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<SEC-DOCUMENT>0000007694-02-000187.txt : 20021203
<SEC-HEADER>0000007694-02-000187.hdr.sgml : 20021203
<ACCEPTANCE-DATETIME>20021203162919
ACCESSION NUMBER:		0000007694-02-000187
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		19
CONFORMED PERIOD OF REPORT:	20020930
FILED AS OF DATE:		20021203

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ASHLAND INC
		CENTRAL INDEX KEY:			0000007694
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-CHEMICALS & ALLIED PRODUCTS [5160]
		IRS NUMBER:				610122250
		STATE OF INCORPORATION:			KY
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-02918
		FILM NUMBER:		02847498

	BUSINESS ADDRESS:	
		STREET 1:		50 E. RIVERCENTER BOULEVARD
		CITY:			COVINGTON
		STATE:			KY
		ZIP:			41012
		BUSINESS PHONE:		6068153333

	MAIL ADDRESS:	
		STREET 1:		50 E. RIVERCENTER BOULEVARD
		CITY:			COVINGTON
		STATE:			KY
		ZIP:			41012

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ASHLAND OIL & REFINING CO
		DATE OF NAME CHANGE:	19700806

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ASHLAND OIL INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>finalk.txt
<DESCRIPTION>ASHLAND INC. FORM 10-K FOR THE FISCAL YEAR ENDED 9/30/02
<TEXT>

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

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

              Annual Report Pursuant to Section 13 or 15(d) of the

                         Securities Exchange Act of 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002

                          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

                Securities Registered Pursuant to Section 12(b):

                                               Name of each exchange
        Title of each class                     on which registered
        -------------------                     -------------------
Common Stock, par value $1.00 per share       New York Stock Exchange
                                            and Chicago Stock Exchange
Rights to Purchase Series A Participating     New York Stock Exchange
 Cumulative Preferred Stock                 and Chicago Stock Exchange

              SECURITIES REGISTERED PURSUANT TO SECTION 12(G): NONE

     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

     Indicate by check mark if disclosure of delinquent  filers pursuant to
Item  405 of  Regulation  S-K is not  contained  herein,  and  will  not be
contained,  to the best of Registrant's  knowledge,  in definitive proxy or
information  statements  incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]

     At October  31,  2002,  based on the New York Stock  Exchange  closing
price, the aggregate market value of voting stock held by non-affiliates of
the  Registrant  was  approximately  $1,780,870,376.  In  determining  this
amount,  the  Registrant  has  assumed  that its  directors  and  executive
officers are affiliates. Such assumption shall not be deemed conclusive for
any other purpose.

     At October 31,  2002,  there were  68,242,197  shares of  Registrant's
common stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of Registrant's  Annual Report to Shareholders for the fiscal
year ended  September 30, 2002 are  incorporated by reference into Parts I,
II and IV.

     Portions of  Registrant's  definitive  Proxy Statement for its January
30, 2003 Annual Meeting of Shareholders  are incorporated by reference into
Part III.


<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
     <S>         <C>        <C>                                                                 <C>
     PART I                                                                                      Page
                  Item 1.    Business........................................................      1
                             APAC   .........................................................      1
                             Ashland Distribution............................................      2
                             Ashland Specialty Chemical......................................      2
                             Valvoline.......................................................      3
                             Refining and Marketing..........................................      4
                             Miscellaneous...................................................      7
                  Item 2.    Properties......................................................      10
                  Item 3.    Legal Proceedings...............................................      10
                  Item 4.    Submission of Matters to a
                             Vote of Security Holders........................................      12
                  Item X.    Executive Officers of Ashland...................................      12
     PART II
                  Item 5.    Market for Registrant's Common Stock and Related
                               Security Holder Matters.......................................      13
                  Item 6.    Selected Financial Data.........................................      13
                  Item 7.    Management's Discussion and Analysis of Financial
                             Condition and Results of Operations.............................      13
                  Item 7A.   Quantitative and Qualitative Disclosures About Market Risk......      13
                  Item 8.    Financial Statements and Supplementary Data.....................      13
                  Item 9.    Changes in and Disagreements with Accountants
                              on Accounting and Financial Disclosure.........................      13
     PART III
                  Item 10.   Directors and Executive Officers of the Registrant..............      13
                  Item 11.   Executive Compensation..........................................      14
                  Item 12.   Security Ownership of Certain Beneficial
                              Owners and Management and Related Shareholder Matters..........      14
                  Item 13.   Certain Relationships and Related Transactions..................      14
                  Item 14.   Controls and Procedures.........................................      14

     PART IV
                  Item 15.   Exhibits, Financial Statement Schedules and Reports
                              on Form 8-K....................................................      15


</TABLE>
<PAGE>




                                     PART I
ITEM 1. BUSINESS

     Ashland Inc. is a Kentucky corporation, organized on October 22, 1936,
with  its  principal   executive  offices  located  at  50  E.  RiverCenter
Boulevard,  Covington,  Kentucky 41011 (Mailing Address:  50 E. RiverCenter
Boulevard, P.O. Box 391, Covington,  Kentucky 41012-0391) (Telephone: (859)
815-3333).  The terms  "Ashland" and the  "Company" as used herein  include
Ashland Inc. and its  consolidated  subsidiaries,  except where the context
indicates otherwise.

     Ashland's  businesses are grouped into five industry  segments:  APAC,
Ashland  Distribution,  Ashland Specialty Chemical,  Valvoline and Refining
and  Marketing.  Financial  information  about these segments for the three
fiscal  years ended  September  30, 2002 is set forth on pages 60 and 61 of
Ashland's Annual Report to Shareholders for the fiscal year ended September
30, 2002 ("Annual Report").

     APAC  performs  asphalt  and  concrete  contract   construction  work,
including  highway paving and repair,  excavation  and grading,  and bridge
construction,  and produces asphaltic and ready-mix concrete, crushed stone
and other aggregate in the southern and midwestern United States.

     Ashland  Distribution  distributes  industrial chemicals and solvents,
plastics,  composite  materials and fine  ingredients  in North America and
plastics in Europe.  Ashland  Distribution also provides  environmental and
energy  management  services.   Ashland  Specialty  Chemical   manufactures
composites,  adhesives,  and  casting  binder  chemicals  for  use  in  the
transportation and construction industries. Ashland Specialty Chemical also
manufactures  water treatment  chemicals for use in the general  industrial
and merchant  marine  markets.  In  addition,  Ashland  Specialty  Chemical
manufactures   high  purity   chemicals   and  provides   services  to  the
microelectronics industry.

     Valvoline is a producer and marketer of premium packaged motor oil and
automotive chemicals, including appearance products,  antifreeze,  filters,
rust  preventives  and coolants.  In addition,  Valvoline is engaged in the
"fast oil change"  business  through outlets  operating under the Valvoline
Instant Oil Change(R) name.

     Marathon Ashland Petroleum LLC ("MAP"),  a joint venture with Marathon
Oil  Company,  operates  seven  refineries  with a total crude oil refining
capacity  of 935,000  barrels per day.  Refined  products  are  distributed
through a network of independent and company-owned  outlets in the Midwest,
the upper Great Plains and the  southeastern  United  States.  Marathon Oil
Company  holds a 62% interest in MAP,  and Ashland  holds a 38% interest in
MAP. Ashland accounts for its investment in MAP using the equity method.

     At September 30, 2002,  Ashland and its consolidated  subsidiaries had
approximately 24,300 employees (excluding contract employees).

                                      APAC

     The APAC  group of  companies  is the  nation's  largest  asphalt  and
concrete paving company and is a major supplier of construction  materials.
APAC performs construction work, such as paving,  repairing and resurfacing
highways,  streets,  airports,  residential  and  commercial  developments,
sidewalks  and  driveways,  and  grading  and base work.  In  addition,  it
performs a number of  construction  services such as excavation and related
activities  in  the  construction  of  bridges  and  structures,   drainage
facilities and underground utilities. APAC conducts its business through 25
market  focused  business  units  operating in 14 southern  and  midwestern
states.  Distinguished  by their local  identities,  these  business  units
provide  construction  services,  technologies and materials throughout the
regions in which they  operate.  These market  focused  business  units are
supported by management and administrative staff in Atlanta, Georgia.

     To  deliver  its  services  and  products,   APAC  utilizes  extensive
aggregate-producing properties and construction equipment. It currently has
36 permanent  operating  quarry  locations,  61 other aggregate  production
facilities,  67 ready-mix concrete plants, 242 hot-mix asphalt plants and a
fleet of over 16,500 mobile equipment units,  including heavy  construction
equipment and  transportation-related  equipment.  In certain market areas,
APAC  is  vertically  integrated  with  asphalt,  aggregate  and  ready-mix
operations, all complementing one another.

     Raw aggregate generally consists of sand, gravel,  granite,  limestone
and sandstone.  About 30% of the raw aggregate  produced by APAC is used in
APAC's  own  contract  construction  work  and the  production  of  various
processed construction  materials.  The remainder is sold to third parties.
APAC also  purchases  substantial  quantities of raw  aggregate  from other
producers   whose  proximity  to  the  job  site  renders  it  economically
attractive.  Most other raw  materials,  such as liquid  asphalt,  portland
cement and reinforcing steel, are purchased from third parties.

     Approximately   79%  of  APAC's  sales  and  operating   revenues  are
construction  revenues,  with  the  remaining  21%  coming  from  sales  of
construction  materials.  Approximately 83% of APAC's construction revenues
are derived

                                     1
<PAGE>

directly from highway and other public sector  sources,  with the remaining
17% coming from industrial and commercial customers and private developers.

     Climate and weather  significantly  affect revenues and margins in the
construction  business.  Due  to  its  location,  APAC  tends  to  enjoy  a
relatively long  construction  season.  Most of APAC's  operating income is
generated during the construction period of May to October.

     Total  backlog at  September  30, 2002 was $1,691  million  (including
APAC's   $130   million   proportionate   share  of  work   related  to  an
unconsolidated  equity  joint  venture),  compared  to  $1,629  million  at
September  30, 2001.  APAC includes a  construction  project in its backlog
when a contract is awarded or a firm letter of  commitment  is obtained and
funding is in place.  The backlog at September 30, 2002 is considered firm,
and a major portion is expected to be completed during fiscal 2003.

                              ASHLAND DISTRIBUTION

     Ashland  Distribution  Company  ("Ashland  Distribution")  distributes
chemicals,  plastics,  reinforcements  and resins,  and fine ingredients in
North  America  and  plastics  in  Europe.  Suppliers  include  many of the
nation's  leading chemical  manufacturers  and a growing number of offshore
producers.  Ashland Distribution  specializes in providing mixed truckloads
and  less-than-truckload  quantities  to  customers  in  a  wide  range  of
industries. Deliveries are facilitated through a network of owned or leased
facilities  including  approximately  70 locations in North  America and 25
locations in 18 foreign  countries.  Ashland  Distribution  operates in the
following major market segments:

     CHEMICALS - Ashland Distribution  distributes specialty and industrial
chemicals,  additives and solvents to industrial users through distribution
centers in the United  States,  Canada,  Mexico and Puerto Rico, as well as
some export  operations.  Markets  served  include the paint and  coatings,
inks, adhesives, polymer, rubber, industrial and institutional compounding,
automotive, appliance and paper industries.

     PLASTICS  -  Ashland  Distribution  sells a  broad  range  of  branded
thermoplastic  resins to injection molders,  extruders,  blow molders,  and
rotational molders in the plastics industry through distribution  locations
in the United  States,  Canada,  Mexico and Puerto Rico.  It also  provides
plastic material  transfer and packaging  services and  less-than-truckload
quantities of packaged thermoplastics.  Additionally,  Ashland Distribution
markets  a broad  range of  thermoplastics  to  processors  in  Europe  via
distribution centers located in Belgium, England, Finland, France, Germany,
Ireland,  Italy,  the  Netherlands,  Norway,  Poland,  Portugal,  Spain and
Sweden.

     COMPOSITES  -  Ashland  Distribution   supplies  mixed  truckload  and
less-than-truckload   quantities   of   polyester   thermosetting   resins,
fiberglass  and  other  specialty  reinforcements,   catalysts  and  allied
products to  customers  in the  reinforced  plastics  and  cultured  marble
industries  through   distribution   facilities  located  throughout  North
America.

     INGREDIENTS - Ashland  Distribution markets food-grade and nutritional
additives  and   ingredients  to  customers  in  North  America.   It  also
distributes cosmetic and pharmaceutical specialty chemicals.

     SERVICES - Ashland Distribution also provides energy and environmental
management  services.  Energy  services  include  customized  management of
energy  purchasing,  supply  and  transportation.  Environmental  services,
working in  cooperation  with  chemical  waste service  companies,  provide
customers with chemical waste collection, disposal and recycling services.

                         ASHLAND SPECIALTY CHEMICAL

     Ashland  Specialty  Chemical Company  ("Ashland  Specialty  Chemical")
manufactures composites, adhesives, and casting binder chemicals for use in
the transportation and construction industries.  Ashland Specialty Chemical
also  manufactures  water  treatment  chemicals  for  use  in  the  general
industrial and merchant marine markets.  In addition,  it manufactures high
purity chemicals and provides  services to the  microelectronics  industry.
Ashland  Specialty  Chemical owns and operates 33 manufacturing  facilities
and  participates  in 14  manufacturing  joint  ventures  in 18  countries.
Ashland Specialty Chemical is comprised of the following business units:

     COMPOSITE POLYMERS - This business unit manufactures and sells a broad
range   of   chemical-resistant,    fire-retardant,   general-purpose   and
high-performance  marine  grades of  unsaturated  polyester and vinyl ester
resins and  gelcoats  for the  reinforced  plastics  industry.  Key markets
include  the  transportation,  construction  and  marine  industries.  This
business  unit has  manufacturing  plants in  Jacksonville  and Fort Smith,
Arkansas; Los Angeles, California;  Bartow, Florida;  McMinnville,  Oregon;
Philadelphia,  Pennsylvania;  Johnson Creek,  Wisconsin;  Kelowna,  British
Columbia,  Canada; Kunshan,  China; Porvoo and Lahti, Finland;  Sauveterre,
France;  Miszewo,  Poland;  Benicarlo,  Spain;  and, through separate joint
ventures has manufacturing  plants in Sao Paolo,  Brazil, and Jeddah, Saudi
Arabia. In addition,  this business unit also manufactures products through
other Ashland  Specialty  Chemical  facilities  located in Neville  Island,
Pennsylvania,  and Mississauga,  Ontario, Canada. Effective September 2002,
the former Petrochemicals business unit became a group within the Composite
Polymers business unit. The

                                     2
<PAGE>

Petrochemical business manufactures maleic anhydride at Neal, West Virginia
and also markets maleic anhydride in North America.

     CASTING  SOLUTIONS  (FORMERLY  FOUNDRY  PRODUCTS) - This business unit
manufactures and sells foundry chemicals worldwide,  including sand-binding
resin  systems,   refractory  coatings,  release  agents,  engineered  sand
additives  and riser  sleeves.  This  business unit serves the global metal
casting  industry from 24  manufacturing  locations in 18  countries.  This
business unit changed its name to Casting Solutions business unit in 2002.

     DREW  INDUSTRIAL - This business unit supplies  specialized  chemicals
and consulting  services for the treatment of boiler water,  cooling water,
steam,  fuel and waste  streams.  It also  supplies  process  chemicals and
technical  services  to the  pulp  and  paper  and  mining  industries  and
additives  to  manufacturers  of latex and paint.  It  conducts  operations
throughout  North  America,  Europe and the Far East through  subsidiaries,
joint  venture   companies  and   distributors.   This  business  unit  has
manufacturing  plants in Kearny,  New Jersey;  Houston,  Texas;  Sydney and
Perth, Australia;  Singapore; Ajax, Ontario, Canada;  Somercotes,  England;
and Auckland, New Zealand.

     ELECTRONIC  CHEMICALS - This  business unit  manufactures  and sells a
variety of ultrapure  chemicals  for the worldwide  semiconductor  industry
through various manufacturing locations and also custom blends and packages
ultrapure liquid chemicals to customer  specifications.  This business unit
operates manufacturing plants in Pueblo,  Colorado;  Easton,  Pennsylvania;
Dallas, Texas; Pyongtaek-Shi,  Kyonggi-Do, Korea; Milan, Italy; and through
a joint venture with Union Petrochemical Corporation,  an ultrapure-process
chemicals  manufacturing  facility in Taiwan.  In addition,  it enters into
long-term  agreements  to  provide  complete  on-site  chemical  management
services,  including  purchasing,  warehousing and delivering chemicals for
in-plant  use of  high  purity  chemicals  at  major  facilities  of  large
consumers. This business unit's Fab Services business provides full-service
equipment  parts-cleaning,  refurbishment  and  management  services to the
semiconductor manufacturing industry from facilities in Chandler and Tempe,
Arizona; and Austin and Carrollton, Texas.

     SPECIALTY  POLYMERS & ADHESIVES - This business unit  manufactures and
sells  specialty  phenolic  resins  for  paper  impregnation  and  friction
material  bonding;  acrylic  polymers  for  pressure-sensitive   adhesives;
emulsion  polymer   isocyanate   adhesives  for  structural  wood  bonding;
polyurethane  and  epoxy  structural   adhesives  for  bonding   fiberglass
reinforced plastics,  composites,  thermoplastics and metals in automotive,
recreational,  and industrial  applications;  induction bonding systems for
thermoplastic  materials;  elastomeric  polymer  adhesives and butyl rubber
roofing  tapes  for  commercial  roofing  applications;  and  vapor-curing,
high-performance  urethane coatings systems. It has manufacturing plants in
Calumet  City,  Illinois;  Norwood  and  Totowa,  New  Jersey;  Ashland and
Columbus, Ohio; White City, Oregon; and Kidderminster, England.

     DREW MARINE - This  business  unit  supplies  specialty  chemicals for
water  and fuel  treatment  and  general  maintenance,  as well as  sealing
products,  welding and  refrigerant  products and fire  fighting and safety
services to the world's  merchant marine fleet. It also provides  shipboard
technical service for vessels serving ports throughout the world.

OTHER MATTERS

     For information on Ashland Distribution and Ashland Specialty Chemical
and federal,  state and local statutes and regulations  governing  releases
into,  or  protection  of,  the  environment,   see  "Item  1.  Business  -
Miscellaneous  -  Environmental  Matters" and "Item 3. Legal  Proceedings -
Environmental Proceedings" in this Form 10-K.

                                    VALVOLINE

     The  Valvoline  Company,  a division  of  Ashland,  is a  marketer  of
premium-branded  automotive  and  commercial  oils,  automotive  chemicals,
automotive appearance products and automotive services,  with sales in more
than 140 countries.  The Valvoline(R) trademark was federally registered in
1873  and is the  oldest  trademark  for a  lubricating  oil in the  United
States. Valvoline is comprised of the following business units:

     NORTH  AMERICAN:  DO IT YOURSELF  ("DIY") & DO IT FOR ME ("DIFM") - In
the  United  States  and  Canada,  Valvoline  markets  its array of premium
automotive  lubricants and chemicals to the U.S. private  passenger car and
light truck market  through two large  business units based on the consumer
segments  of the market,  "Do-It-Yourself"  and  "Do-It-For-Me."  These two
business units market Valvoline(R) motor oil, one of the top selling brands
in the  United  States;  synthetic  SynPower(R)  automobile  chemicals  for
"under-the-hood" use; Eagle One(R) automotive appearance products; Zerex(R)
antifreeze; and Pyroil(R) automotive chemicals. The DIY business unit sells
the  Valvoline  family of brands to  consumers  who perform  their own auto
maintenance,  through  retail auto parts stores,  mass  merchandisers,  and
warehouse  distributors and their affiliated jobber stores such as NAPA and
Carquest.  The DIFM business unit sells Valvoline products to consumers who
use auto service businesses, such as car dealers and

                                        3

<PAGE>

quick  lubes,  through  a  network  of  independent  distributors  and five
company-owned and operated "direct market" operations.

     The domestic Commercial and Specialty Products Group,  operated within
the DIFM  business  unit,  has a strategic  alliance  with  Cummins  Engine
Company, Inc. to distribute heavy-duty lubricants to the commercial market.

     This business unit also markets R-12, an automotive  refrigerant  that
was phased out of production in 1995.  R-12 is being replaced in the market
by a new  generation  of  refrigerants.  Valvoline  expects to deplete  its
inventory of R-12 in fiscal 2003.

     EAGLE  ONE - Eagle  One is a brand of  premium  automobile  appearance
chemicals  for  "above-the-hood"  applications.   Products  include  waxes,
polishes and wheel  cleaners.  Managed by Valvoline as a separate  business
unit,  Eagle One  markets its  products  through  Valvoline's  DIY and DIFM
business  units in North  America and through the  Valvoline  International
business  unit.  During  fiscal  2002,  Eagle One  successfully  introduced
Wax-As-U-Dry  automobile wax.  Wax-As-U-Dry is a first-of-its-kind  product
designed to be applied to the  automobile  during the  hand-drying  process
following the washing of the automobile.

     VALVOLINE  INTERNATIONAL - Valvoline  International  markets Valvoline
branded  products  and Eagle One  automotive  appearance  products  through
company-owned affiliates or business units in Australia,  Austria, Belgium,
Brazil, Denmark,  Finland,  Germany, Great Britain, Italy, the Netherlands,
Poland,  South Africa,  Sweden and Switzerland.  TECTYL(R) rust preventives
are marketed in Europe.  Licensees and distributors market certain products
in other parts of Europe,  Mexico, Central and South America, the Far East,
the Middle East and certain  African  countries.  Joint  ventures have been
established in China, Ecuador, India, Thailand and Venezuela. Packaging and
blending  plants  and  distribution  centers  in  Australia,   Canada,  the
Netherlands and the United States supply international customers.

     VALVOLINE INSTANT OIL CHANGE(R)  ("VIOC") - VIOC is one of the largest
competitors  in the  expanding  U.S.  "fast oil change"  service  business,
providing  Valvoline with a significant  share of the installed  segment of
the  passenger  car and light truck motor oil market.  As of September  30,
2002, 363 company-owned  and 335 franchised  service centers were operating
in 40 states.

     VIOC  has  continued  its  customer  service  innovation  through  its
upgraded and enhanced Maximum Vehicle Performance program ("MVP"). MVP is a
computer-based  program that maintains  system-wide  service records on all
customer  vehicles.  MVP also contains a database on all car models,  which
allows employees to make service recommendations based on a vehicle owner's
manual recommendations.

                             REFINING AND MARKETING

     Refining  and  Marketing  operations  are  conducted  by MAP  and  its
subsidiaries,    including   its   wholly-owned   subsidiaries,    Speedway
SuperAmerica LLC and Marathon  Ashland Pipe Line LLC.  Marathon Oil Company
("Marathon")  holds a 62% interest in MAP and Ashland  holds a 38% interest
in MAP.

REFINING

     MAP owns and operates  seven  refineries  with an  aggregate  refining
capacity of 935,000  barrels of crude oil per  calendar  day (1 barrel = 42
United States  gallons).  The table below sets forth the location and daily
crude  oil  throughput  capacity  (measured  in  barrels)  of each of MAP's
refineries as of September 30, 2002:

     Garyville, Louisiana...................................232,000
     Catlettsburg, Kentucky.................................222,000
     Robinson, Illinois.....................................192,000
     Detroit, Michigan...................................... 74,000
     Canton, Ohio........................................... 73,000
     Texas City, Texas...................................... 72,000
     St. Paul Park, Minnesota............................... 70,000
                                                            -------
         Total  ............................................935,000
                                                            =======

     MAP's   refineries   include   crude  oil   atmospheric   and   vacuum
distillation,    fluid    catalytic    cracking,    catalytic    reforming,
desulfurization   and  sulfur  recovery  units.  The  refineries  have  the
capability  to process a wide variety of crude oils and to produce  typical
refinery products,  including reformulated gasoline ("RFG"). In addition to
typical refinery products, the Catlettsburg refinery, an ISO-9000 certified
facility, manufactures lubricating oils and a wide range of petrochemicals.
For the twelve months ended September 30, 2002, 74% of MAP's  production of

                                     4

<PAGE>


lubricating  oils was purchased by Valvoline and 39% of MAP's production of
petrochemicals was purchased by Ashland Distribution.

     MAP also produces a wide range of asphalt  products,  petroleum  pitch
(primarily  used in the  graphite  electrode,  clay  target and  refractory
industries),  aromatics,  aliphatic  hydrocarbons,  cumene,  base lube oil,
slack wax and polymer grade propylene.

     The table below sets forth  MAP's  refinery  total input and  refinery
production by product group for the twelve months ended September 30, 2002,
2001  and  2000.   Refinery  total  inputs  include  crude  oil  and  other
feedstocks.

<TABLE>
<CAPTION>
                                                         Twelve Months Ended September 30
                                               ----------------------------------------------------
    <S>                                               <C>              <C>               <C>
                                                      2002             2001              2000
                                                      ----             ----              ----
     Refinery Input
     (in thousands of barrels per day)              1,080.9          1,051.0           1,033.4
     ---------------------------------
     Refined Product Yields
     (in thousands of barrels per day)
     Gasoline...............................          594.0            560.5             559.0
     Distillates............................          292.9            278.7             271.5
     Propane................................           21.7             21.2              21.0
     Feedstocks & Special Products..........           83.5             69.9              68.9
     Heavy Fuel Oils........................           21.3             44.7              41.2
     Asphalt................................           73.3             74.5              73.3
                                                    -------          -------           -------
                    Total...................        1,086.7          1,049.5           1,034.9
                                                    =======          =======           =======
</TABLE>

     Planned maintenance activities requiring temporary shutdown of certain
refinery operating units are periodically  performed at each refinery.  MAP
had a major  turnaround  at the St. Paul Park refinery in the twelve months
ended September 30, 2002.

     The  Garyville,  Louisiana  coker  unit  project  achieved  mechanical
completion  in  October  2001  and  was  operating  at full  production  by
mid-December  2001. To supply this new unit,  MAP entered into a multi-year
contract with P.M.I. Comercio Internacional,  S.A. de C.V., an affiliate of
Petroleos  Mexicanos,  to purchase  approximately 90,000 barrels per day of
heavy Mayan crude oil. The contract was increased to approximately  100,000
barrels per day in July 2002.

     At its Catlettsburg, Kentucky refinery, MAP has initiated a multi-year
integrated  investment  program to upgrade product yield  realizations  and
reduce fixed and variable manufacturing expenses. This program involves the
expansion,  conversion and retirement of certain refinery  processing units
which, in addition to improving  profitability,  will reduce the refinery's
total gasoline pool sulfur below 30 parts per million,  thereby eliminating
the need for low sulfur  gasoline  compliance  investments at the refinery.
The project is expected to be completed in late 2003.

MARKETING

     MAP's principal  marketing areas for gasoline and distillates  include
the Midwest,  the upper Great Plains and the  southeastern  United  States.
Gasoline  and  distillates  are  sold  in 21  states.  Gasoline  is sold at
wholesale primarily to independent  marketers,  jobbers and chain retailers
who resell these products through several thousand retail outlets. MAP also
supplies  approximately 3,800 jobber-dealer,  open-dealer and lessee-dealer
locations using the Marathon(R) and Ashland(R) brand names.

     Gasoline,   distillates  and  aviation   products  are  also  sold  to
utilities,  railroads, river towing companies,  commercial fleet operators,
airlines and  governmental  agencies.  About half of MAP's  propane is sold
into the home heating  markets and the balance is  purchased by  industrial
consumers.  Propylene,  cumene,  aromatics,   aliphatics,  and  sulfur  are
marketed to customers in the  chemical  industry.  Base lube oils and slack
wax are sold throughout the United States. Pitch is also sold domestically,
but  approximately  10% of pitch products are exported into growing markets
in Canada, Mexico, India, and South America.

     MAP  markets  asphalt  through  owned  and  leased  terminals  located
throughout  the Midwest  and  Southeast.  The MAP  customer  base  includes
approximately 900 asphalt paving contractors,  government entities (states,
counties, cities and townships) and asphalt roofing shingle manufacturers.


                                     5

<PAGE>

     Retail  sales of  gasoline  and  diesel  fuel are made  through  MAP's
wholly-owned subsidiary, Speedway SuperAmerica LLC ("SSA"). As of September
30,  2002,  SSA had 2,063  retail  outlets in 13 states in the  Midwest and
Southeast which sell petroleum  products and convenience  store merchandise
primarily under the brand names Speedway(R) and SuperAmerica(R). The retail
locations  sell a  variety  of food,  merchandise,  cigarettes,  candy  and
beverages.  Several locations also have on-premises  brand-name restaurants
such as Subway(R) and Taco Bell(R).

     During  the twelve  months  ended  September  30,  2002,  57% of SSA's
revenues  (excluding  excise  taxes) were derived from the sale of gasoline
and  diesel  fuel,  and  the  remainder  were  derived  from  the  sale  of
merchandise.

     Pilot  Travel  Centers  LLC  ("PTC"),   a  joint  venture  with  Pilot
Corporation  ("Pilot"),  is the largest  operator of travel  centers in the
United States with  approximately  230  locations in 35 states.  The travel
centers  offer  diesel  fuel,  gasoline  and a  variety  of other  services
associated   with  such   locations,   including   on-premises   brand-name
restaurants. Pilot and MAP each own a 50% interest in PTC.

     The table below shows the volume of MAP's consolidated refined product
sales for the twelve months ended September 30, 2002, 2001 and 2000.
<TABLE>
<CAPTION>
                                                                 Twelve Months Ended September 30
                                                     ---------------------------------------------------------
    <S>                                                       <C>               <C>              <C>
                                                              2002              2001             2000
                                                              ----              ----             ----
     Refined Product Sales
     (in thousands of barrels per day)
     ---------------------------------
         Gasoline..........................                   774.3             741.0            752.1
         Distillates.......................                   345.7             349.6            351.2
         Propane...........................                    22.7              21.5             21.6
         Feedstocks & Special Products ....                    80.3              68.1             67.6
         Heavy Fuel Oils...................                    22.0              46.3             40.9
         Asphalt...........................                    76.2              75.8             75.1
                                                            -------           -------          -------
                             Total.........                 1,321.2           1,302.3          1,308.5
                                                            =======           =======          =======

     Matching Buy/Sell Volumes
     included in above.....................                    69.3              43.7             41.4

</TABLE>

     MAP sells RFG in parts of its marketing territory,  primarily Chicago,
Illinois;   Louisville,   Kentucky;   Northern  Kentucky;   and  Milwaukee,
Wisconsin. MAP also markets low-vapor-pressure gasolines in nine states.

SUPPLY AND TRANSPORTATION

     The  crude  oil  processed  in  MAP's   refineries  is  obtained  from
negotiated contract and spot purchases or exchanges.  For the twelve months
ended September 30, 2002, MAP's negotiated  contract and spot purchases for
refinery input of crude oil produced in the U.S.  averaged  454,800 barrels
per day,  including an average of 46,900 net barrels per day acquired  from
Marathon.  For the twelve months ended  September  30, 2002,  MAP's foreign
crude oil  requirements  were met largely  through  purchases  from various
foreign national oil companies,  producing companies and traders. Purchases
of foreign crude oil  represented 51% of MAP's crude oil  requirements  for
the twelve months ended September 30, 2002.

     MAP's  ownership  or  interest  in  domestic  pipeline  systems in its
refining and marketing  areas is  significant.  MAP owns,  leases or has an
ownership  interest in 7,160 miles of pipelines in 12 states.  This network
transports crude oil and refined products to and from terminals, refineries
and other  pipelines.  It includes 10 miles of crude oil  gathering  lines,
3,410  miles of crude oil trunk  lines and 3,740  miles of refined  product
lines.

     MAP has a 46.7% ownership interest in LOOP LLC ("LOOP"),  which is the
owner and  operator of the only U.S.  deepwater  port  facility  capable of
receiving crude oil from very large crude carriers.  Ashland has retained a
4% ownership  interest in LOOP. MAP also owns a 49.9% ownership interest in
LOCAP  INC.  ("LOCAP"),  which is the  owner  and  operator  of a crude oil
pipeline  connecting  LOOP to the Capline  system.  Ashland has retained an
8.6% ownership  interest in LOCAP.  In addition,  MAP has a 37.2% ownership
interest in the Capline system. These port and pipeline systems provide MAP
with access to common carrier  transportation from the Louisiana Gulf Coast
to Patoka,  Illinois.  At Patoka,  the Capline  system  connects with other
common carrier pipelines owned by MAP that provide  transportation to MAP's
refineries in Illinois, Kentucky, Michigan, Minnesota and Ohio.

     Ohio River Pipe Line LLC ("ORPL"),  a subsidiary of MAP, is building a
pipeline  from Kenova,  West Virginia to Columbus,  Ohio.  ORPL is a common
carrier  pipeline  company and the pipeline  will be an  interstate  common
carrier pipeline. The pipeline is currently known as Cardinal Products Pipe
Line and is  expected to  initially  move about  50,000  barrels per day of
refined petroleum into the central Ohio region. ORPL has secured all of the
rights-

                                     6

<PAGE>


of-way  required to build the pipeline,  and the final permits  required to
build the pipeline have been approved.  Construction  on the pipeline began
in August 2002, with start-up of the pipeline expected in the first half of
2003.

     MAP has been  designated  operator of the Centennial  Pipeline,  owned
jointly by Panhandle Eastern Pipe Line Company,  a subsidiary of CMS Energy
Corporation,  MAP, and TE Products Pipe Line Company,  Limited Partnership.
The new pipeline  system,  which  connects the Gulf Coast refiners with the
Midwest market, has the initial capacity to transport approximately 210,000
barrels  per day of refined  petroleum  products  and began  deliveries  of
refined products in April 2002.

     MAP  also  has a 33.3%  ownership  interest  in  Minnesota  Pipe  Line
Company,  which operates a crude oil pipeline in Minnesota.  Minnesota Pipe
Line  Company  provides  MAP  with  access  to  crude  oil  common  carrier
transportation  from Clearbrook,  Minnesota,  to Cottage Grove,  Minnesota,
which is in the vicinity of MAP's St. Paul Park, Minnesota refinery.

     MAP's marine  transportation  operations  include  towboats and barges
that  transport  refined  products on the Ohio,  Mississippi  and  Illinois
rivers,  their tributaries and the Intracoastal  Waterway.  MAP also leases
and owns railcars in various sizes and  capacities for movement and storage
of petroleum  products and a large  number of tractors,  tank  trailers and
general service trucks.

     In addition,  MAP owns and operates 88 terminal  facilities from which
it sells a wide range of petroleum products.  These facilities are supplied
by a combination of barges, pipeline, truck and/or rail.

OTHER MATTERS

     For  information  on MAP and  federal,  state and local  statutes  and
regulations  governing  releases into the  environment or protection of the
environment, see "Item 1. Business - Miscellaneous - Environmental Matters"
in this Form 10-K.

                                  MISCELLANEOUS
ENVIRONMENTAL MATTERS

     Ashland has implemented a company-wide  environmental  policy overseen
by the  Public  Policy -  Environmental  Committee  of  Ashland's  Board of
Directors.  Ashland's Environmental,  Health and Safety ("EH&S") department
has the  responsibility to ensure that Ashland's  operating groups maintain
environmental   compliance  in   accordance   with   applicable   laws  and
regulations.  This  responsibility is carried out via training;  widespread
communication  of  EH&S  policies,   information  and  regulatory  updates;
formulation of relevant policies, procedures and work practices; design and
implementation  of  EH&S  management  systems;   internal  auditing  by  an
independent  auditing  group  within  the EH&S  department;  monitoring  of
regulatory developments that may affect Ashland's operations; assistance to
the operating divisions in identifying  compliance issues and opportunities
for  voluntary  actions that go beyond  compliance;  and incident  response
planning and implementation.

     Federal,  state  and  local  laws  and  regulations  relating  to  the
protection  of the  environment  have a  significant  impact on how Ashland
conducts its  businesses.  New laws are being enacted and  regulations  are
being adopted by various regulatory agencies on a continuing basis, and the
costs of  compliance  with these new rules  cannot be  estimated  until the
manner in which they will be implemented has been more accurately  defined.
In addition, most foreign countries in which Ashland conducts business have
laws dealing with similar matters.

     At  September   30,  2002,   Ashland's   reserves  for   environmental
remediation amounted to $169 million, reflecting Ashland's estimates of the
most  likely  costs  that  will be  incurred  over an  extended  period  to
remediate  identified   conditions  for  which  the  costs  are  reasonably
estimable,  without  regard to any  third-party  recoveries.  Environmental
remediation  reserves are subject to numerous inherent  uncertainties  that
affect  Ashland's  ability  to  estimate  its  share  of  the  costs.  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.  Ashland  regularly
adjusts its reserves as environmental  remediation  continues.  None of the
remediation  locations is  individually  material to Ashland as its largest
reserve  for any site is less  than $10  million.  As a  result,  Ashland's
exposure to adverse developments with respect to any individual site is not
expected to be material,  and these sites are in various  stages of ongoing
remediation.  Although  environmental  remediation  could  have a  material
effect on results of operations if a series of adverse  developments occurs
in a particular quarter or fiscal year, Ashland believes that the chance of
such developments occurring in the same quarter or fiscal year is remote.

     In  connection  with the  formation of MAP,  Marathon and Ashland each
retained  responsibility  for certain  environmental  costs  arising out of
their   respective   prior   ownership  and  operation  of  the  facilities
transferred to MAP.

                                     7

<PAGE>


In certain situations,  various threshold provisions apply,  eliminating or
reducing  the  financial  responsibility  of the  contributing  party until
certain  levels of  expenditure  have been  reached.  In other  situations,
sunset provisions gradually diminish the level of financial  responsibility
of the contributing party over time.

     AIR - The Clean Air Act (the "CAA")  imposes  stringent  limits on air
emissions,  establishes a federally mandated operating permit program,  and
allows  for  civil  and  criminal  enforcement  actions.  Additionally,  it
establishes air quality attainment deadlines and control requirements based
on the severity of air  pollution  in a given  geographical  area.  Various
state clean air acts implement,  complement and, in some instances,  add to
the  requirements  of the federal CAA. The  requirements of the CAA and its
state  counterparts  have a  significant  impact on the daily  operation of
Ashland's  businesses and, in many cases, on product  formulation and other
long-term  business  decisions.   Ashland's  businesses  maintain  numerous
permits  pursuant to these clean air laws and have  implemented  systems to
oversee ongoing compliance efforts.

     In July  1997,  the  United  States  Environmental  Protection  Agency
("EPA") promulgated revisions to the National Ambient Air Quality Standards
("NAAQS") for ground level ozone and particulate  matter.  As written,  the
revisions could have a significant  effect on certain of Ashland's chemical
manufacturing  and distribution  businesses,  and on MAP. In 2001, the U.S.
Supreme Court upheld the EPA's  authority to set NAAQS without  considering
the costs  related to  compliance.  In early  2002,  the  Washington,  D.C.
District Court of Appeals upheld EPA's proposed revisions to the NAAQS. EPA
has begun to implement  the new ozone and  particulate  matters  standards,
which could result in areas of the country,  where  Ashland and MAP conduct
operations,  being  designated as not in compliance  with the NAAQS.  Until
these  revisions  have been more  fully  implemented,  it is not  currently
possible  to  estimate  any  potential  financial  impact  that the revised
standards may have on Ashland's or MAP's operations.

     WATER - Ashland's  businesses  maintain numerous discharge permits, as
the National Pollutant Discharge  Elimination System of the Clean Water Act
("CWA") and state programs require, and have implemented systems to oversee
their compliance  efforts.  In addition,  several of MAP's  operations,  in
particular its barge and terminal  facilities,  are regulated under the Oil
Pollution Act of 1990.

     SOLID  WASTE  -  Ashland's  businesses  are  subject  to the  Resource
Conservation and Recovery Act ("RCRA"), which establishes standards for the
management of solid and hazardous  wastes.  Besides affecting current waste
disposal  practices,  RCRA also  addresses  the  environmental  effects  of
certain past waste  disposal  operations,  the  recycling of wastes and the
storage of regulated substances in underground tanks.

     REMEDIATION  -  Ashland  currently  operates,  and  in  the  past  has
operated,  various  facilities where,  during the normal course of business
releases of hazardous  substances  have  occurred.  Federal and state laws,
including  but not limited to RCRA and various  remediation  laws,  require
that  contamination  caused by such releases be assessed and, if necessary,
remediated to meet applicable standards.  MAP operates, and in the past has
operated,  certain  retail  outlets  where,  during  the  normal  course of
business releases of petroleum products from underground storage tanks have
occurred.  Federal and state laws require that contamination caused by such
releases at these sites be assessed and, if  necessary,  remediated to meet
applicable standards.

RESEARCH

     Ashland  conducts a program of research and  development to invent and
improve  products and processes and to improve  environmental  controls for
its existing  facilities.  It maintains its research  facilities in Dublin,
Ohio; Lexington,  Kentucky; and Atlanta,  Georgia. Research and development
costs are  expensed as they are  incurred and totaled $38 million in fiscal
2002 ($36 million in 2001 and $33 million in 2000).

COMPETITION

     In all its operations,  Ashland is subject to intense competition both
from  companies in the industries in which it operates and from products of
companies in other industries.

     The majority of the  business  for which APAC  competes is obtained by
competitive  bidding.  There are a substantial number of competitors in the
markets in which APAC  operates  and, as a result,  all of APAC's goods and
services are marketed under highly  competitive  conditions.  Factors which
influence APAC's  competitiveness  are price,  reputation for quality,  the
availability of aggregate materials,  machinery and equipment, knowledge of
local markets and conditions and estimating abilities.

     Each of Ashland  Distribution's  businesses,  except for the  plastics
distribution  businesses,   compete  with  national,   regional  and  local
companies  throughout North America. The plastics  distribution  businesses
compete in both North America and Europe.  Competition in these  businesses
is based  primarily on price and reliability of supply.  Ashland  Specialty
Chemical's  businesses compete globally in selected niche markets,  largely
on the basis of technology  and service.  The number of  competitors in the
specialty  chemical business varies from product to product,  and it is not

                                     8

<PAGE>

practical  to  identify  such  competitors  because  of the broad  range of
products and markets  served by those  products.  However,  many of Ashland
Specialty Chemical's  businesses hold proprietary  technology,  and Ashland
believes  it has a  leading  or  strong  market  position  in  most  of its
specialty chemical products.  Ashland Specialty  Chemical's  petrochemicals
business is largely a commodities business,  with pricing and quality being
the most important factors.

     Valvoline  competes  in the  highly  competitive  lubricants  business
principally through product and service quality, distribution capability, a
focused "master" brand strategy,  advertising and sales promotion.  Some of
the major  brands of motor  oils and  lubricants  Valvoline  competes  with
internationally  are  Havoline(R),   Castrol(R),   Pennzoil(R)  and  Quaker
State(R).  The highly  competitive  consumer  products car care business is
primarily composed of maintenance  chemicals,  appearance products and tire
cleaners.  Valvoline  competes  primarily in this market  through  specific
product performance benefits,  distribution  capability and advertising and
sales  promotion.  In the highly  competitive  "fast oil change"  business,
Valvoline  competes  with other leading  independent  fast lube chains on a
national,  regional  or local  basis,  as well as  automobile  dealers  and
service  stations.  Valvoline's  brand  recognition,  service  offering and
increasing market presence in the U.S. "fast oil change" market, as well as
quality of service, speed, location,  convenience and sales promotion,  are
important competitive factors.

     MAP competes with a large number of companies to acquire crude oil for
refinery  processing and in the  distribution and marketing of a full array
of  petroleum  products.  MAP  believes  it  ranks  among  the top ten U.S.
petroleum  companies  on the basis of crude  oil  refining  capacity  as of
September 30, 2002.  MAP competes in four distinct  markets for the sale of
refined products - wholesale,  spot, branded and retail  distribution.  MAP
believes it competes  with  approximately  40  companies  in the  wholesale
distribution  of petroleum  products to private  brand  marketers and large
commercial and industrial consumers; approximately 80 companies in the sale
of   petroleum   products   in   the   spot   market;    approximately   10
refiner/marketers  in the supply of branded  petroleum  products to dealers
and jobbers;  and  approximately  600  petroleum  product  retailers in the
retail sale of petroleum  products.  MAP also  competes in the  convenience
store  industry  through  SSA's  retail  outlets  and in the travel  center
industry through their ownership in PTC. The retail outlets offer consumers
gasoline,  diesel  fuel (at  selected  locations)  and a  variety  of food,
merchandise, cigarettes, candy and beverages.

FORWARD-LOOKING STATEMENTS

     This Form 10-K and the  documents  incorporated  by reference  contain
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,   including  various  information  within  the  "Capital  Resources,"
"Application of Critical Accounting Policies," "Derivative Instruments" and
"Outlook"  sections in  Management's  Discussion  and Analysis in Ashland's
Annual  Report.  Words  such  as  "anticipates,"  "believes,"  "estimates,"
"expects,"  "is  likely,"  "predicts,"  and  variations  of such  words and
similar   expressions   are  intended  to  identify  such   forward-looking
statements.  Although  Ashland  believes that its expectations are based on
reasonable assumptions, it cannot assure that the expectations contained in
such  statements  will be  achieved.  Important  factors  which could cause
actual results to differ materially from those contained in such statements
are  discussed  under  "Risks  and  Uncertainties"  in Note A of  Notes  to
Consolidated  Financial  Statements  in  Ashland's  Annual  Report.  For  a
discussion  of other  factors and risks  affecting  Ashland's  revenues and
operations see "Item 1. Business -  Miscellaneous  - Marketing  Conditions"
below.

MARKETING CONDITIONS

     Domestic and  international  political,  legislative,  regulatory  and
legal  changes  may  adversely  affect  Ashland's  results  of  operations.
Political  actions may include changes in the policies of the  Organization
of  Petroleum  Exporting  Countries  or  other  developments  involving  or
affecting oil-producing countries,  including military conflict, embargoes,
internal  instability  or actions or  reactions of the U.S.  government  in
anticipation  of, or in response  to, such  actions.  Profitability  of MAP
depends  largely  on the  margin  between  the cost of crude  oil and other
feedstocks  refined and the selling  prices of refined  products.  MAP is a
purchaser  of  crude  oil in  order  to  satisfy  its  refinery  throughput
requirements.  As a result, MAP's overall  profitability could be adversely
affected by increases in crude oil and other feedstock  prices that are not
recovered in the market place through  higher prices.  Reference  should be
made to the Refining and Marketing  section of the Management's  Discussion
and Analysis  section in Ashland's  Annual  Report for a discussion  of the
impact of crude oil costs on MAP's  operating  performance.  While  Ashland
maintains  reserves for anticipated  liabilities and carries various levels
of insurance,  Ashland could be affected by civil, criminal,  regulatory or
administrative  proceedings and claims relating to asbestos,  environmental
remediation and other matters.

     Ashland's  operations are subject to various U.S. and foreign laws and
regulations  relating to  environmental  protection  and worker  health and
safety.  These laws and regulations  regulate discharges of pollutants into
the air and water, the management and disposal of hazardous substances, and
the cleanup of contaminated  properties.  The costs

                                     9

<PAGE>


of complying with these laws and  regulations  can be  substantial  and may
increase as applicable requirements become more stringent and new rules are
implemented.  If violation of these laws and regulations occur, Ashland may
be forced to pay substantial fines, to complete additional costly projects,
or to modify or curtail its operations to limit contaminant emissions.

     The profitability of Ashland's businesses are particularly susceptible
to downturns in the economy,  particularly downturns in the segments of the
U.S.  economy related to the purchase and sale of durable goods,  including
housing, construction,  automotive, marine and semiconductor.  Both overall
demand for  Ashland's  products  and its profit  margins  may  decline as a
direct result of an economic recession, inflation, changes in the prices of
hydrocarbons  and other raw  materials  (e.g.,  crude oil and petroleum and
chemical  products),  consumer  confidence,  interest rates or governmental
fiscal  policies.  In  addition,  Ashland's  profitability  may  experience
significant changes as a result of variations in sales,  changes in product
mix or pricing competition.

     In addition,  changes in climate and weather can significantly  affect
the performance of several of Ashland's operations. Extreme variations from
normal climatic conditions could have a significant effect on the operating
results  of APAC's  construction  operations.  In  particular,  unfavorable
weather conditions will delay the completion of construction  projects, and
may require  the use of  additional  resources.  In  addition,  most of the
refined  products  sold by MAP are seasonal in nature,  and thus demand for
those products may decline due to significant changes in prevailing climate
and weather  conditions.  MAP's  production or distribution  operations are
also subject to disruption by extreme  weather  conditions  such as floods,
frozen rivers or hurricanes.

ITEM 2. PROPERTIES

     Ashland's  corporate  headquarters,  which is  leased,  is  located in
Covington,  Kentucky.  Principal  offices  of other  major  operations  are
located in Atlanta,  Georgia (APAC); Dublin, Ohio (Ashland Distribution and
Ashland Specialty Chemical);  Lexington, Kentucky (Valvoline); and Russell,
Kentucky (Administrative Services). All of these offices are leased, except
for the Russell office, which is owned. Principal manufacturing,  marketing
and other  materially  important  physical  properties  of Ashland  and its
subsidiaries  are described under the  appropriate  segment under Item 1 in
this Form 10-K.  Additional  information  concerning  certain leases may be
found in Note F of Notes to Consolidated  Financial Statements in Ashland's
Annual Report.

ITEM 3. LEGAL PROCEEDINGS

     ENVIRONMENTAL PROCEEDINGS - As of September 30, 2002, Ashland has 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 97 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. The
ultimate  costs are not  predictable  with assurance and could be material.
However, based on its experience with site remediation, 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 does not believe that any liability
at these  sites,  either  individually  or in the  aggregate,  will  have a
material adverse effect on Ashland's consolidated financial position,  cash
flows or liquidity.  For information  regarding  environmental  matters and
Ashland's  reserves  for  environmental   remediation,   see  "Management's
Discussion  and Analysis - Application  of Critical  Accounting  Policies -
Environmental  Remediation"  and Note M of Notes to Consolidated  Financial
Statements in Ashland's Annual Report and "Item 1. Business - Miscellaneous
- - Environmental Matters" in this Form 10-K.

     ASBESTOS-RELATED  LITIGATION - Ashland is subject to liabilities  from
claims  alleging  personal  injury  caused by exposure to  asbestos.  Those
claims result primarily from indemnification obligations undertaken in 1990
in connection with the sale of Riley Stoker Corporation ("Riley"), a former
subsidiary.  Although  Riley was neither a producer nor a  manufacturer  of
asbestos,   its  industrial  boilers  contained  some   asbestos-containing
components produced by other companies.

                                    10

<PAGE>


     A summary of asbestos  claims  activity  follows.  Because  claims are
frequently  filed and  settled  in large  groups,  the amount and timing of
settlements,  and the number of open claims,  can  fluctuate  significantly
from period to period.  Over the last 17 years, Riley has been dismissed as
a defendant in 55% of the resolved claims.

<TABLE>
<CAPTION>
                                                                2002            2001             2000
                                                                ----            ----             ----
     <S>                                                        <C>              <C>              <C>
     (In thousands)

     Open claims - beginning of year.......                      167             118               93
     New claims filed......................                       45              52               37
     Claims settled........................                      (15)             (2)              (9)
     Claims dismissed......................                      (37)             (1)              (3)
                                                                ----            ----             ----
     Open claims - end of year............                       160             167              118
                                                                ====            ====             ====

</TABLE>

     Amounts spent on litigation defense and claim settlements  totaled $38
million in 2002,  $15  million in 2001 and $11  million in 2000.  Insurance
provides  reimbursements  for most of these  costs,  and  coverage-in-place
agreements exist with the insurance carriers that provide substantially all
of  the  coverage  that  is  currently  being  accessed.  The  amounts  not
recoverable are generally due from insurers that are insolvent, rather than
as a  result  of  uninsured  claims  or the  exhaustion  of  the  insurance
coverage.

