Document:

ex103.htm

EXHIBIT 10.3

ASHLAND INC. SEVERANCE PAY PLAN

 

 

 

  

 

ASHLAND INC. SEVERANCE PAY PLAN

Omnibus Plan Wrap

The three components of the Ashland Inc. Severance Pay Plan, as completely amended and restated effective December 31, 2008, consist of:

	
1)  
	
Ashland Inc. Severance Pay Plan (base salary grades 22 and above);

	
2)  
	
Ashland Inc. Severance Pay Plan (base salary grades 21 and below); and

	
3)  
	
Ashland Inc. Salary Continuation Plan.

 

 

  

 

 

ASHLAND INC. SEVERANCE PAY PLAN

(base salary grades 22 and above)

TABLE OF CONTENTS

 

	
INTRODUCTION ..................................................................................................................

 
	
1
	 
	
PLAN INFORMATION .........................................................................................................
	
1
	 
	
Eligibility ............................................................................................................................................................................
	
1
	 
	
Exclusions from Eligibility ..............................................................................................................................................
	
1
	 
	
Conditions of Severance Payments ................................................................................................................................
	
1
	 
	
Amount of Benefits ...........................................................................................................................................................
	
2
	 
	
Continuous Service .......................................................................................................................................................
	
2
	 
	
Base Rate of Pay ............................................................................................................................................................
	
3
	 
	
Method of Payment .......................................................................................................................................................
	
3
	 
	
Duplication of Payments ..................................................................................................................................................
	
4
	 
	
Terminations Not Covered ...............................................................................................................................................
	
4
	 
	
Deferred Terminations ....................................................................................................................................................
	
5
	
 

 

	
CLAIM PROCEDURES ........................................................................................................
	
5
	 
	
How to Apply for Benefits ................................................................................................................................................
	
5
	 
	
Notice of Claim Denial/Right of Appeal ........................................................................................................................
	
5
	 
	
Initial Claim – Notice of Denial .................................................................................................................................
	
5
	 
	
Appeal of Denied Claim ...............................................................................................................................................
	
6
	
 

 

	
GENERAL INFORMATION ................................................................................................
	
7
	 
	
Plan Sponsor/Administrator ...........................................................................................................................................
	
7
	 
	
Plan Identification .............................................................................................................................................................
	
7
	 
	
Plan Year ............................................................................................................................................................................
	
7
	 
	
Legal Service .....................................................................................................................................................................
	
7
	 
	
Method of Funding .............................................................................................................................................................
	
7
	 
	
Your Rights.........................................................................................................................................................................
	
7
	 
	
Plan Interpretations/Administration .............................................................................................................................
	
8
	 
	
Plan Documents .................................................................................................................................................................
	
8
	 
	
Non-Assignments of Benefits .........................................................................................................................................
	
8
	 
	
Plan Amendment/Termination .......................................................................................................................................
	
9
	 
	
Authority to Delegate .......................................................................................................................................................
	
9
	 
	
Elections and Notices ........................................................................................................................................................
	
9
	 
	
Applicable Law ...................................................................................................................................................................
	
9
	 

 

 

 

  

 

 

 

INTRODUCTION

This booklet describes the Ashland Inc. Severance Pay Plan as applied to employees in base salary grades of 22 and above. The plan may provide additional compensation to you if your employment is terminated under certain circumstances. This booklet describes the plan as in effect on December 31, 2008.

If you have questions about the plan, please call the HR Service Center at 1-800-782-4669.

No provision of the plan: (1) gives any employee the right to continued employment; (2) affects the company’s right to terminate or discharge an employee at any time; (3) gives the company the right to require any employee to remain employed; or (4) affects any employee’s right to terminate employment.

References to the “company” refer to Ashland Inc., its subsidiaries and its divisions.  References to the “plan sponsor” or “plan administrator” refer to Ashland Inc.

PLAN INFORMATION

Eligibility

You are eligible to participate in this plan if you meet all of the following:

	
·
	
You are a regular, full-time employee of the company; and

	
·
	
You are working in a group designated by the plan sponsor as eligible for this plan.

Your eligibility is based on your status on the date of your termination from employment. A termination from employment occurs when you stop performing active service for the company. You are considered to have terminated from employment on the date when it is reasonably anticipated that your services to the company will permanently decrease
to 20% or less of the average amount of services you performed for the company during the immediately preceding 36 month period (or your total employment if less than 36 months).

Exclusions from Eligibility

You are not eligible to participate in the plan if:

	
·
	
You are covered by a collective bargaining agreement, unless the collective bargaining agreement provides you are eligible for the plan.

	
·
	
You have an agreement with the company that provides severance payments for one or more of the conditions for severance payments described in this plan.

	
·
	
You are in a classification of one or more employees designated in advance by the plan sponsor as exempted from participating in the plan or, you are employed in a division or subsidiary of the company that opted out of participating in the plan.

	
·
	
You are employed by a Canadian subsidiary of the company.

	
·
	
You reside and work outside of the United States and you are subject to a statutory severance or similar obligation required under the law of the foreign jurisdiction in which you work.

Conditions of Severance Payments

You may be considered for severance benefits under the plan if the plan administrator determines that your termination occurs as a direct result of:

	
1.
	
the permanent closing of a location or plant;

	
2.
	
job discontinuance; or

	
3.
	
any circumstances in which your employment is terminated at the company’s initiative for reasons not excluded under the plan and the company, in conjunction with the plan sponsor, elects to provide benefits for such circumstances.

(See the Terminations Not Covered section for limitations).

 

 

 

  

 

However, for benefits to become payable, you must satisfy the following additional conditions:

	
1.
	
If you are given advance notice, you must continue to work until you are officially released by the company; and

	
2.
	
You must sign and execute a Severance Agreement and Release prepared by appropriate company legal counsel.

The Severance Agreement and Release will provide that you agree not to participate in litigation or other action against the company with respect to your termination. It may also provide that you agree not to compete in a business against the company for a stated period of time. It may provide that you must keep the terms of the Severance
Agreement and Release confidential. It may also provide that your severance payments under the plan will be reduced by any amounts you owe to the company. The Severance Agreement and Release may encompass other matters in addition to addressing the benefits payable under this plan. Additionally, the Severance Agreement and Release may be changed for each termination covered by this plan.

Your Human Resources representative will coordinate the preparation and execution of the Severance Agreement and Release and provide you with a copy for your file. You will be responsible for obtaining your own legal advice.

Amount of Benefits

If you satisfy the conditions for benefit payments, you will receive the benefit identified in the following table:

 

	
Position/Base Salary Grade
	
Severance Benefit

	
Chief Executive Officer
	
104 weeks of base salary

	
Base Salary Grades 25-29
	
78 weeks of base salary

	
Base Salary Grades 22-24
	
52 weeks of base salary

(See the Duplication of Payments and Deferred Terminations sections for limitations.)

Continuous Service

Continuous service is your period of employment, generally beginning with the latest of:

	
·
	
your hire date;

	
·
	
your rehire date; or

	
·
	
your adjusted service date

An earlier adjusted service date may be used to measure your continuous service if you became employed with the company as part of the purchase of a business or if you are rehired. (See the Method of Payment section for the significance of calculating your continuous service.)

Your service with the purchased business only counts towards your continuous service under two circumstances. The first is if the agreement that the company signed when the business was purchased provides that such service counts for this purpose. The second is if the company determined that such service would count for this purpose in
the absence of any provision in the agreement that the company signed when the business was purchased.

If you were rehired by the company, your prior employment with the company may count as continuous service under the plan. In order for your prior employment to count as continuous service you must have an adjusted service date connected to your prior employment and you must not have received any severance or similar payment from the company.

You can find out how much continuous service you have under the plan by calling the HR Service Center at 1-800-782-4669.

 

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Base Rate of Pay

Severance payments are computed using your base rate of pay at the time of termination.

Your base rate of pay for a calendar year includes your non-standard base pay. Non-standard base pay includes items like commissions and bonus payments to employees in base salary grades below 21 that were paid in the previous calendar year. Non-standard base pay also includes lump sum payments made in lieu of a percentage merit salary
increase. These amounts are added to your compensation the following calendar year for plan purposes to determine the base rate of pay. The company determines the items constituting non-standard base pay.

Base rate of pay does not include special pay such as severance pay, incentive bonuses, awards, overtime, shift premium, payments under the Ashland Incentive Plan or other allowances not included in your base compensation rate or in your non-standard base pay.

Method of Payment

Payments of severance may be made in a lump sum at the time of termination or in installments over a period equal to the number of weeks of pay represented by your severance benefit (referred to as payroll continuation). Payments to specified employees are subject to special limits that are described in the Payments
to Specified Employees section.

The payment cannot be contingent upon the employee retiring and the amount of the payment cannot exceed twice the eligible employee’s annual compensation during the preceding year. For this purpose, “annual compensation” means the total amount that was paid or would have been paid if the employee had been employed with the
company during all of the preceding calendar year.

If you are not retirement eligible, your plan benefit is paid in a lump sum. If you are retirement eligible, your plan benefit is paid as payroll continuation in bi-weekly increments. You are “retirement eligible” if:

	
  
	
·
	
You are vested in the applicable company pension plan and

	
  
	
·
	
You are at least age 55 or have age and service credit under the applicable company pension plan totaling at least 80 points as of –

	
  
	
o
	
The last day of your active employment, or

	
  
	
o
	
The end of your payroll continuation period.

If paying your plan benefit as payroll continuation will not make you retirement eligible, then your benefit will be paid in a lump sum. A lump sum payment will be made as soon as possible after the termination. In no event will a lump sum be made later than March 1 of the calendar year following the calendar year of the termination from
employment. If your benefit is paid in a lump sum, you will be eligible to elect COBRA continuation of coverage for three months at active employee rates under the company medical and dental plans. You must be eligible to elect COBRA under the medical and dental plans to be eligible for the three months of premiums at active employee rates. The summary plan descriptions for the medical and dental plans explain COBRA continuation of coverage.

