ASHLAND INC.
1997 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the Ashland Inc. 1997 Stock Incentive Plan is to
promote the interests of Ashland Inc. and its shareholders by providing
incentives to its directors, officers and employees. Accordingly, the
Company may grant to selected officers and employees Options, Stock
Appreciation Rights, Restricted Stock, Merit Awards and Performance Share
Awards in an effort to attract and retain in its employ qualified
individuals and to provide such individuals with incentives to continue
service with Ashland, devote their best efforts to the Company and
improve Ashland's economic performance, thus enhancing the value of the
Company for the benefit of shareholders. The Plan also provides an
incentive for qualified persons, who are not officers or employees of the
Company, to serve on the Board of Directors of the Company and to
continue to work for the best interests of the Company by rewarding such
persons with automatic grants of Restricted Stock of the Company.
Options, Stock Appreciation Rights, Merit Awards and Performance Shares
may not be granted to such Outside Directors under the Plan.
SECTION 2. DEFINITIONS
(A) "Agreement" shall mean a written agreement setting forth the
terms of an Award, to be entered into at the Company's discretion.
(B) "Ashland" shall mean, collectively, Ashland Inc. and its
Subsidiaries.
(C) "Award" shall mean an Option, a Stock Appreciation Right, a
Restricted Stock Award, a Merit Award, or a Performance Share Award, in
each case granted under this Plan.
(D) "Ashland Inc. 1993 Plan" shall mean the Ashland Inc. 1993 Stock
Incentive Plan, as it now exists or as it may hereafter be amended.
(E) "Beneficiary" shall mean the person, persons, trust or trusts
designated by an Employee or Outside Director or if no designation has
been made, the person, persons, trust, or trusts entitled by will or the
laws of descent and distribution to receive the benefits specified under
this Plan in the event of an Employee's or Outside Director's death.
(F) "Board" shall mean the Board of Directors of the Company.
(G) "Change in Control" shall be deemed to occur (1) upon approval of
the shareholders of Ashland (or if such approval is not required, upon
the approval of the Board) of (A) any consolidation or merger of Ashland
in which Ashland is not the continuing or surviving corporation or
pursuant to which shares of Common Stock would be converted into cash,
securities or other property other than a merger in which the holders of
Common Stock immediately prior to the merger will have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger, (B) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of Ashland, or (C) adoption of any plan
or proposal for the liquidation or dissolution of Ashland, (2) when any
"person" (as defined in Section 3(a)(9) or 13(d) of the Exchange Act),
other than Ashland or any Subsidiary or employee benefit plan or trust
maintained by Ashland, shall become the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of more than
15% of Ashland's Common Stock outstanding at the time, without the
approval of the Board, or (3) at any time during a period of two
consecutive years, individuals who at the beginning of such period
constituted the Board shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election by
Ashland's shareholders of each new director during such two-year period
was approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such two-year period.
(H) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(I) "Committee" shall mean the Personnel and Compensation Committee
of the Board, as from time to time constituted, or any successor
committee of the Board with similar functions, which shall consist of
three or more members, each of whom shall be a Non-Employee Director and
an "outside director" as defined in the regulations issued under Section
162(m) of the Code.
(J) "Common Stock" shall mean the Common Stock of the Company ($1.00
par value), subject to adjustment pursuant to Section 13.
(K) "Company" shall mean, collectively, Ashland Inc. and its
Subsidiaries.
(L) "Employee" shall mean a regular, full-time or part-time employee
of Ashland as selected by the Committee to receive an award under the
Plan.
(M) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(N) "Exercise Price" shall mean, with respect to each share of Common
Stock subject to an Option, the price fixed by the Committee at which
such share may be purchased from the Company pursuant to the exercise of
such Option, which price at no time may be less than 100% of the Fair
Market Value of the Common Stock on the date the Option is granted.
(O) "Fair Market Value" shall mean the price of the Common Stock as
reported on the Composite Tape of the New York Stock Exchange on the date
and at the time selected by the Company or as otherwise provided in the
Plan.
(P) "Incentive Stock Option" or "ISO" shall mean an Option that is
intended by the Committee to meet the requirements of Section 422 of the
Code or any successor provision.
(Q) "Merit Award" shall mean an award of Common Stock issued pursuant
to Section 9 of the Plan.
