SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2918
ASHLAND INC.
(Formerly Ashland Oil, Inc.)
(Exact name of registrant as specified in its charter)
Kentucky 61-0122250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Ashland Drive, Russell, Kentucky 41169
(Address of principal executive offices (Zip Code)
P.O. Box 391, Ashland, Kentucky 41114
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (606) 329-3333
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
At January 31, 1995, there were 60,766,604 shares of
Registrant's Common Stock outstanding. One-half of one Right
to purchase one-tenth of a share of Cumulative Preferred
Stock, Series of 1987 accompanies each outstanding share of
Registrant's Common Stock.
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PART I - FINANCIAL INFORMATION
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ASHLAND INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
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Three months ended
December 31
----------------------
(In millions except per share data) 1994 1993
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<S> <C> <C>
REVENUES
Sales and operating revenues (including excise taxes) $ 2,768 $ 2,572
Other 10 6
--------- ---------
2,778 2,578
COSTS AND EXPENSES
Cost of sales and operating expenses 2,095 1,914
Excise taxes on products and merchandise 244 206
Selling, general and administrative expenses 267 247
Depreciation, depletion and amortization 76 72
General corporate expenses 25 19
--------- ---------
2,707 2,458
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OPERATING INCOME 71 120
OTHER INCOME (EXPENSE)
Interest expense (net of interest income) (32) (29)
Equity income (loss) 11 (6)
--------- ---------
INCOME BEFORE INCOME TAXES 50 85
Income taxes 15 27
--------- ---------
NET INCOME $ 35 $ 58
========= =========
EARNINGS PER SHARE - Note E
Primary $ .50 $ .90
Assuming full dilution $ .50 $ .83
DIVIDENDS PAID PER COMMON SHARE $ .275 $ .25
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
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ASHLAND INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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December 31 September 30 December 31
(In millions) 1994 1994 1993
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ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 56 $ 40 $ 63
Accounts receivable 1,359 1,346 1,124
Allowance for doubtful accounts (21) (23) (21)
Construction completed and in progress 31 55 27
Inventories - Note B 698 601 561
Deferred income taxes 64 71 72
Other current assets 72 81 68
--------- --------- ---------
2,259 2,171 1,894
INVESTMENTS AND OTHER ASSETS
Investments in and advances to unconsolidated affiliates 297 291 271
Investments of captive insurance companies 182 181 190
Cost in excess of net assets of companies acquired 81 80 64
Other noncurrent assets 290 276 288
--------- --------- ---------
850 828 813
PROPERTY, PLANT AND EQUIPMENT
Cost 5,951 5,898 5,757
Accumulated depreciation, depletion and amortization (3,109) (3,082) (2,994)
--------- --------- ---------
2,842 2,816 2,763
--------- --------- ---------
$ 5,951 $ 5,815 $ 5,470
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $ 199 $ 133 $ 127
Trade and other payables 1,510 1,520 1,315
Income taxes 44 35 38
--------- --------- ---------
1,753 1,688 1,480
NONCURRENT LIABILITIES
Long-term debt (less current portion) 1,439 1,391 1,384
Accrued pension and other postretirement benefits 520 515 515
Reserves of captive insurance companies 179 173 186
Deferred income taxes 34 30 44
Other long-term liabilities and deferred credits 407 423 366
Commitments and contingencies - Note C _________ _________ _________
2,579 2,532 2,495
STOCKHOLDERS' EQUITY
Convertible preferred stock 293 293 293
Common stockholders' equity 1,326 1,302 1,202
--------- --------- ---------
1,619 1,595 1,495
--------- --------- ---------
$ 5,951 $ 5,815 $ 5,470
========= ========= =========
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
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ASHLAND INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED COMMON STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------------------
Loan to
leveraged
employee Prepaid
stock contri-
ownership bution
Common Paid-in Retained plan to
(In millions) stock capital earnings (LESOP) LESOP Other Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT OCTOBER 1, 1993 $ 60 $ 143 $ 1,008 $ (33) $ (6) $ (10) $ 1,162
Net income 58 58
Dividends
Preferred stock (4) (4)
Common stock (15) (15)
Issued common stock under stock
incentive plans 2 2
Other changes (1) (1)
------- ------- -------- ----------- -------- ------- ---------
BALANCE AT DECEMBER 31, 1993 $ 60 $ 145 $ 1,047 $ (33) $ (6) $ (11) $ 1,202
======= ======= ======== =========== ======== ======= =========
BALANCE AT OCTOBER 1, 1994 $ 61 $ 159 $ 1,126 $ (33) $ - $ (11) $ 1,302
Net income 35 35
Dividends
Preferred stock (4) (4)
Common stock (17) (17)
Issued common stock under stock
incentive plans 3 3
LESOP loan repayment 8 8
Other changes (1) (1)
------- ------- -------- ----------- -------- ------- ---------
BALANCE AT DECEMBER 31, 1994 $ 61 $ 162 $ 1,140 $ (25) $ - $ (12) $ 1,326
======= ======= ======== =========== ======== ======= =========
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
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ASHLAND INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
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Three months ended
December 31
------------------------------
(In millions) 1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net income $ 35 $ 58
Expense (income) not affecting cash
Depreciation, depletion and amortization (1) 79 75
Deferred income taxes 11 7
Undistributed earnings of unconsolidated affiliates (7) 9
Loss (gain) on sale of operations - net of current income taxes - 3
Other noncash items (9) 25
Change in operating assets and liabilities (2) (32) (14)
--------- ---------
77 163
CASH FLOWS FROM FINANCING
Proceeds from issuance of long-term debt 63 -
Proceeds from issuance of capital stock - 2
Repayment of long-term debt (11) (36)
Increase (decrease) in short-term debt 61 (12)
Dividends paid (21) (19)
--------- ---------
92 (65)
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment (102) (74)
Purchase of operations - net of cash acquired (55) (5)
Proceeds from sale of operations 2 5
Disposals of property, plant and equipment 3 3
Investment purchases (3) (63) (73)
Investment sales and maturities (3) 62 68
--------- ---------
(153) (76)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 16 22
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 40 41
--------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 56 $ 63
========= =========
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(1) Includes amounts charged to general corporate expenses.
(2) Excludes changes resulting from operations acquired or sold.
(3) Represents primarily investment transactions of captive insurance companies.
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
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ASHLAND INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE A - GENERAL
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial reporting and
Securities and Exchange Commission regulations, but are subject to
any year-end audit adjustments which may be necessary. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. These financial statements should be read in
conjunction with Ashland's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994. Results of operations for
the period ended December 31, 1994, are not necessarily indicative
of results to be expected for the year ending September 30, 1995.
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NOTE B - INVENTORIES
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December 31 September 30 December 31
(In millions) 1994 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Crude oil $ 254 $ 243 $ 229
Petroleum products 299 286 241
Chemicals and other products 476 421 349
Materials and supplies 46 46 44
Excess of replacement costs over LIFO carrying values (377) (395) (302)
-------- -------- --------
$ 698 $ 601 $ 561
======== ======== ========
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NOTE C - LITIGATION, CLAIMS AND CONTINGENCIES
Federal, state and local statutes and regulations relating to the
protection of the environment have a significant impact on the
conduct of Ashland's businesses. For information regarding
environmental expenditures and reserves, see the "Miscellaneous -
Governmental Regulation and Action - Environmental Protection"
section of Ashland's
Form 10-K.
Environmental reserves are subject to considerable uncertainties
which affect Ashland's ability to estimate its share of the
ultimate costs of required remediation efforts. Such uncertainties
involve the nature and extent of contamination at each site, the
extent of required cleanup efforts under existing environmental
regulations, widely varying costs of alternate cleanup methods,
changes in environmental regulations, the potential effect of
continuing improvements in remediation technology, and the number
and financial strength of other potentially responsible parties at
multiparty sites. As a result, charges to income for environmental
liabilities could have a material effect on results of operations
in a particular quarter or fiscal year as assessments and
remediation efforts proceed or as new remediation sites are
identified. However, such charges are not expected to have a
material adverse effect on Ashland's consolidated financial
position.
Ashland has numerous insurance policies that provide coverage at
various levels for environmental costs. Ashland is currently
involved in negotiations concerning the amount of insurance
coverage for environmental costs under some of these policies. In
addition, various costs of remediation efforts related to
underground storage tanks are eligible for reimbursement from
state administered funds. Probable recoveries related to certain
costs incurred or expected to be incurred in future years are
included in other noncurrent assets.
In addition, Ashland and its subsidiaries are parties to numerous
claims and lawsuits (some of which are for substantial amounts)
with respect to product liability and commercial and other
matters. While these claims and actions are being contested, the
outcome of individual matters is not predictable with assurance.
Although any actual liability is not determinable as of December
31, 1994, Ashland believes that any liability resulting from these
matters involving Ashland and its subsidiaries, after taking into
consideration Ashland's insurance coverages and amounts already
provided for, should not have a material adverse effect on
Ashland's consolidated financial position.
6
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ASHLAND INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE D - ACQUISITIONS
During the quarter ended December 31, 1994, Ashland acquired the
Zerex(R) antifreeze product line, a marine chemical business and a
construction materials operation. These acquisitions were
accounted for as purchases and did not have a significant effect
on Ashland's consolidated financial statements.
Ashland recently exercised an option to purchase from
Saarbergwerke AG all of Ashland Coal's Class B Preferred Stock,
representing about 15 percent of Ashland Coal's voting stock.
Expected to close on or about February 8, the purchase will
increase Ashland's ownership of Ashland Coal from 39 percent to 54
percent. The closing of this transaction will result in the
consolidation of Ashland Coal into Ashland's financial statements
beginning with the March quarter and retroactive to the beginning
of fiscal 1995.
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NOTE E - COMPUTATION OF EARNINGS PER SHARE
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Three months ended
December 31
-------------------------
(In millions except per share data) 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Income available to common shares
Net income $ 35 $ 58
Dividends on convertible preferred stock (4) (4)
--------- ---------
$ 31 $ 54
========= =========
Average common shares and equivalents outstanding
Average common shares outstanding 61 60
Common shares issuable upon exercise of stock options - 1
Share adjustment for LESOP - (1)
--------- ---------
61 60
========= =========
Earnings per share $ .50 $ .90
========= =========
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EARNINGS PER SHARE
ASSUMING FULL DILUTION
Income available to common shares
Net income $ 35 $ 58
Dividends on convertible preferred stock (4) -
Interest on convertible debentures (net of income taxes) - 2
--------- ---------
$ 31 $ 60
========= =========
Average common shares and equivalents outstanding
Average common shares outstanding 61 60
Common shares issuable upon
Exercise of stock options - 1
Conversion of debentures - 3
Conversion of preferred stock - 9
Share adjustment for LESOP - (1)
--------- ---------
61 72
========= =========
Earnings per share $ .50 $ .83
========= =========
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7
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ASHLAND INC. AND SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT
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Three months ended
December 31
-----------------------
(Dollars in millions except as noted) 1994 1993
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<S> <C> <C>
SALES AND OPERATING REVENUES
Petroleum $ 1,229 $ 1,166
SuperAmerica 442 424
Valvoline 268 272
Chemical 818 643
Construction 274 316
Exploration 48 52
Intersegment sales (311) (301)
---------- -----------
$ 2,768 $ 2,572
========== ===========
OPERATING INCOME
Petroleum $ 2 $ 45
SuperAmerica 18 21
Valvoline 9 15
---------- -----------
Total Refining and Marketing Group 29 81
Chemical 47 28
Construction 20 20
Exploration - 10
General corporate expenses (25) (19)
---------- -----------
$ 71 $ 120
========== ===========
EQUITY INCOME (LOSS)
Arch Mineral Corporation $ 3 $ (7)
Ashland Coal, Inc. 5 (1)
Other 3 2
---------- -----------
$ 11 $ (6)
========== ===========
OPERATING INFORMATION
Petroleum
Product sales (thousand barrels per day) (1) 360.0 377.0
Refining inputs (thousand barrels per day) (2) 321.9 359.5
Value of products manufactured per barrel $ 21.41 $ 20.79
Input cost per barrel 17.73 15.79
---------- -----------
Refining margin per barrel $ 3.68 $ 5.00
SuperAmerica
Product sales (thousand barrels per day) 72.5 71.9
Merchandise sales $ 132 $ 123
Valvoline lubricant sales (thousand barrels per day) (1) 17.6 16.5
Construction backlog (3)
At end of period $ 523 $ 447
Decrease during period $ (31) $ (48)
Exploration
Net daily production
Natural gas (million cubic feet) (1) 88.9 100.2
Nigerian crude oil (thousand barrels) 19.4 19.5
Sales price
Natural gas (per thousand cubic feet) $ 1.86 $ 2.56
Nigerian crude oil (per barrel) $ 15.85 $ 15.14
Arch Mineral Corporation (4)
Tons sold (millions) 7.4 3.8
Sales price per ton $ 26.84 $ 24.08
Ashland Coal, Inc. (4)
Tons sold (millions) 5.5 3.4
Sales price per ton $ 28.46 $ 31.89
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(1) Includes intersegment sales.
(2) Includes crude oil and other purchased feedstocks.
(3) Amounts have been restated to exclude APAC's Arizona operations which
were sold in February 1994.
(4) Amounts are reported on a 100% basis for these affiliated companies
accounted for on the equity method.
</TABLE>
8
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ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
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RESULTS OF OPERATIONS
Ashland recorded net income of $35 million for the first quarter
of fiscal 1995, compared to $58 million for the first quarter of
fiscal 1994. Operating income for the current quarter totaled $71
million, compared to $120 million for last year's December
quarter. The decrease in earnings was due to a substantial decline
in operating income from Petroleum. However, earnings from
Ashland's related energy and chemical businesses improved 21%, as
Chemical reported record quarterly earnings and equity income from
Ashland's coal investments improved $16 million. Construction had
a good quarter, equaling the year-ago results, despite the sale of
Arizona operations in 1994. Partially offsetting these positive
comparisons, profits from SuperAmerica, Valvoline and Exploration
declined when compared to last year's first quarter.
Petroleum
Operating income for Ashland Petroleum totaled $2 million for the
three months ended December 31, 1994, compared to $45 million for
the same period last year. A decrease in the refining margin and
lower sales volumes were the primary factors for the decline in
earnings. The refining margin was $3.68 per barrel for the first
quarter of fiscal 1995, compared to $5.00 per barrel in last
year's first quarter. This decline paralleled the decrease in U.S.
refining margins, which steadily deteriorated during the quarter
as a result of industry overproduction of gasoline, confusion
surrounding the introduction of reformulated gasoline and
unseasonably warm weather. In addition, Ashland's refining margin
for the first quarter of fiscal 1994 was enhanced by the
introduction of low-sulfur diesel fuel. Crude oil throughput
volumes were negatively affected by maintenance turnarounds during
the current quarter at the Canton, Ohio and Catlettsburg, Kentucky
refineries. Major turnarounds have been completed for all of the
refineries within the last twelve months. Earnings from Scurlock
Permian increased, reflecting the streamlining and combination of
operations, in addition to improved margins.
SuperAmerica
Although down from a record quarter of $21 million for the three
months ended December 31, 1993, SuperAmerica's operating income
for the current quarter of $18 million represented one of its best
quarters ever. The decline in earnings reflected a decrease in
gasoline and merchandise margins, partially offset by an increase
in volumes. Retail gasoline margins remained strong during the
current quarter, but were down slightly from the very favorable
levels of last year's first quarter. An increase in the number of
stores in operation this year contributed to higher gasoline and
merchandise volumes. At December 31, 1994, 605 SuperAmerica stores
were operating, compared to 591 stores at December 31, 1993.
SuperAmerica plans to open 30 new stores during the current fiscal
year, of which nine opened during the first quarter.
Valvoline
For the three months ended December 31, 1994, Valvoline's
operating income totaled $9 million, compared to last year's
record first quarter of $15 million. The decline in earnings
reflected reduced branded motor oil and automotive chemical
volumes, combined with lower gross margins on all products, due to
higher component costs. These unfavorable comparisons were
partially offset by improved results from international
operations, reflecting the acquisition of Valvoline
distributorships in six European countries during the second
quarter of fiscal 1994, and earnings from the newly acquired
Zerex(R) antifreeze product line.
9
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ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
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Chemical
For the first three months of fiscal 1995, Ashland Chemical
reported record quarterly operating income of $47 million, or a
67% improvement when compared to earnings of $28 million for the
same period last year. Record profits of $22 million from the
petrochemical group reflected substantially higher methanol
margins. The distribution and specialty groups reported record
first quarter results, due to an increase in distribution margins
and higher specialty sales volumes.
Construction
Operating income from the APAC construction operations for the
three months ended December 31, amounted to $20 million for both
the current and prior year, despite last year's results including
earnings from the Arizona operations that were sold in February
1994. Earnings from continuing operations increased 16%,
reflecting favorable operating conditions and improved
margins. Backlog at December 31, 1994, totaled $523 million,
compared to $447 million at December 31, 1993. With a strong first
quarter and a 17% increase in backlog at December 31, the
construction operations are positioned to have a good year.
Exploration
For the first quarter of fiscal 1995, Ashland Exploration reported
break-even results, compared to income of $10 million for the same
period last year. Industry-wide deterioration in natural gas
prices and reduced production were the principal factors resulting
in an $8 million decrease in domestic operating income. Also,
earnings from foreign operations declined, reflecting reduced
profitability from the existing producing properties in Nigeria.
During the quarter, Ashland Exploration announced an offshore
Louisiana commercial gas discovery in which Ashland is the
operator with a 50 percent working interest. Four wells have been
successful, with a production zone from the first well testing up
to 5 million cubic feet a day. Ashland Exploration has agreed to
acquire the northern West Virginia assets of two natural gas
companies, Waco Oil & Gas, a Glenville, W.Va., firm and United
Meridian Corporation, a Houston-based company. The completion of
these acquisitions would add 1,265 gas wells producing 13 million
cubic feet of natural gas to Ashland's holdings.
General Corporate Expenses
For the first quarter of fiscal 1995, general corporate expenses
totaled $25 million, compared to expenses of $19 million for the
first quarter of fiscal 1994. The increase in expenses included
higher accruals this year for performance based compensation and
the effect of positive adjustments related to estimated
liabilities and reserves on last year's results.
Other Income (Expense)
Interest expense for the quarter ended December 31, 1994,
increased when compared to the same period last year, reflecting
higher interest rates on floating-rate debt and higher average
outstanding balances for both short-term and long-term debt.
Ashland recorded equity income of $3 million from Arch Mineral for
the current quarter, compared to an equity loss of $7 million for
the three months ended December 31, 1993. Results for the prior
year were adversely impacted by the UMW strike which ended
December 14, 1993. The current quarter included favorable results,
including 1.1 million tons of coal sales, from the AgipCoal
properties which were acquired January 31, 1994.
Equity income from Ashland Coal amounted to $5 million for the
quarter ended December 31, 1994, compared to an equity loss of $1
million for the same period last year. Ashland Coal's results for
the current
10
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ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Other Income (Expense) (continued)
year included quarterly records for pre-tax income, production and
sales tons. The negative effect of the UMW strike, coupled with
damage to a coal silo at Mingo Logan Coal Company, reduced
earnings for last year's December quarter. Ashland recently
exercised an option to purchase from Saabergwerke AG all of
Ashland Coal's Class B Preferred Stock, representing about 15
percent of Ashland Coal's voting stock. Expected to close on or
about February 8, the purchase will increase Ashland's ownership
of Ashland Coal from 39 percent to 54 percent. The closing of this
transaction will result in the consolidation of Ashland Coal into
Ashland's financial statements beginning with the March quarter
and retroactive to the beginning of fiscal 1995.
FINANCIAL POSITION
Liquidity
Ashland's financial position has enabled it to obtain capital for
its financing needs and maintain investment grade ratings on its
senior debt of Baa1 from Moody's and BBB from Standard & Poor's.
Ashland has revolving credit agreements providing for up to $350
million in borrowings, none of which were in use at December 31,
1994. At that date, Ashland could issue an additional $164 million
in medium-term notes under a shelf registration with the
Securities and Exchange Commission (SEC) should future
opportunities or needs arise. During the current quarter, Ashland
filed a universal shelf registration statement with the SEC to
allow for offerings from time to time of up to $600 million in
debt and/or equity securities. Ashland also has access to various
uncommitted lines of credit and commercial paper markets, and had
short-term notes and commercial paper of $132 million outstanding
at December 31, 1994. While certain debt agreements contain
covenants restricting the amount by which Ashland can increase its
indebtedness, such indebtedness could have been increased by up to
$641 million at December 31, 1994.
Cash and cash equivalents at December 31, 1994, were $56 million,
compared to $40 million at September 30, 1994. Cash flows from
operations, a major source of Ashland's liquidity, amounted to $77
million for the three months ended December 31, 1994, compared to
$163 million for the three months ended December 31, 1993. This
decrease was attributed primarily to lower earnings this year and
an increase in working capital requirements.
Working capital at December 31, 1994, was $506 million, compared
to $483 million at September 30, 1994. Liquid assets (cash, cash
equivalents and accounts receivable) as a percent of current
liabilities amounted to 80% at December 31, 1994, compared to 81%
at September 30, 1994. Ashland's working capital is significantly
affected by its use of the LIFO method of inventory valuation,
which valued such inventories at $377 million below their
replacement costs at December 31, 1994.
Capital Resources
For the three months ended December 31, 1994, property additions
amounted to $102 million, compared to $74 million for the same
period last year. Property additions (including exploration costs
and geophysical expenses) and cash dividends for the remainder of
fiscal 1995 are estimated at $362 million and $64 million,
respectively. Ashland anticipates meeting its remaining 1995
capital requirements for property additions and dividends principally
from internally generated funds. External financing will likely be
necessary to provide funds for the remainder of such requirements,
for remaining contractual maturities of $51 million for long-term
debt or for acquisitions.
Ashland's capitalization at December 31, 1994, consists of debt
due within one year (6%), long-term debt (44%), deferred income
taxes (1%), convertible preferred stock (9%), and common
stockholders' equity (40%). Total debt as a percent of total
capitalization was 50% at December 31, 1994, compared to 48% at
September 30, 1994. As a result of the purchase of the Saabergwerke
AG shares and the consolidation of Ashland Coal, Ashland's total
debt as a percent of total capitalization will increase
approximately 2%. At December 31, 1994, long-term debt included
$78 million of floating-rate debt, and the interest rates on an
11
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ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
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Capital Resources (continued)
additional $430 million of fixed-rate debt were converted to
floating rates through interest rate swaps. As a result, future
interest costs will fluctuate with short-term interest rates in
1995 on 34% of Ashland's long-term debt.
ENVIRONMENTAL MATTERS
Federal, state and local statutes and regulations relating to the
protection of the environment have resulted in higher operating
costs and capital investments by the industries in which Ashland
operates. Because of the continuing trend toward greater
environmental awareness and increasingly stringent environmental
regulations, Ashland believes that expenditures for environmental
compliance will continue to have a significant effect on the
conduct of its businesses. Although it cannot accurately predict
how these developments will affect future operations and earnings,
Ashland does not believe the nature and significance of its costs
will vary significantly from those of its competitors in the
petroleum and chemical industries. For information regarding
environmental expenditures and reserves, see the "Miscellaneous -
Governmental Regulation and Action - Environmental Protection"
section of Ashland's Form 10-K.
Environmental reserves are subject to considerable uncertainties
which affect Ashland's ability to estimate its share of the
ultimate costs of required remediation efforts. Such uncertainties
involve the nature and extent of contamination at each site, the
extent of required cleanup efforts under existing environmental
regulations, widely varying costs of alternate cleanup methods,
changes in environmental regulations, the potential effect of
continuing improvements in remedial technology, and the number and
financial strength of other potentially responsible parties at
multiparty sites. As a result, charges to income for environmental
liabilities could have a material effect on results of operations
in a particular quarter or fiscal year as assessments and
remediation efforts proceed or as new remediation sites are
identified. However, such charges are not expected to have a
material adverse effect on Ashland's consolidated financial
position, cash flow or liquidity.
12
PART II - OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
Environmental Proceedings - (1) As of December 31, 1994,
Ashland was subject to 71 notices received from the USEPA
identifying Ashland as a "potentially responsible party"
("PRP") under CERCLA and the Superfund Amendment and
Reauthorization Act ("SARA") for potential joint and several
liability for cleanup costs in connection with alleged
releases of hazardous substances from various waste treatment
or disposal sites. These sites are currently subject to
ongoing investigation and remedial activities, overseen by
the USEPA in accordance with procedures established under
CERCLA and SARA regulations, in which Ashland may be
participating as a member of various PRP groups. Generally,
the type of relief sought by the USEPA includes remediation
of contaminated soil and/or groundwater, reimbursement for
the costs of site cleanup or oversight expended by the USEPA,
and/or long-term monitoring of environmental conditions at
the sites. Ashland also receives notices from state
environmental agencies pursuant to similar state legislation.
