UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 

 
FORM 8-K
 


CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  October 5, 2015

 

 
ASHLAND INC.
(Exact name of registrant as specified in its charter)
 



Kentucky
1-32532
20-0865835
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)

50 E. RiverCenter Boulevard
P.O. Box 391
Covington, Kentucky
(Address of principal executive office)
41012-0391
(Zip Code)

(859) 815-3333
(Registrant’s telephone number, including area code)


 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 


 
 
 


 
 
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

New Change in Control Agreements

On October 5, 2015, Ashland Inc. (“Ashland”) approved new executive change in control agreements for its Chief Executive Officer and the following executive officers:  J. Kevin Willis, Senior Vice President and Chief Financial Officer; Peter J. Ganz, Senior Vice President, General Counsel and Secretary; Luis Fernandez-Moreno, Senior Vice President of Ashland and President, Chemicals Group; Samuel J. Mitchell, Senior Vice President of Ashland and President, Valvoline; Anne T. Schumann, Vice President and Chief Information and Administrative Services Officer; and J. William Heitman, Vice President and Controller.

The new change in control agreements clarify that certain transactions, such as the previously announced plan (referred to herein as the “Transaction”) to separate Ashland into two independent, publicly traded companies (referred to herein as “New Ashland” and “Valvoline”), will not constitute a change in control for purposes of the agreements.

In addition, the new change in control agreements narrow the circumstances in which the executive will have “good reason” to resign and become entitled to receive severance following a change in control.

Two of the prior change in control agreements entitled the executives to a tax “gross-up” for excise taxes payable on certain payments made to the individual in connection with a change in control of Ashland.  The new change in control agreements exclude all excise tax “gross-up” provisions and instead provide for a “best-after-tax” cutback.

Except for the modifications described above, the new change in control agreements are substantially the same as the prior change in control agreements with each executive officer.

The foregoing description of the new change in control agreements is not complete and is qualified in its entirety by reference to the complete form of CEO Change in Control Agreement and the form of the Executive Officer Change in Control Agreement which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated by reference herein.

Executive Performance Incentive & Retention Program

In connection with the adoption of the new change in control agreements, on October 5, 2015, Ashland adopted an Executive Performance Incentive & Retention program for the following key executives:  William A. Wulfsohn, Chairman and Chief Executive Officer; J. Kevin Willis, Senior Vice President and Chief Financial Officer; Peter J. Ganz, Senior Vice President, General Counsel and Secretary; Luis Fernandez-Moreno, Senior Vice President of Ashland and President, Chemicals Group; Samuel J. Mitchell, Senior Vice President of Ashland and President, Valvoline; and Anne T. Schumann, Vice President and Chief Information and Administrative Services Officer.
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The Executive Performance Incentive & Retention program is designed to provide an additional incentive to remain employed by Ashland in the critical period up to the Transaction, and by New Ashland or Valvoline following the Transaction, and to provide increased alignment between executives and shareholders by providing equity-based compensation that vests based on both relative Total Shareholder Return (“TSR”) and the participant’s continued service, as described below.

Participants in the program who remain employed on the grant date will receive a grant of performance-based restricted shares under the Amended and Restated 2015 Ashland Inc. Incentive Plan.  These shares are expected to be granted at the November 2015 Personnel & Compensation Committee meeting, as part of Ashland’s annual equity award grant cycle.

In connection with the Transaction, a pro-rated portion of the performance-based restricted shares (such proration to be determined based on the period elapsed between October 1, 2015 and the closing of the Transaction, but in any event no less than two-thirds of the shares) will convert into a number of time-vesting restricted shares (“TVRS”) of either New Ashland or Valvoline (depending on which entity employs the participant immediately following the Transaction) based on the combined weighted-average TSR of New Ashland and Valvoline, relative to the TSR of a group of peer companies, over the period beginning October 1, 2015 and ending on the 120th day following the closing of the Transaction.

The performance-based restricted shares will be granted at the “Maximum” performance level, and will be forfeited in the event TSR performance is achieved below maximum.  “Maximum” performance is defined as 90th percentile or greater TSR performance relative to the peer group and will result in 100% of the performance-based restricted shares subject to the performance goal converting into TVRS.  “Target” performance is defined as 50th percentile TSR performance relative to the peer group and will result in 50% of the performance-based restricted shares subject to the performance goal converting into TVRS.  “Threshold” performance is defined as 35th percentile TSR performance relative to the peer group and will result in 12.5% of the performance-based restricted shares subject to the performance goal converting into TVRS.  TSR performance below the 35th percentile will result in 0% of the performance-based restricted shares that are subject to the performance goal converting into TVRS.  Any performance-based restricted shares subject to the TSR performance goal that do not convert into TVRS will be forfeited.

As described above, the number of shares that are subject to the TSR performance goal will depend on the timing of the Transaction.  The shares that are not subject to the TSR performance goal will convert into TVRS at “Target” level.  In no event will more than one-sixth of the shares awarded convert into TVRS without being subject to the TSR performance goal.

The performance-based restricted shares will be forfeited in the event the board of directors of Ashland determines that the Transaction will not occur, except as otherwise set forth in the award agreement with respect to a change in control of Ashland.

The TVRS will generally cliff vest upon the third anniversary of the grant date, so long as the participant remains employed through the vesting date, except as otherwise set forth in the award agreement.  The TVRS held by Mr. Wulfsohn, Ashland’s Chief Executive Officer, will cliff vest on the fourth anniversary of the grant date, so long as he remains employed through the vesting date, except as otherwise set forth in the award agreement.
 
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The foregoing description of the Executive Performance Incentive & Retention program is not complete and is qualified in its entirety by reference to the complete form of Performance-Based Restricted Stock Award Agreement which is attached hereto as Exhibit 10.3 and incorporated by reference herein.

Forward Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “may,” “will,” “should” and “intends” and the negative of these words or other comparable terminology. In addition, Ashland may from time to time make forward-looking statements in its annual report, quarterly reports and other filings with the Securities and Exchange Commission (SEC), news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance and financial condition, including the proposed separation of its specialty chemicals and Valvoline businesses, the expected timetable for completing the separation, the future financial and operating performance of each company, strategic and competitive advantages of each company, the leadership of each company, and future opportunities for each company, as well as the economy and other future events or circumstances. Ashland’s expectations and assumptions include, without limitation, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies and economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the possibility that the proposed separation will not be consummated within the anticipated time period or at all, including as the result of regulatory market or other factors; the potential for disruption to Ashland’s business in connection with the proposed separation; the potential that the new Ashland and Valvoline do not realize all of the expected benefits of the separation,  Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt); the impact of acquisitions and/or divestitures Ashland has made or may make (including the possibility that Ashland may not realize the anticipated benefits from such transactions); the global restructuring program (including the possibility that Ashland may not realize the anticipated revenue and earnings growth, cost reductions and other expected benefits from the program); Ashland’s ability to generate sufficient cash to finance its stock repurchase plans; severe weather, natural disasters, and legal proceedings and claims (including environmental and asbestos matters). Various risks and uncertainties may cause actual results to differ materially from those stated, projected or implied by any forward-looking statements, including, without limitation, risks and uncertainties affecting Ashland that are described in its most recent Form 10-K (including Item 1A Risk Factors) filed with the SEC, which is available on Ashland’s website at http://investor.ashland.com or on the SEC’s website at http://www.sec.gov . Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this Form 8-K whether as result of new information, future event or otherwise.
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Item 9.01.   Financial Statements and Exhibits

(d)       Exhibits
 
 
Exhibits
 
Description
       
 
10.1
 
Form of CEO Change in Control Agreement.
 
 
10.2
 
Form of Executive Officer Change in Control Agreement.
       
 
10.3
 
Form of Performance-Based Restricted Stock Award Agreement.
 
 
 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
ASHLAND INC.
 
(Registrant)
 
       
October 9, 2015
By:
/s/ Peter J. Ganz  
    Name:  Peter J. Ganz  
   
Title:    Senior Vice President, General Counsel and
             Secretary
 
       
 
 
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EXHIBITS INDEX
 
 
Exhibits
 
Description
     
10.1
 
Form of CEO Change in Control Agreement.
 
10.2
 
Form of Executive Officer Change in Control Agreement.
     
10.3
 
Form of Performance-Based Restricted Stock Award Agreement.
 
 
 
 
 
 
 
 
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Exhibit 10.1
 
 

 
October ___, 2015

Employee Name
Employee Address


Dear ______________:

RE: Change in Control Agreement

Ashland Inc. considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interest of the Company and its shareholders. In this regard, the Company recognizes that, as is the case with many publicly-held corporations, the possibility of a Change in Control of the Company does exist and that such possibility, and the uncertainty and questions which a Change in Control of the Company may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. In addition, difficulties in attracting and retaining new senior management personnel may be experienced. Accordingly, on the basis of the recommendation of the Personnel and Compensation Committee of the Board, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of certain members of the Company's management, including you, to their assigned duties without distraction in the face of the potentially disruptive circumstances arising from the possibility of a Change in Control of the Company.

In order to encourage you to remain in the employ of the Company, this Agreement sets forth those benefits which the Company will provide to you in the event your employment with the Company terminates after or as a result of a Change in Control of the Company under the circumstances specified in this Agreement.

SECTION A. DEFINITIONS

1.              "Agreement" shall mean this letter agreement, which is a complete, entire and immediate substitute for any prior agreement you may have had with the Company addressing the benefits you would receive in the event of your termination from employment with the Company as a result of a Change in Control of the Company, including your Change in Control Agreement dated _________, and effective ___________.

2.              "Board" shall mean the Company's Board of Directors.

3.              "Cause" shall occur hereunder only upon:
 
 

 
(a) the willful and continued failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness or injury) after a written demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties;
 
(b) the willful engaging by you in gross misconduct materially and demonstrably injurious to the Company after a written demand to cease such misconduct is delivered to you by the Board; or

(c) your conviction of or the entering of a plea of nolo contendre to the commission of a felony involving moral turpitude.

For purposes of this paragraph 3, no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose, alone or in conjunction with any other purpose, (after at least 20 days prior notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you failed to perform your duties or engaged in misconduct as set forth above in subparagraph (a) or (b) of this paragraph, and that you did not correct such failure or cease such misconduct after being requested to do so by the Board, or as set forth in subparagraph (c) of this paragraph, finding that you have been convicted of or have entered a plea of nolo contendre to the commission of a felony involving moral turpitude.

4.              "Change in Control of the Company" shall be deemed to have occurred if:

(a) there shall be consummated:

(i)      any consolidation or merger of the Company (a "Business Combination"), other than a consolidation or merger of the Company into or with a direct or indirect wholly-owned subsidiary, in which the shareholders of the Company own, directly or indirectly, less than 50% of the then outstanding shares of common stock of the Business Combination that are entitled to vote generally for the election of directors of the Business Combination or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger; or

(ii)     any sale, lease, exchange or 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;
 
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(b) the shareholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company;

(c) any Person, other than the Company or a Subsidiary thereof or any employee benefit plan sponsored by the Company or a Subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately-negotiated purchases or otherwise, without the approval of the Board; or

(d) at any time during a period of two (2) 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.
 
