EXHIBIT 10 DEFERRED COMPENSATION PLAN FOR EMPLOYEE

 

                                                                 EXHIBIT 10

 

                                ASHLAND INC.

              DEFERRED COMPENSATION PLAN FOR EMPLOYEES (2005)

                     (EFFECTIVE AS OF JANUARY 1, 2005)

 

     WHEREAS,   the Ashland Inc.   Deferred   Compensation   Plan for Employees

(2005)   (hereinafter   the "Plan") was approved by the Board of Directors of

Ashland Inc.   ("Ashland")   on November 4, 2004 to be   effective   January 1,

2005;

 

     WHEREAS,   the Plan as approved   and   effective   reserved   the right to

amend it;

 

     WHEREAS,   it is desired to   exercise   that right to amend the Plan and

thereby institute the first amendment and restatement of the Plan;

 

     NOW,   THEREFORE,   effective   January 1, 2005,   the Plan is amended and

restated as follows:

 

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 ret