     In previous years,  Ashland recognized a net reserve for the estimated
litigation  defense and claim  settlement  costs to settle open claims that
would not be recovered  from insolvent  insurance  carriers.  However,  the
reserve  and  related  receivable  are now  presented  on a gross  basis in
Ashland's  consolidated  balance sheet at September 30, 2001, to conform to
the 2002  presentation.  This  change did not result  from an  increase  in
expected   asbestos   exposure,   and  had  no  effect  on  net  income  or
stockholders'  equity.  Under this  presentation,  the reserve for asbestos
claims  amounted to $202 million at September 30, 2002, and $199 million at
September  30,  2001.  Such  reserve  reflects  the  estimated  costs on an
undiscounted basis that will be incurred over an extended period to resolve
open claims.  In addition,  the  receivable  for  recoveries  of litigation
defense and claim settlement  costs from insurers  amounted to $196 million
at September 30, 2002, and $178 million at September 30, 2001.

     The reserve for asbestos  claims is based on assumptions and estimates
derived from currently known facts. However, projecting future events, such
as the average  cost of resolving  the open claims,  is subject to numerous
variables that are extremely difficult to predict.  These variables include
the type and severity of the disease  alleged by each  claimant,  dismissal
rates,  future costs of medical  treatment,  the impact of  bankruptcies of
other companies that are co-defendants in claims, uncertainties surrounding
the litigation  process from  jurisdiction to jurisdiction and from case to
case,  and the impact of  potential  changes  in  legislative  or  judicial
standards.

     Ashland  believes that  insurance will cover the majority of the costs
that will be incurred on open and future asbestos  claims.  Equitas Limited
("Equitas") and other London companies  currently  provide about 59% of the
insurance  coverage,  and this percentage could decline over time to around
44% if higher  layers of  coverage  provided by other  carriers  have to be
accessed.  The remaining 41% of the coverage is currently  provided by five
companies,  all of which  are  rated A or  higher  by A. M.  Best  Company.
Depending  upon the  level  of costs  that  are  ultimately  incurred,  the
non-London coverage could ultimately expand to about 25 insurance companies
or groups.  Companies or groups that provide about 90% of this coverage are
also rated A or higher.

     Ashland has not recognized a reserve for future  asbestos  claims that
may be asserted.  Although  additional claim filings are expected,  Ashland
does not have sufficient  information to make a reasonable  estimate of the
number of new claims  that  might be filed.  Furthermore,  any  predictions
about the other variables discussed  previously are subject to even greater
uncertainty as the projection  period  lengthens.  Ashland has retained the
services of professional advisors to assist management in the estimation of
projected liabilities and probable insurance recoveries for future asbestos
claims.  Results of that  effort are  expected to be  available  during the
quarter ending March 31, 2003.

     Although  coverage  limits  are  resolved  in  the   coverage-in-place
agreement  with  Equitas  and  the  other  London  companies,  there  is  a
disagreement with these companies over the timing of recoveries.  Depending
upon the assumptions made with respect to the projected  payments to settle
future  claims,  an  unfavorable  resolution  of  this  disagreement  could
materially affect the present value of additional insurance recoveries from
those companies.  Until such time as this disagreement is resolved, Ashland
will use the less favorable  interpretation of this agreement in estimating
such insurance recoveries.

     SHAREHOLDER  DERIVATIVE  LITIGATION  - On  August  16,  2002,  Central
Laborers'   Pension  Fund,   derivatively  as  a  shareholder  of  Ashland,
instituted  an action in the Circuit  Court of  Kentucky  in Kenton  County
against Ashland's then-serving Board of Directors. On motion of Ashland and
the other defendants, the case was removed to the

                                    11

<PAGE>

United  States  District  Court,  Eastern  District of Kentucky,  Covington
Division.  Plaintiff  has moved to remand the case to the state court.  The
action is purportedly filed on behalf of Ashland, and asserts the following
causes of action against the Directors:  breach of fiduciary duty, abuse of
control, gross mismanagement,  and waste of corporate assets. The suit also
names Paul W.  Chellgren,  the  then-serving  Chief  Executive  Officer and
Chairman of the Board, and James R. Boyd,  former Senior Vice President and
Group Operating Officer, as individual defendants,  and it seeks to recover
an unstated sum from them  individually  alleging  unjust  enrichment  from
various  transactions  completed during their tenure with Ashland. The suit
further seeks an unspecified sum from Mr. Chellgren individually based upon
alleged usurpation of corporate  opportunities.  The suit also names Mr. J.
Marvin Quin,  Ashland's  Chief Financial  Officer,  as well as three former
employees  of  Ashland's  wholly-owned  subsidiary,   APAC,  as  individual
defendants and alleges that they participated in the preparation and filing
of false  financial  statements  during fiscal years 1999 - 2001.  The suit
further  names  Ernst  &  Young  LLP  ("E&Y"),  as  a  defendant,  alleging
professional  accounting  malpractice  and negligence in the conduct of its
audit of Ashland's 1999 and 2000  financial  statements,  respectively,  as
well as alleging  that E&Y aided and abetted the  individual  defendants in
their alleged breach of duties. The complaint seeks to recover, jointly and
severally,  from  defendants an unstated sum of  compensatory  and punitive
damages.  The complaint seeks equitable and/or  injunctive  relief to avoid
continuing harm from alleged ongoing illegal acts, and seeks a disgorgement
of defendants' alleged insider-trading gains, in addition to the reasonable
cost and expenses incurred in bringing the complaint,  including attorneys'
and experts' fees.

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

     No matters were submitted to a vote of security  holders,  through the
solicitation  of proxies or otherwise,  during the quarter ended  September
30, 2002.

ITEM X.  EXECUTIVE OFFICERS OF ASHLAND

     The following is a list of Ashland's  executive  officers,  their ages
and  their  positions  and  offices  during  the last  five  years  (listed
alphabetically  after the Chief  Executive  Officer as to other Senior Vice
Presidents, Administrative Vice Presidents and other executive officers).

     JAMES J.  O'BRIEN (age 48) is Chairman of the Board,  Chief  Executive
Officer and  Director of Ashland  and has served in such  capacities  since
November  15,  2002,  October 1, 2002 and August  13,  2002,  respectively.
During  the  past  five  years,  he has also  served  as  President,  Chief
Operating  Officer,  Senior Vice President and Group  Operating  Officer of
Ashland and President of The Valvoline Company.

     PAUL W. CHELLGREN (age 59) was Ashland's  Chairman of the Board, Chief
Executive  Officer and a Director of Ashland - positions  he had held since
1997, 1996 and 1992, respectively. Mr. Chellgren retired as Chief Executive
Officer on October 1, 2002,  and as Chairman  of the Board and  Director on
November 15, 2002.

     DAVID  J.  D'ANTONI  (age  57) is  Senior  Vice  President  and  Group
Operating  Officer of Ashland and has served in such capacities  since 1988
and 1999,  respectively.  During the past five years, he has also served as
President of Ashland Chemical Company.

     CHARLES F.  POTTS (age 58) is Senior  Vice  President  of Ashland  and
President of APAC, Inc. and has served in such capacities since 1992.

     J. MARVIN QUIN (age 55) is Senior Vice  President and Chief  Financial
Officer of Ashland and has served in such capacities since 1992.

     KENNETH  L.  AULEN  (age  53) is  Administrative  Vice  President  and
Controller of Ashland and has served in such capacities since 1992.

     GARY A.  CAPPELINE (age 53) is Vice President of Ashland and President
of Ashland Specialty  Chemical Company  effective  December 4, 2002. During
the last five years, he has also served as a chemical  industry  partner at
Bear Stearns Merchant Bank,  President of AlliedSignal  Specialty Chemicals
and Group Vice President, Pigments and Additives of Engelhard Corp.

     JAMES A. DUQUIN (age 55) was Vice  President of Ashland and  President
of Ashland  Specialty  Chemical Company - positions he had held since 1999.
During  the past five  years,  he also  served as Group  Vice  President  -
Specialty  Chemical  Division  of  Ashland  Chemical  Company.  Mr.  DuQuin
resigned as Vice  President of Ashland and  President of Ashland  Specialty
Chemical  Company on November  25,  2002 and will  retire  from  Ashland on
December 31, 2002.

                                    12

<PAGE>

     DAVID L.  HAUSRATH (age 50) is Vice  President and General  Counsel of
Ashland   and  has  served  in  such   capacities   since  1998  and  1999,
respectively.  During the past five years,  he has also served as Associate
General Counsel of Ashland.

     J. DAN LACY (age 55) is Vice President - Corporate  Affairs of Ashland
and has served in such capacity since 1986.

     SAMUEL J. MITCHELL (age 41) is Vice President of Ashland and President
of The Valvoline  Company and has served in such  capacities  since January
2002.  During the past five years,  he has also served as Vice  President -
Retail  Business,  Vice  President of Marketing and Director of Marketing -
The Valvoline Company.

     RICHARD P. THOMAS (age 56) is Vice  President and Secretary of Ashland
and has served in such capacities since 1998 and 1999, respectively.

     FRANK L. WATERS (age 41) is Vice President of Ashland and President of
Ashland  Distribution  Company  and has  served  in such  capacities  since
January  2002.  During  the past  five  years,  he has also  served as Vice
President  of Ashland  Plastics  - Europe,  Director  of Sales for  Ashland
Distribution's  Fine  Ingredients  Division and an  Executive  Assistant of
Ashland.

     Each executive officer is elected by the Board of Directors of Ashland
to a term of one  year,  or until his  successor  is duly  elected,  at the
annual meeting of the Board of Directors,  except in those  instances where
the  officer  is elected  other  than at an annual  meeting of the Board of
Directors,  in which case his tenure will expire at the next annual meeting
of the Board of Directors unless the officer is re-elected.

                                  PART II

ITEM 5. MARKET FOR  REGISTRANT'S  COMMON STOCK AND RELATED  SECURITY HOLDER
MATTERS

     There is hereby incorporated by reference the information appearing in
Note P of Notes to Consolidated  Financial  Statements in Ashland's  Annual
Report.

     At September  30, 2002,  there were  approximately  17,700  holders of
record of Ashland's Common Stock. Ashland Common Stock is listed on the New
York and  Chicago  stock  exchanges  (ticker  symbol  ASH) and has  trading
privileges  on the  Boston,  Cincinnati,  Pacific  and  Philadelphia  stock
exchanges.

ITEM 6.  SELECTED FINANCIAL DATA

     There is hereby  incorporated by reference the  information  appearing
under the caption "Five-Year Selected Financial  Information" on page 62 in
Ashland's Annual Report.

ITEM 7.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

     There is hereby  incorporated by reference the  information  appearing
under the caption "Management's  Discussion and Analysis" on pages 32 to 41
in Ashland's Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     There is hereby  incorporated by reference the  information  appearing
under the caption  "Derivative  Instruments" on page 40 in Ashland's Annual
Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     There is hereby  incorporated by reference the consolidated  financial
statements appearing on pages 43 through 61 in Ashland's Annual Report.

ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

                                  PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     There is hereby  incorporated  by reference the  information to appear
under the  caption  "Ashland  Inc.'s  Board of  Directors  -  Nominees  for
Election at the 2003 Annual Meeting" and the information  regarding Section
16 beneficial  ownership reporting compliance in Ashland's definitive Proxy
Statement for its January 30, 2003 Annual  Meeting of  Shareholders,  which
will be filed with the SEC within 120 days after September 30, 2002 ("Proxy
Statement").  See also the list of Ashland's executive officers and related
information  under  "Executive  Officers  of Ashland" in Part I - Item X in
this Form 10-K.

                                    13

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

     There is hereby  incorporated  by reference the  information to appear
under the captions  "Executive  Compensation,"  "Compensation of Directors"
and  "Miscellaneous - Personnel and Compensation  Committee  Interlocks and
Insider Participation" in Ashland's Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

     There is hereby  incorporated  by reference the  information to appear
under the caption  "Ashland Common Stock Ownership of Directors and Certain
Officers  of  Ashland"  and the  information  regarding  the  ownership  of
securities of Ashland in Ashland's Proxy Statement.

     The following  table  summarizes the equity  compensation  plans under
which Ashland  Common Stock may be issued as of September 30, 2002.  Except
as disclosed  in the  narrative  to the table,  all plans were  approved by
shareholders of Ashland.

<TABLE>
<CAPTION>

                      EQUITY COMPENSATION PLAN INFORMATION

                                                                                             NUMBER OF SECURITIES
                                                                                            REMAINING AVAILABLE FOR
        PLAN CATEGORY           NUMBER OF SECURITIES TO     WEIGHTED-AVERAGE EXERCISE      FUTURE ISSUANCE UNDER
        -------------           BE ISSUED UPON EXERCISE        PRICE OF OUTSTANDING       EQUITY COMPENSATION PLANS
                                OF OUTSTANDING OPTIONS,        OPTIONS, WARRANTS          (EXCLUDING SECURITIES
                                 WARRANTS AND RIGHTS               AND RIGHTS               REFLECTED IN COLUMN (a))
                                 -------------------               ----------               ----------------------
<S>                                     <C>                           <C>                         <C>
                                            (a)                          (b)                          (c)
Equity compensation plans
approved by security                     6,636,877                     $37.72                     3,727,439
holders.....................

Equity compensation plans
not approved by security
holders (1).................               845,392                     $33.88                             0
                                         ---------                     ------                     ---------
         Total...............            7,482,269                     $37.28                     3,727,439
                                         =========                     ======                     =========


</TABLE>


(1)      The Ashland Inc. Stock Option Plan for Employees of Joint Ventures
         is the only equity  compensation  plan of Ashland not  approved by
         Ashland's shareholders.  This plan was approved by Ashland's Board
         of Directors on September 17, 1998 and is specifically designed to
         grant  stock  options  to  employees  of joint  ventures  in which
         Ashland has an interest.  There are  currently no shares  reserved
         for  future  issuance  under  this  plan.  The Board of  Directors
         authorizes  the  issuance  of the  shares  at the time  the  stock
         options are granted.  A recipient of such stock  options will have
         the right to purchase Ashland Common Stock at a price and on terms
         specified by the Personnel and Compensation Committee of Ashland's
         Board of Directors.  The stock  options  listed in the table above
         have been  granted to certain MAP  employees  and were  registered
         with the SEC.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     There is hereby  incorporated  by reference the  information to appear
under the caption  "Miscellaneous  - Business  Relationships"  in Ashland's
Proxy Statement.

ITEM 14. CONTROLS AND PROCEDURES

(a)      Ashland's Chief Executive Officer and its Chief Financial Officer,
         after  evaluating  the   effectiveness  of  Ashland's   disclosure
         controls and  procedures as of a date within 90 days of the filing
         date of  this  Form  10-K,  have  concluded  that  the  disclosure
         controls and  procedures  were  effective to ensure that  material
         information relating to Ashland and its consolidated  subsidiaries
         was made known to them by others within those entities.

(b)      There were no significant  changes in Ashland's  internal controls
         or in other factors that could significantly affect these controls
         or procedures subsequent to the date of Ashland's evaluation,  nor
         were there any significant  deficiencies or material weaknesses in
         Ashland's  internal  controls.  As a result, no corrective actions
         were required or undertaken.

                                    14

<PAGE>

                                  PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) Documents filed as part of this Report

     (1) and (2) Financial Statements and Financial Schedule

     The  consolidated  financial  statements  and  financial  schedule  of
Ashland presented or incorporated by reference in this report are listed in
the index on page 20.

     (3) Exhibits

3.1      Third  Restated  Articles of  Incorporation  of Ashland  (filed as
         Exhibit 3 to  Ashland's  Form 10-Q for the quarter  ended June 30,
         2002 and incorporated herein by reference).

3.2      By-laws of Ashland, effective as of November 15, 2002.

4.1      Ashland  agrees  to  provide  the SEC,  upon  request,  copies  of
         instruments  defining the rights of holders of  long-term  debt of
         Ashland  and all of its  subsidiaries  for which  consolidated  or
         unconsolidated  financial statements are required to be filed with
         the SEC.

4.2      Indenture, dated as of August 15, 1989, as amended and restated as
         of August 15, 1990, between Ashland and Citibank, N.A., as Trustee
         (filed as Exhibit 4.2 to  Ashland's  Form 10-K for the fiscal year
         ended September 30, 2001 and incorporated herein by reference).

4.3      Indenture, dated as of September 7, 2001, between Ashland and U.S.
         Bank  National  Association,  as Trustee  (filed as Exhibit 4.3 to
         Ashland's  Form 10-K for the fiscal year ended  September 30, 2001
         and incorporated herein by reference).

4.4      Rights Agreement,  dated as of May 16, 1996,  between Ashland Inc.
         and the  Rights  Agent,  together  with Form of Right  Certificate
         (filed as Exhibit 4.4 to  Ashland's  Form 10-K for the fiscal year
         ended September 30, 2001 and incorporated herein by reference).

     The following  Exhibits 10.1 through 10.15 are  compensatory  plans or
arrangements  or  management  contracts  required  to be filed as  exhibits
pursuant to Item 601(b)(10)(ii)(A) of Regulation S-K.

10.1     Amended Stock Incentive Plan for Key Employees of Ashland Inc. and
         its Subsidiaries (filed as Exhibit 10.1 to Ashland's Form 10-K for
         the fiscal year ended September 30, 1999 and  incorporated  herein
         by reference).

10.2     Ashland  Inc.   Deferred   Compensation   Plan  for   Non-Employee
         Directors.

10.3     Ashland Inc. Deferred Compensation Plan.

10.4     Tenth  Amended  and  Restated  Ashland  Inc.   Supplemental  Early
         Retirement Plan for Certain Employees, as amended.

10.5     Ashland Inc. Salary Continuation Plan.

10.6     Form of Ashland Inc. Executive Employment Contract between Ashland
         Inc. and certain executives of Ashland.

10.7     Form of Separation  Agreement and General  Release between Ashland
         Inc.  and Paul W.  Chellgren,  former Chief  Executive  Officer of
         Ashland.

10.8     Form of  Indemnification  Agreement  between Ashland Inc. and each
         member  of its  Board  of  Directors  (filed  as  Exhibit  10.8 to
         Ashland's  Form 10-K for the fiscal year ended  September 30, 2001
         and incorporated herein by reference).

10.9     Ashland Inc. Nonqualified Excess Benefit Pension Plan.

10.10    Ashland Inc.  Long-Term  Incentive  Plan (filed as Exhibit 10.9 to
         Ashland's  Form 10-K for the fiscal year ended  September 30, 2000
         and incorporated herein by reference).

10.11    Ashland Inc. Directors' Charitable Award Program.

10.12    Ashland Inc. 1993 Stock  Incentive Plan (filed as Exhibit 10.11 to
         Ashland's  Form 10-K for the fiscal year ended  September 30, 2000
         and incorporated herein by reference).

                                    15

<PAGE>


10.13    Ashland Inc. 1995 Performance Unit Plan (filed as Exhibit 10.12 to
         Ashland's  Form 10-K for the fiscal year ended  September 30, 2000
         and incorporated herein by reference).

10.14    Ashland Inc. 1997 Stock Incentive Plan.

10.15    Amended and Restated Ashland Inc. Incentive Plan.

10.16    Amended  and  Restated  Limited  Liability  Company  Agreement  of
         Marathon  Ashland  Petroleum  LLC dated as of  December  31,  1998
         (filed as Exhibit 10.17 to Ashland's Form 10-K for the fiscal year
         ended September 30, 1999 and incorporated herein by reference).

10.17    Put/Call,  Registration Rights and Standstill Agreement as amended
         to December 31, 1998 among Marathon Oil Company,  USX Corporation,
         Ashland  Inc.  and Marathon  Ashland  Petroleum  (filed as Exhibit
         10.18 to Ashland's  Form 10-K for the fiscal year ended  September
         30, 1999 and incorporated herein by reference).

11       Computation  of  Earnings  Per  Share  (appearing  on  page  48 of
         Ashland's Annual Report to Shareholders, incorporated by reference
         herein, for the fiscal year ended September 30, 2002).

12       Computation of Ratio of Earnings to Fixed Charges.

13       Portions of Ashland's Annual Report to Shareholders,  incorporated
         by reference herein, for the fiscal year ended September 30, 2002.

21       List of subsidiaries.

23.1     Consent of independent auditors.

24       Power  of  Attorney,   including   resolutions  of  the  Board  of
         Directors.

99.1     Certificate  of Chief  Executive  Officer of Ashland  pursuant  to
         Section 906 of the Sarbanes-Oxley  Act of 2002, 18 U.S.C.  Section
         1350.

99.2     Certificate  of Chief  Financial  Officer of Ashland  pursuant  to
         Section 906 of the Sarbanes-Oxley  Act of 2002, 18 U.S.C.  Section
         1350.

     Upon written or oral  request,  a copy of the above  exhibits  will be
furnished at cost.

     (b) Reports on Form 8-K

     A report on Form 8-K was filed August 2, 2002,  to report that Paul W.
Chellgren,  Chairman and Chief Executive Officer of Ashland,  announced his
plans to retire effective November 15, 2002.

     A report  on Form 8-K was  filed on  August  7,  2002 to  report  that
Ashland had submitted to the SEC the Statements under Oath of the Principal
Executive Officer and the Principal Financial Officer pursuant to the SEC's
June 27, 2002 Order requiring the filing of such statements.

     A report on Form 8-K was filed on August 13, 2002 to report that James
J. O'Brien had been named  President  and Chief  Operating  Officer and was
elected to Ashland's  Board of Directors.  O'Brien would become Chairman of
the Board and Chief  Executive  Officer of Ashland  effective  November 15,
2002 when Paul W. Chellgren,  the then current Chairman and Chief Executive
Officer retired.

     A report on Form 8-K was filed on  September  19,  2002 to report that
James J. O'Brien would become Chief Executive  Officer of Ashland effective
October 1, 2002 and Chairman of the Board effective November 15, 2002.

                                    16

<PAGE>


                                 SIGNATURES

     PURSUANT TO THE  REQUIREMENTS OF SECTION 13 OR 15(D) 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)
                                  By:


                                 /s/ J. Marvin Quin
                                 -----------------------------------
                                 J. Marvin Quin
                                 Senior Vice President and Chief
                                 Financial Officer

                                 Date:  December 3, 2002

     Pursuant to the  requirements of the Securities  Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant, in the capacities indicated, on December 3, 2002.

      SIGNATURES                                   CAPACITY
      ----------                                   --------

 /S/ JAMES J. O'BRIEN             Chairman of the Board, Chief Executive Officer
- ---------------------------        and Director
     JAMES J. O'BRIEN

 /S/ J. MARVIN QUIN               Senior Vice President and Chief
- ---------------------------        Financial Officer
     J. MARVIN QUIN

 /S/ KENNETH L. AULEN             Administrative Vice President, Controller and
- ---------------------------        Principal Accounting Officer
     KENNETH L. AULEN

           *                      Director
- ---------------------------
     SAMUEL C. BUTLER

           *                      Director
- ---------------------------
     FRANK C. CARLUCCI

           *                      Director
- ---------------------------
     ERNEST H. DREW

           *                      Director
- ---------------------------
     JAMES B. FARLEY

           *                      Director
- ---------------------------
     ROGER W. HALE

           *                      Director
- ---------------------------
     BERNADINE P. HEALY

           *                      Director
- ---------------------------
     MANNIE L. JACKSON

           *                      Director
- ---------------------------
     PATRICK F. NOONAN

                                    17

<PAGE>

           *                      Director
- ---------------------------
     JANE C. PFEIFFER

           *                      Director
- ---------------------------
     WILLIAM L. ROUSE, JR.

           *                      Director
- ---------------------------
     THEODORE M. SOLSO

           *                      Director
- ---------------------------
     MICHAEL J. WARD


     *By: /s/ David L. Hausrath
           ---------------------
           David L. Hausrath
           Attorney-in-Fact


     Date:  December 3, 2002


                                  CERTIFICATION
                                  -------------

Statement  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of 2002 by
Chief  Executive  Officer  Regarding  Facts and  Circumstances  Relating to
Exchange Act Filings.

     I, James J. O'Brien,  Chief Executive Officer of Ashland Inc., certify
that:

1.       I have reviewed this annual report on Form 10-K of Ashland Inc.;

2.       Based on my  knowledge,  this  annual  report does not contain any
         untrue  statement  of a material  fact or omit to state a material
         fact  necessary  to make  the  statements  made,  in  light of the
         circumstances   under  which  such   statements   were  made,  not
         misleading  with  respect  to the period  covered  by this  annual
         report;

3.       Based  on  my  knowledge,  the  financial  statements,  and  other
         financial  information  included  in this  annual  report,  fairly
         present in all material respects the financial condition,  results
         of operations and cash flows of the registrant as of, and for, the
         periods presented in this annual report;

4.       The registrant's  other certifying  officers and I are responsible
         for   establishing   and  maintaining   disclosure   controls  and
         procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
         for the registrant and have:

          a) designed  such  disclosure  controls and  procedures to ensure
         that material  information  relating to the registrant,  including
         its  consolidated  subsidiaries,  is made  known  to us by  others
         within  those  entities,  particularly  during the period in which
         this annual report is being prepared;

          b) evaluated the  effectiveness  of the  registrant's  disclosure
         controls and  procedures  as of a date within 90 days prior to the
         filing date of this annual report (the "Evaluation Date"); and

          c)  presented  in this annual  report our  conclusions  about the
         effectiveness  of the disclosure  controls and procedures based on
         our evaluation as of the Evaluation Date;

5.       The registrant's  other certifying  officers and I have disclosed,
         based on our most recent evaluation,  to the registrant's auditors
         and the audit  committee of  registrant's  board of directors  (or
         persons performing the equivalent functions):

          a) all  significant  deficiencies  in the design or  operation of
         internal  controls which could adversely  affect the  registrant's
         ability to record,  process,  summarize and report  financial data
         and have  identified  for the  registrant's  auditors any material
         weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that involves management
         or other employees who have a significant role in the registrant's
         internal controls; and

                                    18

<PAGE>


6.       The registrant's other certifying officers and I have indicated in
         this  annual  report  whether  there were  significant  changes in
         internal  controls or in other  factors  that could  significantly
         affect internal controls subsequent to the date of our most recent
         evaluation,  including  any  corrective  actions  with  regard  to
         significant deficiencies and material weaknesses.


 Date: December 3, 2002

                                               /s/ James J. O'Brien
                                               -----------------------
                                               Chief Executive Officer


                               CERTIFICATION
                               -------------

Statement  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of 2002 by
Chief  Financial  Officer  Regarding  Facts and  Circumstances  Relating to
Exchange Act Filings.

     I, J. Marvin Quin,  Chief Financial  Officer of Ashland Inc.,  certify
that:

1.       I have reviewed this annual report on Form 10-K of Ashland Inc.;

2.       Based on my  knowledge,  this  annual  report does not contain any
         untrue  statement  of a material  fact or omit to state a material
         fact  necessary  to make  the  statements  made,  in  light of the
         circumstances   under  which  such   statements   were  made,  not
         misleading  with  respect  to the period  covered  by this  annual
         report;

3.       Based  on  my  knowledge,  the  financial  statements,  and  other
         financial  information  included  in this  annual  report,  fairly
         present in all material respects the financial condition,  results
         of operations and cash flows of the registrant as of, and for, the
         periods presented in this annual report;

4.       The registrant's  other certifying  officers and I are responsible
         for   establishing   and  maintaining   disclosure   controls  and
         procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
         for the registrant and have:

          a) designed  such  disclosure  controls and  procedures to ensure
         that material  information  relating to the registrant,  including
         its  consolidated  subsidiaries,  is made  known  to us by  others
         within  those  entities,  particularly  during the period in which
         this annual report is being prepared;

          b) evaluated the  effectiveness  of the  registrant's  disclosure
         controls and  procedures  as of a date within 90 days prior to the
         filing date of this annual report (the "Evaluation Date"); and

          c)  presented  in this annual  report our  conclusions  about the
         effectiveness  of the disclosure  controls and procedures based on
         our evaluation as of the Evaluation Date;

5.       The registrant's  other certifying  officers and I have disclosed,
         based on our most recent evaluation,  to the registrant's auditors
         and the audit  committee of  registrant's  board of directors  (or
         persons performing the equivalent functions):

          a) all  significant  deficiencies  in the design or  operation of
         internal  controls which could adversely  affect the  registrant's
         ability to record,  process,  summarize and report  financial data
         and have  identified  for the  registrant's  auditors any material
         weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that involves management
         or other employees who have a significant role in the registrant's
         internal controls; and

6.       The registrant's other certifying officers and I have indicated in
         this  annual  report  whether  there were  significant  changes in
         internal  controls or in other  factors  that could  significantly
         affect internal controls subsequent to the date of our most recent
         evaluation,  including  any  corrective  actions  with  regard  to
         significant deficiencies and material weaknesses.

Date:  December 3, 2002
                                               /s/ J. Marvin Quin
                                               ------------------------
                                               Chief Financial Officer

                                    19

<PAGE>


INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE
                                                                     Page
                                                                     ----
     Consolidated financial statements:
     Statements of consolidated income ................................*
     Consolidated balance sheets ......................................*
     Statements of consolidated stockholders' equity ..................*
     Statements of consolidated cash flows ............................*
     Notes to consolidated financial statements .......................*
     Information by industry segment ..................................*
     Report of independent auditors....................................21
     Consolidated financial schedule:
     Schedule II - Valuation and qualifying accounts...................22

     *The consolidated  financial  statements appearing on pages 43 through
61 in Ashland's  Annual Report are incorporated by reference in this Annual
Report on Form 10-K.

     Schedules  other than that listed above have been  omitted  because of
the absence of the conditions  under which they are required or because the
information  required is shown in the consolidated  financial statements or
the notes thereto.  Separate financial  statements for MAP required by Rule
3-09 of  Regulation  S-X will be filed as an  amendment  to this  Form 10-K
within 90 days after the end of MAP's fiscal year ending December 31, 2002.
Separate  financial  statements  of  other  unconsolidated  affiliates  are
omitted  because each company does not constitute a significant  subsidiary
using the 20% tests  when  considered  individually.  Summarized  financial
information  for  such  affiliates  is  disclosed  in  Note D of  Notes  to
Consolidated Financial Statements in Ashland's Annual Report.

                                     20

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

     We have audited the consolidated  financial statements and schedule of
Ashland Inc. and consolidated subsidiaries listed in the accompanying index
to  financial   statements  and  financial  schedule  (Item  15(a)).  These
financial  statements  and  schedule  are the  responsibility  of Ashland's
management.  Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

     We  conducted  our  audits  in  accordance  with  auditing   standards
generally  accepted in the United States.  Those standards  require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material  misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in  the  financial  statements.   An  audit  also  includes  assessing  the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

     In our opinion,  the financial  statements  listed in the accompanying
index to financial  statements (Item 15(a)) present fairly, in all material
respects,   the  consolidated   financial  position  of  Ashland  Inc.  and
consolidated   subsidiaries  at  September  30,  2002  and  2001,  and  the
consolidated  results of their  operations and their cash flows for each of
the three years in the period ended  September 30, 2002, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion,  the related  financial  statement  schedule,  when  considered in
relation  to the  basic  financial  statements  taken as a whole,  presents
fairly in all material respects the information set forth therein.

     As  discussed  in Note A to the  financial  statements,  in  2002  the
Company changed its method of accounting for goodwill and other  intangible
assets.  Additionally,  as discussed in Note A to the financial statements,
in 2001 the  Company and its  unconsolidated  affiliate,  Marathon  Ashland
Petroleum LLC, changed their method of accounting for derivatives.

                                                   /s/ Ernst & Young LLP
     Cincinnati, Ohio
     November 6, 2002

                                    21

<PAGE>


<TABLE>
<CAPTION>



- -----------------------------------------------------------------------------------------------------------------------------------
 Ashland Inc. and Consolidated Subsidiaries
 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS


<S>                                                        <C>             <C>             <C>            <C>              <C>
- -----------------------------------------------------------------------------------------------------------------------------------
(In millions)                                              Balance at      Provisions                                      Balance
                                                            beginning      charged to      Reserves            Other        at end
Description                                                   of year        earnings      utilized          changes       of year
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2002
Reserves deducted from asset accounts
   Accounts receivable                                           $ 34            $ 24         $ (23)(1)          $ -          $ 35
   Inventories                                                     15               7            (6)               -            16
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2001
Reserves deducted from asset accounts
   Accounts receivable                                           $ 25            $ 34         $ (25)(1)          $ -          $ 34
   Inventories                                                     13               5            (3)               -            15
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2000
Reserves deducted from asset accounts
   Accounts receivable                                           $ 23            $ 15         $( 12)(1)          $(1)         $ 25
   Inventories                                                     15               3            (5)               -            13
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1)      Uncollected  amounts written off, net of recoveries which were not
         significant in 2002, $1 million in 2001 and $1 million in 2000.


                                       22

<PAGE>


                                  Exhibit Index

Exhibit No.                  Description


3.2      By-laws of Ashland, effective as of November 15, 2002.

10.2     Ashland  Inc.   Deferred   Compensation   Plan  for   Non-Employee
         Directors.

10.3     Ashland Inc. Deferred Compensation Plan.

10.4     Tenth  Amended  and  Restated  Ashland  Inc.   Supplemental  Early
         Retirement Plan for Certain Employees, as amended.

10.5     Ashland Inc. Salary Continuation Plan.

10.6     Form of Ashland Inc. Executive Employment Contract between Ashland
         Inc. and certain executives of Ashland.

10.7     Form of Separation  Agreement and General  Release between Ashland
         Inc.  and Paul W.  Chellgren,  former Chief  Executive  Officer of
         Ashland.

10.9     Ashland Inc. Nonqualified Excess Benefit Pension Plan.

10.11    Ashland Inc. Directors' Charitable Award Program.

10.14    Ashland Inc. 1997 Stock Incentive Plan.

10.15    Amended and Restated Ashland Inc. Incentive Plan.

12       Computation of Ratio of Earnings to Fixed Charges.

13       Portions of Ashland's Annual Report to Shareholders,  incorporated
         by reference herein, for the fiscal year ended September 30, 2002.

21       List of subsidiaries.

23.1     Consent of independent auditors.

24       Power  of  Attorney,   including   resolutions  of  the  Board  of
         Directors.

99.1     Certificate  of Chief  Executive  Officer of Ashland  pursuant  to
         Section 906 of the Sarbanes-Oxley  Act of 2002, 18 U.S.C.  Section
         1350.

99.2     Certificate  of Chief  Financial  Officer of Ashland  pursuant  to
         Section 906 of the Sarbanes-Oxley  Act of 2002, 18 U.S.C.  Section
         1350.



<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>3
<FILENAME>bylaws.txt
<DESCRIPTION>EXHIBIT 3.2 BY-LAWS OF ASHLAND
<TEXT>


                                     BY-LAWS
                                       OF
                                  ASHLAND INC.

                                    ARTICLE I

                                     OFFICES

     The  principal  office  of  the  Corporation  in the  Commonwealth  of
Kentucky shall be at 50 E. RiverCenter Boulevard, City of Covington, County
of Kenton.  The  Corporation  may also have offices at other places  either
within or without  the  Commonwealth  of  Kentucky  as may be useful in the
business of the Corporation.

                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

     SECTION 1. Annual Meetings. The annual meeting of the shareholders for
the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held at the principal  office
of the Corporation on the last Thursday of January,  annually,  at the hour
of 10:30 a.m., or at such other place  (within or without the  Commonwealth
of Kentucky), date and hour as shall be designated in the notice thereof.

     SECTION 2. Annual Meeting  Business.  To be properly brought before an
annual meeting, business must be (i) specified in the notice of the meeting
(or any  supplement  thereto)  given by or at the direction of the Board of
Directors of the Corporation (the "Board"); (ii) otherwise properly brought
before the meeting by or at the direction of the Board;  or (iii) otherwise
properly  brought before the meeting by a  shareholder.  For business to be
properly brought before an annual meeting by a shareholder, the shareholder
must have given written notice thereof,  either by personal  delivery or by
United States mail,  postage prepaid,  to the Secretary of the Corporation,
not later than ninety days in advance of such meeting (provided that if the
annual  meeting of  shareholders  is held earlier than the last Thursday in
January,  such notice must be given  within ten days after the first public
disclosure,  which may include any public  filing with the  Securities  and
Exchange  Commission,  of the date of the annual meeting).  Any such notice
shall set forth as to each matter the shareholder  proposes to bring before
the annual meeting (i) a brief  description  of the business  desired to be
brought before the meeting and the reasons for conducting  such business at
the  meeting  and in the event that such  business  includes a proposal  to
amend either the articles of  incorporation  or By-laws of the Corporation,
the  language of the proposed  amendment;  (ii) the name and address of the
shareholder  proposing  such  business;  (iii) a  representation  that  the
shareholder is a holder of record of stock of the  Corporation  entitled to
vote at such  meeting  and

<PAGE>


intends  to appear in person or by proxy at the  meeting  to  propose  such
business;  (iv) any material  interest of the shareholder in such business;
and (v) a representation  as to whether or not the shareholder will solicit
proxies in support of the  proposal.  No business  shall be conducted at an
annual meeting of shareholders except in accordance with this paragraph and
the chairman of any annual meeting of shareholders may refuse to permit any
business to be brought  before an annual meeting which fails to comply with
the foregoing procedures or, in the case of a shareholder  proposal, if the
shareholder  fails to  comply  with the  representations  set  forth in the
notice.

     SECTION 3. Special Meetings. A special meeting of the shareholders may
be called by a majority  of the members of the Board,  the  Chairman of the
Board or the President,  at such place (within or without the  Commonwealth
of Kentucky), date and hour as shall be designated in the notice thereof.

     A special meeting of the shareholders shall be called by the Secretary
on the written request of the holders of not less than one-third of all the
shares entitled to vote at such meeting.  Such request shall set forth: (i)
the action  proposed  to be taken at such  meeting  and the reasons for the
action;  (ii) the name and  address of each of such  holders who intends to
propose action be taken at such meeting;  (iii) a representation  that each
is a holder of record of stock of the Corporation  entitled to vote at such
meeting  and  intends  to appear in person or by proxy at such  meeting  to
propose the action specified in the request;  (iv) any material interest of
any  shareholder  in such  action;  and (v) in the event that any  proposed
action  consists of or includes a proposal to amend  either the articles of
incorporation  or the  By-laws  of the  Corporation,  the  language  of the
proposed  amendment.  The  Secretary  shall  determine the place (within or
without the Commonwealth of Kentucky),  date and hour of such meeting.  The
Secretary may refuse to call a special  meeting  unless the request is made
in compliance with the foregoing procedure.

     SECTION 4. Notice of Meetings. Notice stating the place, date and hour
of the  meeting  and,  in the case of a special  meeting,  the  purpose  or
purposes  for  which  the  meeting  is  called,  shall  be  given  to  each
shareholder  entitled  to vote at such  meeting  not less than ten nor more
then  sixty  days  before  the date of the  meeting  by any form of  notice
permitted by Kentucky law. Except as otherwise  expressly  required by law,
notice of any adjourned  meeting of the  shareholders  need not be given if
the date,  hour and place thereof are announced at the meeting at which the
adjournment is taken,  unless the adjournment is for more than 120 days or,
unless after the  adjournment  a new record date is fixed for the adjourned
meeting.

     SECTION 5. Record of Shareholders. It shall be the duty of the officer
or agent of the  Corporation  who shall have  charge of its stock  transfer
books to prepare and make a complete record of the shareholders entitled to
vote at any meeting of  shareholders  or adjournment  thereof,  arranged by
voting group (and


<PAGE>


within  each voting  group by class or series),  and showing the address of
each  shareholder  and the number of shares  registered in the name of each
shareholder.  Such  record  shall be  produced at the time and place of the
meeting and shall be open to the inspection of any shareholder  entitled to
vote at such meeting or any  adjournment  thereof  during the whole time of
such meeting or adjournment for the purposes thereof.

     SECTION 6. Fixing Date for Determination of Shareholders of Record. In
order that the  Corporation  may  determine  the  shareholders  entitled to
notice of or to vote at any  meeting  of  shareholders  or any  adjournment
thereof  or  entitled  to  receive   payment  of  any   dividend  or  other
distribution or allotment of any rights, or entitled to exercise any rights
in respect  of any  change,  conversion  or  exchange  of shares or for the
purpose of any other lawful action, the Board may fix, in advance, a record
date,  which  shall  not be less  than  ten  days  before  the date of such
meeting,  nor  more  than  seventy  days  prior  to  any  other  action.  A
determination of shareholders entitled to notice of or to vote at a meeting
of the  shareholders  shall  apply  to  any  adjournment  of  the  meeting;
provided,  however,  that  the  Board  may fix a new  record  date  for the
adjourned  meeting if the meeting is  adjourned  to a date 120 days or less
after the date fixed for the  original  meeting.  The Board shall fix a new
record date if the meeting is  adjourned to a date more than 120 days after
the date fixed for the original meeting.

     SECTION 7. Quorum.  At each meeting of the shareholders or adjournment
thereof,  except as otherwise  expressly  required by law, these By-laws or
the  articles  of  incorporation,  shareholders  holding a majority  of the
shares of the  Corporation  issued and outstanding and entitled to be voted
thereat  shall be present in person or by proxy to  constitute a quorum for
the transaction of business.  The shareholders  present at a duly organized
meeting can continue to do business until adjournment,  notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.

     SECTION 8. Organization.  At each meeting of the shareholders,  one of
the following shall act as chairman of the meeting and preside thereat,  in
the following order of precedence:

     (a) the Chairman of the Board;

     (b) the President; or

     (c) any other  officer of the  Corporation  designated by the Board or
the executive committee of the Board to act as chairman of such meeting and
to preside  thereat if the Chairman of the Board and the President shall be
absent from such meeting.


<PAGE>


     The Secretary or, if the Secretary  shall be absent from such meeting,
the person (who shall be an Assistant Secretary of the Corporation,  if one
of such  officers  shall be  present  thereat)  whom the  chairman  of such
meeting shall appoint,  shall act as secretary of such meeting and keep the
minutes thereof.

     SECTION  9.  Order  of  Business.  The  chairman  of  any  meeting  of
shareholders  shall have the right and  authority to prescribe  such rules,
regulations  and  procedures and to do all such acts as, in the judgment of
such  chairman,  are  appropriate  for the proper  conduct of the  meeting.
Unless and to the extent  determined  by the Board or the  chairman  of the
meeting,  meetings  of  shareholders  shall not be  required  to be held in
accordance with the rules of parliamentary procedure.

     SECTION 10.  Voting.  Except as otherwise  expressly  required by law,
these By-laws, or the articles of incorporation,  each shareholder entitled
to vote  shall,  at each  meeting of the  shareholders,  have one vote,  in
person  or by  proxy,  for  each  share  of  the  Corporation  held  by the
shareholder  and registered in the  shareholder's  name on the books of the
Corporation:

     (a) on the date fixed  pursuant to the  provisions of these By-laws as
the record date for the determination of shareholders who shall be entitled
to receive notice of and to vote at such meeting, or

     (b) if no record  date shall have been so fixed,  then at the close of
business on the day on which notice of such meeting shall be given.

     Any vote of shares of the  Corporation  may be given at any meeting of
the shareholders by the shareholders entitled thereto in person or by proxy
appointed  by  the  shareholder.   The  attendance  at  any  meeting  of  a
shareholder  shall not have the effect of revoking a previously given proxy
unless the  shareholder  shall  give the  Secretary  written  notice of the
revocation.

     At all meetings of the shareholders  each matter,  except as otherwise
expressly  required by law, these By-laws or the articles of incorporation,
shall be  approved  if the votes  cast in favor of such  matter  exceed the
votes cast opposing such matter.

     Except as otherwise expressly required by law, the vote at any meeting
of the  shareholders  on any  question  need not be by  ballot,  unless  so
directed by the chairman of the meeting.  On a vote by ballot,  each ballot
shall be signed by the shareholder  voting, or by the shareholder's  proxy,
if there be such proxy, and shall state the number of shares voted.  Except
as  otherwise  expressly  required  by law,  the vote at any meeting of the
shareholders  on any question need not be by ballot,  unless so directed by
the chairman of the meeting.


<PAGE>


                                ARTICLE III

                             BOARD OF DIRECTORS

     SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board.

     SECTION 2. Number and Term of Office.  Except as otherwise provided by
law,  the number of  directors  which shall  constitute  the Board shall be
fixed from time to time by a resolution adopted by a majority of the Board;
provided,  however, that a vote of the shareholders is required to increase
or decrease by more than 30% the number of directors  from that number last
fixed by the  shareholders.  So long as the Board shall  consist of nine or
more members,  the directors  shall be classified  with respect to the time
for which they shall  severally  hold office,  by dividing  them into three
classes, as nearly equal in number as possible.

         At each annual meeting, successors to the class of directors whose term
then expires shall be elected to serve for a term expiring at the annual meeting
of shareholders held in the third year following the year of their election and
until their successors shall have been elected and qualified. The Board shall
increase or decrease the number of directors in one or more classes as may be
appropriate whenever it increases or decreases the number of directors in order
to ensure that the three classes remain as nearly equal in number as possible.
No decrease in the number of directors constituting the Board shall shorten the
term of any incumbent director.

     SECTION 3.  Nomination.  Nominations for the election of directors may
be  made by the  Board  or by any  shareholder  entitled  to  vote  for the
election of directors. Any shareholder entitled to vote for the election of
directors  at a meeting may  nominate a person or persons  for  election as
directors only if written notice of such shareholder's  intent to make such
nomination is given,  either by personal delivery or by United States mail,
postage  prepaid,  to the Secretary,  not later than (i) with respect to an
election to be held at an annual  meeting of  shareholders,  ninety days in
advance  of  such  meeting   (provided   that  if  the  annual  meeting  of
shareholders is held earlier than the last Thursday in January, such notice
must be given within ten days after the first public disclosure,  which may
include any public filing with the Securities and Exchange  Commission,  of
the date of the annual  meeting) and (ii) with respect to an election to be
held at a special  meeting of  shareholders  for the election of directors,
the close of business on the seventh day following the date on which notice
of such meeting is first given to shareholders.  Each such notice shall set
forth:  (a) the name and address of the shareholder who intends to make the
nomination   and  of  the  person  or  persons  to  be  nominated;   (b)  a
representation  that the  shareholder  is a  shareholder  of  record of the
Corporation

<PAGE>


entitled  to vote at such  meeting  and  intends  to appear in person or by
proxy at the meeting to  nominate  the person or persons  specified  in the
notice; (c) a description of all arrangements or understandings between the
shareholder  and each nominee and any other person or persons  (naming such
person or persons)  pursuant to which the nomination or nominations  are to
be made by the  shareholder;  (d) such  other  information  regarding  each
nominee  proposed  by such  shareholder  as would have been  required to be
included  in a proxy  statement  filed  pursuant  to the proxy rules of the
Securities  and Exchange  Commission  had each nominee been  nominated,  or
intended to be nominated  by the Board;  (e) the consent of each nominee to
serve  as  a  director  of  the  Corporation  if  so  elected;  and  (f)  a
representation as to whether or not the shareholder will solicit proxies in
support of the  shareholder's  nominee(s).  The  chairman of any meeting of
shareholders to elect directors and the Board may refuse to acknowledge the
nomination  of any  person  not  made  in  compliance  with  the  foregoing
procedure or if the  shareholder  fails to comply with the  representations
set forth in the notice.

     SECTION 4.  Election.  Except as otherwise  expressly  provided in the
articles of  incorporation,  at each  meeting of the  shareholders  for the
election of directors at which a quorum is present,  the persons  receiving
the greatest  number of votes, up to the number of directors to be elected,
shall be the directors.

     SECTION 5. Resignation, Removal and Vacancies. Any director may resign
at any time by giving written notice of such resignation to the Chairman of
the Board, the President or the Secretary.  Any such resignation shall take
effect at the time specified therein,  or, if the time when it shall become
effective  shall not be specified  therein,  then it shall take effect when
accepted by action of the Board.  Except as  aforesaid,  the  acceptance of
such resignation shall not be necessary to make it effective.

     Any or all directors  may be removed at a meeting of the  shareholders
called  expressly for that purpose.  In the case of a removal of a director
without cause,  removal shall require a vote of the holders of at least 80%
of  the  voting  power  of  the  then  outstanding   voting  stock  of  the
Corporation, voting together as a single voting group. For purposes of this
Section,  "cause"  shall  mean the  willful  and  continuous  failure  of a
director to substantially perform such director's duties to the Corporation
(other than any failure resulting from incapacity due to physical or mental
illness)  or  the  willful  engaging  by a  director  in  gross  misconduct
materially and demonstrably injurious to the Corporation.  As used in these
By-laws,  "voting  stock"  shall  mean  shares  of  capital  stock  of  the
Corporation entitled to vote generally in the election of directors.

     Any vacancy  occurring on the Board may be filled by a majority of the
directors  then in  office,  though  less than a quorum,  and the  director
elected to fill such  vacancy  shall hold office for the  remainder  of the
full term of the class of

<PAGE>


directors in which the vacancy occurred and until the director's  successor
is elected and qualified.

     SECTION 6. Meetings.

     (A) Annual Meetings. As soon as practicable after each annual election
of directors,  the Board shall meet for the purpose of organization and the
transaction of other business.

     (B) Regular  Meetings.  Regular meetings of the Board shall be held at
such  dates,  times  and  places  as the  Board  shall  from  time  to time
determine.

     (C)  Special  Meetings.  Special  meetings  of the Board shall be held
whenever  called by the  Chairman of the Board,  the  President or upon the
written  request of a majority of the members of the whole Board filed with
the Secretary.  Any and all business may be transacted at a special meeting
which may be transacted at a regular meeting of the Board.

     (D) Place of Meeting. The Board may hold its meetings at such place or
places within or without the Commonwealth of Kentucky as the Board may from
time to time by  resolution  determine  or as  shall be  designated  in the
respective notices or waiver of notices thereof.

     (E) Notice of Meetings. Notices of regular meetings of the Board or of
any adjourned meeting need not be given. Notices of special meetings of the
Board,  or of any meeting of any  committee of the Board which has not been
fixed in advance as to hour and place by such  committee,  shall be sent by
the Secretary to each director, or member of such committee, by any form of
notice permitted by Kentucky law at the director's residence or usual place
of business at least two days before the day on which such meeting is to be
held.  Such notice shall include the date,  hour and place of such meeting,
but any such notice need not specify the business to be  transacted  at, or
the purpose of, any such  meeting.  Notice of any such  meeting need not be
given to any director or member of any committee, however, if waived by the
director in writing, whether before or after such meeting shall be held, or
if the director  shall be present at such  meeting,  unless the director at
the  beginning of the meeting (or promptly  upon such  director's  arrival)
objects to holding the meeting or  transacting  business at the meeting and
does not thereafter vote for or assent to action taken at the meeting.

     (F) Quorum and Manner of Acting. A majority of the number of directors
fixed by or in the manner  provided in these  By-laws or in the articles of
incorporation  shall be  present  at any  meeting  of the Board in order to
constitute a quorum for the  transaction  of business at such meeting,  and
the vote of a  majority  of those  directors  shall  be  necessary  for the
passage of any resolution or act of the

<PAGE>


Board,  except as otherwise expressly required by law, these By-laws or the
articles  of  incorporation.  The  directors  present  at a duly  organized
meeting can continue to do business until adjournment,  notwithstanding the
withdrawal of enough directors to leave less than a quorum.

     (G) Action by Consent. Any action required or permitted to be taken at
any meeting of the Board, or of any committee thereof, may be taken without
a meeting  if all  members of the Board or  committee,  as the case may be,
consent thereto in writing, and such writings are filed with the minutes of
the proceedings of the Board or committee.

     (H) Presence at a Meeting. Any or all directors may participate in any
meeting  of the Board or any  committee  thereof,  or conduct  the  meeting
through  the use of,  any  means  of  communication  by which  all  persons
participating  may  simultaneously  hear and speak to each other during the
meeting.  Any  director  participating  in a meeting by such means shall be
deemed to be present in person at the meeting for all purposes.

     SECTION 7.  Compensation.  The Board may, from time to time,  fix such
amount per annum and such fees to be paid by the  Corporation  to Directors
for attendance at meetings of the Board or of any  committee,  or both. The
Board may  likewise  provide  that the  Corporation  shall  reimburse  each
director or member of a committee for any expenses incurred by the director
on  account  of the  director's  attendance  at any such  meeting.  Nothing
contained in this Section  shall be construed to preclude any director from
serving the  Corporation in any other  capacity and receiving  compensation
therefor.