(e) Notwithstanding the foregoing, a “Change in Control of the Company” shall not be deemed to have occurred by virtue of:

(i)              the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions;

(ii)            the repurchase by the Company of outstanding shares of Common Stock or other securities pursuant to a tender or exchange offer; or

(iii)           the consummation of the transaction, or series of transactions, initially approved in principle by the Ashland Inc. Board of Directors on September 16, 2015, intended to separate the Valvoline business from the Company’s specialty chemicals business and create two independent, publicly traded companies. 

5.              "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act, as amended.
 
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6.              "Common Stock" shall mean the common stock, par value $.01 per share, of the Company.
 
7.              "Company" shall mean Ashland Inc. and any successor to its business and/or assets which executes and delivers the agreement provided for in Section D, paragraph 1 hereof or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

8.              "Competitive Activity" shall have the meaning as set forth in Section C, paragraph 4.

9.              "Competitive Operation" shall have the meaning as set forth in Section C, paragraph 4.

10.           "Confidential Information" shall mean information relating to the Company's, its divisions' and Subsidiaries' and their successors' business practices and business interests, including, but not limited to, customer and supplier lists, business forecasts, business and strategic plans, financial and sales information, information relating to products, process, equipment, operations, marketing programs, research, or product development, engineering records, computer systems and software, personnel records or legal records.

11             "Cutback" shall have the meaning as set forth in Section D, paragraph 18.

12.           "Date of Termination" shall mean:

(a)         if this Agreement is terminated for Disability, thirty (30) days after the Notice of Termination is given by the Company to you (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period);

(b)          if your employment is terminated for Good Reason by you, the date specified in the Notice of Termination you provide to the Company, which must be no more than 90 days after the date on which notice of your intent to terminate your employment for Good Reason is provided to the Company, as provided in Section A paragraph 15, and Section C, paragraph 2(b) herein; or

(c)          if your employment is terminated for any other reason, the date on which a Notice of Termination is received by you unless a later date is specified.

For purposes of applying the provisions of this paragraph 12, except in the case of Disability, your employment is terminated when you stop performing active service for the Company, which shall be deemed to occur 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).
 
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13.              "Disability" shall occur when: if, as a result of your incapacity due to physical or mental illness or injury, you shall have been absent from your duties with the Company for six (6) consecutive months and shall not have returned to full-time performance of your duties within thirty (30) days after written notice is given to you by the Company.

14.              "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

15.              "Good Reason" shall mean the occurrence of any of the following without your express written consent:

(a)              a significant diminution of your positions, duties, responsibilities or status with the Company as in effect immediately prior to a Change in Control of the Company, or a diminution in your titles or offices as in effect immediately prior to a Change in Control of the Company or any removal of you from, or any failure to reelect you to, any of such positions following a Change in Control of the Company;

(b)              a reduction of fifteen (15) percent or more to your base salary in effect immediately prior to a Change in Control of the Company;

(c)              the failure by the Company to continue in effect any incentive plan or arrangement (including without limitation, the Company's Incentive Compensation plan, annual bonus and contingent bonus arrangements and credits and the right to receive performance awards and similar incentive compensation benefits) in which you are participating at the time of a Change in Control of the Company (or to substitute and continue other plans or arrangements providing you with substantially similar benefits), except as otherwise required by the terms of such plans as in effect at the time of any Change in Control of the Company, or the taking of any action by the Company which would adversely affect your participation in or materially reduce your benefits under any such plan;

(d)              the failure by the Company to continue in effect any plan or arrangement to receive securities of the Company (including, without limitation, any plan or arrangement to receive and exercise stock options, stock appreciation rights, restricted stock or grants thereof or to acquire stock or other securities of the Company) in which you are participating at the time of a Change in Control of the Company (or to substitute and continue plans or arrangements providing you with substantially similar benefits), except as otherwise required by the terms of such plans as in effect at the time of any Change in Control of the Company; or the taking of any action by the Company which would adversely affect your participation in or materially reduce your benefits under any such plan;

(e)              the relocation after a Change in Control of the Company of your principal place of business to a location that exceeds a 50 mile radius from your principal place of business before the Change in Control of the Company, except for required travel on the Company's business to an extent substantially consistent with your business travel obligations as of immediately prior to such Change in Control of the Company;
 
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(f)              any breach by the Company of any material provision of this Agreement; or

(g)              any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company as described in Section D, paragraph 1.

Provided that the Company and Employee agree that Good Reason shall not exist unless and until Employee provides the Company with written notice of the act(s) alleged to constitute Good Reason within ninety (90) days of Employee's knowledge of the occurrence of such act(s), as provided under Section C, paragraph 2(a) herein, and the Company fails to cure such acts within thirty (30) days of receipt of such notice. Further, if the Company fails to cure such act(s) within this thirty (30) day period, then Employee must exercise the right to terminate Employee’s employment for Good Reason within sixty (60) days thereafter, in order for the termination to be for Good Reason.

16.              "Notice of Good Reason" shall mean a written notice which shall indicate the specific  provision(s) in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment for “Good Reason” under the provision(s) so indicated.

17.              "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. For purposes of applying the provisions of this paragraph 17, the determination of when your employment is terminated shall be made consistent with the Section 409A Provisions and the provisions of Section A, paragraph 12.

18.              "Person" shall have the meaning as set forth in the Sections 13(d) and 14(d)(2) of the Exchange Act.

19.              "Qualifying Termination" shall mean the termination of your employment after a Change in Control of the Company while this Agreement is in effect, unless such termination is (a) by reason of your death or Disability, (b) by the Company for Cause, or (c) by you other than for Good Reason.

20.              "Section 409A Provisions" shall mean those statutory provisions of the Internal Revenue Code of 1986 (as amended) contained in §409A thereof and the guidance promulgated by the U.S. Department of Treasury or any subdivision thereof interpreting §409A.

21.              "Subsidiary" shall mean any corporation of which more than 20% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by the Company, by the Company and one or more other Subsidiaries, or by one or more other Subsidiaries.
 
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SECTION B. TERM AND BENEFITS
 
This Agreement shall be in effect for two (2) years from the date you accept this Agreement and shall automatically renew for successive one (1) year periods on the first day of each month. This Agreement may be terminated by either party provided that at least fifteen (15) days advance written notice is given by either party to the other party hereto prior to the commencement of the next succeeding one (1) year period, in which case the Agreement shall terminate at the end of such next succeeding one (1) year period. During the term of employment hereunder, you agree to devote your full business time and attention to the business and affairs of the Company and to use your best efforts, skills and abilities to promote its interests.
 
This Agreement shall automatically terminate, without additional notice, in the event of your death, Disability, or upon the effective date of your retirement in the event you retire at your election or in accordance with the Company's generally applicable retirement policies, as in effect from time to time. Notwithstanding the first sentence of this paragraph and the first and second sentences of this Section B, if a Change in Control of the Company should occur while you are still an employee of the Company and while this Agreement is in effect, then this Agreement shall continue in effect from the date of such Change in Control of the Company for a period of two years. No benefits shall be payable hereunder unless there shall have been a Change in Control of the Company and your employment by the Company shall thereafter terminate in accordance with Section C hereof.
 
SECTION C. TERMINATION FOLLOWING CHANGE IN CONTROL

1.              Qualifying Termination . If your termination is a Qualifying Termination, you shall be entitled to receive the payments and benefits provided in this Section.

2.              Required Notices .

(a)              Notice of Good Reason. Notice of Good Reason following a Change in Control of the Company, as provided for in Section A, paragraphs 15 and 16, shall be communicated by written Notice of Good Reason to the Company within the time limits provided in Section A, paragraph 15, and shall not be effective without such timely Notice of Good Reason.

(b)              Notice of Termination. Any termination of your employment following a Change in Control of the Company shall be communicated by written Notice of Termination to the other party hereto. No termination shall be effective without such Notice of Termination.
 
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3.              Compensation Upon Termination After a Change in Control.

(a)              If your termination is a Qualifying Termination, then as consideration for and subject to your obligation to abide by the provisions contained in Section C, paragraph 4 (a) and (b) of this Agreement following a Qualifying Termination, the Company shall pay to you as severance pay (and without regard to the provisions of any benefit or incentive plan), in a lump sum cash payment within five (5) business days following the first day of the seventh calendar month following the month in which your Date of Termination occurs, an amount equal to three (3) times the sum of (i) your highest annual base compensation plus (ii) the highest target annual incentive compensation (expressed as a percentage of base compensation for all applicable incentive compensation plans) in respect of the three (3) fiscal years preceding the fiscal year in which your Date of Termination occurs.

(b)              If your termination is a Qualifying Termination, the Company shall, in addition to the payments required by the preceding paragraph:

(i)              provide for continuation of your and your eligible dependents' participation at regular employee rates, in effect from time to time, in all of the Company's medical, dental and group life plans or programs in which you were participating immediately prior to your Date of Termination for a period ending on the December 31 of the second calendar year following the calendar year in which your Date of Termination occurred and any entitlement to COBRA continuation coverage under the medical and dental plans shall run concurrently with said period; provided, however, that said continuation of coverage in the medical and dental plans during all or part of such period shall be charged at the full cost for such coverage (meaning the active employee contribution and the Company's contribution) if the charging of active employee rates for such coverage during all or part of such period would result in a violation of the Section 409A Provisions. In the event that your continued participation in any such plan or program is for whatever reason impossible, the Company shall at that time, or at the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions, arrange upon comparable terms to provide you with benefits substantially equivalent on an after-tax basis to those which you and your eligible dependents are, or become, entitled to receive under such plans and programs;

(ii)             provide for payment in cash of any performance unit/share awards in existence on your Date of Termination, calculated at target performance, less any amounts paid to you under the applicable performance unit/share plan upon a Change in Control of the Company pursuant to the provisions of such plan; provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions;
 
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(iii)              provide for payment in cash of any incentive compensation (a) earned for the fiscal year during which the Change in Control of the Company occurred and any prior fiscal years for which you have not yet received payment, and (b) payment of the pro-rata portion (through your Date of Termination) of any incentive compensation for the fiscal year in which your Date of Termination occurs calculated on the basis of the target bonus percentage of base compensation in the applicable incentive compensation plan (or plans); provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions;

(iv)              provide benefits or compensation under any compensation plan, arrangement or agreement not in existence as of the date hereof but which may be established by the Company prior to your Date of Termination at such time as payments are made thereunder to the same extent as if you had been a full-time employee on the date such payments would otherwise have been made or benefits vested; provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions;

(v)              for one (1) year after your Date of Termination, provide and pay for outplacement services, by a firm reasonably acceptable to you, consistent with those that have historically been offered to displaced employees generally by the Company under substantially the same terms and fee structure (but limited in an amount not to exceed fifteen (15) percent of your annual base compensation for the year in which your Date of Termination occurs or fifteen (15) percent of your annual base compensation as of immediately before the Change in Control of the Company, if greater) as is consistent with an employee in your then current position (or, if higher, your position immediately prior to the Change in Control of the Company);
 
(vi)              for one (1) year after your Date of Termination, provide and pay for financial planning services, by a firm reasonably acceptable to you, that have historically been offered to you under substantially the same terms and fee structure as is consistent with an employee in your then current position (or, if higher, your position immediately prior to the Change in Control of the Company);
 
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(vii)              pay to you an amount equal to the value of all unused, earned and accrued vacation as of your Date of Termination pursuant to the company's policies in effect immediately prior to the Change in Control of the Company; provided, however, said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions; and

(viii)              provide for the immediate vesting of all stock options, restricted stock, restricted stock units and stock appreciation rights held by you, as of your Date of Termination, under any Company incentive compensation plan or other stock option plan and stock appreciation rights plan, and all such stock options and stock appreciation rights shall be exercisable for the remaining terms of the said options and rights. In the event such immediate vesting is not permitted under law or the applicable benefit plan or award agreement, the Company shall provide a payment to you in cash of an amount equal to the value of the equity-based compensation awards that would otherwise be forfeited as a result of your Qualifying Termination, based on the closing price of the Company’s stock on your Date of Termination; provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions.

