
               AGREEMENT OF MERGER AND PLAN OF REORGANIZATION

                                   among

                               Ashland Inc.,

            through its division known as The Valvoline Company

                                    and

      Bernard A Li, individually and as trustee of The Li Family Trust
                              Charles W. Hill
                                    and
                              Walter S. Arnold
                                    and
                        EGL-1, Inc. (the "Company")

       for the acquisition by merger of all the outstanding shares of
                        Common Stock of the Company

                              January 21, 1998



<PAGE>


                           LIST OF EXHIBITS

Exhibit 1.4       Form of Registration Rights Agreement

Exhibit 5.1(G)    Form of Affidavit re Non-Foreign Status

Exhibit 6.7       Forms of Releases

Exhibit 6.11(a)   Form of Consulting Agreement for Bernard A. Li

Exhibit 6.11(b)   Form of Employment Agreement for Walter S. Arnold

Exhibit 6.11(c)   Form of Employment Agreement for Charles W. Hill

Exhibit 6.11(d)   Offer of Employment for Elsie Jordan

Exhibit 9.1(a)    Form of Shareholders' Closing Certificate

Exhibit 9.1(b)    Form of Opinion of Counsel to Shareholders

Exhibit 9.2(e)    Form of Opinion of Counsel to Purchaser



<PAGE>


               AGREEMENT OF MERGER AND PLAN OF REORGANIZATION


                  THIS  AGREEMENT  OF  MERGER  AND  PLAN OF  REORGANIZATION
("Agreement"),  made and entered into as of this 21st day of January, 1998,
among Bernard A. Li, an individual,  individually  and as trustee of The Li
Family Trust,  Charles W. Hill,  an  individual,  and Walter S. Arnold,  an
individual  (collectively  hereinafter  referred to as the "Shareholders"),
EGL-1, Inc., a California corporation (the "Company"),  and Ashland Inc., a
Kentucky corporation,  through its division known as The Valvoline Company,
with offices  located at 3499 Blazer  Parkway,  Lexington,  Kentucky  40509
(hereinafter referred to as the "Purchaser"). Immediately upon execution of
this Agreement,  Purchaser shall form a California  corporation which shall
be a wholly-owned subsidiary of Purchaser ("Valvoline Sub");

                                WITNESSETH:

                  WHEREAS,  the Shareholders own of record and beneficially
all of the issued and outstanding shares of capital stock of the Company;

                  WHEREAS,  the  Shareholders  desire to sell to Purchaser,
and Purchaser desires to buy from the  Shareholders,  all of the issued and
outstanding  shares of common  stock,  no par value,  of the  Company  (the
"Shares");

                  WHEREAS,  the  Shareholders and Purchaser intend that the
acquisition of the Shares qualify as a reorganization within the meaning of
Sections  368(a)(1)(A)  and  368(a)(2)(E)  of the Internal  Revenue Code of
1986, as amended (the "Code");

                  NOW,   THEREFORE,   in  consideration  of  the  foregoing
premises, the mutual representations,  warranties, covenants and agreements
contained herein, and upon terms and subject to the conditions  hereinafter
set forth, the parties do hereby agree as follows:


                                ARTICLE I.
                              TERMS OF MERGER

                  1.1 Merger. On the Closing Date, pursuant to the statutory
agreement of merger executed concurrently herewith, (i) Valvoline Sub shall
merge with and into the Company (the  "Merger"),  (ii) all the  outstanding
capital  stock of  Valvoline  Sub shall be  converted  into that  number of
shares of  common  stock of the  Company  equal to the  Purchase  Price (as
adjusted  pursuant to Section 1.3)  divided by the amount of Ashland  Stock
equivalent  to the  value  of the  Purchase  Price  (as  so  adjusted),  as
determined  under Section 1.4, and (iii) the Shares shall be converted into
the  Purchase  Price  (as  hereinafter   defined).   At  the  Closing,  the
Shareholders shall deliver to Purchaser  certificates,  representing all of
the Shares,  and Purchaser shall deliver to the  Shareholders  the Purchase
Price.

                  1.2 Purchase Price.  The aggregate  purchase price for the
Shares to be paid by Purchaser to the  Shareholders  hereunder shall be the
sum of Twenty Seven Million  Dollars  ($27,000,000.00),  as may be adjusted
pursuant to the provisions of Section 1.3 hereof (the "Purchase Price").

                  1.3 Purchase  Price  Adjustment.  Subject to compliance by
Purchaser with the provisions of this Section 1.3, the Purchase Price shall
be  adjusted  downward  by the sum of (i) the  Employee  Bonus  Amounts (as
hereinafter  defined) and (ii) the Company Transaction Fees (as hereinafter
defined). Prior to the Closing, the Purchaser shall have contributed to the
capital of Valvoline Sub cash in the amount  sufficient to pay the Employee
Bonus Amounts and the Company  Transaction Fees and on the Closing Date the
Purchaser  shall cause the Company,  as successor to Valvoline  Sub, to use
such cash to pay the  Employee  Bonus  Amounts and the Company  Transaction
Fees.  "Company  Transaction  Fees" means the fees and charges  incurred in
connection  with the  transactions  contemplated  by this  Agreement to (i)
Donaldson, Lufkin & Jenrette, (ii) Sheppard, Mullin, Richter & Hampton LLP,
(iii) Good, Swartz & Berns, and (iv) Fulwider,  Patton, Lee & Utecht,  LLP.
At least five days before the Closing Date,  the  Shareholders  shall cause
the Company to deliver to  Purchaser a schedule  showing the amounts of the
Company Transaction Fees. The parties agree that the Company shall have the
right to enter  into  agreements  with its  employees  to  provide  for the
payment to such  employees of the amounts set forth beside each  employee's
name as set forth on Schedule 1.3 hereto  ("Employee Bonus  Amounts").  The
Company shall use its  commercially  reasonable  efforts to obtain releases
from such  employees and to provide  copies thereof to the Purchaser on the
business day immediately preceding the Closing Date.


                  1.4 Form of  Consideration.  The  Purchase  Price shall be
paid by Purchaser at Closing to the  Shareholders  by issuance of shares of
common  stock,  par value  $1.00 per  share,  of Ashland  Inc.,  a Kentucky
corporation (the "Ashland  Stock") in an amount  equivalent to the value of
the  Purchase  Price.  The number of shares of  Ashland  Stock that will be
deemed equivalent to the value of the Purchase Price shall be determined by
dividing the Purchase  Price by the lesser of the closing  price of Ashland
Stock as reported on the composite tape of the New York Stock Exchange for:
(1) the business day immediately  preceding the Closing;  or (2) the twenty
(20) business days immediately  preceding Closing,  represented as a simple
average.   The   Ashland   Stock   shall   be  paid  to  the   Shareholders
proportionately  according  to the number and  percentage  of shares of the
Company held by each Shareholder at Closing. None of the Purchase Price may
be paid in cash or other  property  except for  payment  of any  fractional
shares of the Purchaser.  Following the Closing, the Purchaser shall file a
registration  statement  for the purpose of  registering  the resale of the
Ashland Stock under the  Securities  Act of 1933,  as amended  ("Securities
Act")  subject  to  the  terms  and  conditions  of a  Registration  Rights
Agreement substantially in the form of Exhibit 1.4 hereto.

                  1.5 Binding Nature of Agreement.  Until the Closing Date,
the  Shareholders  and  their  representatives  shall  be  prohibited  from
discussing,  negotiating or entering into an agreement with any third party
for the purpose of or in any way related to the  potential  acquisition  of
the  Company,  its stock or its assets.  In  addition,  the  parties  shall
jointly prepare a public  announcement  outlining the proposed  arrangement
between the parties to be released  as soon as  practicable  following  the
execution of this Agreement.

                                  ARTICLE II.
                                  CLOSING

                  2.1 The Closing; Closing Date. The Merger shall take place
at the  offices  of  Sheppard,  Mullin,  Richter  & Hampton  LLP,  501 West
Broadway,  19th Floor, San Diego, California 92101 at 9:00 a.m. on February
2, 1998,  or at such other  place  and/or  other  date as the  parties  may
mutually agree (the "Closing Date").  In no event shall the Closing Date be
later than February 15, 1998.


                                 ARTICLE III.
                       REPRESENTATIONS AND WARRANTIES
                            OF THE SHAREHOLDERS

                  Each  of  the   Shareholders   represents   and  warrants
severally,  but not jointly, to Purchaser as set forth in this Article III.
The  representations  and  warranties  of the  Shareholders  set  forth  in
Sections  3.3,  3.5 and 3.6 shall be  deemed  to be given by a  Shareholder
solely as to himself. For all other representations and warranties provided
by the Shareholders,  each Shareholder's  knowledge shall be imputed to the
other  Shareholders   regardless  of  a  particular   Shareholder's  actual
knowledge.  As used herein,  "knowledge"  of a Shareholder  shall mean such
Shareholder's  actual  knowledge.   Matters  disclosed  in  a  schedule  in
reference to any specific  section  shall be deemed to be disclosed for all
purposes of this Article III.

                  3.1  Organization  of  the  Company.   The  Company  is  a
corporation duly organized, validly existing and in good standing under the
laws of the State of  California  and has full power and  authority to own,
lease and operate its  properties and to carry on its business as now being
conducted.  The Company is duly  qualified  or  otherwise  authorized  as a
foreign  corporation  to transact  business and is in good  standing in all
jurisdictions  in which it is  conducting  its business  (except  where the
failure  to so  qualify  would not have a  material  adverse  effect on the
Company)  and  each  jurisdiction  wherein  the  Company  is  qualified  or
authorized is set forth in Schedule 3.1.

                  3.2  Capitalization of the Company. As of the date hereof,
the authorized  capitalization  of the Company consists of 1,000,000 shares
of Common  Stock,  no par  value,  of which  100,000  shares are issued and
outstanding.  All of the issued and  outstanding  shares of the Company are
held  by  the  Shareholders,   and  are  validly  issued,  fully  paid  and
non-assessable.  There are no outstanding rights, subscriptions,  warrants,
calls,  options or other  agreements  of any kind to purchase or  otherwise
receive from the  Shareholders or the Company,  and there are no securities
convertible  into or  exchangeable  for, any shares of capital stock of the
Company.

                  3.3 Title to Shares.  The  Shareholders are the beneficial
and record owners of all the Shares,  free and clear of any lien, pledge or
encumbrance ("Liens").

                  3.4   Articles   of   Incorporation   and   By-laws.   The
Shareholders  have  heretofore  delivered  or made  available  to Purchaser
copies of the Company's  Articles of Incorporation and By-laws,  which have
not been amended since such delivery or being made available.

                  3.5 The Shareholders; Authority. The Shareholders have all
requisite  power and authority to execute and deliver this Agreement and to
perform their obligations hereunder.  This Agreement has been duly executed
and delivered by the  Shareholders  and  constitutes  the valid and binding
obligation of the  Shareholders,  enforceable  against the  Shareholders in
accordance with its terms,  except as enforcement thereof may be limited by
bankruptcy,   insolvency,   reorganization,   moratorium,  and  other  laws
affecting the  enforcement  of creditors'  rights  generally and subject to
equitable principles.

                  3.6  Consents  and  Approvals.  Except  as  set  forth  on
Schedule 3.6, there is no  authorization,  consent order or approval of, or
notice  to or  filing  with,  any  governmental  authority  required  to be
obtained or given or waiting  period  required to expire as a condition  to
the  lawful  consummation  by the  Shareholders  of the sale of the  Shares
pursuant to this Agreement.

                  3.7 No  Conflicts.  Except as set forth on  Schedule  3.7,
neither the execution and delivery of this  Agreement nor the  consummation
of the transactions contemplated hereby will:

                           a) violate or conflict with any provision of the
Articles of Incorporation or By-laws of the Company;

                           b)  violate,  conflict  with  or  result  in the
breach or termination of, or otherwise give any other contracting party the
right  to  terminate,  or  constitute  a  default  under  the  terms of any
contract, mortgage, lease, bond, indenture,  agreement,  franchise or other
instrument or obligation  of or with the Company,  whether  written or oral
(collectively,  "Obligations"), except where any of the foregoing would not
have a material adverse effect on the Company;

                           c) result in the creation of any  material  Lien
upon any assets of the Company pursuant to the terms of any Obligation;

                           d) violate any judgment, order, writ, injunction
or decree of any court,  arbitrator,  administrative  agency or  government
authority (collectively, "Orders") to which the Company is a party; or

                           e) constitute a violation by the Shareholders or
the Company of any statute,  law or regulation of any jurisdiction,  except
for any  violation  which would not have a material  adverse  effect on the
Company.

                  3.8 Financial Statements.  The Shareholders have delivered
to  Purchaser  (a)  true  copies,  reviewed  by Good,  Swartz & Berns,  the
Company's  independent  certified  public  accountants,  of  the  Company's
Balance  Sheet  ("Balance  Sheet" and the date  thereof  being the "Balance
Sheet  Date") for the fiscal year ended  December  31, 1996 (the  "Reviewed
Financial Statements");  and (b) the balance sheet and income statement for
the eleven  month period ended  November 30, 1997 (the  "Current  Financial
Statements"),  all of  which  Reviewed  Financial  Statements  and  Current
Financial  Statements  are set forth on Schedule  3.8  (collectively,  "the
Financial Statements"). The Reviewed Financial Statements were reviewed and
prepared  in  conformity  with  generally  accepted  accounting  principles
consistently  applied so as to fairly  present the financial  condition and
results of operations of the Company for the period presented.  The Current
Financial  Statements  have been  prepared by management of the Company for
internal purposes on a basis consistent with past practice.

                  3.9  Liabilities.  The  Company  does not have any  debts,
obligations  or  liabilities  of whatever kind or nature,  either direct or
indirect,  absolute or contingent,  matured or unmatured, except for debts,
obligations or liabilities that (i) are set forth on Schedule 3.9, (ii) are
fully  reflected  in,  or  reserved  against  on,  the  Reviewed  Financial
Statements or the Current Financial Statements,  (iii) were not required to
be set  forth in the  Reviewed  Financial  Statements  in  accordance  with
generally accepted accounting  principles on a consistently  applied basis,
(iv) were  incurred in the  ordinary  course of  business,  (v) are created
under this Agreement or other  contracts  listed on Schedule 3.14 hereto or
as required or permitted thereby, or (vi) would not have a material adverse
effect on the Company.

                  3.10  Absence of Certain  Changes or Events.  Except as set
forth  in  Schedule  3.10  or  except  as  otherwise  contemplated  by this
Agreement  (including  without  limitation  payment of the  Employee  Bonus
Amounts),  since  September  30,  1997,  there has not been (a) any damage,
destruction  or casualty  loss to the  physical  properties  of the Company
(whether  covered  by  insurance  or not) in  excess of  $25,000.00  in the
aggregate;  (b) any material adverse change in the business,  operations or
financial  condition  of the Company;  (c) any entry into any  transaction,
commitment  or agreement  (including  without  limitation  any borrowing or
capital  expenditure)  to the  Company  except  in the  ordinary  course of
business and in any event not greater than  $25,000.00;  (d) any redemption
or other  acquisition by the Company of the Company's  capital stock or any
declaration, setting aside or payment of any dividend or other distribution
in cash, stock or property with respect to the Company's capital stock; (e)
any  increase in the rate or terms of  compensation  payable,  or to become
payable,  by the Company to its  directors,  officers or  employees  or any
increase  in the rate or terms of any bonus,  pension,  insurance  or other
employee benefit plan, payment or arrangement made to, for or with any such
directors,  officers or key employees;  or (f) any sale,  transfer or other
disposition  of any  asset  of the  Company  to any  party,  including  the
Shareholders,  except for (I) payment of third-party  obligations incurred,
(II) transfers of assets identified as "Excluded Assets" on Schedule 3.10-A
hereto,  which Excluded Assets may be transferred to the Shareholders or an
entity  owned or  controlled  by them  (which  transfer  will not cause the
Company, after the merger with Valvoline Sub, to fail to hold substantially
all of its  properties  other than the Ashland  Stock within the meaning of
Code  Section  368(a)(2)(E)(i)),  and  (III)  transfers  of  assets  in the
ordinary  course of  business  or (g) any failure by the Company to pay its
accounts  payable or other  obligations in the ordinary course of business,
except for any failure  which would not have a material  adverse  effect on
the Company.

