<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ X ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ASHLAND COAL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ASHLAND COAL, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid: $125
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
<PAGE> 2
ASHLAND COAL, INC.
P.O. Box 6300 Huntington, WV 25771-6300 (304) 526-3333
March , 1996
Dear Stockholder:
The Board of Directors of Ashland Coal and I cordially invite you to attend
the Annual Meeting of Stockholders to be held in Huntington, West Virginia, on
Friday, April 26, 1996 at 10:30 a.m.
The formal business to be conducted is the election of Directors, approval
of a Restated Certificate of Incorporation, and ratification of Ernst & Young
LLP as independent auditors of the company. After completion of the formal
business, I will review Ashland Coal's 1995 results of operations and the
outlook for the future. Officers and directors will be available to answer any
questions you may have about the company.
We hope you can attend the meeting in person. If you plan to attend in
person, please mark the attendance block shown on the proxy card.
WHETHER OR NOT YOU PLAN TO ATTEND, I URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE POSTAGE-PAID ENVELOPE WHICH IS
PROVIDED SO THAT YOUR SHARES CAN BE REPRESENTED AT THE MEETING. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE BOARD NOMINEES, FOR APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE RESTATED CERTIFICATE OF INCORPORATION,
AND FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT AUDITORS
FOR 1995.
I hope you will review the enclosed Annual Report. I look forward to seeing
you in Huntington.
Sincerely,
WILLIAM C. PAYNE
Chairman of the Board,
President and Chief
Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
ASHLAND COAL, INC.
TO BE HELD APRIL 26, 1996
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Ashland
Coal, Inc., a Delaware corporation ("Ashland Coal"), will be held on Friday,
April 26, 1996, at 10:30 A.M., local time, at the Ashland Coal Headquarters
Building, 2205 Fifth Street Road, Huntington, West Virginia, and at any
adjournment thereof, to take action upon the following proposals as well as such
other business as may properly come before the Annual Meeting or any adjournment
thereof: (1) to elect ten directors to the Board of Directors, three of whom
shall be elected by holders of outstanding shares of Preferred Stock and seven
of whom shall be elected by holders of outstanding shares of Common Stock; (2)
to approve the Restated Certificate of Incorporation (copy attached as Exhibit
A); and (3) to ratify the appointment of Ernst & Young LLP as independent
auditors for 1996.
The Board of Directors has fixed the close of business on March 13, 1996,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof.
In order that your stock may be represented at the Annual Meeting, please
date and sign the enclosed proxy card and return it in the accompanying
envelope. If you attend the Annual Meeting and give written notice to Ashland
Coal's Secretary prior to the voting of your proxy, you may vote in person even
though you have previously sent in your proxy card.
By Order of the Board of Directors,
ROY F. LAYMAN
Administrative Vice President
and Secretary
Huntington, West Virginia
March , 1996
<PAGE> 4
ASHLAND COAL, INC.
2205 FIFTH STREET ROAD
HUNTINGTON, WEST VIRGINIA 25701
(304) 526-3333
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1996
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Ashland Coal, Inc. ("Ashland Coal") of proxies to be
voted at the Annual Meeting of Stockholders to be held on Friday, April 26,
1996, at 10:30 A.M., local time, at the Ashland Coal Headquarters Building, 2205
Fifth Street Road, Huntington, West Virginia, and at any adjournment thereof,
for the purposes set forth in the accompanying Notice. This Proxy Statement and
the accompanying form of proxy will be mailed to stockholders commencing on or
about March 26, 1996. Ashland Coal's mailing address is P. O. Box 6300,
Huntington, West Virginia 25771. An annual report including financial statements
for the year ended December 31, 1995, is enclosed with this Proxy Statement.
Only the holders of record of Ashland Coal's Common Stock, par value $.01
("Common Stock"), convertible Class B Preferred Stock, par value $100 ("Class B
Preferred Stock"), and convertible Class C Preferred Stock, par value $100
("Class C Preferred Stock") (Class C Preferred Stock, together with the Class B
Preferred Stock, the "Preferred Stock") at the close of business on March 13,
1996, will be entitled to vote at the Annual Meeting. At that date there were
shares of Common Stock, 150 shares of Class B Preferred Stock and
100 shares of Class C Preferred Stock issued and outstanding.
With respect to the election of directors, the holders of the outstanding
shares of Preferred Stock, voting together as a class, have the right to elect
one director for every 63 shares of Class B or Class C Preferred Stock held by
them. The maximum number of directors to be elected by the holders of Preferred
Stock is three. Holders of Preferred Stock are entitled to one vote for each
share of Preferred Stock in the election of directors. The remaining seven
directors are elected by the holders of the outstanding shares of Common Stock,
voting as a single class, without the vote of the holders of Preferred Stock.
The holders of outstanding shares of Common Stock are entitled to one vote for
each share held by them on the record date with respect to the election of
directors.
Cumulative voting applies in the election of the three directors to be
elected by the holders of outstanding shares of Preferred Stock and the seven
directors to be elected by holders of outstanding shares of Common Stock.
Cumulative voting means that a stockholder may multiply the number of votes to
which such stockholder is entitled by virtue of his share ownership by the
number of directors to be elected by such stockholder and cast this total number
of votes for any one nominee, or may distribute the total number of votes, in
any proportion, among as many nominees as the stockholder desires, up to the
number of directors to be elected.
Cumulative voting does not apply with respect to the ratification of the
appointment of auditors, approval of the amendment and restatement of Ashland
Coal's Restated Certificate of Incorporation, or any other matter that may
properly come before the meeting (other than the election of directors), and in
such cases the holders of outstanding shares of Common Stock and Preferred Stock
shall vote together as one class and each holder of shares of Class B and Class
C Preferred Stock shall be entitled to the number of votes that such holder
would have if such holder had converted its Preferred Stock into Common Stock
immediately prior to the record date (see SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT). The holders of outstanding shares of Common
Stock are entitled to one vote for each share held by them on the record date
with respect to the ratification of auditors and any other such matters that may
properly come before the meeting.
<PAGE> 5
The holders of a majority of the outstanding shares of stock, determined as
if each holder of shares of Preferred Stock had converted said Preferred Stock
into Common Stock immediately prior to the record date for such meeting, present
in person or by proxy, shall constitute a quorum. Abstentions and broker
non-votes count in the determination of a quorum.
ITEM 1. ELECTION OF DIRECTORS
(PROPOSAL 1 ON FORM OF PROXY CARD)
Under the Amended By-Laws of Ashland Coal, until otherwise fixed by the
Board of Directors, the number of directors constituting the whole Board shall
be ten. The Board has not determined otherwise. Each director holds office until
his successor is elected and qualified. All directors are seeking reelection at
the 1996 Annual Meeting. These directors are Messrs. J. A. "Fred" Brothers,
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, Juan Antonio Ferrando,
Robert L. Hintz, Thomas Marshall, William C. Payne, J. Marvin Quin and Robert E.
Yancey, Jr. All of the nominees have consented to serve if elected and all of
them were elected directors at last year's Annual Meeting of Stockholders. Mr.
Michael G. Ziesler, a member of the Board of Directors since 1992, and Mr.
Werner Externbrink, a member of the Board since 1993, both resigned from the
Board and the Committees on which they served on February 8, 1995, in connection
with the sale by Saarbergwerke AG of its 150 shares of Class B Preferred Stock
to Ashland Inc. Mr. Brothers was elected in February 1995 by the holders of the
Preferred Stock to fill one of the vacancies created by the resignations of
Messrs. Ziesler and Externbrink, and Mr. Quin, who previously served as a
Director elected by the holders of shares of Common Stock, was elected in April
at the 1995 Annual Meeting of Stockholders to fill the other vacancy, and at
which time Mr. Marshall was elected a Director by the holders of shares of
Common Stock.
With respect to the directors to be elected by the holders of outstanding
shares of Preferred Stock, the three persons receiving the greatest number of
votes cast by holders of outstanding shares of Preferred Stock, present or
represented at the Annual Meeting, shall be elected as directors. With respect
to the directors to be elected by the holders of outstanding shares of Common
Stock, the seven persons receiving the greatest number of votes cast by the
holders of the outstanding shares of Common Stock, present or represented at the
Annual Meeting, shall be elected as directors. Holders of Preferred Stock and
holders of Common Stock voting at the Annual Meeting may not vote for more than
the respective number of nominees listed in the Proxy Statement to be elected by
the holders of outstanding shares of Preferred Stock and Common Stock,
respectively. Abstentions and broker non-votes are not counted as votes cast
either for or against a nominee for election as a director.
It is the intention of the persons named in the enclosed form of proxy
(Messrs. Paul W. Chellgren and William C. Payne), unless otherwise instructed in
any form of proxy, to vote FOR the election of the three nominees described
herein to be elected by holders of outstanding shares of Preferred Stock and FOR
the seven nominees to be elected by holders of outstanding shares of Common
Stock. Such proxy holders also may vote such shares cumulatively for less than
the entire number of nominees if any situation arises which, in the opinion of
the proxy holders, makes such action necessary or desirable. Ashland Coal has no
reason to believe that any of the nominees will not be available for election as
directors. Ashland Coal is soliciting and the proxy holders are being granted
discretionary authority to cumulate and to vote the shares of stock as they
determine. If stockholders do not wish to confer authority to cumulate their
votes to Messrs. Chellgren and Payne as provided in the proxy, stockholders may
exercise their right to cumulate votes in the election of directors by attending
the meeting and voting in person.
2
<PAGE> 6
NOMINEES FOR DIRECTOR
The following information is provided regarding each nominee for election
as a director by holders of outstanding shares of Preferred Stock:
- --------------------------------------------------------------------------------
J. A. "FRED" BROTHERS, Senior Vice President and Group
Operating Officer of Ashland Inc. since 1988. A Director of
Ashland Coal since February, 1995. Director, Society
National Bank, Children's Hospital (Columbus, Ohio) , The
Geon Company (a manufacturer and marketer of vinyl
plastics), and Ohio Dominican College. Age 55.
- --------------------------------------------------------------------------------
JUAN ANTONIO FERRANDO, Director of Carboex International,
Ltd.; Senior Vice President, Business Development, Sociedad
Espanola de Carbon Exterior, S.A. (a coal supply firm
controlled by a Spanish state-owned corporation, and the
owner of Carboex) since 1986; during the past five years,
has served in a variety of managerial positions in
Desarrollo de Operaciones Mineras, S.A. (a coal mining
company with operations in Spain and other countries); a
Director of Ashland Coal since 1988. Director, Granitos
Espanoles, S.A. (a Spanish company which produces and sells
granite). Age 54.
- --------------------------------------------------------------------------------
J. MARVIN QUIN, Senior Vice President and Chief Financial
Officer of Ashland Inc. since January 1992; Administrative
Vice President and Treasurer of Ashland Inc. from 1987 to
1992; a Director of Ashland Coal since 1992. Director,
Kentucky Electric Steel, Inc. Age 48.
3
<PAGE> 7
The following information is provided regarding each nominee for election
as a director by holders of outstanding shares of Common Stock:
- --------------------------------------------------------------------------------
ROBERT A. CHARPIE, Chairman of Ampersand Ventures, Inc. (a
venture capital company); retired in September 1988 as
Chairman of the Board of Cabot Corporation; a Director of
Ashland Coal since 1988. Director, Champion International
Corporation, and Federated Department Stores, Inc. Age 70.
- --------------------------------------------------------------------------------
PAUL W. CHELLGREN, President and Chief Operating Officer of
Ashland Inc. since 1992; Senior Vice President and Chief
Financial Officer of Ashland Inc. from 1988 to 1992;
Chairman of the Board of Ashland Coal from 1982 to 1992; a
Director of Ashland Coal since 1981. Director, Ashland Inc.
and PNC Bank Corp. Age 53.
- --------------------------------------------------------------------------------
THOMAS L. FEAZELL, Senior Vice President, General Counsel
and Secretary of Ashland Inc. since 1992; Administrative
Vice President and General Counsel of Ashland Inc. from
1988 to 1992; a Director of Ashland Coal since 1981.
Director, National City Bank of Ashland, Kentucky. Age 59.
- --------------------------------------------------------------------------------
ROBERT L. HINTZ, Chairman of the Board of R. L. Hintz &
Associates (a management consulting firm) since 1989;
retired in 1988 as Executive Vice President of CSX
Corporation. A Director of Ashland Coal since 1993.
Director, Reynolds Metals Corporation, Scott &
Stringfellow, Inc. and Chesapeake Corporation. Age 65.
4
<PAGE> 8
- --------------------------------------------------------------------------------
THOMAS MARSHALL, retired in 1995 as Chairman of the Board
of Aristech Chemical Corporation, a position he held from
1986; Chief Executive Officer of Aristech Chemical
Corporation from 1986 to 1994; a Director of Ashland Coal
since April 1995. Director, PNC Bank Corp. and Allegheny
Ludlum Corporation. Age 67.
- --------------------------------------------------------------------------------
WILLIAM C. PAYNE, Chairman of the Board of Ashland Coal
since 1992; President and Chief Executive Officer and a
Director of Ashland Coal since 1987. Age 63.
- --------------------------------------------------------------------------------
ROBERT E. YANCEY, JR., Senior Vice President and Group
Operating Officer of Ashland Inc. and President of Ashland
Petroleum Company, a division of Ashland Inc. since 1986; a
Director of Ashland Coal since 1987. Age 50.
Except as otherwise indicated, the nominees have held the principal
occupations described above during the past five years. Ashland Inc. owns
approximately 55 per cent of the outstanding shares of Common Stock of Ashland
Coal, assuming conversion of the Preferred Stock to Common Stock (see SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT).
