<SUBMISSION>
<ACCESSION-NUMBER>0000007694-01-000020
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20001231
<FILING-DATE>20010213
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ASHLAND INC
<CIK>0000007694
<ASSIGNED-SIC>1600
<IRS-NUMBER>610122250
<STATE-OF-INCORPORATION>KY
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-02918
<FILM-NUMBER>1537012
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>50 E. RIVERCENTER BOULEVARD
<CITY>COVINGTON
<STATE>KY
<ZIP>41012
<PHONE>6068153333
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>50 E. RIVERCENTER BOULEVARD
<CITY>COVINGTON
<STATE>KY
<ZIP>41012
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>ASHLAND OIL INC
<DATE-CHANGED>19920703
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>ASHLAND OIL & REFINING CO
<DATE-CHANGED>19700806
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>

=============================================================================


                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549



                                 FORM 10-Q



          Quarterly Report Pursuant to Section 13 or 15(d) of the
                      Securities Exchange Act of 1934




              FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000

                       Commission file number 1-2918



                                ASHLAND INC.
                          (a Kentucky corporation)



                           I.R.S. No. 61-0122250
                        50 E. RiverCenter Boulevard
                               P. O. Box 391
                       Covington, Kentucky 41012-0391



                      Telephone Number: (859) 815-3333



     Indicate  by check  mark  whether  the  Registrant  (1) has  filed all
reports  required  to be filed  by  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934 during the  preceding  12 months (or for such shorter
period that the Registrant was required to file such reports),  and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No []

     At January 31,  2001,  there were  69,576,879  shares of  Registrant's
Common Stock outstanding.  One Right to purchase  one-thousandth of a share
of Series A  Participating  Cumulative  Preferred  Stock  accompanies  each
outstanding share of Registrant's Common Stock.


=============================================================================


<PAGE>
                       PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>

 -------------------------------------------------------------------------------------------------------------------------------

 ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED INCOME

 -------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Three months ended
                                                                                                             December 31
                                                                                                         -----------------------
 (In millions except per share data)                                                                       2000          1999
 -------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>           <C>
 REVENUES
     Sales and operating revenues                                                                       $ 1,878       $ 1,897
     Equity income                                                                                          121            37
     Other income                                                                                            14            14
                                                                                                        ----------    ---------
                                                                                                          2,013         1,948
 COSTS AND EXPENSES
     Cost of sales and operating expenses                                                                 1,546         1,537
     Selling, general and administrative expenses                                                           265           243
     Depreciation, depletion and amortization                                                                58            57
                                                                                                        ----------    ---------
                                                                                                          1,869         1,837
                                                                                                        ----------    ---------
 OPERATING INCOME                                                                                           144           111
     Net interest and other financial costs                                                                 (46)          (43)
                                                                                                        ----------    ---------
 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                                                       98            68
     Income taxes                                                                                           (39)          (28)
                                                                                                        ----------    ---------
 INCOME FROM CONTINUING OPERATIONS                                                                           59            40
     Loss from discontinued operations (net of income taxes)                                                  -          (206)
                                                                                                        ----------    ---------
 NET INCOME (LOSS)                                                                                      $    59       $  (166)
                                                                                                        ==========    =========

 BASIC EARNINGS (LOSS) PER SHARE - Note A
     Income from continuing operations                                                                  $   .84       $   .56
     Loss from discontinued operations                                                                        -         (2.88)
                                                                                                        ----------    ---------
     Net income (loss)                                                                                  $   .84       $ (2.32)
                                                                                                        ==========    =========
 DILUTED EARNINGS (LOSS) PER SHARE - Note A
     Income from continuing operations                                                                  $   .84       $   .55
     Loss from discontinued operations                                                                        -         (2.87)
                                                                                                        ----------    ---------
     Net income (loss)                                                                                  $   .84       $ (2.32)
                                                                                                        ==========    =========

 DIVIDENDS PAID PER COMMON SHARE                                                                        $  .275       $  .275

</TABLE>



SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                     2
<PAGE>


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

-----------------------------------------------------------------------------------------------------------------------------------
                                                                            December 31         September 30         December 31
(In millions)                                                                      2000                 2000                1999
-----------------------------------------------------------------------------------------------------------------------------------

                               ASSETS

<S>                                                                           <C>                  <C>                  <C>
CURRENT ASSETS
    Cash and cash equivalents                                                 $     108            $      67            $     46
    Accounts receivable                                                           1,153                1,268               1,274
    Allowance for doubtful accounts                                                 (30)                 (25)                (24)
    Note receivable from Industri Kapital (1)                                         -                    -                 285
    Inventories - Note A                                                            528                  488                 522
    Deferred income taxes                                                           126                  135                  99
    Other current assets                                                            108                  198                 124
                                                                              ----------           ----------           ---------
                                                                                  1,993                2,131               2,326
INVESTMENTS AND OTHER ASSETS
    Investment in Marathon Ashland Petroleum LLC (MAP)                            2,209                2,295               2,140
    Cost in excess of net assets of companies acquired                              528                  537                 503
    Investment in Arch Coal - discontinued operations                                35                   35                 178
    Other noncurrent assets                                                         377                  351                 291
                                                                              ----------           ----------           ---------
                                                                                  3,149                3,218               3,112
PROPERTY, PLANT AND EQUIPMENT
    Cost                                                                          2,898                2,879               2,902
    Accumulated depreciation, depletion and amortization                         (1,496)              (1,457)             (1,390)
                                                                              ----------           ----------           ---------
                                                                                  1,402                1,422               1,512
                                                                              ----------           ----------           ---------

                                                                              $   6,544            $   6,771            $  6,950
                                                                              ==========           ==========           =========
                LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Debt due within one year                                                  $     268            $     327            $    544
    Trade and other payables                                                      1,114                1,330               1,033
    Income taxes                                                                    181                   42                  87
                                                                              ----------           ----------           ---------
                                                                                  1,563                1,699               1,664
NONCURRENT LIABILITIES
    Long-term debt (less current portion)                                         1,874                1,899               2,198
    Employee benefit obligations                                                    386                  383                 421
    Deferred income taxes                                                           174                  288                 139
    Reserves of captive insurance companies                                         202                  179                 179
    Other long-term liabilities and deferred credits                                352                  358                 377
    Commitments and contingencies - Note D
                                                                              ----------           ----------           ---------
                                                                                  2,988                3,107               3,314

COMMON STOCKHOLDERS' EQUITY                                                       1,993                1,965               1,972
                                                                              ----------           ----------           ---------

                                                                              $   6,544            $   6,771            $  6,950
                                                                              ==========           ==========           =========

-----------------------------------------------------------------------------------------------------------------------------------
(1) This note, received in connection with the acquisition of the U.S. construction  operations  of  Superfos,  was  redeemed
    in the  March  2000 quarter.
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                     3


<PAGE>

<TABLE>
<CAPTION>

 -----------------------------------------------------------------------------------------------------------------------------------

 ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED COMMON STOCKHOLDERS' EQUITY

 --------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Accumulated
                                                                                                             other
                                                          Common        Paid-in       Retained       comprehensive
(In millions)                                              stock        capital       earnings                loss         Total
---------------------------------------------------------------------------------------------------------------------------------

<S>                                                     <C>            <C>           <C>               <C>               <C>
BALANCE AT OCTOBER 1, 1999                              $     72       $    464      $   1,710         $      (46)       $ 2,200
   Total comprehensive income (loss) (1)                                                  (166)                (6)          (172)
   Cash dividends                                                                          (19)                              (19)
   Issued common stock for
     acquisitions of other companies                                          1                                                1
   Repurchase of common stock                                 (1)           (37)                                             (38)
                                                        ---------      ---------     ----------        -----------       --------
BALANCE AT DECEMBER 31, 1999                            $     71       $    428      $   1,525         $      (52)       $ 1,972
                                                        =========      =========     ==========        ===========       ========

BALANCE AT OCTOBER 1, 2000                              $     70       $    388      $   1,579         $      (72)       $ 1,965
   Total comprehensive income (1)                                                           59                 (8)            51
   Cash dividends                                                                          (19)                              (19)
   Issued common stock under
     stock incentive plans                                                    5                                                5
   Repurchase of common stock                                                (9)                                              (9)
                                                        ---------      ---------     ----------        -----------       --------
BALANCE AT DECEMBER 31, 2000                            $     70       $    384      $   1,619         $      (80)       $ 1,993
                                                        =========      =========     ==========        ===========       ========
---------------------------------------------------------------------------------------------------------------------------------
  (1)  Reconciliations of net income (loss) to total comprehensive income (loss) follow.

</TABLE>
<TABLE>
<CAPTION>

                                                                                                      Three months ended
                                                                                                          December 31
                                                                                                   ---------------------------
          (In millions)                                                                                  2000           1999
          -----------------------------------------------------------------------------------------------------------------------

<S>                                                                                                <C>             <C>
          Net income (loss)                                                                        $       59      $    (166)
          Unrealized translation adjustments                                                              (10)           (10)
            Related tax benefit                                                                             2              4
                                                                                                   -----------     -----------
          Total comprehensive income (loss)                                                        $       51      $    (172)
                                                                                                   ===========     ===========
           -----------------------------------------------------------------------------------------------------------------------
       At December 31, 2000, the accumulated other  comprehensive  loss was comprised of net unrealized  translation losses of $72
       million and a minimum pension liability of $8 million.
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                     4
<PAGE>


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS

-------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Three months ended
                                                                                                        December 31
                                                                                               --------------------------------
(In millions)                                                                                      2000                 1999
-------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                            <C>                  <C>
CASH FLOWS FROM CONTINUING OPERATIONS
    Income from continuing operations                                                          $     59             $     40
    Expense (income) not affecting cash
      Depreciation, depletion and amortization                                                       58                   57
      Deferred income taxes                                                                          13                   (7)
      Equity income from affiliates                                                                (121)                 (37)
      Distributions from equity affiliates                                                          209                   68
    Change in operating assets and liabilities (1)                                                  (31)                (132)
                                                                                               -----------          -----------
                                                                                                    187                  (11)

CASH FLOWS FROM FINANCING
    Proceeds from issuance of long-term debt                                                          -                  636
    Proceeds from issuance of common stock                                                            2                    -
    Repayment of long-term debt                                                                     (38)                 (40)
    Repurchase of common stock                                                                       (9)                 (38)
    Increase (decrease) in short-term debt                                                          (46)                 296
    Dividends paid                                                                                  (19)                 (19)
                                                                                               -----------          -----------
                                                                                                   (110)                 835

CASH FLOWS FROM INVESTMENT
    Additions to property, plant and equipment                                                      (40)                 (65)
    Purchase of operations - net of cash acquired (2)                                                (8)                (825)
    Proceeds from sale of operations                                                                  9                    -
    Other - net                                                                                       3                    -
                                                                                               -----------          -----------
                                                                                                    (36)                (890)
                                                                                               -----------          -----------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS                                                        41                  (66)
    Cash provided by discontinued operations                                                          -                    2
                                                                                               -----------          -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                     41                  (64)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                                      67                  110
                                                                                               -----------          -----------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                                      $    108             $     46
                                                                                               ===========          ===========
-------------------------------------------------------------------------------------------------------------------------------
(1)      Excludes changes resulting from operations acquired or sold.
(2)      Amounts exclude acquisitions through the issuance of common stock of $1 million in 1999.
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                     5
<PAGE>

-----------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

-----------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

         INTERIM FINANCIAL REPORTING

         The  accompanying   unaudited  condensed   consolidated  financial
         statements   have  been  prepared  in  accordance  with  generally
         accepted accounting principles for interim financial reporting and
         Securities  and Exchange  Commission  regulations.  Although  such
         statements are subject to any year-end audit adjustments which may
         be  necessary,  in the  opinion  of  management,  all  adjustments
         (consisting of normal recurring accruals) considered necessary for
         a fair presentation have been included. These financial statements
         should be read in conjunction with Ashland's Annual Report on Form
         10-K for the fiscal  year ended  September  30,  2000.  Results of
         operations  for  the  period  ended  December  31,  2000,  are not
         necessarily  indicative  of  results to be  expected  for the year
         ending September 30, 2001.

         INVENTORIES
<TABLE>
<CAPTION>

           --------------------------------------------------------------------------------------------------------------------
                                                                          December 31        September 30         December 31
           (In millions)                                                         2000                2000                1999
           --------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                  <C>                 <C>
           Chemicals and plastics                                             $   411              $  375              $  394
           Construction materials                                                  76                  80                  73
           Petroleum products                                                      65                  52                  54
           Other products                                                          42                  45                  52
           Supplies                                                                 7                   7                   6
           Excess of replacement costs over LIFO carrying values                  (73)                (71)                (57)
                                                                              --------             -------             -------
                                                                              $   528              $  488              $  522
                                                                              ========             =======             =======
</TABLE>
         EARNINGS PER SHARE

            The  following  table  sets  forth  the  computation  of basic and
            diluted earnings per share (EPS) from continuing operations.

<TABLE>
<CAPTION>
            -------------------------------------------------------------------------------------------------------------------
                                                                                                         Three months ended
                                                                                                             December 31
                                                                                                        -----------------------
            (In millions except per share data)                                                              2000         1999
            --------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>           <C>
            NUMERATOR
            Numerator for basic and diluted EPS - Income from
               continuing operations                                                                    $      59     $     40
                                                                                                        ===========   ==========
            DENOMINATOR
            Denominator for basic EPS - Weighted average
               common shares outstanding                                                                       70           72
            Common shares issuable upon exercise of stock options                                               -            -
                                                                                                        -----------   ----------
            Denominator for diluted EPS - Adjusted weighted
               average shares and assumed conversions                                                          70           72
                                                                                                        ===========   ==========

            BASIC EPS FROM CONTINUING OPERATIONS                                                        $     .84     $    .56
            DILUTED EPS FROM CONTINUING OPERATIONS                                                      $     .84     $    .55

</TABLE>




                                     6
<PAGE>
-----------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

-----------------------------------------------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

         DERIVATIVE INSTRUMENTS

         In June 1998,  the  Financial  Accounting  Standards  Board issued
         Statement   No.  133  (FAS  133),   "Accounting   for   Derivative
         Instruments  and  Hedging  Activities."  FAS 133 was  subsequently
         amended by two other  statements  and is required to be adopted in
         years beginning after June 15, 2000.  Because of Ashland's minimal
         use of derivatives,  FAS 133 did not have a significant  effect on
         Ashland's  financial position or results of operations when it was
         adopted on October 1, 2000.  MAP's  adoption of FAS 133 on January
         1, 2001, resulted in a $20 million pretax loss from the cumulative
         effect of this accounting change. Ashland's after tax share of the
         loss  amounts to $5 million and will be recorded in the March 2001
         quarter.

NOTE B - UNUSUAL ITEMS

         DISCONTINUED OPERATIONS

         In March 2000, Ashland distributed 17.4 million shares of its Arch
         Coal Common Stock to Ashland's  shareholders.  Ashland  intends to
         dispose  of its  remaining  4.7  million  Arch  Coal  shares  in a
         transaction  or  transactions  that  qualify as a sale for federal
         income  tax  purposes  by  March  2001.  Arch  Coal  has  filed  a
         registration  statement for the sale of these shares by Ashland in
         an underwritten public offering.

         Results  from  Arch  Coal are  shown as  discontinued  operations.
         Components  of amounts  reflected  in income are  presented in the
         following  table.  Results for the three months ended December 31,
         1999,  included  a net  loss  of $203  million  related  to  asset
         impairment and restructuring  costs, largely due to the write-down
         of assets at Arch's  Dal-Tex  and Hobet 21 mining  operations  and
         certain coal reserves in central Appalachia.

<TABLE>
<CAPTION>
          -----------------------------------------------------------------------------------------------------------------------
                                                                                                          Three months ended
                                                                                                             December 31
                                                                                                      ---------------------------
           (In millions)                                                                                   2000           1999
          ------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                    <C>            <C>
           Revenues - Equity loss                                                                      $      -       $   (237)
           Costs and expenses - SG&A expenses                                                                 -             (1)
                                                                                                      ------------    ------------
           Operating loss                                                                                     -           (238)
           Income tax benefit                                                                                 -             32
                                                                                                      ------------    ------------
           Loss from discontinued operations                                                           $      -       $   (206)
                                                                                                      ============    ============

         The following  tables show the effects of discontinued  operations
         on  Ashland's  net income and diluted  earnings  per share for the
         periods ended December 31, 2000, and 1999.

</TABLE>
<TABLE>
<CAPTION>
          -----------------------------------------------------------------------------------------------------------------------
                                                                                                         Three months ended
                                                                                                             December 31
                                                                                                      ---------------------------
           (In millions except per share data)                                                             2000            1999
          ------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                    <C>             <C>
           Net income before unusual items                                                             $     59        $     40
             Loss from discontinued operations                                                                -            (206)
                                                                                                      ------------    ------------
           Net income (loss) as reported                                                               $     59        $   (166)
                                                                                                      ============    ============

           Diluted earnings per share before unusual items                                             $    .84        $    .55
             Impact of unusual items                                                                          -           (2.87)
                                                                                                      ------------    ------------
           Diluted earnings (loss) per share as reported                                               $    .84        $  (2.32)
                                                                                                      ============    ============
</TABLE>




                                     7
<PAGE>



-----------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

-----------------------------------------------------------------------------

NOTE C - UNCONSOLIDATED AFFILIATES

         Ashland  is  required  by  Rule  3-09  of  Regulation  S-X to file
         separate financial  statements for its significant  unconsolidated
         affiliate,   Marathon  Ashland  Petroleum  LLC  (MAP).   Ashland's
         ownership  position  in Arch  Coal,  Inc.  met those  same  filing
         requirements  prior to the spin-off described in Note B. Financial
         statements  for MAP and Arch Coal for the year ended  December 31,
         1999,  were filed on a Form  10-K/A on March 21,  2000.  Financial
         statements for MAP for the year ended  December 31, 2000,  will be
         filed by means of a Form  10-K/A  on or  before  March  31,  2001.
         Unaudited income statement information for MAP is shown below.