Severance payments under the plan are subject to all applicable federal and state tax withholding, including FICA, and any other requirements of law. Payroll continuation payments are also subject to the applicable benefit plan contributions as elected by the eligible employee (subject to certain limitations and exclusions). The plan sponsor
determines the terms and conditions that apply to any benefits that are made available during payroll continuation.

If your benefit is paid by payroll continuation, you are typically allowed to continue to participate in your medical, dental, vision, group life and other welfare plan coverage as identified by the plan sponsor. You are not eligible to continue long-term disability coverage. However, your full period of payroll continuation does not count
for this purpose. Instead, a shorter benefits continuation period applies to determine the period of time you may continue on the benefits selected by the plan sponsor.

 

 

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Your benefits continuation period is two weeks for each completed 12 months of continuous service (also referred to a year of continuous service). There is a minimum benefits continuation period of four weeks of base pay (provided you have at least 12 weeks of employment). The maximum benefits continuation period under the plan is 52 weeks.

For purposes of the Ashland Inc. and Affiliates Pension Plan and the Ashland Inc. Employee Savings Plan, you are not considered to have terminated from employment during your benefits continuation period. However, you will not be eligible to make contributions to the Ashland Inc. Employee Savings Plan during a period of payroll continuation.

Any election before your termination to defer salary to the Ashland Deferred Compensation Plan stops at your termination.

Notwithstanding anything to the contrary, the plan sponsor reserves the right to determine the method of payment, in its sole discretion.

Payments to Specified Employees

Specified employee status is determined as of December 31 and is then effective on January 1 of the next calendar year. The plan sponsor has designated employees in salary grade bands of 23 and above as specified employees. Therefore, for example, if you were in salary grade band 23 at anytime during the 12 months ending on December 31,
2007, you would be a specified employee for the 12 month period beginning January 1, 2008.

Payroll continuation benefits to a specified employee that exceed a specified threshold amount are subject to a six month delay of payment. The threshold is equal to the lesser of:

	
  
	
·
	
Two times your annual base pay for the prior calendar year (adjusted for any increase that occurred during that year and that was expected to last indefinitely, but for the termination); or

	
  
	
·
	
Two times the maximum Internal Revenue Code section 401(a)(17) limit for the year of the termination ($460,000 in 2008, which is two times the 2008 limit of $230,000).

Therefore, if the total amount that would otherwise be paid to you within six months of your termination exceeds the applicable threshold amount, the amount of the excess cannot be paid to you until on or after the first day of the seventh month following your termination.  The amount that must be delayed is paid you in a single
sum in the seventh month following your termination, unadjusted for any earnings.

Duplication of Payments

There will be no duplication of severance benefit payments for the same period of continuous service. For example, you cannot receive additional benefits for the same period of continuous service if you previously received benefits under this plan or any other payment in the nature of a severance payment with respect to that service.

The determination of whether you are eligible for plan benefits will be delayed if you are receiving sick pay, pending a decision for a claim under the company’s long-term disability plan. If such a claim were filed at or before your scheduled termination and the claim is denied, your benefits under this plan would be reduced by the
amount of sick pay you received during the deferred termination period. (Refer to Deferred Termination section.)

Terminations Not Covered

Although not all inclusive, the following are some circumstances when termination of employment with the company would not result in the payment of severance benefits under this plan:

	 1.	
Refusal to sign the Severance Agreement and Release provided by the company;

	 2.	
Discharge for less than effective performance, absenteeism or misconduct;

	 3.	
Voluntary resignations;

 

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	 4.	
Declining an offer by the company of equivalent employment as an alternative to termination, provided that a transfer to a new geographic location shall not be considered to be “equivalent employment;"

	 5.	
Accepting an offer of employment by the company of non-equivalent employment;

	 6.	
The sale, exchange or transfer of company property to another employer who assumes the operations of a company facility or business, unless such sale, exchange or transfer results in unemployment caused by reasons other than the employee’s refusal to accept or continue employment with the new employer, as determined by the plan sponsor;

	 7.	
When an employee is entitled to benefits under the “Ashland Inc. Salary Continuation Plan;”

	 8.	
Death;

	 9.	
Retirement (except for retirements which result from situations outlined under the Condition of Severance Payments section of this plan);

	 10.	
Entitlement to severance or severance-related benefits under an employment agreement;

	 11.	
Terminations while on a personal unpaid leave of absence or when reinstatement attempts following the expiration of such leave are unsuccessful; and

	 12.	
Subject to certain terminations (refer to the section entitled Deferred Terminations), when an employee does not return to work following a period of disability.

 

The plan sponsor reserves the right to determine circumstances, in addition to those identified above, that will not warrant the payment of severance benefits under this plan. Such determinations can be made without advance notice.

Deferred Terminations

If, at the time of your scheduled termination for reasons covered under this plan, you are receiving sick pay or are on a medical leave of absence in accordance with applicable company policies, you may elect to file a claim for benefits under the company’s long-term disability plan (LTD), provided you are enrolled in that plan. Your
scheduled termination will be deferred pending a decision on the LTD claim. During such time, sick pay or the medical leave of absence, whichever is applicable, will be continued. If your LTD claim is denied, your termination will be processed retroactively and any benefits under this plan will be payable in accordance with its terms. Such benefits will be reduced by any sick pay you received after your originally scheduled termination date. If your LTD claim is approved, you will be treated as any disabled individual
in accordance with the applicable company policies and benefit plans.

CLAIM PROCEDURES

How to Apply for Benefits

If you believe you are entitled to plan benefits, contact the Employee Benefits Department in Lexington, Kentucky.

Notice of Claim Denial/Right of Appeal

Initial Claim – Notice of Denial

Written notification of a denied claim will be delivered to the claimant in a reasonable period, but not later than 90 days after the claim is received.  The 90-day period can be extended under special circumstances.  If special circumstances apply, the claimant will be notified before the end of the 90-day period after
the claim was received.  The notice will identify the special circumstances.  It will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than 180 days after the claim is received.

The written decision will include:

 

	 ·	The reasons for the denial.
	 ·	Reference to the plan provisions on which the denial is based.  The reference need not be to page numbers or to section headings or titles.  The reference only needs to sufficiently describe the provisions so that the provisions could be identified based on that description.

 

 

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	 ·	
A description of additional materials or information needed to process the claim.  It will also explain why those materials or information are needed.

	 ·	
A description of the procedure to appeal the denial, including the time limits applicable to those procedures.  It will also state that the claimant may file a civil action under Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA – §29 U.S.C. 1132).  The claimant must complete the plan’s appeal procedure before filing a civil action in court.

 

If the claimant does not receive notice of the decision on the claim within the prescribed time periods, the claim is deemed denied.  In that event the claimant may proceed with the appeal procedure described below.

Appeal of Denied Claim

The claimant may file a written appeal of a denied claim with the plan administrator in Lexington, Kentucky.  Ashland Inc. is the named fiduciary under ERISA for purposes of the appeal of the denied claim.  Ashland Inc. has delegated its authority to the Ashland Inc. Benefit Appeals Panel (Panel).  The Panel
has authority to further delegate some of its authority.  The appeal must be sent at least 60 days after the claimant received the denial of the initial claim.  If the appeal is not sent within this time, then the right to appeal the denial is waived.

The claimant may submit materials and other information relating to the claim.  The Panel (or its delegate) will appropriately consider these materials and other information, even if they were not part of the initial claim submission.  The claimant will also be given reasonable and free access to, or copies of documents,
records and other information relevant to the claim.

Written notification of the decision on the appeal will be delivered to the claimant in a reasonable period, but not later than 60 days after the appeal is received.  The 60-day period can be extended under special circumstances.  If special circumstances apply, the claimant will be notified before the end of the 60-day
period after the appeal was received.  The notice will identify the special circumstances.  It will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than 120 days after the appeal is received.

Special rules apply if the company or the Panel designates a committee as the appropriate named fiduciary for purposes of deciding appeals of denied claims.  For the special rules to apply, the committee (or the Panel if it functions as such a committee) must meet regularly on at least a quarterly basis.

When the special rules for committee meetings apply, the decision on the appeal must be made not later than the date of the committee meeting immediately following the receipt of the appeal.  If the appeal is received within 30 days of the next following meeting, then the decision must be made not later than the date of the second
committee meeting following the receipt of the appeal.

The period for making the decision on the appeal can be extended under special circumstances.  If special circumstances apply, the claimant will be notified by the committee or its delegate before the end of the otherwise applicable period within which to make a decision.  The notice will identify the special circumstances.  It
will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than the date of the third committee meeting after the appeal is received.

In any event, the claimant will be provided written notice of the decision within a reasonable period after the meeting at which the decision is made.  The notification will not be later than five days after the meeting at which the decision is made.

Whether the decision on the appeal is made by a committee or not, a denial of the appeal will include:

	 ·	The reasons for the denial.
	 ·	Reference to the plan provisions on which the denial is based.  The reference need not be to page numbers or to section headings or titles.  The reference only needs to sufficiently describe the provisions so that the provisions could be identified based on that description.

 

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	 ·	
A statement that the claimant may receive free of charge reasonable access to or copies of documents, records and other information relevant to the claim.

	 ·	
A description of any voluntary procedure for an additional appeal, if there is such a procedure.  It will also state that the claimant may file a civil action under Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA – §29 U.S.C. 1132).

If the claimant does not receive notice of the decision on the appeal within the prescribed time periods, the appeal is deemed denied.  In that event, the claimant may file a civil action in court.

GENERAL INFORMATION

Plan Sponsor/Administrator

Ashland Inc., 50 E. RiverCenter Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391 (telephone: 1-859-815-3333) is both the plan administrator and the plan sponsor. The plan sponsor is the named fiduciary under the plan. The plan administrator has the overall responsibility for the operation of the plan. Participants and beneficiaries
may receive from the plan administrator, upon written request, information as to whether a particular employer maintains the plan and, if so, the employer's address.

Plan Identification

The Ashland Inc. Severance Pay Plan is a welfare plan.  It is identified by the following numbers under IRS rules:

	
·
	
The Employer Identification Number assigned by the IRS to Ashland Inc. is 20-0865835.

	
·
	
The plan number assigned to the plan is 541.

Plan Year

For recordkeeping purposes, the plan year is January 1 to December 31.