     SECTION 8.  Committees.  The Board  may,  by  resolution  adopted by a
majority of the Board,  designate committees,  each committee to consist of
two or more  directors  and to have such duties and  functions  as shall be
provided in such  resolution.  The Board shall have the power to change the
members  of any  such  committee  at any  time,  to fill  vacancies  and to
discharge any such  committee,  either with or without cause,  at any time.
The Board may  establish an  executive  committee  in  accordance  with and
subject to the  restrictions set out in the statutes of the Commonwealth of
Kentucky.

                                 ARTICLE IV

                                  OFFICERS

     SECTION  1.  Officers.  The  officers  of  the  Corporation  shall  be
determined by the Board. The officers of the Corporation may include:

         (a)      a Chairman of the Board;
         (b)      a President;


<PAGE>


         (c)      one or more Executive Vice Presidents;
         (d)      one or more Senior Vice Presidents;
         (e)      one or more Administrative Vice Presidents;
         (f)      one or more Vice Presidents;
         (g)      a Secretary and one or more Assistant Secretaries;
         (h)      a Treasurer and one or more Assistant Treasurers;
         (i)      a Controller and one or more Assistant Controllers; and
         (j)      an Auditor and one or more Assistant Auditors.

     In  addition,  the Board may elect  such  other  officers  as it deems
necessary or  appropriate  and such other  officers shall have such powers,
authority, and duties as may be delegated or assigned to such officer, from
time to time, by the Board, the Chairman of the Board, or the President.

     The Board shall  designate  which of the  officers  shall be executive
officers of the Corporation.

     SECTION 2. Election and Appointment  and Term of Office.  Each officer
shall be elected by the Board at its annual  meeting and hold office  until
the next annual  meeting of the Board and until the officer's  successor is
elected or until the officer's earlier death, resignation or removal in the
manner  hereinafter  provided.  If  additional  officers are elected by the
Board during the year, each of them shall hold office until the next annual
meeting of the Board at which officers are regularly  elected and until the
officer's  successor is elected or appointed or until the officer's earlier
death, resignation or removal in the manner hereinafter provided.

     In addition to the  foregoing,  the Chairman of the Board,  by written
designation  filed  with  the  Secretary,  may  appoint  one or  more  Vice
Presidents,   Assistant   Secretaries,   Assistant  Treasurers,   Assistant
Controllers and Assistant Auditors of the Corporation.  If appointed during
the year,  each of them shall hold office until the next annual  meeting of
the Board at which  officers are regularly  elected and until the officer's
successor  is elected or appointed or until the  officer's  earlier  death,
resignation or removal in the manner hereinafter  provided.  Subject to the
authority of the Board, the Chairman of the Board shall also have authority
to fix the salary of such officer.

     SECTION 3. Resignation,  Removal and Vacancies. Any officer may resign
at any time by giving  written  notice to the  Chairman  of the Board,  the
President or the Secretary,  and such  resignation  shall be effective when
the notice is  delivered,  unless the notice  specifies  a later  effective
date.  All  officers and agents  elected or  appointed  shall be subject to
removal  at any time by the Board  with or  without  cause.  All  appointed
officers  may be removed at any time by the  Chairman  of the Board  acting
jointly with the  President or any Executive or Senior Vice  President,  by
written  designation filed with the Secretary.  A vacancy in any office may
be



filled for the unexpired portion of the term in the same manner as provided
for election or appointment to such office.

     SECTION 4. Duties and Functions

     (A)  Chairman of the Board.  The  Chairman  of the Board,  if present,
shall  preside  at all  meetings  of the  shareholders  and the  Board.  If
designated  by Board  resolution,  the Chairman of the Board shall be Chief
Executive Officer of the Corporation, and if so designated, shall be vested
with  executive  control and  management of the business and affairs of the
Corporation  and have the  direction  of all  other  officers,  agents  and
employees. The Chairman of the Board shall perform all such other duties as
are  incident to the office or as may be properly  required of the Chairman
by the Board, subject in all matters to the control of the Board.

     (B) The President.  The  President,  in the absence of the Chairman of
the Board, shall preside at all meetings of the shareholders and the Board.
If designated by Board  resolution,  the President shall be Chief Executive
Officer of the  Corporation,  and if so  designated,  shall be vested  with
executive  control  and  management  of the  business  and  affairs  of the
Corporation  and have the  direction  of all  other  officers,  agents  and
employees.  The President  shall have such powers,  authority and duties as
may be  delegated  or  assigned to the  President  from time to time by the
Board or the Chairman of the Board.

     (C) Vice  Presidents.  The  Executive  Vice  Presidents,  Senior  Vice
Presidents,  Administrative  Vice Presidents and Vice Presidents shall have
such powers,  authority  and duties as may be delegated or assigned to them
from time to time by the Board, the Chairman of the Board or the President.

     (D) Secretary. The Secretary shall attend to the giving and serving of
all notices required by law or these By-laws, shall be the custodian of the
corporate seal and shall affix and attest the same to all papers  requiring
it; shall have  responsibility for preparing minutes of the meetings of the
Board  and  shareholders;  shall  have  responsibility  for  authenticating
records of the  Corporation;  and shall in general  perform  all the duties
incident  to the office of the  Secretary,  subject  in all  matters to the
control of the Board.

     (E)  Treasurer.  The  Treasurer  shall have custody and control of the
funds and  securities of the  Corporation  and shall perform all such other
duties  as are  incident  to the  office  of the  Treasurer  or that may be
properly  required of the Treasurer by the Board, the Chairman of the Board
or the President.

     (F) Controller.  The Controller shall maintain adequate records of all
assets,  liabilities and  transactions of the  Corporation;  shall see that
adequate  audits  thereof are  currently  and  regularly  made;  shall have
general supervision of the

<PAGE>


preparation of the Corporation's  balance sheets, income accounts and other
financial  statements  or records;  and shall  perform such other duties as
shall, from time to time, be assigned to him, by the Board, the Chairman of
the Board or the  President.  These  duties and powers  shall extend to all
subsidiary corporations and, so far as the Board, the Chairman of the Board
or the President may deem practicable, to all affiliated corporations.

     (G) Auditor.  The Auditor shall review the  accounting,  financial and
related  operations  of  the  Corporation  and  shall  be  responsible  for
measuring  the  effectiveness  of  various  controls  established  for  the
Corporation.  The Auditor's duties shall include,  without limitation,  the
appraisal of  procedures,  verifying the extent of  compliance  with formal
controls and the  prevention  and detection of fraud or dishonesty and such
other duties as shall, from time to time, be assigned to the Auditor by the
Board, the Chairman of the Board or the President.  These duties and powers
shall extend to all subsidiary  corporations  and, so far as the Board, the
Chairman  of the  Board  or the  President  may  deem  practicable,  to all
affiliated corporations.

     (H) General Provision. The powers, authorities, and duties established
pursuant to this Section 4 may be delegated, assigned, or required directly
or indirectly  by the Board of Directors,  the Chairman of the Board or the
President, as the case may be.

                                 ARTICLE V

                             BOOKS AND RECORDS

     The  Corporation  shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders,  the
Board and the committees of the Board.


                                 ARTICLE VI

                      CONTRACTS, CHECKS, AND DEPOSITS

     SECTION 1.  Contracts  and  Agreements.  The Board may  authorize  any
officer or agent to enter into any  contract  or  agreement  or execute and
deliver any instrument in the name of and on behalf of the Corporation, and
such authority may be general or limited to specific instances.

     SECTION 2. Checks,  Drafts,  Orders, Etc. All checks, drafts, or other
orders for the payment of money,  notes or other  evidences of indebtedness
issued in the name of the Corporation

<PAGE>


shall be signed by such  officer  or agent of the  Corporation  and in such
manner  as shall  from  time to time be  prescribed  by the Board in a duly
authorized resolution.

     SECTION  3.  Deposits.  All  funds of the  Corporation  not  otherwise
employed  shall  be  deposited  from  time  to time  to the  credit  of the
Corporation in such banks,  trust companies,  or other depositories in such
manner  as shall  from  time to time be  prescribed  by the Board in a duly
authorized resolution.

                                ARTICLE VII

                         SHARES AND THEIR TRANSFER

     SECTION 1. Certificates for Shares.  The shares of the Corporation may
be  represented  by  certificates  or may be  uncertificated.  Certificates
representing  shares of the Corporation  shall be in such form as the Board
shall prescribe.  Such certificates shall be in the name of the Corporation
and signed by the Chairman of the Board,  the President or a Vice President
and by the Secretary or an Assistant Secretary and shall be sealed with the
corporate seal or contain a facsimile thereof.  In case any officer who has
signed or whose  facsimile  signature  has been placed  upon a  certificate
shall have ceased to be such officer before such certificate is issued,  it
may  nevertheless be issued by the  Corporation  with the same effect as if
the  person  were  such  officer  at the  date of  issue.  Where  any  such
certificate  is manually  countersigned  by a transfer  agent or  registrar
(other than the Corporation itself or an employee of the Corporation),  any
of the other signatures on the certificate may be a facsimile.

     SECTION 2. Record. The Corporation shall keep at its registered office
or principal  place of business,  or at the office of its transfer agent or
registrar,  a record of its  shareholders,  as required by applicable  law.
Except as  otherwise  expressly  required by law,  the person in whose name
shares  stand on the books of the  Corporation  shall be  deemed  the owner
thereof for all purposes as regards the Corporation.

     SECTION 3. Transfer of Shares.  Transfers of shares of the Corporation
shall  be made  only on the  books  of the  Corporation  by the  registered
shareholder thereof, or by the registered  shareholder's attorney thereunto
duly  authorized  by written power of attorney duly executed and filed with
the Secretary or with a transfer  agent  appointed as provided in Section 4
of this Article,  and on the surrender of any  certificate or  certificates
for such shares properly endorsed.

     SECTION 4. Regulations.  The Board may make such rules and regulations
as it may deem expedient,  not inconsistent with these By-laws,  concerning
the issue,  transfer and  registration  of shares of the  Corporation.  The
Board may  appoint or  authorize  any officer or officers to appoint one or
more transfer agents

<PAGE>


and one or more registrars and may require all  certificates  for shares to
bear the signature or signatures of any of them.

                                ARTICLE VIII

                                FISCAL YEAR

     The fiscal  year of the  Corporation  shall  begin on the first day of
October in each year.

                                 ARTICLE IX

                              INDEMNIFICATION

     SECTION 1. Every  person who is or was an officer or  employee  of the
Corporation  or of any other  corporation  or entity in which  that  person
served as a director, officer or employee at the request of the Corporation
(hereinafter  collectively  referred  to as a "Covered  Person"),  shall be
indemnified by the  Corporation  against any and all  reasonable  costs and
expenses (including but not limited to attorney's fees) and any liabilities
(including  but not limited to judgments,  fines,  penalties and reasonable
settlements)  that may be paid by or imposed against that Covered Person in
connection  with or  resulting  from any pending,  threatened  or completed
claim,  action,  suit or proceeding  (whether brought by or in the right of
the  Corporation or such other  corporation  or entity or  otherwise),  and
whether,  civil,  criminal,  administrative,  investigative  or legislative
(including any appeal relating thereto), in which the Covered Person may be
involved,  as a party or witness  or  otherwise,  by reason of the  Covered
Person's being or having been an officer or employee of the  Corporation or
a director,  officer or employee of such other corporation or entity, or by
reasons of any action taken or not taken in such  capacity,  whether or not
the  Covered  Person  continues  to be such at the time such  liability  or
expense shall have been paid or imposed, if the Covered Person:

     (a) has been  successful  on the merits or  otherwise  with respect to
such claim, action, suit or proceeding; or

     (b)  acted  in good  faith,  in what  the  Covered  Person  reasonably
believed  to be  the  best  interests  of the  Corporation  or  such  other
corporation or entity, as the case may be, and in addition, in any criminal
action or proceeding,  had no reasonable  cause to believe that the Covered
Person's conduct was unlawful.

     As used in this Article,  the terms  "expense" and  "liability"  shall
include,  but not be limited to, counsel fees and disbursements and amounts
of judgments,  fines or penalties  against,  and reasonable amounts paid in
settlement by, a Covered Person. The termination of any claim, action, suit
or  proceeding  by  judgment,  settlement  (whether  with or without  court
approval),  conviction or upon a plea of guilty or nolo contendere,  or its
equivalent,  shall not create a presumption  that a Covered

<PAGE>


Person did not meet the  standards of conduct set forth in paragraph (b) of
this Section 1.

     SECTION 2.  Indemnification  under paragraph (b) of Section 1 shall be
made  unless it is  determined  by any of the  following  that the  Covered
Person has not met the  standard of conduct set forth in  paragraph  (b) of
Section 1:

     (a) the Board, acting by a quorum consisting of directors who were not
parties to (or who are determined to have been  successful with respect to)
the claim, action, suit or proceeding;

     (b) a  committee  of the Board  established  pursuant  to Article  III
Section 8 of the By-laws  consisting  of directors  who were not parties to
(or who are determined to have been  successful with respect to) the claim,
action, suit or proceeding;

     (c) any  officer  or group of  officers  of the  Corporation  who,  by
resolution  adopted by the Board,  has been  given  authority  to make such
determinations; or

     (d) either of the following  selected by the Board if a  disinterested
committee of the Board (as  described  in paragraph  (b) of this Section 2)
cannot be obtained or by the person(s) designated in paragraphs (a), (b) or
(c) of this Section 2:

     (1)  independent  legal counsel (who may be the regular counsel of the
Corporation) who has delivered to the Corporation a written  determination;
or

     (2) an arbitrator or a panel of  arbitrators  (which panel may include
directors,  officers,  employees  or  agents  of the  Corporation)  who has
delivered to the Corporation a written determination.

     SECTION 3. Expenses incurred with respect to any claim,  action,  suit
or proceeding of the character described in Section 1 of this Article shall
be  advanced  to a  Covered  Person by the  Corporation  prior to the final
disposition  thereof,  but the Covered  Person  shall be obligated to repay
such advances if it is ultimately determined that the Covered Person is not
entitled  to   indemnification.   As  a  condition  to  advancing  expenses
hereunder, the Corporation may require the Covered Person to sign a written
instrument acknowledging such obligation to repay any advances hereunder if
it  is  ultimately  determined  the  Covered  Person  is  not  entitled  to
indemnity.

     Notwithstanding the preceding paragraph, the Corporation may refuse to
advance expenses or may discontinue  advancing expenses to a Covered Person
if


<PAGE>


such  advancement  is  determined  by  the  Corporation,  in its  sole  and
exclusive discretion, not to be in the best interest of the Corporation.

     SECTION 4.  Notwithstanding  anything in this Article to the contrary,
no person shall be  indemnified  in respect of any claim,  action,  suit or
proceeding  initiated  by such  person or such  person's  personal or legal
representative,   or  which   involved  the   voluntary   solicitation   or
intervention   of  such   person  or  such   person's   personal  or  legal
representative  (other  than an action to  enforce  indemnification  rights
hereunder  or an action  initiated  with the  approval of a majority of the
Board).

     SECTION  5. The rights of  indemnification  provided  in this  Article
shall be in  addition to any other  rights to which any Covered  Person may
otherwise be entitled to by contract, vote of shareholders or disinterested
directors,  other  corporate  action or otherwise;  and in the event of any
such  Covered  Person's  death,  such  rights  shall  extend to the Covered
Person's heirs and legal representatives.

                                 ARTICLE X

                                 AMENDMENTS

     Any By-law may be adopted repealed, altered or amended by the Board at
any regular or special meeting thereof. The shareholders of the Corporation
shall  have the power to  amend,  alter or repeal  any  By-law  only to the
extent and in the manner provided in the articles of  incorporation  of the
Corporation.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>director.txt
<DESCRIPTION>EXHIBIT 10.2 DEFERRED COMP. FOR NON-EMPLOYEE DIRECTORS
<TEXT>




                                ASHLAND INC.
           DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
                      (Amended as of November 7, 2002)


ARTICLE I.  GENERAL PROVISIONS

     1. PURPOSE

     The  purpose  of this  Ashland  Inc.  Deferred  Compensation  Plan For
Non-Employee  Directors  (the "Plan") is to provide each  Director  with an
opportunity  to  defer  some or all of the  Director's  Fees as a means  of
saving for  retirement or other  purposes.  In addition,  the Plan provides
Directors  with the ability to increase their  proprietary  interest in the
Company's long-term  prospects by permitting  Directors to receive all or a
portion of their Fees in Ashland Common Stock.

     2. DEFINITIONS

     The following definitions shall be applicable throughout the Plan:

     (a)  "Accounting  Date" means the Business Day on which a  calculation
concerning  a  Participant's  Compensation  Account  is  performed,  or  as
otherwise defined by the Committee.

     (b) "Act" means the  Securities  Act of 1933,  as amended from time to
time.

     (c) "Beneficiary"  means the person(s)  designated by a Participant in
accordance with Article IV, Section 1.

     (d)  "Board"  means the Board of  Directors  of  Ashland  Inc.  or its
designee.

     (e) "Business Day" means a day on which the New York Stock Exchange is
open for trading activity.

     (f) "Change in Control" shall be deemed to occur (1) upon the 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, other than a consolidation or merger of the Company into or with a
direct or indirect wholly-owned subsidiary, 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,
provided,  however,  that no sale, lease, exchange or other transfer of all
or  substantially  all the assets of the  Company  shall be deemed to occur
unless  assets  constituting  80% of the total  assets of the  Company  are
transferred  pursuant to such sale, lease,  exchange or other transfer,  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 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 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.  Notwithstanding the foregoing, any transaction, or series
of  transactions,  that shall result in the  disposition  of the  Company's
interest in Marathon Ashland Petroleum LLC,  including  without  limitation
any transaction  arising out of that certain Put/Call,  Registration Rights
and Standstill  Agreement dated January 1, 1998 among Marathon Oil Company,
USX Corporation, the Company and Marathon Ashland Petroleum LLC, as amended
from time to time, shall not be deemed to constitute a Change in Control.

     (g) "Code"  means the Internal  Revenue Code of 1986,  as amended from
time to time.

     (h)  "Committee on Directors"  means the Committee on Directors of the
Board or its designee.

     (i) "Common Stock" means the common stock, $1.00 par value, of Ashland
Inc.

     (j) "Common Stock Fund" means that investment option,  approved by the
Committee on Directors, in which a Participant's  Retirement Account may be
deemed  to  be  invested  and  may  earn  income  based  on a  hypothetical
investment in Common Stock.

     (k) "Company" means Ashland Inc., its divisions and subsidiaries.

     (l) "Corporate  Human  Resources"  means the Corporate Human Resources
Department of the Company.

     (m)  "Credit  Date"  means the date on which any Fees would  otherwise
have  been  paid to the  Participant  or in the  case of the  Participant's
designation of investment option changes,  within three Business Days after
the Participant's  designation is received by Corporate Human Resources, or
as otherwise designated by the Committee.

     (n) "Deferral Account" means the account(s) to which the Participant's
Deferred Fees are credited and from which, pursuant to Article III, Section
5, distributions are made.

     (o) "Deferred  Fees" means the Fees elected by the  Participant  to be
deferred pursuant to the Plan.

     (p) "Director" means any non-employee director of the Company.

     (q)  "Disability"  means a Director's  incapacity,  due to physical or
mental  illness,  resulting  in an inability to attend to his or her duties
and responsibilities as a member of the Board.

     (r) "Election"  means a Participant's  delivery of a written notice of
election to the  Secretary of the Company  electing to defer payment of his
or her Fees or to receive such Fees in the form of Common Stock.

     (s)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

     (t) "Fair Market Value" means the price of a share of Common Stock, as
reported on the Composite  Tape for New York Stock  Exchange  issues on the
date and at the time designated by the Company.

     (u) "Fees" mean the annual  retainer and meeting  fees, as well as any
per diem compensation for special assignments, earned by a Director for his
or her service as a member of the Board  during a calendar  year or portion
thereof.

     (v) "Fiscal  Year" means that annual period  commencing  October 1 and
ending the following September 30.

     (w) "Participant" means a Director who has elected to defer payment of
all or a portion of his or her Fees  and/or to receive  all or a  specified
portion of his or her Fees in shares of Common Stock.

     (x)  "Payment  Commencement  Date" means the date  payments of amounts
deferred begin pursuant to Article III, Section 6.

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

     (z) "Plan"  means this  Ashland Inc.  Deferred  Compensation  Plan For
Non-Employee Directors.

     (aa)  "Stock  Account"  means  an  account  by that  name  established
pursuant to Article III, Section 1.

     (bb)  "Stock  Unit(s)"  means  the  share  equivalents  credited  to a
Participant's Stock Account pursuant to Article III, Section 1.

     (cc)  "Termination"  means retirement from the Board or termination of
service as a Director for any other reason.

     3. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION

     (a) Shares  Authorized  for  Issuance.  There  shall be  reserved  for
issuance  under  the Plan  500,000  shares  of  Common  Stock,  subject  to
adjustment   pursuant  to  subsection  (b)  below.  Such  shares  shall  be
authorized but unissued shares of Common Stock.

     (b) Adjustments in Certain  Events.  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  shareholders  other than cash  dividends,  the number or kind of
shares that may be issued under the Plan shall be automatically adjusted so
that the  proportionate  interest of the  Directors  shall be maintained as
before the occurrence of such event.  Such  adjustment  shall be conclusive
and binding for all purposes of the Plan.

     4. ELIGIBILITY

     Any  non-employee  Director  of  the  Company  shall  be  eligible  to
participate in the Plan.





     5. ADMINISTRATION

     Full power and  authority to construe,  interpret and  administer  the
Plan  shall be  vested  in the  Company  and the  Committee  on  Directors.
Decisions of the Company and the  Committee  on  Directors  shall be final,
conclusive and binding upon all parties.  Day-to-day  administration of the
Plan  shall  be the  responsibility  of  Corporate  Human  Resources.  This
Department  may authorize new or modify  existing  forms for use under this
Plan so long as any such  modified or new forms are not  inconsistent  with
the terms of the Plan.

     ARTICLE II. COMMON STOCK PROVISION

     Each Director may elect to receive all or a portion of his or her Fees
in shares of Common  Stock by making an Election  pursuant to Article  III,
Section  4.  Shares  shall be  issued  to the  Director  at the end of each
quarter  beginning in the quarter the Election is effective.  The number of
shares of Common Stock so issued shall be equal to the amount of Fees which
otherwise  would have been  payable  to such  Director  during the  quarter
divided by the Fair  Market  Value.  Only whole  number of shares of Common
Stock will be issued, with any fractional shares to be paid in cash.

     ARTICLE III. DEFERRED COMPENSATION

     1. PARTICIPANT ACCOUNTS

     (a)  Upon  election  to  participate  in  the  Plan,  there  shall  be
established  a  Deferral  Account  to which  there  shall be  credited  any
Deferred  Fees as of each  Credit  Date.  The  Deferral  Account  shall  be
credited (or debited) on each  Accounting  Date with income (or loss) based
upon a hypothetical investment in any one or more of the investment options
available  under the Plan,  as  prescribed  by the  Committee on Directors,
which may include a Common Stock Fund, as elected by the Participant  under
the terms of Article III, Section 4.

     (b) The Stock  Account  of a  Participant  shall be  credited  on each
Accounting  Date with Stock  Units  equal to the number of shares of Common
Stock (including  fractions of a share) that could have been purchased with
the amount of such deferred Fees as to which a stock deferral  election has
been made at the Fair Market Value on the  Accounting  Date. As of the date
of any dividend  distribution  date for the Common Stock, the Participant's
Stock Account shall be credited  with  additional  Stock Units equal to the
number of shares of Common  Stock  (including  fractions  of a share)  that
could have been purchased,  at the Fair Market Value on such date, with the
amount  which  would have been paid as  dividends  on that number of shares
(including  fractions  of a share)  of Common  Stock  which is equal to the
number of Stock Units then credited to the Participant's Stock Account.

     2. FINANCIAL HARDSHIP

     Upon the written request of a Participant or a Participant's  Personal
Representative  and a finding  that  continued  deferral  will result in an
unforeseeable  financial  hardship to the  Participant,  the  Committee  on
Directors or the Company  (each in its sole  discretion)  may authorize (a)
the  payment  of all or a part of a  Participant's  Deferral  Account  in a
single installment prior to his or her ceasing to be a Director, or (b) the
acceleration of payment of any multiple installments hereof. It is intended
that the  Committee's  determinations  as to whether  the  Participant  has
suffered an  "unforeseeable  financial  emergency" shall be made consistent
with the requirements under Section 457(d) of the Internal Revenue Code. If
the  Participant  requesting such a payment is a member of the Committee on
Directors,  the Participant  shall abstain from the Committee on Directors'
determination as to whether the payment shall be made.

     3. ACCELERATED DISTRIBUTION

     (a) Availability of Withdrawal  Prior to Termination.  The Participant
or the  Participant's  Beneficiary  who is receiving  installment  payments
under the Plan may elect,  in writing,  to  withdraw  all or a portion of a
Participant's  Deferral Account at any time prior to the time such Deferral
Account otherwise  becomes payable under the Plan,  provided the conditions
specified in  subsections  (c), (d) and (e) of this Article III,  Section 3
are satisfied.

     (b) Acceleration of Periodic Distributions.  Upon the written election
of  the  Participant  or the  Participant's  Beneficiary  who is  receiving
installment  payments  under the Plan,  the  Participant  or  Participant's
Beneficiary   may  elect  to  have  all  or  a  portion  of  the  remaining
installments  distributed in the form of an  immediately  payable lump sum,
provided the conditions specified in subsection (c) and (e) of this Article
III, Section 3 are satisfied.

     (c)  Forfeiture  Penalty.  In the event of a  withdrawal  pursuant  to
subsection  (a)  of  this  Article  III,   Section  3,  or  an  accelerated
distribution pursuant to subsection (b) of this Article III, Section 3, the
Participant shall forfeit from such Deferral Account an amount equal to 10%
of the amount of the  withdrawal or accelerated  distribution,  as the case
may be. The forfeited  amount shall be deducted  from the Deferral  Account
prior to giving effect to the requested withdrawal or acceleration. Neither
the Participant nor the  Participant's  Beneficiary shall have any right or
claim to the  forfeited  amount,  and the Company  shall have no obligation
whatsoever to the Participant,  the Participant's  Beneficiary or any other
person with regard to the forfeited amount.

     (d)  Minimum  Withdrawal.  In no event shall the amount  withdrawn  in
accordance with subsection (a) of this Article III,  Section 3 be less than
25%  of  the  amount  credited  to  such  Participant's   Deferral  Account
immediately prior to the withdrawal.

         (e) Suspension from Deferrals. In the event of a withdrawal pursuant to
subsection (a) or (b) of this Article III, Section 3, a Participant who is
otherwise eligible to make deferrals of Fees under this Plan shall be prohibited
from making such deferrals with respect to the remainder of the current Fiscal
Year and the Fiscal Year of the Plan immediately following the Fiscal Year of
the Plan during which the withdrawal was made, and any Election previously made
by the Participant with respect to deferrals of Fees for such Fiscal Year of the
Plan shall be void and of no effect.

     4. MANNER OF ELECTION

     (a) General. Any Director wishing to participate in the Plan may elect
to do so by  delivering  to the  Secretary  of the Company an Election on a
form  prescribed by Corporate  Human  Resources  designating  the manner in
which such Deferred Fees are to be invested in accordance with Article III,
Section 1 and electing the timing and form of  distribution.  The timing of
the filing of the appropriate  form with Corporate Human Resources shall be
determined  by the Company or the  Committee  on  Directors.  An  effective
election to defer Fees may not be revoked or modified  except as  otherwise
determined  by the  Company  or the  Committee  on  Directors  or as stated
herein.

     (b) Investment  Alternatives - Existing  Balances.  A Participant  may
elect to change an existing selection as to the investment  alternatives in
effect with respect to existing deferred Fees (in increments  prescribed by
the  Committee  on  Directors  or the  Company)  as  often,  and with  such
restrictions,  as  determined  by  the  Committee  on  Directors  or by the
Company.

     (c) Change of Beneficiary.  A Participant  may, at any time,  elect to
change the  designation  of a Beneficiary  in  accordance  with Article IV,
Section 1 hereof.

     (d) Initial Election.  With respect to Directors' Fees payable for all
or any portion of a calendar year after such person's  initial  election to
the  office  of  Director  of the  Company,  any  such  person  wishing  to
participate  in the Plan may file a proper  Election  within 30 days  after
such election to office.  Any such Election  shall be effective upon filing
or as soon as possible thereafter with respect to such Fees.

     5. DISTRIBUTION

     (a) Deferral Account.  In accordance with the  Participant's  Election
and as prescribed by the Committee on Directors,  Deferred Fees credited to
a Participant's  Deferral Account shall be distributed in cash or shares of
Common Stock (or a combination of both).  Unless otherwise  directed by the
Committee on Directors,  if no Election is made by a Participant  as to the
distribution  or form  of  payment  of his or her  Deferral  Account,  upon
Termination  such  account  shall be paid in cash in lump sum.  The  entire
Deferral  Account must be paid out within forty years following the date of
the Participant's Termination.

     (b) Change of Distribution of Deferral Account.  A Participant will be
allowed to change the Election as to the applicable  payment period for all
amounts  deferred  pursuant  to such  Election,  subject to approval by the
Company or the Committee. Such change must be made by the earlier of:

     (i) the date six months prior to the first day of the month  following
the Participant's Termination; or

     (ii) the December 31 immediately  preceding the first day of the month
following the Participant's Termination.

     If the Participant  making such change is a member of the Committee on
Directors,  such Participant shall abstain from the Committee on Directors'
decision to approve or disapprove such change.

     6. PAYMENT COMMENCEMENT DATE

     Payments  of  amounts  deferred  pursuant  to a valid  Election  shall
commence after a  Participant's  Termination in accordance  with his or her
Election.  If a  Participant  dies  prior  to the  first  deferred  payment
specified  in an Election,  payments  shall  commence to the  Participant's
Beneficiary on the first payment date so specified.

     7. CHANGE IN CONTROL

     Notwithstanding  any  provision of this Plan to the  contrary,  in the
event of a "Change in Control"  (as defined in Section  2(f) of Article I),
each  Participant  in the Plan  shall  receive an  automatic  lump sum cash
distribution of all amounts accrued in the Participant's  Cash and/or Stock
Account(s)  (including  interest at the Prime Rate of Interest  through the
business day immediately preceding the date of distribution) not later than
fifteen  (15) days  after the date of the  "Change  in  Control."  For this
purpose,   the  balance  in  the  Stock  Account  shall  be  determined  by
multiplying  the  number of Stock  Units by the  higher of (a) the  highest
closing  price of a share of Common Stock during the period  commencing  30
days prior to such Change in Control or (b) if the Change in Control of the
Company occurs as a result of a tender or exchange offer or consummation of
a corporate  transaction,  then the highest  price paid per share of Common
Stock pursuant thereto. Any consideration other than cash forming a part or
all of the  consideration  for  Common  Stock  to be paid  pursuant  to the
applicable  transaction  shall be valued  at the  valuation  price  thereon
determined by the Board.

     In addition, the Company shall reimburse a Director for the legal fees
and  expenses  incurred  if the  Director  is required to seek to obtain or
enforce any right to distribution.  In the event that it is determined that
such Director is properly entitled to a cash distribution  hereunder,  such
Director  shall also be entitled  to interest  thereon at the Prime Rate of
Interest quoted by Citibank,  N.A. as its prime commercial  lending rate on
the subject date from the date such  distribution  should have been made to
and  including the date it is made.  Notwithstanding  any provision of this
Plan to the contrary, Article I, Section 2(f) and Section 7 of this Article
may not be amended after a "Change in Control"  occurs  without the written
consent of a majority in number of Participants.


     ARTICLE IV. MISCELLANEOUS PROVISIONS

     1. BENEFICIARY DESIGNATION

     A Director may  designate  one or more persons  (including a trust) to
whom  or to  which  payments  are to be made if the  Director  dies  before
receiving   payment  of  all  amounts  due  hereunder.   A  designation  of
Beneficiary  will be effective only after the signed Election is filed with
the  Secretary  of the Company  while the Director is alive and will cancel
all designations of a Beneficiary signed and filed earlier. If the Director
fails  to  designate  a  Beneficiary  as  provided  above  or if  all  of a
Director's  Beneficiaries  predecease  him or her  and he or she  fails  to
designate a new Beneficiary,  remaining unpaid amounts shall be paid in one
lump  sum to the  estate  of such  Director.  If all  Beneficiaries  of the
Director die before the Director or before complete  payment of all amounts
due hereunder,  the remaining  unpaid amounts shall be paid in one lump sum
to the estate of the last to die of such Beneficiaries.

     2. INALIENABILITY OF BENEFITS

     The interests of the Directors and their  Beneficiaries under the Plan
may not in any way be voluntarily or involuntarily  transferred,  alienated
or assigned, nor be subject to attachment,  execution, garnishment or other
such equitable or legal process.

     3. GOVERNING LAW

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

     4. AMENDMENTS

     The Committee on Directors may amend,  alter or terminate this Plan at
any time without the prior  approval of the Directors;  provided,  however,
that  the  Committee  on  Directors  may  not,   without  approval  by  the
shareholders:

     (a)  materially  increase the number of securities  that may be issued
under the Plan (except as provided in Article I, Section 3),

     (b)  materially   modify  the   requirements  as  to  eligibility  for
participation in the Plan, or

     (c)   otherwise   materially   increase  the   benefits   accruing  to
participants under the Plan.

     5. COMPLIANCE WITH RULE 16b-3

     It is the  intention  of the  Company  that  the  Plan  comply  in all
respects  with Rule 16b-3  promulgated  under Section 16(b) of the Exchange
Act and that Plan Participants remain non-employee directors ("Non-Employee
Directors") for purposes of  administering  other employee benefit plans of
the Company and having such other plans be exempt from Section 16(b) of the
Exchange  Act.  Therefore,  if any Plan  provision  is  found  not to be in
compliance with Rule 16b-3 or if any Plan provision  would  disqualify Plan
participants from remaining Non-Employee Directors, that provision shall be
deemed  amended so that the Plan does so comply  and the Plan  participants
remain  Non-Employee  Directors,  to the extent permitted by law and deemed
advisable by the Committee on  Directors,  and in all events the Plan shall
be construed in favor of its meeting the requirements of Rule 16b-3.

     6. EFFECTIVE DATE

     The Plan was  approved by the  shareholders  of the Company on January
27, 1994, and originally  became  effective as of November 9, 1993, and has
been restated in this document effective November 7, 2002.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>defcomp.txt
<DESCRIPTION>EXHIBIT 10.3 DEFERRED COMP. PLAN
<TEXT>

                                ASHLAND INC.
                         DEFERRED COMPENSATION PLAN
               (Amended and Restated as of November 7, 2002)

     1. PURPOSE

     The  purpose of this  Ashland  Inc.  Deferred  Compensation  Plan (the
"Plan"),  is to provide  eligible  key  employees  of the  Company  with an
opportunity to defer  compensation to be earned by them from the Company as
a means of saving for retirement or other future purposes.

     2. DEFINITIONS

     The following definitions shall be applicable throughout the Plan:

     (a)  "Accounting  Date" means the Business Day on which a  calculation
concerning  a  Participant's  Compensation  Account  is  performed,  or  as
otherwise defined by the Committee.

     (b) "Beneficiary" means the person(s) designated by the Participant in
accordance  with Section 12, or if no person(s)  is/are so designated,  the
estate of a deceased Participant.

     (c)  "Board"  means the Board of  Directors  of  Ashland  Inc.  or its
designee.

     (d) "Business Day" means a day on which the New York Stock Exchange is
open for trading activity.

     (e) "Change in Control" shall be deemed to occur (1) upon the 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, other than a consolidation or merger of the Company into or with a
direct or indirect wholly-owned subsidiary, 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,
provided,  however,  that no sale, lease, exchange or other transfer of all
or  substantially  all the assets of the  Company  shall be deemed to occur
unless  assets  constituting  80% of the total  assets of the  Company  are
transferred  pursuant to such sale, lease,  exchange or other transfer,  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 Ashland Inc. or any subsidiary or employee
benefit  plan  or  trust   maintained   by  Ashland  Inc.  or  any  of  its
subsidiaries, shall become the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act),  directly or  indirectly,  of more than 15% of the
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 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.  Notwithstanding  the  foregoing,  any
transaction,   or  series  of  transactions,   that  shall  result  in  the
disposition of the Company's  interest in Marathon  Ashland  Petroleum LLC,
including  without  limitation any transaction  arising out of that certain
Put/Call,  Registration  Rights and Standstill  Agreement  dated January 1,
1998 among Marathon Oil Company, USX Corporation,  the Company and Marathon
Ashland Petroleum LLC, as amended from time to time, shall not be deemed to
constitute a Change in Control.

     (f) "Committee" means the Personnel and Compensation  Committee of the
Board or its designee.

     (g) "Common Stock" means the common stock, $1.00 par value, of Ashland
Inc.

     (h) "Common Stock Fund" means that investment option,  approved by the
Committee,  in which a Participant's  Compensation Account may be deemed to
be  invested  and may earn income  based on a  hypothetical  investment  in
Common Stock.

     (i) "Company"  means Ashland Inc.,  its  divisions,  subsidiaries  and
affiliates.

     (j) "Compensation" means any employee  compensation  determined by the
Committee to be properly deferrable under the Plan.

     (k) "Compensation  Account(s)" means the Retirement Account and/or the
In-Service Account(s).

     (l) "Corporate  Human  Resources"  means the Corporate Human Resources
Department of the Company.

     (m) "Credit Date" means the date on which Compensation would otherwise
have  been  paid to the  Participant  or in the  case of the  Participant's
designation of investment option changes,  within three Business Days after
the Participant's  designation is received by Corporate Human Resources, or
as otherwise designated by the Committee.

     (n)  "Deferred  Compensation"  means the  Compensation  elected by the
Participant to be deferred pursuant to the Plan.

     (o) "Election"  means a Participant's  delivery of a written notice of
election  to defer  payment of all or a portion of his or her  Compensation
either until retirement,  Termination,  death or such other time as further
provided by the Committee or the Company.

     (p) "Employee"  means a full-time,  regular  salaried  employee (which
term shall be deemed to include  officers) of the Company,  its present and
future  subsidiary  corporations  as defined in Section 424 of the Internal
Revenue Code of 1986, as amended or its affiliates.

     (q) "Excess Payments" means payments made to a Participant pursuant to
the Plan and the Excess Plan.

     (r) "Excess Plan" means the Ashland Inc.  Nonqualified  Excess Benefit
Pension Plan, as it now exists or as it may hereafter be amended.

     (s)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

     (t) "Fair Market Value" means the price of a share of Common Stock, as
reported on the Composite Tape for New York Stock Exchange issues on the date
and at the time designated by the Company.

     (u) "Fiscal  Year" means that annual period  commencing  October 1 and
ending the following September 30.

     (v)   "In-Service   Account"   means  the   account(s)  to  which  the
Participant's Deferred Compensation is credited and from which, pursuant to
Section 10, distributions are made.

     (w)  "Participant"  means an  Employee  selected by the  Committee  to
participate  in the Plan and who has  elected to defer  payment of all or a
portion of his or her Compensation under the Plan.

     (x) "Plan" means this Ashland Inc.  Deferred  Compensation  Plan as it
now exists or as it may hereafter be amended.

     (y)   "Retirement   Account"   means  the   account(s)  to  which  the
Participant's Deferred Compensation is credited and from which, pursuant to
Section 10, distributions are made.

     (z)  "SERP"  means  the  Tenth  Amended  and  Restated   Ashland  Inc.
Supplemental Early Retirement Plan for Certain Key Executive Employees,  as
it now exists or as it may hereafter be amended.

     (aa) "SERP Payments" means payments made to a Participant  pursuant to
the Plan and the SERP.

     (bb)  "Stock  Unit(s)"  means the share  equivalents  credited  to the
Common  Stock Fund of a  Participant's  Compensation  Account  pursuant  to
Section 6.

     (cc)  "Termination"  means  termination of services as an Employee for
any reason other than retirement.

     3. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION

     (a) Shares  Authorized  for  Issuance.  There  shall be  reserved  for
issuance  under  the Plan  500,000  shares  of  Common  Stock,  subject  to
adjustment pursuant to subsection (c) below.

     (b) Units  Authorized  for Credit.  The maximum  number of Stock Units
that may be credited to Participants'  Compensation Accounts under the Plan
is 1,500,000, subject to adjustment pursuant to subsection (c) below.

     (c) Adjustments in Certain  Events.  In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, share
dividend,   recapitalization,   merger,   consolidation,    reorganization,
combination,   or  exchange  or  reclassification   of  shares,   split-up,
split-off, spin-off, liquidation or other similar change in capitalization,
or any distribution to common  shareholders other than cash dividends,  the
number  or kind of  shares or Stock  Units  that may be issued or  credited
under the Plan shall be  automatically  adjusted so that the  proportionate
interest of the  Participants  shall be maintained as before the occurrence
of such event.  Such  adjustment  shall be  conclusive  and binding for all
purposes of the Plan.

     4. ELIGIBILITY

     The  Committee  shall have the  authority  to select  from  management
and/or highly  compensated  Employees those Employees who shall be eligible
to  participate  in the Plan;  provided,  however,  that  employees  and/or
retirees  who have  elected to defer an amount into this Plan from  another
plan  sponsored or maintained  by Ashland Inc.,  the terms of which allowed
such  employee or retiree to make such a deferral  election into this Plan,
shall be considered to be eligible to participate in this Plan.



     5. ADMINISTRATION

     Full power and  authority to construe,  interpret and  administer  the
Plan  shall be vested in the  Company  and the  Committee.  This  power and
authority includes,  but is not limited to, selecting Compensation eligible
for  deferral,  establishing  deferral  terms and  conditions  and adopting
modifications,  amendments  and  procedures  as  may be  deemed  necessary,
appropriate  or convenient by the  Committee.  Decisions of the Company and
the  Committee  shall be final,  conclusive  and binding  upon all parties.
Day-to-day  administration  of the  Plan  shall  be the  responsibility  of
Corporate Human Resources.

     6. PARTICIPANT ACCOUNTS

     Upon election to participate in the Plan, there shall be established a
Retirement  Account  and/or  In-Service   Account,  as  designated  by  the
Participant to which there shall be credited any Deferred Compensation,  as
of each Credit Date. Each such  Compensation  Account shall be credited (or
debited)  on each  Accounting  Date  with  income  (or loss)  based  upon a
hypothetical  investment  in any  one or  more  of the  investment  options
available under the Plan, as prescribed by the Committee for the particular
compensation credited, which may include a Common Stock Fund, as elected by
the Participant under the terms of Section 9.

     7. FINANCIAL HARDSHIP

     Upon the written  request of a Participant  or a  Participant's  legal
representative  and a finding  that  continued  deferral  will result in an
unforeseeable financial emergency to the Participant,  the Committee or the
Company (each in its sole  discretion) may authorize (a) the payment of all
or a part of a Participant's  Compensation  Account in a single installment
prior to his or her ceasing to be a Participant, or (b) the acceleration of
payment of any  multiple  installments  thereof.  It is  intended  that the
Committee's  determinations  as to whether the  Participant has suffered an
"unforeseeable  financial  emergency"  shall  be made  consistent  with the
requirements under Section 457(d) of the Internal Revenue Code.

     8. ACCELERATED DISTRIBUTION

     (a) Availability of Withdrawal Prior to Retirement. The Participant or
the Participant's  Beneficiary who is receiving  installment payments under
the  Plan  may  elect,  in  writing,  to  withdraw  all or a  portion  of a
Participant's  Compensation  Account  at any time  prior  to the time  such
Compensation Account otherwise becomes payable under the Plan, provided the
conditions specified in Sections 8(c), 8(d) and 8(e) hereof are satisfied.

     (b) Acceleration of Periodic Distributions. Upon the written notice of
the  Participant  or  the   Participant's   Beneficiary  who  is  receiving
installment  payments  under the Plan,  the  Participant  or  Participant's
Beneficiary   may  elect  to  have  all  or  a  portion  of  the  remaining
installments  distributed in the form of an  immediately  payable lump sum,
provided  the  conditions  specified  in Section  8(c) and 8(e)  hereof are
satisfied.

     (c)  Forfeiture  Penalty.  In the event of a  withdrawal  pursuant  to
Section 8(a), or an accelerated  distribution pursuant to Section 8(b), the
Participant shall forfeit from such Compensation Account an amount equal to
10% of the amount of the  withdrawal or  accelerated  distribution,  as the
case may be. The forfeited  amount shall be deducted from the  Compensation
Account prior to giving effect to the requested withdrawal or acceleration.
Neither the Participant nor the  Participant's  Beneficiary  shall have any
right or claim to the  forfeited  amount,  and the  Company  shall  have no
obligation whatsoever to the Participant,  the Participant's Beneficiary or
any other person with regard to the forfeited amount.

     (d)  Minimum  Withdrawal.  In no event shall the amount  withdrawn  in
accordance  with  Section  8(a) be less than 25% of the amount  credited to
such   Participant's   Compensation   Account   immediately  prior  to  the
withdrawal.

     (e) Suspension from Deferrals.  In the event of a withdrawal  pursuant
to Section 8(a) or 8(b), a  Participant  who is otherwise  eligible to make
deferrals of  Compensation  under this Plan shall be prohibited from making
such deferrals with respect to the remainder of the current Fiscal Year and
the Fiscal Year of the Plan  immediately  following  the Fiscal Year of the
Plan during which the withdrawal was made, and any Election previously made
by the  Participant  with  respect to deferrals  of  Compensation  for such
Fiscal Years of the Plan shall be void and of no effect.

     9. MANNER OF ELECTION

     (a) General.  The Company or the Committee  shall determine the timing
of the filing of the appropriate  Election forms. An effective Election may
not be revoked or modified except as otherwise determined by the Company or
the Committee or as stated herein. In addition to the provisions  contained
in this Plan, any deferrals of SERP Payments or Excess  Payments must be in
accordance with the terms of the SERP or the Excess Plan.

     (b) Investment  Alternatives -- Existing  Balances.  A Participant may
elect to change an existing selection as to the investment  alternatives in
effect with  respect to an  existing  Compensation  Account (in  increments
prescribed  by the  Committee  or the  Company)  as  often,  and with  such
restrictions, as determined by the Committee or by the Company.

     (c) Change of Beneficiary.  A Participant  may, at any time,  elect to
change the  designation  of a  Beneficiary  in  accordance  with Section 11
hereof.

     10. DISTRIBUTION

     (a) Retirement Account. In accordance with the Participant's  Election
and within the guidelines  established  by the Committee or the Company,  a
Participant's  Retirement Account shall be distributed in cash or shares of
Common  Stock (or a  combination  of  both).  If no  Election  is made by a
Participant  as to  the  distribution  or  form  of  payment  of his or her
Retirement  Account,  upon the earlier of death or retirement  such account
shall be paid in cash or shares of Common Stock (or a combination  of both)
in lump sum.  The entire  Retirement  Account must be paid out within forty
years  following  the date of the  earlier  of the  Participant's  death or
retirement.

     (b) In-Service Account. In accordance with the Participant's  Election
and within the  guidelines  established  by the  Committee  or the Company,
Deferred Compensation credited to a Participant's  In-Service Account shall
be  distributed  in cash or  shares of Common  Stock (or a  combination  of
both).  A  Participant  may make  different  Elections  with respect to the
applicable  distribution  periods  for  different  deferral  cycles  in the
In-Service Accounts.

     (c)  Termination.  Notwithstanding  the  foregoing,  in the event of a
Participant's Termination, the Company reserves the right to distribute the
Participant's  Compensation  Account  at such  time and in such  manner  as
deemed appropriate.

     (d) Change of Distribution of Compensation Account. A Participant will
be  allowed to change  the  Election  as to the  distribution  of  Deferred
Compensation  of his or her Retirement  Account for all amounts  previously
deferred pursuant to such Election, subject to approval by the Committee or
the Company. Such change must be made by the earlier of:

     (1) the date six months prior to the first day of the month  following
such Participant's retirement; or

     (2) the December 31  immediately  preceding the first day of the month
following such Participant's retirement.

     A Participant  may not change the Election as to the  distribution  of
Deferred  Compensation  in his  or  her  In-Service  Account(s)  except  as
otherwise set forth in Sections 7 and 8.

     11. BENEFICIARY DESIGNATION

     A Participant may designate one or more persons (including a trust) to
whom or to which  payments  are to be made if the  Participant  dies before
receiving  distribution  of all amounts due  hereunder.  A  designation  of
Beneficiary  will be effective only after the signed Election is filed with
Corporate  Human  Resources  while the Participant is alive and will cancel
all  designations  of  Beneficiary   signed  and  filed  earlier.   If  the
Participant fails to designate a Beneficiary as provided above or if all of
a Participant's  Beneficiaries predecease him or her and he or she fails to
designate a new Beneficiary,  the remaining unpaid amounts shall be paid in
one lump sum to the estate of such Participant. If all Beneficiaries of the
Participant die after the  Participant  but before complete  payment of all
amounts due  hereunder,  the remaining  unpaid amounts shall be paid in one
lump sum to the estate of the last to die of such Beneficiaries.

     12. CHANGE IN CONTROL

     Notwithstanding  any  provision of this Plan to the  contrary,  in the
event of a Change in Control, each Participant in the Plan shall receive an
automatic  lump  sum  cash  distribution  of  all  amounts  accrued  in the
Participant's  Compensation  Account not later than fifteen (15) days after
the date of the Change in  Control.  For this  purpose,  the balance in the
portion of a  Participant's  Compensation  Account  invested  in the Common
Stock Fund shall be determined by multiplying  the number of Stock Units by
the higher of (a) the  highest  Fair  Market  Value on any date  within the
period  commencing  30 days prior to such Change in Control,  or (b) if the
Change in Control of the Company occurs as a result of a tender or exchange
offer or  consummation of a corporate  transaction,  then the highest price
paid per share of Common Stock pursuant thereto.  Any  consideration  other
than cash forming a part or all of the consideration for Common Stock to be
paid  pursuant  to  the  applicable  transaction  shall  be  valued  at the
valuation price thereon determined by the Board.

     In addition,  the Company shall  reimburse a Participant for the legal
fees and expenses incurred if the Participant is required to seek to obtain
or enforce any right to  distribution.  In the event that it is  determined
that  such  Participant  is  properly   entitled  to  a  cash  distribution
hereunder,  such  Participant  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 the subject date
from the date such distribution  should have been made to and including the
date  it is  made.  Notwithstanding  any  provision  of  this  Plan  to the
contrary,  this  Section  12 may not be  amended  after a Change in Control
occurs without the written consent of a majority in number of Participants.

     13. INALIENABILITY OF BENEFITS

     The interests of the  Participants and their  Beneficiaries  under the
Plan  may  not in any  way be  voluntarily  or  involuntarily  transferred,
alienated or assigned, nor subject to attachment, execution, garnishment or
other such equitable or legal process.  A Participant or Beneficiary cannot
waive the provisions of this Section 13.

     14. GOVERNING LAW

     The  provisions  of this plan shall be  interpreted  and  construed in
accordance  with the laws of the  Commonwealth  of Kentucky,  except to the
extent preempted by Federal law.

     15. AMENDMENTS

     The  Committee  may amend,  alter or  terminate  this Plan at any time
without  the prior  approval  of the  Board;  provided,  however,  that the
Committee may not, without approval by the Board and the shareholders:

     (a)  increase  the number of  securities  that may be issued under the
Plan (except as provided in Section 3(c));

     (b)  materially   modify  the   requirements  as  to  eligibility  for
participation in the Plan; or

     (c)   otherwise   materially   increase  the   benefits   accruing  to
Participants under the Plan.