         MAP is organized as a limited  liability  company that has elected
         to  be  taxed  as  a  partnership.   Therefore,  the  parents  are
         responsible  for income taxes  applicable  to their share of MAP's
         taxable  income.  The net income  reflected below for MAP does not
         include any  provision  for income taxes which will be incurred by
         its parents.

           --------------------------------------------------------------------
                                                           Three months ended
                                                              December 31
                                                -------------------------------
           (In millions)                                2000             1999
           --------------------------------------------------------------------
           Sales and operating revenues            $   7,363         $  5,924
           Income from operations                        327              106
           Net income                                    329              111
           Ashland's equity income                       119               36

NOTE D - LITIGATION, CLAIMS AND CONTINGENCIES

         Ashland  is  subject   to   various   federal,   state  and  local
         environmental  laws  and  regulations  that  require   remediation
         efforts  at  multiple   locations,   including  current  operating
         facilities, operating facilities conveyed to MAP, previously owned
         or operated  facilities,  and Superfund or other waste sites.  For
         information   regarding    environmental    reserves,    see   the
         "Miscellaneous - Environmental  Matters" section of Ashland's Form
         10-K.

         Environmental   reserves   are   subject  to   numerous   inherent
         uncertainties  that affect Ashland's ability to estimate its share
         of the  ultimate  costs  of  required  remediation  efforts.  Such
         uncertainties  involve the nature and extent of  contamination  at
         each site, the extent of required  cleanup  efforts under existing
         environmental  regulations,  widely  varying  costs  of  alternate
         cleanup  methods,  changes  in  environmental   regulations,   the
         potential   effect  of  continuing   improvements  in  remediation
         technology,  and  the  number  and  financial  strength  of  other
         potentially  responsible parties at multiparty sites. Reserves are
         regularly  adjusted as  environmental  assessments and remediation
         efforts proceed.

         In addition to these  matters,  Ashland and its  subsidiaries  are
         parties to numerous  other claims and lawsuits,  some of which are
         for substantial amounts.  While these actions are being contested,
         the  outcome  of  individual   matters  is  not  predictable  with
         assurance.

         Ashland does not believe that any liability  resulting from any of
         the above matters,  after taking into  consideration its insurance
         coverage and amounts  already  provided  for, will have a material
         adverse effect on its consolidated financial position,  cash flows
         or liquidity.  However,  such matters could have a material effect
         on results of operations in a particular quarter or fiscal year as
         they develop or as new issues are identified.


                                     8
<PAGE>



-----------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT

-----------------------------------------------------------------------------
                                                        Three months ended
                                                            December 31
                                               ------------------------------
(In millions)                                        2000             1999
-----------------------------------------------------------------------------
REVENUES
   Sales and operating revenues
     APAC                                      $      621       $      605
     Ashland Distribution                             731              768
     Ashland Specialty Chemical                       311              314
     Valvoline                                        241              239
     Intersegment sales
       Ashland Distribution                            (8)             (10)
       Ashland Specialty Chemical                     (18)             (19)
                                              ------------     ------------
                                                    1,878            1,897
   Equity income
     Ashland Specialty Chemical                         1                1
     Valvoline                                          1                -
     Refining and Marketing                           119               36
                                              ------------     ------------
                                                      121               37
   Other income
     APAC                                               2                2
     Ashland Distribution                               2                2
     Ashland Specialty Chemical                         7                6
     Valvoline                                          1                1
     Refining and Marketing                             -                2
     Corporate                                          2                1
                                              ------------     ------------
                                                       14               14
                                              ------------     ------------
                                               $    2,013       $    1,948
                                              ============     ============
OPERATING INCOME
   APAC                                        $       13       $       38
   Ashland Distribution                                10               13
   Ashland Specialty Chemical                          18               29
   Valvoline                                           10               11
   Refining and Marketing (1)                         109               33
   Corporate                                          (16)             (13)
                                              ------------     ------------
                                               $      144       $      111
                                              ============     ============


-----------------------------------------------------------------------------
(1)  Includes  Ashland's equity income from MAP,  amortization of Ashland's
     excess  investment in MAP, and certain retained refining and marketing
     activities.



                                     9

<PAGE>



<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Three months ended
                                                                                                                December 31
                                                                                                      -----------------------------
                                                                                                             2000            1999
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>              <C>
OPERATING INFORMATION
   APAC
     Construction backlog at December 31 (millions)                                                     $   1,600        $  1,210
     Hot mix asphalt production (million tons)                                                                8.5             8.8
     Aggregate production (million tons)                                                                      5.9             6.4
     Ready-mix concrete production (thousand cubic yards)                                                     523             597
   Ashland Distribution (1)
     Sales per shipping day (millions)                                                                  $    12.0        $   12.6
     Gross profit as a percent of sales                                                                      15.6%           15.6%
   Ashland Specialty Chemical (1)
     Sales per shipping day (millions)                                                                  $     5.1        $    5.1
     Gross profit as a percent of sales                                                                      34.0%           36.0%
   Valvoline lubricant sales (thousand barrels per day)                                                      10.5            11.3
   Refining and Marketing (2)
     Refined products sold (thousand barrels per day)                                                       1,308           1,320
     Crude oil refined (thousand barrels per day)                                                             857             824
     Merchandise sales (millions)                                                                       $     551        $    543
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  Sales are defined as sales and  operating  revenues.  Gross  profit is
     defined  as sales  and  operating  revenues,  less  cost of sales  and
     operating  expenses,  less  depreciation and amortization  relative to
     manufacturing assets.
(2)  Amounts represent 100 percent of the volumes of MAP, in which Ashland
     owns a 38 percent interest.

                                    10

<PAGE>

-----------------------------------------------------------------------------

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

-----------------------------------------------------------------------------

RESULTS OF OPERATIONS

         Ashland's  net  income  was  $59  million  for the  quarter  ended
         December 31, 2000,  compared to a net loss of $166 million for the
         quarter ended  December 31, 1999.  Excluding the $206 million loss
         from discontinued  operations in the 1999 period described in Note
         B to the Condensed Consolidated  Financial Statements,  net income
         amounted  to $59  million  in the  2000  period,  compared  to $40
         million in the 1999 period. Operating income of $144 million was a
         record for the  December  quarter and a 30%  improvement  over the
         prior  year  period.  The  increase  reflected  improved  refining
         margins and a positive  in-transit crude oil inventory  adjustment
         for Marathon Ashland  Petroleum (MAP),  which more than offset the
         impact of the early  arrival  of winter  and a softer  economy  on
         Ashland's wholly owned businesses.

         APAC

         Operating income from APAC's  construction  operations declined to
         $13 million for the December 2000 quarter, compared to $38 million
         in the December 1999  quarter,  reflecting  the adverse  impact of
         unusually  severe  weather in November and December  2000. In many
         markets  weather  patterns  prevented APAC crews from being on the
         job and limited  demand for  aggregates  and hot mix asphalt.  Net
         construction   revenue  (total  revenue  less  subcontract  costs)
         declined 6% from the prior year period,  while  production  of hot
         mix asphalt  declined 3%,  aggregate  production  declined 8%, and
         ready-mix  concrete  production  declined  12%.  Earnings from the
         asphalt plants were also adversely affected as increased costs for
         liquid asphalt,  fuel and power were not fully recovered in APAC's
         hot mix asphalt prices.  The construction  backlog at December 31,
         2000,  amounted to a record $1.6 billion,  a 32% improvement  over
         the prior year, including a recently awarded $236 million contract
         in the Richmond, Virginia area. The backlog is healthy in terms of
         volumes and margins and  includes a good mix of public and private
         projects.

         ASHLAND DISTRIBUTION

         Ashland Distribution  reported operating income of $10 million for
         the quarter  ended  December  31, 2000, a 23% decline from the $13
         million  reported  for  last  year's  December  quarter.   Factors
         contributing  to  the  performance   include  lower  demand-driven
         volumes and reduced  prices in North  American  commodity  product
         lines, impacting the thermoplastics and fiber-reinforced  plastics
         businesses.  On a positive  note,  chemical  distribution  profits
         improved,  as costs continued to be taken out of the business.  In
         addition, European thermoplastics distribution improved reflecting
         the  stronger   European   market,   and  fine   ingredients   and
         environmental  services  businesses  improved,  as both  are  less
         commodity-sensitive.

         ASHLAND SPECIALTY CHEMICAL

         For  the  quarter  ended  December  31,  2000,  Ashland  Specialty
         Chemical reported  operating income of $18 million,  a 38% decline
         from the $29  million  reported  for the  December  1999  quarter.
         Results  from three of  Ashland's  specialty  chemical  businesses
         reflect  the  impact  of a weaker  U.S.  economy.  Soft  demand in
         transportation  and  construction  markets resulted in unit volume
         declines for unsaturated  polyester resins,  adhesives and foundry
         chemicals.  Margins were down in these  businesses due not only to
         reduced  demand,  but  also to  higher  costs  for raw  materials.
         Petrochemical  margins also  suffered  from  significantly  higher
         butane costs. However,  earnings from electronic chemicals,  water
         treatment and marine chemicals  improved,  as these businesses are
         generally  not as  sensitive  to  weakness  in the  durable  goods
         sector.

                                    11

<PAGE>


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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

-----------------------------------------------------------------------------

         VALVOLINE

         For the  quarter  ended  December  31,  2000,  Valvoline  reported
         operating  income of $10 million,  compared to $11 million for the
         December  1999  quarter.  The slight  decline was primarily due to
         continued  margin  compression  in  the  antifreeze  business  and
         minimal  sales of R-12  automotive  refrigerant.  R-12  sales  are
         typically  low in the  December  quarter.  Profits  from  the core
         lubricants  business  improved while Valvoline  Instant Oil Change
         produced earnings similar to last year.

         REFINING AND MARKETING

         Operating  income from  Refining  and  Marketing,  which  consists
         primarily of equity income from MAP,  amounted to $109 million for
         the quarter ended  December 31, 2000,  compared to $33 million for
         the quarter ended  December 31, 1999.  Crude oil prices on the New
         York Mercantile Exchange declined $4 per barrel during the quarter
         as a result of stronger worldwide  production.  The combination of
         lower  crude oil  costs and good  demand  for  distillates  led to
         stronger refining  margins.  MAP's results also reflect a positive
         in-transit crude oil inventory adjustment,  which was generated by
         the sharp  December  decline  in crude oil  prices.  Results  from
         retail  operations  were down as pump  prices  failed to keep pace
         with the higher level of  wholesale  gasoline  costs.  Merchandise
         sales were up, but the impact was more than offset by a decline in
         merchandise  margins  from the very  strong  levels in last year's
         December quarter.

         CORPORATE

         Corporate  expenses  amounted to $16 million in the quarter  ended
         December 31, 2000,  compared to $13 million for the quarter  ended
         December 31, 1999. The higher level of expenses reflects increases
         in incentive and deferred  compensation  costs in the current year
         period, as well as environmental  insurance recoveries included in
         the prior year period.

         NET INTEREST AND OTHER FINANCIAL COSTS

         For the quarter  ended  December 31, 2000,  net interest and other
         financial  costs totaled $46 million,  compared to $43 million for
         the December  1999  quarter.  Although  debt levels are down,  net
         costs are up, as the prior year period included interest income on
         the note receivable from Industri Kapital,  received in connection
         with  the  acquisition  of the  U.S.  construction  operations  of
         Superfos.  In  addition,  the current year period  includes  costs
         associated  with the sale of $150 million of  receivables  under a
         program initiated in March 2000.

         DISCONTINUED OPERATIONS

         As described  in Note B to the  Condensed  Consolidated  Financial
         Statements,   in  March  2000  Ashland   distributed   to  Ashland
         shareholders  the major portion of its common shares of Arch Coal.
         As  a  result,  the  former  Arch  Coal  segment  is  shown  as  a
         discontinued operation, with prior periods restated.

         For the three months ended December 31, 1999,  Ashland recorded an
         equity loss of $206 million from its  investment in Arch Coal. The
         loss  included  $203  million  related  to  asset  impairment  and
         restructuring  costs,  largely due to the  write-down of assets at
         Arch's  Dal-Tex and Hobet 21 mining  operations  and certain  coal
         reserves in central Appalachia.

                                    12

<PAGE>

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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

-----------------------------------------------------------------------------

FINANCIAL POSITION

         LIQUIDITY

         Ashland's  financial position has enabled it to obtain capital for
         its financing  needs and to maintain  investment  grade ratings on
         its  senior  debt of Baa2 from  Moody's  and BBB from  Standard  &
         Poor's.  Ashland has two revolving credit agreements providing for
         up to $425 million in borrowings, neither of which was used during
         the  three  months  ended   December  31,  2000.   Under  a  shelf
         registration,  at December 31, 2000,  Ashland  could also issue an
         additional  $350  million  in debt and  equity  securities  should
         future  opportunities or needs arise. On February 2, 2001, Ashland
         issued  $50  million  in   medium-term   notes  under  this  shelf
         registration,  thereby  reducing  the  remaining  capacity to $300
         million.  Furthermore,  Ashland has access to various  uncommitted
         lines of credit and  commercial  paper  markets,  under which $199
         million of short-term  borrowings were outstanding at December 31,
         2000.  While the revolving  credit  agreements  contain a covenant
         limiting  new   borrowings,   Ashland  could  have  increased  its
         borrowings (including any borrowings under these agreements) by up
         to $848  million at  December  31,  2000.  Additional  permissible
         borrowings  are increased or decreased by 150% of any increases or
         decreases in stockholders' equity.

         Cash flows from continuing operations, a major source of Ashland's
         liquidity,  amounted to $187  million for the three  months  ended
         December  31,  2000,  compared to a deficit of $11 million for the
         three months ended  December  31, 1999.  The increase  principally
         reflects  increased cash  distributions  from MAP ($207 million in
         2000, compared to $67 million in 1999). In addition, the growth in
         working  capital during the current  quarter was much less than in
         the 1999 period.  Ashland's cash flows from continuing  operations
         exceeded its capital  requirements for net property  additions and
         dividends by $123 million for the three months ended  December 31,
         2000,   providing   additional   funds  for  debt   repayment  and
         acquisitions.

         Operating  working capital  (accounts and notes  receivable,  plus
         inventories,  less trade and other payables) at December 31, 2000,
         was $537 million,  compared to $401 million at September 30, 2000,
         and $1,024 million at December 31, 1999. Liquid assets (cash, cash
         equivalents,  accounts  and notes  receivable)  amounted to 79% of
         current  liabilities  at  December  31,  2000,  compared to 77% at
         September  30,  2000,  and 95% at  December  31,  1999.  Ashland's
         working  capital  is  affected  by its use of the LIFO  method  of
         inventory  valuation,  which valued  inventories $73 million below
         their replacement costs at December 31, 2000.

         CAPITAL RESOURCES

         For the three months ended December 31, 2000,  property  additions
         amounted  to $40  million,  compared  to $65  million for the same
         period last year.  Property  additions and cash  dividends for the
         remainder  of fiscal 2001 are  estimated  at $200  million and $57
         million.  At December 31, 2000, Ashland had remaining authority to
         purchase  2.3  million  shares  of its  common  stock  in the open
         market.  The number of shares ultimately  purchased and the prices
         Ashland  will pay for its stock are subject to periodic  review by
         management. Ashland anticipates meeting its remaining 2001 capital
         requirements for property additions,  dividends and scheduled debt
         repayments  of  $44  million  from  internally   generated  funds.
         However,  external financing may be necessary to provide funds for
         acquisitions or purchases of common stock.

         At  December  31,  2000,  Ashland's  debt level  amounted  to $2.1
         billion, compared to $2.2 billion at September 30, 2000. Debt as a
         percent of capital employed  amounted to 52% at December 31, 2000,
         compared to 53% at September  30, 2000.  Ashland's  debt  included
         $338 million of floating-rate obligations,  including $199 million
         of short-term  borrowings  and $139 million of long-term  debt, at
         December 31, 2000.


                                    13
<PAGE>

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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

-----------------------------------------------------------------------------

         CAPITAL RESOURCES (CONTINUED)

         In addition, Ashland's costs under its sale of receivables program
         and  various  operating  leases  are  based  on the  floating-rate
         interest  costs on $255  million of  third-party  debt  underlying
         those   transactions.   As  a  result,   Ashland  was  exposed  to
         fluctuations in short-term  interest rates on $593 million of debt
         obligations at December 31, 2000.

ENVIRONMENTAL MATTERS

         Federal,  state and local  laws and  regulations  relating  to the
         protection of the  environment  have resulted in higher  operating
         costs and capital  investments  by the industries in which Ashland
         operates.   Because  of  the  continuing   trends  toward  greater
         environmental awareness and ever increasing  regulations,  Ashland
         believes  that  expenditures  for  environmental  compliance  will
         continue to have a significant effect on its businesses.  Although
         it cannot  accurately  predict how such trends will affect  future
         operations   and  earnings,   Ashland   believes  the  nature  and
         significance of its ongoing compliance costs will be comparable to
         those of its  competitors.  For  information  on certain  specific
         environmental  proceedings  and  investigations,  see  the  "Legal
         Proceedings" section of this Form 10-Q. For information  regarding
         environmental  reserves,  see the  "Miscellaneous  - Environmental
         Matters" section of Ashland's Form 10-K.

