Document:

ex1010raymond.htm

EXHIBIT 10.15

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated this 9 day of July 2008, is between Ashland Inc., a Kentucky corporation (“Ashland”), having its principal place of business at 50 E. RiverCenter
Boulevard, Covington, KY 41011 and Paul C. Raymond, III (“Employee”).

 

WHEREAS, it is anticipated that Ashland will acquire all the stock of Hercules Incorporated (“Hercules”), pursuant to and in accordance with a Merger Agreement, to be executed by and between Hercules and Ashland (the “Merger Agreement”); and

 

Employee currently serves as President Paper Technologies and Ventures Division of Hercules and Vice President, Hercules Incorporated, and has substantial experience, knowledge and skill associated with the operations and administration of this business unit and of Hercules; and

 

Ashland wishes to retain Employee upon the terms and conditions set forth in this Agreement, upon the completion of the acquisition of Hercules.

 

NOW THEREFORE, in consideration of the recitals and mutual covenants contained in this Agreement, the parties agree as follows:

 

1.           Employment.

 

	
1.1
	
Duties and Responsibilities.  Employee shall be employed by Ashland on a full-time basis effective as of the closing date of the transactions contemplated by the Merger Agreement (the “Commencement Date”).  Employee
shall serve as an executive officer of Ashland, in the role of President Paper Technologies, Water Technologies  and Ventures and Vice President of Ashland Inc.  Employee shall also serve as a member of Ashland’s operating committee.  Employee shall faithfully, industriously and to the best of his ability perform the duties that may be required of him and shall devote his full business time, effort, skill and attention to the affairs of Ashland during his employment.  It
is agreed that Employee’s performance during the term of this Agreement will be measured in accordance with Ashland’s performance appraisal process.

 

	
1.2
	
Term.  The term of this Agreement shall be three (3) years from the Commencement Date (the “Term”). Employee understands and agrees that in the event this Agreement is not extended for a subsequent term, then upon its expiration
he will become an employee “at-will,” which means that either Employee or Ashland will be free to discontinue the employment relationship without penalty at any time thereafter, with or without notice and with or without Cause; provided that in the event the merger with Hercules does not 

 

 

 

 

 

1

 

	 	occur on or before June 30, 2009, this Agreement will lapse and no further obligations will be owed by either party hereunder.

 

	
1.3
	
Effect of Prior Agreements.  Employee acknowledges that except for those obligations Ashland has specifically assumed under the terms of the Merger Agreement with Hercules, Ashland and Hercules shall have no
obligations to Employee pursuant to any previous employment agreements between Employee and Hercules, or any of its subsidiaries, affiliates or predecessors in interest.

 

2.           Compensation and Benefits.

 

	
2.1
	
Base Compensation.  Ashland shall pay Employee an annual salary (“Base Compensation”) of Three Hundred Sixty Thousand Dollars ($360,000), less applicable withholdings, which shall be payable in accordance
with its customary payroll practices with respect to time and manner of payment.

 

	
2.2
	
Vacation.  Employee’s vacation eligibility will be in accordance with Ashland’s Vacation Benefit program, provided that Employee’s years of service with Hercules shall be counted for purposes of
determining his eligibility for vacation accrual under said vacation policy.

 

	
2.3
	
Periods not Worked.  Employee understands and agrees that except where some form of paid leave is provided under the regular policies of Ashland, Employee shall not receive compensation for workweeks in which
no work is performed.

 

	
2.4
	
Employee Benefits. Employee’s position is in salary band 26, and as a regular, full-time employee of Ashland, he shall be entitled to participate in all benefits offered to employees in this band according to the
terms and conditions of such programs, as they may be amended from time to time.

 

	
2.5
	
Restricted Stock.  In order to assist Employee in meeting the stock ownership requirements applicable to his position and to encourage Employee to remain with Ashland, within 90 days of the Commencement Date
Ashland will provide Employee with a grant of shares of Ashland Inc. restricted stock equivalent in value to one and one-half (1.5) times Employee’s Base Compensation, the number of shares granted to be determined based on the closing price of Ashland Inc. common stock as reflected on the New York Stock Exchange (“NYSE”) composite tape as of the Commencement Date.  These shares of restricted stock will vest in full 48 months from the Commencement Date.  In the event Employee’s
employment is terminated less than 48 months from the Commencement Date either by Ashland without Cause and in its sole discretion, or due to Employee’s death or disability, then Employee shall receive accelerated pro-rata vesting of these shares of restricted stock, based on the number of months of employment completed as of the date his employment ended.  In the event Employee voluntarily elects to terminate his 

 

 

 

 

 

2

 

	 	employment or Ashland terminates his employment for Cause, as provided herein, less than 48 months from the Commencement Date, then all shares of restricted stock will not vest, and will be forfeited in their entirety.  Employee and Ashland agree that Ashland’s obligations under this section of the Agreement shall survive the expiration of the term of this Agreement.

 

	
2.6
	
Retention Bonus.  In order to encourage Employee’s continued service during the term of this Agreement, Ashland will provide Employee with a bonus (“Retention Bonus”) equal to Three Hundred Sixty
Thousand Dollars ($360,000), less applicable withholdings, to be paid as follows:  one-third of the Retention Bonus will be due upon Employee’s 12-month anniversary of service with Ashland; one-third of the Retention Bonus will be due upon Employee’s 24-month anniversary of service with Ashland, and the final one-third payment will be due as of Employee’s 36-month anniversary of service with Ashland.  Each Retention Bonus payment shall be made within 30 days of the date on which
Employee becomes entitled to receive said payment.