5
<PAGE> 9
INFORMATION CONCERNING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
During the year ended December 31, 1995, seven meetings of the Board of
Directors were held. The standing committees of the Board of Directors are the
Audit Committee, Executive Committee, Finance Committee, Key Employee Stock
Administration Committee, Nominating Committee and Personnel and Compensation
Committee. In addition, a Technical Committee, which includes persons who are
not Directors, acts in an advisory capacity to the Board. The Audit Committee
met three times, the Personnel and Compensation Committee met four times, the
Key Employee Stock Administration Committee met one time, and the Finance
Committee met four times. The Nominating Committee, the Executive Committee, and
the Technical Committee did not meet during 1995. Each nominee attended more
than 75 percent of the total meetings of the Board and the Committees on which
he served. Overall attendance at Board and Committee meetings during 1995 was
about 91 percent.
The Audit Committee is composed of Mr. Hintz (Chairman), and Messrs.
Charpie and Ferrando. Its duties include recommending Ashland Coal's independent
auditors, reviewing the scope and results of external and internal audits,
reviewing internal accounting controls, reviewing significant changes in
accounting principles, approving in advance all substantial services which are
not audit-related to be provided by the independent auditors, obtaining reports
on legal compliance and reviewing audit fees and services provided by
independent auditors.
The Executive Committee is composed of Mr. Payne (Chairman), and Messrs.
Chellgren and Ferrando. The Executive Committee, to the extent permitted by law
and Ashland Coal's Amended By-laws and Restated Certificate of Incorporation, as
amended, has and may exercise such powers and authority as the Board of
Directors shall from time to time determine.
The Finance Committee is composed of Mr. Charpie (Chairman), and Messrs.
Brothers, Chellgren, Ferrando, Payne, and Quin. The duties of this Committee
include, in addition to such responsibilities as may be delegated to it from
time to time by the Board of Directors, the review of Ashland Coal's current
fiscal policies, financing and capital structure, and current and contemplated
financial requirements, as well as evaluation of, and recommendations
respecting, significant financial matters. The recommendations of the Finance
Committee are subject to the review and approval of the Board of Directors.
The Key Employee Stock Administration Committee is composed of Mr. Charpie
(Chairman), and Messrs. Hintz and Marshall. The duties of this Committee include
the responsibility for approving awards and participation under Ashland Coal's
1988 and 1995 Stock Incentive Plans.
The Nominating Committee is composed of Mr. Chellgren (Chairman), and
Messrs. Charpie and Ferrando. The duties of this Committee include the
responsibility of recommending nominees for election to the Board of Directors.
The Personnel and Compensation Committee is composed of Mr. Feazell
(Chairman), and Messrs.Charpie, Marshall and Yancey. The duties of this
Committee include the approval of salaries of all principal officers and
employees of Ashland Coal and its subsidiaries above specified dollar levels and
all awards and participation under Ashland Coal's incentive plans, except for
awards and participation under Ashland Coal's 1995 Stock Incentive Plan (which
is administered by the Key Employee Stock Administration Committee). The
Personnel and Compensation Committee also makes recommendations with respect to
compensation policies, position evaluations, transfers, promotions, and
terminations of senior executives. In addition, it administers various Ashland
Coal employee compensation plans and various benefit plans, such as retirement
and saving plans, including contribution levels, determination of investment
guidelines, selection of investment managers and the review of their
performances.
The Technical Committee is composed of individuals who are not Directors,
and presently consists of Mr. Michael F. Moran, Vice President of Ashland Coal,
and Mr. Jose Fernandez Olano, Technical Director of Sociedad Espanola de Carbon
Exterior, S.A. The Technical Committee serves in an advisory capacity to the
Board on significant projects, investments, acquisitions and other matters
requiring action by the Board. This Committee cannot exercise any of the powers
of the Board of Directors.
6
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information as of February 29, 1996,
unless otherwise noted, concerning ownership of Ashland Coal's outstanding
Preferred Stock, Common Stock into which Preferred Stock may be converted
(hereinafter referred to as "Equivalents") and outstanding Common Stock. Except
for the Equivalents and the Common Stock which may be acquired by means of
dividend reinvestments under the Ashland Coal Dividend Reinvestment and Stock
Purchase Plan in respect of dividends declared to holders of record on a record
date after February 29, 1996, the listed persons have no other right to acquire
beneficial ownership of Common Stock of Ashland Coal exercisable within 60 days
after February 29, 1996. Common Stock and Equivalents Beneficially Owned and
Percentage of Common Stock and Equivalents are calculated assuming full
conversion of the Class B and the Class C Preferred Stock at the current
conversion rate. On February 8, 1995, Ashland Inc. (formerly Ashland Oil, Inc.)
("Ashland") purchased from Saarbergwerke AG, all of the issued and outstanding
shares of Class B Preferred Stock. As a result, Ashland now owns Common Stock
and Equivalents representing about 55 percent of the voting power of Ashland
Coal, and has the power to elect a majority of the Board of Directors. If the
Equivalents are excluded from the computation of Percentage of Common Stock and
Equivalents, Ashland owns approximately 54 per cent of the Common Stock. Each
stockholder has sole voting and dispositive power with respect to the stock
listed next to its or his name unless otherwise noted.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK APPROXIMATE
PREFERRED STOCK AND EQUIVALENTS PERCENTAGE OF
BENEFICIALLY BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED OWNED AND EQUIVALENTS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ashland Inc. 1 150(Class B) 10,026,500 2 55%
P. O. Box 391
Ashland, Kentucky 41114
Carboex International, Ltd. 3 100(Class C) 1,834,600 4 10%
Bolan House
P. O. Box N-3010
Nassau, Bahamas
J. A. Brothers 1 0 3,100 *
Robert A. Charpie 0 10,000 *
Paul W. Chellgren 1 0 5,328 *
Thomas L. Feazell 1 0 618 *
Juan Antonio Ferrando. 3 0 0 0%
Robert L. Hintz 0 1,000 *
Thomas Marshall 0 2,500 *
William C. Payne 0 87,250 6 *
J. Marvin Quin1 0 500 *
Robert E. Yancey, Jr. 1 0 1,000 *
Kenneth G. Woodring 0 45,559 7 *
C. Henry Besten, Jr. 0 33,564 8 *
Marc R. Solochek 0 26,727 9 *
Roy F. Layman 0 31,443 10 *
All Executive Officers and Directors as a 0 248,499 11 1%
group (14 persons)
- ---------------------------------------------------------------------------------------------------
</TABLE>
1 Messrs. Brothers, Chellgren, Feazell, Quin and Yancey, directors of
Ashland Coal, are executive officers of Ashland, and to the extent they
may be deemed to be control persons of Ashland, they may be deemed to be
beneficial owners of shares owned by Ashland. Each of Messrs. Brothers,
Chellgren, Feazell, Quin and Yancey disclaims beneficial ownership of
such stock.
7
<PAGE> 11
2 The Class B Preferred Stock is currently convertible at the rate of
18,346 shares of Common Stock for each share of Class B Preferred Stock.
Ashland is the only holder of Ashland Coal's Class B Preferred Stock.
3 Mr. Ferrando, a director of Ashland Coal, is a director of Carboex
International, Ltd., and to the extent he may be deemed to be a control
person of Carboex, he may be deemed to be a beneficial owner of shares
owned by Carboex. Mr. Ferrando disclaims beneficial ownership of such
shares.
4 The Common Stock equivalent of 100 shares of Class C Preferred Stock
currently convertible at the rate of 18,346 shares of Common Stock for
each share of Class C Preferred Stock. Carboex International, Ltd. is
the only holder of Ashland Coal's Class C Preferred Stock.
5 Includes 1,048 shares owned by members of Mr. Chellgren's family for
which he disclaims beneficial ownership.
6 Includes 72,750 shares held subject to currently exercisable stock
options.
7 Includes 40,960 shares held subject to currently exercisable stock
options.
8 Includes 4,581 shares, as of December 31, 1995, held by Mr. Besten under
Ashland Coal's Employee Thrift Plan, which provides participants with
voting and investment power with respect to such shares, and 27,750
shares held subject to currently exercisable stock options.
9 Includes 3,209 shares, as of December 31, 1995, held by Mr. Solochek
under Ashland Coal's Employee Thrift Plan, which provides participants
with voting and investment power with respect to such shares, and 23,500
shares held subject to currently exercisable stock options.
10 Includes 26 shares owned by members of Mr. Layman's family for which
Mr. Layman disclaims beneficial ownership, 865 shares, as of December
31, 1995, held by Mr. Layman under Ashland Coal's Employee Thrift Plan,
which provides participants with voting and investment power with
respect to such shares, and 30,500 shares held subject to currently
exercisable stock options.
11 Includes 1,074 shares owned by family members of persons in the group
for which such persons disclaim beneficial ownership, 8,655 shares, as
of December 31, 1995, held by Executive Officers under Ashland Coal's
Employee Thrift Plan, which provides participants with voting and
investment power with respect to such shares, and 195,460 shares held
subject to currently exercisable stock options.
* Represents less than 1 percent of the total number of shares of Common
Stock and Equivalents outstanding.
RESTATED SHAREHOLDERS AGREEMENT
Ashland and Carboex (together, the "Principal Shareholders") and Ashland
Coal are parties to a Restated Shareholders Agreement, as amended ("Shareholders
Agreement") imposing certain restrictions on the disposition of Ashland Coal
capital stock held by them. The Shareholders Agreement also binds transferees of
the Principal Shareholders and applies to all shares of capital stock of Ashland
Coal, including any shares of Common Stock into which the Preferred Stock may be
converted. The Shareholders Agreement also restricts Ashland Coal's business to
coal mining, processing and marketing and related business activities.
Under the Shareholders Agreement, the Principal Shareholders may dispose of
their shares without consent of the other Principal Shareholder in an
underwritten public offering; with certain limits, in resales exempt from
registration under the Securities Act of 1933 (the "Act") under Rule 144
thereof; or to buyers who with their affiliates would own fewer than 500,000
common shares after the disposition.
REGISTRATION RIGHTS AGREEMENT
Ashland Coal and the Principal Shareholders are parties to a Registration
Rights Agreement, effective on July 1, 1994, pursuant to which Ashland Coal
granted to each of the Principal Shareholders "demand" and "piggyback-on-demand"
registration rights requiring Ashland Coal to register common stock held by the
8
<PAGE> 12
Principal Shareholders under the Securities Act of 1933 for sale to the public,
as well as certain "incidental" registration rights entitling the Principal
Shareholders to register common stock (subject to limitations on the number
registered) in offerings by Ashland Coal or other holders of registration
rights.
9
<PAGE> 13
PERSONNEL AND COMPENSATION COMMITTEE
AND
KEY EMPLOYEE STOCK ADMINISTRATION COMMITTEE
REPORT ON
EXECUTIVE COMPENSATION FOR 1995
GENERAL
The Personnel and Compensation Committee ("P&C Committee") is composed
entirely of outside directors and has the responsibility, among others, for
approving Ashland Coal's executive compensation program, except for the grant of
stock options. The Key Employee Stock Administration Committee ("KESA
Committee"), which is also composed entirely of outside directors, was
responsible for approving grants of stock options under Ashland Coal's 1988
Stock Incentive Plan for Key Employees, and is responsible for approving grants
under the 1995 Stock Incentive Plan approved by the Stockholders at Ashland
Coal's 1995 Annual Meeting. The members of these committees are free from
interlocking or other relationships that could create a conflict of interest.
The compensation of Ashland Coal's executives is reviewed and approved
annually. In 1995, Ashland Coal again retained an executive compensation
consultant to advise the P&C Committee on the executive compensation program and
the KESA Committee on stock awards to key executives.
COMPENSATION PRINCIPLES
The fundamental objectives of Ashland Coal's compensation program are to
attract, retain and motivate key executives to enhance long-term profitability
and stockholder value. The compensation program:
- provides for a base level of compensation that is competitive with other
similarly sized publicly-traded mining companies, particularly those in
the coal mining industry, and compensates key executives based on their
level of responsibility;
- links executives' compensation to the operating and financial performance
of Ashland Coal by making significant elements of their compensation
sensitive to the performance of the company; and
- rewards the executives for short and long-term enhancement of shareholder
value.
Presently the executive compensation program consists of four principal
components:
- annual salary
- annual incentive compensation
- medium-term incentive compensation
- stock options
ANNUAL SALARY
Annual salaries for executive officers other than the President and Chief
Executive Officer ("CEO") are determined by the P & C Committee's independent
consideration of the executive's performance of his duties (as reported by the
CEO), responsibilities and experience; the historical compensation levels of
Ashland Coal; and a consultant's report of the median range of the salaries for
similarly situated executives as determined from surveys of salaries for
executives in the mining and coal industries and other industrial companies,
including anticipated estimated salary increases given or to be given in such
industries in the current year (such factors being collectively referred to as
"Salary Factors"). Annual salaries are not based on specific measures of
corporate performance, but, notwithstanding the Salary Factors, annual salaries
could be frozen, reduced, or increased by a smaller increment than otherwise
would be the case, in the P & C Committee's sole discretion, as a result of poor
corporate performance. Individual performance of an executive is not measured by
specific quantitative criteria, but is qualitatively assessed. The CEO's
compensation, including his annual salary, is discussed later in this report.
10
<PAGE> 14
The determination of annual salaries begins with the CEO's evaluation of
each executive officer's performance of his duties for the preceding year and a
comparison of his salary with salaries of similarly situated executives as
reported in compensation surveys conducted by entities not associated with
Ashland Coal and a compensation report by its compensation consultant. The
compensation consultant report for use in setting 1996 salaries showed that over
all Ashland Coal executive salaries continue to be slightly lower than the
survey average, but within the range of competitive compensation. The companies
included in these compensation surveys are selected by such unrelated entities,
and the total number of companies surveyed is larger than the peer group of
issuers selected by Ashland Coal for comparison in the Cumulative Total Return
graph included later in this Proxy Statement. The CEO then makes recommendations
in February to the P&C Committee which may approve his recommendations or set
salaries at a level different than the CEO's recommendations.