         Environmental   reserves   are   subject  to   numerous   inherent
         uncertainties  that affect Ashland's ability to estimate its share
         of the  ultimate  costs  of  required  remediation  efforts.  Such
         uncertainties  involve the nature and extent of  contamination  at
         each site, the extent of required  cleanup  efforts under existing
         environmental  regulations,  widely  varying  costs  of  alternate
         cleanup  methods,  changes  in  environmental   regulations,   the
         potential   effect  of  continuing   improvements  in  remediation
         technology,  and  the  number  and  financial  strength  of  other
         potentially  responsible parties at multiparty sites. Reserves are
         regularly  adjusted as  environmental  assessments and remediation
         efforts proceed.

         Ashland  does  not  believe  that  any  liability  resulting  from
         environmental   matters,   after  taking  into  consideration  its
         insurance  coverage and amounts already  provided for, will have a
         material  adverse effect on its consolidated  financial  position,
         cash  flows or  liquidity.  However,  such  matters  could  have a
         material  effect on results of operations in a particular  quarter
         or fiscal year as they develop or as new issues are identified.

OUTLOOK

         Looking  ahead to the remainder of fiscal 2001, supply  and demand
         fundamentals  for Midwest  petroleum  markets,  as well as forward
         3-2-1 crack spreads on the New York Mercantile Exchange, suggest a
         strong  performance  for Refining and  Marketing.  The outlook for
         Ashland's wholly owned businesses is mixed. Certain businesses are
         expected to perform well, such as Valvoline,  electronic chemicals
         and also APAC,  provided normal spring and summer weather patterns
         prevail.  At this point,  total operating income from wholly owned
         businesses  is expected  to be roughly  similar to the fiscal 2000
         total. However, if the durable goods segment of the economy, which
         affects  certain parts of Ashland  Specialty  Chemical and Ashland
         Distribution,  does not  recover in the second  half of  Ashland's
         fiscal  year,   combined   operating   income  from  wholly  owned
         businesses  is more  likely to trail that of last  year.  Overall,
         Ashland  is  optimistic  that  fiscal  2001  will be a good  year,
         assuming current trends in petroleum markets continue.

                                    14
<PAGE>

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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS

-----------------------------------------------------------------------------

OUTLOOK (continued)

         Ashland's  sales and  operating  revenues are normally  subject to
         seasonal  variations.  Although  APAC tends to enjoy a  relatively
         long  construction   season,  most  of  its  operating  income  is
         generated  during the  construction  period of May to October.  In
         addition,  MAP benefits from increased  demand for gasoline during
         the summer driving season, higher demand for distillate during the
         winter  heating  season and increased  demand for asphalt from the
         road paving industry during the construction season.

CONVERSION TO THE EURO

         On January 1,  1999,  certain  member  countries  of the  European
         Economic and Monetary  Union (EMU)  established  fixed  conversion
         rates  between  their  existing  currencies  and the EMU's  common
         currency,  the Euro.  Entities in the participating  countries can
         conduct  their  business   operations  in  either  their  existing
         currencies or the Euro until  December 31, 2001.  After that date,
         all  non-cash   transactions   will  be  conducted  in  Euros  and
         circulation  of Euro  notes and coins for cash  transactions  will
         commence. National notes and coins will be withdrawn no later than
         June 30, 2002.

         Ashland conducts business in most of the  participating  countries
         and is addressing  the issues  associated  with the Euro. The more
         important issues include converting information technology systems
         and processing  accounting and tax records.  Based on the progress
         to date, Ashland believes that the use of the Euro will not have a
         significant  impact on the  manner in which it does  business  and
         processes its accounting records. Accordingly, the use of the Euro
         is  not   expected  to  have  a  material   effect  on   Ashland's
         consolidated financial position, results of operations, cash flows
         or liquidity.

FORWARD LOOKING STATEMENTS

         Management's    Discussion    and   Analysis    (MD&A)    contains
         forward-looking  statements,  within the meaning of Section 27A of
         the  Securities  Act of 1933  and  Section  21E of the  Securities
         Exchange Act of 1934,  with respect to various  information in the
         Capital Resources,  Outlook and Conversion to the Euro sections of
         this MD&A. Estimates as to operating  performance and earnings are
         based upon a number of  assumptions,  including those mentioned in
         MD&A.  Such  estimates are also based upon internal  forecasts and
         analyses  of current  and future  market  conditions  and  trends,
         management plans and strategies,  weather,  operating efficiencies
         and  economic  conditions,  such as prices,  supply and demand and
         cost of raw materials.  Although Ashland believes its expectations
         are  based  on  reasonable  assumptions,   it  cannot  assure  the
         expectations   reflected   in   MD&A   will  be   achieved.   This
         forward-looking  information may prove to be inaccurate and actual
         results may differ  significantly from those anticipated if one or
         more of the underlying  assumptions or  expectations  proves to be
         inaccurate or is unrealized or if other  unexpected  conditions or
         events  occur.  Other  factors  and risks  affecting  Ashland  are
         contained in Risks and Uncertainties in Note A to the Consolidated
         Financial  Statements  in  Ashland's  2000  Annual  Report  and in
         Ashland's Form 10-K for the fiscal year ended September 30, 2000.

                                    15

<PAGE>



     ITEM 1.  LEGAL PROCEEDINGS

     Environmental  Proceedings - (1) As of December 31, 2000,  Ashland had
been  identified  as  a  "potentially   responsible  party"  ("PRP")  under
Superfund or similar state laws for potential  joint and several  liability
for  clean-up  costs in  connection  with  alleged  releases  of  hazardous
substances  associated  with 88 waste  treatment or disposal  sites.  These
sites  are  currently   subject  to  ongoing   investigation  and  remedial
activities,  overseen  by the EPA or a state  agency,  in which  Ashland is
typically participating as a member of a PRP group. Generally,  the type of
relief sought includes remediation of contaminated soil and/or groundwater,
reimbursement for past costs of site clean-up and administrative oversight,
and/or  long-term  monitoring  of  environmental  conditions  at the sites.
Ashland carefully  monitors the  investigatory  and remedial  activities at
many of these sites.  Based on its experience  with site  remediation,  its
familiarity with current  environmental laws and regulations,  its analysis
of the  specific  hazardous  substances  at issue,  the  existence of other
financially  viable  PRPs  and  its  current  estimates  of  investigatory,
clean-up  and  monitoring  costs at each site,  Ashland  believes  that its
liability at these sites,  either  individually or in the aggregate,  after
taking into  account  its  insurance  coverage  and  established  financial
reserves, will not have a material adverse effect on Ashland's consolidated
financial  position,  cash flow or liquidity.  However,  such matters could
have a material  effect on Ashland's  results of operations in a particular
quarter or fiscal  year as they  develop  or as new issues are  identified.
Estimated  costs  for these  matters  are  recognized  in  accordance  with
generally  accepted  accounting  principles  governing the likelihood  that
costs will be incurred and Ashland's ability to reasonably  estimate future
costs.

     (2)  Pursuant  to  a  1990  Agreed  Order  with  the  Commonwealth  of
Kentucky's   Natural   Resources  and  Environmental   Protection   Cabinet
("NREPC"),   Ashland  has  conducted  source   investigation  and  remedial
activities related to hydrocarbon  contamination of the groundwater beneath
the Catlettsburg,  Kentucky refinery, operated since 1998 by a wholly owned
subsidiary of Marathon  Ashland  Petroleum LLC ("MAP").  In connection with
the  formation of MAP,  Ashland  agreed to retain  responsibility  for this
matter.  In 1999,  Ashland and the NREPC initiated  negotiations  for a new
Agreed Order that identified future  investigative  efforts and established
timetables for remedial  activities.  This Order, which became effective on
December  4, 2000 and  rescinded  the 1990 Agreed  Order,  included a civil
penalty of $900,000,  reimbursement of state oversight costs and a remedial
action  project.  The  settlement  will have no material  adverse effect on
Ashland's consolidated financial position, cash flow or liquidity.

     ITEM 4.   SUBMISSION OF MATERS TO A VOTE OF SECURITY HOLDERS

(a)      Ashland's  Annual Meeting of Shareholders  was held on January 25,
         2001  at  the  Metropolitan  Club,  50 E.  RiverCenter  Boulevard,
         Covington, Kentucky at 10:30 a.m.

(b)      Ashland's  shareholders  at said meeting  elected  four  directors
         (Samuel C. Butler,  Ernest H. Drew, Mannie L. Jackson and Theodore
         M. Solso) to serve a three-year  term and one  director  (Ralph E.
         Gomory) to serve a two-year term.

                                                 Votes
                                   Affirmative            Withheld

         Samuel C. Butler           60,175,428             1,783,864
         Ernest H. Drew             60,924,049             1,035,243
         Mannie L. Jackson          60,844,863             1,114,429
         Theodore M. Solso          60,909,128             1,050,164
         Ralph E. Gomory            60,809,029             1,150,263

         Directors who  continued in office:  Frank C.  Carlucci,  James B.
         Farley,  Bernadine P. Healy, W. L. Rouse,  Jr., Paul W. Chellgren,
         Patrick F. Noonan and Jane C. Pfeiffer.

                                    16

<PAGE>

(c)      Ashland's shareholders at said meeting ratified the appointment of
         Ernst & Young LLP as independent  auditors for fiscal year 2001 by
         a vote of 61,168,070 affirmative,  to 484,455 negative and 306,767
         abstention votes.

(d)      Ashland's  shareholders  at said meeting  approved the Amended and
         Restated  Ashland  Inc.  Incentive  Plan by a vote  of  49,724,967
         affirmative, to 11,530,314 negative and 704,011 abstention votes.

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

     10.1   Amended and Restated Ashland Inc. Incentive Plan.

     10.2   Tenth  Amended and  Restated  Ashland Inc.  Supplemental  Early
            Retirement Plan for Certain Employees.

     12     Computation of Ratios of Earnings to Fixed Charges and Earnings
            to Combined Fixed Charges and Preferred Stock Dividends.

(b)      Reports on Form 8-K

         No reports on Form 8-K have been filed  during the  quarter  ended
         December 31, 2000.




<PAGE>


                                 SIGNATURES

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

                                           Ashland Inc.
                                   ------------------------------
                                          (Registrant)




Date:  February 13, 2001           /s/ Kenneth L. Aulen
                                   -------------------------------
                                   Kenneth L. Aulen
                                   Administrative Vice President and Controller
                                   (Chief Accounting Officer)



Date:  February 13, 2001           /s/ David L. Hausrath
                                   --------------------------------
                                   David L. Hausrath
                                   Vice President and General Counsel



<PAGE>
                               EXHIBIT INDEX



Exhibit
   No.                              Description
------        ---------------------------------------------------------


10.1           Amended and Restated Ashland Inc. Incentive Plan

10.2           Tenth Amended and Restated Ashland Inc.  Supplemental  Early
               Retirement Plan for Certain Employees

12             Computation  of  Ratios of  Earnings  to Fixed  Charges  and
               Earnings  to Combined  Fixed  Charges  and  Preferred  Stock
               Dividends.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EX 10.1 - AMENDED AND RESTATED INCENTIVE PLAN
<TEXT>


                            AMENDED AND RESTATED
                        ASHLAND INC. INCENTIVE PLAN
                       (As amended January 24, 2001)

SECTION 1.  PURPOSE

     The  purpose of the  Ashland  Inc.  Incentive  Plan is to promote  the
interests of Ashland Inc. and its  shareholders by providing  incentives to
its directors,  officers and employees.  Accordingly, the Company may grant
to selected officers and employees Option Awards, Stock Appreciation Rights
Awards, Restricted Stock Awards, Incentive Awards,  Performance Unit Awards
and Merit Awards in an effort to attract and retain in its employ qualified
individuals  and to provide such  individuals  with  incentives to continue
service  with the  Company,  devote  their best  efforts to the Company and
improve the Company's economic performance, thus enhancing the value of the
Company  for the  benefit  of  shareholders.  This  Plan also  provides  an
incentive for qualified  persons,  who are not officers or employees of the
Company,  to serve on the Board of Directors of the Company and to continue
to work for the best  interests  of the Company by  rewarding  such persons
with an  automatic  Restricted  Stock Award and with  discretionary  Option
Awards.

SECTION 2.  DEFINITIONS

     (A) "Agreement" shall mean a written agreement setting forth the terms
of an Award, to be entered into at the Company's discretion.

     (B)  "Attestation"  means the  delivery  to the Company of a completed
attestation  form  prescribed by the Company setting forth the whole shares
of  Common  Stock  owned by the  Recipient  which the  Recipient  wishes to
utilize  to  pay  the  Exercise  Price.  The  Common  Stock  listed  on the
attestation  form must  have  been  owned by the  Recipient  six  months or
longer,  and not have been used to effect  an Option  exercise  within  the
preceding six months, unless the Committees specifically provide otherwise.

     (C) "Award" shall mean an Option  Award,  a Stock  Appreciation  Right
Award,  an Incentive  Award, a Performance  Unit Award, a Restricted  Stock
Award or a Merit Award, in each case granted under this Plan.

     (D)  "Beneficiary"  shall mean the  person,  persons,  trust or trusts
designated by a Recipient or if no  designation  has been made, the person,
persons,  trust,  or trusts  entitled  by will or the laws of  descent  and
distribution to receive the benefits specified under this Plan in the event
of a Recipient's death.

     (E) "Board"  shall mean the Board of  Directors  of the Company or its
designee.

     (F)  "Cashless  Exercise"  shall mean the  procedure by which a broker
provides  the funds to a  Recipient  to effect an Option  exercise.  At the
direction of the  Recipient,  the broker will  either:  (i) sell all of the
shares  received  when the Option is exercised  and pay the  Recipient  the
proceeds of the sale (minus the Exercise Price,  withholding  taxes and any
fees due to the broker);  or (ii) sell enough of the shares  received  upon
exercise of the Option to cover the Exercise Price,  withholding  taxes and
any fees due the broker and deliver to the  Recipient  (either  directly or
through the Company) a stock certificate for the remaining shares.

     (G) "Change in Control"  shall be deemed to occur (1) upon approval of
the shareholders of the Company (or if such approval is not required,  upon
the  approval  of the  Board)  of (A) any  consolidation  or  merger of the
Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of Common  Stock would be converted  into cash,
securities  or other  property  other than a merger in which the holders of
Common  Stock   immediately   prior  to  the  merger  will  have  the  same
proportionate  ownership  of  common  stock  of the  surviving  corporation
immediately  after the  merger,  (B) any sale,  lease,  exchange,  or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company, or (C) adoption of any plan or
proposal for the  liquidation or  dissolution of the Company,  (2) when any
person (as defined in Section 3(a)(9) or 13(d) of the Exchange Act),  other
than the  Company  or any  Subsidiary  or  employee  benefit  plan or trust
maintained by the Company, shall become the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act),  directly or  indirectly,  of more than
15% of the  Company's  Common Stock  outstanding  at the time,  without the
approval  of the  Board,  or  (3)  at  any  time  during  a  period  of two
consecutive  years,  individuals  who  at


<PAGE>

the  beginning  of such  period  constituted  the Board shall cease for any
reason to  constitute at least a majority  thereof,  unless the election or
the  nomination  for  election by the  Company's  shareholders  of each new
director  during such  two-year  period was  approved by a vote of at least
two-thirds of the directors  then still in office who were directors at the
beginning of such two-year period.

     (H) "Code"  shall mean the Internal  Revenue Code of 1986,  as amended
from time to time.

     (I)  "Committees"  shall refer to the P&C  Committee  as it relates to
Awards to Participants  and to the G&N Committee as it relates to Awards to
Outside Directors.

     (J) "Common  Stock" shall mean the Common Stock of the Company  ($1.00
par value), subject to adjustment pursuant to Section 15 hereof.

     (K)  "Company"  shall  mean,   collectively,   Ashland  Inc.  and  its
Subsidiaries.

     (L) "Disability"  shall mean, (i) in the case of a Participant,  he or
she becomes unable to perform the functions  required by his or her regular
job due to physical or mental illness and, in connection  with the grant of
an  Incentive  Stock Option shall be disabled if he or she falls within the
meaning of that term as provided  in Section  22(e)(3) of the Code and (ii)
in the case of an Outside  Director,  when he or she is unable to attend to
his or her duties and  responsibilities as a member of the Board because of
incapacity due to physical or mental illness.

     (M) "Exercise  Price" shall mean, with respect to each share of Common
Stock subject to an Option, the price fixed by the Committees at which such
share may be  purchased  from the Company  pursuant to the exercise of such
Option,  which  price at no time may be less than  100% of the Fair  Market
Value of the Common Stock on the date the Option is granted.

     (N) "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
amended.

     (O) "Fair  Market  Value"  shall mean the price of the Common Stock as
reported on the Composite  Tape of the New York Stock  Exchange on the date
and at the time selected by the Committees or as otherwise provided in this
Plan.

     (P) "G&N Committee" shall mean the Governance and Nominating Committee
of the Board, as from time to time constituted,  or any successor committee
of the Board with similar functions, or its designee.

     (Q)  "Incentive  Award" shall mean an Award made pursuant to Section 7
hereof,  the payment of which is  contingent  upon the  achievement  of the
Performance Goals for the particular Performance Period.

     (R)  "Incentive  Stock  Option" or "ISO"  shall mean an Option that is
intended by the Committees to meet the  requirements  of Section 422 of the
Code or any successor provision.

     (S) "ISO  Award"  shall  mean an Award of an  Incentive  Stock  Option
pursuant to Section 10 hereof.

     (T) "Merit Award" shall mean an Award of Common Stock issued  pursuant
to Section 9 hereof.

