

     Exhibit 1.1




                                   1,312,500 Shares
                                      Ashland Inc.
                                      Common Stock


                             Indemnification Agreement


                                 February 21, 1995



Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
250 Vesey Street
New York, N.Y. 10281-1305

Dear Sirs:

         Ashland Inc., a Kentucky Corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch,  Pierce,  Fenner & Smith
Incorporated  ("Merrill Lynch"),  with respect to the sale, through Merrill
Lynch as agent or to  Merrill  Lynch as  principal,  by Waco Oil & Gas Co.,
Inc., Ira L. Morris and Betty Sue Morris (the "Selling  Stockholders"),  of
up to 1,312,500 shares of Common Stock of the Company (the "Securities").

         The Company has filed with the Securities and Exchange  Commission
(the "Commission") a registration  statement on Form S-3 (No. 33-57767) and
a related  preliminary  prospectus for the  registration  of the Securities
under  the  Securities  Act of  1933  (the  "1933  Act"),  has  filed  such
amendments thereto,  if any, and such amended  preliminary  prospectuses as
may have been  required to the date hereof,  and will file such  additional
amendments  thereto  and such  amended  prospectuses  as may  hereafter  be
required.  Such registration  statement (as amended, if applicable) and the
prospectus  constituting  a  part  thereof  (including  in  each  case  all
documents  incorporated or deemed to be  incorporated by reference  therein
and  the  information,  if  any,  deemed  to be part  thereof  pursuant  to
information,  if any, deemed to be part thereof pursuant to Rule 430A(b) of
the rules and  regulations of the Commission  under the 1933 Act (the "1933
Act Regulations"), as from time to time amended or supplemented pursuant to
the 1933 Act, the Securities Exchange Act of 1934, as

<PAGE>
amended (the "1934 Act"), or otherwise,  are hereinafter referred to as the
"Registration Statement" and the "Prospectus", respectively, except that if
any revised  prospectus  shall be provided to Merrill  Lynch by the Company
for use in  connection  with the offering of the  Securities  which differs
from the Prospectus on file at the Commission at the time the  Registration
Statement  becomes  effective  (whether or not such revised  prospectus  is
required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act
Regulations),  the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to Merrill Lynch for such use.
All references in this Agreement to financial  statements and schedules and
other  information  which is  "contained",  "included"  or  "stated" in the
Registration  Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such  financial  statements
and  schedules  and  other   information  which  is  or  is  deemed  to  be
incorporated by reference in the Registration  Statement or the Prospectus,
as the case may be; and all  references in this  Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed
to mean and include the filing of any document  under the 1934 Act which is
or is deemed to be incorporated by reference in the Registration  Statement
or the Prospectus, as the case may be.

         1. The Company covenants with Merrill Lynch for so long as Merrill
Lynch  acts as  agent  or  principal  in  connection  with  the sale of the
Securities, as follows:

     (a) The  Company  will notify  Merrill  Lynch  immediately  (i) of the
effectiveness  of the  Registration  Statement  and any  amendment  thereto
(including  any  post-effective  amendment),  (ii)  of the  receipt  or any
comments from the  Commission,  (iii) of any request by the  Commission for
any amendment to the Registration  Statement or any amendment or supplement
to the Prospectus or for additional  information,  and (iv) of the issuance
by the  Commission of any stop order  suspending the  effectiveness  of the
Registration  Statement  or the  initiation  of any  proceedings  for  that
purpose.  The  Company  will make every  reasonable  effort to prevent  the
issuance of any stop order and, if any stop order is issued,  to obtain the
lifting thereof at the earliest practicable time.

     (b) The Company  will give Merrill  Lynch  notice of its  intention to
file or prepare any amendment to the Registration  Statement (including any
post-effective  amendment) or any amendment or supplement to the Prospectus
(including  any revised  prospectus  which the Company  proposes for use by
Merrill  Lynch in  connection  with the  offering of the  Securities  which
differs from the Prospectus on file

<PAGE>

at the Commission at the time the Registration Statement becomes effective,
whether or not such revised  Prospectus is required to be filed pursuant to
Rule 424(b) of the 1933 Act  Regulations)  and will  furnish with copies of
any such amendment or supplement a reasonable  amount of time prior to such
proposed filing or use, as the case may be.

     (c) The Company will deliver to Merrill Lynch as many conformed copies
of the  Registration  Statement as originally  filed and of each  amendment
thereto  (including  exhibits filed  therewith or incorporated by reference
therein) as Merrill Lynch may reasonably request.

     (d) The Company will furnish to Merrill Lynch from time to time during
the period when the  Prospectus is required to be delivered  under the 1933
Act or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented)  as Merrill  Lynch may  reasonably  request for the  purposes
contemplated  by the 1933 Act or the 1934 Act or the respective  applicable
rules and regulations of the Commission thereunder.