The P&C Committee reviews the CEO's recommendations with the CEO including
the CEO's justification and support for them. The P&C Committee does not give a
specified weight to the individual Salary Factors. The individual performance of
any executive is measured by the extent to which the individual discharges his
or her duties. With respect to 1995 salary recommendations, the P&C Committee
did not follow all of Mr. Payne's recommendations. The salaries of the Ashland
Coal executives as determined by the P&C Committee are generally tied to the
median level of salaries indicated by the surveys as reported by the
compensation consultant to the Committee.
ANNUAL INCENTIVE COMPENSATION
This component of the executive compensation program provides short-term
incentives under the Incentive Compensation Program for Key Employees
("Incentive Compensation Program"). The executives named in the Summary
Compensation Table ("Summary Table") set forth later in this Proxy Statement,
together with twenty-four other key employees of Ashland Coal designated by the
P&C Committee, are provided an opportunity to earn incentive cash compensation
based on individual and company performance. In determining the annual incentive
compensation award to any individual, a minimum company performance level must
be met, and assuming it is met, an individual's level of responsibilities,
company performance and individual performance are considered in determining the
amount of the award. There are presently six levels in the Incentive
Compensation Program. The P&C Committee determines at the beginning of each year
the level within the Incentive Compensation Program at which each participant is
placed based on the participant's potential to affect profitability. All other
performance factors being equal, the maximum achievable incentive award
increases based on increasing levels of potential to affect profitability. In
addition, in respect of the performance factors, company performance is given
twice the weight of individual performance. In the cases of Messrs. Payne and
Woodring (as well as two other persons not named in the Summary Table), the
environmental and health and safety performances of the operating subsidiaries
also are taken into account in making incentive compensation awards.
Each February the P&C Committee sets a minimum company performance standard
(hurdle) that must be met before any incentive compensation may be awarded. For
1995, company performance was measured against a profit before tax hurdle and
performance exceeded the hurdle by about 26 percent, and awards were paid in
March of 1996. The determination of individual performance for purposes of
incentive compensation awards is based upon the CEO's evaluation of the extent
to which an individual successfully discharges his or her duties. There are no
specific quantitative criteria by which individual performance is measured for
purposes of incentive compensation, but such performance is qualitatively
assessed. The P&C Committee may reject the CEO's recommendations on individual
performances if it does not concur, and the P&C Committee's decision is final.
A participant's payout at his participation level is a function of the
weighted combined company and individual performance score (expressed as a
percentage) and the participant's salary. The Incentive Compensation Program
provides that total payments are not to exceed 6 percent of net income of
Ashland Coal, excluding nonoperating items. The P&C Committee may adjust, at its
discretion, the minimum company performance standard and payments under this
Program. No such adjustments have been made during the last three years.
11
<PAGE> 15
With respect to total annual cash compensation paid to Messrs. Payne,
Woodring, Besten, Solochek, and Layman for 1995, approximately 35 percent, 27
percent, 28 percent, 25 percent and 21 percent, respectively, was
performance-sensitive under the Incentive Compensation Program. For the
three-year period covered by the Summary Table, the portion of total annual cash
compensation which was performance sensitive under the Incentive Compensation
Program was 28 percent, 23 percent, 25 percent, 23 percent and 19 percent,
respectively, for the named executives.
PERFORMANCE UNIT PLAN
This component of the executive compensation program seeks to reward
executives for successful medium-term strategic planning and operating
performance by Ashland Coal. Only company performance is taken into account in
determining payments under Ashland Coal's Performance Unit Plan ("Performance
Plan"). Under the Performance Plan, executives designated by the P&C Committee
(currently 16 persons in addition to the named individuals) are awarded
performance units contingent upon the level of Ashland Coal's future
performance.
The number of performance units awarded to a participant is based on that
individual's level of responsibility. Performance units awarded are based on the
participant's base salary on the date of the award. The original amount of any
award may not exceed 400 percent of the employee's then base salary.
Historically, performance units have been awarded every two years and each award
covers a four-year performance cycle.
Performance measures and the time period over which performance is to be
measured are determined by the P&C Committee. Performance measures may include,
but shall not be limited to, return on net assets employed, cumulative earnings
per share, and return on equity ("ROE"). The 1993-1996 cycle uses ROE as the
performance measure and the 1995-1998 cycle uses profit before tax as the
performance measure. Below a "hurdle", there is no payment, and at or above a
"target", 100 percent of the award is earned. Payouts are earned for company
performance between the hurdle and target, depending on the level of
performance.
The amount paid out upon meeting the performance measures cannot exceed the
original amount of such award, and the total amount of payments under the
Performance Plan for each award period shall not exceed 2 percent of
stockholders' equity of Ashland Coal as shown in its Annual Report to
Stockholders at the end of the fiscal year next preceding the commencement of
such award period. Payments with respect to performance units may be made in one
or more installments and may be made wholly in cash, wholly in shares of Ashland
Coal Common Stock or partly in cash and partly in such shares, at the discretion
of the P&C Committee and as permitted by applicable securities laws. Although
the Performance Plan permits payment in shares of Ashland Coal Common Stock, no
Common Stock has been authorized by Ashland Coal's Board of Directors for
issuance under the Performance Plan. Under the Performance Plan, the P&C
Committee can adjust, at its discretion, the performance measures set and
payments made for any cycle. There have been no such adjustments made during the
last three years.
Although the Performance Plan permits awards of up to 400 percent of a
participant's salary, the maximum award to any individual has not exceeded 160
percent. In 1995, payments were made with respect to the 1991-1994 Performance
Plan cycle because the ROE hurdle was achieved. Payments under the plan cycle
for 1993-1996 approved in 1993, if earned, will be made in 1997, and payments
under the 1995-1998 plan cycle approved in 1995 will be made, if earned, in
1999.
When payments under the Performance Plan for the 1991-1994 cycle are
prorated among the years covered by that cycle, approximately 31 percent, 26
percent, 27 percent, 25 percent and 21 percent of the total cash compensation
paid to Messrs. Payne, Woodring, Besten, Solochek and Layman, respectively, for
the years shown in the Summary Table was sensitive to company performance.
STOCK INCENTIVE PLAN
Stock options tie the interests of key employees of Ashland Coal to the
interests of its stockholders by providing value to an employee if the stock
price appreciates. This element of the compensation program provides longer-term
incentives. All salaried employees of Ashland Coal and its subsidiaries
(including the executives named in the Summary Table) are eligible to
participate in Ashland Coal's 1995 Stock Incentive
12
<PAGE> 16
Plan (the "1995 Plan"). The KESA Committee, in its discretion, determines the
salaried employees who are granted awards under the 1995 Plan.
At its February 1995 meeting, the KESA Committee awarded under Ashland
Coal's 1988 Stock Incentive Plan for Key Employees (the "1988 Plan") options to
27 people in addition to those persons named in the Summary Table. The options
so granted were not based on past company performance. With the award of those
options, shares available for grant of awards under the 1988 Plan were
exhausted. In December 1994, the KESA Committee and the Board approved the 1995
Plan and recommend its approval by Ashland Coal's Stockholders, and at the 1995
Annual Meeting of Stockholders, the Stockholders approved the 1995 Plan.
The KESA Committee administers awards under the 1995 Plan. Under the 1995
Plan, awards may be granted only to individuals who are employees of Ashland
Coal or its subsidiaries. A director of Ashland Coal who is also an employee of
Ashland Coal or its subsidiaries may be granted awards under the 1995 Plan.
Directors who are not also employees may not receive awards under the 1995 Plan.
The KESA Committee has the exclusive authority to select the persons to be
granted awards under the 1995 Plan, to determine the type, size and terms of the
awards, to determine the time when awards will be granted, and to prescribe the
form of any agreement embodying awards. The 1995 Plan limits the number of
options that may be granted in any calendar year to any individual employee to
options to purchase no more than 100,000 shares of Common Stock. The KESA
Committee shall be authorized to interpret the 1995 Plan and to establish, amend
and rescind any rules and regulations relating to it.
Awards under the 1995 Plan may be made in the form of incentive or
nonqualified stock options, stock appreciation rights, restricted stock, merit
grants of shares, performance shares, or "phantom" stock, all as provided for in
the 1995 Plan. The ultimate value of an award depends on the value of the
underlying stock of Ashland Coal, thus aligning the interests of the
stockholders and the executives. Although the size of an award to an individual
is entirely at the discretion of the KESA Committee, the award is generally
based on the participation level to which a person is assigned. This level is
determined by the person's potential to affect profitability, as well as options
previously granted to that person. These factors were considered in making
option awards in 1995 under the 1988 Plan and will be considered in making
awards under the 1995 Plan. The KESA Committee also reserves the right to make
awards that deviate from the level-based awards depending on an executive's
individual performance.
CEO COMPENSATION
As with the other executives, the Salary Factors are the only factors
routinely considered by the P&C Committee in setting the annual salary of the
CEO, but notwithstanding the Salary Factors, the CEO's annual salary could be
frozen, reduced, or increased by a smaller increment than otherwise would be the
case, in the Committee's sole discretion, as a result of poor corporate
performance. The CEO's individual performance in discharging his duties as CEO
is assessed by the P&C Committee in determining his annual salary and incentive
compensation awards. As is the case with the other executives, no specific
objective or other criteria are used by the P&C Committee in assessing the
individual performance of the CEO. In determining the CEO's incentive
compensation, company performance is given twice the weight of individual
performance, as for any other executive, but the CEO's incentive compensation is
further subject to adjustment upward or downward in the Committee's sole
discretion (and without specific weighting factors) depending upon the
environmental and safety performance of the operating subsidiaries. Awards of
performance units under the Performance Plan are higher for the CEO than for
other executives because the CEO bears the highest degree of responsibility
among Ashland Coal's executives for both strategic planning and overall
operating performance. The number of options awarded under the Stock Incentive
Plan to the CEO is higher than for any other executive because of the potential
effect of his performance upon profitability and the award is also affected by
the total number of options outstanding or previously granted to the CEO.
13
<PAGE> 17
This Report is submitted by the Personnel and Compensation Committee with
respect to all matters set forth in the Report, except for those matters related
to stock options, and by the Key Employee Stock Administration Committee only
with respect to stock options.
<TABLE>
<CAPTION>
PERSONNEL AND KEY EMPLOYEE STOCK
COMPENSATION COMMITTEE ADMINISTRATION COMMITTEE
<S> <C>
Thomas L. Feazell (Chairman) Robert A. Charpie (Chairman)
Robert A. Charpie Robert L. Hintz
Thomas Marshall Thomas Marshall
Robert E. Yancey, Jr.
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------
AWARDS
ANNUAL COMPENSATION -------------------- PAYOUTS
------------------------------------------- RESTRICTED -------
OTHER ANNUAL STOCK LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS1 COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION3
POSITION YEAR ($) ($) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
William C. Payne 1995 309,423 163,397 -0- -0- 15,000 -0- 6,300
Chairman 1994 294,423 110,000 -0- -0- 15,000 90,176 2 12,366
President & CEO 1993 279,481 75,000 -0- -0- 15,000 -0- 11,738
Kenneth G. Woodring 1995 237,019 86,763 -0- -0- 7,500 -0- 6,290
Senior Vice President 1994 224,423 64,128 -0- -0- 7,500 56,783 2 9,426
1993 209,654 52,927 -0- -0- 6,500 -0- 8,805
C. Henry Besten, Jr. 1995 174,615 69,180 -0- -0- 5,000 -0- 6,333
Senior Vice President 1994 164,500 54,177 -0- -0- 5,000 43,961 2 6,909
1993 151,758 38,309 -0- -0- 5,000 -0- 6,374
Marc R. Solochek 1995 174,615 58,680 -0- -0- 5,000 -0- 5,831
Senior Vice President 1994 164,500 49,227 -0- -0- 5,000 34,661 2 4,606
& CFO 1993 151,758 34,919 -0- -0- 4,000 -0- 4,249
Roy F. Layman 1995 157,211 42,914 -0- -0- 4,000 -0- 6,300
Admin. Vice President 1994 149,615 34,807 -0- -0- 4,000 30,998 2 6,284
& Secretary 1993 139,654 27,495 -0- -0- 4,000 -0- 5,865
<FN>
1 These amounts represent the amount of money earned under the Ashland Coal,
Inc. Incentive Compensation Program for Key Employees with respect to the
subject year and paid in the immediately succeeding year.
2 This amount represents the amount paid in 1995 for the four years of the
1991-1994 plan cycle under the Ashland Coal, Inc. Performance Unit Plan.
3 These amounts represent contributions by Ashland Coal to the named executive's
account under the Ashland Coal, Employee Thrift Plan. For information
concerning supplemental retirement benefits payable to Mr. Payne following
retirement, see EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE
IN CONTROL ARRANGEMENTS.
</TABLE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ----------------------------------------------------------------------------------- VALUE AT ASSUMED
% OF ANNUAL RATES OF
TOTAL STOCK
OPTIONS PRICE APPRECIATION
GRANTED TO EXERCISE FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION --------------------
NAME (#)1 YEAR ($/SH) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
William C. Payne 15,000 15.7 26.125 3/21/2005 248,842 632,007
Kenneth G. Woodring 7,500 7.8 26.125 3/21/2005 124,421 316,003
C. Henry Besten, Jr. 5,000 5.2 26.125 3/21/2005 82,947 210,669
Marc R. Solochek 5,000 5.2 26.125 3/21/2005 82,947 210,669
Roy F. Layman 4,000 4.2 26.125 3/21/2005 66,358 168,535
<FN>
1 The options are not exercisable at all during the first year following the
date of the grant, are exercisable with respect to 50 percent of the
underlying shares after the first anniversary date of the grant and until the
second anniversary, and are exercisable between the second and third
anniversaries of the grant with respect to an additional 25 percent of the
underlying shares. After the third anniversary of the date of the grant, the
options are exercisable with respect to 100 percent of the underlying shares.