     (U) "Non-Employee  Director" shall mean a non-employee director within
the  meaning  of  applicable  regulatory   requirements,   including  those
promulgated under Section 16 of the Exchange Act.

     (V) "Nonqualified Stock Option" or "NQSO" shall mean an Option granted
pursuant to this Plan which does not qualify as an Incentive Stock Option.

     (W) "Notice of Grant" shall mean a written  notice  setting  forth the
terms of an  Option  or SAR  Award,  to be  entered  into at the  Company's
discretion.
<PAGE>

     (X) "Option" shall mean the right to purchase  Common Stock at a price
to be  specified  and upon  terms to be  designated  by the  Committees  or
otherwise  determined pursuant to this Plan. The Committees shall designate
an Option as a Nonqualified Stock Option or an Incentive Stock Option.

     (Y)  "Option  Award"  shall  mean an Award of an  Option  pursuant  to
Section 10 hereof.

     (Z) "Outside Director" shall mean a director of the Company who is not
also an employee of the Company as selected by the G&N Committee to receive
an Award under this Plan.

     (AA)  "P&C  Committee"  shall  mean  the  Personnel  and  Compensation
Committee of the Board, as from time to time constituted,  or any successor
committee of the Board with similar functions, which shall consist of three
or more  members,  each of whom  shall be a  Non-Employee  Director  and an
outside director as defined in the regulations  issued under Section 162(m)
of the Code, or its designee.

     (BB)  "Participant"  shall  mean a  regular,  full-time  or  part-time
employee  of the Company as  selected  by the P&C  Committee  to receive an
Award under this Plan.

     (CC)  "Performance  Goals"  shall  mean  performance  goals  as may be
established in writing by the P&C Committee which may be based on earnings,
stock  price,  return on  equity,  return on  investment,  total  return to
shareholders,  economic  profit,  debt rating or  achievement  of business,
financial or operational  goals.  Such goals may be absolute in their terms
or  measured  against  or in  relation  to other  companies  comparably  or
otherwise  situated.   Such  performance  goals  may  be  particular  to  a
Participant  or the division or other unit in which the  Participant  works
and/or may be based on the performance of the Company generally.

     (DD) "Performance  Period" shall mean the period designated by the P&C
Committee during which the performance objectives shall be measured.

     (EE)  "Performance  Unit Award"  shall mean an Award made  pursuant to
Section 8 hereof,  the payment of which is contingent  upon the achievement
of the Performance Goals for the particular Performance Period.

     (FF) "Personal  Representative"  shall mean the person or persons who,
upon the Disability or incompetence of a Recipient,  shall have acquired on
behalf of the  Recipient  by legal  proceeding  or  otherwise  the right to
receive the benefits specified in this Plan.

     (GG) "Plan" shall mean this Ashland Inc.  Incentive  Plan,  as amended
and restated.

     (HH) "Recipients" shall mean a Participant or an Outside Director,  as
appropriate.

     (II) "Restricted Period" shall mean the period designated during which
Restricted  Stock  may not be  sold,  assigned,  transferred,  pledged,  or
otherwise encumbered, which period in the case of Participants shall not be
less than one year from the date of grant (unless otherwise directed by the
P&C  Committee),  and in the case of  Outside  Directors  is the period set
forth in Section 6(B) hereof.

     (JJ) "Restricted Stock" shall mean those shares of Common Stock issued
pursuant to a Restricted Stock Award which are subject to the restrictions,
terms, and conditions set forth in the related Agreement, if any.

     (KK) "Restricted  Stock Award" shall mean an Award of Restricted Stock
pursuant to Section 6 hereof.

     (LL)  "Retained  Distributions"  shall  mean any  securities  or other
property (other than regular cash dividends)  distributed by the Company in
respect of Restricted Stock during any Restricted Period.

     (MM)  "Retirement"  shall  mean,  (a) in the  case  of a  Participant,
retirement  from the employ of the Company at any time as  described in the
Ashland Inc. and Affiliates  Pension Plan or in any successor pension plan,
as from time to time in effect, and (b) in the case of an Outside Director,
retirement  from the  Board at age 72 or at any  other age as the Board may
from time to time determine.

     (NN) "Stock  Appreciation  Right" or "SAR" shall mean the right of the
holder to elect to surrender an Option or any portion thereof which is then
exercisable and receive in exchange therefor shares of Common Stock,  cash,
or a combination thereof, as the case may be, with an aggregate value equal
to the excess of the Fair  Market  Value of one share of Common  Stock over
the Exercise  Price  specified in such Option  multiplied  by the number of
shares of Common Stock  covered by such Option or portion  thereof which is
so surrendered.  A SAR may only be granted  concurrently  with the grant of
the related Option.  A SAR shall be exercisable  upon any additional  terms
and conditions (including,  without limitation,  the issuance of Restricted
Stock and the imposition of restrictions upon the timing of exercise) which
may be determined as provided in this Plan.
<PAGE>

     (OO) "Stock  Appreciation  Right  Award" or "SAR Award"  shall mean an
Award of a Stock Appreciation Right pursuant to Section 11 hereof.

     (PP)  "Subsidiary"   shall  mean  any  present  or  future  subsidiary
corporations, as defined in Section 424 of the Code, of the Company.

     (QQ) "Tax Date"  shall mean the date the  withholding  tax  obligation
arises with respect to an Award.

SECTION 3.  STOCK SUBJECT TO THIS PLAN

     There will be reserved  for  issuance  under this Plan an aggregate of
4,000,000  shares of Common  Stock,  par value  $1.00 per share;  provided,
however,  that of such shares only 1,000,000  shares in the aggregate shall
be available  for  Restricted  Stock Awards,  Merit Awards,  ISO Awards and
Performance  Unit  Awards.  Such shares  shall be  authorized  but unissued
shares of  Common  Stock.  If any Award  under  this Plan  shall  expire or
terminate for any reason  without  having been earned or vested in full, or
if any Award shall be  forfeited  or  deferred,  the shares  subject to the
unearned,  forfeited  or  deferred  portion  of such Award  shall  again be
available  for the purposes of this Plan. No  Participant  shall be granted
more than a total of 250,000  Option or SAR Awards  annually and no Outside
Director  shall be granted more than a total of 10,000 Option or SAR Awards
annually.

SECTION 4.  ADMINISTRATION

     The P&C  Committee  shall have the  exclusive  authority to administer
this Plan for  Participants.  The G&N  Committee  shall have the  exclusive
authority to administer this Plan for Outside Directors.

     In  addition  to any  implied  powers and duties that may be needed to
carry out the provisions hereof, the Committees, acting individually, shall
have all the powers vested in them by the terms hereof, including exclusive
authority to select the  Recipients,  to determine the type, size and terms
of the  Awards to be made to each  Recipient,  to  determine  the time when
Awards will be  granted,  and to  prescribe  the form of the  Agreement  or
Notice of Grant embodying Awards made under this Plan. The Committees shall
be  authorized  to interpret  this Plan and the Awards  granted  under this
Plan, to establish, amend and rescind any rules and regulations relating to
this Plan, to make any other determinations which they believe necessary or
advisable  for the  administration  hereof,  and to  correct  any defect or
supply any omission or reconcile any  inconsistency  in this Plan or in any
Award in the  manner and to the extent the  Committees  deem  desirable  to
carry it into effect.  Any decision of the Committees in the administration
of this Plan, as described herein, shall be final and conclusive.

SECTION 5.  ELIGIBILITY

     Awards  may only be  granted  (i) to regular  full-time  or  part-time
employees of the Company,  or (ii) as expressly  provided in Sections 6(B),
10 and 11 hereof, to Outside Directors of the Company.

SECTION 6.  RESTRICTED STOCK AWARDS

(A)  Awards to Employees

     The P&C  Committee  may make a  Restricted  Stock  Award  to  selected
Participants,   which   Restricted  Stock  Awards  may,  at  the  Company's
discretion  and as  directed  by the  P&C  Committee,  be  evidenced  by an
Agreement  which  shall  contain  such  terms  and  conditions  as the  P&C
Committee, in its sole discretion, may determine. The
<PAGE>

amount  of each  Restricted  Stock  Award  and  the  respective  terms  and
conditions of such Award (which terms and  conditions  need not be the same
in each  case)  shall  be  determined  by the  P&C  Committee  in its  sole
discretion. As a condition to any Restricted Stock Award hereunder, the P&C
Committee may require a Participant to pay to the Company a  non-refundable
amount  equal  to,  or in excess  of,  the par  value of the  shares of the
Restricted  Stock  Award.  Subject  to the  terms  and  conditions  of each
Restricted Stock Award,  the Participant,  as the owner of the Common Stock
issued  as  Restricted  Stock,  shall  have  all  rights  of a  shareholder
including,  but not limited to,  voting  rights as to such Common Stock and
the right to receive dividends thereon when, as and if paid.

     Unless otherwise determined and directed by the P&C Committee,  in the
event that a Restricted  Stock Award has been made to a  Participant  whose
employment or service is  subsequently  terminated  for any reason prior to
the  lapse of all  restrictions  thereon,  such  Restricted  Stock  will be
forfeited in its entirety by such Participant.

(B)  Awards to Outside Directors

     During  the term of this  Plan,  each  person  who is  hereafter  duly
appointed or elected as an Outside Director shall be granted,  effective on
the date of his or her  appointment  or election to the Board, a Restricted
Stock  Award of 1,000  shares.  All Awards  under this  subsection  (B) are
subject to the limitation on the number of shares of Common Stock available
pursuant to Section 3 hereof and to the terms and  conditions  set forth in
this subsection (B) and subsection (C) below.

     As a condition to any Restricted  Stock Award  hereunder,  the Outside
Director  may be  required to pay to the  Company a  non-refundable  amount
equal to the par value of the shares of the  Restricted  Stock Award.  Upon
the granting of the Restricted Stock Award,  such Outside Director shall be
entitled to all rights incident to ownership of Common Stock of the Company
with respect to his or her Restricted Stock, including, but not limited to,
the right to vote such shares of Restricted Stock and to receive  dividends
thereon when, as and if paid; provided, however, that subject to subsection
(C) hereof,  in no case may any shares of  Restricted  Stock  granted to an
Outside  Director be sold,  assigned,  transferred,  pledged,  or otherwise
encumbered  during the  Restricted  Period  which shall not lapse until the
earlier  to occur  of the  following:  (i)  Retirement,  (ii) the  death or
Disability of such Outside  Director,  (iii) a 50% change in the beneficial
ownership of the Company as defined in Rule 13d-3 under the  Exchange  Act,
or (iv)  voluntary  early  retirement  to take a position  in  governmental
service.  Unless otherwise determined and directed by the G&N Committee, in
the case of voluntary  resignation  or other  termination  of service of an
Outside  Director prior to the occurrence of any of the events described in
the preceding  sentence,  any Restricted  Stock Award made pursuant to this
subsection will be forfeited by such Outside Director.

(C) Transferability

     Subject to Section  17(B)  hereof,  Restricted  Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered during a Restricted
Period, which, in the case of Participants,  shall be determined by the P&C
Committee and, unless otherwise determined by the P&C Committee,  shall not
be less than one year from the date of the Restricted Stock Award,  and, in
the case of Outside  Directors,  shall be  determined  in  accordance  with
subsection (B) of this Section.  The P&C Committee may, at any time, reduce
the  Restricted  Period  with  respect  to  any  outstanding  shares  of  a
Restricted  Stock  Award,  but,  unless  otherwise  determined  by the  P&C
Committee, such Restricted Period shall not be less than one year.

     During the Restricted Period, certificates representing the Restricted
Stock and any Retained Distributions shall be registered in the Recipient's
name and bear a  restrictive  legend to the effect that  ownership  of such
Restricted Stock (and any such Retained  Distributions),  and the enjoyment
of all rights appurtenant  thereto are subject to the restrictions,  terms,
and conditions provided in this Plan and the applicable Agreement,  if any.
Such  certificates  shall be deposited by the  Recipient  with the Company,
together  with  stock  powers  or other  instruments  of  assignment,  each
endorsed in blank,  which will permit transfer to the Company of all or any
portion of the Restricted  Stock and any securities  constituting  Retained
Distributions which shall be forfeited in accordance with this Plan and the
applicable Agreement,  if any. Restricted Stock shall constitute issued and
outstanding  shares of Common Stock for all  corporate  purposes,  with the
exception  that:  (i) the Recipient will not be entitled to delivery of the
stock   certificates   representing   such   Restricted   Stock  until  the
restrictions  applicable thereto shall have expired;  (ii) the Company will
retain custody of all Retained  Distributions made or declared with respect
to the Restricted Stock (and such Retained Distributions will be subject to
the same  restrictions,  terms  and  conditions  as are  applicable  to the

<PAGE>

Restricted  Stock) until such time, if ever, as the  Restricted  Stock with
respect to which such Retained Distributions shall have been made, paid, or
declared shall have become vested,  and such Retained  Distributions  shall
not bear interest or be segregated in separate  accounts;  (iii) subject to
Section 17(B) hereof, the Recipient may not sell, assign, transfer, pledge,
exchange,  encumber,  or dispose of the  Restricted  Stock or any  Retained
Distributions  during the  Restricted  Period;  and (iv)  unless  otherwise
determined and directed by the  Committees,  a breach of any  restrictions,
terms, or conditions provided in this Plan or established by the Committees
with respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such  Restricted  Stock and any Retained  Distributions  with
respect thereto.

SECTION 7.  INCENTIVE AWARDS

     (A) Any Participant may receive one or more Incentive  Awards,  as the
P&C Committee shall from time to time determine.

     (B) No later than 120 days (90 days for those Participants  subject to
the  limitations  of Code Section  162(m)) after the  commencement  of each
Performance  Period,  the P&C Committee  shall  establish in writing one or
more  Performance  Goals that must be reached by a Participant  in order to
receive an Incentive Award for such Performance Period. Except with respect
to Participants  subject to the limitations of Code Section 162(m), the P&C
Committee shall have the discretion to later revise the  Performance  Goals
and the amount to be paid out upon the  attainment  of these  goals for any
reason  including the reflection of promotions,  transfers or other changes
in a  Participant's  employment so long as such changes are consistent with
the Performance  Goals  established  for other  Participants in the same or
similar positions.  Performance Goals established for Participants  subject
to Code  Section  162(m) may only be  adjusted to reduce or  eliminate  the
amount of compensation otherwise payable upon attainment of the Performance
Goals.

     (C)  The  target   Incentive  Award  is  a  fixed  percentage  of  the
Participant's Base Salary paid during the year. The maximum Incentive Award
is 150% of the target  Incentive  Award.  No  Incentive  Award shall exceed
three million dollars ($3,000,000).

     (D) Payment of Incentive Awards shall be made on a date or dates fixed
by the P&C Committee.  Payment may be made in one or more  installments and
may be made  wholly  in  cash,  wholly  in  shares  of  Common  Stock  or a
combination thereof as determined by the P&C Committee.

     If payment of an  Incentive  Award shall be made all or  partially  in
shares  of Common  Stock,  the  number  of  shares  of  Common  Stock to be
delivered  to a  Participant  on any payment  date shall be  determined  by
dividing (x) the original  dollar amount to be paid on the payment date (or
the part thereof  determined by the P&C Committee to be delivered in shares
of such Incentive Award) by (y) the Fair Market Value on the date the Board
approves the P&C  Committee's  decision to pay an  Incentive  Award or such
other date as the Board shall determine.

     (E) Unless otherwise determined and directed by the P&C Committee,  an
Incentive  Award  shall  terminate  if  the  Participant  does  not  remain
continuously  employed and in good standing with the Company until the date
of payment of such Award.  Unless otherwise  determined and directed by the
P&C  Committee,  in the  event a  Participant's  employment  is  terminated
because of death, Disability or Retirement,  the Participant (or his or her
beneficiaries  or estate) shall receive the prorated portion of the payment
of an Incentive Award for which the  Participant  would have otherwise been
eligible based upon the portion of the  Performance  Period during which he
or she was so employed so long as the  Performance  Goals are  subsequently
achieved.

SECTION 8.  PERFORMANCE UNIT AWARDS

     (A) Any Participant may receive one or more  Performance  Unit Awards,
as the P&C Committee shall from time to time determine.

     (B) The  Performance  Goals and  Performance  Period  applicable  to a
Performance  Unit Award shall be set forth in writing by the P&C  Committee
no later  than 120 days (90  days for  those  Participants  subject  to the
limitations  imposed by Code Section 162(m)) after the  commencement of the
Performance  Period.  Except with  respect to  Participants  subject to the
limitations  of Code  Section  162(m),  the P&C  Committee  shall  have the
discretion to later

<PAGE>

revise  the  Performance  Goals  and the  amount  to be paid  out  upon the
attainment  of these  goals for any  reason  including  the  reflection  of
promotions,  transfers or other  changes in a  Participant's  employment so
long as such changes are consistent with the Performance  Goals established
for other Participants in the same or similar positions.  Goals established
for  Participants  subject to Code  Section  162(m) may only be adjusted to
reduce or  eliminate  the amount of  compensation  otherwise  payable  upon
attainment of the Performance Goals.

     (C) Each  Performance  Unit Award shall be  established  in dollars or
shares of Common Stock,  or a combination of both, as determined by the P&C
Committee.  The  original  amount of any  Performance  Unit Award shall not
exceed 400% of the  Participant's  then annual base salary and the original
amount of any Performance  Unit Award shall not exceed five million dollars
($5,000,000). In determining the amount of any Performance Unit Award made,
in whole or in part, in shares of Common Stock,  the value thereof shall be
based on the Fair Market Value on the first day of the  Performance  Period
or on such other date, as the Board shall determine.

