ASHLAND INC. SEVERANCE PAY PLAN

This booklet describes the Ashland Inc. Severance Pay Plan as applied to employees in base salary grades of 22 and above. The plan may provide additional compensation to you if your employment is terminated under certain circumstances. This booklet describes the plan as in effect on December 31, 2008.

If you have questions about the plan, please call the HR Service Center at 1-800-782-4669.

No provision of the plan: (1) gives any employee the right to continued employment; (2) affects the company’s right to terminate or discharge an employee at any time; (3) gives the company the right to require any employee to remain employed; or (4) affects any employee’s right to terminate employment.

References to the “company” refer to Ashland Inc., its subsidiaries and its divisions.  References to the “plan sponsor” or “plan administrator” refer to Ashland Inc.

Eligibility

You are eligible to participate in this plan if you meet all of the following:

Your eligibility is based on your status on the date of your termination from employment. A termination from employment occurs when you stop performing active service for the company. You are considered to have terminated from employment on the date when it is reasonably anticipated that your services to the company will permanently decrease to 20% or less of the average amount of services you performed for the company during the immediately preceding 36 month period (or your total employment if less than 36 months).

Exclusions from Eligibility

You are not eligible to participate in the plan if:

Conditions of Severance Payments

You may be considered for severance benefits under the plan if the plan administrator determines that your termination occurs as a direct result of:

(See the Terminations Not Covered section for limitations).

However, for benefits to become payable, you must satisfy the following additional conditions:

The Severance Agreement and Release will provide that you agree not to participate in litigation or other action against the company with respect to your termination. It may also provide that you agree not to compete in a business against the company for a stated period of time. It may provide that you must keep the terms of the Severance Agreement and Release confidential. It may also provide that your severance payments under the plan will be reduced by any amounts you owe to the company. The Severance Agreement and Release may encompass other matters in addition to addressing the benefits payable under this plan. Additionally, the Severance Agreement and Release may be changed for each termination covered by this plan.

Your Human Resources representative will coordinate the preparation and execution of the Severance Agreement and Release and provide you with a copy for your file. You will be responsible for obtaining your own legal advice.

Amount of Benefits

If you satisfy the conditions for benefit payments, you will receive the benefit identified in the following table:

(See the Duplication of Payments and Deferred Terminations sections for limitations.)

Continuous Service

Continuous service is your period of employment, generally beginning with the latest of:

An earlier adjusted service date may be used to measure your continuous service if you became employed with the company as part of the purchase of a business or if you are rehired. (See the Method of Payment section for the significance of calculating your continuous service.)

Your service with the purchased business only counts towards your continuous service under two circumstances. The first is if the agreement that the company signed when the business was purchased provides that such service counts for this purpose. The second is if the company determined that such service would count for this purpose in the absence of any provision in the agreement that the company signed when the business was purchased.

If you were rehired by the company, your prior employment with the company may count as continuous service under the plan. In order for your prior employment to count as continuous service you must have an adjusted service date connected to your prior employment and you must not have received any severance or similar payment from the company.

You can find out how much continuous service you have under the plan by calling the HR Service Center at 1-800-782-4669.

Base Rate of Pay

Severance payments are computed using your base rate of pay at the time of termination.

Your base rate of pay for a calendar year includes your non-standard base pay. Non-standard base pay includes items like commissions and bonus payments to employees in base salary grades below 21 that were paid in the previous calendar year. Non-standard base pay also includes lump sum payments made in lieu of a percentage merit salary increase. These amounts are added to your compensation the following calendar year for plan purposes to determine the base rate of pay. The company determines the items constituting non-standard base pay.

Base rate of pay does not include special pay such as severance pay, incentive bonuses, awards, overtime, shift premium, payments under the Ashland Incentive Plan or other allowances not included in your base compensation rate or in your non-standard base pay.

Method of Payment

Payments of severance may be made in a lump sum at the time of termination or in installments over a period equal to the number of weeks of pay represented by your severance benefit (referred to as payroll continuation). Payments to specified employees are subject to special limits that are described in the Payments to Specified Employees section.