Provided, that nothing in this Section C, paragraph 3(b) shall require the continued vesting, acceleration, or payment in cash in lieu of the value of the Performance-Based Restricted Stock Award provided to you under the Executive Performance Incentive & Retention Program approved by the Personnel and Compensation Committee of the Board on October 5, 2015, which is intended to be granted to you on November 18, 2015, your rights to which shall be governed exclusively by the applicable plan as modified by the Performance-Based Restricted Stock Award agreement.

(c)              Unless otherwise provided in this Agreement or in the applicable compensation or stock option plan or program, all payments shall be made to you within thirty (30) days after your Date of Termination. The benefits in this Agreement are in addition to all accrued and vested benefits to which you are entitled under any of the Company's plans and arrangements (to the extent accrued and vested benefits are relevant under the particular plan or arrangement), including but not limited to, the accrued vested benefits you are eligible and entitled to receive under any of the Company's qualified and non-qualified benefit or retirement plans, or any successor plans in effect on your Date of Termination hereunder. For these purposes, accrued and vested benefits shall include any extra, special or additional benefits under such qualified and nonqualified benefit or retirement plans that become due because of the Change in Control of the Company.
 
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(d)              You shall not be required to mitigate the amount of any payment provided for in this Section by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Section be reduced by any compensation earned by you as the result of employment by another employer after your Date of Termination, or otherwise. Except as provided herein, the Company shall have no right to set off against any amount owing hereunder any claim which it may have against you.

4.              Certain Restrictions

(a)              Competitive Activity. In consideration of the foregoing, you agree that if your termination from employment is a Qualifying Termination, then during a period ending 24 months following your Date of Termination (the “Non-Compete Period”) you shall not, directly or indirectly, engage in any Competitive Activity. If you engage in any Competitive Activity during the Non-Compete Period, the Company shall be entitled to recover any benefits paid to you under paragraph 3(a) of this Section C. For purposes of this Agreement, "Competitive Activity" shall mean your participation, without the written consent of the General Counsel of the Company, in the management of any business operation of any enterprise if such business operation (a "Competitive Operation") engages in substantial and direct competition with any business operation actively conducted by the Company or its divisions and Subsidiaries on your Date of Termination. For purposes of this paragraph, a business operation shall be considered a Competitive Operation if such business sells a competitive product or service which constitutes (i) 15% of that business's total sales, or (ii) 15% of the total sales of any individual subsidiary or division of that business and, in either event, the Company's sales of a similar product or service constitutes either 15% of the total sales of the Company or 15% of the total sales of any individual Subsidiary or division of the Company. Notwithstanding the foregoing, a “Competitive Activity” shall not include the mere ownership of securities in any enterprise, or participation in the management of any enterprise or any business operation thereof, other than in connection with a Competitive Operation of such enterprise.

(b)              Non-Solicitation and Non-Interference. In consideration of the foregoing, you agree that if your termination from employment is a Qualifying Termination, then during a period ending 24 months following your Date of Termination (the “Non-Solicitation and Non-Interference Period”) you shall not, without the prior written consent of the General Counsel of the Company, directly or indirectly:

(i) solicit for employment (which shall include services as an employee, independent contractor or in any other like capacity) any person employed by the Company or its affiliated companies as of the date of such solicitation; or

(ii) solicit any customer or other person with a business relationship with the Company or any of its affiliated companies to terminate, curtail or otherwise limit such business relationship; or
 
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(iii) in any other manner interfere in the business relationship the Company or any of its affiliated companies have with any customer or any third party service provider or other vendor.

If you engage in any such solicitation or interference during the Non-Solicitation and Non-Interference Period, the Company shall be entitled to recover any and all amounts paid to you under paragraph 3(a) of this Section C.

(c)              Injunctive Relief. In the event of a breach or threatened breach of this paragraph 4 of this Section C, each party agrees that the non-breaching party shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, the parties acknowledging that damages would be inadequate and insufficient.


SECTION D. MISCELLANEOUS

1.              Assumption of Agreement . The Company will require any successor in interest: (a) to all or substantially all of the business and/or assets of the Company (whether direct or indirect, by purchase, merger, consolidation, share exchange or otherwise); or (b) to any portion of the business or assets of the Company to which your services relate, as a result of the creation of an independent company through the sale or distribution of new shares of an existing business or other unit of the Company; in each case, by agreement in form and substance satisfactory to you, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of a material provision of this Agreement.

2.              Confidentiality . All Confidential Information which you acquire or have acquired in connection with or as a result of the performance of services for the Company, whether under this Agreement or prior to the effective date of this Agreement, shall be kept secret and confidential by you unless:

(a)          the Company otherwise consents;

(b)          the Company breaches any material provision of this Agreement, in which case you shall be entitled to make limited disclosure of Confidential Information only to the extent necessary to seek legal relief for such breach;

(c)          you are legally required to disclose such Confidential Information by a court of competent jurisdiction;
 
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(d)          you disclose such Confidential Information to the Securities and Exchange Commission, to the extent necessary to report suspected or actual violations of U.S. securities laws; or

(e)          your disclosure of Confidential Information is protected under the whistleblower provisions of any other state or federal laws or regulations.

You understand that if you make a disclosure of Confidential Information that is covered under subparagraph (d) or (e) above, you are not required to inform the Company, in advance or otherwise, that you have made such disclosure(s), and nothing in this Agreement shall prohibit you from maintaining the confidentiality of a claim with a governmental agency that is responsible for enforcing a law, or cooperating, participating or assisting in any governmental or regulatory entity investigation or proceeding. This covenant of confidentiality shall extend beyond the term of this Agreement and shall survive the termination of this Agreement for any reason and shall continue for so long as the information you have acquired remains Confidential Information. If you breach this covenant of confidentiality, the Company shall be entitled to recover from any benefits paid to you under this Agreement its damages resulting from such breach.

3.              Employment . You agree to be bound by the terms and conditions of this Agreement and to remain in the employ of the Company during any period following any public announcement by any person of any proposed transaction or transactions which, if effected, would result in a Change in Control of the Company until a Change in Control of the Company has taken place. However, nothing contained in this Agreement shall impair or interfere in any way with the right of the Company to terminate your employment prior to a Change in Control of the Company.

4.              Arbitration . Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled exclusively by arbitration in accordance with the Center for Public Resources' Model ADR Procedures and Practices, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the Company shall not be restricted from seeking equitable relief, including injunctive relief as set forth in paragraph 5 of this Section, in the appropriate forum. Any cost of arbitration will be paid by the Company. In the event of a dispute over the existence of Good Reason or Cause after a Change in Control of the Company, the Company shall continue to pay your salary, bonuses and plan benefits pending resolution of the dispute. If you prevail in the arbitration, the amounts due to you under this Agreement are to be immediately paid to you.

5.              Injunctive Relief . You acknowledge and agree that the remedy of the Company at law for any breach of the covenants and agreements contained in paragraph 2 of this Section D and in Section C, paragraph 4 will be inadequate, and that the Company will be entitled to injunctive relief against any such breach or any threatened, imminent, probable or possible breach. You represent and agree that such injunctive relief shall not prohibit you from earning a livelihood acceptable to you.
 
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6.              Notice . For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the General Counsel of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

7.              Indemnification . The Company will indemnify you to the fullest extent permitted by the laws of the Commonwealth of Kentucky and the existing By-laws of the Company, in respect of all your services rendered to the Company and its divisions and Subsidiaries prior to your Date of Termination. You shall be entitled to the protection of any insurance policies the Company now or hereafter maintains generally for the benefit of its directors, officers and employees (but only to the extent of the coverage afforded by the existing provisions of such policies) to protect against all costs, charges and expenses whatsoever incurred or sustained by you in connection with any action, suit or proceeding to which you may be made a party by reason of your being or having been a director, officer or employee of the Company or any of its divisions or Subsidiaries during your employment therewith.

8.              Further Assurances . Each party hereto agrees to furnish and execute such additional forms and documents, and to take such further action, as shall be reasonably and customarily required in connection with the performance of this Agreement or the payment of benefits hereunder.

9.              Miscellaneous . No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and such officer(s) as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, which are not set forth expressly in this Agreement.

10.              Termination of other Agreements . Upon execution by both parties, this Agreement shall terminate all prior employment and severance agreements, between you and the Company and its divisions or Subsidiaries.

11.              Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
 
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12.              Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.              Legal Fees And Expenses . Any other provision of this Agreement notwithstanding, the Company shall pay all legal fees and expenses which you may incur as a result of the Company's unsuccessful contesting of the validity, enforceability or your interpretation of, or determinations under, any part of this Agreement.

14.              Section 409A Provisions And Compliance .  The intent of the parties is that this agreement comply with the Section 409A Provisions or is exempt therefrom, and accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in accordance therewith.  Notwithstanding any other provision of this Agreement to the contrary, the parties shall in good faith amend this Agreement to the limited extent necessary to comply with the requirements of the Section 409A Provisions in order to ensure that any amounts paid or payable hereunder are not subject to the additional 20% income tax thereunder while maintaining to the maximum extent practicable the original intent of this Agreement. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by the Section 409A Provisions: (a) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (b) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (c) such payments shall be made on or before the last business day of your taxable year following the taxable year in which the expense occurred, or such earlier date as required hereunder.

15.              Governing Law . This Agreement shall be governed in all respects by the laws of the Commonwealth of Kentucky.

16.              Agreement Binding on Successors . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amounts would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee, or other designee or, if there be no such designee, to your estate.

17.              Headings . All Headings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement.
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18.              Tax Cutback .  In the event that you shall become entitled to payments and/or benefits provided by this Agreement or any other amounts in the “nature of compensation” (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change of ownership or effective control covered by Section 280G(b)(2) of the Internal Revenue Code (“Code”) or any person affiliated with the Company or such person) as a result of such change in ownership or effective control (collectively the “Company Payments”), and such Company Payments will be subject to the tax (“Excise Tax”) imposed by Section 4999 of the Code, the Company Payments shall be reduced (such reduction the “Cutback”) to one dollar less than the amount which would result in such Company Payments being subject to the Excise Tax if after taking into account the Excise Tax and all U.S. federal, state, and local income and payroll tax upon the Company Payments if the net amount retained by you would be greater in the event of such reduction in Company Payments then if such reduction in Company Payments did not occur.  To the extent the Cutback applies, the Company Payments shall be reduced in the following order: (a) payments under Section C, paragraph 3(a); (b) payments under Section C, paragraph 3(b)(ii), and lastly (c) the remaining payments under Section C on a pro-rata basis.  Notwithstanding anything in this provision or Agreement to the contrary, you shall be solely liable for the Excise Tax, and shall hold the Company harmless for any liability, not including penalties and interest on such liability, for the Excise Tax including, but not limited to, for failing to withhold or pay over any Excise Tax.  If the Cutback applies but for any reason you pay the Excise Tax, including any applicable interest and penalties, then the Company shall pay you an amount equal to the Cutback, plus interest on the Cutback amount at a reasonable market rate, plus any interest and penalties relating to the Excise Tax paid by you (plus a tax gross-up only on the Excise Tax interest and penalties).  If the Cutback applies but for any reason the Company pays the Excise Tax, including any applicable interest and penalties, then the Company shall offset any amounts due from you, under this provision or otherwise, by an amount equal to the Cutback, plus interest on the Cutback amount at a reasonable market rate.