     (D) Unless otherwise  determined and directed by the P&C Committee,  a
Performance  Unit Award shall terminate for all purposes if the Participant
does not remain continuously employed and in good standing with the Company
until payment of such Performance Unit Award.  Unless otherwise  determined
and  directed  by  the  P&C  Committee,   a  Participant  (or  his  or  her
beneficiaries or estate) whose employment was terminated  because of death,
Disability or Retirement will receive a prorated  portion of the payment of
his or her Award based upon the portion of the  Performance  Period  during
which  he or she  was so  employed  so long as the  Performance  Goals  are
subsequently achieved.

     (E) Payment  with respect to  Performance  Unit Awards will be made to
Participants  on a date or dates fixed by the P&C Committee.  The amount of
such payment shall be determined by the P&C Committee and shall be based on
the original amount of such  Performance Unit Award adjusted to reflect the
attainment of the Performance Goals during the Performance Period.  Payment
may be made in one or more  installments  and may be made  wholly  in cash,
wholly in shares of Common Stock or a combination  thereof as determined by
the P&C Committee.

     If payment of a Performance Unit Award established in dollars is to be
made in shares of Common  Stock or  partly in such  shares,  the  number of
shares of Common Stock to be delivered to a Participant on any payment date
shall be  determined  by  dividing  (x) the amount  payable by (y) the Fair
Market Value on the date the Board approves the P&C Committee's decision to
pay the  Performance  Unit Award or on such  other date as the Board  shall
determine.

     If payment of a Performance Unit Award established in shares of Common
Stock is to be made in cash or  partly  in cash,  the  amount of cash to be
paid  to  a  Participant  on  any  payment  date  shall  be  determined  by
multiplying  (x) the number of shares of Common Stock to be paid in cash on
such payment date with respect to such  Performance  Unit Award, by (y) the
Fair  Market  Value on the  date the  Board  approves  the P&C  Committee's
decision  to pay the  Performance  Unit  Award or on such other date as the
Board shall determine.  Any payment may be subject to such restrictions and
conditions as the P&C Committee may determine.

SECTION 9.  MERIT AWARDS

     Any  Participant  may receive a Merit Award of Common Stock under this
Plan for such  reasons and in such  amounts as the P&C  Committee  may from
time to time  determine.  As a condition to any such Merit  Award,  the P&C
Committee may require a Participant to pay to the Company a  non-refundable
amount  equal to, or in excess  of,  the par value of the  shares of Common
Stock awarded to him or her.

SECTION 10.  OPTION AWARDS

     (A) Any  Recipient  may  receive  one or more  Option  Awards,  as the
Committees shall from time to time determine.

     (B)  Designation and Price

         (1) Any  Option  granted  under  this  Plan may be  granted  as an
Incentive  Stock  Option  or as a  Nonqualified  Stock  Option  as shall be
designated by the Committees at the time of the grant of such Option.  Only
Participants


<PAGE>

may be granted ISOs.  Each Option shall,  at the  discretion of the Company
and as directed by the Committees, be evidenced by a Notice of Grant, which
Notice of Grant shall specify the  designation of the Option as an ISO or a
NQSO,  as the case may be, and shall  contain such terms and  conditions as
the Committees, in their sole discretion,  may determine in accordance with
this Plan.

         (2) Every ISO shall  provide  for a fixed  expiration  date of not
later  than ten years from the date such ISO is  granted.  Every NQSO shall
provide  for a fixed  expiration  date of not later  than ten years and one
month from the date such NQSO is granted.

          (3) The Exercise  Price of Common  Stock issued  pursuant to each
Option shall be fixed by the  Committees at the time of the granting of the
Option;  provided,  however,  that such Exercise Price shall in no event be
less than 100% of the Fair  Market  Value of the  Common  Stock on the date
such Option is granted.

     (C)  Exercise

     The  Committees  may,  in their sole  discretion,  provide for Options
granted under this Plan to be  exercisable  in whole or in part;  provided,
however, that no Option shall be exercisable prior to the first anniversary
of the date of its grant, except as provided in Section 13 hereof or as the
Committees otherwise determine in accordance with this Plan, and in no case
may an Option be  exercised  at any time for fewer  than 50 shares  (or the
total  remaining  shares  covered  by the  Option if fewer  than 50 shares)
during  the term of the  Option.  The  specified  number of shares  will be
issued upon receipt by the Company of (i) notice from the holder thereof of
the exercise of an Option,  and (ii) payment to the Company (as provided in
subsection  (D) of this  Section),  of the Exercise Price for the number of
shares with respect to which the Option is exercised.  Each such notice and
payment  shall be  delivered or mailed by postpaid  mail,  addressed to the
Trust  Investments   Department  of  the  Company,   3499  Blazer  Parkway,
Lexington, Kentucky 40509, or such other place as the Company may designate
from time to time.

     (D)  Payment for Shares

     Except as otherwise  provided in this Section,  the Exercise Price for
the  Common  Stock  shall be paid in full  when the  Option  is  exercised.
Subject to such rules as the Committees may impose,  the Exercise Price may
be paid in whole or in part:  (i) in cash;  (ii) in whole  shares of Common
Stock owned by the  Recipient  and  evidenced by  negotiable  certificates,
valued at their Fair Market Value  (which  shares of Common Stock must have
been owned by the Recipient six months or longer, and not used to effect an
Option  exercise  within the  preceding six months,  unless the  Committees
specifically   provide  otherwise);   (iii)  by  Attestation;   (iv)  by  a
combination of such methods of payment;  or (v) by such other consideration
as shall constitute  lawful  consideration for the issuance of Common Stock
and be approved by the Committees (including, without limitation, effecting
a Cashless Exercise of the Option with a broker).

     (E) Continued Employment, Agreement to Serve and Exercise Period

         (1)   Participants

                  (a) Subject to the  provisions  of Section  13(D) hereof,
every Option and SAR shall provide that it may not be exercised in whole or
in part for a period of one year  after the date of  granting  such  Option
(unless otherwise determined by the P&C Committee) and if the employment of
the  Participant  shall  terminate prior to the end of such one year period
(or such other period determined by the P&C Committee),  the Option granted
to such Participant shall immediately terminate.

                  (b)  Every  Option  shall  provide  that in the event the
Participant dies (i) while employed by the Company, (ii) during the periods
in  which  Options  may be  exercised  by a  Participant  determined  to be
Disabled, or (iii) after Retirement,  such Option shall be exercisable,  at
any time or from  time to time,  prior to the  fixed  termination  date set
forth in the Option, by the Beneficiaries of the decedent for the number of
shares  which  the  Participant   could  have  acquired  under  the  Option
immediately prior to the Participant's death.

                  (c)  Every  Option  shall  provide  that in the event the
employment  of any  Participant  shall  cease by reason of  Disability,  as
determined  by the P&C Committee at any time during the term of the Option,
such Option


<PAGE>

shall be  exercisable,  at any time or from time to time prior to the fixed
termination date set forth in the Option by such Participant for the number
of shares  which the  Participant  could  have  acquired  under the  Option
immediately prior to the Participant's Disability. The determination by the
P&C Committee of any question  involving  Disability of a Participant shall
be conclusive and binding.

                  (d)  Every  Option  shall  provide  that in the event the
employment of any  Participant  shall cease by reason of  Retirement,  such
Option  may be  exercised  at any time or from  time to time,  prior to the
fixed  termination  date set forth in the  Option  for the number of shares
which the  Participant  could have  acquired  under the Option  immediately
prior to such Retirement.

                  (e)  Notwithstanding  any  provision  of this Plan to the
contrary,  any Option,  may, in the  discretion  of the P&C Committee or as
provided in the relevant Notice of Grant (if any), become  exercisable,  at
any time or from  time to time,  prior to the  fixed  termination  date set
forth in the  Option  for the full  number  of  awarded  shares or any part
thereof,  less such number as may have been theretofore  acquired under the
Option from and after the time the Participant  ceases to be an employee of
the Company as a result of the sale or other  disposition by the Company of
assets or property (including shares of any Subsidiary) in respect of which
such Participant had theretofore been employed or as a result of which such
Participant's continued employment with the Company is no longer required.

                  (f) Except as provided in sub-subsections  (b), (c), (d),
(e) and (g) of this Section 10(E) and Section  13(D)  hereof,  every Option
shall provide that it shall  terminate on the earlier to occur of the fixed
termination  date  set  forth in the  Option  or  thirty  (30)  days  after
cessation of the  Participant's  employment for any cause in respect of the
number of shares which the Participant could have acquired under the Option
immediately prior to such cessation of employment;  provided, however, that
no Option may be exercised  after the fixed  termination  date set forth in
the Option.

                  (g)  Notwithstanding any provision of this Section to the
contrary,  in the  event  the P&C  Committee  determines,  in its  sole and
absolute discretion,  that the employment of any Participant has terminated
for a reason or in a manner  adversely  affecting  the  Company  (which may
include,  without limitation,  taking other employment or rendering service
to others  without the consent of the Company),  then the P&C Committee may
direct that such  Participant  forfeit  any and all Options  that he or she
could otherwise have exercised pursuant to the terms of this Plan.

                  (h) Each  Participant  granted  an Award  under this Plan
shall agree by his or her acceptance of such Award to remain in the service
of the  Company  for a  period  of at least  one year  from the date of the
Notice of Grant  respecting  the Award (or, if no Notice of Grant is given,
at least one year from the date of the Award). Such service shall,  subject
to the terms of any contract between the Company and such  Participant,  be
at the  pleasure  of the Company  and at such  compensation  as the Company
shall reasonably  determine from time to time.  Nothing in this Plan, or in
any Award granted pursuant to this Plan, shall confer on any individual any
right to  continue  in the  employment  of or  service  to the  Company  or
interfere  in any way  with the  right  of the  Company  to  terminate  the
Participant's employment at any time.

                  (i) Notwithstanding  anything to the contrary herein, any
Option that is an ISO shall be exercisable  not later than three (3) months
following the date that the employment of a Participant terminated.

         (2)      Outside Directors

         If an Outside Director's service on the Board terminates by reason
of (i) Retirement,  (ii) the death or Disability of such Outside  Director,
(iii) a 50% change in the beneficial ownership of the Company as defined in
Rule 13d-3 under the Exchange Act, or (iv)  voluntary  early  retirement to
take a position in  governmental  service,  any Option held by such Outside
Director may  thereafter  be exercised by the Outside  Director,  or in the
event of death,  by his or her  Beneficiary to the extent it was vested and
exercisable at the time of such  termination  (i) for a period equal to the
number  of  years  of  completed  Board  service  as of the  date  of  such
termination  of  the  Outside  Director  on  whose  behalf  the  Option  is
exercised,  or (ii) until the  expiration of the stated term of such Option
whichever period is the shorter. In the event of termination for any reason
other than those set forth above,  any Option held by such Outside Director
may  thereafter  be exercised by the Outside  Director to the extent it was
vested and  exercisable at the time of termination  (i) for a period of one
year from the date of such  termination or (ii) until


<PAGE>

the expiration of the stated term of such Option,  whichever  period is the
shorter, unless otherwise determined by the G&N Committee.

SECTION 11.  STOCK APPRECIATION RIGHT AWARDS

     The Committees  may grant Stock  Appreciation  Rights  pursuant to the
provisions  of this  Section to any  Recipient  holding any Option  granted
under this Plan with  respect to all or a portion of the shares  subject to
the related Option. A SAR may only be granted  concurrently  with the grant
of the related Option. Subject to the terms and provisions of this Section,
each SAR shall be exercisable  only at the same time and to the same extent
the related Option is exercisable  and in no event after the termination of
the related  Option.  A SAR shall be exercisable  only when the Fair Market
Value  (determined  as of the date of exercise of the SAR) of each share of
Common Stock with respect to which the SAR is to be exercised  shall exceed
the Exercise Price per share of Common Stock subject to the related Option.
A SAR granted under this Plan shall be  exercisable  in whole or in part by
notice to the  Company.  Each such notice  shall be  delivered or mailed by
postpaid  mail,  addressed  to  the  Trust  Investments  Department  of the
Company,  3499 Blazer  Parkway,  Lexington,  Kentucky  40509, or such other
place as the company may  designate  from time to time.  Such notice  shall
state that the holder of the SAR elects to exercise  the SAR and the number
of shares in respect of which the SAR is being exercised.

     Subject to the terms and provisions of this Section, upon the exercise
of a SAR,  the  Recipient  shall be  entitled  to receive  from the Company
consideration  (in the  form  hereinafter  provided)  equal in value to the
excess of the Fair Market Value  (determined  as of the date of exercise of
the SAR) of each share of Common  Stock with  respect to which such SAR has
been exercised over the Exercise Price per share of Common Stock subject to
the related Option. The Committees may stipulate in the Notice of Grant the
form of  consideration  which shall be received upon the exercise of a SAR.
If no consideration is specified  therein,  upon the exercise of a SAR, the
Recipient,  may  specify the form of  consideration  to be received by such
Recipient,  which shall be in shares of Common Stock, or in cash, or partly
in cash and partly in shares of Common  Stock  (valued  at the Fair  Market
Value on the date of exercise of the SAR), as the Recipient  shall request;
provided,  however,  that the  Committees,  in their sole  discretion,  may
disapprove the form of  consideration  requested and instead  authorize the
payment  of such  consideration  in  shares  of  Common  Stock  (valued  as
aforesaid),  or in cash,  or partly in cash and  partly in shares of Common
Stock.

     Upon the  exercise  of a SAR,  the  related  Option  shall  be  deemed
exercised  to the  extent of the  number of  shares  of Common  Stock  with
respect to which such SAR is exercised  and to that extent a  corresponding
number of shares of Common Stock shall not again be available for the grant
of Awards under this Plan.  Upon the exercise or termination of the related
Option,  the SAR with  respect  thereto  shall be  considered  to have been
exercised  or  terminated  to the  extent of the number of shares of Common
Stock  with  respect  to which  the  related  Option  was so  exercised  or
terminated.

SECTION 12.  CONTINUED EMPLOYMENT

     Nothing in this Plan, or in any Award  granted  pursuant to this Plan,
shall confer on any  individual any right to continue in the employment of,
or service  to, the Company or  interfere  in any way with the right of the
Company to terminate the Participant's employment at any time.

SECTION 13.  CHANGE IN CONTROL

     (A) Upon a Change in Control, any Restricted Stock Award shall be free
of all  restrictions for the full number of awarded shares less such number
as may have been theretofore acquired under the Restricted Stock Award.

     (B) Upon a Change in Control,  there shall be an  acceleration  of any
Performance  Period  relating to any  Incentive  Award,  and payment of any
Incentive  Award  shall be made in cash as soon as  practicable  after such
Change  in  Control  based  upon  achievement  of  the  Performance   Goals
applicable to such Award up to the date of the Change in Control.  Further,
the  Company's  obligation  with respect to such  Incentive  Award shall be
assumed,  or new  obligations  substituted  therefor,  by the  acquiring or
surviving  corporation after such Change in Control. In addition,  prior to
the  date  of such  Change  in  Control,  the P&C  Committee,  in its  sole
judgment, may make adjustments to any Incentive Award as may be appropriate
to reflect such Change in Control.

<PAGE>

     (C) Upon a Change in Control,  there shall be an  acceleration  of any
Performance  Period relating to any Performance  Unit Award, and payment of
any  Performance  Unit Award  shall be made in cash as soon as  practicable
after such  Change in Control  based upon  achievement  of the  Performance
Goals  applicable  to such  Performance  Unit  Award  up to the date of the
Change in Control. If such Performance Unit Award was established in shares
of  Common  Stock,  the  amount  of cash to be paid to a  Participant  with
respect to the  Performance  Unit Award shall be determined by  multiplying
(x) the number of shares of Common Stock relating to such  Performance Unit
Award,  by (y) the Fair Market  Value on the date of the Change in Control.
Further,  the Company's  obligation with respect to such  Performance  Unit
Award shall be assumed,  or new obligations  substituted  therefor,  by the
acquiring  or  surviving  corporation  after  such  Change in  Control.  In
addition,  prior to the date of such Change in Control,  the P&C Committee,
in its sole judgment, may make adjustments to any Performance Unit Award as
may be appropriate to reflect such Change in Control.

     (D) Upon a Change in  Control,  any  Option  Award or SAR Award  shall
become immediately exercisable for the full number of awarded shares or any
part thereof, less such numbers as may have been theretofore acquired under
the  Option  Award or SAR Award  from and after the date of such  Change in
Control, unless otherwise provided in the Notice of Grant.

SECTION 14.  WITHHOLDING TAXES

     Federal,  state or local  law may  require  the  withholding  of taxes
applicable  to gains  resulting  from the  payment  or vesting of an Award.
Unless  otherwise  prohibited by the P&C Committee,  each  Participant  may
satisfy any such tax withholding  obligation by any of the following means,
or by a combination of such means: (i) a cash payment; (ii) authorizing the
Company to withhold from the shares of Common Stock  otherwise  issuable to
the  Participant  pursuant  to the  vesting  of an Award a number of shares
having a Fair  Market  Value,  as of the Tax Date,  which will  satisfy the
amount of the  withholding  tax  obligation;  or (iii) by  delivery  to the
Company of a number of shares of Common Stock having a Fair Market Value as
of the Tax Date  which  will  satisfy  the  amount of the  withholding  tax
obligation  arising from the vesting of an Award. A Participant's  election
to pay the  withholding  tax obligation by (ii) or (iii) above must be made
on or before the Tax Date, is irrevocable,  is subject to such rules as the
P&C Committee may adopt,  and may be disapproved  by the P&C Committee.  If
the amount  requested is not paid,  the P&C  Committee  may refuse to issue
Common Stock under this Plan.