The payment cannot be contingent upon the employee retiring and the amount of the payment cannot exceed twice the eligible employee’s annual compensation during the preceding year. For this purpose, “annual compensation” means the total amount that was paid or would have been paid if the employee had been employed with the company during all of the preceding calendar year.

If you are not retirement eligible, your plan benefit is paid in a lump sum. If you are retirement eligible, your plan benefit is paid as payroll continuation in bi-weekly increments. You are “retirement eligible” if:

If paying your plan benefit as payroll continuation will not make you retirement eligible, then your benefit will be paid in a lump sum. A lump sum payment will be made as soon as possible after the termination. In no event will a lump sum be made later than March 1 of the calendar year following the calendar year of the termination from employment. If your benefit is paid in a lump sum, you will be eligible to elect COBRA continuation of coverage for three months at active employee rates under the company medical and dental plans. You must be eligible to elect COBRA under the medical and dental plans to be eligible for the three months of premiums at active employee rates. The summary plan descriptions for the medical and dental plans explain COBRA continuation of coverage.

Severance payments under the plan are subject to all applicable federal and state tax withholding, including FICA, and any other requirements of law. Payroll continuation payments are also subject to the applicable benefit plan contributions as elected by the eligible employee (subject to certain limitations and exclusions). The plan sponsor determines the terms and conditions that apply to any benefits that are made available during payroll continuation.

If your benefit is paid by payroll continuation, you are typically allowed to continue to participate in your medical, dental, vision, group life and other welfare plan coverage as identified by the plan sponsor. You are not eligible to continue long-term disability coverage. However, your full period of payroll continuation does not count for this purpose. Instead, a shorter benefits continuation period applies to determine the period of time you may continue on the benefits selected by the plan sponsor.

Your benefits continuation period is two weeks for each completed 12 months of continuous service (also referred to a year of continuous service). There is a minimum benefits continuation period of four weeks of base pay (provided you have at least 12 weeks of employment). The maximum benefits continuation period under the plan is 52 weeks.

For purposes of the Ashland Inc. and Affiliates Pension Plan and the Ashland Inc. Employee Savings Plan, you are not considered to have terminated from employment during your benefits continuation period. However, you will not be eligible to make contributions to the Ashland Inc. Employee Savings Plan during a period of payroll continuation.

Any election before your termination to defer salary to the Ashland Deferred Compensation Plan stops at your termination.

Notwithstanding anything to the contrary, the plan sponsor reserves the right to determine the method of payment, in its sole discretion.

Payments to Specified Employees

Specified employee status is determined as of December 31 and is then effective on January 1 of the next calendar year. The plan sponsor has designated employees in salary grade bands of 23 and above as specified employees. Therefore, for example, if you were in salary grade band 23 at anytime during the 12 months ending on December 31, 2007, you would be a specified employee for the 12 month period beginning January 1, 2008.

Payroll continuation benefits to a specified employee that exceed a specified threshold amount are subject to a six month delay of payment. The threshold is equal to the lesser of:

Therefore, if the total amount that would otherwise be paid to you within six months of your termination exceeds the applicable threshold amount, the amount of the excess cannot be paid to you until on or after the first day of the seventh month following your termination.  The amount that must be delayed is paid you in a single sum in the seventh month following your termination, unadjusted for any earnings.

Duplication of Payments

There will be no duplication of severance benefit payments for the same period of continuous service. For example, you cannot receive additional benefits for the same period of continuous service if you previously received benefits under this plan or any other payment in the nature of a severance payment with respect to that service.

The determination of whether you are eligible for plan benefits will be delayed if you are receiving sick pay, pending a decision for a claim under the company’s long-term disability plan. If such a claim were filed at or before your scheduled termination and the claim is denied, your benefits under this plan would be reduced by the amount of sick pay you received during the deferred termination period. (Refer to Deferred Termination section.)

Terminations Not Covered

Although not all inclusive, the following are some circumstances when termination of employment with the company would not result in the payment of severance benefits under this plan:

The plan sponsor reserves the right to determine circumstances, in addition to those identified above, that will not warrant the payment of severance benefits under this plan. Such determinations can be made without advance notice.