(R) "Non-Employee Director" shall mean a non-employee director within
the meaning of applicable regulatory requirements, including those
promulgated under Section 16 of the Exchange Act.
(S) "Nonqualified Stock Option" or "NQSO" shall mean an Option
granted pursuant to this Plan which does not qualify as an Incentive
Stock Option.
(T) "Option" shall mean the right to purchase Common Stock at a price
to be specified and upon terms to be designated by the Committee or
otherwise determined pursuant to this Plan. An Option shall be designated
by the Committee as a Nonqualified Stock Option or an Incentive Stock
Option.
(U) "Outside Director" shall mean a director of the Company who is
not also an Employee of the Company.
(V) "Performance Goals" means performance goals as may be established
in writing by the Committee which may be based on earnings, stock price,
return on equity, return on investment, total return to shareholders,
economic value added, debt rating or achievement of business or
operational goals, such as drilling or exploration targets or profit per
barrel. Such goals may be absolute in their terms or measured against or
in relation to other companies comparably or otherwise situated. Such
performance goals may be particular to an Employee or the division,
department, branch, line of business, subsidiary or other unit in which
the Employee works and/or may be based on the performance of Ashland
generally.
(W) "Performance Period" shall mean the period designated by the
Committee during which the performance objectives shall be measured.
(X) "Performance Share Award" shall mean an award of shares of Common
Stock, the issuance of which is contingent upon attainment of performance
objectives specified by the Committee.
(Y) "Performance Shares" shall mean those shares of Common Stock
issuable pursuant to a Performance Share Award.
(Z) "Personal Representative" shall mean the person or persons who,
upon the disability or incompetence of an Employee or Outside Director,
shall have acquired on behalf of the Employee or Outside Director by
legal proceeding or otherwise the right to receive the benefits specified
in this Plan.
(AA) "Plan" shall mean this Ashland Inc. 1997 Stock Incentive Plan.
(BB) "Restricted Period" shall mean the period designated by the
Committee during which Restricted Stock may not be sold, assigned,
transferred, pledged, or otherwise encumbered, which period in the case
of Employees shall not be less than one year from the date of grant
(unless otherwise directed by the Committee), and in the case of Outside
Directors is the period set forth in subsection (B) of Section 8.
(CC) "Restricted Stock" shall mean those shares of Common Stock
issued pursuant to a Restricted Stock Award which are subject to the
restrictions, terms, and conditions set forth in the related Agreement,
if any.
(DD) "Restricted Stock Award" shall mean an award of Restricted
Stock.
(EE) "Retained Distributions" shall mean any securities or other
property (other than regular cash dividends) distributed by the Company
in respect of Restricted Stock during any Restricted Period.
(FF) "Retirement" shall mean retirement of an Employee from the
employ of the Company at any time as described in the Ashland Inc. and
Affiliates Pension Plan or in any successor pension plan, as from time to
time in effect.
(GG) "Section 16(b) Optionee" shall mean an Employee or former
Employee who is subject to Section 16(b) of the Exchange Act.
(HH) "Stock Appreciation Right" or "SAR" shall mean the right of the
holder to elect to surrender an Option or any portion thereof which is
then exercisable and receive in exchange therefor shares of Common Stock,
cash, or a combination thereof, as the case may be, with an aggregate
value equal to the excess of the Fair Market Value of one share of Common
Stock over the Exercise Price specified in such Option multiplied by the
number of shares of Common Stock covered by such Option or portion
thereof which is so surrendered. An SAR may only be granted concurrently
with the grant of the related Option. An SAR shall be exercisable upon
any additional terms and conditions (including, without limitation, the
issuance of Restricted Stock and the imposition of restrictions upon the
timing of exercise) which may be determined as provided in the Plan.
(II) "Subsidiary" shall mean any present or future subsidiary
corporations, as defined in Section 424 of the Code, of Ashland.
(JJ) "Tax Date" shall mean the date the withholding tax obligation
arises with respect to the exercise of an Award.
