ASHLAND INC.
                         1997 STOCK INCENTIVE PLAN
                      (Amended as of November 7, 2002)


SECTION 1. PURPOSE

     The  purpose  of the  Ashland  Inc.  1997 Stock  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  Options,  Stock
Appreciation  Rights,  Restricted Stock, Merit Awards and Performance Share
Awards  in an  effort  to  attract  and  retain  in  its  employ  qualified
individuals  and to provide such  individuals  with  incentives to continue
service with Ashland,  devote their best efforts to the Company and improve
Ashland's economic performance, thus enhancing the value of the Company for
the  benefit of  shareholders.  The 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 grant of Restricted  Stock of the Company upon being appointed or
elected to the Company's Board of Directors.  Options,  Stock  Appreciation
Rights,  Merit  Awards  and  Performance  Shares may not be granted to such
Outside Directors under the Plan.





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)  "Ashland"  shall  mean,   collectively,   Ashland  Inc.  and  its
Subsidiaries.

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

     (D)  "Beneficiary"  shall mean the  person,  persons,  trust or trusts
designated by an Employee or Outside Director 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 an Employee's or Outside Director's death.

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

     (F) "Change in Control"  shall be deemed to occur (1) upon approval of
the shareholders of Ashland (or if such approval is not required,  upon the
approval of the Board) of (A) any consolidation or merger of Ashland, other
than a consolidation or merger of Ashland into or with a direct or indirect
wholly-owned  subsidiary,  in  which  Ashland  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 Ashland, provided,  however, that no
sale,  lease,  exchange or other transfer of all or  substantially  all the
assets of Ashland shall be deemed to occur unless assets  constituting  80%
of the total  assets of  Ashland  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 Ashland,  (2) when any "person" (as
defined  in  Section  3(a)(9)  or 13(d) of the  Exchange  Act),  other than
Ashland or any Subsidiary or employee  benefit plan or trust  maintained by
Ashland,  shall  become the  "beneficial  owner" (as  defined in Rule 13d-3
under  the  Exchange  Act),  directly  or  indirectly,  of more than 15% of
Ashland'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 Ashland'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,  Ashland and Marathon
Ashland Petroleum LLC, as amended from time to time, shall not be deemed to
constitute a Change in Control.

     (G) "Code"  shall mean the Internal  Revenue Code of 1986,  as amended
from time to time.

     (H) "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.

     (I) "Committee on Directors"  shall mean the Committee on Directors of
the Board, as from time to time constituted,  or any successor committee of
the Board with similar functions.

     (J) "Common  Stock" shall mean the Common Stock of the Company  ($1.00
par value), subject to adjustment pursuant to Section 13.

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

     (L) "Employee" shall mean a regular,  full-time or part-time  employee
of Ashland as selected by the Committee to receive an Award under the Plan.

     (M) "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
amended.

     (N) "Exercise  Price" shall mean, with respect to each share of Common
Stock subject to an Option,  the price fixed by the Committee 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.

     (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 Company or as  otherwise  provided in the
Plan.

     (P)  "Incentive  Stock  Option" or "ISO"  shall mean an Option that is
intended by the  Committee to meet the  requirements  of Section 422 of the
Code or any successor provision.

     (Q) "Merit Award" shall mean an award of Common Stock issued  pursuant
to Section 9 of the Plan.

     (R) "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.

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

     (T) "Option" shall mean the right to purchase  Common Stock at a price
to be  specified  and  upon  terms to be  designated  by the  Committee  or
otherwise  determined  pursuant to this Plan. An Option shall be designated
by the  Committee as a  Nonqualified  Stock  Option or an  Incentive  Stock
Option.

     (U) "Outside Director" shall mean a director of the Company who is not
also an Employee of the Company.