         2. (a) The Company  agrees to indemnify and hold harmless  Merrill
Lynch,  its  directors,  officers,  employees  and their  agents,  and each
person,  if any, who controls  Merrill Lynch (within the meaning of Section
15 of the 1933 Act or the 1934 Act) against any losses,  claims  (including
any actual or threatened  investigation  or proceeding by any  governmental
agency or body), damages, liabilities or expenses whatsoever (including the
reasonable costs of investigating and defending against any claims therefor
and reasonable  counsel fees incurred in connection  therewith) as incurred
to which  Merrill  Lynch or any such other person may become  subject under
the 1933 Act or the 1934 Act or  otherwise  which arise out of or are based
on the  grounds  or alleged  grounds  (i) that the  Registration  Statement
(including,  without  limitation  any documents  incorporated  by reference
therein), as amended, includes or allegedly includes an untrue statement of
a  material  fact or omits or  allegedly  omits  to state a  material  fact
required to be stated  therein or necessary in order to make the statements
therein not  misleading,  or (ii) that any  preliminary  prospectus  or the
Prospectus (including,  without limitation any document(s)  incorporated by
reference  therein,  as  amended or  supplemented,  includes  or  allegedly
includes an untrue statement of a material fact or omits or allegedly omits
to state a material  fact  required to be stated  therein or  necessary  in
order to make the  statements  therein,  in light of the  circumstances  in
which they were made, not misleading; provided that the foregoing indemnity
agreement  shall  not apply in any such  case to the  extent  that any such
loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense  arises out of or is based upon an untrue  statement  or alleged
untrue statement in or omission or alleged omission from such  Registration
Statement,  or any preliminary  prospectus or Prospectus,  in reliance upon
and in conformity with information furnished to the

<PAGE>

Company by or on behalf of the Selling  Shareholders  or Merrill  Lynch for
use in the preparation thereof; and provided further that the Company shall
not be liable to Merrill  Lynch or any other  person,  if any, who controls
Merrill  Lynch  within the meaning of the 1933 Act, in any such case to the
extent  that  any  such  loss,  claim,  damage,  liability  (or  action  or
proceeding  in  respect  thereof)  or expense  arises out of such  person's
failure to send or give a copy of the  Prospectus,  as the same may be then
supplemented  or amended,  to the person  asserting an untrue  statement or
alleged  untrue  statement  or alleged  omission at or prior to the written
confirmation of the sale of the Securities to such person if such statement
or omission was corrected in such Prospectus.

     (b)  Merrill  shall  indemnify  and hold  harmless  the  Company,  its
directors,  officers,  employees and their agents, each person, if any, who
controls  the Company  (within the meaning of Section 15 of the 1933 Act or
the  1934  Act)  against  any  losses,  claims  (including  any  actual  or
threatened investigation or proceeding by any governmental agency or body),
damages, liabilities or expenses whatsoever (including the reasonable costs
of investigating  and defending  against any claims therefor and reasonable
counsel fees  incurred in  connection  therewith)  as incurred to which the
Company or any such other person may become  subject  under the 1933 Act or
the 1934 Act or otherwise which arise out of or are based on the grounds or
alleged grounds (i) that the  Registration  Statement  (including,  without
limitation any documents  incorporated by reference  therein),  as amended,
includes or allegedly  includes an untrue  statement of a material  fact or
omits or  allegedly  omits to state a material  fact  required to be stated
therein  or  necessary  in  order  to  make  the  statements   therein  not
misleading,  or (ii)  that any  preliminary  prospectus  or the  Prospectus
(including,  without  limitation any document(s)  incorporated by reference
therein,  as amended or  supplemented,  includes or  allegedly  includes an
untrue  statement of a material fact or omits or allegedly omits to state a
material fact  required to be stated  therein or necessary in order to make
the statements  therein,  in light of the  circumstances in which they were
made, not misleading, if such statement or alleged statement or omission or
alleged  omission  was  made  in  reliance  upon  and  in  conformity  with
information  furnished  by  Merrill  Lynch  to the  Company  for use in the
preparation of such Registration Statement or any preliminary prospectus or
Prospectus.