SECTION 15.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

     In the event of any  change  in the  outstanding  Common  Stock of the
Company by reason of any stock  split,  stock  dividend,  recapitalization,
merger, consolidation,  reorganization, combination, or exchange of shares,
split-up,  split-off,  spin-off,  liquidation  or other  similar  change in
capitalization,  or any distribution to common stockholders other than cash
dividends,  the number or kind of shares that may be issued under this Plan
pursuant  to Section 3 hereof and the number or kind of shares  subject to,
or the price per share under any outstanding  Award shall be  automatically
adjusted  so that the  proportionate  interest  of the  Recipient  shall be
maintained as before the occurrence of such event. Such adjustment shall be
conclusive and binding for all purposes hereof.

SECTION 16.  AMENDMENT AND TERMINATIONS

     The  Committees  may amend,  alter or terminate  this Plan at any time
without the prior approval of the Board;  provided,  however, that: (i) the
Committees may not, without approval by the Board and the shareholders, (a)
materially  increase the benefits provided to Recipients under this Plan or
(b) provide for the  re-pricing  of Options;  and (ii) any  amendment  with
respect to Restricted  Stock granted to Outside  Directors must be approved
by the full Board.

     Termination  of this Plan shall not affect any Awards  made  hereunder
which are  outstanding  on the date of  termination  and such Awards  shall
continue  to be  subject  to the  terms of this  Plan  notwithstanding  its
termination.

SECTION 17.  MISCELLANEOUS PROVISIONS

     (A) Except as to Awards of Restricted Stock to Outside  Directors,  no
Participant  or other person shall have any claim or right to be granted an
Award under this Plan.
<PAGE>

     (B) A  Recipient's  rights  and  interest  under  this Plan may not be
assigned  or  transferred  in  whole  or in  part,  either  directly  or by
operation of law or otherwise (except in the event of a Recipient's  death,
by will or the laws of descent and distribution), including, but not by way
of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy
or in any other  manner,  and no such right or interest of any Recipient in
this  Plan  shall  be  subject  to any  obligation  or  liability  of  such
individual; provided, however, that a Recipient's rights and interest under
this Plan may,  subject to the discretion and direction of the  Committees,
be made  transferable by such Recipient during his or her lifetime.  Except
as specified in Section 6 hereof, the holder of an Award shall have none of
the rights of a  shareholder  until the shares  subject  thereto shall have
been  registered  in the name of the person  receiving or person or persons
exercising the Award on the transfer books of the Company.

     (C) No Common Stock shall be issued  hereunder  unless counsel for the
Company shall be satisfied  that such  issuance will be in compliance  with
applicable Federal, state, and other securities laws.

     (D) The expenses of this Plan shall be borne by the Company.

     (E) By accepting  any Award under this Plan,  each  Recipient and each
Personal Representative or Beneficiary claiming under or through him or her
shall be  conclusively  deemed to have  indicated his or her acceptance and
ratification  of, and consent  to, any action  taken under this Plan by the
Company, the Board, and the Committees.

     (F) Awards  granted under this Plan shall be binding upon the Company,
its successors, and assigns.

     (G)  Nothing  contained  in this Plan  shall  prevent  the Board  from
adopting  other  or  additional  compensation   arrangements,   subject  to
shareholder approval if such approval is required.

     (H) Each  Recipient  shall be deemed to have been granted any Award on
the date the Committees  took action to grant such Award under this Plan or
such date as the Committees in their sole discretion shall determine at the
time such grant is authorized.

SECTION 18.  EFFECTIVENESS OF THIS PLAN

     This Plan was originally  approved by the  shareholders of the Company
on January 27, 2000.  The Amended and  Restated  Plan shall be submitted to
the  shareholders of the Company for their approval and adoption on January
25, 2001, or such other date fixed for the next meeting of  shareholders or
any   adjournment  or  postponement   thereof.   If  not  approved  by  the
shareholders  of the Company at the January  25, 2001 Annual  Meeting,  the
original  Plan shall  remain in effect  with  respect to Awards  other than
Option Awards and SAR Awards.  No Option Awards or SAR Awards shall be made
under the  Amended  and  Restated  Plan  unless and until the  Amended  and
Restated  Plan has been  approved and adopted at a meeting of the Company's
shareholders.

SECTION 19.  GOVERNING LAW

         The provisions of this Plan shall be interpreted  and construed in
accordance with the laws of the Commonwealth of Kentucky.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EXHIBIT 10.2 - ASHLAND INC. SERP
<TEXT>

                         TENTH AMENDED AND RESTATED
                                ASHLAND INC.
                     SUPPLEMENTAL EARLY RETIREMENT PLAN
                           FOR CERTAIN EMPLOYEES
                              November 4, 1999
                  CONFORMED COPY INCLUDING AMENDMENT NO. 1

ARTICLE I.        PURPOSE AND EFFECTIVE DATE.
---------         --------------------------
1.01     PURPOSE

         The purpose of the Plan is to allow designated employees to retire
         prior  to  their   sixty-fifth   birthday   without  an  immediate
         substantial loss of income. This Plan is a supplemental retirement
         arrangement for a select group of management.

1.02     EFFECTIVE DATE

         The Tenth  Amended and Restated  Ashland Inc.  Supplemental  Early
         Retirement Plan for Certain  Employees is hereby amended effective
         November 4, 1999. However, the rights and obligations of Employees
         who were  selected  by the  Board or  approved  for  participation
         pursuant to the eligibility  requirements of the Plan to receive a
         benefit under the Plan, or who were  receiving  benefits  prior to
         November  4, 1999  shall be  governed  by the terms of the Plan in
         effect at the time of each such  Employee's  Effective  Retirement
         Date,  unless  otherwise  determined  by the Committee in its sole
         discretion.

ARTICLE II.       DEFINITIONS.
----------        -----------

         The following terms used herein shall have the following  meanings
unless the  context  otherwise  requires:

2.01     "Age"  -  means  the  age of an  Employee  as of  his or her  last
         birthday,  except as may otherwise be provided under Sections 5.01
         and 5.02 in the event of a Change in Control.
<PAGE>

2.02     "Annual Retirement Income" - means the annual income payable under
         this Plan by Ashland for the lifetime of a Participant  commencing
         on such Participant's  Effective Retirement Date and ending on his
         or her date of death,  subject to the  provisions of Section 5.04.

2.03     "Ashland"  -  means   Ashland  Inc.  and  its  present  or  future
         subsidiary corporations.

2.04     "Board"  -  means  the  Board  of  Directors  of  Ashland  and its
         designees.

2.05     "Change  in  Control"  - shall be  deemed  to  occur  (1) upon the
         approval of the  shareholders  of Ashland (or if such  approval is
         not required,  the approval of the Board) of (A) any consolidation
         or merger of Ashland in which  Ashland  is not the  continuing  or
         surviving  corporation  or  pursuant  to which  shares of  Ashland
         common stock would be  converted  into cash,  securities  or other
         property  other  than a merger in which  the  holders  of  Ashland
         common  stock  immediately  prior to the merger will have the same
         proportionate   ownership  of  common   stock  of  the   surviving
         corporation  immediately  after the merger,  (B) any sale,  lease,
         exchange,  or other  transfer (in one  transaction  or a series of
         related  transactions) of all or  substantially  all the assets of
         Ashland,  or  (C)  adoption  of  any  plan  or  proposal  for  the
         liquidation or  dissolution of Ashland,  (2) when any "person" (as
         defined in Section 3(a)(9) or 13(d) of the Securities Exchange Act
         of 1934), other than Ashland or any subsidiary or employee benefit
         plan or trust  maintained  by Ashland or any of its  subsidiaries,
         shall  become the  "beneficial  owner"  (as  defined in Rule 13d-3
         under  the   Securities   Exchange  Act  of  1934),   directly  or
         indirectly,   of  more  than  15%  of  the  Ashland  common  stock
         outstanding at the time, without the approval of the Board, or (3)
         if  at  any  time  during  a  period  of  two  consecutive  years,
         individuals  who at the beginning of such period  constituted  the
         Board shall cease for any reason to constitute at least a majority
         thereof,  unless  the  election  or  nomination  for  election  by
         Ashland's  shareholders  of each new director during such two-year
         period  was  approved  by a vote  of at  least  two-


<PAGE>

         thirds of the directors then still in office who were directors at
         the beginning of such two-year period.

2.06     "Committee" - means the Personnel  and  Compensation  Committee of
         the Board and its designees.

2.07     "Effective  Retirement  Date"  -  means  the  date  upon  which  a
         Participant  retires  under this Plan which shall be the first day
         of the month  following  the  Participant's  62nd  birthday or, at
         Ashland's  discretion or as otherwise provided in Article V or VI,
         any earlier age.  Upon  approval as provided in Sections  3.01 and
         3.02, the "Effective  Retirement  Date" of a Participant may occur
         after the Employee  reaches age 62. The Effective  Retirement Date
         of an  Employee  who  becomes a  Participant  under  Section  3.03
         because of a Change in Control and who is considered to be a Level
         I or II participant in the Incentive Compensation Plan and who has
         an  Employment  Agreement  shall  be the  first  day of the  month
         following (i) such  Employee's  termination for reasons other than
         "Cause" or (ii) such Employee's resignation for "Good Reason." The
         Effective Retirement Date of an Employee who becomes a Participant
         under  Section  3.03  because  of a Change in  Control  and who is
         considered to be a Level III, IV or V participant in the Incentive
         Compensation  Plan,  or who is  considered  to be a  Level I or II
         participant  in the Incentive  Compensation  Plan and who does not
         have an Employment Agreement,  shall be the first day of the month
         following  such  Employee's  termination  for  reasons  other than
         "Cause".  For Employees  who do not have an  Employment  Agreement
         with Ashland, "Cause" shall have the meaning given to that word in
         Section 3.05.

2.08     "Employee"  - means an  employee of Ashland who (i) is at least 55
         years of age or such earlier age pursuant to Section 5.06(b);  and
         (ii) is deemed on the Effective Retirement Date to be a Level V or
         above   employee   under   the   Incentive    Compensation   Plan.
         Notwithstanding  anything  herein  to the  contrary,  if,  after a
         Change in  Control,  an  Employee  is  terminated  other  than


<PAGE>

         for "Cause" or, in the case of a Level I or II Employee  having an
         Employment  Agreement,  resigns  for  "Good  Reason,"  the  age 55
         threshold in clause (i) does not apply and is inapplicable.

2.09     "Employment Agreements" - means those contractual  agreements,  in
         effect  from  time to time,  which are  approved  by the Board and
         which  provide an Employee  with a specified  period of employment
         and other benefits.

2.10     "Final Average Bonus" - means the Participant's average bonus paid
         under the Incentive  Compensation Plan (including amounts that may
         have been deferred) during the highest  thirty-six (36) months out
         of the final  sixty-month  (60) period.  For these  purposes,  the
         "bonus  paid" for a particular  month  within a particular  fiscal
         year  under  such plan  shall be equal to the amount of such bonus
         actually  paid  (regardless  of the date paid,  but  excluding any
         adjustment  for the deferral of such payment) to such  Participant
         on account  of such  fiscal  year  divided by the number of months
         contained in such fiscal year which were used in  determining  the
         amount of such bonus actually paid to such Participant.

2.11     "Final   Average   Compensation"   -  means  the   average   total
         compensation paid during the highest thirty-six months (36) out of
         the final  sixty-month  (60) period.  For these  purposes,  "total
         compensation  paid" is the sum of the "compensation  paid" and the
         "bonus paid" during a particular month.  "Compensation paid" shall
         be the base rate of compensation for such Participant in effect on
         the first day of such calendar month.  "Bonus paid" shall have the
         same meaning as set forth in Section  2.10. In the event a payment
         is due  under  the Plan  after a Change  in  Control  because  the
         Participant was terminated  other than for "Cause" or resigned for
         "Good Reason," the calculation of Final Average Compensation shall
         include  the  amount  paid  under  such  Participant's  Employment
         Agreement. The amount so paid shall be divided by 36 to derive the
         monthly "total compensation paid" it represents.


<PAGE>

2.12     "Incentive  Compensation  Plan" - means the Ashland Inc. Incentive
         Compensation Plan or the Ashland Inc. Incentive  Compensation Plan
         for Key Executives, as applicable, including any successor to such
         plans.

2.13     "Participant"  - means  an  Employee  who has  been  approved  for
         participation in the Plan pursuant to Article III or Section 5.06.

2.14     "Plan"  - means  the  Tenth  Amended  and  Restated  Ashland  Inc.
         Supplemental  Early  Retirement Plan for Certain  Employees as set
         forth herein.

2.15     "Service"  - means the  number of years  and  fractional  years of
         employment by Ashland of an Employee,  measured from the first day
         of the month coincident with or next succeeding his or her initial
         date of employment up to and including such  Employee's  Effective
         Retirement Date. For purposes of this Section 2.15,  Service shall
         include an Employee's employment with a subsidiary or an affiliate
         of Ashland  determined in accordance  with rules from time to time
         adopted or approved by the Board, or its delegate.

ARTICLE III.      PARTICIPATION IN PLAN.
-----------       ---------------------
         Eligibility for benefits shall be determined as follows:

3.01     EMPLOYEES WHO REQUIRE BOARD APPROVAL

         Except as otherwise  provided in Section  3.03, an Employee who on
         the  Effective  Retirement  Date is  deemed  to be a Level I or II
         participant  under the Incentive  Compensation  Plan shall require
         Board approval to participate in this Plan.

3.02     EMPLOYEES WHO REQUIRE CEO OR OTHER APPROVAL

         Except as otherwise  provided in Section  3.03, an Employee who on
         the Effective  Retirement Date is deemed to be a Level III, IV, or
         V participant under the Incentive  Compensation Plan shall require
         the approval of either (i) Ashland's  Chief  Executive  Officer or
         (ii) Ashland's Administrative Vice President,  Human Resources and
         either the President or the Chief Financial Officer to participate
         in this Plan.


<PAGE>

3.03     AUTOMATIC APPROVAL FOR CHANGE IN CONTROL

         Subject to the  provisions of Article VI, in the event of a Change
         in Control (as defined in Section 2.05), an Employee who is deemed
         to be a Level I, II, III, IV or V participant  under the Incentive
         Compensation Plan shall  automatically be deemed to be approved by
         the Board or by the Chief Executive  Officer,  as applicable,  for
         participation under this Plan.

3.04     OTHER APPROVALS

         The Board or Chief Executive Officer,  as applicable,  may approve
         such  employees for  participation  in the Plan as they deem to be
         appropriate, all in its or his sole discretion.

3.05     TERMINATION FOR CAUSE

         Ashland  reserves  the  right to  terminate  any  Participant  for
         "Cause"  prior to his or her  Effective  Retirement  Date,  with a
         resulting  forfeiture  of the payment of benefits  under the Plan.
         Ashland also  reserves the right to  terminate  any  Participant's
         participation  in the Plan for  "Cause"  subsequent  to his or her
         Effective  Retirement  Date.  For purposes of this  Section  3.05,
         "Cause"  shall  mean  the  willful  and  continuous  failure  of a
         Participant to substantially  perform his or her duties to Ashland
         (other than any such  failure  resulting  from  incapacity  due to
         physical  or  mental  illness),  or  the  willful  engaging  by  a
         Participant  in  gross  misconduct   materially  and  demonstrably
         injurious to Ashland, each to be determined by Ashland in its sole
         discretion.

ARTICLE IV.       INTERACTION WITH EMPLOYMENT AGREEMENTS.
----------        --------------------------------------

4.01     TERMINATIONS - GENERAL

         Notwithstanding  any  provision of this Plan to the  contrary,  an
         Employee who has entered into an Employment Agreement with Ashland
         and who is either terminated without "Cause" prior to a "change in
         control of Ashland" or is  terminated  without  "Cause" or resigns
         for "Good Reason" following a "change in control of Ashland" (each
         quoted  term as defined in the  applicable  employment  agreement)
         shall be entitled to receive the benefits as provided  pursuant to
         this Plan. Benefits payable hereunder in such a situation shall be
         calculated in accordance  with the payment option  selected by the
         Employee at such time.

4.02     BENEFITS PRIOR TO "CHANGE IN CONTROL."
         ------------------------------------

         If the  Employee's  termination  is  without  "Cause"  prior  to a
         "change in control of  Ashland,"  the benefits  payable  hereunder
         shall commence no earlier than as of the first day of the calendar
         month  coincident  with or next  following the second  anniversary
         following the Employee's  "Date of Termination" (as defined in the
         applicable employment agreement);  however, if the Employee elects
         to receive  such  benefits  in a lump sum as  provided  in Section
         5.04(b)(1), such benefits shall commence and be payable as therein
         specified.

4.03     BENEFITS SUBSEQUENT TO A "CHANGE IN CONTROL."
         -------------------------------------------

         If the  Employee's  termination  is  without  "Cause" or he or she
         resigns  for "Good  Reason"  following  a "change  in  control  of
         Ashland,"  benefits payable  hereunder shall begin as of the first
         day  of  the  calendar  month  next  following  the  Participant's
         Effective Retirement Date.

4.04     SUBSEQUENT ACTIVITY IN CONFLICT WITH ASHLAND

         The  provisions  of this  Section 4.04 shall apply to Level I, II,
         III,  IV  and  V  Participants,   regardless  of  whether  such  a
         Participant   has  an  Employment   Agreement;   except  that  the
         provisions of this Section 4.04 shall not apply to any Participant
         who was approved for participation  hereunder under the provisions
         of Section 3.03. If a Participant accepts, during a period of five
         (5) years subsequent to his or her Effective  Retirement Date, any
         consulting  or  employment   activity   which  is  in  direct  and
         substantial  conflict  with the  business  of Ashland at such time
         (such determination  regarding  conflicting activity to be made in
         the sole  discretion of the Board),  he or she shall be considered
         in  breach  of the  provisions  of this  Section  4.04;  provided,
         however,  he or she shall not be  restricted  in any  manner  with
         respect to any other  non-conflicting  activity in which he or she
         is  engaged.