Ashland carefully monitors the investigatory and remedial
activity at many of these sites. Based on its experience with
site remediation, its familiarity with current environmental
laws and regulations, its analysis of the specific hazardous
substances at issue, the existence of other financially
viable PRPs and its current estimates of investigatory,
clean-up and monitoring costs at each site, Ashland believes
that its liability at these sites, either individually or in
the aggregate, after taking into account established
reserves, will not have a material adverse effect on
Ashland's consolidated financial position, cash flow or
liquidity but could have a material adverse effect on results
of operations in a particular quarter or fiscal year.
Estimated costs for these matters are recognized in
accordance with generally accepted accounting principles
governing probability and the ability to reasonably estimate
future costs.
(2) Ashland received a Notice of Potential Liability from the
Commonwealth of Pennsylvania regarding a crude oil spill
incident in the Delaware River in July 1994 involving the M/V
Kentucky, which Ashland charters under a long-term bareboat
charter.
(3) On December 19, 1994, Ashland received a demand for
penalty for alleged violations from the Minnesota Pollution
Control Agency ("MPCA"). The demand alleges violations of
various Minnesota statutes and rules relating to discharges
to the environment and above ground storage tank safeguards,
with respect to a leak of gasoline from a tank at Ashland's
St. Paul Park refinery. In its response to the demand,
Ashland stated it believes it has complied with the requisite
provisions of Minnesota law. Ashland anticipates further
discussions with the MPCA.
El Paso Dispute - On March 11, 1993, a complaint was filed by
El Paso Refinery, L.P., against Scurlock Permian Corporation
("SPC"), a
<PAGE>
wholly owned subsidiary of Ashland, in the District Court of
El Paso County, Texas. El Paso Refinery, L.P., is currently
in Chapter 7 bankruptcy. Plaintiff alleges that SPC
wrongfully breached certain duties under a contract to supply
crude oil. Plaintiff further alleges violations of Texas
usury law, common law fraud and duress and seeks substantial
damages. In an apparent companion case filed the same day by
individual plaintiffs (two officers of El Paso Refining,
Inc., the general partner of El Paso Refinery, L.P.), damages
are sought against SPC and others based upon the execution by
plaintiffs of promissory notes in connection with the
financing of the refinery. Ashland and SPC believe these
complaints to be without merit and intend to defend them
vigorously. SPC is a creditor in the El Paso bankruptcy
proceeding and had filed a proof of claim for approximately
$39 million against the bankrupt estate. As of January 23,
1995, SPC had received approximately $20 million from the
liquidation of collateral. Ashland believes its current
reserves are adequate to cover any shortfall that could be
sustained in the bankruptcy proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Ashland's Annual Meeting of Shareholders was held on
January 26, 1995, at the Ashland Petroleum Executive
Office Building, Ashland Drive, Russell, Kentucky at
10:30 a.m.
(b) Ashland's shareholders at said meeting elected 6 directors:
Votes
Affirmative Withheld
----------- ---------
Jack S. Blanton 52,509,682 507,104
Samuel C. Butler 52,468,740 517,292
Edmund B. Fitzgerald 52,487,935 496,817
John R. Hall 52,481,275 521,239
Mannie L. Jackson 52,476,829 516,584
James W. Vandeveer 52,496,865 512,100
Directors who continued in office: Thomas E. Bolger, Frank C.
Carlucci, Paul W. Chellgren, James B. Farley, Ralph E. Gomory,
Patrick F. Noonan, Jane C. Pfeiffer, James R. Rinehart, Michael D.
Rose, William L. Rouse, and Dr. Robert B. Stobaugh.
(c) Ashland's shareholders at said meeting ratified the
appointment of Ernst & Young as independent
auditors for fiscal year 1995 by a vote of
52,334,711 affirmative to 471,923 negative and
176,387 abstention votes.
(d) Ashland's shareholders at said meeting approved the
amendment to Ashland's Second Restated Articles of
Incorporation to change Ashland's name to Ashland Inc.
by a vote of 51,239,239 affirmative to 1,370,949
negative and 372,833 abstention votes. The amendment
was effective January 27, 1995. A copy of the
Articles are attached as Exhibit 3.1
<PAGE>
(e) Ashland's shareholders at said meeting approved the
Ashland Inc. 1995 Performance Unit Plan by a vote of
38,300,729 affirmative to 13,747,717 negative and
932,073 abstention votes. A copy of the Plan is
attached as Exhibit B.
(f) Ashland's shareholders at said meeting approved the
Ashland Inc. Incentive Compensation Plan for Key
Executives by a vote of 37,804,958 affirmative to
14,101,375 negative and 1,076,688 abstention votes.
A copy of the Plan is attached as Exhibit C.
(g) Ashland's shareholders at said meeting approved the
Ashland Inc. Deferred Compensation Plan by a vote
of 41,212,632 affirmative to 10,663,573 negative
and 1,106,816 abstention votes. A copy of the Plan
is attached as Exhibit D.
(h) The results of voting on a shareholder proposal for
the Board of Directors to take steps necessary to
require that at future elections of directors all
directors be elected annually were 29,659,014
negative to 18,432,619 affirmative and 1,251,949
abstention and 3,639,439 broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Second Restated Articles of Incorporation of
Ashland, as amended to January 27, 1995.
3.2 By-laws of Ashland, as amended to January 27,
1995.
10.18 Ashland Inc. 1995 Performance Unit Plan
10.19 Ashland Inc. Incentive Compensation Plan for
Key Executives
10.20 Ashland Inc. Deferred Compensation Plan
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Ashland Inc.
--------------------------------
(Registrant)
Date February 8, 1995 /s/ Kenneth L. Aulen
-----------------------------
Kenneth L. Aulen
Administrative Vice President
and Controller
(Chief Accounting Officer)
Date February 8, 1995 /s/ Thomas L. Feazell
---------------------------------
Thomas L. Feazell
Senior Vice President,
General Counsel and Secretary
<PAGE>
[ASHLAND LOGO]
ASHLAND INC.
SECOND RESTATED ARTICLES
OF INCORPORATION
(INCLUDING ALL AMENDMENTS THERETO)
As Effective January 27, 1995
<PAGE>
TABLE OF CONTENTS
RECORDING DATA
SECOND RESTATED ARTICLES OF INCORPORATION
ASHLAND INC.
<TABLE>
<CAPTION>
Date Filed In Date
Office of Recorded in Number of
Secretary Office of Shares
of State County Clerk Authorized -
Document of Kentucky Clerk Explanation
- ----------------- --------------- ---------------------- ------------------
<S> <C> <C> <C>
1. Second Restated January 29, 1987 Boyd Co., KY - January 30,000,000 shares
Articles of 30, 1987, Arts. of Inc., Cumulative Preferred
Incorporation Book 25, Page 461; Stock, no par value;
Greenup Co., KY - January 150,000,000 shares
30, 1987, Arts. of Inc., Common Stock, $1 par
Book 9, Page 543 value
2. Certificate and January 29, 1987 Boyd Co., KY - January 10,000,000 shares
Statement, etc. 30, 1987, Arts. of Inc., initially issuable
Establishing and Book 25, Page 470;
Designating Greenup Co., KY - January
Cumulative 30, 1987, Arts. of Inc.,
Preferred Stock, Book 9, Page 552
Series of
1987, etc. of AOI
3. Amendment No. 1 January 28, 1988 Boyd Co., KY - January New Article X
29, 1988, Arts. of Inc.,
Book 25, Page 954;
Greenup Co., KY - January
29, 1988, Arts. of Inc.,
Book 10, Page 169
4. Amendment No. 2 January 27, 1989 Boyd Co., KY - January New Article XI
30, 1989, Arts. of Inc.,
Book 26, Page 522;
Greenup Co., KY - January
30, 1989, Arts. of Inc.,
Book 10, Page 423
5. Amendment No. 3 May 18, 1993 Boyd Co., KY - May 6,000,000 shares of
18, 1993, Arts. of Inc., $3.125 Cumulative
Book 30, Page 59; Convertible
Greenup Co., KY - May Preferred Stock,
18, 1993, Arts. of Inc., no par value
Book 12, Page 322
6. Amendment No. 4 January 27, 1995 Boyd Co., KY - January 27, New Article I
1995, Arts. of Inc.,
Book 31, Page 320;
Greenup Co., KY -
January 27, 1995, Arts.
of Inc., Book 13,
147
</TABLE>
<PAGE>
[STAMP]
ORIGINAL COPY
FILED
SECRETARY OF STATE OF KENTUCKY
FRANKFORT, KENTUCKY
JANUARY 29, 1987
12:45 PM
SECOND RESTATED ARTICLES OF INCORPORATION
OF
ASHLAND OIL, INC.
Pursuant to Section 271A.320 of the Kentucky Business Corporation Act,
Ashland Oil, Inc., pursuant to a resolution duly adopted by its Board of
Directors, hereby adopts the following Second Restated Articles of
Incorporation (hereinafter called the "Articles of Incorporation"):
ARTICLE I
The name of the corporation is Ashland Oil, Inc. (hereinafter called the
"Company" or the "Corporation").
ARTICLE II
The purpose for which the Company is organized is the transaction of
any or all lawful businesses for which corporations may be organized under
the Kentucky Business Corporation Act, or any act amendatory thereof,
supplemental thereto or substituted therefor (hereinafter called the
"Act"), and to do all things necessary, convenient, proper or desirable in
connection with or incident to any of the Company's businesses.
ARTICLE III
A. The Company shall have all the powers conferred upon a corporation
organized under the Act and shall have all powers necessary, convenient or
desirable in order to fulfill and further the purpose of the Company.
B. The Company shall have the power to purchase shares of the stock of
the Company to the extent of unreserved and unrestricted capital and earned
surplus of the Company and to any greater extent permitted by the Act.
C. The Board of Directors of the Company may distribute to the
shareholders of the Company a portion of the Company's assets, in cash or
property, out of capital surplus of the Company and from any other source
permitted by the Act.
ARTICLE IV
A. The aggregate number of shares which the Company is authorized to
issue is 30,000,000 shares of Cumulative Preferred Stock, without par value
(hereinafter called the "Preferred Stock"), and 150,000,000 shares of
Common Stock, par value $1.00 per share (hereinafter called the "Common
Stock").
B. Preferred Stock
(1) To the extent permitted by the Act, the Board of Directors
is authorized, by resolution, to cause the Preferred Stock to be
divided into and issued from time to time in one or more series and
to fix and determine the designation and number of shares, and the
relative rights and preferences of the shares, of each such series,
and to change shares of one series that have been redeemed or
reacquired into shares of another series.
(2) All shares of Preferred Stock shall rank equally and be
identical in all respects except as to the relative rights and
preferences of any series fixed and determined by the Board of
Directors, which may vary to the extent permitted by the Act.
<PAGE>
(3) The Preferred Stock shall be preferred over the Common
Stock as to payment of dividends. Before any dividends or
distributions (other than dividends or distributions payable in
Common Stock) on the Common Stock shall be declared and set apart for
payment or paid, the holders of shares of each series of Preferred
Stock shall be entitled to receive dividends (either in cash, shares
of Common Stock or Preferred Stock, or otherwise) when, as and if
declared by the Board of Directors, at the rate and on the date or
dates fixed in the resolution adopted by the Board of Directors
establishing such series, and no more. With respect to each series of
Preferred Stock, the dividends on each share of such series shall be
cumulative from the date of issue of such share unless some other
date is fixed in the resolution adopted by the Board of Directors
establishing such series. Accruals of dividends shall not bear
interest.
(4) The Preferred Stock shall be preferred over the Common
Stock as to assets so that the holders of each series of Preferred
Stock shall be entitled to be paid, upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company and before any
distribution is made to the holders of Common Stock, the amount fixed
in the resolution adopted by the Board of Directors establishing such
series, but in such case the holders of such series of Preferred
Stock shall not be entitled to any other or further payment. If upon
any such liquidation, dissolution or winding up of the Company its
net assets shall be insufficient to permit the payment in full of the
respective amounts to which the holders of all outstanding Preferred
Stock are entitled, the entire remaining net assets of the Company
shall be distributed among the holders of each series of Preferred
Stock in amounts proportionate to the full amounts to which the
holders of each such series are respectively so entitled. For
purposes of this paragraph (4), the voluntary sale, lease, exchange
or transfer of all or substantially all of the Company's property or
assets to, or its consolidation or merger with, one or more
corporations shall not be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Company.
(5) All shares of any series of Preferred Stock shall be
redeemable to the extent permitted by the Act and fixed in the
resolution adopted by the Board of Directors establishing such
series. All shares of any series of Preferred Stock shall be
convertible into shares of Common Stock or into shares of any other
series of Preferred Stock to the extent permitted by the Act and
fixed in the resolution adopted by the Board of Directors
establishing such series.
(6) Unless otherwise provided herein or by the Act, or unless
otherwise provided in the resolution adopted by the Board of
Directors establishing any series of Preferred Stock, the holders of
shares of Preferred Stock shall be entitled to one vote for each
share of Preferred Stock held by them on all matters properly
presented to shareholders, the holders of Common Stock and the
holders of all series of Preferred Stock voting together as one
class.
(7) So long as any shares of Preferred Stock are outstanding,
the Company shall not:
(a) Redeem, purchase or otherwise acquire any shares of
Common Stock if at the time of making such redemption, purchase
or acquisition, the Company shall be in default with respect to
any dividends accrued on, or any obligation to retire, shares
of Preferred Stock.
(b) Without the affirmative vote or consent of the
holders of at least 66 2/3 percent of the number of shares of
Preferred Stock at the time outstanding, voting or consenting
(as the case may be) separately as a class without regard to
series, given in person or by proxy, either in writing or by
resolution adopted at a meeting called for the purpose, (i)
create any class of stock ranking prior to the Preferred Stock
as to dividends or upon liquidation or increase the authorized
number of shares of any such class of stock or (ii) alter or
change any of the provisions of these Articles of Incorporation
so as adversely to affect the relative rights and preferences
of the Preferred Stock or (iii) increase the authorized number
of shares of Preferred Stock.
(c) Without the affirmative vote or consent of the
holders of at least 66 2/3 percent of the number of shares of
any series of Preferred Stock at the time outstanding, voting
or consenting (as the case may be) separately as a series,
given in person or by proxy, either in writing or by resolution
adopted at a meeting called for the purpose, alter or change
any of the provisions of these Articles of Incorporation so as
adversely to affect the relative rights and preferences of such
series.
2
<PAGE>
C. Common Stock
(1) The holders of Common Stock of the Company shall be
entitled to one vote for each share of Common Stock held by them on
all matters properly presented to shareholders, except as otherwise
provided herein or by the Act.
(2) Subject to the preferential rights of Preferred Stock set
forth herein or in the resolution adopted by the Board of Directors
establishing any series of Preferred Stock, such dividends (either in
cash, shares of Common Stock or Preferred Stock, or otherwise) as may
be determined by the Board of Directors may be declared and paid on
the Common Stock from time to time in accordance with the Act.
D. No holder of shares of any class of stock of the Company shall
have any preemptive right to subscribe to stock, obligations, warrants,
subscription rights or other securities of the Company of any class,
whether now or hereafter authorized.
ARTICLE V
The Company shall have perpetual existence.
ARTICLE VI
Subject to the restriction that the number of directors shall not be
less than the number required by the laws of the Commonwealth of Kentucky,
the number of directors may be fixed, from time to time, pursuant to the
By-laws of the Company.
The members of the Board of Directors (other than those who may be
elected by the holders of any class or series of capital stock of the
Company having a preference over the Common Stock as to dividends or upon
liquidation pursuant to the terms of these Articles of Incorporation or of
such class or series of stock) shall be classified (so long as the Board of
Directors shall consist of at least nine members pursuant to the By-laws),
with respect to the time for which they severally hold office, into three
classes, as nearly equal in number as possible, as shall be provided in the
By-laws of the Company, one class to be originally elected for a term
expiring at the annual meeting of the shareholders to be held in 1987,
another class to be originally elected for a term expiring at the annual
meeting of the shareholders to be held in 1988, and another class to be
originally elected for a term expiring at the annual meeting of the
shareholders to be held in 1989, with each class to hold office until the
successors of such class are elected and qualified. At each annual meeting
of the shareholders, the date of which shall be fixed by or pursuant to the
By-laws of the Company, the successors of the class of directors whose term
expires at that meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year following the
year of their election.
Subject to any requirements of law and the rights of any class or
series of capital stock of the Company having a preference over the Common
Stock as to dividends or upon liquidation pursuant to the terms of these
Articles of Incorporation or of such class or series of stock (and
notwithstanding the fact that a lesser percentage may be specified by law,
these Articles of Incorporation or the terms of such class or series), the
affirmative vote of the holders of 80 percent or more of the voting power
of the then outstanding voting stock of the Company, voting together as a
single class, shall be required to remove any director without cause. For
purposes of this Article VI, "cause" shall mean the willful and continuous
failure of a director to substantially perform such director's duties to
the Company, other than any such failure resulting from incapacity due to
physical or mental illness, or the willful engaging by a director in gross
misconduct materially and demonstrably injurious to the Company. As used in
these Articles of Incorporation, "voting stock" shall mean shares of
capital stock of the Company entitled to vote generally in an election of
directors.
Subject to any requirements of law and the rights of any class or
series of capital stock of the Company having a preference over the Common
Stock as to dividends or upon liquidation pursuant to the terms of these
Articles of Incorporation or of such class or series of stock, newly
created directorships resulting from any
3
<PAGE>
increase in the number of directors may be filled by the Board of
Directors, or as otherwise provided in the By-laws, and any vacancies on
the Board of Directors resulting from death, resignation, removal or other
cause shall only be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the
Board of Directors, or by a sole remaining director, or as otherwise
provided in the By-laws. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been
elected and qualified.
ARTICLE VII
In furtherance and not in limitation of the powers conferred upon it
by law, the Board of Directors is expressly authorized to:
A. adopt any By-laws that the Board of Directors may deem necessary
or desirable for the efficient conduct of the affairs of the Company,
including, but not limited to, provisions governing the conduct of, and the
matters which may properly be brought before, annual or special meetings of
the shareholders and provisions specifying the manner and extent to which
prior notice shall be given of the submission of proposals to be considered
at any such meeting or of nominations for election of directors to be held
at any such meeting; and
B. repeal, alter or amend the By-laws.
In addition to any requirements of law and any other provisions of
these Articles of Incorporation or the terms of any class or series of
capital stock having a preference over the Common Stock as to dividends or
upon liquidation (and notwithstanding the fact that a lesser percentage may
be specified by law, these Articles of Incorporation or the terms of such
class or series), the affirmative vote of the holders of 80 percent or more
of the voting power of the then outstanding voting stock of the Company,
voting together as a single class, shall be required to amend, alter or
repeal any provision of the By-laws.
ARTICLE VIII
A. A higher than majority vote of shareholders for certain Business
Combinations shall be required as follows:
(1) In addition to any affirmative vote otherwise required by
law or these Articles of Incorporation or the terms of any class or
series of capital stock of the Company having a preference over the
Common Stock as to dividends or upon liquidation (and notwithstanding
the fact that a lesser percentage may be specified by law, these
Articles of Incorporation or the terms of such class or series) and
except as otherwise expressly provided in Section B of this Article
VIII:
(a) any merger or consolidation of the Company or any
Subsidiary with an Interested Shareholder or with any other
corporation, whether or not itself an Interested Shareholder,
which is, or after such merger or consolidation would be, an
Affiliate of an Interested Shareholder who was an Interested
Shareholder prior to the transaction;
(b) any sale, lease, transfer, or other disposition,
other than in the ordinary course of business, in one
transaction or a series of transactions in any twelve-month
period, to any Interested Shareholder or any Affiliate of an
Interested Shareholder, other than the Company or any
Subsidiary, of any assets of the Company or any Subsidiary
having, measured at the time the transaction or transactions
are approved by the Board of Directors, an aggregate book value
as of the end of the Company's most recently ended fiscal
quarter of 5 percent or more of the total market value of the
outstanding stock of the Company or of its net worth as of the
end of its most recently ended fiscal quarter;
(c) the issuance or transfer by the Company or any
Subsidiary, in one transaction or a series of transactions in
any twelve-month period, of any equity securities of the
Company or any Subsidiary which have an aggregate market value
of 5% or more of the total market value of the outstanding
stock
4
<PAGE>
of the Company, determined as of the end of the Company's most
recently ended fiscal quarter prior to the first such issuance
or transfer, to any Interested Shareholder or any Affiliate of
any Interested Shareholder, other than the Company or any
Subsidiary, except pursuant to the exercise of warrants or
rights to purchase securities offered pro rata to all holders
of the Company's voting stock or any other method affording
substantially proportionate treatment to the holders of voting
stock;
(d) the adoption of any plan or proposal for the
liquidation or dissolution of the Company in which anything
other than cash will be received by an Interested Shareholder
or any Affiliate of an Interested Shareholder; or
(e) any reclassification of securities, including any
reverse stock split; any recapitalization of the Company; any
merger or consolidation of the Company with any Subsidiary; or
any other transaction which has the effect, directly or
indirectly, in one transaction or a series of transactions, of
increasing by 5 percent or more the proportionate amount of the
outstanding shares of any class of equity securities of the
Company or any Subsidiary which is directly or indirectly
beneficially owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require the recommendation of the Board of Directors and the
affirmative vote of the holders of at least (i) 80 percent of the
voting power of the then outstanding voting stock of the Company,
voting together as a single class, and (ii) two-thirds of the voting
power of the then outstanding voting stock other than voting stock
beneficially owned by the Interested Shareholder who is, or whose
Affiliate is, a party to the Business Combination or by an Affiliate
or Associate of such Interested Shareholder, voting together as a
single class.
(2) The term "Business Combination" as used in this Article
VIII shall mean any transaction which is referred to in any one or
more of clauses (a) through (e) of paragraph (1) of Section A of this
Article VIII.
B. The provisions of Section A of this Article VIII shall not be
applicable to any Business Combination, and such Business Combination shall
require only such affirmative vote (if any) as is required by law, any
other provision of these Articles of Incorporation or the terms of any
class or series of capital stock of the Company having a preference over
the Common Stock as to dividends or upon liquidation, if all conditions
specified in either of the following paragraphs (1) or (2) are met:
(1) The Business Combination shall have been approved by
resolution by a majority of the Continuing Directors at a meeting of
the Board of Directors at which a quorum consisting of at least a
majority of the then Continuing Directors was present; or
(2) All the following five conditions have been met:
(a) The aggregate amount of the cash and the market value
as of the Valuation Date of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination is at least equal to the highest of the following:
(i) the highest per share price, including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for any
shares of Common Stock (a) within the two-year period
immediately prior to the Announcement Date or (b) in the
transaction in which it became an Interested Shareholder,
whichever is higher;
(ii) the market value per share of Common Stock on the
Announcement Date or on the Determination Date, whichever is
higher; and
(iii) the price per share equal to the market value
per share of Common Stock determined pursuant to clause
(ii) immediately preceding, multiplied by the fraction
resulting from (a) the highest per share price, including
any brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for any
shares of Common Stock acquired by it within the two-year
period immediately prior to the Announcement Date, over
(b) the market value per share of Common Stock on the
first day in such two-year period on which the Interested
Shareholder acquired any shares of Common Stock.
5
<PAGE>
(b) The aggregate amount of the cash and the market value
as of the Valuation Date of consideration other than cash to be
received per share by holders of shares of any class or series
of outstanding stock other than Common Stock is at least equal
to the highest of the following, whether or not the Interested
Shareholder has previously acquired any shares of a particular
class or series of stock:
(i) the highest per share price, including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for any
shares of such class of stock acquired by it (a) within
the two-year period immediately prior to the Announcement
Date or (b) in the transaction in which it became an
Interested Shareholder, whichever is higher;
(ii) the highest preferential amount per share to
which the holders of shares of such class of stock are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company;
(iii) the market value per share of such class of
stock on the Announcement Date or on the Determination Date,
whichever is higher; and
(iv) the price per share equal to the market value
per share of such class of stock determined pursuant to
clause (iii) immediately preceding, multiplied by the
fraction resulting from (a) the highest per share price,
including any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested
Shareholder for any shares of any class of voting stock
acquired by it within the two-year period immediately
prior to the Announcement Date over (b) the market value
per share of the same class of voting stock on the first
day in such two-year period on which the Interested
Shareholder acquired any shares or the same class of
voting stock.
(c) In making any price calculation under paragraph (2)
of this Section B, appropriate adjustments shall be made to
reflect any reclassification or stock split (including any
reverse stock split), stock dividend, recapitalization,
reorganization or any similar transaction which has the effect
of increasing or reducing the number of outstanding shares of
the stock. The consideration to be received by holders of any
class or series of outstanding stock is to be in cash or in the
same form as the Interested Shareholder has previously paid for
shares of the same class or series of stock. If the Interested
Shareholder has paid for shares of any class of stock with
varying forms of consideration, the form of consideration for
such class of stock shall be either in cash or the form used to
acquire the largest number of shares of such class or series of
stock previously acquired by it.