     (V) "Performance  Goals" means performance goals as may be established
in writing by the  Committee  which may be based on earnings,  stock price,
return on  equity,  return on  investment,  total  return to  shareholders,
economic value added, debt rating or achievement of business or operational
goals, such as drilling or exploration  targets or profit per barrel.  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 an Employee or the division,  department, branch, line
of business,  subsidiary  or other unit in which the Employee  works and/or
may be based on the performance of Ashland generally.

     (W)  "Performance  Period"  shall  mean the period  designated  by the
Committee during which the performance objectives shall be measured.

     (X) "Performance  Share Award" shall mean an award of shares of Common
Stock,  the issuance of which is contingent  upon attainment of performance
objectives specified by the Committee.

     (Y)  "Performance  Shares"  shall  mean those  shares of Common  Stock
issuable pursuant to a Performance Share Award.

     (Z)  "Personal  Representative"  shall mean the person or persons who,
upon the  disability or  incompetence  of an Employee or Outside  Director,
shall have acquired on behalf of the Employee or Outside  Director by legal
proceeding or otherwise the right to receive the benefits specified in this
Plan.

     (AA) "Plan" shall mean this Ashland Inc. 1997 Stock Incentive Plan.

     (BB)  "Restricted  Period"  shall  mean the period  designated  by the
Committee  during  which  Restricted  Stock  may  not  be  sold,  assigned,
transferred,  pledged, or otherwise encumbered, which period in the case of
Employees  shall not be less  than one year from the date of grant  (unless
otherwise directed by the Committee),  and in the case of Outside Directors
is the period set forth in subsection (B) of Section 8.

     (CC) "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.

     (DD) "Restricted Stock Award" shall mean an award of Restricted Stock.

     (EE)  "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.

     (FF) "Retirement" shall mean retirement of an Employee 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.

     (GG)  "Section  16(b)  Optionee"  shall  mean an  Employee  or  former
Employee who is subject to Section 16(b) of the Exchange Act.

     (HH) "Stock  Appreciation  Right" or "SAR" shall mean the right of the
holder to elect to surrender an Option or any portion thereof which is then
exercisable and receive in exchange therefor shares of Common Stock,  cash,
or a combination thereof, as the case may be, with an aggregate value equal
to the excess of the Fair  Market  Value of one share of Common  Stock over
the Exercise  Price  specified in such Option  multiplied  by the number of
shares of Common Stock  covered by such Option or portion  thereof which is
so surrendered.  An SAR may only be granted  concurrently with the grant of
the related Option.  An 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 the Plan.

     (II)  "Subsidiary"   shall  mean  any  present  or  future  subsidiary
corporations, as defined in Section 424 of the Code, of Ashland.

     (JJ) "Tax Date"  shall mean the date the  withholding  tax  obligation
arises with respect to the exercise of an Award.




SECTION 3. STOCK SUBJECT TO THE PLAN

     There will be reserved for issuance  under the Plan (upon the exercise
of Options and Stock Appreciation  Rights, upon awards of Restricted Stock,
Performance  Shares  and Merit  Awards and for stock  bonuses  on  deferred
awards of  Restricted  Stock  and  Performance  Shares),  an  aggregate  of
3,212,000  shares of  Ashland  Common  Stock,  par value  $1.00 per  share;
provided,  however,  that  of  such  shares,  only  500,000  shares  in the
aggregate  shall be available for issuance for Restricted  Stock Awards and
Merit Awards. Such shares shall be authorized but unissued shares of Common
Stock.  Except as provided in Sections 7 and 8, if any Award under the Plan
shall expire or terminate for any reason  without  having been exercised in
full,  or if any  Award  shall be  forfeited,  the  shares  subject  to the
unexercised or forfeited portion of such Award shall again be available for
the  purposes  of the Plan.  During  the term of the Plan (as  provided  in
Section 14  hereof),  no  Employee  shall be  granted  more than a total of
500,000 in Options or Stock Appreciation Rights.



