EXHIBIT 10.5
ASHLAND INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
(AMENDED AS OF APRIL 1, 2003)
ARTICLE I. GENERAL PROVISIONS
1.
PURPOSE
The purpose of this Ashland Inc. Deferred Compensation Plan For
Non-Employee Directors (the "Plan") is to provide each
Director with an
opportunity to defer some or all of the Director's Fees as a means of
saving for retirement or other purposes. In addition, the Plan provides
Directors with the ability to increase their
proprietary
interest in the
Company's long-term prospects by permitting
Directors to receive
all or a
portion of their Fees in Ashland Common
Stock.
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) "Act" means the
Securities Act of
1933, as amended from time
to time.
(c) "Beneficiary" means the person(s) designated by a Participant
in accordance with Article IV, Section
1.
(d) "Board" means the
Board of Directors
of Ashland Inc. or
its
designee.
(e) "Business
Day" means a day on which the New York Stock
Exchange is open for trading activity.
(f) "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 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 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.
(g) "Code" means the
Internal Revenue
Code of 1986,
as amended
from time to time.
(h) "Committee" means
the Governance and Nominating Committee of
the Board or its designee.
(i) "Common Stock"
means the common
stock, $1.00 par
value, of
Ashland Inc.
(j) "Common Stock Fund" means that investment option, approved by
the Committee, in which a Participant's
Retirement Account may be deemed to
be invested and may earn income based on a hypothetical investment in
Common Stock.
(k) "Company" means Ashland Inc., its divisions and
subsidiaries.
(l) "Corporate
Human
Resources"
means the Corporate Human
Resources Department of the Company.
(m) "Credit Date" means the date on which any Fees 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.
(n) "Deferral
Account"
means
the account(s) to which the
Participant's Deferred Fees are credited and from which, pursuant to
Article III, Section 5, distributions are
made.
(o) "Deferred Fees"
means the Fees elected by the Participant to
be deferred pursuant to the Plan.
(p) "Director" means any non-employee director of the Company.
(q) "Disability" means a Director's incapacity, due to physical
or
mental illness, resulting in an inability to attend to his
or her duties
and responsibilities as a member of the
Board.
(r) "Election" means a Participant's delivery of a written notice
of election to the Secretary of the Company
electing to defer
payment of
his or her Fees or to receive such Fees in
the form of Common Stock.
(s) "Exchange
Act" means the
Securities Exchange
Act of 1934, as
amended.
(t) "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.
(u) "Fees" mean the annual retainer and meeting fees, as well as
any per diem compensation for special
assignments, earned by a Director for
his or her service as a member of the Board during a calendar year or
portion thereof.
(v) "Fiscal Year"
means that annual period commencing October 1
and ending the following September 30.
(w) "Participant"
means a Director who has elected to defer
payment of all or a portion of his or her
Fees and/or to receive
all or a
specified portion of his or her Fees in
shares of Common Stock.
(x) "Payment Commencement Date" means the date payments of
amounts
deferred begin pursuant to Article III,
Section 6.
(y) "Personal
Representative"
means the person or
persons who,
upon the disability or incompetence
of a Director,
shall have acquired
on
behalf of the Director, by legal proceeding or otherwise, the right to
receive the benefits specified in this
Plan.
(z) "Plan" means this Ashland Inc. Deferred Compensation Plan For
Non-Employee Directors.
(aa) "Stock
Account" means an account by that name
established
pursuant to Article III, Section 1.
(bb) "Stock Unit(s)"
means the share
equivalents
credited to a
Participant's Stock Account pursuant to
Article III, Section 1.
(cc) "Termination"
means retirement from the Board or termination
of service as a Director for any other
reason.
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 (b) below. Such shares shall be
authorized but unissued shares of Common
Stock.
(b) Adjustments in Certain Events. 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 shareholders other than cash dividends, the number or kind of
shares that may be issued under the Plan
shall be automatically adjusted so
that the proportionate interest of the Directors 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
Any non-employee
Director of the Company shall be eligible to
participate in the Plan.
5.
ADMINISTRATION
Full power and authority to construe, interpret and administer
the
Plan shall be vested in the Company
and the Committee. Decisions of the
Company and the Committee shall be final, conclusive and binding upon
all
parties. Day-to-day administration of the
Plan shall be the responsibility
of Corporate Human Resources. This Department may authorize new
or modify
existing forms for use under this Plan so
long as any such modified or new
forms are not inconsistent with the terms
of the Plan.
ARTICLE II. COMMON STOCK PROVISION
Each Director may
elect to receive all or a portion of his or her
Fees in shares of Common Stock by making an Election pursuant to Article
III, Section 5. Shares shall be issued to the Director at
the end of each
quarter beginning in the quarter the
Election is effective.
The number of
shares of Common Stock so issued shall be
equal to the amount of Fees which
otherwise would have been payable to such Director during the quarter
divided by the Fair Market Value. Only whole number of shares of Common
Stock will be issued, with any fractional
shares to be paid in cash.
ARTICLE III. DEFERRED COMPENSATION
1.
PARTICIPANT ACCOUNTS
(a) Upon election
to participate in the Plan, there shall be
established a Deferral Account to which there shall be credited any
Deferred Fees as of each Credit Date. The Deferral Account shall be
credited (or debited) on each Accounting Date with income (or loss)
based
upon a hypothetical investment in any one
or more of the investment options
available under the Plan, as prescribed by
the Committee, which may include
a Common Stock Fund, as elected by the Participant under the terms of
Article III, Section 5.
(b) The Stock Account of a Participant shall be credited on each
Accounting Date with Stock Units equal to the number of shares of
Common
Stock (including fractions of a share) that could
have been purchased with
the amount of such deferred Fees as to
which a stock deferral
election has
been made at the Fair Market Value on the
Accounting
Date. As of the
date
of any dividend distribution date for the Common Stock, the
Participant's
Stock Account shall be credited
with additional Stock Units equal to the
number of shares of Common Stock (including fractions of a share) that
could have been purchased, at the Fair Market Value on such
date, with the
amount which would have been paid as
dividends on t
