goals.

    


    (C)  The target Incentive
Award is a fixed percentage of the Participant’s Base Salary paid during the
year.  The maximum Incentive Award is 150% of the target Incentive
Award.  No Incentive Award shall exceed three million dollars
($3,000,000).

    


    (D)  Payment of Incentive
Awards shall be made on a date or dates fixed by the P&C
Committee.  Payment may be made in one or more installments and may be
made wholly in cash, wholly in shares of Common Stock or a combination thereof
as determined by the P&C Committee.

    


    If payment of an Incentive Award shall
be made all or partially in shares of Common Stock, the number of shares of
Common Stock to be delivered to a Participant on any payment date shall be
determined by dividing (x) the original dollar amount to be paid on the
payment date (or the part thereof determined by the P&C Committee to be
delivered in shares of such Incentive Award) by (y) the Fair Market Value
on the date the Board approves the P&C Committee’s decision to pay an
Incentive Award or such other date as the Board shall determine.

    


    (E)  Unless otherwise
determined and directed by the P&C Committee, an Incentive Award shall
terminate if the Participant does not remain continuously employed and in good
standing with the Company until the date of payment of such
Award.  Unless otherwise determined and directed by the P&C
Committee, in the event a Participant’s employment is terminated because of
death, Disability or Retirement, the Participant (or his or her beneficiaries or
estate) shall receive the prorated portion of the payment of an Incentive Award
for which the Participant would have otherwise been eligible based upon the
portion of the Performance Period during which he or she was so employed so long
as the Performance Goals are subsequently achieved.

     

     

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    SECTION
8.  PERFORMANCE UNIT AWARDS

    


    (A)  Any Participant may
receive one or more Performance Unit Awards, as the P&C Committee shall from
time to time determine.

    


    (B)                
The Performance Goals and Performance Period applicable to a Performance Unit
Award shall be set forth in writing by the P&C Committee no later than 120
days (90 days for those Participants subject to the limitations imposed by
Code Section 162(m)) after the commencement of the Performance
Period.  Except with respect to Participants subject to the
limitations of Code Section 162(m), the P&C Committee shall have the
discretion to later revise the Performance Goals and the amount to be paid out
upon the attainment of these goals for any reason including the reflection of
promotions, transfers or other changes in a Participant’s employment so long as
such changes are consistent with the Performance Goals established for other
Participants in the same or similar positions.  Goals established for
Participants subject to Code Section 162(m) may only be adjusted to reduce
or eliminate the amount of compensation otherwise payable upon attainment of the
Performance Goals.

    


    (C)                
Each Performance Unit Award shall be established in dollars or shares of Common
Stock, or a combination of both, as determined by the P&C
Committee.  The original amount of any Performance Unit Award shall
not exceed 400% of the Participant’s then annual base salary and the original
amount of any Performance Unit Award shall not exceed five million dollars
($5,000,000).  In determining the amount of any Performance Unit Award
made, in whole or in part, in shares of Common Stock, the value thereof shall be
based on the Fair Market Value on the first day of the Performance Period or on
such other date as the Board shall determine.

    


    (D)                
Unless otherwise determined and directed by the P&C Committee, a Performance
Unit Award shall terminate for all purposes if the Participant does not remain
continuously employed and in good standing with the Company until payment of
such Performance Unit Award.  Unless otherwise determined and directed
by the P&C Committee, a Participant (or his or her beneficiaries or estate)
whose employment was terminated because of death, Disability or Retirement will
receive a prorated portion of the payment of his or her Award based upon the
portion of the Performance Period during which he or she was so employed so long
as the Performance Goals are subsequently achieved.

    


    (E)                
Payment with respect to Performance Unit Awards will be made to Participants on
a date or dates fixed by the P&C Committee.  The amount of such
payment shall be determined by the P&C Committee and shall be based on the
original amount of such Performance Unit Award adjusted to reflect the
attainment of the Performance Goals during the Performance
Period.  Payment may be made in one or more installments and may be
made wholly in cash, wholly in shares of Common Stock or a combination thereof
as determined by the P&C Committee.