     16. EFFECTIVE DATE

     The Plan was  approved by the  shareholders  of the Company on January
26, 1995,  and originally  became  effective as of October 1, 1994, and has
been restated in this document effective as of November 7, 2002.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>serp.txt
<DESCRIPTION>EXHIBIT 10.4 SERP
<TEXT>


                         TENTH AMENDED AND RESTATED
                                ASHLAND INC.
                     SUPPLEMENTAL EARLY RETIREMENT PLAN
                           FOR CERTAIN EMPLOYEES
                 November 4, 1999 and as amended thereafter

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.

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  approval
         of the  shareholders  of  Ashland  (or  if  such  approval  is not
         required, upon the approval of the Board) of (A) any consolidation
         or merger of  Ashland,  other  than a  consolidation  or merger of
         Ashland into or with a direct or indirect wholly-owned subsidiary,
         in which Ashland 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
         Ashland, provided, however, that no sale, lease, exchange or other
         transfer of all or  substantially  all the assets of Ashland shall
         be deemed to occur  unless  assets  constituting  80% of the total
         assets of Ashland are  transferred  pursuant  to such sale,  lease
         exchange  or  other  transfer,  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 Exchange
         Act),  other than Ashland or any  subsidiary  or employee  benefit
         plan or trust  maintained by Ashland,  shall become the beneficial
         owner (as defined in Rule 13d-3 under the Exchange Act),  directly
         or  indirectly,  of  more  than  15%  of  Ashland'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 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 Ashland'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.  Notwithstanding the foregoing,  any transaction,
         or series of transactions, that shall result in the disposition of
         Ashland's  interest in Marathon Ashland  Petroleum LLC,  including
         without  limitation  any  transaction  arising out of that certain
         Put/Call,  Registration  Rights  and  Standstill  Agreement  dated
         January 1, 1998  among  Marathon  Oil  Company,  USX  Corporation,
         Ashland and Marathon  Ashland  Petroleum LLC, as amended from time
         to time, shall not be deemed to constitute a Change in Control.

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 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  eighty-four-month  (84) 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  eighty-four-month  (84)  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.

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  Chief Financial
Officer  and either  the Vice  President  Human  Resources  - Programs  and
Services or the Vice  President and General  Counsel to participate in this
Plan.

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  written  notice  (Attention:  Vice  President  Human
Resources  -  Programs  and  Services)  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  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
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  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  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 subparagraphs (1)-(4) of this paragraph (c).
For distributions  commencing after May 31, 2001, such calculation shall be
conducted on the basis that the benefits referred to in said  subparagraphs
(1)-(4)  commence  at the same time as of which the benefit in this Plan is
paid as a lump sum,  using the  Participant's  attained  age at the time of
such  commencement,  unless  otherwise  required in  paragraph  (d) of this
Section 5.01.

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

Length of Participant's Service at                            Number of Years
  Separation from 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 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                           Number of Years
   Separation from 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 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

(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
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  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 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 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-10
<SEQUENCE>7
<FILENAME>salary.txt
<DESCRIPTION>EXHIBIT 10.5 SALARY CONTINUATION PLAN
<TEXT>


                                ASHLAND INC.
                          SALARY CONTINUATION PLAN
                    (as amended as of November 7, 2002)


     The Ashland Inc. Salary Continuation Plan (the "Plan"), effective July
21, 1988,  is an employee  benefit plan which  provides  eligible  salaried
employees of Ashland Inc. and its majority-owned subsidiaries (collectively
referred to herein as the "Company") with certain severance benefits if the
individual's  employment  with the  Company  is  terminated  under  defined
circumstances  after a Change in Control,  as defined in Section 4(b).  The
details and purpose of the Plan are more fully explained below.

     SECTION 1. PURPOSE

     The  purpose  of the Plan is to  reduce  employee  concerns  about the
possibility of a Change in Control, as defined below in Section 4(b). It is
important that each employee be able to focus his or her full attention and
energy  toward the goals and  objectives  of the Company.  The Plan is also
designed  to permit the  Company to retain its high  quality  work force by
increasing  stability and improving morale and  productivity.  In addition,
the Plan will  allow the  company  to  attract  and  retain  new  qualified
employees.

     SECTION 2. ADMINISTRATION

     Ashland Inc.  ("Ashland")  shall be the Plan  Administrator  and shall
administer  the  Plan.  Any  determinations  by the Vice  President,  Human
Resources - Programs and Services, or his or her designee, in carrying out,
administering, or interpreting this Plan shall be final and binding for all
purposes and upon all interested persons and their heirs,  successors,  and
personal representatives. All costs associated with the Plan shall be borne
by the Company.

     SECTION 3. ELIGIBILITY

     An  employee  who is  classified  on the  records of the  Company as a
regular,  full-time  salaried  employee,  whether  exempt or  non-exempt as
specified in the Fair Labor  Standards  Act, as from time to time  amended,
(excluding  hourly employees;  employees  covered by collective  bargaining
agreements;  employees of subsidiaries,  entities, or partnerships in which
the  Company  has a 50%  or  less  ownership  interest;  and  international
employees,  except foreign nationals who are located in Canada or those who
are  U.S.  expatriates)  will  be  entitled  to  participate  in the  Plan,
regardless of length of service. Employees who have entered into employment
contracts with the Company will not be eligible to participate in the Plan.

     At any time prior to a Change in Control,  as defined in Section 4(b),
Ashland  reserves,  in its  complete  discretion,  the  right to amend  the
eligible classes of employees.

     SECTION 4. CONDITIONS FOR BENEFIT PAYMENTS

     (a) A participant shall not be entitled to receive benefits under this
Plan  prior  to  a  Change  in  Control,   as  defined  in  Section   4(b).
Participation in the Plan does not create a contract of employment  between
the Company and its employees.  The Company reserves the right to terminate
employees at any time for any reason,  just as employees  have the right to
terminate their employment at any time for any reason.

     (b) For purposes of the Plan,  a change in control of Ashland  (herein
after  referred  to as a  "Change  in  Control")  shall be  deemed  to have
occurred if:

     (i) there shall be consummated (A) any  consolidation or merger of the
Company, other than a consolidation or merger of the Company into or with a
direct or indirect wholly-owned subsidiary, in which the Company is not the
continuing  or  surviving  corporation  or pursuant to which  shares of the
Company's common stock would be converted into cash,  securities,  or other
property,  other  than a merger  of the  Company  in which  the  individual
holders of the Company's common stock  immediately prior to the merger have
the  same  proportionate   ownership  of  common  stock  of  the  surviving
corporation immediately after the merger, or (B) any sale, lease, exchange,
or transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of the Company, provided,  however, that no
sale,  lease,  exchange or other transfer of all or  substantially  all the
assets of the Company shall be deemed to occur unless  assets  constituting
80% of the total  assets of the  Company are  transferred  pursuant to such
sale, lease, exchange or other transfer; or

     (ii)  the  Shareholders  of the  Company  shall  approve  any  plan or
proposal for the liquidation or dissolution of the Company; or

     (iii)  any  "person"  (as  such  term is used in  Sections  13(d)  and
14(d)(2) of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act")),  other than the  Company or a  subsidiary  thereof or any  employee
benefit plan sponsored by the Company or a subsidiary thereof, shall become
the  beneficial  owner (within the meaning of Rule 13d-3 under the Exchange
Act) of  securities  of Ashland  representing  50% or more of the  combined
voting power of Ashland's then outstanding securities ordinarily (and apart
from rights accruing in special  circumstances) having the right to vote in
the election of directors,  as a result of a tender or exchange offer, open
market purchases, privately-negotiated purchases or otherwise; or

     (iv) at any time during a period of two consecutive years, individuals
who at the beginning of such period  constituted  the Board of Directors of
Ashland  shall  cease for any  reason  to  constitute  at least a  majority
thereof,  unless the election or the  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-thirds of the directors then still in office who
were directors at the beginning of such two-year period.

     Notwithstanding   the  foregoing,   any  transaction,   or  series  of
transactions,  that  shall  result  in the  disposition  of  the  Company's
interest in Marathon Ashland Petroleum LLC,  including  without  limitation
any transaction  arising out of that certain Put/Call,  Registration Rights
and Standstill  Agreement dated January 1, 1998 among Marathon Oil Company,
USX Corporation, the Company and Marathon Ashland Petroleum LLC, as amended
from time to time, shall not be deemed to constitute a Change in Control.

         (c) Benefits shall be payable to a participant under the Plan after a
Change in Control has occurred if a participant's employment is terminated by
the Company without Cause, as defined below, within two (2) years from the date
of the Change in Control. For purposes of the Plan, "cause" shall mean (i) the
willful and continued failure of an employee to substantially perform his or her
duties with the company (other than such failure resulting from the employee's
incapacity due to physical or mental illness), or (ii) willful engaging by an
employee in gross misconduct materially injurious to the Company.

SECTION 5.        AMOUNT OF BENEFITS

     Following  a Change in  Control  and a  participant's  termination  of
employment  within two (2) years  thereafter  without  Cause, a participant
shall be entitled to receive benefits under the Plan as described below:

     (a) A participant shall be entitled to be paid in an undiscounted lump
sum, within ten (10) business days after such participant's  termination of
employment  without Cause, an amount equal to a specified portion of his or
her current base compensation (excluding any bonus compensation) based upon
the greater of such participant's (a) aggregate years and months of service
(whether or not  continuous),  or (b) current Job Band (or, if higher,  the
Job  Band  of  such  participant  at the  time of the  Change  in  Control)
calculated as follows:

         Length of Service      Payment
        Up to 5 full years      3 months' base compensation
        More than 5 and up      6 months' base compensation
          to 10 full years
        More than 10 and up     1 year's base compensation
          to 15 full years
        More than 15 and up     1-1/2 year's base compensation
          to 20 full years
        More than 20 full       2 years' base compensation
          years

           Job Band             Payment

         Band 1 - 10            3 months' base compensation
         Band 11 - 22           6 months' base compensation
         Band 23 and above      1 year's base compensation

     (b) At the  sole  expense  of the  Company,  a  participant  shall  be
entitled to the continuation of his or her medical,  dental, and group life
benefits  in  effect  at the  time of  such  participant's  termination  of
employment  without  Cause for a period of six (6)  months  following  such
participant's termination of employment.

     (c) A participant  shall be reimbursed  for any legal fees or expenses
incurred by the  participant to enforce the payment of Plan benefits within
ten (10)  business days of providing  copies of applicable  invoices to the
Company.

     (d) A  participant  shall be entitled to interest on the amount of any
payments due under the Plan (but not timely  paid) in an amount  equivalent
to the prime  rate of  interest  (quoted  by  Citibank,  N.A.  as its prime
commercial  lending rate) on the latest date practicable  prior to the date
such payments should have been made, to and including the date it is made.

     (e) Within ten (10) business days of the participant's  termination of
employment  following a Change in Control, the Company shall provide, at no
cost to the  participant,  individual  outside  assistance in finding other
employment.  Such  obligation  may be fulfilled by the Company  through the
retention of an outplacement service for use by individual participants.

     (f) Participants shall be entitled to receive any pension, disability,
workers' compensation, other Company benefit plan distribution, payment for
vacation accrued but not taken, statutory employment termination benefit, or any
other compensation plan payment otherwise independently due; however, in no
event shall a participant who receives benefit under this Plan be entitled to
additional severance payment pursuant to any other existing severance policy of
the Company.

     SECTION 6. ACCEPTANCE OF BENEFITS

     If a participant receives and accepts all of the benefits provided
under Section 5 of the Plan, he or she shall be deemed thereby to have waived
any right or cause of action against the Company and its directors, officers, or
employees arising from the termination of the participant's employment.

     SECTION 7. CLAIMS PROCEDURE

     (a) Following a Change in Control and a  participant's  termination of
employment,  the benefits  described in Section 5 of the Plan shall be paid
as  described  therein  without  any  required  action  on the part of such
participant.



     (b) If any participant believes that he or she is entitled to benefits
provided under the Plan and has not received such benefits  within the time
prescribed  by the Plan,  such  participant  may submit a written claim for
payment of such  benefits  to the  Company.  If such claim for  benefits is
wholly or partially denied, the Company shall,  within thirty (30) business
days after receipt of the claim,  notice the  participant  of the denial of
the claim.  Such  notice of denial (i) shall be in  writing,  (ii) shall be
written in a manner  calculated to be understood  by the  participant,  and
(iii) shall  contain (A) the  specific  reason or reasons for denial of the
claim, (B) a specific reference to the pertinent Plan provisions upon which
the  denial is based,  (C) a  description  of any  additional  material  or
information  necessary to perfect the claim,  along with an  explanation of
why such material or  information  is necessary,  and (D) an explanation of
the claim review  procedure,  in  accordance  with the  provisions  of this
Section 7.

     (c)  Within  sixty  (60)  business  days  after  the  receipt  by  the
participant of a written notice of denial of the claim,  or such later time
as shall be deemed reasonable taking into account the nature of the benefit
subject to the claim and any other attendant circumstances, the participant
may file a written request with the Company that it conduct a full and fair
review of the denial of the claim for benefits.  As a part of such full and
fair  review,  the  participant  (or  such  participant's  duly  authorized
representative) may review and photocopy pertinent documents (including but
not limited to the  participant's  personal history file) and submit issues
and  comments  to the  Company  in  writing.  The  Company  shall  make its
determination  in accordance with the documents  governing the Plan insofar
as such  documents  are  consistent  with the  provisions  of the  Employee
Retirement Income Security Act of 1914 (herein "ERISA").

     The Company  shall  promptly  deliver to the  participant  its written
decision on the claim (in no event later than  thirty  (30)  business  days
after the receipt of the aforesaid request for review, except that if there
are special circumstances (such as a conference with the participant or his
or her  representative)  which require an extension of time,  the aforesaid
thirty (30) business day period shall be extended to a reasonable period of
time not to exceed sixty (60) business  days).  Such decision  shall (i) be
written in a manner  calculated to be understood by the  participant,  (ii)
include the specific reason or reasons for the decision,  and (iii) contain
a  specific  reference  to the  pertinent  Plan  provisions  upon which the
decision is based.  If the decision on review is not  furnished  within the
time  prescribed by this Section 7(c), the claim shall be deemed granted on
review.

     SECTION 8. AMENDMENTS AND TERMINATIONS

     Ashland's  Board  of  Directors   shall  have  plenary   authority  to
terminate,  modify,  or amend this Plan in such  respects  as it shall deem
advisable at any time prior to a Change in Control.

     SECTION 9. SUCCESSORS BINDING AGREEMENT

     (a)  The  Company  will  require  any  successor  (whether  direct  or
indirect,  by  purchase,  merger,  consolidation  or  otherwise)  to all or
substantially  all  of the  business  and/or  assets  of  the  Company,  by
agreement  in form and  substance  satisfactory  to eligible  participants,
expressly to assume and agree to provide benefits  pursuant to this Plan in
the same manner and to the same  extent that the Company  would be required
to perform its  obligations  under the Plan if no such succession had taken
place.  Failure  of the  Company  to  obtain  such  agreement  prior to the
effectiveness  of any such succession shall be a violation of this Plan and
shall entitle eligible participants to compensation from the Company in the
same  amount and on the same  terms as the  participant  would be  entitled
pursuant  to  Section 5,  except  that for  purposes  of  implementing  the
foregoing, the date on which any such succession becomes effective shall be
deemed the date of the  participant's  termination  of  employment  without
Cause.  As  used  in  this  Plan,  "Company"  shall  mean  the  Company  as
hereinbefore  defined and any  successor to its business  and/or  assets as
aforesaid  which  executes and delivers the agreement  provided for in this
Section 9 or which otherwise  becomes bound by all the terms and provisions
of this Plan by operation of law.


     (b) This Plan shall  inure to the benefit of and be  enforceable  by a
participant's personal or legal representatives, executors, administrators,
successors,  heirs, distributees,  devisees, and legatees. If a participant
should die while any amounts would still be payable to him or her hereunder
if he or she had  continued to live,  all such  amounts,  unless  otherwise
provided herein, shall be paid in accordance with the terms of this Plan to
such participant's  devisee,  legatee, or other designee or, if there be no
such designee, to his or her estate.

     SECTION 10. WITHHOLDING TAXES

     The Company is  authorized to withhold any tax required to be withheld
from the amounts  payable to a participant  pursuant to this Plan which are
considered taxable compensation to the participant.

     SECTION 11. GOVERNING LAW

     The  Plan  shall  be  governed  by the  laws  of the  Commonwealth  of
Kentucky.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>exeemp.txt
<DESCRIPTION>EXHIBIT 10.6 EXECUTIVE EMPLOYMENT AGREEMENT
<TEXT>







NAME
ADDRESS




Dear Mr. _________________:

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

     In order to encourage you to remain in the employ of the Company, this
Agreement  sets forth those  benefits which the Company will provide to you
in the event your  employment  with the Company (1) is  terminated  without
Cause during the term of this Agreement,  or (2) you resign for Good Reason
following  a Change in  Control  of the  Company  under  the  circumstances
described below.

SECTION A.  DEFINITIONS

1.       "Agreement" shall mean this letter agreement.

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

3.       "Cause"  shall  occur  hereunder  only  upon (A) the  willful  and
         continued failure by you substantially to perform your duties with
         the  Company  (other  than any such  failure  resulting  from your
         incapacity  due to  physical  or mental  illness)  after a written
         demand for  substantial  performance  is  delivered  to you by the
         Board which specifically  identifies the manner in which the Board
         believes that you have not  substantially  performed  your duties,
         (B) the willful engaging by you in gross misconduct materially and
         demonstrably  injurious to the Company  after a written  demand to
         cease such  misconduct  is delivered  to you by the Board,  or (C)
         your  conviction of or the entering of a plea of nolo contendre to
         the commission of a felony involving moral turpitude. For purposes
         of this  paragraph,  no act, or failure to act, on your part shall
         be considered "willful" unless done, or omitted to be done, by you
         not in good faith and without  reasonable  belief that your action
         or   omission   was  in  the  best   interest   of  the   Company.
         Notwithstanding  the  foregoing,  you  shall not be deemed to have
         been  terminated  for Cause unless and until there shall have been
         delivered  to you a  copy  of a  resolution  duly  adopted  by the
         affirmative  vote of not less than  three-quarters  of the  entire
         membership  of the Board at a meeting of the Board called and held
         for the  purpose,  among  others,  (after  at least 20 days  prior
         notice  to you and an  opportunity  for you,  together  with  your
         counsel, to be heard before the Board), of finding that (i) in the
         good faith  opinion of the Board you failed to perform your duties
         or engaged in misconduct as set forth above in subparagraph (A) or
         (B) of this  paragraph,  and that you did not correct such failure
         or cease such  misconduct  after being  requested  to do so by the
         Board, or (ii) as set forth in subparagraph (C) of this paragraph,
         you  have  been  convicted  of or  have  entered  a plea  of  nolo
         contendre to the commission of a felony involving moral turpitude.

4.       "Change  in  Control  of the  Company"  shall  be  deemed  to have
         occurred if (i) there shall be consummated  (A) any  consolidation
         or merger of the Company,  other than a consolidation or merger of
         the  Company  into  or  with a  direct  or  indirect  wholly-owned
         subsidiary,  in  which  the  Company  is  not  the  continuing  or
         surviving corporation or pursuant to which shares of the Company's
         Common Stock would be  converted  into cash,  securities  or other
         property,  other than a merger of the Company in which the holders
         of the Company's Common Stock immediately prior to the merger have
         substantially the same proportionate  ownership of common stock of
         the surviving corporation immediately after the merger, or (B) any
         sale, lease,  exchange or transfer (in one transaction or a series
         of related transactions) of all or substantially all the assets of
         the Company,  provided,  however, that no sale, lease, exchange or
         other  transfer  of all or  substantially  all the  assets  of the
         Company shall be deemed to occur unless assets constituting 80% of
         the total assets of the Company are  transferred  pursuant to such
         sale, lease,  exchange or other transfer, or (ii) the shareholders
         of the  Company  shall  approve  any  plan  or  proposal  for  the
         liquidation or  dissolution  of the Company,  or (iii) any Person,
         other than the  Company or a  Subsidiary  thereof or any  employee
         benefit plan  sponsored  by the Company or a  Subsidiary  thereof,
         shall  become the  beneficial  owner  (within  the meaning of Rule
         13d-3  under  the  Exchange  Act)  of  securities  of the  Company
         representing  15% or  more of the  combined  voting  power  of the
         Company's then outstanding  securities  ordinarily (and apart from
         rights accruing in special circumstances) having the right to vote
         in the election of directors,  as a result of a tender or exchange
         offer,  open market purchases,  privately-negotiated  purchases or
         otherwise,  or  (iv)  at any  time  during  a  period  of two  (2)
         consecutive years, individuals who at the beginning of such period
         constituted  the Board shall cease for any reason to constitute at
         least a majority  thereof,  unless the election or the  nomination
         for election by the  Company's  shareholders  of each new director
         during  such  two-year  period was  approved by a vote of at least
         two-thirds  of  the  directors  then  still  in  office  who  were
         directors   at   the   beginning   of   such   two-year    period.
         Notwithstanding  the  foregoing,  any  transaction,  or  series of
         transactions,   that  shall  result  in  the  disposition  of  the
         Company's  interest in Marathon Ashland  Petroleum LLC,  including
         without  limitation  any  transaction  arising out of that certain
         Put/Call,  Registration  Rights  and  Standstill  Agreement  dated
         January 1, 1998 among Marathon Oil Company,  USX Corporation,  the
         Company and Marathon  Ashland  Petroleum LLC, as amended from time
         to time, shall not be deemed to constitute a Change in Control.

5.       "COBRA" shall mean the Consolidated Omnibus Budget  Reconciliation
         Act, as amended.

6.       "Common  Stock" shall mean the common  stock,  par value $1.00 per
         share, of the Company.

7.       "Company"  shall  mean  Ashland  Inc.  and  any  successor  to its
         business  and/or assets which  executes and delivers the agreement
         provided for in Section F,  paragraph 1 hereof or which  otherwise
         becomes bound by all the terms and provisions of this Agreement by
         operation of law.

8.       "Competitive  Activity"  shall  have the  meaning  as set forth in
         Section C, paragraph 2.

9.       "Competitive  Operation"  shall  have the  meaning as set forth in
         Section C, paragraph 2.

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

11.      "Date  Of  Termination"  shall  mean:  (A) if  this  Agreement  is
         terminated  for  Disability,  thirty (30) days after the Notice of
         Termination  is given by the  Company  to you  (provided  that you
         shall not have  returned  to the  performance  of your duties on a
         full-time  basis during such thirty (30) day period),  (B) if your
         employment  is  terminated  for  Good  Reason  by  you,  the  date
         specified in the Notice of Termination, and (C) if your employment
         is terminated for any other reason,  the date on which a Notice of
         Termination is received by you unless a later date is specified.

12.      "Disability"  shall occur when: if, as a result of your incapacity
         due to physical or mental illness, you shall have been absent from
         your duties with the  Company for six (6)  consecutive  months and
         shall not have  returned to full-time  performance  of your duties
         within  thirty (30) days after  written  notice is given to you by
         the Company.

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

14.      "Excise Tax" shall have the meaning as set forth in Section E.

15.      "Good Reason" shall mean:

(a)      without your express written consent,  the assignment to you after
         a Change in Control  of the  Company,  of any duties  inconsistent
         with,  or a significant  diminution  of, your  positions,  duties,
         responsibilities or status with the Company immediately prior to a
         Change in Control of the Company,  or a diminution  in your titles
         or offices as in effect  immediately  prior to a Change in Control
         of the  Company  or any  removal  of you from,  or any  failure to
         reelect you to, any of such positions;

(b)      a  reduction  by  the  Company  in  your  base  salary  in  effect
         immediately  prior to a Change  in  Control  of the  Company  or a
         failure by the Company to increase  (within fifteen months of your
         last  increase in base  salary) your base salary after a Change in
         Control  of  the  Company  in an  amount  which  is  substantially
         similar, on a percentage basis, to the average percentage increase
         in base salary for all  corporate  officers of the Company  during
         the preceding twelve (12) months;

(c)      the failure by the Company to continue in effect any thrift, stock
         ownership, pension, life insurance, health, dental and accident or
         disability plan in which you are  participating or are eligible to
         participate  at the time of a Change in Control of the Company (or
         plans providing you with substantially  similar benefits),  except
         as  otherwise  required by the terms of such plans as in effect at
         the time of any Change in Control of the Company, or the taking of
         any  action by the  Company  which  would  adversely  affect  your
         participation  in or materially  reduce your benefits under any of
         such plans or deprive you of any material fringe benefits  enjoyed
         by you at the time of the Change in Control of the  Company or the
         failure  by the  Company  to  provide  you with the number of paid
         vacation  days to which you are  entitled in  accordance  with the
         vacation policies of the Company in effect at the time of a Change
         in Control of the Company, unless a comparable plan is substituted
         therefor;

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

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

(f)      the relocation of the Company's  principal  executive offices to a
         location  outside the  Covington,  Kentucky area, or the Company's
         requiring  you to be based  anywhere  other  than at your  current
         location or at the location of the Company's  principal  executive
         or divisional offices, except for required travel on the Company's
         business to an extent  substantially  consistent with your present
         business travel  obligations,  or, in the event you consent to any
         such relocation of the Company's principal executive or divisional
         offices,  the failure by the Company to pay (or reimburse you for)
         all  reasonable  moving  expenses  incurred  by you  relating to a
         change  of  your  principal  residence  in  connection  with  such
         relocation  and to indemnify  you against any loss (defined as the
         difference between the actual sale price of such residence and the
         greater of (a) your aggregate investment in such residence, or (b)
         the  fair  market  value  of  such   residence  as  determined  by
         Relocation   Properties   Management  LLC  or  other  real  estate
         appraiser  reasonably  satisfactory  to both you and the  Company)
         realized in the sale of your  principal  residence  in  connection
         with any such change of residence;

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

(h)      any  failure  by the  Company  to obtain  the  assumption  of this
         Agreement by any successor or assign of the Company.

16.      "Gross-up  Payment" shall have the meaning as set forth in Section
         E.

17.      "Notice of  Termination"  shall mean a notice which shall indicate
         the specific  termination  provision in this Agreement relied upon
         and  shall  set  forth  in   reasonable   detail   the  facts  and
         circumstances  claimed to provide a basis for  termination of your
         employment under the provision so indicated.

18.      "Payment" shall have the meaning as set forth in Section E.

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

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

21.      "Salary  Continuation  Period" shall have the meaning set forth in
         Section C, paragraph 1.

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

SECTION B.  TERM AND BENEFITS

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

     In the event of your  retirement,  at your  election or in  accordance
with the Company's generally applicable  retirement policies,  as in effect
from time to time, this Agreement shall  automatically  terminate,  without
additional  notice to you,  as of the  effective  date of your  retirement.
Notwithstanding  the first  sentence  of this  paragraph  and the first and
second  sentences  of this Section B, if a Change in Control of the Company
should  occur while you are still an employee of the Company and while this
Agreement is in effect,  then this Agreement  shall continue in effect from
the date of such  Change  in  Control  of the  Company  for a period of two
years. Prior to a Change in Control of the Company,  your employment may be
terminated  by the  Company  for Cause at any time  pursuant to a Notice of
Termination.  In such  event,  you shall not be  entitled  to the  benefits
provided  hereunder.  No benefits  shall be payable  hereunder  unless your
employment is terminated without Cause or there shall have been a Change in
Control of the Company and your employment by the Company shall  thereafter
terminate in accordance with Section D hereof.


SECTION C.  TERMINATION PRIOR TO CHANGE IN CONTROL

1.       Compensation  Prior to a Change in Control.  If you are terminated
         by the Company without Cause during the term of this Agreement and
         prior to a Change in Control of the Company, you shall be entitled
         to receive:

(a)      payment of your  highest  salary  during the prior two year fiscal
         years  preceding the fiscal year in which your Date of Termination
         occurs  for  a  period  of  two  (2)  years  after  your  Date  of
         Termination ("Salary Continuation Period");

(b)      continuation  of  your  and  your  eligible  dependents'  existing
         participation  at regular  employee  rates, in effect from time to
         time, in all of the Company's medical, dental and group life plans
         or programs in which you were  participating  immediately prior to
         your Date of Termination  during the Salary  Continuation  Period,
         after which time you and your eligible dependents will be eligible
         for  coverage  under  COBRA.  In the  event  that  your  continued
         participation  in any such plan or program is for whatever  reason
         impossible,  the Company  shall arrange upon  comparable  terms to
         provide you with benefits substantially equivalent on an after tax
         basis to those  which you and your  eligible  dependents  are,  or
         become, entitled to receive under such plans and programs;

(c)      if and when  payments  are made,  payment in cash of any  pro-rata
         portion (up through your Date Of  Termination)  of any amounts you
         would have  received  under the Company's  performance  unit/share
         plans, incentive compensation plan and any other similar executive
         compensation  plan in  which  you were a  participant  immediately
         prior to your Date of Termination; and

(d)      outplacement  services historically offered to displaced employees
         by  the  Company  under  substantially  the  same  terms  and  fee
         structure as is consistent with an employee in your position.

     However,  in the  event  that  your  employment  with the  Company  is
terminated  during  the term of this  Agreement  and  prior to a Change  in
Control of the Company and such  termination  is not a termination  without
Cause  (including,  without  limitation,  termination  by  reason  of  your
voluntary  termination,  retirement,  death,  or  Disability),  or if  your
employment is terminated for Cause during the term of this  Agreement,  you
shall not be entitled to receive any benefits under this Agreement.

     2. Competitive Activity. In consideration of the foregoing,  you agree
that if your employment is terminated during the term of this Agreement and
prior to a Change in Control of the  Company,  then during a period  ending
six (6) months  following your Date of Termination  you shall not engage in
any  Competitive  Activity;  provided,  you  shall  not be  subject  to the
foregoing  obligation if the Company breaches a material  provision of this
Agreement.  If you engage in any  Competitive  Activity during that period,
the Company  shall be entitled  to recover any  benefits  paid to you under
this  Agreement.  For purposes of this  Agreement,  "Competitive  Activity"
shall mean your  participation,  without the written consent of the General
Counsel of the Company,  in the management of any business operation of any
enterprise  if  such  operation  (a  "Competitive  Operation")  engages  in
substantial and direct  competition  with any business  operation  actively
conducted by the Company or its divisions and  Subsidiaries on your Date of
Termination.  For purposes of this paragraph, a business operation shall be
considered a  Competitive  Operation if such  business  sells a competitive
product or service which constitutes (i) 15% of that business's total sales
or (ii) 15% of the total sales of any individual  subsidiary or division of
that  business  and,  in either  event,  the  Company's  sales of a similar
product or service constitutes (i) 15% of the total sales of the Company or
(ii) 15% of the total sales of any individual Subsidiary or division of the
Company.  Competitive  Activity shall not include (i) the mere ownership of
securities in any enterprise,  or (ii)  participation  in the management of
any enterprise or any business operation thereof,  other than in connection
with a Competitive Operation of such enterprise.

     3.  Release.  In exchange  for the  benefits  herein,  you  completely
release the Company to the fullest extent  permitted by law from all claims
you may have against the Company on your Date of Termination  except claims
related to (a) claims for  benefits  to which you are  entitled  under this
Agreement and (b) any  applicable  worker's  compensation  or  unemployment
compensation laws.

SECTION D.  TERMINATION FOLLOWING CHANGE IN CONTROL

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

     2. Notice of  Termination.  Except as provided in Section F, paragraph
1, any termination of your employment  following a Change in Control of the
Company shall be communicated by written Notice of Termination to the other
party  hereto.  No  termination  shall be effective  without such Notice of
Termination.

     3. Compensation Upon Termination After a Change in Control.


(a)      If your termination is a Qualifying Termination,  then the Company
         shall  pay to you as  severance  pay (and  without  regard  to the
         provisions of any benefit or incentive  plan),  in a lump sum cash
         payment on the fifth (5th) day following your Date of Termination,
         an amount  equal to three (3) times  the  highest  of your  annual
         compensation  (including  annual incentive  compensation)  paid or
         payable in respect of the prior three (3) fiscal  years  preceding
         the fiscal  year in which your Date of  Termination  occurs or, if
         greater,  the prior three (3) fiscal  years  preceding  the fiscal
         year in which the Change in Control of the Company occurs.

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

(i)      provide for  continuation  of your and your  eligible  dependents'
         participation  at regular  employee  rates, in effect from time to
         time, in all of the Company's medical, dental and group life plans
         or programs in which you were  participating  immediately prior to
         your Date of  Termination  for a period of three  years  from your
         Date of  Termination,  after  which  time  you and  your  eligible
         dependents will be eligible for coverage under COBRA. In the event
         that your continued  participation  in any such plan or program is
         for whatever  reason  impossible,  the Company  shall arrange upon
         comparable  terms  to  provide  you  with  benefits  substantially
         equivalent  on an after  tax  basis to  those  which  you and your
         eligible dependents are, or become, entitled to receive under such
         plans and programs;

(ii)     provide  for full  payment in cash of any  performance  unit/share
         awards in existence on your Date of  Termination  less any amounts
         paid to you under the applicable  performance unit/share plan upon
         a Change in Control of the Company  pursuant to the  provisions of
         such plan;

(iii)    provide for payment in cash of any incentive  compensation (a) for
         the fiscal year during  which the Change in Control of the Company
         occurred  and any  prior  fiscal  years for which you have not yet
         received  payment,  and (b) payment of incentive  compensation for
         the  fiscal  year  in  which  your  Date  of  Termination   occurs
         calculated   as  the   greater  of  (x)  the   highest   incentive
         compensation  amount you were awarded in the last (3) three fiscal
         years  preceding the fiscal year in which your Date of Termination
         occurs and (y) 125% of your gross base  salary  (gross base salary
         to be  calculated  as of the day  prior to the date the  Change in
         Control  of the  Company  occurs  or,  if  greater,  your  Date of
         Termination);

(iv)     provide  benefits or  compensation  under any  compensation  plan,
         arrangement  or  agreement  not in existence as of the date hereof
         but which may be  established by the Company prior to your Date of
         Termination  at such time as payments are made  thereunder  to the
         same  extent as if you had been a  full-time  employee on the date
         such payments would otherwise have been made or benefits vested;

(v)      if  requested  by  you,  purchase  your  principal   residence  in
         accordance with the provisions of Relocation Properties Management
         LLC that have historically applied in the case of transfers of the
         Company's employees; provided, however, that the purchase price of
         your  residence  shall be  deemed  to be the  greater  of (a) your
         aggregate  investment in such  residence,  or (b) the then current
         fair market value of such residence;

(vi)     for one (1) year after your Date of  Termination,  provide and pay
         for outplacement services, by a firm reasonably acceptable to you,
         that  have  historically  been  offered  to  displaced   employees
         generally by the Company  under  substantially  the same terms and
         fee  structure  as is  consistent  with an  employee  in your then
         current position (or, if higher,  your position  immediately prior
         to the Change in Control of the Company);

(vii)    for one (1) year after your Date of  Termination,  provide and pay
         for financial planning services,  by a firm reasonably  acceptable
         to  you,  that  have   historically  been  offered  to  you  under
         substantially  the same terms and fee  structure as is  consistent
         with an employee  in your then  current  position  (or, if higher,
         your  position  immediately  prior to the Change in Control of the
         Company);

(viii)   pay to you an amount equal to the value of all unused,  earned and
         accrued  vacation as of your Date of  Termination  pursuant to the
         Company's  policies in effect  immediately  prior to the Change in
         Control of the Company; and

(ix)     provide for the  immediate  vesting of all stock  options  held by
         you,  as of your  Date of  Termination,  under any  Company  stock
         option  plan and all such  options  shall be  exercisable  for the
         remaining terms of the options.

(c)      Unless  otherwise  provided in this Agreement or in the applicable
         compensation  or stock option plan or program,  all payments shall
         be  made  to you  within  thirty  (30)  days  after  your  Date of
         Termination. The benefits in this Agreement are in addition to all
         accrued and vested benefits to which you are entitled under any of
         the Company's  plans and  arrangements  (to the extent accrued and
         vested   benefits  are  relevant  under  the  particular  plan  or
         arrangement),  including  but not limited  to, the accrued  vested
         benefits to which you are eligible  and entitled to receive  under
         any  of the  Company's  qualified  and  non-qualified  benefit  or
         retirement plans, or any successor plans in effect on your Date of
         Termination  hereunder.  For these  purposes,  accrued  and vested
         benefits shall include any extra,  special or additional  benefits
         under such qualified and non-qualified benefit or retirement plans
         that become due because of the Change in Control.

(d)      You shall not be required  to  mitigate  the amount of any payment
         provided  for in this  Section  by  seeking  other  employment  or
         otherwise,  nor shall the amount of any  payment  provided  for in
         this Section be reduced by any  compensation  earned by you as the
         result  of  employment  by  another  employer  after  your Date of
         Termination,  or otherwise. Except as provided herein, the Company
         shall have no right to set off against any amount owing  hereunder
         any claim which it may have against you.

SECTION E.  ADDITIONAL PAYMENTS BY THE COMPANY

     Notwithstanding  anything to the  contrary in this  Agreement,  in the
event  that any  payment  or  distribution  by the  Company  to or for your
benefit,  whether paid or payable or distributed or distributable  pursuant
to the terms of this Agreement or otherwise (a "Payment"), would be subject
to the excise tax imposed by Section 4999 of the  Internal  Revenue Code of
1986, as amended,  or any interest or penalties with respect to such excise
tax (such excise tax,  together with any such  interest or  penalties,  are
hereinafter  collectively  referred  to as the "Excise  Tax"),  the Company
shall pay to you an additional payment (a "Gross-up  Payment") in an amount
such that after  payment by you of all taxes  (including  any  interest  or
penalties  imposed  with  respect to such  taxes),  including  any  income,
employment  and Excise Tax imposed on any Gross-up  Payment,  you retain an
amount of the  Gross-up  Payment  equal to the Excise Tax imposed  upon the
Payments.  You and the Company  shall make an initial  determination  as to
whether a Gross-up  Payment is required and the amount of any such Gross-up
Payment. If you and the Company can not agree on whether a Gross-up Payment
is  required  or  the  amount  thereof,  then  an  independent   nationally
recognized accounting firm, appointed by you, shall determine the amount of
the Gross-up  Payment.  The Company  shall pay all  expenses  which you may
incur in determining the Gross-up Payment.  You shall notify the Company in
writing of any claim by the Internal  Revenue Service which, if successful,
would require the Company to make a Gross-up Payment (or a Gross-up Payment
in excess of that,  if any,  initially  determined  by the Company and you)
within ten days of the receipt of such claim.  The Company shall notify you
in writing at least ten days prior to the due date of any response required
with respect to such claim if it plans to contest the claim. If the Company
decides to contest such claim,  you shall  cooperate fully with the Company
in such action; provided,  however, the Company shall bear and pay directly
or indirectly  all costs and expenses  (including  additional  interest and
penalties)  incurred in connection with such action and shall indemnify and
hold you harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,  imposed as a result
of the  Company's  action.  If, as a result of the  Company's  action  with
respect to a claim,  you receive a refund of any amount paid by the Company
with  respect to such  claim,  you shall  promptly  pay such  refund to the
Company.  If the Company fails to timely notify you whether it will contest
such claim or the Company  determines  not to contest such claim,  then the
Company  shall  immediately  pay to you the portion of such claim,  if any,
which it has not previously paid to you.

SECTION F.  MISCELLANEOUS

     1.  Assumption  of  Agreement.  The Company will require any successor
(whether  direct or indirect,  by purchase,  merger,  consolidation,  share
exchange or otherwise) to all or  substantially  all of the business and/or
assets of the Company,  by agreement in form and substance  satisfactory to
you,  expressly to assume and agree to perform  this  Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession had taken place.  Failure of the Company to obtain
such agreement prior to the effectiveness of any such succession shall be a
breach of a material  provision of this  Agreement and shall entitle you to
compensation  in the  same  amount  and on the same  terms as you  would be
entitled  pursuant to Section D, except that for  purposes of  implementing
the  foregoing,  the date on which any such  succession  becomes  effective
shall be deemed your Date of  Termination  without a Notice of  Termination
being given.

     2. Confidentiality.  All Confidential Information which you acquire or
have  acquired  in  connection  with or as a result of the  performance  of
services  for the  Company,  whether  under this  Agreement or prior to the
effective date of this Agreement,  shall be kept secret and confidential by
you unless (a) the Company otherwise consents, (b) the Company breaches any
material  provision of this Agreement,  or (c) you are legally  required to
disclose   such   Confidential   Information   by  a  court  of   competent
jurisdiction. This covenant of confidentiality shall extend beyond the term
of this  Agreement and shall survive the  termination of this Agreement for
any reason.  If you breach this  covenant of  confidentiality,  the Company
shall be  entitled  to  recover  from any  benefits  paid to you under this
Agreement its damages resulting from such breach.

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

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

     5. Injunctive Relief. You acknowledge and agree that the remedy of the
Company at law for any breach of the covenants and agreements  contained in
paragraph  2 of  this  Section  and in  Section  C,  paragraph  2  will  be
inadequate,  and that the Company  will be entitled  to  injunctive  relief
against any such breach or any threatened,  imminent,  probable or possible
breach.  You  represent  and agree that such  injunctive  relief  shall not
prohibit you from earning a livelihood acceptable to you.

     6. Notice.  For the purposes of this Agreement,  notices and all other
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt  requested,  postage prepaid,  addressed to
the  respective  addresses  set forth on the first page of this  Agreement,
provided that all notices to the Company shall be directed to the attention
of the General  Counsel of the Company,  or to such other address as either
party may have  furnished to the other in writing in  accordance  herewith,
except  that  notices of change of  address  shall be  effective  only upon
receipt.

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

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

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

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

     11. Severability.  The invalidity or unenforceability of any provision
of this Agreement  shall not affect the validity or  enforceability  of any
other  provision  of this  Agreement,  which shall remain in full force and
effect.

     12.  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  each of which shall be deemed to be an  original  but all of
which together will constitute one and the same instrument.

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

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


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

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

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


                                 Sincerely,

                                ASHLAND INC.


                                By:
                                   -------------------------




ACCEPTED this _______ day of

______________________, 2002.




NAME



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>pwc.txt
<DESCRIPTION>EXHIBIT 10.7 SEPARATION AGREEMENT
<TEXT>


                       AGREEMENT AND GENERAL RELEASE


     THIS  AGREEMENT  AND  GENERAL  RELEASE is entered  into this 27 day of
November,  2002 by and  between  Ashland  Inc.,  on behalf of  itself,  its
officers,   directors,   shareholders,   employees  and  agents  (in  their
individual and  representative  capacities),  and each of them, jointly and
severally  (collectively  referred to as "Ashland" or the  "Company");  and
Paul  W.  Chellgren,  on  behalf  of  himself  and  his  heirs,  executors,
guardians,  administrators,  successors  and  assigns,  and  each of  them,
jointly and  severally  (herein  singularly  and  collectively  called "Mr.
Chellgren"  or the  "Employee"),  who agree to be bound by all of the terms
and conditions hereof.

     WHEREAS,  Employee has been employed by the Company from July 29, 1974
to the present; and

     WHEREAS,  Employee and the Company  desire to settle fully and finally
all matters between them,  including,  but in no way limited to, any issues
that might arise out of Employee's  employment with and retirement from the
Company;

     NOW,  THEREFORE,  in  consideration  of  the  mutual  promises  herein
contained, Employee and the Company agree as follows:

     1. This Agreement and General Release (the  "Agreement")  shall not in
any way be  construed  as an  admission  by the  Company  that it has acted
wrongfully  with respect to Employee or any other person,  or that Employee
has any rights whatsoever against the Company, and the Company specifically
disclaims any  liability to or wrongful acts against  Employee or any other
person,  on the part of  itself,  its  officers,  directors,  shareholders,
employees or agents.

     2.  Employee  represents,  understands,  and agrees that in accordance
with the terms of the Letter Agreement  executed by Employee on November 6,
2002,  the  terms  and  conditions  of which  are  incorporated  herein  by
reference,  Employee  stepped  down from his  position  as Chief  Executive
Officer on  September  30,  2002,  and will step down from his  position as
Chairman of the Board of  Directors  of Ashland  Inc.  and as a director of
Ashland Inc., effective November 15, 2002. His employment will terminate on
November 15, 2002  ("Termination  Date"), and he will be eligible to retire
from the Company on December 1, 2002 ("Retirement Date").

     3. Employee represents that he has not filed any complaints or charges
or lawsuits against the Company with any  governmental  agency or any court
concerning  any  matter  subject  to  the  release  he is  providing  under
paragraph  (15) of this  Agreement,  and that he will not do so at any time
hereafter;  provided,  however, this shall not limit Employee from filing a
lawsuit for the sole  purpose of  enforcing  Employee's  rights  under this
Agreement,  or for the  purposes of  enforcing  rights  under the ADEA,  as
described further herein.

                                                        Employee Initials:/s/PWC
                                                                     Page 1

<PAGE>


     4. In order to assist Employee in the transition into other endeavors,
and as mutual consideration for the covenants expressed herein, the Company
will provide  Employee with the Benefits more fully described in Attachment
I (Summary of Benefits), which is hereby incorporated by reference.

     5. Employee  understands and agrees that the  consideration  described
above is more  than  Employee  would  otherwise  be  entitled  to under the
Company's existing policies and any current agreement with Employee.

     6.  Employee   understands  and  agrees  that,  effective  as  of  his
Termination  Date,  he is no longer  authorized  to incur any  expenses  or
obligations or liabilities on behalf of the Company.  However, Ashland may,
during  the  two-year   period   immediately   following   his   retirement
("Consulting Period"),  request Employee perform services of the nature and
type he performed  during his service with  Ashland,  and Employee  will be
responsive  on a  reasonable  basis to the  requests of  Ashland;  provided
however,  that any  request to perform  services  in excess of six (6) days
during any one calendar month shall by mutual  agreement only. For each day
during the  Consulting  Period in which  services are  provided  under this
paragraph (6), Employee shall be compensated at a rate of an additional Two
Thousand  Dollars  ($2,000)  per day,  minus all  applicable  withholdings.
Ashland will reimburse Employee for his reasonable  expenses related to the
performance of the services requested  hereunder.  Use of Company property,
equipment or aircraft in connection  with the  performance of such services
must be expressly  authorized in advance by the Company's  Chief  Executive
Officer or the CEO's designee.

     7. As of his Termination Date, Employee will return to the Company all
Company  Information,  as defined below, and related reports,  maps, files,
memoranda,  and records;  credit cards, cardkey passes; door and file keys;
computer access codes;  software;  and other physical or personal  property
which Employee  received or prepared or helped  prepare in connection  with
his  employment.  Employee has not retained and will not retain any copies,
duplicates,   reproductions,   or  excerpts  thereof.   The  term  "Company
Information" as used in this Agreement means (a)  confidential  information
including,  without  limitation,  information  received  from third parties
under confidential conditions;  and (b) technical,  business,  financial or
other  information,  the use or  disclosure  of which might  reasonably  be
construed  to  be  contrary  to  the  interests  of  the  Company,   and/or
detrimental to its business reputation or good will.

     8. Employee  agrees that during the course of his employment  with the
Company he has acquired  Company  Information  as defined in paragraph (7).
Employee  understands  and  agrees  that such  Company  Information  is the
property of the Company and has been  disclosed  to Employee in  confidence
and for Company use only. Employee  understands and agrees that he (i) will
keep such Company  Information  confidential  at all times during and after
his  employment  with the Company,  (ii) will not  disclose or  communicate
Company  Information  to any third  party,  and (iii)  will not make use of
Company  Information  on Employee's  own behalf,  or on behalf of any third
party.  In view of the nature of  Employee's  employment  and the nature of
Company

                                                        Employee Initials:/s/PWC
                                                                     Page 2

<PAGE>

Information   which  Employee  has  received   during  the  course  of  his
employment,  Employee  agrees  that any  unauthorized  disclosure  to third
parties of Company Information or other violation, or threatened violation,
of this Agreement would cause irreparable damage to the trade secret status
of Company Information and to the Company. When Company Information becomes
generally  available  to the  public  other  than  by  Employee's  acts  or
omissions, it is no longer subject to these restrictions.  However, Company
Information shall not be deemed to come under this exception merely because
it is embraced by more  general  information  that is or becomes  generally
available to the public.  It is understood  that, if requested by Employee,
the Company may review and approve the Employee's resume to assure there is
no  violation  of  this   paragraph   (8),  which  approval  shall  not  be
unreasonably withheld.

     9. From the effective  date of this  Agreement,  through  December 31,
2005 (the  "Non-compete  Period"),  Employee shall not,  without  Ashland's
prior written consent, which shall not be unreasonably  withheld,  accept a
directorship  or employment  with,  engage in  consulting  for or otherwise
render services for, make  investments in, or otherwise engage in any other
business activity with, any corporation, partnership, firm or other form of
business  enterprise  which  directly  competes,  both  as to the  type  of
activity and geographical  location,  with any substantial  business of the
Company. However,  Employee's ownership,  directly or indirectly, of issued
and outstanding  stock or debt  obligations of any  corporation,  which are
regularly   traded   on  a   national   securities   exchange   or  in  the
over-the-counter  market,  shall not be deemed  to be a  violation  of this
Agreement  so long as such  ownership  does not,  directly  or  indirectly,
permit  Employee to control the business  and affairs of such  corporation.
Employee further agrees that for the Non-compete Period,  Employee will not
interfere with or disrupt the relationship,  contractual or otherwise, with
respect to the business or employment  relationship  between the Company or
its  successors  and any other  party,  including  other  employees  of the
Company or its  successors.  Employee  agrees that these  restrictions  are
reasonable,  and that they do not unreasonably preclude Employee from being
gainfully employed. Notwithstanding,  Employee shall also be subject to the
non-compete  provisions of paragraph 4.04 of Ashland's  Supplemental  Early
Retirement Plan.

     10. This Agreement shall  immediately and  automatically  terminate if
(a)  Employee  breaches the  confidentiality  provisions  of paragraph  (8)
above,  (b)  Employee  engages  in  competitive  activity  as set  forth in
paragraph (9) above,  or (c) Employee  takes any other action  inconsistent
with this Agreement. In the case of such termination of this Agreement, the
Company may cease further payments and benefits to Employee, and may recoup
previous amounts paid to Employee, and other damages, under this Agreement.
The covenants,  agreements  and releases set forth in paragraphs  (8), (9),
(15), (16) and (17) shall survive the term of this Agreement.

     11. Employee acknowledges and agrees that the remedy of the Company at
law for any breach of the  covenants and  agreements of paragraphs  (8) and
(9) of this  Agreement  will be  inadequate,  and that the Company  will be
entitled to injunctive  relief  against any such breach or any  threatened,
imminent, probable or possible breach.

                                                        Employee Initials:/s/PWC
                                                                     Page 3


<PAGE>

     12. The provisions of this Agreement are severable, and if any part of
it is found to be  unenforceable,  the other  paragraphs shall remain fully
valid and enforceable.

     13. Employee represents and agrees that he will keep the terms of this
Agreement completely confidential,  and that he will not hereafter disclose
any  information  concerning  this Agreement to anyone except his immediate
family,  financial advisor and attorney;  provided, they agree to keep said
information confidential and not disclose it to others.

     14.  Employee  represents  and agrees that he has  carefully  read and
fully  understands  all of the  provisions  of this  Agreement,  that he is
voluntarily  entering into this  Agreement,  and that he has had sufficient
time before signing this Agreement to consult with legal counsel concerning
its  content  and  effect.  Employee  understands  that it is his  decision
whether  to  consult  with  legal  counsel,  and if he  elects to sign this
document  without first  consulting  legal counsel,  it will have been as a
result of his voluntary choice.