                  3.11        Properties.

                           a) The  Company  does not own any real  property
and there are no options held by the Company or contractual  obligations to
purchase  or  acquire  (including  by way of lease)  any  interest  in real
property.

                           b)  Schedule  3.11(b)  sets  forth  all  leases,
subleases or other  agreements  under which the Company is lessee or lessor
of any  real  property.  There is not  under  any of such  instruments  any
existing  or claimed  default,  event of default  or, to the  Shareholders'
knowledge,  event  which,  with  notice  or lapse  of time or  both,  would
constitute an event of default by the Company.

                  3.12 Patents, Copyrights and Trademarks. Schedule 3.12 sets
forth a list  of all  patents,  pending  patent  applications,  copyrights,
trademarks and trade names  ("Proprietary  Rights") used by the Company for
which the Company has or is seeking registration  protection,  all of which
are either owned by or licensed to the Company.  The Company  possesses the
right to use and to prevent  others from using such  Proprietary  Rights to
the extent  allowable  by  applicable  law and to the extent not limited by
existing  agreements.  Excepting the potential  claims which may arise from
certain  existing   conflicts  as  set  forth  on  Schedule  3.12,  to  the
Shareholders'  knowledge,  such Proprietary Rights do not infringe upon the
intellectual property rights currently asserted by others. Such Proprietary
Rights are  sufficient and adequate to carry on the business of the Company
as heretofore conducted by the Company.

                  3.13 Insurance.  Schedule 3.13 sets forth a list of current
primary policies or binders of fire, liability, product liability, workers'
compensation,  vehicular, and other current primary insurance held by or in
force for the benefit of the  Shareholders,  including  the  Company.  Such
policies and binders are in full force and effect. All premiums due on such
policies  have  been paid or  accrued.  The  Company  has not  borrowed  or
assigned  any of the  proceeds of any such  policies to any other person or
entity,  other than naming  persons or entities as  additional  insureds or
loss payees.  The Company is not in default  with respect to any  provision
contained in any such policy or binder,  the effect of which  default could
impair the ability of the Company to avail itself of the coverage  provided
by such policy or binder, and the Company has not failed to give any notice
or  present  any claim  under any such  policy or binder  when due and in a
timely fashion.

                  3.14 Contracts and Other Agreements.

                           a)   Schedule   3.14(a)   sets   forth  a  short
description  of all of the  following  agreements to which the Company is a
party or which it or its assets or properties are bound or subject:

                                  (i) agreements which obligate the Company
to purchase more than  $25,000.00  worth of goods and/or  services from any
one of the  Shareholders or a group or entity related to or affiliated with
one of the Shareholders;

                                  (ii) agreements for the sale of any of the
assets of the Company not in the ordinary course of business;

                                  (iii) leases  with a duration  of more than
one (1) year which  obligate the payment as rent or  otherwise,  in case of
each such lease, in excess of $25,000.00 per year;

                                  (iv) employment  contracts,  consulting or
other contracts for personal services,  executive compensation plans, bonus
plans,  deferred  compensation  agreements,  golden parachute agreements or
other plans, arrangements or contracts,  whether written or oral, providing
for benefits or compensation for employees of the Company;

                                  (v)  agreements  and/or  commitments  for
capital expenditures in excess of $25,000.00;

                                  (vi) agreements which obligate the Company
to supply products,  materials and/or services for a period of one (1) year
or more or which  have a  remaining  amount  to be paid to the  Company  in
excess of $25,000.00;

                                  (vii)    contracts,     loan    agreements,
repurchase agreements,  mortgages,  security agreements,  trust indentures,
promissory  notes or other documents  relating to the borrowing of money or
for lines of credit;

                                  (viii)  contracts for the sale of securities
or for the  grant  of  options  or  preferential  rights  to  purchase  any
securities;

                                  (ix)   partnerships   or   joint   venture
agreements;

                                  (x)  contracts   materially  limiting  or
restraining the Company from competing in its business;

                                  (xi) agreements which obligate the Company
to  assume,  indemnify,  or to  otherwise  become  contingently  liable  or
responsible for the obligations of any other person or entity;

                                  (xii) bids to  perform  services  and/or to
provide products or materials in an amount in excess of $25,000;

                                  (xiii) warranties or similar  commitments or
agreements where the consideration paid or to be paid is more than $25,000;

                                  (xiv) any other  contract or agreement that
is material to the Company or its business.

                           b) Except  as  otherwise  set forth in  Schedule
3.14(b),  neither the Company nor the Shareholders  have received notice of
any (i)  unresolved  claim or threat that the Company has breached any term
or condition of any of the contracts,  commitments, or agreements set forth
in  Schedule  3.14(a),  or (ii)  notice  of  repudiation  or  denial of the
enforceability of any of the contracts, commitments or agreements set forth
in Schedule 3.14(a). All contracts, commitments and agreements set forth on
Schedule 3.14(a) are in full force and effect and there is no default, nor,
to the  Shareholders'  knowledge,  any event which, with notice or lapse of
time, or both, will become a default.

                  3.15 Accounts  Receivable.  All of the accounts  receivable
and notes  receivable  owing to the  Company as of the  Closing  constitute
valid and  enforceable  claims arising from bona fide  transactions  in the
ordinary course of business, and as of the date hereof there are no claims,
refusals to pay or other rights of set-off against any thereof known to the
Shareholder.  Except as set forth on Schedule  3.15,  as of the date hereof
there is (a) no account debtor or note debtor  delinquent in its payment by
more than  sixty (60) days,  (b) no account  debtor or note  debtor who has
refused or threatened to refuse to pay its obligations for any reason,  (c)
to the Shareholders'  knowledge,  no such account debtor or note debtor who
is insolvent or bankrupt,  and (d) no account receivable or note receivable
pledged to any third party.

                  3.16 Accounts  Payable and Accrued  Expenses.  All accounts
payable,  accruable  expenses,  and notes  payable by the  Company to third
parties as of the Closing arose in the ordinary course of business,  and as
of the  Closing  there is no  account  payable,  accrued  expense,  or note
payable past due or delinquent in its payment.

                  3.17 Inventories. Except as set forth on Schedule 3.17, the
inventories of the Company as of the Closing (a) include no items which are
slow  moving,  below  standard  quality,  or of a quality or  quantity  not
useable or saleable in the ordinary course of business, the aggregate value
of which has not been  written  down on the  Company's  books of account to
realizable  market  value,  and (b) are of a quality and quantity  which is
reasonable in the circumstances of the Company's business.

                  3.18  Equipment and  Machinery.  Schedule 3.18 sets forth a
complete and correct list as of December 31, 1997 of each item of equipment
and  machinery  owned or  leased  by the  Company.  Except  as set forth in
Schedule 3.18,  the Company has good title,  free and clear of all Liens to
the  equipment  and  machinery  owned  by it.  None of the  title  defects,
objections,  security interests,  or Liens materially adversely affects the
value of any of the items of equipment and machinery or interferes with its
use in the conduct of the business of the  Company.  Except as set forth in
Schedule 3.18, the Company holds good and transferable leaseholds in all of
the equipment  and  machinery  leased by them, in each case under valid and
enforceable  leases. The Company is not in default with respect to any item
of  equipment  and  machinery  leased by them,  and,  to the  Shareholders'
knowledge,  no event has occurred that  constitutes  or, with due notice or
lapse of time or both,  may  constitute a default under any lease  thereof.
Except for repairs in the ordinary  course of business,  the  equipment and
machinery  listed  in  Schedule  3.18 is in good  operating  condition  and
repair, normal wear and tear excepted.

                  3.19  Permits and  Licenses.  Schedule  3.19 sets forth all
governmental licenses, permits and approvals (collectively,  the "Permits")
currently  held by the Company  and all such  Permits are in full force and
effect.  Schedule  3.19  also  sets  forth  all  applications  for  Permits
currently  pending.  Except as set forth in Schedule  3.19, the Company has
not  received  notice from any  governmental  entity to the effect that any
additional Permits are required.  Except as set forth in Schedule 3.19, the
Permits are sufficient and adequate to permit the continued  lawful conduct
of the  business of the  Company as  heretofore  conducted  and none of the
operations of the Company are being  conducted in a manner that violate any
of the terms or  conditions  under  which any  Permit  was  granted,  which
violation would have a material adverse effect on the Company.

                  3.20 Compliance With Laws.  Except as set forth in Sections
3.19  (Permits  and  Licenses),  3.21  (Environmental  Liabilities),   3.22
(Actions  and  Proceedings),   3.24  (Certain  Business  Practices),   3.25
(Employees and Benefit Plans),  and Article V (Taxes),  or in the Schedules
thereto,  the  Company  has  complied  with  all  laws,  statutes,   rules,
regulations  and  orders  applicable  to  its  business,  except  for  such
non-compliance  which  would  not have a  material  adverse  effect  on the
Company.

                  3.21        Environmental Liabilities.

                           a) Except as set forth on Schedule 3.21(a),  the
Company has not used, stored, treated, transported,  manufactured, refined,
handled,  produced,  or disposed of any  Hazardous  Materials  or Petroleum
Products,  as hereinafter defined, on, in, under, at, from, or above any of
their current or former properties or assets or property leased by them, or
otherwise,  in any  manner  which at the  time of the  action  in  question
violated any Environmental Law, as hereinafter defined,  governing the use,
storage,  treatment,  transportation,  manufacture,  refinement,  handling,
production,  or disposal of  Hazardous  Materials  or  Petroleum  Products,
except for any violation which would not have a material  adverse effect on
the Company.

                           b) Except as set forth on Schedule 3.21(b),  the
Company has no material obligations or liabilities, matured or not matured,
absolute or contingent,  assessed or unassessed, and no pending claims have
been made against them and no  currently  outstanding  citations or notices
including,  without  limitation,  notice letters,  information  requests or
notices of potential responsibility,  have been issued against any of them,
which in the case of any of the  foregoing  have been or are imposed by any
provision of any Environmental Laws.

                           c) As used  herein,  "Environmental  Laws" shall
mean any and all federal state,  local, or municipal laws,  rules,  orders,
regulations,  statutes,  ordinances, codes, decrees, or requirements of any
federal, state, municipal,  or other governmental  department,  commission,
board, bureau or agency, regulating,  relating to, or imposing liability or
standards  of conduct  concerning  any  Hazardous  Materials  or  Petroleum
Products or environmental  protection,  as now in effect, including without
limitation,  the Clean Water Act, also known as the Federal Water Pollution
Control  Act,  33 U.S.C.  Sec. 1251 et seq.,  the Clean Air Act,  42 U.S.C.
Secs.  7401 et seq., the Federal  Insecticide,  Fungicide and  Rodenticide
Act, 7 U.S.C.  300F et seq., the Surface Mining Control and Reclamation Act
30 U.S.C.  Secs. 1201 et seq., the Comprehensive  Environmental  Response,
Compensation  and Liability Act, 42 U.S.C.  Sec. 9601 et seq., the Superfund
Amendment and  Reauthorization  Act of 1986,  Public Law 99-499,  100 Stat.
1613, the Emergency Planning and Community Right to Know Act, 42 U.S.C. Sec.
1101 et seq.,  the Resource  Conservation  and Recovery Act, 42 U.S.C.  Sec.
6901 et seq., the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et seq.,
and any comparable  state law,  together,  in each case, with any amendment
thereto,  and the  regulations  adopted  thereunder  and all  substitutions
thereof.

                           d) As used herein,  "Hazardous  Materials" shall
mean any hazardous materials,  hazardous wastes, infectious medical wastes,
hazardous or toxic substances, asbestos, asbestos fibers, friable asbestos,
any PCB's,  waste or used oil, or constituents  of the foregoing,  or other
waste  or  material   defined  or   regulated  as  such  in  or  under  any
Environmental  Law and shall  include  gasoline,  diesel  fuel,  motor oil,
heating oil, kerosene, and any other petroleum products.

                  3.22  Actions  and  Proceedings.  Except  as set  forth  in
Schedule 3.22, there are no (a) suits,  claims or legal,  administrative or
arbitration   proceedings  or  investigations   (collectively,   "Actions")
(whether or not the defense  thereof or liabilities in respect  thereof are
covered by policies  of  insurance)  or (b)  governmental  or  professional
inquiries   (including,   without   limitation,   any  inquiry  as  to  the
qualification of the Company to hold or receive any Permit), pending or, to
the Shareholders' knowledge,  threatened,  against,  involving or affecting
the Company.

                  3.23 Certain Transactions.  Except as set forth in Schedule
3.23, the Company is not, directly or indirectly, a party to or is bound by
a contractual  obligation with, owes any money to, is purchasing or leasing
any property from, or obtaining  services from, is  transferring or leasing
any  property to, or  providing  services to, or otherwise  engaging in any
transaction  with, any officer,  director,  shareholder or affiliate of the
Company.

                  3.24 Certain Business  Practices.  The Company has not, and
each shareholder, officer, employee, or agent of the Company (in each case,
acting on behalf of or at the request of the  Company) has not, nor has any
other person acting on behalf of the Company,  directly or indirectly,  (i)
given or agreed to give any bribe,  kickback,  or other illegal  payment to
any customer,  supplier,  governmental  employee, or other person or entity
who is or may be in a  position  to  help or  hinder  the  business  of the
Company  (or assist the Company in  connection  with any actual or proposed
transaction);  (ii) made or agreed to make any  contribution,  payment,  or
gift of funds or property to any governmental official,  employee, or agent
where either the contribution,  payment, or gift or the purpose thereof was
illegal  under  the  laws  of  any  federal,   state,   local,  or  foreign
jurisdiction;  or (iii)  established or maintained  any unrecorded  fund or
asset for any  purpose,  or made any false  entries on any books or records
for any reason.

                  3.25        Employees and Benefit Plans.

                           a) Employees. Schedule 3.25(a) sets forth a true
and complete  list of every  officer,  director,  employee and  independent
contractor  of the  Company  as of the  date  of this  Agreement.  Schedule
3.25(a) also sets forth any employee who is on a leave of absence under the
federal Family and Medical Leave Act or under any similar state law; who is
on sick leave or short-term or long-term disability, or who is on any other
kind of personal or medical leave. Schedule 3.25(a) includes:

                                  (i)  each  such  person's  name,  date of
hire, work location and job title;

                                  (ii) if  applicable,  the name and address
of  any  labor  organization  which  represents  each  such  person  and  a
description of the bargaining unit in which each such person is a member;

                                  (iii) each  such  person's  current  annual
base rate of compensation  plus the amount of any increases thereto and any
and all bonuses,  incentive pay or other additional  compensation which the
Company is  obligated to pay (other than  pursuant to any employee  benefit
plan as defined  under  section  3(3) of the  Employees  Retirement  Income
Security  Act of  1974,  as  amended  ("ERISA"),  and the  reason  for such
obligation; and

                                  (iv) the corporate  credit cards issued to
each such person.  Other than that set forth on Schedule 3.25, there are no
currently  existing  agreements  or  arrangements  which  extend  credit to
Company employees pursuant to which such employees may incur debt on behalf
of the Company.

