Exhibit 10.11
ASHLAND INC.
1993 STOCK INCENTIVE PLAN
(Amended as of July 19, 2000)
SECTION 1. PURPOSE
The purpose of the Ashland Inc. 1993 Stock 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,
Merit Awards and Performance Share Awards in an effort to attract and
retain in its employ qualified individuals and to provide such individuals
with incentives to 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, Merit Awards and Performance Shares may not be
granted to such Outside Directors under the Plan.
SECTION 2. DEFINITIONS
(A) "Agreement" shall mean a written agreement setting forth the terms
of an Award.
(B) "Ashland" shall mean, collectively, Ashland Inc. and its Subsidiaries.
(C) "Award" shall mean an Option, a Stock Appreciation Right, a
Restricted Stock Award, a Merit Award, or a Performance Share Award, in
each case granted under this Plan.
(D) "Beneficiary" shall mean the person, persons, trust or trusts
designated by an Employee or Outside Director or if no designation has
been made, the person, persons, trust, or trusts entitled by will or the
laws of descent and distribution to receive the benefits specified under
this Plan in the event of an Employee's or Outside Director's death.
(E) "Board" shall mean the Board of Directors of the Company or its
designee.
(F) "Change in Control" shall be deemed to occur (1) upon approval of
the shareholders of Ashland (or if such approval is not required, upon the
approval of the Board) of (A) any consolidation or merger of Ashland 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 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.
(I) "Common Stock" shall mean the Common Stock of the Company ($1.00
par value), subject to adjustment pursuant to Section 13.
(J) "Company" shall mean, collectively, Ashland Inc. and its Subsidiaries.
<PAGE>
(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 (i) an Option (other than a Reload 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 or (ii) a Reload Option, the price of which is
as fixed pursuant to Section 6 of the Plan.
(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 selected 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) "Long-Term Incentive Plan" shall mean the Ashland Inc. Long-Term
Incentive Plan approved and adopted on January 26, 1989 by the
shareholders of the Company, as it now exists or as it may hereafter be
amended.
(Q) "Merit Award" shall mean an award of Common Stock issued pursuant
to Section 9 of the Plan.
(R) "Non-Employee Director" shall mean a non-employee director within
the meaning of applicable regulatory requirements, including those
promulgated under Section 16 of the Exchange Act.
(S) "Nonqualified Stock Option" or "NQSO" shall mean an Option granted
pursuant to this Plan which does not qualify as an Incentive Stock Option.
(T) "Option" shall mean the right to purchase Common Stock at a price
to be specified and upon terms to be designated by the Committee or
otherwise determined pursuant to this Plan. An Option shall be designated
by the Committee as a Nonqualified Stock Option or an Incentive Stock
Option.
(U) "Original Option" shall mean an option as defined in Subsection (D)
of Section 6 of the Plan.
(V) "Outside Director" shall mean a director of the Company who is not
also an Employee of the Company.
(W) "Performance Period" shall mean the period designated by the
Committee during which the performance objectives shall be measured.
(X) "Performance Share Award" shall mean an award of shares of Common
Stock, the issuance of which is contingent upon attainment of performance
objectives specified by the Committee.
(Y) "Performance Shares" shall mean those shares of Common Stock
issuable pursuant to a Performance Share Award.
(Z) "Personal Representative" shall mean the person or persons who,
upon the disability or incompetence of an Employee or Outside Director,
shall have acquired on behalf of the Employee or Outside Director by legal
proceeding or otherwise the right to receive the benefits specified in
this Plan.
(AA) "Plan" shall mean this Ashland Inc. 1993 Stock Incentive Plan.
(BB) "Reload Option" shall mean an option granted pursuant to
Subsection (D) of Section 6 of the Plan.
(CC) "Restricted Period" shall mean the period designated by the
Committee during which Restricted Stock may not be sold, assigned,
transferred, pledged, or otherwise encumbered, which period in the case of
Employees shall not be less than one year from the date of grant, and in
the case of Outside Directors is the period set forth in subsection (B) of
Section 8.
(DD) "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.
(EE) "Restricted Stock Award" shall mean an award of Restricted Stock.
(FF) "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.