Deferred Terminations

If, at the time of your scheduled termination for reasons covered under this plan, you are receiving sick pay or are on a medical leave of absence in accordance with applicable company policies, you may elect to file a claim for benefits under the company’s long-term disability plan (LTD), provided you are enrolled in that plan. Your scheduled termination will be deferred pending a decision on the LTD claim. During such time, sick pay or the medical leave of absence, whichever is applicable, will be continued. If your LTD claim is denied, your termination will be processed retroactively and any benefits under this plan will be payable in accordance with its terms. Such benefits will be reduced by any sick pay you received after your originally scheduled termination date. If your LTD claim is approved, you will be treated as any disabled individual in accordance with the applicable company policies and benefit plans.

How to Apply for Benefits

If you believe you are entitled to plan benefits, contact the Employee Benefits Department in Lexington, Kentucky.

Notice of Claim Denial/Right of Appeal

Initial Claim – Notice of Denial

Written notification of a denied claim will be delivered to the claimant in a reasonable period, but not later than 90 days after the claim is received.  The 90-day period can be extended under special circumstances.  If special circumstances apply, the claimant will be notified before the end of the 90-day period after the claim was received.  The notice will identify the special circumstances.  It will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than 180 days after the claim is received.

The written decision will include:

If the claimant does not receive notice of the decision on the claim within the prescribed time periods, the claim is deemed denied.  In that event the claimant may proceed with the appeal procedure described below.

Appeal of Denied Claim

The claimant may file a written appeal of a denied claim with the plan administrator in Lexington, Kentucky.  Ashland Inc. is the named fiduciary under ERISA for purposes of the appeal of the denied claim.  Ashland Inc. has delegated its authority to the Ashland Inc. Benefit Appeals Panel (Panel).  The Panel has authority to further delegate some of its authority.  The appeal must be sent at least 60 days after the claimant received the denial of the initial claim.  If the appeal is not sent within this time, then the right to appeal the denial is waived.

The claimant may submit materials and other information relating to the claim.  The Panel (or its delegate) will appropriately consider these materials and other information, even if they were not part of the initial claim submission.  The claimant will also be given reasonable and free access to, or copies of documents, records and other information relevant to the claim.

Written notification of the decision on the appeal will be delivered to the claimant in a reasonable period, but not later than 60 days after the appeal is received.  The 60-day period can be extended under special circumstances.  If special circumstances apply, the claimant will be notified before the end of the 60-day period after the appeal was received.  The notice will identify the special circumstances.  It will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than 120 days after the appeal is received.

Special rules apply if the company or the Panel designates a committee as the appropriate named fiduciary for purposes of deciding appeals of denied claims.  For the special rules to apply, the committee (or the Panel if it functions as such a committee) must meet regularly on at least a quarterly basis.

When the special rules for committee meetings apply, the decision on the appeal must be made not later than the date of the committee meeting immediately following the receipt of the appeal.  If the appeal is received within 30 days of the next following meeting, then the decision must be made not later than the date of the second committee meeting following the receipt of the appeal.

The period for making the decision on the appeal can be extended under special circumstances.  If special circumstances apply, the claimant will be notified by the committee or its delegate before the end of the otherwise applicable period within which to make a decision.  The notice will identify the special circumstances.  It will also specify the expected date of the decision.  When special circumstances apply, the claimant must be notified of the decision not later than the date of the third committee meeting after the appeal is received.

In any event, the claimant will be provided written notice of the decision within a reasonable period after the meeting at which the decision is made.  The notification will not be later than five days after the meeting at which the decision is made.

Whether the decision on the appeal is made by a committee or not, a denial of the appeal will include:

If the claimant does not receive notice of the decision on the appeal within the prescribed time periods, the appeal is deemed denied.  In that event, the claimant may file a civil action in court.

Plan Sponsor/Administrator

Ashland Inc., 50 E. RiverCenter Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391 (telephone: 1-859-815-3333) is both the plan administrator and the plan sponsor. The plan sponsor is the named fiduciary under the plan. The plan administrator has the overall responsibility for the operation of the plan. Participants and beneficiaries may receive from the plan administrator, upon written request, information as to whether a particular employer maintains the plan and, if so, the employer's address.