 

In the event Employee’s employment is terminated prior to the payment of one or more of these Retention Bonus payments, either by Ashland without Cause and in its sole discretion, or due to Employee’s death or disability, then Employee shall immediately receive payment of the balance of the Retention Bonus.  However
Employee agrees that Ashland shall have no further obligation to make any Retention Bonus payment(s) under this section if, prior to the date on which a Retention Bonus payment would become due, Employee voluntarily elects to terminate his employment, or Ashland terminates his employment for Cause, as provided herein.

 

	
2.7
	
Incentive Compensation.  During the term of this Agreement, Employee shall be eligible to receive incentive compensation as follows:

 

	
  
	
(a)
	
2008 Incentive Compensation.  If the Commencement Date occurs on or before December 31, 2008, then for the remainder of calendar year 2008, Employee will remain eligible to receive incentive pay under the annual incentive compensation
program in which Employee was a participant immediately prior to the Commencement Date.

 

	
  
	
(b)
	
Ashland Incentive Compensation Plan.   Employee shall become eligible to participate in Ashland’s Incentive Compensation Plan as of the Commencement Date.  All terms and conditions governing Employee’s annual
incentive pay opportunity will be determined according to the terms and conditions of said plan.

 

	
  
	
(c)
	
Long-Term Incentive Plan. Employee will become eligible to participate in Ashland’s Long-Term Incentive Plan as of the Commencement Date. All terms and conditions governing Employee’s long-term incentive pay opportunity will be determined
according to the terms and conditions of said plan.

 

 

 

3

 

	
2.8
	
Severance Benefits. In addition to those termination benefits otherwise provided for hereunder, Employee shall be eligible to receive benefits under Ashland’s normal severance pay policies in the event his employment is terminated by Ashland
without Cause and in its sole discretion during the term of this Agreement; provided that the severance benefit Employee is eligible to receive shall be not less than 18 months of Base Compensation. All other terms and conditions for payment of the above benefits shall be made in accordance with the terms and conditions of the applicable plan(s).

 

	
2.9
	
Change in Control.  Employee shall be eligible to receive those benefits offered to employees in his salary band in the event of a “Change in Control” of Ashland (as defined in the applicable plan) during the term of this Agreement;
provided that the minimum benefit Employee shall receive in the event of such Change in Control shall be two (2) years of Employee’s Base Compensation, a payment equal to Employee’s annual incentive pay target, and all  unvested equity compensation provided to Employee shall immediately vest.  All other terms and conditions for payment of the above benefits shall be made in accordance with the terms and conditions of the applicable plan(s).

 

	
3.
	
Non-Competition.  Employee understands and agrees that as a condition of his employment, contemporaneous with the execution of this Agreement, he will also execute the Ashland Service Agreement, a copy of which is attached
hereto as Exhibit I, and the terms and conditions of which are incorporated by reference as if fully set forth herein.  Provided however, that Employee specifically agrees that the restrictions provided in said Service Agreement shall extend for the greater of three (3) years from the date of the execution of this Agreement, or 18 months from the date Employee is no longer employed by Ashland in any capacity.

 

Employee understands that his obligations under the Ashland Service Agreement and the provisions of this section of this Agreement shall survive the expiration or early termination of this Agreement.  Employee further understands that his obligations under the Ashland Service Agreement will be in addition
to any obligations under any confidentiality and/or non-competition agreements executed by Employee prior to or during his employment with Hercules which are assumed by Ashland under the terms of the Merger Agreement.

 

4.           Confidentiality.

 

	
4.1
	
No Disclosure or Use of Confidential Information. During Employee’s employment with Ashland and thereafter, Employee shall not, directly or indirectly, (a) disclose or permit the disclosure of any Confidential Information to any person or
entity, or (b) use or permit the use of Confidential Information:  (i) in any way detrimental to Ashland, including in competition with Ashland; or (ii) for any purpose other than to benefit Ashland.   Upon Ashland’s request or termination of Employee’s employment, Employee shall 

 

 

 

 

 

4

 

	 	promptly return to Ashland all written or tangible Confidential Information.  For purposes hereof, “Confidential Information” means all information about Ashland and/or Hercules, and any subsidiaries, affiliates or predecessors in interest of either, which is disclosed to Employee, directly or indirectly, before or during Employee’s employment with Ashland and/or Hercules,  includ­ing:
product design and manufacturing information; any communications or corres­pondence identifying customers, prospects or projects; pricing and sales lists, business plans and strategies; pol­icies, techniques and concepts; employee compensation; financial reports; proprietary technology, trade secrets, research and development data and know-how; copyrighted and unprotected materials; and other secret or confidential information or data which pertains to Ashland.  Confidential Information does
not include information which is or becomes publicly available through an authorized or lawful disclosure.

 

	
4.2
	
Ownership of Works.  All ideas, discoveries, inventions, improvements, artworks, compositions, conceptions, and materials (including materials within the scope of the copyright laws) (“Works”) prepared or conceived by Employee
during the term of this Agreement and usable in or relating to Ashland’s business shall be the property of Ashland and Employee hereby assigns and agrees to assign to Ashland all of Employee’s right, title and interest in such Works.  Employee shall not use, or transfer to others, any Works other than in connection with Ashland’s business or with Ashland’s written consent.  Employee agrees to execute all papers, and otherwise provide proper assistance, at Ashland’s
request and expense, during and subsequent to Employee’s employment by Ashland to enable Ashland or its nominees to obtain patents, copyrights, and other legal protection for the Works in any country.