</TABLE>
15
<PAGE> 19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FY-END(#) AT FY-END($)
ON VALUE ------------------------------ ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William C. Payne 7,000 126,875 72,750 26,250 121,000 -0-
Kenneth G. Woodring 2,665 43,972 40,960 12,875 115,184 -0-
C. Henry Besten, Jr. -0- -0- 27,750 8,750 30,000 -0-
Marc R. Solochek -0- -0- 23,500 8,500 30,000 -0-
Roy F. Layman -0- -0- 30,500 7,000 106,875 -0-
</TABLE>
LONG TERM INCENTIVE PLANS
AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF ESTIMATED FUTURE
SHARES, PERFORMANCE PAYOUTS UNDER NON-STOCK
UNITS OR OR OTHER PRICE-BASED PLANS
OTHER PERIOD UNTIL ------------------------------------
RIGHTS MATURATION THRESHOLD 2 TARGET 2 MAXIMUM 2
NAME (#) OR PAYOUT1 ($) ($) ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William C. Payne 472,000 4 Years -- -- 472,000
Kenneth G. Woodring 292,500 4 Years -- -- 292,000
C. Henry Besten, Jr. 214,500 4 Years -- -- 214,500
Marc R. Solochek 214,500 4 Years -- -- 214,500
Roy F. Layman 150,000 4 Years -- -- 150,000
<FN>
1 Each award covers a four year performance cycle. Payment is made at the end of
the four year performance cycle if performance objectives are made over the
four year period. The performance objective for the 1995-1998 performance
cycle is a minimum four year average profit before tax.
2 Payouts of award begin upon exceeding a threshold performance level. At or
below the threshold, there is no payout. Above the threshold, the amount of
payout can range from an amount just in excess of 0 to the maximum payout of
100% of the award, in all cases depending on the performance level achieved.
</TABLE>
16
<PAGE> 20
ASHLAND COAL PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD PEER
(FISCAL YEAR COVERED) ASHLAND COAL COMPANIES S&P 500
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
12/31/91 154.16 113.72 130.47
12/31/92 112.75 94.46 140.41
12/31/93 136.16 95.55 154.56
12/31/94 130.08 105.01 156.60
12/31/95 99.09 109.12 215.45
</TABLE>
Peer Companies include: Addington Resources, Inc., Cyprus Amax Minerals
Co., Nerco, Inc. (through 6/2/93), Pittson Minerals Group, Westmoreland Coal
Co., Zeigler Coal Co. (beginning 9/30/94)
PENSION PLAN
The Ashland Coal, Inc. Pension Plan ("Pension Plan") covers certain
full-time salaried and hourly employees, including the executives named in the
Summary Table set forth above. To the extent benefits under the qualified
Pension Plan would exceed the limits established by Section 415 of the Internal
Revenue Code of 1986, as amended ("Code"), they would be payable under Ashland
Coal's Nonqualified Excess Benefit Pension Plan. Similarly, to the extent
benefits payable under the qualified Pension Plan are limited by Section
401(a)(17) of the Code, such benefits will be provided to certain employees
under Ashland Coal's Benefits Restoration Plan. The following table shows the
estimated annual benefits payable to eligible employees under the qualified
Pension Plan, the Nonqualified Excess Benefit Plan, and the Benefits Restoration
Plan using the benefit formula for salaried employees and assuming continued
employment until the normal date of retirement at age 65.
17
<PAGE> 21
PENSION PLAN TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
YEARS OF SERVICE
-----------------------------------------------------------
REMUNERATION 15 20 25 30 35
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $21,826 $ 29,101 $ 36,377 $ 43,652 $ 50,927
$125,000 $27,451 $ 36,601 $ 45,752 $ 54,902 $ 64,052
$150,000 $33,076 $ 44,101 $ 55,127 $ 66,152 $ 77,177
$175,000 $38,701 $ 51,601 $ 64,502 $ 77,402 $ 90,302
$200,000 $44,326 $ 59,101 $ 73,877 $ 88,652 $103,427
$225,000 $49,951 $ 66,601 $ 83,252 $ 99,902 $116,552
$250,000 $55,576 $ 74,101 $ 92,627 $111,152 $129,677
$275,000 $61,201 $ 81,601 $102,002 $122,402 $142,802
$300,000 $66,826 $ 89,101 $111,377 $133,652 $155,927
$325,000 $72,451 $ 96,601 $120,752 $144,902 $169,052
$350,000 $78,076 $104,101 $130,127 $156,152 $182,177
$375,000 $83,701 $111,601 $139,502 $167,402 $195,302
</TABLE>
Remuneration is computed only on annual salary shown in the Summary Table
and excludes all other amounts shown in that Table. The benefits set forth in
the table above assumes the remuneration set forth is the remuneration during
the highest consecutive 36-month period of the final 120-month period prior to
retirement. For the purposes of computing the Annual Retirement Benefit payable
under the Pension Plan, no more than the annual compensation limit established
by the Code may be taken into account. This limit is currently $150,000.
As of December 31, 1995, Messrs. Payne, Woodring, Besten, Solochek and
Layman had credited service in the Pension Plan of 18 years, 17 years and 7
months, 22 years and 9 months, 19 years and 4 months, and 24 years and 5 months,
respectively.
The amounts in the foregoing table are shown on a straight life basis and
are not subject to any reductions for Social Security or other benefits received
by the participant. The amounts include the pre-January 1987 portion of the
benefit vested and annuitized upon termination and re-establishment of the
Pension Plan in January 1987. Under the Pension Plan, officers are entitled to
benefits on the same basis as other salaried employees. For a complete
discussion of the supplemental annual benefits payable upon retirement to
William C. Payne under his supplemental retirement benefits agreement, (see
"Employment Contracts and Termination of Employment and Change in Control
Arrangements" below).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACT
In October 1990, Ashland Coal entered into a supplemental retirement
benefits agreement with Mr. Payne ("Agreement") which provides for different
benefits depending upon whether Mr. Payne's service to Ashland Coal ends before,
or on or after age 62 . Because Mr. Payne has now reached the age of 62, the
portion of the Agreement which addresses benefits if his service with Ashland
Coal ends before he reaches the age of 62 is no longer applicable. If Mr.
Payne's employment is terminated by Ashland Coal without cause, he resigns for
any reason following a change in control, or he retires with or without the
consent of the Board of Directors of Ashland Coal, then he would receive on an
annual basis a supplemental benefit equal to 50 percent of his average base
compensation plus average incentive compensation paid or accrued under Ashland
Coal's Incentive Compensation Plan during the highest 36 months of the final
60-month period of his employment. Benefits payable under the Agreement are
reduced by any benefits payable to Mr. Payne under Ashland Coal's Pension Plan,
any other qualified defined benefit pension plan maintained by Ashland Coal, the
Nonqualified Excess Benefit Plan, and the Benefit Restoration Plan. As a
consequence of this Agreement,
18
<PAGE> 22
Mr. Payne's benefits under the Pension Plan and the Nonqualified Excess Benefit
Pension Plan and the Benefit Restoration Plan will be supplemented by
approximately $139,200 per year, assuming (1) he retires at age 65, (2) that
half of the sum of (A) his average base compensation paid during the highest 36
months of the final 60-month period of his employment and (B) his average
incentive compensation paid during the highest 36 months of the final 60 month
period of his employment is $231,200, and (3) that his regular benefit under the
Pension Plan, the Nonqualified Excess Benefit Pension Plan and the Benefit
Restoration Plan, upon retirement at age 65 would be $92,000. Benefits under the
Agreement are not prorated on years of service, and are not payable if Mr.
Payne's employment is terminated by Ashland Coal for cause.
SALARY CONTINUATION PLAN
Ashland Coal has adopted a Salary Continuation Plan pursuant to which each
regular, full-time salaried employee (including the executives named in the
Summary Table, but excluding hourly employees, employees covered by collective
bargaining, employees of entities in which Ashland Coal has a 50 percent or less
ownership interest and certain international employees of Ashland Coal and its
subsidiaries) is entitled to receive a certain lump sum payment and other
benefits in the event of a "change in control" of Ashland Coal (as defined in
this plan) and termination of a participant's employment without cause within
two years following such a change in control. Benefits under the Salary
Continuation Plan are determined according to the following schedule:
<TABLE>
<CAPTION>
LENGTH OF SERVICE PAYMENT
- ------------------- ------------------------
<S> <C>
Up to 5 full years 3 months' compensation
6-10 full years 6 months' compensation
11-15 full years 1 year's compensation
16-20 full years 1 1/2 years' compensation
20+ years 2 years' compensation
</TABLE>
As of December 31, 1995, Messrs. Payne, Woodring, Besten, Solochek, and
Layman had service under the Salary Continuation Plan of 19, 18, 23, 20 and 25
years, respectively.
COMPENSATION OF DIRECTORS
Nonemployee directors of Ashland Coal during 1995 received an annual
retainer of $18,000 and a $1,000 fee for each Board and Committee meeting
attended and expenses incurred in attending all such meetings. Effective January
1, 1996, these amounts were increased to $19,000 and $1,100 respectively. A
director who serves as a chairman of a committee is entitled to receive an
additional $2,500 fee per year for each chairmanship held by such director. In
addition, directors receive accidental death and dismemberment insurance
coverage of $100,000. Messrs. Brothers, Chellgren, Feazell, Quin and Yancey have
waived the payment of their fees and retainers, which waiver may be withdrawn at
any time. Under the Deferred Compensation Plan for Directors' Fees, a director
who is separately compensated for his services on the Board or a committee of
the Board may defer all or part of his director's retainer, meeting fees and any
per diem compensation for special assignments. A director may elect to earn
interest on deferred amounts based on either the prime rate (as quoted by
Citibank, N.A. as its prime commercial lending rate on the last day of each
calendar quarter) or based on a hypothetical investment in Ashland Coal Common
Stock. Deferred amounts, plus earnings, are payable in cash to the director, his
estate, or beneficiary over such period of time as might be designated by the
director, in no event to extend beyond the twentieth anniversary of the
termination of his services as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of either the P&C Committee or the KESA Committee are
officers or employees of Ashland Coal or any of its subsidiaries or former
officers or employees of Ashland Coal or any of its subsidiaries. Messrs. Robert
A. Charpie, Robert E. Yancey and Thomas L. Feazell served on the P&C Committee
for all of 1995. Mr. Marshall served on the P&C Committee following his
appointment to that
19
<PAGE> 23
Committee in April 1995. Messrs. Robert L. Hintz and Robert A. Charpie served on
the KESA Committee for all of 1995. Mr. Marshall served on the KESA Committee
following his appointment to that Committee in April, 1995. Mr. Michael Ziesler
served on the P&C and KESA Committees until his resignation in February 1995.
Mr. Ziesler is an employee of Saarbergwerke AG, the holder of Ashland Coal's
Class B Preferred Stock until February 1995. Messrs. Feazell and Yancey are
employees of Ashland (see Certain Relationships and Related Transactions for
further information about the relationship of Ashland Coal with Ashland and its
former relationship with Saarbergwerke).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ashland Coal receives certain services from and provides certain services
to Ashland for which fees are charged between the companies. During 1995,
Ashland Coal paid Ashland $428,000, and Ashland paid Ashland Coal $5,000 for
these services.
Ashland Coal also has purchased fuel, oil and other products from Ashland
at current market prices using standard purchase orders. Such purchases amounted
to $5,996,000 in 1995.
By Coal Sales Agency Agreement dated December 12, 1991, as amended on
January 26, 1993 and as of January 1, 1995 ("Agency Agreement"), the Company
appointed Saarbergwerke and Carboex (collectively, "Sales Agent"), as its
exclusive agent for the purpose of selling high volatile coking coal and PCI
product from reserves controlled by Ashland Coal's subsidiaries for use in the
steel making process to customers within an area comprised of Europe, several
neighboring Mediterranean countries and the former Soviet Union. Ashland Coal
agreed to make available for sale pursuant to the Agency Agreement a minimum of
250,000 tons of high volatile coking coal per year. Pursuant to the Agency
Agreement, the Sales Agent has certain options to request PCI product in
substitution for high volatile coking coal. The Agency Agreement is for a term
through December 31, 2000, if certain sales volumes are achieved during the
two-year period of calendar 1996 and 1997. During 1995, Ashland Coal paid
Carboex $125,000 for its services as agent under the terms of the Agency
Agreement.
Management believes charges between Ashland Coal and Ashland Inc. for
services rendered or provided were reasonable, and that the other transactions
described above were concluded on terms equivalent to those prevailing among
unaffiliated parties.
Ernst & Young LLP, whose appointment as independent auditor for Ashland
Coal is sought to be ratified under Item IV, is also the independent auditor for
Ashland Inc., and Ernst & Young S.A., a Spanish affiliate of Ernst & Young LLP,
is the independent auditor for Carboex.
ITEM II. AMENDMENT AND RESTATEMENT OF
RESTATED CERTIFICATE OF INCORPORATION
(ITEM 2 ON THE FORM OF PROXY CARD)
The Board of Directors of Ashland Coal has approved the form of Restated
Certificate of Incorporation in the form of Exhibit A to this Proxy Statement,
and has directed that the proposed Restated Certificate of Incorporation be
submitted to the Stockholders for approval at the 1996 Annual Meeting.
SECOND RESTATED CERTIFICATE OF INCORPORATION
Since filing its Restated Certificate of Incorporation (the "Restated
Certificate") with the Secretary of State of Delaware in June 1982, Ashland Coal
has amended the Restated Certificate four times. Ashland Coal proposes to
further restate the Restated Certificate to reflect these amendments and to
further amend the Restated Certificate. The principal proposed amendments are
summarized below. This summary is qualified in its entirety by reference to the
full text of the Restated Certificate of Incorporation (the "Second
Restatement") attached as Exhibit A to this Proxy Statement.
20
<PAGE> 24
Serial Preferred Stock
The authorized capital stock of Ashland Coal will be changed to provide for
the authorization of 20,000,000 shares of no par preferred stock which may be
issued from time to time in such series as may be determined by the Board of
Directors of Ashland Coal. The Board of Directors is given the authority to fix
the designation, number, voting powers, preferences, and relative,
participating, optional and other special rights of any series of serial
preferred stock, and the qualifications, limitations and restrictions thereof.