If this Agreement correctly sets forth our agreement on the subject matter hereof, please sign and return to the Company the enclosed copy of this Agreement which will then constitute our agreement on this matter.
 
 
 

 
Sincerely,
 
     
  ASHLAND INC.  
       
 
By:
   
 
 
ACCEPTED this ____ day of

_____________, 2015.

_____________________________
NAME
 
 
 
 
16
Exhibit 10.2
 
 
 
 
October ___, 2015

Employee Name
Employee Address


Dear ______________:

RE: Change in Control Agreement

Ashland Inc. considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interest of the Company and its shareholders. In this regard, the Company recognizes that, as is the case with many publicly-held corporations, the possibility of a Change in Control of the Company does exist and that such possibility, and the uncertainty and questions which a Change in Control of the Company may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. In addition, difficulties in attracting and retaining new senior management personnel may be experienced. Accordingly, on the basis of the recommendation of the Personnel and Compensation Committee of the Board, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of certain members of the Company's management, including you, to their assigned duties without distraction in the face of the potentially disruptive circumstances arising from the possibility of a Change in Control of the Company.

In order to encourage you to remain in the employ of the Company, this Agreement sets forth those benefits which the Company will provide to you in the event your employment with the Company terminates after or as a result of a Change in Control of the Company under the circumstances specified in this Agreement.

SECTION A. DEFINITIONS

1.            "Agreement" shall mean this letter agreement, which is a complete, entire and immediate substitute for any prior agreement you may have had with the Company addressing the benefits you would receive in the event of your termination from employment with the Company as a result of a Change in Control of the Company, including your Change in Control Agreement dated _________, and effective ___________.

2.            "Board" shall mean the Company's Board of Directors.

3.            "Cause" shall occur hereunder only upon:

(a) the willful and continued failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness or injury) after a written demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties;
 
 


 
 (b) the willful engaging by you in gross misconduct materially and demonstrably injurious to the Company after a written demand to cease such misconduct is delivered to you by the Board; or

 (c) your conviction of or the entering of a plea of nolo contendre to the commission of a felony involving moral turpitude.

For purposes of this paragraph 3, no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose, alone or in conjunction with any other purpose, (after at least 20 days prior notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you failed to perform your duties or engaged in misconduct as set forth above in subparagraph (a) or (b) of this paragraph, and that you did not correct such failure or cease such misconduct after being requested to do so by the Board, or as set forth in subparagraph (c) of this paragraph, finding that you have been convicted of or have entered a plea of nolo contendre to the commission of a felony involving moral turpitude.

4.            "Change in Control of the Company" shall be deemed to have occurred if:

(a) there shall be consummated:

(i) any consolidation or merger of the Company (a "Business Combination"), other than a consolidation or merger of the Company into or with a direct or indirect wholly-owned subsidiary, in which the shareholders of the Company own, directly or indirectly, less than 50% of the then outstanding shares of common stock of the Business Combination that are entitled to vote generally for the election of directors of the Business Combination or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger; or

(ii) any sale, lease, exchange or 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;
 
 
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(b) the shareholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company;

(c) any Person, other than the Company or a Subsidiary thereof or any employee benefit plan sponsored by the Company or a Subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately-negotiated purchases or otherwise, without the approval of the Board; or

(d) at any time during a period of two (2) 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.

(e) Notwithstanding the foregoing, a “Change in Control of the Company” shall not be deemed to have occurred by virtue of:

(i)            the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions;

(ii)            the repurchase by the Company of outstanding shares of Common Stock or other securities pursuant to a tender or exchange offer; or

(iii)            the consummation of the transaction, or series of transactions, initially approved in principle by the Ashland Inc. Board of Directors on September 16, 2015, intended to separate the Valvoline business from the Company’s specialty chemicals business and create two independent, publicly traded companies. 

5.            "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act, as amended.
 
 
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6.            "Common Stock" shall mean the common stock, par value $.01 per share, of the Company.
 
7.            "Company" shall mean Ashland Inc. and any successor to its business and/or assets which executes and delivers the agreement provided for in Section D, paragraph 1 hereof or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

8.            "Competitive Activity" shall have the meaning as set forth in Section C, paragraph 4.

9.            "Competitive Operation" shall have the meaning as set forth in Section C, paragraph 4.

10.            "Confidential Information" shall mean information relating to the Company's, its divisions' and Subsidiaries' and their successors' business practices and business interests, including, but not limited to, customer and supplier lists, business forecasts, business and strategic plans, financial and sales information, information relating to products, process, equipment, operations, marketing programs, research, or product development, engineering records, computer systems and software, personnel records or legal records.

11.            "Cutback" shall have the meaning as set forth in Section D, paragraph 18.

12.            "Date of Termination" shall mean:

(a) if this Agreement is terminated for Disability, thirty (30) days after the Notice of Termination is given by the Company to you (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period);

(b) if your employment is terminated for Good Reason by you, the date specified in the Notice of Termination you provide to the Company, which must be no more than 90 days after the date on which notice of your intent to terminate your employment for Good Reason is provided to the Company, as provided in Section A paragraph 15, and Section C, paragraph 2(b) herein; or

(c) if your employment is terminated for any other reason, the date on which a Notice of Termination is received by you unless a later date is specified.

For purposes of applying the provisions of this paragraph 12, except in the case of Disability, your employment is terminated when you stop performing active service for the Company, which shall be deemed to occur 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).
 
 
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13.            "Disability" shall occur when: if, as a result of your incapacity due to physical or mental illness or injury, you shall have been absent from your duties with the Company for six (6) consecutive months and shall not have returned to full-time performance of your duties within thirty (30) days after written notice is given to you by the Company.

14.            "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

15.            "Good Reason" shall mean the occurrence of any of the following without your express written consent:

(a)            a significant diminution of your positions, duties, responsibilities or status with the Company as in effect immediately prior to a Change in Control of the Company, or a diminution in your titles or offices as in effect immediately prior to a Change in Control of the Company or any removal of you from, or any failure to reelect you to, any of such positions following a Change in Control of the Company;

(b)            a reduction of fifteen (15) percent or more to your base salary in effect immediately prior to a Change in Control of the Company;

(c)            the failure by the Company to continue in effect any incentive plan or arrangement (including without limitation, the Company's Incentive Compensation plan, annual bonus and contingent bonus arrangements and credits and the right to receive performance awards and similar incentive compensation benefits) in which you are participating at the time of a Change in Control of the Company (or to substitute and continue other plans or arrangements providing you with substantially similar benefits), except as otherwise required by the terms of such plans as in effect at the time of any Change in Control of the Company, or the taking of any action by the Company which would adversely affect your participation in or materially reduce your benefits under any such plan;

(d)            the failure by the Company to continue in effect any plan or arrangement to receive securities of the Company (including, without limitation, any plan or arrangement to receive and exercise stock options, stock appreciation rights, restricted stock or grants thereof or to acquire stock or other securities of the Company) in which you are participating at the time of a Change in Control of the Company (or to substitute and continue plans or arrangements providing you with substantially similar benefits), except as otherwise required by the terms of such plans as in effect at the time of any Change in Control of the Company; or the taking of any action by the Company which would adversely affect your participation in or materially reduce your benefits under any such plan;

(e)            the relocation after a Change in Control of the Company of your principal place of business to a location that exceeds a 50 mile radius from your principal place of business before the Change in Control of the Company, except for required travel on the Company's business to an extent substantially consistent with your business travel obligations as of immediately prior to such Change in Control of the Company;

 
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(f)            any breach by the Company of any material provision of this Agreement; or

(g)            any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company as described in Section D, paragraph 1.

Provided that the Company and Employee agree that Good Reason shall not exist unless and until Employee provides the Company with written notice of the act(s) alleged to constitute Good Reason within ninety (90) days of Employee's knowledge of the occurrence of such act(s), as provided under Section C, paragraph 2(a) herein, and the Company fails to cure such acts within thirty (30) days of receipt of such notice. Further, if the Company fails to cure such act(s) within this thirty (30) day period, then Employee must exercise the right to terminate Employee’s employment for Good Reason within sixty (60) days thereafter, in order for the termination to be for Good Reason.

16.            "Notice of Good Reason" shall mean a written notice which shall indicate the specific  provision(s) in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment for “Good Reason” under the provision(s) so indicated.

17.            "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. For purposes of applying the provisions of this paragraph 17, the determination of when your employment is terminated shall be made consistent with the Section 409A Provisions and the provisions of Section A, paragraph 12.

18.            "Person" shall have the meaning as set forth in the Sections 13(d) and 14(d)(2) of the Exchange Act.

19.            "Qualifying Termination" shall mean the termination of your employment after a Change in Control of the Company while this Agreement is in effect, unless such termination is (a) by reason of your death or Disability, (b) by the Company for Cause, or (c) by you other than for Good Reason.

20.            "Section 409A Provisions" shall mean those statutory provisions of the Internal Revenue Code of 1986 (as amended) contained in §409A thereof and the guidance promulgated by the U.S. Department of Treasury or any subdivision thereof interpreting §409A.

21.            "Subsidiary" shall mean any corporation of which more than 20% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by the Company, by the Company and one or more other Subsidiaries, or by one or more other Subsidiaries.
 
 
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SECTION B. TERM AND BENEFITS

This Agreement shall be in effect for two (2) years from the date you accept this Agreement and shall automatically renew for successive one (1) year periods on the first day of each month. This Agreement may be terminated by either party provided that at least fifteen (15) days advance written notice is given by either party to the other party hereto prior to the commencement of the next succeeding one (1) year period, in which case the Agreement shall terminate at the end of such next succeeding one (1) year period. During the term of employment hereunder, you agree to devote your full business time and attention to the business and affairs of the Company and to use your best efforts, skills and abilities to promote its interests.

This Agreement shall automatically terminate, without additional notice, in the event of your death, Disability, or upon the effective date of your retirement in the event you retire at your election or in accordance with the Company's generally applicable retirement policies, as in effect from time to time. Notwithstanding the first sentence of this paragraph and the first and second sentences of this Section B, if a Change in Control of the Company should occur while you are still an employee of the Company and while this Agreement is in effect, then this Agreement shall continue in effect from the date of such Change in Control of the Company for a period of two years. No benefits shall be payable hereunder unless there shall have been a Change in Control of the Company and your employment by the Company shall thereafter terminate in accordance with Section C hereof.

SECTION C. TERMINATION FOLLOWING CHANGE IN CONTROL

1.            Qualifying Termination . If your termination is a Qualifying Termination, you shall be entitled to receive the payments and benefits provided in this Section.