Plan Identification

The Ashland Inc. Severance Pay Plan is a welfare plan.  It is identified by the following numbers under IRS rules:

Plan Year

For recordkeeping purposes, the plan year is January 1 to December 31.

Legal Service

Service of legal process may be made upon the Secretary of Ashland Inc., 50 E. RiverCenter Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391 (1-859-815-3333).

Method of Funding

The plan is funded from the company’s general assets, in a pay as you go basis. There is no trust from which benefits are paid and no assets are set aside in advance of the time plan benefits are paid.

Your Rights

As a participant in the Ashland Inc. Severance Pay Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA).  ERISA provides that all Plan participants shall be entitled to:

In addition to creating rights for plan participants, ERISA imposes obligations upon the persons who are responsible for the operation of the plan. These persons are referred to as "fiduciaries" under the law. Fiduciaries must act solely in the interest of plan participants, and they must exercise prudence in the performance of their plan duties. Fiduciaries who violate ERISA may be removed and required to make good any losses they have caused the plan.

Your employer may not fire you or discriminate against you to prevent you from obtaining benefits or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have your claim reviewed and reconsidered.

If you are improperly denied a benefit in full or in part, you have a right to file suit in a federal or state court. If plan fiduciaries are misusing the plan's money, you have a right to file suit in a federal court or request assistance from the U.S. Department of Labor. If you are successful in your lawsuit, the court may, if it so decides, require the other party to pay your legal costs, including attorney's fees.

If you have any questions about this statement or your rights under ERISA, you should contact the plan administrator or the nearest Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC  20210.

Plan Interpretations/Administration

The plan administrator and plan sponsor have all necessary, appropriate, discretionary and convenient power and authority to interpret, administer and apply the provisions of the plan with respect to all persons having or claiming to have any rights, benefits, entitlements or obligations under the plan. This includes, without limitation, the ability to make factual determinations, construe and interpret provisions of the plan, determine who is eligible and compute benefits, reconcile any inconsistencies between provisions in the plan or between provisions of the plan and any other statement concerning the plan, whether oral or written, supply any omissions to the plan or any document associated with the plan, and to correct any defect in the plan or in any document associated with the plan. All such factual determinations and interpretations of the plan and documents associated with the plan and questions concerning its administration and application as determined by the plan administrator or plan sponsor shall be binding on all persons having an interest under the plan.

Plan Documents

This document constitutes the summary plan description and the plan document of the Ashland Inc. Severance Pay Plan. References to “plan” herein include all amendments that have been made to it. The plan also includes two separate documents: one that describes the plan benefits for base salary grades 21 and below and another that describes the benefits associated with terminations after a change in control of the plan sponsor. The plan sponsor has the right to modify plan provisions for a particular severance program for one or more eligible employees. In that event, the descriptions of that particular program produced by the plan sponsor control over the terms of this document to extent they are inconsistent with each other.

Non-Assignments of Benefits

You may not anticipate, assign, pledge, alienate or encumber benefits to which you are entitled under this plan.  If you are entitled to plan benefits paid as installments, then you may continue to have contributions deducted from them to pay for company benefits that you are still eligible to maintain, as determined by the plan sponsor.  To the extent you have any right to receive plan benefits you are an unsecured creditor of the company. You have no other right, title, or interest in the assets of the company because of this plan.

Plan Amendment/Termination

The plan sponsor, by action of its board of directors or the board's delegate (pursuant to resolution, by-law, or otherwise), reserves the right, in its sole discretion, to amend, suspend, modify, interpret, terminate or otherwise discontinue the plan or change the funding method at any time without the requirement to give cause or consideration to any individual.

Authority to Delegate

The plan administrator or plan sponsor may employ one or more persons to render advice with respect to its fiduciary responsibilities.  The plan administrator or plan sponsor may also delegate fiduciary responsibilities to one or more persons who shall have the rights to employ one or more persons to render advice with respect to its fiduciary duties.  There is no restriction on any person serving in more than one fiduciary capacity under the plan.

Elections and Notices

An election, designation