<PAGE>
(GG) "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.
(HH) "Section 16(b) Optionee" shall mean an Employee or former Employee
who is subject to Section 16(b) of the Exchange Act.
(II) "Stock Appreciation Right" or "SAR" shall mean the right of the
holder to elect to surrender an Option or any portion thereof which is
then exercisable and receive in exchange therefor shares of Common Stock,
cash, or a combination thereof, as the case may be, with an aggregate
value equal to the excess of the Fair Market Value of one share of Common
Stock over the Exercise Price specified in such Option multiplied by the
number of shares of Common Stock covered by such Option or portion thereof
which is so surrendered. An SAR may only be granted concurrently with the
grant of the related Option. An SAR shall be exercisable upon any
additional terms and conditions (including, without limitation, the
issuance of Restricted Stock and the imposition of restrictions upon the
timing of exercise) which may be determined as provided in the Plan.
(JJ) "Subsidiary" shall mean any present or future subsidiary
corporations, as defined in Section 424 of the Code, of Ashland.
(KK) "Tax Date" shall mean the date the withholding tax obligation
arises with respect to the exercise of an Award.
SECTION 3. STOCK SUBJECT TO THE PLAN
There will be reserved for issuance under the Plan (upon the exercise
of Options and Stock Appreciation Rights, upon awards of Restricted Stock,
Performance Shares and Merit Awards and for stock bonuses on deferred
awards of Restricted Stock and Performance Shares), an aggregate of
2,900,000 shares of Ashland Common Stock, par value $1.00 per share;
provided, however, that of such shares, only 1,500,000 shares in the
aggregate shall be available for issuance for Restricted Stock Awards and
Merit Awards. Such shares shall be authorized but unissued shares of
Common Stock. Except as provided in Sections 7 and 8, if any Award under
the Plan shall expire or terminate for any reason without having been
exercised in full, or if any Award shall be forfeited, the shares subject
to the unexercised or forfeited portion of such Award shall again be
available for the purposes of the Plan.
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
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
<PAGE>
authorize any one or more of their 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
(other than a Reload 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 (other than a Reload Option) shall be exercisable prior to
the first anniversary of the date of its grant, except as provided in
Section 11 or as the Committee otherwise determines in accordance with the
Plan, and in no case may an Option be exercised at any time for fewer than
50 shares (or the total remaining shares covered by the Option if fewer
than 50 shares) during the term of the Option. The specified number of
shares will be issued upon receipt by Ashland of (i) notice from the
holder thereof of the exercise of an Option, and (ii) 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 secured 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.
C. Payment for Shares.
Except as otherwise provided in this Section 6, the Exercise Price for
the Common Stock shall be paid in full when the Option is exercised.
Subject to such rules as the Committee may impose, the Exercise Price may
be paid in whole or in part (i) in cash, (ii) in whole shares of Common
Stock owned by the Employee and evidenced by negotiable certificates,
valued at their Fair Market Value (which shares of Common Stock must have
been owned by the Employee six months or longer, and not used to effect a
stock Option exercise within the preceding six months, unless the
Committee specifically provides otherwise), (iii) by Attestation, (iv) by
a combination of such methods of payment, or (v) by such other
consideration as shall constitute lawful consideration for the issuance of
Common Stock and be approved by the Committee (including, without
limitation, effecting a "cashless exercise," with a broker, of the
Option). "Attestation" means the delivery to Ashland of a completed
Attestation Form prescribed by Ashland setting forth the whole shares of
Common Stock owned by the Employee which the Employee wishes to utilize to
pay the Exercise Price. The Common
<PAGE>
Stock listed on the Attestation Form must have been owned by the Employee
six months or longer, and not have been used to effect an Option exercise
within the preceding six months, unless the Committee specifically
provides otherwise. 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 be
secured by such collateral and shall bear interest at such rate or rates
as determined from time to time by the Committee.