         If  a  Participant  wishes  to  accept  employment  or  consulting
         activity  which may be prohibited  under this Section  4.04,  such
         Participant  may  submit to  Ashland


<PAGE>

         written notice (Attention:  Administrative  Vice President,  Human
         Resources)  of  his or her  wish  to  accept  such  employment  or
         consulting  activity.  If within ten (10) business days  following
         receipt of such notice Ashland does not notify the  Participant in
         writing  of  Ashland's  objection  to his or  her  accepting  such
         employment or consulting activity,  then such Participant shall be
         free to accept such  employment  or  consulting  activity  for the
         period of time and upon the basis set forth in his or her  written
         request.

         In the event the provisions of this Section 4.04 are breached by a
         Participant,   the  Participant  shall  not  be  entitled  to  any
         additional  periodic  payments  hereunder  and  shall be liable to
         repay to Ashland all amounts such  Participant  received  prior to
         such breach.  If a Participant who breaches the provisions of this
         Section  4.04  received  a  lump  sum  distribution  of his or her
         benefit prior to such breach,  such Participant shall be liable to
         repay to Ashland the amount of such distribution. If a Participant
         who breaches the  provisions  of this Section 4.04 deferred all or
         any part of a lump sum distribution  hereunder to the Ashland Inc.
         Deferred  Compensation  Plan,  the  amount  so  deferred  shall be
         forfeited,  and if  any  amount  of the  amount  so  deferred  was
         distributed  from the  Ashland  Inc.  Deferred  Compensation  Plan
         before the breach  occurred,  the amount so  distributed  shall be
         repaid to Ashland.  Any repayment of benefits  hereunder  shall be
         assessed  interest at the rate applicable for the calculation of a
         lump sum payment under Section  5.04(b) for the month in which the
         breach  occurs,  with such  interest  compounded  monthly from the
         month  in which  the  breach  occurs  to the  month in which  such
         repayment is made to Ashland.  Ashland shall have  available to it
         all other  remedies  at law and  equity to remedy a breach of this
         Section 4.04.

ARTICLE V.        ANNUAL RETIREMENT INCOME AND OTHER BENEFITS.
---------         -------------------------------------------

5.01     LEVELS I AND II.
         ---------------

         The Annual  Retirement Income of a Participant who is deemed to be
         a Level I or II Participant under the Incentive  Compensation Plan
         shall be equal to:

         (a)       Pre-Age 62 Benefit
                   ------------------

                  A Participant  who retires  under this Plan,  including a
                  Participant  to whom the  provisions  of paragraph (d) of
                  this  Section  5.01  apply,   shall   receive  an  Annual
                  Retirement  Income  from and  after  the first day of the
                  calendar  month  next  following  his  or  her  Effective
                  Retirement Date until the end of the month in which he or
                  she  attains  age 62  equal  to the  greater  of (1)  the
                  amounts provided in the following  schedule or (2) 50% of
                  Final Average Compensation.  Notwithstanding the previous
                  sentence, in the event such Participant retired with less
                  than 20 years of Service,  such Annual  Retirement Income
                  shall be  multiplied  by a fraction (A) the  numerator of
                  which is such Participant's years of and fractional years
                  of Service,  and (B) the  denominator  of which is twenty
                  (20).

                                                                      % of
                  Retirement                                      Compensation

                  1st    -   Year After Effective                      75%
                             Retirement Date
                  2nd    -          "                                  70%
                  3rd    -          "                                  65%
                  4th    -          "                                  60%
                  5th    -          "                                  55%
                  6th    -   Year and thereafter                       50%
                             to Age 62

                  For purposes of this Section 5.01(a), "% of Compensation"
                  shall mean the  annualized  average of the  Participant's
                  base  monthly  compensation  rates  (excluding  incentive
                  awards,  bonuses,  and any  other  form of  extraordinary
                  compensation)  in effect  with  respect to Ashland on the
                  first day of the  thirty-six  (36)  consecutive  calendar
                  months  which will give the  highest  average  out of the
                  one-hundred


<PAGE>

                  twenty (120) consecutive  calendar month period ending on
                  the Participant's Effective Retirement Date.

         (b)      AGE 62 BENEFIT AND THEREAFTER

                  From and after the first day of the  calendar  month next
                  following  his or her Effective  Retirement  Date, or the
                  attainment   of  age  62,   whichever   is   later,   the
                  Participant's  Annual Retirement Income shall be equal to
                  50% of Final  Average  Compensation;  provided,  however,
                  that in the event such Participant retired with less than
                  20 years of Service,  such Annual Retirement Income shall
                  be 50% of  Final  Average  Compensation  multiplied  by a
                  fraction (A) the numerator of which is such Participant's
                  years of and  fractional  years of  Service,  and (B) the
                  denominator of which is twenty (20).

         (c)      BENEFIT REDUCTION

                  The amount of benefit  provided in paragraphs (a) and (b)
                  of this  Section  5.01 shall be reduced by the sum of the
                  following:

                  (1)    the  Participant's  benefit under the Ashland Inc.
                         and Affiliates  Pension Plan (the "Pension  Plan")
                         (assuming 50% of such Participant's  account under
                         the  Ashland   Inc.   Leveraged   Employee   Stock
                         Ownership  Plan were  transferred  to the  Pension
                         Plan,  as  allowed  under the terms of each of the
                         said plans [AMENDMENT NO. 1 EFFECTIVE 11/4/99] AND
                         DISREGARDING  ANY  BENEFIT   ASSIGNMENT  UNDER  AN
                         APPROVED   QUALIFIED   DOMESTIC   RELATIONS  ORDER
                         AFFECTING  EITHER THE PENSION  PLAN OR THE ASHLAND
                         INC.  LEVERAGED  EMPLOYEE STOCK  OWNERSHIP  PLAN),
                         determined  on the basis of a single life  annuity
                         form of benefit;

                  (2)    the Participant's  benefit under any other defined
                         benefit   pension  plan  qualified  under  Section
                         401(a) of the Internal  Revenue  Code of 1986,  as
                         amended which is maintained by Ashland, determined
                         [AMENDMENT    NO.   1   EFFECTIVE    11/4/99]   BY
                         DISREGARDING  ANY  BENEFIT   ASSIGNMENT  UNDER  AN
                         APPROVED QUALIFIED DOMESTIC RELATIONS ORDER AND ON
                         the basis of a single life annuity form of benefit
                         (said plans


<PAGE>

                         referred to in sub-paragraphs  (1) and (2) of this
                         paragraph (c) are hereinafter  referred to jointly
                         and severally as the "Affected Plans");

                  (3)    the  Participant's  benefit under the Ashland Inc.
                         Nonqualified    Excess   Benefit   Pension   Plan,
                         determined  on the basis of a single life  annuity
                         form of benefit; and

                  (4)    the  Participant's  benefit under the Ashland Inc.
                         ERISA  Forfeiture  Plan  attributable  to  amounts
                         which  were  forfeited   under  the  Ashland  Inc.
                         Leveraged    Employee   Stock    Ownership   Plan,
                         multiplied by 50%, and  determined on the basis of
                         a single life annuity benefit.

                  In the event a Participant's benefit hereunder is paid as
                  a  lump  sum  pursuant  to  an  election   under  Section
                  5.04(b)(1),  the  reduction  to  such  benefit  shall  be
                  calculated  based  upon the lump  sum  actuarial  present
                  value  of  the  benefits  referred  to in  sub-paragraphs
                  (1)-(4) of this  paragraph  (c) to which the  Participant
                  would  be  entitled  at age 62,  regardless  of the  date
                  payments   actually   commence.    In   the   event   the
                  Participant's  benefit  hereunder  is paid in any form of
                  periodic  payments,  the  reduction  shall apply from and
                  after  the  date  the  Participant   actually   commences
                  payments under the plans referred to under sub-paragraphs
                  (1), (2) or (3) of this paragraph (c).

         (d)      BENEFIT AFTER A CHANGE IN CONTROL

                  (1)        Participants Having Employment  Agreements.  A
                             Participant having an Employment Agreement who
                             either  is  terminated   without   "Cause"  or
                             resigns  for "Good  Reason"  after a Change in
                             Control  shall have the benefit  payable under
                             this Section  5.01  computed by adding 3 years
                             to the  Participant's  Age and  Service at the
                             Participant's Effective Retirement Date. These
                             additions to Age and Service shall,  except as
                             otherwise  provided,  apply  for  purposes  of
                             computing  the single life

<PAGE>

                             annuity   payment   to  the   Participant.   A
                             Participant  subject to this paragraph  (d)(1)
                             whose Effective  Retirement Date occurs before
                             attaining an actual age of 55 shall have the 3
                             year addition to Age apply when converting the
                             single life  annuity  amount to any  permitted
                             optional  form  under  this  Article V. If the
                             Effective  Retirement  Date  of a  Participant
                             subject to this paragraph  (d)(1) occurs on or
                             after the Participant attains an actual age of
                             55, then the Participant's actual age shall be
                             used   when   making   such   a    conversion.
                             Notwithstanding   anything  to  the   contrary
                             contained    herein,    when    converting   a
                             Participant's  single  life  annuity to a lump
                             sum payment option,  the Participant's  actual
                             age  shall be used  without  reference  to the
                             additional 3 years. If the addition of 3 years
                             to the  Participant's  age  results  in an Age
                             less than 55 and the Participant commences the
                             benefit,  the amount of the  benefit  shall be
                             adjusted  to  account  for the fact it is paid
                             before the Participant's attainment of Age 55.
                             This adjustment  shall be based upon the early
                             retirement table in Section 6.2 of the Ashland
                             Inc. and Affiliates Pension Plan as it existed
                             on September  30,  1999.  When  applying  this
                             table under these circumstances,  age 55 shall
                             be substituted  for age 62 and adjustments for
                             ages  younger than those on the table shall be
                             reasonably   determined   by  an   actuary  or
                             actuarial firm who regularly performs services
                             in connection with the Plan.

                  (2)        Participants Without Employment Agreements.  A
                             Participant  without an  Employment  Agreement
                             who is  terminated  without  "Cause"  after  a
                             Change  in  Control  shall  have  the  benefit
                             payable  under this Section  5.01  computed by
                             adding   the   applicable    amount   to   the
                             Participant's   Age   and   Service   at   the

<PAGE>

                             Participant's  Effective  Retirement Date. For
                             these  purposes,   the  applicable  amount  is
                             derived from the following table.

    Length of Participant's Service
       at Separation from                           Number of Years
           Employment                            (the Applicable Amount)
------------------------------------             --------------------------
Up to 5 years                                          3 months
More than 5 and up to 10 years                         6 months
More than 10 and up to 15 years                        1 year
More than 15 and up to 20 years                        1 year and 6 months
More than 20 years                                     2 years

                             These  additions  to Age  and  Service  shall,
                             except  as  otherwise   provided,   apply  for
                             purposes of computing  the single life annuity
                             payment  to  the  Participant.  A  Participant
                             subject  to  this   paragraph   (d)(2)   whose
                             Effective   Retirement   Date  occurs   before
                             attaining  an actual  age of 55 shall have the
                             applicable amount added to such  Participant's
                             Age apply  when  converting  the  single  life
                             annuity amount to any permitted  optional form
                             under  this   Article  V.  If  the   Effective
                             Retirement  Date of a  Participant  subject to
                             this  paragraph  (d)(2) occurs on or after the
                             Participant  attains an actual age of 55, then
                             the  Participant's  actual  age  shall be used
                             when making such a conversion. Notwithstanding
                             anything  to the  contrary  contained  herein,
                             when  converting a  Participant's  single life
                             annuity  to a lump  sum  payment  option,  the
                             Participant's actual age shall be used without
                             reference  to the  addition of the  applicable
                             amount.  If the  addition  of  the  applicable
                             amount to the  Participant's age results in an
                             Age less than 55 and the Participant commences
                             the benefit,  the amount of the benefit  shall
                             be adjusted to account for the fact it is paid
                             before


<PAGE>

                             the  Participant's  attainment of Age 55. This
                             adjustment  shall  be  based  upon  the  early
                             retirement table in Section 6.2 of the Ashland
                             Inc. and Affiliates Pension Plan as it existed
                             on September  30,  1999.  When  applying  this
                             table under these circumstances,  age 55 shall
                             be substituted  for age 62 and adjustments for
                             ages  younger than those on the table shall be
                             reasonably   determined   by  an   actuary  or
                             actuarial firm who regularly performs services
                             in connection with the Plan.

5.02     LEVELS III, IV AND V.
         --------------------

         (a)      GENERAL

                  The Annual Retirement Income of a Participant  (including
                  a Participant  to whom the provisions of paragraph (b) of
                  this  Section  5.02  apply)  who on his or her  Effective
                  Retirement  Date was deemed to be a Level  III,  IV, or V
                  Participant under the Incentive  Compensation Plan shall,
                  from and after the first day of the  calendar  month next
                  following  his or her 62nd  birthday,  be equal to 50% of
                  Participant's  Final Average  Bonus;  provided,  however,
                  that in the event such Participant retired with less than
                  20 years of Service,  such Annual Retirement Income after
                  age 62 shall be 50% of Final Average Bonus  multiplied by
                  a   fraction   (A)  the   numerator   of  which  is  such
                  Participant's  years of and fractional  years of Service,
                  and (B) the denominator of which is twenty (20). Although
                  a Participant  may elect to commence  benefits under this
                  Plan upon his or her  Effective  Retirement  Date,  there
                  shall be an actuarial  adjustment  (consistent  with that
                  applied under Ashland's  qualified  pension plan, as from
                  time  to  time  in  effect)  for  Participants  receiving
                  benefits   under  this  Section   5.02  whose   Effective
                  Retirement Date is prior to age 62.

         (b)      BENEFIT AFTER A CHANGE IN CONTROL

                  A Participant  who is  terminated  other than for "Cause"
                  after a Change in Control shall have the benefit  payable
                  under  this  Section  5.02  computed  by  adding  to  the
                  Participant's   Age  and  Service  at  the  Participant's
                  Effective  Retirement  Date the number of years  equal to
                  the applicable  amount for the  Participant  derived from
                  the following table.

    Length of Participant's Service
       at Separation from                           Number of Years
           Employment                            (the Applicable Amount)
------------------------------------             -----------------------------
Up to 5 years                                                3 months
More than 5 and up to 10 years                               6 months
More than 10 and up to 15 years                              1 year
More than 15 and up to 20years                               1 year and 6 months
More than 20 years                                           2 years

                  These  additions  to Age and  Service  shall,  except  as
                  otherwise  provided,  apply for purposes of computing the
                  single  life  annuity  payment  to  the  Participant.   A
                  Participant subject to this paragraph (b) whose Effective
                  Retirement Date occurs before  attaining an actual age of
                  62  shall  have the  applicable  amount  from  the  table
                  hereinabove added to his or her Age apply when converting
                  the single life annuity amount to any permitted  optional
                  form under this  Article V. If the  Effective  Retirement
                  Date  of a  Participant  subject  to this  paragraph  (b)
                  occurs on or after the Participant  attains an actual age
                  of 62,  then the  Participant's  actual age shall be used
                  when making such a conversion.  Notwithstanding  anything
                  to the  contrary  contained  herein,  when  converting  a
                  Participant's  single life  annuity to a lump sum payment
                  option,  the  Participant's  actual  age  shall  be  used
                  without  reference to the applicable  amount derived from
                  the table hereinabove.  If the addition of the applicable
                  amount from the table  hereinabove  to the


<PAGE>

                  Participant's  age results in an Age less than 62 and the
                  Participant  commences  the  benefit,  the  amount of the
                  benefit  shall be  adjusted to account for the fact it is
                  paid before the Participant's  attainment of Age 62. This
                  adjustment shall be based upon the early retirement table
                  in Section 6.2 of the Ashland Inc. and Affiliates Pension
                  Plan as it existed on September 30, 1999, and adjustments
                  for  ages  younger  than  those  on the  table  shall  be
                  reasonably determined by an actuary or actuarial firm who
                  regularly performs services in connection with the Plan.

5.03     BENEFITS PAYABLE FOR LESS THAN 12 MONTHS

         Annual  Retirement Income benefits payable under Sections 5.01 and
         5.02 for a period of less than 12  months  due to a  Participant's
         attainment of age 62 or death will be payable on a pro-rata basis,
         with months taken as a fraction of a year.

5.04     PAYMENT OPTIONS

         (a)      ELECTION

                  A Participant  shall,  subject to Sections 5.05 and 5.06,
                  elect the form in which such  benefit  shall be paid from
                  among  those  identified  in this  Section  5.04 and such
                  election  shall  be made at the  time  and in the  manner
                  prescribed by Ashland,  from time to time,  provided that
                  the election is made before the  Participant's  Effective
                  Retirement Date. Such election, including the designation
                  of any contingent  annuitant or alternate recipient under
                  Sections  5.04(b)(4) or (5), shall be irrevocable  except
                  as otherwise set forth herein.  Notwithstanding  anything
                  in  the  foregoing  to  the  contrary,   any  Participant
                  approved  for  participation  in  the  Plan  pursuant  to
                  Sections 3.01,  3.02 and 3.04 who makes an election under
                  Section  5.04(b)(2) shall make such election by the later
                  of -  (1)  the  60th  day  following  such  Participant's
                  approval to participate in this Plan; or


<PAGE>

                  (2)      the earlier of -
                           (A) the date six months  prior to  Participant's
                           Effective  Retirement  Date; or (B) the December
                           31  immediately   preceding  the   Participant's
                           Effective Retirement Date.
                           Such  deferral  election  shall  be  made in the
                           manner prescribed by Ashland, from time to time,
                           and shall be  irrevocable  as of the  applicable
                           time  identified  under  Sections  5.04(a)(1) or
                           (2).