SECTION 4. ADMINISTRATION

     Except as provided  in  subsection  (B) of Section 8 herein,  the Plan
shall be administered by the Committee.

     In  addition  to any  implied  powers and duties that may be needed to
carry out the  provisions  of the Plan,  the  Committee  shall have all the
powers vested in it by the terms of the Plan, including exclusive authority
(except as to Awards of Restricted  Stock granted to Outside  Directors) to
select the Employees to be granted  Awards under the Plan, to determine the
type, size and terms of the Awards to be made to each Employee selected, to
determine  the time when Awards will be granted,  and to prescribe the form
of the  Agreements  embodying  Awards  made under the Plan.  Subject to the
provisions of the Plan  specifically  governing  Awards of Restricted Stock
granted or to be granted to Outside Directors pursuant to subsection (B) of
Section 8 herein,  the Committee  shall be authorized to interpret the Plan
and the Awards granted under the Plan, to establish,  amend and rescind any
rules  and   regulations   relating   to  the  Plan,   to  make  any  other
determinations   which  it  believes   necessary  or   advisable   for  the
administration  of the Plan,  and to  correct  any  defect  or  supply  any
omission or reconcile any  inconsistency in the Plan or in any Award in the
manner and to the extent the  Committee  deems  desirable  to carry it into
effect. Any decision of the Committee in the administration of the Plan, as
described herein, shall be final and conclusive.

     The Committee  (or, in the case of subsection (B) of Section 8 herein,
the Committee on Directors) may act only by a majority of its members.  Any
determination  of the  Committee or the Committee on Directors may be made,
without  notice,  by the written  consent of the majority of the members of
the Committee or the Committee on Directors.  In addition, the Committee or
the Committee on Directors may authorize any one or more of their number or
any officer of the Company to execute  and deliver  documents  on behalf of
the Committee or the Committee on Directors.  No member of the Committee or
the Committee on Directors  shall be liable for any action taken or omitted
to be taken by him or her or by any other  member of the  Committee  or the
Committee on Directors in connection  with the Plan,  except for his or her
own willful misconduct or as expressly provided by statute.





SECTION 5. ELIGIBILITY

     Awards may only be granted (i) to  individuals  who are  Employees  of
Ashland,  and (ii) as expressly  provided in subsection (B) of Section 8 of
the Plan, to individuals who are duly elected Outside Directors of Ashland.





SECTION 6. OPTIONS

     A. Designation and Price.

     (a) Any Option  granted  under the Plan may be granted as an Incentive
Stock Option or as a  Nonqualified  Stock Option as shall be  designated by
the  Committee at the time of the grant of such Option.  Each Option shall,
at the  discretion  of the Company and as  directed  by the  Committee,  be
evidenced  by an Agreement  between the  recipient  and the Company,  which
Agreement  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
Committee,  in its sole  discretion,  may determine in accordance  with the
Plan.

     (b) Every Incentive Stock Option shall provide for a fixed  expiration
date of not later than ten years from the date such Incentive  Stock Option
is granted.  Every  Nonqualified  Stock  Option  shall  provide for a fixed
expiration  date of not later  than ten  years and one month  from the date
such Nonqualified Stock Option is granted.

     (c) The Exercise Price of Common Stock issued  pursuant to each Option
shall be fixed by the  Committee 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.

  B. Exercise.

     The  Committee  may, in its  discretion,  provide for Options  granted
under the 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 11 or as the  Committee
otherwise  determines  in accordance  with the 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 Ashland of (i) notice from the holder thereof of the exercise of
an Option,  and (ii)  payment to Ashland (as  provided  in this  Section 6,
subsection (C) below),  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 by postpaid  mail,  addressed to the Treasurer
of Ashland at Ashland Inc.,  500  Diederich  Boulevard,  Russell,  Kentucky
41169,  or such other place or person as Ashland may designate from time to
time.