(d) After the Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination:
(i) there shall have been no failure to declare and
pay at the regular date thereof any full periodic
dividends, whether or not cumulative, on any outstanding
Preferred Stock of the Company or other capital stock
entitled to a preference over the Common Stock as to
dividends or upon liquidation;
(ii) there shall have been no reduction in the
annual rate of dividends paid on the Common Stock, except
as necessary to reflect any subdivision of the Common
Stock, and no failure to increase the annual rate of
dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or other similar transaction which has the
effect of reducing the number of outstanding shares of
Common Stock; and
(iii) the Interested Shareholder did not become the
beneficial owner of any additional shares of stock of the
Company except as part of the transaction which resulted
in such Interested Shareholder or by virtue of
proportionate stock splits or stock dividends.
The provisions of clauses (i) and (ii) immediately preceding shall
not apply if neither an Interested Shareholder nor any Affiliate or
Associate of an Interested Shareholder voted as a director of the Company
in a manner inconsistent with such clauses and the Interested Shareholder,
within ten days after any act or failure to act inconsistent with such
clauses, notifies the Board of Directors of the Company in writing that the
Interested Shareholder disapproves thereof and requests in good faith that
the Board of Directors rectify such act or failure to act.
6
<PAGE>
(e) After the Interested Shareholder has become an
Interested Shareholder, the Interested Shareholder shall not
have received the benefit, directly or indirectly, except
proportionately as a shareholder, of any loans, advances,
guarantees, pledges or other financial assistance provided by
the Company or any Subsidiary, whether in anticipation of or in
connection with such Business Combination or otherwise.
C. For purposes of this Article VIII:
(1) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 1, 1985
(the term "registrant" in such Rule 12b-2 meaning in this case the
Company).
(2) "Announcement Date" means the first general public announcement
of the proposal or intention to make a proposal of the Business Combination
or its first communication generally to shareholders of the Company,
whichever is earlier.
(3) "Beneficial owner" when used with respect to any voting stock,
means a person who, individually or with any Affiliate or Associate has:
(i) the right to acquire voting stock, whether such right is
exercisable immediately or only after the passage of time and whether
or not such right is exercisable only after specified conditions are
met pursuant to any agreement, arrangement, or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise;
(ii) the right to vote voting stock pursuant to any agreement,
arrangement, or understanding; or
(iii) any agreement, arrangements, or understanding for the
purpose of acquiring, holding, voting or disposing of voting stock
with any other person who beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, such shares of
voting stock.
(4) "Continuing Director" means any member of the Board of Directors
who is not an Affiliate or Associate of an Interested Shareholder or any of
its Affiliates, other than the Company or any Subsidiary, and who was a
director of the Company prior to the time the Interested Shareholder became
an Interested Shareholder, and any other member of the Board of Directors
who is not an Affiliate or Associate of an Interested Director or any of
its Affiliates, other than the Company or any Subsidiary, and was
recommended or elected by a majority of the Continuing Directors at a
meeting at which a quorum consisting of a majority of the Continuing
Directors is present.
(5) "Determination Date" means the date on which an Interested
Shareholder first became an Interested Shareholder.
(6) "Equity security" means:
(a) any stock or similar security, certificate of interest, or
participation in any profit-sharing agreement, voting trust
certificate, or certificate of deposit for the foregoing;
(b) any security convertible, with or without consideration,
into an equity security, or any warrant or other security carrying
any right to subscribe to or purchase an equity security; or
(c) any put, call, straddle, or other option, right or
privilege of acquiring an equity security from or selling an equity
security to another without being bound to do so.
(7) "Interested Shareholder" means any person, other than the Company
or any Subsidiary, who:
(a) is the beneficial owner, directly or indirectly, of 10 percent
or more of the voting power of the outstanding voting stock of the
Company; or
(b) is an Affiliate of the Company and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 10 percent or more of
the voting power of the then outstanding voting stock of the Company.
7
<PAGE>
For the purpose of determining whether a person is an Interested
Shareholder, the number of shares of voting stock deemed to be outstanding
shall include shares deemed owned by the person through application of
paragraph (3) of this Section C but shall not include any other shares of
voting stock which may be issuable pursuant to any agreement, arrangement,
or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise. Furthermore, any such beneficial ownership or voting
power arising solely out of a trustee or custodial relationship of any
person in connection with a Company "employee benefit or stock plan" shall
be excluded for purposes of determining whether or not any such person is
an Interested Stockholder. For purposes hereof, the term "employee benefit
or stock plan" of the Company shall mean any option, bonus, appreciation,
profit sharing, retirement, incentive, thrift, employee stock ownership,
dividend reinvestment, savings or similar plan of the Company.
(8) "Market value" means:
(a) in the case of stock, the highest closing sale price during
the 30 calendar day period immediately preceding the date in question
of a share of such stock on the Composite Tape for New York Stock
Exchange listed stocks, or, if such stock is not quoted on such
Composite Tape, on the New York Stock Exchange, or if such stock is
not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of
1934 on which such stock is listed, or, if such stock is not listed
on any such exchange, the highest closing bid quotation with respect
to a share of such stock during the 30 calendar day period preceding
the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use,
or if no such quotation is available, the fair market value on the
date in question of a share of such stock as determined by a majority
of the Continuing Directors at a meeting of the Board of Directors at
which a quorum consisting of at least a majority of the then
Continuing Directors is present; and
(b) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined
by a majority of the Continuing Directors at a meeting of the Board
of Directors at which a quorum consisting of at least a majority of
the then Continuing Directors is present.
(9) "Subsidiary" means any corporation of which voting stock having a
majority of the votes entitled to be cast is owned, directly or indirectly,
by the Company.
(10) "Valuation Date" means:
(a) for a Business Combination voted upon by shareholders, the
later of the day prior to the date of the shareholders' vote or the
date 20 business days prior to the consummation of the Business
Combination; and
(b) for a Business Combination not voted upon by shareholders, the
date of the consummation of the Business Combination.
(11) "Voting Stock" means shares of capital stock of the Company
entitled to vote generally in an election of directors.
D. In addition to any requirements of law and any other provisions of
these Articles of Incorporation or the terms of any class or series of
capital stock of the Company entitled to a preference over the Common Stock
as to dividends or upon liquidation (and notwithstanding the fact that a
lesser percentage may be specified by law, these Articles of Incorporation
or the terms of such class or series), the affirmative vote of
(1) the holders of at least 80 percent of the voting power of
the then outstanding voting stock of the Company, voting together as
a single class, and
(2) the holders of at least two-thirds of the voting power of
the then outstanding voting stock of the Company other than the
Interested Shareholder, voting together as a single class,
shall be required to amend, alter or repeal, or adopt any provision
inconsistent with, this Article VIII.
8
<PAGE>
ARTICLE IX
In addition to any requirements of law and any other provisions of
these Articles of Incorporation or the terms of any class or series of
capital stock of the Company having a preference over the Common Stock as
to dividends or upon liquidation (and notwithstanding the fact that a
lesser percentage may be specified by law, these Articles of Incorporation
or the terms of such class or series), the affirmative vote of the holders
of 80 percent or more of the voting power of the then outstanding voting
stock of the Company, voting together as a single class, shall be required
to amend, alter or repeal, or adopt any provision inconsistent with, this
Article IX or Article VI or VII of these Articles of Incorporation. Subject
to the foregoing provisions of this Article IX and Section D of Article
VIII, the Company reserves the right from time to time to amend, alter,
change, add to or repeal any provision contained in these Articles of
Incorporation in any manner now or hereafter prescribed by law and in these
Articles of Incorporation, and all rights and powers at any time conferred
upon shareholders, directors and officers of the Company by these Articles
of Incorporation or any amendment thereof are subject to the provisions of
this Article IX and Section D of Article VIII.
The foregoing Second Restated Articles of Incorporation correctly set
forth without change the corresponding provisions sequentially renumbered
of the Restated Articles of Incorporation as heretofore amended, and
supersede the Restated Articles of Incorporation and all amendments
thereto.
Dated: January 29, 1987.
ASHLAND OIL, INC.
/Thomas L. Feazell/
-------------------------------
By: Thomas L. Feazell
Vice President
/John P. Ward/
-------------------------------
By: John P. Ward
Secretary
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF GREENUP )
I, Teresa F. Gabbard, a notary public, do hereby certify that on this
29th day of January, 1987, personally appeared before me JOHN P. WARD, who,
being duly sworn, declared that he is the Secretary of Ashland Oil, Inc.,
that he signed the foregoing document as such, and that the statements
contained therein are true.
My commission expires: October 9, 1989
/Teresa F. Gabbard/
-------------------------
Teresa F. Gabbard
Notary Public
Prepared by John P. Ward
1000 Ashland Drive
Russell, Kentucky
/John P. Ward/
- -----------------------------
John P. Ward
9
<PAGE>
[STAMP] [STAMP]
LODGED FOR RECORD ON LODGED FOR RECORD ON
THE 30 DAY OF JUNE THE 30 DAY OF JANUARY
1987 AT 9:57 AM. RECORDED 1987 AT 10:47 AM. RECORDED
IN ART OF INC. BOOK IN ART OF INC. BOOK
NO. 9 PAGE 552 NO. 25 PAGE 470
TAX ________ FEES $5.50 TAX $________ FEE $5.50
DONALD DAVIDSON, CLERK WILLIAM A. SELBEE, CLERK
GREENUP COUNTY BOYD COUNTY
BY JOAN BURNETT, D.C. BY: DONNA MARCUM, D.C.
<PAGE>
[STAMP]
ORIGINAL COPY
FILED
SECRETARY OF STATE OF KENTUCKY
FRANKFORT, KENTUCKY
JANUARY 29, 1987
12:50 PM
DREXELL R. DAVIS
ASHLAND OIL, INC.
CERTIFICATE AND STATEMENT OF RESOLUTION ESTABLISHING AND
DESIGNATING CUMULATIVE PREFERRED STOCK, SERIES
OF 1987, AND FIXING AND DETERMINING CERTAIN RIGHTS
THEREOF AND THE NUMBER OF SHARES INITIALLY ISSUABLE
KNOW ALL MEN BY THESE PRESENTS, that THOMAS L. FEAZELL, as a Vice
President, and JOHN P. WARD, as the Secretary, of ASHLAND OIL INC., a
Kentucky corporation (the "Company"), do hereby certify that at a meeting
of the Board of Directors of the Company duly called and held in accordance
with the laws of Kentucky and the By-laws of the Company on January 29,
1987, the following resolution establishing and designating the Series of
1987 of the Cumulative Preferred Stock of the Company and fixing and
determining certain rights thereof and the number of shares initially
issuable was duly adopted.
"RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Company (the "Board of Directors")
by the Second Restated Articles of Incorporation of the Company (the
"Articles"), this Board of Directors hereby establishes and designates a
series of Cumulative Preferred Stock, without par value, of the Company and
fixes and determines the number of shares to be initially issuable in such
series and the relative rights and preferences thereof (in addition to the
relative rights and preferences thereof set forth in the Articles which are
applicable to Cumulative Preferred Stock of all series) as follows:
SECTION 1. Designation, Number of Shares and Stated Value. The shares
of such series shall be designated as "Cumulative Preferred Stock, Series
of 1987" (the "Series 1987 Preferred Stock"). The stated value per share of
the Series 1987 Preferred Stock shall be $25. The number of shares
initially issuable and constituting the Series 1987 Preferred Stock shall
be 10,000,000.
SECTION 2. Dividends or Distributions. (a) The dividend rate for
shares of the Series 1987 Preferred Stock shall be per share per annum the
amount of cash, securities or other property equal to the sum of the
Formula Amounts with respect to each quarterly dividend payable pursuant to
Section 2(b) hereof on the Series 1987 Preferred Stock. The Formula Amount
with respect to each such quarterly dividend payable shall be the greater
of (1) $1.25 or (2) the Formula Number then in effect times the aggregate
per whole share amount of (x) dividends payable in cash and (y) dividends
or distributions payable in assets, securities or other forms of non-cash
consideration (other than dividends or distributions solely in shares of
common stock, par value $1.00 of the Company or any stock into which such
common stock may be reclassified or changed as contemplated by the second
proviso of this Section 2(a) (the "Common Stock")), declared on the Common
Stock since the immediately preceding date on which a quarterly dividend
was payable under Section 2(b) hereof on the Series 1987 Preferred Stock (a
"Quarterly Dividend Payment Date") or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of Series 1987 Preferred Stock. For purposes of the preceding
sentence, the aggregate per whole share amount of all non-cash dividends or
distributions with respect to each quarterly payment of dividends on the
Series 1987 Preferred Stock shall be the cash amount equivalent to the fair
market value of all non-cash dividends or distributions as determined by
the Board of Directors, which determination shall be final and binding. On
or before the record date fixed or determined pursuant to Section 2(b)
hereof for each Quarterly Dividend Payment Date after the date of issuance
of any shares of the Series 1987 Preferred Stock, the Company shall submit
for filing with the Secretary of State of the Commonwealth of Kentucky a
certificate which sets forth the dividend payable for each share of the
Series 1987 Preferred Stock on such Quarterly Dividend Payment Date
determined in accordance with the provisions of this Section 2(a). As used
herein, the "Formula Number" shall be 10; provided, however, that if at any
time after January 29, 1987, the Company shall (i) pay a dividend
(regardless of when declared) or make a distribution, on its outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
(by a stock split or otherwise) or split the outstanding shares of Common
Stock into a larger number of shares of Common Stock, or (iii) combine (by
a reverse stock split or otherwise) the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then in each such event
the Formula Number shall be adjusted to a number determined by multiplying
the Formula Number in effect immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of which is
the number of shares that are outstanding
<PAGE>
immediately prior to such event (and rounding the result to the nearest
whole number); and provided further that if at any time after January 29,
1987, the Company shall reclassify or change the outstanding shares of
Common Stock into some other stock (including any such reclassification or
change in connection with a merger in which the Company is the surviving
corporation), then in such event the Formula Number shall be appropriately
adjusted to reflect such reclassification or change.
(b) Except as otherwise provided in the provisions of Article IV of
the Articles, and unless prohibited by Kentucky law, the Company shall
declare a dividend or distribution on the Series 1987 Preferred Stock as
provided in Section 2(a), out of funds legally available therefor,
immediately prior to the time it declares a dividend or distribution on the
Common Stock (other than a dividend or distribution in shares of Common
Stock), and such dividend or distribution on the Series 1987 Preferred
Stock shall (except as otherwise provided in Article IV of the Articles) be
payable on the same date on which the corresponding dividend or
distribution on the Common Stock is payable, to holders of shares of Series
1987 Preferred Stock of record at the close of business on the record date
fixed by the Board of Directors, which shall (except as otherwise provided
in Article IV of the Articles) be the same as the record date for the
corresponding dividend or distribution on the Common Stock; provided,
however, that, in the event no dividend or distribution (other than a
dividend or distribution in shares of Common Stock) shall have been
declared on the Common Stock during the three month period after any
Quarterly Dividend Payment Date (or with respect to the first Quarterly
Dividend Payment Date during the three month period after the first
issuance of any share or fraction of a share of Series 1987 Preferred
Stock), a dividend of $1.25 per share on the Series 1987 Preferred Stock
shall, unless prohibited by Kentucky law, nevertheless be payable, out of
funds legally available therefor, 30 days after the last day of such three
month period to holders of shares of Series 1987 Preferred Stock of record
at the close of business on the record date, which shall (except as
otherwise provided in Article IV of the Articles) be 5 days after the last
day of such three month period.
SECTION 3. Voting Rights. Except as otherwise provided in the
provisions of Article IV of the Articles and by the provisions of
applicable law, the holders of shares of Series 1987 Preferred Stock shall
have the following voting rights:
(a) Each holder of record of one whole share of the Series 1987
Preferred Stock shall be entitled to a number of votes equal to the
Formula Number then in effect on all matters on which holders of the
Common Stock or stockholders generally are entitled to vote. Each
holder of record of a fraction of a share of the Series 1987
Preferred Stock shall be entitled, for each one-tenth (1/10th) of a
share, to a number of votes equal to one-tenth (1/10th) of the
Formula Number then in effect on all matters on which holders of the
Common Stock or stockholders generally are entitled to vote; and
(b) The holders of shares of Series 1987 Preferred Stock and
the holders of shares of Common Stock shall vote together as one
class for the election of directors of the Company and on all other
matters submitted to a vote of stockholders of the Company.
SECTION 4. Liquidation Rights. Upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company, and before any
distribution is made to the holders of Common Stock, the holder of each
full share or fraction of a share of Series 1987 Preferred Stock shall be
entitled to be paid an amount equal to the accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, plus an amount per whole share equal to the greater of (1) $25 per
share or (2) the Formula Number then in effect times the aggregate amount
to be distributed per share to holders of Common Stock.
SECTION 5. Consolidation, Merger, etc. Except as otherwise provided
in Article IV of the Articles, in case the Company shall enter into any
consolidation, merger, combination or other transaction in which the
outstanding shares of Common Stock are exchanged for or changed into other
stock or securities, cash or any other property, then in any such case the
then outstanding shares of Series 1987 Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share equal to the
Formula Number then in effect times the aggregate amount of stock,
securities, cash or other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is exchanged or changed.
SECTION 6. No Redemption. Except as otherwise provided in Section 5, the
shares of Series 1987 Preferred Stock shall not be subject to redemption by
the Company or at the option of any holder of Series 1987 Preferred
2
<PAGE>
Stock; provided, however, that the Company may purchase or otherwise
acquire outstanding shares of Series 1987 Preferred Stock in the open
market or by offer to any holder or holders of shares of Series 1987
Preferred Stock.
SECTION 7. Fractional Shares. The Series 1987 Preferred Stock shall
be issuable upon exercise of the Rights issued pursuant to the Rights
Agreement dated as of May 15, 1986, between the Company and The Chase
Manhattan Bank, N.A., as Rights Agent, as amended, (a copy of which is
filed with the Securities and Exchange Commission), in whole shares or, at
the option of the Company, in any fraction of a share that is one-tenth
(1/10th) of a share or any integral multiple of such fraction. At the
election of the Company prior to the first issuance of a share or a
fraction of a share of Series 1987 Preferred Stock, either (1) certificates
may be issued to evidence any such authorized fraction of a share of Series
1987 Preferred Stock, or (2) any such authorized fraction of a share of
Series 1987 Preferred Stock may be evidenced by scrip or warrants in
registered form which shall entitle the holder thereof to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. The holders of such scrip or warrants shall have
all the rights, privileges and preferences to which the holders of
fractional shares are entitled. In lieu of such fractional shares or scrip
or warrants, the Company may pay registered holders cash equal to the same
fraction of the current market value of a share of Series 1987 Preferred
Stock (if any are outstanding) or the equivalent number of shares of Common
Stock.
SECTION 8. Amendments. The Board of Directors reserves the right by
subsequent amendment of this resolution from time to time to increase and,
in its discretion, to decrease the number of shares issuable in this series
and in other respects to amend this resolution within the limitations
provided by Kentucky law and the Articles.
SECTION 9. Definitions. For purposes of this resolution, all terms
defined in the Articles shall have the same meaning herein, except as
otherwise specifically provided herein."
IN TESTIMONY WHEREOF, witness our signatures this 29th day of
January, 1987.
/Thomas L. Feazell/
----------------------------
Thomas L. Feazell
Vice President
/John P. Ward/
----------------------------
John P. Ward
Secretary
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF GREENUP )
I, Teresa F, Gabbard, a Notary Public, do hereby certify that on
this 29th day of January, 1987, personally appeared before me JOHN P. WARD,
who being by me first duly sworn, declared that he is the Secretary of
ASHLAND OIL,INC., and that he signed the foregoing document as Secretary of
the Company and that the statements therein contained are true.
/TERESA F. GABBARD/
------------------------------
Notary Public
[STAMP]
Prepared by: TERESA F. GABBARD
John P. Ward My Commission expires October 9, 1989
1000 Ashland Drive
Russell, Kentucky 41169
/John P. Ward/
- -------------------------------
John P. Ward
3
<PAGE>
[STAMP] [STAMP]
LODGED FOR RECORD ON LODGED FOR RECORD ON
THE 30 DAY OF JANUARY THE 30 DAY OF JANUARY
1987 AT 10:46 AM. RECORDED 1987 AT 9:56 AM. RECORDED
IN ART OF INC. BOOK IN ART OF INC. BOOK
NO. 25 PAGE 461 NO. 9 PAGE 543
TAX ________ FEES $14.50 TAX $________ FEE $14.50
WILLIAM A. SELBEE, CLERK DONALD L. DAVIDSON, CLERK
BOYD COUNTY GREENUP COUNTY
BY: DONNA MARCUM, D.C. BY JOAN BURNETT, D.C.
<PAGE>
[STAMP]
ORIGINAL COPY FILED
SECRETARY OF STATE OF KENTUCKY,
FRANKFORT, KENTUCKY
JAN 28, 1988
11:05 AM
BREMER EHRLER
SECRETARY OF STATE
AMENDMENT TO SECOND RESTATED
ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 1
KNOW ALL MEN BY THESE PRESENTS, that Thomas L. Feazell, as Vice
President, and John P. Ward, as Secretary of Ashland Oil, Inc., a Kentucky
corporation (the "Company") do hereby certify that, at a meeting on January
28, 1988 of the holders of its issued and outstanding stock, which meeting
was duly called upon notice of the specific purpose, the holders of a
majority of the outstanding stock entitled to vote adopted a new Article X
of the Second Restated Articles of Incorporation (the "Articles") of the
Company which reads in its entirety as follows:
Notwithstanding any right to indemnification provided by the
Act to any director, officer, employee or agent of the Company, the
Company may, but shall not be required to, to the maximum extent
permitted by law, indemnify any such person against costs and
expenses (including but not limited to attorneys' fees) and any
liabilities (including but not limited to judgments, fines, penalties
and settlements) paid by or imposed against any such person in
connection with any actual or threatened claim, action, suit or
proceeding, whether civil, criminal, administrative, legislative,
investigative or other (including any appeal relating thereto) and
whether made or brought by or in the right of the Company or
otherwise, in which any such person is involved, whether as a party,
witness, or otherwise, because he or she is or was a director,
officer, employee or agent of the Company or a director, officer,
partner, trustee, employee or agent of any other corporation,
partnership, employee benefit plan or other entity.
The indemnification authorized by this Article X shall not
supersede or be exclusive of any other right of indemnification which
any such person may have or hereafter acquire under any provision of
these Articles or the By-laws of the Company, agreement, vote of
shareholders or disinterested directors or otherwise. The Company may
take such steps as may be deemed appropriate by the Board of
Directors to provide indemnification to any such person, including,
without limitation, entering into contracts for indemnification
between the Company and individual directors, officers, employees or
agents which may provide rights to indemnification which are broader
or otherwise different than the rights authorized by this Article.
The Company may take such steps as may be deemed appropriate by the
Board of Directors to secure, subject to the occurrence of such
conditions or events as may be determined by the Board of Directors,
the payment of such amounts as are required to effect any
indemnification permitted or authorized by this Article, including,
without limitation, purchasing and maintaining insurance, creating a
trust fund, granting security interests or using other means
(including, without limitation, irrevocable letters of credit).
Any amendment or repeal of this Article X shall operate
prospectively only and shall not affect any action taken, or failure
to act, by the Company or any such person prior to such amendment or
repeal.
IN TESTIMONY WHEREOF, witness our signatures this 28th day of
January, 1988.
/Thomas L. Feazell/ /John P. Ward/
- ---------------------------------- ----------------------------------
Thomas L. Feazell, Vice President John P. Ward, Secretary
<PAGE>
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF GREENUP )
I, Valerie J. Parks, Notary Public, do hereby certify that on this
28th day of January, 1988, personally appeared before me JOHN P. WARD, who
being by me first duly sworn, declared that he is the Secretary of ASHLAND
OIL, INC., and that he signed the foregoing document as such and that the
statements therein contained are true.
/VALERIE J. PARKS/
----------------------------------
VALERIE J. PARKS
[STAMP]
VALERIE J. PARKS
Prepared by John P. Ward My Commission expires November 11,
1000 Ashland Drive, 1990
Russell, Kentucky
/John P. Ward/
- --------------------------------
John P. Ward
[STAMP] [STAMP]
LODGED FOR RECORD ON LODGED FOR RECORD ON
THE 29th DAY OF JANUARY THE 29 DAY OF JANUARY
1988 AT 10:55 AM. RECORDED 1988 AT 10:15 AM. RECORDED
IN ART OF INC. BOOK IN ART OF INC. BOOK
NO. 25 PAGE _________ NO. 10 PAGE 169
TAX ________FEES $5.50 TAX $________ FEE $5.50
WILLIAM A. SELBEE, CLERK DONALD L. DAVIDSON, CLERK
BOYD COUNTY GREENUP COUNTY
BY: D.R. MARCUM, D.C. BY: MARY STULTZ, D.C.