 

	
4.3
	
Confidentiality of this Agreement.  Employee agrees that he will keep the terms of this Agreement completely confidential, and will not hereafter disclose any information concerning this Agreement to anyone except his immediate family,
financial advisors and/or attorney: provided that they agree in advance of said disclosure to keep this information confidential and not disclose it to others.  However, the obligation to treat information contained herein as confidential will not apply to any information Ashland has disclosed pursuant to United States securities laws, the rules of the New York Stock Exchange, or the rules of any other stock exchange on which Ashland stock is listed.

 

	
5.  
	
Injunctive Relief.  Employee agrees that (a) the provisions of Sections 3 and 4 are reasonable and necessary to protect the legitimate interests of Ashland
and (b) any violation of Sections 3 or 4 will result in irreparable injury to Ashland, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such violation would not be reasonable or adequate compensation to Ashland for such a violation.  Accordingly, Employee agrees that if he violates any provisions of Sections 3 or 4, Ashland shall be entitled to specific performance and injunctive relief, without posting bond or other security, and without the necessity of
proving actual damages.

 

 

 

5

 

Employee and Ashland agree that any controversy or claim arising out of or relating to other sections of this Agreement, or the breach thereof, shall be settled exclusively by arbitration in accordance with the Center for Public Resources’ Model ADR Procedures and Practices, and judgment upon the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof.

 

6.           Early
Termination.

 

	
6.1
	
Termination for Cause. Ashland may terminate this Agreement for Cause at any time during its term.  Upon a termination for Cause, no further compensation under this Agreement will be owed to Employee. “Cause” shall be defined
for the purposes of this Agreement as being:

 

	
  
	
(a)
	
any act or omission by Employee which reasonably constitutes dishonesty, disloyalty, fraud, deceit, gross negligence, willful misconduct or recklessness, including, but not limited to the willful violation of Ashland’s by-laws, Business Responsibilities of an Ashland Employee, or other corporate policies and procedures governing employee conduct;

 

	
  
	
(b)
	
Employee’s insubordination; “Insubordination” shall be defined as Employee’s refusal or willful failure to perform specifically assigned duties relating to his position;

 

	
  
	
(c)
	
Employee’s inattention to, neglect of or any other failure to competently perform any assigned duties, unless such failure is due to Employee’s incapacity as a result of the Employee’s physical or mental illness;

 

	
  
	
(d)
	
any act by Employee that constitutes a conviction of any felony under the laws of the United States; or

 

	
  
	
(e)
	
Employee’s breach of any material portion of this Agreement.

 

	
6.2
	
Termination due to Death or Disability. In addition, this agreement will automatically terminate, and except for those benefits specified under paragraphs 2.5 and 2.6 of this Agreement, no further compensation under this Agreement will be owed
to Employee in the event either of the following should occur during its term:

 

	
  
	
(a)
	
Employee becomes disabled and subsequently becomes eligible to receive payments under Ashland’s Long Term Disability Plan; or

 

	
  
	
(b)
	
In the event of the Employee’s death.   Provided, however, that Ashland will not be relieved of any obligations under its employee benefits plans which arise due to Employee’s death.

 

 

 

6

 

Any payments owed under this Agreement following Employee’s death will be paid to Employee’s estate.

 

	
6.3
	
Termination for Other Reasons.  Ashland may terminate this contract at any time during its term, for any reason other than those enumerated above, and shall thereafter only be obligated to provide the following to Employee:

 

	
(a)  
	
payment of the greater of (i) the balance of the Base Compensation Employee would have received if his employment had continued for the full term of this Agreement, or (ii) the amount of severance pay payable to employees in his salary band whose employment is terminated without Cause under Ashland’s normal severance pay policies; and

 

	
(b)  
	
payment of those amounts Employee would have otherwise been eligible to receive under Ashland’s Incentive Compensation and Long-Term Incentive Pay plans, pro-rated through his last day of active employment, which will be paid in accordance with all other terms and conditions of said plans; and

 

	
(c)  
	
pro-rata vesting of those shares of restricted stock granted to Employee pursuant to section 2.5 of this Agreement; and

 

	
(d)  
	
payment of the balance of the Retention Bonus provided for in section 2.6 of this Agreement.

 

In such event, Employee’s termination shall be deemed without Cause, and Employee will remain eligible to receive those benefits ordinarily provided under Ashland’s employee benefits plans to employees who are terminated without Cause.

 

	
7.
	
Notices. Any notice required or desired to be given under this Agreement shall be deemed given if in writing mailed or delivered
as follows:

 

	
  
	
If to Employee:

 

With a copy to:

 

 

If to Ashland:

 

With a copy to:

 

 

  

  

7  

  

	
8.
	
Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of Ashland and its successors
and assigns.

 

	
9.
	
Waiver. No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver
of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.

 

	
10.
	
Modification.  This Agreement may not be amended or modified other than by a written agreement signed by Employee
and an authorized representative of Ashland.  No company practice or policy of Ashland shall change the provisions of this Agreement.

 

	
11.
	
