Exhibit 10.9
ASHLAND INC.
LONG-TERM INCENTIVE PLAN
(Amended as of July 19, 2000)
SECTION 1. PURPOSE
The purpose of the Ashland Inc. Long-Term Incentive Plan is to
promote the interests of Ashland Inc. and its shareholders by providing its
directors, officers and employees with an incentive to continue service
with Ashland. Accordingly, the Company may grant to selected officers and
employees Stock Options, Stock Appreciation Rights, Restricted Stock and
Performance Share awards in an effort to attract and retain in its employ
qualified individuals and to provide such individuals with additional
incentive to devote their best efforts to the Company through ownership of
the Company's stock, thus enhancing the value of the Company for the
benefit of shareholders. The Plan also provides an incentive for qualified
persons, who are not officers or employees of the Company, to serve on the
Board of Directors of the Company and to continue to work for the best
interests of the Company by rewarding such persons with automatic grants of
Restricted Stock of the Company. Stock Options, Stock Appreciation Rights
and Performance Shares may not be granted to such Outside Directors under
the Plan.
SECTION 2. DEFINITIONS
(A) "Agreement" shall mean a written agreement setting forth the
terms of an Award.
(B) "Ashland" shall mean, collectively, Ashland Inc. and its
Subsidiaries.
(C) "Award" shall mean an Option (which may be a Nonqualified or
Incentive Stock Option), a Stock Appreciation Right, a Restricted Stock
Award, or a Performance Share Award, in each case granted under this Plan.
(D) "Beneficiary" shall mean the person, persons, trust or trusts
designated by an Employee or Outside Director or if no designation has been
made, the person, persons, trust, or trusts entitled by will or the laws of
descent and distribution to receive the benefits specified under this Plan
in the event of an Employee's or Outside Director's death.
(E) "Board" shall mean the Board of Directors of the Company or
its designee.
(F) "Change in Control" shall be deemed to occur (1) upon approval
of the shareholders of Ashland (or if such approval is not required, upon
the approval of the Board) of (A) any consolidation or merger of Ashland 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 or any Subsidiary
or employee benefit plan or trust maintained by Ashland, shall become the
"beneficial owner" (as defined in Rule 3(a)(9) or 13d-3 under the Exchange
Act), directly or indirectly, of more than 15% of Ashland's Common Stock
outstanding at the time, without the approval of the Board, or (3) at any
time during a period of two consecutive years, individuals who at the
beginning of such period constituted the Board shall cease for any reason
to constitute at least a majority thereof, unless the election or the
nomination for election by Ashland's shareholders of each new director
during such two-year period was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning
of such two-year period.
(G) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(H) "Committee" shall mean the Personnel and Compensation
Committee of the Board, as from time to time constituted, or any successor
committee of the Board with similar functions, which shall consist of three
or more members, each of whom shall be a Non-Employee Director or its
designee.
<PAGE>
(I) "Common Stock" shall mean the Common Stock of the Company
($1.00 par value), subject to adjustment pursuant to Section 12.
(J) "Company" shall mean, collectively, Ashland Inc. and its
Subsidiaries.
(K) "Employee" shall mean an officer or employee of the Company.
(L) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(M) "Exercise Price" shall mean, with respect to each share of
Common Stock subject to an Option, the price fixed by the Committee at
which such share may be purchased from the Company pursuant to the exercise
of such Option, which price at no time may be less than 100% of the Fair
Market Value of the Common Stock on the date the Option is granted.
(N) "Fair Market Value" shall mean the price of the Common Stock
as reported on the Composite Tape on the date and at the time designated by
the Company.
(O) "Incentive Stock Option" or "ISO" shall mean an Option that is
intended by the Committee to meet the requirements of Section 422 of the
Code or any successor provision.
(P) "Nonqualified Stock Option" or "NQSO" shall mean an Option
granted pursuant to this Plan which does not qualify as an Incentive Stock
Option.
(Q) "Non-Employee Director" shall mean a non-employee director
within the meaning of applicable regulatory requirements, including those
promulgated under Section 16 of the Exchange Act.
(R) "Option" shall mean the right to purchase Common Stock at a
price to be specified and upon terms to be designated by the Committee
pursuant to this Plan. An Option shall be designated by the Committee as a
Nonqualified Stock Option or an Incentive Stock Option.