To the reasonable knowledge of the Shareholders, all communications made to
any such  officer,  director,  or employee by the Company  prior to Closing
relating to any Benefit Plan, as defined in Section 3.25(b) below, were, at
the time made, substantially correct and not misleading.

                           b) Benefit Plans.  Schedule 3.25(b) sets forth a
true and complete list and identification of all of the following described
arrangements which the Company maintains,  contributes to, is a party to or
otherwise has any obligation with respect to any current or former officer,
director, employee and independent contractor as of the date hereof:

                                  (i) all employee welfare benefit plans as
defined under section 3(1) of ERISA (hereinafter called "Welfare Plans");

                                  (ii) all employee pension benefit plans as
defined under section 3(2) of ERISA (hereinafter called "Pension Plans" and
such Pension  Plans and Welfare  Plans shall  hereinafter  be  collectively
referred to as "Plans" as defined under section 3(3) of ERISA);

                                  (iii) all multiemployer  plans as defined
under sections 3(37) and 4001(a)(3) of ERISA;

                                  (iv)  all   multiple-employer   plans  as
described under section 413 of the Code;

                                  (v) all written employment contracts;

                                  (vi) all oral contracts or understandings
which alter the employee-at-will  relationship or create express or implied
obligations;

                                  (vii)    all    collective     bargaining
agreements;

                                  (viii)   all  stock   option   and  stock
purchase programs, other than those listed under (i) or (ii) above:

                                  (ix)   all   incentive,   bonus,   profit
sharing,  deferred compensation or other similar  arrangements,  other than
those listed under (i) or (ii) above;

                                  (x)  all  severance  plans  or  policies,
whether or not written, other than those listed under (i) or (ii) above;

                                  (xi) all unfunded excess benefit plans as
defined under section 3(36) of ERISA;

                                  (xii)   all   insurance    contracts   or
policies, including both group and individual arrangements, and any and all
agreements  or  arrangements  relating to benefit  claims,  administration,
investment  or other  services  maintained  in  connection  with any of the
foregoing; and

                                  (xiii) any other compensation (other than
regular annual compensation),  fringe benefit,  employment policy, multiple
employer welfare arrangement (MEWA) as defined under section 3(40) of ERISA
or other  employment  benefit  arrangement  not already  included under the
foregoing.

                  Except as set forth in Schedule 3.25(b),  true,  complete
and  correct  copies  of all  documents  embodying  the  provisions  of the
arrangements listed and identified under (i)-(xiii) above will be delivered
to Purchaser by the Shareholders  prior to the execution of this Agreement.
Except as set forth in Schedule 3.25(b) , for the  arrangements  listed and
identified under (i)-(xiii) for which there are no writings,  true, correct
and complete written  descriptions of such  arrangements,  as they may have
been  amended  to the  date of  this  Agreement,  have  been  delivered  to
Purchaser  by the  Shareholders.  Except as set forth in Schedule  3.25(b),
since  September  30,  1997,  the  Company  has not  adopted or amended any
arrangement  of a  nature  referred  to  under  (i)-(xiii)  above,  has not
authorized or promised any salary  increase or bonus to any  employee,  and
has not  authorized,  promised or taken other actions which would require a
contribution  to be  made to the  trustee  of such  Plan in  excess  of any
contributions already physically transferred to the trustee of such Plan.

                           c) ERISA and Code  Filings.  Except as set forth
in Schedule 3.25(c), with respect to each Plan and arrangement listed under
paragraph  (b)  above  required  to make the  filings  referred  to in this
paragraph  (c),  there is no material  violation  of ERISA or the Code with
respect to the filing of applicable reports, documents and notices with the
Secretary of Labor,  the Secretary of the Treasury,  any participant or any
beneficiary.  Except as set forth n Schedule 3.25(c),  with respect to each
such Plan or arrangement  (if  applicable),  complete and correct copies of
the following have been delivered to Purchaser by the Shareholders:

                                  (i)  the  most  recent  annual  actuarial
valuation reports;

                                  (ii)  the most  recent  forms in the 5500
series, including all applicable schedules and other attachments;

                                  (iii) the most recent annual and periodic
accounting statements of plan assets;

                                  (iv)  the  most   recent   summary   plan
descriptions and summaries of material modifications;

                                  (v)  the  most  recent  forms  in the 990
series, including all applicable schedules and other attachments;

                                  (vi) any form S310-A  filings  within the
last 12 months, including all applicable schedules and other attachments;

                                  (vii) any form 5330  filings  within  the
last 12 months; and

                                  (viii) any  notice  filing  described  in
Department of Labor regulations 2520.104-23 relating to Pension Plans for a
select group of management or highly compensated employees.

                           d) Compliance  with  Obligations.  Except as set
forth in Schedule 3.25(d), with respect to each Plan and arrangement listed
in paragraph (b) above, to the Knowledge of the  Shareholders,  the Company
has performed in all material  respects all of its  obligations  thereunder
and the terms and administration of each such Plan or arrangement,  are and
have been in compliance in all material  respects with all the requirements
prescribed by any and all applicable  federal,  state and local statutes or
ordinances,   executive  orders,   regulatory  law,  common  law,  judicial
decisions and other governmental rules.

                           e)  Medical  Plans.   Except  as  set  forth  in
Schedule 3.25(e), each Welfare Plan listed in paragraph (b) above that is a
group  health  plan as defined in  section  5000(b)(1)  of the Code and the
Company  have,  to the  knowledge  of  the  Shareholders,  complied  in all
material  respects  with all  applicable  requirements  of the COBRA health
continuation of coverage  provisions  contained in section  49808(f) of the
Code and sections  601 through 609 of ERISA with respect to its  employees,
former employees,  qualified beneficiaries and alternate recipients. To the
Knowledge  of  the   Shareholders,   (i)  the  Company  has  not  made  any
contributions  to a nonconforming  large group health plan as defined under
section  5000 of the Code,  and (ii) the Company  has,  with respect to the
coverage  provided  under such group health plan,  complied in all material
respects with the current and former Medicare  secondary  payer  provisions
contained in 42 USCS ss. 1395y.

                           f)  Actions.  Except  as set  forth in  Schedule
3.25(f), there are no suits, actions,  disputes, claims (other than routine
claims  for  benefits),   arbitrations,   legal,  administrative  or  other
proceedings   (including  any  pending  IRS   determination   requests)  or
governmental  investigations pending or threatened with respect to any Plan
or arrangement listed in paragraph (b) above or with respect to the Company
as the sponsor or fiduciary  thereof or with respect to any other fiduciary
thereof,  and there are no facts  which  could  give rise to any such suit,
action,   dispute,   claim  (other  than  routine   claims  for  benefits),
arbitration,  legal,  administrative  or other  proceeding or  governmental
investigation  with respect to any such Plan or arrangement or with respect
to the Company as the sponsor or  fiduciary  thereof or with respect to any
other fiduciary thereof.

                           g) IRS Matters.  Except as set forth in Schedule
3.25(g), each Benefit Plan in paragraph (b) above intended to qualify under
section  401 of the Code or trust or  other  organization  related  thereto
intended to be exempt from  taxation  under section 501 of the Code, is the
subject of a favorable unrevoked  determination or opinion letter issued by
the IRS as to its  qualification  and/or tax exempt  status  under the Code
which may  still be  relied  upon as to such tax  qualified  and/or  exempt
status.  The  Shareholders  have  delivered to Purchaser  true and complete
copies of each such favorable unrevoked determination or opinion letter, if
any. Nothing has occurred which would cause the loss of such  qualification
and/or tax exempt  status,  other than the  enactment of any statute or the
promulgation of any regulation, ruling, notice or announcement with respect
to which  there is in  effect a  delayed  amendment  date if each such Plan
which is subject thereto has been  administered and maintained at all times
in  compliance  with  such  statute  or  regulation,   ruling,   notice  or
announcement since the effective date thereof. No such Plan or any trust or
other  organization  related  thereto is  subject  to any tax on  unrelated
business  income  under  section  511  of the  Code  or is  subject  to the
possibility  of the  imposition  of such a tax and no such tax is currently
outstanding.  Each  such  Plan has been  operated  in  compliance  with all
applicable  provisions of ERISA, the Code and all regulations,  rulings and
other authority issued  thereunder,  and all other applicable  governmental
laws and regulations.

                           h) Prohibited  Transactions  and Other  Matters.
Except as set forth in Schedule 3.25(h),  with respect to each Benefit Plan
listed in paragraph (b) above, to the Knowledge of the  Shareholders (i) no
prohibited transaction, as such term is defined in section 4975 of the Code
and section 406 of ERISA,  has  occurred or been engaged in by any party in
interest,  fiduciary or  disqualified  person and (ii) no actions have been
undertaken by any such Plan,  party in interest,  fiduciary or disqualified
person  which could result in the  imposition  of the  penalties  specified
under sections 502(c), 502(i) and 502(i) of ERISA.

                           i)  Contributions  and  Funding.  Except  as set
forth in Schedule  3.25(i),  with  respect to each  Pension  Plan listed in
paragraph  (b) above which is subject to Part 3 of Subtitle B of Title 1 of
ERISA  and/or  section 412 of the Code,  there has not been an  accumulated
funding deficiency within the meaning of such statutory provisions, whether
or not waived,  as of the last day of the most  recent  fiscal year of each
such  Pension  Plan which ended on or prior to the Closing  Date and,  with
respect to each  Pension  Plan which is subject to Title IV of ERISA (other
than a  multiemployer  plan as  defined in  section  3(37) of  ERISA),  the
actuarial present value of the accumulated benefit obligations (both vested
and  non-vested)  under each such  Pension  Plan as of its most recent plan
valuation  date did not exceed the then  current  fair market  value of the
assets of each such Pension Plan and, as of the Closing Date, the actuarial
present value of all such accumulated  benefit  obligations will not exceed
the then current fair market value of the assets of such Pension Plan.  For
these  purposes,   the  actuarial  present  value  of  accumulated  benefit
obligations  shall be determined  using the actuarial  assumptions  used to
calculate contributions to each such Pension Plan.

                           j)  Reportable  Events.  Except  as set forth in
Schedule 3.25(j), with respect to each Pension Plan listed in paragraph (b)
above which is subject to Title IV of ERISA, there is no event or condition
which has  occurred or is now  existing  which would be deemed a reportable
event (other than the transactions  contemplated by this Agreement)  within
the meaning of sections 4043(b)  (11)-(8),  4062(e),  4063(a) or 4041(f) of
ERISA and no such reportable  event is expected to occur during the current
fiscal year for any such Pension Plan.

                           k) PBGC  Liability.  Except as set forth in with
respect to each Pension Plan listed in paragraph (b) above which is subject
to Title IV of ERISA,  there has not been and there is not  expected  to be
any liability to the Pension Benefit Guaranty Corporation ("PBGC"),  except
for required premium  payments,  under sections 4062, 4063, 4064 or 4069 of
ERISA. All such premium payments to the PBGC have been paid when due and no
such premiums which should have been paid remain outstanding. Except as set
forth in Schedule 3.25(k),  none of the Plans listed in paragraph (b) above
nor any other plan of the  Company  which is or was  subject to Title IV of
ERISA has terminated since September 1, 1974.

                           l) Multiemployer  Plans.  Except as set forth in
Schedule 3.25(l),  the Company does not and did not at any time on or after
the effective date of ERISA  maintain,  contribute to or otherwise have any
obligation  with respect to any  multiemployer  plan (as defined in section
3(37) of ERISA) and the Company has not incurred any  withdrawal  liability
to any such  multiemployer plan and has not received any notice pursuant to
section 4202 of ERISA with respect to any such multiemployer plan.

                           m) Retiree  Liabilities.  Except as set forth in
Schedule 3.25(m),  the Company and/or any Plan or other arrangement  listed
in  paragraph  (b) above has no  obligation  to  provide  any type of life,
medical, dental,  disability,  long-term care or other benefit to retirees,
former employees, former directors or former independent contractors of the
Company,  other than coverage  required under section  4980B(f) of the Code
and benefits  payable under any Plan or other  arrangement  listed on which
provides for deferred compensation or severance benefits.

                           n) QDRO AND QMSCO Obligations.  Schedule 3.25(n)
sets forth a true and  complete  list of every  individual  affected  by or
potentially  affected by any approved or any submitted  domestic  relations
order which has been submitted for the purpose of determining  whether such
order is a Qualified Domestic Relations Order as defined under Code section
of 414(p) or a  Qualified  Medical  Child  Support  Order as defined  under
section 509 of ERISA.

                           o) ERISA Affiliates.  The Company has never been
a member of a  controlled  group of  entities,  as  determined  under  Code
Sections  414(b)  and (c),  where  such  membership  would be  material  to
compliance of any Benefit Plan with the Code or ERISA.

                  3.26.  Brokers  or  Finder's  Fees.  Except  as set forth in
Schedule 3.26,  neither the Shareholders nor the Company has paid or has or
will incur any liability for, any fees,  compensation  or other expenses to
any third party who acted on behalf of the  Shareholders  or the Company in
connection  with this Agreement or the  transactions  contemplated  hereby.
'Conditional End of Page' code here: keep together 4 lines.

                  3.27     Investment Representations.

         (a)  Each  Shareholder   represents  that  he  is  an  "accredited
investor"  within  the  meaning  of  Regulation  D  promulgated  under  the
Securities  Act and has such  knowledge  and  experience  in financial  and
business  matters  that he or it is  capable of  evaluating  the merits and
risks of investment in Ashland Stock.

         (b) Each  Shareholder  represents  that he or it is acquiring  the
Ashland Stock for his or her own account and acknowledges  that the Ashland
Stock has not been  registered  under the  Securities  Act by reason of its
issuance in a  transaction  which is exempt from  registration  pursuant to
Section 4(2) of the Securities Act, and that the Ashland Stock must be held
indefinitely  unless  registered  under the  Securities Act or an exemption
from registration is available.

         (c) The Shareholders agree that as evidence of the restrictions on
transfer,   the  following  legend  will  be  placed  on  the  certificates
evidencing the Ashland Stock:

         "The  securities  represented  by this  certificate  have not been
         registered  under the Securities Act of 1933, as amended,  and may
         not  be  sold,   transferred,   pledged  or  hypothecated   unless
         subsequently  registered  under  said  Act  or an  exemption  from
         registration is available."

         (d) Each of the  Shareholders  hereby  confirms  that he or it was
furnished with, or had access to, during the course of this transaction and
prior to sale:  (i) the  information  contained  in the  Purchaser.'s  most
recent  Form  10-K  and  annual  report  required  to be  filed  under  the
Securities  Exchange Act of 1934, as amended (the  "Exchange  Act") and the
information  contained  in the  Purchaser's  most recent  definitive  proxy
statement  required to be filed  pursuant to Section 14 of the Exchange Act
and all  periodic  reports  required  to be filed  since the filing of such
annual  report  (all such  reports  being  referred to  hereinafter  as the
"Ashland SEC Documents");  (ii) a brief description of the securities being
offered and any material changes in the Purchaser's  affairs which were not
disclosed in any documents  furnished by the  Purchaser;  and (iii) any and
all such other  information  as was  requested  from the  Purchaser (to the
extent the Purchaser possessed such information or could acquire it without
unreasonable effort or expense).