Legal Service

Service of legal process may be made upon the Secretary of Ashland Inc., 50 E. RiverCenter Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391 (1-859-815-3333).

Method of Funding

The plan is funded from the company’s general assets, in a pay as you go basis. There is no trust from which benefits are paid and no assets are set aside in advance of the time plan benefits are paid.

Your Rights

As a participant in the Ashland Inc. Severance Pay Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA).  ERISA provides that all Plan participants shall be entitled to:

	
·
	
Examine, without charge, at the plan administrator's office and at various work sites, all plan documents, including insurance contracts, collective bargaining agreements, and copies of all documents filed by the plan with the U.S. Department of Labor, such as annual reports and plan descriptions.

	
·
	
Obtain copies of all plan documents and other plan information upon written request to the plan administrator. There will be a charge of 10 cents per page for these documents, and you will be required to furnish a personal check payable to Ashland Inc. covering the photocopying cost before receiving any copies.

	
·
	
Receive a summary of the plan's annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary financial report.

	
·
	
File suit in federal court, if any materials requested are not received within 30 days of your request, unless the materials were not sent because of matters beyond the control of the plan administrator. The court may require the plan administrator to pay you up to $110 for each day's delay until the materials are received.

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In addition to creating rights for plan participants, ERISA imposes obligations upon the persons who are responsible for the operation of the plan. These persons are referred to as "fiduciaries" under the law. Fiduciaries must act solely in the interest of plan participants, and they must exercise prudence in the performance of their plan
duties. Fiduciaries who violate ERISA may be removed and required to make good any losses they have caused the plan.

Your employer may not fire you or discriminate against you to prevent you from obtaining benefits or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have your claim reviewed and reconsidered.

If you are improperly denied a benefit in full or in part, you have a right to file suit in a federal or state court. If plan fiduciaries are misusing the plan's money, you have a right to file suit in a federal court or request assistance from the U.S. Department of Labor. If you are successful in your lawsuit, the court may, if it so
decides, require the other party to pay your legal costs, including attorney's fees.

If you have any questions about this statement or your rights under ERISA, you should contact the plan administrator or the nearest Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries Employee Benefits Security Administration,
U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC  20210.

Plan Interpretations/Administration

The plan administrator and plan sponsor have all necessary, appropriate, discretionary and convenient power and authority to interpret, administer and apply the provisions of the plan with respect to all persons having or claiming to have any rights, benefits, entitlements or obligations under the plan. This includes, without limitation,
the ability to make factual determinations, construe and interpret provisions of the plan, determine who is eligible and compute benefits, reconcile any inconsistencies between provisions in the plan or between provisions of the plan and any other statement concerning the plan, whether oral or written, supply any omissions to the plan or any document associated with the plan, and to correct any defect in the plan or in any document associated with the plan. All such factual determinations and interpretations
of the plan and documents associated with the plan and questions concerning its administration and application as determined by the plan administrator or plan sponsor shall be binding on all persons having an interest under the plan.

Plan Documents

This document constitutes the summary plan description and the plan document of the Ashland Inc. Severance Pay Plan. References to “plan” herein include all amendments that have been made to it. The plan also includes two separate documents: one that describes the plan benefits for base salary grades 21 and below and another that
describes the benefits associated with terminations after a change in control of the plan sponsor. The plan sponsor has the right to modify plan provisions for a particular severance program for one or more eligible employees. In that event, the descriptions of that particular program produced by the plan sponsor control over the terms of this document to extent they are inconsistent with each other.

Non-Assignments of Benefits

You may not anticipate, assign, pledge, alienate or encumber benefits to which you are entitled under this plan.  If you are entitled to plan benefits paid as installments, then you may continue to have contributions deducted from them to pay for company benefits that you are still eligible to maintain, as determined by the plan
sponsor.  To the extent you have any right to receive plan benefits you are an unsecured creditor of the company. You have no other right, title, or interest in the assets of the company because of this plan.

 

 

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Plan Amendment/Termination

The plan sponsor, by action of its board of directors or the board's delegate (pursuant to resolution, by-law, or otherwise), reserves the right, in its sole discretion, to amend, suspend, modify, interpret, terminate or otherwise discontinue the plan or change the funding method at any time without the requirement to give cause or consideration
to any individual.

Authority to Delegate

The plan administrator or plan sponsor may employ one or more persons to render advice with respect to its fiduciary responsibilities.  The plan administrator or plan sponsor may also delegate fiduciary responsibilities to one or more persons who shall have the rights to employ one or more persons to render advice with respect
to its fiduciary duties.  There is no restriction on any person serving in more than one fiduciary capacity under the plan.

Elections and Notices

An election, designation, notice or other correspondence made regarding coverage or benefits under the plan shall not be effective unless it is made both in writing and received by the plan administrator (or its delegate), except as otherwise provided under the terms of the plan or by the plan administrator.

Applicable Law

This plan shall be construed and enforced according to Kentucky state law, to the extent that Kentucky state law is not preempted by federal law.

Ashland Inc.

P.O. Box 391

50 E. RiverCenter Boulevard

Covington, Kentucky  41012-0391

040101-04

 

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ASHLAND INC. SEVERANCE PAY PLAN

(base salary grades 21 and below)

TABLE OF CONTENTS

 

	
INTRODUCTION ..................................................................................................................

 
	
1
	 
	
PLAN INFORMATION .........................................................................................................
	
1
	 
	
Eligibility ............................................................................................................................................................................
	
1
	 
	
Exclusions from Eligibility ..............................................................................................................................................
	
1
	 
	
Conditions of Severance Payments ................................................................................................................................
	
1
	 
	
Amount of Benefits ...........................................................................................................................................................
	
2
	 
	
Continuous Service .......................................................................................................................................................
	
2
	 
	
Base Rate of Pay ............................................................................................................................................................
	
3
	 
	
Method of Payment .......................................................................................................................................................
	
3
	 
	
Duplication of Payments ..................................................................................................................................................
	
4
	 
	
Terminations Not Covered ...............................................................................................................................................
	
4
	 
	
Deferred Terminations ....................................................................................................................................................
	
4
	
 

 

	
CLAIM PROCEDURES ........................................................................................................
	
5
	 
	
How to Apply for Benefits ................................................................................................................................................
	
5
	 
	
Notice of Claim Denial/Right of Appeal ........................................................................................................................
	
5
	 
	
Initial Claim – Notice of Denial .................................................................................................................................
	
5
	 
	
Appeal of Denied Claim ...............................................................................................................................................
	
6
	
 

 

	
GENERAL INFORMATION ................................................................................................
	
6
	 
	
Plan Sponsor/Administrator ...........................................................................................................................................
	
6
	 
	
Plan Identification .............................................................................................................................................................
	
6
	 
	
Plan Year ............................................................................................................................................................................
	
6
	 
	
Legal Service .....................................................................................................................................................................
	
7
	 
	
Method of Funding .............................................................................................................................................................
	
7
	 
	
Your Rights.........................................................................................................................................................................
	
7
	 
	
Plan Interpretations/Administration .............................................................................................................................
	
7
	 
	
Plan Documents .................................................................................................................................................................
	
8
	 
	
Non-Assignments of Benefits .........................................................................................................................................
	
8
	 
	
Plan Amendment/Termination .......................................................................................................................................
	
8
	 
	
Authority to Delegate .......................................................................................................................................................
	
8
	 
	
Elections and Notices ........................................................................................................................................................
	
8
	 
	
Applicable Law ...................................................................................................................................................................
	
8
	 

 

 

 

  

 

INTRODUCTION

This booklet describes the Ashland Inc. Severance Pay Plan as applied to employees in base salary grades of 21 and below. The plan may provide additional compensation to you if your employment is terminated under certain circumstances. This booklet describes the plan as in effect on December 31, 2008.

If you have questions about the plan, please call the HR Service Center at 1-800-782-4669.

No provision of the plan: (1) gives any employee the right to continued employment; (2) affects the company’s right to terminate or discharge an employee at any time; (3) gives the company the right to require any employee to remain employed; or (4) affects any employee’s right to terminate employment.

References to the “company” refer to Ashland Inc., its subsidiaries and its divisions.  References to the “plan sponsor” or “plan administrator” refer to Ashland Inc.

PLAN INFORMATION

Eligibility

You are eligible to participate in this plan if you meet all of the following:

	
·
	
You are a regular, full-time employee of the company;

	
·
	
You have been working for the company for at least 12 weeks; and

	
·
	
You are working in a group designated by the plan sponsor as eligible for this plan.

Your eligibility is based on your status on the date of your termination from employment. A termination from employment occurs when you stop performing active service for the company.

Exclusions from Eligibility

You are not eligible to participate in the plan if:

	
·
	
You are covered by a collective bargaining agreement, unless the collective bargaining agreement provides you are eligible for the plan.

	
·
	
You have an agreement with the company that provides severance payments for one or more of the conditions for severance payments described in this plan.

	
·
	
You are in a classification of one or more employees designated in advance by the plan sponsor as exempted from participating in the plan or, you are employed in a division or subsidiary of the company that opted out of participating in the plan.

	
·
	
You are employed by a Canadian subsidiary of the company.

	
·
	
You reside and work outside of the United States and you are subject to a statutory severance or similar obligation required under the law of the foreign jurisdiction in which you work.

Conditions of Severance Payments

You may be considered for severance benefits under the plan if the plan administrator determines that your termination occurs as a direct result of:

	
1.
	
the permanent closing of a location or plant;

	
2.
	
job discontinuance; or

	
3.
	
any circumstances in which your employment is terminated at the company’s initiative for reasons not excluded under the plan and the company, in conjunction with the plan sponsor, elects to provide benefits for such circumstances.

(See the Terminations Not Covered section for limitations).

However, for benefits to become payable, you must satisfy the following additional conditions:

 

 

 

  

 

 

	
1.
	
If you are given advance notice, you must continue to work until you are officially released by the company; and

	
2.
	
You must sign and execute a Severance Agreement and Release prepared by appropriate company legal counsel.