(S) "Outside Director" shall mean a director of the Company who is
not also an Employee of the Company.
(T) "Performance Period" shall mean the period designated by the
Committee during which the performance objectives shall be measured.
(U) "Performance Share Award" shall mean an award of shares of
Common Stock, the issuance of which is contingent upon attainment of
performance objectives specified by the Committee.
(V) "Performance Shares" shall mean those shares of Common Stock
issuable pursuant to a Performance Share Award.
(W) "Personal Representative" shall mean the person or persons
who, upon the disability or incompetence of an Employee or Outside
Director, shall have acquired on behalf of the Employee or Outside Director
by legal proceeding or otherwise the right to receive the benefits
specified in this Plan.
(X) "Plan" shall mean this Ashland Inc. Long-Term Incentive
Plan.
(Y) "Restricted Period" shall mean the period designated by the
Committee during which Restricted Stock may not be sold, assigned,
transferred, pledged, or otherwise encumbered, which period in the case of
Employees shall not be less than one year nor more than five years from the
date of grant, and in the case of Outside Directors is the period set forth
in subsection (B) of Section 8.
(Z) "Restricted Stock" shall mean those shares of Common Stock
issued pursuant to a Restricted Stock Award which are subject to the
restrictions, terms, and conditions set forth in the related Agreement.
(AA) "Restricted Stock Award" shall mean an award of Restricted
Stock.
(BB) "Retained Distributions" shall mean any securities or other
property (other than regular cash dividends) distributed by the Company in
respect of Restricted Stock during any Restricted Period.
(CC) "Retirement" shall mean retirement of an Employee from the
employ of the Company at any time as described in the Ashland Inc. and
Affiliates Pension Plan or in any successor pension plan, as from time to
time in effect.
(DD) "Section 16(b) Optionee" shall mean an Employee or former
Employee who is subject to Section 16(b) of the Exchange Act.
(EE) "Stock Appreciation Right" or "SAR" shall mean the right of
the holder to elect to surrender an Option or any portion thereof which is
then exercisable and receive in exchange therefor shares of Common Stock,
cash, or a combination thereof, as the case may be, with an aggregate value
equal to the excess of the Fair Market Value of one share of Common Stock
over the Exercise Price specified in such Option multiplied by the number
of shares of Common Stock covered by such Option or portion thereof which
is so surrendered. An SAR may be granted as part of an Option or as a
separate right to any holder of any Option theretofore or then being
granted under this Plan. An SAR shall be exercisable upon any additional
terms and conditions (including, without limitation, the issuance of
Restricted Stock and the imposition of restrictions upon the timing of
exercise) which may be determined as provided in the Plan.
(FF) "Subsidiary" shall mean any present or future subsidiary
corporations, as defined in Section 424 of the Code, of Ashland.
(GG) "Tax Date" shall mean the date the withholding tax obligation
arises with respect to the exercise of an Award.
SECTION 3. STOCK SUBJECT TO THE PLAN
There will be reserved for issuance under the Plan (upon the
exercise of Options and Stock Appreciation Rights, upon awards of
Restricted Stock and Performance Shares and for stock bonuses on deferred
awards of Restricted Stock and Performance Shares), an aggregate of
3,000,000 shares of Ashland Common Stock, par value $1.00 per share. Such
shares shall be authorized but unissued shares of Common Stock. Except as
provided in Sections 7 and 8, if any Award under the Plan shall expire or
terminate for any reason without having been exercised in full, or if any
Award shall be forfeited, the shares subject to the unexercised or
forfeited portion of such Award shall again be available for the purposes
of the Plan.
SECTION 4. ADMINISTRATION
The Plan shall be administered by the Committee. No person who is
(or, within one year prior to his or her appointment as a member of the
Committee, was) eligible to participate in the Plan, except as specifically
authorized under subsection (B) of Section 8 herein, or in any other stock
option or stock bonus plan of the Company, shall be a member of the
Committee. The Committee shall have no authority regarding the granting of
Restricted Stock to Outside Directors, as such grants are fixed pursuant to
subsection (B) of Section 8 of the Plan.