         3.28 Ashland Stock.  The Shareholders do not have any present plan
or  intention  to  dispose of any of the  Ashland  Stock  received  in this
transaction if such  disposition  would reduce the fair market value of the
Ashland  Stock  (with  such  value  measured  as of the  transaction  date)
retained by the  Shareholders to an amount less than forty percent (40%) of
the fair value of the Company  stock held by the  Shareholders  immediately
before the transaction.  Each Shareholder  shall give to Purchaser  written
notice (i) by November 30, 1998, of the number of shares of Ashland  Stock,
if any,  disposed  of by such  Shareholder  prior to that  time and (ii) by
April 15, 1999, of the number of shares of Ashland Stock, if any,  disposed
of by such  Shareholder  after  November  29,  1998 and  before  the  first
anniversary of the Closing Date.

         3.29 Product Formulations.  The Company has disclosed to Purchaser
the  percentages  by  weight of  petroleum  distillates,  volatile  organic
compounds,  Hazardous  Materials and certain other (but not all) components
for each current formula for the Company's chemical products, together with
the  Material  Data  Safety  Sheets and  product  labels for such  chemical
products. To the Shareholders'  knowledge,  (i) the product labels for such
products comply with Consumer  Product Safety  Commission  guidelines,  and
(ii) the product  formulations are accurately  reflected in the disclosures
in the Material Safety Data Sheets for these products.

         3.30 Full Disclosure. All documents, schedules and other materials
delivered  or to be  delivered  by or on  behalf  of  the  Shareholders  to
Purchaser  in  connection   with  this   Agreement  and  the   transactions
contemplated  hereby are true and  complete in all material  respects.  The
information  furnished by or on behalf of the  Shareholders to Purchaser in
this Article III does not contain any untrue  statement of a material  fact
or omit to state any material fact which may  materially  adversely  affect
the results of operation or the financial position of the Company.

         For  purposes  of  the  indemnification  provisions  contained  in
Article XI, any Cost (as defined in Article XI)  incurred by the  Purchaser
as a result of a breach by a Shareholder (without regard to materiality) of
any  representation  and  warranty  contained  in this  Article  III (which
representation  and warranty is so qualified  as to  materiality)  shall be
applied  dollar  for dollar  against  the  Deductible  and the Cap (each as
defined in Article XI).

                                 ARTICLE IV
                REPRESENTATIONS AND WARRANTIES OF PURCHASER

                  Purchaser   hereby   represents   and   warrants  to  the
Shareholders as follows:

                  4.1 Corporate Existence of Purchaser; Authority. Purchaser
is a  corporation  duly  organized,  validly  existing and in good standing
under the laws of Kentucky. Purchaser has all requisite corporate power and
authority  to  execute  and  deliver  this  Agreement  and to  perform  its
obligations hereunder, and the execution,  delivery and performance of this
Agreement  by  Purchaser  have  been  duly and  validly  authorized  by the
Executive  Committee  of Purchaser  (it being agreed by Purchaser  that the
Executive  Committee  of  Purchaser  shall  recommend  the approval of this
Agreement  and  the  transactions  contemplated  thereby  to the  Board  of
Directors of the  Purchaser).  This  Agreement  has been duly  executed and
delivered on behalf of Purchaser and,  subject to the approval of the Board
of Directors of the Purchaser, constitutes the valid and binding obligation
of Purchaser,  enforceable  against Purchaser in accordance with its terms,
except as  enforcement  thereof may be limited by  bankruptcy,  insolvency,
reorganization,  moratorium,  and other laws  affecting the  enforcement of
creditors'  rights  generally  and  subject to  equitable  principles.  The
issuance of the Ashland  Stock has been duly  authorized  by all  necessary
action on the part of the Purchaser and, when issued in accordance with the
terms of this Agreement,  the Ashland Stock will be validly  issued,  fully
paid and non-assessable.

                  4.2 No  Conflicts.  Neither the  execution,  delivery and
performance  of  this  Agreement  by  Purchaser  nor  the  consummation  by
Purchaser of the transactions contemplated by it hereby will:

                           a) violate any provision of the  Certificate  of
Incorporation or By-laws of Purchaser, (b) violate, conflict with or result
in the  material  breach or  termination  of, or  otherwise  give any other
contracting party the right to terminate,  or constitute (or with notice or
lapse of time,  or both,  would  constitute)  a material  default under the
terms of any Obligation,  which,  individually  or in the aggregate,  would
materially  adversely  affect the results of operations  on a  consolidated
basis or the consolidated  financial  position of Purchaser,  (c) result in
the creation of any Lien upon the material assets of Purchaser  pursuant to
the terms of any Obligation;  (d) violate any Order to which Purchaser is a
party;  (e)  constitute a violation  by  Purchaser  of any statute,  law or
regulation of any jurisdiction which would materially  adversely affect the
results of operations on a consolidated basis or the consolidated financial
position of  Purchaser,  or (f) violate any Permit,  the violation of which
would   materially   adversely  affect  the  results  of  operations  on  a
consolidated basis or the consolidated financial position of Purchaser.

                  4.3  Actions  and  Proceedings.  There are no (a)  Actions
(whether or not the defense  thereof or liabilities in respect  thereof are
covered by policies  of  insurance)  or (b)  governmental  or  professional
inquiries  pending  or, to the best  knowledge  of  Purchaser,  threatened,
against  Purchaser  which  question  or  challenge  the  validity  of  this
Agreement or any action  taken or to be taken by  Purchaser  in  connection
with the transactions contemplated of Purchaser hereby.

                  4.4  Consents and  Approvals.  There is no  authorization,
consent order or approval of, or notice to or filing with, any governmental
authority required to be obtained or given or waiting period to expire as a
condition to the lawful  consummation  by the  Purchaser of the purchase of
the Shares pursuant to this Agreement.

                  4.5 Financial  Statements.  The Purchaser has delivered to
the  Shareholders a balance sheet of Purchaser as of September 30, 1997 and
September 30, 1996 (the "Purchaser Latest Audited  Financial  Statements");
and the related statements of income,  stockholders'  equity and cash flows
for  each of the  years  then  ended,  all  certified  by  Ernst  &  Young,
independent  certified  public  accountants,   whose  reports  thereon  are
included therein.  The Purchaser's Latest Audited Financial  Statements and
the notes  thereto were audited and prepared in conformity  with  generally
accepted accounting principles consistently applied so as to fairly present
the financial condition and results of operations of the Purchaser.

                  4.6  Liabilities.  The Purchaser  does not have any debts,
obligations  or  liabilities  of whatever kind or nature,  either direct or
indirect,  absolute or contingent,  matured or unmatured, except for debts,
obligations  and  liabilities  that (i) are set forth in Schedule 4.6 or in
the SEC Documents, (ii) are fully reflected in, or reserved against on, the
Purchaser Latest Audited Financial  Statements,  (iii) were not required to
be set  forth in the  Purchaser  Latest  Audited  Financial  Statements  in
accordance with generally accepted accounting principles (iv) were incurred
in the ordinary course of business, (v) are created under this Agreement or
other contracts  filed as exhibits to the SEC Documents,  or (vi) would not
have a material adverse effect on the Purchaser.

                  4.7  Absence of Certain  Changes or Events.  Except as set
forth in the SEC  Documents,  or except as otherwise  contemplated  by this
Agreement,  since the date of the Purchaser Latest Balance Sheet, there has
not been  any  material  adverse  change  in the  business,  operations  or
financial condition of the Purchaser.

                  4.8  Contracts  and  Commitments.  Except as otherwise set
forth in the SEC  Documents,  the Purchaser has not received  notice of any
(i) unresolved  claim or threat that the Purchaser has breached any term or
condition of any contract or agreement which is material to its business or
operations  ("Purchaser Material Contract"),  or (ii) notice of repudiation
or denial of the enforceability of any Purchaser Material Contract,  in the
case of clause (i) or (ii) which  would have a material  adverse  effect on
the Purchaser,  and all Purchaser  Material Contracts are in full force and
effect and there is no default,  nor any event which,  with notice or lapse
of time, or both, will become a default.

                  4.9 Accuracy of Reports.  The Purchaser's most recent Form
10-K filed with the SEC,  and all reports on Form 8-K and 10-Q  required to
be filed by the Purchaser  thereafter to the date of this  Agreement  under
the Securities  Exchange Act of 1934, as amended (the "Exchange Act"), have
been duly filed,  were in substantial  compliance with the  requirements of
their  respective  report forms,  were complete and correct in all material
respects  as of the  dates at which  the  information  was  furnished,  and
contained  (as of such dates) no untrue  statement  of a material  fact nor
omitted to state a material  fact  necessary  to make the  statements  made
therein,  in light  of the  circumstances  in which  they  were  made,  not
misleading.

                  4.10 Investment.  Purchaser is acquiring the Shares for its
own  account  for  investment   purposes  only  and  not  with  a  view  to
distribution  or resale thereof to the public.  Purchaser will not transfer
or otherwise  dispose of the Shares  except in accordance  with  applicable
federal and state securities laws or the rules and regulations  promulgated
thereunder.

                  4.11 Tax-Free  Reorganization.  Purchaser  intends that the
purchase  of  all of the  issued  and  outstanding  shares  of the  Company
pursuant  to this  Agreement  shall  constitute  a tax-free  reorganization
within the meaning of Sections  368(a)(1)(A)  and  368(a)(2)(E) of the Code
and corresponding  provisions of state and local income tax law.  Purchaser
has no plan or intention to reacquire any of the voting common stock of the
Purchaser issued to the Shareholders pursuant to this Agreement.  Purchaser
has no present plan or  intention  (i) to  liquidate  the Company;  (ii) to
merge the  Company  with or into  another  corporation  other than a merger
permitted by Treasury  Regulation Section  1.368-2(j)(4);  (iii) to sell or
otherwise  dispose of the shares of the Company's  Common Stock acquired by
Purchaser  pursuant to this  Agreement,  except for  transfers  of stock to
corporations  controlled  by  Purchaser,  or to cause the  Company to issue
additional shares of its stock or to engage in any merger that would result
in Purchaser  losing control of the Company after the purchase  pursuant to
this Agreement;  or (iv) to cause the Company to sell or otherwise  dispose
of any of its assets,  except for dispositions  made in the ordinary course
of business  or  transfers  of assets to a  corporation  controlled  by the
Company.  Following  the purchase of shares of the  Company's  Common Stock
pursuant  to this  Agreement,  Purchaser  intends  to cause the  Company to
continue its historic business or use a significant portion of its historic
business  assets in a business.  Purchaser is not an investment  company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. Purchaser is not
under the  jurisdiction of a court in a Title 11 or similar case within the
meaning of Section  368(a)(3)(A) of the Code. The rights of shareholders of
Ashland Inc., under the Rights Agreement dated as of May 16, 1996,  between
Ashland  Inc.  and Harris  Trust and  Savings  Bank,  an  Illinois  banking
corporation  (the "Rights"),  are not (and as of the Closing Date shall not
have become)  separately  tradable or represented by any certificate  other
than the stock certificates for Ashland Inc. voting common stock itself. As
of the time  Ashland  Inc.'s  board of  directors  adopted the plan for the
issuance of such Rights,  the  likelihood  that such Rights  would,  at any
time, be exercised was both remote and speculative.  The principal  purpose
for the adoption of the Plan was to establish a mechanism by which  Ashland
Inc. could,  in the future,  provide  shareholders  with rights to purchase
stock at substantially less than fair market value as a means of responding
to unsolicited offers to acquire Ashland Inc.

                  4.12 No Broker or Finders Fee.  Purchaser has not taken any
action which would cause the  Shareholders  or the Company to become liable
for any  commission,  fees,  compensation  or other expenses to any broker,
agent,  finder or their  intermediary in connection with the negotiation of
this Agreement or the consummation of the transactions contemplated hereby.

                  4.13 Full  Disclosure.  All documents,  schedules and other
materials  delivered or to be delivered by or on behalf of the Purchaser to
the  Shareholders  in connection  with this Agreement and the  transactions
contemplated  hereby are true and  complete in all material  respects.  The
information  furnished by or on behalf of the Purchaser to the Shareholders
in connection with this Agreement and the transactions  contemplated hereby
do not contain any untrue statement of a material fact or omit to state any
material  fact  which  may  materially  adversely  affect  the  results  of
operation or the financial position of the Purchaser.


                                  ARTICLE V
                                   TAXES

                  5.1 Tax Representations  and Warranties.  The Shareholders
hereby represent and warrant to the Purchaser that,  except as set forth on
Schedule 5.1, the statements  contained in this Section 5.1 are correct and
complete as of the date of this  Agreement and will be correct and complete
as of the Closing  Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this Article V).

                           (A) The  Company has timely  filed all  returns,
declarations,  reports,  information  returns,  and statements  ("Returns")
required to be filed under federal,  state,  local, or foreign law, and all
such Returns were  correct and complete in all material  respects,  and all
taxes  required to be paid by the Company  have been paid or  reflected  as
liabilities  or  reserved  for  on the  Reviewed  Financial  Statements  as
adjusted for passage of time and events in the ordinary  course of business
through the Closing Date in accordance with the past custom and practice of
the Company in preparing its returns and its reviewed financial statements.
The Company is not the beneficiary of any extension of time within which to
file any tax  return.  No claim  has ever been  made by an  authority  in a
jurisdiction  where the Company  does not file Returns that it is or may be
subject to taxation by that  jurisdiction.  There are no Security Interests
on any of the  assets of the  Company  that  arose in  connection  with any
failure (or alleged  failure) to pay any tax.  For purposes of this Section
5.1(a),  the term "Security  Interest"  means any mortgage,  pledge,  lien,
encumbrance,  charge, or other security interest other than liens for taxes
not yet due and  payable or for taxes that the  taxpayer is  contesting  in
good faith through appropriate proceedings.

                           (B) The Company has  withheld and paid all taxes
required to have been withheld and paid in connection  with amounts paid or
owing to any employee,  independent contractor,  creditor,  stockholder, or
other third party, and has paid over to the appropriate  taxing authorities
all amounts required to be so withheld and paid over.

                           (C)  No  director   or  officer   (or   employee
responsible for tax matters) of the Company expects any authority to assess
any  additional  taxes for any period for which  Returns  have been  filed.
There is no dispute or claim  concerning  any tax  liability of the Company
either (i) claimed or raised by any  authority  in  writing,  or (ii) as to
which any of the Shareholders and the directors and officers (and employees
responsible  for tax  matters)  of the  Company  has  knowledge  based upon
personal  contact with any agent of such authority.  Schedule 5.1 lists all
federal, state, local, and foreign income tax returns filed with respect to
the  Company  for  taxable  periods  ended on or after  January  31,  1995,
indicates those Returns that have been audited, and indicates those Returns
that  currently are the subject of audit.  The Company has delivered to the
Purchaser  correct and  complete  copies of all federal  income tax Returns
filed by the Company,  examination  reports  received by the  Company,  and
statements of deficiencies assessed against or agreed to by the Company for
the periods ending on or after January 31, 1995.