The Severance Agreement and Release will provide that you agree not to participate in litigation or other action against the company with respect to your termination. It may also provide that you agree not to compete in a business against the company for a stated period of time. It may provide that you must keep the terms of the Severance Agreement and Release confidential. It may also provide that your severance payments
under the plan will be reduced by any amounts you owe to the company. The Severance Agreement and Release may encompass other matters in addition to addressing the benefits payable under this plan. Additionally, the Severance Agreement and Release may be changed for each termination covered by this plan.

Your Human Resources representative will coordinate the preparation and execution of the Severance Agreement and Release and provide you with a copy for your file. You will be responsible for obtaining your own legal advice.

Amount of Benefits

If you satisfy the conditions for benefit payments, you will receive two weeks of base pay for each completed 12 months of continuous service (also referred to a year of continuous service). The plan will pay a minimum benefit of four weeks of base pay. The maximum benefit under the plan is 52 weeks of base pay.

Examples: Megan has eight months of continuous service. Her job is eliminated and she satisfies all the conditions for benefit payments. Megan will receive the minimum benefit of four weeks of base pay.

Bill has 86 months of continuous service. Therefore, he has completed seven years of continuous service for purposes of computing the plan benefit. Bill’s location is permanently closed and he satisfies all the conditions for benefit payments. Bill will receive 14 weeks of base pay.

Pam has 28 years of continuous service. Her job is eliminated and she satisfies all the conditions for benefit payments. Pam will receive the maximum benefit of 52 weeks of base pay.

Continuous Service

Continuous service is your period of employment, generally beginning with the latest of:

	
·
	
your hire date;

	
·
	
your rehire date; or

	
·
	
your adjusted service date

An earlier adjusted service date may be used to measure your continuous service if you became employed with the company as part of the purchase of a business or if you are rehired.

Your service with the purchased business only counts towards your continuous service under two circumstances. The first is if the agreement that the company signed when the business was purchased provides that such service counts for this purpose. The second is if the company determined that such service would count for this purpose in
the absence of any provision in the agreement that the company signed when the business was purchased.

If you were rehired by the company, your prior employment with the company may count as continuous service under the plan. In order for your prior employment to count as continuous service you must have an adjusted service date connected to your prior employment and you must not have received any severance or similar payment from the company.

 

 

 

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You can find out how much continuous service you have under the plan by calling the HR Service Center at 1-800-782-4669.

Base Rate of Pay

Severance payments are computed using your base rate of pay at the time of termination.

For eligible hourly employees, base rate of pay is determined by multiplying the straight-time hourly rate by the number of hours in the regular work week up to a maximum of 40 hours.

Your base rate of pay for a calendar year includes your non-standard base pay. Non-standard base pay includes items like commissions and bonus payments to employees in base salary grades below 21 that were paid in the previous calendar year. Non-standard base pay also includes lump sum payments made in lieu of a percentage merit salary
increase. These amounts are added to your compensation the following calendar year for plan purposes to determine the base rate of pay. The company determines the items constituting non-standard base pay.

Base rate of pay does not include special pay such as severance pay, incentive bonuses, awards, overtime, shift premium, payments under the Ashland Incentive Plan or other allowances not included in your base compensation rate or in your non-standard base pay.

Method of Payment

Payments of severance may be made in a lump sum at the time of termination or in installments over a period not exceeding 52 weeks (referred to as payroll continuation). The payment cannot be contingent upon the employee retiring and the amount of the payment cannot exceed twice the eligible employee’s annual compensation during the
preceding year. For this purpose, “annual compensation” means the total amount that was paid or would have been paid if the employee had been employed with the company during all of the preceding calendar year.

If you are not retirement eligible, your plan benefit is paid in a lump sum. If you are retirement eligible, your plan benefit is paid as payroll continuation in bi-weekly increments. You are “retirement eligible” if:

	
  
	
·
	
You are vested in the applicable company pension plan and

	
  
	
·
	
You are at least age 55 or have age and service credit under the applicable company pension plan totaling at least 80 points as of –

	
  
	
o
	
The last day of your active employment, or

	
  
	
o
	
The end of your payroll continuation period.

If paying your plan benefit as payroll continuation will not make you retirement eligible, then your benefit will be paid in a lump sum. If your benefit is paid in a lump sum, you will be eligible to elect COBRA continuation of coverage for three months at active employee rates under the company medical and dental plans. You must be eligible
to elect COBRA under the medical and dental plans to be eligible for the three months of premiums at active employee rates. The summary plan descriptions for the medical and dental plans explain COBRA continuation of coverage.

Severance payments under the plan are subject to all applicable federal and state tax withholding, including FICA, and any other requirements of law. Payroll continuation payments are also subject to the applicable benefit plan contributions as elected by the eligible employee (subject to certain limitations and exclusions). The plan sponsor
determines the terms and conditions that apply to any benefits that are made available during payroll continuation.

If your benefit is paid by payroll continuation, you are typically allowed to continue to participate in your medical, dental, vision, group life and other welfare plan coverage as identified by the plan sponsor. You are not eligible to continue long-term disability coverage.

For purposes of the Ashland Inc. and Affiliates Pension Plan, the Pension Plan for Hourly Employees of Ashland Chemical Company and the Ashland Inc. Employee Savings Plan, you are not considered to

 

 

3

  

 

 

have terminated from employment during payroll continuation. However, you will not be eligible to make contributions to the Ashland Inc. Employee Savings Plan during a period of payroll continuation.

For those who were eligible, any election before your termination to defer salary to the Ashland Deferred Compensation Plan stops at your termination.

Notwithstanding anything to the contrary, the plan sponsor reserves the right to determine the method of payment, in its sole discretion.

Duplication of Payments

There will be no duplication of severance benefit payments for the same period of continuous service. For example, you cannot receive additional benefits for the same period of continuous service if you previously received benefits under this plan or any other payment in the nature of a severance payment with respect to that service.

The determination of whether you are eligible for plan benefits will be delayed if you are receiving sick pay, pending a decision for a claim under the company’s long-term disability plan. If such a claim were filed at or before your scheduled termination and the claim is denied, your benefits under this plan would be reduced by the
amount of sick pay you received during the deferred termination period. (Refer to Deferred Termination section.)

Terminations Not Covered

Although not all inclusive, the following are some circumstances when termination of employment with the company would not result in the payment of severance benefits under this plan:

 

	1. 	
Refusal to sign the Severance Agreement and Release provided by the company;

	2.	
Discharge for less than effective performance, absenteeism or misconduct;

	3.	Voluntary resignations;
	4.	
Declining an offer by the company of equivalent employment as an alternative to termination, provided that a transfer to a new geographic location shall not be considered to be “equivalent employment;"

	5.	
Accepting an offer of employment by the company of non-equivalent employment;

	6.	
The sale, exchange or transfer of company property to another employer who assumes the operations of a company facility or business, unless such sale, exchange or transfer results in unemployment caused by reasons other than the employee’s refusal to accept or continue employment with the new employer, as determined by the plan sponsor;

	7.	
When an employee is entitled to benefits under the “Ashland Inc. Salary Continuation Plan;”

	8.	
Death;

	9.	
Retirement (except for retirements which result from situations outlined under the Condition of Severance Payments section of this plan);

	10.	
Entitlement to severance or severance-related benefits under an employment agreement;

	11.	
Terminations while on a personal unpaid leave of absence or when reinstatement attempts following the expiration of such leave are unsuccessful; and

	12.	
Subject to certain terminations (refer to the section entitled Deferred Terminations), when an employee does not return to work following a period of disability.

 

The plan sponsor reserves the right to determine circumstances, in addition to those identified above, that will not warrant the payment of severance benefits under this plan. Such determinations can be made without advance notice.

Deferred Terminations

If, at the time of your scheduled termination for reasons covered under this plan, you are receiving sick pay or are on a medical leave of absence in accordance with applicable company policies, you may elect to file a claim for benefits under the company’s long-term disability plan (LTD), provided you are enrolled in that plan. Your
scheduled termination will be deferred pending a decision on the LTD claim. During such time, sick pay or the medical leave of absence, whichever is applicable, will be continued. If your LTD claim is denied, your termination will be processed retroactively and any benefits under this plan will

 

 

4

  

 

 

be payable in accordance with its terms. Such benefits will be reduced by any sick pay you received after your originally scheduled termination date. If your LTD claim is approved, you will be treated as any disabled individual in accordance with the applicable company policies and benefit plans.

CLAIM PROCEDURES

How to Apply for Benefits

If you believe you are entitled to plan benefits, contact the Employee Benefits Department in Lexington, Kentucky.

Notice of Claim Denial/Right of Appeal

Initial Claim – Notice of Denial

Written notification of a denied claim will be delivered to the claimant in a reasonable period, but not later than 90 days after the claim is received.  The 90-day period can be extended under special circumstances.  If special circumstances apply, the claimant will be notified before the end of the 90-day period after
the claim was received.  The notice will identify the special circumstances.  It will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than 180 days after the claim is received.

The written decision will include:

	
·
	
The reasons for the denial.

	
·
	
Reference to the plan provisions on which the denial is based.  The reference need not be to page numbers or to section headings or titles.  The reference only needs to sufficiently describe the provisions so that the provisions could be identified based on that description.

	
·
	
A description of additional materials or information needed to process the claim.  It will also explain why those materials or information are needed.

	
·
	
A description of the procedure to appeal the denial, including the time limits applicable to those procedures.  It will also state that the claimant may file a civil action under Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA – §29 U.S.C. 1132).  The claimant must complete the plan’s appeal procedure before filing a civil action in court.

If the claimant does not receive notice of the decision on the claim within the prescribed time periods, the claim is deemed denied.  In that event the claimant may proceed with the appeal procedure described below.

Appeal of Denied Claim

The claimant may file a written appeal of a denied claim with the plan administrator in Lexington, Kentucky.  Ashland Inc. is the named fiduciary under ERISA for purposes of the appeal of the denied claim.  Ashland Inc. has delegated its authority to the Ashland Inc. Benefit Appeals Panel (Panel).  The Panel
has authority to further delegate some of its authority.  The appeal must be sent at least 60 days after the claimant received the denial of the initial claim.  If the appeal is not sent within this time, then the right to appeal the denial is waived.