     15.  As a  material  inducement  to the  Company  to enter  into  this
Agreement,   Employee  hereby  irrevocably  and  unconditionally  releases,
acquits,  and forever  discharges Company and each of the Company's owners,
stockholders,   predecessors,   successors,   assigns,  agents,  directors,
officers, employees,  representatives,  attorneys, divisions, subsidiaries,
affiliates,  and all persons acting by, through,  under, or in concert with
any of them (collectively "Releasees"),  jointly and individually, from any
and all charges, complaints,  claims, liabilities,  obligations,  promises,
agreements,  controversies,  damages,  actions,  causes of  action,  suits,
rights,  demands,  costs, losses, debts, and expenses (including attorneys'
fees and costs actually incurred) of any nature whatsoever,  including, but
not limited to, any claims of wrongful discharge or any other claim related
to Employee's  employment or to acts or omissions of the Company  involving
Employee or of rights under federal,  state, or local laws  prohibiting age
or  other  forms  of  discrimination,  claims  growing  out  of  any  legal
restrictions on Company's right to terminate its employees, claims based on
express or implied contract,  claims arising in tort,  including claims for
fraud or misrepresentation, and claims arising out of any actions or events
occurring  before the date of Employee's  execution of this Release against
each or any of the  Releasees.  Examples of such federal,  state,  or local
law,  rule, or regulation  regarding  discrimination  include,  but are not
limited to, any claims  arising  under Title VII of the Civil Rights Act of
1964, 42 U.S.C. Section 2000e et seq., the Age Discrimination in Employment
Act,  29  U.S.C.  Section  621 et  seq.,  or the  Workers'  Adjustment  and
Retraining  Notification  (WARN) Act, 29 U.S.C.  Section 2101 et seq. These
examples  shall  not  limit  the scope of this  Release.  This  Release  is
intended to be a broad release and shall apply to any relief, no matter how
denominated,  including,  but not limited to, claims for future employment,
rights or causes of action for  wages,  backpay,  front  pay,  compensatory
damages,  or punitive  damages.  Employee also agrees that he will not file
such claim and  Employee  hereby  agrees to  indemnify  and hold  Releasees
harmless  from any such claim.  In addition,

                                                        Employee Initials:/s/PWC
                                                                     Page 4

<PAGE>

Employee  agrees to waive  the  right to  receive  any  recovery  under any
charge,  claim or  lawsuit  filed  on  Employee's  behalf.  Notwithstanding
anything to the contrary in this paragraph (15),  Employee does not release
any claim he may have  under any  employee  benefit  plan in which he was a
participant  during his  employment  with the  Company for the payment of a
benefit  thereunder  to which he would be entitled in  accordance  with its
terms in the ordinary course of the  administration  of the Plan.  Further,
Employee does not release any rights of  indemnification  as provided under
the  Company's  By-laws or policies,  except as provided in paragraph  (16)
below.

     16.  Employee  also agrees to  indemnify  the Company from any and all
costs and  expenses  (including  but not  limited to  payment of  attorneys
fees), and to hold the Company harmless against any liabilities  (including
but not limited to judgments,  fines, penalties, and reasonable settlements
(provided  that  prior to  settlement,  Employee  will be given  notice and
opportunity to comment on the proposed settlement)), that may be paid by or
imposed  against  the  Company in  connection  with or  resulting  from any
pending,  threatened,  or  completed  claim,  action,  suit  or  proceeding
(including  any  appeal  relating  thereto),  arising  from the  Employee's
personal  relationship  with a fellow  employee  during his tenure with the
Company, in violation of the Company's human resources policies.  Provided,
that this  indemnification  agreement  shall  not apply to any  obligations
specifically undertaken by the Company with respect to said fellow employee
under the terms of the Amended  Separation  Agreement  and General  Release
executed by and between the Company and said fellow employee.  And further,
that  this  indemnification  agreement  shall  not  apply to any  liability
imposed  against  the Company for its own acts or  omissions  separate  and
independent  of the acts and  omissions  of  Employee,  if the Employee can
demonstrate  that the Company,  by its own acts or  omissions  separate and
independent  of the acts and  omissions  of  Employee,  did not act in good
faith and in a manner the Company reasonably  believed at the time to be in
the best interests of Employee  and/or the Company.  In connection with the
agreements  contained in this paragraph (16) Employee further  specifically
agrees to waive any right to  indemnification  from the Company  that might
otherwise  exist for such claims  made  against  him in his  individual  or
representative  capacity  under Article IX of the Company's  By-Laws or its
Articles of  Incorporation  or  otherwise,  or by operation of the Kentucky
Business  Corporation Act,  Chapter 271B of the Kentucky Revised  Statutes,
including,  but  not  limited  to  those  rights  provided  under  KRS  ss.
271B.8-520  and KRS  271B.8-560.  Employee  further agrees that he will not
assert  any  rights or make any  claims  under  the  Company's  D&O  Policy
relating to such claims, and waives the right to any reimbursement for such
claims thereunder.

     17. As a further material inducement to the Company to enter into this
Agreement, Employee hereby agrees to indemnify and hold each and all of the
Releasees  harmless from and against any and all loss, costs,  damages,  or
expenses,  including,  without  limitation,  attorneys'  fees  incurred  by
Releasees,  or any of them,  arising out of any breach of this Agreement by
Employee,  including costs and expenses incurred to enforce this Agreement,
or the fact that any representation  made herein by Employee was false when
made,  except that this provision shall not apply to any alleged breach due
to a challenge of the validity of the ADEA waiver contained herein.

                                                        Employee Initials:/s/PWC
                                                                     Page 5


<PAGE>

     18.  Employee  understands  and agrees  that  Employee  has been given
through  November  27,  2002  (the  "Review  Period"),  which  is at  least
twenty-one (21) days, to review and consider the General Release  contained
in this Agreement. Employee understands that Employee may use as much or as
little of the  Review  Period as  Employee  wishes to prior to  reaching  a
decision  regarding  the  signing  of  this  Agreement.  However,  Employee
acknowledges  that under no  circumstances  may Employee sign and date this
Agreement  Release prior to his  Termination  Date.  Accordingly,  Employee
understands that if Employee does not sign, date, and return this Agreement
during  that  portion  of  the  Review  Period  falling  after   Employee's
Termination  Date and prior to the  expiration  of the Review  Period,  the
Agreement  and  General  Release  will not be valid and  Employee  will not
receive  the special  severance  benefits  under the terms of this  special
severance offer.

     19. In accordance with federal law, Employee may revoke this Agreement
and the  General  Release  contained  herein at any time  within  seven (7)
calendar days of the date of execution  noted below.  To be effective,  the
revocation  must be in writing and  delivered  to David L.  Hausrath,  Vice
President and General Counsel, 50 E. RiverCenter  Boulevard,  P.O. Box 391,
Covington,  Kentucky  41012,  either by hand or mail within a seven (7) day
period following  Employee's  execution of this Agreement.  If delivered by
mail, the rescission must be:

         1.       Postmarked within the seven (7) day period;
         2.       Properly addressed as noted above; and
         3.       Sent by Certified Mail, Return Receipt Requested.

     This Agreement  shall not become  effective or enforceable  until this
7-day revocation period has expired.

     20.  This  Agreement  constitutes  the  full,  complete,   and  entire
agreement  between the parties and supercedes all prior agreements  between
the parties and Employee's  signature indicates that he has not relied upon
any statements or  representations  or other matters from the Company,  its
agents,  officers, or employees.  Any future alteration,  modification,  or
waiver,  to be binding  on the  parties,  must be  reduced  to writing  and
attached hereto.

     21. Upon execution by both parties, this Agreement shall terminate all
prior  employment  and  severance  agreements  between the Employee and the
Company and its  divisions  or  subsidiaries,  with the  exception of those
prior agreements specifically incorporated herein by reference.

     22. This Agreement may be executed in one or more  counterparts,  each
of which shall be deemed to be an original but all of which  together  will
constitute one and the same instrument.

     23. It is agreed that this  Agreement and Release shall be interpreted
in accordance with the laws of the Commonwealth of Kentucky.

                                                        Employee Initials:/s/PWC
                                                                     Page 6


<PAGE>

                              IMPORTANT NOTICE

     BY SIGNING THIS  AGREEMENT,  YOU, PAUL W.  CHELLGREN,  AFFIRM THAT YOU
HAVE READ AND  UNDERSTAND  THIS  AGREEMENT;  THAT YOU HAVE HAD A MINIMUM OF
TWENTY-ONE  (21) DAYS TO CONSIDER  THE  AGREEMENT  AND USED AS MUCH OF THIS
21-DAY PERIOD AS YOU WISHED PRIOR TO SIGNING;  THAT YOU HAVE NOT SIGNED AND
DATED THIS  AGREEMENT  BEFORE YOUR  TERMINATION  DATE;  THAT YOU UNDERSTAND
FULLY ITS FINAL AND BINDING  EFFECT;  THAT THE ONLY PROMISES MADE TO INDUCE
YOU TO SIGN THIS AGREEMENT ARE THOSE STATED HEREIN AND THAT YOU ARE SIGNING
THIS  AGREEMENT  VOLUNTARILY  WITH THE FULL INTENT OF RELEASING THE COMPANY
AND ALL ASSOCIATED ENTITIES AND INDIVIDUALS FROM ANY AND ALL CLAIMS,  KNOWN
OR UNKNOWN,  RELATING TO OR ARISING OUT OF YOUR  EMPLOYMENT  WITH  ASHLAND;
THAT YOU HAVE  BEEN  ADVISED  THAT IT IS IN YOUR BEST  INTEREST  TO HAVE AN
ATTORNEY, HIRED BY YOU, LOOK AT THE AGREEMENT AND GIVE YOU ADVICE ABOUT IT;
THAT YOU WERE GIVEN A CHANCE TO REFUSE TO SIGN THIS AGREEMENT; AND THAT YOU
ARE  AWARE  THAT YOU HAVE AN  ADDITIONAL  SEVEN (7) DAYS IN WHICH TO REVOKE
YOUR ACCEPTANCE OF THIS AGREEMENT.



                                    ASHLAND INC.


/s/ Paul W. Chellgren              By:  _________________________
PAUL W. CHELLGREN

November 27, 2002                  Title: ________________________
Date of Execution
(Do Not Sign Prior To TERMINATION Date)



                                                     Employee Initials:/s/PWC
                                                                     Page 7
<PAGE>


Name:  PAUL W. CHELLGREN
Date of Presentation: NOVEMBER 6, 2002

Attachment 1

                            RETIREMENT ELIGIBLE
                        SUMMARY OF EMPLOYEE BENEFITS
                        AND MISCELLANEOUS PROVISIONS


On November 15, 2002 (your  "Termination  Date"),  your employment with the
Company  will end.  You will then be eligible to retire on December 1, 2002
(your "Retirement Date").

AGREEMENT AND GENERAL RELEASE

Program  benefits  will not begin until you have executed the Agreement and
Release  and it becomes  valid.  If you do not execute  the  Agreement  and
Release, you will not receive the special benefits provided hereunder,  and
will  receive  only those  benefits  ordinarily  available  to employees in
payroll  classifications  similar  to the one you are in at the  time  your
employment terminates.

In general,  except as  permitted by law, or your  eligibility  to elect to
retire and obtain retiree  benefits,  you cannot continue  participation in
any employee  benefit plan  following  your  Termination  Date. If you were
enrolled in a group  health plan,  you may be able to continue  coverage by
making  what is  called  a COBRA  election.  You  cannot  elect to have any
premiums you may have to pay for COBRA coverage deducted from your lump sum
severance payment.

The following  summarize  selected  terms and  conditions  from some of the
employee benefit plans in which you may have participated. The actual terms
of these  plans  are in  their  plan  documents.  You  should  refer to the
relevant summary plan description for more information on a particular plan
and the effect that your severance has with regard to that plan.

PENSION PLAN

Your rights  under the Pension Plan will be  determined  based on your age,
years of plan  participation,  and final average salary on your Termination
Date. You will be eligible for an immediate  pension benefit  commencing as
of the  first  day of the  month  coincident  with or next  following  your
Termination  Date if either of the following  applies:  on your Termination
Date you are at least age 55; or on your  Termination  Date the sum of your
age and years of continuous service is at least 80.

                                                        Employee Initials:/s/PWC
                                                                     Page 8


<PAGE>

MEDICAL AND DENTAL


If you are at least age 55 or the sum of your age and  years of  continuous
service is at least 80, and you have 5 years of service on your Termination
Date,  you may be eligible for retiree  coverage under the Medical Plan and
the Dental Plan. Dental coverage during retirement is only available if you
were covered by the plan on your  Termination  Date.  Your dental  coverage
during  retirement  also must end on the last day of the month in which you
attain  age 65.  Medical  coverage  during  retirement  is  generally  only
available if you were  covered by the plan on your  Termination  Date.  The
exceptions  to  this  general  rule  are  described  in  the  summary  plan
description.

If  you  elect  retiree  coverage,  your  retiree  contributions  would  be
determined using your service to your Termination Date.

Although  you may be  eligible  to  elect  retiree  coverage,  federal  law
requires that COBRA  continuation  coverage also be offered for the plan or
plans in which you were covered.  If the amount you have to pay for retiree
coverage is greater  than what you paid for the same  coverage as an active
employee,  you can choose to elect the COBRA continuation  coverage instead
of the retiree  coverage.  If enrolled in the Medical or Dental Plan on the
Termination  Date,  you will be eligible  for COBRA  continuation  coverage
under these plans for 12 months, at the same contribution  rates that apply
to regular,  active employees.  To be eligible for this,  though,  you must
first make a timely election of COBRA coverage.  You make a timely election
by completing  and filing the COBRA  election form that will be sent to you
by the  Employee  Benefits  Department.  The form  will  have  instructions
explaining  how to  complete  it and  where to file it.  At the end of this
12-month coverage period, you will be eligible for continued COBRA coverage
for up to 6  additional  months but you must pay the full COBRA costs (both
Company and employee contributions,  plus 2%) for your coverage. Your first
payment for your medical and dental  contributions must be made by personal
check mailed to the Company's Employee Benefits Department at the following
address:

                  Employee Benefits Department
                  Ashland Inc.
                  P. O. Box 14000
                  Lexington, KY  40512

That first payment is due on the first day of the 13th month, with a 30-day
grace period for a late payment. If you do not make the required payment by
the end of the grace period,  the coverage is  retroactively  terminated to
the first day of the said 13th month,  without the ability to reinstate the
coverage.  You will not be billed  for the COBRA  coverage.  Paying for the
coverage is your responsibility.

After the Employee Benefits Department receives your first check, you will
receive information on where future checks should be mailed. For further details
please consult


                                                        Employee Initials:/s/PWC
                                                                     Page 9

<PAGE>

the  relevant  summary  plan  description  or call  the  Employee  Benefits
Department at (800) 782-4669.

LIFE INSURANCE

If you are at least age 55 or the sum of your age and  years of  continuous
service  is at least  80,  you have 5 years  of  service,  and you had plan
coverage on your  Termination  Date, you will be eligible for  company-paid
retiree  life  coverage  equal to $10,000.  Contributory  coverage,  spouse
coverage,  dependent child coverage and accidental death and  dismemberment
coverage end at your Termination Date.

REIMBURSABLE ACCOUNTS PLAN

Any amount you have  remaining in the Dependent Day Care Account and/or the
Health Care  Account is available  to  reimburse  you for covered  services
incurred before the end of the month in which your Termination Date occurs.
Claims  for  services  performed  after  that  time  are not  eligible  for
reimbursement.  Claims  for  reimbursement  must be filed by June 30 in the
calendar year following your Termination Date. Any amounts in your accounts
that are not used will be  forfeited  according  to IRS rules.  You will be
eligible to elect COBRA continuation coverage for your Health Care Account.
Ashland's  Employee Benefits  Department will provide you with a summary of
your  COBRA  rights  that will tell you how to elect to  continue  coverage
under the Health  Care  Account.  You may only elect to  continue  coverage
through the end of the calendar year that contains your Termination Date.

SAVINGS PLAN

Upon your Termination Date, you have a number of withdrawal options. If you
have an unpaid loan,  you may continue to make monthly  payments after your
Termination Date. Fidelity will send you payment instructions approximately
4  weeks  following  your   Termination   Date.  To  receive  Savings  Plan
information,  call Fidelity  Investments  at (800)  827-4526.  You may also
access  Savings Plan  information  on the  internet by clicking  "Access My
Account" under NetBenefits at www.401k .com.

LESOP

Upon your Termination Date, you may elect to receive a distribution of your
entire account in cash or shares (if your spouse consents) or you may elect
to  transfer  50% of your  account  to the  Pension  Plan and  receive  the
remaining 50% in shares. If there are fewer than 100 shares in your account
after the transfer,  then you may elect to have them  distributed  in cash.
LESOP  distributions are usually made 3 to 4 weeks from the Friday that the
Employee Benefits Department processes your withdrawal form.

                                                        Employee Initials:/s/PWC
                                                                    Page 10

<PAGE>


LONG  TERM  DISABILITY;   VOLUNTARY  ACCIDENTAL  DEATH  AND  DISMEMBERMENT;
OCCUPATIONAL ACCIDENTAL DEATH AND DISMEMBERMENT;  TRAVEL ACCIDENT INSURANCE
AND ADOPTION ASSISTANCE PROGRAM


Your eligibility for coverage for all the benefits  identified in the above
title of this section ends on your Termination Date.

VISION COST ASSISTANCE PLAN

If you are  enrolled  for this  coverage,  it will end on your  Termination
Date,  although you may be able to elect COBRA  continuation of coverage at
that time.  Ashland's Employee Benefits  Department will provide you with a
summary of your COBRA  rights  that will tell you how to elect to  continue
coverage.

LEGAL PLAN

If you were enrolled for the Legal Plan,  your  participation  ends on your
Termination  Date.  You may be eligible  for  coverage  for  covered  legal
matters that are not completed as of your  Termination  Date.  Consult your
summary plan description for details.

GROUP AUTO AND HOMEOWNERS INSURANCE; LONG TERM CARE

You may  continue  any  coverage  you had in the group auto and  homeowners
insurance and the long term care insurance  beyond your Termination Date on
the same basis as any other  former  employee.  Continuing  that  coverage,
though,  is strictly between you and the applicable  insurance company that
provides the coverage.

GROUP FINANCIAL SERVICES

If you are enrolled for the group financial services at the time of your
Termination Date, you may continue them for the remainder of the calendar year
if you make appropriate arrangements with the provider to make any required
payments then remaining for the services.

                            MISCELLANEOUS PROVISIONS
UNUSED VACATION/SICK PAY

You will be paid for any unused earned and accrued vacation based on the amount
of earned vacation for calendar year 2002 that remains unused as of your
Termination Date. You will also be paid for 2003 vacation accrued due to
accelerated vesting through your Termination Date. You will not be paid for any
unused sick pay.

                                                       Employee Initials:/s/PWC
                                                                    Page 11

<PAGE>


CREDIT UNION

If you are a member  of the  Credit  Union at the time of your  Termination
Date,  you will be able to  participate  in the  Credit  Union  after  your
Termination  Date.  You will  need to  contact  them  directly  to  discuss
handling of credit union business.

SERVICE AWARDS

If on your  Termination  Date you are  within 6 months of the date on which
you would have received a Service Award, the Service Award will be provided
to you on your regularly scheduled date.

MATCHING GIFTS

You will  continue to be  eligible to  participate  in the  Matching  Gifts
Program  following your  retirement,  under the terms and conditions of the
program.

UNEMPLOYMENT COMPENSATION

Whether you are eligible to receive unemployment compensation is controlled
by state laws.  If you decide to file for  unemployment  compensation,  the
Company is obligated to inform the state's  unemployment  commission of the
nature of your termination.

EXPENSES

If you have incurred any expenses that are reimbursable by the Company, you
should submit an Expense Report, along with required receipts immediately.

EMPLOYEE ASSISTANCE PROGRAM

Family  Enterprises,  Inc.  will  continue  to be  available  for  personal
counseling for up to 12 months following your Termination  Date, should you
have the need. This service can be contacted by calling (800) 522-6330.

FUTURE CORRESPONDENCE

Any future  information  from the  Company  will be sent to the address you
currently have on file (i.e.  employee benefit  information,  W-2's, etc.).
Should your address change in the near future you should contact  Corporate
Human Resources at (800) 782-4669.


                                                        Employee Initials:/s/PWC
                                                                    Page 12


<PAGE>


                        IMPORTANT NOTE ABOUT THIS SUMMARY

DETAILS ON THE BENEFITS FROM THE EMPLOYEE BENEFIT PLANS DISCUSSED ABOVE ARE
PROVIDED  IN THE SUMMARY  PLAN  DESCRIPTION  BOOKLET FOR EACH PLAN.  IN ALL
EVENTS,  THE  RIGHTS  AND  OBLIGATIONS  OF  THE  COMPANY  AND  ALL  COVERED
EMPLOYEES,  BENEFICIARIES  OR OTHER  CLAIMANTS  ARE GOVERNED  SOLELY BY THE
TERMS OF THE OFFICIAL DOCUMENTS UNDER WHICH EACH PARTICULAR PLAN, POLICY OR
PROGRAM IS OPERATED.

                                                        Employee Initials:/s/PWC
                                                                    Page 13

<PAGE>



                                ASHLAND INC.
                 ADDENDUM TO RETIREMENT ELIGIBLE SUMMARY OF
               EMPLOYEE BENEFITS AND MISCELLANEOUS PROVISIONS


STOCK OPTIONS

Any unvested  Ashland Inc.  stock options shall  immediately  vest, and all
vested options may be exercised for the remaining term of the options.

INCENTIVE COMPENSATION

You will be eligible to earn incentive  compensation under the Ashland Inc.
Incentive  Compensation  Plan through your  Termination  Date.  If and when
payments  are made,  you shall  receive  payment  in cash of any amount due
under  Ashland's FY 2002  incentive  compensation  bonus based on Ashland's
performance through the fiscal year and your current individual performance
rating.  If and when  payments are made under  Ashland's FY 2003  Incentive
Compensation  Plan, you shall receive a pro-rata payment in cash under this
plan calculated using your Termination Date, Ashland's  performance through
fiscal year 2003 and your current individual performance rating.  Provided,
however,   that  this  pro-rata   payment  shall  not  be  considered  when
calculating your SERP benefit hereunder.

PUP/LTIP

If and when payments are made to participants generally,  you shall receive
payment in cash of One Hundred  Sixty-four  Thousand,  One Hundred Thirteen
Dollars and Eighteen Cents ($164,113.18) minus applicable  withholdings for
employment  taxes and deferred  compensation  elections,  as payment  under
Ashland's  Performance  Unit Plan for the  1999-2002  cycle.  You will also
receive a pro rata portion of any payment, if and when made, under the Long
Term  Incentive  Plan for the  2001-2003  cycle  and the  2002-2004  cycle.
Payments  shall be pro-rated  through your  Termination  Date, and based on
actual  Ashland Inc.  measures  (as  specified in the plans and your awards
under  the  plans)  through  the  entire  three or  four-year  plan  cycles
(including adjustments for unusual items).

Deferred Compensation

Upon your  Termination  Date, you shall receive  distribution of your "DCP"
account(s) in accordance with your DCP election(s).  Any changes  regarding
the distribution of your DCP account(s) must be made by September 30, 2002.

                                                        Employee Initials:/s/PWC
                                                                    Page 14

<PAGE>


Financial Planning

You shall be reimbursed for eligible financial planning expenses, including
eligible expenses for services  provided by AYCO,  incurred through the end
of calendar year 2004.

Executive Physicals

You shall be eligible for an Executive  Physical during calendar years 2003
and 2004.

OFFICE EQUIPMENT AND FURNISHINGS

On your Release  Date,  the Company will  transfer the ownership of certain
office  furnishings  and  equipment,  as  approved in advance by Richard P.
Thomas,  Vice-President  and  Corporate  Secretary,  to  you.  In  lieu  of
providing  certain software that may be  non-transferable  due to licensing
agreements,   the  Company  may  agree  to  purchase  replacement  software
specifically  for your  use.  The  fair  market  value of any  furnishings,
equipment  and/or  related  materials  provided to you under this paragraph
will be reported as income to you by the Company.

OFFICE SPACE AND Administrative ASSISTANCE

During the first twelve (12) months  following your  Termination  Date, the
Company will pay the costs of office space for your professional use at the
Toebben  Building,  located at 541  Buttermilk  Pike,  Suite 207,  Crescent
Springs,  Kentucky,  or at some  other  mutually  agreeable  location.  The
Company will also provide you with reimbursement for your reasonable office
expenses,  and administrative  assistance during this period. To the extent
mutually agreeable, your current administrative assistant will be permitted
to report to you at your new office  location,  while  remaining  a regular
full-time  employee of the Company.  In the event either you or the Company
wish to  discontinue  this  reporting  arrangement  at any time during this
twelve (12) month period,  the Company agrees that in lieu of providing you
with an administrative assistant, it will provide you with up to $2,500 per
month for the remainder of this period for your use in securing alternative
administrative  support  services.  Any  extension  of  this  agreement  or
reimbursement  for such  expenses  beyond  this  initial  twelve (12) month
period must be approved by the Company in advance.

Pension Plan, Non-qualified Pension Plan and SERP

If  eligible,  you  shall  receive  benefits  under  these  plans as if you
remained  actively  employed  up through  the earlier of your death or your
Termination  Date.  For purposes of  determining  your  benefits  under the
Pension  Plan  or,  if  approved,  the  Non-qualified  Pension  Plan,  your
compensation  history will be determined as of your  Termination  Date. For
purposes of  determining  your benefits  under the SERP, if approved,  your
compensation history will be determined using the 60-month period ending on
September 30, 2002.

                                                        Employee Initials:/s/PWC
                                                                    Page 15


<PAGE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>10
<FILENAME>pension.txt
<DESCRIPTION>EXHIBIT 10.9 PENSION PLAN
<TEXT>


                    ASHLAND INC. NONQUALIFIED EXCESS BENEFIT
                         PENSION PLAN - 1996 RESTATEMENT
           as adopted on September 19, 1996 and as amended thereafter
- ------------------------------------------------------------------------------

     WHEREAS, the Employee Retirement Income Security Act of 1974 ("ERISA")
establishes   maximum   limitations  on  benefits  and   contributions  for
retirement  plans  which meet the  requirements  of  Section  401(a) of the
Internal Revenue Code of 1986, as amended ("Code");

     WHEREAS,  Ashland Inc. ("Ashland" or the "Company")  maintains certain
pension  plans which are subject to the aforesaid  limitations  on benefits
and contributions;

     WHEREAS,  Ashland adopted the Ashland Oil, Inc.  Nonqualified  Pension
Plan as of  September  24,  1975  (which is now  called  the  Ashland  Inc.
Nonqualified  Excess  Benefit  Pension Plan,  otherwise  referred to as the
"Plan"),  for the purpose of providing  benefits  for certain  employees in
excess of the aforesaid limitations;

     WHEREAS,  the Plan was amended and completely  restated as of July 21,
1977;  WHEREAS,  the Plan was amended and completely restated as of October
1, 1982;  WHEREAS,  the Plan was  amended  and  completely  restated  as of
November 3, 1988;  WHEREAS,  Ashland has  retained  the  authority  to make
additional amendments to or terminate the Plan;

     WHEREAS, Ashland desires to further amend and restate the Plan and, as
so amended, to continue the Plan in full force and effect;

     NOW,  THEREFORE,  effective  September  19, 1996,  Ashland does hereby
further amend and restate the Plan in accordance  with the following  terms
and conditions:

     1.  Designation  and  Purpose  of  Plan.  The Plan is  designated  the
"Ashland Inc.  Nonqualified  Excess  Benefit  Pension Plan"  ("Plan").  The
purpose of the Plan is to provide benefits for certain  employees in excess
of the limitations on contributions,  benefits, and compensation imposed by
Sections 415 and  401(a)(17) of the Code  (including  successor  provisions
thereto) on the plans to which  those  Sections  apply.  The portion of the
Plan  providing  benefits in excess of the Section 415 limits is an "excess
benefit  plan" as that term is  defined in  Section  3(36) of ERISA.  It is
intended  that the  portion,  if any,  of the Plan  which is not an  excess
benefit plan shall be maintained primarily for a select group of management
or highly compensated employees.

     2.  Eligibility.  Subject to Section 11, the Plan shall apply to those
employees - (i) who have retired as an early,  normal,  or deferred  normal
retiree  under the  provisions of the Ashland Inc. and  Affiliates  Pension
Plan ("Ashland Pension Plan"), as it may be amended,  from time to time, or
under  provisions of any other  retirement  plan, as such other plan may be
amended  from  time to time,  which,  from  time to time,  is  specifically
designated by Ashland for purposes of  eligibility  and benefits  under the
Plan (all such plans are  hereinafter  referred to jointly and severally as
"Affected  Plans");  and (ii) who have been approved for  participation  in
this  Plan by  Ashland  or its  delegate,  and such  approval  may,  in the
discretion  of  Ashland,  be made (A) before an  employee's  actual  early,
normal  or  deferred  retirement;  or (B)  posthumously  in the  event of a
benefit potentially available under Section 6 of the Plan.  Notwithstanding
anything  to the  contrary  contained  herein,  any  employee  who would be
entitled to  participate  in this Plan, but who is not a member of a select
group of management or a highly compensated employee,  shall be entitled to
a benefit amount payable under the Plan based solely on the  limitations on
benefits imposed under Section 415 of the Code.

     3. Benefit Amount.

     (i)  Computation.  At any particular  time,  the benefit  payable to a
retiree  eligible to participate in this Plan pursuant to the provisions in
Section 2 shall be computed by subtracting  from (A) the sum of (B) and (C)
where -

     (A) shall be the single life  annuity  that would be payable at age 62
to such retiree under the Affected Plans -

     (1) with the benefit so payable thereunder  calculated by disregarding
any  salary  deferrals  that may have been made by such  retiree  under the
Ashland Inc.  Deferred  Compensation  Plan and thereby restoring any salary
that may have been so deferred to such retiree's  compensation for purposes
of the Affected Plans, and

     (2) prior to any  reductions  made  because of the  limits  imposed by
Sections  415 and  401(a)(17)  of the Code;  provided  that the single life
annuity  that would be so payable  under the Ashland  Pension Plan shall be
computed  without  applying  any offset  attributable  to the Ashland  Inc.
Leveraged  Employee Stock  Ownership Plan  ("LESOP"),  and such single life
annuity  shall be  actuarially  adjusted to be  equivalent to a single life
annuity payable at the particular time applicable based upon the applicable
actuarial  assumptions  and other relevant  provisions used for the same in
the Affected Plans;

     (B) shall be the single life  annuity  that would be payable at age 62
to such  retiree  under the  Affected  Plans after  reducing  the amount so
payable for the limits  imposed by Sections 415 and 401(a)(17) of the Code,
provided  that such single life annuity that would be so payable  under the
Ashland  Pension  Plan shall be computed  after first  applying  the offset
attributable  to the  Offset  Account  (as that term is  defined  under the
LESOP) in the LESOP, and each such single life annuity shall be actuarially
adjusted  to  be  equivalent  to a  single  life  annuity  payable  at  the
particular time applicable based upon the applicable actuarial  assumptions
and other relevant provisions used for the same in the Affected Plans; and

     (C)  shall be the  single  life  annuity  that  would  be  actuarially
equivalent to such retiree's  nonforfeitable  portion of the Offset Account
under the LESOP as of the valuation date thereunder coincident with or next
preceding  such  retiree's  termination  of employment  using the actuarial
assumptions prescribed for this purpose in the Ashland Pension Plan.

     (ii)  Commencement.  Subject to Section 6, the benefit  computed under
paragraph  (i) of this  Section 3 shall  commence or  otherwise  be paid or
transferred  pursuant to the provisions in Sections 4 or 5, effective as of
the date as of which  payments to such retiree  commence under the Affected
Plans.

     4. Payment Options.

     (i) Election. A retiree eligible under Section 2 for the benefit under
Section 3 shall,  subject to Sections 5 and 6, elect the form in which such
benefit  shall be paid from among those  identified  in this  Section 4 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
first  day  of  the  month  following  such  retiree's   termination   from
employment.  Such  election,  including the  designation  of any contingent
annuitant  or  alternate  recipient  under  sub-paragraphs  (D)  or  (E) of
paragraph (ii) of this Section 4, shall be irrevocable  except as otherwise
set  forth  herein.  Notwithstanding  anything  in  the  foregoing  to  the
contrary,  any  retiree who makes an election  under  sub-paragraph  (B) of
paragraph (ii) of this Section 4 shall make such election by the later of -

     (A) the 60th day following such  retiree's  approval to participate in
this Plan as provided under Section 2; or

     (B) by the earlier of -

     (1) the date six months prior to the first day of the month  following
such retiree's termination from employment; or

     (2) the December 31  immediately  preceding the first day of the month
following such retiree's termination from employment.

     Such  election  under  sub-paragraph  (B) of  paragraph  (ii)  of this
Section 4 shall be made in the manner  prescribed by Ashland,  from time to
time, and shall be irrevocable as of the applicable time  identified  under
(A) or (B) of this paragraph (i) of Section 4. Until the time at which such
election becomes  irrevocable,  an eligible retiree shall be able to change
it. (ii) Optional Forms of Payment.

     (A) Lump Sum Option.  Notwithstanding  any  provisions of Section 3 to
the  contrary,  a retiree in an eligible  class may elect to receive all of
the  benefit  under  Section 3 as a lump sum  distribution,  subject to the
discretion of the Committee as described  below. A lump sum benefit payable
under the Plan to a retiree in an  eligible  class shall be computed on the
basis of the actuarially equivalent present value of such retiree's benefit
under Section 3 of the Plan payable at the particular time applicable based
upon such actuarial assumptions (including the interest rate) as determined
from time to time by the  Committee,  described  below.  The  Personnel and
Compensation  Committee of Ashland's Board of Directors shall have the sole
discretion to provide a lump sum benefit  option to a class of retirees for
a given  calendar  year.  The  decision as to whether to provide a lump sum
benefit  option  shall  generally  be made  by the  Committee  at the  last
committee  meeting prior  thereto.  The option shall be made available to a
retiree contingent upon various considerations,  including, but not limited
to, the following:

     The tax  status of the  Company,  including  without  limitation,  the
corporate and  individual  tax rate then  applicable and whether or not the
Company has or projects a net  operating  loss;  the current and  projected
liquidity of the Company,  including cash flow,  capital  expenditures  and
dividends;  Company  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 retiree's
preference.

     (B) Lump Sum Deferral  Option.  A retiree who is eligible to receive a
lump sum  distribution  under  sub-paragraph  (A) of this paragraph (ii) of
Section  4 and who was part of a select  group  of  management  or a highly
compensated  employee,  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 paragraph (i) of this Section 4.

     (C) Single Life Annuity.  A retiree  eligible  under Section 2 for the
benefit  under Section 3 may elect to have such benefit paid in the form of
equal  monthly  payments  for and during  such  retiree's  life,  with such
payments  ending at such  retiree's  death.  Before such  election  becomes
irrevocable as provided  under  paragraph (i) of Section 4, the retiree may
change  the  option  elected,  subject to the  applicable  limitations  and
conditions   applied  to  elections   for  the  options   described   under
sub-paragraphs  (A) and (B) of this  paragraph  (ii) of Section 4. Payments
under this option shall be actuarially  equivalent to the benefit  provided
under  Section  3,  determined  on the  basis of the  applicable  actuarial
assumptions and other relevant  provisions used for the same in the Ashland
Pension Plan.

     (D) Joint and Survivor Income Option. A retiree eligible under Section
2 for the  benefit  under  Section 3 may elect to  receive  an  actuarially
reduced benefit payable monthly during the retiree's lifetime with payments
to continue after his 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 monthly  payment for the month in which occurred
the date of death of the  later to die of the  retiree  and his  contingent
annuitant.  The following  additional  limitations and conditions  apply to
this option:

     (a) The  contingent  annuitant  shall be  designated by the retiree in
writing  in such  form and at such  time as  Ashland  may from time to time
prescribe.

     (b) In the event the  contingent  annuitant dies prior to the date the
election of this optional form of benefit  becomes  irrevocable as provided
under  paragraph (i) of Section 4, the  retiree's  selection of this option
shall  be void.  Before  the date the  election  of this  optional  form of
benefit  becomes  irrevocable as provided under paragraph (i) of Section 4,
the  retiree  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  sub-paragraphs  (A) and (B) of
this paragraph (ii) of Section 4.

     (c) In the  event of the  death of the  retiree  prior to the date the
election is irrevocable as provided under  paragraph (i) of Section 4, such
retiree shall be deemed to have terminated employment on the day before his
death (for reasons  other than death) and survived  until the day after the
date as of which the benefit he elected under this  sub-paragraph (D) would
have commenced.

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

     (E) Period Certain Income Option.  A retiree  eligible under Section 2
for the benefit under Section 3 may elect to receive an actuarially reduced
benefit  payable  monthly  during his  lifetime  and  terminating  with the
monthly payment for the month in which his death occurs, with the provision
that not less  than a total of 120  monthly  payments  shall be made in any
event to him and/or the person  designated by him to receive payments under
this  sub-paragraph  (E) in the  event  of his  death  (hereinafter  called
"alternate  recipient").  Such alternate  recipient  shall be designated in
writing by the  retiree  in such form and at such time as Ashland  may from
time to time prescribe.  If a retiree and his alternate recipient die after
the date as of which payments have commenced but before the total specified
monthly  payments  have  been made to such  retiree  and/or  his  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  retiree or his
alternate recipient.  The following  additional  limitations and conditions
shall apply to this option:

     (a) A retiree may designate a new alternate recipient if the one first
designated  dies before the retiree and after the date the election of this
optional form of benefit became  irrevocable under paragraph (i) of Section
4. In the event the alternate recipient dies prior to the date the election
becomes  irrevocable  as  provided  under  paragraph  (i) of Section 4, the
retiree's  selection  of this  option  shall be void.  Before  the date the
election of this optional form of benefit  becomes  irrevocable as provided
under  paragraph  (i) of Section 4, the  retiree  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 sub-paragraphs (A) and (B) of this paragraph (ii) of Section 4.

     (b) In the  event of the  death of the  retiree  prior to the date the
election is irrevocable as provided under  paragraph (i) of Section 4, such
retiree shall be deemed to have terminated employment on the day before his
death (for reasons  other than death) and survived  until the day after the
date as of which the benefit he elected under this  sub-paragraph (E) would
have commenced.

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

     (F) Death Before Payment. Subject to Section 6, in the event a retiree
eligible  under Section 2 for the benefit under Section 3 dies after having
made an election of an optional form of payment under this  paragraph  (ii)
of Section 4 before the date such election  became  irrevocable as provided
under  paragraph  (i) of  Section 4, such  retiree  shall be deemed to have
terminated  employment  on the day before his death (for reasons other than
death) and  survived  until the day after the date as of which the optional
form of payment he elected  would have  commenced and payment shall then be
made under the Plan in accordance with such retiree's election.

     5. Payment of Small Amounts. Unless such retiree elects to receive his
or her  benefit  in a lump sum as  provided  in  Section  4, in the event a
monthly  benefit  under  this  Plan,  payable to either a retiree or to his
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.

     6. Surviving  Spouse Benefit.  In the event a retiree who was eligible
under Section 2 for the benefit  under Section 3 dies,  leaving a surviving
spouse, before electing an optional form of payment under paragraph (ii) of
Section  4  and  before  the  date  such  an  election  would  have  become
irrevocable  under  paragraph  (i) of Section 4, then such retiree shall be
deemed to have - (i)  elected  the joint and 100%  survivor  income  option
under  sub-paragraph  (D) of  paragraph  (ii) of  Section 4; (ii) named his
spouse as the 100% contingent annuitant; (iii) terminated employment on the
day before his death (for  reasons  other than  death);  and (iv)  survived
until the day after the date as of which such benefit would have commenced.

     7. Costs. In appropriate cases, Ashland may cause an affiliate to make
the  payment  (or an  allocable  portion  thereof)  called  for by the Plan
directly to the person eligible to receive such payments.

     8.  Confidentiality  and No  Competition.  All benefits under the Plan
shall be  forfeited by anyone who  discloses  confidential  information  to
others outside of Ashland's  organization without the prior written consent
of Ashland or who accepts,  during a period of five (5) years following his
or her retirement, any employment or consulting activity which is in direct
conflict  with the  business  of Ashland at such time.  Such  determination
shall be made in the sole discretion of Ashland. A breach of this Section 8
shall result in an immediate  forfeiture of benefits payable to any retiree
under the Plan.

     9.  Lost   Participant/Beneficiary.   In  the  event  Ashland,   after
reasonable  effort,  is unable  to  locate a person  to whom a  benefit  is
payable under the Plan, such benefit shall be forfeited; provided, however,
that such benefit shall be reinstated  (in the same amount and form as that
of the benefit  forfeited without any obligation to pay amounts which would
otherwise have  previously  come due) upon proper claim made by such person
prior to termination of the Plan.

     10. Miscellaneous.

     (i) The obligations of Ashland and any affiliate  thereof with respect
to benefits  under this Plan  constitute  merely the  unsecured  promise of
Ashland  and/or its  affiliates,  as the case may be, to make the  payments
provided  for in this Plan.  No property of Ashland or any  affiliate is or
shall,  by reason of the Plan,  be held in trust or be deemed to be held in
trust for any person and any participant or beneficiary under the Plan, the
estate of either of them and any  person  claiming  under or  through  them
shall not have, by reason of the Plan, any right,  title or interest of any
kind in or to any property of Ashland and its affiliates. To the extent any
person has a right to receive  payments under the Plan, such right shall be
no greater than the right of any unsecured  general creditor of Ashland/ or
its affiliates.

     (ii) Ashland shall administer the Plan.  Ashland shall have full power
and  authority to amend,  modify,  or terminate the Plan and shall have all
powers and the  discretion  necessary and convenient to administer the Plan
in accordance with its terms, including, but not limited to, all necessary,
appropriate, discretionary and convenient power and authority to interpret,
administer and apply the provisions of the Plan with respect to all persons
having  or  claiming  to  have  any  rights,   benefits,   entitlements  or
obligations under the Plan. This includes,  without limitation, the ability
to construe  and  interpret  provisions  of the Plan,  make  determinations
regarding law and fact, 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.  All  such
interpretations  of the Plan  and  documents  associated  with the Plan and
questions  concerning its administration and application,  as determined by
Ashland, shall be binding on all persons having an interest under the Plan.
Ashland may delegate (and may give to its delegatee the power and authority
to redelegate) to any person or persons any  responsibility,  power or duty
under the Plan.  Decisions  of  Ashland  or its  delegatee  shall be final,
conclusive, and binding on all parties.

     (iii) Except as expressly allowed pursuant to Sections 3 and 4 of this
Plan in regard to the form of benefit  option,  no right or interest of any
person  entitled to a benefit  under the Plan shall be subject to voluntary
or involuntary alienation, assignment, transfer, hypothecation,  pledge, or
encumbrance of any kind;  provided,  however,  Ashland or any affiliate may
offset or cause an offset to be made  against  any payment to be made under
the Plan in regard to amounts  due and owing from such person to Ashland or
any affiliate.  Notwithstanding  anything to the contrary in this paragraph
(iii), legally required tax withholding on benefit payments,  the recovery,
by any means,  of previously  made  overpayments  of Plan benefits,  or the
direct  deposit of Plan  benefit  payments  in a bank or  similar  account,
provided  that  such  direct   deposits  are  allowed  by  Ashland  in  the
administration  of the Plan and  provided  that such direct  deposit is not
part of an arrangement constituting an assignment or alienation,  shall not
be considered to be prohibited under this paragraph (iii).

     (iv) No amount paid or payable  under the Plan shall be deemed  salary
or other compensation to any employee for the purpose of computing benefits
to which  such  employee  or any other  person  may be  entitled  under any
employee benefit plan of Ashland or any affiliate.

     (v) To the  extent  that  state law shall not have been  preempted  by
ERISA or any other law of the United States,  the Plan shall be governed by
the laws of the  Commonwealth of Kentucky.  (vi) The Plan described  herein
shall amend and supersede,  as of September 19, 1996, all provisions in the
Ashland  Oil,  Inc.  Nonqualified  Pension  Plan as  Amended,  dated  as of
November 3, 1988, except as otherwise provided herein and further excepting
that the rights of former employees who terminated employment,  retired, or
became  disabled prior to the day before the effective date hereof shall be
governed  by the  terms  of the  Plan  as in  effect  at the  time  of such
termination of employment,  retirement,  or  disability,  unless  otherwise
provided herein.

     11. Change in Control.  Notwithstanding  any provision of this Plan to
the contrary,  in the event of a Change in Control (as defined  hereinafter
in this Section  11), any employee who would or will meet the  requirements
of  Section  2,  except  that  such  employee  has  not  been  approved  to
participate as provided under  paragraph (ii) of Section 2, shall be deemed
to be  approved  for  participation  hereunder,  regardless  of  when  such
employee actually retires and commences benefits under an Affected Plan and
such entitlement  shall be vested from and after the time of such Change in
Control.  Ashland  shall  reimburse an employee for legal fees and expenses
incurred  if he or she is required  to, and is  successful  in,  seeking to
obtain or enforce any right to payment  pursuant to the Plan after a Change
in Control.  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 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 Plan may not be amended  after a Change in
Control without the written consent of a majority of the Board of Directors
of Ashland (hereinafter  "Board") who were directors prior to the Change in
Control. For purposes of this Section 11, Change in Control shall be deemed
to occur (1) upon  approval  of the  shareholders  of  Ashland  (or if such
approval  is not  required,  upon the  approval  of the  Board)  of (A) any
consolidation or merger of Ashland, other than a consolidation or merger of
Ashland into or with a direct or indirect wholly-owned subsidiary, in which
Ashland 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
Ashland, provided, however, that no sale, lease, exchange or other transfer
of all or substantially  all the assets of Ashland shall be deemed to occur
unless  assets  constituting  80%  of  the  total  assets  of  Ashland  are
transferred pursuant to such sale, lease exchange or other transfer, 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
Exchange  Act),  other than Ashland or any  subsidiary or employee  benefit
plan or trust maintained by Ashland,  shall become the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act),  directly or indirectly,  of
more than 15% of Ashland'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  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
Ashland'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.
Notwithstanding the foregoing, any transaction,  or series of transactions,
that shall  result in the  disposition  of  Ashland's  interest in Marathon
Ashland Petroleum LLC, including without limitation any transaction arising
out of that certain Put/Call,  Registration Rights and Standstill Agreement
dated January 1, 1998 among Marathon Oil Company, USX Corporation,  Ashland
and Marathon Ashland Petroleum LLC, as amended from time to time, shall not
be deemed to constitute a Change in Control.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>11
<FILENAME>charitable.txt
<DESCRIPTION>EXHIBIT 10.11 DIRECTORS CHARITABLE AWARD
<TEXT>




                                ASHLAND INC.
                    DIRECTORS' CHARITABLE AWARD PROGRAM
                       (Amended as of November 7, 2002)


     1.  Purpose.  The purpose of the Ashland  Inc.  Directors'  Charitable
Award  Program (the  "Program")  is to enhance the  competitiveness  of the
Company's Director benefits program, thereby aiding Ashland Inc. ("Ashland"
or the  "Company") in the  attraction and retention of Board members of the
highest  caliber.  The  Program  also  provides a  cost-effective  means to
recognize  the  mutual  interest  of  the  Company  and  its  Directors  in
supporting   worthy  charitable  and  educational   institutions,   thereby
advancing the social and charitable goals and objectives of the Company and
its Directors.

     2. Definitions.

     (a) "Ashland" - means Ashland Inc.

     (b) "Board" or "Board or  Directors" - means the Board of Directors of
Ashland or its designee.

     (c)  "Change  in  Control"  - shall be  deemed  to occur  (1) upon the
approval of the Board of  Directors of Ashland (or if approval of the Board
of  Directors  of  Ashland  is  not  required  as  a  matter  of  law,  the
shareholders  of  Ashland) of (A) any  consolidation  or merger of Ashland,
other than a  consolidation  or merger of Ashland  into or with a direct or
indirect wholly-owned subsidiary, 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,
provided,  however,  that no sale, lease, exchange or other transfer of all
or substantially  all the assets of Ashland shall be deemed to occur unless
assets  constituting  80% of the total  assets of Ashland  are  transferred
pursuant to such sale, lease,  exchange or other transfer,  or (C) adoption
of any plan or proposal for the  liquidation or dissolution of Ashland,  or
(2) when any  "person"  (as  defined  in  Section  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 prior
approval of the Board of Directors of Ashland, or (3) if at any time during
a period of two consecutive years, individuals who at the beginning of such
period  constituted  the Board of Directors of Ashland  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-thirds
of the directors  then still in office who were  directors at the beginning
of such two-year period. Notwithstanding the foregoing, any transaction, or
series of  transactions,  that shall result in the disposition of Ashland's
interest in Marathon Ashland Petroleum LLC,  including  without  limitation
any transaction  arising out of that certain Put/Call,  Registration Rights
and Standstill  Agreement dated January 1, 1998 among Marathon Oil Company,
USX  Corporation,  Ashland and Marathon  Ashland  Petroleum LLC, as amended
from time to time, shall not be deemed to constitute a Change in Control.

     (d) "Director" - means a member of Ashland's Board of Directors.

     (e)  "Director  Retirement  Plan" - means the  Ashland  Inc.  Director
Retirement Plan in effect from time to time.

     (f)  "Disability"  - means a Director's  incapacity due to physical or
mental  illness for a period of six (6) months or more during  which period
the Director is unable to attend to his or her duties and  responsibilities
as a member of the Board.

     (g) "Donation" - means a charitable  contribution made under the terms
of this Program.

     (h)  "Program" - means the Ashland Inc.  Directors'  Charitable  Award
Program.

     3. Eligibility Criteria.

     All  current  and future  Directors  of Ashland  shall be  eligible to
participate in the Program.  However,  former  directors (whose service has
ceased prior to the effective date of the Program) shall not be eligible to
participate.

     4. Grant Procedure.

     (a) Each eligible  Director  will become a participant  in the Program
upon  submission  of a form  approved  by  Ashland  for this  purpose  (the
"Beneficiary  Recommendation Form") to the Vice President,  Corporate Human
Resources (the "Human  Resources  Department") of Ashland  designating that
one or more  organization(s)  be  considered  for a grant of all or part of
$1,000,000,  payable following the death of the Director.  However, no more
than ten (10)  organizations  may be  recommended  by any  Director and the
amount of the  recommended  Donation  must not be less than $100,000 to any
one organization.

     (b) In order to qualify for a grant under this Program, the designated
charity must be a tax-exempt  organization  under Section  501(c)(3) of the
Internal  Revenue  Code  of  1986,  as  amended  (i.e.,  civic,  religious,
educational  or  medical/health  care  organizations),  and the  designated
charity's  activities  or purposes  must be  compatible  with the goals and
objectives of Ashland's charitable programs.

     (c) Each organization  recommended by a Director to receive a Donation
is subject to the review and initial  approval of Ashland's Human Resources
Department,  with the final  determination  as to whether  an  organization
meets the eligibility  requirements at the time a Donation is to be made to
be decided jointly by the Chairman and Chief  Executive  Officer of Ashland
and the Chairman of the Personnel and Compensation Committee of the Board.

     (d) The recommendation of a beneficiary may be revoked or revised by a
Director  at any time  before his or her death by the  completion  of a new
Beneficiary  Recommendation  Form,  unless  a  Director  elects  to  make a
recommendation irrevocable.

     (e)  A  Director  can  make  the   recommendation   of  a  beneficiary
irrevocable  as to all or a portion  of the  recommended  Donation  for the
organization.  An  irrevocable  recommendation  cannot  be  changed  by the
Director unless the recommended organization ceases to meet the eligibility
requirements of Section 4(b) under the Program.

     (f) A Director may request Ashland to notify an  organization  that it
has been  selected  by the  Director  to receive a Donation  by so advising
Ashland on the Beneficiary Recommendation Form.

     (g) If  any  organization  recommended  by a  Director  to  receive  a
Donation ceases to meet the requirements of Section 4(b), the Director will
be  advised  of  such  and  given  an  opportunity  to  revise  his  or her
Beneficiary  Recommendation  Form. If a revised Beneficiary  Recommendation
Form is not submitted by the Director  before his or her death,  the amount
recommended  for that  particular  organization  shall be divided among the
Director's  remaining  recommended  qualified  organizations  on a prorated
basis.  If all the  organizations  selected by a Director cease to qualify,
Ashland will, in its sole discretion, select the organization(s) to receive
the Donation(s) on behalf of the Director.