     (c) If any action or claim  shall be brought  or  asserted  against an
indemnified  party  or  parties  (the  "Indemnified   "Party")  under  this
paragraph  (vi)  in  respect  of  which  indemnity  may be  sought  from an
indemnifying  party  or  parties  (the  "Indemnifying  Party")  under  this
paragraph (2) (a "Claim"), the Indemnified Party shall

<PAGE>

immediately  give prompt  written  notice of the Claim to the  Indemnifying
Party,  who shall assume the defense  thereof,  including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of
all  expenses,   except  that  any  delay  or  failure  to  so  notify  the
Indemnifying  Party  shall  only  relieve  the  Indemnifying  Party  of its
obligations  hereunder to the extent, if any, they are prejudiced by reason
of such delay or  failure.  The  Indemnified  Party shall have the right to
employ separate  counsel and  participate in the defense of the Claim,  but
the fees and  expenses  of such  counsel  shall  be at the  expense  of the
Indemnified  Party unless (i) the employment of counsel by the  Indemnified
Party has been authorized by the Indemnifying  Party,  (ii) the Indemnified
Party shall have reasonably  concluded that there is a conflict of interest
between the Indemnifying  Party and the Indemnified Party in the conduct of
the defense of such action (in which case the Indemnifying  Party shall not
have the  right to  direct  the  defense  of such  action  on behalf of the
Indemnified  Party) or (iii) the Indemnifying  Party shall not in fact have
employed  counsel to assume the  defense of such  action,  in each of which
cases the fees and  expenses  of  counsel  shall be at the  expense  of the
Indemnifying  Party.  An  Indemnifying  Party  shall not be liable  for any
settlement  of any action or claim  effected  without its written  consent.
Anything  in this  paragraph  (vi)  to the  contrary  notwithstanding,  the
Indemnifying Party shall not, without the Indemnified Party's prior written
consent,  settle or  compromise  any claim or  consent  to the entry of any
judgment  with respect to any Claim for anything  other than money  damages
paid by the  Indemnifying  Party that would have any adverse  affect on the
Indemnified Party.

         3. In order to  provide  for just and  equitable  contribution  in
circumstances  in which the indemnity  agreement  provided for in Section 2
hereof  is for any  reason  held  to be  unenforceable  by the  indemnified
parties  although  applicable in accordance with its terms, the Company and
Merrill  Lynch  shall  contribute  to the  aggregate  losses,  liabilities,
claims,  damages and expenses of the nature  contemplated by said indemnity
agreement  incurred by the Company and Merrill Lynch, as incurred,  in such
proportions that Merrill Lynch is responsible for that portion  represented
by the  percentage  that the  commission  received by Merrill  Lynch on the
sales of the Securities  bears to the sales price of such  Securities,  and
the Company is  responsible  for the balance;  provided,  however,  that no
person  guilty of  fraudulent  misrepresentation  (within  the  meaning  of
Section 11(f) of the 1933 Act) shall be entitled to  contribution  from any
person  who  was  not  guilty  of such  fraudulent  misrepresentation.  For
purposes of this Section,  each  officer,  director and employee of Merrill
Lynch and each  person,  if any,  who  controls  Merrill  Lynch  within the
meaning  of  Section  15 of the 1933 Act  shall  have  the same  rights  to
contribution as Merrill


<PAGE>


Lynch,  and each  director of the Company,  each officer of the Company who
signed the Registration  Statement,  and each person,  if any, who controls
the Company within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as the Company.

     4. This  Agreement  shall inure to the benefit of and be binding  upon
Merrill  Lynch and the Company  and their  respective  successors.  Nothing
expressed or mentioned in this  Agreement is intended or shall be construed
to give any person,  firm or corporation,  other than Merrill Lynch and the
Company and their  respective  successors and the  controlling  persons and
officers, directors and employees referred to in Sections 2 and 3 and their
heirs and legal  representatives,  any legal or equitable right,  remedy or
claim  under  or in  respect  of this  Agreement  or any  provision  herein
contained.  This Agreement and all  conditions  and  provisions  hereof are
intended to be for the sole and exclusive  benefit of Merrill Lynch and the
Company and their respective  successors,  and said controlling persons and
officers,   directors   and   employees   and   their   heirs   and   legal
representatives,   and  for  the  benefit  of  no  other  person,  firm  or
corporation.  No purchaser of Securities from Merrill Lynch shall be deemed
to be a successor by reason merely of such purchase.

     5. This  Agreement  shall be governed by and  construed in  accordance
with the laws of the State of New York  applicable to agreements made to be
performed in said State.

     If the  foregoing  is in  accordance  with your  understanding  of our
agreement,  please  sign and return to the  Company a  counterpart  hereof,
whereupon  this  instrument,  along with all  counterparts,  will  become a
binding  agreement between Merrill Lynch and the Company in accordance with
its terms.

                                           Very truly yours,
                                           Ashland Inc.

                                           By: /s/ Thomas L. Feazell
                                               Thomas L. Feazell
                                               Senior Vice President,
                                               General Counsel and Secretary

CONFIRMED AND ACCEPTED 
as of the date first above written:

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
   Incorporated

By:  /s/ Charles Plohn, Jr.
      Authorized Signatory