In addition to any implied powers and duties that may be needed to
carry out the provisions of the Plan, the Committee shall have all the
powers vested in it by the terms of the Plan, including exclusive authority
(except as to Awards of Restricted Stock granted to Outside Directors) to
select the Employees to be granted Awards under the Plan, to determine the
type, size and terms of the Awards to be made to each Employee selected, to
determine the time when Awards will be granted, and to prescribe the form
of the Agreements embodying Awards made under the
<PAGE>
Plan. Subject to the provisions of the Plan specifically governing Awards
of Restricted Stock granted or to be granted to Outside Directors pursuant
to subsection (B) of Section 8 herein, the Committee shall be authorized to
interpret the Plan and the Awards granted under the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, to make
any other determinations which it believes necessary or advisable for the
administration of the Plan, and to correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent the Committee deems desirable to carry it into
effect. Any decision of the Committee in the administration of the Plan, as
described herein, shall be final and conclusive.
The Committee may act only by a majority of its members. Any
determination of the Committee may be made, without notice, by the written
consent of the majority of the members of the Committee. In addition, the
Committee may authorize any one or more of its number or any officer of the
Company to execute and deliver documents on behalf of the Committee. No
member of the Committee shall be liable for any action taken or omitted to
be taken by him or her or by any other member of the Committee in
connection with the Plan, except for his or her own willful misconduct or
as expressly provided by statute.
The provisions of this Section 4 with respect to decisions made
by, and authority of, the Committee shall be subject to the provisions of
subsection (B) of Section 8 herein.
SECTION 5. ELIGIBILITY
Awards may only be granted (i) to individuals who are Employees of
Ashland, and (ii) as expressly provided in subsection (B) of Section 8 of
the Plan, to individuals who are duly elected Outside Directors of Ashland.
SECTION 6. STOCK OPTIONS
A. Designation and Price.
(a) Any Option granted under the Plan may be granted as an Incentive
Stock Option or as a Nonqualified Stock Option as shall be designated by
the Committee at the time of the grant of such Option. Each Option shall be
evidenced by an Agreement between the recipient and the Company, which
Agreement shall specify the designation of the Option as an ISO or a NQSO,
as the case may be, and shall contain such terms and conditions as the
Committee, in its sole discretion, may determine in accordance with the
Plan.
(b) Every Incentive Stock Option shall provide for a fixed
expiration date of not later than ten years from the date such Incentive
Stock Option is granted.
(c) The Exercise Price of Common Stock issued pursuant to each
Option shall be fixed by the Committee at the time of the granting of the
Option; provided, however, that such Exercise Price shall in no event be
less than 100% of the Fair Market Value of the Common Stock on the date
such Option is granted.
B. Exercise.
The Committee may, in its discretion, provide for Options granted
under the Plan to be exercisable in whole or in part; provided, however,
that no Option shall be exercisable prior to the first anniversary of the
date of its grant, except as provided in Section 10 or as the Committee
otherwise determines in accordance with the Plan, and in no case may an
Option be exercised at any time for fewer than 50 shares (or the total
remaining shares covered by the Option if fewer than 50 shares) during the
term of the Option. The specified number of shares will be issued upon
receipt by Ashland of (i) notice from the holder thereof of the exercise of
an Option, and (ii) either payment to Ashland (as provided in this Section
6, subsection (C) below), of the Exercise Price for the number of shares
with respect to which the Option is exercised, or with approval of the
Committee, a promissory note as hereinafter provided. Each such notice and
payment shall be delivered or mailed by postpaid mail, addressed to the
Treasurer of Ashland at Ashland Inc., 500 Diederich Boulevard, Russell,
Kentucky, 41169, or such other place as Ashland may designate from time to
time.
<PAGE>
C. Payment for Shares.
Except as otherwise provided in this Section 6, the Exercise Price
for the Common Stock shall be paid in full when the Option is exercised.
Subject to such rules as the Committee may impose, the Exercise Price may
be paid in whole or in part (i) in cash, (ii) in whole shares of Common
Stock (which shares of Common Stock must have been owned by the Employee
six months or longer, and not used to effect an Option exercise within the
preceding six months, in the case of an exercise of an Option which was
granted after May21, 1992, unless the Committee specifically provides
otherwise) evidenced by negotiable certificates, valued at their Fair
Market Value on the date of exercise, (iii) by Attestation; (iv) by a
combination of such methods of payment, or (v) by such other consideration
as shall be approved by the Committee (including without limitation, by
effecting a "cashless exercise," with a broker, of the Option).