                           (D) The  Company  has not waived any  statute of
limitations  in  respect of Taxes or agreed to any  extension  of time with
respect to a Tax assessment or deficiency.

                           (E) The  Company  has not filed a consent  under
Sec. 341(f) of the Code, concerning collapsible  corporations.  The Company
has not made any payments, is not obligated to make any payments,  nor is a
party to any agreement that under certain  circumstances  could obligate it
to make any payments  that will not be  deductible  under Code Sec. 280G by
reason of consummation of the transactions  contemplated by this Agreement.
The Company has  disclosed on its federal  income tax returns all positions
taken  therein  that could  give rise to a  substantial  understatement  of
federal income tax within the meaning of Code Sec. 6662. The Company has no
subsidiaries  and has not been a member of an  Affiliated  Group within the
meaning of Code Sec. 1502 filing a consolidated  federal income tax Return,
and does not have any  liability  for the Taxes of any person  under Treas.
Reg. Sec.  1.1502-6 (or any similar  provision of state,  local, or foreign
law), as a transferee or successor, by contract or otherwise.

                           (F) The unpaid  Taxes of the Company did not, as
of the Balance  Sheet Date,  exceed the reserve for Tax  liability  (rather
than  any  reserve  for  deferred  Taxes   established  to  reflect  timing
differences  between  book  and tax  income)  set  forth on the face of the
Balance Sheet (rather than any notes thereto).

                           (G) The Shareholders are not foreign persons for
purposes of Code Sec.  1445 and each shall  certify  such at Closing in the
form of the affidavit substantially in the form of Exhibit 5.1(G).

                           (H) For purposes of this Agreement "Taxes" shall
mean all taxes,  charges,  fees,  levies,  or other assessments of whatever
kind or nature, including without limitation, all net income, gross income,
gross  receipts,  sales,  use, ad valorem,  transfer,  franchise,  profits,
license, withholding,  payroll, employment,  excise, estimated,  severance,
stamp, occupancy, or property taxes, customs duties, fees, assessments,  or
charges  of any  kind  whatsoever  (together  with  any  interest  and  any
penalties,  additions to tax or additional  amounts)  imposed by any taxing
authority upon or payable by the Company.

                  5.2  Tax  Indemnity.  Subject  (except  in the case of tax
fraud by the Company or the  Shareholders)  to the limitations set forth in
Article XI, the  Shareholders  hereby agree to pay,  indemnify,  defend and
hold the  Purchaser  harmless  from and  against  any and all  Taxes of the
Company  with  respect  to any period (or any  portion  thereof)  up to and
including the Closing Date,  except for such Taxes shown as  liabilities or
reserved for on the Balance  Sheet  ("Current Tax  Liabilities"),  together
with all reasonable legal fees,  disbursements and expenses related to said
Taxes incurred by the Purchaser in connection therewith. Each Shareholder's
liability  hereunder  shall be several and limited to the percentage of the
total  liability  equal to such  Shareholder's  percentage of Shares on the
Closing  Date.  Tax  returns,  audits and claims for  indemnity  under this
section shall be handled as follows:

                           (A) The  Shareholders  shall prepare or cause to
be prepared and filed all income tax Returns of the Company with respect to
all taxable  periods of the Company  ending on or prior to the Closing Date
and to pay any and all  income  taxes  shown  as due with  respect  to such
income tax Returns and not  previously  paid or reserved for by the Company
in accordance with past custom and practice of the Company in preparing its
returns  and its  reviewed  financial  statements  (other  than the one and
one-half percent (1-1/2%)  California  franchise tax imposed on the Company
as an S corporation,  which shall be paid by the Company). The Shareholders
shall provide the  Purchaser  with copies of each such Income tax Return at
least  twenty (20) days prior to the due date for filing  such  returns and
the  Purchaser  shall have the right to review and approve such Returns for
fifteen (15) days following receipt thereof,  provided,  however,  that the
Purchaser's  approval shall only be required to the extent such Returns are
not prepared in a manner  consistent  with prior  practice and shall not be
unreasonably withheld.

                           (B) Following the Closing,  the Purchaser  shall
be  responsible  for  preparing  or causing to be  prepared  all income tax
Returns of the Company with  respect to all taxable  periods of the Company
ending after the Closing Date and all other Returns required to be filed by
the Company  after the Closing  Date.  To the extent any Taxes shown due on
such separate Returns may be indemnifiable  by the  Shareholders,  (i) such
Returns shall be prepared in a manner consistent with prior practice unless
otherwise required by applicable Tax laws; (ii) the Purchaser shall provide
the Shareholders  with copies of each such Return at least 20 days prior to
the due date for filing such return;  and (iii) the Shareholders shall have
the right to review and approve (which  approval shall not be  unreasonably
withheld)  such  Returns  for  15  days  following  receipt  thereof.   The
Shareholders  and the  Purchaser  shall  attempt in good faith  mutually to
resolve any disagreements  regarding such Returns prior to the due date for
filing  thereof.  The  Purchaser  shall  file or cause to be filed all such
Returns and shall pay the Taxes shown due thereon; provided,  however, that
nothing contained in the foregoing shall in any manner terminate,  limit or
adversely  affect any right of the Purchaser or the Shareholders to receive
indemnification pursuant to any provision in this Agreement.

                           (C) All audit inquiries and proposed adjustments
related thereto shall be handled as follows:

                           1. The Shareholders shall be responsible for all
         audit  inquiries  and  proceedings  with  respect  to any  Returns
         relating  to any period (or portion  thereof) up to and  including
         the Closing  Date.  If any audit notice is sent to the  Purchaser,
         the Purchaser shall notify the  Shareholders  within ten (10) days
         after  receipt of such  notice.  Such notice  shall be sent to the
         Shareholders  for  purposes  of this  Article 5 at the address set
         forth in Section 13.3 below.  Upon notice to the Purchaser  within
         fifteen  (15) days  after  receipt  of the  notice  of such  audit
         inquiry or proceeding from the Purchaser,  the Shareholders  shall
         assume (at the Shareholders' own cost and expense) control of such
         audit inquiry or proceeding.  If the  Shareholders  fail to notify
         the Purchaser  they are assuming  control of such audit inquiry or
         proceeding  within the period set forth above, the Purchaser shall
         assume  control  of  such  audit  inquiry  or  proceeding  at  the
         Shareholders'  expense.  If  any  audit  notice  is  sent  to  the
         Shareholders,  the Shareholders  shall notify the Purchaser within
         fifteen  (15)  days  after  receipt  of  such  audit  notice.  The
         Shareholders shall keep the Purchaser advised regarding the status
         and progress of any such audit.

                           2.  If,  in  connection  with  the  audit of any
         Return,  a  proposed  adjustment  is  asserted  in  writing to the
         Purchaser with respect to any Taxes for which the Shareholders are
         required to indemnify the  Purchaser,  the Purchaser  shall notify
         the Shareholders of such proposed  adjustment within ten (10) days
         of receipt of such proposed adjustment.  Such notice shall be sent
         to  the  Shareholders,  as  provided  above.  Upon  notice  to the
         Purchaser within ten (10) days after receipt of the notice of such
         proposed  adjustment from the Purchaser,  the  Shareholders  shall
         assume (at the  Shareholders' own cost and expense) control of the
         contest of such proposed  adjustment.  If the Shareholders fail to
         notify the  Purchaser  they are assuming  control of such proposed
         adjustment  within the period set forth above, the Purchaser shall
         assume control of such contest of such proposed  adjustment at the
         Shareholders'  expense.  The Shareholders shall keep the Purchaser
         advised regarding the status and progress of any such contest.

                           (D)  For  federal  and  California   income  tax
purposes,  the taxable year of the Company shall end as of the close of the
Closing Date and, with respect to all other Taxes, the Shareholders and the
Purchaser  will,  unless  prohibited by applicable  Law,  close the taxable
period of the  Company as of the close of the  Closing  Date.  Neither  the
Shareholders  nor the Purchaser shall take any position  inconsistent  with
the preceding sentence on any Return. In any case where applicable law does
not permit the Company to close its taxable  year on the Closing Date or in
any case in which a Tax is assessed with respect to a taxable  period which
includes  the  Closing  Date (but does not begin or end on that day),  then
Taxes, if any,  attributable to the taxable period of the Company beginning
before and ending  after the  Closing  Date shall be  allocated  (i) to the
Shareholders  for the period prior to and including  the Closing Date,  and
(ii) to the  Purchaser for the period  subsequent to the Closing Date.  Any
allocation  of  income  or  deductions  required  to  determine  any  Taxes
attributable  to any period  beginning  before and ending after the Closing
Date  shall be made by means of a closing  of the books and  records of the
Company as of the close of the  Closing  Date,  provided  that  exemptions,
allowances or deductions that are calculated on an annual basis (including,
but not limited to,  depreciation  and  amortization  deductions)  shall be
allocated  between  the period  ending on the  Closing  Date and the period
after the  Closing  Date in  proportion  to the number of days in each such
period,  the  Purchaser  shall  provide  the  Shareholders  with a schedule
showing the  computation  of the allocation at least twenty (20) days prior
to the due date for filing such a Return which  includes the Closing  Date.
The  Shareholders  shall have the right to review  such  schedule,  and the
Purchaser  and the  Shareholders  shall  attempt in good faith  mutually to
resolve any disagreements regarding the determination of such allocation.

                           (E)  To  the  extent  any  determination  of tax
liability of the Company, whether as the result of an audit or examination,
a claim for refund, the filing of an amended return or otherwise results in
any refund of Taxes paid  attributable  to (i) any period  which ends on or
before the Closing Date or (ii) any period which  includes the Closing Date
but does not begin or end on that day,  any such refund shall belong to the
Shareholders  provided  that in the  case of any Tax  refund  described  in
clause (ii) of this Section 2.D, the portion of such Tax refund which shall
belong to the  Shareholders  shall be that portion that is  attributable to
the portion of that period  which ends on the Closing Date  (determined  on
the basis of an interim  closing of the books as of the Closing Date),  and
the Purchaser shall promptly pay any such refund, and the interest actually
received  thereon,   to  the  Shareholders  upon  receipt  thereof  by  the
Purchaser.  Any  payments  made under this  Section 2.D shall be net of any
Taxes  payable  with  respect to such  refund,  credit or interest  thereon
(taking into account any actual  reduction in Tax  liability  realized upon
the payment pursuant to this Section 2D).

                           (F)  Certain  Information.  The  Purchaser,  the
Shareholders,  and the Company agree to furnish or cause to be furnished to
each other (at reasonable  times and at no charge) upon request as promptly
as practicable  such  information  (including  access to books and records)
pertinent  to the  Company  and  assistance  relating  to the Company as is
reasonably  necessary for the preparation,  review, audit and filing of any
Return,  the preparation for any audit or the prosecution or defense of any
claim, suit or proceeding  relating to any proposed adjustment or which may
result  in  the  Shareholders   being  liable  under  the   indemnification
provisions of this Article,  provided that access shall be limited to items
pertaining  solely  to  the  Company.  The  Shareholders  shall  grant  the
Purchaser access to all Returns filed with respect to the Company.

                  G. The  indemnity  provided for in this Section 5.2 shall
be independent  of any other  indemnity  provision in this Agreement  (but,
except in the case of tax fraud by the Company or the Shareholders, subject
to the limitations on  indemnification  obligations set forth in Article XI
hereof) and,  anything in this  Agreement to the contrary  notwithstanding,
shall survive until the expiration of the applicable statutes of limitation
for the taxes  referred  to herein  (as  determined  without  regard to any
extension of such statutes of  limitation,  unless the  Shareholders  shall
have granted their prior written consent to such  extension,  which consent
shall not be unreasonably withheld).

         5.3  Tax  Distributions.  The  Company  shall  distribute  to  the
Shareholders  an amount equal to fifty  percent  (50%) of the amount of the
taxable income of the Company for the portion of calendar year 1998 through
the date of  Closing  ("Tax  Distributions").  For this  purpose,  "taxable
income" means the net amount of all items of income, gain, deduction,  loss
and expense of the Company,  whether or not  separately  stated  (excluding
from such calculation any tax-exempt income or nondeductible expenditures).
Notwithstanding  any other  provision of this Agreement to the contrary and
without any effect on the Purchase  Price,  (i) the  Shareholders  shall be
permitted to cause the Company to make estimated Tax  Distributions  before
the date of Closing,  and (ii) within ten (10) days after  receipt from the
Shareholders  of the proposed forms of federal and state income tax returns
of the  Company  for the  portion of 1998  through  Closing,  respectively,
either  (A)  Purchaser  shall  cause the  Company  to make  additional  Tax
Distributions,   if  necessary,  in  the  amount  required  such  that  the
Shareholders  shall have received all Tax  Distributions  to which they are
entitled under the first sentence of this Section or (B) Shareholders shall
contribute  to the capital of the  Company any excess of Tax  Distributions
received by them over the amount of all Tax Distributions to which they are
so entitled.


                                 ARTICLE VI
                       COVENANTS OF THE SHAREHOLDERS

                  6.1 Access to Property,  Information, Etc. Until Closing,
the Shareholders shall cause the Company to:

                           a) give to Purchaser and to its  representatives
reasonable access to all of the properties,  documents,  personnel,  books,
records and contracts pertaining to the Company;

                           b) furnish to Purchaser all data and information
with respect to the assets and the business of the Company as Purchaser may
from  time to time  reasonably  request,  except  to the  extent  that  the
Shareholders  or the Company is  prohibited  therefrom by any  agreement or
contract  to which  they are a party  or of which  they are a  beneficiary,
provided  that the  Shareholders  shall use their best  efforts to promptly
obtain the waiver of such prohibition; and

                           c) authorize  Purchaser and its  representatives
to   reasonably   consult  with  the  personnel  of  the  Company  and  its
representatives concerning matters affecting the business and operations of
the Company.

                  6.2   Operations   of   Business.   Until   Closing,   the
Shareholders  shall cause the business and  operations of the Company to be
conducted in its usual and customary manner.  Notwithstanding the preceding
sentence,  except as  contemplated  by this Agreement and the  transactions
contemplated thereby, the Shareholders shall not permit the Company to take
any  of  the  following  actions  without  the  prior  written  consent  of
Purchaser.

                           a) issue any  shares of stock of the  Company or
any other  securities  convertible into or exchangeable for shares of stock
of the  Company  or grant any  options,  warrants  or other  rights for the
acquisition of or relating to the stock of the Company;

                           b) except for Tax  Distributions,  declare,  set
aside or pay any  dividend  (whether in cash,  shares or property) or stock
split  or  make  any  other  payment  or   distribution  to  any  of  their
shareholders or purchase or otherwise  acquire for value any of their stock
or other securities;

                           c) make  any  change  in their  certificates  of
incorporation,   by-laws  or  other  governing  instruments;  or  merge  or
consolidate or obligate themselves to do so with or into any other entity;

                           d) borrow or agree to borrow any funds or incur,
or assume or become subject to,  whether  directly or by way of guaranty or
otherwise,  any obligation or liability  (absolute or  contingent),  except
obligations  and  liabilities  incurred  under  existing lines of credit or
letters of credit and incurred in the ordinary course of business;

                           e) prepay any obligation having a fixed maturity
of more than ninety (90) days from the date such  obligation  was issued or
incurred; or

                           f)  make  any  single  capital   expenditure  or
commitment  in  excess of  $25,000  for  additions  to  property,  plant or
equipment.