The claimant may submit materials and other information relating to the claim.  The Panel (or its delegate) will appropriately consider these materials and other information, even if they were not part of the initial claim submission.  The claimant will also be given reasonable and free access to, or copies of documents,
records and other information relevant to the claim.

Written notification of the decision on the appeal will be delivered to the claimant in a reasonable period, but not later than 60 days after the appeal is received.  The 60-day period can be extended under special circumstances.  If special circumstances apply, the claimant will be notified before the end of the 60-day
period after the appeal was received.  The notice will identify the special circumstances.  It will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than 120 days after the appeal is received.

 

 

 

5

  

 

 

Special rules apply if the company or the Panel designates a committee as the appropriate named fiduciary for purposes of deciding appeals of denied claims.  For the special rules to apply, the committee (or the Panel if it functions as such a committee) must meet regularly on at least a quarterly basis.

When the special rules for committee meetings apply, the decision on the appeal must be made not later than the date of the committee meeting immediately following the receipt of the appeal.  If the appeal is received within 30 days of the next following meeting, then the decision must be made not later than the date of the second
committee meeting following the receipt of the appeal.

The period for making the decision on the appeal can be extended under special circumstances.  If special circumstances apply, the claimant will be notified by the committee or its delegate before the end of the otherwise applicable period within which to make a decision.  The notice will identify the special circumstances.  It
will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than the date of the third committee meeting after the appeal is received.

In any event, the claimant will be provided written notice of the decision within a reasonable period after the meeting at which the decision is made.  The notification will not be later than five days after the meeting at which the decision is made.

Whether the decision on the appeal is made by a committee or not, a denial of the appeal will include:

	
·
	
The reasons for the denial.

	
·
	
Reference to the plan provisions on which the denial is based.  The reference need not be to page numbers or to section headings or titles.  The reference only needs to sufficiently describe the provisions so that the provisions could be identified based on that description.

	
·
	
A statement that the claimant may receive free of charge reasonable access to or copies of documents, records and other information relevant to the claim.

	
·
	
A description of any voluntary procedure for an additional appeal, if there is such a procedure.  It will also state that the claimant may file a civil action under Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA – §29 U.S.C. 1132).

If the claimant does not receive notice of the decision on the appeal within the prescribed time periods, the appeal is deemed denied.  In that event, the claimant may file a civil action in court.

GENERAL INFORMATION

Plan Sponsor/Administrator

Ashland Inc., 50 E. RiverCenter Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391 (telephone: 1-859-815-3333) is both the plan administrator and the plan sponsor. The plan sponsor is the named fiduciary under the plan. The plan administrator has the overall responsibility for the operation of the plan. Participants and beneficiaries
may receive from the plan administrator, upon written request, information as to whether a particular employer maintains the plan and, if so, the employer's address.

Plan Identification

The Ashland Inc. Severance Pay Plan is a welfare plan.  It is identified by the following numbers under IRS rules:

	
·
	
The Employer Identification Number assigned by the IRS to Ashland Inc. is 20-0865835.

	
·
	
The plan number assigned to the plan is 541.

Plan Year

For recordkeeping purposes, the plan year is January 1 to December 31.

 

 

 

6

  

 

 

Legal Service

Service of legal process may be made upon the Secretary of Ashland Inc., 50 E. RiverCenter Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391 (1-859-815-3333).

Method of Funding

The plan is funded from the company’s general assets, in a pay as you go basis. There is no trust from which benefits are paid and no assets are set aside in advance of the time plan benefits are paid.

Your Rights

As a participant in the Ashland Inc. Severance Pay Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA).  ERISA provides that all Plan participants shall be entitled to:

	
·
	
Examine, without charge, at the plan administrator's office and at various work sites, all plan documents, including insurance contracts, collective bargaining agreements, and copies of all documents filed by the plan with the U.S. Department of Labor, such as annual reports and plan descriptions.

	
·
	
Obtain copies of all plan documents and other plan information upon written request to the plan administrator. There will be a charge of 10 cents per page for these documents, and you will be required to furnish a personal check payable to Ashland Inc. covering the photocopying cost before receiving any copies.

	
·
	
Receive a summary of the plan's annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary financial report.

	
·
	
File suit in federal court, if any materials requested are not received within 30 days of your request, unless the materials were not sent because of matters beyond the control of the plan administrator. The court may require the plan administrator to pay you up to $110 for each day's delay until the materials are received.

In addition to creating rights for plan participants, ERISA imposes obligations upon the persons who are responsible for the operation of the plan. These persons are referred to as "fiduciaries" under the law. Fiduciaries must act solely in the interest of plan participants, and they must exercise prudence in the performance of their plan
duties. Fiduciaries who violate ERISA may be removed and required to make good any losses they have caused the plan.

Your employer may not fire you or discriminate against you to prevent you from obtaining benefits or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have your claim reviewed and reconsidered.

If you are improperly denied a benefit in full or in part, you have a right to file suit in a federal or state court. If plan fiduciaries are misusing the plan's money, you have a right to file suit in a federal court or request assistance from the U.S. Department of Labor. If you are successful in your lawsuit, the court may, if it so
decides, require the other party to pay your legal costs, including attorney's fees.

If you have any questions about this statement or your rights under ERISA, you should contact the plan administrator or the nearest Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries Employee Benefits Security Administration,
U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC  20210.

Plan Interpretations/Administration

The plan administrator and plan sponsor have all necessary, appropriate, discretionary and convenient power and authority to interpret, administer and apply the provisions of the plan with respect to all persons having or claiming to have any rights, benefits, entitlements or obligations under the plan. This includes, without limitation,
the ability to make factual determinations, construe and interpret provisions of the plan, determine who is eligible and compute benefits, reconcile any inconsistencies between

 

 

 

7

  

 

 

provisions in the plan or between provisions of the plan and any other statement concerning the plan, whether oral or written, supply any omissions to the plan or any document associated with the plan, and to correct any defect in the plan or in any document associated with the plan. All such factual determinations and interpretations of
the plan and documents associated with the plan and questions concerning its administration and application as determined by the plan administrator or plan sponsor shall be binding on all persons having an interest under the plan.

Plan Documents

This document constitutes the summary plan description and the plan document of the Ashland Inc. Severance Pay Plan. References to “plan” herein include all amendments that have been made to it. The plan also includes two separate documents: one that describes the plan benefits for base salary grades 22 and above and another that
describes the benefits associated with terminations after a change in control of the plan sponsor. The plan sponsor has the right to modify plan provisions for a particular severance program for one or more eligible employees. In that event, the descriptions of that particular program produced by the plan sponsor control over the terms of this document to extent they are inconsistent with each other.

Non-Assignments of Benefits

You may not anticipate, assign, pledge, alienate or encumber benefits to which you are entitled under this plan.  If you are entitled to plan benefits paid as installments, then you may continue to have contributions deducted from them to pay for company benefits that you are still eligible to maintain, as determined by the plan
sponsor.  To the extent you have any right to receive plan benefits you are an unsecured creditor of the company. You have no other right, title, or interest in the assets of the company because of this plan.

Plan Amendment/Termination

The plan sponsor, by action of its board of directors or the board's delegate (pursuant to resolution, by-law, or otherwise), reserves the right, in its sole discretion, to amend, suspend, modify, interpret, terminate or otherwise discontinue the plan or change the funding method at any time without the requirement to give cause or consideration
to any individual.

Authority to Delegate

The plan administrator or plan sponsor may employ one or more persons to render advice with respect to its fiduciary responsibilities.  The plan administrator or plan sponsor may also delegate fiduciary responsibilities to one or more persons who shall have the rights to employ one or more persons to render advice with respect
to its fiduciary duties.  There is no restriction on any person serving in more than one fiduciary capacity under the plan.

Elections and Notices

An election, designation, notice or other correspondence made regarding coverage or benefits under the plan shall not be effective unless it is made both in writing and received by the plan administrator (or its delegate), except as otherwise provided under the terms of the plan or by the plan administrator.

Applicable Law

This plan shall be construed and enforced according to Kentucky state law, to the extent that Kentucky state law is not preempted by federal law.

Ashland Inc.

P.O. Box 391

50 E. RiverCenter Boulevard

Covington, Kentucky  41012-0391

040101-04

 

 

8

 

 

 

 

  

 

ASHLAND INC.

SALARY CONTINUATION PLAN

(as amended and restated as of December 31, 2008)

The Ashland Inc. Salary Continuation Plan (the “Plan”) was first effective July 21, 1988, was amended and restated effective November 7, 2002 and is, in this document, amended and restated effective as of December 31, 2008.  The Plan is an employee
benefit plan that provides eligible salaried employees of Ashland Inc. and its majority-owned subsidiaries (collectively referred to herein as the “Company”) with certain severance benefits if the individual’s employment with the Company is terminated under defined circumstances after a Change in Control, as defined in Section 4(b).  The Plan is part of the Ashland Inc. Severance Pay Plan.  The details and purpose of the Plan are more fully explained below.

SECTION 1.  PURPOSE

The purpose of the Plan is to reduce employee concerns about the possibility of a Change in Control, as defined below in Section 4(b).  It is important that each employee be able to focus his or her full attention and energy toward the goals and objectives of
the Company. The Plan is also designed to permit the Company to retain its high quality work force by increasing stability and improving morale and productivity.  In addition, the Plan will allow the company to attract and retain new qualified employees.

SECTION 2.  ADMINISTRATION

Ashland Inc. (“Ashland”) shall be the Plan Administrator and shall administer the Plan.  Additionally, Ashland shall be the named fiduciary for purposes of the Employee Retirement Income Security Act of 1974.  Any determinations by the Vice
President, Human Resources and Communications, or his or her designee, in carrying out, administering, or interpreting this Plan shall be final and binding for all purposes and upon all interested persons and their heirs, successors, and personal representatives; provided that the same are reasonably consistent with the terms and intent of the Plan.  All costs associated with the Plan shall be borne by the Company.