Severability. The provisions of this Agreement are independent and severable from each other, and no provisions shall be affected
or rendered invalid or unenforceable if any other provision or provisions is deemed invalid or unenforceable by a court or arbitrator or competent jurisdiction.

 

	
12.
	
No Violation of any Other Contract Binding Upon Employee. Employee warrants and represents to Ashland that Employee is not
subject to any covenants, agreements or restrictions, including any covenants, agreements or restrictions arising out of any prior employment that would be breached or violated by Employee’s execution of this Agreement or by his performance of his duties hereunder.

 

	
13.
	
Attorney’s Fees.  Any signatory to this Agreement who is the prevailing party in any legal proceeding against any other signatory brought under or with relation to this Agreement shall be entitled to recover court
costs, reasonable attorney fees, and all other out-of-pocket costs of litigation, including deposition, trace, and witness costs, from the non-prevailing party.

 

	
14.
	
Governing Law.  This Agreement shall be deemed to have been executed and delivered within the state of Ohio, and shall be construed, enforced and governed by, the laws of the State of Ohio without regard to principles
of conflict of laws and without regard to any law requiring construction against the party preparing the document.

 

  

  

8

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date first above written.

 

 

	         /s/ Paul C. Raymond, III	 	 	 	 	 
	 Paul C. Raymond, III	 	 	 	 	 
	 	 	 	 	 	 

 

  -- and ---

 

ASHLAND INC.

 

	 By:	/s/ Susan B. Esler 	 	 	 	 	 
	 Its:	 VP Human Resources  & Communications	 	 	 	 	 
	 	 	 	 	 	 	 

 

Agreed subject to attached term sheet including duties and responsibilities for Ashland Water Technologies

 

 

	       	 	 	   /s/ Paul C. Raymond, III	 	 
	 	 	 	 Paul C. Raymond, III	 	 
	 	 	 	 	 	 
	 	 	 	 /s/ SBE	 	 
	 	 	 	 /s/ PCR	 	 

 

 

 

9

 

 

Exhibit I

EMPLOYEE AGREEMENT

 

As an employee of Ashland Inc. or any of its divisions or subsidiaries1  (collectively call "Ashland"), you may be exposed to Confidential information about Ashland's business processes,
products and developments.  In order that you fully understand and accept your responsibilities as an Ashland employee, you are asked to review and agree to the terms printed below by signing this Agreement.

 

In consideration of my employment or continued employment with Ashland, the salary or wages, increase and promotions and other benefits received by me during such employment, and in consideration of being given access to Confidential information when required, I hereby agree as follows:

 

Article 1 - Professional Conduct

I agree to follow Ashland's policies and guidelines with respect to the conduct of its business as described in the Business Responsibilities of an Ashland Employee.  I will use my best efforts to comply with both the letter and the spirit of all laws and regulations applicable to my duties as an employee
of Ashland.  I further agree to adhere to the highest ethical standards of conduct in all of my business activities and to act at all times in the best interest of Ashland.

 

Article 2 - Confidential Information

Ashland has defined Confidential Information to mean trade secrets, know-how, and other information relating to Ashland's business practices and prospective business interests (including, but not limited to):  customer lists, fore-casts, business and strategic plans, financial and sales information, products,
processes, equipment, manufacturing operations, marketing programs, research, product development, engineering, computer systems, software, personnel and legal records.

 

I agree that I will promptly disclose to Ashland all trade secrets or inventions made or conceived by me, either alone or with others, during my employment with Ashland.  I also agree that I will not use or disclose to anyone any Confidential Information of Ashland, except with the written consent of Ashland
or as required in my duties as an employee of Ashland.  This obligation shall continue until such Confidential Information becomes generally known to the public without participation on my part.

 

I agree that the same obligation to protect Confidential Information shall apply to the information of any third party obtained by me as an Ashland employee and with respect to which Ashland has an obligation of secrecy.  Further, I agree not 

 

 

_____________________________________  
1 Subsidiaries or divisions, which have their own Employee or Service Agreements are not
included hereunder.

 

 

 

 

to use or disclose to Ashland any confidential information of any previous employer or other third party to whom I have an obligation of secrecy.  I also agree to immediately provide Ashland with a copy of any agreement I may have with a prior employer that affects my employment with Ashland.

 

Article 3 - Intellectual Property Ownership

I understand Intellectual Property of Ashland to mean any invention, discovery, work of authorship, computer program, design, trademark or any other non-physical property, including ownership of copyright as based on the work-for-hire doctrine, which was not developed entirely on my own time or, even if developed on
my own time: (1) relates to the business of Ashland or to Ashland's actual or anticipated research or development; or (2) results from any work performed by me for Ashland.

 

Article 4 - Intellectual Property Rights

Upon the request of Ashland and at Ashland's expense, I or my legal representative will assign, and hereby do assign and convey to Ashland, my entire right in and to any patent or inventions or discoveries, and registrations or works of authorship which are the property of Ashland under Article 3; assist Ashland and
its agents in preparing documents for the protection of such Intellectual Property in all countries of the world; sign and deliver to Ashland all papers necessary for the assignment or patent applications and patents the registration of copy-rights; and will give all information and testimony, sign all papers and do all things which may be needed or requested by Ashland to obtain, extend, re-issue, maintain for enforce such Intellectual Property Rights.  When any assistance relating to such Intellectual
Property Rights is rendered after my employment, I understand that Ashland will pay me a reasonable sum for my time and expenses.