Without limiting the generality of the foregoing, the Board of Directors shall
have the power to determine the number of shares in each series; the rights of
each series with respect to dividends (including the extent of any preference or
relation, if any, to any other class or classes of stock), provided however,
dividends on any such shares of serial preferred stock shall not be preferred to
dividends payable to holders of shares of Class B and Class C Preferred Stock as
currently provided for in the Restated Certificate; the conversion rights, if
any, of any series; whether any series shall be subject to redemption and the
times and terms and conditions thereof; the liquidation and dissolution rights
of any series, provided however, that any such rights shall not be preferred to
such rights of holders of Class B and Class C Preferred Stock; the terms of any
sinking fund, or redemption, repurchase or purchase account with respect to any
series; and the voting rights and powers of any series, provided however,
holders of shares of serial preferred stock (1) will not be entitled to more
than the lesser of (x) one vote per $100 of liquidation value or (y) one vote
per share, when voting as a class with the holders of shares of other capital
stock, and (2) will not be entitled to vote on any matter separately as a class,
except to the extent required by law or as specified with respect to each series
with respect to (x) any amendment or alteration of the provisions of the Second
Restatement that would adversely affect the powers, preferences, or special
rights of the applicable series of serial preferred stock or (y) the failure of
Ashland Coal to pay dividends on any series of serial preferred stock in full
for any six quarterly dividend payment periods, whether or not consecutive, in
which event the number of directors may be increased by two and the holders of
outstanding shares of serial preferred stock then similarly entitled shall be
entitled to elect the two additional directors until full accumulated dividends
on all such shares of serial preferred stock shall have been paid.
Management of Ashland Coal and the Board by a vote of nine for and eight
against, believe that amending the Restated Certificate to permit the Board to
authorize the issuance of serial preferred stock will provide flexibility for
possible future financings, as well as other corporate purposes such as to make
acquisitions. If the Second Restatement is approved, the Board will be able to
specify the precise characteristics of the serial preferred stock to be issued,
depending on current market conditions and the nature of the specific
transactions. Ashland Coal is not currently contemplating the issuance of serial
preferred stock for financing or acquisition purposes.
Although voting rights of the proposed serial preferred stock are limited
as described above, and Ashland owns more than 50%, on a converted basis, of the
issued and outstanding stock of Ashland Coal thus making an unsolicited takeover
attempt of Ashland Coal by a third party unlikely, the issuance of preferred
stock could be used to discourage attempts to acquire control of Ashland Coal
and to increase the Board's ability to continue in office. Neither the Board nor
management is considering the use of serial preferred stock for such purposes,
and they are not aware of any present effort to accumulate Ashland Coal's
securities for the purpose of gaining control of Ashland Coal. The Board and
management of Ashland Coal represent that they will not issue, without prior
stockholder approval, serial preferred stock (i) for any defensive or
anti-takeover purpose, (ii) implement any stockholders' rights plan, or (iii)
with features intended to make any attempted acquisition of Ashland Coal more
difficult or costly. No serial preferred stock will be issued to any individual
or group for the purpose of creating a block of voting power to support
management on a controversial issue.
Management of Ashland Coal, and the Board by a vote of nine for and one
against, believe that the authorization of serial preferred stock is in the best
interests of stockholders and Ashland Coal since voting rights of the serial
preferred stock cannot be disproportionate and the availability of the serial
preferred stock is could permit Ashland Coal to take advantage of lower cost
financing alternatives depending on market conditions.
21
<PAGE> 25
Other Changes
Some provisions of the Restated Certificate which were adopted at the time
of Ashland Coal's initial public offering and the first issuance of common stock
on August 18, 1988 and which are no longer relevant have been deleted. The use
of "First Issuance date" as a phrase to define August 18, 1988, has been deleted
and the actual date has been inserted. Conforming changes because of deletions
or other changes have also been made.
Although Ashland Coal continually evaluates acquisition prospects and is
currently doing so, there is no present intention to issue the serial preferred
stock in connection with an acquisition or otherwise. Other than the changes
discussed above with respect to changing Ashland Coal's Restated Certificate,
Ashland Coal is not aware of any proposed transaction the approval of which is
subject to stockholder vote.
The affirmative vote of at least 85% of the shares of the capital stock of
Ashland Coal voting as one class on this matter, so long as such affirmative
vote is a majority of the shares outstanding and entitled to vote, is necessary
to approve the Restated Certificate. Abstentions and broker non-votes will not
be counted as votes either for or against the adoption of the Restated
Certificate.
At the meeting of the Board at which the Second Restatement was considered,
all the members of the Board voting thereon, with the exception of the member of
the Board elected by the holder of the Class C Preferred Stock, Carboex, voted
to approve the form of the Second Restatement attached hereto as Exhibit A. The
director elected by Carboex objected on the grounds that he believes the
issuance of voting or convertible preferred stock could have the effect of
diluting the voting rights of Carboex and all the other stockholders. The
director elected by Carboex did not object to the other proposed changes to the
Restated Certificate of Incorporation. Carboex, which owns about 10% of the
issued and outstanding stock of the Corporation on a converted basis, has
indicated its intention to vote its shares against the proposal described in
this Item II.
IN ORDER TO PROVIDE THE FINANCING FLEXIBILITY DESCRIBED ABOVE AND TO HAVE
SERIAL PREFERRED STOCK AVAILABLE FOR POSSIBLE FUTURE ACQUISITIONS, AND FOR THE
OTHER REASONS STATED HEREIN, THE BOARD OF DIRECTORS, BY A VOTE OF NINE FOR AND
ONE AGAINST, RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL DESCRIBED IN
THIS ITEM II.
ITEM III. RATIFICATION OF AUDITORS
(PROPOSAL 3 ON FORM OF PROXY CARD)
The Audit Committee of the Board of Directors recommended and, subject to
stockholder ratification, the Board has appointed Ernst & Young LLP to audit the
accounts of Ashland Coal and its subsidiaries for the year ending December 31,
1996. Ernst & Young LLP has audited the accounts of Ashland Coal and its
subsidiaries for at least the last five years. Ernst & Young LLP is also the
independent auditor for Ashland and Ernst & Young S.A., a Spanish affiliate of
Ernst & Young LLP, is the independent auditor for Carboex. Submission of the
appointment to the stockholders for their ratification is not required. However,
the Board will reconsider the appointment if it is not ratified by the
stockholders. The holders of outstanding shares of Preferred Stock and Common
Stock will vote together as one class with respect to this Proposal 3.
The following resolution concerning the appointment of independent auditors
will be offered at the meeting:
"RESOLVED, that the appointment of Ernst & Young LLP by the Board of
Directors of the Corporation to audit the accounts of the Corporation and
its subsidiaries for the year ending December 31, 1996, is hereby
ratified."
Representatives of Ernst & Young LLP will be present at the Annual Meeting
and will have the opportunity to make a statement and to respond to appropriate
questions.
22
<PAGE> 26
MISCELLANEOUS
The expenses of solicitation of proxies for the Annual Meeting, including
the cost of preparing and mailing this Proxy Statement and the accompanying
material, will be paid by Ashland Coal. Such expenses may also include the
charges and expenses of banks, brokerage houses and other custodians, nominees
or fiduciaries for forwarding proxies and proxy material to beneficial owners of
shares. Solicitation may be made by mail, telephone, telegraph and personal
interview, and by regularly engaged officers and employees of Ashland Coal, who
will not be additionally compensated therefor.
The Board of Directors knows of no other matters to be voted upon at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed form of proxy to vote on
such matters in accordance with their judgment.
Any stockholder who executes a form of proxy may revoke it by giving
written notice to the Secretary of Ashland Coal, or by giving to the Secretary
of the meeting a duly executed form of proxy bearing a date later than the form
of proxy being revoked, at any time before such proxy is voted. Attendance at
the meeting shall not have the effect of revoking a proxy unless the stockholder
so attending shall, in writing, so notify the Secretary of the meeting prior to
the voting of the proxy.
A form of proxy which is properly signed, dated and not revoked will be
voted in accordance with the instructions contained therein. IF NO INSTRUCTIONS
ARE GIVEN, THE PERSONS NAMED IN THE FORM OF PROXY SOLICITED BY THE BOARD OF
DIRECTORS INTEND TO VOTE FOR THE NOMINEES NAMED THEREIN FOR ELECTION AS
DIRECTORS; FOR APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE RESTATED
CERTIFICATE OF INCORPORATION; AND FOR THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 1996.
Any stockholder may strike out the names of the proxies designated by the
Board of Directors on the form of proxy card and may write in and substitute the
name of any other person as proxy and may deliver the revised form of proxy card
to such other person whom the stockholder may wish to designate as proxy for the
purpose of representing such stockholder at the meeting.
Stockholder Proposals: Proposals which are the proper subject for inclusion
in the Proxy Statement and for consideration at the 1997 Annual Meeting of
Stockholders must be received by Ashland Coal no later than November 28, 1996,
in order to be included in Ashland Coal's Proxy Statement and form of proxy
card.
Please fill in, sign and date the enclosed form of proxy and return it in
the accompanying addressed envelope which requires no further postage if mailed
in the United States. If you attend the Annual Meeting and wish to vote your
shares in person, you may do so if you notify the Secretary of the meeting in
writing prior to the voting of the proxy. Your cooperation in giving this matter
your prompt attention will be appreciated.
ROY F. LAYMAN
Administrative Vice President
and Secretary
Huntington, West Virginia
March , 1996
23
<PAGE> 27
RESTATED CERTIFICATE OF INCORPORATION
OF
ASHLAND COAL, INC.
PURSUANT TO SECTIONS 242 AND 245 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The name of the corporation is Ashland Coal, Inc. (the "Corporation"). The
Corporation was incorporated under that name by the filing of its original
Certificate of Incorporation with the Secretary of State of the State of
Delaware on June 6, 1975. This Restated Certificate of Incorporation, which
restates, integrates and further amends the Restated Certificate of
Incorporation of the Corporation as heretofore amended, was duly adopted in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
FIRST: The name of the Corporation is Ashland Coal, Inc.
SECOND: The registered office of the Corporation in the State of Delaware
is located at 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: 1. AUTHORIZED CAPITAL STOCK--The aggregate number of shares of
capital stock that the Corporation is authorized to issue is 64,001,000 shares,
as follows:
(a) 44,000,000 shares of which shall be Common Stock (the "Common
Stock"), par value $.01 per share;
(b) 1,000 shares of which shall be Preferred Stock, par value $100 per
share, which shall be divided into three classes (collectively, the
"Preferred Stock"), the designation and number of shares of each class of
Preferred Stock of which is as follows:
<TABLE>
<CAPTION>
NUMBER
CLASS OF SHARES
------------------------------------------------------------------ ---------
<S> <C>
Class A Preferred Stock........................................... 500
Class B Preferred Stock........................................... 250
Class C Preferred Stock........................................... 250
</TABLE>
(c) 20,000,000 shares of which shall be serial preferred stock, par
value $.01 per share (the "Serial Preferred Stock"). The Board of Directors
is authorized, at any time or from time to time, to issue Serial Preferred
Stock and (i) to divide the shares of Serial Preferred Stock into one or
more series; (ii) to determine the designation for any such series by
number, letter, or title that shall distinguish such series from any other
series of Serial Preferred Stock; (iii) to determine the number of shares
in any such series (including a determination that such series shall
consist of a single share); and (iv) to determine with respect to the
shares of any series of Serial Preferred Stock:
(A) whether the holders thereof shall be entitled to cumulative,
noncumulative, or partially cumulative dividends and, with respect to
shares entitled to dividends, the dividend rate or rates, including
without limitation the methods and procedures for determining such rate
or rates, and any other terms and conditions relating to such dividends;
provided however, that dividends on any such shares shall not be
preferred to dividends payable pursuant to paragraph 2(b) of this
Article FOURTH to holders of shares of Class B and Class C Preferred
Stock;
(B) whether, and if so to what extent and upon what terms and
conditions, the holders thereof shall be entitled to rights upon the
voluntary or involuntary liquidation, dissolution or winding up of, or
upon any distribution of the assets of the Corporation; provided
however, that any such rights shall not be preferred to such rights of
holders of shares of Class B and Class C Preferred Stock;
Exhibit A-1
<PAGE> 28
(C) whether, and if so upon what terms and conditions, shares of
Serial Preferred Stock shall be convertible into, or exchangeable for,
other securities or property;
(D) whether, and if so upon what terms and conditions, shares of
Serial Preferred Stock shall be redeemable;
(E) whether shares of Serial Preferred Stock shall be subject to
any sinking fund provided for the purchase or redemption of such shares
and, if so, the terms of such fund;
(F) whether the holders thereof shall be entitled to voting rights
and, if so, the terms and conditions for the exercise thereof, provided
that the holders of shares of Serial Preferred Stock (1) will not be
entitled to more than the lesser of (x) one vote per $100 of liquidation
value or (y) one vote per share, when voting as a class with the holders
of shares of other capital stock, and (2) will not be entitled to vote
on any matter separately as a class, except to the extent required by
law or as specified with respect to each series with respect to (x) any
amendment or alteration of the provisions of this Certificate of
Incorporation that would adversely affect the powers, preferences, or
special rights of the applicable series of Serial Preferred Stock or (y)
the failure of the Corporation to pay dividends on any series of Serial
Preferred Stock in full for any six quarterly dividend payment periods,
whether or not consecutive, in which event the number of directors may
be increased by two and the holders of outstanding shares of Serial
Preferred Stock then similarly entitled shall be entitled to elect the
two additional directors until full accumulated dividends on all such
shares of Serial Preferred Stock shall have been paid; and
(G) whether the holders thereof shall be entitled to other powers,
preferences or rights and, if so, the qualifications, limitations, or
restrictions of such powers, preferences or rights.