SECTION 3.  ELIGIBILITY

An employee who is classified on the records of the Company as a regular, full-time salaried employee, whether exempt or non-exempt as specified in the Fair Labor Standards Act, as from time to time amended, (excluding hourly employees; employees covered by collective
bargaining agreements; employees of subsidiaries, entities, or partnerships in which the Company has a 50% or less ownership interest; and international employees, except foreign nationals who are located in Canada or those who are U.S. expatriates) will be entitled to participate in the Plan, regardless of length of service. Employees who have entered into employment contracts with the Company will not be eligible to participate in the Plan.  Employees in base salary grades 25 and higher are not eligible
to participate in the Plan.  An eligible employee described in this Section 3 shall be a participant in the Plan.

At any time prior to a Change in Control, as defined in Section 4(b), Ashland reserves, in its complete discretion, the right to amend the eligible classes of employees.

SECTION 4.  CONDITIONS FOR BENEFIT PAYMENTS

 

 

 

 

  

 

 

(a)           A participant shall not be entitled to receive benefits under this Plan prior to a Change in Control, as defined in Section 4(b).  Participation in the Plan does not create a contract of employment
between the Company and its employees.  The Company reserves the right to terminate employees at any time for any reason, just as employees have the right to terminate their employment at any time for any reason.

(b)           For purposes of the Plan, a change in control of Ashland (herein after referred to as a “Change in Control”) shall be deemed to have occurred if:

(i)      there shall be consummated (A) any consolidation or merger of the Company (a “Business Combination”), other than a consolidation or merger of the Company into or with a direct or indirect wholly-owned subsidiary, in which the shareholders of the Company own, directly
or indirectly, less than 50% of the then outstanding shares of common stock of the Business Combination that are entitled to vote generally for the election of directors of the Business Combination or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (B) any sale, lease, exchange or 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

 

(ii)      the shareholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company, or

 

(iii)                 any Person, other than the Company or a Subsidiary thereof or any employee benefit plan sponsored by the Company or a Subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately-negotiated purchases or otherwise, without the approval of the Board or

 

(iv)                 at any time during a period of two (2) 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.

 

(c)           Benefits shall be payable to a participant under the Plan after a Change in Control has occurred if either a participant’s employment is terminated by the Company without

 

 

 

-2-

  

 

 

Cause, as defined below, within two (2) years from the date of the Change in Control or a participant terminates his or her employment for Good Reason, as defined below, within two (2) years from the date of the Change in Control.  For purposes of the Plan, “Cause” shall mean
(i) the willful and continued failure of an employee to substantially perform his or her duties with the company (other than such failure resulting from the employee’s incapacity due to physical or mental illness), or (ii) willful engaging by an employee in gross misconduct materially injurious to the Company.  For purposes of the Plan, “Good Reason” shall mean (A) a material reduction in base salary or base wages or (B) a relocation of the participant to work site 50 or more miles from
his or her work site immediately before the Change in Control.  If a participant terminates his or her employment for Good Reason, the participant shall provide written notice of the same to his or her direct supervisor.

SECTION 5.  AMOUNT OF BENEFITS

Following a Change in Control and the occurrence within two (2) years of either a participant’s termination of employment by the Company without Cause or a participant’s termination for Good Reason, a participant shall be entitled to receive benefits under the
Plan as described below:

(a)           The applicable amount described in this paragraph (a) shall be paid to a participant in an undiscounted lump sum within ten (10) business days after such participant’s termination of employment
without Cause.  A participant who was in base salary grade 22, 23 or 24 on the day before the Change in Control or on the date of his or her termination from employment without cause shall be paid an amount equal to 52 weeks of his or her base pay plus the highest target annual incentive compensation (expressed as a percentage of base compensation for all applicable incentive compensation plans) payable for the determination period in which occurs the participant’s termination from employment.  The
“determination period” is the period for which target annual incentive compensation is calculated and paid.  All other participants will receive two (2) weeks of base pay for each completed 12 months of service, with a minimum benefit of 13 weeks of base pay and a maximum benefit of 52 weeks of base pay.  For this purpose, a participant’s "service” is his or her total aggregate years and months of service (whether or not continuous), rounded up to the next highest whole
year.

For purposes of the Plan, “base pay” for eligible hourly employees is determined by multiplying the straight-time hourly rate by the number of hours in the regular work week up to a maximum of 40 hours.  For all other eligible employees, “base
pay” for a calendar year includes applicable non-standard base pay.  Non-standard base pay includes items like commissions and bonus payments to employees in base salary grades below 21 that were paid in the previous calendar year.  Non-standard base pay also includes lump sum payments made in lieu of a percentage merit salary increase.  These amounts are added to an eligible employee’s compensation the following calendar year for Plan purposes to determine the base pay.  Base
pay does not include special pay such as severance pay, incentive bonuses, awards, overtime, shift premium, payments under the Ashland Incentive Plan or other allowances not included in base compensation rate or in non-standard base pay.

(b)           At the sole expense of the Company, a participant shall be entitled to the continuation of his or her medical, dental, and group life benefits in effect at the time of such participant’s termination
of employment without Cause or for Good Reason for a period equal to the number of weeks of pay represented by the payment to which the participant is entitled under paragraph (a) of this Section 5.

(c)           A participant shall be reimbursed for any legal fees or expenses incurred by the participant to enforce the payment of Plan benefits within ten (10) business days of providing copies of applicable invoices
to the Company.

 

 

 

-3-

  

 

 

(d)           A participant shall be entitled to interest on the amount of any payments due under the Plan (but not timely paid) in an amount equivalent to the prime rate of interest (quoted by Citibank, N.A. as its
prime commercial lending rate) on the latest date practicable prior to the date such payments should have been made, to and including the date it is made; provided, however, that such payment, including the applicable interest, shall be made no later than March 15 of the calendar year following the calendar year in which the participant terminated employment.

(e)           Within ten (10) business days of the participant’s termination of employment following a Change in Control, the Company shall provide, at no cost to the participant, individual outside assistance
in finding other employment. Such obligation may be fulfilled by the Company through the retention of an outplacement service for use by individual participants for a period following such participant’s termination from employment identified in the following table:

 

	
Base Salary Grade
	
Number of Calendar Months

	
22 and above
	
12

	
Exempt employees 21 and below
	
6

	
Non-exempt employees
	
1

 

(f)           Participants shall be entitled to receive any pension, disability, workers’ compensation, other Company benefit plan distribution, payment for vacation accrued but not taken, statutory employment
termination benefit, or any other compensation plan payment otherwise independently due; however, in no event shall a participant who receives benefit under this Plan be entitled to additional severance payment pursuant to any other existing severance policy or plan of the Company.

SECTION 6.  ACCEPTANCE OF BENEFITS

If a participant receives and accepts all of the benefits provided under Section 5 of the Plan, he or she shall be deemed thereby to have waived any right or cause of action against the Company and its directors, officers, or employees arising from the termination
of the participant’s employment.

SECTION 7.  CLAIMS PROCEDURE

(a)           Following a Change in Control and a participant’s termination of employment, the benefits described in Section 5 of the Plan shall be paid as described therein without any required action on the
part of such participant.

(b)           If any participant believes that he or she is entitled to benefits provided under the Plan and has not received such benefits within the time prescribed by the Plan, such participant may submit a written
claim for payment of such benefits to the Company.  If such claim for benefits is wholly or partially denied, the Company shall, within thirty (30) business days after receipt of the claim, notify the participant of the denial of the claim.  Such notice of denial (i) shall be in writing, (ii) shall be written in a manner calculated to be understood by the participant, and (iii) shall contain (A) the specific reason or reasons for denial of the claim, (B) a specific reference to the pertinent
Plan provisions upon which the denial is based, (C) a description of any additional material or information necessary to perfect the claim, along with an explanation of why such material or information is necessary, and (D) an explanation of the claim review procedure, in accordance with the provisions of this Section 7.  It will also provide that the participant may file a civil action under Section 502 of the Employee Retirement

 

 

 

-4-

  

 

 

Income Security Act of 1974 (ERISA – §29 U.S.C. 1132).  The participant may complete the plan’s appeal procedure before filing a civil action in court or the participant may proceed directly with filing a civil action in a court of competent jurisdiction.

(c)           Within sixty (60) business days after the receipt by the participant of a written notice of denial of the claim, or such later time as shall be deemed reasonable taking into account the nature of the
benefit subject to the claim and any other attendant circumstances, the participant may file a written request with the Company that it conduct a full and fair review of the denial of the claim for benefits.  As a part of such full and fair review, the participant (or such participant’s duly authorized representative) may review and photocopy pertinent documents (including but not limited to the participant’s personal history file) and submit issues and comments to the Company in writing.  The
participant may also submit materials supporting his or her appeal that will be considered by the Company, even if they were not part of the initial claim review.  The Company shall make its determination in accordance with the documents governing the Plan insofar as such documents are consistent with the provisions of the Employee Retirement Income Security Act of 1974 (herein “ERISA”).

The Company shall promptly deliver to the participant its written decision on the claim (in no event later than thirty (30) business days after the receipt of the aforesaid request for review, except that if there are special circumstances (such as a conference with the
participant or his or her representative) which require an extension of time, the aforesaid thirty (30) business day period shall be extended to a reasonable period of time not to exceed sixty (60) business days).  Such decision shall (i) be written in a manner calculated to be understood by the participant, (ii) include the specific reason or reasons for the decision, (iii) contain a specific reference to the pertinent Plan provisions upon which the decision is based, (iv) a statement that the
participant may receive free of charge reasonable access to or copies of documents, records and other information relevant to the claim, and (v) a statement that the participant may file a civil action under Section 502 of ERISA (ERISA – §29 U.S.C. 1132).  If the decision on review is not furnished within the time prescribed by this Section 7(c), the claim shall be deemed granted on review.

SECTION 8.  AMENDMENTS AND TERMINATIONS

Ashland’s Board of Directors shall have plenary authority to terminate, modify, or amend this Plan in such respects as it shall deem advisable at any time prior to a Change in Control.