    


    If payment of a Performance Unit Award
established in dollars is to be made in shares of Common Stock or partly in such
shares, the number of shares of Common Stock to be delivered to a Participant on
any payment date shall be determined by dividing (x) the amount payable by
(y) the Fair Market Value on the date the Board approves the P&C
Committee’s decision to pay the Performance Unit Award or on such other date as
the Board shall determine.

    


    If payment of a Performance Unit Award
established in shares of Common Stock is to be made in cash or partly in cash,
the amount of cash to be paid to a Participant on any payment date shall be
determined by multiplying (x) the number of shares of Common Stock to be
paid in cash on such payment date with respect to such Performance Unit Award,
by (y) the Fair Market Value on the date the Board approves the P&C
Committee’s decision to pay the Performance Unit Award or on such other date as
the Board shall determine.  Any payment may be subject to such
restrictions and conditions as the P&C Committee may determine.

    


    SECTION
9.  MERIT AWARDS

    


    Any Participant may receive a Merit
Award of Common Stock under this Plan for such reasons and in such amounts as
the P&C Committee may from time to time determine.  As a condition
to any such Merit Award, the P&C Committee may require a Participant to pay
to the Company a non-refundable amount equal to, or in excess of, the par value
of the shares of Common Stock awarded to him or her.

     

     

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    SECTION
10.  OPTION AWARDS

    


    (A)  Any Recipient may
receive one or more Option Awards, as the Committees shall from time to time
determine.

    


    (B)  Designation and
Price

    


    (1)  Any Option granted under
this Plan may be granted as an Incentive Stock Option or as a Nonqualified Stock
Option as shall be designated by the Committees at the time of the grant of such
Option.  Only Participants may be granted ISOs.  Each Option
shall, at the discretion of the Company and as directed by the Committees, be
evidenced by a Notice of Grant, which Notice of Grant shall specify the
designation of the Option as an ISO or a NQSO, as the case may be, and shall
contain such terms and conditions as the Committees, in their sole discretion,
may determine in accordance with this Plan.

    


    (2)  Every ISO shall provide
for a fixed expiration date of not later than ten years from the date such ISO
is granted.  Every NQSO shall provide for a fixed expiration date of
not later than ten years and one month from the date such NQSO is
granted.

    


     (3)  The Exercise Price
of Common Stock issued pursuant to each Option shall be fixed by the Committees
at the time of the granting of the Option; provided, however, that such Exercise
Price shall in no event be less than 100% of the Fair Market Value of the Common
Stock on the date such Option is granted.

    


    (C)  Exercise

    


    The Committees may, in their sole
discretion, provide for Options granted under this Plan to be exercisable in
whole or in part; provided, however, that no Option shall be exercisable prior
to the first anniversary of the date of its grant, except as provided in Section
13 hereof or as the Committees otherwise determine in accordance with this Plan,
and in no case may an Option be exercised at any time for fewer than 50 shares
(or the total remaining shares covered by the Option if fewer than 50 shares)
during the term of the Option. The specified number of shares will be issued
upon receipt by the Company of (i) notice from the holder thereof of the
exercise of an Option, and (ii) payment to the Company (as provided in
subsection (D) of this Section), of the Exercise Price for the number of shares
with respect to which the Option is exercised. Each such notice and payment
shall be delivered or mailed to the Company at such place and in such manner as
the Company may designate from time to time.

    


    (D)  Payment for
Shares

    


    Except as otherwise provided in this
Section, the Exercise Price for the Common Stock shall be paid in full when the
Option is exercised. Subject to such rules as the Committees may impose, the
Exercise Price may be paid in whole or in part: (i) in cash; (ii) in whole
shares of Common Stock owned by the Recipient and evidenced by negotiable
certificates, valued at their Fair Market Value (which shares of Common Stock
must have been owned by the Recipient six months or longer, and not used to
effect an Option exercise within the preceding six months, unless the Committees
specifically provide otherwise); (iii) by Attestation; (iv) by a combination of
such methods of payment; or (v) by such other consideration as shall constitute
lawful consideration for the issuance of Common Stock and be approved by
the  Committees (including, without limitation, effecting a Cashless
Exercise of the Option with a broker).