"Attestation" means the delivery to Ashland of a completed Attestation Form
prescribed by Ashland setting forth the whole shares of Common Stock owned
by the Employee which the Employee wishes to utilize to pay the Exercise
Price. In the case of an exercise of an Option granted after May 21, 1992,
the Common Stock listed on the Attestation Form must have been owned by the
Employee six months, unless the Committee specifically provides otherwise.
Moreover, in the case of an exercise of an Option granted prior to May 21,
1992, if so provided in the Agreement, and subject to such restrictions,
terms and conditions as the Committee may impose, an Employee may request
Ashland to "pyramid" his or her shares; that is, to automatically apply the
shares which he or she is entitled to receive on the exercise of a portion
of an Option to satisfy the exercise for additional portions of the Option,
thus resulting in multiple simultaneous exercises of an Option by use of
whole shares as payment.
The Committee may, in its discretion, authorize payment of all or
any part of the Exercise Price over a period of not more than five years
from the date the Option is exercised. In such instance any unpaid balance
of the Exercise Price shall be evidenced by the Employee's promissory note
payable to the order of Ashland which shall bear interest at such rate or
rates as determined from time to time by the Committee.
SECTION 7. STOCK APPRECIATION RIGHTS
The Committee may grant Stock Appreciation Rights pursuant to the
provisions of this Section 7 to any holder of any Option granted under the
Plan with respect to all or a portion of the shares subject to the related
Option. An SAR may be granted as part of an Option or as a separate right
to any holder of any Option theretofore or then being granted under this
Plan. Subject to the terms and provisions of this Section 7, each SAR shall
be exercisable only at the same time and to the same extent the related
Option is exercisable and in no event after the termination of the related
Option. An SAR shall be exercisable only when the Fair Market Value
(determined as of the date of exercise of the SAR) of each share of Common
Stock with respect to which the SAR is to be exercised shall exceed the
Exercise Price per share of Common Stock subject to the related Option. An
SAR granted under the Plan shall be exercisable in whole or in part by
notice to Ashland. Such notice shall state that the holder of the SAR
elects to exercise the SAR and the number of shares in respect of which the
SAR is being exercised. For purposes of this Section 7, the date of
exercise of an SAR shall mean the date on which the Company receives such
notice.
Subject to the terms and provisions of this Section 7, upon the
exercise of an SAR, the holder thereof shall be entitled to receive from
Ashland consideration (in the form hereinafter provided) equal in value to
the excess of the Fair Market Value (determined as of the date of exercise
of the SAR) of each share of Common Stock with respect to which such SAR
has been exercised over the Exercise Price per share of Common Stock
subject to the related Option. The Committee may stipulate in the Agreement
the form of consideration which shall be received upon the exercise of an
SAR. If no consideration is specified therein, upon the exercise of an SAR,
the holder may specify the form of consideration to be received by such
holder, which shall be in shares of Common Stock (valued at Fair Market
Value on the date of exercise of the SAR), or in cash, or partly in cash
and partly in shares of Common Stock, as the holder shall request;
provided, however, that the Committee, in its sole discretion, may
disapprove the form of consideration requested and instead authorize the
payment of such consideration in shares of Common Stock (valued as
aforesaid), or in cash, or partly in cash and partly in shares of Common
Stock.
Upon the exercise of an SAR, the related Option shall be deemed
exercised to the extent of the number of shares of Common Stock with
respect to which such SAR is exercised and to that extent for purposes of
determining
<PAGE>
the number of shares of Common Stock available for the grant of Awards
under the Plan. Upon the exercise or termination of the related Option, the
SAR with respect thereto shall be considered to have been exercised or
terminated to the extent of the number of shares of Common Stock with
respect to which the related Option was so exercised or terminated.
SECTION 8. RESTRICTED STOCK AWARDS
A. Awards to Employees
The Committee may make an award of Restricted Stock to selected
Employees, evidenced by an Agreement which shall contain such terms and
conditions as the Committee, in its sole discretion, may determine. The
amount of each Restricted Stock Award and the respective terms and
conditions of each Award (which terms and conditions need not be the same
in each case) shall be determined by the Committee in its sole discretion.
As a condition to any Award hereunder, the Committee may require an
Employee to pay to the Company an amount equal to, or in excess of, the par
value of the shares of Restricted Stock awarded to him or her. Any such
Restricted Stock Award shall automatically expire if not purchased in
accordance with the Committee's requirements within thirty (30) days after
the date of grant. Subject to the terms and conditions of each Restricted
Stock Award, the Employee, as the owner of the Common Stock issued as
Restricted Stock, shall have all rights of a shareholder including, but not
limited to, voting rights as to such Common Stock and the right to receive
dividends thereon when, as and if paid.