<PAGE>
[STAMP]
DATE: JANUARY 27, 1989
TIME: 2:02 PM
AMOUNT: $40.00
BREMER EHRLER
SECRETARY OF STATE
COMMONWEALTH OF KENTUCKY
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 2
Pursuant to the provisions of Section 271B.10-060 of the Kentucky
Business Corporation Act, the undersigned corporation adopts the following
articles of amendment to its Second Restated Articles of Incorporation:
FIRST: The name of the corporation is Ashland Oil, Inc.
SECOND: At a meeting of the Board of Directors held on November 3,
1988, the Board of Directors proposed that the Second Restated Articles of
Incorporation be amended by adding a new Article XI, and directed that the
proposed amendment be submitted to the shareholders with the affirmative
recommendation of the Board of Directors at a meeting of the company's
shareholders to be held on January 26, 1989 (the "Meeting"), which Meeting
was duly called upon notice of the specific purpose. The text of the new
Article XI is as follows:
ARTICLE XI
No director shall be personally liable to the Company or its
shareholders for monetary damages for breach of his duties as a
director except to the extent that the applicable law from time to
time in effect shall provide that such liability may not be
eliminated or limited.
Neither the amendment nor repeal of this Article XI shall
affect the liability of any director of the Company with respect to
any act or failure to act which occurred prior to such amendment or
repeal.
This Article XI is not intended to eliminate or limit any
protection otherwise available to the directors of the Company.
THIRD: There were 58,707,121 shares of Ashland Oil, Inc. Common
Stock, each of which was entitled to cast one vote, outstanding at December
8, 1988, the record date for the Meeting, which represent all of the shares
entitled to vote on such amendment.
FOURTH: There were 50,687,052 shares of Ashland Oil, Inc. Common Stock
indisputably represented at the Meeting.
FIFTH: The total number of votes cast for such amendment was 47,745,995
and the total number of votes cast against such amendment was 2,231,353.
Dated January 27, 1989.
ASHLAND OIL, INC.
/Thomas L. Feazell/
By: _____________________________
Thomas L. Feazell
Administrative Vice President
and General Counsel
and
/John P. Ward/
-----------------------------
John P. Ward
Secretary
<PAGE>
COMMONWEALTH OF KENTUCKY )
COUNTY OF GREENUP )
The foregoing instrument was acknowledged before me this 27th day of
January, 1989, by Thomas L. Feazell, Administrative Vice President and
General Counsel, and John P. Ward, Secretary, of ASHLAND OIL, INC., a
Kentucky corporation, on behalf of the corporation.
/Valerie J. Parks/
-------------------------------
Valerie J. Parks
Notary Public
[STAMP]
VALERIE J. PARKS
Prepared by John P. Ward My Commission Expires November 11,
1000 Ashland Drive 1990
Russell, Kentucky 41114
/John P. Ward/
- -------------------------
[STAMP]
LODGED FOR RECORD ON
THE 30 DAY OF JANUARY
1989 AT 9:40 AM. RECORDED
IN ART OF INC. BOOK
NO. 10 PAGE 423
TAX $________ FEE $5.50
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY JOAN BURNETT, D.C.
[STAMP]
NO.
LODGED FOR RECORD
THE 30 DAY OF JAN
1989 AT 10:25 AM RECORDED
IN ART OF INC BOOK
NO. 26 PAGE 522
<PAGE>
[STAMP]
RECEIVED & FILED CH $40.00
MAY 18 10:52 AM 93
BOB BABBAGE
SECRETARY OF STATE
COMMONWEALTH KENTUCKY
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 3
Pursuant to the provisions of Section 271B.10-060 of the Kentucky
Business Corporation Act, the undersigned corporation adopts the following
articles of amendment to set forth the preferences, limitations and
relative rights of a series of shares of its Cumulative Preferred Stock, no
par value, under Article IV of its Second Restated Articles of
Incorporation:
FIRST: The name of the Corporation is Ashland Oil, Inc.
SECOND: The text of the amendment determining the terms of the series of
shares of the Cumulative Preferred Stock is as follows:
I. Designation of Series and Number of Shares to be Issuable Therein.
This series of the Cumulative Preferred Stock shall be designated $3.125
Cumulative Convertible Preferred Stock (hereinafter called the "Convertible
Preferred Stock"), of which 6,000,000 shares shall be issuable.
II. Rank. All shares of Convertible Preferred Stock shall rank prior,
both as to payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, to all of the Corporation's now or hereafter issued Common
Stock (the "Common Stock"), to all of the Corporation s Cumulative Preferred
Stock, Series of 1987, when and if issued, and to all of the Corporation s
hereafter issued capital stock ranking junior to the Convertible Preferred
Stock both as to the payment of dividends and as to distributions of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, when and if issued (the Common Stock, the Cumulative
Preferred Stock, Series of 1987, and any such other capital stock being herein
referred to as "Junior Stock").
III. Dividends. The holders of Convertible Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds at the time legally available therefor, dividends at the rate of
$3.125 per annum per share, and no more, which shall be fully cumulative,
shall accrue without interest from the date of the initial issuance of such
shares of Convertible Preferred Stock (on a daily basis whether or not such
amounts would be available at that time for distribution to holders of
shares of Convertible Preferred Stock) and shall be payable in cash
quarterly in arrears on March 15, June 15, September 15 and December 15 of
each year commencing June 15, 1993 (with respect to the period from such
date of initial issuance to June 15, 1993) (except that if any such date is
a Saturday, Sunday or legal holiday, then such dividend shall be payable on
the next day that is not a Saturday, Sunday or legal holiday) to holders of
record as they appear upon the stock transfer books of the Corporation on
such record dates, not more than sixty days nor less than ten days
preceding the payment dates for such dividends, as are fixed by the Board
of Directors (or, to the extent permitted by applicable law, a duly
authorized committee thereof). In no event shall any such dividend record
date be fixed less than (a) six business days prior to any date fixed for
the redemption of the Convertible Preferred Stock or (b) with respect to
the dividend payment date occurring on March 15, 1997, less than ten
business days prior to any date fixed for such redemption. For purposes
hereof, the term "legal holiday" shall mean any day on which banking
institutions are authorized to close in New York, New York and the term
"business day" shall mean any day other than a Saturday, Sunday or legal
holiday. Subject to the next paragraph of this Section III, dividends on
account of arrears for any past dividend period may be declared and paid at
any time, without reference to any regular dividend payment date. The
amount of dividends payable per share of Convertible Preferred Stock for
each quarterly dividend period shall be computed by dividing the annual
dividend amount by four. The amount of dividends payable for the initial
dividend period and any period shorter than a full quarterly period shall
be computed on the basis of a 360-day year of twelve 30-day months. No
interest shall be payable in respect of any dividend payment on the
Convertible Preferred Stock which may be in arrears.
No dividends or other distributions, other than dividends payable
solely in shares of Junior Stock, shall be
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<PAGE>
declared, paid or set apart for payment on shares of Junior Stock or any
other capital stock of the Corporation ranking junior as to dividends to
the Convertible Preferred Stock (the Junior Stock and any such other class
or series of the Corporation's capital stock being herein referred to as
"Junior Dividend Stock"), unless and until all accrued and unpaid dividends
on the Convertible Preferred Stock for all dividend payment periods ending
on or before the payment date of such dividends or other distributions on
Junior Dividend Stock shall have been paid or declared and set apart for
payment.
No payment on account of the purchase, redemption, retirement or
other acquisition of shares of Junior Dividend Stock or any other class or
series of the Corporation's capital stock ranking junior to the Convertible
Preferred Stock as to distributions of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary (the
Junior Stock and any other class or series of the Corporation's capital
stock ranking junior to the Convertible Preferred Stock as to such
distributions being herein referred to as "Junior Liquidation Stock") shall
be made unless and until all accrued and unpaid dividends on the
Convertible Preferred Stock for all dividend payment periods ending on or
before such payment for such Junior Dividend Stock or Junior Liquidation
Stock shall have been paid or declared and set apart for payment; provided,
however, that the restrictions set forth in this sentence shall not apply
to the purchase or other acquisition of Junior Dividend Stock or Junior
Liquidation Stock either (A) pursuant to any employee or director incentive
or benefit plan or arrangement (including any employment, severance or
consulting agreement) of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted or (B) in exchange solely for
Junior Stock.
No full dividends shall be declared, paid or set apart for payment on
shares of any class or series of the corporation's capital stock hereafter
issued ranking, as to dividends, on a parity with the Convertible Preferred
Stock (any such class or series of the Corporation's capital stock being
herein referred to as "Parity Dividend Stock") for any period unless full
cumulative dividends have been, or contemporaneously are, paid or declared
and set apart for such payment on the Convertible Preferred Stock for all
dividend payment periods ending on or before the payment date of such
dividends on Parity Dividend Stock. No dividends shall be paid on Parity
Dividend Stock except on dates on which dividends are paid on the
Convertible Preferred Stock. All dividends paid or declared and set apart
for payment on the Convertible Preferred Stock and the Parity Dividend
Stock shall be paid or declared and set apart for payment pro rata so that
the amount of dividends paid or declared and set apart for payment per
share on the Convertible Preferred Stock and the Parity Dividend Stock on
any date shall in all cases bear to each other the same ratio that accrued
and unpaid dividends to the date of payment on the Convertible Preferred
Stock and the Parity Dividend Stock bear to each other.
No payment on account of the purchase, redemption, retirement or
other acquisition of shares of Junior Stock, Parity Dividend Stock or any
class or series of the Corporation's capital stock ranking on a parity with
the Convertible Preferred Stock as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary (any such class or series of the Corporation's
capital stock being herein referred to as "Parity Liquidation Stock") shall
be made, and, other than dividends to the extent permitted by the preceding
paragraph, no distributions shall be declared, paid or set apart for
payment on shares of Parity Dividend Stock or Parity Liquidation Stock,
unless and until all accrued and unpaid dividends on the Convertible
Preferred Stock for all dividend payment periods ending on or before such
payment for, or the payment date of such distributions on, such Parity
Dividend Stock or Parity Liquidation Stock shall have been paid or declared
and set apart for payment; provided, however, that the restrictions set
forth in this sentence shall not apply to the purchase or other acquisition
of Parity Dividend Stock or Parity Liquidation Stock either (A) pursuant to
any employee or director incentive or benefit plan or arrangement
(including any employment, severance or consulting agreement) of the
Corporation or any subsidiary of the Corporation hereafter adopted or (B)
in exchange solely for Junior Stock.
Any reference to "distribution" contained in this Section III shall
not be deemed, except as expressly stated, to include any distribution made
in connection with any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.
IV. Liquidation Preference. In the event of a liquidation, dissolution
or winding up of the Corporation,
2
<PAGE>
whether voluntary or involuntary, the holders of shares of Convertible
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to shareholders an amount equal to
the dividends accrued and unpaid on such shares on the date of final
distribution to such holders, whether or not declared, without interest,
plus a sum equal to $50 per share, and no more, before any payment shall be
made or any assets distributed to the holders of shares of Junior
Liquidation Stock; provided, however, that such rights shall accrue to the
holders of shares of Convertible Preferred Stock only with respect to
assets (if any) remaining after the Corporation's payments with respect to
the liquidation preferences of the shares of any class or series of the
Corporation capital stock hereafter issued ranking prior to the Convertible
Preferred Stock as to distributions of assets upon such liquidation,
dissolution or winding up ("Senior Liquidation Stock") are fully met. The
entire assets of the Corporation available for distribution to shareholders
after the liquidation preferences of the shares of Senior Liquidation Stock
are fully met shall be distributed ratably among the holders of the
Convertible Preferred Stock and Parity Liquidation Stock in proportion to
the respective preferential amounts to which each is entitled (but only to
the extent of such preferential amounts). After payment in full of the
liquidation preferences of the shares of the Convertible Preferred Stock,
the holders of such shares shall not be entitled to any further
participation in any distribution of assets by the Corporation. The
voluntary sale, lease, exchange or transfer of all or substantially all of
the Company's property or assets to, or its consolidation or merger with,
one or more corporations shall not be deemed to be considered a voluntary
or involuntary liquidation, dissolution or winding up of the Corporation.
V. Redemption at Option of the Corporation. The Convertible Preferred
Stock may not be redeemed by the Corporation prior to March 25, 1997. On
and after such date, the Convertible Preferred Stock may be redeemed by the
Corporation, at its option on any date set by the Board of Directors, in
whole or in part at any time, subject to the limitations, if any, imposed
by the Kentucky Business Corporation Act, for an amount in cash equal to
the applicable price per share set forth for the date fixed for redemption
in the following table:
Date Fixed for Redemption
Price
On or after March 25, 1997 and on or before March 14,1998. $51.88
After March 14, 1998 and on or before March 14, 1999...... $51.56
After March 14, 1999 and on or before March 14, 2000...... $51.25
After March 14, 2000 and on or before March 14, 2001...... $50.94
After March 14, 2001 and on or before March 14, 2002...... $50.63
After March 14, 2002 and on or before March 14, 2003...... $50.31
Any date after March 14, 2003............................. $50.00
plus, in each case, an amount in cash equal to all per share dividends on
the Convertible Preferred Stock accrued and unpaid thereon, whether or not
declared, to but excluding the date fixed for redemption, such sum being
hereinafter referred to as the "Redemption Price".
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall designate by lot, or in
such other manner as the Board of Directors may determine to be fair, the
shares to be redeemed, or shall effect such redemption pro rata.
Notwithstanding the foregoing, the Corporation shall not redeem less than
all of the Convertible Preferred Stock at any time outstanding until all
dividends accrued and in arrears upon all Convertible Preferred Stock then
outstanding shall have been paid in full for all past dividend periods.
Not more than ninety nor less than thirty days prior to the date
fixed for redemption by the Board of Directors, notice thereof by first
class mail, postage prepaid, shall be given to the holders of record of the
shares of Convertible Preferred Stock to be redeemed, addressed to such
holders at their last addresses as shown upon the stock transfer books of
the Corporation. Each such notice of redemption shall specify the date
fixed for redemption, the Redemption Price, the place or places of payment,
that payment will be made upon presentation and surrender of the shares of
Convertible Preferred Stock, that on and after the date fixed for
redemption dividends will cease to accrue on such shares, the
then-effective conversion price pursuant to Section VI and that the right
of holders to convert shares of Convertible Preferred Stock shall terminate
at the close of business on
3
<PAGE>
the fifth business day prior to the date fixed for redemption (unless the
Corporation defaults in the payment of the Redemption Price).
Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of shares of
Convertible Preferred Stock receives such notice; and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings
for the redemption of any other shares of Convertible Preferred Stock. On
or after the date fixed for redemption as stated in such notice, each
holder of the shares called for redemption shall surrender the certificate
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the Redemption
Price. If less than all the shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued evidencing the
unredeemed shares.
No fractional shares of Convertible Preferred Stock shall be issued
upon redemption of less than all Convertible Preferred Stock. If more than
one certificate evidencing shares of Convertible Preferred Stock shall be
held at one time by the same holder, the number of full shares issuable
upon redemption of less than all of such shares of Convertible Preferred
Stock shall be computed on the basis of the aggregate number of shares of
Convertible Preferred Stock so held. Instead of any fractional share of
Convertible Preferred Stock that would otherwise be issuable to a holder
upon redemption of less than all shares of Convertible Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional share
in an amount equal to the same fraction of the fair value per share of
Convertible Preferred Stock (as determined in good faith by the Board of
Directors or in any manner prescribed by the Board of Directors) at the
close of business on the date fixed for redemption.
Notice having been given as aforesaid, if, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor
and shall have been deposited with a bank or trust company with irrevocable
instructions and authority to pay the Redemption Price to the holders of
the Convertible Preferred Stock, then, notwithstanding that the
certificates evidencing any shares so called for redemption shall not have
been surrendered, dividends with respect to the shares so called shall
cease to accrue on and after the date fixed for redemption, such shares
shall no longer be deemed outstanding, the holders thereof shall cease to
be shareholders of the Corporation and all rights whatsoever with respect
to the shares so called for redemption (except the right of the holders to
receive the Redemption Price without interest upon surrender of their
certificates therefor) shall terminate. If funds legally available for such
purpose are not sufficient for redemption of the shares of Convertible
Preferred Stock which were to be redeemed, then the certificates evidencing
such shares shall be deemed not to be surrendered, such shares shall remain
outstanding and the right of holders of shares of Convertible Preferred
Stock thereafter shall continue to be only those of a holder of shares of
the Convertible Preferred Stock.
The shares of Convertible Preferred Stock shall not be subject to the
operation of any mandatory purchase, retirement or sinking fund.
VI. Conversion Privilege.
(a) Right of Conversion. Each share of Convertible Preferred Stock
shall be convertible at the option of the holder thereof, at any time prior
to the close of business on the fifth business day prior to the date fixed
for redemption of such share as herein provided, into fully paid and
nonassessable shares of Common Stock, at the rate of that number of shares
of Common Stock for each full share of Convertible Preferred Stock that is
equal to $50 divided by the conversion price applicable per share of Common
Stock, or into such additional or other securities, cash or property and at
such other rates as required in accordance with the provisions of this
Section VI. For purposes of this resolution, the "conversion price"
applicable per share of Common Stock shall initially be equal to $32.343
and shall be adjusted from time to time in accordance with the provisions
of this Section VI.
(b) Conversion Procedures. Any holder of shares of Convertible Preferred
Stock desiring to convert such shares into Common Stock shall surrender the
certificate or certificates evidencing such shares of Convertible
4
<PAGE>
Preferred Stock at the office of the transfer agent for the Convertible
Preferred Stock, which certificate or certificates, if the Corporation
shall so require, shall be duly endorsed to the Corporation or in blank, or
accompanied by proper instruments of transfer to the Corporation or in
blank, accompanied by irrevocable written notice to the Corporation that
the holder elects so to convert such shares of Convertible Preferred Stock
and specifying the name or names (with address or addresses) in which a
certificate or certificates evidencing shares of Common Stock are to be
issued.
Subject to Section VI(l) hereof, no payments or adjustments in
respect of dividends on shares of Convertible Preferred Stock surrendered
for conversion or on account of any dividend on the Common Stock issued
upon conversion shall be made upon the conversion of any shares of
Convertible Preferred Stock and the holder will lose any right to payment
of dividends on the shares of Convertible Preferred Stock surrendered for
conversion.
The Corporation shall, as soon as practicable after such deposit of
certificates evidencing shares of Convertible Preferred Stock accompanied
by the written notice and compliance with any other conditions herein
contained, deliver at such office of such transfer agent to the person for
whose account such shares of Convertible Preferred Stock were so
surrendered, or to the nominee or nominees of such person, certificates
evidencing the number of full shares of Common Stock to which such person
shall be entitled as aforesaid, together with a cash adjustment in respect
of any fraction of a share of Common Stock as hereinafter provided. Such
conversion shall be deemed to have been made as of the date of such
surrender of the shares of Convertible Preferred Stock to be converted, and
the person or persons entitled to receive the Common Stock deliverable upon
conversion of such Convertible Preferred Stock shall be treated for all
purposes as the record holder or holders of such Common Stock on such date.
(c) Adjustment of Conversion Price. The conversion price at which a
share of Convertible Preferred Stock is convertible into Common Stock shall be
subject to adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock exclusively in Common Stock or
shall pay or make a dividend or other distribution on any other class
or series of capital stock of the Corporation which dividend or
distribution includes Common Stock, the conversion price in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination.
(ii) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock consisting exclusively of, or
shall otherwise issue to all holders of its Common Stock, rights or
warrants entitling the holders thereof to subscribe for or purchase
shares of Common Stock at a price per share less than the current
market price per share (determined as provided in subparagraph (vi)
of this Section VI(c)) of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such rights or
warrants, the conversion price in effect at the opening of business
on the day following the date fixed for such determination shall be
reduced by multiplying such conversion price by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase
at such current market price and the denominator shall be the number
of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. In case any rights
or warrants referred to in this subparagraph (ii) in respect of which
an adjustment shall have been made shall
5
<PAGE>
expire unexercised within 45 days after the same shall have been
distributed or issued by the Corporation, the conversion price shall
be readjusted at the time of such expiration to the conversion price
that would have been in effect if no adjustment had been made on
account of the distribution or issuance of such expired rights or
warrants. For the purposes of this Section VI(c)(ii), if both (A) a
Distribution Date (as such term is defined in the Rights Agreement)
and (B) an event set forth in Section 11(d)(i) or 13(a) of the Rights
Agreement shall have occurred, then the later to occur of such events
shall be deemed to constitute an issuance of rights to purchase
shares of the related common stock.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the
day upon which such subdivision or combination becomes effective.
(iv) Subject to the last sentence of this subparagraph (iv), in
case the Corporation shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares
of any class or series of capital stock, cash or assets (including
securities, but excluding any rights or warrants referred to in
subparagraph (ii) of this Section VI(c), any dividend or distribution
paid exclusively in cash and any dividend or distribution referred to
in subparagraph (i) of this Section VI(c)), the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this
subparagraph (iv) by a fraction of which the numerator shall be the
current market price per share (determined as provided in
subparagraph (vi) of this Section VI(c)) of the Common Stock on the
date fixed for the payment of such distribution (the "Reference
Date") less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors), on the
Reference Date, of the portion of the evidences of indebtedness,
shares of capital stock, cash and assets so distributed applicable to
one share of Common Stock and the denominator shall be such current
market price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day
following the Reference Date. If the Board of Directors determines
the fair market value of any distribution for purposes of this
subparagraph (iv) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in
doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock
pursuant to subparagraph (vi) of this Section VI(c). For purposes of
this subparagraph (iv), any dividend or distribution that includes
shares of Common Stock or rights or warrants to subscribe for or
purchase shares of Common Stock shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, cash,
assets or shares of capital stock other than such shares of Common
Stock or rights or warrants (making any further conversion price
reduction required by this subparagraph (iv) immediately followed by
(2) a dividend or distribution of such shares of Common Stock or such
rights or warrants (making any further conversion price reduction
required by subparagraph (i) or (ii) of this Section VI(c), except
(A) the Reference Date of such dividend or distribution as defined in
this subparagraph (iv) shall be substituted as "the date fixed for
the determination of shareholders entitled to receive such dividend
or other distribution or to exchange such Rights", "the date fixed
for the determination of shareholders entitled to receive such rights
or warrants" and "the date fixed for such determination" within the
meaning of subparagraphs (i) and (ii) of this Section VI(c) and (B)
any shares of Common Stock included in such dividend or distribution
shall not be deemed "outstanding at the close of business on the date
fixed for such determination" within the meaning of subparagraph (i)
of this Section VI(c)).
(v) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock exclusively in cash (excluding
(A) cash that is part of a distribution referred to in (iv) above
and, (B) in the
6
<PAGE>
case of any quarterly cash dividend on the Common Stock, the portion
thereof that does not exceed the per share amount of the next
preceding quarterly cash dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to in subparagraphs
(i), (ii), (iii), (iv) and (v) of this Section VI(c)), or all of such
quarterly cash dividend if the amount thereof per share of Common
Stock multiplied by four does not exceed 15 percent of the current
market price per share (determined as provided in subparagraph (vi)
of this Section VI(c) of the Common Stock on the Trading Day (as
defined in Section VI(i) next preceding the date of declaration of
such dividend), the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the effectiveness of the
conversion price reduction contemplated by this subparagraph (v) by a
fraction of which the numerator shall be the current market price per
share (determined as provided in subparagraph (vi) of this Section
VI(c)) of the Common Stock on the date fixed for the payment of such
distribution less the amount of cash so distributed and not excluded
as provided above applicable to one share of Common Stock and the
denominator shall be such current market price per share of the
Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following the date fixed for the
payment of such distribution.
(vi) For the purpose of any computation under subparagraphs
(ii), (iv) and (v) of this Section VI(c), the current market price
per share of Common Stock on any date in question shall be deemed to
be the average of the daily Closing Prices (as defined in Section
VI(i)) for the five consecutive Trading Days prior to and including
the date in question; provided, however, that (1) if the "ex" date
(as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to subparagraph (i), (ii), (iii),
(iv), or (v) above ("Other Event") occurs after the fifth Trading Day
prior to the day in question and prior to the "ex" date for the
issuance or distribution requiring such computation (the "Current
Event"), the Closing Price for each Trading Day prior to the "ex"
date for such Other Event shall be adjusted by multiplying such
Closing Price by the same fraction by which the conversion price is
so required to be adjusted as a result of such Other Event, (2) if
the "ex" date, for any Other Event occurs after the "ex" date for the
Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the conversion price is so
required to be adjusted as a result of such Other Event, (3) if the
"ex" date for any Other Event occurs on the "ex" date for the Current
Event, one of those events shall be deemed for purposes of clauses
(1) and (2) of this proviso to have an "ex" date occurring prior to
the "ex" date for the other event, and (4) if the "ex" date for the
Current Event is on or prior to the date in question, after taking
into account any adjustment required pursuant to clause (2) of this
proviso, the Closing Price for each Trading Day on or after such "ex"
date shall be adjusted by adding thereto the amount of any cash and
the fair market value on the date in question (as determined in good
faith by the Board of Directors in a manner consistent with any
determination of such value for purposes of paragraph (iv) or (v) of
this Section VI(c), whose determination shall be conclusive and
described in a resolution of the Board of Directors) of the portion
of the rights, warrants, evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common
Stock. For purposes of this paragraph, the term "ex" date, (1) when
used with respect to any issuance or distribution, means the first
date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution
and (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common
Stock trades regular way on such exchange or in such market after the
time at which such subdivision or combination becomes effective.