  C. Payment for Shares.

     Except as otherwise provided in this Section 6, the Exercise Price for
the  Common  Stock  shall be paid in full  when the  Option  is  exercised.
Subject to such rules as the Committee 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  Employee  and  evidenced  by  negotiable  certificates,
valued at their Fair Market Value  (which  shares of Common Stock must have
been owned by the Employee six months or longer,  and not used to effect an
Option  exercise  within the  preceding  six months,  unless the  Committee
specifically  provides  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 Committee (including, without limitation,  effecting
a "cashless  exercise," with a broker, of the Option).  "Attestation" means
the  delivery  to Ashland of a completed  Attestation  Form  prescribed  by
Ashland  setting  forth the  whole  shares  of  Common  Stock  owned by the
Employee  which the Employee  wishes to utilize to pay the Exercise  Price.
The Common Stock listed on the Attestation Form must have been owned by the
Employee  six months or longer,  and not have been used to effect an Option
exercise within the preceding six months, unless the Committee specifically
provides  otherwise.  A "cashless  exercise" of an option is a procedure by
which a broker  provides  the  funds to an  Employee  to  effect  an option
exercise. At the direction of the Employee, the broker will either (i) sell
all of the  shares  received  when  the  option  is  exercised  and pay the
Employee  the  proceeds  of the sale  (minus  the  option  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
Employee (either  directly or through the Company) a stock  certificate for
the  remaining  shares.  Dispositions  to a  broker  effecting  a  cashless
exercise are not exempt under Section 16 of the Exchange Act.





SECTION 7. STOCK APPRECIATION RIGHTS

     The  Committee  may grant Stock  Appreciation  Rights  pursuant to the
provisions of this Section 7 to any holder of any Option  granted under the
Plan with respect to all or a portion of the shares  subject to the related
Option.  An SAR may only be  granted  concurrently  with  the  grant of the
related Option. Subject to the terms and provisions of this Section 7, each
SAR 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. An 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 related Option.  An
SAR  granted  under the Plan  shall be  exercisable  in whole or in part by
notice to  Ashland.  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  7, upon the
exercise of an SAR,  the holder  thereof  shall be entitled to receive from
Ashland  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 the related Option. The Committee may stipulate in the Agreement
the form of  consideration  which shall be received upon the exercise of an
SAR. If no consideration is specified therein, upon the exercise of an SAR,
the holder may  specify  the form of  consideration  to be received by such
holder,  which shall be in shares of Common Stock, or in cash, or partly in
cash and partly in shares of Common  Stock  (valued at Fair Market Value on
the date of exercise of the SAR) , as the holder shall  request;  provided,
however,  that the Committee,  in its 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 an SAR,  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 the Plan.  Upon the exercise or  termination of the related
Option,  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 8. RESTRICTED STOCK AWARDS

  A. Awards to Employees

     The  Committee  may  make an  award of  Restricted  Stock to  selected
Employees,  which may, at the Company's  discretion  and as directed by the
Committee,  be evidenced by an Agreement which shall contain such terms and
conditions as the Committee,  in its sole  discretion,  may determine.  The
amount  of each  Restricted  Stock  Award  and  the  respective  terms  and
conditions of each Award (which terms and  conditions  need not be the same
in each case) shall be determined by the Committee in its sole  discretion.
As a  condition  to any Award  hereunder,  the  Committee  may  require  an
Employee  to pay to the  Company a  non-refundable  amount  equal to, or in
excess of, the par value of the shares of  Restricted  Stock awarded to him
or her. Subject to the terms and conditions of each Restricted Stock Award,
the Employee,  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.

     In the  event  that a  Restricted  Stock  Award  has  been  made to an
Employee  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  Employee;  provided,
however,  that the  Committee  may,  in its  sole  discretion,  limit  such
forfeiture.

