ASHLAND INC.
SALARY CONTINUATION PLAN
(as amended as of November 7, 2002)
The Ashland Inc. Salary Continuation Plan (the "Plan"), effective July
21, 1988, is an employee benefit plan which provides eligible salaried
employees of Ashland Inc. and its majority-owned subsidiaries (collectively
referred to herein as the "Company") with certain severance benefits if the
individual's employment with the Company is terminated under defined
circumstances after a Change in Control, as defined in Section 4(b). The
details and purpose of the Plan are more fully explained below.
SECTION 1. PURPOSE
The purpose of the Plan is to reduce employee concerns about the
possibility of a Change in Control, as defined below in Section 4(b). It is
important that each employee be able to focus his or her full attention and
energy toward the goals and objectives of the Company. The Plan is also
designed to permit the Company to retain its high quality work force by
increasing stability and improving morale and productivity. In addition,
the Plan will allow the company to attract and retain new qualified
employees.
SECTION 2. ADMINISTRATION
Ashland Inc. ("Ashland") shall be the Plan Administrator and shall
administer the Plan. Any determinations by the Vice President, Human
Resources - Programs and Services, or his or her designee, in carrying out,
administering, or interpreting this Plan shall be final and binding for all
purposes and upon all interested persons and their heirs, successors, and
personal representatives. All costs associated with the Plan shall be borne
by the Company.
SECTION 3. ELIGIBILITY
An employee who is classified on the records of the Company as a
regular, full-time salaried employee, whether exempt or non-exempt as
specified in the Fair Labor Standards Act, as from time to time amended,
(excluding hourly employees; employees covered by collective bargaining
agreements; employees of subsidiaries, entities, or partnerships in which
the Company has a 50% or less ownership interest; and international
employees, except foreign nationals who are located in Canada or those who
are U.S. expatriates) will be entitled to participate in the Plan,
regardless of length of service. Employees who have entered into employment
contracts with the Company will not be eligible to participate in the Plan.
At any time prior to a Change in Control, as defined in Section 4(b),
Ashland reserves, in its complete discretion, the right to amend the
eligible classes of employees.
SECTION 4. CONDITIONS FOR BENEFIT PAYMENTS
(a) A participant shall not be entitled to receive benefits under this
Plan prior to a Change in Control, as defined in Section 4(b).
Participation in the Plan does not create a contract of employment between
the Company and its employees. The Company reserves the right to terminate
employees at any time for any reason, just as employees have the right to
terminate their employment at any time for any reason.
(b) For purposes of the Plan, a change in control of Ashland (herein
after referred to as a "Change in Control") shall be deemed to have
occurred if:
(i) there shall be consummated (A) any consolidation or merger of the
Company, other than a consolidation or merger of the Company into or with a
direct or indirect wholly-owned subsidiary, in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company's common stock would be converted into cash, securities, or other
property, other than a merger of the Company in which the individual
holders of the Company's common stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (B) any sale, lease, exchange,
or transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of the Company, provided, however, that no
sale, lease, exchange or other transfer of all or substantially all the
assets of the Company shall be deemed to occur unless assets constituting
80% of the total assets of the Company are transferred pursuant to such
sale, lease, exchange or other transfer; or
(ii) the Shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company; or
(iii) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Company or a subsidiary thereof or any employee
benefit plan sponsored by the Company or a subsidiary thereof, shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of Ashland representing 50% or more of the combined
voting power of Ashland's then outstanding securities ordinarily (and apart
from rights accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange offer, open
market purchases, privately-negotiated purchases or otherwise; or
(iv) at any time during a period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of
Ashland shall cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by Ashland's
shareholders of each new director during such two-year period was approved
by a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of such two-year period.
Notwithstanding the foregoing, any transaction, or series of
transactions, that shall result in the disposition of the Company's
interest in Marathon Ashland Petroleum LLC, including without limitation
any transaction arising out of that certain Put/Call, Registration Rights
and Standstill Agreement dated January 1, 1998 among Marathon Oil Company,
USX Corporation, the Company and Marathon Ashland Petroleum LLC, as amended
from time to time, shall not be deemed to constitute a Change in Control.
(c) Benefits shall be payable to a participant under the Plan after a
Change in Control has occurred if a participant's employment is terminated by
the Company without Cause, as defined below, within two (2) years from the date
of the Change in Control. For purposes of the Plan, "cause" shall mean (i) the
willful and continued failure of an employee to substantially perform his or her
duties with the company (other than such failure resulting from the employee's
incapacity due to physical or mental illness), or (ii) willful engaging by an
employee in gross misconduct materially injurious to the Company.
SECTION 5. AMOUNT OF BENEFITS
Following a Change in Control and a participant's termination of
employment within two (2) years thereafter without Cause, a participant
shall be entitled to receive benefits under the Plan as described below:
(a) A participant shall be entitled to be paid in an undiscounted lump
sum, within ten (10) business days after such participant's termination of
employment without Cause, an amount equal to a specified portion of his or
her current base compensation (excluding any bonus compensation) based upon
the greater of such participant's (a) aggregate years and months of service
(whether or not continuous), or (b) current Job Band (or, if higher, the
Job Band of such participant at the time of the Change in Control)
calculated as follows:
Length of Service Payment
Up to 5 full years 3 months' base compensation
More than 5 and up 6 months' base compensation
to 10 full years
More than 10 and up 1 year's base compensation
to 15 full years
More than 15 and up 1-1/2 year's base compensation
to 20 full years
More than 20 full 2 years' base compensation
years
Job Band Payment
Band 1 - 10 3 months' base compensation
Band 11 - 22 6 months' base compensation
Band 23 and above 1 year's base compensation
(b) At the sole expense of the Company, a participant shall be
entitled to the continuation of his or her medical, dental, and group life
benefits in effect at the time of such participant's termination of
employment without Cause for a period of six (6) months following such
participant's termination of employment.