(vii) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at
least 1 percent in the conversion price; provided, however, that any
adjustments which by reason of this subparagraph (vii) are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment.
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(viii) Whenever the conversion price is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted conversion
price and shall prepare a certificate signed by the Treasurer
of the Corporation setting forth the adjusted conversion price
and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be
filed with the transfer agent for the Convertible Preferred
Stock; and
(2) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by the Corporation to all
record holders of shares of Convertible Preferred Stock at
their last addresses as they shall appear upon the stock
transfer books of the Corporation.
(ix) The Corporation from time to time may reduce the
conversion price by any amount for any period of time if the period
is at least twenty days, the reduction is irrevocable during the
period and the Board of Directors of the Corporation shall have made
a determination that such reduction would be in the best interest of
the Corporation, which determination shall be conclusive. Whenever
the conversion price is reduced pursuant to the preceding sentence,
the Corporation shall mail to holders of record of the Convertible
Preferred Stock a notice of the reduction at least fifteen days prior
to the date the reduced conversion price takes effect, and such
notice shall state the reduced conversion price and the period it
will be in effect.
(d) No Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Convertible Preferred Stock. If more than one
certificate evidencing shares of Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of
full shares issuable upon conversion thereof shall be computed on the basis
of the aggregate number of shares of Convertible Preferred Stock so
surrendered. Instead of any fractional share of Common Stock that would
otherwise be issuable to a holder upon conversion of any shares of
Convertible Preferred Stock, the Corporation shall pay a cash adjustment in
respect of such fractional share in an amount equal to the same fraction of
the market price per share of Common Stock (as determined by the Board of
Directors or in any manner prescribed by the Board of Directors, which, so
long as the Common Stock is listed on the New York Stock Exchange, shall be
the reported last sale price regular way on the New York Stock Exchange) at
the close of business on the day of conversion.
(e) Reclassification, Consolidation, Merger or Sale of Assets. In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common
Stock (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), any consolidation of the Corporation
with, or merger of the Corporation into, any other person, any merger of
another person into the Corporation (other than a merger which does not
result in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Corporation), any sale or
transfer of all or substantially all of the assets of the Corporation or
any share exchange) pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property, then lawful
provisions shall be made as part of the terms of such transaction whereby
the holder of each share of Convertible Preferred Stock then outstanding
shall have the right thereafter to convert such share only into (i) in the
case of any such transaction other than a Common Stock Fundamental Change
and subject to funds being legally available for such purpose under
applicable law at the time of such conversion, the kind and amount of
securities, cash and other property receivable upon such transaction by a
holder of the number of shares of Common Stock of the Corporation into
which such share of Convertible Preferred Stock might have been converted
immediately prior to such transaction, after giving effect, in the case of
any Non-Stock Fundamental Change, to any adjustment in the conversion price
required by the provisions of Section VI(h), and (ii) in the case of a
Common Stock Fundamental Change, common stock of the kind received by
holders of Common Stock as a result of such Common Stock Fundamental Change
in an amount determined pursuant to the provisions of Section VI(h). The
Corporation or the person formed by such consolidation or resulting from
such merger or which acquires such assets or which acquires the
Corporation's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent document to
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<PAGE>
establish such right. Such certificate or articles of incorporation or
other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section VI.
The above provisions shall similarly apply to successive transactions of
the foregoing type.
(f) Reservation of Shares; Etc. The Corporation shall at all times
reserve and keep available, free from preemptive rights out of its
authorized and unissued stock, solely for the purpose of effecting the
conversion of the Convertible Preferred Stock, such number of shares of its
Common Stock as shall from time to time be sufficient to effect the
conversion of all shares of Convertible Preferred Stock from time to time
outstanding. The Corporation shall from time to time, in accordance with
the laws of the Commonwealth of Kentucky, in good faith and as
expeditiously as possible endeavor to cause the authorized number of shares
of Common Stock to be increased if at any time the number of shares of
authorized and unissued Common Stock shall not be sufficient to permit the
conversion of all the then-outstanding shares of Convertible Preferred
Stock.
If any shares of Common Stock required to be reserved for purposes of
conversion of the Convertible Preferred Stock hereunder require
registration with or approval of any governmental authority under any
Federal or State law before such shares may be issued upon conversion, the
Corporation will in good faith and as expeditiously as possible endeavor to
cause such shares to be duly registered or approved as the case may be. If
the Common Stock is listed on the New York Stock Exchange or any other
national securities exchange, the Corporation will, if permitted by the
rules of such exchange, list and keep listed on such exchange, upon
official notice of issuance, all shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock.
(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) declare any dividend (or any
other distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend payable in cash
out of its retained earnings other than any special or nonrecurring
or other extraordinary dividend or (2) declare or authorize a
redemption or repurchase of in excess of 10 percent of the
then-outstanding shares of Common Stock; or
(ii) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other
rights or warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which
the Corporation is a party and for which approval of any shareholders
of the Corporation shall be required, or of the sale or transfer of
all or substantially all of the assets of the Corporation or of any
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for
the Convertible Preferred Stock, and shall cause to be mailed to the
holders of record of the Convertible Preferred Stock, at their last
addresses as they shall appear upon the stock transfer books of the
Corporation, at least fifteen days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on
which a record (if any) is to be taken for the purpose of such dividend,
distribution, redemption, repurchase, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and
the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up (but no failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
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(h) Adjustments in Case of Fundamental Changes. Notwithstanding any
other provision in this Section VI to the contrary, if any Fundamental
Change (as defined in Section VI(i) occurs, then the conversion price in
effect will be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock Fundamental
Change (as defined in Section VI(i), each share of Convertible Preferred
Stock shall be convertible solely into common stock of the kind received by
holders of Common Stock as the result of such Common Stock Fundamental
Change.
For purposes of calculating any adjustment to be made pursuant to
this Section VI(h) in the event of a Fundamental Change, immediately after
such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined
in Section VI(i)), the conversion price of the Convertible Preferred
Stock shall thereupon become the lower of (A) the conversion price in
effect immediately prior to such Non-Stock Fundamental Change, but
after giving effect to any other prior adjustments effected pursuant
to this Section VI, and (B) the result obtained by multiplying the
greater of the Applicable Price (as defined in Section VI(i)) or the
then applicable Reference Market Price (as defined in Section VI(i))
by a fraction of which the numerator shall be $50 and the denominator
shall be (x) the then-current Redemption Price per share of
Convertible Preferred Stock or (y) for any Non-Stock Fundamental
Change that occurs before the Convertible Preferred Stock becomes
redeemable by the Corporation pursuant to Section V, the applicable
price per share set forth for the date of such Non-Stock Fundamental
Change in the following table:
Date of Non-Stock Fundamental Change
Price
After date of original issuance of Convertible
Preferred Stock and on or before March 14,1994................. $53.13
After March 14, 1994 and on or before March 14,1995.......... . $52.81
After March 14, 1995 and on or before March 14,1996. .......... $52.50
After March 14, 1996 and on or before March 24,1997............ $52.19
plus, in any case referred to in this clause (y), an amount equal to
all per share dividends on the Convertible Preferred Stock accrued
and unpaid thereon, whether or not declared, to but excluding the
date of such Non-Stock Fundamental Change; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Convertible Preferred Stock in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to
this Section VI, shall thereupon be adjusted by multiplying such
conversion price by a fraction of which the numerator shall be the
Purchaser Stock Price (as defined in Section VI(i)) and the
denominator shall be the Applicable Price; provided, however, that in
the event of a Common Stock Fundamental Change in which (A) 100
percent by value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third party
(and cash, if any, is paid with respect to any fractional interests
in such common stock resulting from such Common Stock Fundamental
Change) and (B) all of the Common Stock shall have been exchanged
for, converted into or acquired for common stock (and cash with
respect to fractional interests) of the successor, acquiror or other
third party, the conversion price of the Convertible Preferred Stock
in effect immediately prior to such Common Stock Fundamental Change
shall thereupon be adjusted by multiplying such conversion price by a
fraction of which the numerator shall be one (1) and the denominator
shall be the number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one share of
Common Stock as a result of such Common Stock Fundamental Change.
(i) Definitions. The following definitions shall apply to terms used in
this Section VI:
(1) "Applicable Price" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of the Common Stock
receive only cash, the amount of cash received by the holder of one
share of Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the
average of the daily Closing Prices of the Common Stock for the ten
consecutive
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Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to receive
cash, securities, property or other assets in connection with such
Non-Stock Fundamental Change or Common Stock Fundamental Change, or,
if there is no such record date, the date upon which the holders of
the Common Stock shall have the right to receive such cash,
securities, property or other assets, in each case, as adjusted in
good faith by the Board of Directors of the Corporation to
appropriately reflect any of the events referred to in subparagraphs
(i), (ii), (iii), (iv) and (v) of Section VI(c).
(2) "Closing Price" of any common stock on any day shall mean
the last reported sale price regular way on such day or, in case no
such sale takes place on such day, the average of the reported
closing bid and asked prices regular way of the common stock in each
case on the New York Stock Exchange, or, if the common stock is not
listed or admitted to trading on such Exchange, on the principal
national securities exchange or quotation system on which the common
stock is listed or admitted to trading or quoted, or, if not listed
or admitted to trading or quoted on any national securities exchange
or quotation system, the average of the closing bid and asked prices
of the common stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated,
or a similarly generally accepted reporting service, or, if not so
available in such manner, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors of
the Corporation for that purpose.
(3) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50 percent by value (as
determined in good faith by the Board of Directors of the
Corporation) of the consideration received by holders of Common Stock
consists of common stock that for each of the ten consecutive Trading
Days referred to with respect to such Fundamental Change in Section
VI(i)(1) above has been admitted for listing or admitted for listing
subject to notice of issuance on a national securities exchange or
quoted on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System; provided, however, that
a Fundamental Change shall not be a Common Stock Fundamental Change
unless either (i) the Corporation continues to exist after the
occurrence of such Fundamental Change and the outstanding shares of
Convertible Preferred Stock continue to exist as outstanding shares
of Convertible Preferred Stock, or (ii) not later than the occurrence
of such Fundamental Change, the outstanding shares of Convertible
Preferred Stock are converted into or exchanged for shares of
convertible preferred stock of a corporation succeeding to the
business of the Corporation, which convertible preferred stock has
powers, preferences and relative, participating, optional or other
rights, and qualifications, limitations and restrictions,
substantially similar to those of the Convertible Preferred Stock.
(4) "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all
or substantially all of the Common Stock shall be exchanged for,
converted into, acquired for or constitute solely the right to
receive cash, securities, property or other assets (whether by means
of an exchange offer, liquidation, tender offer, consolidation,
merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more
than one such transaction or event, for purposes of adjustment of the
conversion price, such Fundamental Change shall be deemed to have
occurred when substantially all of the Common Stock of the
Corporation shall be exchanged for, converted into, or acquired for
or constitute solely the right to receive cash, securities, property
or other assets, but the adjustment shall be based upon the highest
weighted average of consideration per share which a holder of Common
Stock could have received in such transactions or events as a result
of which more than 50 percent of the Common Stock of the Corporation
shall have been exchanged for, converted into, or acquired for or
constitute solely the right to receive cash, securities, property or
other assets.
(5) "Non-Stock Fundamental Change" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
(6) "Purchaser Stock Price" shall mean, with respect to any
Common Stock Fundamental Change, the average of the daily Closing
Prices of the Common Stock received in such Common Stock Fundamental
Change for the ten consecutive Trading Days prior to and including
the record date for the determination of the holders of the Common
Stock entitled to receive such common stock, or, if there is no such
record date,
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the date upon which the holders of the Common Stock shall have the
right to receive such common stock, in each case, as adjusted in good
faith by the Board of Directors of the Corporation to appropriately
reflect any of the events referred to in subparagraphs (i), (ii),
(iii), (iv) and (v) of Section VI(c); provided, however, if no such
Closing Prices of the common stock for such Trading Days exist, then
the Purchaser Stock Price shall be set at a price determined in good
faith by the Board of Directors of the Corporation.
(7) "Reference Market Price" shall initially mean $17.25 (which
is an amount equal to 66 2/3 percent of the reported last sale price
for the Common Stock on the New York Stock Exchange on May 13, 1993),
and in the event of any adjustment to the conversion price other than
as a result of a Fundamental Change, the Reference Market Price shall
also be adjusted so that the ratio of the Reference Market Price to
the conversion price after giving effect to any such adjustment shall
always be the same as the ratio of $17.25 to the initial conversion
price per share set forth in the last sentence of Section VI(a).
(8) "Trading Day" shall mean a day on which securities traded
on the national securities exchange or quotation system or in the
over-the-counter market used to determine the Closing Price.
(j) Dividend or Interest Reinvestment Plans. Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock pursuant
to any plan providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of additional optional
amounts in shares of Common Stock under any such plan, and the issuance of
any shares of Common Stock or options or rights to purchase such shares
pursuant to any employee benefit plan or program of the Corporation or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Convertible Preferred
Stock was first designated (except as expressly provided in Section
VI(c)(1) or VI(c)(ii) with respect to certain events under the Rights
Agreement), and any issuance of Rights (as hereinafter defined), shall not
be deemed to constitute an issuance of Common Stock or exercisable,
exchangeable or convertible securities by the Corporation to which any of
the adjustment provisions described above applies. There shall also be no
adjustment of the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Corporation
except as specifically described in this Section VI. If any action would
require adjustment of the conversion price pursuant to more than one of the
provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest absolute
value to holders of Convertible Preferred Stock.
(k) Preferred Share Purchase Rights. So long as Preferred Share
Purchase Rights of the kind declared and distributed by the Corporation's
Board of Directors in May 1986, as the same have been and may hereafter be
amended ("Rights"), are attached to the outstanding shares of Common Stock
of the Corporation, each share of Common Stock issued upon conversion of
the shares of Convertible Preferred Stock prior to the earliest of any
Distribution Date (as defined in the Rights Agreement), the date of
redemption of the Rights or the date of expiration of the Rights shall be
issued with Rights in an amount equal to the amount of Rights then attached
to each such outstanding share of Common Stock.
(l) Certain Additional Rights. In case the Corporation shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section VI(c)(iv) or VI(c)(v) (including, without
limitation, dividends or distributions referred to in the last sentence of
Section VI(c)(iv)), the holder of each share of Convertible Preferred
Stock, upon the conversion thereof subsequent to the close of business on
the date fixed for the determination of shareholders entitled to receive
such distribution and prior to the effectiveness of the conversion price
adjustment in respect of such distribution, shall also be entitled to
receive for each share of Common Stock into which such share of Convertible
Preferred Stock is converted, the portion of the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash
and assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Corporation (whose election
shall be evidenced by a resolution of the Board of Directors) with respect
to all holders so converting, the Corporation may, in lieu of distributing
to such holder any portion of such distribution not consisting of cash
securities of the Corporation, pay such holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and
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described in a resolution of the Board of Directors). If any conversion of
a share of Convertible Preferred Stock described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of the share of Convertible
Preferred Stock so converted is entitled to receive in accordance with the
immediately preceding sentence, the Corporation may elect (such election to
be evidenced by a resolution of the Board of Directors) to distribute to
such holder a due bill for the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets to which
such holder is so entitled, provided that such due bill (i) meets any
applicable requirements of the principal national securities exchange or
other market on which the Common Stock is then traded and (ii) requires
payment or delivery of such shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets no later
than the date of payment or delivery thereof to holders of shares of Common
Stock receiving such distribution.
VII. Voting Rights.
(a) General. The holders of shares of Convertible Preferred Stock
shall not have any voting rights except as set forth below or as otherwise
from time to time required by law. In connection with any right to vote,
each holder of a share of Convertible Preferred Stock shall have one vote
for each share held. Any shares of Convertible Preferred Stock owned,
directly or indirectly, by any entity of which the Corporation owns,
directly or indirectly, a majority of the shares entitled to vote for
directors, shall not have voting rights hereunder and shall not be counted
in determining the presence of a quorum.
(b) Default Voting Rights. Whenever dividends on the Convertible
Preferred Stock or any other class or series of Parity Dividend Stock shall
be in arrears in an aggregate amount equal to at least six quarterly
dividends (whether or not consecutive), (i) the number of members of the
Board of Directors of the Corporation shall be increased by two, effective
as of the time of election of such directors as hereinafter provided and
(ii) the holders of shares of Convertible Preferred Stock (voting
separately as a class with all other affected classes or series of Parity
Dividend Stock upon which like voting rights have been conferred and are
exercisable) shall have the exclusive right to vote for and elect such two
additional directors of the Corporation who shall continue to serve during
the period such dividends remain in arrears. The right of the holders of
shares of Convertible Preferred Stock to vote for such two additional
directors shall terminate when all accrued and unpaid dividends on the
Convertible Preferred Stock and all other affected classes or series of
Parity Dividend Stock have been declared and paid or set apart for payment.
The term of office of all directors so elected shall terminate immediately
upon the termination of the right of the holders of shares of Convertible
Preferred Stock and such Parity Dividend Stock to vote for such two
additional directors, and the number of directors of the Board of Directors
of the Corporation shall immediately thereafter be reduced by two.
The foregoing right of the holders of shares of Convertible Preferred
Stock with respect to the election of two directors may be exercised at any
annual meeting of shareholders or at any special meeting of shareholders
held for such purpose. If the right to elect directors shall have accrued
to the holders of shares of Convertible Preferred Stock more than ninety
days preceding the date established for the next annual meeting of
stockholders, the President of the Corporation shall, within twenty days
after the delivery to the Corporation at its principal office of a written
request for a special meeting signed by the holders of at least 10 percent
of all outstanding shares of Convertible Preferred Stock, call a special
meeting of the holders of Convertible Preferred Stock to be held within
sixty days after the delivery of such request for the purpose of electing
such additional directors.
The holders of shares of Convertible Preferred Stock and any Parity
Dividend Stock referred to above voting as a class shall have the right to
remove without cause at any time and replace any directors such holders
shall have elected pursuant to this Section VII.
VIII. Outstanding Shares. For purposes of this amendment, all shares
of Convertible Preferred Stock issued by the Corporation shall be deemed
outstanding, all shares of Convertible Preferred Stock issued by the
Corporation shall be deemed outstanding except (i) from the date fixed for
redemption pursuant to Section V, all shares of Convertible Preferred Stock
that have been so called for redemption under Section V, to the extent
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provided thereunder; (ii) from the date of surrender of certificates
evidencing shares of Convertible Preferred Stock, all shares of Convertible
Preferred Stock converted into Common Stock; and (iii) from the date of
registration of transfer, all shares of Convertible Preferred Stock owned,
directly or indirectly, by any entity of which the Corporation owns,
directly or indirectly, a majority of the shares entitled to vote for
directors.
IX. Partial Payments. Upon an optional redemption by the Corporation,
if at any time the Corporation does not pay amounts sufficient to redeem
all Convertible Preferred Stock, then such funds which are paid shall be
applied to redeem such shares of Convertible Preferred Stock as the
Corporation may designate by lot or in such other manner as the Board of
Directors may determine to be fair, or such redemption shall be effected
pro rata.
X. Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or
otherwise adversely affecting the remaining provisions hereof. If a court
of competent jurisdiction should determine that a provision hereof would be
valid or enforceable if a period of time were extended or shortened or a
particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question
effective and valid under applicable law.
XI. Miscellaneous. (a) The Corporation shall pay any and all stock
transfer and documentary stamp taxes that may be payable in respect of any
issuance or delivery of shares of Convertible Preferred Stock or shares of
Common Stock or other securities issued on account of Convertible Preferred
Stock pursuant hereto or certificates or instruments evidencing such shares
or securities. The Corporation shall not, however, be required to pay any
such tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of Convertible Preferred Stock or Common
Stock or other securities in a name other than that in which the shares of
Convertible Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any
payment to any person with respect to any such shares or securities other
than a payment to the registered holder thereof, and shall not be required
to make any such issuance, delivery or payment unless and until the person
otherwise entitled to such issuance, delivery or payment has paid to the
Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid or is not
payable.
(b) In the event that a holder of shares of Convertible Preferred
Stock shall not by written notice designate the name in which shares of
Common Stock to be issued upon conversion of such shares should be
registered or to whom payment upon redemption of shares of Convertible
Preferred Stock should be made or the address to which the certificates or
instruments evidencing such shares or such payment, should be sent, the
Corporation shall be entitled to register such shares and make such
payment, in the name of the holder of such Convertible Preferred Stock as
shown on the records of the Corporation and to send the certificates or
instruments evidencing such shares or such payment, to the address of such
holder shown on the records of the Corporation.
THIRD: The Amendment was adopted on May 18, 1993.
FOURTH: The Amendment was duly adopted by the Board of Directors.
ASHLAND OIL, INC.
/Paul W. Chellgren/
-------------------------
Paul W. Chellgren
President
COMMONWEALTH OF KENTUCKY )
COUNTY OF GREENUP )
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The foregoing instrument was acknowledged before me this 17th day of
May, 1993, by Paul W. Chellgren, President of ASHLAND OIL, INC., a Kentucky
corporation, on behalf the corporation.
/Mary E. Mell/
---------------------------------
Mary E. Mell
Notary Public
[STAMP]
MARY E. MELL
My commission expires: July 3,
1994
Prepared by Thomas L. Feazell
1000 Ashland Drive
Russell, Kentucky 41114
/Thomas L. Feazell/
- ---------------------------------
Thomas L. Feazell
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[STAMP]
LODGED FOR RECORD ON
THE 18 DAY OF MAY
1993 AT 3:45 PM RECORDED
IN ART. OF INC. BOOK
NO. 12 PAGE 322
TAX $______ FEES $23.50
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY J. THOMPSON D.C.
NO. ___________
[STAMP]
LODGED FOR RECORD
ON THE 18 DAY OF MAY
1993 AT 2:55 PM RECORDED
IN ART. OF INC. BOOK
NO. 30 PAGE 59
[STAMP]
RECEIVED & FILED
$40.00
JAN 27 8:34AM '95
BOB BABBAGE
SECRETARY OF STATE
COMM. OF KENTUCKY
BY: ACH
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 4
Pursuant to the provisions of Section 271B.10-060 of the Kentucky
Business Corporation Act, the undersigned corporation adopts the following
articles of amendment to its Second Restated Articles of Incorporation:
First: The name of the corporation is Ashland Oil, Inc.
Second: At a meeting of the Board of Directors held on November 3,
1994, the Board of Directors proposed that the Second Restated Articles of
Incorporation be amended by substituting a new Article I for the existing
Article I, and directed that the proposed amendment be submitted to the
shareholders with the affirmative recommendation of the Board of Directors
at a meeting of the corporation's shareholders to be held on January 26,
1995 (the "Meeting"), which Meeting was duly called upon notice of the
specific purpose.
The text of the new Article I is as follows:
ARTICLE I
The name of the corporation is Ashland Inc. (hereinafter called the
"Company" or the "Corporation").
Third: There were 60,754,474 shares of Ashland Oil, Inc. Common
Stock, each of which was entitled to cast one vote, outstanding at November
28, 1994, the record date for the Meeting, which represent all of the
shares entitled to vote on such amendment.
Fourth: There were 52,983,021 shares of Ashland Oil, Inc. Common
Stock indisputably represented at the Meeting.
Fifth: The total number of undisputed votes cast for such
amendment was 51,239,239 and the total number of votes cast against such
amendment was 1,370,949. The number of votes cast for the amendment was
sufficient for approval.
Sixth: The amendment will become effective at 4:00 p.m. on January
27, 1995.
ASHLAND OIL, INC.
/Paul W. Chellgren/
By: _____________________________
Paul W. Chellgren
President
[STAMP] BOOK 31 PAGE 320
<PAGE>
Commonwealth of Kentucky
County of Greenup
The foregoing instrument was acknowledged before me this 27th day of
January, 1995, by Paul W. Chellgren, President of Ashland Oil, Inc., a
Kentucky corporation, on behalf of the corporation.