     Employees  may be  offered  the  opportunity  to defer the  receipt of
payment of vested  shares of  Restricted  Stock,  and  Common  Stock may be
granted as a bonus for deferral,  under terms as may be  established by the
Committee  from time to time;  however,  in no event shall the Common Stock
granted  as a bonus for  deferral  exceed  20% of the  Restricted  Stock so
deferred.

  B. Awards to Outside Directors

     During  the term of the Plan,  each  person who is 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,  an Award of 1,000 shares
of Restricted  Stock.  All Awards under this  subsection (B) are subject to
the limitation on the number of shares of Common Stock  available  pursuant
to Section 3 and to the terms and conditions  set forth in this  subsection
(B) and subsection (C) below.

     As a condition  to any 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  Restricted  Stock  awarded to him or her.  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 from the Board
at age 72, (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  Committee on  Directors,  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 grant of
Restricted Stock made to him or her pursuant to this subsection (B) will be
forfeited by such Outside  Director.  As used herein,  a director  shall be
deemed  "disabled"  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.

  C. Transferability

     Subject to subsection (B) of Section 15 hereof,  Restricted  Stock may
not be sold, assigned, transferred, pledged, or otherwise encumbered during
a Restricted Period,  which, in the case of Employees,  shall be determined
by the Committee and, unless otherwise  determined by the Committee,  shall
not be less than one year from the date such Restricted  Stock was awarded,
and, in the case of Outside  Directors,  shall be  determined in accordance
with  subsection  (B) of this  Section 8. The  Committee  may, at any time,
reduce the  Restricted  Period with  respect to any  outstanding  shares of
Restricted Stock awarded under the Plan to Employees, but, unless otherwise
determined by the 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 the Plan and the applicable  Agreement,  if any.
Such  certificates  shall 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 the Plan and the
applicable Agreement,  if any. Restricted Stock shall constitute issued and
outstanding  shares  of  Common  Stock  for  all  corporate  purposes.  The
recipient will have the right to vote such Restricted Stock, to receive and
retain all  regular  cash  dividends,  and to  exercise  all other  rights,
powers,  and  privileges  of a holder of Common  Stock with respect to such
Restricted  Stock,  with the exception  that (i) the recipient  will not be
entitled to delivery of the stock certificate or 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 subsection (B) of Section
15 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) a breach of any restrictions, terms,
or conditions  provided in the Plan or  established  by the Committee  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 9.  MERIT AWARDS

     The  Committee  may from time to time  make an award of  Common  Stock
under the Plan to selected  Employees  for such reasons and in such amounts
as the Committee, in its sole discretion,  may determine. As a condition to
any such Merit Award,  the  Committee may require an Employee to pay to the
Company an amount equal to, or in excess of, the par value of the shares of
Common Stock awarded to him or her.




SECTION 10. PERFORMANCE SHARES

     The  Committee  may make  awards of Common  Stock  which  may,  in the
Company's  discretion and as directed by the Committee,  be evidenced by an
Agreement,  to selected  Employees on the basis of the Company's  financial
performance in any given period. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Employees
who shall receive such Performance  Shares, to determine the number of such
shares to be granted for each  Performance  Period,  and to  determine  the
duration  of each  such  Performance  Period.  There  may be more  than one
Performance  Period in  existence  at any one  time,  and the  duration  of
Performance Periods may differ from each other.

     The Performance Goals and Performance Period applicable to an award of
Performance  Shares shall be set forth in writing by the Committee no later
than 90 days after the commencement of the Performance  Period and shall be
communicated  to the Employee.  The Committee  shall have the discretion to
later  revise the  Performance  Goals solely for the purpose of reducing or
eliminating the amount of compensation otherwise payable upon attainment of
the Performance Goals;  provided that the Performance Goals and the amounts
payable upon attainment of the Performance Goals may be adjusted during any
Performance Period to reflect promotions,  transfers or other changes in an
Employee's  employment  so long as such  changes  are  consistent  with the
Performance  Goals  established  for other Employees in the same or similar
positions.