SECTION 3. STOCK SUBJECT TO THE PLAN
There will be reserved for issuance under the Plan (upon the exercise
of Options and Stock Appreciation Rights, upon awards of Restricted
Stock, Performance Shares and Merit Awards and for stock bonuses on
deferred awards of Restricted Stock and Performance Shares), an aggregate
of 3,212,000 shares of Ashland Common Stock, par value $1.00 per share;
provided, however, that of such shares, only 500,000 shares in the
aggregate shall be available for issuance for Restricted Stock Awards and
Merit Awards. Such shares shall be authorized but unissued shares of
Common Stock. Except as provided in Sections 7 and 8, if any Award under
the Plan shall expire or terminate for any reason without having been
exercised in full, or if any Award shall be forfeited, the shares subject
to the unexercised or forfeited portion of such Award shall again be
available for the purposes of the Plan. During the term of the Plan (as
provided in Section 14 hereof), no Employee shall be granted more than a
total of 500,000 in Options or Stock Appreciation Rights.
SECTION 4. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have no authority regarding the granting of Restricted Stock to Outside
Directors, as such grants are fixed pursuant to subsection (B) of Section
8 of the Plan.
In addition to any implied powers and duties that may be needed to
carry out the provisions of the Plan, the Committee shall have all the
powers vested in it by the terms of the Plan, including exclusive
authority (except as to Awards of Restricted Stock granted to Outside
Directors) to select the Employees to be granted Awards under the Plan,
to determine the type, size and terms of the Awards to be made to each
Employee selected, to determine the time when Awards will be granted, and
to prescribe the form of the Agreements embodying Awards made under the
Plan. Subject to the provisions of the Plan specifically governing Awards
of Restricted Stock granted or to be granted to Outside Directors
pursuant to subsection (B) of Section 8 herein, the Committee shall be
authorized to interpret the Plan and the Awards granted under the Plan,
to establish, amend and rescind any rules and regulations relating to the
Plan, to make any other determinations which it believes necessary or
advisable for the administration of the Plan, and to correct any defect
or supply any omission or reconcile any inconsistency in the Plan or in
any Award in the manner and to the extent the Committee deems desirable
to carry it into effect. Any decision of the Committee in the
administration of the Plan, as described herein, shall be final and
conclusive.
The Committee may act only by a majority of its members. Any
determination of the Committee may be made, without notice, by the
written consent of the majority of the members of the Committee. In
addition, the Committee may authorize any one or more of their number or
any officer of the Company to execute and deliver documents on behalf of
the Committee. No member of the Committee shall be liable for any action
taken or omitted to be taken by him or her or by any other member of the
Committee in connection with the Plan, except for his or her own willful
misconduct or as expressly provided by statute.
The provisions of this Section 4 with respect to decisions made by,
and authority of, the Committee shall be subject to the provisions of
subsection (B) of Section 8 herein.
SECTION 5. ELIGIBILITY
Awards may only be granted (i) to individuals who are Employees of
Ashland, and (ii) as expressly provided in subsection (B) of Section 8 of
the Plan, to individuals who are duly elected Outside Directors of
Ashland.
SECTION 6. OPTIONS
A. Designation and Price.
(a) Any Option granted under the Plan may be granted as an
Incentive Stock Option or as a Nonqualified Stock Option as shall be
designated by the Committee at the time of the grant of such Option.
Each Option shall, at the discretion of the Company and as directed
by the Committee, 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. Every Nonqualified Stock Option
shall provide for a fixed expiration date of not later than ten years
and one month from the date such Nonqualified Stock Option is
granted.
(c) The Exercise Price of Common Stock issued pursuant to each
Option shall be fixed by the Committee at the time of the granting of
the Option; provided, however, that such Exercise Price shall in no
event be less than 100% of the Fair Market Value of the Common Stock
on the date such Option is granted.
B. Exercise.
The Committee may, in its discretion, provide for Options granted
under the Plan to be exercisable in whole or in part; provided,
however, that no Option shall be exercisable prior to the first
anniversary of the date of its grant, except as provided in Section
11 or as the Committee otherwise determines in accordance with the
Plan, and in no case may an Option be exercised at any time for fewer
than 50 shares (or the total remaining shares covered by the Option
if fewer than 50 shares) during the term of the Option. The specified
number of shares will be issued upon receipt by Ashland of (i) notice
from the holder thereof of the exercise of an Option, and (ii)
payment to Ashland (as provided in this Section 6, subsection (C)
below), of the Exercise Price for the number of shares with respect
to which the Option is exercised. Each such notice and payment shall
be delivered or mailed by postpaid mail, addressed to the Treasurer
of Ashland at Ashland Inc., 1000 Ashland Drive, Russell, Kentucky
41169, or such other place or person as Ashland may designate from
time to time.