    


    (E)                Continued
Employment, Agreement to Serve and Exercise Period

    


    (1)   Participants

    


    (a)  Subject to the
provisions of Section 13(D) hereof, every Option and SAR shall provide that it
may not be exercised in whole or in part for a period of one year after the date
of granting such Option (unless otherwise determined by the P&C Committee)
and if the employment of the Participant shall terminate prior to the end of
such one year period (or such other period determined by the P&C Committee),
the Option granted to such Participant shall immediately terminate.

     

     

     

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    (b)  Every Option shall
provide that in the event the Participant dies (i) while employed by the
Company, (ii) during the periods in which Options may be exercised by a
Participant determined to be Disabled, or (iii) after Retirement, such Option
shall be exercisable, at any time or from time to time, prior to the fixed
termination date set forth in the Option, by the Beneficiaries of the decedent
for the number of shares which the Participant could have acquired under the
Option immediately prior to the Participant’s death.

    


    (c)  Every Option shall
provide that in the event the employment of any Participant shall cease by
reason of Disability, as determined by the P&C Committee at any time during
the term of the Option, such Option shall be exercisable, at any time or from
time to time prior to the fixed termination date set forth in the Option by such
Participant for the number of shares which the Participant could have acquired
under the Option immediately prior to the Participant’s Disability. The
determination by the P&C Committee of any question involving Disability of a
Participant shall be conclusive and binding.

    


    (d)  Every Option shall
provide that in the event the employment of any Participant shall cease by
reason of Retirement, such Option may be exercised at any time or from time to
time, prior to the fixed termination date set forth in the Option for the number
of shares which the Participant could have acquired under the Option immediately
prior to such Retirement.

    


    (e)  Notwithstanding any
provision of this Plan to the contrary, any Option, may, in the discretion of
the P&C Committee or as provided in the relevant Notice of Grant (if any),
become exercisable, at any time or from time to time, prior to the fixed
termination date set forth in the Option for the full number of awarded shares
or any part thereof, less such number as may have been theretofore acquired
under the Option from and after the time the Participant ceases to be an
employee of the Company as a result of the sale or other disposition by the
Company of assets or property (including shares of any Subsidiary) in respect of
which such Participant had theretofore been employed or as a result of which
such Participant's continued employment with the Company is no longer
required.

    


    (f)  Except as provided in
sub-subsections (b), (c), (d), (e) and (g) of this Section 10(E) and Section
13(D) hereof, every Option shall provide that it shall terminate on the earlier
to occur of the fixed termination date set forth in the Option or thirty (30)
days after cessation of the Participant's employment for any cause in respect of
the number of shares which the Participant could have acquired under the Option
immediately prior to such cessation of employment; provided, however, that no
Option may be exercised after the fixed termination date set forth in the
Option.

    


    (g)  Notwithstanding any
provision of this Section to the contrary, in the event the P&C Committee
determines, in its sole and absolute discretion, that the employment of any
Participant has terminated for a reason or in a manner adversely affecting the
Company (which may include, without limitation, taking other employment or
rendering service to others without the consent of the Company), then the
P&C Committee may direct that such Participant forfeit any and all Options
that he or she could otherwise have exercised pursuant to the terms of this
Plan.

    


    (h)  Each Participant granted
an Award under this Plan shall agree by his or her acceptance of such Award to
remain in the service of the Company for a period of at least one year from the
date of the Notice of Grant respecting the Award (or, if no Notice of Grant is
given, at least one year from the date of the Award). Such service shall,
subject to the terms of any contract between the Company and such Participant,
be at the pleasure of the Company and at such compensation as the Company shall
reasonably determine from time to time. Nothing in this Plan, or in any Award
granted pursuant to this Plan, shall confer on any individual any right to
continue in the employment of or service to the Company or interfere in any way
with the right of the Company to terminate the Participant's employment at any
time.