In the event that a Restricted Stock Award has been made to an
Employee whose employment or service is subsequently terminated by reason
of death or disability (as defined in subsection (C) of Section 10 hereof),
or for such other reason as the Committee may provide, such Employee (or
his or her estate) will receive his or her Restricted Stock subject to the
terms of his or her Agreement with the Company, which Agreement shall be in
accordance with the terms and conditions set forth in this Section 8. In
the event that a Restricted Stock Award has been made to an Employee who
subsequently voluntarily resigns or whose employment is terminated for any
reason other than as referred to above, such Restricted Stock will be
forfeited by such Employee; provided, however, that the Committee may limit
such forfeiture to that portion thereof which is proportional to the
unelapsed portion of the Restricted Period under such Award.
Employees may be offered the opportunity to defer the receipt of
payment of vested shares of Restricted Stock, and Common Stock may be
granted as a bonus for deferral, under terms as may be established by the
Committee from time to time; however, in no event shall the Common Stock
granted as a bonus for deferral exceed 20% of the Restricted Stock so
deferred per year over a five-year period.
B. Awards to Outside Directors
Subject to the limitation of the number of shares of Common Stock
available pursuant to Section 3, effective immediately following the 1989
Annual Meeting of Shareholders of the Company, each person who at such time
shall be a duly elected Outside Director is hereby granted, effective on
such date, 1,000 shares of Restricted Stock subject to the terms and
conditions set forth in this subsection (B) and subsection (C) below.
Subsequent to the 1989 Annual Meeting of Shareholders of the Company, each
person who has received no previous Award under the Plan and who is duly
appointed or elected as an Outside Director of the Company is hereby
granted, effective on the date of his or her appointment or election to the
Board, 1,000 shares of Restricted Stock, subject to the terms and
conditions set forth in this subsection (B) and subsection (C) below.
As a condition to any Award hereunder, the Outside Director will
be required to pay to the Company a non-refundable amount equal to the par
value of the shares of Restricted Stock awarded to him or her. Upon the
granting of the Restricted Stock Award, such Outside Director shall be
entitled to all rights incident to ownership of Common Stock of the Company
with respect to his or her Restricted Stock, including, but not limited to,
the right to vote such shares of Restricted Stock and to receive dividends
thereon when, as and if paid; provided, however, that, subject to
subsection (B) of Section 14 hereof, in no case may any shares of
Restricted Stock granted to an Outside Director be sold, assigned,
transferred, pledged, or otherwise encumbered during the Restricted Period
which shall not lapse until the earlier to occur of the following: (i)
normal retirement from the Board at age 72, (ii) the death or disability of
<PAGE>
such Outside Director, or (iii) a 50% change in the beneficial ownership of
the Company as defined in Rule 13d-3 under the Exchange Act. In the case of
voluntary resignation or other termination of service of an Outside
Director prior to the occurrence of any of the events described in (i),
(ii) or (iii) of the preceding sentence, any grant of Restricted Stock made
to him or her pursuant to this subsection (B) will be forfeited by such
Outside Director. As used herein, an Outside Director shall be deemed
"disabled" when he or she is unable to attend to his or her duties and
responsibilities as a member of the Board because of incapacity due to
physical or mental illness.
C. Transferability
Subject to subsection (B) of Section 14 hereof, Restricted Stock
may not be sold, assigned, transferred, pledged, or otherwise encumbered
during a Restricted Period, which, in the case of Employees, shall be
determined by the Committee and which shall not be less than one year nor
more than five years from the date such Restricted Stock was awarded, and,
in the case of Outside Directors, shall be determined in accordance with
subsection (B) of this Section 8. The Committee may at any time, reduce the
Restricted Period with respect to any outstanding shares of Restricted
Stock awarded under the Plan to Employees, but in no event shall such
Restricted Period be less than one year.
During the Restricted Period, certificates representing the
Restricted Stock and any Retained Distributions shall be registered in the
recipient's name and bear a restrictive legend to the effect that ownership
of such Restricted Stock (and any such Retained Distributions), and the
enjoyment of all rights appurtenant hereto are subject to the restrictions,
terms, and conditions provided in the Plan and the applicable Agreement.