 

Article 5 - Documents

I acknowledge that all originals and copies of drawings, blueprints, manuals, reports, notebooks, notes, calendars, photographs, computer programs in whatever form and other data, and any other recorded, written, printed or electronically-stored matter, whether considered confidential or not, relating to research, operations
and/or the business of Ashland, made or received by me during my employment, are the property of Ashland.  I will upon termination of my employment, return such information or documents to Ashland, retaining no copies for myself.  I also agree to return to Ashland all other physical or personal property of Ashland.

 

Article 6 - Noncompetition

I agree that for a period of eighteen (18) months from the date of my termination of employment with Ashland for any reason, I will not be employed by or participate in, or have any interest (directly or indirectly) in any business which involves an area of technology or business in which I worked for Ashland during
the last two (2) years of my employment with Ashland and which might require 

 

 

 

 

 

 

me to disclose or misuse any Confidential Information of Ashland.  I further agree that for a period of eighteen (18) months, I will not interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, with respect to the business carried on by Ashland with any other party, including
other Ashland employees.  I agree that these restrictions are reasonable and shall apply to the same geographical area over which I had primary responsibility during the last two (2) years of my employment with Ashland.

 

Article 7 - Employment at Will

I understand that I have the right to terminate my employment with Ashland for any reason at any time, with or without notice.  I understand that Ashland has the same right.  I further acknowledge that I do not have a contract of employment with Ashland and that, in the future, I will not have any
contractual rights of employment unless such rights are made part of a written agreement executed by me and by a Vice President or a higher level officer of Ashland.

 

Article 8 - Acceptance

I have read this Agreement carefully and I understand and voluntarily agree to comply with its terms.  I understand that in the event that Ashland should waive any part of this Agreement of that any part should be determined to be unenforceable, the remaining provisions shall remain in effect.

 

 

DATE THIS 14 DAY OF JULY 2008

 

WITNESS:

 

 

	 /s/ Michelle Brackin	 	 	 	 
	 Michelle Brackin	 	 	 	 
	 	 	 /s/ Paul C. Raymond, III	 	 
	 	 	     (SIGNATURE)	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 Paul C. Raymond, III	 	 
	 	 	     (PRINT NAME)	 	 

 

:
 

	
  ACCEPTED:

 
	 	 
	 ASHLAND INC.	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 BY:	/s/ Susan B. Esler 	 	 
	 TITLE:	 V.P. Human Resources & Communications	 	 
	 	 	 	 

 

 

 

 

  

 

Term Sheet

for

Mr. Paul Raymond

	
Position:
	
President Paper Technologies, Water Technologies and Ventures and Vice President Ashland Inc.

	
Location:
	
Wilmington, Delaware

	
Salary Grade
	
26

	
Base Salary:
	
$360,000

	
Annual Incentive Opportunity (IC):
	 

	
(all numbers as a % of base salary)
	
 

	  	
Percent
	  	
Value
	 
	
Target
	
75%
	  	
$270,000
	 
	
Maximum (150% of target)
	
112.5%
	  	
$405,000
	 
	  	  	  	  	 

	  	  	  	
Approximate

Percent (of salary)
	  	
Approximate

Value
	  	
Approximate

Performance

Shares/Options

@$50 grant 

price

	
Long-Term Incentive
	  	  	  	  	  	  
	  Total Target Value	  	
135%
	  	
$486,000
	  	  
	  SAR-grant (fixed and rounded by band)	  	
65%
	  	  	  	
14,000

	  Long-Term Incentive Grant (as % of salary)	  	
70%
	  	  	  	
5,040

	
Severance Benefit (not for cause)
	
18 months base salary paid in a lump sum

	
CIC Agreement
	
2x base salary + target annual incentive (1 year)

	
  
	
immediate vesting of all unvested equity compensation

	
Retention Bonus
	
$360,000 paid in 1/3 increments at the completion of 12 months, 24 months and 36 months service.

	
Restricted Stock Grant
	
Restricted stock grant valued at 1.5x salary.  Value determined based on share price at close of deal.  Vest in full at completion of 48 months service

	

Supplemental Early Retirement Plan

	 

	
(SERP) (non-qualified)
	
- Formula:  Average of highest 3 years base salary and annual bonus (IC) out of last 7 years x .25 x full years of Ashland service (up to a maximum of 20 years)

	
  
	 

	

(This benefit is offset by value of
Cash Balance Benefit)
	
- Fully vested in benefit after 5 years (Hercules service counts towards vesting)

	
  
	
Estimated value of SERP at various levels assuming target incentive and average salary increases of 2%

	 	
5 years
	
$836,000
	  
	 	
7 years
	
$1,200,000
	  
	 	
10 years
	
$1,800,000
	  
	 	
15 years
	
$3,050,000
	  
	 	
20 years
	
$4,500,000
	  

	
Financial Planning Benefit
	
AYCO (value approximately $12,000 annual) +  $2,500; or up to $5,000

	
(benefit is taxable as imputed income)ex1017.htm

EXHIBIT 10.17

 

 

ASHLAND INC.