    


    (i)  Notwithstanding anything
to the contrary herein, any Option that is an ISO shall be exercisable not later
than three (3) months following the date that the employment of a Participant
terminated.

    


    (2)           Outside
Directors

    


    If an Outside Director’s service on the
Board terminates by reason of (i) Retirement, (ii) the death or Disability of
such Outside Director, (iii) a 50% change in the beneficial ownership of the
Company as defined in

     

     

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    Rule
13d-3 under the Exchange Act, or (iv) voluntary early retirement to take a
position in governmental service, any Option held by such Outside Director may
thereafter be exercised by the Outside Director, or in the event of death, by
his or her Beneficiary to the extent it was vested and exercisable at the time
of such termination (i) for a period equal to the number of years of completed
Board service as of the date of such termination of the Outside Director on
whose behalf the Option is exercised, or (ii) until the expiration of the stated
term of such Option whichever period is the shorter.  In the event of
termination for any reason other than those set forth above, any Option held by
such Outside Director may thereafter be exercised by the Outside Director to the
extent it was vested and exercisable at the time of termination (i) for a period
of one year from the date of such termination or (ii) until the expiration of
the stated term of such Option, whichever period is the shorter, unless
otherwise determined by the G&N Committee.

    


    SECTION
11.  STOCK APPRECIATION RIGHT AWARDS

    


    The Committees may, in their
discretion, grant Stock Appreciation Rights pursuant to the provisions of this
Section either singly or concurrently with an Option granted under this Plan
with respect to all or a portion of the shares subject to the related
Option.  Subject to the terms and provisions of this Section, each SAR
that is granted singly shall be exercisable as determined by the Committees, and
each SAR that is granted concurrently with the grant of a related Option shall
be exercisable only at the same time and to the same extent the related Option
is exercisable and in no event after the termination of the related
Option.  A SAR shall be exercisable only when the Fair Market Value
(determined as of the date of exercise of the SAR) of each share of Common Stock
with respect to which the SAR is to be exercised shall exceed the Exercise Price
per share of Common Stock subject to the SAR, or in the event that the SAR was
granted concurrently with the grant of a related Option, the related
Option.  A SAR granted under this Plan shall be exercisable in whole
or in part by notice to the Company at such place and in such manner as the
Company may designate from time to time. Such notice shall state that the holder
of the SAR elects to exercise the SAR and the number of shares in respect of
which the SAR is being exercised.

    


    Subject to the terms and provisions of
this Section, upon the exercise of a SAR, the Recipient shall be entitled to
receive from the Company consideration (in the form hereinafter provided) equal
in value to the excess of the Fair Market Value (determined as of the date of
exercise of the SAR) of each share of Common Stock with respect to which such
SAR has been exercised over the Exercise Price per share of Common Stock subject
to either the SAR or, in the event that the SAR was granted concurrently with
the grant of a related Option, the related Option.  The Committees may
stipulate in the Notice of Grant the form of consideration which shall be
received upon the exercise of a SAR.  If no consideration is specified
therein, upon the exercise of a SAR, the Recipient may specify the form of
consideration to be received by such Recipient, which shall be in shares of
Common Stock, or in cash, or partly in cash and partly in shares of Common Stock
(valued at the Fair Market Value on the date of exercise of the SAR), as the
Recipient shall request; provided, however, that the Committees, in their sole
discretion, may disapprove the form of consideration requested and instead
authorize the payment of such consideration in shares of Common Stock (valued as
aforesaid), or in cash, or partly in cash and partly in shares of Common
Stock.