Such certificates shall be deposited by the recipient with the Company,
together with stock powers or other instruments of assignment, each
endorsed in blank, which will permit transfer to the Company of all or any
portion of the Restricted Stock and any securities constituting Retained
Distributions which shall be forfeited in accordance with the Plan and the
applicable Agreement. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The
recipient will have the right to vote such Restricted Stock, to receive and
retain all regular cash dividends, and to exercise all other rights,
powers, and privileges of a holder of Common Stock with respect to such
Restricted Stock, with the exception that (i) the recipient will not be
entitled to delivery of the stock certificate or certificates representing
such Restricted Stock until the restrictions applicable thereto shall have
expired; (ii) the Company will retain custody of all Retained Distributions
made or declared with respect to the Restricted Stock (and such Retained
Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if
ever, as the Restricted Stock with respect to which such Retained
Distributions shall have been made, paid, or declared shall have become
vested, and such Retained Distributions shall not bear interest or be
segregated in separate accounts; (iii) the recipient may not sell, assign,
transfer, pledge, exchange, encumber, or dispose of the Restricted Stock or
any Retained Distributions during the Restricted Period; and (iv) a breach
of any restrictions, terms, or conditions provided in the Plan or
established by the Committee with respect to any Restricted Stock or
Retained Distributions will cause a forfeiture of such Restricted Stock and
any Retained Distributions with respect thereto. Any forfeited Restricted
Stock shall not again be available for the grant of Awards under the Plan.
SECTION 9. PERFORMANCE SHARES
The Committee may make awards of Common Stock, evidenced by an
Agreement, to selected Employees on the basis of the Company's financial
performance in any given period. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Employees
who shall receive such Performance Shares, to determine the number of such
shares to be granted for each Performance Period, and to determine the
duration of each such Performance Period. There may be more than one
Performance Period in existence at any one time, and the duration of
Performance Periods may differ from each other.
The Committee shall establish performance measures for each
Performance Period on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time, in its sole discretion,
determine. Such measures may include, but shall not be limited to, return
on investments, cumulative earnings per share, or return on shareholders'
equity. The performance measures determined by the Committee shall be
established prior to the beginning of each Performance Period but may be
subject to such later revisions as the Committee shall deem
<PAGE>
appropriate. Subject to subsection (B) of Section 14 hereof, Performance
Shares may not be sold, assigned, transferred, pledged, or otherwise
encumbered, except as herein provided and as provided in subsection (F) of
Section 10 hereof, during the Performance Period.
The Committee shall determine, in its sole discretion, the manner
of payment, which may include (i) cash, (ii) shares of Common Stock, or
(iii) shares of Restricted Stock in such proportions as the Committee shall
determine. Employees may be offered the opportunity to defer the receipt of
payment of earned Performance Shares, and Common Stock may be granted as a
bonus for deferral under terms as may be established by the Committee from
time to time; however, in no event shall the Common Stock granted as a
bonus for deferral exceed 20% of the Performance Shares so deferred per
year over a five-year period.
An Employee must be employed by the Company at the end of a
Performance Period in order to be entitled to payment of Performance Shares
in respect of such period; provided, however, that in the event of an
Employee's cessation of employment before the end of such period, or upon
the occurrence of his or her death, retirement, or disability, or other
reason approved by the Committee, the Committee may, in its discretion,
limit such forfeiture to that portion of the Performance Shares deemed not
earned.
SECTION 10. CONTINUED EMPLOYMENT, AGREEMENT TO SERVE AND EXERCISE PERIODS
(A) Subject to the provisions of subsections (B), (C) and (F) of
this Section 10, every Option and SAR shall provide that it may not be
exercised in whole or in part for a period of one year after the date of
granting such Option (unless otherwise determined by the Committee) and, if
the employment of the Employee shall be terminated, for any reason other
than death or disability as determined by the Committee, prior to the end
of such one year period, the Option granted to such Employee shall
immediately terminate.
(B) Every Option shall provide that in the event the Employee dies
while employed by Ashland; during the period in which Options may be
exercised by an Employee determined to be disabled as provided in
subsection (C) of this Section 10; or within three months after cessation
of employment for any cause, such Option shall be exercisable, at any time
or from time to time, prior to the fixed termination date set forth in the
Option, by the Beneficiaries of the decedent for the full number of
optioned shares or any part thereof, less such number as may have been
theretofore acquired under the Option.