C. Payment for Shares.
Except as otherwise provided in this Section 6, the Exercise
Price for the Common Stock shall be paid in full when the Option is
exercised. Subject to such rules as the Committee may impose, the
Exercise Price may be paid in whole or in part (i) in cash, (ii) in
whole shares of Common Stock owned by the Employee and evidenced by
negotiable certificates, valued at their Fair Market Value (which
shares of Common Stock must have been owned by the Employee six
months or longer, and not used to effect an Option exercise within
the preceding six months, unless the Committee specifically provides
otherwise), (iii) by Attestation, (iv) by a combination of such
methods of payment, or (v) by such other consideration as shall
constitute lawful consideration for the issuance of Common Stock and
be approved by the Committee (including, without limitation,
effecting a "cashless exercise," with a broker, of the Option).
"Attestation" means the delivery to Ashland of a completed
Attestation Form prescribed by Ashland setting forth the whole shares
of Common Stock owned by the Employee which the Employee wishes to
utilize to pay the Exercise Price. The Common Stock listed on the
Attestation Form must have been owned by the Employee six months or
longer, and not have been used to effect an Option exercise within
the preceding six months, unless the Committee specifically provides
otherwise. A "cashless exercise" of an option is a procedure by which
a broker provides the funds to an Employee to effect an option
exercise. At the direction of the Employee, the broker will either
(i) sell all of the shares received when the option is exercised and
pay the Employee the proceeds of the sale (minus the option exercise
price, withholding taxes and any fees due to the broker) or (ii) sell
enough of the shares received upon exercise of the option to cover
the exercise price, withholding taxes and any fees due the broker and
deliver to the Employee (either directly or through the Company) a
stock certificate for the remaining shares. Dispositions to a broker
effecting a cashless exercise are not exempt under Section 16 of the
Exchange Act.
SECTION 7. STOCK APPRECIATION RIGHTS
The Committee may grant Stock Appreciation Rights pursuant to the
provisions of this Section 7 to any holder of any Option granted under
the Plan with respect to all or a portion of the shares subject to the
related Option. An SAR may only be granted concurrently with the grant of
the related Option. Subject to the terms and provisions of this Section
7, each SAR shall be exercisable only at the same time and to the same
extent the related Option is exercisable and in no event after the
termination of the related Option. An SAR shall be exercisable only when
the Fair Market Value (determined as of the date of exercise of the SAR)
of each share of Common Stock with respect to which the SAR is to be
exercised shall exceed the Exercise Price per share of Common Stock
subject to the related Option. An SAR granted under the Plan shall be
exercisable in whole or in part by notice to Ashland. Such notice shall
state that the holder of the SAR elects to exercise the SAR and the
number of shares in respect of which the SAR is being exercised.
Subject to the terms and provisions of this Section 7, upon the
exercise of an SAR, the holder thereof shall be entitled to receive from
Ashland consideration (in the form hereinafter provided) equal in value
to the excess of the Fair Market Value (determined as of the date of
exercise of the SAR) of each share of Common Stock with respect to which
such SAR has been exercised over the Exercise Price per share of Common
Stock subject to the related Option. The Committee may stipulate in the
Agreement the form of consideration which shall be received upon the
exercise of an
SAR. If no consideration is specified therein, upon the exercise of an
SAR, the holder may specify the form of consideration to be received by
such holder, which shall be in shares of Common Stock, or in cash, or
partly in cash and partly in shares of Common Stock (valued at Fair
Market Value on the date of exercise of the SAR) , as the holder shall
request; provided, however, that the Committee, in its sole discretion,
may disapprove the form of consideration requested and instead authorize
the payment of such consideration in shares of Common Stock (valued as
aforesaid), or in cash, or partly in cash and partly in shares of Common
Stock.