                  Until the time at which an election becomes  irrevocable,
                  a Participant shall be able to change it.

         (b)      OPTIONAL FORMS OF PAYMENT

                  (1)      LUMP  SUM  OPTION  A  Participant  may  elect to
                           receive  the benefit  under  Article V as a lump
                           sum  distribution..  A lump sum benefit  payable
                           under  the  Plan  to  a  Participant   shall  be
                           computed   on  the  basis  of  the   actuarially
                           equivalent  present value of such  Participant's
                           benefit   under   Article  V  based   upon  such
                           actuarial   assumptions  as  determined  by  the
                           Committee. Such lump sum shall be payable within
                           thirty  (30)  days  following  the  later of the
                           Participant's  Effective  Retirement Date, or at
                           such later date as Ashland or its  delegate  may
                           determine,  in its sole  discretion.  The option
                           shall  be  made   available  to  a   Participant
                           contingent    upon    various    considerations,
                           including, but not limited to, the following:
                           The tax  status of  Ashland,  including  without
                           limitation,  the  corporate and  individual  tax
                           rate then  applicable and whether or not Ashland
                           has  or  projects  a  net  operating  loss;  the
                           current  and  projected  liquidity  of  Ashland,
                           including cash flow,  capital  expenditures  and
                           dividends; Ashland `s borrowing requirements and
                           debt   leverage;    applicable   book   charges;
                           organizational   issues,   including  succession
                           issues;  security of the  retirement

                           payment(s) with respect to the retiree;  and the
                           Participant's preference.

                  (2)      LUMP SUM DEFERRAL  OPTION A  Participant  who is
                           eligible  to  receive  a lump  sum  distribution
                           under 5.04(b)(1) shall be able to elect to defer
                           all or a portion of the  receipt of the  elected
                           lump sum (in  increments  of such  percentage or
                           such amount as may be  prescribed  by Ashland or
                           its delegatee, from time to time), by having the
                           obligation to distribute such amount transferred
                           to the Ashland Inc.  Deferred  Compensation Plan
                           to be held thereunder in a notional  account and
                           paid  pursuant to the  applicable  provisions of
                           such Plan,  as they may be amended  from time to
                           time;  provided,  however,  that the election to
                           defer  such  distribution  shall  be made at the
                           time and in the  manner  prescribed  in  Section
                           5.04(a)(1) and (2).

                  (3)      SINGLE LIFE ANNUITY A  Participant  may elect to
                           have  such  benefit  paid in the  form of  equal
                           monthly    payments    for   and   during   such
                           Participant's life, with such payments ending at
                           such  Participant's  death.  Payments under this
                           option shall be  actuarially  equivalent  to the
                           benefit  provided  under  Section  5.01 or 5.02,
                           whichever is applicable, determined on the basis
                           of  the  applicable  actuarial  assumptions  and
                           other relevant  provisions  used for the same in
                           the Pension Plan.

                  (4)      JOINT AND SURVIVOR  INCOME  OPTION A Participant
                           may  elect to  receive  an  actuarially  reduced
                           benefit payable monthly during the Participant's
                           lifetime with payments to continue  after his or
                           her   death   to  the   person   he   designates
                           (hereinafter called "contingent annuitant"),  in
                           an amount equal to (1) 100% of such  actuarially
                           reduced benefit, (2) 66 2/3% of such actuarially
                           reduced benefit,  or (3) 50% of such actuarially
                           reduced  benefit.  Benefit  payments  under this
                           option shall  terminate with the
<PAGE>

                           monthly  payment for the month in which occurred
                           the  date of  death  of the  later to die of the
                           Participant and his or her contingent annuitant.
                           The   following   additional   limitations   and
                           conditions apply to this option:

                           (A)      The  contingent   annuitant   shall  be
                                    designated   by  the   Participant   in
                                    writing  in such  form and at such time
                                    as  Ashland   may  from  time  to  time
                                    prescribe.   Before  the  Participant's
                                    Effective    Retirement    Date,    the
                                    Participant  may change the  contingent
                                    annuitant elected.

                           (B)      In  the  event  of  the  death  of  the
                                    contingent  annuitant prior to the date
                                    as   of   which   the    election    is
                                    irrevocable,      the     Participant's
                                    selection  of this option shall be void
                                    and  the  Participant  may  change  the
                                    contingent   annuitant  or  change  the
                                    option   elected,    subject   to   the
                                    applicable  limitations  and conditions
                                    applied to  elections  for the  options
                                    described under 5.04(a)(1) and (2).

                           (C)      Actuarial    equivalence   under   this
                                    sub-paragraph  (4) shall be  determined
                                    on  the   basis   of   the   applicable
                                    actuarial    assumptions    and   other
                                    relevant  provisions  used for the same
                                    in the Pension Plan.

                  (5)      PERIOD CERTAIN  INCOME OPTION A Participant  may
                           elect to receive an actuarially  reduced benefit
                           payable  monthly  during his or her lifetime and
                           terminating  with the  monthly  payment  for the
                           month in which his or her death occurs, with the
                           provision  that  not  less  than a total  of 120
                           monthly  payments  shall be made in any event to
                           him or her and/or the person  designated  by him
                           or   her  to   receive   payments   under   this
                           sub-paragraph  (5)  in the  event  of his or her
                           death     (hereinafter     called     "alternate
                           recipient").  If a  Participant  and  his or her
                           alternate  recipient  die  after  the  Effective
                           Retirement  Date, but before the total specified
                           monthly   payments   have   been  made  to  such
                           Participant   and/or   his  or   her   alternate
                           recipient,  the commuted  value of the remaining
                           unpaid  payments  shall be paid in a lump sum to
                           the   estate   of  the   later  to  die  of  the
                           Participant  or his or her alternate  recipient.
                           The   following   additional   limitations   and
                           conditions shall apply to this option:

                           (A)      The   alternate   recipient   shall  be
                                    designated    in    writing    by   the
                                    Participant  in such  form  and at such
                                    time as  Ashland  may from time to time
                                    prescribe.   The   designation   of  an
                                    alternate    recipient    under    this
                                    sub-paragraph  (5) is irrevocable after
                                    the    Effective    Retirement    Date,
                                    provided,  however,  a Participant  may
                                    designate a new alternate  recipient if
                                    the one first  designated  dies  before
                                    the Participant and after the Effective
                                    Retirement Date.

                           (B)      In  the  event  of  the  death  of  the
                                    alternate  recipient  prior to the date
                                    as   of   which   the    election    is
                                    irrevocable,      the     Participant's
                                    selection  of this option shall be void
                                    and  the  Participant  may  change  the
                                    alternate   recipient   or  change  the
                                    option   elected,    subject   to   the
                                    applicable  limitations  and conditions
                                    applied to  elections  for the  options
                                    described under 5.04(a)(1) and (2).

         (C)      Actuarial  equivalence under this sub-paragraph (5) shall
                  be  determined on the basis of the  applicable  actuarial
                  assumptions  and other relevant  provisions  used for the
                  same in the Pension Plan.

         5.05.    PAYMENT OF SMALL AMOUNTS

                  Unless  such  Participant  elects to  receive  his or her
                  benefit in a lump sum as provided in Section 5.04, in the
                  event a monthly  benefit  under  this  Plan,  payable  to
                  either  a  Participant   or  to  his  or  her  contingent
                  annuitant,  alternate  recipient or surviving  spouse, is
                  too small (in the sole  judgment  of  Ashland) to be paid
                  monthly,    such   benefit   may   be   paid   quarterly,
                  semi-annually,  or annually,  as determined by Ashland to
                  be administratively convenient.

         5.06.    SURVIVING BENEFITS

                  (a)    Except as  otherwise  provided in Section  5.04 of
                         this  Plan,   in  the  event  that  a  Participant
                         receiving Annual  Retirement Income benefits shall
                         die after his or her Effective Retirement Date, no
                         additional  benefits  shall be  payable by Ashland
                         under  this  Plan to such  deceased  Participant's
                         beneficiaries, survivors, or estate.

                  (b)    If an Employee  dies while in active  service with
                         Ashland

                           (1) prior to approval for  participation  in the
                           Plan  and  said  Employee  is a  Level  I or  II
                           participant  under  the  Incentive  Compensation
                           Plan; or

                           (2) after approval for participation in the Plan
                           but  prior to  making an  election  pursuant  to
                           Section  5.04(a) and said  Employee is a Level I
                           -V participant under the Incentive  Compensation
                           Plan; then such Employee shall be deemed:

                           (i) to be a  Participant  under  the Plan in the
                           case  of  Section  5.06  (b)(1);  (ii)  to  have
                           commenced participation one (1) day prior to the
                           date of the Employee's  death; and (iii) to have
                           elected to receive  his or her  benefits  in the
                           form of the  100%  Joint &  Survivor  retirement
                           income option and to have  designated his or her
                           spouse as the beneficiary thereunder.

                  (c)    In  the  event  an  Employee   is   approved   for
                         participation under the Plan and dies after having
                         made an election  under Section  5.04(a) but prior
                         to his or her Effective Retirement Date, then such
                         Employee   shall  be  deemed  to  have   commenced
                         participation one (1) day prior to the date of the
                         Employee's


<PAGE>

                         death and payment shall be made under this Plan in
                         accordance with the Employee's election.

5.07     PARTICIPATION IN OTHER BENEFITS

         After a Participant's  Effective  Retirement Date, he or she shall
         continue to participate in Ashland's Group Life Insurance, Medical
         and Dental  programs  in the same  manner and under the same terms
         and  conditions  as  provided  for  retirees  as a class under the
         provisions  of  such  programs,  as from  time to time in  effect.
         Except  as   otherwise   expressly   provided  in  this  Plan,   a
         Participant's   active   participation  in  all  employee  benefit
         programs  maintained by Ashland derived from his or her employment
         status with Ashland shall be discontinued.

ARTICLE VI.                CHANGE IN CONTROL.
----------                 -----------------

         Notwithstanding any provision of this Plan to the contrary, in the
         event of a Change in Control,  an  Employee  who is deemed to be a
         Level I, II, III, IV or V participant  under  Ashland's  Incentive
         Compensation   Plan,  shall,  in  accordance  with  Section  3.03,
         automatically  be deemed  approved  for  participation  under this
         Plan.  Consistent  with the applicable  terms of Sections 5.01 and
         5.02, such a Participant may, in his or her sole discretion, elect
         to retire prior to Age 62. In addition,  Ashland (or its successor
         after the Change in Control) shall reimburse an Employee for legal
         fees, fees of other experts and expenses incurred by such Employee
         if he or she is  required  to, and is  successful  in,  seeking to
         obtain or enforce any right to payment  pursuant  to the Plan.  In
         the  event  that it shall be  determined  that  such  Employee  is
         properly  entitled  to the  payment of  benefits  hereunder,  such
         Employee shall also be entitled to interest  thereon payable in an
         amount  equivalent  to the  prime  rate  of  interest  (quoted  by
         Citibank,  N.A. as its prime commercial lending rate on


<PAGE>

         the  latest  date  practicable  prior  to the  date of the  actual
         commencement  of payments)  from the date such  payment(s)  should
         have   been   made  to  and   including   the  date  it  is  made.
         Notwithstanding  any provision of this Plan to the  contrary,  the
         provisions of this Plan or any other plan of Ashland Inc. having a
         material impact on the benefits payable under this Plan may not be
         amended  after a Change in  Control  occurs  without  the  written
         consent of a majority of the Board who were directors prior to the
         Change in Control.

ARTICLE VII.      MISCELLANEOUS.
-----------       -------------

7.01     The obligations of Ashland hereunder constitute merely the promise
         of  Ashland to make the  payments  provided  for in this Plan.  No
         employee,  his or her spouse or the estate of either of them shall
         have, by reason of this Plan, any right,  title or interest of any
         kind  in  or to  any  property  of  Ashland.  To  the  extent  any
         Participant  has a right to receive  payments  from Ashland  under
         this Plan,  such right  shall be no greater  than the right of any
         unsecured general creditor of Ashland.

7.02     Full power and  authority to construe,  interpret  and  administer
         this  Plan  shall be vested  in the  Board or its  delegate.  This
         includes,   without  limitation,   the  ability  to  make  factual
         determinations,  construe and  interpret  provisions  of the Plan,
         reconcile any  inconsistencies  between  provisions in the Plan or
         between provisions of the Plan and any other statement  concerning
         the Plan,  whether  oral or written,  supply any  omissions to the
         Plan or any document  associated with the Plan, and to correct any
         defect in the Plan or in any  document  associated  with the Plan.
         Decisions of the Board or its delegate shall be final,  conclusive
         and binding  upon all  parties,  provided,  however,  that no such
         decision may adversely  affect the rights of any  Participant  who
         has been approved for participation in the Plan under the


<PAGE>

         terms of Section 3.03 and whose  benefit is  determined  under the
         terms of Section 5.01(d) or Section 5.02(b).

7.03     This Plan shall be binding upon Ashland and any  successors to the
         business  of  Ashland  and  shall  inure  to  the  benefit  of the
         Participants  and their  beneficiaries,  if applicable.  Except as
         otherwise  provided in Article VI, the Board or its delegate  may,
         at any time, amend this Plan,  retroactively or otherwise,  but no
         such amendment may adversely  affect the rights of any Participant
         who has been approved for  participation in the Plan except to the
         extent that such action is required by law.

7.04     Except as otherwise provided in Section 5.04, no right or interest
         of the Participants  under this Plan shall be subject to voluntary
         or involuntary alienation, assignment or transfer of any kind.

7.05     This Plan shall be  governed  for all  purposes by the laws of the
         Commonwealth of Kentucky.

7.06     If any term or provision of this Plan is  determined by a court or
         other appropriate authority to be invalid,  void, or unenforceable
         for any reason,  the remainder of the terms and provisions of this
         Plan shall  remain in full force and effect and shall in no way be
         affected, impaired or invalidated.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>EXHIBIT 12 - COMPUTATION OF RATIOS OF EARNINGS
<TEXT>

                                                                EXHIBIT 12
                                ASHLAND INC.
             COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                 AND EARNINGS TO COMBINED FIXED CHARGES AND
                         PREFERRED STOCK DIVIDENDS
                               (In millions)
<TABLE>
<CAPTION>
                                                                                                                Three Months Ended
                                                                  Years Ended September 30                           December 31
                                             -------------------------------------------------------------   -----------------------
                                                  1996         1997         1998        1999         2000         1999         2000
                                             ----------   ----------  -----------  ----------   ----------   ----------  -----------
<S>                                          <C>          <C>         <C>          <C>          <C>          <C>         <C>
EARNINGS

Income from continuing operations            $    115     $    169    $    178     $    291     $    292     $     40    $     59
Income taxes                                       71          125         114          193          191           28          39
Interest expense                                  154          148         133          141          189           48          43
Interest portion of rental expense                 44           48          40           35           39            9          10
Amortization of deferred debt expense               1            1           1            1            2            -           -
Undistributed earnings of
    unconsolidated affiliates                      (3)          (6)        (62)         (11)        (112)          31          88
Earnings of significant affiliates*                 7            7           -            -            -            -           -
                                             ----------   ----------  -----------  ----------   ----------   ----------  -----------
                                             $    389     $    492    $    404     $    650     $    601     $    156    $    239
                                             ==========   ==========  ===========  ==========   ==========   ==========  ===========

FIXED CHARGES

Interest expense                             $    154     $    148    $    133     $    141     $    189     $     48    $     43
Interest portion of rental expense                 44           48          40           35           39            9          10
Amortization of deferred debt expense               1            1           1            1            2            -           -
Capitalized interest                                -            1           -            -            -            -           -
Fixed charges of significant affiliates*            6            5           -            -            -            -           -
                                             ----------   ----------  -----------  ----------   ----------   ----------  -----------
                                             $    205     $    203    $    174     $    177     $    230     $     57    $     53
                                             ==========   ==========  ===========  ==========   ==========   ==========  ===========

COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS

Preferred dividend requirements              $     19     $      9    $      -     $      -     $      -     $      -    $      -
Ratio of pretax to net income**                  1.61         1.74           -            -            -            -           -
                                             ----------   ----------  -----------  ----------   ----------   ----------  -----------
Preferred dividends on a pretax basis              30           17           -            -            -            -           -
Fixed charges                                     205          203         174          177          230           57          53
                                             ----------   ----------  -----------  ----------   ----------   ----------  -----------
                                             $    235     $    220    $    174     $    177     $    230     $     57    $     53
                                             ==========   ==========  ===========  ==========   ==========   ==========  ===========

RATIO OF EARNINGS TO
FIXED CHARGES                                    1.90         2.42        2.32         3.67         2.61         2.71        4.48

RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS                                  1.66         2.24        2.32         3.67         2.61         2.71        4.48
</TABLE>

*     Significant  affiliates  are  companies  accounted  for on the equity
      method that are 50% or greater owned or whose  indebtedness  has been
      directly  or  indirectly  guaranteed  by Ashland or its  consolidated
      subsidiaries.

**    Computed as income from  continuing  operations  before  income taxes
      divided by income from continuing operations, which adjusts dividends
      on preferred stock to a pretax basis.


</TEXT>
</DOCUMENT>
</SUBMISSION>