D. Reload Options
The Committee shall have the authority to specify at the time of grant
that an Employee shall be granted another Stock Option (a "Reload Option")
in the event such Employee exercises all or a part of a Stock Option (an
"Original Option") by surrendering in accordance with Section 6,
subsection (C) already owned shares of Common Stock in full or partial
payment of the Exercise Price under such Original Option, subject to the
availability of shares of Common Stock under the Plan at the time of
exercise. Each Reload Option shall cover a number of shares of Common
Stock equal to the number of shares of Common Stock surrendered in payment
of the Exercise Price, shall have an Exercise Price per share of Common
Stock equal to the Fair Market Value of the Common Stock on the date of
grant of such Reload Option and shall expire on the stated expiration date
of the Original Option. A Reload Option shall be exercisable at any time
and from time to time from and after the date of grant of such Reload
Option (or, as the Committee in its sole discretion shall determine at the
time of grant, at such time or times as shall be specified in the Reload
Option); provided, however, that a Reload Option granted to a Section
16(b) Optionee shall not be exercisable during the first six months from
the date of grant of such Reload Option. The first such Reload Option may
provide for the grant, when exercised, of one subsequent Reload Option to
the extent and upon such terms and conditions, consistent with this
Section 6, subsection (D), as the Committee in its sole discretion shall
specify at or after the time of grant of such Reload Option. A Reload
Option shall contain such other terms and conditions which may include a
restriction on the transferability of the number of shares of Common Stock
received upon exercise of the Original Option reduced by a number of
shares equal in value to the tax liability incurred upon exercise as the
Committee in its sole discretion may deem desirable which may be set forth
in the Agreement evidencing the Reload Option.
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 (including any
Reload Option) granted under the Plan with respect to all or a portion of
the shares subject to the related Option. An SAR may only be granted
concurrently with the grant of the related Option. Subject to the terms
and provisions of this Section 7, each SAR shall be exercisable only at
the same time and to the same extent the related Option is exercisable and
in no event after the termination of the related Option. An SAR shall be
exercisable only when the Fair Market Value (determined as of the date of
exercise of the SAR) of each share of Common Stock with respect to which
the SAR is to be exercised shall exceed the Exercise Price per share of
Common Stock subject to the related Option. An SAR granted under the Plan
shall be exercisable in whole or in part by notice to Ashland. Such notice
shall state that the holder of the SAR elects to exercise the SAR and the
number of shares in respect of which the SAR is being exercised. 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, or in
cash, or partly in cash and partly in shares of Common Stock (valued at
Fair Market Value on the date of exercise of the SAR) , as the holder
shall request; provided, however, that the Committee, in its sole
discretion, may disapprove the form of consideration requested and instead
authorize the payment of such consideration in shares of Common Stock
(valued as aforesaid), or in cash, or partly in cash and partly in shares
of Common Stock.
Upon the exercise of an SAR, the related Option shall be deemed
exercised to the extent of the number of shares of Common Stock with
respect to which such SAR is exercised and to that extent a corresponding
number of shares of
<PAGE>
Common Stock shall not again be available for the grant of Awards under
the Plan. Upon the exercise or termination of the related Option, the SAR
with respect thereto shall be considered to have been exercised or
terminated to the extent of the number of shares of Common Stock with
respect to which the related Option was so exercised or terminated.
SECTION 8. RESTRICTED STOCK AWARDS
A. Awards to Employees
The Committee may make an award of Restricted Stock to selected
Employees, 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 for any
reason prior to the lapse of all restrictions thereon, such Restricted
Stock will be forfeited in its entirety by such Employee; provided,
however, that the Committee may, in its sole discretion, limit such
forfeiture. Any Restricted Stock so forfeited by an Employee shall not
again be available for the grant of Awards under the Plan.
Employees may be offered the opportunity to defer the receipt of
payment of vested shares of Restricted Stock, and Common Stock may be
granted as a bonus for deferral, under terms as may be established by the
Committee from time to time; however, in no event shall the Common Stock
granted as a bonus for deferral exceed 20% of the Restricted Stock so
deferred.