(C) Every Option shall provide that in the event the employment of
any Employee shall cease by reason of disability as determined by the
Committee at any time during the term of the Option, such Option shall be
exercisable, at any time or from time to time by such Employee for the full
number of optioned shares or any part thereof, less such number as may have
been theretofore acquired under the Option. An Option held by an Employee
determined by the Committee to be disabled prior to September 19, 1996
shall be exercisable during a period of one year of continuing disability
following termination of employment by reason of such disability. An Option
held by an Employee determined by the Committee to be disabled on or after
September 19, 1996 shall be exercisable at any time prior to the fixed
termination date set forth in the Option. As used herein, an Employee will
be deemed "disabled" when he or she becomes unable to perform the functions
required by his or her regular job due to a physical or mental illness and,
in connection with the grant of an Incentive Stock Option, shall be deemed
disabled if he or she falls within the meaning of that term as provided in
Section 22(e)(3) of the Code. The determination by the Committee of any
question involving disability shall be conclusive and binding.
(D) Every Option shall provide that in the event the employment of
any Employee shall cease by reason of Retirement, such Option may be
exercised only in respect of the number of shares which the Employee could
have acquired under the Option immediately prior to such Retirement.
Options held by an Employee who retires prior to September 19, 1996 shall
be exercisable until the earlier to occur of the fixed termination date set
forth in the Option or three years after such Retirement. Options held by
an Employee who retires on or after September 19, 1996 shall be exercisable
until the fixed termination date set forth in the Option.
(E) Except as provided in subsections (A), (B), (C), (D) and (F)
of this Section 10, every Option shall provide that it shall terminate on
the earlier to occur of the fixed termination date set forth in the Option
or three
<PAGE>
months after cessation of the Employee's employment for any cause, and,
except as provided in subsection (F) of this Section 10, if exercised after
cessation of such employment, may be exercised only in respect of the
number of shares which the Employee could have acquired under the Option
immediately prior to such cessation of employment; provided, however, that
no Option may be exercised after the fixed termination date set forth in
the Option.
(F) Notwithstanding any provision of this Section 10 to the
contrary, any Award granted pursuant to the Plan, except a Restricted Stock
Award to Outside Directors, which is governed by Section 8, subsection (B),
may, in the discretion of the Committee or as provided in the relevant
Agreement, become exercisable, at any time or from time to time, prior to
the fixed termination date set forth in the Award for the full number of
awarded shares or any part thereof, less such numbers as may have been
theretofore acquired under the Award (i) from and after the time the
Employee ceases to be an Employee of Ashland as a result of the sale or
other disposition by Ashland of assets or property (including shares of any
subsidiary) in respect of which such Employee had theretofore been employed
or as a result of which such Employee's continued employment with Ashland
is no longer required, and (ii) in the case of a Change in Control of
Ashland, from and after the date of such Change in Control.
(G) Each Employee granted an Award under this Plan shall agree by
his or her acceptance of such Award to remain in the service of Ashland for
a period of at least one year from the date of the Agreement respecting the
Award between Ashland and the Employee. Such service shall, subject to the
terms of any contract between Ashland and such Employee, be at the pleasure
of Ashland and at such compensation as Ashland shall reasonably determine
from time to time. Nothing in the Plan, or in any Award granted pursuant to
the Plan, shall confer on any individual any right to continue in the
employment of or service to Ashland or interfere in any way with the right
of Ashland to terminate the Employee's employment at any time.
(H) Subject to the limitations set forth in Section 422 of the
Code, the Committee may adopt, amend, or rescind from time to time such
provisions as it deems appropriate with respect to the effect of leaves of
absence approved by any duly authorized officer of Ashland with respect to
any Employee.