    


    Upon the exercise of a SAR that was
granted concurrently with the grant of a related Option, the related Option
shall be deemed exercised to the extent of the number of shares of Common Stock
with respect to which such SAR is exercised and to that extent a corresponding
number of shares of Common Stock shall not again be available for the grant of
Awards under this Plan.  Upon the exercise or termination of a related
Option granted concurrently with the grant of a SAR, the SAR with respect
thereto shall be considered to have been exercised or terminated to the extent
of the number of shares of Common Stock with respect to which the related Option
was so exercised or terminated.

    


    SECTION
12.  CONTINUED EMPLOYMENT

    


    Nothing in this Plan, or in any Award
granted pursuant to this Plan, shall confer on any individual any right to
continue in the employment of, or service to, the Company or interfere in any
way with the right of the Company to terminate the Participant’s employment at
any time.

     

     

     

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    SECTION
13.  CHANGE IN CONTROL

    


    (A)  Upon a Change in Control, any
Restricted Stock Award shall be free of all restrictions for the full number of
awarded shares less such number as may have been theretofore acquired under the
Restricted Stock Award.

    


    (B)   Upon a Change in
Control, there shall be an acceleration of any Performance Period relating to
any Incentive Award, and payment of any Incentive Award shall be made in cash as
soon as practicable after such Change in Control based upon achievement of the
Performance Goals applicable to such Award up to the date of the Change in
Control.  Further, the Company’s obligation with respect to such
Incentive Award shall be assumed, or new obligations substituted therefor, by
the acquiring or surviving corporation after such Change in
Control.  In addition, prior to the date of such Change in Control,
the P&C Committee, in its sole judgment, may make adjustments to any
Incentive Award as may be appropriate to reflect such Change in
Control.

    


    (C)   Upon a Change in
Control, there shall be an acceleration of any Performance Period relating to
any Performance Unit Award, and payment of any Performance Unit Award shall be
made in cash as soon as practicable after such Change in Control based upon
achievement of the Performance Goals applicable to such Performance Unit Award
up to the date of the Change in Control.  If such Performance Unit
Award was established in shares of Common Stock, the amount of cash to be paid
to a Participant with respect to the Performance Unit Award shall be determined
by multiplying (x) the number of shares of Common Stock relating to such
Performance Unit Award, by (y) the Fair Market Value on the date of the
Change in Control.  Further, the Company’s obligation with respect to
such Performance Unit Award shall be assumed, or new obligations substituted
therefor, by the acquiring or surviving corporation after such Change in
Control.  In addition, prior to the date of such Change in Control,
the P&C Committee, in its sole judgment, may make adjustments to any
Performance Unit Award as may be appropriate to reflect such Change in
Control.

    


    (D)   Upon a Change in
Control, any Option Award or SAR Award shall become immediately exercisable for
the full number of awarded shares or any part thereof, less such numbers as may
have been theretofore acquired under the Option Award or SAR Award from and
after the date of such Change in Control, unless otherwise provided in the
Notice of Grant.

    


    SECTION
14.  WITHHOLDING TAXES

    


    Federal, state or local law may require
the withholding of taxes applicable to gains resulting from the payment or
vesting of an Award.  Unless otherwise prohibited by the P&C
Committee, each Participant may satisfy any such tax withholding obligation by
any of the following means, or by a combination of such means: (i) a cash
payment; (ii) authorizing the Company to withhold from the shares of Common
Stock otherwise issuable to the Participant pursuant to the vesting of an Award
a number of shares having a Fair Market Value, as of the Tax Date, which will
satisfy the amount of the withholding tax obligation; or (iii) by delivery
to the Company of a number of shares of Common Stock having a Fair Market Value
as of the Tax Date which will satisfy the amount of the withholding tax
obligation arising from the vesting of an Award.  A Participant’s
election to pay the withholding tax obligation by (ii) or (iii) above
must be made on or before the Tax Date, is irrevocable, is subject to such rules
as the P&C Committee may adopt, and may be disapproved by the P&C
Committee.  If the amount requested is not paid, the P&C Committee
may refuse to issue Common Stock under this Plan.