     (h) No Donation  will be made on behalf of a Director if a  Director's
termination  from Board service is for any reason other than: (1) mandatory
retirement at age 72 under the Ashland Inc.  Director  Retirement Plan; (2)
death; (3) Disability; (4) voluntary early retirement to take a position in
public  governmental  service;  or (5) a  Change  in  Control  of  Ashland;
however,  the Board of Directors shall have plenary  authority to authorize
that a Donation be made on behalf of a retiring Director, provided that the
Director  has a  minimum  of ten (10)  years  service  as a  Director  with
Ashland.

     (i) Any Donation  made under this Program  shall  generally be made as
soon as practicable  following the eligible  Director's  death. The payment
shall be  identified  as a gift in honor of the service of the  Director on
Ashland's Board of Directors. Payment shall be contingent upon presentation
to the Human Resources  Department of proof of the Director's death and the
continued approval of the Director's recommendations.

     5. Miscellaneous Provisions.

     (a) An eligible  Director's  rights and interest under the Program may
not be assigned or  transferred in whole or in part.  Nothing  contained in
this  Program  shall  create,  or be deemed to create,  a trust  (actual or
constructive) for the benefit of a Director or any organization recommended
by a Director to receive a Donation.

     (b) In order to financially support the Program,  Ashland may elect to
purchase a life  insurance  policy or  policies  insuring  the lives of the
Directors.  Ashland will be the sole owner and beneficiary thereof. Neither
the Directors nor the charitable organizations recommended by the Directors
will have any rights or beneficial  ownership  interests in any such policy
or policies acquired by Ashland.  Directors may be asked to provide certain
medical and other information to assist Ashland in acquiring such policy or
policies.

     (c) The expenses of the Program shall be borne by Ashland.

     (d) The Program shall be administered and interpreted by the Personnel
and Compensation  Committee of the Board (the  "Committee").  The Committee
shall have plenary authority to prescribe,  amend, suspend or terminate the
Program (or any rules, regulations, and procedures relating to the Program)
at any time in its sole  discretion  without the  consent of the  Directors
participating in the Program.  The determinations of the Committee shall be
conclusive  and  binding on all  interested  parties.  The Human  Resources
Department   of  Ashland,   or  its   designee,   shall  be  delegated  the
responsibility  of preparing  and  distributing  periodic  reports,  making
disbursements, and administering the Program.

     (e) The provisions of this Program shall be interpreted  and construed
in accordance with the laws of the Commonwealth of Kentucky.

     (f) Benefits payable under this Program shall be binding upon Ashland,
its successors and assigns.

     (g) The effective date of this Program shall be December 1, 1990.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>12
<FILENAME>stockinc.txt
<DESCRIPTION>EXHIBIT 10.14 1997 STOCK INCENTIVE PLAN
<TEXT>





                                ASHLAND INC.
                         1997 STOCK INCENTIVE PLAN
                      (Amended as of November 7, 2002)


SECTION 1. PURPOSE

     The  purpose  of the  Ashland  Inc.  1997 Stock  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  Options,  Stock
Appreciation  Rights,  Restricted Stock, Merit Awards and Performance Share
Awards  in an  effort  to  attract  and  retain  in  its  employ  qualified
individuals  and to provide such  individuals  with  incentives to continue
service with Ashland,  devote their best efforts to the Company and improve
Ashland's economic performance, thus enhancing the value of the Company for
the  benefit of  shareholders.  The 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 grant of Restricted  Stock of the Company upon being appointed or
elected to the Company's Board of Directors.  Options,  Stock  Appreciation
Rights,  Merit  Awards  and  Performance  Shares may not be granted to such
Outside Directors under the Plan.





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

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

     (D)  "Beneficiary"  shall mean the  person,  persons,  trust or trusts
designated by an Employee or Outside Director 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 an Employee's or Outside Director's death.

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

     (F) "Change in Control"  shall be deemed to occur (1) upon approval of
the shareholders of Ashland (or if such approval is not required,  upon the
approval of the Board) of (A) any consolidation or merger of Ashland, other
than a consolidation or merger of Ashland into or with a direct or indirect
wholly-owned  subsidiary,  in  which  Ashland  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 Ashland, provided,  however, that no
sale,  lease,  exchange or other transfer of all or  substantially  all the
assets of Ashland shall be deemed to occur unless assets  constituting  80%
of the total  assets of  Ashland  are  transferred  pursuant  to such sale,
lease,  exchange or other transfer, 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  Exchange  Act),  other than
Ashland or any Subsidiary or employee  benefit plan or trust  maintained by
Ashland,  shall  become the  "beneficial  owner" (as  defined in Rule 13d-3
under  the  Exchange  Act),  directly  or  indirectly,  of more than 15% of
Ashland'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 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 Ashland'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.  Notwithstanding  the  foregoing,  any
transaction,   or  series  of  transactions,   that  shall  result  in  the
disposition  of  Ashland's  interest in  Marathon  Ashland  Petroleum  LLC,
including  without  limitation any transaction  arising out of that certain
Put/Call,  Registration  Rights and Standstill  Agreement  dated January 1,
1998 among  Marathon Oil  Company,  USX  Corporation,  Ashland and Marathon
Ashland Petroleum LLC, as amended from time to time, shall not be deemed to
constitute a Change in Control.

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

     (H) "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.

     (I) "Committee on Directors"  shall mean the Committee on Directors of
the Board, as from time to time constituted,  or any successor committee of
the Board with similar functions.

     (J) "Common  Stock" shall mean the Common Stock of the Company  ($1.00
par value), subject to adjustment pursuant to Section 13.

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

     (L) "Employee" shall mean a regular,  full-time or part-time  employee
of Ashland as selected by the Committee to receive an Award under the Plan.

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

     (N) "Exercise  Price" shall mean, with respect to each share of Common
Stock subject to an Option,  the price fixed by the Committee 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.

     (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 Company or as  otherwise  provided in the
Plan.

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

     (Q) "Merit Award" shall mean an award of Common Stock issued  pursuant
to Section 9 of the Plan.

     (R) "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.

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

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

     (U) "Outside Director" shall mean a director of the Company who is not
also an Employee of the Company.

     (V) "Performance  Goals" means performance goals as may be established
in writing by the  Committee  which may be based on earnings,  stock price,
return on  equity,  return on  investment,  total  return to  shareholders,
economic value added, debt rating or achievement of business or operational
goals, such as drilling or exploration  targets or profit per barrel.  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 an Employee or the division,  department, branch, line
of business,  subsidiary  or other unit in which the Employee  works and/or
may be based on the performance of Ashland generally.

     (W)  "Performance  Period"  shall  mean the period  designated  by the
Committee during which the performance objectives shall be measured.

     (X) "Performance  Share Award" shall mean an award of shares of Common
Stock,  the issuance of which is contingent  upon attainment of performance
objectives specified by the Committee.

     (Y)  "Performance  Shares"  shall  mean those  shares of Common  Stock
issuable pursuant to a Performance Share Award.

     (Z)  "Personal  Representative"  shall mean the person or persons who,
upon the  disability or  incompetence  of an Employee or Outside  Director,
shall have acquired on behalf of the Employee or Outside  Director by legal
proceeding or otherwise the right to receive the benefits specified in this
Plan.

     (AA) "Plan" shall mean this Ashland Inc. 1997 Stock Incentive Plan.

     (BB)  "Restricted  Period"  shall  mean the period  designated  by the
Committee  during  which  Restricted  Stock  may  not  be  sold,  assigned,
transferred,  pledged, or otherwise encumbered, which period in the case of
Employees  shall not be less  than one year from the date of grant  (unless
otherwise directed by the Committee),  and in the case of Outside Directors
is the period set forth in subsection (B) of Section 8.

     (CC) "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.

     (DD) "Restricted Stock Award" shall mean an award of Restricted Stock.

     (EE)  "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.

     (FF) "Retirement" shall mean retirement of an Employee 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.

     (GG)  "Section  16(b)  Optionee"  shall  mean an  Employee  or  former
Employee who is subject to Section 16(b) of the Exchange Act.

     (HH) "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.  An SAR may only be granted  concurrently with the grant of
the related Option.  An 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 the Plan.

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

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




SECTION 3. STOCK SUBJECT TO THE PLAN

     There will be reserved for issuance  under the Plan (upon the exercise
of Options and Stock Appreciation  Rights, upon awards of Restricted Stock,
Performance  Shares  and Merit  Awards and for stock  bonuses  on  deferred
awards of  Restricted  Stock  and  Performance  Shares),  an  aggregate  of
3,212,000  shares of  Ashland  Common  Stock,  par value  $1.00 per  share;
provided,  however,  that  of  such  shares,  only  500,000  shares  in the
aggregate  shall be available for issuance for Restricted  Stock Awards and
Merit Awards. Such shares shall be authorized but unissued shares of Common
Stock.  Except as provided in Sections 7 and 8, if any Award under the Plan
shall expire or terminate for any reason  without  having been exercised in
full,  or if any  Award  shall be  forfeited,  the  shares  subject  to the
unexercised or forfeited portion of such Award shall again be available for
the  purposes  of the Plan.  During  the term of the Plan (as  provided  in
Section 14  hereof),  no  Employee  shall be  granted  more than a total of
500,000 in Options or Stock Appreciation Rights.



SECTION 4. ADMINISTRATION

     Except as provided  in  subsection  (B) of Section 8 herein,  the Plan
shall be administered by the Committee.

     In  addition  to any  implied  powers and duties that may be needed to
carry out the  provisions  of the Plan,  the  Committee  shall have all the
powers vested in it by the terms of the Plan, including exclusive authority
(except as to Awards of Restricted  Stock granted to Outside  Directors) to
select the Employees to be granted  Awards under the Plan, to determine the
type, size and terms of the Awards to be made to each Employee selected, to
determine  the time when Awards will be granted,  and to prescribe the form
of the  Agreements  embodying  Awards  made under the Plan.  Subject to the
provisions of the Plan  specifically  governing  Awards of Restricted Stock
granted or to be granted to Outside Directors pursuant to subsection (B) of
Section 8 herein,  the Committee  shall be authorized to interpret the Plan
and the Awards granted under the Plan, to establish,  amend and rescind any
rules  and   regulations   relating   to  the  Plan,   to  make  any  other
determinations   which  it  believes   necessary  or   advisable   for  the
administration  of the Plan,  and to  correct  any  defect  or  supply  any
omission or reconcile any  inconsistency in the Plan or in any Award in the
manner and to the extent the  Committee  deems  desirable  to carry it into
effect. Any decision of the Committee in the administration of the Plan, as
described herein, shall be final and conclusive.

     The Committee  (or, in the case of subsection (B) of Section 8 herein,
the Committee on Directors) may act only by a majority of its members.  Any
determination  of the  Committee or the Committee on Directors may be made,
without  notice,  by the written  consent of the majority of the members of
the Committee or the Committee on Directors.  In addition, the Committee or
the Committee on Directors may authorize any one or more of their number or
any officer of the Company to execute  and deliver  documents  on behalf of
the Committee or the Committee on Directors.  No member of the Committee or
the Committee on Directors  shall be liable for any action taken or omitted
to be taken by him or her or by any other  member of the  Committee  or the
Committee on Directors in connection  with the Plan,  except for his or her
own willful misconduct or as expressly provided by statute.





SECTION 5. ELIGIBILITY

     Awards may only be granted (i) to  individuals  who are  Employees  of
Ashland,  and (ii) as expressly  provided in subsection (B) of Section 8 of
the Plan, to individuals who are duly elected Outside Directors of Ashland.





SECTION 6. OPTIONS

     A. Designation and Price.

     (a) Any Option  granted  under the Plan may be granted as an Incentive
Stock Option or as a  Nonqualified  Stock Option as shall be  designated by
the  Committee at the time of the grant of such Option.  Each Option shall,
at the  discretion  of the Company and as  directed  by the  Committee,  be
evidenced  by an Agreement  between the  recipient  and the Company,  which
Agreement  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
Committee,  in its sole  discretion,  may determine in accordance  with the
Plan.

     (b) Every Incentive Stock Option shall provide for a fixed  expiration
date of not later than ten years from the date such Incentive  Stock Option
is granted.  Every  Nonqualified  Stock  Option  shall  provide for a fixed
expiration  date of not later  than ten  years and one month  from the date
such Nonqualified Stock Option is granted.

     (c) The Exercise Price of Common Stock issued  pursuant to each Option
shall be fixed by the  Committee 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.

  B. Exercise.

     The  Committee  may, in its  discretion,  provide for Options  granted
under the 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 11 or as the  Committee
otherwise  determines  in accordance  with the 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 Ashland of (i) notice from the holder thereof of the exercise of
an Option,  and (ii)  payment to Ashland (as  provided  in this  Section 6,
subsection (C) below),  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 Treasurer
of Ashland at Ashland Inc.,  500  Diederich  Boulevard,  Russell,  Kentucky
41169,  or such other place or person as Ashland may designate from time to
time.

  C. Payment for Shares.

     Except as otherwise provided in this Section 6, the Exercise Price for
the  Common  Stock  shall be paid in full  when the  Option  is  exercised.
Subject to such rules as the Committee 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  Employee  and  evidenced  by  negotiable  certificates,
valued at their Fair Market Value  (which  shares of Common Stock must have
been owned by the Employee six months or longer,  and not used to effect an
Option  exercise  within the  preceding  six months,  unless the  Committee
specifically  provides  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 Committee (including, without limitation,  effecting
a "cashless  exercise," with a broker, of the Option).  "Attestation" means
the  delivery  to Ashland of a completed  Attestation  Form  prescribed  by
Ashland  setting  forth the  whole  shares  of  Common  Stock  owned by the
Employee  which the Employee  wishes to utilize to pay the Exercise  Price.
The Common Stock listed on the Attestation Form must have been owned by the
Employee  six months or longer,  and not have been used to effect an Option
exercise within the preceding six months, unless the Committee specifically
provides  otherwise.  A "cashless  exercise" of an option is a procedure by
which a broker  provides  the  funds to an  Employee  to  effect  an option
exercise. At the direction of the Employee, the broker will either (i) sell
all of the  shares  received  when  the  option  is  exercised  and pay the
Employee  the  proceeds  of the sale  (minus  the  option  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
Employee (either  directly or through the Company) a stock  certificate for
the  remaining  shares.  Dispositions  to a  broker  effecting  a  cashless
exercise are not exempt under Section 16 of the Exchange Act.





SECTION 7. STOCK APPRECIATION RIGHTS

     The  Committee  may grant Stock  Appreciation  Rights  pursuant to the
provisions of this Section 7 to any holder of any Option  granted under the
Plan with respect to all or a portion of the shares  subject to the related
Option.  An SAR may only be  granted  concurrently  with  the  grant of the
related Option. Subject to the terms and provisions of this Section 7, 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. An 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.  An
SAR  granted  under the Plan  shall be  exercisable  in whole or in part by
notice to  Ashland.  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  7, upon the
exercise of an SAR,  the holder  thereof  shall be entitled to receive from
Ashland  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 Committee may stipulate in the Agreement
the form of  consideration  which shall be received upon the exercise of an
SAR. If no consideration is specified therein, upon the exercise of an SAR,
the holder may  specify  the form of  consideration  to be received by such
holder,  which shall be in shares of Common Stock, or in cash, or partly in
cash and partly in shares of Common  Stock  (valued at Fair Market Value on
the date of exercise of the SAR) , as the holder shall  request;  provided,
however,  that the Committee,  in its 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 an 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 the 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 8. RESTRICTED STOCK AWARDS

  A. Awards to Employees

     The  Committee  may  make an  award of  Restricted  Stock to  selected
Employees,  which may, at the Company's  discretion  and as directed by the
Committee,  be evidenced by an Agreement which shall contain such terms and
conditions as the Committee,  in its sole  discretion,  may determine.  The
amount  of each  Restricted  Stock  Award  and  the  respective  terms  and
conditions of each Award (which terms and  conditions  need not be the same
in each case) shall be determined by the Committee in its sole  discretion.
As a  condition  to any Award  hereunder,  the  Committee  may  require  an
Employee  to pay to the  Company a  non-refundable  amount  equal to, or in
excess of, the par value of the shares of  Restricted  Stock awarded to him
or her. Subject to the terms and conditions of each Restricted Stock Award,
the Employee,  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.

     In the  event  that a  Restricted  Stock  Award  has  been  made to an
Employee  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  Employee;  provided,
however,  that the  Committee  may,  in its  sole  discretion,  limit  such
forfeiture.

     Employees  may be  offered  the  opportunity  to defer the  receipt of
payment of vested  shares of  Restricted  Stock,  and  Common  Stock may be
granted as a bonus for deferral,  under terms as may be  established by the
Committee  from time to time;  however,  in no event shall the Common Stock
granted  as a bonus for  deferral  exceed  20% of the  Restricted  Stock so
deferred.

  B. Awards to Outside Directors

     During  the term of the Plan,  each  person who is 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,  an Award of 1,000 shares
of Restricted  Stock.  All Awards under this  subsection (B) are subject to
the limitation on the number of shares of Common Stock  available  pursuant
to Section 3 and to the terms and conditions  set forth in this  subsection
(B) and subsection (C) below.

     As a condition  to any 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  Restricted  Stock  awarded to him or her.  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 from the Board
at age 72, (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  Committee on  Directors,  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 grant of
Restricted Stock made to him or her pursuant to this subsection (B) will be
forfeited by such Outside  Director.  As used herein,  a director  shall be
deemed  "disabled"  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.

  C. Transferability

     Subject to subsection (B) of Section 15 hereof,  Restricted  Stock may
not be sold, assigned, transferred, pledged, or otherwise encumbered during
a Restricted Period,  which, in the case of Employees,  shall be determined
by the Committee and, unless otherwise  determined by the Committee,  shall
not be less than one year from the date such Restricted  Stock was awarded,
and, in the case of Outside  Directors,  shall be  determined in accordance
with  subsection  (B) of this  Section 8. The  Committee  may, at any time,
reduce the  Restricted  Period with  respect to any  outstanding  shares of
Restricted Stock awarded under the Plan to Employees, but, unless otherwise
determined by the 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 the 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 the Plan and the
applicable Agreement,  if any. Restricted Stock shall constitute issued and
outstanding  shares  of  Common  Stock  for  all  corporate  purposes.  The
recipient will have the right to vote such Restricted Stock, to receive and
retain all  regular  cash  dividends,  and to  exercise  all other  rights,
powers,  and  privileges  of a holder of Common  Stock with respect to such
Restricted  Stock,  with the exception  that (i) the recipient  will not be
entitled to delivery of the stock certificate or 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  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 subsection (B) of Section
15 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) a breach of any restrictions, terms,
or conditions  provided in the Plan or  established  by the Committee  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 9.  MERIT AWARDS

     The  Committee  may from time to time  make an award of  Common  Stock
under the Plan to selected  Employees  for such reasons and in such amounts
as the Committee, in its sole discretion,  may determine. As a condition to
any such Merit Award,  the  Committee may require an Employee to pay to the
Company an amount equal to, or in excess of, the par value of the shares of
Common Stock awarded to him or her.




SECTION 10. PERFORMANCE SHARES

     The  Committee  may make  awards of Common  Stock  which  may,  in the
Company's  discretion and as directed by the Committee,  be evidenced by an
Agreement,  to selected  Employees on the basis of the Company's  financial
performance in any given period. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Employees
who shall receive such Performance  Shares, to determine the number of such
shares to be granted for each  Performance  Period,  and to  determine  the
duration  of each  such  Performance  Period.  There  may be more  than one
Performance  Period in  existence  at any one  time,  and the  duration  of
Performance Periods may differ from each other.

     The Performance Goals and Performance Period applicable to an award of
Performance  Shares shall be set forth in writing by the Committee no later
than 90 days after the commencement of the Performance  Period and shall be
communicated  to the Employee.  The Committee  shall have the discretion to
later  revise the  Performance  Goals solely for the purpose of reducing or
eliminating the amount of compensation otherwise payable upon attainment of
the Performance Goals;  provided that the Performance Goals and the amounts
payable upon attainment of the Performance Goals may be adjusted during any
Performance Period to reflect promotions,  transfers or other changes in an
Employee's  employment  so long as such  changes  are  consistent  with the
Performance  Goals  established  for other Employees in the same or similar
positions.

     In making a  Performance  Share  award,  the  Committee  may take into
account an Employee's responsibility level, performance,  cash compensation
level,  incentive  compensation awards and such other  considerations as it
deems  appropriate.  Each  Performance  Share award shall be established in
shares  of  Common  Stock  and/or  shares  of  Restricted   Stock  in  such
proportions as the Committee  shall  determine.  The original amount of any
Performance  Share award shall not exceed 250,000 shares of Common Stock or
Restricted Stock.

     The Committee shall determine,  in its sole discretion,  the manner of
payment,  which may include (i) cash, (ii) shares of Common Stock, or (iii)
shares of  Restricted  Stock in such  proportions  as the  Committee  shall
determine. Employees may be offered the opportunity to defer the receipt of
payment of earned Performance  Shares, and Common Stock may be granted as a
bonus for deferral  under terms as may be established by the Committee from
time to time;  however,  in no event  shall the Common  Stock  granted as a
bonus for deferral exceed 20% of the Performance Shares so deferred.

     An  Employee  must  be  employed  by  the  Company  at  the  end  of a
Performance Period in order to be entitled to payment of Performance Shares
in  respect  of such  period;  provided,  however,  that in the event of an
Employee's  cessation of employment  before the end of such period, or upon
the occurrence of his or her death,  retirement,  or  disability,  or other
reason  approved  by  the  Committee,   the  Committee  may,  in  its  sole
discretion, limit such forfeiture.





SECTION 11. CONTINUED EMPLOYMENT, AGREEMENT TO SERVE AND EXERCISE PERIODS

     (A) Subject to the  provisions of  subsection  (F) of this Section 11,
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 Committee) and if the employment of the
Employee shall  terminate prior to the end of such one year period (or such
other  period  determined  by the  Committee),  the Option  granted to such
Employee shall immediately terminate.

     (B) Every Option shall provide that in the event the Employee dies (i)
while employed by Ashland,  (ii) during the periods in which Options may be
exercised  by  an  Employee  determined  to  be  disabled  as  provided  in
subsection  (C) of this Section 11 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  Employee  could have  acquired
under the Option immediately prior to the Employee's death.

     (C) Every Option shall provide that in the event the employment of any
Employee  shall  cease  by  reason  of  disability,  as  determined  by the
Committee  at any time during the term of the Option,  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 such Employee for the number of
shares which the Employee could have acquired under the Option  immediately
prior to the  Employee's  disability.  As used herein,  an Employee will be
deemed  "disabled"  when 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.  The  determination  by the Committee of any question
involving disability shall be conclusive and binding.

     (D) Every Option shall provide that in the event the employment of any
Employee 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 Employee  could have
acquired under the Option immediately prior to such Retirement.

     (E) Except as provided in subsections  (A), (B), (C), (D), (F) and (G)
of this Section 11, 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  Employee's  employment for any
cause only in respect of the number of shares which the Employee 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.

     (F)  Notwithstanding any provision of this Section 11 to the contrary,
any Award granted pursuant to the Plan,  except a Restricted Stock Award to
Outside Directors,  which is governed by Section 8, subsection (B), may, in
the  discretion of the  Committee or as provided in the relevant  Agreement
(if any),  become  exercisable,  at any time or from time to time, prior to
the fixed  termination  date set forth in the Award for the full  number of
awarded  shares or any part  thereof,  less such  numbers  as may have been
theretofore  acquired  under  the  Award  (i) from and  after  the time the
Employee  ceases to be an  Employee  of  Ashland as a result of the sale or
other disposition by Ashland of assets or property (including shares of any
Subsidiary) in respect of which such Employee had theretofore been employed
or as a result of which such Employee's  continued  employment with Ashland
is no  longer  required,  and (ii) in the case of a Change  in  Control  of
Ashland, from and after the date of such Change in Control.

     (G)  Notwithstanding any provision of this Section 11 to the contrary,
in the event the Committee determines, in its sole and absolute discretion,
that the  employment  of any Employee 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  Committee  may  direct  that such
Employee  forfeit any and all Options that he or she could  otherwise  have
exercised pursuant to the terms of this Plan.

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

     (I) Subject to the  limitations  set forth in Section 422 of the Code,
the  Committee  may  adopt,  amend,  or  rescind  from  time to  time  such
provisions as it deems  appropriate with respect to the effect of leaves of
absence approved by any duly authorized  officer of Ashland with respect to
any Employee.





SECTION 12. WITHHOLDING TAXES

     Federal,  state or local  law may  require  the  withholding  of taxes
applicable  to  gains  resulting  from the  exercise  of an  Award.  Unless
otherwise  prohibited by the Committee,  each Employee 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 Ashland to
withhold from the shares of Common Stock otherwise issuable to the Employee
pursuant to the exercise or 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 Ashland 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 an
exercise  or  vesting  of an  Award.  An  Employee'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 Committee may
adopt, and may be disapproved by the Committee.  If the amount requested is
not paid, the Committee may refuse to issue Common Stock under the Plan.





SECTION 13. 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 the Plan
pursuant  to Section 3 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  Employee  or Outside  Director
shall be maintained as before the occurrence of such event. Such adjustment
shall be conclusive and binding for all purposes of the Plan.





SECTION 14. AMENDMENTS AND TERMINATIONS

     Unless the Plan  shall have been  earlier  terminated  as  hereinafter
provided,  no Awards shall be granted hereunder after January 30, 2002. The
Board,  the  Committee,  or the  Committee  on  Directors  may at any  time
terminate,  modify  or amend  the Plan in such  respects  as it shall  deem
advisable;  provided,  however,  that the Board or the  Committee  may not,
without approval by the holders of a majority of the outstanding  shares of
stock present and voting at any annual or special  meeting of  shareholders
of Ashland change the manner of determining  the minimum  Exercise Price of
Options,  other than to change the manner of  determining  the Fair  Market
Value of the Common Stock as set forth in Section 2.





SECTION 15. MISCELLANEOUS PROVISIONS

     (A)  Except as to an Award of 1,000  Restricted  Shares to an  Outside
Director  upon  being  appointed  or  elected  to the  Company's  Board  of
Directors,  no Employee or other person shall have any claim or right to be
granted an Award under the Plan.

     (B) An Employee's or Outside  Director's rights and interest under the
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 an
Employee's or Outside  Director'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  Employee  or Outside  Director in the Plan
shall  be  subject  to any  obligation  or  liability  of such  individual;
provided,  however,  that an  Employee's or Outside  Director's  rights and
interest under the Plan may, subject to the discretion and direction of the
Committee  or,  in the  case  of an  Outside  Director,  the  Committee  on
Directors, be made transferable by such Employee or Outside Director during
his or her  lifetime.  Except as  specified  in Section 8, 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 the Plan shall be borne by the Company.

     (E) By accepting  any Award under the Plan,  each Employee and Outside
Director 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
the Plan by the  Company,  the Board,  the  Committee  or the  Committee on
Directors.

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

     (G) The  appropriate  officers of the Company  shall cause to be filed
any reports,  returns,  or other information  regarding Awards hereunder or
any Common Stock issued  pursuant hereto as may be required by Sections 13,
15(d) or 16(a) of the Exchange Act, or any other applicable statute,  rule,
or regulation.

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

     (I) Each  Employee  shall be deemed to have been  granted any Award on
the date the  Committee  took  action to grant such Award under the Plan or
such later date as the Committee in its sole discretion  shall determine at
the time such grant is authorized.





SECTION 16. EFFECTIVENESS OF THE PLAN

     The Plan was  submitted to the  shareholders  of the Company for their
approval  and  adoption  on  January  30,  1997  and  was  approved  by the
shareholders on that date.





SECTION 17. 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>13
<FILENAME>arincent.txt
<DESCRIPTION>EXHIBIT 10.15 AMENDED AND RESTATED PLAN
<TEXT>


                            AMENDED AND RESTATED
                        ASHLAND INC. INCENTIVE PLAN
                       (As amended November 7, 2002)

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, other than a consolidation or merger of the Company into or with a
direct or indirect wholly-owned subsidiary, 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,
provided,  however,  that no sale, lease, exchange or other transfer of all
or  substantially  all the assets of the  Company  shall be deemed to occur
unless  assets  constituting  80% of the total  assets of the  Company  are
transferred  pursuant to such sale, lease,  exchange or other transfer,  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 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. Notwithstanding the foregoing, any transaction, or
series of  transactions,  that shall result in the disposition of Ashland's
interest in Marathon Ashland Petroleum LLC,  including  without  limitation
any transaction  arising out of that certain Put/Call,  Registration Rights
and Standstill  Agreement dated January 1, 1998 among Marathon Oil Company,
USX Corporation, the Company and Marathon Ashland Petroleum LLC, as amended
from time to time, shall not be deemed to constitute a Change in Control.

     (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.

     (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.

     (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  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
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 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
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 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 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.

     (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.

     (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-12
<SEQUENCE>14
<FILENAME>ex12.txt
<DESCRIPTION>EXHIBIT 12 COMPUTATION OF RATIOS
<TEXT>
                                   EXHIBIT 12
                                  ASHLAND INC.
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                                  (In millions)

<TABLE>
<CAPTION>


                                                                                Years Ended September 30
                                                              --------------------------------------------------------------
                                                                1998         1999         2000         2001         2002
                                                              ----------   ----------   ----------   ----------   ----------
<S>                                                           <C>          <C>          <C>          <C>          <C>
EARNINGS

Income from continuing operations                             $    178     $    291     $    288     $    403     $    129
Income taxes                                                       114          194          189          273           71
Interest expense                                                   133          141          189          160          133
Interest portion of rental expense                                  40           35           39           41           36
Amortization of deferred debt expense                                1            1            2            2            2
Distributions in excess of (less than) earnings of
    unconsolidated affiliates                                      (62)         (12)        (112)         (90)          20
                                                              ----------   ----------   ----------   ----------   ----------
                                                              $    404     $    650     $    595     $    789     $    391
                                                              ==========   ==========   ==========   ==========   ==========


FIXED CHARGES

Interest expense                                              $    133     $    141     $    189     $    160     $    133
Interest portion of rental expense                                  40           35           39           41           36
Amortization of deferred debt expense                                1            1            2            2            2
                                                              ----------   ----------   ----------   ----------   ----------
                                                              $    174     $    177     $    230     $    203     $    171
                                                              ==========   ==========   ==========   ==========   ==========

RATIO OF EARNINGS TO FIXED CHARGES                                2.32         3.67         2.59         3.89         2.29



</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>15
<FILENAME>mda.txt
<DESCRIPTION>EXHIBIT 13 PORTIONS OF ASHLAND'S ANNUAL REPORT
<TEXT>



Ashland Inc. and Consolidated Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
Years Ended September 30
<TABLE>
<CAPTION>



(In millions)                                                              2002          2001           2000
<S>                                                                        <C>           <C>            <C>


SALES AND OPERATING REVENUES
APAC                                                                     $2,652        $2,624         $2,505
Ashland Distribution                                                      2,535         2,849          3,214
Ashland Specialty Chemical                                                1,290         1,248          1,283
Valvoline                                                                 1,152         1,092          1,077
Intersegment sales                                                          (86)          (94)          (118)
                                                                         ------------------------------------
                                                                         $7,543        $7,719         $7,961
                                                                         ====================================

OPERATING INCOME
APAC                                                                     $  122        $   55         $  140
Ashland Distribution                                                          1            35             70
Ashland Specialty Chemical                                                   87            58             95
Valvoline                                                                    77            81             78
Refining and Marketing(1)                                                   143           707            361
Corporate                                                                   (92)          (85)           (73)
                                                                         ------------------------------------
                                                                         $  338        $  851         $  671
                                                                         ====================================


OPERATING INFORMATION
APAC
   Construction backlog at September 30 (millions)(2)                    $1,691        $1,629         $1,397
   Hot-mix asphalt production (million tons)                               36.7          36.7           35.0
   Aggregate production (million tons)                                     31.0          28.7           27.8
   Ready-mix concrete production (million cubic yards)                      2.1           2.3            2.6
Ashland Distribution(3)
   Sales per shipping day (millions)                                     $ 10.1        $ 11.2         $ 12.8
   Gross profit as a percent of sales                                      16.0%         15.9%          15.6%
Ashland Specialty Chemical(3)
   Sales per shipping day (millions)                                     $  5.1        $  5.0         $  5.1
   Gross profit as a percent of sales                                      36.0%         33.8%          34.7%
Valvoline lubricant sales (million gallons)                               194.4         183.0          189.6
Refining and Marketing(4)
   Crude oil refined (thousand barrels per day)                             930           912            892
   Refined products sold (thousand barrels per day)(5)                    1,321         1,302          1,309
   Refining and wholesale marketing margin (per barrel)(6)               $ 1.82        $ 5.17         $ 2.63
   Speedway SuperAmerica (SSA)
      Retail outlets at September 30                                      2,063         2,145          2,288
      Gasoline and distillate sales (million gallons)                     3,622         3,587          3,742
      Gross margin - gasoline and distillates (per gallon)               $.1040        $.1218         $.1284
      Merchandise sales (millions)                                       $2,381        $2,186         $2,143
      Merchandise margin (as a percent of sales)                           24.2%         23.3%          24.5%
                                                                         ====================================

</TABLE>
(1)      Includes  Ashland's equity income from Marathon Ashland  Petroleum
         LLC (MAP),  amortization related to Ashland's excess investment in
         MAP, and other activities associated with refining and marketing.

(2)      Includes   APAC's   proportionate   share   of  the   backlog   of
         unconsolidated joint ventures.

(3)      Sales are defined as sales and operating revenues. Gross profit is
         defined as sales and  operating  revenues,  less cost of sales and
         operating expenses,  and depreciation and amortization relative to
         manufacturing assets.

(4)      Amounts represent 100% of MAP's operations,  in which Ashland owns
         a 38% interest.

(5)      Total average  daily volume of all refined  product sales to MAP's
         wholesale, branded and retail (SSA) customers.

(6)      Sales revenue less cost of refinery inputs, purchased products and
         manufacturing expenses, including depreciation.


                                    32

<PAGE>





RESULTS OF OPERATIONS

Ashland's net income (including  discontinued operations and the cumulative
effect of  accounting  changes)  amounted  to $117  million  in 2002,  $417
million in 2001 and $70 million in 2000. Income from continuing  operations
(which  excludes  discontinued  operations  and the  cumulative  effect  of
accounting  changes) amounted to $129 million in 2002, $403 million in 2001
and  $288  million  in 2000.  As  discussed  in Note A to the  Consolidated
Financial  Statements,  Ashland  adopted FASB  Statement No. 142 (FAS 142),
"Goodwill  and Other  Intangible  Assets,"  as of October  1,  2001.  Since
goodwill is not amortized  under FAS 142,  Ashland's  reported  results for
2002 are not comparable with previous  years.  The following table compares
reported results with pro forma financial information assuming that Ashland
adopted FAS 142 as of October 1, 1999.

<TABLE>
<CAPTION>
(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>            <C>
OPERATING INCOME
   As reported                                                             $338          $851           $671
   Pro forma                                                                338           903            710
INCOME FROM CONTINUING OPERATIONS
   As reported                                                              129           403            288
   Pro forma                                                                129           448            320
                                                                           =================================
</TABLE>

Prior  to  the  change  in  accounting  for  goodwill,  Ashland's  segments
recognized  goodwill  amortization  of $42 million in 2001 ($25 million for
APAC, $7 million for Ashland Distribution, $9 million for Ashland Specialty
Chemical and $1 million for Valvoline) and $29 million in 2000 ($22 million
for APAC,  $1 million  for  Ashland  Distribution,  $5 million  for Ashland
Specialty  Chemical and $1 million for  Valvoline).  In  addition,  part of
Ashland's  excess  investment in Marathon  Ashland  Petroleum LLC (MAP) was
accounted for as goodwill and was being  amortized at a rate of $10 million
a year prior to the adoption of FAS 142.

APAC

The APAC construction  companies generated operating income of $122 million
in 2002, compared to $55 million in 2001. The improvement  reflects the net
effects of better operating results, the change in accounting for goodwill,
costs associated with APAC's business process  redesign  initiative,  and a
non-recurring  charge of $18  million  related  to the  Manassas,  Virginia
division that reduced last year's earnings. Earnings from construction jobs
and the asphalt plants improved,  reflecting  better margins.  These margin
improvements  resulted from more efficient production and favorable weather
conditions,  lower costs for liquid asphalt,  fuel and power, and the prior
year  completion of most of the low-margin  work obtained in  acquisitions.
Goodwill  amortization  amounted  to $25  million in 2001,  but the expense
reduction from eliminating that amortization was largely offset by costs of
$17 million in 2002 associated with the process redesign initiative.

Operating  income from APAC  amounted  to $55 million in 2001,  compared to
$140  million in 2000.  The decline  resulted  principally  from  unusually
severe  winter  weather  in  most  of  APAC's   operating   regions,   weak
construction  margins  and a charge  of $18  million  to  correct  improper
recognition of construction contract earnings at its Manassas division. Net
construction job revenue (total revenue less  subcontract  costs) was about
flat,  while  production  of hot-mix  asphalt  and  aggregate  were both up
modestly.  The sale of certain  operations in September  2000 resulted in a
decline in the  production of ready-mix  concrete.  However,  the levels of
construction  activity and material  production were less important factors
than the  conditions  under  which the work took  place  (extreme  cold and
precipitation)  that made the processes  highly  inefficient.  Construction
contract  margins were also depressed as many  low-margin  jobs obtained in
acquisitions  worked  their  way  through  the  backlog,  and the  level of
higher-margin private work declined as a result of the economic slowdown.

(Bar graph showing APAC's operating income for 2000, 2001 and 2002)

During an internal investigation of financial activities at APAC's Manassas
division in the March 2001 quarter,  it was discovered  that the division's
earnings had been  intentionally  overstated,  and local  management of the
division  was  replaced.  Independent  investigations  confirmed  that  the
problems  related  primarily  to the improper  recognition  of revenues and
failure to  recognize  certain  costs over a period of about two years.  No
evidence of any impact on, or involvement by, outside parties, customers or
suppliers was discovered.

ASHLAND DISTRIBUTION

Operating  income of Ashland  Distribution  amounted to $1 million in 2002,
compared to $35  million in 2001.  Overall  sales were off 11%,  reflecting
weak markets and internal  execution problems related to the implementation
of an enterprise resource planning system. Of all of Ashland's  businesses,
Ashland  Distribution  is the most  sensitive to industrial  output,  which
remains soft in comparison to prior years. However,  sales in the September
2002 quarter  exceeded  last year's amount for that period and were also up
13% from the low point  experienced in the December 2001 quarter.  Economic
improvements and vigorous efforts to improve service  across-the-board with
new processes are continuing to occur.  Reported  results include income of
$7 million from the settlement of a sorbate class action


                                    33

<PAGE>


antitrust suit in 2002, compared to $11 million from a similar class action
involving citric acid in 2001. Results for 2001 also included charges of $7
million for goodwill  amortization  and  write-offs  prior to the change in
accounting.

Operating income from Ashland Distribution amounted to $35 million in 2001,
compared to $70 million in 2000.  Overall sales  declined 11%,  principally
reflecting  the  challenging  economic  environment  and a slowdown  in key
customer markets.  The unfavorable  economic  conditions also led to higher
credit losses,  particularly for the North American  plastics  distribution
and energy services divisions.  However, the effects of these declines were
partially  offset by expense  reductions  and  various  margin  improvement
efforts.  Such efforts resulted in higher earnings from three  distribution
business  units -  industrial  chemicals,  fine  ingredients  and  European
plastics  distribution.  Results of Ashland Distribution for 2001 reflect a
goodwill  write-off of $6 million and other asset impairment  charges,  the
combination of which was largely offset by the proceeds of $11 million from
the citric acid settlement.

(Bar graph showing Ashland  Distribution's  operating income for 2000, 2001
and 2002)

ASHLAND SPECIALTY CHEMICAL

Operating income from Ashland Specialty  Chemical  increased to $87 million
in 2002, a 50% increase compared to its  recession-weakened  results of $58
million  in 2001.  Despite  softness  in unit  volumes,  Ashland  Specialty
Chemical has  achieved  steady  improvement  throughout  the year.  Results
improved from performance materials  (unsaturated polyester resins, foundry
chemicals and adhesives)  and water  treatment  chemicals and services.  In
addition,  the  semiconductor  industry is  continuing  to recover from its
worldwide  downturn  during 2001. As a result,  electronic  chemicals had a
much better  performance  in the last half of 2002 even though results from
that  division were still down for the year.  Results of Ashland  Specialty
Chemical for 2001 included a charge of $9 million for goodwill amortization
and write-downs prior to the change in accounting.

(Bar graph showing Ashland Specialty  Chemical's operating income for 2000,
2001 and 2002)

Ashland  Specialty  Chemical's  operating income amounted to $58 million in
2001,  compared  to $95  million in 2000.  Earnings  from  marine and water
treatment  chemicals were up, but these  improvements were more than offset
by significant  declines in other business units that are more sensitive to
a weak economy,  including foundry products,  specialty  adhesives,  maleic
anhydride and polyester  resins.  Profits from  electronic  chemicals  also
deteriorated sharply as 2001 progressed,  reflecting the worldwide downturn
in the semiconductor  manufacturing industry.  Results of Ashland Specialty
Chemical  for 2001  reflect a goodwill  write-down  of $4 million and minor
asset impairment charges.

VALVOLINE

Operating  income from  Valvoline was $77 million in 2002,  compared to $81
million in 2001.  The decline was  attributable  entirely to lower sales of
R-12 automotive refrigerant that contributed essentially no gross profit to
2002 results, compared to $13 million in 2001. However, strong results from
core lubricants, automotive chemicals and international operations, as well
as a record year from Valvoline  Instant Oil Change (VIOC),  largely offset
the reduced earnings from sales of R-12.  Lubricant  volumes were up 6% and
sales of  premium  lubricants  continued  to grow.  Increasing  numbers  of
premium oil changes using MaxLife,  Durablend and SynPower also contributed
to VIOC's record year. Earnings from automotive chemicals and international
operations both recovered strongly from their weakened levels in 2001.

(Bar graph showing Valvoline's operating income for 2000, 2001 and 2002)

At September 30, 2002,  VIOC operated 363  company-owned  service  centers,
compared  to 364  centers  in 2001  and  358  centers  in  2000.  The  VIOC
franchising program continues to expand, with 335 centers open at September
30, 2002,  compared to 311 centers in 2001 and 272 centers in 2000.  VIOC's
future growth will continue to focus principally on expanding the number of
franchised rather than company-owned centers.

Valvoline's  operating  income  increased  from $78  million in 2000 to $81
million in 2001.  Results from the core  lubricants  business and Eagle One
were up, offsetting declines from other businesses. Although domestic sales
of Valvoline  branded motor oil were  comparable to 2000,  sales of premium
motor oils,  such as MaxLife,  continued to grow at a rapid rate.  Sales of
Eagle One products were up 16%, and its operating  income  amounted to more
than 10% of its revenues.  Results from international  operations were down
as sales  volumes  fell,  with Europe  experiencing  the  largest  decline.
Results from VIOC improved during the September 2001 quarter, but were down
slightly  from  2000,   which   included  gains  on  the  sale  of  certain
company-owned  service  centers.  Earnings  from  automotive  chemicals and
antifreeze suffered from lower margins.

REFINING AND MARKETING

Operating income from Refining and Marketing,  which consists  primarily of
equity  income from  Ashland's  38%  ownership  interest  in MAP,  was $143
million in 2002,  down from a record $707  million in 2001.  Equity  income
from  MAP's  refining  and  wholesale  marketing  operations  was down $585
million due principally to weak refining margins.  The reduction of $3.35 a
barrel in MAP's refining and wholesale  marketing  margin  resulted from an
industry-wide decline

                                    34

<PAGE>


in demand for petroleum  products and a narrow  differential  between sweet
and sour crude oil prices.  Sour crude oils typically account for about 60%
of MAP's  crude oil  slate.  Equity  income  from MAP's  retail  operations
(Speedway SuperAmerica and a 50% interest in the Pilot Travel Centers joint
venture)  improved  slightly,  reflecting  the net effects of higher  sales
volumes of products and merchandise, improved merchandise margins and lower
product margins.  Equity income from MAP for 2001 also included a charge of
$10 million for goodwill amortization.

(Bar graph showing  Refining and Marketing  operating income for 2000, 2001
and 2002)

Operating  income from  Refining  and  Marketing  amounted to a record $707
million in 2001, compared to $361 million in 2000. Equity income from MAP's
refining and wholesale marketing operations was up $404 million, reflecting
the net effects of strong refining  margins,  a slight reduction in refined
product  sales  and  higher  operating  and  administrative  expenses.  The
increase of $2.54 a barrel in MAP's refining and wholesale marketing margin
reflected tight product supplies during much of 2001 in its primary Midwest
market. However, equity income from MAP's retail operations declined by $40
million.  The  decline  principally  reflects  lower  product  margins  and
volumes,  reduced  earnings  from  merchandise  sales and higher  operating
expenses.

CORPORATE

Corporate  expenses  were $92 million in 2002,  $85 million in 2001 and $73
million in 2000. The increase in 2001 principally reflects higher incentive
and deferred compensation costs. Although such costs were down in 2002, the
effects  were  more  than  offset by  higher  administrative  expenses  and
additional reserves for environmental, litigation and severance costs.

NET INTEREST AND OTHER FINANCIAL COSTS

The following  table  summarizes  the  components of net interest and other
financial costs.
<TABLE>
<CAPTION>

(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>            <C>
NET INTEREST AND OTHER FINANCIAL COSTS
Interest expense                                                           $135          $162           $191
Expenses on sales of accounts receivable                                      4             8              6
Loss on early retirement of debt                                              -             5              6
Other financial costs                                                         3             2              1
Interest income                                                              (4)           (2)           (10)
                                                                           ---------------------------------
                                                                           $138          $175           $194
                                                                           =================================

</TABLE>
The decreases in Ashland's  interest  expense  during this period  resulted
principally  from  reductions  in the  average  level of debt  outstanding.
However, lower interest rates also brought the expense down from prior year
levels by $9 million in 2002 and $4 million in 2001.  Expenses  on sales of
accounts  receivable  also reflect lower  interest rates since that program
was implemented in March 2000.

INCOME TAXES

Ashland's  overall  effective  income tax rate  amounted  to 35.5% in 2002,
40.4% in 2001 and 39.6% in 2000. The tax rate declined in 2002  principally
as a result of the  accounting  change for  goodwill,  reduced state income
taxes  and a lower  tax rate on  foreign  results.  The  accounting  change
eliminated the amortization for financial reporting  purposes,  and most of
that amortization was not deductible for income tax purposes.  In addition,
state  income  tax  rates  actually   experienced  were  lower  than  those
previously  assumed in the  deferred  tax  calculations.  Those  reductions
resulted from changing  apportionment factors related to MAP's earnings and
the use of tax loss  carryforwards  in various  jurisdictions  that had not
been  recognized in prior years due to  uncertainties  as to their ultimate
realization.

DISCONTINUED OPERATIONS AND ACCOUNTING CHANGES

During  2000,  Ashland  spun-off  the  majority  of its shares of Arch Coal
common  stock to  Ashland's  shareholders.  Ashland  subsequently  sold its
remaining  Arch Coal shares in a public  offering in February 2001. Any net
income  or loss  associated  with  Arch  Coal  (including  the costs of the
spin-off) is included in discontinued operations.  The loss of $218 million
in 2000  associated  with Arch Coal included $203 million  related to asset
impairment  and  restructuring  costs.  The net gain of $19 million in 2001
represents  an  after-tax  gain of $33 million on the sale of the Arch Coal
shares,  less  after-tax  charges of $14 million from  reserves  related to
other discontinued operations.

As a result of the adoption of FAS 142,  Ashland  recognized  an impairment
loss of $12 million  after  income taxes in 2002 related to the goodwill of
Ashland Distribution.  In addition,  the cumulative effect of the change in
the method of accounting  for  derivatives  by MAP resulted in an after-tax
charge to Ashland of $5 million in 2001.

                                    35

<PAGE>

FINANCIAL POSITION
LIQUIDITY

Cash flows from operations, a major source of Ashland's liquidity, amounted
to $188  million in 2002,  $829  million in 2001 and $484  million in 2000.
Such amounts include cash  distributions  from MAP of $196 million in 2002,
$658 million in 2001 and $279  million in 2000.  MAP operates on a calendar
year basis and is organized as a limited liability company that has elected
to be taxed as a  partnership.  As a result,  Ashland  pays income taxes on
most of its share of the taxable earnings  reported by MAP in the following
year, creating additional  variability in Ashland's cash flows from year to
year.  Income taxes paid by Ashland  related to MAP's earnings  amounted to
$239 million in 2002, $157 million in 2001 and $54 million in 2000.

Cash flows from  operations  for 2000 were  increased  by  proceeds of $150
million from the sale of  receivables  (reflected  as part of the change in
operating assets and  liabilities).  Over the last three years,  cash flows
from  operations  have  exceeded  Ashland's  capital  requirements  for net
property  additions  and  dividends  by  nearly  $750  million,   providing
additional funds for debt reductions, stock purchases and acquisitions.

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 has been  used.  Furthermore,  Ashland  has access to the
commercial paper markets and various uncommitted lines of credit. While the
revolving  credit  agreements  contain a covenant  limiting new  borrowings
based on  Ashland's  stockholders'  equity,  these  agreements  would  have
permitted an  additional  $1.4 billion of borrowings at September 30, 2002.
Additional  permissible borrowings are increased (decreased) by 150% of any
increase (decrease) in stockholders' equity.

At September 30, 2002, working capital (excluding debt due within one year)
amounted  to $615  million,  compared  to $788  million at the end of 2001.
Ashland's  working  capital is  affected  by its use of the LIFO  method of
inventory valuation. That method valued inventories below their replacement
costs by $65 million at September  30,  2002,  and $70 million at September
30, 2001.  Liquid assets (cash,  cash equivalents and accounts  receivable)
amounted to 78% of current  liabilities at September 30, 2002,  compared to
94% at the end of 2001.

CAPITAL RESOURCES

Property additions amounted to $622 million during the last three years and
are summarized in the Information by Industry  Segment on page 61. For that
period,  APAC accounted for 48% of Ashland's  capital  expenditures,  while
Ashland  Specialty  Chemical  accounted for an additional 28%. Capital used
for acquisitions (including assumed debt and companies acquired through the
issuance of common  stock)  amounted to $705 million  during the last three
years,  of which $623 million was invested in APAC,  $79 million in Ashland
Specialty  Chemical and $3 million in  Valvoline.  A summary of the capital
employed in Ashland's operations follows.

<TABLE>
<CAPTION>

(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>           <C>            <C>
CAPITAL EMPLOYED
APAC                                                                     $1,039        $1,047         $1,156
Ashland Distribution                                                        459           470            574
Ashland Specialty Chemical                                                  610           612            597
Valvoline                                                                   343           389            333
Refining and Marketing                                                    1,818         1,654          1,679
                                                                         -----------------------------------
                                                                         $4,269        $4,172         $4,339
                                                                         ===================================
</TABLE>

Long-term  borrowings provided cash flows of nearly $1.1 billion during the
last three years, including the issuance of $600 million in debt related to
the acquisition of the construction operations of Superfos and $457 million
of medium-term  notes.  The proceeds from these  long-term  borrowings were
used in part to retire $984 million of long-term  debt,  including the $600
million of  Superfos-related  debt.  Debt  retirements  included  scheduled
maturities,  as well as prepayments or refundings to reduce interest costs.
Cash flows were  supplemented  as necessary  by the issuance of  short-term
notes and commercial paper.


During 2002, Ashland reduced its total debt by $64 million to $1.8 billion.
However,  stockholders'  equity also declined during 2002 by $53 million to
$2.2  billion.  Ashland's net income of $117 million for 2002 was more than
offset by cash  dividends  of $76 million,  common  stock  purchases of $42
million and a noncash  charge of $88  million to  recognize  an  additional
pension  liability.  On balance,  debt as a percent of capital employed was
reduced  slightly  from 45.7% at the end of 2001 to 45.4% at September  30,
2002.