/Teresa F. Gabbard/
---------------------------
Notary Public
[STAMP] TERESA F. GABBARD
My commission expires October 9, 1997
Prepared by Thomas L. Feazell
1000 Ashland Drive
Russell, Kentucky 41169
/Thomas L. Feazell/
- -----------------------------
[STAMP]
DOCUMENT NO: 440448
RECORDED ON: JANUARY 27, 1995 12:58:53PM
TOTAL FEES: $9.00
COUNTY CLERK: MAXINE SELBEE
COUNTY: BOYD COUNTY
DEPUTY CLERK: GAIL BOGGS
BOOK 31 PAGE 321
[STAMP]
LODGED FOR RECORD ON
THE 27 DAY OF JAN., 1995
AT 1:45PM RECORDED IN ART.
OF INC. BOOK NO. 13 PAGE
147 TAX $_________ FEES
$9.00
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY: JOAN BURNETT D.C.
<PAGE>
[LOGO] ASHLAND
ASHLAND INC.
BY-LAWS
As Effective January 27, 1995
<PAGE>
BY-LAWS
OF
ASHLAND INC.
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of the
Corporation in the Commonwealth of Kentucky shall be at Ashland Drive, City
of Russell, Greenup County. The names of the registered agents located
thereat shall be designated by the Board from time to time by a resolution
adopted by a majority of the Board.
SECTION 2. Other Offices. The Corporation may also have offices at other
places either within or without the Commonwealth of Kentucky.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the shareholders
for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held at the
principal office of the Corporation on the last Thursday of January,
annually, at the hour of ten thirty a.m., or at such other place (within or
without the Commonwealth of Kentucky), date and hour as shall be designated
in the notice thereof.
SECTION 2. Annual Meeting Business. To be properly brought before an
annual meeting, business must be (i) specified in the notice of the meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors or (iii) otherwise properly brought
before the meeting by a shareholder. For business to be properly brought
before an annual meeting by a shareholder, the shareholder must have given
written notice thereof, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Corporation, not later than
90 days in advance of such meeting (provided that if the annual meeting of
shareholders is held earlier than the last Thursday in January, such notice
must be given within 10 days after the first public disclosure, which may
include any public filing with the Securities and Exchange Commission, of
the date of the annual meeting). Any such notice shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the meeting
and the reasons for conducting such business at the meeting and in the
event that such business includes a proposal to amend either the Second
Restated Articles of Incorporation or By-laws of the Corporation, the
language of the proposed amendment, (ii) the name and address of the
shareholder proposing such business, (iii) a representation that the
shareholder is a holder of record of stock of the corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the
meeting to propose such business, and (iv) any material interest of the
shareholder in such business. No business shall be conducted at an annual
meeting of shareholders except in accordance with this paragraph and the
chairman of any annual meeting of shareholders may refuse to permit any
business to be brought before an annual meeting without compliance with the
foregoing procedures.
SECTION 3. Special Meetings. A special meeting of the shareholders
may be called by the Board of Directors, the Chairman of the Board, any
Vice Chairman of the Board or the President, at such place (within or
without the Commonwealth of Kentucky), date and hour as shall be designated
in the notice thereof. The Secretary shall call a special meeting of the
shareholders, to be held on such date as the Secretary shall determine, on
the request in writing of the holders of shares of capital stock of the
Corporation entitled to vote at such meeting which represent one-third or
more of the total votes entitled to be cast at such meeting. Such request
shall set forth: (i) the action proposed to be taken at such meeting and
the reasons for the action; (ii) the name and address of each of such
holders who intends to propose action be taken at such meeting; (iii) a
representation that each is a holder of record of stock of the Corporation
entitled to vote at such meeting and intends to appear in person or by
proxy at such meeting to propose the action specified in the request; (iv)
any material interest of any shareholder in such action; and (v) in the
event that any proposed action consists of or includes a proposal to amend
either the Second Restated Articles of Incorporation or the By-laws of the
Corporation, the language of the proposed amendment. The Secretary may
refuse to call a special meeting unless the request is made in compliance
with the foregoing procedure.
SECTION 4. Notice of Meetings. Except as otherwise expressly required
by law, notice of each meeting of the shareholders shall be given not less
than ten nor more than sixty days before the date of the meeting to each
shareholder entitled to vote at such meeting by mailing such notice,
postage prepaid, directed to the shareholder at his address as it appears
on the records of the Corporation. Every such notice shall state the place,
date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Except as otherwise
expressly required by law, notice of any adjourned meeting of the
shareholders need not be given if the date, time and place thereof are
announced at the meeting at which the adjournment is taken, unless the
adjournment is for more than 120 days or after the adjournment a new record
date is fixed for the adjourned meeting.
SECTION 5. Record of Shareholders. It shall be the duty of the
officer or agent of the Corporation who shall have charge of its stock
transfer books to prepare and make a complete record of the shareholders
entitled to vote at any meeting of shareholders or adjournment thereof,
arranged by voting group (and within each voting group by class or series),
and showing the address of each shareholder and the number of shares
registered in the name of each shareholder. Such record shall be produced
at the time and place of the meeting and shall be open to the inspection of
any shareholder entitled to vote at such meeting or any adjournment thereof
during the whole time of such meeting or adjournment for the purposes
thereof.
SECTION 6. Quorum. At each meeting of the shareholders or adjournment
thereof, except as otherwise expressly required by law, these By-laws or
the Second Restated Articles of Incorporation, shareholders holding a
majority of the shares of the Corporation issued and outstanding and
entitled to be voted thereat shall be present in person or by proxy to
constitute a quorum for the transaction of business. The shareholders
present at a duly organized meeting can continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave
less than a quorum.
SECTION 7. Organization. At each meeting of the shareholders, one of the
following shall act as chairman of the meeting and preside thereat, in the
following order of precedence:
(a) the Chairman of the Board;
(b) a Vice Chairman of the Board in order of rank of seniority in
office;
(c) the President; or
(d) any other officer of the Corporation designated by the Board or
the Executive Committee to act as chairman of such meeting and to preside
thereat if the Chairman of the Board, each Vice Chairman of the Board and
the President shall be absent from such meeting.
The Secretary or, if he shall be absent from such meeting, the person
(who shall be the Deputy Secretary or an Assistant Secretary of the
Corporation, if one of such officers shall be present thereat) whom the
chairman of such meeting shall appoint, shall act as secretary of such
meeting and keep the minutes thereof.
SECTION 8. Order of Business. The order of business at each meeting
of the shareholders shall be determined by the chairman of such meeting,
but such order of business may be changed by a majority in voting interest
of those present in person or by proxy at such meeting and entitled to vote
thereat.
SECTION 9. Voting. Except as otherwise expressly required by law,
these By-laws, or the Second Restated Articles of Incorporation, each
shareholder entitled to vote shall, at each meeting of the shareholders,
have one vote (except that at each election for directors each such
shareholder shall have the right to cast as many votes in the aggregate as
he shall be entitled to vote under the Second Restated Articles of
Incorporation multiplied by the number of directors to be elected at such
election; and each shareholder may cast the whole number of votes for one
candidate, or distribute such votes among two or more candidates), in
person or by proxy, for each share of the Corporation held by him and
registered in his name on the books of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 6 of
Article VIII of these By-laws as the record date for the determination of
shareholders who shall be entitled to receive notice of and to vote at such
meeting, or
(b) if no record date shall have been so fixed, then at the close of
business on the day on which notice of such meeting shall be given.
Shares of the Corporation's stock belonging to a majority-owned
subsidiary of the Corporation shall not be counted in determining the total
number of outstanding shares and shall neither be entitled to vote nor
counted for quorum purposes. Any vote of shares of the Corporation may be
given at any meeting of the shareholders by the shareholders entitled
thereto in person or by proxy appointed by an instrument in writing by the
shareholder or his duly authorized attorney-in-fact. The attendance at any
meeting of a shareholder who may theretofore have given a proxy shall not
have the effect of revoking the same unless he shall in writing so notify
the Secretary.
At all meetings of the shareholders each matter, except as otherwise
expressly required by law, these By-laws or the Second Restated Articles of
Incorporation, shall be approved if the votes cast in favor of such matter
exceed the votes cast opposing such matter.
Except as otherwise expressly required by law, the vote at any
meeting of the shareholders on any question need not be by ballot, unless
so directed by the chairman of the meeting. On a vote by ballot each ballot
shall be signed by the shareholder voting, or by his proxy, if there be
such proxy, and shall state the number of shares voted.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors.
SECTION 2. Number and Term of Office. Except as otherwise provided by
law, the number of directors which shall constitute the Board of Directors
shall be fixed from time to time by a resolution adopted by a majority of
the Board of Directors. So long as the Board of Directors shall consist of
nine or more members, the directors shall be classified with respect to the
time for which they shall severally hold office, by dividing them into
three classes, as nearly equal in number as possible. Each class shall be
elected at the annual meeting of shareholders held in 1986 for terms which
will expire as follows: one class of directors to be originally elected for
a term expiring at the annual meeting of shareholders to be held in 1987;
the second class of directors to be originally elected for a term expiring
at the annual meeting of shareholders to be held in 1988; and the third
class of directors to be originally elected for a term expiring at the
annual meeting of shareholders to be held in 1989.
At each annual meeting of shareholders beginning in 1987, successors
to the class of directors whose term then expires shall be elected to serve
for a term expiring at the annual meeting of shareholders held in the third
year following the year of their election and until their successors shall
have been elected and qualified; provided, that the successor to a director
whose term expires at such annual meeting because he was elected to fill a
vacancy on the board may, if so specified by the Board of Directors, be
elected to serve for a term expiring at the annual meeting of shareholders
held in the first or second year following the year of his election and
until his successor shall have been elected and qualified. The Board of
Directors shall increase or decrease the number of directors in one or more
classes as may be appropriate whenever it increases or decreases the number
of directors in order to ensure that the three classes remain as nearly
equal in number as possible. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 3. Nomination. Nominations for the election of directors may
be made by the Board of Directors or by any shareholder entitled to vote
for the election of directors. Any shareholder entitled to vote for the
election of directors at a meeting may nominate a person or persons for
election as directors only if written notice of such shareholder's intent
to make such nomination is given, either by personal delivery or by United
States mail, postage prepaid, to the Secretary of the Corporation, not
later than (i) with respect to an election to be held at an annual meeting
of shareholders, 90 days in advance of such meeting (provided that if the
annual meeting of shareholders is held earlier than the last Thursday in
January, such notice must be given within 10 days after the first public
disclosure, which may include any public filing with the Securities and
Exchange Commission, of the date of the annual meeting) and (ii) with
respect to an election to be held at a special meeting of shareholders for
the election of directors, the close of business on the seventh day
following the date on which notice of such meeting is first given to
shareholders. Each such notice shall set forth: (a) the name and address of
the shareholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the shareholder is a
holder of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description
of all arrangements or understandings between the shareholder and each
nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had each nominee been nominated, or intended to be nominated, by
the Board of Directors; and (e) the consent of each nominee to serve as a
director of the Corporation if so elected. The chairman of any meeting of
shareholders to elect directors and the Board of Directors may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
SECTION 4. Election. Except as otherwise expressly provided in the
Second Restated Articles of Incorporation, at each meeting of the
shareholders for the election of directors at which a quorum is present,
the persons receiving the greatest number of votes, up to the number of
directors to be elected, shall be the directors.
SECTION 5. Resignation, Removal and Vacancies. Any director may
resign at any time by giving written notice of his resignation to the
Chairman of the Board, any Vice Chairman of the Board, the President or the
Secretary. Any such resignation shall take effect at the time specified
therein, or, if the time when it shall become effective shall not be
specified therein, then it shall take effect when accepted by action of the
Board. Except as aforesaid, the acceptance of such resignation shall not be
necessary to make it effective.
Any or all directors may be removed at a meeting of the shareholders
called expressly for that purpose (i) in the case of a removal of a
director for cause, by a vote of the holders of a majority of the voting
power of the then outstanding voting stock of the Corporation, voting
together as a single class, or (ii) in the case of a removal of a director
without cause, by a vote of the holders of at least 80% of the voting power
of the then outstanding voting stock of the Corporation, voting together as
a single class. If less than all the directors are to be removed, no one of
the directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the
entire Board or, if there be classes of directors, at an election of the
class of directors of which he or she is a part. For purposes of this
Section 5, "cause" shall mean the willful and continuous failure of a
director to substantially perform such director's duties to the Corporation
(other than any failure resulting from incapacity due to physical or mental
illness) or the willful engaging by a director in gross misconduct
materially and demonstrably injurious to the Corporation. As used in these
By-laws, "voting stock" shall mean shares of capital stock of the
Corporation entitled to vote generally in the election of directors.
Any vacancy occurring on the Board may be filled by a majority of the
directors then in office, though less than a quorum, and the director
elected to fill such vacancy shall hold office until the next annual
meeting of shareholders at which directors are elected and until his
successor is elected and qualified.
SECTION 6. Meetings.
(A) Annual Meetings. As soon as practicable after each annual
election of directors, the Board shall meet for the purpose of organization
and the transaction of other business.
(B) Regular Meetings. Regular meetings of the Board shall be held at
such dates, times and places as the Board shall from time to time
determine.
(C) Special Meetings. Special meetings of the Board shall be held
whenever called by the Chairman of the Board, any Vice Chairman of the
Board, the President or upon the written request of a majority of the
members of the whole Board filed with the Secretary. Any and all business
may be transacted at a special meeting which may be transacted at a regular
meeting of the Board.
(D) Place of Meeting. The Board may hold its meetings at such place
or places within or without the Commonwealth of Kentucky as the Board may
from time to time by resolution determine or as shall be designated in the
respective notices or waiver of notices thereof.
(E) Notice of Meetings. Notices of regular meetings of the Board or
of any adjourned meeting need not be given.
Notices of special meetings of the Board, or of any meeting of any
committee of the Board which has not been fixed in advance as to time and
place by such committee, shall be mailed by the Secretary to each director,
or member of such committee, addressed to him at his residence or usual
place of business, at least two days before the day on which such meeting
is to be held, or shall be sent to him by telegraph, cable or other form of
recorded communication or be delivered personally or by telephone not later
than the day before the day on which such meeting is to be held. Such
notice shall include the date, time and place of such meeting, but any such
notice need not specify the business to be transacted at, or the purpose
of, any such meeting. Notice of any such meeting need not be given to any
director or member of any committee, however, if waived by him in writing,
whether before or after such meeting shall be held, or if he shall be
present at such meeting, unless the director at the beginning of the
meeting (or promptly upon his or her arrival) objects to holding the
meeting or transacting business at the meeting and does not thereafter vote
for or assent to action taken at the meeting.
(F) Quorum and Manner of Acting. A majority of the number of
directors fixed by or in the manner provided in these By-laws or in the
Second Restated Articles of Incorporation shall be present in person at any
meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting, and the vote of a majority of those directors
present at any such meeting at which a quorum is present shall be necessary
for the passage of any resolution or act of the Board, except as otherwise
expressly required by law, these By-laws or the Second Restated Articles of
Incorporation.
(G) Action by Consent. Any action required or permitted to be taken
at any meeting of the Board, or of any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may
be, consent thereto in writing, and such writing is filed with the minutes
of the proceedings of the Board or committee.
(H) Meeting by Telephone. Any meeting of the Board, or of any
committee thereof may be conducted through the use of any means of
communication by which all persons participating in the meeting can hear
and speak to each other, and the directors' participation in such a meeting
shall constitute presence in person at the meeting for all purposes.
(I) Organization. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside thereat, in the following
order of precedence:
(a) the Chairman of the Board;
(b) a Vice Chairman of the Board in order of rank of seniority in
office; or
(c) the President.
SECTION 7. Compensation. The Board of Directors may fix such amount
per annum and such fees to be paid by the Corporation to directors for
attendance at meetings of the Board or of any committee, or both, as the
Board shall from time to time determine. The Board may likewise provide
that the Corporation shall reimburse each director or member of a committee
for any expenses incurred by him on account of his attendance at any such
meeting. Nothing contained in this Section shall be construed to preclude
any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
COMMITTEES
SECTION 1. Executive Committee.
(A) Designation and Membership. The Board may, by resolution passed
by a majority of the whole Board, designate an Executive Committee
consisting of the Chairman of the Board, each Vice Chairman of the Board,
the President and such additional number of directors as the Board shall
determine. Vacancies may be filled by the Board at any time and any member
of the Executive Committee shall be subject to removal, with or without
cause, at any time by resolution passed by a majority of the whole Board.
(B) Functions and Powers. The Executive Committee, subject to any
limitations prescribed by the Board, shall possess and may exercise, during
the intervals between meetings of the Board, all the powers and authority
of the Board in the management of the business and affairs of the
Corporation; provided, however, that the Executive Committee shall not have
the power or authority to approve amendments to the Second Restated
Articles of Incorporation, adopt agreements of merger or consolidation,
recommend to the shareholders the sale, lease or exchange of all or
substantially all the property and assets of the Corporation, recommend to
the shareholders the dissolution of the Corporation or the revocation of a
dissolution, amend these By-laws or to take any other action which a
committee is prohibited by law from taking.
At each meeting of the Board the Executive Committee shall make a
report of all action taken by it since its last report to the Board.
(C) Meetings and Quorum. The Executive Committee shall meet as often
as may be deemed necessary and expedient at such times and places as shall
be determined by the members of the Executive Committee. A majority of the
members of the Executive Committee shall constitute a quorum. The Chairman
of the Board shall preside at meetings thereof, and, in his absence, the
Executive Committee may appoint any other member of the Executive Committee
to preside.
SECTION 2. Audit Committee.
(A) The Board may by resolution passed by a majority of the whole
Board designate an Audit Committee consisting of three or more directors.
Vacancies may be filled by the Board at any time and any member of the
Audit Committee shall be subject to removal, with or without cause, at any
time by resolution passed by a majority of the whole Board.
(B) The Audit Committee shall review with the independent public
accountants for the Corporation the scope of their examination, receive
copies of the reports of such accountants, meet with representatives of
such accountants for the purpose of reviewing and considering questions
relating to such accountants' examination and such reports, review, either
directly or through such accountants, the internal accounting and auditing
procedures of the Corporation, report the results of the foregoing to the
Board and act upon such other matters as may be referred to it by the
Board.
At each meeting of the Board the Audit Committee shall make a report
of all action taken by it since its last report to the Board.
(C) Meetings and Quorum. The Audit Committee shall meet as often as
may be deemed necessary and expedient at such times and places as shall be
determined by the members of the Audit Committee. A majority of the members
of the Audit Committee shall constitute a quorum. The Audit Committee may
appoint any member to preside at meetings thereof.
SECTION 3. Other Committees. The Board may, by resolution passed by a
majority of the whole Board, designate other committees, each committee to
consist of two or more directors and to have such duties and functions as
shall be provided in such resolution. The Board shall have the power to
change the members of any such committee at any time, to fill vacancies and
to discharge any such committee, either with or without cause, at any time.
ARTICLE V
OFFICERS
SECTION 1. Officers and Executive Officers of the Corporation. The
officers of the Corporation shall
be:
(a) a Chairman of the Board;
(b) one or more Vice Chairmen of the Board;
(c) a President;
(d) one or more Vice Presidents, one or more of whom may be
designated as Executive Vice President, one or more of whom may be
designated as Senior Vice President, and one or more of whom may be
designated as Administrative Vice President;
(e) a Secretary and, as and when designated, a Deputy Secretary and one
or more Assistant Secretaries;
(f) a Treasurer and, as and when designated, a Deputy Treasurer and one
or more Assistant Treasurers;
(g) a Controller and, as and when designated, a Deputy Controller and
one or more Assistant Controllers;
(h) an Auditor and, as and when designated, one or more Assistant
Auditors. The following officers are hereby designated the Executive
Officers of the Corporation:
Chairman of the Board;
Vice Chairmen of the Board;
President;
Executive Vice Presidents;
Senior Vice Presidents;
Administrative Vice Presidents;
Secretary;
Treasurer;
Controller;
Auditor.
SECTION 2. Election and Appointment and Term of Office. Each
Executive Officer shall be elected by the Board at its annual meeting and
hold office until the next annual meeting of the Board and until his
successor is elected or until his earlier death, resignation or removal in
the manner hereinafter provided.
The Board may elect such other officers and designate such other
Executive Officers as it deems necessary and such other officers shall have
such authority and shall perform such duties as the Board may prescribe.
The Chairman of the Board acting jointly with any Vice Chairman of
the Board or the President, by written designation filed with the
Secretary, may appoint all officers, other than Executive Officers, of the
Corporation. Subject to the authority of the Board, the persons having
authority to appoint an officer shall also have authority to fix the salary
of such officer.
If additional officers are elected by the Board during the year, each
of them shall hold office until the next annual meeting of the Board at
which officers are regularly elected and until his successor is elected or
appointed or until his earlier death, resignation or removal in the manner
hereinafter provided.
SECTION 3. Resignation, Removal and Vacancies. Any officer may resign
at any time by giving written notice to the Chairman of the Board, any Vice
Chairman of the Board, the President or the Secretary, and such resignation
shall be effective when the notice is delivered, unless the notice
specifies a later effective date.
All officers and agents elected or appointed shall be subject to
removal at any time by the Board with or without cause. All appointed
officers may be removed at any time by the Chairman of the Board acting
jointly with any Vice Chairman of the Board or the President, by written
designation filed with the Secretary.
A vacancy in any office may be filled for the unexpired portion of
the term in the same manner as provided for election or appointment to such
office.
SECTION 4. Duties and Functions.
(A) Chairman of the Board. The Chairman of the Board, if present,
shall preside at all meetings of the shareholders and the Board. He shall
be Chief Executive Officer of the Corporation, shall be vested with
executive control and management of the business and affairs of the
Corporation and shall have the direction of all other officers, agents and
employees. He shall perform all such other duties as are incident to the
office or as may be properly required of him by the Board, subject in all
matters to the control of the Board.
(B) Vice Chairmen of the Board. The Vice Chairman of the Board with
seniority of office, in the absence of the Chairman of the Board, shall
preside at all meetings of the shareholders and the Board. Each Vice
Chairman of the Board shall have such powers, authority and duties as may
be delegated to him from time to time by the Board or the Chairman of the
Board.
(C) The President. The President, in the absence of the Chairman of
the Board and all the Vice Chairmen of the Board, shall preside at all
meetings of the shareholders and the Board. He shall have such powers,
authority and duties as may be delegated to him from time to time by the
Board or the Chairman of the Board.
(D) Executive Vice Presidents. The Executive Vice Presidents shall
have such powers, authority and duties as may be delegated or assigned to
them from time to time by the Board, the Chairman of the Board, any Vice
Chairman of the Board or the President.
(E) Senior Vice Presidents. The Senior Vice Presidents shall have
such powers, authority and duties as may be delegated or assigned to them
from time to time by the Board, the Chairman of the Board, any Vice
Chairman of the Board or the President.
(F) Administrative Vice Presidents. The Administrative Vice
Presidents shall have such powers, authority and duties as may be delegated
or assigned to them from time to time by the Board, the Chairman of the
Board, any Vice Chairman of the Board or the President.
(G) Vice Presidents. The Vice Presidents shall have such powers,
authority and duties as may be delegated or assigned to them from time to
time by the Board, the Chairman of the Board, any Vice Chairman of the
Board or the President.
(H) Secretary. The Secretary shall attend to the giving and serving
of all notices required by law or these By-laws; shall be the custodian of
the corporate seal and shall affix and attest the same to all papers
requiring it; shall have responsibility for preparing minutes of the
meetings of the Board and shareholders; and shall in general perform all
the duties incident to the office of the Secretary, subject in all matters
to the control of the Board.
(I) Treasurer. The Treasurer shall have custody and control of the
funds and securities of the Corporation and shall perform all such other
duties as are incident to his office or that may be properly required of
him by the Board, the Chairman of the Board, any Vice Chairman of the Board
or the President.
(J) Controller. The Controller shall maintain adequate records of all
assets, liabilities and transactions of the Corporation; shall see that
adequate audits thereof are currently and regularly made; shall have
general supervision of the preparation of the Corporation's balance sheets,
income accounts and other financial statements or records; and shall
perform such other duties as shall, from time to time, be assigned to him
by the Board, the Chairman of the Board, any Vice Chairman of the Board or
the President. These duties and powers shall extend to all subsidiary
corporations and so far as the Board, the Chairman of the Board, any Vice
Chairman of the Board or the President may deem practicable, to all
affiliated corporations.
(K) Auditor. The Auditor shall review the accounting, financial and
related operations of the Corporation and shall be responsible for
measuring the effectiveness of various controls established for the
Corporation. His duties shall include, without limitation, the appraisal of
procedures, verifying the extent of compliance with formal controls and the
prevention and detection of fraud or dishonesty and such other duties as
shall, from time to time, be assigned to him by the Board, the Chairman of
the Board, any Vice Chairman of the Board or the President. These duties
and powers shall extend to all subsidiary corporations and so far as the
Board, any Chairman of the Board, any Vice Chairman of the Board or the
President may deem practicable, to all affiliated corporations.