B. Awards to Outside Directors
During the term of the Plan, (i) each Outside Director who was granted
an award of restricted stock under the Long-Term Incentive Plan on January
26, 1989 and who continues to serve as an Outside Director on January 31,
1994 shall be granted an Award of 1,000 shares of Restricted Stock on
January 31, 1994; (ii) each Outside Director who was granted an award of
restricted stock under such Long-Term Incentive Plan other than those
Outside Directors in (i) above shall be granted an Award of 1,000 shares
of Restricted Stock upon the fifth anniversary of his or her prior award
under the Long-Term Incentive Plan; and (iii) each person who is hereafter
duly appointed or elected as an Outside Director and who does not receive
an award under the Long-Term Incentive Plan shall be granted, effective on
the date of his or her appointment or election to the Board, an Award of
1,000 shares of Restricted Stock. All Awards under this subsection (B) are
subject to the limitation on the number of shares of Common Stock
available pursuant to Section 3 and to the terms and conditions set forth
in this subsection (B) and subsection (C) below.
As a condition to any Award hereunder, the Outside Director 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 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 such Outside Director, (iii) a 50% change in the
beneficial ownership of the Company as defined in Rule 13d-3 under the
Exchange Act, or (iv) voluntary early retirement to take a position in
governmental service. 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), (iii) or (iv) 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. Any
Restricted Stock so forfeited by an Outside Director shall not again be
available for the grant of Awards under the Plan. As used herein, a
director shall be deemed "disabled" when he or she is unable
<PAGE>
to attend to his or her duties and responsibilities as a member of the
Board because of incapacity due to physical or mental illness.
C. Transferability
Subject to subsection (B) of Section 15 hereof, Restricted Stock may
not be sold, assigned, transferred, pledged, or otherwise encumbered
during a Restricted Period, which, in the case of Employees, shall be
determined by the Committee and which shall not be less than one year from
the date such Restricted Stock was awarded, and, in the case of Outside
Directors, shall be determined in accordance with subsection (B) of this
Section 8. The Committee may, at any time, reduce the Restricted Period
with respect to any outstanding shares of Restricted Stock awarded under
the Plan to Employees, but 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 thereto 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) subject to subsection (B) of Section 15 hereof, the
recipient may not sell, assign, transfer, pledge, exchange, encumber, or
dispose of the Restricted Stock or any Retained Distributions during the
Restricted Period; and (iv) a breach of any restrictions, terms, or
conditions provided in the Plan or established by the Committee with
respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any Retained Distributions with
respect thereto.
SECTION 9. MERIT AWARDS
The Committee may from time to time make an award of Common Stock under
the Plan to selected Employees for such reasons and in such amounts as the
Committee, in its sole discretion, may determine. As a condition to any
such Merit Award, the Committee may require an Employee to pay to the
Company an amount equal to, or in excess of, the par value of the shares
of Common Stock awarded to him or her.
SECTION 10. PERFORMANCE SHARES
The Committee may make awards of Common Stock, 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
investment, earnings per share, return on shareholders' equity, or return
to shareholders. 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. Performance Shares may not be sold, assigned, transferred,
pledged, or otherwise encumbered, except as herein provided and as
provided in subsection (E) of Section 11 and subject to subsection (B) of
Section 15, 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.
An Employee must be employed by the Company at the end of a Performance
Period in order to be entitled to payment of Performance Shares in respect
of such period; provided, however, that in the event of an Employee's
cessation of employment before the end of such period, or upon the
occurrence of his or her death, retirement, or disability, or other reason
approved by the Committee, the Committee may, in its sole discretion,
limit such forfeiture.
SECTION 11. CONTINUED EMPLOYMENT, AGREEMENT TO SERVE AND EXERCISE PERIODS
(A) Subject to the provisions of subsection (F) of this Section 11,
every Option (other than a Reload Option) and SAR shall provide that it
may not be exercised in whole or in part for a period of one year after
the date of granting such Option (unless otherwise determined by the
Committee) and, if the employment of the Employee shall terminate, for any
reason other than death or disability (as defined in subsection (C) of
this Section 11) as determined by the Committee, prior to the end of such
one year period or with respect to any Reload Option such other period as
may be specified by the Committee within which such Reload Option may not
be exercised, 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 11, 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 number of shares
which the Employee could have acquired under the Option immediately prior
to the Employee's death.