                  6.3   Maintenance  and  Operation  of  Properties.   Until
Closing, the Shareholders shall cause the Company to use their best efforts
to maintain  the  properties  and assets of the  Company in good  operating
condition,  with the exception of ordinary wear and tear and damage by fire
or other casualty to the extent  insured,  and will operate such properties
and assets in the  ordinary  course of business  and  consistent  with past
business practices.

                  6.4 Sales or Encumbrances of Assets.  Except to the extent
any such  actions  are  undertaken  in the  ordinary  course of business or
pursuant to the terms of this Agreement,  until Closing,  the  Shareholders
shall  prohibit  the Company from  selling,  mortgaging,  leasing,  buying,
exchanging, or otherwise acquiring, transferring or disposing of any amount
of  machinery  or equipment  and shall  prohibit the Company from  selling,
transferring,  mortgaging,  pledging, exchanging, or voluntarily subjecting
to any Lien the other assets of the Company and Subsidiaries

                  6.5 Maintenance of Books. The Shareholders  will cause the
books and records of the Company to be maintained in the usual, regular and
ordinary course consistent with past business practices.

                  6.6  Other   Expenditures.   Except  pursuant  to  binding
agreements  in  effect as of the date of this  Agreement,  and  except  for
normal  payments or increases in accordance with current salary programs in
effect as of the date of this Agreement,  the Shareholders  shall cause the
Company  not to make or agree to make any  increase  in the rate of  wages,
salaries,  bonuses,  fringe benefits or other  remuneration of any officer,
employee or  consultant,  or pay any bonus or similar fee to any  director,
officer  or  employee  or  become  a  party  to  any  employment  contract,
consulting  agreement  or  other  arrangement  with  any of its  directors,
officers or employees other than contracts which are terminable at will.

                  6.7 Directors,  Officers and Employees.  The  Shareholders
shall, upon written request by Purchaser made prior to the Closing, procure
the  resignations  of the officers and directors of the Company  elected or
appointed prior to the Closing Date, which  resignations shall be effective
only upon the occurrence of the Closing.  The  Shareholders  agree that all
employment  agreements  between the Company and each  Shareholder in effect
immediately  prior to the Closing shall be deemed  terminated  effective on
the  Closing.  The  Shareholders  shall  cause the  Company  to obtain  the
termination of the existing  employment  agreement  between the Company and
Elizabeth Li, and releases in the form of Exhibit 6.7 from the Shareholders
and  Elizabeth  Li,  which  termination  shall be  effective  only upon the
occurrence of the Closing.

                  6.8  Confidentiality.  The  Shareholders and its officers,
employees,  agents and representatives will hold in strict confidence,  and
not use in any way except in connection with the transactions  contemplated
by the Agreement,  information  obtained from Purchaser or any affiliate of
the Purchaser, or any officer, employee, affiliate, agent or representative
of Purchaser except to the extent such information:

                           a) was in  the  public  domain  prior  to  being
furnished to the Shareholders or the Company;

                           b) was known, as shown in the written records of
the Shareholders of the Company prior to disclosure by Purchaser;

                           c)  is   required   to  be   disclosed   by  the
Shareholders   or  the  Company,   or  any  of  their   officers,   agents,
representatives  or employees,  in connection  with any court action or any
proceeding  before a  governmental  or  regulatory or  administrative  body
(provided  that prompt notice of such  requirement is given to Purchaser to
allow Purchaser to seek an appropriate  protective  order) or in connection
with  securing any consent or approval  required  hereunder  upon the prior
written notice to and approval by Purchaser;

                           d) is  disclosed  to  the  Shareholders  or  The
Company by a third party who does not have an obligation of confidentiality
to Purchaser; or

                           e) after being furnished to the  Shareholders or
The Company,  entered the public domain  through no fault or failure to act
on their part or on the part of their officers, agents, representatives, or
employees.

                  In  addition,  the  Shareholders  shall  hold  in  strict
confidence  and shall not use in any manner  detrimental to the Company any
confidential and proprietary information of or relating to the Company.

                  6.9 Consents and Approvals.  The Shareholders shall do the 
following:

                           a) use all  reasonable  efforts  to  obtain  all
consents from all parties  required to be obtained by the  Shareholders and
the Company to carry out the transactions contemplated by this Agreement;

                           b) in a timely,  accurate and  complete  manner,
make or cause to be made,  such required  filings and prepare such required
applications  to  any  governmental  agency  with  which  such  filings  or
applications  are  required  to be made or whose  approval  or  consent  is
required  for the  consummation  by the  Shareholders  of the  transactions
contemplated by this Agreement;

                           c)  provide  to   Purchaser   such   information
concerning  the  Shareholders  and the Company as Purchaser  may require to
make the filings and prepare the  applications  as specified in Section 7.2
(b); and

                           d) cooperate in good faith with any governmental
investigation and of witnesses, if requested.

         6.10 Representations,  Warranties and Schedules.  The Shareholders
shall  disclose to Purchaser any material  changes to  representations  and
warranties  of the  Shareholders  in Article III occurring on or before the
Closing Date, and such representations,  warranties, and schedules shall be
deemed amended by such disclosures.

         6.11 Other Agreements. At the Closing, Bernard A. Li shall execute
and deliver to Purchaser a Consulting  Agreement  substantially in the form
of  Exhibit  6.11(a)  hereto  (the  "Consulting  Agreement").  Also  at the
Closing,  Walter S. Arnold and Charles W. Hill shall execute and deliver to
Purchaser  Employment  Agreements  substantially  in the  forms of  Exhibit
6.11(b) (the "Arnold Employment  Agreement") and Exhibit 6.11(c) (the "Hill
Employment Agreement"),  respectively, hereto. The parties acknowledge that
prior to the  execution  of this  Agreement,  Elsie Jordan has executed the
agreement attached hereto as Exhibit 6.11(d).

         6.12 Shareholder Waivers.  Each Shareholder waives any rights such
Shareholder may have pursuant to the Executive Shareholders Agreement dated
November  1, 1995 among the  Company  and the  Shareholders  (and all other
agreements among the Shareholders  regarding the sale or transfer of shares
of the Company),  and agrees that such agreement shall be deemed terminated
and revoked immediately prior to the Closing; provided, that if the Closing
does not  occur  pursuant  to this  Agreement  then  such  agreement  shall
continue in full force and effect.

         6.13 Matters Relating To Ashland Stock.  Each  Shareholder  agrees
not to sell to a third party the Ashland Stock issued to him or it pursuant
to this Agreement prior to the earliest date necessary for the transactions
contemplated   hereby  to  be  treated  as  a  "pooling"  under  applicable
accounting rules; provided, however, that such restrictions shall not apply
in the event the  transaction is otherwise not eligible for such accounting
treatment at the time of such sale.  Each  Shareholder  agrees to indemnify
and hold the  Purchaser  harmless from any Costs (as  hereinafter  defined)
suffered by the Purchaser in the event the transaction  contemplated hereby
is not treated as a "pooling" as a result of the breach by that Shareholder
of this  Section  6.13;  provided,  that (i) such  indemnity  shall  not be
subject to the  limitations  of any other  provision  hereof,  and (ii) the
maximum liability for a Shareholder for a breach of this Section 6.13 shall
be limited to the pro-rata  portion of the Purchase  Price received by such
Shareholder hereunder.

         6.14  Matters   Relating  to  Vincent   Motorcycles   Black  Eagle
Trademarks.  The  Shareholders  agree that prior to the  earlier of the one
year anniversary of the Closing Date or the date that public statements are
made in connection  with the use of the "Vincent  Motorcycles  Black Eagle"
trademarks,  Serial Nos. 75-045,352 and 75-210,945 (the "Trademarks"),  the
Shareholders will cause the Trademarks to be revised so that the eagle head
portion of the  Trademarks is materially  different  than the Trademarks in
their  current  configurations  when one is overlayed  upon the other.  The
Purchaser  shall  have the  right to  approve  any  such  revisions  to the
Trademarks, which approval shall not be unreasonably withheld,  conditioned
or delayed.


                                 ARTICLE VII
                           COVENANTS OF PURCHASER

                  7.1 Duty of  Confidentiality.  Purchaser and its officers,
employees,  agents  and  representatives  will  comply  with the  terms and
conditions set forth in the letter of agreement dated October 20, 1997 from
Donaldson,  Lufkin & Jenrette Securities  Corporation through Jeffrey Raich
as agent for the Company to the Purchaser through Rick Organ.  'Conditional
End of Page' code here: keep together 5 lines.

                  7.2  Consents  and  Approvals.  Purchaser  shall  do  the
following:

                           a) use all  reasonable  efforts  to  obtain  all
consents from all parties required to be obtained by Purchaser to carry out
the transaction contemplated by this Agreement.

                           b) in a timely,  accurate and  complete  manner,
make or cause to be made such  required  filings and prepare such  required
applications  to  any  governmental  agency  with  which  such  filings  or
applications  are  required  to be made or whose  approval  or  consent  is
required for the consummation by Purchaser of the transactions contemplated
by this Agreement;

                           c) provide to the Shareholders  such information
concerning  Purchaser as the  Shareholders  may require to make the filings
and prepare the applications as specified in Section 6.9(b); and

                           d) cooperate in good faith with the governmental
investigation and of witnesses, if requested.

         7.3 Tax-Free Reorganization. Purchaser covenants that it shall not
take any actions or position  between the  execution of this  Agreement and
the closing of the  purchase  of the Company as well as anytime  thereafter
which is  inconsistent  with the  treatment  and  characterization  of such
purchase  as a tax-free  reorganization  under  Sections  368(a)(1)(A)  and
368(a)(2)(E) of the Code (unless actions of the Shareholders  subsequent to
the  Closing  Date shall  have  caused the  transaction  to have  failed to
qualify as a tax-free  reorganization).  Purchaser  shall cause the Company
to,  file  all its  Returns  due with  respect  to or  after  the  purchase
consistent  with  treatment  of the  purchase as a tax-free  reorganization
under  Sections  368(a)(1)(A)  and  368(a)(2)(E)  (unless  actions  of  the
Shareholders   subsequent  to  the  Closing  Date  shall  have  caused  the
transaction  to have  failed  to  qualify  as a  tax-free  reorganization).
Following the purchase,  Purchaser  shall cause the Company to continue its
historic  business or use a  significant  portion of its historic  business
assets in a business.

                                  ARTICLE VIII
                CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE

                  8.1  Conditions  Precedent for the  Shareholders to Close.
The  obligations  of  the   Shareholders  to  consummate  the  transactions
contemplated by this Agreement are contingent and specifically  conditioned
upon the satisfaction at or before Closing of the following conditions:

                           a)  Representations  and  Warranties at Closing.
Except  as  contemplated  by  this  Agreement,   the   representations  and
warranties of Purchaser  contained in this  Agreement  shall continue to be
true and accurate in all material respects as of the Closing Date.

                           b) Compliance With  Conditions.  Purchaser shall
have performed and complied in all material  respects with all  agreements,
covenants  and  conditions  required by this  Agreement  prior to or at the
Closing.

                           c)  Corporate   Authority.   The  execution  and
delivery  of  this  Agreement  by  Purchaser  and  the  performance  of its
covenants  and  obligations  under  this  Agreement  shall  have  been duly
authorized by all necessary corporate actions (including without limitation
the approval of the Board of Directors of the Purchaser).

                           d) Absence of  Litigation.  At the Closing Date,
no Actions shall have been instituted or shall be threatened in which it is
sought to restrain or prohibit the  consummation  of this  Agreement or the
transactions  contemplated herein or the transfer of title or use of any of
the  properties  or  assets of  Company  or in which it is sought to obtain
substantial  damages  against  the  Shareholders  in  connection  with this
Agreement or the consummation of the transactions contemplated herein.

                           e) [Intentionally Omitted].

                           f)  Closing   Documents,   Actions,   Etc.   All
certificates,  instruments and documents  required to be delivered by or on
behalf of Purchaser at Closing, and all actions to be taken by Purchaser at
Closing,  all as set forth in Section  9.2,  shall have been  delivered  or
taken.

                           g)  Assignments  and  Consents.   All  necessary
agreements,  assignments  and consents to the  consummation by Purchaser of
the transaction  contemplated by this Agreement, or otherwise pertaining to
matters  covered by it shall have been  obtained by Purchaser and delivered
to the Shareholders on or prior to the Closing Date.

                  8.2  Conditions  Precedent  for  Purchaser  to Close.  The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is contingent and specifically  conditioned upon the satisfaction
at or before Closing of the following conditions:

                           a)  Representations  and  Warranties at Closing.
Except  as  contemplated  by  this  Agreement,   the   representations  and
warranties of the  Shareholders  contained in this Agreement shall continue
to be true and  accurate in all  material  respects as of the Closing  Date
except that if there  occurs a breach (i) with  respect to  representations
and  warranties  (other  than  those set forth in  Sections  3.3  (Title to
Shares) and 3.5 (Authority)) of the  Shareholders,  this condition shall be
deemed  satisfied  unless such breach  results in a  Termination  Event (as
defined below) on the Company, and (ii) with respect to the representations
and  warranties  of the  Shareholders  set  forth  in the  first  and  last
sentences of Section 3.2, Sections 3.3 and 3.5, this condition shall not be
deemed  satisfied for any breach thereof.  For purposes of this Article,  a
"Termination   Event"  shall  mean  any  changes  or   discoveries  in  the
representations,  warranties and schedules as disclosed by the Shareholders
pursuant to Section 6.10 that in the  reasonable  judgment of the Purchaser
have  resulted or are  reasonably  likely to result in increased  expenses,
losses or  liabilities of the Company which will total in the aggregate One
Million Three Hundred Seventy Five Thousand Dollars ($1,375,000) or more.

                           b) Compliance With Conditions.  The Shareholders
shall  have  performed  and  complied  in all  material  respects  with all
agreements,  covenants and conditions  required by this Agreement  prior to
the Closing.

                           c)  Corporate   Authority.   The  execution  and
delivery of this Agreement by the  Shareholders  and the performance of its
covenants  and  obligations  under  this  Agreement,  shall  have been duly
authorized by all necessary actions.

                           d) Absence of  Litigation.  At the Closing Date,
no Actions shall have been  instituted in which it is sought to restrain or
prohibit  the   consummation   of  this   Agreement  or  the   transactions
contemplated herein or in which it is sought to obtain damages in excess of
$250,000  against  Purchaser  in  connection  with  this  Agreement  or the
consummation of the transactions contemplated hereby.

                           e) Termination  Event. At the Closing Date there
shall have been no Termination Event with respect to the Company.

                           f)  Lease  Amendment.  The  Company  shall  have
entered into a lease  amendment  with  Inter-Market  Investment  Group (the
"Partnership")  for the  lease  of the  Company's  premises  (the  "Lease")
pursuant  to which  (i) the term of the Lease  shall be for six (6)  months
following the date of Closing,  (ii)  following  such  six-month  term, the
Lease  shall be on a  month-to-month  basis and during  such  period may be
terminated by either party with thirty (30) days written  notice,  (iii) in
the event the current sublessee of the Company's premises (the "Sublessee")
renews the sublease  (the  "Sublease")  upon the  expiration  thereof,  the
Company  shall pay monthly rent to the  Partnership  equal to the amount of
the  monthly  rental  payment  due under the Lease  less the  amount of the
monthly rent, if any,  paid under the Sublease  (the  "Sublease  Rent") (it
being  understood that the Company shall include in such payment the amount
of Sublease Rent, if any, received by the Company under the Sublease),  and
(iv) all other terms and  conditions of the Lease  (including the amount of
monthly rent) shall remain in full force and effect.