2.            Required Notices .

(a)            Notice of Good Reason. Notice of Good Reason following a Change in Control of the Company, as provided for in Section A, paragraphs 15 and 16, shall be communicated by written Notice of Good Reason to the Company within the time limits provided in Section A, paragraph 15, and shall not be effective without such timely Notice of Good Reason.

(b)            Notice of Termination. Any termination of your employment following a Change in Control of the Company shall be communicated by written Notice of Termination to the other party hereto. No termination shall be effective without such Notice of Termination.
 
 
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3.            Compensation Upon Termination After a Change in Control.

(a)            If your termination is a Qualifying Termination, then as consideration for and subject to your obligation to abide by the provisions contained in Section C, paragraph 4 (a) and (b) of this Agreement following a Qualifying Termination, the Company shall pay to you as severance pay (and without regard to the provisions of any benefit or incentive plan), in a lump sum cash payment within five (5) business days following the first day of the seventh calendar month following the month in which your Date of Termination occurs, an amount equal to two (2) times the sum of (i) your highest annual base compensation plus (ii) the highest target annual incentive compensation (expressed as a percentage of base compensation for all applicable incentive compensation plans) in respect of the three (3) fiscal years preceding the fiscal year in which your Date of Termination occurs.

(b)            If your termination is a Qualifying Termination, the Company shall, in addition to the payments required by the preceding paragraph:

(i)            provide for continuation of your and your eligible dependents' participation at regular employee rates, in effect from time to time, in all of the Company's medical, dental and group life plans or programs in which you were participating immediately prior to your Date of Termination for a period ending on the December 31 of the second calendar year following the calendar year in which your Date of Termination occurred and any entitlement to COBRA continuation coverage under the medical and dental plans shall run concurrently with said period; provided, however, that said continuation of coverage in the medical and dental plans during all or part of such period shall be charged at the full cost for such coverage (meaning the active employee contribution and the Company's contribution) if the charging of active employee rates for such coverage during all or part of such period would result in a violation of the Section 409A Provisions. In the event that your continued participation in any such plan or program is for whatever reason impossible, the Company shall at that time, or at the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions, arrange upon comparable terms to provide you with benefits substantially equivalent on an after-tax basis to those which you and your eligible dependents are, or become, entitled to receive under such plans and programs;

(ii)            provide for payment in cash of any performance unit/share awards in existence on your Date of Termination, calculated at target performance, less any amounts paid to you under the applicable performance unit/share plan upon a Change in Control of the Company pursuant to the provisions of such plan; provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions;
 
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(iii)            provide for payment in cash of any incentive compensation (a) earned for the fiscal year during which the Change in Control of the Company occurred and any prior fiscal years for which you have not yet received payment, and (b) payment of the pro-rata portion (through your Date of Termination) of any incentive compensation for the fiscal year in which your Date of Termination occurs calculated on the basis of the target bonus percentage of base compensation in the applicable incentive compensation plan (or plans); provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions;

(iv)            provide benefits or compensation under any compensation plan, arrangement or agreement not in existence as of the date hereof but which may be established by the Company prior to your Date of Termination at such time as payments are made thereunder to the same extent as if you had been a full-time employee on the date such payments would otherwise have been made or benefits vested; provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions;

(v)            for one (1) year after your Date of Termination, provide and pay for outplacement services, by a firm reasonably acceptable to you, consistent with those that have historically been offered to displaced employees generally by the Company under substantially the same terms and fee structure (but limited in an amount not to exceed fifteen (15) percent of your annual base compensation for the year in which your Date of Termination occurs or fifteen (15) percent of your annual base compensation as of immediately before the Change in Control of the Company, if greater) as is consistent with an employee in your then current position (or, if higher, your position immediately prior to the Change in Control of the Company);

(vi)            for one (1) year after your Date of Termination, provide and pay for financial planning services, by a firm reasonably acceptable to you, that have historically been offered to you under substantially the same terms and fee structure as is consistent with an employee in your then current position (or, if higher, your position immediately prior to the Change in Control of the Company);
 
 
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(vii)            pay to you an amount equal to the value of all unused, earned and accrued vacation as of your Date of Termination pursuant to the company's policies in effect immediately prior to the Change in Control of the Company; provided, however, said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions; and

(viii)            provide for the immediate vesting of all stock options, restricted stock, restricted stock units and stock appreciation rights held by you, as of your Date of Termination, under any Company incentive compensation plan or other stock option plan and stock appreciation rights plan, and all such stock options and stock appreciation rights shall be exercisable for the remaining terms of the said options and rights. In the event such immediate vesting is not permitted under law or the applicable benefit plan or award agreement, the Company shall provide a payment to you in cash of an amount equal to the value of the equity-based compensation awards that would otherwise be forfeited as a result of your Qualifying Termination, based on the closing price of the Company’s stock on your Date of Termination; provided, however, if the Company should determine that the said payment would constitute deferred compensation under the Section 409A Provisions, then said payment shall be made no earlier than the first day of the seventh calendar month after the calendar month in which the Date of Termination occurs, or the earliest time permitted that will not trigger a tax or penalty under the Section 409A Provisions.

Provided, that nothing in this Section C, paragraph 3(b) shall require the continued vesting, acceleration, or payment in cash in lieu of the value of the Performance-Based Restricted Stock Award provided to you under the Executive Performance Incentive & Retention Program approved by the Personnel and Compensation Committee of the Board on October 5, 2015, which is intended to be granted to you on November 18, 2015, your rights to which shall be governed exclusively by the applicable plan as modified by the Performance-Based Restricted Stock Award agreement.

(c)            Unless otherwise provided in this Agreement or in the applicable compensation or stock option plan or program, all payments shall be made to you within thirty (30) days after your Date of Termination. The benefits in this Agreement are in addition to all accrued and vested benefits to which you are entitled under any of the Company's plans and arrangements (to the extent accrued and vested benefits are relevant under the particular plan or arrangement), including but not limited to, the accrued vested benefits you are eligible and entitled to receive under any of the Company's qualified and non-qualified benefit or retirement plans, or any successor plans in effect on your Date of Termination hereunder. For these purposes, accrued and vested benefits shall include any extra, special or additional benefits under such qualified and nonqualified benefit or retirement plans that become due because of the Change in Control of the Company.
 
 
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(d)            You shall not be required to mitigate the amount of any payment provided for in this Section by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Section be reduced by any compensation earned by you as the result of employment by another employer after your Date of Termination, or otherwise. Except as provided herein, the Company shall have no right to set off against any amount owing hereunder any claim which it may have against you.

4.            Certain Restrictions

(a)            Competitive Activity. In consideration of the foregoing, you agree that if your termination from employment is a Qualifying Termination, then during a period ending 24 months following your Date of Termination (the “Non-Compete Period”) you shall not, directly or indirectly, engage in any Competitive Activity. If you engage in any Competitive Activity during the Non-Compete Period, the Company shall be entitled to recover any benefits paid to you under paragraph 3(a) of this Section C. For purposes of this Agreement, "Competitive Activity" shall mean your participation, without the written consent of the General Counsel of the Company, in the management of any business operation of any enterprise if such business operation (a "Competitive Operation") engages in substantial and direct competition with any business operation actively conducted by the Company or its divisions and Subsidiaries on your Date of Termination. For purposes of this paragraph, a business operation shall be considered a Competitive Operation if such business sells a competitive product or service which constitutes (i) 15% of that business's total sales, or (ii) 15% of the total sales of any individual subsidiary or division of that business and, in either event, the Company's sales of a similar product or service constitutes either 15% of the total sales of the Company or 15% of the total sales of any individual Subsidiary or division of the Company. Notwithstanding the foregoing, a “Competitive Activity” shall not include the mere ownership of securities in any enterprise, or participation in the management of any enterprise or any business operation thereof, other than in connection with a Competitive Operation of such enterprise.

(b)            Non-Solicitation and Non-Interference. In consideration of the foregoing, you agree that if your termination from employment is a Qualifying Termination, then during a period ending 24 months following your Date of Termination (the “Non-Solicitation and Non-Interference Period”) you shall not, without the prior written consent of the General Counsel of the Company, directly or indirectly:

(i) solicit for employment (which shall include services as an employee, independent contractor or in any other like capacity) any person employed by the Company or its affiliated companies as of the date of such solicitation; or

(ii) solicit any customer or other person with a business relationship with the Company or any of its affiliated companies to terminate, curtail or otherwise limit such business relationship; or
 
 
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(iii) in any other manner interfere in the business relationship the Company or any of its affiliated companies have with any customer or any third party service provider or other vendor.

If you engage in any such solicitation or interference during the Non-Solicitation and Non-Interference Period, the Company shall be entitled to recover any and all amounts paid to you under paragraph 3(a) of this Section C.

(c)            Injunctive Relief. In the event of a breach or threatened breach of this paragraph 4 of this Section C, each party agrees that the non-breaching party shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, the parties acknowledging that damages would be inadequate and insufficient.


SECTION D. MISCELLANEOUS

1.            Assumption of Agreement . The Company will require any successor in interest: (a) to all or substantially all of the business and/or assets of the Company (whether direct or indirect, by purchase, merger, consolidation, share exchange or otherwise); or (b) to any portion of the business or assets of the Company to which your services relate, as a result of the creation of an independent company through the sale or distribution of new shares of an existing business or other unit of the Company; in each case, by agreement in form and substance satisfactory to you, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of a material provision of this Agreement.

2.            Confidentiality . All Confidential Information which you acquire or have acquired in connection with or as a result of the performance of services for the Company, whether under this Agreement or prior to the effective date of this Agreement, shall be kept secret and confidential by you unless:

(a) the Company otherwise consents;

(b) the Company breaches any material provision of this Agreement, in which case you shall be entitled to make limited disclosure of Confidential Information only to the extent necessary to seek legal relief for such breach;

(c) you are legally required to disclose such Confidential Information by a court of competent jurisdiction;
 
 
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(d) you disclose such Confidential Information to the Securities and Exchange Commission, to the extent necessary to report suspected or actual violations of U.S. securities laws; or

(e) your disclosure of Confidential Information is protected under the whistleblower provisions of any other state or federal laws or regulations.

You understand that if you make a disclosure of Confidential Information that is covered under subparagraph (d) or (e) above, you are not required to inform the Company, in advance or otherwise, that you have made such disclosure(s), and nothing in this Agreement shall prohibit you from maintaining the confidentiality of a claim with a governmental agency that is responsible for enforcing a law, or cooperating, participating or assisting in any governmental or regulatory entity investigation or proceeding.    This covenant of confidentiality shall extend beyond the term of this Agreement and shall survive the termination of this Agreement for any reason and shall continue for so long as the information you have acquired remains Confidential Information. If you breach this covenant of confidentiality, the Company shall be entitled to recover from any benefits paid to you under this Agreement its damages resulting from such breach.

3.            Employment . You agree to be bound by the terms and conditions of this Agreement and to remain in the employ of the Company during any period following any public announcement by any person of any proposed transaction or transactions which, if effected, would result in a Change in Control of the Company until a Change in Control of the Company has taken place. However, nothing contained in this Agreement shall impair or interfere in any way with the right of the Company to terminate your employment prior to a Change in Control of the Company.