Upon the exercise of an SAR, the related Option shall be deemed
exercised to the extent of the number of shares of Common Stock with
respect to which such SAR is exercised and to that extent a corresponding
number of shares of Common Stock shall not again be available for the
grant of Awards under the Plan. Upon the exercise or termination of the
related Option, the SAR with respect thereto shall be considered to have
been exercised or terminated to the extent of the number of shares of
Common Stock with respect to which the related Option was so exercised or
terminated.
SECTION 8. RESTRICTED STOCK AWARDS
A. Awards to Employees
The Committee may make an award of Restricted Stock to selected
Employees, which may, at the Company's discretion and as directed by the
Committee, be evidenced by an Agreement which shall contain such terms
and conditions as the Committee, in its sole discretion, may determine.
The amount of each Restricted Stock Award and the respective terms and
conditions of each Award (which terms and conditions need not be the same
in each case) shall be determined by the Committee in its sole
discretion. As a condition to any Award hereunder, the Committee may
require an Employee to pay to the Company a non-refundable amount equal
to, or in excess of, the par value of the shares of Restricted Stock
awarded to him or her. 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.
Employees may be offered the opportunity to defer the receipt of
payment of vested shares of Restricted Stock, and Common Stock may be
granted as a bonus for deferral, under terms as may be established by the
Committee from time to time; however, in no event shall the Common Stock
granted as a bonus for deferral exceed 20% of the Restricted Stock so
deferred.
B. Awards to Outside Directors
During the term of the Plan, (i) each Outside Director who was
granted an award of restricted stock under the Ashland Inc. 1993 Plan
shall be granted an Award of 1,000 shares of Restricted Stock upon the
fifth anniversary of his or her prior award under the Ashland Inc. 1993
Plan; and (ii) each person who is hereafter duly appointed or elected as
an Outside Director and who does not receive an award under the Ashland
Inc. 1993 Plan shall be granted, effective on the date of his or her
appointment or election to the Board, an Award of 1,000 shares of
Restricted Stock; provided, however, that no Outside Director shall
receive an award of Restricted Stock under this Plan if such award would
be in addition to a simultaneous award of 1,000 shares of Restricted
Stock under the Ashland Inc. 1993 Plan. All Awards under this subsection
(B) are subject to the limitation on the number of shares of Common Stock
available pursuant to Section 3 and to the terms and conditions set forth
in this subsection (B) and subsection (C) below.
As a condition to any Award hereunder, the Outside Director may be
required to pay to the Company a non-refundable amount equal to the par
value of the shares of Restricted Stock awarded to him or her. Upon the
granting of the Restricted Stock Award, such Outside Director shall be
entitled to all rights incident to ownership of Common Stock of the
Company with respect to his or her Restricted Stock, including, but not
limited to, the right to vote such
shares of Restricted Stock and to receive dividends thereon when, as and
if paid; provided, however, that, subject to subsection (C) hereof, in no
case may any shares of Restricted Stock granted to an Outside Director be
sold, assigned, transferred, pledged, or otherwise encumbered during the
Restricted Period which shall not lapse until the earlier to occur of the
following: (i) retirement from the Board at age 70, (ii) the death or
disability of such Outside Director, (iii) a 50% change in the beneficial
ownership of the Company as defined in Rule 13d-3 under the Exchange Act,
or (iv) voluntary early retirement to take a position in governmental
service. Unless otherwise determined and directed by the Committee, in
the case of voluntary resignation or other termination of service of an
Outside Director prior to the occurrence of any of the events described
in the preceding sentence, any grant of Restricted Stock made to him or
her pursuant to this subsection (B) will be forfeited by such Outside
Director. As used herein, a director shall be deemed "disabled" when he
or she is unable to attend to his or her duties and responsibilities as a
member of the Board because of incapacity due to physical or mental
illness.
C. Transferability
Subject to subsection (B) of Section 15 hereof, Restricted Stock may
not be sold, assigned, transferred, pledged, or otherwise encumbered
during a Restricted Period, which, in the case of Employees, shall be
determined by the Committee and, unless otherwise determined by the
Committee, shall not be less than one year from the date such Restricted
Stock was awarded, and, in the case of Outside Directors, shall be
determined in accordance with subsection (B) of this Section 8. The
Committee may, at any time, reduce the Restricted Period with respect to
any outstanding shares of Restricted Stock awarded under the Plan to
Employees, but, unless otherwise determined by the Committee, such
Restricted Period shall not be less than one year.