     In making a  Performance  Share  award,  the  Committee  may take into
account an Employee's responsibility level, performance,  cash compensation
level,  incentive  compensation awards and such other  considerations as it
deems  appropriate.  Each  Performance  Share award shall be established in
shares  of  Common  Stock  and/or  shares  of  Restricted   Stock  in  such
proportions as the Committee  shall  determine.  The original amount of any
Performance  Share award shall not exceed 250,000 shares of Common Stock or
Restricted Stock.

     The Committee shall determine,  in its sole discretion,  the manner of
payment,  which may include (i) cash, (ii) shares of Common Stock, or (iii)
shares of  Restricted  Stock in such  proportions  as the  Committee  shall
determine. Employees may be offered the opportunity to defer the receipt of
payment of earned Performance  Shares, and Common Stock may be granted as a
bonus for deferral  under terms as may be established by the Committee from
time to time;  however,  in no event  shall the Common  Stock  granted as a
bonus for deferral exceed 20% of the Performance Shares so deferred.

     An  Employee  must  be  employed  by  the  Company  at  the  end  of a
Performance Period in order to be entitled to payment of Performance Shares
in  respect  of such  period;  provided,  however,  that in the event of an
Employee's  cessation of employment  before the end of such period, or upon
the occurrence of his or her death,  retirement,  or  disability,  or other
reason  approved  by  the  Committee,   the  Committee  may,  in  its  sole
discretion, limit such forfeiture.





SECTION 11. CONTINUED EMPLOYMENT, AGREEMENT TO SERVE AND EXERCISE PERIODS

     (A) Subject to the  provisions of  subsection  (F) of this Section 11,
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 Committee) and if the employment of the
Employee shall  terminate prior to the end of such one year period (or such
other  period  determined  by the  Committee),  the Option  granted to such
Employee shall immediately terminate.

     (B) Every Option shall provide that in the event the Employee dies (i)
while employed by Ashland,  (ii) during the periods in which Options may be
exercised  by  an  Employee  determined  to  be  disabled  as  provided  in
subsection  (C) of this Section 11 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  Employee  could have  acquired
under the Option immediately prior to the Employee's death.

     (C) Every Option shall provide that in the event the employment of any
Employee  shall  cease  by  reason  of  disability,  as  determined  by the
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 Employee for the number of
shares which the Employee could have acquired under the Option  immediately
prior to the  Employee's  disability.  As used herein,  an Employee will be
deemed  "disabled"  when 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.  The  determination  by the Committee of any question
involving disability shall be conclusive and binding.

     (D) Every Option shall provide that in the event the employment of any
Employee 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 Employee  could have
acquired under the Option immediately prior to such Retirement.

     (E) Except as provided in subsections  (A), (B), (C), (D), (F) and (G)
of this Section 11, 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  Employee's  employment for any
cause only in respect of the number of shares which the Employee 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.

     (F)  Notwithstanding any provision of this Section 11 to the contrary,
any Award granted pursuant to the Plan,  except a Restricted Stock Award to
Outside Directors,  which is governed by Section 8, subsection (B), may, in
the  discretion of the  Committee or as provided in the relevant  Agreement
(if any),  become  exercisable,  at any time or from time to time, prior to
the fixed  termination  date set forth in the Award for the full  number of
awarded  shares or any part  thereof,  less such  numbers  as may have been
theretofore  acquired  under  the  Award  (i) from and  after  the time the
Employee  ceases to be an  Employee  of  Ashland as a result of the sale or
other disposition by Ashland of assets or property (including shares of any
Subsidiary) in respect of which such Employee had theretofore been employed
or as a result of which such Employee's  continued  employment with Ashland
is no  longer  required,  and (ii) in the case of a Change  in  Control  of
Ashland, from and after the date of such Change in Control.