1997 STOCK INCENTIVE PLAN

(Amended as of November 7, 2002)

 

 

Section 1. Purpose

 

The purpose of the Ashland Inc. 1997 Stock Incentive Plan is to promote the interests of Ashland Inc. and its shareholders by providing incentives to its directors, officers and employees.  Accordingly, the Company may grant to selected officers and employees Options, Stock Appreciation Rights, Restricted Stock,
Merit Awards and Performance Share Awards in an effort to attract and retain in its employ qualified individuals and to provide such individuals with incentives to continue service with Ashland, devote their best efforts to the Company and improve Ashland’s economic performance, thus enhancing the value of the Company for the benefit of shareholders.  The Plan also provides an incentive for qualified persons, who are not officers or employees of the Company, to serve on the Board of Directors
of the Company and to continue to work for the best interests of the Company by rewarding such persons with an automatic grant of Restricted Stock of the Company upon being appointed or elected to the Company’s Board of Directors.  Options, Stock Appreciation Rights, Merit Awards and Performance Shares may not be granted to such Outside Directors under the Plan.

 

 

 

 

Section 2. Definitions

 

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

 

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

 

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

 

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

 

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

 

(F) “Change in Control” shall be deemed to occur (1) upon approval of the shareholders of Ashland (or if such approval is not required, upon the approval of the Board) of (A) any consolidation or merger of Ashland, other than a consolidation or merger of Ashland into or with a direct or indirect wholly-owned
subsidiary, in which Ashland is not the continuing or surviving corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property other than a merger in which the holders of Common Stock immediately prior to the merger will have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, (B) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially
all the assets of Ashland, provided, however, that no sale, lease, exchange or other transfer of all or substantially all the assets of Ashland shall be deemed to occur unless assets constituting 80% of the total assets of Ashland are transferred pursuant to such sale, lease, exchange or other transfer, or (C) adoption of any plan or proposal for the liquidation or dissolution of Ashland, (2) when any “person” (as defined in Section 3(a)(9) or 13(d) of the Exchange Act), other than Ashland or any
Subsidiary or employee benefit plan or trust maintained by Ashland, shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 15% of Ashland's Common Stock outstanding at the time, without the approval of the Board, or (3) at any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Board shall cease for any reason to constitute at least a majority thereof, unless the election
or the nomination for election by Ashland's shareholders of each new director during such two-year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two-year period.  Notwithstanding the foregoing, any transaction, or series of transactions, that shall result in the disposition of Ashland’s interest in Marathon Ashland Petroleum LLC, including without limitation any transaction arising out of that certain Put/Call,
Registration Rights and Standstill Agreement dated January 1, 1998 among Marathon Oil Company, USX Corporation, Ashland and

 

Marathon Ashland Petroleum LLC, as amended from time to time, shall not be deemed to constitute a Change in Control.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(FF) “Retirement” shall mean retirement of an Employee from the employ of the Company at any time as described in the Ashland Inc. and Affiliates Pension Plan or in any successor pension plan, as from time to time in effect.

 

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

 

(HH) “Stock Appreciation Right” or “SAR” shall mean the right of the holder to elect to surrender an Option or any portion thereof which is then exercisable and receive in exchange therefor shares of Common Stock, cash, or a combination thereof, as the case may be, with an aggregate value equal
to the excess of the Fair Market Value of one share of Common Stock over the Exercise Price specified in such Option multiplied by the number of shares of Common Stock covered by such Option or portion thereof which is so surrendered. An SAR may only be granted concurrently with the grant of the related Option. An SAR shall be exercisable upon any additional terms and conditions (including, without limitation, the issuance of Restricted Stock and the imposition of restrictions upon the timing of exercise) which
may be determined as provided in the Plan.

 

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

 

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

 

 

 

Section 3. Stock Subject To The Plan

 

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

 

 

Section 4. Administration

 

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

 

In addition to any implied powers and duties that may be needed to carry out the provisions of the Plan, the Committee shall have all the powers vested in it by the terms of the Plan, including exclusive authority (except as to Awards of Restricted Stock granted to Outside Directors) to select the Employees to be granted
Awards under the Plan,

 

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

 

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

 

 

 

 

Section 5. Eligibility

 

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

 

 

 

 

Section 6. Options

 

	
A. Designation and Price.

 

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

 

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

 

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

 

	
B. Exercise.

 

The Committee may, in its discretion, provide for Options granted under the Plan to be exercisable in whole or in part; provided, however, that no Option shall be exercisable prior to the first anniversary of the date of its grant, except as provided in Section 11 or as the Committee otherwise determines in accordance
with the Plan, and in no case may an Option be exercised at any time for fewer than 50 shares (or the total remaining shares covered by the Option if fewer than 50 shares) during the term of the Option. The specified number of shares will be issued upon receipt by Ashland of (i) notice from the holder thereof of the exercise of an Option, and (ii) payment to Ashland (as provided in this Section 6, subsection (C) below), of the Exercise Price for the number of shares with respect to which the Option is exercised.
Each such notice and payment shall be delivered or mailed by postpaid mail, addressed to the Treasurer of Ashland at Ashland Inc., 500 Diederich Boulevard, Russell, Kentucky  41169, or such other place or person as Ashland may designate from time to time.