During the Restricted Period, certificates representing the
Restricted Stock and any Retained Distributions shall be registered in
the recipient's name and bear a restrictive legend to the effect that
ownership of such Restricted Stock (and any such Retained Distributions),
and the enjoyment of all rights appurtenant thereto are subject to the
restrictions, terms, and conditions provided in the Plan and the
applicable Agreement, if any. 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, if
any. Restricted Stock shall constitute issued and outstanding shares of
Common Stock for all corporate purposes. The recipient will have the
right to vote such Restricted Stock, to receive and retain all regular
cash dividends, and to exercise all other rights, powers, and privileges
of a holder of Common Stock with respect to such Restricted Stock, with
the exception that (i) the recipient will not be entitled to delivery of
the stock certificate or certificates representing such Restricted Stock
until the restrictions applicable thereto shall have expired; (ii) the
Company will retain custody of all Retained Distributions made or
declared with respect to the Restricted Stock (and such Retained
Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if
ever, as the Restricted Stock with respect to which such Retained
Distributions shall have been made, paid, or declared shall have become
vested, and such Retained Distributions shall not bear interest or be
segregated in separate accounts; (iii) subject to subsection (B) of
Section 15 hereof, the recipient may not sell, assign, transfer, pledge,
exchange, encumber, or dispose of the Restricted Stock or any Retained
Distributions during the Restricted Period; and (iv) a breach of any
restrictions, terms, or conditions provided in the Plan or established by
the Committee with respect to any Restricted Stock or Retained
Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.
SECTION 9. MERIT AWARDS
The Committee may from time to time make an award of Common Stock
under the Plan to selected Employees for such reasons and in such amounts
as the Committee, in its sole discretion, may determine. As a condition
to any such Merit Award, the Committee may require an Employee to pay to
the Company an amount equal to, or in excess of, the par value of the
shares of Common Stock awarded to him or her.
SECTION 10. PERFORMANCE SHARES
The Committee may make awards of Common Stock which may, in the
Company's discretion and as directed by the Committee, be 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 Performance Goals and Performance Period applicable to an award
of Performance Shares shall be set forth in writing by the Committee no
later than 90 days after the commencement of the Performance Period and
shall be communicated to the Employee. The Committee shall have the
discretion to later revise the Performance Goals solely for the purpose
of reducing or eliminating the amount of compensation otherwise payable
upon attainment of the Performance Goals; provided that the Performance
Goals and the amounts payable upon attainment of the Performance Goals
may be adjusted during any Performance Period to reflect promotions,
transfers or other changes in an Employee's employment so long as such
changes are consistent with the Performance Goals established for other
Employees in the same or similar positions.
In making a Performance Share award, the Committee may take into
account an Employee's responsibility level, performance, cash
compensation level, incentive compensation awards and such other
considerations as it deems appropriate. Each Performance Share award
shall be established in shares of Common Stock and/or shares of
Restricted Stock in such proportions as the Committee shall determine.
The original amount of any Performance Share award shall not exceed
250,000 shares of Common Stock or Restricted Stock.
The Committee shall determine, in its sole discretion, the manner of
payment, which may include (i) cash, (ii) shares of Common Stock, or
(iii) shares of Restricted Stock in such proportions as the Committee
shall determine. Employees may be offered the opportunity to defer the
receipt of payment of earned Performance Shares, and Common Stock may be
granted as a bonus for deferral under terms as may be established by the
Committee from time to time; however, in no event shall the Common Stock
granted as a bonus for deferral exceed 20% of the Performance Shares so
deferred.
An Employee must be employed by the Company at the end of a
Performance Period in order to be entitled to payment of Performance
Shares in respect of such period; provided, however, that in the event of
an Employee's cessation of employment before the end of such period, or
upon the occurrence of his or her death, retirement, or disability, or
other reason approved by the Committee, the Committee may, in its sole
discretion, limit such forfeiture.
SECTION 11. CONTINUED EMPLOYMENT, AGREEMENT TO SERVE AND EXERCISE PERIODS
(A) Subject to the provisions of subsection (F) of this Section 11,
every Option and SAR shall provide that it may not be exercised in whole
or in part for a period of one year after the date of granting such
Option (unless otherwise determined by the Committee) and if the
employment of the Employee shall terminate prior to the end of such one
year period (or such other period determined by the Committee), the
Option granted to such Employee shall immediately terminate.