2. PREFERRED STOCK
(a) CONVERSION
(i) Each holder of Class B Preferred Stock and each holder of Class
C Preferred Stock shall be entitled to convert each share of Class B
Preferred Stock and Class C Preferred Stock, as the case may be, held by
such holder into shares of Common Stock according to the following
schedule:
(A) During the period beginning on August 18, 1993 until August
18, 1998, each share of such Class B and Class C Preferred Stock
shall be convertible into 18,346 shares of Common Stock;
(B) During the period beginning on August 18, 1998 until August
18, 2003, each share of such Class B and Class C Preferred Stock
shall be convertible into 19,596 shares of Common Stock; and
(C) From and after August 18, 2003, each share of such Class B
and Class C Preferred Stock shall be convertible into 20,846 shares
of Common Stock.
(ii) Shares of such Preferred Stock shall be convertible at the
option of the holder thereof at any time upon surrender to any transfer
agent for the Common Stock or the Treasurer or Secretary of the
Corporation of the certificate or certificates evidencing the shares so
to be converted into fully paid and nonassessable shares of Common Stock
of the Corporation. Conversion shall be deemed to have been effected on
the date when such surrender is made by delivery of such certificate or
certificates to any transfer agent for the Common Stock or the Treasurer
or Secretary of the Corporation. The Corporation shall at all times
reserve and keep available, free from pre-emptive rights, for the
purpose of effecting the conversion of the Preferred Stock, such number
of its duly authorized shares of Common Stock as shall be sufficient to
effect the conversion of all outstanding shares of the Preferred Stock.
(iii) The number of shares of Common Stock and the number of shares
of other classes of the Corporation, if any, into which each share of
the Preferred Stock is convertible shall be subject to adjustment from
time to time as follows:
Exhibit A-2
<PAGE> 29
(A) In case the Corporation shall (1) set a record date for the
holders of Common Stock for the purpose of entitling them to receive
a dividend declared payable in shares of Common Stock, or in
securities convertible into Common Stock, (2) split or subdivide its
outstanding shares of Common Stock, (3) combine its outstanding
shares of Common Stock into a smaller number of shares, or (4) issue
by reclassification, or change in the outstanding shares, of the
Common Stock any shares of the Corporation, the holder of each share
of Preferred Stock shall thereafter be entitled to receive upon
payment of such dividend, or such split, subdivision, combination,
reclassification, change or issuance, as the case may be, the number
of shares of the Corporation which the holder would have owned or
have been entitled to receive after the happening of any of the
events described above had such share of the Preferred Stock been
converted immediately prior to the happening of such event, such
adjustment to become effective immediately after the opening of
business on the day following such record date or the day upon which
such dividend, split, subdivision, combination, reclassification,
change or issuance becomes effective.
(B) In case of any consolidation or merger of the Corporation
with or into another corporation, or in case of any sale or
conveyance to another corporation of all or substantially all the
assets of the Corporation, the holder of each share of Preferred
Stock then outstanding shall have the right thereafter to convert
such share into the kind and amount of shares of stock and other
securities, cash and/or property receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of
Common Stock into which such share might have been converted
immediately prior to such consolidation, merger, sale or conveyance,
and shall have no other conversion rights under these provisions;
provided, however, that effective provision shall be made, in the
Articles or Certificate of Incorporation of the resulting or
surviving corporation or otherwise, so that the provisions set forth
herein for the protection of the conversion rights of the shares of
the Preferred Stock shall thereafter be applicable, as nearly as
reasonably may be, to any such other shares of stock and other
securities and cash and/or property, if any, deliverable upon
conversion of the shares of the Preferred Stock remaining outstanding
or other convertible preferred stock received by the holders in place
thereof; and provided, further, that any such resulting or surviving
corporation shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities or
property as the holders of the shares of the Preferred Stock
remaining outstanding, or other convertible preferred stock received
by the holders in place thereof, shall be entitled to receive, if
any, pursuant to the provisions hereof, and to make provisions for
the protection of the conversion rights as above provided.
(C) In the case the Corporation shall issue to the holders of
its Common Stock rights or warrants to subscribe for or purchase
shares of its Common Stock at a price less than the Current Market
Price (as defined below in this subsection) of the Corporation's
Common Stock at the record date fixed for the determination of the
holders of Common Stock entitled to such rights or warrants, the
conversion rate shall be increased, effective at the opening of
business on the next full business day after such record date, to an
amount determined by multiplying such conversion rate by a fraction
the numerator of which is the number of shares of Common Stock of the
Corporation outstanding immediately prior to such record date plus
the number of additional shares of its Common Stock offered for
subscription or purchase and the denominator of which is said number
of shares outstanding immediately prior to such record date plus the
number of shares of Common Stock of the Corporation which the
aggregate subscription or purchase price of the total number of
shares so offered would purchase at the Current Market Price of the
Corporation's Common Stock at such record date. As used in this
subparagraph the term "Current Market Price" at such record date
shall mean the average of the daily last reported sale prices per
share of the Corporation's Common Stock on any exchange or market
where the Common Stock trades during the most recent twenty (20)
consecutive full business days before such record date, provided that
if there was no reported sale on any such day or days there shall be
substituted the average of the closing bid and asked quotations on
that exchange or market on that day.
Exhibit A-3
<PAGE> 30
(D) In the case the Corporation shall distribute to the holders
of its Common Stock any evidences of its indebtedness, any other
security not convertible into Common Stock other than Common Stock,
or any rights or warrants to subscribe for any security other than
its Common Stock, or any other assets (excluding dividends and
distributions in cash to the extent permitted by law), the conversion
rate shall be increased, effective at the opening of business on the
next full business day after the record date fixed for the
determination of the holders of Common Stock entitled to such
distribution, to an amount determined by multiplying such conversion
rate by a fraction the numerator of which is the Current Market Price
(as defined in subsection (C) above) of one (1) share of the
Corporation's Common Stock at such record date and the denominator of
which is such Current Market Price less the fair market value (as
determined by the Board of Directors, whose determination, in the
absence of fraud, shall be conclusive) of such evidences of
indebtedness, security, rights, warrants or other assets (excluding
dividends and distributed which is applicable to one (1) share of
Common Stock).
(E) The Corporation shall not be required to issue any fraction
of a share upon conversion of any share or shares of Preferred Stock.
If more than one share of Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares
of Common Stock issuable upon conversion thereof shall be computed on
the basis of the total number of shares of Preferred Stock so
surrendered. If any fractional interest in share of Common Stock
would be deliverable upon conversion, the Corporation shall make an
adjustment therefor in cash unless its Board of Directors shall have
determined to adjust fractional interests by issuance of scrip
certificates or in some other equitable manner. Adjustment in cash
shall be made on the basis of the current market value of one share
of Common Stock, which shall be taken to be the last reported sale
price of the Corporation's Common Stock on any exchange or market
where the Common Stock trades on the last business day before the
conversion date or, if there was no reported sale on that day, the
average of the closing bid and asked quotations on any exchange or
market where the Common Stock trades on that day.
(F) Whenever any adjustment is required in the shares into which
any share of the Preferred Stock is convertible, the Corporation
shall forthwith prepare a notice describing in reasonable detail the
adjustment and the method of calculation used and cause a copy of
such notice to be mailed to the holders of record of the shares of
the Preferred Stock.
(b) DIVIDENDS
(i) Each share of Preferred Stock shall be entitled to receive
dividends at such times and in such amounts as shall be equal to the
dividends payable on the number of shares of Common Stock into which
each such share of Preferred Stock is convertible as provided in Section
2(a)(i) of this Article FOURTH immediately prior to the applicable
record date for such Common Stock dividend.
(ii) In addition to being entitled to receive dividends as provided
in Section 2(b)(i) of this Article FOURTH, the Class B and Class C
Preferred Stock shall receive the following cumulative dividends in
preference to the Common Stock:
(A) from August 18, 1993 until August 18, 1998 - $2,800 per
share per annum, payable on or about August 18 of each of 1994, 1995,
1996, 1997 and 1998;
(B) from August 18, 1998 until August 18, 2003 - $1,400 per
share per annum, payable on or about August 18 of each of 1999, 2000,
2001, 2002, 2003;
(C) from and after August 18, 2003 - $0.
(iii) No interest shall be paid on accumulated and unpaid
dividends.
(c) LIQUIDATION
The shares of Preferred Stock shall be preferred over the shares of
Common Stock of the Corporation in the event of any liquidation,
dissolution or winding up of the Corporation, whether
Exhibit A-4
<PAGE> 31
voluntary or involuntary, so that the holders of the Preferred Stock shall
be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or
earnings, before any distribution is made to holders of shares of Common
Stock, an amount equal to the par value per share of Preferred Stock and,
thereafter, the holders of Preferred Stock shall participate in any
remaining distribution to holders of shares of Common Stock as if the
Preferred Stock had been converted into Common Stock on the applicable date
at the then applicable conversion rate. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares
of Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid, then such assets, or the proceeds thereof, shall be
distributed among such holders ratably in accordance with the respective
amounts which would be payable on such shares if all amounts payable
thereon were payable in full.
(d) ELECTION OF DIRECTORS
The holders of the outstanding shares of Class B and Class C Preferred
Stock, voting together as a class, shall have the right to elect one
Director of the Corporation for every 63 shares of Class B or Class C
Preferred Stock held by such holders and the successors to said Directors,
each of which Directors shall hold office until the earlier of his or her
death, resignation, removal at any time, with or without cause, by the vote
of the holders of such class or classes, as the case may be, which have
elected such Director, or the election of his or her successor; provided,
however, that the maximum number of Directors to be elected by the holders
of Class B and Class C Preferred Stock shall be three. The Directors to be
elected by the holders of the Class B and Class C Preferred Stock shall be
elected and removed by cumulative voting in accordance with Sections 214
and 141(k) of the General Corporation Law of Delaware.
3. COMMON STOCK
(a) The holders of Common Stock shall be entitled to one vote for each
share of Common Stock held by them on all matters properly presented to the
shareholders, except as otherwise provided by this Restated Certificate of
Incorporation or the General Corporation Law of Delaware.
(b) The Board of Directors of the Corporation may declare and pay dividends
on the Common Stock out of funds of the Corporation legally available for the
payment thereof.
(c) The holders of the outstanding shares of Common Stock, voting as a
single class and without the vote of the holders of the Preferred Stock, shall
have the right to elect and remove that number of Directors of the Corporation
and the successors to said Directors as shall equal the number of Directors
fixed by resolution of the Board of Directors adopted pursuant to the By-laws,
less that number of Directors which the holders of the Preferred Stock shall be
entitled to elect, by cumulative voting in accordance with Sections 214 and
141(k) of the General Corporation Law of Delaware.
4. PREEMPTIVE RIGHTS. No holder of shares of any class or series of stock
of the Corporation shall have any preemptive rights to subscribe to stock,
obligations, warrants, subscription rights or other securities of the
Corporation of any class or series, whether now or hereafter authorized.
5. VOTING. Except as otherwise provided in this Restated Certificate of
Incorporation or as otherwise required by law, all shares of all classes of
capital stock shall vote on all matters as one class and there shall be no
separate class vote with respect to any matters. On all matters properly
presented to holders of Preferred Stock and Common Stock voting as one class,
each holder of shares of Preferred Stock shall be entitled to the number of
votes that such holder would have if such holder had converted said Preferred
Stock into Common Stock immediately prior to the applicable record date.
FIFTH: The number of Directors of the Corporation shall be fixed in the
manner set forth in the By-laws.
SIXTH: The Corporation shall not amend, alter or repeal this Restated
Certificate of Incorporation as it relates to the election and removal of any
Directors to be elected by the holders of the Class B and Class C Preferred
Stock by cumulative voting except upon the approval of the holders of a majority
of the outstanding shares of the Class B and Class C Preferred Stock voting as
separate classes. The Corporation shall not
Exhibit A-5
<PAGE> 32
otherwise amend, alter or repeal this Restated Certificate of Incorporation, or
its By-laws, enter into any merger or consolidation, sell, lease or transfer all
or substantially all of its property and assets, or dissolve and wind up its
affairs, except upon the approval of at least 85% of the outstanding shares of
capital stock of the Corporation voting thereon and voting as one class as
provided in Section 5 of Article FOURTH.
SEVENTH: To the fullest extent that the General Corporation Law of the
State of Delaware as it exists on the date hereof or as it may hereafter be
amended permits the limitation or elimination of the liability of directors, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
EIGHTH: Unless and except to the extent that the By-laws of the Corporation
shall so require, the election of Directors of the Corporation need not be by
written ballot.
Exhibit A-6
<PAGE> 33
EXHIBIT A
ASHLAND COAL, INC.