SECTION 9.  SUCCESSORS BINDING AGREEMENT

(a)           The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement
in form and substance satisfactory to eligible participants, expressly to assume and agree to provide benefits pursuant to this Plan in the same manner and to the same extent that the Company would be required to perform its obligations under the Plan if no such succession had taken place.  Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a violation of this Plan and shall entitle eligible participants to compensation from the Company in the
same amount and on the same terms as the participant would be entitled pursuant to Section 5, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date of the participant’s termination of employment without Cause.  As used in this Plan, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for
in this Section 9 or which otherwise becomes bound by all the terms and provisions of this Plan by operation of law.

 

-5-

  

 

 

(b)           This Plan shall inure to the benefit of and be enforceable by a participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.  If
a participant should die while any amounts would still be payable to him or her hereunder if he or she had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such participant’s devisee, legatee, or other designee or, if there be no such designee, to his or her estate.

SECTION 10.  WITHHOLDING TAXES

The Company is authorized to withhold any tax required to be withheld from the amounts payable to a participant pursuant to this Plan which are considered taxable compensation to the participant.

SECTION 11.  GOVERNING LAW

The Plan shall be governed by the laws of the Commonwealth of Kentucky, to the extent not preempted by Federal law.

-6-ex10-1.htm

    Exhibit
10.1

     

    

     

     

    AMENDMENT
NO. 1

    TO

    SECURITIES
PURCHASE AGREEMENT

     

     

    AMENDMENT
NO. 1 TO SECURITIES PURCHASE AGREEMENT, dated as of January 7, 2009 (this
"Amendment"),
by and among SKYTERRA LP, a Delaware limited partnership, formerly named Mobile
Satellite Ventures LP,  ("SKYT LP"), SKYTERRA
FINANCE CO., a Delaware corporation, formerly named Mobile Satellite Ventures
Finance Co., ("SKYT
Finance Co.") and, together with SKYT LP, the "Issuers"), SKYTERRA
COMMUNICATIONS INC., a Delaware corporation, ("SkyTerra") HARBINGER CAPITAL PARTNERS
MASTER FUND I, LTD., a Cayman Islands fund, and HARBINGER CAPITAL PARTNERS
SPECIAL SITUATIONS FUND, LP, a Delaware limited partnership (collectively, the
"Purchasers").

     

    W I T N E S S E T H:

     

    WHEREAS,
the Issuers, SkyTerra and the Purchasers are parties to that certain Securities
Purchase Agreement, dated as of July 24, 2008 (the "Purchase Agreement");
and

     

     

    WHEREAS,
in accordance with Section 9.11 of the Purchase Agreement, the Issuers,
SkyTerra and the Purchasers wish to amend the Purchase Agreement as provided
herein.

     

     

    NOW,
THEREFORE, in consideration of the mutual promises herein set forth, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     

     

    ARTICLE I

     

    AMENDMENT TO PURCHASE
AGREEMENT

     

      
1.1   Amendment to
Article 2 of the Purchase Agreement.

     

    (a)         The definition of "Notes" in Section 2 of the Purchase Agreement shall be amended to be "the Issuers
18.0% Senior Unsecured Notes due July 1,
2013."

     

    (b)         All references in the Purchase Agreement to the rate of interest that the Notes
shall bear shall be amended from 16% to 18.0%.

     

      
1.2   Amendment to
Articles 1 and 3 of the Purchase Agreement.

     

    (a)         The definition of "April Warrants" in
Article 1 of the Purchase Agreement shall be amended in its entirety
to read as
follows:

     

    "April Warrants" means
one or more warrants to purchase an aggregate of 21,250,000 shares of Common
Stock, substantially in the form attached as Exhibit A-2 hereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)         Article 1 of the Purchase Agreement is
amended by adding the following definition:

     

    "January 2010
Warrants" means one or more warrants to purchase an aggregate of
3,750,000 shares of Common Stock, substantially in the form attached as Exhibit
A-3 hereto.

     

    (c)         The definition of "Warrants" in Article
1 of the Purchase Agreement shall be amended in its entirety to read as
follows:

     

    "Warrants" means the
January Warrants, April Warrants and January 2010 Warrants.

     

    (d)         Clause (ii) of Section 3.1 of the Purchase Agreement shall be amended in its entirety to read as
follows:

     

    (ii)
SkyTerra agrees to issue and sell to the Purchasers, and the Purchasers agree to
purchase from SkyTerra, the January Warrants on the First Closing Date, the
April Warrants on the Second Closing Date and the January 2010 Warrants on the
Fourth Closing Date.

     

    (e)         A corresponding reference to the January 2010 Warrants
to be delivered by SkyTerra
on the Fourth Closing Date shall be added to Section 3.2 of the
Purchase Agreement.

     

    (f)         The definition of "First Closing Date" shall be amended in its
entirety to be 10:00 AM (New York time) on January 7, 2009.

     

      
1.3   Amendment to
Article 7 of the Purchase Agreement.  The conditions to the
obligations of the Purchasers to consummate a Closing set forth in Sections
7.1(a) – (n) shall be amended in their entirety
to read as follows:

     

    (a)           (i)(A)
On the First Closing Date and the
Second Closing Date, the representations and warranties of the Issuers and
SkyTerra contained herein shall be true and correct in all material respects,
provided that if any representation and warranty includes a materiality
qualification (including the words "Material Adverse Effect," "material," "in
all material respects" or like words) then, such representation and warranty
shall be true and correct in all respects, as of such Closing Date with the same
effect as though made on and as of such Closing Date (except for representations
and warranties made as of an earlier date, in which case as of such earlier
date) and provided solely for purposes of this Section 7.1(a)(i), the Issuers
may update Section 4.10 of the Disclosure Schedules, and the Issuers and
SkyTerra shall have performed all obligations and conditions 

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    herein
required to be performed or complied with by the Issuers and SkyTerra on or
prior to such Closing Date; and (B) in the case of the
Second Closing Date, SkyTerra's aggregate cash position is not materially less
than as projected in SkyTerra's business plan, as provided to the Purchasers
prior to the execution of the MCSA.  This Section 7.1(a)(i) will be
deemed to be satisfied in full upon the delivery by the Issuers and SkyTerra of
the certificates required to be delivered on the Second Closing Date pursuant to
Sections 7.1(g)-(h), unless (a) management of the entity delivering such
certificate, knowingly and wilfully delivered a false and inaccurate
certificate, and (b) management of the entity delivering such certificate was
grossly negligent or reckless in verifying the accuracy of matters contained in
such certificate.

     

       
(ii)   On the Third Closing Date and the Fourth Closing Date, the
representations and warranties of the Issuers and SkyTerra contained herein
shall be true and correct in all respects (without giving effect to any
limitation on any representation and warranty indicated by a materiality
qualification, including the words "Material Adverse Effect," "material," "in
all material respects" or like words) as of such Closing Date with the same
effect as though made on and as of such Closing Date (except for representations
and warranties made as of an earlier date, in which case as of such earlier
date), except with regard to the representations and warranties contained in
Section 4.29 above as to which the Issuers shall not be providing any
representation or warranty on such Closing Dates, and except where the failure
of such representations and warranties to be so true and correct (without giving
effect to any limitation on any representation and warranty indicated by a
materiality qualification, including the words "Material Adverse Effect,"
"material," "in all material respects" or like words) would not, individually or
in the aggregate, have a Material Adverse Effect and provided solely for
purposes of this Section 7.1(a)(ii), the Issuers may update Section 4.10 of the
Disclosure Schedules, and the Issuers and SkyTerra shall have performed all
obligations and conditions herein required to be performed or complied with by
the Issuers and SkyTerra on or prior to such Closing Date.

     

    (b)           There
shall not be any Law, injunction, order or decree, enacted, enforced,
promulgated, entered, issued or deemed applicable to this Agreement or the
transactions contemplated hereby by any Governmental Authority prohibiting or
enjoining the transactions contemplated by this Agreement or the Transaction
Documents.

     

    (c)           The
sale of the Securities to be issued on a particular Closing Date by the Issuers
or SkyTerra, as applicable, shall not be prohibited by any Law on such Closing
Date. All necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
Governmental Authority or of or with any other Person, including, without
limitation, all filings in accordance with Section 6 hereof, with respect to the
purchase and sale of the Securities to be issued on a particular Closing Date
shall have been duly obtained or made and shall be in full force and effect on
such Closing Date; provided, however, that this shall not require all approvals
needed to issue Voting Common Stock.

     

    
                  
(d)           On the First
Closing Date, the Purchasers shall have received from Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel to the Issuers and SkyTerra, an opinion,
dated as of the First Closing Date, substantially in the form of the opinion
letter dated January 7, 2008 delivered to the Purchasers, modified as
appropriate to reflect the terms of this transaction.

    

     

    (e)           SKYT
LP shall have delivered to the Purchasers a certificate dated as of such Closing
Date and signed by the secretary or other officer of MSV GP, certifying (i) that
the copies of the Limited Partnership Agreement and resolutions of the Board
approving this Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby attached thereto, are all true, complete and
correct and remain in full force and effect as of such date; and (ii)
(A) on the First Closing Date, the incumbency and specimen signature of each
officer of SKYT LP executing this Agreement, the Transaction Documents and any
other document delivered in connection herewith on behalf of SKYT LP, and (B) on
each Closing following the First Closing Date, the incumbency and
specimen signature of each officer of SKYT LP executing any Notes in connection
with such Closing.

     

    (f)           SKYT
Finance Co. shall have delivered to the Purchasers a certificate dated as of
such Closing Date and signed by the secretary or another officer of SKYT Finance
Co., certifying (i) that the copies of the Certificate of Incorporation, the
By-Laws and resolutions of the Board of Directors of SKYT Finance Co. approving
this Agreement, the Transaction 

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Documents
and the transactions contemplated hereby and thereby attached thereto, are all
true, complete and correct and remain in full force and effect as of such date;
and
(ii) (A) on the First Closing Date, the incumbency and specimen signature of
each officer of SKYT Finance Co. executing this Agreement, the Transaction
Documents and any other document delivered in connection herewith on behalf of
SKYT Finance Co., and (B) on each Closing following the First Closing
Date, the incumbency and specimen signature of each officer of SKYT
Finance Co. executing any Notes in connection with such Closing.