(B) Every Option shall provide that in the event the Employee dies
(i) while employed by Ashland, (ii) during the periods in which Options
may be exercised by an Employee determined to be disabled as provided in
subsection (C) of this Section 11 or (iii) after Retirement, such Option
shall be exercisable, at any time or from time to time, prior to the
fixed termination date set forth in the Option, by the Beneficiaries of
the decedent for the number of shares which the Employee could have
acquired under the Option immediately prior to the Employee's death.
(C) Every Option shall provide that in the event the employment of
any Employee shall cease by reason of disability, as determined by the
Committee at any time during the term of the Option, such Option shall be
exercisable, at any time or from time to time prior to the fixed
termination date set forth in the Option by such Employee for the
number of shares which the Employee could have acquired under the Option
immediately prior to the Employee's disability. As used herein, an
Employee will be deemed "disabled" when he or she becomes unable to
perform the functions required by his or her regular job due to physical
or mental illness and, in connection with the grant of an Incentive Stock
Option shall be disabled if he or she falls within the meaning of that
term as provided in Section 22(e)(3) of the Code. The determination by
the Committee of any question involving disability shall be conclusive
and binding.
(D) Every Option shall provide that in the event the employment of
any Employee shall cease by reason of Retirement, such Option may be
exercised at any time or from time to time, prior to the fixed
termination date set forth in the Option for the number of shares which
the Employee could have acquired under the Option immediately prior to
such Retirement.
(E) Except as provided in subsections (A), (B), (C), (D), (F) and (G)
of this Section 11, every Option shall provide that it shall terminate on
the earlier to occur of the fixed termination date set forth in the
Option or thirty (30) days after cessation of the Employee's employment
for any cause only in respect of the number of shares which the Employee
could have acquired under the Option immediately prior to such cessation
of employment; provided, however, that no Option may be exercised after
the fixed termination date set forth in the Option.
(F) Notwithstanding any provision of this Section 11 to the contrary,
any Award granted pursuant to the Plan, except a Restricted Stock Award
to Outside Directors, which is governed by Section 8, subsection (B),
may, in the discretion of the Committee or as provided in the relevant
Agreement (if any), become exercisable, at any time or from time to time,
prior to the fixed termination date set forth in the Award for the full
number of awarded shares or any part thereof, less such numbers as may
have been theretofore acquired under the Award (i) from and after the
time the Employee ceases to be an Employee of Ashland as a result of the
sale or other disposition by Ashland of assets or property (including
shares of any Subsidiary) in respect of which such Employee had
theretofore been employed or as a result of which such Employee's
continued employment with Ashland is no longer required, and (ii) in the
case of a Change in Control of Ashland, from and after the date of such
Change in Control.
(G) Notwithstanding any provision of this Section 11 to the contrary,
in the event the Committee determines, in its sole and absolute
discretion, that the employment of any Employee has terminated for a
reason or in a manner adversely affecting the Company (which may include,
without limitation, taking other employment or rendering service to
others without the consent of the Company), then the Committee may direct
that such Employee forfeit any and all Options that he or she could
otherwise have exercised pursuant to the terms of this Plan.
(H) Each Employee granted an Award under this Plan shall agree by his
or her acceptance of such Award to remain in the service of Ashland for a
period of at least one year from the date of the Agreement respecting the
Award between Ashland and the Employee (or, if no Agreement is entered
into, at least one year from the date of 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.
(I) Subject to the limitations set forth in Section 422 of the Code,
the Committee may adopt, amend, or rescind from time to time such
provisions as it deems appropriate with respect to the effect of leaves
of absence approved by any duly authorized officer of Ashland with
respect to any Employee.