4.            Arbitration . Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled exclusively by arbitration in accordance with the Center for Public Resources' Model ADR Procedures and Practices, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the Company shall not be restricted from seeking equitable relief, including injunctive relief as set forth in paragraph 5 of this Section, in the appropriate forum. Any cost of arbitration will be paid by the Company. In the event of a dispute over the existence of Good Reason or Cause after a Change in Control of the Company, the Company shall continue to pay your salary, bonuses and plan benefits pending resolution of the dispute. If you prevail in the arbitration, the amounts due to you under this Agreement are to be immediately paid to you.

5.            Injunctive Relief . You acknowledge and agree that the remedy of the Company at law for any breach of the covenants and agreements contained in paragraph 2 of this Section D and in Section C, paragraph 4 will be inadequate, and that the Company will be entitled to injunctive relief against any such breach or any threatened, imminent, probable or possible breach. You represent and agree that such injunctive relief shall not prohibit you from earning a livelihood acceptable to you.
 
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6.            Notice . For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the General Counsel of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

7.            Indemnification . The Company will indemnify you to the fullest extent permitted by the laws of the Commonwealth of Kentucky and the existing By-laws of the Company, in respect of all your services rendered to the Company and its divisions and Subsidiaries prior to your Date of Termination. You shall be entitled to the protection of any insurance policies the Company now or hereafter maintains generally for the benefit of its directors, officers and employees (but only to the extent of the coverage afforded by the existing provisions of such policies) to protect against all costs, charges and expenses whatsoever incurred or sustained by you in connection with any action, suit or proceeding to which you may be made a party by reason of your being or having been a director, officer or employee of the Company or any of its divisions or Subsidiaries during your employment therewith.

8.            Further Assurances . Each party hereto agrees to furnish and execute such additional forms and documents, and to take such further action, as shall be reasonably and customarily required in connection with the performance of this Agreement or the payment of benefits hereunder.

9.            Miscellaneous . No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and such officer(s) as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, which are not set forth expressly in this Agreement.

10.            Termination of other Agreements . Upon execution by both parties, this Agreement shall terminate all prior employment and severance agreements, between you and the Company and its divisions or Subsidiaries.

11.            Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
 
 
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12.            Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.            Legal Fees And Expenses . Any other provision of this Agreement notwithstanding, the Company shall pay all legal fees and expenses which you may incur as a result of the Company's unsuccessful contesting of the validity, enforceability or your interpretation of, or determinations under, any part of this Agreement.

14.            Section 409A Provisions And Compliance .  The intent of the parties is that this agreement comply with the Section 409A Provisions or is exempt therefrom, and accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in accordance therewith.  Notwithstanding any other provision of this Agreement to the contrary, the parties shall in good faith amend this Agreement to the limited extent necessary to comply with the requirements of the Section 409A Provisions in order to ensure that any amounts paid or payable hereunder are not subject to the additional 20% income tax thereunder while maintaining to the maximum extent practicable the original intent of this Agreement. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by the Section 409A Provisions: (a) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (b) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (c) such payments shall be made on or before the last business day of your taxable year following the taxable year in which the expense occurred, or such earlier date as required hereunder.

15.            Governing Law . This Agreement shall be governed in all respects by the laws of the Commonwealth of Kentucky.

16.            Agreement Binding on Successors . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amounts would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee, or other designee or, if there be no such designee, to your estate.

17.            Headings . All Headings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement.

 
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18.            Tax Cutback .  In the event that you shall become entitled to payments and/or benefits provided by this Agreement or any other amounts in the “nature of compensation” (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change of ownership or effective control covered by Section 280G(b)(2) of the Internal Revenue Code (“Code”) or any person affiliated with the Company or such person) as a result of such change in ownership or effective control (collectively the “Company Payments”), and such Company Payments will be subject to the tax (“Excise Tax”) imposed by Section 4999 of the Code, the Company Payments shall be reduced (such reduction the “Cutback”) to one dollar less than the amount which would result in such Company Payments being subject to the Excise Tax if after taking into account the Excise Tax and all U.S. federal, state, and local income and payroll tax upon the Company Payments if the net amount retained by you would be greater in the event of such reduction in Company Payments then if such reduction in Company Payments did not occur.  To the extent the Cutback applies, the Company Payments shall be reduced in the following order: (a) payments under Section C, paragraph 3(a); (b) payments under Section C, paragraph 3(b)(ii), and lastly (c) the remaining payments under Section C on a pro-rata basis.  Notwithstanding anything in this provision or Agreement to the contrary, you shall be solely liable for the Excise Tax, and shall hold the Company harmless for any liability, not including penalties and interest on such liability, for the Excise Tax including, but not limited to, for failing to withhold or pay over any Excise Tax.  If the Cutback applies but for any reason you pay the Excise Tax, including any applicable interest and penalties, then the Company shall pay you an amount equal to the Cutback, plus interest on the Cutback amount at a reasonable market rate, plus any interest and penalties relating to the Excise Tax paid by you (plus a tax gross-up only on the Excise Tax interest and penalties).  If the Cutback applies but for any reason the Company pays the Excise Tax, including any applicable interest and penalties, then the Company shall offset any amounts due from you, under this provision or otherwise, by an amount equal to the Cutback, plus interest on the Cutback amount at a reasonable market rate.

If this Agreement correctly sets forth our agreement on the subject matter hereof, please sign and return to the Company the enclosed copy of this Agreement which will then constitute our agreement on this matter.
 
  Sincerely,   
     
  ASHLAND INC.  
     
 
By:
   

ACCEPTED this ____ day of

_____________, 2015.

_____________________________
NAME
16
Exhibit 10.3
 

 

PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT

Name of Participant :
 
   
Name of Plan:
Amended and Restated   2015 Ashland Inc. Incentive Plan
   
Number of Shares of Restricted Stock:
[ ]
   
Performance Period:
October 1, 2015 through 120 days post-Transaction (as defined below)
   
Date of Award:
[ ]
   
Vesting Date of Award:
3rd anniversary of Date of Award 1
4th anniversary of Date of Award 2

Ashland Inc. (“ Ashland ”) hereby confirms the grant of a Performance-Based Restricted Stock Award (this “ Award ”) with respect to the number of shares of Ashland common stock, par value $0.01 per share (“ Common Stock ”) set forth above, subject to certain restrictions and forfeiture conditions as described herein (the shares of “ Restricted Stock ”), to the above-named Participant (the “ Participant ” or “ you ”), pursuant to the 2015 Ashland Inc. Incentive Plan (the “Plan”) (Attachment 1) and this Performance-Based Restricted Stock Agreement (this “ Agreement ”), in order to provide the Participant with an additional incentive to continue his/her services to Ashland and to continue to work towards the consummation of the transaction, or series of transactions, initially approved in principle by the Ashland Board of Directors on September 16, 2015, intended to separate the Valvoline business from Ashland’s specialty chemicals business and create two independent, publicly traded companies (the consummation of such transaction or series of transactions, the “ Transaction ”).

1.              General .  This Award is granted under, and subject to, all the terms and conditions of Attachment 2 hereto and the Plan, including, but not limited to, the forfeiture provision of Section 16(H) of the Plan, as modified by this Agreement.  Capitalized terms used but not defined in this Agreement shall have the meanings given to such terms in the Plan.

This Award shall be evidenced by entry on the books of Ashland’s transfer agent, Wells Fargo Bank, N.A.  Each entry in respect of shares covered by this Award shall be designated in the name of the Participant and shall bear the following legend:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeitures) contained in the Plan and the Agreement entered into between the registered owner and Ashland Inc. (or its successor).”

_________________
1 For all recipients other than the CEO.
2 For the CEO.
 
 

 
 
 
The shares of Restricted Stock, Adjusted Restricted Stock (as defined below) and Time-Vesting Restricted Stock (as defined below) and the Participant’s rights under this Agreement may not be sold, assigned, transferred, pledged, or otherwise encumbered, until such shares vest as provided herein.  Except for the restrictions described herein, the Participant will have all rights of a shareholder with respect to the shares of Restricted Stock, Adjusted Restricted Stock and Time-Vesting Restricted Stock.

As the shares of Restricted Stock, Adjusted Restricted Stock and Time-Vesting Restricted Stock vest, the Participant will owe applicable federal income and employment taxes and state and local income and employment taxes.

2.              Restricted Activities .  In consideration of this Award, the Participant agrees that, during the Participant’s employment, and the twenty-four (24) month period following the Participant’s termination of employment, with Ashland or any of its subsidiaries (or, in the event the Participant becomes employed by the Successor (as defined below) in connection with the Transaction, the Successor or any of its subsidiaries) for any reason, without the prior written consent of Ashland (or the Successor, as applicable), the Participant will not (a) engage directly or indirectly in any manner or capacity as principal, agent, partner, officer, director, employee or otherwise in any business or activity competitive with the business conducted by Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable); or (b) perform any act or engage in any activity that is detrimental to the best interests of Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable), including, without limitation, (i) solicit or encourage any existing or former employee, director, contractor, consultant, customer or supplier of Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable) to terminate his, her or its relationship with Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable) for any reason, or (ii) disclose proprietary or confidential information of Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable) to third parties or use any such proprietary or confidential information for the benefit of anyone other than Ashland and its subsidiaries (or the Successor and its subsidiaries, as applicable) (the foregoing, restrictions, collectively, the “ Participant Covenants ”); provided , however , that clause (ii) above shall not be breached in the event that the Participant discloses proprietary or confidential information to the Securities and Exchange Commission, to the extent necessary to report suspected or actual violations of U.S. securities laws, or the Participant’s disclosure of proprietary or confidential information is protected under the whistleblower provisions of any applicable law or regulation.  The Participant understands that if he or she makes a disclosure of proprietary or confidential information that is covered above, he or she is not required to inform Ashland (or the Successor, as applicable), in advance or otherwise, that such disclosure(s) has been made.  Nothing in this Agreement shall prohibit the Participant from maintaining the confidentiality of a claim with a governmental agency that is responsible for enforcing a law, or cooperating, participating or assisting in any governmental or regulatory entity investigation or proceeding.
 
 

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Notwithstanding any other provision of the Plan or this Agreement to the contrary, but subject to any applicable laws to the contrary, the Participant agrees that in the event the Participant fails to comply or otherwise breaches any of the Participant Covenants either during the Participant’s employment, or within twenty-four (24) months following the Participant’s termination of employment, with Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable) for any reason:  (a) Ashland (or the Successor, as applicable) may eliminate or reduce the amount of any compensation, benefit, or payment otherwise payable by Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable) (either directly or under any employee benefit or compensation plan, agreement, or arrangement, except to the extent that such compensation, benefit or payment under such employee benefit plan, agreement or arrangement constitutes deferred compensation under Section 409A of the Internal Revenue Code (“ Section 409A ”) and such elimination or reduction would trigger a tax or penalty under Section 409A) to or on behalf of the Participant in an amount up to the total amount paid or payable to the Participant under this Agreement; and/or (b) Ashland may require the Participant to pay Ashland an amount up to the total amount paid to the Participant under this Agreement; in each case together with the amount of Ashland’s (or the Successor’s, as applicable) court costs, attorney fees, and other costs and expenses incurred in connection therewith.  For purposes of this paragraph, the total amount paid under this Agreement shall equal the closing stock price of Common Stock (or common stock of the Successor, as applicable) on the date of award set forth above (the “ Date of Award ”) or the Vesting Date (as defined below) multiplied by the number of shares of Common Stock (or common stock of the Successor, as applicable) awarded or vested, as determined by the P&C Committee of Ashland (or the board of directors of the Successor or the appropriate committee thereof, as applicable) .  For the avoidance of doubt, the transfer of the Participant’s employment from Ashland to the Successor in connection with the Transaction shall not constitute a termination of employment for purposes of this Agreement.