    


    SECTION
15.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

    


    In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, stock
dividend, recapitalization, merger, consolidation, reorganization, combination,
or exchange of shares, split-up, split-off, spin-off, liquidation or other
similar change in capitalization, or any distribution to common stockholders
other than cash dividends, the number or kind of shares that may be issued under
this Plan pursuant to Section 3 hereof and the number or kind of shares
subject to, or the price per share under any outstanding Award shall be
automatically adjusted so that the proportionate interest of the Recipient shall
be maintained as before the occurrence of such event.  Such adjustment
shall be conclusive and binding for all purposes hereof.

     

     

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    SECTION
16.  AMENDMENT AND TERMINATIONS

    


    The Committees may amend, alter or
terminate this Plan at any time without the prior approval of the Board;
provided, however, that: (i) the Committees may not, without approval by
the Board and the shareholders, (a) materially increase the benefits provided to
Recipients under this Plan or (b) provide for the re-pricing of Options; and
(ii) any amendment with respect to Restricted Stock granted to Outside
Directors must be approved by the full Board.

    


    Termination of this Plan shall not
affect any Awards made hereunder which are outstanding on the date of
termination and such Awards shall continue to be subject to the terms of this
Plan notwithstanding its termination.

    


    SECTION
17.  MISCELLANEOUS PROVISIONS

    


    (A)  Except as to Awards of
Restricted Stock to Outside Directors, no Participant or other person shall have
any claim or right to be granted an Award under this Plan.

    


    (B)  A Recipient’s rights and
interest under this Plan may not be assigned or transferred in whole or in part,
either directly or by operation of law or otherwise (except in the event of a
Recipient’s death, by will or the laws of descent and distribution), including,
but not by way of limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner, and no such right or interest of any
Recipient in this Plan shall be subject to any obligation or liability of such
individual; provided, however, that a Recipient’s rights and interest under this
Plan may, subject to the discretion and direction of the Committees, be made
transferable by such Recipient during his or her lifetime.  Except as
specified in Section 6 hereof, the holder of an Award shall have none of
the rights of a shareholder until the shares subject thereto shall have been
registered in the name of the person receiving or person or persons exercising
the Award on the transfer books of the Company.

    


    (C)  No Common Stock shall be
issued hereunder unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable Federal, state, and other
securities laws.

    


    (D)  The expenses of this Plan
shall be borne by the Company.

    


    (E)  By accepting any Award under
this Plan, each Recipient and each Personal Representative or Beneficiary
claiming under or through him or her shall be conclusively deemed to have
indicated his or her acceptance and ratification of, and consent to, any action
taken under this Plan by the Company, the Board, and the
Committees.

    


    (F)  Awards granted under this
Plan shall be binding upon the Company, its successors, and
assigns.

    


    (G)  Nothing contained in this
Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to shareholder approval if such approval is
required.

    


    (H)  Each Recipient shall be
deemed to have been granted any Award on the date the Committees took action to
grant such Award under this Plan or such date as the Committees in their sole
discretion shall determine at the time such grant is authorized.

    


    SECTION
18.  EFFECTIVENESS OF THIS PLAN

    


    This Plan was originally approved by
the shareholders of the Company on January 27, 2000.  The Amended and
Restated Plan shall be submitted to the shareholders of the Company for their
approval and adoption on January 25, 2001, or such other date fixed for the next
meeting of shareholders or any adjournment or postponement
thereof.  If not approved by the shareholders of the Company at the
January 25, 2001 Annual Meeting, the original Plan shall remain in effect with
respect to Awards other than Option Awards and SAR Awards.  No Option
Awards or SAR Awards shall be made under the Amended and Restated Plan unless
and until the Amended and Restated Plan has been approved and adopted at a
meeting of the Company’s shareholders.

     

     

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    SECTION
19.  GOVERNING LAW

    


    The provisions of this Plan shall be
interpreted and construed in accordance with the laws of the Commonwealth of
Kentucky.

     

     

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