EXHIBIT 10.6 ASHLAND INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (2005) (EFFECTIVE AS OF JANUARY 1, 2005)

 

                                                        EXHIBIT 10.6

 

                                ASHLAND INC.

        DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (2005)

                     (EFFECTIVE AS OF JANUARY 1, 2005)

 

 

ARTICLE I.   GENERAL PROVISIONS

 

1.        PURPOSE

 

         The purpose of this Ashland Inc.   Deferred   Compensation   Plan For

Non-Employee Directors (2005) (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.   The   obligations   of the

Company   hereunder   constitute a mere promise to make the payments provided

for in this Plan. No Director, 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 for Non-Employee   Directors   amended as of April 1, 2003

(the   "Former   Plan").   Fees   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 Fees deferred

under the Former Plan shall include all income,   gains and losses connected

to such Deferred Fees.

 

         The rules,   terms and   conditions of this Plan shall apply to Fees

deferred after December 31, 2004, including any Election to defer such Fees

made in 2004.   For this purpose,   the Fees deferred after December 31, 2004

shall include all income, gains and losses connected to such Fees.

 

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.

 

         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.

 

         (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.

"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.

 

         (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   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 that a Participant is 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.

 

         (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,   under

the   terms   of the   Plan.   Such   notice   shall   also   include   instructions

specifying   the time and form under which the   Deferred   Fees 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.

 

         (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)   "Performance-Based   Fees"   mean Fees   that meet   requirements

specified by the   Secretary of the   Treasury.   Performance-Based   Fees will

include   the   attributes    that   they   are   variable,    contingent   on   the

satisfaction of preestablished metrics and are not readily ascertainable at

the time of the election.

 

         (z)   "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.

 

         (aa) "Plan" means this Ashland Inc. Deferred Compensation Plan For

Non-Employee Directors (2005) as it now exists or may hereafter be amended.

 

         (bb)   "Secretary of the   Treasury" or "Treasury"   means the United

States Department of Treasury.

 

         (cc)   "Stock   Account"   means an account by that name   established

pursuant   to   Article   III,   Section   1,which   is a subset of the   Deferral

Account.

 

         (dd) "Stock   Unit(s)"   means the share   equivalents   credited to a

Participant's Stock Account pursuant to Article III, Section 1.

 

         (ee) "Termination"   means retirement from the Board or termination

of service as a Director for any other reason.

 

         (ff)   "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   (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