1995 STOCK INCENTIVE PLAN
EFFECTIVE MAY 1, 1995
<PAGE> 34
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C> <C>
ARTICLE I PURPOSE........................................................ A-1
ARTICLE II DEFINITIONS.................................................... A-1
2.01. Agreement...................................................... A-1
2.02. Ashland........................................................ A-1
2.03. Award.......................................................... A-1
2.04. Beneficiary.................................................... A-1
2.05. Board.......................................................... A-1
2.06. Change in Control.............................................. A-1
2.07. Code........................................................... A-1
2.08. Committee...................................................... A-1
2.09. Common Stock................................................... A-2
2.10. Company........................................................ A-2
2.11. Disinterested.................................................. A-2
2.12. Employee....................................................... A-2
2.13. Exchange Act................................................... A-2
2.14. Exercise Price................................................. A-2
2.15. Fair Market Value.............................................. A-2
2.16. Incentive Stock Option or ISO.................................. A-2
2.17. Merit Award.................................................... A-2
2.18. Nonqualified Stock Option or NQSO.............................. A-2
2.19. Option......................................................... A-2
2.20. Performance Period............................................. A-2
2.21. Performance Share Award........................................ A-2
2.22. Performance Shares............................................. A-2
2.23. Personal Representative........................................ A-2
2.24. Phantom Stock Award............................................ A-2
2.25. Plan........................................................... A-2
2.26. Restricted Period.............................................. A-2
2.27. Restricted Stock............................................... A-2
2.28. Restricted Stock Award......................................... A-3
2.29. Retained Distributions......................................... A-3
2.30. Retirement..................................................... A-3
2.31. Section 16(b) Optionee......................................... A-3
2.32. Stock Appreciation Right or SAR................................ A-3
2.33. Subsidiary..................................................... A-3
2.34. Tax Date....................................................... A-3
ARTICLE III STOCK SUBJECT TO THE PLAN...................................... A-3
ARTICLE IV ADMINISTRATION................................................. A-3
ARTICLE V ELIGIBILITY.................................................... A-4
ARTICLE VI STOCK OPTIONS.................................................. A-4
6.01. Designation and Price.......................................... A-4
6.02. Exercise....................................................... A-4
6.03. Payment for Shares............................................. A-5
ARTICLE VII STOCK APPRECIATION RIGHTS...................................... A-5
ARTICLE VIII RESTRICTED STOCK AWARDS........................................ A-6
ARTICLE IX MERIT AWARDS................................................... A-7
ARTICLE X PERFORMANCE SHARES............................................. A-7
ARTICLE XI PHANTOM STOCK AWARDS........................................... A-7
</TABLE>
i
<PAGE> 35
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C> <C>
ARTICLE XII SPECIAL EXERCISE RULES AND CONTINUED EMPLOYMENT AND AGREEMENT
TO SERVE....................................................... A-8
12.01. Death.......................................................... A-8
12.02. Disability..................................................... A-8
12.03. Other Separations From Service................................. A-8
12.04. Certain Accelerations.......................................... A-9
12.05. Continued Employment Undertaking............................... A-9
12.06. Leaves of Absence.............................................. A-9
ARTICLE XIII WITHHOLDING TAXES.............................................. A-9
ARTICLE XIV ADJUSTMENTS UPON CHANGES IN CAPITALIZATION..................... A-10
ARTICLE XV AMENDMENTS AND TERMINATIONS.................................... A-10
ARTICLE XVI MISCELLANEOUS PROVISIONS....................................... A-10
16.01. No Right to Award.............................................. A-10
16.02. Assignment or Alienation....................................... A-10
16.03. Compliance with Securities Laws................................ A-10
16.04. Expenses....................................................... A-11
16.05. Consent to, Ratification of Certain Actions.................... A-11
16.06. Binding Nature of Actions...................................... A-11
16.07. Other Compensation Arrangements................................ A-11
16.08. Time Awards Granted............................................ A-11
ARTICLE XVII EFFECTIVENESS OF THE PLAN...................................... A-11
ARTICLE XVIII GOVERNING LAW.................................................. A-11
ARTICLE XIX UNFUNDED PLAN.................................................. A-12
ARTICLE XX RULES OF CONSTRUCTION.......................................... A-12
</TABLE>
ii
<PAGE> 36
ASHLAND COAL, INC.
1995 STOCK INCENTIVE PLAN
ARTICLE I
PURPOSE
The purpose of the Ashland Coal, Inc. 1995 Stock Incentive Plan is to
promote the interests of Ashland Coal, Inc. and its shareholders by providing
the officers and employees of the Company and its Subsidiaries with an incentive
to continue service with Ashland. Accordingly, the Company may grant to selected
officers and employees of Ashland Stock Options (both options qualifying under
Code section 422 and options not so qualifying), Stock Appreciation Rights,
Restricted Stock, Merit Awards, Performance Share Awards and Phantom Stock
Awards in an effort to attract and retain in Ashland's employ qualified
individuals and to provide such individuals with incentives to devote their best
efforts to Ashland through ownership of the Company's stock, thus enhancing the
value of the Company for the benefit of shareholders. The proceeds received by
the Company from the exercise of options granted pursuant to this Plan shall be
used for general corporate purposes.
ARTICLE II
DEFINITIONS
2.01. AGREEMENT means a written agreement (including any amendment or
supplement thereto) between the Company and an Employee specifying the terms and
conditions of an Award.
2.02. ASHLAND means, collectively, Ashland Coal, Inc. and its Subsidiaries.
2.03. AWARD means an Option, a Stock Appreciation Right, a Restricted Stock
Award, a Merit Award, a Performance Share Award, or a Phantom Stock Award, in
each case granted under this Plan.
2.04. BENEFICIARY means the person, persons, trust or trusts designated by an
Employee, 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 death.
2.05. BOARD means the Board of Directors of the Company.
2.06. CHANGE IN CONTROL means an event or circumstance which shall be deemed to
occur (1) upon the approval by the Board (or if approval of the Board is not
required as a matter of law, the shareholders of the Company) 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(d) of the Exchange Act), other than the Company or any subsidiary or
employee benefit plan or trust maintained by the Company, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 20% of the Company's Common Stock outstanding at the
time, without the prior 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 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.
2.07. CODE means the Internal Revenue Code of 1986, as amended from time to
time.
2.08. COMMITTEE means the Key Employee Stock Administration or "KESA" 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 Disinterested.
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<PAGE> 37
2.09. COMMON STOCK means the Common Stock of the Company ($.01 par value),
subject to adjustment pursuant to Article 14.
2.10. COMPANY means Ashland Coal, Inc.
2.11. DISINTERESTED means disinterested within the meaning of applicable
regulatory requirements, including those promulgated under Section 16 of the
Exchange Act.
2.12. EMPLOYEE means an officer or employee of Ashland.
2.13. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.14. EXERCISE PRICE means, 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.
2.15. FAIR MARKET VALUE means, on any given date, the closing price of a share
of Common Stock as reported on the New York Stock Exchange composite tape on
such day, or, if the Common Stock was not traded on the New York Stock Exchange
on such day, then on the next preceding day that the Common Stock was traded on
such exchange, all as reported by such service as the Committee may select. If
shares of Common Stock are not then traded on the New York Stock Exchange, the
Fair Market Value shall be determined by the Committee using any reasonable
method in good faith.
2.16. INCENTIVE STOCK OPTION or ISO means an Option that is intended by the
Committee to meet the requirements of Section 422 of the Code or any successor
provision. No Option that is intended to be an Incentive Stock Option shall be
invalid for failure to qualify as an Incentive Stock Option.
2.17. MERIT AWARD means an award of Common Stock issued pursuant to Article IX
of the Plan.
2.18. NONQUALIFIED STOCK OPTION or NQSO means an Option granted pursuant to
this Plan which does not qualify as an Incentive Stock Option.
2.19. OPTION means 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.
2.20. PERFORMANCE PERIOD means the period designated by the Committee during
which the performance objectives shall be measured.
2.21. PERFORMANCE SHARE AWARD means an award of shares of Common Stock, the
issuance of which is contingent upon attainment of performance objectives
specified by the Committee.
2.22. PERFORMANCE SHARES means those shares of Common Stock issuable pursuant
to a Performance Share Award.
2.23. PERSONAL REPRESENTATIVE means the person or persons who, upon the
disability or incompetence of an Employee, shall have acquired on behalf of the
Employee by legal proceeding or otherwise the right to receive the benefits
specified in this Plan.
2.24. PHANTOM STOCK AWARD means a hypothetical or target award of a number of
shares of Common Stock, the vesting, earnout or payment of which is contingent
upon the completion of a number of years of service, the occurrence of an event
or the attainment of performance objectives established by the Committee.
2.25. PLAN means this Ashland Coal, Inc. 1995 Stock Incentive Plan.
2.26. RESTRICTED PERIOD means the period designated by the Committee during
which Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered, which period shall not be less than one year from the date
of grant.
2.27. RESTRICTED STOCK means 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.
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<PAGE> 38
2.28. RESTRICTED STOCK AWARD means an award of Restricted Stock.
2.29. RETAINED DISTRIBUTIONS means any securities or other property (other than
cash dividends) distributed by the Company in respect of Restricted Stock during
any Restricted Period.
2.30. RETIREMENT means retirement of an Employee from the employ of Ashland as
described in a tax-qualified pension or profit sharing plan maintained by
Ashland in which the Employee participates.
2.31. SECTION 16(B) OPTIONEE means an Employee or former Employee who is
subject to Section 16(b) of the Exchange Act.
2.32. STOCK APPRECIATION RIGHT or SAR means the right of the holder to
surrender an Option or any portion thereof which is then exercisable and/or
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 or SAR multiplied by the number of shares of Common Stock covered
by such Option or SAR or portion thereof which is so surrendered. 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.
2.33. SUBSIDIARY means any present or future subsidiary corporation, as defined
in Section 424 of the Code, of the Company.
2.34. TAX DATE means the date the withholding tax obligation arises with
respect to the exercise of an Award.
ARTICLE III
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, Merit Awards and Phantom Stock Awards (where such Awards
include the value of the hypothetical or target number of shares of Common
Stock) and for stock bonuses on deferred awards of Restricted Stock, Performance
Shares and Phantom Stock Awards (where such Awards include the value of the
hypothetical or target number of shares of Common Stock)), an aggregate of
1,000,000 shares of Common Stock. Such shares shall be authorized but unissued
shares of Common Stock. Except as provided in Articles VII, VIII, and XI, 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, terminated or forfeited portion of such Award shall again be
available for the purposes of this Plan.
ARTICLE IV
ADMINISTRATION
This 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 this Plan, or in any stock option or stock bonus
plan of the Company, or any person who is not Disinterested, shall be a member
of the Committee.
In addition to any implied powers and duties that may be needed to carry
out the provisions of the Plan, the Committee shall have all the powers vested
in it by the terms of the Plan, including, without limitation, exclusive
authority to select the Employees to be granted Awards under the Plan, to
determine the type, size and terms (not inconsistent with the provisions of this
Plan) 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. No employee may be granted Options for
more than 100,000 shares of Common Stock during any calendar year. The terms of
any Award may include conditions (in addition to those in this Plan) on the
exercisability of all or any part of an Option or on the transferability or
forfeitability of Restricted Stock or a Phantom Stock Award. Notwithstanding any
such conditions, the Committee may, in
A-3
<PAGE> 39
its discretion, accelerate the time at which any Option may be exercised or the
time at which Restricted Stock or a Phantom Stock Award may become transferable
or nonforfeitable.
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 express grant in the Plan of any specific power to the Committee shall not
be construed as limiting any power or authority of the Committee.
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 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.
ARTICLE V
ELIGIBILITY
Awards may be granted only to individuals who are employees of the Company
or its Subsidiaries. A director of the Company or a Subsidiary who is an
employee of the Company or a Subsidiary may be granted Awards under this Plan. A
member of the Committee may not participate in this Plan or be eligible for
Awards hereunder during the time that his or her participation would prevent the
Committee from being Disinterested.
ARTICLE VI
STOCK OPTIONS
6.01. 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.
(d) An option may be granted with or without a related SAR.
6.02. 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
may 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 the
Company of (i) notice from the Optionee of exercise of an Option, and (ii)
either payment to the Company (as provided in this Article VI, Section 6.03
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
A-4
<PAGE> 40
shall be delivered or mailed by post-paid mail, addressed to Ashland Coal, Inc.,
2205 Fifth Street Road, Huntington, West Virginia 25701, Attn: Vice
President--Human Resources, or such other place or to the attention of such
other person as the Company may designate from time to time. Separate stock
certificates shall be issued by the Company for those shares acquired pursuant
to the exercise of an ISO and for those shares acquired pursuant to a NQSO.
6.03. PAYMENT FOR SHARES
Except as otherwise provided in this Article VI, 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 in (i) cash, (ii) whole shares of Common Stock owned by the Employee six
months or longer and evidenced by negotiable certificates, valued at their Fair
Market Value on the date of exercise, (iii) by a combination of such methods of
payment, or (iv) such other consideration as shall constitute lawful
consideration for the issuance of Common Stock and be approved by the Committee
(including without limitation, assurance satisfactory to the Committee from a
broker registered under the Exchange Act, of the delivery of the proceeds of an
imminent sale of the stock to be issued pursuant to the exercise of such Option,
such sale to be made at the direction of the Employee). If certificates
representing shares of Common Stock are used to pay all or part of the Exercise
Price of an Option, separate certificates shall be delivered by the Company
representing the same number of shares as each certificate so used and an
additional certificate shall be delivered representing any additional shares to
which the Employee is entitled as a result of exercise of the Option. 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 the
Company 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.
ARTICLE VII
STOCK APPRECIATION RIGHTS
The Committee may grant Stock Appreciation Rights pursuant to the
provisions of this Article VII to any Employee. Subject to the terms and
provisions of this Article VII, 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 SAR. An SAR granted
under the Plan shall be exercisable in whole or in part by notice to the
Company. 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 Article VII, 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 Article VII, 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 SAR. 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, an Option for the number of shares of Common
Stock with respect to which such SAR is exercised shall be deemed to have been
exercised and to that extent a corresponding number of shares of Common Stock
shall not again be available for the grant of Awards under the Plan. Upon the
exercise or termination of an SAR, the number of shares with respect thereto
shall be considered to have
A-5
<PAGE> 41
been exercised or terminated to the extent of the number of shares of Common
Stock with respect to which the SAR was so exercised or terminated.
ARTICLE VIII
RESTRICTED STOCK AWARDS
The Committee may make awards of Restricted Stock, 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. The consideration to be paid by an Employee for any Award made
hereunder shall be fixed by the Committee from time to time, but shall in no
event be less than the par value of the shares of Restricted Stock awarded to
him or her determined in a manner and on a basis consistent with Delaware
General Corporation Law. 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.
Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered during a Restricted Period, which shall be determined by
the Committee and which shall not be less than one year from the date such
Restricted Stock was awarded. 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 this 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
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
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<PAGE> 42
(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.
ARTICLE IX
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. The consideration to be paid
by an Employee for any such Merit Award made hereunder shall be fixed by the
Committee from time to time, but shall in no event be less than the par value of
the shares of Common Stock awarded to him or her determined in a manner and on a
basis consistent with Delaware General Corporation Law.