 

C. Payment for Shares.

 

Except as otherwise provided in this Section 6, the Exercise Price for the Common Stock shall be paid in full when the Option is exercised. Subject to such rules as the Committee may impose, the Exercise Price may be paid in whole or in part (i) in cash, (ii) in whole shares of Common Stock owned by the Employee and
evidenced by negotiable certificates, valued at their Fair Market Value (which shares of Common Stock must have been owned by the Employee six months or longer, and not used to effect an Option exercise within the preceding six months, unless the Committee specifically provides otherwise), (iii) by Attestation, (iv) by a combination of such methods of payment, or (v) by such other consideration as shall constitute lawful consideration for the issuance of Common Stock and be approved by the Committee (including,
without limitation, effecting a “cashless exercise,” with a broker, of the Option).  “Attestation” means the delivery to Ashland of a completed Attestation Form prescribed by Ashland setting forth the whole shares of Common Stock owned by the Employee which the Employee wishes to utilize to pay the Exercise Price. The Common Stock listed on the Attestation Form must have been owned by the Employee six months or longer, and not have been used to effect an Option exercise within
the preceding six months, unless the Committee specifically provides otherwise.  A “cashless exercise” of an option is a procedure by which a broker provides the funds to an Employee to effect an option exercise.  At the direction of the Employee, the broker will either (i) sell all of the shares received when the option is exercised and pay the Employee the proceeds of the sale (minus the option exercise price, withholding taxes and any fees due to the broker) or (ii) sell enough
of the shares received upon exercise of the option to cover the exercise price, withholding taxes and any fees due the broker and deliver to the Employee (either directly or through the Company) a stock certificate for the remaining shares.  Dispositions to a broker effecting a cashless exercise are not exempt under Section 16 of the Exchange Act.

 

 

 

 

Section 7. Stock Appreciation Rights

 

The Committee may grant Stock Appreciation Rights pursuant to the provisions of this Section 7 to any holder of any Option granted under the Plan with respect to all or a portion of the shares subject to the related Option. An SAR  may only be granted concurrently with the grant of the related Option.  Subject
to the terms and provisions of this Section 7, each SAR shall be exercisable only at the same time and to the same extent the related Option is exercisable and in no event after the termination of the related Option. An SAR shall be exercisable only when the Fair Market Value (determined as of the date of exercise of the SAR) of each share of Common Stock with respect to which the SAR is to be exercised shall exceed the Exercise Price per share of Common Stock subject to the related Option. An SAR granted under
the Plan shall be exercisable in whole or in part by notice to Ashland. Such notice shall state that the holder of the SAR elects to exercise the SAR and the number of shares in respect of which the SAR is being exercised.

 

Subject to the terms and provisions of this Section 7, upon the exercise of an SAR, the holder thereof shall be entitled to receive from Ashland consideration (in the form hereinafter provided) equal in value to the excess of the Fair Market Value (determined as of the date of exercise of the SAR) of each share of Common
Stock with respect to which such SAR has been exercised over the Exercise Price per share of Common Stock subject to the related Option. The Committee may stipulate in the Agreement the form of consideration which shall be received upon the exercise of an SAR. If no consideration is specified therein, upon the exercise of an SAR, the holder may specify the form of consideration to be received by such holder, which shall be in shares of Common Stock, or in cash, or partly in cash and partly in shares of Common
Stock (valued at Fair Market Value on the date of exercise of the SAR) , as the holder shall request; provided, however, that the Committee, in its sole discretion, may disapprove the form of consideration requested and instead authorize the payment of such consideration in shares of Common Stock (valued as aforesaid), or in cash, or partly in cash and partly in shares of Common Stock.

 

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

 

 

 

 

Section 8. Restricted Stock Awards

 

	
A. Awards to Employees

 

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

 

In the event that a Restricted Stock Award has been made to an Employee whose employment or service is subsequently terminated for any reason prior to the lapse of all restrictions thereon, such Restricted Stock will be forfeited in its entirety by such Employee; provided, however, that the Committee may, in its sole
discretion, limit such forfeiture.

 

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

 

	
B. Awards to Outside Directors

 

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

 

As a condition to any Award hereunder, the Outside Director may be required to pay to the Company a non-refundable amount equal to the par value of the shares of Restricted Stock awarded to him or her. Upon the granting of the Restricted Stock Award, such Outside Director shall be entitled to all rights incident to ownership
of Common Stock of the Company with respect to his or her Restricted Stock, including, but not limited to, the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid; provided, however, that, subject to subsection (C) hereof, in no case may any shares of Restricted Stock granted to an Outside Director be sold, assigned, transferred, pledged, or otherwise encumbered during the Restricted Period which shall not lapse until the earlier to occur of the following: (i) retirement
from the Board at age 72, (ii) the death or disability of such Outside Director, (iii) a 50% change in the beneficial ownership of the Company as defined in Rule 13d-3 under the Exchange Act, or (iv) voluntary early retirement to take a position in governmental service.  Unless otherwise determined and directed by the Committee on Directors, in the case of voluntary resignation or other termination of service of an Outside Director prior to the occurrence of any of the events described in the preceding
sentence, any grant of Restricted Stock made to him or her pursuant to this subsection (B) will be forfeited by such Outside Director.  As used herein, a director shall be deemed “disabled” when he or she is unable to attend to his or her duties and responsibilities as a member of the Board because of incapacity due to physical or mental illness.

 

	
C. Transferability

 

Subject to subsection (B) of Section 15 hereof, Restricted Stock may not be sold, assigned, transferred, pledged, or otherwise encumbered during a Restricted Period, which, in the case of Employees, shall be determined by the Committee and, unless otherwise determined by the Committee, shall not be less than one year
from the date such Restricted Stock was awarded, and, in the case of Outside Directors, shall be determined in accordance with subsection (B) of this Section 8. The Committee may, at any time, reduce the Restricted Period with respect to any outstanding shares of Restricted Stock awarded under the Plan to Employees, but, unless otherwise determined by the Committee,  such Restricted Period shall not be less than one year.