3.              Adjustment in Connection with the Transaction .  In connection with the Transaction, the P&C Committee of Ashland shall adjust this Award pursuant to Section 14 of the Plan such that, immediately following the Transaction, this Award shall represent solely either (a) in the event you become employed with the Successor in connection with the Transaction, a number of shares of restricted common stock of the Successor (and, for the avoidance of doubt, no shares of stock of Ashland), with such number being determined by the P&C Committee of Ashland in its sole discretion, and otherwise having the same terms and conditions (including performance vesting) as this Award, or (b) in the event you remain employed with Ashland following the Transaction, a number of shares of Restricted Stock (and, for the avoidance of doubt, no shares of stock of the Successor), with such number being determined by the P&C Committee of Ashland in its sole discretion, and otherwise having the same terms and conditions (including performance vesting) as this Award (any such shares described in clause (a) or (b), shares of “ Adjusted Restricted Stock ”).  Immediately following the end of the performance period set forth above (the “ Performance Period ”), the shares of Adjusted Restricted Stock will convert into a number of time-vesting shares of Common Stock (or time-vesting shares of common stock of the Successor, as applicable) having the same terms and conditions (other than performance vesting) as this Award (shares of “ Time-Vesting Restricted Stock ”), with such number being determined based upon the attainment of the performance goal described in Attachment 2 hereto (the “ Performance Goal ”) as of the end of the Performance Period, as calculated in accordance with Attachment 2 hereto.  The shares of Time-Vesting Restricted Stock will remain outstanding and will become vested on the same vesting date set forth above (the “ Vesting Date ”) , so long as the Participant remains in the continuous employment of Ashland (or the Successor, as applicable) through the Vesting Date, except as otherwise described herein .
 
 
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4.              Dividends .  While the shares of Restricted Stock, Adjusted Restricted Stock or Time-Vesting Restricted Stock are outstanding, on any date on which cash dividends (but not other distributions, notwithstanding anything in Section 6 of the Plan to the contrary) are paid to holders of shares of Common Stock (or shares of common stock of the Successor, as applicable), the Participant will be credited with a number of additional shares of Restricted Stock, Adjusted Restricted Stock or Time-Vesting Restricted Stock, as applicable, equal to (a) the product of (i)  the number of shares of Restricted Stock, Time-Vesting Restricted Stock or Adjusted Restricted Stock, as applicable, held by the Participant as of the date of record for such dividend multiplied by (ii) the per share cash dividend amount, divided by (b) the closing stock price of Common Stock on the NYSE Composite Tape (or the closing price of the shares of common stock of the Successor, as applicable), on the date of record for such dividend (with all fractional shares, if any, resulting from such calculation being cancelled).  Such additional shares of Restricted Stock, Adjusted Restricted Stock or Time-Vesting Restricted Stock, as applicable, will be subject to the same terms and conditions as the underlying shares of Restricted Stock, Adjusted Restricted Stock or Time-Vesting Restricted Stock to which they relate (including performance vesting, if any).  For the avoidance of doubt, the Participant will not be credited with additional shares of Common Stock or shares of common stock of the Successor in connection with any dividend or other distribution declared in connection with the Transaction, other than as expressly provided in this Agreement.

5.              Change in Control Prior to the Transaction Notwithstanding the foregoing and notwithstanding any provision of Section 12(A) of the Plan to the contrary, in the event of a Change in Control (as defined below) of Ashland prior to the Transaction, all then-outstanding shares of Restricted Stock will convert immediately prior to such Change in Control into a number of time-vesting shares of Common Stock having the same terms and conditions (other than performance vesting) as this Award, with such number determined (a) in the event such Change in Control occurs on or prior to October 1, 2016, as if the Performance Period ended on the date of such Change in Control and the Performance Goal was achieved at “target” level, as calculated in accordance with Attachment 2 hereto, and (b) in the event such Change in Control occurs following October 1, 2016, as if the Performance Period ended on the date of such Change in Control and the Performance Goal was achieved based on actual performance as of the end of such shortened Performance Period, as determined by the P&C Committee of Ashland (or the board of directors of the Successor or the appropriate committee thereof, as applicable) in accordance with Attachment 2 hereto.
 
In the event such time-vesting shares of Common Stock are assumed, continued, converted or replaced by the surviving or resulting entity (such entity and its subsidiaries, the “ Acquiror ”) in connection with such Change in Control (as determined by the P&C Committee of Ashland (or the board of directors of the Successor or the appropriate committee thereof, as applicable)) , then such shares (or other Acquiror securities) will remain outstanding and will become vested in full on the Vesting Date , so long as the Participant remains in the continuous employment of the Acquiror through the Vesting Date , except as otherwise described herein .  In the event such time-vesting shares of Common Stock are not so assumed, continued, converted or replaced, then such shares shall immediately vest in full upon such Change in Control.
 
 

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For purposes of Section 5 and Section 6 of this Agreement, this Award will not be considered to be assumed, continued, converted or replaced by the Acquiror in connection with a Change in Control unless (a) the Award is adjusted to prevent dilution of the Participant’s rights hereunder as a result of the Change in Control, and (b) immediately after the Change in Control, the Award relates to shares of stock in the Acquiror which are publicly traded and listed on a national securities exchange, in each case as determined by the P&C Committee of Ashland (or the board of directors of the Successor or the appropriate committee thereof, as applicable) prior to such Change in Control.

6.              Change in Control Following the Transaction .  Notwithstanding the foregoing and notwithstanding any provision of Section 12(A) of the Plan to the contrary, in the event of a Change in Control of Ashland (or the Successor, as applicable) following the Transaction:
 
(a)                 in the event the then-outstanding shares of Adjusted Restricted Stock or Time-Vesting Restricted Stock, as applicable, are assumed, continued, converted or replaced by the Acquiror in connection with such Change in Control, then such shares will remain outstanding and will become vested on the Vesting Date (in the case of shares of Adjusted Restricted Stock, following the conversion into shares of Time-Vesting Restricted Stock, as described in Section 3) , so long as the Participant remains in the continuous employment of the Acquiror through the Vesting Date , except as otherwise described herein.

(b)                 in the event the then-outstanding shares of Adjusted Restricted Stock or Time-Vesting Restricted Stock, as applicable, are not assumed, continued, converted or replaced by the Acquiror in connection with such Change in Control, then such shares shall immediately vest in full upon such Change in Control (provided that, in the case of shares of Adjusted Restricted Stock, such vesting shall occur immediately following the conversion of the shares of Adjusted Restricted Stock into shares of Time-Vesting Restricted Stock, as described in Section 3).

7.              Termination of Employment; Forfeiture .  Except as otherwise determined by the P&C Committee of Ashland (or the board of directors of the Successor or the appropriate committee thereof, as applicable), all then-outstanding shares of Restricted Stock , Adjusted Restricted Stock or Time-Vesting Restricted Stock, as applicable, which have not vested will be forfeited in the event that any of the following shall occur:

(a)                 you voluntarily terminate your employment with Ashland (or the Successor, as applicable) or the Acquiror (and, solely following a Change in Control, other than a termination for Good Reason (as defined below));

(b)                 your employment is terminated by Ashland (or the Successor, as applicable) or the Acquiror as a result of your refusal to accept employment in a new or different position (and solely following a Change in Control, under circumstances in which you do not have Good Reason to terminate your employment);

(c)                 Ashland (or the Successor, as applicable) or the Acquiror terminates your employment for Cause (as defined below); or

(d)                 the Board of Directors of Ashland determines, in its sole discretion prior to the Vesting Date and prior to a Change in Control, that the Transaction will not be consummated.
 
 

-5-

 
 
 
In the event of a Specified Termination (as defined below) prior to the Transaction and prior to a Change in Control of Ashland, a prorated portion of the then-outstanding shares of Restricted Stock (the “ Prorated Portion ”) shall remain outstanding, except as otherwise described herein, and shall convert into shares of Adjusted Restricted Stock in connection with the Transaction and shall, subject to achievement of the Performance Goal, convert into shares of Time-Vesting Restricted Stock immediately following the end of the Performance Period, in each case as described in Section 3, at which time such shares shall immediately vest in full.  The Prorated Portion shall be determined based on a fraction, the numerator of which is the number of full or partial months elapsed from the Date of Award to the date of the Specified Termination, and the denominator of which is [36] 3 [48]. 4   All shares of Restricted Stock other than the Prorated Portion shall be forfeited as of the date of the Specified Termination.

In the event of a Specified Termination following the Transaction and prior to a Change in Control of Ashland (or the Successor, as applicable), all of the then-outstanding shares of Time-Vesting Restricted Stock shall immediately vest in full (provided that, in the event such termination occurs prior to the end of the Performance Period, such vesting shall occur immediately following the conversion of the shares of Adjusted Restricted Stock into shares of Time-Vesting Restricted Stock, as described above).

In the event of a Specified Termination following a Change in Control of Ashland (or the Successor, as applicable), regardless of whether the Transaction has occurred prior to such Change in Control, all of the then-outstanding time-vesting shares of Common Stock described in Section 5 above, shares of Adjusted Restricted Stock or Time-Vesting Restricted Stock (in each case, as assumed, continued, converted or replaced by the Acquiror in connection with such Change in Control, if applicable), shall immediately vest in full (provided that, in the event such termination occurs prior to the end of the Performance Period, such vesting shall occur immediately following the conversion of the shares of Adjusted Restricted Stock into shares of Time-Vesting Restricted Stock, as described above).

8.  Definitions .  For purposes of this Agreement:

(a)                 a termination for “ Cause ” will arise in the event that you:  (i) substantially fail to perform your duties with Ashland (or the Successor, as applicable) or the Acquiror, unless such failure is due to your incapacity as a result of physical or mental illness; or (ii) engage in willful misconduct or gross negligence in performing your duties with Ashland (or the Successor, as applicable) or the Acquiror.

(b)                 Change in Control ” shall have the meaning assigned to the term “Change in Control of the Company” (or term of similar import) in the Participant’s Change in Control Agreement with Ashland as then in effect.  For the avoidance of doubt, for purposes of this Agreement, a Change in Control of the Successor shall mean a “Change of Control of the Company” (or term of similar import) as defined in such Change in Control Agreement, except that, as applicable, each reference to “the Company” within such definition shall be replaced with a reference to the Successor.
 