     

    (g)           Each
of the Issuers shall have delivered to the Purchasers a certificate dated as of
such Closing Date and signed by the Issuer’s respective chief financial officer
or chief executive officer, certifying that (i) such Issuer has performed and
complied with all of the agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by such Issuers on or
before such Closing Date; and (ii) that the conditions set forth in Sections
7.1(a) (other than the condition set forth in Section 7.1(a)(i)(B)) and 7.1(b)
have been met.

     

    (h)           SkyTerra
shall have delivered to the Purchasers a certificate dated as of such Closing
Date and signed by the secretary or another officer of SkyTerra, certifying (i)
that the copies of the Certificate of Incorporation, the By-Laws and resolutions
of the Board of Directors of SkyTerra approving this Agreement, the Transaction
Documents and the transactions contemplated hereby and thereby attached thereto,
are all true, complete and correct and remain in full force and effect as of
such date; (ii) that the conditions set forth in Sections 7.1(a) and 7.1(b) have
been met; and (iii) (A) on the Second Closing Date, the incumbency and specimen
signature of each officer of SkyTerra executing this Agreement, the Transaction
Documents and any other document delivered in connection herewith on behalf of
SkyTerra, and (B) the incumbency and specimen signature of each officer of
SkyTerra executing any Warrants in connection with such Closing. 

     

    (i)           Each
of the Issuers and SkyTerra shall have delivered to the Purchasers a certificate
of good standing for each of the Issuers and SkyTerra from the Secretary of
State of the State of Delaware, in each case dated within one week of such
Closing Date.

     

    (j)           The
MCSA shall have been executed by SkyTerra Subsidiary LLC (formerly Mobile
Satellite Ventures Subsidiary LLC), SkyTerra and SKYT LP and none of them shall
have committed a material breach of its obligations thereunder which has not
been cured.

     

    (k)           The
Registration Rights Agreement shall have been executed and SkyTerra shall not
have committed a willful breach of its registration obligations thereunder prior
to the relevant Closing Date.

     

    (l)           There
shall be no Material Adverse Effect not otherwise cured on the relevant Closing
Date (without regard to any amendment to Section 4.10 of the Disclosure
Schedules permitted pursuant to Section 7.1(a) of this Agreement).

     

    (m)          Each
of the Issuers and SkyTerra will have provided reasonable cooperation in
providing the Purchasers with all the information available to them reasonably
requested by the Purchasers in writing to verify the satisfaction of any closing
condition or otherwise to consummate the Closings; provided, however, that for
purposes of the Second Closing Date, this 

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Section
7.1(m) will be deemed to be satisfied in full with respect to Section 7.1(a)(i),
upon the delivery by the Issuers and SkyTerra of the certificates required
pursuant to Sections 7.1(g)-(h), unless (a) management of the entity delivering
such certificate, knowingly and wilfully delivered a false and inaccurate
certificate, and (b) management of the entity delivering such certificate was
grossly negligent or reckless in verifying the accuracy of matters contained in
such certificate.

     

    (n)           On
each Closing Date following the First Closing Date, all previously scheduled
Closings shall have occurred.

     

      
1.4    Amendment to
Article 8 of the
Purchase Agreement.

     

    (a)         Section 8.1 (a) of the Purchase Agreement shall be amended in its entirety to read as
follows:

     

    SkyTerra
shall reserve and keep available for issuance upon and until the exercise of the
Warrants at least such number of its authorized but unissued shares of
Non-Voting Common Stock as would be sufficient to exercise the Warrants in full
for shares of Non-Voting Common Stock then issuable pursuant to the
Warrants.

     

    (b)         Sections 8.1(b) – 8.1(g)(1) of the Purchase Agreement
shall be deleted in their
entirety.

     

      
1.5    Amendment to
Article 9 of the Purchase Agreement.

     

    (a)         Section 9.14 of the Purchase Agreement shall
be amended in its entirety to read as follows:

     

    9.14        Expenses.  Whether
or not the transactions contemplated by the Transaction Documents are
consummated, the Issuers shall pay all reasonable, documented fees and expenses
incurred by the Purchasers in connection with the negotiation, preparation and
execution of the Transaction Documents and the consummation of the transactions
contemplated hereby; provided, however that no
Purchaser will claim reimbursement for any expense incurred in connection with
or relating to satisfying itself that any conditions precedent to the
obligations of the Purchasers to consummate the Closing on the
Second Closing Date have been satisfied or otherwise complied
with.

     

     

    (b)         Article 9 of the Purchase Agreement is
amended by adding the following Section 9.15:

     

     

    9.15       8-K.   No
later than 5 p.m. (New York time) on January 12, 2009, the Purchasers may
request SkyTerra to publicly disclose any financial information provided by it
to Navigant that the Purchasers reasonably determine (based upon the written
advice of the Purchasers' outside counsel, a copy of which the Purchasers will
deliver to SkyTerra) must under applicable law be publicly disclosed in order to
permit the Purchasers to purchase publicly traded securities of SkyTerra or its
affiliates, it being understood that SkyTerra will not be required 

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    in
any event to publicly disclose any business plan, projections or assumptions
contained in or related thereto. Within three business days after receipt of
such a request, SkyTerra will publicly disclose such information in a Form 8-K
filed with the SEC unless SkyTerra reasonably determines (based upon the written
advice of SkyTerra's outside counsel, a copy of which SkyTerra will deliver to
the Purchasers) that such information need not be publicly disclosed under
applicable law in order to permit the Purchasers to purchase publicly
traded securities of SkyTerra or its affiliates.

     

      
1.6    Amendment to
Exhibits A-1,
A-2 and
B.  The form of January Warrants attached as Exhibit A-1
to the Purchase Agreement, the form of April Warrants attached as Exhibit A-2 to the Purchase
Agreement and the
form of Indenture attached as Exhibit B
to the Purchase Agreement shall be replaced with the form of January Warrants, April Warrants and
Indenture, attached
hereto as Exhibits A-1, A-2 and B, respectively.

     

      
1.7   Effect on
the Purchase Agreement.  This Amendment shall not
constitute a waiver, amendment or modification of any provision of the Purchase
Agreement not expressly
referred to herein.  Except as expressly amended or modified herein,
the provisions of the Purchase Agreement are and shall remain in full force and
effect and are hereby ratified and confirmed.  On and after the date
hereof, each reference in the Purchase Agreement to
"this Agreement," "herein," "hereof," "hereunder" or words of similar import
shall mean and be a reference to the Purchase Agreement as amended
hereby.  To the extent that a provision of this Amendment conflicts
with or differs from a provision of the
Purchase Agreement, such provision of this Amendment shall prevail and govern
for all purposes and in all respects. Capitalized terms used but not defined
herein shall have the meaning ascribed to them in the Purchase Agreement.

     

    ARTICLE II

     

    MISCELLANEOUS

     

      
2.1   GOVERNING
LAW.  THIS
AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

     

      
2.2   Counterparts.  This Amendment may be
executed in any number of counterparts, each of which shall be
deemed an original,
but all of which together shall constitute one and the same document. The
parties hereto confirm that any facsimile copy of another party’s executed
counterpart of this Amendment (or its signature page thereof) will be deemed to
be an executed original thereof.

     

      
2.3   Captions.  The captions and
paragraph headings of this Amendment are solely for the convenience of
reference and shall not affect its
interpretation.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

      
2.4   Assignment.  The rights and obligations
of any party hereto shall inure to the benefit of and shall be binding upon the
authorized successors and permitted assigns of such party. None of the Issuers, SkyTerra or the Purchasers may assign
this Amendment or any rights or obligations hereunder without the
prior written consent of
the other; provided,
however, that the each of Purchasers may assign this Amendment in whole or in
part to one or more
Affiliates (as defined in the Purchase Agreement) of the Purchasers, whether
presently existing or hereinafter created by providing notice in writing to the
Issuers and
SkyTerra.

     

    [Remainder
of Page Intentionally Left Blank]

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

     

    IN
WITNESS WHEREOF, the undersigned have executed, or have caused to be executed,
this Amendment on the date first written above.

     

    
      
        
          
            	 
      	
                    SKYTERRA
      LP by its general partner,

                    SkyTerra
      GP Inc.

                  
	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	 
      /s/ Randy Segal	 
      
	 
      	 
      	
                    Name: 
      Randy Segal

                  
	 
      	 
      	
                    Title: 
      SVP, General Counsel and Secretary

                  
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    SKYTERRA
      FINANCE CO.

                  
	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	 
      /s/ Randy Segal	 
      
	 
      	 
      	
                    Name: 
      Randy Segal

                  
	 
      	 
      	
                    Title: 
      SVP, General Counsel and Secretary

                  
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    SKYTERRA
      COMMUNICATIONS, INC.

                  
	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	 
      /s/ Randy Segal	 
      
	 
      	 
      	
                    Name: 
      Randy Segal

                  
	 
      	 
      	
                    Title: 
      SVP, General Counsel and
Secretary

                  

          

        

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      
        
          	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  HARBINGER
      CAPITAL PARTNERS

                  MASTER
      FUND I, LTD.

                
	 
      	
                  By:
      Harbinger Capital Partners Offshore

                  Manager,
      L.L.C., as investment manager

                
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	 
      /s/ Philip Falcone	 
      
	 
      	 
      	
                  Name: 
      Philip Falcone

                
	 
      	 
      	
                  Title: 
      

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  HARBINGER
      CAPITAL PARTNERS 

                  SPECIAL
      SITUATIONS FUND, LP

                
	 
      	
                  By:
      Harbinger Capital Partners Special 

                  Situations
      GP, LLC, as general partner

                
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	 
      /s/ Philip Falcone	 
      
	 
      	 
      	
                  Name: 
      Philip Falcone

                
	 
      	 
      	
                  Title:

                

        

      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    EXHIBIT
A-1

    FORM
OF JANUARY WARRANTS

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    EXHIBIT
A-2

    FORM
OF APRIL WARRANTS

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    EXHIBIT
A-3

    FORM
OF JANUARY 2010 WARRANTS

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    EXHIBIT
B

    FORM
OF INDENTURE

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}]]