EXHIBIT 10.4
ASHLAND INC.
DEFERRED COMPENSATION PLAN FOR EMPLOYEES (2005)
(EFFECTIVE AS OF JANUARY 1, 2005)
1.
PURPOSE
The
Ashland Inc. Deferred
Compensation Plan for
Employees (2005)
(the "Plan") is maintained primarily for the purpose of providing an
opportunity to defer compensation for retirement or other future
purposes
to a select group of management or highly
compensated employees
(including
former employees that met these criteria
when employed). The obligations of
the Company hereunder constitute a mere promise to make the payments
provided for in this Plan. No employee,
his or her spouse or
the estate of
either of them shall have, by reason of this Plan,
any right,
title or
interest of any kind in or to any
property of the
Company. To the extent
any Participant has a right to receive
payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company.
This Plan is a
replacement of the
prior Ashland
Inc. Deferred
Compensation Plan amended and restated as of April 1, 2003 (the
"Former
Plan"). Compensation deferred under the
Former Plan shall remain subject to
all of the rules, terms and conditions in effect under the
Former Plan as
of December 31, 2004. For this purpose, the
Compensation deferred under the
Former Plan shall include all income, gains and losses connected to such
Compensation.
The rules,
terms and conditions of this Plan shall apply to
Compensation deferred after December 31, 2004, including any Election to
defer such Compensation made in 2004. For this purpose,
the Compensation
deferred after December 31, 2004 shall
include all income, gains and losses
connected to such Compensation.
2.
DEFINITIONS
The following definitions shall be applicable throughout the
Plan:
(a) "Accounting
Date"
means the Business Day on which a
calculation concerning a Participant's
Compensation Account
is performed,
or as otherwise defined by the
Committee.
(b)
"Beneficiary"
means the person(s) designated by the
Participant in accordance with Section 10, or if no
person(s) is/are
so
designated, the estate of a deceased
Participant.
(c) "Board" means the
Board of Directors
of Ashland Inc. or
its
designee.
(d) "Business
Day" means a day on which the New York Stock
Exchange is open for trading activity.
(e) "Change
in Control" shall be deemed to occur (1) upon the
approval of the shareholders of the Company (or if such approval is not
required, upon the approval of the Board) of (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 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, 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 (C) adoption of any plan or
proposal for the
liquidation or
dissolution of the Company, (2) when any "person" (as defined
in Section
3(a)(9) or 13(d) of the Exchange Act), other than Ashland Inc. or any
subsidiary or employee benefit plan or trust maintained
by Ashland Inc. or
any of its subsidiaries, shall become the
"beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act),
directly or
indirectly,
of more than
15% of the Common Stock outstanding at the time, without the approval of
the Board, or (3) if 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. 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.
The definition of Change in Control as written hereinabove shall
remain in effect until the Secretary of the Treasury prescribes a
definition that is inconsistent with the definition in the Plan. If a
definition is prescribed that is inconsistent with the definition in the
Plan, such prescribed definition shall supercede the one in the
Plan. If
such definition is not inconsistent with the definition in the Plan,
then
the Plan's definition shall remain in
effect.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Personnel and Compensation Committee of
the Board or its designee.
(h) "Common Stock"
means the common
stock, $1.00 par
value, of
Ashland Inc.
(i) "Common Stock Fund" means that investment option, approved by
the Committee, in which a Participant's
Compensation Account
may be deemed
to be invested and may earn income based on
a hypothetical
investment
in
Common Stock.
(j) "Company" means Ashland Inc., its divisions, subsidiaries and
affiliates. "Company" shall also include any
direct successor in
interest
to Ashland Inc. that results from a
corporate reorganization connected with
divesting the interest Ashland Inc. has in
Marathon Ashland Petroleum LLC.
(k) "Compensation" means any employee compensation determined by
the Committee to be properly deferrable
under the Plan.
(l) "Compensation
Account(s)" means the Retirement Account and/or
the In-Service Account(s).
(m) "Corporate
Human
Resources"
means the Corporate Human
Resources Department of the Company.
(n) "Credit
Date" means the date on which Compensation would
otherwise have been paid to the Participant or in the case of the
Participant's designation of investment option changes, within three
Business Days after the Participant's
designation is
received by Corporate
Human Resources, or as otherwise designated
by the Committee.
(o) "Deferred
Compensation" means the Compensation elected by the
Participant to be deferred pursuant to the
Plan.
(p) "Disability" means that a Participant is either:
1. Unable to
engage in any substantial gainful activity
because of a
medically determinable physical or mental
impairment that is
expected to result in death or last for
a continuous period of 12 or more months; or
2. Receiving income
replacement
benefits for a period
of at
least three
months under an accident and health plan
covering employees
of the Company
because of a
medically
determinable physical or mental impairment that is expected
to result in death or last for a continuous period of 12 or
more months.
(q) "Election"
means a Participant's delivery of a notice of
election to defer payment of all or a portion of his
or her
Compensation
under the terms of the Plan. Such notice shall also
include instructions
specifying the time the deferred
Compensation will be
paid and the form in
which it will be paid. Such elections shall be irrevocable except as
otherwise provided in the Plan or pursuant
to Treasury guidance.