     (G)  Notwithstanding any provision of this Section 11 to the contrary,
in the event the Committee determines, in its sole and absolute discretion,
that the  employment  of any Employee 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  Committee  may  direct  that such
Employee  forfeit any and all Options that he or she could  otherwise  have
exercised pursuant to the terms of this Plan.

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

     (I) Subject to the  limitations  set forth in Section 422 of the Code,
the  Committee  may  adopt,  amend,  or  rescind  from  time to  time  such
provisions as it deems  appropriate with respect to the effect of leaves of
absence approved by any duly authorized  officer of Ashland with respect to
any Employee.





SECTION 12. WITHHOLDING TAXES

     Federal,  state or local  law may  require  the  withholding  of taxes
applicable  to  gains  resulting  from the  exercise  of an  Award.  Unless
otherwise  prohibited by the Committee,  each Employee 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 Ashland to
withhold from the shares of Common Stock otherwise issuable to the Employee
pursuant to the exercise or 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 Ashland 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 an
exercise  or  vesting  of an  Award.  An  Employee'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 Committee may
adopt, and may be disapproved by the Committee.  If the amount requested is
not paid, the Committee may refuse to issue Common Stock under the Plan.





SECTION 13. 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 the Plan
pursuant  to Section 3 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  Employee  or Outside  Director
shall be maintained as before the occurrence of such event. Such adjustment
shall be conclusive and binding for all purposes of the Plan.





SECTION 14. AMENDMENTS AND TERMINATIONS

     Unless the Plan  shall have been  earlier  terminated  as  hereinafter
provided,  no Awards shall be granted hereunder after January 30, 2002. The
Board,  the  Committee,  or the  Committee  on  Directors  may at any  time
terminate,  modify  or amend  the Plan in such  respects  as it shall  deem
advisable;  provided,  however,  that the Board or the  Committee  may not,
without approval by the holders of a majority of the outstanding  shares of
stock present and voting at any annual or special  meeting of  shareholders
of Ashland change the manner of determining  the minimum  Exercise Price of
Options,  other than to change the manner of  determining  the Fair  Market
Value of the Common Stock as set forth in Section 2.





SECTION 15. MISCELLANEOUS PROVISIONS

     (A)  Except as to an Award of 1,000  Restricted  Shares to an  Outside
Director  upon  being  appointed  or  elected  to the  Company's  Board  of
Directors,  no Employee or other person shall have any claim or right to be
granted an Award under the Plan.

     (B) An Employee's or Outside  Director's rights and interest under the
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 an
Employee's or Outside  Director'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  Employee  or Outside  Director in the Plan
shall  be  subject  to any  obligation  or  liability  of such  individual;
provided,  however,  that an  Employee's or Outside  Director's  rights and
interest under the Plan may, subject to the discretion and direction of the
Committee  or,  in the  case  of an  Outside  Director,  the  Committee  on
Directors, be made transferable by such Employee or Outside Director during
his or her  lifetime.  Except as  specified  in Section 8, 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 the Plan shall be borne by the Company.

     (E) By accepting  any Award under the Plan,  each Employee and Outside
Director 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
the Plan by the  Company,  the Board,  the  Committee  or the  Committee on
Directors.

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

     (G) The  appropriate  officers of the Company  shall cause to be filed
any reports,  returns,  or other information  regarding Awards hereunder or
any Common Stock issued  pursuant hereto as may be required by Sections 13,
15(d) or 16(a) of the Exchange Act, or any other applicable statute,  rule,
or regulation.

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

     (I) Each  Employee  shall be deemed to have been  granted any Award on
the date the  Committee  took  action to grant such Award under the Plan or
such later date as the Committee in its sole discretion  shall determine at
the time such grant is authorized.





SECTION 16. EFFECTIVENESS OF THE PLAN

     The Plan was  submitted to the  shareholders  of the Company for their
approval  and  adoption  on  January  30,  1997  and  was  approved  by the
shareholders on that date.





SECTION 17. GOVERNING LAW

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