SECTION 12. WITHHOLDING TAXES
Federal, state or local law may require the withholding of taxes
applicable to gains resulting from the exercise of an Award. Unless
otherwise prohibited by the Committee, each Employee may satisfy any such
tax withholding obligation by any of the following means, or by a
combination of such means: (i) a cash payment, (ii) authorizing Ashland
to withhold from the shares of Common Stock otherwise issuable to the
Employee pursuant to the exercise or vesting of an Award a number of
shares having a Fair Market Value, as of the Tax Date, which will satisfy
the amount
of the withholding tax obligation, or (iii) by delivery to Ashland of a
number of shares of Common Stock having a Fair Market Value as of the Tax
Date which will satisfy the amount of the withholding tax obligation
arising from an exercise or vesting of an Award. An Employee's election
to pay the withholding tax obligation by (ii) or (iii) above must be made
on or before the Tax Date, is irrevocable, is subject to such rules as
the Committee may adopt, and may be disapproved by the Committee. If the
amount requested is not paid, the Committee may refuse to issue Common
Stock under the Plan.
SECTION 13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock of the
Company by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, reorganization, combination, or exchange of
shares, split-up, split-off, spin-off, liquidation or other similar
change in capitalization, or any distribution to common stockholders
other than cash dividends, the number or kind of shares that may be
issued under the Plan pursuant to Section 3 and the number or kind of
shares subject to, or the price per share under any outstanding Award
shall be automatically adjusted so that the proportionate interest of the
Employee or Outside Director shall be maintained as before the occurrence
of such event. Such adjustment shall be conclusive and binding for all
purposes of the Plan.
SECTION 14. AMENDMENTS AND TERMINATIONS
Unless the Plan shall have been earlier terminated as hereinafter
provided, no Awards shall be granted hereunder after January30, 2002. The
Board or the Committee may at any time terminate, modify or amend the
Plan in such respects as it shall deem advisable; provided, however, that
the Board or the Committee may not, without approval by the holders of a
majority of the outstanding shares of stock present and voting at any
annual or special meeting of shareholders of Ashland change the manner of
determining the minimum Exercise Price of Options, other than to change
the manner of determining the Fair Market Value of the Common Stock as
set forth in Section 2.
SECTION 15. MISCELLANEOUS PROVISIONS
(A) Except as to Awards to Outside Directors, no Employee or other
person shall have any claim or right to be granted an Award under the
Plan.
(B) An Employee's or Outside Director's rights and interest under the
Plan may not be assigned or transferred in whole or in part, either
directly or by operation of law or otherwise (except in the event of an
Employee's or Outside Director's death, by will or the laws of descent
and distribution), including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other manner,
and no such right or interest of any Employee or Outside Director in the
Plan shall be subject to any obligation or liability of such individual;
provided, however, that an Employee's or Outside Director's rights and
interest under the Plan may, subject to the discretion and direction of
the Committee, be made transferable by such Employee or Outside Director
during his or her lifetime. Except as specified in Section 8, the holder
of an Award shall have none of the rights of a shareholder until the
shares subject thereto shall have been registered in the name of the
person receiving or person or persons exercising the Award on the
transfer books of the Company.
(C) No Common Stock shall be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance with
applicable Federal, state, and other securities laws.
(D) The expenses of the Plan shall be borne by the Company.
(E) By accepting any Award under the Plan, each Employee and Outside
Director and each Personal Representative or Beneficiary claiming under
or through him or her shall be conclusively deemed to have indicated his
or her acceptance and ratification of, and consent to, any action taken
under the Plan by the Company, the Board or the Committee.
(F) Awards granted under the Plan shall be binding upon Ashland, its
successors, and assigns.
(G) The appropriate officers of the Company shall cause to be filed
any reports, returns, or other information regarding Awards hereunder or
any Common Stock issued pursuant hereto as may be required by Sections
13, 15(d) or 16(a) of the Exchange Act, or any other applicable statute,
rule, or regulation.
(H) Nothing contained in this Plan shall prevent the Board of
Directors from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required.
(I) Each Employee shall be deemed to have been granted any Award on
the date the Committee took action to grant such Award under the Plan or
such later date as the Committee in its sole discretion shall determine
at the time such grant is authorized.
SECTION 16. EFFECTIVENESS OF THE PLAN
The Plan shall be submitted to the shareholders of the Company for
their approval and adoption on January 30, 1997 or such other date fixed
for the next meeting of shareholders or any adjournment or postponement
thereof. The Plan shall not be effective and no Award shall be made
hereunder unless and until the Plan has been so approved and adopted at a
meeting of the Company's shareholders.
SECTION 17. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Kentucky.