 

During the Restricted Period, certificates representing the Restricted Stock and any Retained Distributions shall be registered in the recipient's name and bear a restrictive legend to the effect that ownership of such Restricted Stock (and any such Retained Distributions), and the enjoyment of all rights appurtenant
thereto are subject to the restrictions, terms, and conditions provided in the Plan and the applicable Agreement, if any. Such certificates shall be deposited by the recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock and any securities constituting Retained Distributions which shall be forfeited in accordance with the Plan and the applicable Agreement, if any.
Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The recipient will have the right to vote such Restricted Stock, to receive and retain all regular cash dividends, and to exercise all other rights, powers, and privileges of a holder of Common Stock with respect to such Restricted Stock, with the exception that (i) the recipient will not be entitled to delivery of the stock certificate or certificates representing such Restricted Stock until the restrictions
applicable thereto shall have expired; (ii) the Company will retain custody of all Retained Distributions made or declared with respect to the Restricted Stock (and such Retained Distributions will be subject to the same restrictions, terms and conditions as are applicable to the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such Retained Distributions shall have been made, paid, or declared shall have become vested, and such Retained Distributions shall not bear interest
or be segregated in separate accounts; (iii) subject to subsection (B) of Section 15 hereof, the recipient may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the Restricted Stock or any Retained Distributions during the Restricted Period; and (iv) a breach of any restrictions, terms, or conditions provided in the Plan or established by the Committee with respect to any Restricted Stock or Retained Distributions will cause a forfeiture of such Restricted Stock and any Retained Distributions
with respect thereto.

 

 

 

Section 9.  Merit Awards

 

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

 

 

 

Section 10. Performance Shares

 

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

 

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

 

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

 

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

 

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

 

 

 

 

Section 11. Continued Employment, Agreement To Serve And Exercise Periods

 

(A) Subject to the provisions of subsection (F) of this Section 11, every Option and SAR shall provide that it may not be exercised in whole or in part for a period of one year after the date of granting such Option (unless otherwise determined by the Committee) and if the employment of the Employee shall terminate prior
to the end of such one year period (or such other period determined by the Committee), the Option granted to such Employee shall immediately terminate.

 

(B) Every Option shall provide that in the event the Employee dies (i) while employed by Ashland, (ii) during the periods in which Options may be exercised by an Employee determined to be disabled as provided in subsection (C) of this Section 11 or (iii) after Retirement, such Option shall be exercisable, at any time
or from time to time, prior to the fixed termination date set forth in the Option, by the Beneficiaries of the decedent for the number of shares which the Employee could have acquired under the Option immediately prior to the Employee’s death.

 

(C) Every Option shall provide that in the event the employment of any Employee shall cease by reason of disability, as determined by the Committee at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time prior to the fixed termination date set forth in the Option
by such Employee for the number of shares which the Employee could have acquired under the Option immediately prior to the Employee’s disability.  As used herein, an Employee will be deemed “disabled” when he or she becomes unable to perform the functions required by his or her regular job due to physical or mental illness and, in connection with the grant of an Incentive Stock Option shall be disabled if he or she falls within the meaning of that term as provided in Section 22(e)(3)
of the Code.  The determination by the Committee of any question involving disability shall be conclusive and binding.

 

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

 

(E) Except as provided in subsections (A), (B), (C), (D), (F) and (G) of this Section 11, every Option shall provide that it shall terminate on the earlier to occur of the fixed termination date set forth in the Option or thirty (30) days after cessation of the Employee's employment for any cause only in respect of the
number of shares which the Employee could have acquired under the Option immediately prior to such cessation of employment; provided, however, that no Option may be exercised after the fixed termination date set forth in the Option.

 

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

 

(G)  Notwithstanding any provision of this Section 11 to the contrary, in the event the Committee determines, in its sole and absolute discretion, that the employment of any Employee has terminated for a reason or in a manner adversely affecting the Company (which may include, without limitation, taking other
employment or rendering service to others without the consent of the Company), then the Committee may direct that such Employee forfeit any and all Options that he or she could otherwise have exercised pursuant to the terms of this Plan.

 

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

 

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

 

 

 

 

Section 12. Withholding Taxes

 

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

 

 

 

 

Section 13. Adjustments Upon Changes In Capitalization

 

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

 

 

 

 

Section 14. Amendments And Terminations

 

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

 

 

Section 15. Miscellaneous Provisions

 

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

 

(B) An Employee's or Outside Director's rights and interest under the Plan may not be assigned or transferred in whole or in part, either directly or by operation of law or otherwise (except in the event of an Employee's or Outside Director's death, by will or the laws of descent and distribution), including, but not
by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no such right or interest of any Employee or Outside Director in the Plan shall be subject to any obligation or liability of such individual; provided, however, that an Employee’s or Outside Director’s rights and interest under the Plan may, subject to the discretion and direction of the Committee or, in the case of an Outside Director, the Committee on Directors, be made transferable by
such Employee or Outside Director during his or her lifetime. Except as specified in Section 8, the holder of an Award shall have none of the rights of a shareholder until the shares subject thereto shall have been registered in the name of the person receiving or person or persons exercising the Award on the transfer books of the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

Section 16. Effectiveness Of The Plan

 

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

 

 

 

 

Section 17. Governing Law

 

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

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