At  September   30,  2002,   Ashland's   debt   included  $151  million  of
floating-rate  obligations,  including  short-term  commercial paper of $10
million and $141 million of long-term  debt,  and the interest  rates on an
additional $153 million of fixed-rate,  medium-term  notes were effectively
converted to floating  rates  through  interest  rate swap  agreements.  In
addition, Ashland's costs under its sale of receivables program and various
operating leases are based on the

                                    36

<PAGE>


floating-rate interest costs on $268 million of third-party debt underlying
those  transactions.  As a result,  Ashland was exposed to  fluctuations in
short-term  interest rates on $572 million of debt obligations at September
30, 2002.


Ashland  and its  subsidiaries  are  lessees  of office  buildings,  retail
outlets, transportation and off-road construction equipment, warehouses and
storage  facilities,  and other equipment,  facilities and properties under
leasing  agreements  that  expire  at  various  dates.   Capitalized  lease
obligations  are  not  significant  and are  included  in  long-term  debt.
Aggregate  maturities of long-term debt and minimum  rental  payments under
operating leases are summarized below for each of the periods shown.

<TABLE>
<CAPTION>

(In millions)                                         Total         2003  2004-2005  2006-2007    After 2007
- ------------------------------------------------------------------------------------------------------------
<S>                                                  <C>            <C>        <C>        <C>        <C>
CONTRACTUAL OBLIGATIONS
Long-term debt                                       $1,797         $191       $464       $185       $   957
Operating leases                                        262           47         73         47            95
                                                     -------------------------------------------------------
                                                     $2,059         $238       $537       $232        $1,052
                                                     =======================================================
</TABLE>

Under various operating  leases,  Ashland has guaranteed the residual value
of the underlying leased property. If Ashland had cancelled those leases as
of September 30, 2002, its maximum  obligations  under the related residual
value  guarantees  would have  amounted to $137  million.  Ashland does not
expect to incur any significant  charge to earnings under these guarantees,
$74 million of which  relates to real estate.  These lease  agreements  are
with   unrelated   third  party  lessors  and  Ashland  has  no  additional
contractual or other commitments to any parties to the leases.


Ashland has also  guaranteed  38% of MAP's  payments for certain  crude oil
purchases, up to a maximum guarantee of $86 million. At September 30, 2002,
Ashland's  contingent  liability  under  this  guarantee  amounted  to  $72
million.  Ashland  has not made and does not  expect  to make any  payments
under this guarantee.


During  2000,  Ashland  entered into a five-year  agreement to sell,  on an
ongoing  basis and with limited  recourse,  up to a $200 million  undivided
interest in a designated  pool of accounts  receivable.  Under the terms of
the agreement, new receivables are added to the pool and collections reduce
the pool. Since inception,  interests  totaling $150 million have been sold
on  a  continuous  basis.  Ashland  retains  a  credit  interest  in  these
receivables and addresses its risk of loss on this retained interest in its
allowance  for  doubtful  accounts.   Receivables  sold  exclude  defaulted
accounts (as defined) or  concentrations  over certain  limits with any one
customer.


Earnings before interest,  taxes, depreciation and amortization (EBITDA) is
a widely accepted  financial  indicator of a company's ability to incur and
service debt.  Ashland's  EBITDA,  which  represents  operating income plus
depreciation, depletion and amortization, amounted to $558 million in 2002,
$1.1  billion  in 2001  and $908  million  in 2000.  EBITDA  should  not be
considered  in  isolation  or as an  alternative  to net income,  operating
income,  cash  flows  from  operations,  or  a  measure  of  profitability,
liquidity or performance under generally accepted accounting principles.


From time to time, Ashland's Board of Directors has authorized the purchase
of shares of Ashland  common stock in the open market.  As of September 30,
2002,  Ashland  could  purchase  an  additional  2.7 million  shares  under
previous authorizations.  The number of shares ultimately purchased and the
prices  Ashland  will pay for its stock are subject to  periodic  review by
management.


During 2003,  Ashland expects capital  expenditures of  approximately  $165
million.  Ashland anticipates meeting its capital  requirements during 2003
for property  additions,  dividends and scheduled  debt  repayments of $191
million from internally generated funds. However, external financing may be
necessary to provide funds for acquisitions or other corporate purposes.


APPLICATION OF CRITICAL ACCOUNTING POLICIES

The preparation of Ashland's  consolidated  financial  statements  requires
management  to make  estimates  and  assumptions  that affect the  reported
amounts of assets, liabilities,  revenues and expenses, and the disclosures
of contingent assets and liabilities. Significant items that are subject to
such estimates and assumptions include long-lived assets,  employee benefit
obligations,   reserves   for   asbestos   litigation   and   environmental
remediation,  and income recognized under construction contracts.  Although
management  bases its estimates on historical  experience and various other
assumptions  that are believed to be  reasonable  under the  circumstances,
actual  results  could  differ   significantly  from  the  estimates  under
different assumptions or conditions.  Management has reviewed the estimates
affecting  these  items  with the Audit  Committee  of  Ashland's  Board of
Directors.

LONG-LIVED ASSETS

The cost of plant and equipment is depreciated by the straight-line  method
over the  estimated  useful lives of the assets.  Useful lives are based on
historical  experience  and are  adjusted  when  changes  in  planned  use,
technological advances or other factors show that a different life would be
more appropriate. Such costs are periodically reviewed

                                    37

<PAGE>


for recoverability when impairment  indicators are present. Such indicators
include,  among other factors,  operating losses,  unused capacity,  market
value declines and technological obsolescence. Recorded values of plant and
equipment that are not expected to be recovered through undiscounted future
net cash flows are written down to current  fair value,  which is generally
determined from estimated discounted future net cash flows (assets held for
use) or net realizable value (assets held for sale). Although circumstances
can change  considerably over time,  Ashland is not aware of any impairment
indicators that would necessitate periodic reviews on any significant asset
within its plant and equipment at this time.

Goodwill and other  intangible  assets with indefinite lives are subject to
annual impairment  tests. As a result of Ashland's initial  impairment test
under FAS 142, the entire  goodwill of $14 million of Ashland  Distribution
was written off in 2002. Ashland's reporting units are generally synonymous
with its industry segments,  except that the individual operating divisions
of Ashland Specialty Chemical are also considered reporting units under FAS
142.  Since  market  prices of  Ashland's  reporting  units are not readily
available,   management   makes  various   estimates  and   assumptions  in
determining the estimated fair values of those units. Fair values are based
principally on EBITDA  multiples of peer group  companies for each of these
reporting units. Except for the goodwill of Ashland Distribution, the tests
indicated  that the fair values of each of  Ashland's  remaining  reporting
units with significant  goodwill were in excess of their carrying values by
at least 20%.

EMPLOYEE BENEFIT OBLIGATIONS

Ashland  and its  subsidiaries  sponsor  noncontributory,  defined  benefit
pension plans that cover substantially all employees.  Benefits under these
plans are generally based on employees'  years of service and  compensation
during the years immediately preceding their retirement. In addition, these
companies also sponsor other  postretirement  benefit plans,  which provide
health care and life insurance  benefits for eligible  employees who retire
or are disabled.  Retiree  contributions to Ashland's health care plans are
adjusted  periodically,  and the plans contain other cost-sharing features,
such as deductibles  and  coinsurance.  Life insurance  plans are generally
noncontributory.

The principal  assumptions  used to determine  Ashland's  pension and other
postretirement  benefit costs are the discount rate, the salary  adjustment
rate and the  expected  return  on plan  assets.  Nearly  all of  Ashland's
retiree health care plans contain a cap that limits Ashland's contributions
to base year per capita  costs,  plus  annual  increases  of up to 4.5% per
year.  Ashland  believes that medical  inflation will continue at a rate in
excess of 4.5% for the  immediate  future  and,  as a result,  no  explicit
assumption  was  required  as  to  the  expected  rate  of  future  medical
inflation.

The discount  rates used to determine the present  value of future  pension
payments, medical costs and life insurance benefits are based on the yields
on  high-quality,   fixed-income  investments  (such  as  Moody's  Aa-rated
corporate  bonds), as adjusted for the longer duration of Ashland's pension
and  other  postretirement  benefit  obligations.  The  present  values  of
Ashland's  future  pension  and  other   postretirement   obligations  were
determined  using  discount rates of 6.75% at September 30, 2002, and 7.25%
at September  30, 2001.  Ashland's  expense under these plans is determined
using the  discount  rate as of the  beginning  of the fiscal  year,  which
amounted to 7.25% for 2002, 7.75% for both 2001 and 2000, and will be 6.75%
for 2003.

The salary  adjustment  rate and the  expected  return on plan  assets were
assumed to be 5% and 9% for each of the last three years, and those factors
will  also be used to  determine  Ashland's  costs  for  2003.  The  salary
assumption  has been  indicative of actual  results for the last few years,
but actual  returns on plan  assets  have been below the  expected  amounts
during two of the last three  years.  For 2002,  the  pension  plan  assets
generated a loss of 6.7%,  compared to a loss of 7.1% in 2001 and income of
12.3% in 2000.  However,  the expected return on plan assets is designed to
be a long-term assumption that will be subject to considerable year-to-year
variability by its inherent nature. Ashland has generated compounded annual
investment  returns of 2.1% and 7.3% on its  pension  plan  assets over the
last five and ten year periods.  Although  those returns are well below the
long-term  assumption,  they were  measured  with the ending point amidst a
two-year  period of  declining  stock  prices  that  accompanied  depressed
economic  conditions.  For the  five  and ten year  periods  that  ended in
September  2000 prior to this adverse  investment  climate,  the compounded
annual  investment  returns on Ashland's pension plan assets were 11.4% and
12.4%.

Shown below are the estimated increases in pension and other postretirement
costs  that  would  have  resulted  from  a  1%  change  in  the  principal
assumptions for each of the last three years.

<TABLE>
<CAPTION>

(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>            <C>
INCREASE IN PENSION COSTS FROM
Decrease in the discount rate                                               $21           $15            $14
Increase in the salary adjustment rate                                       10             6              6
Decrease in the expected return on plan assets                                5             5              4
INCREASE IN OTHER POSTRETIREMENT COSTS FROM
Decrease in the discount rate                                                 4             3              2
                                                                           =================================
</TABLE>
                                    38

<PAGE>

ASBESTOS-RELATED LITIGATION

Ashland is subject to  liabilities  from claims  alleging  personal  injury
caused  by  exposure  to  asbestos.  Those  claims  result  primarily  from
indemnification  obligations undertaken in 1990 in connection with the sale
of Riley Stoker Corporation (Riley), a former subsidiary. Ashland's reserve
for asbestos  claims  amounted to $202 million at September  30, 2002,  and
reflects the estimated costs on an undiscounted basis that will be incurred
over an extended period to resolve open claims.

The reserve  for  asbestos  claims is based on  assumptions  and  estimates
derived from currently known facts. However, projecting future events, such
as the average  cost of resolving  the open claims,  is subject to numerous
variables that are extremely difficult to predict.  These variables include
the type and severity of the disease  alleged by each  claimant,  dismissal
rates,  future costs of medical  treatment,  the impact of  bankruptcies of
other companies that are co-defendants in claims, uncertainties surrounding
the litigation  process from  jurisdiction to jurisdiction and from case to
case,  and the impact of  potential  changes  in  legislative  or  judicial
standards.

Insurance  provides  reimbursements  for most of the litigation defense and
claim settlement  costs incurred,  and  coverage-in-place  agreements exist
with the insurance carriers that provide  substantially all of the coverage
that is currently being accessed. The amounts not recoverable are generally
due from insurers that are insolvent,  rather than as a result of uninsured
claims or the exhaustion of the insurance coverage.  At September 30, 2002,
the receivable for  recoveries of litigation  defense and claim  settlement
costs from insurers amounted to $196 million, including $24 million related
to costs previously incurred.

Ashland  believes that  insurance will cover the majority of the costs that
will be  incurred  on open and  future  asbestos  claims.  Equitas  Limited
(Equitas)  and other London  companies  currently  provide about 59% of the
insurance  coverage,  and this percentage could decline over time to around
44% if higher  layers of  coverage  provided by other  carriers  have to be
accessed.  The remaining 41% of the coverage is currently  provided by five
companies,  all of which  are  rated A or  higher  by A. M.  Best  Company.
Depending  upon the  level  of costs  that  are  ultimately  incurred,  the
non-London coverage could ultimately expand to about 25 insurance companies
or groups.  Companies or groups that provide about 90% of this coverage are
also rated A or higher.

Ashland has not recognized a reserve for future asbestos claims that may be
asserted.  Although additional claim filings are expected, Ashland does not
have sufficient  information to make a reasonable estimate of the number of
new claims  that might be filed.  Furthermore,  any  predictions  about the
other   variables   discussed   previously  are  subject  to  even  greater
uncertainty as the projection  period  lengthens.  Ashland has retained the
services of professional advisors to assist management in the estimation of
projected liabilities and probable insurance recoveries for future asbestos
claims.  Results of that  effort are  expected to be  available  during the
quarter ending March 31, 2003.


Although  coverage limits are resolved in the  coverage-in-place  agreement
with Equitas and the other London  companies,  there is a disagreement with
these  companies  over  the  timing  of  recoveries.   Depending  upon  the
assumptions  made with respect to the  projected  payments to settle future
claims,  an unfavorable  resolution of this  disagreement  could materially
affect the present  value of  additional  insurance  recoveries  from those
companies.  Until such time as this disagreement is resolved,  Ashland will
use the less favorable  interpretation of this agreement in estimating such
insurance recoveries.

ENVIRONMENTAL REMEDIATION

Ashland is subject to various federal,  state and local  environmental laws
and  regulations  that  require  environmental  assessment  or  remediation
efforts (collectively  environmental remediation) at multiple locations. At
September 30, 2002, such locations  included 97 waste treatment or disposal
sites where Ashland has been identified as a potentially  responsible party
under Superfund or similar state laws, approximately 140 current and former
operating  facilities  (including certain  facilities  conveyed to MAP) and
about  1,220   service   station   properties.   Ashland's   reserves   for
environmental  remediation  amounted to $169 million at September 30, 2002,
and reflect its  estimates  of the most likely  costs that will be incurred
over an extended  period to remediate  identified  conditions for which the
costs  are  reasonably   estimable,   without  regard  to  any  third-party
recoveries.   Engineering  studies,   probability  techniques,   historical
experience and other factors are used to identify and evaluate  remediation
alternatives and their related costs, in determining the estimated reserves
for environmental remediation.

Environmental   remediation  reserves  are  subject  to  numerous  inherent
uncertainties  that affect  Ashland's  ability to estimate its share of the
costs. 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. Ashland regularly adjusts its reserves as environmental  remediation
continues.

None of the remediation  locations is  individually  material to Ashland as
its  largest  reserve for any site is less than $10  million.  As a result,
Ashland's  exposure to adverse  developments with respect to any individual
site is not

                                    39

<PAGE>

expected to be material,  and these sites are in various  stages of ongoing
remediation.  Although  environmental  remediation  could  have a  material
effect on results of operations if a series of adverse  developments occurs
in a particular quarter or fiscal year, Ashland believes that the chance of
such developments occurring in the same quarter or fiscal year is remote.

CONSTRUCTION CONTRACTS

Income  related to  construction  contracts is generally  recognized by the
units-of-production    method,    which    is   a    variation    of    the
percentage-of-completion method. Construction jobs by their very nature are
subject to numerous risks that could create  variances  from  expectations.
Such risks include changes in raw material and other costs, adverse weather
conditions and the performance of subcontractors and other entities. Income
is only  known for  certain  after a job is  completed,  and the  extent of
completion can be difficult to assess in certain circumstances.

The  extent  of  completion  for each  production  phase is  determined  by
reference to material quantities,  labor hours,  subcontract costs or other
factors that are believed to be most  indicative of the progress made under
each phase of a project.  Revenues  earned are computed by reference to the
extent of  completion  and either the  contract  or  detailed  analyses  of
revenues  and  expenses  by  production  phase that  supported  the related
construction  contract or bid proposal.  These detailed analyses also serve
as early indicators as to whether a construction contract may ultimately be
completed at a loss. Any  anticipated  losses on such contracts are charged
against operations as soon as such losses are determined to be probable and
estimable.

Assumptions  concerning  the extent of  completion  can have a  significant
affect on the income  recognized on an individual  construction  project in
any  period.  However,  the  effects of  individual  assumptions  on APAC's
reported results are mitigated to a large extent by the significant  number
of jobs in various stages of completion at any point in time.


DERIVATIVE INSTRUMENTS

Ashland  selectively  uses  unleveraged  interest  rate swap  agreements to
obtain greater access to the lower  borrowing  costs normally  available on
floating-rate debt, while minimizing refunding risk through the issuance of
long-term,   fixed-rate   debt.   Ashland's   intent  is  to  maintain  its
floating-rate  exposure  between  25%  and  45% of  total  interest-bearing
obligations.  At September 30, 2002,  Ashland held interest rate swaps that
effectively  converted  the interest  rates on $153 million of  fixed-rate,
medium-term notes to floating rates based upon three-month LIBOR. The swaps
have been designated as fair value hedges,  and since the critical terms of
the debt  instruments  and the swaps  match,  the hedges are  assumed to be
perfectly  effective,  with the changes in fair value of the debt and swaps
offsetting.

Ashland  regularly uses  commodity-based  and foreign  currency  derivative
instruments to manage its exposure to price  fluctuations  associated  with
the  purchase and sale of natural gas in its energy  services  business and
certain  transactions  denominated  in  foreign  currencies.  In  addition,
Ashland  opportunistically  enters into  petroleum  crackspread  futures to
economically  hedge or enhance its equity  earnings and cash  distributions
from MAP.  Although  certain of these  instruments  could be  designated as
qualifying for hedge  accounting  treatment,  Ashland has not elected to do
so. Therefore, the fair value of the derivatives is recorded on the balance
sheet,  with the offsetting  gain or loss recognized in earnings during the
period of change. The potential loss from a hypothetical 10% adverse change
in  commodity   prices  or  foreign   currency   rates  on  Ashland's  open
commodity-based  and foreign currency  derivative  instruments at September
30, 2002, would not significantly affect Ashland's  consolidated  financial
position, results of operations, cash flows or liquidity.

MAP uses commodity-based futures, forwards, swaps and options to reduce the
effects of price  fluctuations on purchases and sales of crude oil, natural
gas and refined products. MAP has not elected to designate these derivative
instruments as qualifying for hedge accounting treatment.  As a result, the
changes in fair  value of these  derivatives  are  recognized  in  earnings
during the period of change,  impacting  Ashland's  equity  income from MAP
accordingly.


OUTLOOK

Ashland's  strategy has  consistently  been to strengthen  its wholly owned
businesses,  maintain a strong financial position and manage its investment
in MAP for growth in  earnings  and cash  distributions.  In October  2002,
management announced the following  eight-point plan to bring this strategy
into sharper focus and improve Ashland's profitability.

o        Identify  and divest  assets that cannot  achieve  desired  market
         strength as part of Ashland.

o        Increase  revenues and profits,  largely through organic means, by
         expanding in existing or adjacent product and geographic  markets,
         primarily in APAC and Ashland Specialty Chemical.

o        Reduce debt over time to a target of 35% of capital  employed from
         a current  level of about 45%.  In the near term,  debt  reduction
         will be emphasized over stock repurchases and growth investments.

o        Reduce general and administrative expenses by $25 million a year.

o        Improve  returns from  Ashland  Distribution  or pursue  strategic
         alternatives  for this  business.

o        Increase  returns from APAC,  achieving a 10% after-tax  return on
         capital employed by fiscal 2004.

o        Capture value from the MAP investment through cash distributions.

o        Improve  organizational  effectiveness  by using common  processes
         across  all  of   Ashland's   businesses   to  improve   operating
         efficiency.

                                    40

<PAGE>


In October,  APAC  announced a strategic  reorganization  of  operations to
become more  competitive in each of its markets and more efficient.  APAC's
first  priority is to  complete  this  effort and finish  implementing  its
ongoing  business  process  redesign  initiative.   In  addition,   Ashland
Distribution  has  completely  redesigned  the  way it goes  to  market  by
restructuring  its sales  organization,  consolidating  its marketing  into
regional  territories  and changing its processes to become more  efficient
and customer service oriented.

At  September  30,  2002,  APAC's  construction  backlog  amounted  to $1.7
billion, compared to $1.6 billion at the end of 2001. Public sector work in
the backlog increased 5% during the year from $1.5 billion to $1.6 billion,
and the public funding  outlook  remains  positive.  Private  contract work
declined  from $149  million at the end of 2001 to $136  million this year,
reflecting the weaker economy.

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 experiences demand increases for
gasoline  during the summer  driving  season,  for propane  and  distillate
during the winter heating  season and for asphalt  during the  construction
season.  The following table compares  operating  income by quarter for the
three  years ended  September  30, 2002  (amounts  for each  quarter do not
necessarily total to results for the year due to rounding).

<TABLE>
<CAPTION>
(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>            <C>
QUARTERLY OPERATING INCOME (LOSS)
December 31                                                                $ 98          $144           $111
March 31                                                                     (1)           87             90
June 30                                                                     137           369            268
September 30                                                                104           251            203
                                                                           =================================
</TABLE>

EFFECTS OF INFLATION AND CHANGING PRICES

Ashland's  financial  statements are prepared on the historical cost method
of accounting  and, as a result,  do not reflect  changes in the purchasing
power of the U.S. dollar.  Although annual inflation rates have been low in
recent  years,  Ashland's  results  are still  affected  by the  cumulative
inflationary trend from prior years.

In the capital-intensive industries in which Ashland operates,  replacement
costs for its properties  would generally  exceed their  historical  costs.
Accordingly,  depreciation,  depletion  and  amortization  expense would be
greater if it were  based on  current  replacement  costs.  However,  since
replacement facilities would reflect technological improvements and changes
in  business  strategies,  such  facilities  would be  expected  to be more
productive  than  existing  facilities,  mitigating  part of the  increased
expense.

Ashland  uses  the  LIFO  method  to  value a  substantial  portion  of its
inventories  to provide a better  matching of revenues with current  costs.
However, LIFO values such inventories below their replacement costs.

Monetary  assets (such as cash, cash  equivalents and accounts  receivable)
lose purchasing power as a result of inflation,  while monetary liabilities
(such as accounts payable and indebtedness)  result in a gain, because they
can be settled  with  dollars of  diminished  purchasing  power.  Ashland's
monetary  liabilities  exceed its  monetary  assets,  which  results in net
purchasing  power gains and provides a hedge  against the effects of future
inflation.

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 sections entitled Capital Resources, Application
of  Critical  Accounting  Policies,  Derivative  Instruments  and  Outlook.
Estimates as to operating performance and earnings are based on 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 and in Ashland's Form 10-K for the fiscal
year  ended  September  30,  2002.  Ashland  undertakes  no  obligation  to
subsequently update or revise these forward-looking statements.

                                    41

<PAGE>


Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED INCOME
Years Ended September 30

<TABLE>
<CAPTION>
(In millions except per share data)                                        2002          2001           2000
<S>                                                                      <C>           <C>            <C>

REVENUES
Sales and operating revenues                                             $7,543        $7,719         $7,961
Equity income - Note D                                                      181           754            394
Other income                                                                 68            74             81
                                                                         -----------------------------------
                                                                          7,792         8,547          8,436
COSTS AND EXPENSES
Cost of sales and operating expenses                                      6,049         6,319          6,434
Selling, general and administrative expenses                              1,185         1,127          1,094
Depreciation, depletion and amortization                                    220           250            237
                                                                         -----------------------------------
                                                                          7,454         7,696          7,765
                                                                         -----------------------------------
OPERATING INCOME                                                            338           851            671
Net interest and other financial costs - Note E                            (138)         (175)          (194)
                                                                         -----------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                       200           676            477
Income taxes - Note J                                                       (71)         (273)          (189)
                                                                         -----------------------------------
INCOME FROM CONTINUING OPERATIONS                                           129           403            288
Results from discontinued operations (net of income taxes) - Note N           -            19           (218)
                                                                         -----------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES                       129           422             70
Cumulative effect of accounting changes (net of income taxes) - Note A      (12)           (5)             -
                                                                         -----------------------------------
NET INCOME                                                               $  117        $  417         $   70
                                                                         ===================================

EARNINGS PER SHARE - NOTE A
Basic
   Income from continuing operations                                     $ 1.86        $ 5.79         $ 4.06
   Results from discontinued operations                                       -           .27          (3.07)
   Cumulative effect of accounting changes                                 (.17)         (.07)             -
                                                                         -----------------------------------
   Net income                                                            $ 1.69        $ 5.99         $  .99
                                                                         ===================================

Diluted
   Income from continuing operations                                     $ 1.83        $ 5.73         $ 4.05
   Results from discontinued operations                                       -           .26          (3.07)
   Cumulative effect of accounting changes                                 (.16)         (.06)             -
                                                                         -----------------------------------
   Net income                                                            $ 1.67        $ 5.93         $  .98
                                                                         ===================================

</TABLE>
See Notes to Consolidated Financial Statements.


                                    43

<PAGE>


Ashland Inc. and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30
<TABLE>
<CAPTION>
(In millions)                                                                            2002           2001

<S>                                                                                    <C>           <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                              $   90        $   236
Accounts receivable (less allowances for doubtful accounts of
   $35 million in 2002 and $34 million in 2001)                                         1,089          1,201
Inventories - Note A                                                                      485            495
Deferred income taxes - Note J                                                            122            134
Other current assets                                                                      139            171
                                                                                       ---------------------
                                                                                        1,925          2,237
INVESTMENTS AND OTHER ASSETS
Investment in Marathon Ashland Petroleum LLC (MAP) - Note D                             2,350          2,387
Goodwill                                                                                  521            528
Other noncurrent assets                                                                   512            539
                                                                                       ---------------------
                                                                                        3,383          3,454
PROPERTY, PLANT AND EQUIPMENT
Cost
   APAC                                                                                 1,358          1,290
   Ashland Distribution                                                                   360            359
   Ashland Specialty Chemical                                                             906            887
   Valvoline                                                                              379            374
   Corporate                                                                              115            120
                                                                                       ---------------------
                                                                                        3,118          3,030
Accumulated depreciation, depletion and amortization                                   (1,701)        (1,590)
                                                                                       ---------------------
                                                                                        1,417          1,440
                                                                                       ---------------------
                                                                                       $6,725         $7,131
                                                                                       =====================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year
   Commercial paper                                                                    $   10         $    -
   Current portion of long-term debt                                                      191             85
Trade and other payables                                                                1,285          1,429
Income taxes                                                                               25             20
                                                                                       ---------------------
                                                                                        1,511          1,534
NONCURRENT LIABILITIES
Long-term debt (less current portion) - Note E                                          1,606          1,786
Employee benefit obligations - Note O                                                     509            412
Deferred income taxes - Note J                                                            256            448
Reserves of captive insurance companies                                                   166            173
Other long-term liabilities and deferred credits                                          504            552
Commitments and contingencies - Notes F and M
                                                                                       ---------------------
                                                                                        3,041          3,371
STOCKHOLDERS' EQUITY - NOTES E, K AND L
Preferred stock, no par value, 30 million shares authorized                                 -              -
Common stock,par value $1.00 per share, 300 millon shares authorized
   Issued - 68 million shares in 2002 and 69 million shares in 2001                        68             69
Paid-in capital                                                                           338            363
Retained earnings                                                                       1,961          1,920
Accumulated other comprehensive loss                                                     (194)          (126)
                                                                                       ---------------------
                                                                                        2,173          2,226
                                                                                       ---------------------
                                                                                       $6,725         $7,131
                                                                                       =====================
</TABLE>
See Notes to Consolidated Financial Statements.


                                    44

<PAGE>


Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                  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(1)                                               70            (26)            44
Dividends
   Cash, $1.10 per common share                                            (78)                          (78)
   Spin-off of Arch Coal shares                                           (123)                         (123)
Issued common stock under
   Stock incentive plans                                      8                                            8
   Acquisitions of other companies                            3                                            3
Repurchase of common stock                    (2)           (87)                                         (89)
                                            ----------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 2000                 70            388          1,579            (72)         1,965
Total comprehensive income(1)                                              417            (54)           363
Cash dividends, $1.10 per common share                                     (76)                          (76)
Issued common stock under
   stock incentive plans                       1             22                                           23
Repurchase of common stock                    (2)           (47)                                         (49)
                                            ----------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 2001                 69            363          1,920           (126)         2,226
Total comprehensive income(1)                                              117            (68)            49
Cash dividends, $1.10 per common share                                     (76)                          (76)
Issued common stock under
   stock incentive plans                                     16                                           16
Repurchase of common stock                    (1)           (41)                                         (42)
                                            ----------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 2002               $ 68           $338         $1,961          $(194)        $2,173
                                            ================================================================
</TABLE>
(1)      Reconciliations  of  net  income  to  total  comprehensive  income
         follow.



(In millions)                                2002          2001            2000

Net income                                  $ 117          $417             $70
Minimum pension liability adjustment         (144)          (57)              2
   Related tax benefit (expense)               56            22              (1)
Unrealized translation gains (losses)          19           (21)            (37)
   Related tax benefit                          1             2              10
                                            -----------------------------------
Total comprehensive income                  $  49          $363             $44
                                            ===================================

At September 30, 2002, the  accumulated  other  comprehensive  loss of $194
million (after tax) was comprised of net unrealized  translation  losses of
$63 million and a minimum pension liability of $131 million.




See Notes to Consolidated Financial Statements.


                                    45


<PAGE>



Ashland Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
Years Ended September 30
<TABLE>
<CAPTION>
(In millions)                                                              2002          2001           2000
<S>                                                                       <C>           <C>            <C>

CASH FLOWS FROM OPERATIONS
Income from continuing operations                                         $ 129          $403           $288
Expense (income) not affecting cash
   Depreciation, depletion and amortization                                 220           250            237
   Deferred income taxes                                                   (119)          152            111
   Equity income from affiliates                                           (181)         (754)          (394)
   Distributions from equity affiliates                                     201           664            282
   Other items                                                                -             5            (19)
Change in operating assets and liabilities(1)                               (62)          109            (21)
                                                                          ----------------------------------
                                                                            188           829            484
CASH FLOWS FROM FINANCING
Proceeds from issuance of long-term debt                                     55            52            988
Proceeds from issuance of common stock                                       11            15              5
Repayment of long-term debt                                                (140)         (169)          (675)
Repurchase of common stock                                                  (42)          (49)           (89)
Increase (decrease) in short-term debt                                       10          (245)            63
Dividends paid                                                              (76)          (76)           (78)
                                                                          ----------------------------------
                                                                           (182)         (472)           214
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment                                 (185)         (205)          (232)
Purchase of operations - net of cash acquired                               (15)          (91)          (590)
Proceeds from sale of operations                                              -             9             50
Other - net                                                                  26            13             71
                                                                          ----------------------------------
                                                                           (174)         (274)          (701)
                                                                          ----------------------------------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS                              (168)           83             (3)
Cash provided (used) by discontinued operations                              22            86            (40)
                                                                          ----------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           (146)          169            (43)
Cash and cash equivalents - beginning of year                               236            67            110
                                                                          ----------------------------------
CASH AND CASH EQUIVALENTS - END OF YEAR                                   $  90          $236           $ 67
                                                                          ==================================


DECREASE (INCREASE) IN OPERATING ASSETS(1)
Accounts receivable                                                       $ 112          $ 70           $ 67
Inventories                                                                  11             5              -
Deferred income taxes                                                        18             -            (28)
Other current assets                                                         31            29            (27)
Investments and other assets                                                 33          (170)           (92)
INCREASE (DECREASE) IN OPERATING LIABILITIES(1)
Trade and other payables                                                   (133)           67            112
Income taxes                                                                (17)            2            (13)
Noncurrent liabilities                                                     (117)          106            (40)
                                                                          ----------------------------------
CHANGE IN OPERATING ASSETS AND LIABILITIES                                $ (62)         $109           $(21)
                                                                          ==================================
</TABLE>

(1)      Excludes changes resulting from operations acquired or sold.




See Notes to Consolidated Financial Statements.

                                    46


<PAGE>


Ashland Inc. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE A - SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated  financial  statements include the accounts of Ashland and
its majority owned  subsidiaries.  Investments in joint ventures and 20% to
50% owned affiliates are accounted for on the equity method.

RISKS AND UNCERTAINTIES

The preparation of Ashland's  consolidated  financial  statements  requires
management  to make  estimates  and  assumptions  that affect the  reported
amounts of assets, liabilities,  revenues and expenses, and the disclosures
of contingent assets and liabilities. Significant items that are subject to
such estimates and assumptions include long-lived assets,  employee benefit
obligations,   reserves   for   asbestos   litigation   and   environmental
remediation,  and income recognized under construction contracts.  Although
management  bases its estimates on historical  experience and various other
assumptions  that are believed to be  reasonable  under the  circumstances,
actual  results  could  differ   significantly  from  the  estimates  under
different assumptions or conditions.

Ashland's results, including those of Marathon Ashland Petroleum LLC (MAP),
are   affected  by  domestic   and   international   economic,   political,
legislative,  regulatory and legal actions,  as well as weather conditions.
Economic conditions,  such as recessionary trends, inflation,  interest and
monetary exchange rates, and changes in the prices of crude oil,  petroleum
products and  petrochemicals,  can have a significant effect on operations.
Political  actions may include changes in the policies of the  Organization
of  Petroleum  Exporting  Countries  or  other  developments  involving  or
affecting oil-producing countries,  including military conflict, embargoes,
internal  instability  or actions or  reactions of the U.S.  government  in
anticipation of, or in response to, such actions.  While Ashland  maintains
reserves  for  anticipated   liabilities  and  carries  various  levels  of
insurance,  Ashland  could be affected by civil,  criminal,  regulatory  or
administrative   actions,  claims  or  proceedings  relating  to  asbestos,
environmental  remediation  or other  matters.  In  addition,  climate  and
weather can  significantly  affect  Ashland's  results  from several of its
operations,  such as  APAC's  construction  activities  and  MAP's  refined
product sales.

<TABLE>
<CAPTION>
INVENTORIES

(In millions)                                                                            2002           2001
- ------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>            <C>
Chemicals and plastics                                                                   $367           $374
Construction materials                                                                     68             74
Petroleum products                                                                         58             54
Other products                                                                             51             57
Supplies                                                                                    6              6
Excess of replacement costs over LIFO carrying values                                     (65)           (70)
                                                                                         -------------------
                                                                                         $485           $495
                                                                                         ===================
</TABLE>

Chemicals,  plastics,  petroleum  products and supplies  with a replacement
cost of $321 million at September  30, 2002,  and $330 million at September
30, 2001,  are valued  using the  last-in,  first-out  (LIFO)  method.  The
remaining  inventories are stated generally at the lower of cost (using the
first-in, first-out [FIFO] or average cost method) or market.

LONG-LIVED ASSETS, GOODWILL AND OTHER INTANGIBLE ASSETS

The cost of plant and equipment is depreciated by the straight-line  method
over the estimated useful lives of the assets.  Such costs are periodically
reviewed for recoverability  when impairment  indicators are present.  Such
indicators include, among other factors, operating losses, unused capacity,
market value declines and  technological  obsolescence.  Recorded values of
plant  and  equipment  that  are  not  expected  to  be  recovered  through
undiscounted  future net cash flows are written down to current fair value,
which is generally  determined  from estimated  discounted  future net cash
flows (assets held for use) or net realizable value (assets held for sale).

As of October 1, 2001, Ashland adopted Financial Accounting Standards Board
Statement No. 142 (FAS 142),  "Goodwill and Other Intangible Assets." Under
FAS 142, goodwill and intangible assets with indefinite lives are no longer
amortized but are subject to annual impairment tests. Prior to the adoption
of FAS 142,  Ashland's  goodwill was amortized by the straight-line  method
over  periods   generally  ranging  from  15  to  40  years,  and  goodwill
amortization  amounted to $42 million in 2001 and $29 million in 2000.  The
amount for 2001 included charges of $10 million for write-downs  related to
certain  operations.  Results from these  operations  consistently had been
well  below  the  levels  that  were  expected  when  they  were  acquired,
necessitating the impairment review and resulting write-downs.

When MAP was formed, Ashland's investment exceeded its underlying equity in
the net  assets of that  company.  That  excess  investment  included  $245
million that was accounted for as part of the carrying value of MAP's plant
and  equipment,  and is being  amortized on a  straight-line  basis over 15
years at a rate of $16 million a year.  The  remainder was accounted for as
goodwill and was being amortized on a straight-line  basis over 20 years at
a rate of $10 million


                                    47

<PAGE>




NOTE A - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

a year prior to the adoption of FAS 142. At September  30, 2002,  Ashland's
investment exceeds its equity in the net assets of MAP by $323 million,  of
which $167 million  represents plant and equipment that will continue to be
amortized, and $156 million represents goodwill.

As a result of the adoption of FAS 142, it was determined that the goodwill
of Ashland  Distribution was impaired.  Accordingly,  an impairment loss of
$14 million ($12 million net of income  taxes) was recorded as a cumulative
effect  of   accounting   change  as  of  October  1,  2001.   Due  to  the
nonamortization  of goodwill,  Ashland's  reported results for 2002 are not
comparable  with previous  years.  The following  table  presents pro forma
information assuming that Ashland adopted FAS 142 as of October 1, 1999.

<TABLE>
<CAPTION>
(In millions)                                                             2002           2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>            <C>
Income from continuing operations                                        $ 129          $ 448          $ 320
Earnings per share
   Basic                                                                  1.86           6.44           4.52
   Diluted                                                                1.83           6.37           4.51
                                                                         ===================================
</TABLE>

All of  Ashland's  intangible  assets are  subject to  amortization.  These
intangible  assets  (included in other  noncurrent  assets) and the related
amortization expense are not material to Ashland's  consolidated  financial
position or results of operations.

Following  is a  progression  of  goodwill  by  segment  for the year ended
September 30, 2002.
<TABLE>
<CAPTION>
                                                                          Ashland
                                                        Ashland         Specialty
(In millions)                               APAC   Distribution          Chemical   Valvoline          Total
- ------------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>               <C>          <C>          <C>

Balance at October 1, 2001                  $419            $14               $92          $3           $528
Goodwill acquired                              1              -                 1           2              4
Impairment losses                              -            (14)                -           -            (14)
Currency translation adjustments               -              -                 3           -              3
                                            ----------------------------------------------------------------
Balance at September 30, 2002               $420            $ -               $96          $5           $521
                                            ================================================================
</TABLE>

ENVIRONMENTAL COSTS

Accruals for environmental  costs are recognized when it is probable that a
liability  has  been  incurred  and the  amount  of that  liability  can be
reasonably  estimated.  Such costs are charged to expense if they relate to
the remediation of conditions caused by past operations or are not expected
to mitigate or prevent  contamination from future operations.  Accruals are
recorded at  undiscounted  amounts  based on  experience,  assessments  and
current  technology,  without regard to any third-party  recoveries and are
regularly  adjusted as  environmental  assessments and remediation  efforts
continue.

EARNINGS PER SHARE

Following is the computation of basic and diluted  earnings per share (EPS)
from continuing operations.
<TABLE>
<CAPTION>
(In millions except per share data)                                        2002          2001           2000
- ------------------------------------------------------------------------------------------------------------

<S>                                                                       <C>            <C>            <C>
NUMERATOR
Numerator for basic and diluted EPS - Income from continuing operations   $ 129         $ 403          $ 288
                                                                          ==================================
DENOMINATOR
Denominator for basic EPS - Weighted average common shares outstanding       69            69             71
Common shares issuable upon exercise of stock options                         1             1              -
                                                                          ----------------------------------
Denominator for diluted EPS - Adjusted weighted average shares and
   assumed conversions                                                       70            70             71
                                                                          ==================================

BASIC EPS FROM CONTINUING OPERATIONS                                      $1.86         $5.79          $4.06
DILUTED EPS FROM CONTINUING OPERATIONS                                    $1.83         $5.73          $4.05
                                                                          ==================================
</TABLE>

                                    48

<PAGE>


STOCK INCENTIVE PLANS

Ashland  accounts for its stock options  using the  intrinsic  value method
prescribed  by  Accounting  Principles  Board  Opinion  No.  25  (APB  25),
"Accounting  for Stock Issued to Employees,"  and related  Interpretations.
The  disclosure   requirements  of  Financial  Accounting  Standards  Board
Statement No. 123 (FAS 123), "Accounting for Stock-Based Compensation," are
included in Note L. Ashland will start  expensing  stock  options under FAS
123 effective October 1, 2002.

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 amended by two other  statements and was 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  consolidated 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 share of the pretax loss amounted to $8
million which, net of income tax benefits of $3 million, resulted in a loss
of $5 million from the cumulative effect of this accounting change.

Ashland  selectively  uses  unleveraged  interest  rate swap  agreements to
obtain greater access to the lower  borrowing  costs normally  available on
floating-rate debt, while minimizing refunding risk through the issuance of
long-term,   fixed-rate   debt.   Ashland's   intent  is  to  maintain  its
floating-rate  exposure  between  25%  and  45% of  total  interest-bearing
obligations.  At September 30, 2002,  Ashland held interest rate swaps that
effectively  converted  the interest  rates on $153 million of  fixed-rate,
medium-term notes to floating rates based upon three-month LIBOR. The swaps
have been designated as fair value hedges,  and since the critical terms of
the debt  instruments  and the swaps  match,  the hedges are  assumed to be
perfectly  effective,  with the changes in fair value of the debt and swaps
offsetting.

Ashland  regularly uses  commodity-based  and foreign  currency  derivative
instruments to manage its exposure to price  fluctuations  associated  with
the  purchase and sale of natural gas in its energy  services  business and
certain  transactions  denominated  in  foreign  currencies.  In  addition,
Ashland  opportunistically  enters into  petroleum  crackspread  futures to
economically  hedge or enhance its equity  earnings and cash  distributions
from MAP.  Although  certain of these  instruments  could be  designated as
qualifying for hedge  accounting  treatment,  Ashland has not elected to do
so. Therefore, the fair value of the derivatives is recorded on the balance
sheet,  with the offsetting  gain or loss recognized in earnings during the
period of change.

MAP uses commodity-based futures, forwards, swaps and options to reduce the
effects of price  fluctuations on purchases and sales of crude oil, natural
gas and refined products. MAP has not elected to designate these derivative
instruments as qualifying for hedge accounting treatment.  As a result, the
changes in fair  value of these  derivatives  are  recognized  in  earnings
during the period of change,  impacting  Ashland's  equity  income from MAP
accordingly.

OTHER

Cash equivalents  include highly liquid  investments  maturing within three
months after purchase.

Income  related to  construction  contracts is generally  recognized by the
units-of-production    method,    which    is   a    variation    of    the
percentage-of-completion  method.  Any anticipated losses on such contracts
are charged against  operations as soon as such losses are determined to be
probable and estimable.

Advertising costs ($79 million in 2002, $67 million in 2001 and $67 million
in 2000) and  research  and  development  costs ($38  million in 2002,  $36
million in 2001 and $33 million in 2000) are expensed as incurred.

In April 2002, the Financial  Accounting  Standards Board issued  Statement
No. 145 (FAS 145), under which gains and losses on early retirement of debt
are  generally  no  longer  shown  as  extraordinary  items  in the  income
statement.  Ashland  adopted  the  statement  as of October  1,  2001,  the
beginning of its fiscal year. As a result of the reclassification of losses
on early retirement of debt to interest and other financial  costs,  income
from  continuing  operations  was reduced by $3 million ($.04 per share) in
2001 and $4 million ($.05 per share) in 2000.


Certain  prior year  amounts  have been  reclassified  in the  consolidated
financial   statements   and   accompanying   notes  to   conform  to  2002
classifications.

                                    49

<PAGE>


NOTE B - INFORMATION BY INDUSTRY SEGMENT

Ashland's  operations are conducted  primarily in the United States and are
managed along industry segments,  which include APAC, Ashland Distribution,
Ashland  Specialty  Chemical,   Valvoline,   and  Refining  and  Marketing.
Information by industry segment is shown on pages 60 and 61.

The APAC group of companies  performs contract  construction  work, such as
paving, repairing and resurfacing highways, streets, airports,  residential
and commercial  developments,  sidewalks,  and driveways;  grading and base
work; and excavation and related  activities in the construction of bridges
and  structures,  drainage  facilities  and  underground  utilities  in  14
southern and midwestern  states.  APAC also produces and sells construction
materials,  such as hot-mix asphalt, crushed stone and other aggregate, and
ready-mix concrete.

Ashland Distribution distributes chemicals,  plastics, fiber reinforcements
and fine ingredients in North America and plastics in Europe,  and provides
environmental and energy management services.

Ashland Specialty Chemical manufactures composites,  adhesives, and casting
binder chemicals for use in the transportation and construction industries.
Ashland Specialty Chemical also manufactures water treatment  chemicals for
use in the general industrial and merchant marine markets. In addition, the
company  manufactures  high purity  chemicals and provides  services to the
microelectronics industry.

Valvoline is a marketer of premium-branded  automotive and commercial oils,
automotive  chemicals,  appearance products and automotive  services,  with
sales in more than 140  countries.  Valvoline  is  engaged in the "fast oil
change"  business  through owned and franchised  service centers  operating
under the Valvoline Instant Oil Change name.

The  Refining  and  Marketing  segment  includes  Ashland's  38%  ownership
interest  in  Marathon  Ashland  Petroleum  LLC (MAP) and other  activities
associated  with refining and  marketing.  MAP was formed  January 1, 1998,
combining the major elements of the refining,  marketing and transportation
operations  of Ashland and Marathon Oil Company.  MAP has seven  refineries
with a combined crude oil refining capacity of 935,000 barrels per calendar
day, 88 light  products and asphalt  terminals in the Midwest and Southeast
United  States,  about  5,900  retail  marketing  outlets  in 17 states and
significant  pipeline holdings.  Ashland accounts for its investment in MAP
using the equity method.

Information  about  Ashland's  domestic  and  foreign  operations  follows.
Ashland has no material operations in any individual foreign country.
<TABLE>
<CAPTION>
                                                                Revenues from                Property, plant
                                                              external customers               and equipment
(In millions)                                               2002     2001     2000             2002     2001
- ------------------------------------------------------------------------------------------------------------
<S>                                                       <C>      <C>      <C>              <C>      <C>

United States                                             $6,766   $7,526   $7,344           $1,275   $1,299
Foreign                                                    1,026    1,021    1,092              142      141
                                                          --------------------------------------------------
                                                          $7,792   $8,547   $8,436           $1,417   $1,440
                                                          ==================================================
</TABLE>

NOTE C - RELATED PARTY TRANSACTIONS

Ashland sells  chemicals and lubricants to Marathon  Ashland  Petroleum LLC
(MAP) and purchases  petroleum  products from MAP. Such transactions are in
the ordinary course of business at negotiated prices comparable to those of
transactions  with other  customers  and  suppliers.  In addition,  Ashland
leases  certain  facilities  to  MAP,  and  provides  certain   information
technology and administrative services to MAP. For the year ended September
30, 2002,  Ashland's  sales to MAP amounted to $24 million,  its  purchases
from MAP amounted to $217 million, and its costs charged to MAP amounted to
$6 million.  Comparable amounts for the year ended September 30, 2001, were
$22 million, $258 million, and $6 million, and for the year ended September
30,  2000,  were $15  million,  $261  million,  and $8  million.  Ashland's
transactions   with  other   affiliates   and  related   parties  were  not
significant.

Ashland  has  entered  into  revolving  credit  agreements   providing  for
short-term loans, at Ashland's  discretion,  to and from MAP at competitive
rates. Under MAP's borrowing agreement, Ashland may loan up to $190 million
to MAP. Under Ashland's borrowing agreement,  MAP could invest up to 38% of
its surplus cash  balances with Ashland.  No loans were  outstanding  under
either agreement at September 30, 2002, and 2001.  Under these  agreements,
Ashland paid  interest  expense to MAP of $4 million in 2001 and $5 million
in 2000.  Interest expense paid to MAP in 2002 and interest income received
from MAP in all three years was not significant.


Ashland  has  guaranteed  38% of  MAP's  payments  for  certain  crude  oil
purchases, up to a maximum guarantee of $86 million. At September 30, 2002,
Ashland's  contingent  liability  under  this  guarantee  amounted  to  $72
million.  Ashland  has not made and does not  expect  to make any  payments
under this guarantee.


                                    50

<PAGE>




NOTE D - UNCONSOLIDATED AFFILIATES

Affiliated  companies  accounted for on the equity method include  Marathon
Ashland  Petroleum LLC (MAP) and various other companies.  See Note B for a
description  of MAP.  Summarized  financial  information  reported by these
affiliates and a summary of the amounts recorded in Ashland's  consolidated
financial  statements  follow.  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  that will be  incurred  by its  parents.  At
September 30, 2002,  Ashland's  retained  earnings included $157 million of
undistributed earnings from unconsolidated  affiliates accounted for on the
equity method.
<TABLE>
<CAPTION>
                                                                                        Other
(In millions)                                                               MAP    affiliates          Total
- ------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>              <C>            <C>

SEPTEMBER 30, 2002
Financial position
   Current assets                                                       $ 3,425          $165
   Current liabilities                                                   (2,200)          (85)
                                                                        ------------------------------------
   Working capital                                                        1,225            80
   Noncurrent assets                                                      4,572           125
   Noncurrent liabilities                                                  (461)         (106)
                                                                        ------------------------------------
   Stockholders' equity                                                 $ 5,336          $ 99
                                                                        ====================================
Results of operations
   Sales and operating revenues                                         $25,063          $262
   Income from operations                                                   511            23
   Net income                                                               502            15
Amounts recorded by Ashland
   Investments and advances                                               2,350(1)         48         $2,398
   Equity income                                                            176             5            181
   Distributions received                                                   196             5            201
                                                                        ====================================

SEPTEMBER 30, 2001
Financial position
   Current assets                                                       $ 3,485          $ 80
   Current liabilities                                                   (2,214)          (55)
                                                                        -----------------------------------
   Working capital                                                        1,271            25
   Noncurrent assets                                                      4,431            77
   Noncurrent liabilities                                                  (364)          (15)
                                                                        -----------------------------------
   Stockholders' equity                                                 $ 5,338          $ 87
                                                                        ==================================
Results of operations
   Sales and operating revenues                                         $28,865          $207
   Income from operations                                                 2,042            21
   Net income                                                             2,022            12
Amounts recorded by Ashland
   Investments and advances                                               2,387            45         $2,432
   Equity income                                                            749             5            754
   Distributions received                                                   658             6            664
                                                                        ====================================

SEPTEMBER 30, 2000
Results of operations
   Sales and operating revenues                                         $27,657          $181
   Income from operations                                                 1,084            21
   Net income                                                             1,092            13
Amounts recorded by Ashland
   Equity income                                                            389             5         $  394
   Distributions received                                                   279             3            282
                                                                       =====================================

</TABLE>
(1)      At September 30, 2002,  Ashland's investment exceeds its equity in
         the net  assets  of MAP by $323  million,  of which  $167  million
         represents plant and equipment that will continue to be amortized,
         and $156 million represents goodwill.  Straight-line  amortization
         of this excess  investment  against equity income  amounted to $16
         million in 2002 and $26 million in 2001 and 2000 (see Note A).



                                    51


<PAGE>




 NOTE E - DEBT
<TABLE>
<CAPTION>
(In millions)                                                                            2002           2001
- ------------------------------------------------------------------------------------------------------------

<S>                                                                                    <C>            <C>
Medium-term notes, due 2003-2025, interest at a weighted
   average rate of 7.3% at September 30, 2002 (2.4% to 10.4%)                          $  765         $  845
8.80% debentures, due 2012                                                                250            250
7.83% medium-term notes, Series J, due 2005                                               229            229
Pollution control and industrial revenue bonds, due
   2003-2022, interest at a weighted average rate of 5.7%
   at September 30, 2002 (1.6% to 7.2%)                                                   201            201
6.86% medium-term notes, Series H, due 2009                                               150            150
6.625% senior notes, due 2008                                                             150            150
Other                                                                                      52             46
                                                                                       ---------------------
Total long-term debt                                                                    1,797          1,871
Current portion of long-term debt                                                        (191)           (85)
                                                                                       ---------------------
Long-term debt (less current portion)                                                  $1,606         $1,786
                                                                                       =====================
</TABLE>

Aggregate  maturities  of  long-term  debt are $191  million  in 2003,  $68
million in 2004, $396 million in 2005, $60 million in 2006 and $125 million
in 2007. Interest payments on all indebtedness  amounted to $138 million in
2002,  $167 million in 2001 and $189 million in 2000. The weighted  average
interest rate on short-term  borrowings  outstanding  was 1.9% at September
30, 2002. No short-term borrowings were outstanding at September 30, 2001.