                           g)  Closing   Documents,   Actions,   Etc.   All
certificates,  instruments and documents  required to be delivered by or on
behalf of the  Shareholders at Closing,  and all actions to be taken by the
Shareholders  at Closing,  all as set forth in Section 9.1, shall have been
delivered or taken.

                           h)  Assignments  and  Consents.   All  necessary
agreements,   assignments   and  consents  to  the   consummation   by  the
Shareholders  of  the  transactions  contemplated  by  this  Agreement,  or
otherwise  pertaining to matters covered by it, shall have been obtained by
the  Shareholders  and  delivered  to  Purchaser on or prior to the Closing
Date.

                           i) Resignation of Officers and Directors. To the
extent  requested  in writing by  Purchaser  prior to  Closing  Date,  each
officer  and  director  of the  Company  shall  have  submitted  his or her
resignation effective as of the Closing Date.

                           j)  Termination of Employment  Agreements.  Each
existing  employment  agreement with the  Shareholders  and Elizabeth Li to
which the Company is a party shall have been terminated effective as of the
Closing Date.

                           k)  Life  Insurance   Policies.   The  Company's
obligations   to  pay  premiums  for  life   insurance   policies  for  the
Shareholders shall have been terminated.

                                  ARTICLE IX
                       ACTIONS TO BE TAKEN AT CLOSING

                  9.1  Actions  of  the   Shareholders.   At  Closing,   the
Shareholders  shall deliver the  following  certificates,  instruments  and
documents and take the following actions:

                           a) deliver to Purchaser a  certificate  executed
by each of the  Shareholders,  dated as of the Closing Date,  certifying to
the  fulfillment of the conditions  specified in Sections 8.2(a) and 8.2(b)
substantially in the form of Exhibit 9.1(a) to this Agreement;

                           b)  deliver  to  Purchaser  an  opinion  of  the
counsel for the Shareholders,  dated the Closing Date, substantially in the
form of Exhibit  9.1(b),  with such  modifications  as shall be  reasonably
acceptable to legal counsel from Purchaser;

                           (c) deliver to Purchaser:  true copies, reviewed
by  Good,  Swartz &  Berns,  the  Company's  independent  certified  public
accountants,  of the  Company's  financial  statements  for the fiscal year
ended  December  31,  1997,  which  financial  statements  shall  have been
reviewed and prepared in  conformity  with  generally  accepted  accounting
principles  consistently  applied  so as to fairly  present  the  financial
condition and results of operations of the Company for such period;

                           (d) to the extent the Shareholders have received
a written request for the resignations of directors of the Company, deliver
to Purchaser the resignations of such directors;

                           (e)  deliver  to  Purchaser  stock  certificates
representing  all the  Shares,  endorsed in blank or  accompanied  by stock
powers duly executed in blank in proper form for transfer; and

                           (f)   deliver  to   Purchaser   the   Consulting
Agreement executed by Bernard A. Li and the Arnold Employment Agreement and
the Hill Employment  Agreement  executed by Walter S. Arnold and Charles W.
Hill, respectively.

                  9.2 Actions of  Purchaser.  At Closing,  Purchaser  shall
deliver the following certificates,  instruments and documents and take the
following actions:

                           a) deliver  to the  Shareholders  a  certificate
executed by the  President of Purchaser or other  executive  officer of the
Purchaser,  dated as of the Closing Date,  certifying to the fulfillment of
the conditions specified in Sections 8.1(a) and 8.1(b);

                           b)  deliver  to the  Shareholders  duly  adopted
resolutions  of the  Board of  Directors  of  Purchaser,  certified  by the
Secretary or an Assistant Secretary of Purchaser, as of the Closing Date:

                                  (i)   authorizing   and   approving   the
execution and delivery of this  Agreement and the purchase of the Shares by
Purchaser  and the  consummation  of the  other  transactions  contemplated
herein in accordance with the terms of this Agreement; and

                                  (ii) authorizing  and approving all other
necessary and proper  corporate  actions to enable Purchaser to comply with
the terms hereof;

                           c) deliver to the  Shareholders a certificate of
incumbency,  dated as of the Closing  Date, as to the officers of Purchaser
executing this Agreement and any certificate,  instrument or document to be
delivered  at  Closing,  executed  by the  President  and  attested  by the
Secretary or an Assistant Secretary of Purchaser;

                           d) deliver  to the  Shareholders  a  certificate
from the  Secretary  of State of the state of  incorporation  of  Purchaser
dated not more than seven (7) days  prior to the  Closing  Date,  as to the
legal  existence  and good  standing  of  Purchaser  under the laws of such
state;

                           e)  deliver  to the  Shareholders  an opinion of
counsel,  dated the  Closing  Date,  substantially  in the form of  Exhibit
9.2(e), with such modifications as shall be reasonably  acceptable to legal
counsel for the Shareholders; and

                           f)   deliver   to   the    Shareholders    stock
certificates  representing the Ashland Stock equivalent to the value of the
Purchase Price.

                                  ARTICLE X
                 SURVIVAL OF REPRESENTATIONS AND WARRANTIES

                  All  representations  and  warranties  pursuant  to  this
Agreement  shall  expire  one (1) year  after  the  Closing  Date and shall
thereafter be of no force and effect.

                                  ARTICLE XI
                              INDEMNIFICATION

                  11.1 Indemnification of Purchaser and the Company.  Subject
to the limitations set forth herein,  the Shareholders  shall indemnify and
hold  Purchaser,  Company,  and each of their  shareholders,  subsidiaries,
affiliates,  officers and  directors  harmless  from,  against,  for and in
respect of any and all damages, losses,  settlement payments,  obligations,
liabilities,  claims,  costs and expenses  ("Costs") incurred or paid by an
indemnified party arising out of the breach of any representation, warranty
or covenant of the Shareholders in this Agreement.

Notwithstanding the foregoing:

                           a) no indemnification shall be made with respect
to any matter to the extent that insurance  proceeds have been collected by
the party to be indemnified with respect to such matter;

                           b) no  payment  under  indemnification  shall be
provided,  unless and until the aggregate amount of all such matters exceed
Two Hundred and Fifty Thousand Dollars $250,000.00 (the "Deductible");

                           c) the aggregate  amount of actual  amounts paid
by the Shareholders for breach of any representation,  warranty or covenant
of the  Shareholders in this Agreement shall not exceed Two Million Dollars
($2,000,000.00) (the "Cap"); and

                           (d) each Shareholder's liability hereunder shall
be several and limited to the  percentage of the total  liability  equal to
such Shareholder's percentage of Shares on the Closing Date.

                  11.2  Indemnification  of the Shareholders.  Subject to the
limitations  hereinafter set forth,  Purchaser shall indemnify and hold the
Shareholders  and  each  of  its  subsidiaries,  affiliates,  officers  and
directors  harmless  from,  against,  for  and in  respect  of any  and all
damages, losses,  settlement payments,  obligations,  liabilities,  claims,
costs and expenses paid by any such indemnified  party (i) by reason of the
breach of any representation or warranty of Purchaser  contained or made in
connection with Sections 4.1 through 4.6 or (ii) as a result of third party
claims  against  such party  arising out of the  operations  of the Company
after the Closing Date.

                  11.3 Rules Regarding Indemnification.

                           a)  The  obligations  and  liabilities  of  each
Indemnifying  party  hereunder  shall be subject to the following terms and
conditions:

                                  (i)  The  Indemnified  party  shall  give
prompt  written notice to the  indemnifying  party of any claim which might
give rise to a claim by the  indemnified  party  against  the  indemnifying
party based on the Indemnity agreements contained in Sections 11.1 and 11.2
hereof,  stating  the  nature  and  basis of said  claims  and the  amounts
thereof, to the extent known.

                                 (ii) In the  event  any  action,  suit  or
proceeding is brought against the indemnified  party, with respect to which
the  Indemnifying  party may have liability under the indemnity  agreements
contained in Sections 11.1 and 11.2 hereof, the action,  suit or proceeding
shall, upon the written acknowledgment by the indemnifying party that it is
obligated  to  indemnify  under  such  indemnity  agreement,   be  defended
(including  all  proceedings  on appeal or for review) by the  indemnifying
party. The indemnified party shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
indemnified party's own expense. In such cases, the indemnified party shall
make available to the  indemnified  party and its attorneys and accountants
all  books  and  records  of  the  indemnifying   party  relating  to  such
proceedings  or litigation  and the parties  hereto agree to render to each
other such assistance as they may reasonably require of each other in order
to ensure the  proper and  adequate  defense  of any such  action,  suit or
proceeding.

                                  (iii) With respect to any indemnification
based upon Taxes  pursuant  to Article V by the  Shareholders  for a period
before   Closing,   no   Shareholder   shall  be  liable  as  to  any  such
indemnification  matter  for  which the  Purchaser  does not give a written
notification  to the  Shareholders  within 30 days after the earlier of (A)
receipt by the Purchaser from the relevant taxing  authority of a notice of
deficiency  with respect to such Taxes or (B) expiration of three (3) years
following  the due date  (including  extensions)  for filing the Return for
such Taxes (or, if earlier, the expiration of three (3) years following the
date of actual filing of such Return).

                           b)  Neither  the   indemnified   party  nor  the
indemnifying  party  shall make any  settlement  of any claims  without the
written consent of the other party, which consent shall not be unreasonably
withheld or delayed.  In addition,  if,  within ten (10) days of receipt of
notice of a proposed  settlement amount, the indemnified party notifies the
indemnifying  party  that  the  terms  of  such  proposed   settlement  are
unacceptable  to the  indemnified  party then the  indemnified  party shall
undertake  the  defense  of  the   litigation  and  the  liability  of  the
indemnifying  party  shall  be  limited  to  the  amount  of  the  proposed
settlement.  Further,  if for any reason the indemnified  party  determines
that it is in its best interests to handle the defense of a claim for which
It  is  entitled  to  indemnification  from  the  indemnifying  party,  the
indemnified  party and  indemnifying  party shall endeavor in good faith to
reach an  agreement  by which  the  indemnified  party  shall  release  the
indemnifying  party in  consideration  for the payment by the  Indemnifying
party to the Indemnified party of the estimated value of the claim.

                           c) The  Purchaser's  sole and  exclusive  remedy
against  any  Shareholder  for any  breach of a  representation,  warranty,
covenant  or other  obligation  made in or imposed by this  Agreement  with
respect to such Shareholder shall be a claim for indemnification subject to
the  limitations  set forth in this  Article XI.  Notwithstanding  anything
herein to the  contrary,  the Cap  shall  not apply (i) to the  breach by a
Shareholder of the  representations  and warranties  contained in the first
and last  sentences of Section 3.2  (Capitalization  of the Company) and in
Sections  3.3 (Title to Shares) and 3.5  (Authority),  or (ii) in the event
the  Company  has  borrowed  or agreed to borrow any funds under a new bank
line of credit or similar  arrangement  (that is, other than under lines of
credit or other agreements for indebtedness in effect as of the date of the
Current Financial  Statements),  and paid or distributed the proceeds to or
for the  benefit  of the  Shareholders  in  violation  of  this  Agreement;
provided,  however, that in the event of any such breach or event described
in clauses (i) and (ii) of this subsection  (c), the Purchaser's  claim for
indemnification shall be limited to the amount of proceeds received by such
Shareholder for the purchase of such Shareholder's Shares.

                           d)  With   respect   to  any  matter  for  which
indemnification  has been provided  hereunder the indemnified  party hereby
covenants and agrees to cooperate with the indemnifying party to assign any
of its rights under any Insurance  policy in the  indemnified  party's name
against a loss covered by such policy.

                           (e)  Liability for  indemnification  obligations
hereunder  shall be subject to  reduction  for any tax  benefit as and when
realized  in  connection  with the loss or damage  suffered  by such person
which forms the basis of the indemnifying person's liability hereunder.

                           (f)  Notwithstanding  anything in this Agreement
(including without limitation the indemnity set forth in Schedule 3.9), (i)
in no event shall the liability of a  Shareholder  for breach of any or all
of the warranties,  representations and/or covenants of such Shareholder in
this  Agreement  (including  without  limitation  such  indemnity  and  the
indemnities  in Article V and this  Article XI) exceed the  Purchase  Price
received by such  Shareholder,  except in the case of actual  fraud by such
Shareholder,  and (ii) with respect to any  obligation of the  Shareholders
for the breach of a representation,  warranty or covenant in this Agreement
(including  without limitation any agreement to indemnify and Schedule 3.9)
as to  which  the  Cap  is  not  applicable,  (I)  the  liability  of  each
Shareholder  shall be  several,  (II)  where and to the  extent  the breach
arises from an action of one or more of the Shareholders,  each Shareholder
shall be liable only for his breach,  and (III) in the case of a breach not
described in the preceding clause (II), any amount recoverable by Purchaser
shall only be recoverable from the  Shareholders  pro-rata in proportion to
their holdings of Company stock.

         11.4 Tax  Benefits.  In  determining  the  amount of any claims of
Purchaser ("Purchaser Claims"),  such amount shall be reduced by the amount
of any tax benefit effects  (collectively,  the "Tax Effects")  accruing to
Purchaser  related  to  the  Purchaser's  Claims  or to the  payments  made
pursuant to such Claims.  Tax Effects shall include without  limitation any
tax  refunds  not shown as an asset on the  reviewed  balance  sheet of the
Company  prepared as of December  31, 1997 which are  obtained  for any tax
periods  ending on or prior to the Closing  Date,  whether or not  directly
related to any  Purchaser  Claims or to any payment  made  pursuant to such
Claims,  other  than a tax refund to the  extent  attributable  solely to a
carryback  to a period  ending on or before the Closing  Date of a tax item
from a taxable  period  beginning  on or after the  Closing  Date.  The Tax
Effects   shall  be  determined  by  taking  into  account  all  facts  and
circumstances  existing at the Closing Date  through the future  date(s) to
which  such  benefits  run (to the  extent of the  present  value  thereof,
discounted at the applicable short term applicable  federal rate, as of the
date of such  indemnification).  For  purposes of  determining  the time or
times at which Tax  Effects  shall be taken  into  account  to  reduce  any
indemnification claims hereunder,  the parties agree that Tax Effects shall
reduce the amount of any indemnification  claims under this Article XI only
if, as and when actually realized by Purchaser.  In the event a Shareholder
has paid Purchaser for an  indemnification  claim which is later subject to
reduction due to a Tax Effect,  Purchaser shall promptly pay such amount to
the  Shareholder  at the time  Purchaser if, as and when such Tax Effect is
actually realized by the Purchaser.