(c) A participant shall be reimbursed for any legal fees or expenses
incurred by the participant to enforce the payment of Plan benefits within
ten (10) business days of providing copies of applicable invoices to the
Company.
(d) A participant shall be entitled to interest on the amount of any
payments due under the Plan (but not timely paid) in an amount equivalent
to the prime rate of interest (quoted by Citibank, N.A. as its prime
commercial lending rate) on the latest date practicable prior to the date
such payments should have been made, to and including the date it is made.
(e) Within ten (10) business days of the participant's termination of
employment following a Change in Control, the Company shall provide, at no
cost to the participant, individual outside assistance in finding other
employment. Such obligation may be fulfilled by the Company through the
retention of an outplacement service for use by individual participants.
(f) Participants shall be entitled to receive any pension, disability,
workers' compensation, other Company benefit plan distribution, payment for
vacation accrued but not taken, statutory employment termination benefit, or any
other compensation plan payment otherwise independently due; however, in no
event shall a participant who receives benefit under this Plan be entitled to
additional severance payment pursuant to any other existing severance policy of
the Company.
SECTION 6. ACCEPTANCE OF BENEFITS
If a participant receives and accepts all of the benefits provided
under Section 5 of the Plan, he or she shall be deemed thereby to have waived
any right or cause of action against the Company and its directors, officers, or
employees arising from the termination of the participant's employment.
SECTION 7. CLAIMS PROCEDURE
(a) Following a Change in Control and a participant's termination of
employment, the benefits described in Section 5 of the Plan shall be paid
as described therein without any required action on the part of such
participant.
(b) If any participant believes that he or she is entitled to benefits
provided under the Plan and has not received such benefits within the time
prescribed by the Plan, such participant may submit a written claim for
payment of such benefits to the Company. If such claim for benefits is
wholly or partially denied, the Company shall, within thirty (30) business
days after receipt of the claim, notice the participant of the denial of
the claim. Such notice of denial (i) shall be in writing, (ii) shall be
written in a manner calculated to be understood by the participant, and
(iii) shall contain (A) the specific reason or reasons for denial of the
claim, (B) a specific reference to the pertinent Plan provisions upon which
the denial is based, (C) a description of any additional material or
information necessary to perfect the claim, along with an explanation of
why such material or information is necessary, and (D) an explanation of
the claim review procedure, in accordance with the provisions of this
Section 7.
(c) Within sixty (60) business days after the receipt by the
participant of a written notice of denial of the claim, or such later time
as shall be deemed reasonable taking into account the nature of the benefit
subject to the claim and any other attendant circumstances, the participant
may file a written request with the Company that it conduct a full and fair
review of the denial of the claim for benefits. As a part of such full and
fair review, the participant (or such participant's duly authorized
representative) may review and photocopy pertinent documents (including but
not limited to the participant's personal history file) and submit issues
and comments to the Company in writing. The Company shall make its
determination in accordance with the documents governing the Plan insofar
as such documents are consistent with the provisions of the Employee
Retirement Income Security Act of 1914 (herein "ERISA").
The Company shall promptly deliver to the participant its written
decision on the claim (in no event later than thirty (30) business days
after the receipt of the aforesaid request for review, except that if there
are special circumstances (such as a conference with the participant or his
or her representative) which require an extension of time, the aforesaid
thirty (30) business day period shall be extended to a reasonable period of
time not to exceed sixty (60) business days). Such decision shall (i) be
written in a manner calculated to be understood by the participant, (ii)
include the specific reason or reasons for the decision, and (iii) contain
a specific reference to the pertinent Plan provisions upon which the
decision is based. If the decision on review is not furnished within the
time prescribed by this Section 7(c), the claim shall be deemed granted on
review.
SECTION 8. AMENDMENTS AND TERMINATIONS
Ashland's Board of Directors shall have plenary authority to
terminate, modify, or amend this Plan in such respects as it shall deem
advisable at any time prior to a Change in Control.
SECTION 9. SUCCESSORS BINDING AGREEMENT
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by
agreement in form and substance satisfactory to eligible participants,
expressly to assume and agree to provide benefits pursuant to this Plan in
the same manner and to the same extent that the Company would be required
to perform its obligations under the Plan if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a violation of this Plan and
shall entitle eligible participants to compensation from the Company in the
same amount and on the same terms as the participant would be entitled
pursuant to Section 5, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the date of the participant's termination of employment without
Cause. As used in this Plan, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
Section 9 or which otherwise becomes bound by all the terms and provisions
of this Plan by operation of law.
(b) This Plan shall inure to the benefit of and be enforceable by a
participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If a participant
should die while any amounts would still be payable to him or her hereunder
if he or she had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Plan to
such participant's devisee, legatee, or other designee or, if there be no
such designee, to his or her estate.
SECTION 10. WITHHOLDING TAXES
The Company is authorized to withhold any tax required to be withheld
from the amounts payable to a participant pursuant to this Plan which are
considered taxable compensation to the participant.
SECTION 11. GOVERNING LAW
The Plan shall be governed by the laws of the Commonwealth of
Kentucky.