Ashland  has  two  revolving  credit  agreements  providing  for up to $425
million  in  borrowings,  neither  of which has been  used.  The  agreement
providing  for $250  million in  borrowings  expires  on June 2, 2004.  The
agreement providing for $175 million in borrowings expires on June 6, 2003.
Both  agreements  contain  a  covenant  limiting  new  borrowings  based on
Ashland's  stockholders  equity.   However,  these  agreements  would  have
permitted an  additional  $1.4 billion of borrowings at September 30, 2002.
Additional  permissible borrowings are increased (decreased) by 150% of any
increase (decrease) in stockholders' equity.

NET INTEREST AND OTHER FINANCIAL COSTS
<TABLE>
<CAPTION>
(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------

<S>                                                                        <C>           <C>            <C>
Interest expense                                                           $135          $162           $191
Expenses on sales of accounts receivable (see Note G)                         4             8              6
Loss on early retirement of debt                                              -             5              6
Other financial costs                                                         3             2              1
Interest income                                                              (4)           (2)           (10)
                                                                           ---------------------------------
                                                                           $138          $175           $194
                                                                           =================================

</TABLE>
NOTE F - LEASES

Ashland  and its  subsidiaries  are  lessees  of office  buildings,  retail
outlets, transportation and off-road construction equipment, warehouses and
storage  facilities,  and other equipment,  facilities and properties under
leasing  agreements that expire at various dates.  Under various  operating
leases,  Ashland has guaranteed the residual value of the underlying leased
property.  If Ashland had cancelled  those leases as of September 30, 2002,
its maximum  obligations  under the related residual value guarantees would
have  amounted  to $137  million.  Ashland  does not  expect  to incur  any
significant charge to earnings under these guarantees, $74 million of which
relates to real estate.  These lease  agreements are with  unrelated  third
party  lessors  and  Ashland  has  no  additional   contractual   or  other
commitments to any parties to the leases. Capitalized lease obligations are
not significant  and are included in long-term debt.  Future minimum rental
payments at September 30, 2002, and rental expense under  operating  leases
follow.
<TABLE>
<CAPTION>
(In millions)                                       (In millions)
Future minimum rental payments                      Rental expense                    2002     2001     2000
- ----------------------------------                  --------------------------------------------------------
<S>                          <C>                    <S>                              <C>      <C>      <C>

2003                          $ 47
2004                            40                  Minimum rentals
2005                            33                    (including rentals under
2006                            25                    short-term leases)              $106     $119     $115
2007                            22                  Contingent rentals                   3        5        5
Later years                     95                  Sublease rental income              (2)      (2)      (2)
- ----------------------------------                 ---------------------------------------------------------
                              $262                                                    $107     $122     $118
==================================                 =========================================================
</TABLE>


                                    52


<PAGE>




NOTE G - SALE OF ACCOUNTS RECEIVABLE

On March 15, 2000,  Ashland entered into a five-year  agreement to sell, on
an ongoing  basis with limited  recourse,  up to a $200  million  undivided
interest in a designated  pool of accounts  receivable.  Under the terms of
the agreement, new receivables are added to the pool and collections reduce
the pool. Since inception,  interests  totaling $150 million have been sold
on  a  continuous  basis.  Ashland  retains  a  credit  interest  in  these
receivables and addresses its risk of loss on this retained interest in its
allowance  for  doubtful  accounts.   Receivables  sold  exclude  defaulted
accounts (as defined) or  concentrations  over certain  limits with any one
customer.  The proceeds from the initial sale were reflected as a reduction
of accounts  receivable  on Ashland's  balance sheet and as cash flows from
operations  (included in change in  operating  assets and  liabilities)  on
Ashland's  cash flow  statement.  The costs of these sales are based on the
buyer's  short-term  borrowing rates and approximated 2.2% at September 30,
2002, and 3.5% at September 30, 2001.


NOTE H - FINANCIAL INSTRUMENTS

DERIVATIVE INSTRUMENTS

Ashland uses interest rate swaps and  commodity-based  and foreign currency
derivative  instruments as described in Note A. Open  contracts  other than
interest rate swaps were not significant at September 30, 2002, and 2001.

FAIR VALUES

The  carrying  amounts and fair values of Ashland's  significant  financial
instruments  at September  30, 2002,  and 2001,  are shown below.  The fair
values  of cash and cash  equivalents,  investments  of  captive  insurance
companies and commercial paper approximate their carrying amounts. The fair
values of long-term  debt are based on quoted  market  prices or, if market
prices are not available,  the present values of the underlying  cash flows
discounted at Ashland's  incremental  borrowing  rates.  The fair values of
interest rate swaps are based on quoted market prices.
<TABLE>
<CAPTION>
                                                                         2002                      2001
                                                                 Carrying     Fair        Carrying      Fair
(In millions)                                                      amount    value          amount     value
- ------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>      <C>             <C>      <C>
Assets
   Cash and cash equivalents                                       $   90   $   90          $  236    $  236
   Interest rate swaps                                                 11       11               3         3
   Investments of captive insurance companies(1)                        3        3              20        20
Liabilities
   Commercial paper                                                    10       10               -         -
   Long-term debt (including current portion)                       1,797    1,958           1,871     2,023
                                                                   =========================================
</TABLE>

(1)      Included in other noncurrent  assets in the  Consolidated  Balance
         Sheets.


NOTE I - ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

In October  1999,  Ashland  completed  its tender offer for Superfos a/s, a
Denmark  based  industrial  company.  In  November  1999,  in a  series  of
transactions,  Ashland sold the businesses of Superfos, other than its U.S.
construction operations,  to a unit of Industri Kapital, a European private
equity  fund.  Ashland's  net cost for the U.S.  construction  business  of
Superfos was approximately $533 million, of which $315 million was assigned
to goodwill and was being amortized on a straight-line basis over a 20-year
period   through   September  30,  2001.  In  addition,   several   smaller
acquisitions were made by APAC and Ashland Specialty  Chemical in 2000, two
of which included the issuance of $3 million in Ashland common stock.

During  2001,   Ashland  Specialty   Chemical  acquired  Neste  Polyester's
unsaturated  polyester  resins and gelcoats  business and assets from Dynea
Oy. Several  smaller  acquisitions  were also completed by APAC and Ashland
Specialty  Chemical in 2001. During 2002,  several small  acquisitions were
made by APAC, Ashland Specialty Chemical and Valvoline.  These acquisitions
were  accounted for as purchases  and did not have a significant  effect on
Ashland's consolidated financial statements.

DIVESTITURES

During  2001,  APAC  sold  certain   grading  and  utilities   construction
operations.  During 2000,  APAC sold certain  concrete and block plants and
Ashland  Distribution sold its plastics compounding business in Italy. None
of these  divestitures had a significant  effect on Ashland's  consolidated
financial statements.

                                    53

<PAGE>


NOTE J - INCOME TAXES

A summary of the provision for income taxes related to continuing operations
follows.
<TABLE>
<CAPTION>
(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>            <C>

Current(1)
   Federal                                                                 $151          $ 89           $ 55
   State                                                                     22            13              6
   Foreign                                                                   17            19             17
                                                                           ---------------------------------
                                                                            190           121             78
Deferred                                                                   (119)          152            111
                                                                           ---------------------------------
                                                                           $ 71          $273           $189
                                                                           =================================
</TABLE>

(1)      Income tax payments amounted to $158 million in 2002, $103 million
         in 2001 and $114 million in 2000.

Deferred income taxes are provided for income and expense items  recognized
in different years for tax and financial  reporting  purposes.  Ashland has
not recorded deferred income taxes on the undistributed earnings of certain
foreign  subsidiaries  and 50%  owned  foreign  corporate  joint  ventures.
Management intends to indefinitely  reinvest such earnings,  which amounted
to $96 million at September 30, 2002.  Because of  significant  foreign tax
credits,  it is not  practicable  to determine the U.S.  federal income tax
liability,   if  any,  that  might  be  incurred  if  those  earnings  were
distributed.  Temporary  differences that give rise to significant deferred
tax assets and liabilities follow.
<TABLE>
<CAPTION>
(In millions)                                                                            2002           2001
- ------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>            <C>
Employee benefit obligations                                                             $204           $177
Environmental, self-insurance and litigation reserves                                     134            148
Compensation accruals                                                                      53             61
Uncollectible accounts receivable                                                          19             20
Other items                                                                                54             59
                                                                                         -------------------
Total deferred tax assets                                                                 464            465
                                                                                         -------------------
Property, plant and equipment                                                             186            173
Investment in unconsolidated affiliates                                                   412            606
                                                                                         -------------------
Total deferred tax liabilities                                                            598            779
                                                                                         -------------------
Net deferred tax liability                                                               $134           $314
                                                                                         ===================

</TABLE>

The U.S. and foreign components of income from continuing operations before
income taxes and a reconciliation  of the statutory federal income tax with
the provision for income taxes follow.
<TABLE>
<CAPTION>
(In millions)                                                              2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>            <C>

Income from continuing operations before income taxes
   United States                                                           $114          $605           $417
   Foreign                                                                   86            71             60
                                                                           ---------------------------------
                                                                           $200          $676           $477
                                                                           =================================
Income taxes computed at U.S. statutory rate (35%)                         $ 70          $236           $167
Increase (decrease) in amount computed resulting from
   State income taxes                                                         1            22             14
   Net impact of foreign results                                              -             3              -
   Nondeductible goodwill amortization                                        -            12              7
   Other items                                                                -             -              1
                                                                           ---------------------------------
Income taxes                                                               $ 71          $273           $189
                                                                           =================================
</TABLE>
                                     54


<PAGE>


NOTE K - CAPITAL STOCK

From time to time, Ashland's Board of Directors has authorized the purchase
of shares of Ashland  common stock in the open market.  As of September 30,
2002,  Ashland  could  purchase  an  additional  2.7 million  shares  under
previous authorizations.

Under Ashland's  Shareholder  Rights Plan, each common share is accompanied
by one right to purchase  one-thousandth share of preferred stock for $140.
Each one-thousandth  share of preferred stock will be entitled to dividends
and to vote on an equivalent  basis with one common  share.  The rights are
neither  exercisable  nor  separately  transferable  from the common shares
unless a party  acquires or tenders for more than 15% of  Ashland's  common
stock.  If any party  acquires  more than 15% of Ashland's  common stock or
acquires  Ashland in a business  combination,  each right (other than those
held by the acquiring party) will entitle the holder to purchase  preferred
stock of Ashland or the acquiring  company at a substantial  discount.  The
rights expire on May 16, 2006,  and Ashland's  Board of Directors can amend
certain  provisions  of the Plan or redeem  the rights at any time prior to
their becoming exercisable.

At September 30, 2002,  500,000  shares of cumulative  preferred  stock are
reserved for potential  issuance under the Shareholder  Rights Plan and 7.5
million  common shares are reserved for issuance  under  outstanding  stock
options.


NOTE L - STOCK INCENTIVE PLANS

Ashland has stock  incentive  plans under which key  employees or directors
can purchase shares of common stock under stock options or restricted stock
awards. Stock options are granted to employees at a price equal to the fair
market value of the stock on the date of grant and become  exercisable over
periods of one to four years.  Unexercised options lapse 10 years after the
date of grant.  Restricted  stock awards entitle  employees or directors to
purchase  shares at a nominal  cost, to vote such shares and to receive any
dividends  thereon.  However,  such shares are subject to  forfeiture  upon
termination of service before the restriction period ends.

As discussed in Note A, Ashland  accounts for its stock  incentive plans in
accordance with APB 25. Ashland has not recognized compensation expense for
stock options,  because the exercise price of the options equals the market
price  of  the  underlying  stock  on  the  date  of  grant,  which  is the
measurement  date.  If the  alternative  method  of  accounting  for  stock
incentive  plans  prescribed  by FAS 123 had been  followed,  Ashland's net
income and  earnings  per share  would  have been  reduced to the pro forma
amounts shown in the following  table.  The fair value per share of options
granted was determined  using the  Black-Scholes  option pricing model with
the indicated assumptions.

<TABLE>
<CAPTION>
                                                                          2002          2001            2000
- ------------------------------------------------------------------------------------------------------------

<S>                                                                      <C>           <C>             <C>
Pro forma
   Net income (in millions)                                              $ 113         $ 414           $  66
   Basic earnings per share                                               1.63          5.94             .93
   Diluted earnings per share                                             1.61          5.88             .92
                                                                         -----------------------------------
Weighted average fair value per share of options granted                 $5.35         $7.38           $7.26
                                                                         -----------------------------------
Assumptions (weighted average)
   Risk-free interest rate                                                 2.9%          4.1%            6.1%
   Expected dividend yield                                                 3.8%          3.0%            3.3%
   Expected volatility                                                    26.7%         24.4%           22.9%
   Expected life (in years)                                                5.0           5.0             5.0
                                                                         ===================================

</TABLE>
A progression of activity and various other  information  relative to stock
options is presented in the following table.

<TABLE>
<CAPTION>
                                       2002                         2001                         2000

                                       Weighted avg.                Weighted avg.                Weighted avg.
(In thousands except            Common  option price         Common  option price       Common    option price
 per share data)                shares     per share         shares     per share       shares       per share
- --------------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>            <C>          <C>           <C>            <C>

Outstanding -
   beginning of year(1)         6,735         $38.41          6,380        $38.01        6,381          $38.34
Granted                         1,210          29.05          1,001         36.38          506           32.96
Exercised                        (413)         31.34           (572)        30.06         (195)          30.75
Canceled                          (50)         38.54            (74)        41.04         (312)          41.26
                               -------------------------------------------------------------------------------
Outstanding - end of year(1)    7,482         $37.28          6,735        $38.41        6,380          $38.01
                               ===============================================================================

Exercisable - end of year       5,537         $39.34          4,803        $39.36        4,684          $38.53
                               ===============================================================================

(1)      Shares of common stock  available  for future grants of options or
         awards  amounted to 3,727,000 at September 30, 2002, and 4,812,000
         at  September  30,  2001.  Exercise  prices per share for  options
         outstanding  at September  30, 2002,  ranged from $23.88 to $33.88
         for 2,591,000 shares,  from $35.88 to $43.13 for 3,554,000 shares,
         and from  $44.20 to $53.38  for  1,337,000  shares.  The  weighted
         average remaining contractual life of the options was 6.2 years.

                                    55
</TABLE>
<PAGE>





NOTE M - LITIGATION, CLAIMS AND CONTINGENCIES

ASBESTOS-RELATED LITIGATION

Ashland is subject to  liabilities  from claims  alleging  personal  injury
caused  by  exposure  to  asbestos.  Those  claims  result  primarily  from
indemnification  obligations undertaken in 1990 in connection with the sale
of Riley Stoker Corporation  (Riley),  a former subsidiary.  Although Riley
was neither a producer  nor a  manufacturer  of  asbestos,  its  industrial
boilers  contained some  asbestos-containing  components  produced by other
companies.

A summary of  asbestos claims activity follows. Because claims are
frequently  filed and  settled  in large  groups,  the amount and timing of
settlements,  and the number of open claims,  can  fluctuate  significantly
from period to period.  Over the last 17 years, Riley has been dismissed as
a defendant in 55% of the resolved claims.

<TABLE>
<CAPTION>

(In thousands)                                                             2002          2001           2000
- ------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>            <C>

Open claims - beginning of year                                             167           118             93
New claims filed                                                             45            52             37
Claims settled                                                              (15)           (2)            (9)
Claims dismissed                                                            (37)           (1)            (3)
                                                                           ---------------------------------
Open claims - end of year                                                   160           167            118
                                                                           =================================

</TABLE>
Amounts  spent on  litigation  defense  and claim  settlements  totaled $38
million in 2002,  $15  million in 2001 and $11  million in 2000.  Insurance
provides  reimbursements  for most of these  costs,  and  coverage-in-place
agreements exist with the insurance carriers that provide substantially all
of  the  coverage  that  is  currently  being  accessed.  The  amounts  not
recoverable are generally due from insurers that are insolvent, rather than
as a  result  of  uninsured  claims  or the  exhaustion  of  the  insurance
coverage.

In previous  years,  Ashland  recognized  a net  reserve for the  estimated
litigation  defense and claim  settlement  costs to settle open claims that
would not be recovered  from insolvent  insurance  carriers.  However,  the
reserve  and  related  receivable  are now  presented  on a gross  basis in
consolidated  balance  sheet at September  30, 2001, to conform to the 2002
presentation.  This  change did not result  from an  increase  in  expected
asbestos exposure, and had no effect on net income or stockholders' equity.
Under this  presentation,  the reserve for asbestos claims amounted to $202
million at September 30, 2002, and $199 million at September 30, 2001. Such
reserve reflects the estimated costs on an undiscounted  basis that will be
incurred over an extended period to resolve open claims.  In addition,  the
receivable for recoveries of litigation  defense and claim settlement costs
from  insurers  amounted to $196  million at September  30, 2002,  and $178
million at September 30, 2001.

The reserve  for  asbestos  claims is based on  assumptions  and  estimates
derived from currently known facts. However, projecting future events, such
as the average  cost of resolving  the open claims,  is subject to numerous
variables that are extremely difficult to predict.  These variables include
the type and severity of the disease  alleged by each  claimant,  dismissal
rates,  future costs of medical  treatment,  the impact of  bankruptcies of
other companies that are co-defendants in claims, uncertainties surrounding
the litigation  process from  jurisdiction to jurisdiction and from case to
case,  and the impact of  potential  changes  in  legislative  or  judicial
standards.

Ashland  believes that  insurance will cover the majority of the costs that
will be  incurred  on open and  future  asbestos  claims.  Equitas  Limited
(Equitas)  and other London  companies  currently  provide about 59% of the
insurance  coverage,  and this percentage could decline over time to around
44% if higher  layers of  coverage  provided by other  carriers  have to be
accessed.  The remaining 41% of the coverage is currently  provided by five
companies,  all of which  are  rated A or  higher  by A. M.  Best  Company.
Depending  upon the  level  of costs  that  are  ultimately  incurred,  the
non-London coverage could ultimately expand to about 25 insurance companies
or groups.  Companies or groups that provide about 90% of this coverage are
also rated A or higher.

Ashland has not recognized a reserve for future asbestos claims that may be
asserted.  Although additional claim filings are expected, Ashland does not
have sufficient  information to make a reasonable estimate of the number of
new claims  that might be filed.  Furthermore,  any  predictions  about the
other   variables   discussed   previously  are  subject  to  even  greater
uncertainty as the projection  period  lengthens.  Ashland has retained the
services of professional advisors to assist management in the estimation of
projected liabilities and probable insurance recoveries for future asbestos
claims.  Results of that  effort are  expected to be  available  during the
quarter ending March 31, 2003.

Although  coverage limits are resolved in the  coverage-in-place  agreement
with Equitas and the other London  companies,  there is a disagreement with
these  companies  over  the  timing  of  recoveries.   Depending  upon  the
assumptions  made with respect to the  projected  payments to settle future
claims,  an unfavorable  resolution of this  disagreement  could materially
affect the present  value of  additional  insurance  recoveries  from those
companies.  Until such time as this disagreement is resolved,  Ashland will
use the less favorable  interpretation of this agreement in estimating such
insurance recoveries.


                                    56


<PAGE>



ENVIRONMENTAL PROCEEDINGS


Ashland is subject to various federal,  state and local  environmental laws
and  regulations  that  require  environmental  assessment  or  remediation
efforts (collectively  environmental remediation) at multiple locations. At
September 30, 2002, such locations  included 97 waste treatment or disposal
sites where Ashland has been identified as a potentially  responsible party
under Superfund or similar state laws, approximately 140 current and former
operating  facilities  (including certain operating  facilities conveyed to
MAP) and about 1,220 service  station  properties.  Ashland's  reserves for
environmental  remediation  amounted to $169 million at September 30, 2002,
and $176 million at  September  30, 2001.  Such amounts  reflect  Ashland's
estimates of the most likely  costs that will be incurred  over an extended
period  to  remediate  identified   conditions  for  which  the  costs  are
reasonably  estimable,   without  regard  to  any  third-party  recoveries.
Engineering  studies,  probability  techniques,  historical  experience and
other  factors are used to identify and evaluate  remediation  alternatives
and  their  related  costs,  in  determining  the  estimated  reserves  for
environmental remediation.

Environmental   remediation  reserves  are  subject  to  numerous  inherent
uncertainties  that affect  Ashland's  ability to estimate its share of the
costs. 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. Ashland regularly adjusts its reserves as environmental  remediation
continues.

None of the remediation  locations is individually  material to Ashland, as
its  largest  reserve for any site is less than $10  million.  As a result,
Ashland's  exposure to adverse  developments with respect to any individual
site is not expected to be material,  and these sites are in various stages
of ongoing  remediation.  Although  environmental  remediation could have a
material   effect  on  results  of   operations  if  a  series  of  adverse
developments  occurs  in a  particular  quarter  or  fiscal  year,  Ashland
believes that the chance of such developments occurring in the same quarter
or fiscal year is remote.

OTHER LEGAL PROCEEDINGS

In addition to the matters described above, there are pending or threatened
against  Ashland and its current and former  subsidiaries  various  claims,
lawsuits and administrative  proceedings.  Such actions are with respect to
commercial  matters,  product  liability,  toxic tort liability,  and other
environmental matters, which seek remedies or damages some of which are for
substantial amounts. While these actions are being contested, their outcome
is not predictable with assurance.


NOTE N - DISCONTINUED OPERATIONS

On March 16, 2000, Ashland's Board of Directors approved a spin-off of 17.4
million shares of its Arch Coal Common Stock to Ashland's  shareholders  of
record on March 24,  2000,  in the form of a taxable  dividend.  The shares
were  distributed  on the basis of .246097 of a share of Arch Coal for each
Ashland share  outstanding.  The spin-off  resulted in a charge to retained
earnings of $123 million,  with no gain or loss recorded.  Ashland sold its
remaining 4.7 million Arch Coal shares in a public offering during February
2001 for $86 million (after  underwriting  commissions).  In 2002,  Ashland
received $22 million in current tax benefits  from capital loss  carrybacks
generated  by the sale,  which are  included  in "Cash  provided  (used) by
discontinued  operations"  on the  Statements of  Consolidated  Cash Flows.
Ashland's   net  income  (loss)   associated   with  Arch  Coal  and  other
discontinued operations are summarized below.
<TABLE>
<CAPTION>
(In millions)                                                              2002          2001           2000
- -------------------------------------------------------------------------------------------------------------

<S>                                                                       <C>            <C>            <C>
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
Arch Coal
   Equity loss                                                            $   -           $ -          $(246)(1)
   Administrative expenses                                                    -             -             (1)
Reserves related to other discontinued operations                             -           (23)             -

GAIN (LOSS) ON DISPOSAL OF ARCH COAL
Gain on sale of stock                                                         -            49              -
Costs related to the spin-off                                                 -             -             (5)
                                                                          ------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES                                             -            26           (252)
INCOME TAXES
Income (loss) from discontinued operations                                    -             9             32
Gain (loss) on disposal of Arch Coal                                          -           (16)             2
                                                                          ------------------------------------
RESULTS FROM DISCONTINUED OPERATIONS                                      $   -           $19          $(218)
                                                                          ====================================
</TABLE>

(1)      Includes 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.



                                    57

<PAGE>


NOTE O - EMPLOYEE BENEFIT PLANS

PENSION AND OTHER POSTRETIREMENT PLANS

Ashland  and its  subsidiaries  sponsor  noncontributory,  defined  benefit
pension plans that cover substantially all employees.  Benefits under these
plans are generally based on employees'  years of service and  compensation
during the years immediately preceding their retirement. For certain plans,
50% of employees'  leveraged employee stock ownership plan (LESOP) accounts
are  coordinated  with and used to partially  fund their pension  benefits.
Ashland's objective is to fully fund the accumulated benefit obligations of
its qualified plans, and determines the level of its contributions annually
to achieve  that  objective  over  time.  Ashland's  contributions  of $103
million to its pension  plans  during 2002  exceeded  the amounts  required
under  federal  laws  and  regulations  by $48  million.  These  additional
contributions  were made to partially  mitigate the adverse  effects of the
reduction  in the discount  rate and  depressed  investment  returns on the
funded status of its qualified plans.

Ashland and its  subsidiaries  also sponsor  other  postretirement  benefit
plans,  which provide health care and life insurance  benefits for eligible
employees who retire or are disabled.  Retiree  contributions  to Ashland's
health care plans are adjusted  periodically,  and the plans  contain other
cost-sharing features, such as deductibles and coinsurance.  Life insurance
plans are generally noncontributory. Ashland funds the costs of benefits as
they are paid.

Summaries  of the  changes  in the  benefit  obligations  and  plan  assets
(primarily  listed stocks and debt  securities) and of the funded status of
the plans follow.
<TABLE>
<CAPTION>
                                                         Pension benefits
                                                   2002                     2001
                                           -------------------------------------------             Other
                                                          Non-                    Non-        postretirement
                                           Qualified qualified     Qualified qualified            benefits
(In millions)                                  plans     plans         plans     plans         2002     2001
- ------------------------------------------------------------------------------------------------------------
<S>                                             <C>       <C>           <C>       <C>          <C>      <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at October 1                $715      $103          $595      $ 87         $333     $269
Service cost                                      42         1            35         2           12       11
Interest cost                                     52         7            46         7           23       22
Retiree contributions                              -         -             -         -            8        7
Benefits paid                                    (30)       (4)          (28)       (5)         (33)     (28)
Other-primarily actuarial loss                    95         2            67        12           18       52
                                           -----------------------------------------------------------------
Benefit obligations at September 30             $874      $109          $715      $103         $361     $333
                                           =================================================================

CHANGE IN PLAN ASSETS
Value of plan assets at October 1               $518      $  -          $506      $  -         $  -     $  -
Actual return on plan assets                     (42)        -           (40)        -            -        -
Employer contributions                           103         4            76         5           25       21
Retiree contributions                              -         -             -         -            8        7
Benefits paid                                    (30)       (4)          (28)       (5)         (33)     (28)
Other                                              2         -             4         -            -        -
                                           -----------------------------------------------------------------
Value of plan assets at September 30            $551      $  -          $518      $  -         $  -     $  -
                                           =================================================================

FUNDED STATUS OF THE PLANS
Unfunded accumulated obligation                 $150      $ 98          $ 53      $ 91         $361     $333
Provision for future salary increases            173        11           144        12            -        -
                                          -----------------------------------------------------------------
Excess of obligations over plan assets           323       109           197       103          361      333
Unrecognized actuarial loss                     (354)      (43)         (186)      (44)         (72)     (56)
Unrecognized prior service credit (cost)          (2)        -            (3)        -           15       24
                                           -----------------------------------------------------------------
Net liability recognized                        $(33)     $ 66          $  8      $ 59         $304     $301
                                           =================================================================

BALANCE SHEET LIABILITIES (ASSETS)
Prepaid benefit costs                              $    -                  $  (4)              $  -     $  -
Accrued benefit liabilities                           250                    144                304      301
Intangible assets                                      (2)                    (2)                 -        -
Accumulated other comprehensive loss                 (215)                   (71)                 -        -
                                           -----------------------------------------------------------------
Net liability recognized                           $   33                  $  67               $304     $301
                                           =================================================================

ASSUMPTIONS AS OF SEPTEMBER 30
Discount rate                                        6.75%                  7.25%              6.75%    7.25%
Salary adjustment rate                               5.00                   5.00                  -        -
Expected return on plan assets                       9.00                   9.00                  -        -
                                           =================================================================
</TABLE>

                                     58


<PAGE>



The  following   table   details  the   components  of  pension  and  other
postretirement benefit costs.
<TABLE>
<CAPTION>
                                                                                              Other
                                                       Pension benefits               postretirement benefits
(In millions)                                      2002     2001     2000             2002     2001      2000
<S>                                                <C>      <C>      <C>              <C>      <C>       <C>
- -------------------------------------------------------------------------------------------------------------
Service cost                                        $43      $37      $37              $12      $11       $ 9
Interest cost                                        59       53       47               23       22        19
Expected return on plan assets                      (47)     (48)     (39)               -        -         -
Other amortization and deferral                      19        4        5               (6)      (6)       (9)
                                                   ----------------------------------------------------------
                                                    $74      $46      $50              $29      $27       $19
                                                   ==========================================================

</TABLE>

Ashland  amended  nearly all of its  retiree  health  care plans in 1992 to
place a cap on its contributions  and to adopt a cost-sharing  method based
upon years of service. The cap limits Ashland's  contributions to base year
per capita  costs,  plus  annual  increases  of up to 4.5% per year.  These
amendments  reduced  Ashland's  obligations  under its retiree  health care
plans, with the reduction  amortized to income over approximately 12 years.
The remaining  credit at September 30, 2002,  amounted to $14 million,  and
the amortization to income will amount to $8 million in 2003 and $6 million
in 2004.

OTHER PLANS

Ashland sponsors a qualified  savings plan to assist eligible  employees in
providing for  retirement or other future needs.  Under that plan,  Ashland
contributes  up to 4.2% of a  participating  employee's  earnings.  Company
contributions  amounted to $17 million in 2002, $16 million in 2001 and $15
million in 2000.


NOTE P - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table presents quarterly financial  information and per share
data  relative to Ashland's  common  stock.  Amounts for the December  2001
quarter have been restated to include the  cumulative  effect of accounting
change for the adoption of FAS 142.  Amounts for the September 2001 quarter
have been  restated  for the  adoption  of FAS 145.  See Note A for further
explanations.

<TABLE>
<CAPTION>
Quarters ended                          December 31           March 31             June 30           September 30
(In millions except per share data)     2001(1) 2000        2002(1) 2001         2002    2001        2002    2001
- -----------------------------------------------------------------------------------------------------------------
<S>                                   <C>     <C>         <C>     <C>          <C>     <C>        <C>      <C>

Sales and operating revenues          $1,812  $1,878      $1,598  $1,659       $2,047  $2,053      $2,086  $2,129
Operating income (loss)                   98     144          (1)     87          137     369         104     251
Income (loss) from continuing operations  38      59         (21)     26           65     197          47     122
Net income (loss)                         27      59         (21)     46           65     197          47     116

Basic earnings (loss) per share
   Continuing operations              $  .55  $  .84      $ (.31) $  .37       $  .94  $ 2.82      $  .68  $ 1.75
   Net income (loss)                     .38     .84        (.31)    .66          .94    2.82         .68    1.66

Diluted earnings (loss) per share
   Continuing operations              $  .54  $  .84      $ (.31) $  .37       $  .93  $ 2.79      $  .68  $ 1.73
   Net income (loss)                     .38     .84        (.31)    .66          .93    2.79         .68    1.64

Common cash dividends per share       $ .275  $ .275      $ .275  $ .275       $ .275  $ .275      $ .275  $ .275

Market price per common share
   High                               $46.54  $36.24      $46.98  $41.35       $45.61  $44.25      $41.20  $44.05
   Low                                 37.60   30.63       43.04   34.39        37.11   37.15       26.29   35.53
                                      ===========================================================================
</TABLE>

(1)      MAP  maintains an inventory  valuation  reserve to reduce the LIFO
         cost  of  its   inventories  to  their  net   realizable   values.
         Adjustments  in that  reserve are  recognized  quarterly  based on
         changes in petroleum product prices,  creating non-cash charges or
         credits to Ashland's earnings. A pretax charge of $29 million ($18
         million  after  tax,  or $.26 per  share)  was  recognized  in the
         December  2001 quarter and reversed in the March 2002 quarter as a
         result of these adjustments.

                                    59


<PAGE>


Ashland Inc. and Consolidated Subsidiaries
INFORMATION BY INDUSTRY SEGMENT
Years Ended September 30
<TABLE>
<CAPTION>


(In millions)                                                              2002          2001           2000

<S>                                                                     <C>            <C>            <C>
REVENUES
Sales and operating revenues
   APAC                                                                  $2,652        $2,624         $2,505
   Ashland Distribution                                                   2,535         2,849          3,214
   Ashland Specialty Chemical                                             1,290         1,248          1,283
   Valvoline                                                              1,152         1,092          1,077
   Intersegment sales(1)
      Ashland Distribution                                                  (20)          (26)           (38)
      Ashland Specialty Chemical                                            (64)          (66)           (78)
      Valvoline                                                              (2)           (2)            (2)
                                                                         -----------------------------------
                                                                          7,543         7,719          7,961

Equity income
   Ashland Specialty Chemical                                                 4             4              4
   Valvoline                                                                  1             1              1
   Refining and Marketing                                                   176           749            389
                                                                         -----------------------------------
                                                                            181           754            394

Other income
   APAC                                                                      12            13             21
   Ashland Distribution                                                      17            15              9
   Ashland Specialty Chemical                                                26            27             30
   Valvoline                                                                  6             6              7
   Refining and Marketing                                                     2             7              6
   Corporate                                                                  5             6              8
                                                                         -----------------------------------
                                                                             68            74             81
                                                                         -----------------------------------
                                                                         $7,792        $8,547         $8,436
                                                                         ===================================


OPERATING INCOME
APAC                                                                     $  122        $   55         $  140
Ashland Distribution                                                          1            35             70
Ashland Specialty Chemical                                                   87            58             95
Valvoline                                                                    77            81             78
Refining and Marketing(2)                                                   143           707            361
Corporate                                                                   (92)          (85)           (73)
                                                                         -----------------------------------
                                                                         $  338        $  851         $  671
                                                                         ===================================


ASSETS
APAC                                                                     $1,498        $1,574         $1,654
Ashland Distribution                                                        884           961          1,047
Ashland Specialty Chemical                                                  944           944            888
Valvoline                                                                   611           642            573
Refining and Marketing                                                    2,409         2,452          2,352
Corporate(3)                                                                379           558            311
                                                                         -----------------------------------
                                                                         $6,725        $7,131         $6,825
                                                                         ===================================
</TABLE>
                                    60

<PAGE>
<TABLE>
<CAPTION>

(In millions)                                                              2002          2001           2000

<S>                                                                      <C>           <C>            <C>
INVESTMENT IN EQUITY AFFILIATES
APAC                                                                     $   (2)       $    -         $   10
Ashland Specialty Chemical                                                   41            36             40
Valvoline                                                                     9             9              7
Refining and Marketing                                                    2,350         2,387          2,295
                                                                         -----------------------------------
                                                                         $2,398        $2,432         $2,352
                                                                         ===================================


EXPENSE (INCOME) NOT AFFECTING CASH
Depreciation, depletion and amortization
   APAC                                                                  $  114        $  133         $  129
   Ashland Distribution                                                      21            27             23
   Ashland Specialty Chemical                                                50            56             49
   Valvoline                                                                 24            23             23
   Corporate                                                                 11            11             13
                                                                         -----------------------------------
                                                                            220           250            237
Other noncash items(4)
   APAC                                                                      24            14              9
   Ashland Distribution                                                       1            (1)            (3)
   Ashland Specialty Chemical                                                 5             5              3
   Valvoline                                                                 (2)            4              -
   Refining and Marketing                                                  (168)           21            (17)
   Corporate                                                                 41            24            (12)
                                                                         -----------------------------------
                                                                            (99)           67            (20)
                                                                         -----------------------------------
                                                                         $  121        $  317         $  217
                                                                         ===================================


ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
APAC                                                                     $  107        $   92         $   98
Ashland Distribution                                                         12            15             18
Ashland Specialty Chemical                                                   38            57             82
Valvoline                                                                    21            29             25
Corporate                                                                     7            12              9
                                                                         -----------------------------------
                                                                         $  185        $  205         $  232
                                                                         ===================================
</TABLE>

(1)      Intersegment  sales are accounted  for at prices that  approximate
         market value.

(2)      Includes Ashland's equity income from MAP, amortization related to
         Ashland's   excess   investment  in  MAP,  and  other   activities
         associated with refining and marketing.

(3)      Includes cash, cash equivalents and other unallocated assets.

(4)      Includes deferred income taxes,  equity income from affiliates net
         of distributions, and other items not affecting cash.


                                    61


<PAGE>


Ashland Inc. and Consolidated Subsidiaries
FIVE-YEAR SELECTED FINANCIAL INFORMATION
Years Ended September 30

<TABLE>
<CAPTION>

(In millions except per share data)           2002         2001            2000          1999           1998

<S>                                         <C>          <C>             <C>           <C>            <C>
SUMMARY OF OPERATIONS
Revenues
   Sales and operating revenues             $7,543       $7,719          $7,961        $6,801         $6,534
   Equity income                               181          754             394           351            304
   Other income                                 68           74              81           101             70
Costs and expenses
   Cost of sales and operating expenses     (6,049)      (6,319)         (6,434)       (5,346)        (5,299)
   Selling, general and
      administrative expenses               (1,185)      (1,127)         (1,094)       (1,054)        (1,006)
   Depreciation, depletion and
      amortization                            (220)        (250)           (237)         (228)          (181)
                                            ----------------------------------------------------------------
Operating income                               338          851             671           625            422
Net interest and other financial costs        (138)        (175)           (194)         (140)          (130)
                                            ----------------------------------------------------------------
Income from continuing operations
      before income taxes                      200          676             477           485            292
Income taxes                                   (71)        (273)           (189)         (194)          (114)
                                            ----------------------------------------------------------------
Income from continuing operations              129          403             288           291            178
Results from discontinued operations             -           19            (218)           (1)            25
                                            ----------------------------------------------------------------
Income before cumulative effect
    of accounting changes                      129          422              70           290            203
Cumulative effect of accounting changes        (12)          (5)              -             -              -
                                            ----------------------------------------------------------------
Net income                                  $  117       $  417          $   70        $  290         $  203
                                            ================================================================

BALANCE SHEET INFORMATION
Current assets                              $1,925       $2,237          $2,139        $2,063         $1,832
Current liabilities                          1,511        1,534           1,712         1,401          1,367
                                            ----------------------------------------------------------------
Working capital                             $  414       $  703          $  427        $  662         $  465
                                            ================================================================
Total assets                                $6,725       $7,131          $6,825        $6,478         $6,136
                                            ================================================================
Debt due within one year                    $  201       $   85          $  327        $  219         $  125
Long-term debt (less current portion)        1,606        1,786           1,899         1,627          1,507
Stockholders' equity                         2,173        2,226           1,965         2,200          2,137
                                            ----------------------------------------------------------------
Capital employed                            $3,980       $4,097          $4,191        $4,046         $3,769
                                            ================================================================

CASH FLOW INFORMATION
Cash flows from operations                  $  188       $  829          $  484        $  383         $  354
Additions to property, plant and equipment     185          205             232           248            274
Cash dividends                                  76           76              78            81             84
                                            ================================================================

COMMON STOCK INFORMATION
Diluted earnings per share
   Income from continuing operations        $ 1.83      $  5.73            4.05        $ 3.90         $ 2.31
   Net income                                 1.67         5.93             .98          3.89           2.63
Cash dividends per share                      1.10         1.10            1.10          1.10           1.10
                                            ================================================================

</TABLE>


                                       62

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>16
<FILENAME>ex21.txt
<DESCRIPTION>EXHIBIT 21 SUBSIDIARIES
<TEXT>
                                   EXHIBIT 21

LIST OF SUBSIDIARIES

     Subsidiaries  of Ashland Inc.  ("AI") at September  30, 2002,  included the
companies listed below. Ashland has numerous  unconsolidated  affiliates,  which
are  primarily   accounted  for  on  the  equity  method,   and   majority-owned
consolidated  subsidiaries  in  addition to the  companies  listed  below.  Such
affiliates and subsidiaries are not listed below since they would not constitute
a significant subsidiary considered in the aggregate as a single entity.
<TABLE>
<CAPTION>
                                                                Jurisdiction of                     Immediate
                        Company                                  Incorporation                      Parent*
                        -------                                  -------------                     -----------
<S>                                                                 <C>                                <C>
APAC-Alabama, Inc.........................................          Delaware                           AHI
APAC-Arkansas, Inc........................................          Delaware                           AHI
APAC-Carolina, Inc........................................          Delaware                           AHI
APAC-Florida, Inc.........................................          Delaware                           AHI
APAC-Georgia, Inc.........................................           Georgia                           AHI
APAC Holdings, Inc. ("AHI")...............................          Delaware                           AI
APAC-Kansas, Inc..........................................          Delaware                           AHI
APAC-Mississippi, Inc.....................................          Delaware                           AHI
APAC-Missouri, Inc........................................          Delaware                           AHI
APAC-Oklahoma, Inc........................................          Delaware                           AHI
APAC-Tennessee, Inc.......................................          Delaware                           AHI
APAC-Texas, Inc...........................................          Delaware                           AHI
APAC-Virginia, Inc........................................          Delaware                           AHI
ASH GP LLC ("ASH GP").....................................          Delaware                          AIHI
Ashland ACT Korea Limited.................................            Korea                           AHBV
Ashland Canada Corp. .....................................     Nova Scotia, Canada                    ACHBV
Ashland Canada Holdings B.V. ("ACHBV")....................         Netherlands                        AHBV
Ashland Chemical Hispania, S.L............................            Spain                            AI
Ashland France SAS........................................           France                    AHBV 99% -  ASBV 1%
Ashland Holdings B.V. ("AHBV")............................         Netherlands                        ATCV
Ashland International Holdings, Inc. ("AIHI").............          Delaware                           AI
Ashland Italia S.p.A......................................            Italy                    ATCV 95% - AOCV 5%
Ashland Nederland B.V.....................................         Netherlands                        AHBV
Ashland Services B.V. ("ASBV")............................         Netherlands                        AHBV
Ashland UK Limited........................................       United Kingdom                       AHBV
Ashmont Insurance Company, Inc. ..........................           Vermont                           AI
AshOne C.V. ("AOCV") .....................................         Netherlands            AI 10% - AIHI 89% - ASH GP 1%
AshTwo C.V. ("ATCV")......................................         Netherlands             AIHI 10% - AOCV 89% - ASH GP 1%
Marathon Ashland Petroleum LLC............................          Delaware                         AI 38%
Valvoline (Australia) Pty. Ltd............................          Australia                         AHBV
- ---------------
</TABLE>
*100% of the  voting  securities  are owned by the  immediate  parent  except as
otherwise indicated.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>17
<FILENAME>consent.txt
<DESCRIPTION>EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS
<TEXT>
                                Exhibit 23.1


                      CONSENT OF INDEPENDENT AUDITORS



We consent to the incorporation by reference in the Registration  Statement
(Form  S-8  No.   33-52125)   pertaining  to  the  Ashland  Inc.   Deferred
Compensation  and Stock Incentive Plan for Non-Employee  Directors,  in the
Registration  Statement  (Form S-8 No.  2-95022)  pertaining to the Ashland
Inc.  Amended Stock Incentive Plan for Key Employees,  in the  Registration
Statement (Form S-8 No. 33-32612)  pertaining to the Ashland Inc.  Employee
Savings  Plan,  in the  Registration  Statement  (Form  S-8  No.  33-26101)
pertaining  to  the  Ashland  Inc.   Long-Term   Incentive   Plan,  in  the
Registration  Statement (Form S-8 No.  33-55922)  pertaining to the Ashland
Inc. 1993 Stock Incentive Plan, in the Registration Statement (Form S-8 No.
33-49907) pertaining to the Ashland Inc. Leveraged Employee Stock Ownership
Plan, in the Registration  Statement (Form S-8 No. 33-62901)  pertaining to
the Ashland Inc. Deferred Compensation Plan, in the Registration  Statement
(Form  S-8  No.  333-33617)  pertaining  to the  Ashland  Inc.  1997  Stock
Incentive  Plan, in the  Registration  Statement  (Form S-3 No.  333-78675)
pertaining  to the  registration  of 68,925  shares of Ashland Inc.  Common
Stock, in the Registration Statement (Form S-3 No. 333-36842) pertaining to
the  registration  of 96,600 shares of Ashland Inc.  Common  Stock,  in the
Registration   Statement  (Form  S-3  No.  333-54762)   pertaining  to  the
registration  of  149,300  shares of  Ashland  Inc.  Common  Stock,  in the
Registration   Statement  (Form  S-3  No.  333-82830)   pertaining  to  the
registration of 265,100 shares and in the Registration  Statement (Form S-3
No.  333-69138)   pertaining  to  the  offering  of  $600,000,000  of  Debt
Securities,   Preferred  Stock,  Depository  Shares,  Common  Stock  and/or
Warrants  of Ashland  Inc.,  of our report  dated  November  6, 2002,  with
respect to the  consolidated  financial  statements and schedule of Ashland
Inc. and  consolidated  subsidiaries  included in this Annual  Report (Form
10-K) for the year ended September 30, 2002.





Cincinnati, Ohio
November 26, 2002



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>18
<FILENAME>poaex.txt
<DESCRIPTION>EXHIBIT 24 POWER OF ATTORNEY
<TEXT>

                                 EXHIBIT 24
                             POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each of the undersigned Directors and
Officers of ASHLAND INC., a Kentucky corporation, which is about to file an
Annual  Report on Form 10-K with the  Securities  and  Exchange  Commission
under the  provisions of the  Securities  Exchange Act of 1934, as amended,
hereby  constitutes  and appoints  JAMES J. O'BRIEN,  DAVID L. HAUSRATH and
LINDA  L.   FOSS,   and  each  of  them,   his  or  her  true  and   lawful
attorneys-in-fact  and agents, with full power to act without the others to
sign and file such Annual  Report and the exhibits  thereto and any and all
other documents in connection  therewith,  and any such amendments thereto,
with the Securities and Exchange Commission,  and to do and perform any and
all acts and things  requisite and necessary to be done in connection  with
the  foregoing  as fully as he or she might or could do in  person,  hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, may lawfully do or cause to be done by virtue hereof.

Dated:  November 7, 2002


/s/ James J. O'Brien                            /s/ Bernadine P. Healy
- ---------------------------------------         --------------------------------
James J. O'Brien, Chairman of the Board         Bernadine P. Healy, Director
and Chief Executive Officer


/s/ J. Marvin Quin                              /s/ Mannie L. Jackson
- ---------------------------------------         --------------------------------
J. Marvin Quin, Senior Vice President           Mannie L. Jackson, Director
and Chief Financial Officer


/s/ Kenneth L. Aulen                            /s/ Patrick F. Noonan
- ---------------------------------------         --------------------------------
Kenneth L. Aulen, Administrative Vice           Patrick F. Noonan, Director
President, Controller and Principal
Accounting Officer


/s/ Samuel C. Butler                            /s/ Jane C. Pfeiffer
- ---------------------------------------         --------------------------------
Samuel C. Butler, Director                      Jane C. Pfeiffer, Director


/s/ Frank C. Carlucci                           /s/ William L. Rouse, Jr.
- ---------------------------------------         --------------------------------
Frank C. Carlucci, Director                     William L. Rouse, Jr., Director


/s/ Ernest H. Drew                              /s/ Theodore M. Solso
- ---------------------------------------         --------------------------------
Ernest H. Drew, Director                        Theodore M. Solso, Director


/s/ James B. Farley                             /s/ Michael J. Ward
- ---------------------------------------         --------------------------------
James B. Farley, Director                       Michael J. Ward, Director


/s/ Roger W. Hale
- ---------------------------------------
Roger W. Hale, Director


<PAGE>


                                ASHLAND INC.
                     Certificate of Assistant Secretary


     The undersigned hereby certifies that she is an Assistant Secretary of
Ashland  Inc., a Kentucky  corporation  (the  "Corporation"),  and that, as
such,  she is  authorized  to  execute  this  Certificate  on behalf of the
Corporation and further certifies that:

(a)      Attached  hereto  as  Exhibit A is a true and  correct  copy of an
         excerpt  from the minutes of the meeting of the Board of Directors
         of the Corporation held on November 7, 2002, setting forth certain
         actions  taken at such  meeting,  and the powers  and  authorities
         granted  pursuant to such actions have at all times been in effect
         without  amendment,   waiver,  rescission  or  modification  since
         November 7, 2002.

     IN WITNESS  WHEREOF,  I have hereunto set my hand and affixed the seal
of the Corporation on this 2nd day of December, 2002.


                             /s/ Linda L. Foss
                             ------------------------
                             Linda L. Foss
                             Assistant Secretary

[SEAL]



<PAGE>



                                 Exhibit A
                         Annual Report on Form 10-K

RESOLVED,  that the  Corporation's  Annual  Report  to the  Securities  and
Exchange  Commission (the "SEC") on Form 10-K (the "Form 10-K") in the form
previously  circulated to the Board in preparation for this meeting be, and
it hereby is,  approved with such changes as the Chief  Executive  Officer,
any Vice President, the Secretary or the Corporation's counsel ("Authorized
Persons") shall approve, the execution and filing of the Form 10-K with the
SEC to be conclusive  evidence of such approval;  provided,  however,  that
without  derogating  from the binding effect of the above, it is understood
that an Authorized Person shall cause the distribution  prior to the filing
with the SEC, of a copy of such Form 10-K to the directors in substantially
that form  which is to be filed with the SEC and that each  director  shall
have the  opportunity  to review with and comment to an  Authorized  Person
prior to such filing;

FURTHER RESOLVED,  that the Authorized  Persons be, and each of them hereby
is,  authorized  to file  with  the SEC the Form  10-K  and any  amendments
thereto on Form 10-K/A and/or any other applicable form; and

FURTHER RESOLVED,  that the Authorized  Persons be, and each of them hereby
is, authorized to take all such further actions as in their judgment may be
necessary  or  advisable  to  accomplish  the  purposes  of  the  foregoing
resolutions.


<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>19
<FILENAME>jjcert.txt
<DESCRIPTION>EXHIBIT 99.1 CERT. OF CEO
<TEXT>
                                  Exhibit 99.1


                                  ASHLAND INC.


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection  with the Annual  Report of Ashland Inc.  (the  "Company") on
Form  10-K  for the  year  ended  September  30,  2002 as  filed  with  the
Securities and Exchange  Commission on the date hereof (the  "Report"),  I,
James J. O'Brien, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C.  Section  1350,  as adopted  pursuant  to  Section  906 of the
Sarbanes-Oxley Act of 2002, that:

(1)      The Report fully complies with the  requirements  of section 13(a)
         or 15(d) of the Securities Exchange Act of 1934; and

(2)      The information  contained in the Report fairly  presents,  in all
         material  respects,   the  financial   condition  and  results  of
         operations of the Company.



/s/ James J. O'Brien
- --------------------------------
James J. O'Brien
Chief Executive Officer
December 3, 2002


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>20
<FILENAME>jmqcert.txt
<DESCRIPTION>EXHIBIT 99.2 CERT. OF CFO
<TEXT>
                                Exhibit 99.2


                                ASHLAND INC.


                         CERTIFICATION PURSUANT TO
                          18 U.S.C. SECTION 1350,
                           AS ADOPTED PURSUANT TO
               SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection  with the Annual  Report of Ashland Inc.  (the  "Company") on
Form  10-K  for the  year  ended  September  30,  2002 as  filed  with  the
Securities and Exchange Commission on the date hereof (the "Report"), I, J.
Marvin Quin, Chief Financial Officer of the Company,  certify,  pursuant to
18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of the
Sarbanes-Oxley Act of 2002, that:

(1)      The Report fully complies with the  requirements  of section 13(a)
         or 15(d) of the Securities Exchange Act of 1934; and

(2)      The information  contained in the Report fairly  presents,  in all
         material  respects,   the  financial   condition  and  results  of
         operations of the Company.



/s/ J. Marvin Quin
- ------------------------------
J. Marvin Quin
Chief Financial Officer
December 3, 2002


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