___________________________
3  For all recipients other than the CEO.
4  For the CEO.
 
 

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(c)               Good Reason ” shall mean, following a Change in Control of Ashland (or the Successor, as applicable) (i) a 15% or greater reduction in your base salary as in effect as of immediately prior to such Change in Control; [or] (ii) the relocation of your principal work location to a location outside a 50-mile radius from your principal work location as of the date of such Change in Control, except for required travel on the Acquiror’s business to an extent substantially consistent with your business travel obligations as of immediately prior to such Change in Control[; or (iii) solely in connection with a termination of your employment following November 18, 2018, the assignment to you of primary duties and responsibilities of a type substantially different from the type of duties and responsibilities performed in your position as of immediately prior to such Change in Control.] 5 Notwithstanding the foregoing, Good Reason shall not exist unless:  (a) you provide the Acquiror with written notice of the act(s) alleged to constitute Good Reason within thirty (30) days of your knowledge of the occurrence of such act(s), (b) the Acquiror fails to cure such acts within thirty (30) days of receipt of such notice and (c) you exercise your right to terminate your employment for Good Reason within sixty (60) days thereafter.  For the avoidance of doubt, “Good Reason” shall not exist for purposes of this Agreement prior to a Change in Control of Ashland (or the Successor, as applicable).
 
(d)                 a “ Specified Termination ” will arise (i) in the event that your employment is involuntarily terminated by Ashland (or the Successor, as applicable) or the Acquiror without Cause, (ii) in the event that, following a Change in Control, you elect to terminate your employment with the Acquiror for Good Reason or (iii) in the event of your death or Disability.

(e)                 the “ Successor ” shall mean the successor in interest (i) to all or substantially all of the business and/or assets of Ashland (whether direct or indirect, by purchase, merger, consolidation, share exchange or otherwise); or (ii) to any portion of the business or assets of Ashland which are no longer owned by Ashland as a result of the completion of the Transaction; in each case with which you become employed in connection with the Transaction.  For the avoidance of doubt, for purposes of this Agreement, the independent, publicly traded company that would operate the Valvoline business immediately following the Transaction would be the Successor in the event you become employed by such company in connection with the Transaction.

9.              Executive Compensation Recovery Policy .  Ashland has adopted an Executive Compensation Recovery Policy (the “ Clawback Policy ”) for Ashland’s executive officers effective for plan years beginning on or after October 1, 2009.  Under the Clawback Policy, in the event any of Ashland’s financial statements from and after fiscal 2010 are materially restated, as determined by the Audit Committee of the Board of Directors of Ashland, due to fraudulent activity or intentional misconduct by an executive officer as determined by the Board of Directors of Ashland in its sole discretion, such officer would be required to reimburse Ashland for any incentive-related compensation paid to such executive officer in the manner described below.  The portion this Award that is based on performance measures which are recalculated to reflect the restated financial results would be used to determine the amount to be reimbursed.  Any reimbursement with respect to this Award would be required to be made in cash.
 
___________________________
5  For the CEO.
 
 
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In addition, the Board of Directors of Ashland has the discretion to determine whether other named executive officers (“ NEOs ”) would be required to repay incentive-related compensation pursuant to the Clawback Policy, whether or not such NEOs were involved in the fraudulent activity or misconduct.  Ashland has a period of three (3) years after the payment or award was made to seek reimbursement from the applicable executive officer(s) or NEO(s).

10.              Miscellaneous .  Notwithstanding any other provision of this Agreement, the P&C Committee of Ashland (or the board of directors of the Successor or the appropriate committee thereof, as applicable) or the Acquiror may, in its sole discretion, provide for accelerated vesting of the Award at any time and for any reason.

Ashland confirms this Award to the Participant, as a matter of separate agreement and not in lieu of salary or any other compensation for services, of the number of shares of Restricted Stock set forth above, subject to and upon all the terms, provisions and conditions contained herein and in Attachment 2 hereto and the Plan.  Copies of the Plan and related prospectus are available for the Participant’s review on Fidelity’s website.

Nothing contained in this Agreement, Attachment 2 hereto or in the Plan shall confer upon the Participant any right to continue in the employment of, or remain in the service of, Ashland or any of its subsidiaries (or the Successor or any of its subsidiaries, as applicable) or the Acquiror or any of its subsidiaries.

In the event that any provisions of this Agreement conflict with the Plan, the provisions of this Agreement shall control.  The section headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Information about the Participant and the Participant’s participation in the Plan may be collected, recorded and held, used and disclosed by and among Ashland, the Successor and their subsidiaries and any third-party Plan administrators as necessary for the purpose of managing and administering the Plan.  The Participant understands that such processing of this information may need to be carried out by Ashland, the Successor and their subsidiaries and by third-party administrators whether such persons are located within the Participant’s country or elsewhere, including the United States of America.  By accepting this Award, the Participant consents to the processing of information relating to the Participant and the Participant’s participation in the Plan in any one or more of the ways referred to above.

The Participant consents and agrees to electronic delivery of any documents that Ashland may elect to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other forms of communications) in connection with this and any other award made or offered under the Plan.  The Participant understands that, unless earlier revoked by the Participant by giving written notice to Ashland Inc., Attn: Lynne Sprinkle, 500 Hercules Road, Bldg. 8134, Wilmington, Delaware 19808, this consent shall be effective for the duration of the Award.  The Participant also understands that the Participant shall have the right at any time to request that Ashland deliver written copies of any and all materials referred to above at no charge.
 
 
 

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Please contact Lynne Sprinkle (302) 594-5015; LASprinkle@ashland.com if you have any questions.

This Award of shares of Restricted Stock is subject to the Participant’s on-line acceptance of the terms and conditions of this Agreement through the Fidelity website.  The right to the shares of Restricted Stock under the Plan shall expire if not accepted by __________________.

By accepting the terms and conditions of this Agreement, the Participant acknowledges receipt of a copy of the Plan, the related prospectus, and Ashland’s most recent Annual Report and Proxy Statement (the “ Prospectus Information ”).  The Participant represents that he or she is familiar with the terms and provisions of the Prospectus Information and hereby accepts this Award on the terms and conditions set forth herein and in the Plan, and acknowledges that he or she had the opportunity to obtain independent legal advice at his or her expense prior to accepting this Award.

 
IN WITNESS WHEREOF , ASHLAND has caused this instrument to be executed and delivered effective as of the day and year first above written.

 
ASHLAND INC.

By:
   
Name:
   
Title:
   

 
 
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Attachment 2
Performance Goal

The Performance Goal adopted by the P&C Committee of Ashland for the Performance Period is described below:

Combined weighted-average relative total shareholder return (TSR) over the Performance Period of (1) Ashland as of the beginning of the Performance Period and (2) each of Ashland and Valvoline on the 120th day after the Transaction, against the TSR of the Peer Companies (S&P 500 / S&P 400 Materials).

The TSR Target (50% of the number of shares of Restricted Stock awarded) is the 50th percentile.  The TSR Threshold (12.5% of the number of shares of Restricted Stock awarded) is the 35th percentile.  The maximum award is 100% of the number of shares of Restricted Stock awarded when performance is at the 90th percentile of the peer group.  The number of shares of Restricted Stock awarded will be interpolated in the event percentile performance is achieved between the values shown below.

 
Percentile Performance vs.
Peer Group
Percent of Maximum Earned
Maximum
90th
100%
 
70th
75%
Target
50th
50%
 
40th
25%
Threshold
35th
12.5%
 
Below 35th
0%

The weighting of post-transaction Ashland TSR and Valvoline TSR will be based on the market cap of each of Ashland and Valvoline on the date of the Transaction.   TSR will be measured utilizing the applicable 20-day average stock price preceding the beginning and end of the Performance Period.

In the event of a Change in Control of Ashland (or the Successor, as applicable) following the Transaction and prior to the 120th day following the Transaction, the relative TSR of Ashland (or the Successor, as applicable) will be calculated as soon as practicable following such Change in Control, based on the consideration received by shareholders of Ashland (or the Successor, as applicable) in connection with such transaction.
 
 
 
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The Performance Goal described above will apply to a prorated portion of the shares of Restricted Stock awarded, with such proration to be based on the number of full or partial months elapsed from the beginning of the performance period (October 1, 2015) through the date of the Transaction.  However, in no event will the Performance Goal apply to less than two-thirds of the shares of Restricted Stock awarded.  50% of the shares of Restricted Stock that are not subject to the Performance Goal will convert into shares of Time-Vesting Restricted Stock (“ TVRS ”) immediately following the Performance Period (i.e., at target level).

All calculations and determinations shall be made by the P&C Committee of Ashland (or the board of directors of the Successor or the appropriate committee thereof, as applicable) in its sole discretion.

The first table below illustrates the number of shares that would convert into TVRS based on the level of TSR performance achieved and the month in which the transaction occurs, assuming a grant of 18,000 shares of Restricted Stock.  The subsequent table illustrates the percentage of the shares of Restricted Stock granted that would convert into TVRS in each scenario.  In each case, the final row marked “Not Subject to Performance Goal” illustrates the number or percentage of shares of Restricted Stock that will convert into TVRS without being subject to the Performance Goal.


Assumes 18,000 shares of Restricted Stock Granted
Percentile Peformance vs. Peer Group
Performance
Achieved
 
# of Restricted Shares That Would Convert Into TVRS Based on Percentile Performance vs Peer Group and Month in Which Transaction Occurs
0-24
25
26
27
28
29
30
31
32
33
34
35
36
Maximum – 90th
100%
Subject to Performance Goal
12,000
12,500
13,000
13,500
14,000
14,500
15,000
15,500
16,000
16,500
17,000
17,500
18,000
70th
75%
9,000
9,375
9,750
10,125
10,500
10,875
11,250
11,625
12,000
12,375
12,750
13,125
13,500
Target – 50th
50%
6,000
6,250
6,500
6,750
7,000
7,250
7,500
7,750
8,000
8,250
8,500
8,750
9,000
40th
25%
3,000
3,125
3,250
3,375
3,500
3,625
3,750
3,875
4,000
4,125
4,250
4,375
4,500
Threshold – 35th
12.5%
1,500
1,563
1,625
1,688
1,750
1,813
1,875
1,938
2,000
2,063
2,125
2,188
2,250
Below 35th
0.0%
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
Not Subject to
Performance Goal
3,000
2,750
2,500
2,250
2,000
1,750
1,500
1,250
1,000
750
500
250
-



Percentile Peformance vs. Peer Group
Performance
Achieved
 
% of Restricted Shares That Would Convert Into TVRS Based on Percentile Performance vs Peer Group and Month in Which Transaction Occurs
0-24
25
26
27
28
29
30
31
32
33
34
35
36
Maximum – 90th
100%
Subject to Performance Goal
66.7%
69.4%
72.2%
75.0%
77.8%
80.6%
83.3%
86.1%
88.9%
91.7%
94.4%
97.2%
100.0%
70th
75%
50.0%
52.1%
54.2%
56.3%
58.3%
60.4%
62.5%
64.6%
66.7%
68.8%
70.8%
72.9%
75.0%
Target – 50th
50%
33.3%
34.7%
36.1%
37.5%
38.9%
40.3%
41.7%
43.1%
44.4%
45.8%
47.2%
48.6%
50.0%
40th
25%
16.7%
17.4%
18.1%
18.8%
19.4%
20.1%
20.8%
21.5%
22.2%
22.9%
23.6%
24.3%
25.0%
Threshold – 35th
12.5%
8.3%
8.7%
9.0%
9.4%
9.7%
10.1%
10.4%
10.8%
11.1%
11.5%
11.8%
12.2%
12.5%
Below 35th
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
N/A
N/A
Not Subject to
Performance Goal
16.7%
15.3%
13.9%
12.5%
11.1%
9.7%
8.3%
6.9%
5.6%
4.2%
2.8%
1.4%
0.0%

 
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