ARTICLE VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Borrowing Authority. The Chairman of the Board, any Vice
Chairman of the Board, the President, the Senior Vice President supervising
the law function, the Treasurer and any other officer, employee, or agent
of the Corporation designated by the Board (collectively, "Designated
Officers") shall, subject to Section 3 and Section 7 hereof, have the
power, acting jointly with any officer designated by the Board as the Chief
Financial Officer or the Treasurer (collectively, the "Financial
Officers"), to authorize the establishment of borrowing facilities, the
borrowing of money, the issuance of debt obligations, or the guaranteeing
of debt obligations of others on behalf of the Corporation. Any individual
acting as the approving Financial Officer may not act as one of the
approving Designated Officers on the same authorization.
SECTION 2. Delegation of Authority. Any Financial Officer of the
Corporation acting jointly with any Designated Officer may delegate the
authority to establish borrowing facilities or to borrow money or to issue
debt obligations or to guarantee the debt obligations of others or any
combination of the foregoing to any person(s) on behalf of the Corporation,
provided each obligation to be incurred under each such authority does not
exceed the equivalent of Ten Million United States Dollars (U.S.
$10,000,000). Each delegated authority may not be redelegated. Any
individual acting as the approving Financial Officer may not act as one of
the approving Designated Officers on the same authorization.
SECTION 3. Limitation of Authority. The Finance Committee of the Board
of Directors shall, subject to Section 7 and to the last sentence of this
Section 3, retain authority for and, in its sole discretion, shall
authorize (a) any establishment of borrowing facilities, borrowing of money
or issuance of debt obligations by the Corporation which exceeds the
equivalent of Ten Million United States Dollars (U.S. $10,000,000) and
which has a maturity of one year or more from the effective date of the
issuance or borrowing and (b) any guarantee of any debt obligation of
non-affiliated entities by the Corporation which guaranty is for an amount
exceeding the equivalent of Ten Million United States Dollars (U.S.
$10,000,000) and which underlying obligation has a maturity of one year or
more from the effective date of the issuance or borrowing. The foregoing
limitations shall not apply, however, to those borrowings, debt issuances,
or guaranties of debt obligations made or delivered, under or in connection
with a borrowing facility or program previously approved by the Board of
Directors or the Finance Committee or to such types of transactions with or
on behalf of affiliated entities.
SECTION 4. Execution of Documents. The Designated Officers, the
Financial Officers, and any other officer, employee or agent of the
Corporation designated by the Board shall have power, acting alone, to
execute and deliver, in the name and on behalf of the Corporation, (a)
mortgages, bonds, debentures, notes, checks, drafts and other orders
evidencing the borrowing or guaranteeing (when so authorized as provided in
Section 1, 2, 3 or 7) or payment of money and (b) deeds, leases, contracts
and other agreements and documents. Each such named officer empowered to
execute and deliver the aforesaid documents and any such other officer,
employee or agent so designated by the Board pursuant to the first sentence
of this Section 4 may delegate such power (including authority to
redelegate) by written instrument to other officers, employees or agents of
the Corporation.
SECTION 5. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation or otherwise with such banks or other financial institutions as
may be designated by the Board, by any Designated Officer, by any Financial
Officer, or by any other officer, employee or agent of the Corporation so
designated by the Board. Each such named officer and any such other
officer, employee or agent so authorized by the Board may delegate such
power (including authority to redelegate) by written instrument to other
officers, employees or agents of the Corporation.
SECTION 6. Proxies in Respect of Shares or Other Securities of Other
Corporations. Any Designated Officer and any Financial Officer shall have
the authority (a) to appoint from time to time an agent or agents of the
Corporation to exercise in the name and on behalf of the Corporation the
powers and rights which the Corporation may have as the holder of shares
or other securities in any other corporation, (b) to vote or consent in
respect of such shares or securities and (c) to execute or cause to be
executed in the name and on behalf of the Corporation and under its
corporate seal, or otherwise, such written proxies, powers of attorney
or other instruments as he may deem necessary or proper in order that
the Corporation may exercise such powers and rights. Any Designated
Officer and any Financial Officer may instruct any person or persons
appointed as aforesaid as to the manner of exercising such powers and
rights.
SECTION 7. Guaranty Authority in Respect of the Oil Pollution Act
of 1990. Pursuant to the Oil Pollution Act of 1990, rules and regulations
promulgated thereunder, including without limitation those at 33 C.F.R.
Part 138, or any amendments thereto, successor legislation, rules, or
regulations, the Corporation, from time to time, may provide to agencies of
the United States of America financial guaranties for entities who
transport for the Corporation or any of its affiliates into the waters of
the United States of America. Notwithstanding anything in these By-laws to
the contrary, any person designated by the Board as a member of the "Core
Group", the Controller, the Treasurer, and any other officer, employee, or
agent designated by the Board (collectively, "Corporate Officers") shall
have the power,
<PAGE>
acting jointly with the person designated as (a) the President of any
operating division or subsidiary of the Corporation requesting the guaranty
(the "Division"), (b) a Group Vice President of a Division, (c) an
Administrative Vice President of the Division, or (d) a Vice President of
the Division (collectively, "Divisional Officers") to authorize the
issuance of such guaranties. Any such guaranties may be approved as
provided in this Section 7 for any amount and for any term. Any individual
acting as the approving Corporate Officer may not act as an approving
Divisional Officer with respect to the same transaction.
ARTICLE VII
BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders, the
Board, the Executive Committee, the Audit Committee, and such other
committees of the Board as the Board may by resolution designate and shall
keep at its registered office or principal place of business, or at the
office of its transfer agent or registrar, a record of its shareholders,
giving the names and addresses of all shareholders, and the number and
class of the shares held by each.
ARTICLE VIII
SHARES AND THEIR TRANSFER; FIXING RECORD DATE
SECTION 1. Certificates for Shares. Every owner of shares of the
Corporation shall be entitled to have a certificate which shall set forth
upon the face or back of such certificate, or shall state that the
Corporation will furnish to any shareholder upon request and without
charge, a full statement of the designations, preferences, limitations and
relative rights of the shares of each class of shares authorized to be
issued, and the variations in the relative rights and preferences between
the shares of each series of any preferred or special class of shares, so
far as the same have been fixed and determined, and the authority of the
Board to fix and determine the relative rights and preferences of
subsequent series of such preferred or special classes of shares.
Each certificate representing shares shall state upon the face
thereof that the Corporation is organized under the laws of the
Commonwealth of Kentucky; the name of the person to whom issued; the number
and class of shares, and the designation of the series, if any, which such
certificate represents; and the par value of each share represented by such
certificate, or a statement that the shares are without par value. Such
certificate shall otherwise be in such form as the Board shall prescribe.
Each such certificate shall be signed by, or in the name of the
Corporation by, the Chairman of the Board, any Vice Chairman of the Board,
the President or a Vice President and by the Secretary, the Deputy
Secretary or an Assistant Secretary of the Corporation and shall be sealed
with the corporate seal or contain a facsimile thereof. In case any officer
who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may nevertheless be issued by the Corporation with the same
effect as if he were such officer at the date of issue. Where any such
certificate is manually countersigned by a transfer agent or registrar
(other than the Corporation itself or an employee of the Corporation), any
of the other signatures on the certificate may be a facsimile.
SECTION 2. Record. A record shall be kept of the name of the person,
firm or corporation owning the shares represented by each certificate for
shares of the Corporation issued, the number of shares represented by each
such certificate, and the date thereof, and, in the case of cancellation,
the date of cancellation. Except as otherwise expressly required by law,
the person in whose name shares stand on the books of the Corporation shall
be deemed the owner thereof for all purposes as regards the Corporation.
SECTION 3. Transfer of Shares. Transfers of shares of the Corporation
shall be made only on the books of the Corporation by the registered holder
thereof, or by his attorney thereunto duly authorized by written power of
attorney duly executed and filed with the Secretary or with a transfer
agent appointed as provided in Section 4 of this Article, and on the
surrender of the certificate or certificates for such shares properly
endorsed.
SECTION 4. Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these By-laws, concerning
the issue, transfer and registration of certificates for shares of the
Corporation. The Board may appoint or authorize any officer or officers to
appoint one or more transfer agents and one or more registrars and may
require all certificates for shares to bear the signature or signatures of
any of them.
SECTION 5. Lost, Stolen, Destroyed or Mutilated Certificates. The
holder of any shares of the Corporation shall immediately notify the
Corporation of any loss, theft or mutilation of the certificate therefor.
The Corporation may issue a new certificate for shares in the place of any
certificate theretofore issued by it and alleged to have been lost, stolen,
destroyed or mutilated, and the Board, the Chairman of the Board, any Vice
Chairman of the Board, the President or the Secretary may, in its or his
discretion, require the owner of the lost, stolen, mutilated or destroyed
certificate or his legal representatives to give the Corporation a bond in
such sum, limited or unlimited, in such form and with such surety or
sureties as the Board shall in its discretion determine, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft, mutilation or destruction of any such certificate or
the issuance of any such new certificate.
SECTION 6. Fixing Date for Determination of Shareholders of Record.
In order that the Corporation may determine the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion or exchange of shares or for the
purpose of any other lawful action, the Board may fix, in advance, a record
date, which shall not be more than seventy nor less than ten days before
the date of such meeting, nor more than seventy days prior to any other
action. A determination of shareholders entitled to notice of or to vote at
a meeting of the shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for
the adjourned meeting.
ARTICLE IX
SEAL
The Board shall provide a corporate seal, which shall be in the form
of a circle and shall bear the full name of the Corporation.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
October in each year.
ARTICLE XI
INDEMNIFICATION
SECTION 1. Every person who is or was an officer or employee of the
Corporation or of any other corporation or entity in which he served as a
director, officer or employee at the request of the Corporation
(hereinafter collectively referred to as a "Covered Person"), shall be
indemnified by the Corporation against any and all reasonable costs and
expenses (including but not limited to attorney's fees) and any liabilities
(including but not limited to judgments, fines, penalties and reasonable
settlements) that may be paid by or imposed against him in connection with
or resulting from any pending, threatened or completed claim, action, suit
or proceeding (whether brought by or in the right of the Corporation or
such other corporation or entity or otherwise), and whether, civil,
criminal, administrative, investigative or legislative (including any
appeal relating thereto), in which he may be involved, as a party or
witness or otherwise, by reason of his being or having been an officer or
employee of the Corporation or a director, officer or employee of such
other corporation or entity, or by reasons of any action taken or not taken
in such capacity, whether or not he continues to be such at the time such
liability or expense shall have been paid or imposed, if the Covered
Person:
(a) has been successful on the merits or otherwise with respect to such
claim, action, suit or proceeding; or
(b) acted in good faith, in what he reasonably believed to be the
best interests of the Corporation or such other corporation or entity, as
the case may be, and in addition, in any criminal action or proceeding, had
no reasonable cause to believe that his conduct was unlawful. As used in
this Article XI, the terms "expense" and "liability" shall include, but not
be limited to, counsel fees and disbursements and amounts of judgments,
fines or penalties against, and reasonable amounts paid in settlement by, a
Covered Person. The termination of any claim, action, suit or proceeding by
judgment, settlement (whether with or without court approval), conviction
or upon a plea of guilty or nolo contendere, or its equivalent, shall not
create a presumption that a Covered Person did not meet the standards of
conduct set forth in paragraph (b) of this Section 1.
SECTION 2. Indemnification under paragraph (b) of Section 1 shall be
made unless it is determined by any of the following that the Covered
Person has not met the standard of conduct set forth in paragraph (b) of
Section 1:
(a) the Board, acting by a quorum consisting of directors who were
not parties to (or who are determined to have been successful with respect
to) the claim, action, suit or proceeding;
(b) a committee of the Board established pursuant to Section 3 of
Article IV of the By-laws consisting of directors who were not parties to
(or who are determined to have been successful with respect to) the claim,
action, suit or proceeding;
(c) any officer or group of officers of the Corporation who, by
resolution adopted by the Board, has been given authority to make such
determinations;
(d) either of the following selected by the Board if a disinterested
committee of the Board (as described in paragraph (b) of this Section 2)
cannot be obtained or by the person(s) designated in paragraphs (a), (b) or
(c) of this Section 2:
(1) independent legal counsel (who may be the regular counsel of the
Corporation) who has delivered to the Corporation a written determination; or
(2) an arbitrator or a panel of arbitrators (which panel may include
directors, officers, employees or agents of the Corporation) who has
delivered to the Corporation a written determination.
SECTION 3. Expenses incurred with respect to any claim, action, suit
or proceeding of the character described in Section 1 of this Article XI
shall be advanced to a Covered Person by the Corporation prior to the final
disposition thereof, but the Covered Person shall be obligated to repay
such advances if it is ultimately determined that he is not entitled to
indemnification. As a condition to advancing expenses hereunder, the
Corporation may require the Covered Person to sign a written instrument
acknowledging his obligation to repay any advances hereunder if it is
ultimately determined he is not entitled to indemnity.
Notwithstanding the preceding paragraph, the Corporation may refuse
to advance expenses or may discontinue advancing expenses to a Covered
Person if such advancement is determined by the Corporation, in its sole
and exclusive discretion, not to be in the best interest of the
Corporation.
SECTION 4. Notwithstanding anything in this Article XI to the
contrary, no person shall be indemnified in respect of any claim, action,
suit or proceeding initiated by such person or his personal or legal
representative, or which involved the voluntary solicitation or
intervention of such person or his personal or legal representative (other
than an action to enforce indemnification rights hereunder or an action
initiated with the approval of a majority of the Board).
SECTION 5. The rights of indemnification provided in this Article XI
shall be in addition to any other rights to which any Covered Person may
otherwise be entitled to by contract, vote of shareholders or disinterested
directors, other corporate action or otherwise; and in the event of any
such person's death, such rights shall extend to his heirs and legal
representatives.
ARTICLE XII
AMENDMENTS
Any By-law may be adopted, repealed, altered or amended by the Board
at any regular or special meeting thereof. The shareholders of the
Corporation shall have the power to amend, alter to repeal any By-law only
to the extent and in the manner provided in the Second Restated Articles of
Incorporation of the Corporation.
<PAGE>
EXHIBIT 10.18
ASHLAND INC.
1995 PERFORMANCE UNIT PLAN
1. PURPOSE
The purpose of this Ashland Inc. 1995 Performance Unit Plan (the
"Plan") is to further the long-term profitable growth of Ashland by
offering a long-term incentive in addition to current compensation to
eligible employees who will be largely responsible for such growth to the
benefit of the Ashland shareholders. It is expected that this plan will
encourage such employees to remain with Ashland and will also encourage
qualified persons to seek and accept employment with Ashland.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following
meanings:
(a) "Ashland" means Ashland Inc., its divisions and
subsidiaries.
(b) "Board" means the Board of Directors of Ashland Inc.
(c) "Change in Control" shall be deemed to occur (1) upon the
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 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 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 Inc. or any subsidiary or employee benefit plan or trust
maintained by Ashland Inc. or any of its subsidiaries, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 20% of the Common Stock outstanding at
the time, without the prior approval of the Board, or (3) if 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.
(d) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Committee" means the Personnel and Compensation
Committee of the Board.
(f) "Common Stock" means the common stock, $1.00 par value,
of Ashland Inc.
(g) "Employee" means an employee selected for participation
in the Plan as set forth in Section 5.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "Fair Market Value" means, as of any specified date (or, if a
weekend or holiday, the next preceding business day), the closing price of
a share of Common Stock, as reported on the Composite Tape for New York
Stock Exchange issues.
(j) "Participant" means any Employee who receives a
Performance Unit Award under the Plan for a Performance Period.
<PAGE>
(k) "Performance Goals" mean 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
relationship 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.
(l) "Performance Period" means the period of time designated by
the Committee applicable to a Performance Unit Award during which the
Performance Goals shall be measured.
(m) "Performance Unit Award" means an award made pursuant to the
provisions of this Plan, the payment of which is contingent upon attainment
of Performance Goals.
3. SHARES: ADJUSTMENTS IN THE EVENT OF CHANGES IN
CAPITALIZATION
(a) Shares Authorized for Issuance. There shall be
reserved for issuance under the Plan 2,200,000 shares of Common
Stock, subject to adjustment pursuant to subsection (b) below.
Such shares shall be authorized but unissued shares of Common
Stock.
(b) Adjustments in Certain Events. In the event of any change in
the outstanding Common Stock by reason of any stock split, share dividend,
recapitalization, merger, consolidation, reorganization, combination, or
exchange or reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution
to common shareholders other than cash dividends, the number or kind of
shares that may be issued under the Plan shall be automatically adjusted to
that the proportionate interest of the Employees shall be maintained as
before the occurrence of such event.
4. ADMINISTRATION
Subject to the express provisions of this Plan, the Committee
shall have full authority to construe, interpret and administer this Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan,
to make Performance Unit Awards, to determine the terms, provisions and
conditions of the respective Performance Unit Awards (which need not be
identical) and to make all other determinations necessary or advisable for
the Plan's administration. Decisions of the Committee shall be final,
conclusive and binding upon all parties.
5. ELIGIBILITY
Performance Unit Awards may be made only to regular, full-time,
salaried employees of Ashland as selected by the Committee. Any Employee
may receive one or more Performance Unit Awards as the Committee shall from
time to time determine, and such determinations may be different as to
different Employees and may vary as to different awards. Nothing contained
in this Plan shall be construed to limit the right of Ashland to grant
other forms of incentive compensation otherwise than under this Plan. The
Plan or the receipt of a Performance Unit Award shall not confer on any
individual any right to continue in the employ of Ashland or interfere in
any way with the right of Ashland to terminate his or her employment at any
time, with or without cause, despite the fact that such termination may
have an adverse impact on the Participant's receipt of payment of a
Performance Unit Award.
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<PAGE>
6. PERFORMANCE UNIT AWARDS
(a) The Performance Goals and Performance Period applicable to a
Performance Unit Award 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.
(b) In making a Performance Unit 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 Unit Award shall
be established in dollars or shares of Common Stock, or a combination of
both, as determined by the Committee, and shall be based on the Employee's
base salary on the date of the Performance Unit Award. The original amount
of any Performance Unit Award shall not exceed 400% of the Employee's then
annual base salary; the amount paid out upon meeting the Performance Goals
shall not exceed the amount of such Performance Unit Award; and the total
amount of all Performance Unit Awards for a Performance Period shall not
exceed 2% of shareholders' equity as shown in Ashland's Annual Report to
Shareholders at the end of the fiscal year next preceding the
commencement of such Performance Period. In determining the amount of any
Performance Unit Award made, in whole or in part, in shares of Common
Stock, the value thereof shall be based on the Fair Market Value on the
first day of the Performance Period or on such other date as the Board
shall determine.
(c) A Performance Unit Award shall terminate for all purposes if
the Employee does not remain continuously employed and in good standing
with Ashland until payment of such Performance Unit Award. An Employee (or
his or her beneficiaries or estate) whose employment was terminated because
of death, disability or retirement will receive a pro rata portion of the
payment of his or her award based upon the portion of the Performance
Period during which he or she was so employed so long as the Performance
Goals are subsequently achieved.
(d) Payment with respect to Performance Unit Awards will be made
to Employees on a date or dates fixed by the Committee. The amount of such
payment shall be determined by the Committee and shall be based on the
original amount of such Performance Unit Award adjusted to reflect the
attainment of the Performance Goals during the Performance Period. Payment
may be made in one or more installments and may be made wholly in cash,
wholly in shares of Common Stock or partly in cash and partly in such
shares, all at the discretion of the Committee.
In addition, Employees may be offered the opportunity to defer the
receipt of payment of a Performance Unit Award. Common Stock may be granted
(i) as a bonus for deferral, or (ii) as a bonus for retaining for a
specified period of time, Common Stock received in payment of a Performance
Unit Award, all under such terms as may be established by the Committee
from time to time. Notwithstanding, in no event shall the value of the
Common Stock granted as a bonus for deferral or retention exceed 20% of the
value of the Performance Unit Award so deferred or retained. Any and all
payments made under the Plan shall be subject to the applicable federal,
state or local taxes required by law to be withheld.
If payment of a Performance Unit Award established in dollars is
to be made in shares of Common Stock or partly in such shares, the number
of shares of Common Stock to be delivered to an Employee on any payment
date shall be determined by dividing (x) the amount payable by (y) the Fair
Market Value on the date the Board approves the Committee's decision to pay
the Performance Unit Award or on such other date as the Board shall
determine.
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<PAGE>
If payment of a Performance Unit Award established in shares of
Common Stock is to be made in cash or partly in cash, the amount of cash to
be paid to an Employee on any payment date shall be determined by
multiplying (x) the number of shares of Common Stock to be paid in cash on
such payment date with respect to such Performance Unit Award, by (y) the
Fair Market Value on the date the Board approves the Committee's decision
to pay the Performance Unit Award or on such other date as the Board shall
determine. Any payment may be subject to such restrictions and conditions
as the Committee may determine.
7. NONTRANSFERABILITY AND NO SHAREHOLDER RIGHTS
The right to receive payment of a Performance Unit Award shall not
be assigned or transferred in whole or in part, either directly or by
operation of law or otherwise (except by will or the laws of descent and
distribution) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or any other manner. The holder
of a Performance Unit Award payable in whole or in part in shares of Common
Stock shall have none of the rights of a shareholder with respect to such
award until shares of Common Stock shall have been registered in the name
of the person or persons receiving payment of such award on the transfer
books of Ashland upon such payment.
8. CHANGE IN CONTROL
Upon a Change in Control, in order to maintain a Participant's
rights under the Plan, there shall be an acceleration of any Performance
Period relating to any Performance Unit Award, and payment of any
Performance Unit Award shall be made in cash as soon as practicable after
such Change in Control based upon achievement of the Performance Goals
applicable to such award up to the date of the Change in Control. If such
Performance Unit Award was established in shares of Common Stock, the
amount of cash to be paid to an Employee with respect to the Performance
Unit Award shall be determined by multiplying (x) the number of shares of
Common Stock relating to such Performance Unit Award, by (y) the Fair
Market Value on the date of the Change in Control. Further, Ashland's
obligation with respect to such Performance Unit Award shall be assumed, or
new obligations substituted therefor, by the acquiring or surviving
corporation after such Change in Control. In addition, prior to the date of
such Change in Control, the Committee, in its sole judgment may make
adjustment to any Performance Unit Award as may be appropriate to reflect
such Change in Control.
9. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky.
10. AMENDMENT AND TERMINATION
The Plan shall be submitted to the shareholders for approval and
adoption on January 26, 1995 or such other date fixed for the next meeting
of shareholders or any adjournment or postponement thereof. Upon
shareholder approval, the Plan will become effective as of October 1, 1994.
Unless terminated sooner by the Committee, to the extent necessary to
ensure that Performance Unit Award payments be deductible under the Code,
this Plan shall terminate on, and no Performance Unit Awards shall be
granted after, the first meeting of shareholders occurring in calendar year
2000. Termination of the Plan shall not affect any awards made hereunder
which are outstanding on the date of termination and such awards shall
continue to be subject to the terms of the Plan notwithstanding its
termination. The Committee may amend, alter or terminate this Plan at any
time without the prior approval of the Board; provided, however, that the
Committee may not, without approval by the Board and the shareholders:
(i) increase the amount of securities that may be issued
under the Plan (except as provided in Section 3(b));
(ii) materially modify the requirements as to eligibility
for participation in the Plan; or
(iii) otherwise materially increase the benefits accruing
the Employees under the Plan.
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EXHIBIT 10.19
ASHLAND INC.
INCENTIVE COMPENSATION PLAN FOR KEY EXECUTIVES
1. PURPOSE
The principal purposes of the Ashland Inc. Incentive Compensation
Plan for Key Executives (the "Plan") are to provide to Eligible Officers
incentives to earn annual incentive compensation through the achievement of
performance goals and to assist the Company in attracting, motivating and
retaining key employees on a competitive basis.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following
meanings:
(a) "Board" means the Board of Directors of Ashland Inc.
(b) "Change in Control" shall be deemed to occur (1) upon the
approval of the shareholders of the Company (or if such approval is not
required, upon the approval of the Board) of (A) any consolidation or
merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities or other property other than a merger in
which the holders of Common Stock immediately prior to the merger will have
the same proportionate ownership of Common Stock of the surviving
corporation immediately after the merger, (B) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Company or (C) adoption of any
plan or proposal for the liquidation or dissolution of the Company, (2)
when any "person" (as defined in Section 3(a)(9) or 13(d) of the Exchange
Act), other than the Company or any subsidiary or employee benefit plan or
trust maintained by the Company or any of its subsidiaries, shall become
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 20% of the Common Stock outstanding at
the time, without the prior approval of the Board, or (3) if at any time
during a period of two consecutive years, individuals who at the beginning
of such period constituted the Board shall cease for any reason to
constitute at least a majority thereof, unless the election or the
nomination for election by the Company's shareholders of each new director
during such two-year period was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning
of such two-year period.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Committee" means the Personnel and Compensation Committee
of the Board.