(C) Every Option shall provide that in the event the employment of any
Employee shall cease by reason of disability, as determined by the
Committee at any time during the term of the Option, such Option shall be
exercisable, at any time or from time to time by such Employee for the
number of shares which the Employee could have acquired under the Option
immediately prior to the Employee's disability. 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
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 for a period of three years after such Retirement date, which
three-year period may be extended at the discretion of the Committee.
Options held by an Employee who retires on or after September19, 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 11, every Option shall provide that it shall terminate on the
earlier to occur of the fixed termination date set forth in the Option or
three months after cessation of the Employee's employment for any cause
only in respect of the number of shares which the Employee
<PAGE>
could have acquired under the Option immediately prior to such cessation
of employment; provided, however, that no Option may be exercised after
the fixed termination date set forth in the Option.
(F) Notwithstanding any provision of this Section 11 to the contrary,
any Award granted pursuant to the Plan, except a Restricted Stock Award to
Outside Directors, which is governed by Section 8, subsection (B), may, in
the discretion of the Committee or as provided in the relevant Agreement,
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 12. WITHHOLDING TAXES
Federal, state or local law may require the withholding of taxes
applicable to gains resulting from the exercise of an Award. Unless
otherwise prohibited by the Committee, each Employee may satisfy any such
tax withholding obligation by any of the following means, or by a
combination of such means: (i) a cash payment, (ii) authorizing Ashland to
withhold from the shares of Common Stock otherwise issuable to the
Employee pursuant to the exercise or vesting of an Award a number of
shares having a Fair Market Value, as of the Tax Date, which will satisfy
the amount of the withholding tax obligation, or (iii) by delivery to
Ashland of a number of shares of Common Stock having a Fair Market Value
as of the Tax Date which will satisfy the amount of the withholding tax
obligation arising from an exercise or vesting of an Award. An Employee's
election to pay the withholding tax obligation by (ii) or (iii) above must
be made on or before the Tax Date, is irrevocable, is subject to such
rules as the Committee may adopt, and may be disapproved by the Committee.
If the amount requested is not paid, the Committee may refuse to issue
Common Stock under the Plan.
SECTION 13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock of the
Company by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, reorganization, combination, or exchange of shares,
split-up, split-off, spin-off, liquidation or other similar change in
capitalization, or any distribution to common stockholders other than cash
dividends, the number or kind of shares that may be issued under the Plan
pursuant to Section 3 and the number or kind of shares subject to, or the
price per share under any outstanding Award shall be automatically
adjusted so that the proportionate interest of the Employee or Outside
Director shall be maintained as before the occurrence of such event. Such
adjustment shall be conclusive and binding for all purposes of the Plan.
<PAGE>
SECTION 14. AMENDMENTS AND TERMINATIONS
Unless the Plan shall have been terminated as hereinafter provided, the
Plan shall terminate on, and no Award (other than Reload Options
automatically granted pursuant to Section 6) shall be granted after
January 26, 1998. 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 13) 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 15. 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 receiving or person or persons exercising the Award on the transfer
books of the Company.
(C) No Common Stock shall be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance with
applicable Federal, state, and other securities laws.
(D) The expenses of the Plan shall be borne by the Company.
(E) By accepting any Award under the Plan, each Employee and Outside
Director and each Personal Representative or Beneficiary claiming under or
through him or her shall be conclusively deemed to have indicated his or
her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board or the Committee.
(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.
(I) Each Employee shall be deemed to have been granted any Award on the
date the Committee took action to grant such Award under the Plan or such
later date as the Committee in its sole discretion shall determine at the
time such grant is authorized; provided, however, that a Reload Option
shall be deemed to have been granted on the date on which the Original
Option is exercised or such later date as the Committee in its sole
discretion shall determine prior to the date on which such exercise occurs
and a subsequent Reload Option shall be deemed to have been granted on the
date on which the underlying Reload Option is exercised or such later date
as the Committee in its sole discretion shall determine prior to the date
on which such exercise occurs.
<PAGE>
SECTION 16. EFFECTIVENESS OF THE PLAN
The Plan shall be submitted to the shareholders of the Company for
their approval and adoption on January 28, 1993 or such other date fixed
for the next meeting of shareholders or any adjournment or postponement
thereof. 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 17. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky.