ARTICLE X
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 appropriate. Performance Shares may not be
sold, assigned, transferred, pledged, or otherwise encumbered, except as herein
provided and as provided in Section 12.04 of Article XII, 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. The preceding
sentence shall not affect an Employee's right to receive payment of Performance
Shares that were earned in a Performance Period that ended prior to the
Employee's termination of employment, death, retirement or disability.
ARTICLE XI
PHANTOM STOCK AWARDS
The Committee may make Phantom Stock Awards (which may be based solely on
the value of the underlying shares, solely on any earnings or appreciation
thereon, or both) evidenced by an Agreement, to
A-7
<PAGE> 43
selected Employees on the basis of the completion of a number of years of
service, the occurrence of an event or the attainment of personal or corporate
performance objectives established by the Committee in its sole discretion.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees who shall receive Phantom Stock
Awards, to determine the number of hypothetical or target shares as to which
each such Award is subject, and to determine the terms and conditions of each
such Award. There may be more than one Phantom Stock Award in existence at any
one time with respect to a selected Employee, and the terms and conditions of
each such Award may differ from each other.
The Committee shall establish vesting or performance measures for each
Phantom Stock Award 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, years of
service, periods of employment, the occurrence of certain events and individual
or corporate performance objectives including but not limited to return on
investment, earnings per share, return on shareholders' equity, or return to
shareholders. The vesting or performance measures determined by the Committee
shall be established at the time a Phantom Stock Award is made by the Committee
but may be subject to such later revisions as the Committee shall deem
appropriate. Phantom Stock Awards may not be sold, assigned, transferred,
pledged, or otherwise encumbered, except as herein provided and as provided in
Section 12.04 of Article XII, 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 Common Stock in such proportions as the Committee shall determine.
Employees may be offered the opportunity to defer the receipt of payment of
earned Phantom Stock Awards, and cash or Common Stock may be granted as a bonus
for deferral under such terms as may be established by the Committee from time
to time; however, in no event shall the cash or Common Stock granted as a bonus
for deferral exceed 20% of the applicable Phantom Stock Award so deferred.
In the event that a Phantom Stock Award has been made to an Employee whose
employment or service is subsequently terminated for any reason before it is
vested or prior to its earnout or the lapse of all restrictions thereon, such
Phantom Stock Award or the applicable portion thereof will be forfeited by such
Employee; provided, however, that the Committee may, in its sole discretion,
limit such forfeiture. Any Phantom Stock Award so forfeited by an Employee
(relating to the value of the underlying hypothetical or target shares of Common
Stock) shall not again be available for the grant of Awards under the Plan.
ARTICLE XII
SPECIAL EXERCISE RULES AND
CONTINUED EMPLOYMENT AND AGREEMENT TO SERVE
12.01. DEATH
Every Option shall provide that in the event the Employee dies (i) while
employed by the Company, (ii) during the period of disability described in
Section 12.02 of this Article XII, (iii) within three months after cessation of
employment for any cause (other than Retirement), or (iv) after Retirement while
Options remain outstanding, 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.
12.02. DISABILITY
Every Option shall provide that in the event the employment of any Employee
shall cease by reason of total and permanent disability within the meaning of
Section 22(e)(3) of the Code, 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 prior to its termination date for the number of
shares which the Employee could have acquired under the Option immediately prior
to the Employee's total and permanent disability. The determination by the
Committee of any question involving disability shall be conclusive and binding.
A-8
<PAGE> 44
12.03. OTHER SEPARATIONS FROM SERVICE
Except as provided in Sections 12.01 and 12.04 of this Article XII, 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 except Retirement, in which event the
Option shall be exercisable at any time prior to its termination date. If an
Option is exercised after cessation of employment or Retirement, it 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 or
Retirement; provided, however, that no Option may be exercised after the fixed
termination date set forth in the Option.
12.04. CERTAIN ACCELERATIONS
Notwithstanding any provision of this Article XII to the contrary, any
Award granted pursuant to the Plan, may, in the discretion of the Committee or
as provided in the relevant Agreement, become exercisable (earned or vested in
the case of a Restricted Stock, Performance Share or Phantom Stock Award), at
any time or from time to time, prior to satisfying the earnout or vesting
requirements or the fixed termination date set forth in the Award for the full
amount or number of awarded shares or any part thereof, less such amount or
number as may have theretofore become vested or been 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 the Company, from and after the date of such Change in Control.
12.05. CONTINUED EMPLOYMENT UNDERTAKING
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. 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.
12.06. LEAVES OF ABSENCE
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.
ARTICLE XIII
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) cash
withholding from a payment relating to an Award, (ii) a cash payment, (iii)
authorizing the Company 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 (iv) by delivery to the
Company 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 (iii) or (iv) 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.
A-9
<PAGE> 45
ARTICLE XIV
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 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 Article III 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 shall be maintained as before the occurrence of such
event. Any such adjustment must be made on a basis determined fair by the
Committee and in accordance with the Company's Restated Certificate of
Incorporation, as amended, and its Amended Bylaws, as in effect at the time, and
in accordance with all applicable laws. Such adjustment shall be conclusive and
binding for all purposes of the Plan.
ARTICLE XV
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 May 1, 2005. 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 the Company: (i)
increase (except as provided in Article XIV) the maximum number of shares which
may be issued pursuant to the Awards granted under the Plan, or the maximum
number of Options which may be granted to any individual Employee in any
calendar year, (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 Article II, or (iv) extend the period during which
Awards may be granted or exercised.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.01. NO RIGHT TO AWARD
Employees are selected for Awards at the sole discretion of the Committee.
No Employee shall have any claim or right to be granted an Award under the Plan.
16.02. ASSIGNMENT OR ALIENATION
An Employee's rights and interest under the Plan may not be assigned,
transferred, pledged or otherwise encumbered, in whole or in part, either
directly or by operation of law or otherwise (except in the event of an
Employee'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
in the Plan shall be subject to any obligation or liability of any such
Employee. An Award shall be exercisable, during an Employee's lifetime, only by
him or her or his or her Personal Representative. Except as specified in Article
VIII, 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 Ashland.
16.03. COMPLIANCE WITH SECURITIES LAWS
No Common Stock shall be issued hereunder unless counsel for Ashland shall
be satisfied that such issuance will be in compliance with applicable federal,
state, and other securities laws. The appropriate officers of the Company shall
cause to be filed any reports, returns, or other information regarding Awards
A-10
<PAGE> 46
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.
16.04. EXPENSES
The expenses of the Plan shall be borne by the Company.
16.05. CONSENT TO, RATIFICATION OF CERTAIN ACTIONS
By accepting any Award under the Plan, each Employee 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.
16.06. BINDING NATURE OF ACTIONS
Awards granted under the Plan shall be binding upon the Company, its
successors, and assigns.
16.07. OTHER COMPENSATION ARRANGEMENTS
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.
16.08. TIME AWARDS GRANTED
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.
ARTICLE XVII
EFFECTIVENESS OF THE PLAN
The Plan shall be submitted to the shareholders of the Company for their
approval and adoption on April 28, 1995, 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. Subject to approval by the shareholders on April 28, 1995, the
Plan shall be effective May 1, 1995.
ARTICLE XVIII
GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the State of Delaware.
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which shares of
Common Stock may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock for which shares of Restricted Stock are awarded,
Performance Shares or a Phantom Stock Award were earned or for which an Option
or SAR is exercised may bear such legends and statements as the Company deems
advisable to assure compliance with federal and state laws and regulations. No
Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificate for shares shall be delivered, and no payment shall be made under
this Plan until the Company has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
A-11
<PAGE> 47
ARTICLE XIX
UNFUNDED PLAN
The Plan, insofar as it provides for grants, shall be unfunded, and the
Company shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
ARTICLE XX
RULES OF CONSTRUCTION
Headings are given to the articles and sections of this Plan solely as a
convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
A-12
<PAGE> 48
<TABLE>
<S> <C>
ASHLAND COAL, INC.
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R FOR THE ANNUAL MEETING ON APRIL 26, 1996
O The person(s) whose signature(s) appear(s) on the opposite side hereof hereby constitute(s) and
X appoint(s) Paul W. Chellgren and William C. Payne, and each of them, his or her (their) true and
Y lawful attorney and proxy with full power of substitution in each, to represent such person(s)
at the Annual Meeting of Stockholders of Ashland Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road, Huntington, West Virginia, at 10:30 a.m. on
Friday, April 26, 1996, and at any adjournments thereof, and to vote, with all powers such
person(s) would possess if present at such meeting (including with respect to the election of
directors, the power to cumulate votes and distribute such votes among the nominees), all shares
of Common Stock credited to such person'(s) account(s) as of the record date for the Annual
Meeting, on the matters set forth on the opposite side hereof and all other matters properly
coming before the meeting or any adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Common Stockholders: ------------------------------------
------------------------------------
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, ------------------------------------
Robert L. Hintz, Thomas Marshall, William C. Payne, ------------------------------------
Robert E. Yancey, Jr. (If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 49
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- ------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- ------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
- ----------------------------------------------------------------------------
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
SIGNATURE(S)_____________________________________________ DATE ____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full
title as such.
</TABLE>
<PAGE> 50
<TABLE>
<S> <C>
ASHLAND COAL, INC.
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R FOR THE ANNUAL MEETING ON APRIL 26, 1996
O The person(s) whose signature(s) appear(s) on the
X opposite side hereof hereby constitute(s) and
Y appoint(s) Paul W. Chellgren and William C. Payne, and
each of them, its true and lawful attorney and proxy
with full power of substitution in each, to represent
such person(s) at the Annual Meeting of Stockholders of
Ashland Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road,
Huntington, West Virginia, at 10:30 a.m. on Friday,
April 26, 1996, and at any adjournments thereof, and to
vote, with all powers such person(s) would possess if
present at such meeting (including, with respect to the
election of directors, the power to cumulate votes and
distribute such votes among the nominees), all shares
of Preferred Stock credited to such person'(s)
account(s) as of the record date for the Annual
Meeting, on the matters set forth on the opposite side
hereof and on all other matters properly coming before
the meeting or any adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Preferred Stockholders: ------------------------------------
------------------------------------
J. A. "Fred" Brothers, Juan Antonio Ferrando, J. Marvin ------------------------------------
Quin. ------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 51
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- ------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- ------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
- ----------------------------------------------------------------------------------------------------------
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
SIGNATURE(S)_____________________________________________ DATE ____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full
title as such.
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 52
<TABLE>
<S> <C>
ASHLAND COAL, INC.
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R FOR THE ANNUAL MEETING ON APRIL 26, 1996
O The person whose signature appears on the opposite side
X hereof, as a participant in the Coal-Mac. Inc. Savings
Y and Retirement Plan ("Plan"), hereby instructs Chase
Manhattan Bank, N.A., Trustee, to constitute and
appoint Paul W. Chellgren and William C. Payne, and
each of them, the lawful attorney and proxy of said
Trustee with full power of substitution in each, to
represent the interests of such person in the Common
Stock of Ashland Coal, Inc. held under the terms of the
Plan at the Annual Meeting of Stockholders of Ashland
Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road,
Huntington, West Virginia, at 10:30 a.m. on Friday,
April 26, 1996, and at any adjournments thereof, and to
vote, with all powers such person(s) would possess if
present at such meeting (including, with respect
to the election of directors, the power to cumulate
votes and distribute such votes among the nominees),
and in accordance with the choices made on the
opposite side hereof, all shares of Common Stock
credited to such person's account under the Plan as of
the record date for the Annual Meeting, on the matters
set forth on the opposite side hereof and on all other
matters properly coming before the meeting or any
adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Common Stockholders: ------------------------------------
------------------------------------
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, ------------------------------------
Robert L. Hintz, Thomas Marshall, William C. Payne, ------------------------------------
Robert E. Yancey, Jr. (If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 53
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- ------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- ------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
- -----------------------------------------------------------------------------------
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
SIGNATURE(S)_____________________________________________ DATE ____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full
title as such.
</TABLE>
<PAGE> 54
<TABLE>
<S> <C> ASHLAND COAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON APRIL 26, 1996
P The person whose signature appears on the opposite side hereof, as a participant
R in the Ashland Coal Inc. Employee Thrift Plan ("Plan"), hereby instructs Chase Manhattan
O Bank, N.A., Trustee, to constitute and appoint Paul W. Chellgren and William C. Payne,
X and each of them, the lawful attorney and proxy of said Trustee with full power of substitution in each, to
Y represent the interests of such person in the Common Stock of Ashland Coal, Inc. held under the terms of the
Plan at the Annual Meeting of Stockholders of Ashland Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road, Huntington, West Virginia, at 10:30 a.m. on Friday, April 26,
1996, and at any adjournments thereof, and to vote, with all powers such person(s) would possess if present at
such meeting (including, with respect to the election of directors, the power to cumulate votes and distribute
such votes among the nominees), and in accordance with the choices made on the opposite side hereof, all shares
of Common Stock credited to such person's account under the Plan as of the record date for the Annual Meeting,
on the matters set forth on the opposite side hereof and on all other matters properly coming before the meeting
or any adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Common Stockholders: ------------------------------------
------------------------------------
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell, ------------------------------------
Robert L. Hintz, Thomas Marshall, William C. Payne, ------------------------------------
Robert E. Yancey, Jr. (If you have written in the above
space, please mark the corresponding
box on the opposite side of this
card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
</TABLE>
<PAGE> 55
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR 9772
VOTES AS IN THIS
EXAMPLE.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS.
- -------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- -------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the [ ] [ ] [ ]
Directors Restated
(see opposite side) Certificate of
Incorporation.
For, except vote withheld from the following nominee(s):
3. Ratification of [ ] [ ] [ ]
Ernst & Young
_________________________________________________ LLP as
independent
auditors for 1996.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES, AND
PROMPTLY RETURNING THIS PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
- ----------------------------------------------------------------------------------
Change of [ ]
Address/Comments
on opposite side.
I plan to attend the [ ]
Annual Meeting
SIGNATURE(S)_____________________________________________ DATE ____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full
title as such.
</TABLE>