Elections
shall be made and delivered as prescribed by the
Committee or the Company.
(r) "Employee" means a full-time, regular salaried employee
(which
term shall be deemed to include
officers) of the
Company, its present
and
future subsidiary corporations as defined in Section 424 of the
Internal
Revenue Code of 1986, as amended or its
affiliates.
(s) "Employee
Savings Plan" means the Ashland Inc. Employee
Savings Plan, as it now exists or as it may
hereafter be amended.
(t) "Excess
Payments" means payments made to a Participant
pursuant to the Plan and the Excess
Plan.
(u) "Excess
Plan" means the Ashland Inc. Nonqualified Excess
Benefit Pension Plan, as it now exists or
as it may hereafter be amended.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(w) "Fair Market Value" means the price of a share of Common
Stock, as reported on the Composite Tape
for New York Stock Exchange issues
on the date and at the time designated by
the Company.
(x) "In-Service
Account" means the account(s) to which the
Participant's Deferred Compensation is credited and from which
distributions are made.
(y) "Key Employee"
means any Employee who
at any time during the
Plan Year was -
1. an officer
of the Company having annual compensation
greater than $ 130,000 (as adjusted under section 416(i)(1)
of the Code), provided that no more than 50 individuals may
be considered an
officer (or if less,
the greater of 3 or
10 percent of the employees);
2. a 5-percent owner of the Company; or
3. a 1-percent owner
of the Company with annual compensation
exceeding $150,000.
For this purpose, annual compensation means
compensation within the meaning
of section 415(c)(3) of the Code.
(z) "Participant" means an Employee selected by the
Committee to
participate in the Plan and who has
elected to defer
payment of all or
a
portion of his or her Compensation under
the Plan.
(aa)
"Performance-Based
Compensation" means
Compensation
that
meets requirements specified by the Secretary of the Treasury.
Performance-Based Compensation will include the attributes that it is
variable, contingent on the satisfaction of
preestablished metrics
and is
not readily ascertainable at the time of the Election to defer such
compensation under Section 8(b).
(bb) "Plan" means this Ashland Inc. Deferred Compensation Plan
for
Employees (2005) as it now exists or as it
may hereafter be amended.
(cc) "Plan Year" means the calendar year. The first Plan Year of
the Plan is 2005.
(dd) "Retirement
Account" means the account(s) to which the
Participant's Deferred Compensation is credited and from which
distributions are made.
(ee) "Secretary of the
Treasury" or
"Treasury" means the
United
States Department of Treasury.
(ff) "SERP" means the Ashland Inc. Supplemental Early Retirement
Plan for Certain Employees, as it now exists or as it may
hereafter be
amended.
(gg) "SERP Payments" means payments made to a Participant
pursuant
to the Plan and the SERP.
(hh) "Stock Unit(s)" means the share equivalents credited to the
Common Stock Fund of a Participant's Compensation Account pursuant to
Section 6.
(ii) "Termination"
means termination of services as an
Employee
for any reason other than retirement.
(jj) "Unforeseeable
Emergency" means a
severe financial hardship
of a Participant because of -
1. An illness
or accident of the Participant, the
Participant's spouse
or dependent (as
defined in Internal
Revenue Code section 152(a));
2. A loss of the Participant's property due to casualty; or
3. Such
other
similar
extraordinary
unforeseeable
circumstances because
of events beyond the
control of the
Participant.
The meaning of Unforeseeable Emergency shall be interpreted and
applied in
accordance with applicable guidance that
may be issued by the Treasury.
3.
SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION
(a) Shares Authorized
for Issuance.
There shall be
reserved for
issuance under the Plan 500,000 shares of Common Stock, subject to
adjustment pursuant to subsection (c)
below.
(b) Units Authorized for Credit. The maximum number of Stock
Units
that may be credited to Participants'
Compensation Accounts
under the Plan
is 1,500,000, subject to adjustment
pursuant to subsection (c) below.
(c) Adjustments in Certain Events. In the event of any change in
the outstanding Common Stock of the Company by
reason of any stock split,
share dividend, recapitalization, merger, consolidation,
reorganization,
combination, or exchange or reclassification of shares, split-up,
split-off, spin-off, liquidation or other
similar change in capitalization,
or any distribution to common shareholders other than cash
dividends, the
number or kind of shares or Stock Units that may be issued or credited
under the Plan shall be automatically adjusted so that the proportionate
interest of the Participants shall be maintained as before the
occurrence
of such event. Such adjustment shall be conclusive and binding for all
purposes of the Plan.
4.
ELIGIBILITY
The Committee shall
have the authority to select from management
and/or highly compensated Employees those Employees who
shall be eligible
to participate in the Plan; provided, however, that employees and/or
retirees who have elected to defer an amount into
this Plan from
another
plan sponsored or maintained
by Ashland Inc.,
the terms of which
allowed
such employee or retiree to make such a
deferral election into
this Plan,
shall be considered to be eligible to
participate in this Plan.
5.
ADMINISTRA