                                  ARTICLE XII
                          TERMINATION OF AGREEMENT

                  12.1 Termination.  This Agreement may be terminated prior
to the Closing as follows:

                           a) At the  election of the  Shareholders  or the
Purchaser,  if for any reason the  Closing  has not  occurred  on or before
February  15,  1998,   (time  being  of  the  essence  in  respect  of  the
transactions contemplated by this Agreement);

                           b) At  the  election  of  the  Purchaser  or the
Shareholders,  if any legal  proceeding  is  threatened or commenced by any
governmental or regulatory  body or person (other than the  Shareholders or
the Purchaser or any  affiliate of the  Shareholders  or the  Purchaser) to
restrain,   modify  or  prevent  the  carrying  out  of  the   transactions
contemplated under this Agreement and either Purchaser or the Shareholders,
as the case may be,  reasonably  and in good faith deems it  impractical or
inadvisable to proceed in view of such legal proceeding or threat thereof;

                           c) At any time on or prior to the Closing  Date,
by written consent of the Purchaser and the Shareholders;

                           d) By the Shareholders, if there has been: (i) a
material   misrepresentation  on  the  part  of  Purchaser  of  Purchaser's
representations  and  warranties  contained  in this  Agreement ; or (ii) a
material  breach by  Purchaser  of any  covenant or  agreement of Purchaser
contained in this Agreement; or

                           e)  By  Purchaser,  if  there  has  been:  (i) a
material   misrepresentation  on  the  part  of  the  Shareholders  of  the
representations  and  warranties  of the  Shareholders  contained  in  this
Agreement where such misrepresentation  constitutes a Termination Event (as
defined in Section  8.2(a));  or (ii) a material breach by the Shareholders
of  any  covenant  or  agreement  of the  Shareholders  contained  in  this
Agreement.

                  12.2  Survival.  In the event this  Agreement is terminated
pursuant to Section 12.1 and the transactions  contemplated  hereby are not
consummated as described above, this Agreement shall be of no further force
and effect,  except for the provisions of Sections 6.8, 7.1 and 13.4, which
shall survive in accordance with their own respective terms.

                  12.3  Termination  Upon  Default  or  Abandonment  If  this
Agreement  terminates as a result of a breach by a party,  then in addition
to any other remedy which may be afforded to the non-breaching  party, such
non-breaching  party shall be entitled to receive from the breaching  party
reimbursement for all reasonable costs and expenses  (including  attorney's
fees) incurred by such  non-breaching  party incident to this Agreement and
the transactions contemplated herein.

                  12.4  Termination Fee. In recognition of the considerable
time and expense  that the  Shareholders  have  expended and will expend in
entering  into  this  Agreement  and the  other  transactions  contemplated
hereby,  and in  order to  induce  the  Shareholders  to  enter  into  such
transactions, in the event the Merger is not consummated due to the failure
by the Purchaser to meet the  conditions set forth in Article VIII above or
the failure by the Purchaser to use its commercially  reasonable efforts to
meet such conditions,  the Purchaser shall promptly pay to the Shareholders
(pro-rata)  in  cash  the  sum of One  Million  Dollars  ($1,000,000)  (the
"Termination  Fee"),  which fee shall be full and complete  compensation to
the  Shareholders  as a result of such failure and, upon the making of such
payment  (provided such payment is timely made in accordance with the terms
of  this  Agreement),   there  shall  be  no  further   obligation  to  the
Shareholders  by  the  Purchaser  pursuant  to  this  Agreement;  provided,
however,  the  Termination Fee shall not be paid in the event the Merger is
not  consummated  as a result of: (i) a  Termination  Event (as  defined in
Section  8.2(a),  or (ii) the  discovery by Purchaser of facts not known to
Purchaser as of the effective date of this Agreement that indicate that the
Shareholders or the Company have violated  existing law with respect to the
conduct of the Company's  business which  violation (a) results in or could
reasonably be expected to result in increased  expenses or  liabilities  of
the Company which total in the aggregate $1,375,000 or more, or (b) if such
violation  is not  quantifiable  as to dollar  amount,  results in or could
reasonably be expected to result in a substantial detrimental effect on the
business  of the  Company.  In the  event  Purchaser  determines  that  the
Termination  Fee is not payable  pursuant  to clause (i) or (ii) above,  it
shall provide  written  notice of such  determination  to the  Shareholders
within  five  (5)  business   days   following   demand   therefor  by  the
Shareholders,  which notice shall set forth with specificity the basis upon
which Purchaser has made such termination (including all facts available to
Purchaser with respect thereto).  The parties hereto  acknowledge and agree
that,  other  than  as  provided  in this  Section  12.4,  the  Purchaser's
obligation  to pay the  Termination  Fee  shall  not be  subject  to  other
conditions precedent to Purchaser's obligations under this Agreement.


                                ARTICLE XIII
                               MISCELLANEOUS

                  13.1 Further Assurances.  Each of the parties shall execute
such  documents  and other papers and take such  further  actions as may be
reasonably required or desirable to carry out the provisions hereof and the
transactions  contemplated  hereby,  including  but not  limited  to,  such
further  instruments  of  assignment,  transfer,  conveyance,  endorsement,
direction or authorization  and other documents as Purchaser or its counsel
may request.  In order to perfect title of Purchaser and its successors and
assigns to the Shares or as the Shareholders, or its counsel may reasonably
request in order to effectuate the purposes of this Agreement.

                  13.2 No Other  Beneficiaries.  This Agreement is being made
and entered into solely for the benefit of Purchaser  and the  Shareholders
and neither  Purchaser nor the  Shareholders  intends  hereby to create any
rights in favor of any other person,  as a third party  beneficiary of this
Agreement or otherwise.

                  13.3 Notices. Any notice or other communication required or
permitted  hereunder shall be in writing and shall be delivered by personal
delivery, mail, overnight courier or telecopier.  Such communications shall
be deemed given,  if by personal  delivery,  when received if by mail, when
mailed by certified or registered mail (postage  prepaid and return receipt
requested);  or if by overnight  courier or  telecopier,  when delivered to
such  courier or sent by  telecopier  (provided  that the party  giving the
notice has  confirmation  of such  delivery or sending),  and in each case,
addressed to the party to whom notice is to be given as set forth below:

                  To the Shareholders:      Bernard A. Li
                                            P.O. Box 8705
                                            Rancho Santa Fe, California 92067

                                            Charles W. Hill
                                            1555 Pearl Heights Road
                                            Vista, California 92083

                                            Walter S. Arnold
                                            25595 Madero Way
                                            Temecula, California 92590

                  To the Company:           Eagle One Industries
                                            5927 Landau Court
                                            Carlsbad, California 92008

                  To Purchaser:             The Valvoline Company, 
                                             a division of Ashland Inc.
                                            3499 Blazer Parkway
                                            Lexington, Kentucky 40509
                                            Attn: President

Any party may, by notice given in accordance with this Section to the other
parties,  designate  another  address  or person  for  receipt  of  notices
hereunder.

                  13.4 Costs and  Expenses.  Except as otherwise  provided in
this  Agreement,  the  Shareholders  and Purchaser shall each pay their own
expenses  incident  to this  Agreement  and the  transactions  contemplated
herein, including,  without limitation,  fees of attorneys and accountants,
irrespective of whether such transactions shall be consummated.

                  13.5 Access After  Closing.  After the  Closing,  Purchaser
shall give the  Shareholders  reasonable  access to the  personnel  and the
books  and  records  of  the  Company,   and   cooperate   and  assist  the
Shareholders, to enable the Shareholders to perform the functions described
in Section 1.2 or to respond to any  governmental  audit or  investigation,
any  litigation  or  claim,  or any  tax-related  matters  which  relate to
activities of the Company prior to Closing.


                  13.6 Employee Plans.

                           a) Qualified Plan Termination.  The Shareholders
hereby  jointly  and  severally  agree  to  take  all  necessary,   proper,
convenient and legally  permissible  actions to cause the Company to freeze
benefit accruals under any other plan qualified under section 401(a) of the
Code  (collectively  referred to as  "Qualified  Plans")  that it maintains
within a reasonable time prior to the Closing Date and commence  procedures
designed to terminate  the Qualified  Plans as soon as reasonably  possible
thereafter.  Such  actions to freeze  benefit  accruals and  terminate  the
Qualified Plans shall include,  but not be limited to, the adoption of plan
amendments  and/or  Board of Directors  resolutions  the making of required
notifications  under the terms of the Qualified Plans and under law and the
filing for a favorable determination letter with the IRS upon the Qualified
Plans' termination.  The Shareholders shall be jointly and severally liable
for  completing  all actions  required to terminate  the  Qualified  Plans,
including  any such  actions and related  activities  which occur after the
Closing Date.  Purchaser  hereby agrees to  reasonably  cooperate  with the
Shareholders to provide access to it of any information and other materials
it may reasonably  require to accomplish  the  termination of the Qualified
Plans.  In connection  with the  termination  of the qualified  Plans,  all
participants  thereunder who are affected by the  termination  shall become
completely  vested in their  accrued  benefits  thereunder,  to the  extent
funded.

                           (b)  To the  extent  allowed  by law  and by the
terms of the benefit plans  themselves,  the benefits made available by the
Company to its  employees as of the Closing Date shall  continue to be made
available to the Company's  employees on the same terms and  conditions for
the term of their  continued  employment  by the Company or,  alternatively
with respect to life, long-term disability and medical benefits,  Purchaser
may cause the Company to make  available  instead the  corresponding  life,
long-term  disability  and medical  benefit  plans  afforded  generally  to
employees of Ashland Inc.

                  13.7 Notices  Regarding  Insured  Claims.  Purchaser  shall
provide the Shareholders  with timely written notice of any claim for which
insurance  coverage is provided  under the policies  listed on Schedule for
occurrences  prior to the  Closing  Date that might  reasonably  exceed the
applicable   primary  policy  limit.  Upon  receipt  of  such  notice,  the
Shareholders shall timely notify the appropriate  insurance carrier of such
claim and the parties  agree to  cooperate  with each other with respect to
the filing of any such claim.

                  13.8  Entire  Agreement.  This  Agreement,   including  the
Exhibits and  Schedules  and such other  related  agreements,  contains the
entire  agreement  among the parties  with  respect to the  purchase of the
Shares and  related  transactions,  and  supersedes  all prior  agreements,
written  or  oral,  with  respect  thereto  (including  without  limitation
representations, warranties and covenants contained in materials previously
delivered by the Shareholders to the Purchaser).

                  13.9 Waivers and Amendments. This Agreement may be amended,
superseded,  canceled,  renewed or  extended,  and the terms  hereof may be
waived only by a written instrument signed by the parties hereto or, in the
case of a waiver, by the party waiving compliance.  No delay on the part of
any party in  exercising  any right,  power or  privilege  hereunder  shall
operate as a waiver thereof,  nor shall any waiver of any partial  exercise
of any such  right,  power or  privilege,  preclude  any  further  exercise
thereof or the exercise of any other such right,  power or privilege.  From
time to time prior to the Closing Date,  the  Shareholders  shall  promptly
supplement or amend any schedules  hereto which would have been required to
be set forth or described in such a schedule  which is necessary to correct
any information in a schedule which has become inaccurate.

                  13.10  Governing Law. This Agreement shall be governed by
and  construed  in  accordance  with  the laws of the  State of  California
without regard to the conflict of laws provisions of such jurisdiction.

                  13.11  Jurisdiction.  Jurisdiction and venue in an action
against a  Shareholder  (other  than a  counterclaim  or  cross-claim  in a
proceeding filed by a Shareholder in another  jurisdiction or venue) in any
matter arising out of or connected with the  transactions  contemplated  by
this  Agreement  or  documents  or  instruments  executed or  delivered  in
connection  therewith  shall be proper  only  where  such  Shareholder  (i)
resides, (ii) is domiciled, or (iii) carries on an active trade or business
directly,  through an agent, or through an entity in which such Shareholder
holds more than ten percent (10%) of the voting power  (provided,  however,
that any  activity by a  Shareholder  on behalf of the Company or Purchaser
shall not be  considered  to be so carrying  on such a trade or  business).
Circumstances  where a Shareholder  shall be considered to be carrying on a
trade or business  shall  include,  but shall not be limited to,  rendering
material  personal  services as an employee or independent  contractor only
where such Shareholder is physically present when performing such services.
Jurisdiction  and venue shall be proper in all cases in San Francisco,  Los
Angeles, Orange and San Diego Counties, California.

                  13.12 Binding Effect; Assignment. This Agreement shall be
binding  upon and inure to the  benefit  of the  parties  and  their  legal
successors  and  representatives.  This  Agreement  shall not be assignable
except by operation of law by the Purchaser or the Shareholders without the
prior written consent of the other party hereto.

                  13.13 Waiver of Conflict. The Purchaser acknowledges that
the Company and the Shareholders have been represented by Sheppard, Mullin,
Richter & Hampton  LLP in  connection  with this  transaction  and in other
matters,  and the Purchaser  hereby agrees to waive on behalf of itself and
the Company any and all conflicts of interest and privileges that may apply
to any future  representation by such firm of the Company, the Shareholders
or their respective affiliates in connection with disputes arising from the
transactions contemplated hereby or in connection with any other matters.

                  13.14 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original,  but all such  counterparts  shall together
constitute one and the same  instrument.  Each counterpart may consist of a
number of copies  hereof each signed by less than all, but together  signed
by all of the parties  hereto.  Delivery of an executed  counterpart of the
signature  page to this  Agreement  by  facsimile  shall be as effective as
delivery of a manually  executed  counterpart of this Agreement;  provided,
that any party so delivering  an executed  counterpart  by facsimile  shall
thereafter  promptly  deliver  a  manually  executed  counterpart  of  this
Agreement to the other party, but failure to deliver such manually executed
counterpart  shall not  affect the  validity,  enforceability  and  binding
effect of this Agreement.

                  13.15 Exhibits and Schedules.  The Exhibits and Schedules
are a part of this  Agreement as if fully set forth herein.  All references
herein to sections,  subsections,  clauses, exhibits and schedules shall be
deemed references to such parts of this Agreement, unless the context shall
otherwise require.

                  13.16  Headings.  The headings in this  Agreement are for
reference only, and shall not affect the interpretation of this Agreement.

                  13.17 Notices Regarding Representations, Warranties and 
Covenants.

                           a)  The  Shareholders   shall  notify  Purchaser
promptly of any event or  occurrence  prior to Closing that would cause any
representation  or warranty set forth in Article III or V of this Agreement
or any  covenant of the  Shareholders  set forth in Article V or VI of this
Agreement to be untrue and incorrect.

                           b)  Purchaser   will  notify  the   Shareholders
promptly of any event or  occurrence  prior to Closing that would cause any
representation of warranty set forth in Article IV of this Agreement or any
covenant  of  Purchaser  set forth in Article VII of this  Agreement  to be
untrue or incorrect.


                  IN WITNESS WHEREOF,  the Shareholders,  the Purchaser and
the Company have or have caused their respective authorized representatives
to execute this Agreement effective as of the date first above written.


                                   ASHLAND INC., through its division
                                   known as THE VALVOLINE COMPANY

                                   By:    /s/ James J. O'Brien
                                         -------------------------------------
                                   Title:  Senior Vice President
                                         -------------------------------------


                                   THE LI FAMILY TRUST


                                        /s/ Bernard A. Li
                                   -------------------------------------------
                                   By: Bernard A. Li, Trustee


                                        /s/ Bernard A. Li
                                   -------------------------------------------
                                   BERNARD A. LI


                                        /s/ Charles W. Hill
                                   -------------------------------------------
                                   CHARLES W. HILL


                                        /s/ Walter S. Arnold
                                   -------------------------------------------
                                   WALTER S. ARNOLD



                                   EGL-1, INC., a California corporation



                                   By:      /s/  Bernard A. Li
                                         -------------------------------------
                                   Title:    President
                                         -------------------------------------



