
Exhibit 1.2
                             1,312,500 Shares
                                Ashland Inc.
                                Common Stock

                          Indemnification Agreement

                                February 24, 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:

         Waco  Oil  and  Gas  Co.,   Inc.,  a  West  Virginia   Corporation
("Corporate Selling Stockholder"), Ira L. Morris, and Betty Sue Morris (the
"Individual    Selling    Stockholders")    (collectively    the   (Selling
Stockholders"),  confirm  their  agreement  expressed  in  a  letter  dated
February 6, 1995 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 the Selling
Stockholders of up to 1,312,500 shares of Common Stock of Ashland Inc. (the
"Securities").

         Ashland  Inc.  ("Company")  has  filed  with  the  Securities  and
Exchange Commission (the "Commission") a registration statement on Form S-3
(No. 33- ) and a related preliminary prospectus for the registration of the
Securities under the Securities Act of 1933 (the "1933 Act"), has committed
to file such  amendments  thereto,  if any,  and such  amended  preliminary
prospectuses as may have been required to the date hereof, and to 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 Rule  430(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 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 Selling  Stockholders  covenant 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 Selling  Stockholders agree 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
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 about
the  Selling   Stockholders   furnished  to  the  Company  by  the  Selling
Stockholders for use in the preparation of such  Registration  Statement or
any preliminary prospectus or Prospectus.

         (b)  Merrill  shall  indemnify  and hold  harmless  the  Corporate
Selling Stockholder,  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) and the  Individual  Selling
Stockholders  and their agents  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  Selling  Stockholders  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 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 required to be
stated  therein or necessary in order to make the  statements  therein,  in
light of the circumstances in which they are 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 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

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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 of
any  settlement  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.

         2. In order to  provide  for just and  equitable  contribution  in
circumstances  in which the indemnity  agreement  provided for in Section 1
hereof  is for any  reason  held  to be  unenforceable  by the  indemnified
parties  although  applicable  in  accordance  with its terms,  the Selling
Stockholders  and Merrill Lynch shall  contribute to the aggregate  losses,
liabilities,  claims,  damages and expenses of the nature  contemplated  by
said  indemnity  agreement  incurred by Merrill  Lynch and 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 Selling  Stockholders  are 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 Lynch, and the individual Selling  Stockholders and
the  each  officer,   director  and  employee  of  the  Corporate   Selling
Stockholder,  and each person,  if any, who controls the Corporate  Selling
Stockholder within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as the Corporate Selling Stockholder.

         3. This  Agreement  shall  inure to the  benefit of and be binding
upon  Merrill  Lynch and the  Selling  Stockholders  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 Selling Stockholders and their respective  successors
and the controlling persons and officers,  directors and employees referred
to in Sections 1 and 2 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 Selling Stockholders and their respective successors,
and said  controlling  persons and  officers,  directors  and employees and
their  heirs and legal  representatives,  and for the  benefit  or 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.

     4. 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.


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

                                       Very truly yours,
                                       Waco Oil and Gas Co., Inc.

                                       By:  /s/ Kenneth L. Greenlief
                                       Title:  Executive Vice President
                                               and Treasurer                  


                                       /s/ Ira L. Morris by Kenneth L.
                                           Greenlief, Attorney-in-fact
                                       Ira L. Morris


CONFIRMED AND ACCEPTED                 /s/ Betty Sue Morris by Kenneth L.
as of the date first above written:        Greenlief, Attorney-in-fact
                                        Betty Sue Morris
MERRILL LYNCH & CO.                   
Merrill Lynch, Pierce, Fenner & 
   Smith Incorporated

By /s/ Charles Plohn, Jr.
      Authorized Signatory





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