SECTION 11. WITHHOLDING TAXES
Federal, state or local law may require the withholding of taxes
applicable to gains resulting from the exercise of an Award. Unless
otherwise prohibited by the Committee, each Employee may satisfy any such
tax withholding obligation by any of the following means, or by a
combination of such means: (i) a cash payment, (ii) authorizing Ashland to
withhold from the shares of Common Stock otherwise issuable to the Employee
pursuant to the exercise or vesting of an Award a number of shares having a
Fair Market Value, as of the Tax Date, which will satisfy the amount of the
withholding tax obligation, or (iii) by delivery to Ashland of a number of
shares of Common Stock having a Fair Market Value as of the Tax Date which
will satisfy the amount of the withholding tax obligation arising from an
exercise or vesting of an Award. An Employee's election to pay the
withholding tax obligation by (ii) or (iii) above must be made on or before
the Tax Date, is irrevocable, is subject to such rules as the Committee may
adopt, and may be disapproved by the Committee. If the amount requested is
not paid, the Committee may refuse to issue Common Stock under the Plan.
SECTION 12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock of the
Company by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, reorganization, combination, or exchange of shares,
split-up, split-off, spin-off, liquidation or other similar change in
capitalization, or any distribution to common stockholders other than cash
dividends, the number or kind of shares that may be issued under the Plan
pursuant to Section 3 and the number or kind of shares subject to, or the
price per share under any outstanding Award shall be automatically adjusted
so that the proportionate interest of the Employee or Outside Director
shall be maintained as before the occurrence of such event. Such adjustment
shall be conclusive and binding for all purposes of the Plan.
<PAGE>
SECTION 13. AMENDMENTS AND TERMINATIONS
Unless the Plan shall have been terminated as hereinafter
provided, the Plan shall terminate on, and no Award shall be granted after,
November 3, 1993. The Plan may be terminated, modified or amended by the
shareholders of the Company. The Board may at any time terminate, modify or
amend the Plan in such respects as it shall deem advisable; provided,
however, that the Board may not, without approval by the holders of a
majority of the outstanding shares of stock present and voting at any
annual or special meeting of shareholders of Ashland: (i) increase (except
as provided in Section 12) the maximum number of shares which may be issued
pursuant to the Awards granted under the Plan, (ii) change the class of
persons eligible to receive Awards, (iii) change the manner of determining
the minimum Exercise Price of Options other than to change the manner of
determining the Fair Market Value of the Common Stock as set forth in
Section 2, (iv) extend the period during which Awards may be granted or
exercised, or (v) amend any provision of the Plan insofar as it applies
specifically to Restricted Stock Awards granted or to be granted to Outside
Directors.
SECTION 14. MISCELLANEOUS PROVISIONS
(A) Except as to Awards to Outside Directors, no Employee or other
person shall have any claim or right to be granted an Award under the Plan.
(B) An Employee's or Outside Director's rights and interest under
the Plan may not be assigned or transferred in whole or in part, either
directly or by operation of law or otherwise (except in the event of an
Employee's or Outside Director's death, by will or the laws of descent and
distribution), including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner, and no
such right or interest of any Employee or Outside Director in the Plan
shall be subject to any obligation of liability of such individual;
provided, however, that an Employee's or Outside Director's rights and
interest under the Plan may, subject to the discretion and direction of the
Committee, be made transferable by such Employee or Outside Director during
his or her lifetime. Except as specified in Section 8, the holder of an
Award shall have none of the rights of a shareholder until the shares
subject thereto shall have been registered in the name of the person or
persons exercising the Award on the transfer books of the Company.
(C) No Common Stock shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance
with applicable Federal, state, and other securities laws.
(D) The expenses of the Plan shall be borne by the Company.
(E) By accepting any Award under the Plan, each Employee and
Outside Director and each Personal Representative or Beneficiary claiming
under or through him or her shall be conclusively deemed to have indicated
his or her acceptance and ratification of, and consent to, any action taken
under the Plan by the Company or the Board.
(F) Awards granted under the Plan shall be binding upon Ashland,
its successors, and assigns.
(G) The appropriate officers of the Company shall cause to be
filed any reports, returns, or other information regarding Awards hereunder
or any Common Stock issued pursuant hereto as may be required by Section 13
or 15(d) of the Exchange Act, or any other applicable statute, rule, or
regulation.
(H) Nothing contained in this Plan shall prevent the Board of
Directors from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required.
SECTION 15. EFFECTIVENESS OF THE PLAN
The Plan shall be submitted to the shareholders of the Company for
their approval and adoption on January 26, 1989 or such other date fixed
for the next meeting of shareholders or any adjournment or postponement
thereof.
<PAGE>
The Plan shall not be effective and no Award shall be made hereunder unless
and until the Plan has been so approved and adopted at a meeting of the
Company's shareholders.
SECTION 16. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky.