(e) "Common Stock" means the common stock, $1.00 par value, of
Ashland Inc.
(f) "Company" means Ashland Inc., its divisions and subsidiaries.
(g) "Eligible Officer" means an executive officer described in
Section 4.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Executive Officer" means an executive officer as defined
in Rule 3b-7 under the Exchange Act.
(j) "Fair Market Value" means, as of any specified date (or, if a
weekend or holiday, the next preceding business day), the closing price of
a share of Common Stock, as reported on the Composite Tape for New York
Stock Exchange issues.
<PAGE>
(k) "Hurdle" means the minimum Performance Goal(s) that must be
reached in order for the Eligible Officer to receive any Incentive Award.
(l) "Incentive Award" means the amount determined by the Committee
to be payable to a Participant upon the achievement of the Performance
Goals for the particular Performance Period.
(m) "Participant" means any Eligible Officer who receives an
Incentive Award under the Plan for a Performance Period.
(n) "Performance Goals" mean 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
relationship to other companies comparably or otherwise situated. Such
performance goals may be particular to an Eligible Officer or the division,
department, branch, line of business, subsidiary or other unit in which the
Eligible Officer works and/or may be based on the performance of the
Company generally.
(o) "Performance Period" means an annual period based upon the
Company's fiscal year, except to the extent the Committee determines
otherwise.
(p) "Target" means the Performance Goal(s) that must be reached in
order for the Eligible Officer to receive the maximum Incentive Award. The
maximum Incentive Award is a fixed percentage of the midpoint of the salary
range for the position held by the Eligible Officer and is based upon the
Eligible Officer's level of employment. No Eligible Officer may receive a
maximum Incentive Award more than 150% of their salary range midpoint.
3. SHARES; ADJUSTMENTS IN THE EVENT OF CHANGES IN CAPITALIZATION
(a) Shares Authorized for Issuance. There shall be reserved for
issuance under the Plan 150,000 shares of Common Stock, subject to adjustment
pursuant to subsection (b) below. Such shares shall be authorized but unissued
shares of Common Stock.
(b) Adjustments in Certain Events. In the event of any change in
the outstanding Common Stock by reason of any stock split, share dividend,
recapitalization, merger, consolidation, reorganization, combination, or
exchange or reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution
to common shareholders other than cash dividends, the number or kind of
shares that may be issued under the Plan shall be automatically adjusted so
that the proportionate interest of the Eligible Officers shall be
maintained as before the occurrence of such event.
4. ELIGIBILITY
The Chief Executive Officer and the Chief Operating Officer of the
Company, plus any other Executive Officers chosen by the Committee, shall
be eligible to participate in the Plan. An individual who becomes eligible
to participate in the Plan during the Plan Year may be approved by the
Committee for a partial year of participation.
5. ADMINISTRATION
Full power and authority to construe, interpret and administer the
Plan shall be vested in the Committee. Decisions of the Committee shall be
final, conclusive and binding upon all parties.
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<PAGE>
6. AWARDS; PAYMENT
(a) No later than 90 days after the commencement of each
Performance Period, the Committee shall establish in writing one or more
Performance Goals, including the Hurdle and Target, that must be reached by
an Eligible Officer in order to receive an Incentive Award for such
Performance Period. The Committee shall have the discretion to later revise
the Performance Goals and the amount to be paid out upon the attainment of
these 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 a Participant's
employment so long as such changes are consistent with the Performance
Goals established for other Participants in the same or similar positions.
(b) The amount payable to a Participant shall be based upon the
achievement of the Performance Goals and the Participant achieving the
highest possible individual performance rating for the Performance Period.
To the extent that a Participant does not achieve the highest possible
individual performance rating for the Performance Period, the Committee
shall have the discretion to reduce the amount payable to such Participant;
provided, however, that no payment for individual performance shall be made
unless the Performance Goals are achieved.
(c) Payment of Incentive Awards shall be made on a date or dates
fixed by the Committee. Payment may be made in one or more installments and may
be made wholly in cash, wholly in shares of Common Stock or a combination
thereof as determined by the Committee.
In addition, Participants may be offered the opportunity
to defer the receipt of payment of an Incentive Award. Common Stock may be
granted (i) as a bonus for deferral or (ii) as a bonus for retaining for a
specified period of time, Common Stock received in payment of an Incentive
Award, all under such terms as may be established by the Committee from
time to time. Notwithstanding, in no event shall the value of the Common
Stock granted as a bonus for deferral or retention exceed 20% of the value
of the Incentive Award so deferred or retained. Any and all payments made
under the Plan shall be subject to applicable federal, state or local taxes
required by law to be withheld.
If payment of an Incentive Award shall be made all or
partially in shares of Common Stock, the number of shares of Common Stock
to be delivered to a Participant on any payment date shall be determined by
dividing (x) the original dollar amount to be paid on the payment date (or
the part thereof determined by the Committee to be delivered in shares of
such Incentive Award) by (y) the Fair Market Value on the date the Board
approves the Committee's decision to pay an Incentive Award.
(d) An Incentive Award shall terminate for all purposes if the
Participant does not remain continuously employed and in good standing with
the Company until the date of payment of such award. In the event an
Eligible Officer's employment is terminated because of death, disability or
retirement, the Eligible Officer (or his or her beneficiaries or estate)
shall receive a pro rata portion of the payment of an Incentive Award for
which the Eligible Officer would have otherwise been eligible based upon
the portion of the Performance Period during which he or she was so
employed so long as the Performance Goals are subsequently achieved.
7. INALIENABILITY OF BENEFITS
Incentive Awards may not be assigned or transferred in whole or in
part, either directly or by operation of law or otherwise (except by will
or pursuant to the laws of descent and distribution) including, but not by
way of limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy or any other manner.
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<PAGE>
8. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with laws of the Commonwealth of Kentucky.
9. AMENDMENTS
The Committee may amend, alter or terminate this Plan at any time
without the prior approval of the Board; provided, however, that the
Committee may not, without approval by the Board and the shareholders of
the Company:
(a) increase the amount of securities that may be issued under the
Plan (except as provided in Section 3(b));
(b) materially modify the requirements as to eligibility for
participation in the Plan; or
(c) otherwise materially increase the benefits accruing to
participants under the Plan.
10. CHANGE IN CONTROL
Upon a Change in Control, in order to maintain an Eligible
Officer's rights under the Plan, there shall be an acceleration of any
Performance Period relating to any Incentive Award, and payment of any
Incentive Award shall be made in cash as soon as practicable after such
Change in Control based upon achievement of the Performance Goals
applicable to such award up to the date of the Change in Control. Further,
the Company's obligation with respect to such Incentive Award shall be
assumed, or new obligations substituted therefor, by the acquiring or
surviving corporation after such Change in Control. In addition, prior to
the date of such Change in Control, the Committee, in its sole judgment may
make adjustment to any Incentive Award as may be appropriate to reflect
such Change in Control.
11. EFFECTIVE DATE; TERM OF THE PLAN
This Plan shall be submitted to the shareholders of the Company
for their approval and adoption on January 26, 1995 or such other date
fixed for the next meeting of shareholders or any adjournment or
postponement thereof. If approved and adopted by the shareholders, the Plan
will become effective as of September 14, 1994. Unless terminated sooner by
the Committee, to the extent necessary to ensure that Incentive Award
payments be deductible under the Code, the Plan shall terminate on, and no
Incentive Awards shall be granted after, the first meeting of shareholders
occurring in calendar year 2000.
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<PAGE>
EXHIBIT 10.20
ASHLAND INC.
DEFERRED COMPENSATION PLAN
1. PURPOSE
The purpose of this Ashland Inc. Deferred Compensation Plan (the
"Plan"), is to provide eligible key employees of the Company with an
opportunity to defer compensation to be earned by them from the Company as
a means of saving for retirement or other future purposes.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan:
(a) "Accounting Date" means each December 31, March 31,
June 30 and September 30.
(b) "Beneficiary" means the person(s) designated by the
Participant in accordance with Section 11.
(c) "Board" means the Board of Directors of Ashland Inc.
(d) "Change in Control" shall be deemed to occur (1) upon the
approval of the shareholders of the Company (or if such approval is not
required, upon the approval of the Board) of (A) any consolidation or
merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities or other property other than a merger in
which the holders of Common Stock immediately prior to the merger will have
the same proportionate ownership of Common Stock of the surviving
corporation immediately after the merger, (B) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Company, or (C) adoption of any
plan or proposal for the liquidation or dissolution of the Company, (2)
when any "person" (as defined in Section 13(a)(9) or 13(d) of the Exchange
Act), other than Ashland Inc. or any subsidiary or employee benefit plan or
trust maintained by Ashland Inc. or any of its subsidiaries, shall become
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 20% of the Common Stock outstanding at
the time, without the prior approval of the Board, or (3) if at any time
during a period of two consecutive years, individuals who at the beginning
of such period constituted the Board shall cease for any reason to
constitute at least a majority thereof, unless the election or the
nomination for election by the Company's shareholders of each new director
during such two-year period was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning
of such two-year period.
(e) "Committee" means the Personnel and Compensation
Committee of the Board.
(f) "Common Stock" means the common stock, $1.00 per value,
of Ashland Inc.
(g) "Common Stock Fund" means that investment option in which a
Participant's Compensation Account may be invested and may earn income
based on a hypothetical investment in Common Stock.
(h) "Company" means Ashland Inc., its divisions and
subsidiaries.
(i) "Compensation" means any employee compensation
determined by the Committee to be properly deferrable under the
Plan.
<PAGE>
(j) "Compensation Account" means the account to which the
Participant's Deferred Compensation is credited.
(k) "Corporate Human Resources" means the Corporate Human
Resources Department of the Company.
(l) "Credit Date" means such date as designated by the Committee
that Deferred Compensation shall be credited to the Compensation Account.
(m) "Deferred Compensation" means the Compensation elected
by the Participant to be deferred pursuant to the Plan.
(n) "Election" means a Participant's delivery of a written notice
of election to Corporate Human Resources electing to defer payment of all
or a portion of his or her Compensation.
(o) "Employee" means a full-time, regular salaried employee (which
term shall be deemed to include officers) of the Company and of its present
and future subsidiary corporations as defined in Section 424 of the
Internal Revenue Code of 1986, as amended.
(p) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(q) "Fair Market Value" means, as of any specified date (or, if a
weekend or holiday, the next preceding business day), the closing price of
a share of Common Stock, as reported on the Composite Tape for New York
Stock Exchange issues.
(r) "Fiscal Year" means that annual period commencing October 1
and ending the following September 30.
(s) "Participant" means an Employee selected by the Committee to
participate in the Plan and who has elected to defer payment of all or a
portion of his or her Compensation under the Plan. "Participant" shall also
include any Employee who had an account under the Prior Plans which has
been transferred to this Plan.
(t) "Plan" means this Ashland Inc. Deferred Compensation
Plan.
(u) "Prime Rate of Interest" means the rate of interest quoted by
Citibank, N.A. as its prime commercial lending rate on the latest date
practicable prior to the date of actual distribution under Section 12.
(v) "Prior Plans" mean the Ashland Inc. Deferred
Compensation Plan for ERISA Forfeitures and the Ashland Inc.
Deferred Compensation Plan for Key Employees, which are being
replaced by this Plan as of the effective date of this Plan
identified in Section 16.
(w) "Section 16(b) Participant" means a Participant who is
subject to Section 16(b) of the Exchange Act.
(x) "Service Year" means the Fiscal Year or portion thereof during
which the services have been rendered for which Compensation is payable.
(y) "Stock Unit(s)" means the share equivalents credited to
the Common Stock Fund of a Participant's Compensation Account
pursuant to Section 6.
(z) "Termination" means retirement from the Company or
termination of services as an Employee for any other reason.
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<PAGE>
3. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION
(a) Shares Authorized for Issuance. There shall be
reserved for issuance under the Plan 500,000 shares of Common
Stock, subject to adjustment pursuant to subsection (c) below.
(b) Units Authorized for Credit. The maximum number of
Stock Units that may be credited to Participant's Compensation
Accounts under the Plan is 1,500,000, subject to adjustment
pursuant to subsection (c) below.
(c) Adjustments in Certain Events. In the event of any change in
the outstanding Common Stock of the Company by reason of any stock split,
share dividend, recapitalization, merger, consolidation, reorganization,
combination, or exchange or reclassification of shares, split-up,
split-off, spin-off, liquidation or other similar change in capitalization,
or any distribution to common shareholders other than cash dividends, the
number or kind of shares or Stock Units that may be issued or credited
under the Plan shall be automatically adjusted so that the proportionate
interest of the Participants shall be maintained as before the occurrence
of such event. Such adjustment shall be conclusive and binding for all
purposes of the Plan.
4. ELIGIBILITY
The Committee shall have the authority to select among any
Employee those Employees who shall be eligible to participate in the Plan.
5. ADMINISTRATION
Full power and authority to construe, interpret and administer the
Plan shall be vested in the Committee. This power and authority includes,
but is not limited to, selecting compensation eligible for deferral,
establishing deferral terms and conditions and adopting modifications,
amendments and procedures as may be deemed necessary, appropriate or
convenient by the Committee. Decisions of the Committee shall be final,
conclusive and binding upon all parties. Day-to-day administration of the
Plan shall be the responsibility of Corporate Human Resources.
6. PARTICIPANT ACCOUNTS
Upon election to participate in the Plan, there shall be
established a Compensation Account for the Participant to which there shall
be credited any Deferred Compensation, as of each Credit Date. Each
Participant's Compensation Account shall be credited (or debited) on each
Accounting Date with income (or loss) based on a hypothetical investment in
any one or more of the investment options available under the Plan, as
prescribed by the Committee, including (but not limited to) a Common Stock
Fund, as elected by the Participant under the terms of Section 8. Gains,
losses and other elements of determining value shall be determined
substantially on the basis of a hypothetical investment in the various
investment options, as determined and applied in the manner deemed
appropriate by the Committee.
If a Participant elects to invest all or any portion of his or her
Compensation Account in the Common Stock Fund, that portion of the
Participant's Compensation Account shall be credited on each Credit Date
with Stock Units equal to the number of shares of Common Stock (including
fractions of a share) that could have been purchased with the amount of
such Deferred Compensation at the Fair Market Value on the Credit Date. As
of any dividend payment date for the Common Stock, the portion of a
Participant's Compensation Account invested in the Common Stock Fund as of
the dividend record date shall be credited with additional Stock Units. The
number of Stock Units credited to the Common Stock Fund will be determined
by dividing (i) the product of (a) the dollar value of the dividend
declared in respect of a share of Ashland Common Stock multiplied by (b)
the number of Stock Units credited to the Participant's Common Stock Fund
as of the dividend record date by (ii) the Fair Market Value of a share of
Ashland Common Stock on the dividend payment date.
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<PAGE>
A Participant who had an existing account under the Prior Plans
shall automatically have such account transferred to a Compensation Account
under this Plan to be maintained and administered pursuant to the terms and
conditions of this Plan.
Amounts credited to a Compensation Account shall remain a part of
the general funds of the Company and nothing contained in this Plan shall
be deemed to create a trust or fund of any kind or create any fiduciary
relationship. Nothing contained herein shall be deemed to give any
Participant any ownership or other proprietary, security or other rights in
any funds, stock or assets owned or possessed by the Company, whether or
not earmarked for the Company's own purposes as a reserve or fund to be
utilized by the Company for the discharge of its obligations hereunder. To
the extent that any person acquires a right to receive payments or
distributions from the Company under this Plan, such right shall be no
greater than the right of any unsecured creditor of the Company.
7. FINANCIAL HARDSHIP
Upon the written request of a Participant or a Participant's legal
representative and a finding that continued deferral will result in
financial hardship to the Participant, the Committee (in its sole
discretion) may authorize (a) the payment of all or a part of a
Participant's Compensation Account in a single installment prior to his or
her ceasing to be a Participant, or (b) the acceleration of payment of any
multiple installments thereof. If, in the sole discretion of the Committee,
a delay in any distribution pursuant to this Section 7 shall be necessary
to avoid liability of the Participant under Section 16(b) of the Exchange
Act, any such distribution shall be so postponed.
8. MANNER OF ELECTION
(a) General. Any Employee selected by the Committee to participate
in the Plan may elect to do so in any Fiscal Year by delivering to
Corporate Human Resources a written notice on a form prescribed by
Corporate Human Resources electing to defer payment of all or a portion (in
25% increments or other increments so prescribed by the Committee) of his
or her Compensation (an "Election"). The Election must be filed on or
before September 30 in order to be effective for amounts earned in the
immediately succeeding Fiscal Year. An effective Election may not be
revoked or modified (except as otherwise stated herein) with respect to a
Service Year for which such Election is effective.
(b) Investment Alternatives - Existing Balances. A
Participant may elect to change an existing selection as to the
investment alternatives in effect with respect to his or her
existing Compensation Account (in 25% increments or other increments so
prescribed by the Committee) one (1) time during any three-month period by
filing with Corporate Human Resources a new Election, at least fifteen (15)
days prior to the commencement of the quarter in which the Participant
desires the change to become effective. The change will be deemed effective
as of the first business day of the next quarter subsequent to the filing
of such Election. Notwithstanding the foregoing, a Section 16(b)
Participant may elect to change an existing selection involving the Common
Stock Fund during the "window period" beginning on the third business day
following the public release of quarterly financial results by the Company
and ending on the twelfth day following such release. Such change will be
deemed effective as of the last day of the month in which the Election was
filed.
(c) Change of Beneficiary. A Participant may, at any time,
elect to change the designation of a Beneficiary.
(d) Payment Period; Form of Payment. A Participant will be allowed
to change the Election as to the applicable payment period or form of
payment for all amounts previously deferred pursuant to such Election one
time, subject to approval by the Committee. Such change must be made no
later than eighteen months prior to such Participant's Termination.
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<PAGE>
9. MANNER OF PAYMENT UPON TERMINATION
In accordance with the Participant's Election and subject to
Committee approval upon payout, amounts credited to a Participant's
Compensation Account will be paid in a lump sum or in the form of annual or
quarterly installments, in shares of Common Stock or cash, or a combination
of both, to the Participant following his or her Termination or, in the
event of his or her death, to a Beneficiary. If a Participant elects to
receive payment in installments, the payment period shall not exceed ten
years following the date of the Participant's Termination.
The amount of any cash distribution to be made in installments
with respect to the Compensation Account will be determined by multiplying
(i) the balance in such Compensation Account on the Accounting Date
immediately preceding the cash distribution (minus any amounts in the
Common Stock Fund) by (ii) a fraction, the numerator of which is one and
the denominator of which is the number of installments in which
distributions remain to be made (including the current distribution). The
amount of any cash distribution to be made in installments with respect to
Stock Units will be determined by (i) multiplying the number of Stock Units
attributable to such installment (determined as hereinafter provided) by
(ii) the closing price of the Common Stock on each Accounting Date
immediately prior to the date on which such installment is to be paid. The
number of Stock Units attributable to an installment shall be determined by
multiplying (i) the current number of Stock Units in the Common Stock Fund
by (ii) a fraction, the numerator of which is one and the denominator of
which is the number of installments in which distributions remain to be
made (including the current distribution).
The amount of any stock distribution to be made in installments
with respect to the Compensation Account shall be determined by dividing
the amount of cash attributable to such installment (determined as
hereinafter provided) by the closing price of the Common Stock on each
Accounting Date immediately prior to the date on which such installment is
to be paid. The amount of cash attributable to an installment shall be
determined by multiplying (i) the current balance in such Compensation
Account on the Accounting Date immediately preceding the stock distribution
(minus any amounts in the Common Stock Fund) by (ii) a fraction, the
numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the
current distribution). The amount of any stock distribution to be made in
installments with respect to the amount of a Compensation Account invested
in the Common Stock Fund shall be determined by multiplying (i) the current
number of Stock Units by (ii) a fraction, the numerator of which is one and
the denominator of which is the number of installments in which
distributions remain to be made (including the current distribution). Only
whole number of shares of Common Stock will be issued, with any fractional
shares to be paid in cash.
10. COMMENCEMENT OF PAYMENTS
Payments of amounts deferred pursuant to a valid Election shall
commence after a Participant's Termination (i) with respect to a lump sum,
as soon as reasonably practicable after the first business day of the
calendar year selected by a Participant in his or her Election, (ii) with
respect to annual installments, as soon as reasonably practicable after the
first business day of the first calendar year of deferred payment selected
by a Participant in his or her Election, and (iii) with respect to
quarterly installments, as soon as reasonably practicable after the first
business day of the first calendar quarter of deferred payment selected by
a Participant in his or her Election. If a Participant dies prior to the
first deferred payment specified in an Election, payments shall commence to
the Participant's Beneficiary on the first payment date so specified.
11. BENEFICIARY DESIGNATION
A Participant may designate one or more persons to whom payments
are to be made if the Participant dies before receiving payment of all
amounts due hereunder. A designation of Beneficiary will be effective only
after the signed Election is filed with Corporate Human Resources while the
Participant is alive and will cancel all designations of Beneficiary signed
and filed earlier. If the Participant fails to designate a Beneficiary as
provided above, the remaining unpaid amounts shall be paid in one lump sum
to the estate of such Participant. If all Beneficiaries of the Participant
die before the Participant or before complete payment of all amounts due
hereunder, the remaining unpaid amounts shall be paid in one lump sum to
the estate of the last to die of such Beneficiaries.
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<PAGE>
12. CHANGE IN CONTROL
Notwithstanding any provision of this Plan to the contrary, in the
event of a Change in Control, each Participant in the Plan shall receive an
automatic lump sum cash distribution of all amounts accrued in the
Participant's Compensation Account (including interest at the Prime Rate of
Interest from the date of the Change of Control through the business day
immediately preceding the date of distribution) not later than fifteen (15)
days after the date of the Change in Control. For this purpose, the balance
in the portion of a Participant's Compensation Account invested in the
Common Stock Fund shall be determined by multiplying the number of Stock
Units by the higher of (a) the highest Fair Market Value on any date within
the period commencing 30 days prior to such Change in Control, or (b) if
the Change in Control of the Company occurs as a result of a tender or
exchange offer or consummation of a corporate transaction, then the highest
price paid per share of Common Stock pursuant thereto. Any consideration
other than cash forming a part or all of the consideration for Common Stock
to be paid pursuant to the applicable transaction shall be valued at the
valuation price thereon determined by the Board.
In addition, the Company shall reimburse a Participant for the
legal fees and expenses incurred if the Participant is required to seek to
obtain or enforce any right to distribution. In the event that it is
determined that such Participant is properly entitled to a cash
distribution hereunder, such Participant shall also be entitled to interest
thereon payable in an amount equivalent to the Prime Rate of Interest from
the date such distribution should have been made to and including the date
it is made. Notwithstanding any provision of this Plan to the contrary,
this Section 12 may not be amended after a Change in Control occurs without
the written consent of a majority in number of Participants.
13. INALIENABILITY OF BENEFITS
The interests of the Participants and their Beneficiaries under
the Plan may not in any way be voluntarily or involuntarily transferred,
alienated or assigned, nor subject to attachment, execution, garnishment or
other such equitable or legal process. A Participant or Beneficiary cannot
waive the provisions of this Section 13.
14. GOVERNING LAW
The provisions of this plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky, except to the
extent preempted by Federal law.
15. AMENDMENTS
The Committee may amend, alter or terminate this Plan at any time
without the prior approval of the Board; provided, however, that the
Committee may not, without approval by the Board and the shareholders:
(a) increase the number of securities that may be issued
under the Plan (except as provided in Section 3(c));
(b) materially modify the requirements as to eligibility
for participation in the Plan; or
(c) otherwise materially increase the benefits accruing to
Participants under the Plan.
16. EFFECTIVE DATE
The Plan shall be submitted to the shareholders of the Company for
their approval and adoption on January 26, 1995, or such other date fixed
for the next meeting of shareholders or any adjournment or postponement
thereof. If approved and adopted by the shareholders, the Plan will become
effective as of October 1, 1994.
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM ASHLAND INC.'S 1ST QUARTER 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 56
<SECURITIES> 0
<RECEIVABLES> 1,359
<ALLOWANCES> 21
<INVENTORY> 698
<CURRENT-ASSETS> 2,259
<PP&E> 5,951
<DEPRECIATION> 3,109
<TOTAL-ASSETS> 5,951
<CURRENT-LIABILITIES> 1,753
<BONDS> 1,439
<COMMON> 61
0
293
<OTHER-SE> 1,265
<TOTAL-LIABILITY-AND-EQUITY> 5,951
<SALES> 2,768
<TOTAL-REVENUES> 2,778
<CGS> 2,415
<TOTAL-COSTS> 2,415
<OTHER-EXPENSES> 292
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32
<INCOME-PRETAX> 39
<INCOME-TAX> 15
<INCOME-CONTINUING> 35
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
